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<SEC-DOCUMENT>0000950129-05-000887.txt : 20050203
<SEC-HEADER>0000950129-05-000887.hdr.sgml : 20050203
<ACCEPTANCE-DATETIME>20050203172808
ACCESSION NUMBER:		0000950129-05-000887
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20050201
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20050203
DATE AS OF CHANGE:		20050203

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			VIRCO MFG CORPORATION
		CENTRAL INDEX KEY:			0000751365
		STANDARD INDUSTRIAL CLASSIFICATION:	PUBLIC BUILDING AND RELATED FURNITURE [2531]
		IRS NUMBER:				951613718
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0131

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-08777
		FILM NUMBER:		05574370

	BUSINESS ADDRESS:	
		STREET 1:		2027 HARPERS WAY
		CITY:			TORRANCE
		STATE:			CA
		ZIP:			90501
		BUSINESS PHONE:		3105330474

	MAIL ADDRESS:	
		STREET 1:		P O BOX 44846
		CITY:			LOS ANGELES
		STATE:			CA
		ZIP:			90044
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>v05152e8vk.htm
<DESCRIPTION>FORM 8-K
<TEXT>
<HTML>
<HEAD>
<TITLE>Virco Mfg. Corporation - February 1, 2005</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">



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<P align="center" style="font-size: 14pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<P align="center" style="font-size: 18pt"><B>FORM 8-K</B>


<P align="center" style="font-size: 12pt"><B>CURRENT REPORT</B>


<P align="center" style="font-size: 12pt"><B>Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934</B>


<P align="center" style="font-size: 12pt"><B>Date of Report (Date of earliest event reported): February&nbsp;1, 2005</B>


<P align="center" style="font-size: 10pt">Commission file number 1-8777


<P align="center" style="font-size: 24pt"><B>VIRCO MFG. CORPORATION</B>


<DIV align="center" style="font-size: 10pt">(Exact name of registrant as specified in its charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">DELAWARE
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">95-1613718</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or other jurisdiction of incorporation or organization)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(IRS Employer Identification No.)</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">2027 Harpers Way, Torrance, California
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">90501</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(Address of principal executive officer)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Zip Code)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">Registrant&#146;s telephone number, including area code <U>(310)&nbsp;533-0474</U>


<P align="left" style="font-size: 10pt">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="95%">&nbsp;</TD>
</TR>
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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Written communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR 230.425)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT face="Wingdings">&#111;</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Pre-commencement communications pursuant to Rule&nbsp;13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))</TD>
</TR>
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</TABLE>
</DIV>


<P>
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<P align="center" style="font-size: 10pt">1
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">








<P align="left" style="font-size: 10pt"><B>Item&nbsp;1.01 Entry into a Material Definitive Agreement</B>


<P align="left" style="font-size: 10pt">Effective February&nbsp;1, 2005, Virco Mfg Corporation (the &#147;Company&#148;) and FHL Group, a California
corporation (&#147;FHL&#148;) entered into a new Industrial/Commercial Single-Tenant Lease &#150; Net, relating to
the lease of the Company&#146;s Los Angeles facilities, located at 2027 Harpers Way, Torrance California
(the &#147;Commercial Lease&#148;).


<P align="left" style="font-size: 10pt">The Commercial Lease provides for an initial term of five years and one month, which expires on
February&nbsp;28, 2010, a base rent of $213,817.50 per month (the &#147;Base Rent&#148;), a security deposit of
$213,817.50, and one option to extend the initial term of the Commercial Lease by an additional
five years.


<P align="left" style="font-size: 10pt">The Base Rent is subject to the following adjustments:


<P align="left" style="font-size: 10pt">One-half of the Base Rent abates for February&nbsp;2005 and March&nbsp;2005, provided that, at the expiration
of the Commercial Lease, the Company has fully, faithfully and punctually performed all of its
obligations under the Commercial Lease and has surrendered the leased premises and leased building
in the condition required by the Commercial Lease. However, the abated rent will become due and
payable at any time that the Company does not cure a default under the Commercial Lease within any
applicable notice period.


<P align="left" style="font-size: 10pt">The Base Rent is subject to increase, effective August&nbsp;1, 2007, by an amount equal to the greatest
of the following:



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">1.&nbsp;&nbsp;</TD>
    <TD>Three percent (3%) per annum, compounded, from February&nbsp;1, 2005 through July&nbsp;31,
2007; and</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">2.&nbsp;&nbsp;</TD>
    <TD>The annual percentage increase, if any, compounded, in the Consumer Price Index-Urban
Wage Earners and Clerical Workers (Los Angeles, All Items, Base: 1982-84=100) (the
&#147;Index&#148;).</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">However, the amount of any increase may not exceed six percent (6%) per annum, compounded, from
February&nbsp;1, 2005 through July&nbsp;31, 2007. The Base Rent as so increased will remain in effect for
the remainder of the original term of the Commercial Lease.


<P align="left" style="font-size: 10pt">FHL may, among other things, terminate the Commercial Lease and recover from the Company:



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">1.&nbsp;&nbsp;</TD>
    <TD>The unpaid rent at the time of termination;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">2.&nbsp;&nbsp;</TD>
    <TD>The worth at the time of award of the amount by which the unpaid rent which would
have been earned after termination until the time of award exceeds the amount of the
rental loss that the Company proves could have been reasonable avoided;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">2
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">3.&nbsp;&nbsp;</TD>
    <TD>The worth at the time of award of the amount by which the unpaid rent for the balance
of the term after the time of award exceeds the amount of the rental loss that the Company
proves could have been reasonable avoided; and</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="4%" nowrap align="left">4.&nbsp;&nbsp;</TD>
    <TD>Any other amount necessary to compensate FHL for any detriment proximately caused by
the Company&#146;s failure to perform its obligations under the Commercial Lease or which in
the ordinary course would likely to result from such a failure to perform,</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">in the event that the Company commits certain defaults under the Commercial Lease relating to the
abandonment of the premises, certain payment defaults, certain failures to provide reasonable
written evidence of compliance with the terms of the Commercial Lease, certain failures to comply
with the terms, conditions, covenants or provisions of the Commercial Lease that continue for 30
days after notice thereof, certain bankruptcy and insolvency events, to the provision of materially
false financial statements to FHL.


<P align="left" style="font-size: 10pt">The Commercial Lease is attached hereto as Exhibit&nbsp;99.1 and is hereby incorporated in its entirety
by reference. The description of the Commercial Lease included in this item is qualified in its
entirety by reference to the Commercial Lease.



<P align="left" style="font-size: 10pt"><B>Item&nbsp;2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet
Arrangement of a Registrant.</B>


<P align="left" style="font-size: 10pt">The disclosure required by this item is included in Item&nbsp;1.01 and is incorporated herein by
reference.



<P align="left" style="font-size: 10pt"><B>Item&nbsp;9.01(c) Financial Statements, </B><B><I>Pro Forma </I></B><B>Financial Information and Exhibits.</B>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>Financial Statements of Businesses Acquired.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>None.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(b)&nbsp;&nbsp;</TD>
    <TD>P<I>ro Forma </I>Financial Information.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>None.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(c)&nbsp;&nbsp;</TD>
    <TD>Exhibits.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">99.1&nbsp;&nbsp;</TD>
    <TD>Standard Industrial/Commercial Single-Tenant Lease-Net for 2027 Harpers Way, Torrance
California, dated as of February&nbsp;1, 2005, by and between Virco Mfg. Corporation, a
Delaware corporation, and FHL Group, a California corporation.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">3
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="center" style="font-size: 10pt"><B>SIGNATURES</B>


<P align="left" style="font-size: 10pt">Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left"><B>VIRCO MFG. CORPORATION</B><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Date: February 3, 2005&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Robert A. Virtue
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Robert A. Virtue&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Chief Executive Officer and
Chairman of the Board of
Directors&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">4
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><B>INDEX TO EXHIBITS</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Exhibit Number</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Description</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">99.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Standard Industrial/Commercial Single-Tenant Lease-Net
for 2027 Harpers Way, Torrance California, dated as of February&nbsp;1, 2005, by and between
Virco Mfg. Corporation, a Delaware corporation, and FHL Group, a California corporation.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">5
</DIV>


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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>v05152exv99w1.htm
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
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<HEAD>
<TITLE>exv99w1</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="right" style="font-size: 10pt"><B>Exhibit&nbsp;99.1</B>



<P align="center" style="font-size: 10pt"><B>AIR COMMERCIAL REAL ESTATE ASSOCIATION<BR>
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE &#151; NET<BR>
(DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)</B>



<P align="left" style="font-size: 10pt"><B>1. Basic Provisions (&#147;Basic Provisions&#148;).</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.1 Parties: </B>This Lease (&#147;Lease&#148;), dated for reference purposes only <U>February&nbsp;1, 2005,</U>
is made by and between <U>FHL GROUP, a California corporation</U> <U>(&#147;Lessor&#148;) and VIRCO MFG.
CORPORATION, a Delaware corporation</U> (&#147;Lessee&#148;), (collectively the &#147;Parties,&#148; or
individually a &#147;Party&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.2 Premises: </B>That certain real property, Including all Improvements therein or to be provided
by Lessor under the terms of this Lease, and commonly known as <U>2027 Harpers Way, Torrance</U>
located in the County of <U>Los Angeles</U> State of <U>California</U> and generally
described as (describe briefly the nature of the property and, if applicable, the &#147;Project&#148;. If
the property is located within a Project) Parcel 1 in the City of Torrance, County of Los Angeles,
State of California, as shown on Parcel Map 8389 filed in book 88, Pages 1 through 4, Inclusive, of
Parcel Maps in the office of the County Recorder of Los Angeles County consisting of approximately
23.53 acres and all Improvements thereon, including the Industrial and office building consisting
of approximately 559,000 aggregate square feet (the &#147;Building&#148;)
 <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp
;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
&#147;Premises&#148;). (See also Paragraph&nbsp;2)


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.3 Term: </B><U>Five (5)</U> years and <U>One (1)</U> months (&#147;Original Term&#148;) commencing
<U>February&nbsp;1, 2005</U> (&#147;Commencement Date&#148;) and ending <U>February&nbsp;28, 2010</U>
(&#147;Expiration Date&#148;), (See also Paragraph&nbsp;3)


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.4 Early Possession: </B><U>See Addendum</U> (&#147;Early Possession Date&#148;). (See also Paragraphs 3.2
and 3.3)


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.5 Base Rent</B><SUP style="font-size: 85%; vertical-align: text-top"><B>:</B></SUP> <U>$See Addendum</U> per month (&#147;Base Rent&#148;), payable on the
<U>first (1st)</U> day of each month commencing <U>on the Commencement Date</U> (See
also Paragraph&nbsp;4)


<P align="left" style="font-size: 10pt"><FONT style="font-family: Wingdings 2">&#082;</FONT> If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.6 Base Rent and Other Monies Paid Upon Execution:</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Base Rent: <U>$213,817.50</U> for the period (which shall be credited to the installments
of Base Rent due for February and March&nbsp;2005 subject to paragraph 52 of the Addendum)



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Security Deposit: <U>$213,817.50</U> (&#147;Security Deposit&#148;). (See also Paragraph
5)



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Association Fees: $ <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>for the period <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>




<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Other: $<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> for  <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&n
bsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Total Due Upon Execution of this Lease (The $120,000.00 security deposit on deposit with
Lessor under the Existing Lease shall be credited towards Lessee&#146;s obligations to pay the Security
Deposit set forth in Paragraph 1(b) above, and the calculation of Base Rent for the February&nbsp;2005
is pursuant to the abated rent provisions of Addendum Paragraph&nbsp;52.): <U>$200,726.25</U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.7 Agreed Use: </B><U>Manufacturing and warehousing of furniture, including all processes
related thereto, general office and administrative uses, distribution uses</U> . (See also
Paragraph&nbsp;6)


<P align="center" style="font-size: 10pt">&nbsp;
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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.8 Insuring Party: </B>Lessor is the &#147;Insuring Party&#148; unless otherwise stated herein. (See also
Paragraph&nbsp;8)


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.9 Real Estate Brokers: </B>(See also Paragraph&nbsp;15)


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Representation: The following real estate brokers (the &#147;Brokers&#148;) and brokerage
relationships exist in this transaction (check applicable boxes):


<P align="left" style="font-size: 10pt"><FONT style="font-family: Wingdings 2">&#163;</FONT> <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> represents Lessor exclusively (&#147;Lessor&#146;s Broker&#148;);


<P align="left" style="font-size: 10pt"><FONT style="font-family: Wingdings 2">&#163;</FONT> <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> represents Lessor exclusively (&#147;Lessee&#146;s Broker&#148;);


<P align="left" style="font-size: 10pt"><FONT style="font-family: Wingdings 2">&#082;</FONT> <U>The Klabin Company</U> represents both Lessor and Lessee (&#147;Dual Agency&#148;),



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Payment to Brokers: Upon the execution and delivery of this Lease by be Parties, Lessor
shall pay to the Broker the fee agreed to in their separate written agreement (or if there is no
such agreement the sum of <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> or <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> of the total Base Rent) for the brokerage services rendered by the
Brokers.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.10 Guarantor. </B>The obligations of the Lessee under this Lease are to be guaranteed by
<U>None</U>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>1.11 Attachments. </B>Attached hereto are the following, all of which constitute apart of this Lease:


<P align="left" style="font-size: 10pt"><FONT style="font-family: Wingdings 2">&#082;</FONT> an Addendum consisting of Paragraphs <U>51</U> through <U>60</U>:


<P align="left" style="font-size: 10pt"><FONT style="font-family: Wingdings 2">&#163;</FONT> a plot plan depicting the Premises;


<P align="left" style="font-size: 10pt"><FONT style="font-family: Wingdings 2">&#163;</FONT> a current set of the Rules and Regulations;


<P align="left" style="font-size: 10pt"><B>2. Premises.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.1 Letting. </B>Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set
forth in this Lease. Unless otherwise provided herein, any statement of size set forth in this
Lease, or that may have been used in calculating Rent, is an approximation which the Parties agree
is reasonable and any payments based thereon are not subject to revision whether or not the actual
size is more or less. Note: Lessee is advised to verify the actual size prior to executing this
Lease.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.2 Condition. </B>Lessee acknowledges that (i)&nbsp;delivery of the Premises by Lessor to Lessee
shall be on an &#147;as is&#148; basis in its condition as of the date of Lessee&#146;s execution of this Lease,
subject only to Lessor&#146;s performance of those obligations on Lessor&#146;s part to be performed pursuant
to Paragraph&nbsp;54 of the Addendum, (ii)&nbsp;Lessor makes no representations or warranties, express or
implied with respect to the environmental condition of the Premises or the surrounding properties
or with respect to compliance with any building codes, applicable laws, covenants or restrictions
of record, regulations or ordinances (collectively, &#147;Applicable Requirements&#148;), and (iii)&nbsp;Base Rent
and other monetary and non-monetary provisions of this Lease are material consideration for
delivery of the Premises in the foregoing &#147;as is&#148; condition. <STRIKE>Lessor shall deliver the Premises to
Lessee broom clean and free of debris on the Commencement Date or the Early Possession Date,
whichever first occurs (&#147;Start Date&#148;), and, so long as the required service contracts described in
Paragraph&nbsp;7.1(b) below are obtained by Lessee and in effect within thirty days following the Start
Date, warrants that the existing electrical, plumbing, fire sprinkler, lighting, heating,
ventilating and air conditioning systems (&#147;HVAC&#148;), loading doors, sump pumps, if any, and all other
such elements in the Premises, other than those constructed by Lessee, shall be in good operating
condition on cold date and that the structural elements of the roof, bearing walls and foundation
of any buildings on the Premises (the &#147;Building&#148;) shall be free of material defects. If a
non-compliance with said warranty exists as of the Start Date, or if one of such systems or
elements should malfunction or fall within the appropriate warranty period, Lessor shall, as
Lessor&#146;s sale obligation with respect to such matter, except as otherwise provided in the lease,
promptly after receipt of written notice from Lessee setting forth with specificity the nature and
extent of such non-compliance,</STRIKE>


<P align="center" style="font-size: 10pt">2
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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt"><STRIKE>malfunction or failure, rectify same at Lessor&#146;s expense. The warranty periods shall be as
follows: (i)&nbsp;6&nbsp;months as to the HVAC systems, and (ii)&nbsp;30&nbsp;days as to the remaining systems and
other elements of the Building. If Lessee does not give Lessor the required notice within the
appropriate warranty period, correction of any such non-compliance, malfunction or failure shall be
the obligation of Lessee at Lessee&#146;s sale cost and expense.</STRIKE>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<STRIKE><B>2.3 Compliance. </B>Lessor warrants that the improvements on the Premises comply with the
building codes, applicable laws, covenants or restrictions of record, regulations, and ordinances
(&#147;Applicable Requirements&#148;) that were in effect at the time that each improvement, or portion
thereof, was constructed. Said warranty does not apply to the use to which Lessee will put the
Premises, modifications which may be required by the Americans with Disabilities Act or any similar
laws as a result of Lessee&#146;s use (see Paragraph&nbsp;50), or to any Alterations or Utility Installations
(as defined in paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is responsible for
determining whether or not the Applicable Requirements, and especially the zoning, are appropriate
for Lessee&#146;s intended use, and acknowledges that past uses of the Premises may not longer be
allows. If the Premises do not comply with said warranty, Lessor shall, except as otherwise
provided, promptly after receipt of written notice from Lessee setting forth with specificity the
nature and extent of such non-compliance, rectify the same at Lessor&#146;s expense. If Lessee does not
give Lessor written notice of a non-compliance with the warranty within 6&nbsp;months following the
Start Date, correction of that non-compliance shall be the obligation of Lessee at Lessee&#146;s sole
cost and expense. If the Applicable Requirements are hereafter changed so as to require during the
term of this Lease the construction of an addition to or an alteration of the Premises and/or
Building, the remediation of any Hazardous Substance, or the reinforcement or other physical
modification of the Unit, Premises and/or Building (&#147;Capital Expenditure&#148;), Lessor and Lessee shall
allocate the cost of such work as follows:</STRIKE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<STRIKE>(a)&nbsp;Subject to Paragraph&nbsp;2.3(c) below, if such Capital Expenditures are required as a result
of the specific and unique use of the Premises by Lessee as compared with uses by tenants in
general, Lessee shall be fully responsible for the cost thereof, provided, however that if such
Capital Expenditure is required during the last 2&nbsp;years of this Lease and the cost thereof exceeds
6&nbsp;months&#146; Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in
writing, within 10&nbsp;days after receipt of Lessee&#146;s termination notice that Lessor has elected to pay
the difference between the actual cost thereof and an amount equal to 6&nbsp;months&#146; Base Rent. If
Lessee elects termination, Lessee shall immediately case the use of the Premises which requires
such Capital Expenditure and deliver to Lessor written notice specifying a termination date at
least 90&nbsp;days thereafter. Such termination date shall, however, in no event be earlier than the
last day that Lessee could logically utilize the Premises without commencing such Capital
Expenditure.</STRIKE>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<STRIKE>(b)&nbsp;If such Capital Expenditure is not the result of the specific and unique use of the
Premises by Lessee (such as, governmentally mandated seismic modifications), then Lessor and Lessee
shall allocate the obligation to pay for such costs pursuant to the provisions of Paragraph&nbsp;7.1(d);
provided, however, that if such Capital Expenditure is required during the last 2&nbsp;years of this
Lessee or if Lessor reasonably determines that it is not economically feasible to pay the share
thereof, Lessor shall have the option to terminate this Lease upon 90&nbsp;days prior written notice to
Lessee unless Lessee notifies Lessor, in writing, within 10&nbsp;days after receipt of Lessor&#146;s
termination notice that Lessee will pay for such Capital Expenditure. If Lessor does not elect to
terminate, and fails to tender its share of any such Capital Expenditure, Lessee may advance such
funds and deduct same, with interest, from Rent until Lessor&#146;s share of such costs have been fully
paid. If Lessee is unable to finance Lessor&#146;s share, or if the balance of the Rent due and payable
for the remainder of this Lease is not sufficient to fully reimburse Lessee on an effect basis,
Lessee shall have the right to terminate this Lease upon 30&nbsp;days written notice to Lessor.</STRIKE>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<STRIKE>(c)&nbsp;Notwithstanding the above, the provisions concerning Capital Expenditures are intended to
apply onto to non-voluntary, unexpected, and new Applicable Requirements. If the Capital
Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use,
change in intensity of use, or modification to the Premises, then, and in that event, Lessee shall
either: (i)&nbsp;immediately cease such changed use or intensity of use and/or take such other steps as
may be necessary to eliminate the requirement for such Capital Expenditure, or (ii)&nbsp;complete such
Capital Expenditure at its own expense. Lessee shall not, however, have any right to terminate
this Lease.</STRIKE>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>2.4 Acknowledgments. </B>Lessee acknowledges that: (a)&nbsp;It has been advised by Lessor and/or
Brokers to satisfy itself with respect to the condition of the Premises (including but not limited
to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance
with Applicable Requirements and the


<P align="center" style="font-size: 10pt">3
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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">Americans with Disabilities Act), and their suitability for Lessee&#146;s intended use, (b)&nbsp;Lessee
has made such investigation as it deems necessary with reference to such matters and assumes all
responsibility therefore as the same relate to its occupancy of the Premises, and (c)&nbsp;neither
Lessor, Lessor&#146;s agents, nor Brokers have made any oral or written representations or warranties
with respect to said matters other than as set forth in this Lease. In addition, Lessor
acknowledges that: (i)&nbsp;brokers have made no representations, promises or warranties concerning
Lessee&#146;s ability to honor the Lessee or suitability to occupy the Premises, and (ii)&nbsp;it is Lessor&#146;s
sole responsibility to investigate the financial capability and/or suitability of all proposed
tenants.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<STRIKE><B>2.5 Lessee as Prior Owner/Occupant. </B>The warranties made by Lessor in Paragraph&nbsp;2 shall be of
no force or effect if immediately prior to the Start Date Lessee was the owner or occupant of the
Premises. In such event, Lessee shall be responsible for any necessary corrective work.</STRIKE>


<P align="left" style="font-size: 10pt"><B>3. Term.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.1 Term. </B>The Commencement Date, Expiration Date and Original Term of this Lease are as
specified in Paragraph&nbsp;1.3.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>3.2 Early Possession. </B>Lessee is currently in occupancy of the Premises pursuant to the
existing lease dated April&nbsp;15, 1994 (the &#147;Existing Lease&#148;). See also paragraph 51 of the Addendum.
<STRIKE>If Lessee totally or partially occupies the Premises prior to the Commencement Date, the
obligation to pay Base Rent shall be abated for the period of such early possession. All other
terms of this Lease (including but not limited to the obligations to pay Real Property Taxes and
insurance premiums, and to maintain the Premises) shall, however, be in effect during such period.</STRIKE>
Any such early possession shall not affect the Expiration Date.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<STRIKE><B>3.3 Delay in Possession. </B>Lessor agrees to use the best commercially reasonable efforts to
deliver possession of the Premises to Lessee by the Commencement Date. If, despite said efforts,
Lessor is unable to deliver possession by such date, Lessor shall not be subject to any liability
therefore, nor shall such failure affect the validity of this Lease. Lessee shall not, however, be
obligated to pay Rent or perform its other obligations until Lessor delivers possession of the
Premises and any period of rent abatement that Lessee would otherwise have enjoyed shall run from
the date of delivery of possession and continue for a period equal to what Lessee would otherwise
have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of
Lessee. If possession is not delivered within 60&nbsp;days after the Commencement Date, Lessee may, at
its option, by notice in writing within 10&nbsp;days after the end of such 60&nbsp;day period, cancel this
Lease, in which event the Parties shall be discharged from all obligations hereunder. If such
written notice is not received by Lessor within said 10&nbsp;day period, Lessee&#146;s right to cancel shall
terminate. If possession of the Premises is not delivered within 120&nbsp;days after the Commencement
Date, this Lease shall terminate unless other agreements are reached between Lessor and Lessee, in
writing.</STRIKE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<STRIKE><B>3.4 Lessee Compliance. </B>Lessor shall not be required to deliver possession of the Premises to
Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph&nbsp;8.5).
Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under
this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor&#146;s
election to withhold possession pending receipt of such evidence of insurance. Further, if Lessee
is required to perform any other conditions prior to or concurrent with the Start Date, the Start
Date shall occur but Lessor may elect to withhold possession until such conditions are satisfied.</STRIKE>


<P align="left" style="font-size: 10pt"><B>4. Rent.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.1 Rent Defined. </B>All monetary obligations of Lessee to Lessor under the terms of this Lease
(except for the Security Deposit) are deemed to be rent (&#147;Rent&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>4.2 Payment. </B>Lessee shall cause payment of Rent to be received by Lessor in lawful money of
the United States on or before the day on which it is due, without offset or deduction <STRIKE>(except as
specifically permitted in this Lease).</STRIKE> Rent for any period during the term hereof which is for
less than one full calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein or to such other
persons or place as Lessor may from time to time designate in writing.


<P align="center" style="font-size: 10pt">4
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<P align="left" style="font-size: 10pt">Acceptance of a payment which is less than the amount then due shall not be a waiver of
Lessor&#146;s rights to the balance of such Rent, regardless of Lessor&#146;s endorsement of any check so
stating. In the vent that any check, draft, or other instrument of payment given by Lessee to
Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of $25 in addition to
any Late Charge <STRIKE>and Lessor, at its option, may require all future payments to be made by Lessee to
be by cashier&#146;s check.</STRIKE>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<STRIKE><B>4.3 Association Fees. </B>In addition to the Base Rent, Lessee shall pay to Lessor each month an
amount equal to any owner&#146;s association or condominium fees levied or assessed against the
Premises. Said monies shall be paid at the same time and in the same manner as the Base Rent.</STRIKE>

<P align="left" style="font-size: 10pt"><B>5. Security Deposit. </B>Lessee shall deposit with Lessor upon execution hereof the Security Deposit
as security for Lessee&#146;s faithful performance of its obligations under this Lease. If Lessee fails
to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any
portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall
within 10&nbsp;days after written request therefor deposit monies with Lessor sufficient to restore said
Security Deposit to the full amount required by this Lease. If the Base Rent increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit additional moneys with
Lessor so that the total amount of the Security Deposit shall at all times bear the same proportion
to the Increased Base Rent as the Initial Security Deposit bore to the Initial Base Rent. Should
the Agreed Use be amended to accommodate a material change in the business of Lessee or to
accommodate a sub-lessee or assignee, Lessor shall have the right to increase the Security Deposit
to the extent necessary, in Lessor&#146;s reasonable judgment, to account for any increased wear and
tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs
during this Lease and following such change the financial condition of Lessee is, in Lessor&#146;s
reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor
as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based
on such change in financial condition. Lessor shall not be required to keep the Security Deposit
separate from its general accounts. Within 14&nbsp;days after the expiration or termination of this
Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and otherwise within 30
days after the Premises have been vacated and surrendered pursuant to Paragraph&nbsp;7.4(c) below,
Lessor shall return that portion of the Security Deposit not used or applied by Lessor. No part of
the Security



<P align="left" style="font-size: 10pt"><B>6. Use.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.1 Use. </B>Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal
use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or
permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance,
or that disturbs occupants of or causes damage to neighboring premises or properties. Lessor shall
not unreasonably withhold or delay its consent to any written request for a modification of the
Agreed Use, so long as the same will not impair the structural integrity of the Improvements on the
Premises or the mechanical or electrical systems therein, and/or is not significantly more
burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall within 7&nbsp;days after
such request give written notification of same, which notice shall include an explanation of
Lessor&#146;s objections to the change in the Agreed Use.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.2 Hazardous Substances.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Reportable Uses Require Consent. The term &#147;Hazardous Substance&#148; as used in this Lease
shall mean any product, substance, or waste whose presence, use, manufacture, disposal,
transportation, or release, either by itself or in combination with other materials expected to be
on the Premises, is either: (i)&nbsp;potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii)&nbsp;regulated or monitored by any governmental authority, or (iii)&nbsp;a
basis for potential liability of Lessor to any governmental agency or third party under any
applicable statute or common law theory. Hazardous Substances shall include, but not be limited
to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products or fractions
thereof. Lessor acknowledges that Lessee&#146;s business involves the use and storage of certain
Hazardous Substances at the Premises, including petroleum products, oils, paints and lacquers, and
that such use and storage may , in certain




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<P align="left" style="font-size: 10pt">cases, constitute a Reportable use. In any event, however, Lessee shall not engage in any
activity in or on the Premises which constitutes a Reportable Use of Hazardous Substances without
<STRIKE>the express prior written consent of</STRIKE> delivery of a detailed written description thereof to Lessor
and timely compliance (at Lessee&#146;s expense) with all applicable Requirements. &#147;Reportable Use&#148;
shall mean (i)&nbsp;the installation or use of any above or below ground storage tank, (ii)&nbsp;the
generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that
requires a permit from, or with respect to which a report, notice, registration or business plan is
required to be filed with, any governmental authority, and/or (iii)&nbsp;the presence at the Premises of
a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be
given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the
foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in
the normal course of the Agreed Use, ordinary office supplies (copier toner, liquid paper, glue,
etc.) and common household cleaning materials, so long as such use is in compliance with all
Applicable Requirements, is not a Reportable Use, and does not expose the Premises or neighboring
property to any meaningful risk of contamination or damage or expose Lessor to any liability
therefore. In addition, Lessor may condition its consent to any Reportable Use upon receiving such
additional assurances as Lessor reasonably deems necessary to protect itself, the public, the
Premises and/or the environment against damage, contamination, injury and/or liability, including,
but not limited to, the installation (and removal on or before Lease expiration or termination) of
protective modifications (such as concrete encasements) and/or increasing the Security Deposit.
However, notwithstanding anything to the contrary in this Paragraph&nbsp;6.2 or elsewhere in this Lease,
under no circumstances shall Lessee install any below ground storage tanks, and consent thereto may
be withheld in Lessor&#146;s sole and absolute discretion.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a
Hazardous Substance has come to be located in, on, under or about the Premises, other than as
previously consented to by Lessor, Lessee shall immediately give written notice of such fact to
Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be
spilled or released in, on, under, or about the Premises (including through the plumbing or
sanitary sewer system) and shall promptly, as Lessee&#146;s expense, comply with all Applicable
Requirements and take all investigatory and/or remedial action reasonably recommended, whether or
not formally ordered or required, for the cleanup of any contamination of, and for the maintenance,
security and/or monitoring of the Premises or neighboring properties, that was caused or materially
contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the
Premises during the term of the Existing Lease or this Lease, by or for Lessee, or any third party.
Lessee shall have no obligation to remediate any environmental condition that existed at the
Premises prior to Lessee&#146;s occupancy thereof pursuant to the Existing Lease, except to the extent
any such condition is caused, aggravated, or contributed to by Lessee or any of its employees,
agents, representatives, contractors, licensees, or invitees.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;Lessee indemnification. Lessee shall indemnify, defend and hold Lessor, its agents,
employees, lenders and ground Lessor, if any harmless from and against any and all loss of rents
and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys&#146; and
consultants&#146; fees arising out of or involving any Hazardous Substance brought onto the Premises by
or for Lessee at any time, or any third party at any time Lessee is in possession of the Premises
pursuant to this Lease or the Existing Lease (provided, however, that Lessee shall have no
liability under this Lease with respect to underground migration of any Hazardous Substance under
the Premises from adjacent properties not caused or contributed to by Lessee or with respect to any
environmental condition that existed at the Premises prior to Lessee&#146;s occupancy thereof pursuant
to the Existing Lease, except to the extent any such condition is caused, aggravated, or
contributed to by Lessee or any of its employees, agents, representatives, contractors, licensees,
or invitees). Lessee&#146;s obligations shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or suffered by Lessee, and
the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive
the expiration or termination of this Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with
respect to Hazardous Substances, unless specifically so agreed by Lessor in writing at the time of
such agreement. Lessee hereby expressly, fully, forever and irrevocably waives and releases all
claims, demands, losses, liabilities, damages and causes of action against Lessor that result from
any environmental condition that existed at the Premises prior to Lessee&#146;s occupancy thereof
pursuant to the Existing Lease, except to the extent caused by Lessor, Lessor&#146;s
predecessor-in-interest (but not any person or entity having a



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<P align="left" style="font-size: 10pt">leasehold interest in the Premises) or their respective agents or employees. Lessee hereby
waives all rights under California civil Code Section&nbsp;1542, which provides: &#147;A general release
does not extend to claims which the creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have materially affected his settlement
with the debtor.&#148;



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Lessor Indemnification. Lessor and its successors and assigns shall indemnify, defend,
reimburse and hold Lessee, its employees and lenders, harmless from and against any and all
environmental damages, including the cost of remediation, which result from Hazardous Substances
which existed on the Premises prior to Lessee&#146;s occupancy pursuant to the Existing Lease or to the
extent <STRIKE>or which are</STRIKE> caused by the gross negligence or willful misconduct of Lessor, its agents or
employees. Lessor&#146;s obligations, as and when required by the Applicable Requirements, shall
include, but not be limited to, the cost of investigation, removal, remediation, restoration and/or
abatement, and shall survive the expiration or termination of this Lease. No termination,
cancellation, or release agreement entered into by Lessor and Lessee shall release Lessor from its
obligations under this Lease, with respect to Hazardous Substances, unless specifically so agreed
by Lessor in writing at the time of such agreement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Investigations and Remediations. Lessor shall retain the responsibility and pay for any
investigations or remediation measures required by governmental entities having jurisdiction with
respect to the existence of Hazardous Substances on the Premises prior to Lessee&#146;s occupancy
pursuant to the Existing Lease, unless such remediation measure is required as a result of Lessee&#146;s
use (including &#147;Alterations,&#148; as defined in paragraph 7.3(a) below) of the Premises, in which event
Lessee shall be responsible for such payment. lessee shall cooperate fully in any such activities
at the request of Lessor, including allowing Lessor and Lessor&#146;s agents to have reasonable access
to the Premises at reasonable times in order to carry out Lessor&#146;s investigative and remedial
responsibilities.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;Lessor Termination Option. If a Hazardous Substance Condition (see paragraph 9.1(e))
occurs during the term of this Lease, unless Lessee is legally responsible therefor at law or under
this Lease (in which case Lessee shall make the investigation and remediation thereof required by
the Applicable Requirements and this Lease shall continue in full force and effect, but subject to
Lessor&#146;s rights under paragraph 6.2(d) and Paragraph&nbsp;13), Lessor may, at Lessor&#146;s option, either
(i)&nbsp;investigate and remediate such Hazardous Substance Condition, if required, as soon as
reasonably possible at Lessor&#146;s expense, in which event this Lease shall continue in full force and
effect, or (ii)&nbsp;if the estimated cost to remediate such condition exceeds $1,000,000.00 <STRIKE>12 times
the then monthly Base Rent or $100,000, whichever is greater,</STRIKE> give written notice to Lessee, within
30&nbsp;days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance
Condition, of Lessor&#146;s desire to terminate this Lease as of the date 60&nbsp;days following the date of
such notice. In the event Lessor elects to give a termination notice, Lessee may, within 10&nbsp;days
thereafter, give written notice to Lessor of Lessee&#146;s commitment to pay the amount by which the
cost of the remediation of such Hazardous Substance Condition exceeds $1,000,000.00 <STRIKE>an amount equal
to 12 times the then monthly Base Rent or $100,000, whichever is greater.</STRIKE> Lessee shall provide
Lessor with said funds or satisfactory assurance thereof within 30&nbsp;days following such commitment.
In such event, this Lease shall continue in full force and effect, and Lessor shall proceed to make
such remediation as soon as reasonably possible after the required funds are available. If Lessee
does not give such notice and provide the required funds or assurance thereof within the time
provided, this Lease shall terminate as of the date specified in Lessor&#146;s notice of termination.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.3 Lessee&#146;s Compliance with Applicable Requirements. </B>Except as otherwise provided in this
Lease, Lessee shall, at Lessee&#146;s sole expense, fully, diligently and in a timely manner, <STRIKE>materially</STRIKE>
comply with all Applicable Requirements, the requirements of any applicable fire insurance
underwriter or rating bureau, and the recommendations of Lessor&#146;s engineers and/or consultants
which relate in any manner to the such Requirements, without regard to whether such Requirements
are now in effect or become effective after the <STRIKE>Start</STRIKE> Commencement Date; provided, however, that
Lessee shall have no obligation to perform or pay for (a)&nbsp;upgrading of the fire sprinkler system in
the Building, except to the extent such upgrading is required as a result of Tenant&#146;s particular
use or (b)&nbsp;any seismic retrofitting of the Building. Lessee shall, within 10&nbsp;days after receipt of
<STRIKE>Lessor&#146;s</STRIKE> Lessor&#146;s written request, provide Lessor with copies of all permits and other documents,
and other information evidencing Lessee&#146;s compliance with any Applicable Requirements specified by
Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents
involved) of any threatened or actual claim, notice, citation,


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<P align="left" style="font-size: 10pt">warning, complaint or report pertaining to or involving the failure of Lessee or the Premises
to comply with any Applicable Requirements.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>6.4 Inspection; Compliance. </B>Lessor and Lessor&#146;s Lessor&#146;s &#147;Lender&#148; (as defined in Paragraph
30) and consultants shall have the right to enter into Premises at any time, in the case of any
emergency, and otherwise at reasonable times after reasonable notice, for the purpose of inspecting
the condition of the Premises and for verifying compliance by Lessee with this Lease. The cost of
any such inspections shall be paid by Lessor, unless a violation of Applicable Requirements, or a
Hazardous Substance Condition (see paragraph 9.1) is found to exist or be imminent, or the
inspection is requested or ordered by a governmental authority. In such case, Lessee shall upon
request reimburse Lessor for the cost of such inspection, so long as such inspection is reasonably
related to the violation or contamination. In addition, Lessee shall provide copies of all
relevant material safety data sheets (MSDA)&nbsp;to Lessor within 10&nbsp;days after the receipt of a written
request therefor.


<P align="left" style="font-size: 10pt"><B>7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.1 Lessee&#146;s Obligations.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;In General. Subject to the provisions of Paragraph&nbsp;2.2 (Condition), <STRIKE>2.3 (Compliance),</STRIKE> 6.3
(Lessee&#146;s Compliance with Applicable Requirements), 7.2 (Lessor&#146;s Obligations), 9 (Damage or
Destruction), <STRIKE>and</STRIKE> 14 (Condemnation) and the Addendum, Lessee shall, at Lessee&#146;s sole expense, keep
the Premises, Utility Installations (intended for Lessee&#146;s exclusive use, no matter where located),
and the Alterations in good order, condition and repair (whether or not the need for such repairs
occurs as a result of Lessee&#146;s use, any prior use, the elements or the age of such portion of the
Premises), including, but not limited to, all equipment or facilities, such as plumbing, HVAC
equipment, electrical, lighting facilities, boilers, pressure vessels, fire protection system,
fixtures, walls (interior and exterior), foundations, ceilings, roofs, roof drainage systems,
floors, windows, doors, plate glass, skylights, landscaping, driveways, parking lots, fences,
retaining walls, signs, sidewalks and parkways located in, on, or adjacent to the Premises.
Lessee, in keeping the Premises in good order, condition and repair, shall exercise and perform
good maintenance practices, specifically including the procurement and maintenance of the service
contracts required by Paragraph&nbsp;7.1(b) below. Lessee&#146;s obligations shall include restorations,
replacements or renewals when necessary to keep the Premises and all improvements thereon or a part
thereof in good order, condition and state of repair. Lessee shall, during the term of this Lease,
keep the exterior appearance of the Building in a first-class condition (including, e.g. graffiti
removal) consistent with the exterior appearance of other similar facilities of comparable age and
size in the vicinity, including, <STRIKE>when necessary</STRIKE>, as provided in the Addendum, the exterior
repainting of the Building.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Service Contracts. Subject to the Addendum, Lessee shall, at Lessee&#146;s sole expense,
procure and maintain contracts, with copies to Lessor, in customary form and substance for, and
with contractors specializing and experienced in the maintenance of the following equipment and
improvements, if any, if and when installed on the Premises: (i)&nbsp;HVAC equipment, (ii)&nbsp;boiler, and
pressure vessels, (iii)&nbsp;fire extinguishing systems, including fire alarm and/or smoke detection,
(iv)&nbsp;landscaping and irrigation systems, (v)&nbsp;roof covering and drains, (vi)&nbsp;clarifiers, (vii)&nbsp;basic
utility feed to the perimeter of the Building, and (viii)&nbsp;any other equipment, if reasonably
required by Lessor. However, (1)&nbsp;Lessor reserves the right, upon notice to Lessee, to procure and
maintain any or all of such service contracts, and if Lessor so elects, Lessee shall reimburse
Lessor, upon demand, for the cost thereof, and (2)&nbsp;except with respect to the two (2)&nbsp;large roof
top HVAC units servicing the office area of the Building and the roof, Lessee may use its own
qualified and experienced employees in lieu of procuring such service contracts.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Failure to Perform. If Lessee fails to perform Lessee&#146;s obligations under this Paragraph
7.1 or the Addendum, Lessor may enter upon the Premises after 10&nbsp;days&#146; prior written notice to
Lessee (except in the case of an emergency, in which case no notice shall be required), perform
such obligations on Lessee&#146;s behalf, and put the Premises in good order, condition and repair, and
Lessee shall promptly pay to Lessor a sum equal to 115% of the cost thereof.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<STRIKE>(d)&nbsp;Replacement. Subject to Lessee&#146;s indemnification of Lessor as set forth in Paragraph&nbsp;8.7
below, and without relieving Lessee of liability resulting from Lessee&#146;s failure to exercise and
perform good maintenance practices, if an item described in Paragraph&nbsp;7.1(b) cannot be repaired
other than at a cost which is in</STRIKE>



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<P align="left" style="font-size: 10pt"><STRIKE>excess of 50% of the cost of replacing such item, then such item shall be replaced by Lessor,
and the cost thereof shall be prorated between the Parties and Lessee shall only be obligated to
pay, each month during the remainder of the term of this Lease, on the date on which Base Rent is
due, an amount equal to the product of multiplying the cost of such replacement by a fraction, the
numerator of which is one, and the denominator of which is 144 (i.e., 1/144th of the cost per
month). Lessee shall pay interest on the unamortized balance at a rate that is commercially
reasonable in the judgment of Lessor&#146;s accountants. Lessee may, however, prepay its obligations at
any time.</STRIKE>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See Addendum Paragraph&nbsp;53.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.2 Lessor&#146;s Obligations. </B>Subject to the provisions of Paragraphs <STRIKE>2.2 (Condition), 2.3
(Compliance),</STRIKE> 9 (Damage or Destruction), and 14 (Condemnation) and the Addendum, it is intended by
the Parties hereto that Lessor have no obligation, in any matter whatsoever, to repair and maintain
the Premises, or the equipment therein, all of which obligations are intended to be that of the
Lessee. It is the intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises, and they expressly waive
the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the
terms of this Lease.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.3 Utility Installations; Trade Fixtures; Alterations.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Definitions. The term &#147;Utility Installations&#148; refers to all floor and window coverings,
air and/or vacuum lines, power panels, electrical distribution, security and fire protection
systems, communication cabling, lighting fixtures, HVAC equipment, plumbing, and fencing in or on
the Premises. The term &#147;Trade Fixtures&#148; shall mean Lessee&#146;s machinery and equipment that can be
removed without doing material damage to the Premises. the term &#147;Trade Fixtures&#148; shall mean
Lessee&#146;s machinery and equipment that can be removed without doing material damage to the Premises.
The term &#147;Alterations&#148; shall mean any modification of the Improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. &#147;Lessee Owned Alterations and/or
Utility Installations&#148; are defined as Alterations and/or Utility Installations made by Lessee that
are not yet owned by Lessor pursuant to Paragraph&nbsp;7.4(a).



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Consent. Following construction of the Lessee Improvements, Lessee shall not make any
Alterations or Utility Installations to the Premises without Lessor&#146;s prior written consent.
Lessee may, however, do the following without such consent but upon notice to Lessor: (i)&nbsp;make
non-structural Utility installations to the interior of the Premises (excluding the roof) <STRIKE>without
such consent but upon notice to Lessor,</STRIKE> as long as they are not visible from the outside, do not
involve puncturing, relocating or removing the roof or any existing walls, will not affect the
electrical, plumbing, HVAC, and/or life safety systems, and the cumulative cost thereof during this
Lease as extended does not exceed <STRIKE>a sum equal to 3&nbsp;month&#146;s Base Rent</STRIKE> ($250,000 in the aggregate or
<STRIKE>a sum equal to one month&#146;s Base Rent</STRIKE> $100,000 in any one year (and (ii)&nbsp;install and/or relocate
machinery within the interior of the Premises (excluding the roof), as long as it is not visible
from the outside, does not involve puncturing, relocating or removing the roof, and will not affect
any structural element of the Building or the electrical, plumbing, HVAC, and/or life safety
systems (collectively, the &#147;Pre-Permitted Alterations&#148;). Notwithstanding the foregoing, Lessee
shall not make or permit any roof penetrations and/or install anything on the roof within the prior
written approval of Lessor. Lessor may, as a precondition to granting such approval, require
Lessee to utilize a contractor chosen and/or approved by Lessor. Any Alterations or Utility
Installations that Lessee shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. consent shall be deemed conditioned upon
Lessee&#146;s: (i)&nbsp;acquiring all applicable governmental permits, (ii)&nbsp;furnishing said permits and
other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility
Installations shall be performed in a workmanlike manner with good and sufficient materials.
Lessee shall promptly upon completion furnish Lessor with as-built plans and specifications. <STRIKE>For
work which costs an amount in excess of one month&#146;s Base Rent, Lessor may condition its consent
upon Lessee providing a lien and completion bend in an amount equal to 150% of the estimated cost
of such Alteration or Utility Installation and/or upon Lessee&#146;s <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> an additional Security Deposit
with Lessor.</STRIKE>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Liens; Bonds. Lessee shall pay, when due, all claims for labor or materials furnished or
alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or
may be secured by any mechanic&#146;s or materialmen&#146;s lien against the Premises or any interest
therein. Lessee shall give Lessor not less than 10&nbsp;days notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the



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<P align="left" style="font-size: 10pt">right to post notices of non-responsibility. If Lessee shall contest the validity of any such
lien, claim or demand, then lessee shall, at its sole expense defend and protect itself, Lessor and
the premises against the same and shall pay and satisfy any such adverse judgment that may be
rendered thereon before the enforcement thereof. If Lessor shall require, Lessee shall furnish a
surety bond in an amount equal to 150% of the amount of such contested lien, claim or demand,
indemnifying Lessor against liability for the same. If Lessor elects to participate in any such
action, Lessee shall pay Lessor&#146;s attorneys&#146; fees and costs.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>7.4 Ownership; Removal; Surrender; and Restoration.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Ownership. Subject to Lessor&#146;s right to require removal or elect ownership as hereinafter
provided, all Alterations and Utility Installations made by Lessee shall be the property of Lessee,
but considered a part of the Premises. Lessor may, at any time, elect in writing to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility Installations; provided,
however, that if, as part of Lessee&#146;s request for Lessor&#146;s consent to any Alteration or Utility
Installation, Lessee specifically requests Landlord to elect whether or not to be the owner of all
or any part thereof, Lessor shall make such election at the time Lessor gives consent (if at all).
If Lessor makes such election, such Lessee Owned Alterations and Utility Installations, <STRIKE>unless
otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility</STRIKE>
Installations shall, at the expiration or termination of this Lease, become the property of Lessor
and be surrendered by Lessee with the Premises. Otherwise, Lessee shall surrender the Premises as
provided below.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<STRIKE>(b)&nbsp;Removal. By delivery to Lessee of written notice from Lessor not earlier than 90 and not
later than 30&nbsp;days prior to the end of the term of this Lease, Lessor may require that any or all
Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of
this Lease. Lessee may require the removal at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made without the required consent.</STRIKE>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Surrender; Restoration. Upon the expiration or any sooner termination of this Lease,
lessee shall (a)&nbsp;promptly undo and remove all of the Lessee Improvements, Utility Installations,
Trade Fixtures and Alterations on or about the Premises, (b)&nbsp;repair any damage to floors, ceilings,
walls, or other parts of the Premises caused by such removal, and (c)&nbsp;surrender up and deliver
possession of the Premises to Lessor in broom clean, Warehouse Condition (as defined below and in
<U>Schedule&nbsp;1</U> attached to the Addendum). As used herein, &#147;Warehouse Condition&#148; shall mean
that any and all Lessee Improvements, Utility Installations, Trade Fixtures, Alterations and other
items have been removed from the Building, the Building roofs and the yard areas, such that the
only remaining items are the slab floor, the ceiling lights and the roof structure, with all slab,
wall and roof holes or other damage having been patched or otherwise repaired (including, without
limitation, all holes to the roofs such that the roofs are left in a leak-free condition and any
damage or alterations resulting from the removal of the Pre-Permitted Alterations are repaired or
restored), and the overhead process distribution piping having been cleared, that Lessee has
performed the work required under <U>Schedule&nbsp;1</U> attached to the Addendum, and that the
Premises are clean and free of debris and in good operating order, condition and state of repair,
ordinary wear and tear excepted. &#147;Ordinary wear and tear&#148; as used in this Lease shall not include
any damage or deterioration that would have been prevented by good maintenance practice or by
Lessee performing all of its obligations under this Lease. by way of illustration, the removal of
the Lessee Improvements, Utility Installations, Trade Fixtures, Alterations and other items shall
include, without limitation, removal of all (i)&nbsp;machinery and equipment (including bolt removal and
repair of damage resulting therefrom), (ii)&nbsp;horizontal and vertical water and electrical lines, all
supporting lines, and any other utility lines, ducting and/or ventilation systems servicing any
machinery or equipment, (iii)&nbsp;sub-power panels, lines and trenching servicing any Lessee operation,
(iv)&nbsp;racks and bins, (v)&nbsp;conveyors and related systems, (vi)&nbsp;baking ovens, (vii)&nbsp;washing machines,
dry-off ovens, cranes and tracks, (vii)&nbsp;water tanks and cooling towers, (ix)&nbsp;mezzanine and office
installations, (x)&nbsp;duct ventilation systems (including from the Building roofs), (xi)&nbsp;floor pits,
and (xii)&nbsp;as may then be required by this Lease, Applicable Requirements and good practice, any
above or below ground storage tank installed by or for Lessee, together with the removal,
replacement, or remediation of any soil, material or ground water contaminated by Lessee. Lessor
hereby consents to Lessee performing the work necessary to restore the Premises to the Warehouse
Condition. The provisions of this Paragraph&nbsp;7.4(c) and attached <U>Schedule&nbsp;1</U> shall control
over all other terms and conditions in this Lease (and in any other agreement between Lessor and
Lessee, including the Existing Lease) regarding the extent of Lessee&#146;s obligations to repair and
restore the Premises upon Lessee&#146;s surrender of the Premises. <STRIKE>Lessee shall surrender the Premises
by the Expiration Date or any earlier termination date, with all of the Improvements, parts and
surfaces thereof broom clean and free of debris,</STRIKE>



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<P align="left" style="font-size: 10pt"><STRIKE>and in good operating order, condition and state of repair, ordinary wear and tear excepted.
&#147;Ordinary wear and tear&#148; shall not include any damage or deterioration that would have been
prevented by good maintenance practice. Notwithstanding the foregoing, if this Lease is for 12
months or less, then Lessee shall surrender the Premises in the same condition as delivered to
Lessee on the Start Date with NO allowance for ordinary wear and tear, Lessee shall repair any
damage occasioned by the Installation, maintenance or removal of Trade Fixtures, Lessee owned
Alterations and/or Utility installations, furnishings, and equipment as well as the removal of any
storage tank installed by or for Lessee, Lessee shall completely remove from the Premises any and
all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except
Hazardous Substances which were deposited via underground migration from areas outside of the
Premises, or if applicable, the Project) even if such removal would require Lessee to perform or
pay for work that exceeds statutory requirements. Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee. Any personal property of Lessee not removed on or before
the Expiration Date or any earlier termination date shall be deemed to have been abandoned by
Lessee and may be disposed of or retained by Lessor as Lessor may desire. The failure by Lessee to
timely vacate the Premises pursuant to this Paragraph&nbsp;7.4(c) without the express written consent of
Lessor shall constitute a holdover under the provisions of paragraph 26 below.</STRIKE>



<P align="left" style="font-size: 10pt"><B>8. Insurance; Indemnity.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.1 Payment For Insurance. </B>Lessee shall pay for all insurance required under Paragraph&nbsp;8;
provided, however, with regard to liability insurance carried by Lessor, Lessee shall only have the
obligation to pay for the first $10,000,000 of such coverage <STRIKE>except to the extent of the cost
attributable to liability insurance carried by Lessor under Paragraph&nbsp;8.2(b) in excess of
$2,000,000 per occurrence</STRIKE>. Premiums for policy periods commencing prior to or extending beyond the
Lease term shall be prorated to correspond to the Lease term. Payment shall be made by Lessee to
Lessor within 10&nbsp;days following receipt of an invoice.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.2 Liability Insurance.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability
policy of insurance protecting Lessee and Lessor as an additional insured against claims for bodily
injury, personal injury and property damage based upon or arising out of the ownership, use,
occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall
be on an occurrence basis providing single limit coverage in an amount not less than $10,000,000
<STRIKE>1,000,000</STRIKE> per occurrence with an annual aggregate of not less than $10,000,000 <STRIKE>2,000,000</STRIKE>, an
&#147;Additional Insured-Managers or Lessors of Premises Endorsement&#148; and contain the &#147;Amendment of the
Pollution Exclusion Endorsement&#148; for damage caused by heat, smoke or fumes from a hostile fire.
The policy shall not contain any infra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this Lease as an &#147;insured
contract&#148; for the performance of Lessee&#146;s Indemnity obligations under this Lease. The limits of
said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any
obligation hereunder. All insurance carried by Lessee shall be primary to and not contributory
with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance
only. Lessee shall be entitled to provide the foregoing insurance through a corporate policy or
policies of blanket insurance, provided such blanket policy(ies) (i)&nbsp;is in conformance with
Paragraph&nbsp;8.5 below, (ii)&nbsp;does not result in any decrease in insurance coverage required under this
Paragraph&nbsp;8, and (iii)&nbsp;specifically allocates no less than $10,000,000 to the coverage required for
the Premises. Upon request of Lessor, Lessee shall provide Lessor with all documentation
reasonably requested by Lessor setting forth the extent of such blanket coverage and the portions
thereof allocated to the Premises and allocated to other property.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <B>Carried by Lessor</B>. Lessor shall have the right to maintain liability insurance as
described in Paragraph&nbsp;8.2(a), in addition to, and not in lieu of, the insurance required to be
maintained by Lessee. Lessee shall not be named as an additional insured therein.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.3 Property Insurance &#151; Building, Improvements and Rental Value.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(a)&nbsp;Building and Improvements. </B>The Insuring Party shall obtain and keep in force a policy or
policies in the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender
insuring loss or damage to the Promises. The amount of such insurance shall be equal to the full
replacement cost of the Premises, as the same shall exist from time to time, or the amount required
by any Lender, but to no event more than the



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<P align="left" style="font-size: 10pt">commercially reasonable and available insurable value thereof. If Lessor is the Insuring
Party, however, Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee&#146;s
personal property shall be insured by Lessee under Paragraph&nbsp;8.4 rather then by Lessor. If the
coverage is available and commercially appropriate, such policy or policies shall insure against
all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for debris removal and the enforcement of any Applicable
Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of
the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed
valuation provision in lieu of any coinsurance clause, waiver of subrogation, and inflation guard
protection causing an increase in the annual property insurance coverage amount by a factor of not
less than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for
the city nearest to where the Premises are located. If such insurance coverage has a deductible
clause, the deductible amount shall not exceed $50,000 <STRIKE>$1,000</STRIKE> per occurrence (or such higher amount
up to $100,000 if commercially available as determined in Lessor&#146;s reasonable judgment), and Lessee
shall be liable for such deductible amount in the event of an Insured Loss.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(b)&nbsp;Rental Value</B>. The Insuring Party shall obtain and keep in force a policy or policies in
the name of Lessor with less payable to Lessor and any Lender, insuring the loss of the full Rent
for one year with an extended period of indemnity for an additional 180&nbsp;days (&#147;Rental Value
Insurance&#148;). Said insurance shall contain an agreed valuation provision in lieu of any coinsurance
clause, and the amount of coverage shall be adjusted annually to reflect the projected Rent
otherwise payable by Lessee, for the next 12&nbsp;month period. Lessee shall be liable for any
deductible amount in the event of such loss.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(c)&nbsp;Adjacent Premises</B>. If the Premises are part of a larger building, or of a group of
buildings owned by Lessor which are adjacent to the Promises, the Lessee shall pay for any increase
in the premiums for the property Insurance of such building or buildings if said increase is caused
by Lessee&#146;s acts, omissions, use or occupancy of the Premises.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(d)&nbsp;Earthquake and Flood Insurance</B>. Lessor shall procure earthquake and flood Insurance
Insuring the Premises to fifty percent (50%) of its full replacement value and with a deductible
not to exceed five percent (5%) of such replacement cost, and Lessee shall pay the premium for ouch
Insurance.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.4 Lessee&#146;s Property; Business Interruption Insurance.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(a)&nbsp;Property Damage. </B>Lessee shall obtain and maintain insurance coverage on all of Lessees
personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such
insurance shall be full replacement cost coverage with a deductible of not to exceed <STRIKE>$1,000</STRIKE>
$250,000 per occurrence. <STRIKE>The proceeds from any such Insurance shall be used by Lessee for the
replacement of personal property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations.</STRIKE> Lessee shall provide Lessor with written evidence that such insurance is in force.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(b)&nbsp;Business Interruption. </B>Lessee shall obtain and maintain loss of income and extra expense
insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable
to all perils commonly insured against by prudent lessees in the business of Lessee or attributable
to prevention of access to the Premises as a result of such perils.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(c)&nbsp;No Representation of Adequate Coverage. </B>Lessor makes no representation that the limits or
forms of coverage of insurance specified herein are adequate to cover Lessee&#146;s property, business
operations or obligations under this Lease.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.5 Insurance Policies. </B>Insurance required of Lessee herein shall be by companies duly
licensed or admitted to transact business in the state where the Premises are located, and
maintaining during the policy term a &#147;General Policyholders Rating&#148; of at least A,XII<STRIKE>B&#043;, V</STRIKE>, as set
forth in the most current issue of &#147;Best&#146;s Insurance Guide&#148; (provided, however, that the first
$1,000,000 of Lessee&#146;s Commercial General Liability Coverage may be by a company with a rating of
at least A-X), or such other rating as may be required by a Lender. Lessee shall not do or permit
to be done anything which invalidates the required insurance policies. Lessee shall, prior to the
StartCommencement Date, deliver to Lessor certified copies of policies of such insurance or
certificates evidencing the existence and amounts of the required insurance. No such policy shall
be cancelable or subject to modification


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<P align="left" style="font-size: 10pt">except after 30&nbsp;days prior written notice to Lessor. Lessee shall, at least 30&nbsp;days prior to
the expiration of such policies, furnish Lessor with evidence of renewals or &#147;insurance binders&#148;
evidencing renewal thereof, or Lessor may order such insurance and charge the cost thereof to
Lessee, which amount shall be payable by Lessee to Lessor upon demand. Such policies shall be for
a term of at least one year, or the length of the remaining term of this Lease, whichever is less.
If either Party shall fail to procure and maintain the insurance required to be carried by it, the
other Party may, but shall not be required to, procure and maintain the same. All such insurance
certificates and binders shall be subject to the prior approval of Lessor to confirm compliance
with the requirements of this Paragraph&nbsp;8.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.6 Waiver at Subrogation. </B>Without affecting any other rights or remedies, Lessee and Lessor
each hereby release and relieve the other, and waive their entire right to recover damages against
the other, for loss of or damage to its property arising out of or incident to the perils required
to be insured against herein. The effect of such releases and waivers is not limited by the amount
of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to
have their respective property damage insurance carriers waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.7 Indemnity. </B>Except for Lessor&#146;s gross negligence or willful misconduct, Lessee shall
indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessors master or
ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or
damages, liens, judgments, penalties, attorneys&#146; and consultants&#146; fees, expenses and/or liabilities
arising out of, involving, or in connection with, the use and/or occupancy of the Premises by
Lessee, its officers, agents, employees, contractors, guests, business invitees or licensees. If
any action or proceeding is brought against Lessor by reason of any of the foregoing mailers.
Lessee shall upon notice defend the same at Lessee&#146;s expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be defended or Indemnified.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.8 Exemption of Lessor from Liability. </B>Lessor shall not be liable for injury or damage to
the person or goods, wares, merchandise or other property of Lessee. Lessee&#146;s employees,
contractors, invitees, customers, or any other person in or about the premises, whether such damage
or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances,
plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage
results from conditions arising upon the Premises <STRIKE>or upon other portions of the building of which
the Premises are a part</STRIKE>, or from other sources or places. <STRIKE>Lessor shall not be liable for any
damages arising from any set or neglect of any other tenant of Lessor nor from the failure of
Lessor to enforce the provisions of any other lease in the Project.</STRIKE> Notwithstanding Lessor&#146;s
negligence or breach of this Lease, Lessor shall under no circumstances be liable for injury to
Lessee&#146;s business or for any loss of income or profit therefrom.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>8.9 Failure to Provide Insurance. </B>Lessee acknowledges that any failure on its part to obtain
or maintain the insurance required herein will expose Lessor to risks and potentially cause Lessor
to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to
ascertain. Accordingly, for any month or portion thereof that Lessee does not maintain the
required insurance and/or does not provide Lessor with the required binders or certificates
evidencing the existence of the required insurance, the Base Rent shall be automatically increased,
without any requirement for notice to Lessee, by an amount equal to 10% of the then existing Base
Rent <STRIKE>or $100 whichever is greater</STRIKE>. The parties agree that such increase in Base Rent represents
fair and reasonable compensation for the additional risk/costs that Lessor will incur by reason of
Lessee&#146;s failure to maintain the required insurance. Such increase in Base Rent shall in no event
constitute a waiver of Lessee&#146;s Default or Breach with respect to the failure to maintain such
insurance, prevent the exercise of any of the other rights and remedies granted hereunder, nor
relieve Lessee of its obligation to maintain the insurance specified in this Lease.


<P align="left" style="font-size: 10pt"><B>9. Damage or Destruction.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.1 Definitions.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(a) </B>"<B>Premises Partial Damage</B>&#148; shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations, which can reasonably be
repaired in 6



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<P align="left" style="font-size: 10pt">months or less from the date on which Lessor obtains all permits and other approvals necessary
to commence the repair of the damage or destruction. Lessor shall notify Lessee in writing within
30&nbsp;days from the date of the damage or destruction as to whether or not the damage is Partial or
Total.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(b) </B>"<B>Premises Total Destruction</B>&#148; shall mean damage or destruction to the Promises, other than
Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be
repaired in <I>6 </I>months or less from the date <I>on which </I>Lessor obtains all <I>permits </I>and other approvals
necessary to commence the repair of the damage or destruction. Lessor shall notify Lessee in
writing within 30&nbsp;days from the date of the damage or destruction as to whether or not the damage
is Partial or Total.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(c) </B>"<B>Insured Loss&#148; </B>shall mean damage or destruction to Improvements on the Premises, other
than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an
event required to be covered by the insurance described in Paragraph&nbsp;8.3(a), irrespective of any
deductible amounts or coverage limits involved.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(d) &#147;Replacement Cost&#148; </B>shall mean the cost to repair or rebuild the Improvements owned by
Lessor at the time of the occurrence to their condition existing immediately prior thereto,
including demolition, debris removal end upgrading required by the operation of Applicable
Requirements, and without deduction for depredation.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(e) </B>"<B>Hazardous Substance Condition</B>&#148; shall mean the occurrence or discovery of a condition
involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph
6.2(a), in, on, or under the Premises which requires repair, remediation, or restoration.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.2 Partial Damage &#151; Insured Loss. </B>If a Premises Partial Damage that is an Insured Loss
occurs, then Lessor shall, at Lessor&#146;s expense, repair such damage (but not Lessee&#146;s Trade Fixtures
or Lessee Owned Alterations and Utility Installations) as soon as reasonably, possible and this
Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor&#146;s
election, make the repair of any damage or destruction the total cost to repair of which is $10,000
or less, and, in such event, Lessor shall make any applicable insurance proceeds available to
Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required
insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds (except as to the deductible
which is Lessee&#146;s responsibility) as and when required to complete said repairs. In the event,
however, such shortage was due to the fact that, by reason of the unique nature of the
Improvements, full replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to
fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to
cover same, or adequate assurance thereof, within 10&nbsp;days following receipt of written notice of
such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof
within said 10&nbsp;day period, the party responsible for making the repairs shall complete them as soon
as reasonably possible and this Lease shall remain in full force and effect. If such funds or
assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10
days thereafter to: (i)&nbsp;make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or
(ii)&nbsp;have this Lease terminate 30&nbsp;days thereafter. Lessee shall not be entitled to reimbursement
of any funds contributed by Lessee to repair any such damage or destruction. Promises Partial
Damage due to flood or earthquake shall be subject to Paragraph&nbsp;9.8, notwithstanding that there may
be some insurance coverage, but the net proceeds of any such insurance shall be made available for
the repairs if made by either Party.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.3 Partial Damage &#151; Uninsured Loss. </B>If a Premises Partial Damage that is not an Insured Loss
occurs, unless caused by a negligent or willful act or omission of Lessee (in which event Lessee
shall make the repairs at Lessee&#146;s expense), Lessor may either (i)&nbsp;repair such damage as soon as
reasonably possible at Lessor&#146;s expense, in which event this Lease shall continue in full force and
effect, or (ii)&nbsp;terminate this Lease by giving written notice to Lessee within 30&nbsp;days after
receipt by Lessor of knowledge of the occurrence of such damage. Such termination shall be
effective 60&nbsp;days following the date of such notice. In the event Lessor elects to terminate this
Lease. Lessee shall have the right within 10&nbsp;days after receipt of the termination notice to give
written notice to Lessor of Lessee&#146;s commitment to pay for the repair of such damage without
reimbursement from Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance
thereof within 30&nbsp;days after making such commitment.


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<P align="left" style="font-size: 10pt">In such event this Lease shall continue in full force and effect, and Lessor shall proceed to
make such repairs as soon as reasonably possible after the required funds are available. If Lessee
does not make the required commitment, this Lease shall terminate as of the date specified n the
termination notice.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.4 Total Destruction. </B>Notwithstanding any other provision hereof, if a Premises Total
Destruction occurs, this Lease shall terminate 60&nbsp;days following such Destruction. If the damage
or destruction was not an Insured Loss and was caused by the gross negligence or willful misconduct
of Lessee, or if it was an Insured Loss and Lessee failed to carry the insurance required under
Paragraph&nbsp;8.3(a), Lessor shall have the right to recover Lessor&#146;s damages from Lessee, except as
provided in Paragraph&nbsp;8.6.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.5 Damage Near End of Term. </B>If at any time during the last 6&nbsp;months of this Lease there is
damage for which the cost to repair exceeds one month&#146;s Base Rent, whether or not an Insured Loss,
Lessor may terminate this Lease effective 80&nbsp;days following the date of occurrence of such damage
by giving a written termination notice to Lessee with 30&nbsp;days after the date of occurrence of such
damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable option to extend
this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a)&nbsp;exercising such
option and (b)&nbsp;providing Lessor with any shortage in insurance proceeds (or adequate assurance
thereof) needed to make the repairs on or before the earlier of (i)&nbsp;the date which is 10&nbsp;days after
Lessee&#146;s receipt of Lessor&#146;s written notice purporting to terminate this Lease, or (ii)&nbsp;the day
prior to the date upon which such option expires. If Lessee duty exercises such option during such
period and provides Lessor with funds (or adequate assurance thereon to cover any shortage in
insurance proceeds. Lessor shall, at Lessor&#146;s commercially reasonable expense, repair such damage
as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee
falls to exercise such option and provide such funds or assurance during such period, then this
Lease shall terminate on the date specified in the termination notice and Lessee&#146;s option shall be
extinguished.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.6 Abatement of Rent; Lessee&#146;s Remedies.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(a)&nbsp;Abatement</B>. In the event of Premises Partial Damage or Premises Total Destruction or a
Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent
payable by Lessee for the period required for the repair, remediation or restoration of such damage
shall be abated in proportion to the degree to which Lessee&#146;s use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value Insurance. All other obligations of
Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such
damage, destruction, remediation, repair or restoration except as provided herein.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(b)&nbsp;Remedies. </B>If Lessor shall be obligated to repair or restore the Premises and does not
commence, in a substantial and meaningful way, such repair or restoration within 90&nbsp;days after such
obligation shall accrue, Lessee may at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of
Lessee&#146;s election to terminate this Lease on a date not less than 60&nbsp;days following the giving of
such notice. If Lessee gives such notice and such repair or restoration is not commenced within 30
days thereafter, this Lease shall terminate as of the date specified in said notice. If the repair
or restoration is commenced within such 30&nbsp;days, this Lease shall continue in full force and
effect. &#147;Commence&#148; shall mean either the unconditional authorization of the preparation of the
required plans, or the beginning of the actual work on the Premises, whichever first occurs,
provided Lessee has delivered to Lessor any payments required to be made by Lessee under this
Paragraph&nbsp;9.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.7 Termination; Advance Payments</B>. Upon termination of this Lease pursuant to Paragraph
6.2(g) or Paragraph&nbsp;9, an equitable adjustment shall be made concerning advance Base Rent and any
other advance payments made by Lessee to Lesser. Lessor shall, in addition, return to Lessee so
much of Lessee&#146;s Security Deposit as has not been, or is not then required to be, used by Lessor.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.8 Waive Statutes. </B>Lessor and Lessee agree that the terms of this Lease shall govern the
effect of any damage to or destruction of the Premises with respect to the termination of this
Lease and hereby waive the provisions of any present or future statute to the extent inconsistent
herewith.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>9.9 Permits and Approvals. </B>Provided no election has been made or deemed to have been made to
terminate this Lease as a result of any damage, Lessor shall proceed in a commercially reasonable
diligent manner to procure all permits and approvals necessary to commence repair or restoration.


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<P align="left" style="font-size: 10pt"><B>10. Real Property Taxes.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.1 Definition. </B>As used herein, the term &#147;Real Property Taxes&#148; shall include any form of
assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other
than inheritance, personal income or estate taxes); improvement bond; and/or license fee imposed
upon or levied against any legal or equitable interest of Lessor in the Premises or the Project,
Lessor&#146;s right to other income therefrom, and for Lessor&#146;s business of leasing, by any authority
having the direct or indirect power to tax and where the funds are generated with reference to the
Building address and where the proceeds so generated are to be applied by the city, county or other
local taxing authority of a jurisdiction within which the Premises are located. Real Property
Taxes shall also include any tax, fee, levy, assessment or charge, or any increase therein: (i)
imposed by reason of events occurring during the term of this Lease, including but not limited to,
a &#147;change of ownership&#148; (as that term is defined and interpreted in Sections&nbsp;61 <I>et seq. </I>of the
California Revenue and Taxation Code and in sections 461 <I>et seq. </I>of the California Administrative
Code and any amendments or successor statutes and regulations thereto) resulting from a transfer of
ownership of the Premises or any portion thereof by Lessor to a third party (an &#147;FHL Transferee&#148;);
provided, however, that Real Property Taxes shall not include any increase thereof based on any
incremental Increase in the assessed value of the Premises resulting from a subsequent transfer of
ownership of the Premises or any portion thereof by The FHL Transferee <STRIKE>a change in the ownership of
the Premises</STRIKE>, and (ii)&nbsp;levied or assessed on machinery or equipment provided by Lessor to Lessee
pursuant to this Lease.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.2 Payment of Taxes</B>. In addition to Base Rent, Lessee shall pay to Lessor an amount equal
to the Real Property Tax installment due at least 20&nbsp;days prior to the applicable delinquency date.
If any such installment shall cover any period of time prior to or after the expiration or
termination of this Lease, Lessee&#146;s share of such installment shall be prorated. If there is a
Breach by Lessee, or if required by any future lender having a security Interest in all or any
portion of the Premises, in the event Lessee incurs a late charge on any Rent payment, Lessor may
estimate the current Real Property Texas, and require that such taxes be paid in advance to Lessor
by Lessee monthly in advance with the payment of the Base Rent. Such monthly payments shall be en
amount equal to the amount of the estimated Installment of taxes divided by the number of months
remaining before the month in which said installment becomes delinquent. When the actual amount of
the applicable tax bill is known, the amount of such equal monthly advance payments shall be
adjusted as required to provide the funds needed to pay the applicable taxes. If the amount
collected by Lessor is insufficient to pay such Real Property Taxes when due, Lessee shall pay
Lessor, upon demand, such additional sum as is necessary. Advance payments may be Intermingled
with other moneys of Lessor and shall not bear Interest. In the event of a Breach by Lessee in the
performance of its obligations under this Lease, then any such advance payments may be treated by
Lessor as an additional Security Deposit.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.3 Joint Assessment. </B>If the Premises are not separately assessed, Lessee&#146;s liability shall
be an equitable proportion of the Real Property Taxes for all of the land and Improvements Included
within the lax parcel assessed, such proportion to be conclusively determined by Lessor from the
respective valuations assigned in the assessor&#146;s work sheets or such other Information as may be
reasonably available.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>10.4 Personal Property Taxes. </B>Lessee shall pay, prior to delinquency, all taxes assessed
against and levied upon Lessee Owned Alterations, Utility Installations, Trade Fixtures,
furnishings, equipment and all personal property of Lessee. When possible, Lessee shall cause its
Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all
other personal property to be assessed and billed separately from the real property of Lessor. If
any of Lessee&#146;s said property shall be assessed with Lessors real property, Lessee shall pay Lessor
the taxes attributable to Lessee&#146;s property within 10&nbsp;days after receipt of a written statement
setting forth the taxes applicable to Lessee&#146;s property.

<P align="left" style="font-size: 10pt"><B>11. Utilities; and Services. </B>Lessee shall pay for all water, gas, heat, light, power, telephone,
trash disposal and other utilities and services supplied to the Premises, together with any taxes
thereon. If any such services are not separately metered or billed to Lessee, Lessee shall pay a
reasonable proportion, to be determined by Lessor, of all charges jointly metered or billed. There
shall be no abatement of rent and Lessor shall not be liable in any respect whatsoever for the
Inadequacy, stoppage, Interruption or discontinuance of any utility or service due to riot, strike,
labor dispute, breakdown, accident, repair or other cause beyond Lessor&#146;s reasonable control or in
cooperation with governmental request or directions.



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<P align="left" style="font-size: 10pt"><B>12. Assignment and Subletting.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.1 Lessor&#146;s Consent Required.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber
(collectively, &#147;assign or assignment&#148;) or sublet all or any part of Lessee&#146;s Interest in this Lease
or in the Premises without Lessors prior written consent.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Unless Lessee is a corporation and its stock is publicly traded on a national stock
exchange, a change in the control of Lessee shall constitute an assignment requiring consent. The
transfer, on a cumulative basis, of 25% or more of the voting control of Lessee shall constitute a
change in control for this purpose.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Involvement of Lessee or its assets in any transaction, or series of transactions (by
way of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or
not a format assignment or hypothecation of this Lease or Lessee&#146;s assets occurs, which results or
will result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net
Worth as it was represented at the time of the execution of this Lease or at the time of the most
recent assignment to which Lessor has consented, or as it exists immediately prior to said
transaction or transactions constituting such reduction, whichever was or is greater, shall be
considered an assignment of this Lease to which Lessor may withhold its consent &#147;Net Worth of
Lessee&#148; shall mean the net worth of Lessee (excluding any guarantors) established under generally
accepted accounting principles.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;An assignment or subletting without consent shall, at Lessor&#146;s option, be a Default
curable after notice per Paragraph&nbsp;13.1(c), or a noncurable Breach without the necessity of any
notice and grace period, if Lessor elects to treat such unapproved assignment or subletting as a
noncurable Breach, Lessor may either: (i)&nbsp;terminate this Lease, or (ii)&nbsp;upon 30&nbsp;days written
notice, Increase the monthly Base Rent to 110% of the Base Rent then in effect. Further, in the
event of such Breach and rental adjustment, (i)&nbsp;the purchase price of arty option to purchase the
Premises held by Lessee shall be subject to similar adjustment to 110% of the pace previously in
effect, and (ii)&nbsp;all fixed and non-raced rental adjustments scheduled during the remainder of the
Lease term shall be Increased to 11046 of the scheduled adjusted rent.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Lessee&#146;s remedy for any breach of Paragraph&nbsp;12.1 by Lessor shall be limited to
compensatory damages and/or injunctive relief, and Lessee hereby waives the provisions of any
present or future statute to the extent inconsistent herewith Including, without limitation,
California Civil Code Section&nbsp;995.310(b).



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.2 Terms and Conditions Applicable to Assignment and Subletting.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Regardless of Lessor&#146;s consent, no assignment or subletting shall; (i)&nbsp;be effective
without the express written assumption by such assignee or sublessee of the obligations of Lessee
under this Lease, (ii)&nbsp;release Lessee of any obligations hereunder, or (iii)&nbsp;alter the primary
liability of Lessee far the payment of Rent or for the performance of any other obligations tote
performed by Lessee.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Lessor may accept Rent or performance of Lessee&#146;s obligations from any person other than
Lessee pending approval or disapproval of an assignment, Neither a delay in the approval or
disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver
or estoppel of Lessor&#146;s right to exercise its remedies for Lessee&#146;s Default or Breach.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Lessor&#146;s consent to any assignment or subletting shall not constitute a consent to any
subsequent assignment or subletting.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;In the event of any Default or Breach by Lessee, Lessor may proceed directly against
Lessee, any Guarantors or anyone else responsible for the performance of Lessee&#146;s obligations under
this Lease, Including any assignee or sublessee, without first exhausting Lessor&#146;s remedies against
any other person or entity responsible therefor to Lessor, or any security held by Lessor.



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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Each request for consent to an assignment or subletting shall be in writing, accompanied
by Information relevant to Lessor&#146;s determination as to the financial and operational
responsibility and appropriateness of the proposed assignee or sublessee, Including but not limited
to the intended use and/or required modification of the Premises, if any, together with a fee of
$500 as consideration for Lessor&#146;s considering and processing said request. Lessee agrees to
provide Lessor with such other or additional Information and/or documentation as may be reasonably
requested. (See also Paragraph&nbsp;36)



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;Any assignee of, or sublessee under, this Lease shall, by reason of accepting such
assignment or entering into such sublease, be deemed to have assumed and agreed to conform and
comply with each and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has
specifically consented to in writing.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;Lessor&#146;s consent to any assignment or subletting shall not transfer to the assignee or
sublessee any Option granted to the original Lessee by &#091;his Lease unless such transfer is
specifically consented to by Lessor in writing. (See Paragraph&nbsp;39.2)



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>12.3 Additional Terms and Conditions Applicable to Subletting. </B>The following terms and
conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be
deemed Included in all subleases under this Lease whether or not expressly incorporated therein:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Lessee hereby assigns and transfers to Lessor sit of Lessee&#146;s Interest in all Rent payable
an any sublease, and Lessor may collect such Rent and apply same toward Lessee&#146;s obligations under
this Lease; provided, however, that until a Breach shall occur in the performance of Lessee&#146;s
obligations, Lessee may collect said Rent. In the event that the amount collected by Lessor
exceeds Lessee&#146;s obligations any such excess shall be refunded to Lessee. Lessor shall not, by
reason of the foregoing or any assignment of such sublease, nor by reason of the collection of
Rent, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of
Lessee&#146;s obligations to such sublessee. Lessee hereby Irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor staling that a Breach exists in the
performance of Lessee&#146;s obligations under this Lease, to pay to Lessor all Rent due and to become
due under the sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all
Rents to Lessor without any obligation or right to inquire as to whether suds Breach exists,
notwithstanding any claim from Lessee to the contrary.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn
to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of sold option to the expiration of such sublease; provided,
however. Lessor shall not he liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Any matter requiring the consent of the sublessor under a sublease shall also require the
consent of Lessor.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;No sublessee shall further assign or sublet all or any part of the Premises without
Lessor&#146;s prior written consent.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee,
who shall have the right to cure the Default of Lessee within the grace period, if any, specified
in such notice. The sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any notice given under this Paragraph&nbsp;13.1 shall re in lieu of and not in addition to the
notice requirements of California Code of Civil Procedure section 1161, et seq.


<P align="left" style="font-size: 10pt"><B>13. Default; Breach; Remedies.</B>



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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.1 Default; Breach. </B>A &#147;Default&#148; is defined as a failure by the Lessee to comply with or
perform any of the terms, covenants, conditions or Rules and Regulations under this Lease. A
&#147;Breach&#148; is defined as the occurrence of one or more of the following Defaults, and the failure of
Lessee to cure such Default within any applicable grace period;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The abandonment of the Promises; or the vacating of the Premises without providing a
commercially reasonable level of security, or where the coverage of the property Insurance
described <FONT face="'Times New Roman',times,serif">&#128;</FONT>n Paragraph&nbsp;8.3 is jeopardized as a result thereof, or without providing reasonable
assurances to minimize potential vandalism.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The failure of Lessee to make any payment of Rent or any Security Deposit required to be
made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable
evidence of Insurance or surety bond, or to fulfill any obligation under this Lease which endangers
or threatens life or property, where such failure continues for a period of 3 business days
following written notice to Lessee.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The failure by Lessee to provide (i)&nbsp;reasonable written evidence of compliance with
Applicable Requirements, (ii)&nbsp;the service contracts, (iii)&nbsp;the rescission of an unauthorized
assignment or subletting, (iv)&nbsp;en Estoppel Certificate, (v)&nbsp;a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii)&nbsp;any document requested under Paragraph&nbsp;42,
(viii)&nbsp;material safety data sheets (MSDS), or (ix)&nbsp;any other documentation or Information which
Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure
continues for a period of 10&nbsp;days following written notice to Lessee.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or
of the rules adopted under Paragraph&nbsp;40 hereof, ether than those described in subparagraphs
13.f(a), (b)&nbsp;or (c), above, where such Default continues for a period of 30&nbsp;days after written
notice; provided, however, that if the nature of Lessee&#146;s Default is such that more than 30&nbsp;days
are reasonably required for its cure, then it shall not be deemed to be a Breath if Lessee
commences such cure within sold 30&nbsp;day period and thereafter diligently prosecutes such cure to
completion.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;The occurrence of any of the following events: (i)&nbsp;the making of any general arrangement
or assignment for the benefit of creditors; (ii)&nbsp;becoming a &#147;debtor&#148; as defined in 11 U.S.C. &#167; 101
or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same
is dismissed within 60&nbsp;days); (iii)&nbsp;the appointment of a trustee or receiver to take possession of
substantially all of Lessee&#146;s assets located at the Premises or of Lessee&#146;s interest in this Lease,
where possession is rot restored to Lessee within 30&nbsp;days: or (iv)&nbsp;the attachment, execution or
other judicial seizure of substantially all of Lessee&#146;s assets located at the Premises or of
Lessee&#146;s interest in this Lease, where such seizure is not discharged within 30&nbsp;days; provided,
however, in the event that any provision of this subparagraph (a)&nbsp;is contrary to any applicable
law, such provision shall be of no force or effect, and not affect the validity of the remaining
provisions.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;The discovery that any financial statement of Lessee or of any Guarantor given to Lessor
was materially false.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;If the performance of Lessee&#146;s obligations under this Lease is guaranteed: (i)&nbsp;the death
of a Guarantor, (ii)&nbsp;the termination of a Guarantors liability with respect to this Lease other
than in accordance with the terms of such guaranty, (iii)&nbsp;a Guarantor&#146;s becoming insolvent or the
subject of a bankruptcy filing, (iv)&nbsp;a Guarantor&#146;s refusal to honor the guaranty, or (v)&nbsp;a
Guarantor&#146;s breach of its guaranty obligation on an anticipatory basis, and Lessee&#146;s failure,
within 60&nbsp;days following written notice of any such event, to provide written alternative assurance
or security, which, when coupled with the then existing resources of Lessee, equals or exceeds the
combined financial resources of Lessee and the Guarantors that existed at the time of execution of
this Lease,



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.2 Remedies. </B>If Lessee fails to perform any of its affirmative duties or obligations,
within 10&nbsp;days after written notice (or in case of en emergency, without notice), Lessor may, at
its option, perform such duty or obligation on Lessee&#146;s behalf, including but not limited to the
obtaining of reasonably required hands, Insurance policies, or governmental licenses, permits or
approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs and expenses incurred
by Lessor in such performance upon receipt of art Invoice therefor, in the event of a Breach,
Lessor may, with or without further notice or demand, and without limiting Lessor in the exercise
of any right or remedy which Lessor may have by reason of such Breach:


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Terminate Lessee&#146;s right to possession of the Premises by any lawful means, in which case
this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i)&nbsp;the unpaid Rent which had been earned at
the time of termination; (ii)&nbsp;the worth at the time of award of the amount by which the unpaid rent
winch would have been earned after termination until the time of award exceeds the amount of such
rental loss that the Lessee proves could have been reasonably avoided; (iii)&nbsp;the worth at the time
of award of the amount by which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv)
any other amount necessary to compensate Lessor for all the detriment proximately caused by the
Lessee&#146;s failure to perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, Including but not limited to the cost of recovering
possession of the Premises, expenses of resetting, including necessary renovation and alteration of
the Premises, reasonable attorneys&#146; fees, and that portion of arty leasing commission paid by
Lessor in connection with this Lease applicable to the unexpired term of this Lease. The worth at
the time of award of the amount referred to in provision (iii)&nbsp;of the Immediately preceding
sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve
Bank of the District within which the Premises are located at the lime of award plus one percent.
Efforts by Lessor to mitigate damages caused by Lessee&#146;s Breach of this Lease shall not waive
Lessor&#146;s right to recover damages under Paragraph&nbsp;12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right
to recover all or any part thereof in a separate suit. If a notice and grace period required under
Paragraph&nbsp;13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful detainer statute shall also constitute the notice required by
Paragraph&nbsp;13.1. In such case, the applicable grace period required by Paragraph&nbsp;13.1 and the
unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default
within the greater of the two such grace periods shall constitute both an unlawful detainer and a
Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by sold
statute.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Continue the Lease and Lessee&#146;s right to possession and recover the Rent as it becomes
due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of
maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor&#146;s
interests, shall not constitute a termination of the Lessee&#146;s right to possession.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Pursue any other remedy now or hereafter available under the laws or judicial decisions of
the state wherein the Premises are located. The expiration or termination of this Lease and/or the
termination of Lessee&#146;s right to possession shall riot relieve Lessee from liability under any
indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by
reason of Lessee&#146;s occupancy of the Premises,



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.3 Inducement Recapture. </B>Any agreement for free or abated rant or other charges, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideration
for Lessee&#146;s entering into this Lease, all of which concessions are hereinafter referred to as
&#147;Inducement Provisions,&#148; shall be deemed conditioned upon Lessee&#146;s full and faithful performance of
all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any
such Inducement Provision shall automatically be deemed deleted from this Lease and of no further
force or affect, and any rent, other charge, bonus, inducement or consideration theretofore abated,
given or paid by Lessor under such an inducement Provision shall be immediately due and payable by
Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not
be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in
writing by Lessor at the time of such acceptance.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.4 Late Charges. </B>Lessee hereby acknowledges that late payment by Lessee of Rent will cause
Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs Include, but are not limited to, processing and accounting
charges, and late charges which may be Imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor post marked within 5&nbsp;days after such amount shall be due, then,
without any requirement for notice to Lessee, Lessee shall Immediately pay to Lessor a one-time
late charge equal to $5,000 10% of each such overdue amount or $100, whichever is greater. The
Parties hereby agree that such late charge represents a fair and reasonable estimate of the costs
Lessor will incur by reason of such late payment. Acceptance of such late charge by Lessor shall
in cc event constitute a waiver of Lessee&#146;s Default or Breach with respect to such overdue amount,
nor prevent the exercise of


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<P align="left" style="font-size: 10pt">any of the other rights and remedies granted hereunder. In the event that a fate charge is
payable hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then
notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor&#146;s option,
become due and payable quarterly in advance.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.5 Interest. </B>Any monetary payment due Lessor hereunder, other than late charges, not
received by Lessor, when due as to scheduled payments (such as Base Rent) or within 30&nbsp;days
following the date on which it was due for non-scheduled payment, shall bear interest from the date
when due, as to scheduled payments, or the 31st day after It was due as to non-scheduled payments.
The interest (&#147;Interest&#148;) charged shall he computed at the rate of 10% per annum but shall not
exceed the maximum rate allowed by law, interest is payable in addition to the potential late
charge provided for in Paragraph&nbsp;13.4.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>13.6 Breach by Lessor.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor falls
within a reasonable lime to perform an obligation required to be performed by Lessor. For purposes
of this Paragraph, a reasonable time shall in no event be less than 30&nbsp;days after receipt by
Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such
purpose, of written notice specifying wherein such obligation of Lessor has not been performed;
provided, however, that <FONT face="'Times New Roman',times,serif">&#128;</FONT>f the nature of Lessor&#146;s obligation is such that more than 30&nbsp;days are
reasonably required for its performance, then Lessor shall not be in breach if performance <FONT face="'Times New Roman',times,serif">&#128;</FONT>s
commenced within such 30&nbsp;day period and thereafter diligently pursued to completion.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender
cures said breach within 30&nbsp;days after receipt of said notice, or if having commenced said cure
they do not diligently pursue It to completion, then, except as otherwise provided in f paragraph
59 of the Addendum, Lessee&#146;s sole remedies shall be the right to damages and/or Injunctive relief
and in no event shall Lessee have the right to terminate this Lease or abatement of Rent hereunder
a5 the result of Lessor&#146;s breach or default. Lessee may elect to cure said breach at Lessee&#146;s
expense and offset from Rent the actual and reasonable cost to perform such cure, provided,
however, that such effect shall not exceed an amount equal to the greater of one month&#146;s Base Rent
or the Security Deposit, receiving Lessee&#146;s right to seek reimbursement from Lessor. Lessee shall
document the cost of said cure and supply said documentation to Lessor. See Addendum.


<P align="left" style="font-size: 10pt"><B>14. Condemnation. </B>If the Premises or any portion thereof are taken under the power of eminent
domain or sold under the threat et the exercise of said power (collectively &#147;Condemnation&#148;), this
Lease shall terminate as to the part taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than 10% of the Building, or more than 25% of that
portion of the Premises not occupied by any building, is taken by Condemnation, and in either care
substantially impairs the use of the Premises&#146; by Lessee, Lessee may, at Lessee&#146;s option, to be
exercised in writing within 10&nbsp;days after Lessor shall have given Lessee written notice of such
taking (or in the absence of such notice, within 10&nbsp;days after the condemning authority shall have
taken possession) terminate this Lease as of the data the condemning authority takes such
possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease
shall remain in full force cad effect as to the portion of the Premises remaining, except that the
Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such
Condemnation. Condemnation awards and/or payments shall he the property of Lessor, whether such
award shut be made as compensation for diminution in value of the leasehold, the value of the part
taken, or for severance damages; provided, however, that Lessee shall be entitled to any
compensation for Lessee&#146;s relocation expenses, loss of business goodwill and/or Trade Fixtures,
without regard to whether or not this Lease is terminated pursuant to the provisions of this
Paragraph. All Alterations and Utility Installations made to the Premises by Lessee, for purposes
of Condemnation only, shall be considered the property of the Lessee and Lessee shall be entitled
to any and all compensation which is payable therefor. In the event that this Lease is not
terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by
such Condemnation.



<P align="left" style="font-size: 10pt"><B>15. Brokerage Fees.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.1 Additional Commission. </B>In addition to the payments owed pursuant to Paragraph&nbsp;1.9 above,
and unless Lessor and the Brokers otherwise agree in writing, Lessor agrees that: (a)&nbsp;if Lessee
exercises any Option,


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<P align="left" style="font-size: 10pt">(b)&nbsp;if Lessee acquires any rights to the Premises or other premises owned by Lessor and
located within the same Project. If any, within which the Premises is located, (e)&nbsp;if Lessee
remains in possession of the Premises, with the consent of Lessor, after the expiration of this
Lease, or (d)&nbsp;if Base Rent is increased, whether by agreement or operation of an escalation clause
herein, then, Lessor shall pay Brokers a fee in accordance with the schedule of the Brokers in
effect at the time of the execution of the Lease.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.2 Assumption of Obligations. </B>Any buyer or transferee of Lessor&#146;s interest in this Lease
shall be deemed to have assumed Lessor&#146;s obligation hereunder. Brokers shall be third party
beneficiaries of the provision of Paragraphs 1.9, 15, 22 and 31. If Lessor fails to pay to Brokers
any amounts due as and for brokerage fees pertaining to the Lease when due, then such amounts shall
accrue interest. In addition, if Lessor fails to pay any amounts to Lessee&#146;s Broker when due,
Lessee&#146;s Broker may send written notice to Lessor and Lessee of such failure and if Lessor fails to
pay such amount within 10&nbsp;days after said notice, Lessee shall pay said monies to its Broker and
offset such amounts against Rent. In addition, Lessee&#146;s Broker shall be deemed to be a third party
beneficiary of any commission agreement entered into by and/or between Lessor and Lessor&#146;s Broker
for the limited purpose of collecting any brokerage fee owed.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>15.3 Representations and Indemnities of Broker Relationships. </B>Lessee and Lessor each
represent and warrant to the other that it has had no dealings with any person, firm, broker or
finder (other than the Brokers, if arty) in connection with this Lease, and that no one other than
said named Brokers is entitled to any commission or finder&#146;s fee in connection herewith, Lessee and
Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and
against liability for compensation or charges which may be claimed by any such unnamed broker,
finder or other similar party by reason of any dealings or actions of the Indemnifying Party,
including any costs, expenses, attorneys&#146; fees reasonably incurred with respect thereto. Under no
circumstances shall the Brokers be considered third-parry beneficiaries of this Lease.


<P align="left" style="font-size: 10pt"><B>16. Estoppel Certificates.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Each Party (as &#147;Responding Party&#148;) shall within 10&nbsp;days after written notice from the
other Party (the &#147;Requesting Party&#148;) execute, acknowledge and deliver to the Requesting Party a
statement fn writing in form similar to the then most current &#147;Estoppel Certificate&#148; form published
by the AIR Commercial Real Estate Association, plus such additional information, confirmation
and/or statements as may be reasonably requested by the Requesting Party.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;If the Responding Party shall fail to execute or deliver the Estoppel Certificate within
such 10&nbsp;day period, the Requesting Party may execute an Estoppel Certificate stating that: (i)&nbsp;the
Lease is in full force and effect without modification except as may be represented by the
Requesting Party, (ii)&nbsp;there are no uncured defaults in the Requesting Party&#146;s performance, and
(iii)&nbsp;if Lessor is the Requesting Party, not more than one month&#146;s rent has been paid in advance,
Prospective purchasers and encumbrances may rely upon the Requesting Party&#146;s Estoppel Certificate,
and the Responding Party shall be estopped from denying the truth of the facts contained in said
Certificate.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee
end all Guarantors shall deliver to any potential lender or purchaser designated by Lessor such
financial statements as may be reasonably required by such lender or purchaser, including but not
limited to Lessee&#146;s financial statements for the past 3&nbsp;years, provided that, so long as Lessee is
publicly traded, Lessee shall have no obligation to deliver any non-public information. All such
financial statements shall be delivered within 10&nbsp;days after request and shall be received by
Lessor and such tender or purchaser in confidence and shall be used only for the purposes herein
set forth.


<P align="left" style="font-size: 10pt"><B>17. Definition of Lessor. </B>The term &#147;Lessor&#148; as used herein shall mean the owner or owners at the
time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee&#146;s
Interest in the prior lease. In the event of a transfer of Lessor&#146;s title or interest in the
Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor. Except as provided in Paragraph&nbsp;15, Upon such transfer
or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under this Lease
thereafter to .be performed by the Lessor. Subject to the



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<P align="left" style="font-size: 10pt">foregoing, the obligations and/or covenants in this Lease to be performed by the Lessor shall be
binding only upon the Lessor as hereinabove defined.


<P align="left" style="font-size: 10pt"><B>18. Severability. </B>The Invalidity of any provision of this Lease, as determined by a court of
competent jurisdiction, shall in no way affect the validity of any other provision hereof.


<P align="left" style="font-size: 10pt"><B>19. Days. </B>Unless otherwise specifically indicated to the contrary, the word &#147;days&#148; as used in this
Lease shall mean and refer to calendar days.


<P align="left" style="font-size: 10pt"><B>20. Limitation on Liability. </B>The obligations of Lessor under this Lease shall not constitute
personal obligations of Lessor or its partners, members, directors, officers or shareholders, and
Lessee shall lock to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shah not seek recourse against Lessor&#146;s
partners, members, directors, officers or shareholders, or any of their personal assets for such
satisfaction.


<P align="left" style="font-size: 10pt"><B>21. Time of Essence. </B>Time is of the essence with respect to the performance of all obligations to
be performed or observed by the Parties under this Lease.


<P align="left" style="font-size: 10pt"><B>22. No prior or Other Agreements; Broker Disclaimer. </B>This Lease contains all agreements between
the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous
agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to
the Brokers that it has made, and is relying solely upon, its own investigation as to the nature,
quality, character and financial responsibility of the other Party to this Lease and as to the use,
nature, quality and character of the Premises. Brokers have no responsibility with respect thereto
or with respect to any default or breach hereof by either Party. The liability (including court
costs and attorneys&#146; fees) of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or lessee under this Lease or any amendment or modification herein
shall be limited to an amount up to the fee received by such Broker pursuant to this Lease;
provided, however, that the foregoing limitation on each Broker&#146;s liability shall not be applicable
to any gross negligence or willful misconduct of such Broker.


<P align="left" style="font-size: 10pt"><B>23. Notices.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>23.1 Notice Requirements. </B>All notices required or permitted by this Lease or applicable law
shall be in writing and may be delivered in person (by hand or by courier) or may be sent by
regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or
by facsimile transmission, and shall be deemed sufficiently given if served in a manner specified
in this Paragraph&nbsp;23. The addresses noted adjacent to a Party&#146;s signature on this Lease shall be
that Party&#146;s address for delivery or mailing of notices. Either Party may by written notice to the
other specify a different address for notice, except that upon Lessee&#146;s taking possession of the
Premises, the Premises shall constitute Lessee&#146;s address for notice. A copy of all notices to
Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may
from time 1o time hereafter designate in writing.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>23.2 Date of Notice. </B>Any notice sent by registered or certified mall, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt card, or if no
delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed
given 48 hours after the same is addressed as required heroin and mailed with postage prepaid,
Notices delivered by United States Express Mall or overnight courier that guarantee next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or
courier. Notices transmitted by facsimile transmission or similar means shall be deemed delivered
upon telephone confirmation of receipt (confirmation report from fax machine is sufficient),
provided a copy is also delivered via delivery or mall. If notice is received on a Saturday,
Sunday or legal holiday, it shall be deemed received on the next business day.

<P align="left" style="font-size: 10pt"><B>24. Waivers. </B>No waiver by Lessor of the Default or Breach of any term, covenant or condition
hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of
any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition
hereof. Lessor&#146;s consent to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of



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<P align="left" style="font-size: 10pt">Lessor&#146;s consent to, or approval of, any subsequent or similar act by Lessee, or be construed as
the basis of an estoppel to enforce the provision or provisions of this Lease requiring such
consent. The acceptance of Rent by Lessor shell not he a waiver of any Default or Breach by
Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages due
Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection
therewith, which such statements and/for conditions shall be of no force or affect whatsoever
unless specifically agreed to in writing by Lessor at or before the time of deposit of such
payment.


<P align="left" style="font-size: 10pt"><B>25. Disclosures Regarding The Nature of a Real Estate Agency Relationship.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;When entering Into a discussion with a real estate agent regarding a real estate
transaction, a Lessor or Lessee should from the outset understand what type of agency relationship
or representation it has with the agent or agents in the transaction- Lessor and Lessee acknowledge
being advised by the Brokers in this transaction, as follows:




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Lessor&#146;s Agent. A Lessor&#146;s agent under a listing agreement with the Lessor acts as
the agent for the Lessor only. A Lessor&#146;s agent or subagent has the following affirmative
obligations; To the Lessor: A fiduciary duty of utmost care, integrity, honesty, and loyalty
in dealings with the Lessor. To the Lessee and the Lessor: a. Diligent exercise of
reasonable skills and care in performance of the agent&#146;s duties. b. A duty of honest and
fair dealing and good faith. c. A duty to disclose all facts known to the agent materially
affecting the value or desirability of the property that are not known to, or within the
diligent attention and observation of, the Parties. An agent is not obligated to reveal to
either Party any confidential Information obtained from the other Party which does not
involve the affirmative duties set forth above.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Lessee&#146;s Agent. An agent can agree to act as agent for the Lessee only in these
situations, the agent is riot the Lessor&#146;s agent, even if by agreement the agent may receive
compensation for services rendered, either in full or in part from the Lessor. An agent
acting only for a Lessee has the following affirmative obligations. To the Lessee: A
fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessee.
To the Lessee and the Lessor: a. Diligent exercise of reasonable skills and care in
performance of the agent&#146;s cutler. b. A duty of honest and fair dealing and good faith. c.
A duty to disclose all facts known to the agent materially affecting the value or
desirability of the property that are not known to, or within the diligent attention and
observation of, the Parties. An agent is not obligated to reveal to either Party any
confidential information obtained from the other Party which does not involve the
affirmative duties set forth above.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Agent Representing Both Lessor and Lessee. A real estate agent, either acting
directly or through one or more associate licenses, can legally be the agent of both the
Lessor and the Lessee in a transaction, but only with the knowledge and consent of both the
Lessor and the Lessee. In a dual agency situation, (he agent has the following affirmative
obligations to both the Lessor and the Lessee: a. A fiduciary duty of utmost care,
integrity, honesty and loyalty in the dealings with either Lessor or the Lessee, b. Other
duties to the Lessor and the Lessee as stated above in subparagraphs (i)&nbsp;or (ii). In
representing both Lessor and Lessee, the agent may not without the express permission of the
respective Party, disclose to the other Party that the Lessor will accept rent in an amount
less than that Indicated in the listing or that the Lessee is willing to pay a higher rent
than that offered. The above duties of the agent in a real estate transaction do not
relieve a Lessor or Lessee from the responsibility to protect their own Interests, Lessor
and Lessee should carefully read all agreements to assure that they adequately express their
understanding of the transaction, A real estate agent is a person qualified to advise about
real estate. If legal or tax advice is desired, consult a competent professional.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Brokers have no responsibility with respect to any default or breach hereof by either
Party. The liability (including court costs and attorneys&#146; fees), of any Broker with respect to
any breach of duty, error or omission relating to this Lease shall not exceed the fee received by
such Broker pursuant to this Lease; provided, however, that the foregoing limitation on each
Broker&#146;s liability shall not be applicable to any gross negligence or willful misconduct of such
Broker.



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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;Lessor and Lessee agree to Identify to Brokers as &#147;Confidential&#146; any communication or
information given Brokers that is considered by such Party to be confidential.


<P align="left" style="font-size: 10pt"><B>26. No Right To Holdover. </B>Lessee has no right to retain possession of the Premises or any part
thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over,
then the Bass Rent shall be Increased to 150% of the Base Rent applicable immediately preceding the
expiration or termination. Nothing contained herein shall be construed as consent by Lessor to any
holding over by Lessee.


<P align="left" style="font-size: 10pt"><B>27. Cumulative Remedies. </B>No remedy or election hereunder shall be deemed exclusive but shall,
wherever possible, be cumulative with all other remedies at law or in equity.


<P align="left" style="font-size: 10pt"><B>28. Covenants and Conditions; Construction of Agreement. </B>All provisions of this Lease to be
observed or performed by Lessee are both covenants and conditions. In construing this Lease, all
headings and titles are for the convenience of the Parties only and shall not be considered a part
of this Lease. Whenever required by the context, the singular shall include the plural and vice
versa. This Lease shelf not be construed as if prepared by one of the Parties, but rather
according to its fair meaning as a whole, as if both Parties had prepared it.


<P align="left" style="font-size: 10pt"><B>29. Binding Effect; Choice of Law. </B>This Lease shall be binding upon the Parties, their personal
representatives, successors and assigns and be governed by the laws of the State in which the
Premises are located. Any litigation between the Parties hereto concerning this Lease shall be
Initiated in the county in which the Premises are located.


<P align="left" style="font-size: 10pt"><B>30. Subordination; Adornment; Non-Disturbance.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>30.1 Subordination. </B>This Lease and any Option granted hereby shall be subject and subordinate
to any ground lease, mortgage, deed of trust, or other hypothecation or security device
(collectively, &#147;Security Device&#148;), now or hereafter placed upon the Premises, to any and all
advances made on the security thereof, and to all renewals, modifications, and extensions thereof,
Losses agrees that the holders of any such Security Devices (in this Lease together referred to as
&#147;Lender&#148;) shall have no liability or obligation to perform any of the obligations of Lessor under
this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to
the lien of its Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates
of the documentation or recordation thereof.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>30.2 Attornment. </B>In the event that Lessor transfers title to the Premises, or the Premises
are acquired by another upon the foreclosure or termination of a Security Device to which this
Lease is subordinated (i)&nbsp;Lessee shall, subject to the non-disturbance provisions of Paragraph
30.3, attorn to such new owner, and upon request, enter Into a new lease, containing all of the
forms and provisions of this Lease, with such new owner for the remainder of the term hereof, or,
at the election of such new owner, this Lease shall automatically become a new Lease between Lessee
and such new owner, upon all of the terms and conditions hereof, for the remainder of is term
hereof, and (ii)&nbsp;Lessor shall thereafter be relieved of any further obligations hereunder and such
new owner shall assume all of Lessor&#146;s obligations hereunder, except that such new owner shall not:
(a)&nbsp;be liable for any act or omission of any prior Lessor or with respect to events occurring prior
to acquisition of ownership; (b)&nbsp;be subject to any offsets or defenses which Lessee might have
against any prior Lessor, (c)&nbsp;be bound by prepayment of more than one month&#146;s rent, or (d)&nbsp;be
liable for the return of any security deposit paid to any prior Lessor.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>30.3 Non-Disturbance. </B>With respect to Security Devices entered into by Lessor after the
execution of this Lease, Lessee&#146;s subordination of this Lease shall be subject to receiving a
Subordination, Non-Disturbance and Attornment Agreement in the form attached as Exhibit&nbsp;13 to the
Addendum (or such other commercially reasonable form as a lender may require). commercially
reasonable non disturbance agreement (a &#147; Non Disturbance Agreement&#148;) from the Lender which Non
Disturbance Agreement provides that Lessee&#146;s possession of the Premises, and this Lease, including
any options to extend the item hereof, will not be disturbed so long as Lessee is not in Breach
hereof and attend to the record owner of the Premises. Further, within 60&nbsp;days after the execution
of this Lease. Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">of any pre-existing Security Device which is secured by the Premises. In the event that
Lessor is unable to provide the Non-Disturbance Agreement within said 60&nbsp;days, then Lessee may, at
Lessee&#146;s option, directly contact Lender and attempt to negotiate for the execution and delivery of
a Non-Disturbance Agreement.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>30.4 Self-Executing. </B>The agreements contained in this Paragraph&nbsp;30 shall be effective without
the execution of any further documents; provided, however, that, upon written request from Lessor
or a Lender in connection with a sale, financing or refinancing of the Premises. Lessee and Lessor
shall execute d Non Disturbance Agreement and/or such further writings as may he reasonably
required to separately document any subordination, attornment and/or Non-Disturbance Agreement
provided for herein.

<P align="left" style="font-size: 10pt"><B>31. Attorneys&#146; Fees. </B>If any Party or Broker brings an action or proceeding involving the Premises
whether founded 1n tort, contract or equity, or to declare rights hereunder, the Prevailing Party
(as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to
reasonable attorneys&#146; fees. Such fees may be awarded in the same suit or recovered in a separate
suit, whether or not such action or proceeding is pursued to decision or judgment. The term,
&#147;Prevailing Party&#148; shall Include, without limitation, a Party or-Broker-who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or
the abandonment by the other Party or Broker of its claim or defense. The attorneys&#146; fees award
shall not be computed in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys&#146; fees reasonably Incurred. In addition, Lessor shall be entitled to
attorneys&#146; fees, costs and expenses incurred in the preparation and service of notices of Default
and consultations in connection therewith, whether or not a legal action is subsequently commenced
in connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence
for such services and consultation).


<P align="left" style="font-size: 10pt"><B>32. Lessor&#146;s Access; Showing Promises; Repairs. </B>Lessor and Lessor&#146;s agents shall have the right to
enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times
after reasonable prior notice for the purpose of showing the same to prospective purchasers,
lenders, or tenants, and making such alterations, repairs, Improvements or additions to the
Premises as Lessor may deem necessary or desirable and the erecting, using and maintaining of
utilities, &#145;services, pipes and conduits through the Premises and/or other promises as long as
there is no material adverse effect to Lessee&#146;s use of the Premises. All such activities shall be
without abatement of rent or liability to Lessee.


<P align="left" style="font-size: 10pt"><B>33. Auctions. </B>Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises
without Lessor&#146;s prior written consent. Lessor shall not be obligated to exercise any standard of
reasonableness in determining whether to permit an auction.


<P align="left" style="font-size: 10pt"><B>34. Signs. </B>Lessor may place on the Premises ordinary &#147;For Sale&#148; signs at any time and ordinary
&#147;For Lease&#148; signs during the last 6&nbsp;months of the term hereof. Except for ordinary &#147;for sublease&#148;
signs, Lessee shall not place any sign upon the Premises without Lessor&#146;s prior written consent.
All signs must comply with all Applicable Requirements.


<P align="left" style="font-size: 10pt"><B>35. Termination; Merger. </B>Unless specifically stated otherwise in writing by Lessor, the voluntary
or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a
termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or
lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenants. Lessor&#146;s failure within 10&nbsp;days following any such event to elect to the
contrary by written notice to the holder of any such lesser interest, shall constitute Lessor&#146;s
election to have such event constitute the termination of such Interest.


<P align="left" style="font-size: 10pt"><B>36. Consents. </B>Except as otherwise provided herein, wherever in this Lease the consent of a Party
is required to an act by or for the other Party, such consent shall not be unreasonably withheld or
delayed. Lessor&#146;s actual reasonable costs and expenses (including but not limited to architects&#146;,
attorneys&#146;, engineers&#146; and other consultants&#146; fees) incurred in the consideration of, or response
to, a request by Lessee for any Lessor consent, including but not limited to consents to an
assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee
upon receipt of an Invoice and supporting documentation therefor Lessor&#146;s consent to any act,
assignment or subletting shall not



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<P align="left" style="font-size: 10pt">constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists, nor shell
such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise
specifically stated in writing by Lessor at the time of such consent. The failure to specify
herein any particular condition to Lessor&#146;s consent shall not preclude the Imposition by Lessor at
the time of consent of such further or other conditions as are then reasonable with reference to
the particular matter for which consent is being given. In the event that either Party disagrees
with any determination made by the other hereunder and reasonably requests the reasons for such
determination, the determining party shall furnish its reasons in wrong and in reasonable detail
within 10 business days following such request.


<P align="left" style="font-size: 10pt"><B>37. Guarantor.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>37.1 Execution. </B>The Guarantors, if any, shall each execute a guaranty in the form most
recently published by the AIR Commercial Real Estate Association, and each such Guarantor shall
have the same obligations as Lessee under this Lease.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>37.2 Default. </B>It shall constitute a Default of the Lessee if any Guarantor fails or refuses,
upon request to provide: (a)&nbsp;evidence of the execution of the guaranty, including the authority of
the party signing on Guarantor&#146;s behalf to obligate Guarantor, and in the case of a corporate
guarantor, a certified copy of a resolution of the board of directs authorizing the making of such
guaranty; (b)&nbsp;current financial statements; (c)&nbsp;an Estoppel Certificate, or (d)&nbsp;written
confirmation that the guaranty is still in effect.

<P align="left" style="font-size: 10pt"><B>38. Quiet Possession. </B>Subject to payment by Lessee of the Rent and performance of all of the
covenants, conditions and provisions on Lessens part to be observed and performed under this Lease,
Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof.


<P align="left" style="font-size: 10pt"><B>39. Options. </B>if Lessee is granted an Option, as defined below, then the following previsions shall
apply:



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>39.1 Definition. </B>&#147;Option&#148; shall mean: (a)&nbsp;the right to extend the term of or renew this Lease
or to extend or renew any lease that Lessee has on other property of Lessor; (b)&nbsp;the right of first
refusal or first offer to lease either the Premises or other property of Lessor: (c)&nbsp;the right to
purchase or the right of first refusal to purchase the Premises or other property of Lessor.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>39.2 Options Personal To Original Lessee. </B>Any Option granted to Lessee in this Lease is
personal to the original Lessee, and cannot be assigned or exercised by anyone other than said
original Lessee and only while the original Lessee is in full possession of the Premises and, if
requested by Lessor, with Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>39.3 Multiple Options. </B>In the event that Lessee has any multiple Options to extend or renew
this Lease, a later Option cannot be exercised unless the prior Options have been validly
exercised.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>39.4 Effect of Default on Options.</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Lessee shall have no right to exercise an Option: (I)&nbsp;during the period commencing with
the giving of any notice of Default and continuing until said Default is cared, (ii)&nbsp;during the
period of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (iii)
during the time Lessee is in Breach of this Lease, or (iv)&nbsp;in the event that Lessee has been given
3 or more notices of separate Default, whether or not the Defaults are cured, during the 12&nbsp;month
period Immediately preceding the exercise of the Option.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The period of time within which an Option may be exercised shall not be extended or
enlarged by reason of Lessee&#146;s inability to exercise an Option because of the provisions of
Paragraph&nbsp;39.4(a).



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;An Option shall terminate and be of no further force or effect, notwithstanding Lessee&#146;s
due and timely exercise of the Option, if, offer such exercise and prior to the commencement of the
extended term or



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<P align="left" style="font-size: 10pt">completion of the purchase, (i)&nbsp;Lessee falls to pay Rent for a period of 30&nbsp;days after such
Rent becomes due (without any necessity of Lessor to give notice thereof), or (ii)&nbsp;if Lessee
commits a Breech of this Lease.


<P align="left" style="font-size: 10pt"><B>40. Multiple Buildings. </B>If the Premises area part of a group of buildings controlled by Lessor,
Lessee agrees that twill abide by and conform to all reasonable rules and regulations which Lessor
may make from time to time for the management, safety, and care of said properties, Including the
care and cleanliness of the grounds end including the parking, loading and unloading of vehicles,
and to cause its employees, suppliers, shippers, customers, contractors and Invitees to so abide
and conform, Lessee also agrees to pay its fair share of common expenses Incurred in connection
with such rules and regulations.


<P align="left" style="font-size: 10pt"><B>41. Security Measures. </B>Lessee hereby acknowledges that the Rent payable to Lessor hereunder does
not Include the cost of guard service or other security measures, and that Lessor shall have no
obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their properly from the acts of third parties.


<P align="left" style="font-size: 10pt"><B>42. Reservations. </B>Lessor reserves to itself the right, from time to time, to grant, without the
consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary,
and to cause the recordation of parcel maps and restrictions, so long as such easements, rights,
dedications, maps and restrictions do not unreasonably Interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such
easement rights, dedication, map or restrictions.


<P align="left" style="font-size: 10pt"><B>43. Performance Under Protest. </B>If at any time a dispute shall arise as to any amount or sum of
money to be paid by one Party to the other under the provisions hereof, the Party against whom the
obligation to pay the money is asserted shall have the right to make payment &#147;under protest&#148; and
such payment shall not be regarded as a voluntary payment and there shall survive the right on the
part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there
was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party
shall he entitled to recover such sum or so much thereof as It was not legally required to pay.


<P align="left" style="font-size: 10pt"><B>44. Authority; Multiple Parties; Execution.</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;If either Party hereto is a corporation, trust, limited liability company, partnership, or
similar entity, each individual executing thin Lease on behalf of such entity represents and
warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. Each
party shall, within 30&nbsp;days after request, deliver to the other party satisfactory evidence of such
authority.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;if this Lease is executed by more than one person or entity as &#147;Lessee&#148;. Each such person
or entity shall be jointly and severally &#091;!able hereunder. It is agreed that any one of the named
Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary
thereto and bind all of the named Lessees, and Lessor may rely on the same as if all of the named
Lessees had executed such document.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;This Lease may be executed by the Parties in counterparts, each of which shall be deemed
an original and all of which together shall constitute ore and the same Instrument.


<P align="left" style="font-size: 10pt"><B>45. Conflict. </B>Any conflict between the printed provisions of this Lease and typewritten or
handwritten provisions shall be controlled by the typewritten or handwritten provisions.


<P align="left" style="font-size: 10pt"><B>46. Offer. </B>Preparation of this Lease by either Party or their agent and submission of same to the
other Party shall not be doomed an offer to lease to the other Party. This Lease is not Intended
to be binding until executed and delivered by all Parties hereto.


<P align="left" style="font-size: 10pt"><B>47. Amendments. </B>This Lease may be modified only in writing, signed by the Parties in interest at
the time of the modification. As long as they do not materially change Lessee&#146;s obligations
hereunder.



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<P align="left" style="font-size: 10pt">Lessee agrees to make such reasonable non-monetary modifications to this Lease as may be reasonably
required by a Lender in connection with the obtaining of normal financing or refinancing of the
Premises.


<P align="left" style="font-size: 10pt"><B>48. Waiver of Jury Trial. </B>THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.


<P align="left" style="font-size: 10pt"><B>49. Mediation and Arbitration of Disputes. </B>An Addendum requiring the Mediation and/or the
Arbitration of all disputes between the Parties and/or Brokers arising cut of this Lease <FONT style="font-family: Wingdings 2">&#163;</FONT> is
<FONT style="font-family: Wingdings 2">&#082;</FONT> is not attached to this Lease.


<P align="left" style="font-size: 10pt"><B>50. Americans with Disabilities Act. </B>Since compliance with the Americans with Disabilities Act
(ADA)&nbsp;is dependent upon Lessee&#146;s specific use of the Promises, Lessor makes no warranty or
representation as to whether or not The Premises comply with ADA or any similar legislation. In
the event that Lessee&#146;s use of the Premises requires modifications or additions to the Premises in
order to be in ADA compliance, Lessee agrees to make any such necessary modifications and/or
additions at Lessee&#146;s expense,


<P align="left" style="font-size: 10pt">LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED
HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE
PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE
COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO
THE PREMISES.


<P align="left" style="font-size: 10pt">ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE
ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS
LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:


<P align="left" style="font-size: 10pt">1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.


<P align="left" style="font-size: 10pt">2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID
INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES,
THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY. THE CONDITION OF THE ROOF AND OPERATING
SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR LESSEE&#146;S INTENDED USE.


<P align="left" style="font-size: 10pt">WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE
LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED.



<P align="center" style="font-size: 10pt">29
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<P align="left" style="font-size: 10pt">The parties hereto have executed this Lease at the place and on the dates specified above their
respective signatures.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">Executed at:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Executed at:</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">On:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">On:</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top">By LESSOR:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By LESSEE:</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">FHL GROUP,
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">VIRCO MFG. CORPORATION,</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">a California corporation
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">a Delaware corporation</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">Name Printed:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name Printed:</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">By: /s/ Henry J. Harper, Jr.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By: /s/ Robert Dose</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top">By: Name Printed: Henry J. Harper, Jr.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name Printed: Robert Dose</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">Title: President
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title: Chief Financial Officer</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">Address: 2500 Paseo Del Mar
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Address: 2027 Harpers Way</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">Palos Verdes Estates, CA 90274
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Torrance, CA 90501</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">Telephone: (&#95;&#95;&#95;)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Telephone: (310)&nbsp;533-0474</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">Facsimile: (&#95;&#95;&#95;)
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facsimile: (&#95;&#95;&#95;)</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">Federal ID No.
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Federal ID No.</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top">BROKER:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BROKER:</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">Attn:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attn.:</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">Address:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Address:</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">Telephone:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Telephone:</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">Facsimile:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Facsimile:</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">Federal ID No.:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Federal ID No.:</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>

<P align="left" style="font-size: 10pt"><B>NOTE: These forms are often modified to meet the changing requirements of law and Industry needs.
Always write or call to make sure you are utilizing the most current form: AIR COMMERCIAL REAL
ESTATE ASSOCIATION, 700 So. Flower Street, Suite&nbsp;600, Los Angeles, California 90017. (213)
687.8777. Fax No. (213)&nbsp;687-8616</B>




<P align="center" style="font-size: 10pt">
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="center" style="font-size: 10pt"><B>ADDENDUM TO AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION<BR>
STANDARD INDUSTRIAL/COMMERCIAL SINGLE LESSEE LEASE &#151; NET</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless otherwise defined herein, capitalized terms used in this Addendum shall have the same
meanings as set forth in the Lease to which it is attached. In the event of any conflict or
inconsistency between this Addendum and the Lease, this Addendum shall control.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;51.&nbsp;<U><B>Early Possession; Lessee Improvements</B></U>. At any time after execution of this Lease,
subject to the terms and conditions of the Work Letter Agreement attached hereto as <U>Exhibit
A</U> (the &#147;<B>Work Letter</B>&#148;), Lessee shall be entitled to commence construction of the &#147;<B>Lessee
Improvements</B>&#148; (as that term is defined in the Work Letter), provided that: (i)&nbsp;Lessee&#146;s
construction of the Lessee Improvements in no way interferes with any other work of construction or
other work on any part of the Premises to be undertaken by Lessor, including, without limitation,
that set forth in Paragraph&nbsp;54 of this Addendum; (ii)&nbsp;Lessee delivers to Lessor before commencement
of the Lessee Improvements evidence of insurance coverage required under this Lease; (iii)&nbsp;Lessee
at all times during Lessee&#146;s construction of the Lessee Improvements keeps the Premises free of all
mechanic&#146;s, materialmen&#146;s and design professionals&#146; liens; and (iv)&nbsp;Lessee is not in default under
the Existing Lease. Lessee&#146;s entering the Premises and construction of the Lessee Improvements is
subject to compliance, at Lessee&#146;s sole expense, with all Applicable Requirements, including
procurement of all required permits and licenses.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;52.&nbsp;<U><B>Base Rent</B></U>. Base Rent during the Original Term shall be as follows:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Month</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Base Rent</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">February&nbsp;1, 2005 through July&nbsp;31, 2007
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$213,817.50 per month. As provided
below, one-half (1/2) of Base Rent
shall abate for February and March
2005.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">August&nbsp;1, 2007 through February&nbsp;28, 2010
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Increased based upon Consumer Price
Index (See below).</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Base Rent in effect on July&nbsp;31, 2007 shall be increased, effective August&nbsp;1, 2007, by an
amount equal to the greater of (A)&nbsp;three percent (3%) per annum, compounded, from February&nbsp;1, 2005
through July&nbsp;31, 2007 <U>or</U> (B)&nbsp;the annual percentage increase, if any, compounded, in the
Consumer Price Index-Urban Wage Earners and Clerical Workers (Los Angeles, All Items, Base:
1982-84=100) (the &#147;<B>Index</B>&#148;). However, the amount of such increase shall not exceed six percent (6%)
per annum, compounded, from February&nbsp;1, 2005 through July&nbsp;31, 2007. The Base Rent as so increased
shall remain in effect for the remainder of the Original Term. If on August&nbsp;1, 2007, the Index for
July&nbsp;2007 is not yet available, then Lessee shall pay the Base Rent as increased by the compounded
three percent (3%) calculation as set forth above until such time as the Index for July&nbsp;2007 is
available, at which time Lessee shall pay to Lessor any shortages in Base Rent payments based on
the July&nbsp;2007 Index.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By way of illustrating the Base Rent increase described above:




<P align="left" style="margin-left:4%; font-size: 10pt">(1)&nbsp;if the Index increases by 4% during the period from February&nbsp;1, 2005 to January
31, 2006, by 3% during the period from February&nbsp;1, 2006 to January&nbsp;31, 2007 and by
2.5% during the period from January&nbsp;31, 2007 to July&nbsp;31, 2007, then the increased
Base Rent effective August&nbsp;1, 2007 shall be $234,767.34; and



<P align="left" style="margin-left:4%; font-size: 10pt">(2)&nbsp;if the Index increases by 2% during the period from February&nbsp;1, 2005 to January
31, 2006 &#091;such that the stated minimum of 3% per annum would apply during such
12-month period&#093;, by 5% during the period from February&nbsp;1, 2006 to January&nbsp;31, 2007
and by 4% during the period from January&nbsp;31, 2007 to July&nbsp;31, 2007 &#091;such that the
maximum of 6% per annum would apply during such 6-month period, i.e., 3%&#093;, then the
increased Base Rent effective August&nbsp;1, 2007 shall be $238,180.94.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;One-half (1/2) of Base Rent only shall abate for February&nbsp;2005 and March&nbsp;2005 (collectively,
&#147;<B>Abated Rent</B>&#148;). During the period of Abated Rent, Lessee shall pay all other costs and fees due
and owing under this Lease. Lessee shall be credited with having paid all of the Abated Rent on
the expiration of the Term only if Lessee has fully, faithfully and punctually performed all of
Lessee&#146;s obligations, including without limitation the payment of all Rent (other than the Abated
Rent) and all other monetary obligations, and has surrendered the Premises and the Building in the
condition required by this Lease. Lessee acknowledges that its right to receive credit for the
Abated Rent is absolutely conditioned upon Lessee&#146;s full, faithful and punctual performance of all
its obligations under this Lease. If Lessee does not cure a default under the Lease within any
applicable notice period, the Abated Rent shall immediately become due and payable in full, and the
Lease shall be enforced as if there were no Abated Rent or other rent concession. In such case,
Abated Rent shall be calculated based on the full initial Base Rent payable under the Lease.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;53.&nbsp;<U><B>Lessee&#146;s Maintenance and Repair Obligations</B></U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is added to Paragraph&nbsp;7.1 of the Lease:




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Roof</U>. Lessee shall be responsible for certain components of the cost of
any Oven Related Repairs and for the costs of subsequent roof maintenance and repair, all as
and to the extent provided in Paragraph&nbsp;54(b)


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<P align="left" style="margin-left:3%; font-size: 10pt">of this Addendum. In addition, notwithstanding anything to the contrary in this Lease,
Lessee shall not place any equipment, machinery, fixtures or other items on the roof without
first obtaining Lessor&#146;s consent, which shall not be unreasonably withheld. Any such items
approved by Lessor shall in any event be installed in accordance with Paragraph&nbsp;7.3 of the
Lease.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>HVAC</U>. &#147;<B>HVAC</B>&#148; shall mean collectively all portions of the heating,
ventilation and air conditioning systems serving the Building. Prior to or promptly
following the Commencement Date, Lessor shall, at Lessee&#146;s sole cost and expense, contract
for a complete service of the HVAC with the contractor and the scope of work to be approved
in advance by Lessee, which approval shall not be unreasonably withheld, conditional or
delayed (the &#147;<B>Initial HVAC Service</B>&#148;). Following completion of the Initial HVAC Service,
responsibility for repair, maintenance and replacement of the HVAC shall be allocated as
follows:



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) With respect to the two (2)&nbsp;large roof top HVAC units servicing the office
area of the Building, (A)&nbsp;Lessor shall, at Lessee&#146;s sole cost and expense, procure
and maintain a contract for routine maintenance and repair, with the contractor,
scope of work, and monthly compensation to be approved in advance by Lessee, which
approval shall not be unreasonably withheld, conditional or delayed, and (B)&nbsp;Lessor
shall be responsible, at Lessor&#146;s sole cost and expense, for any costs of routine
maintenance and repair in excess of the foregoing approved monthly compensation and
for making any necessary capital repairs or replacements; and



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) With respect to all other components of the HVAC other than the above two
(2)&nbsp;large roof top HVAC units, (A)&nbsp;Lessee shall, at Lessee&#146;s sole cost and expense,
perform all routine maintenance and repair, and (B)&nbsp;Lessor shall, in Lessor&#146;s sole
discretion, make any capital repairs or replacements, in which event all costs of
such capital repairs or replacements shall be equally amortized on a straight-line
basis over its useful life not to exceed ten (10)&nbsp;years, and Tenant shall pay, as
additional Rent, such amortized amount throughout the remainder of the Original Term
and any Extension Period.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>Landscaping</U>. Lessee shall, at Lessee&#146;s sole cost and expense, procure and
maintain a contract, with copies to Lessor and in customary form and substance, and with a
contractor having the requisite skill and experience, for maintaining the Landscaping in a
manner that is consistent with landscaping for comparable buildings in the same general
vicinity as the Premises.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <U>Exterior Painting</U>. Between the thirty-seventh (37<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>) and
forty-eighth (48<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>) months of the Original Term, Lessee shall, at Lessee&#146;s sole
cost and expense, cause the entire exterior of the Building to be water blasted, caulked,
patched, primed and painted, provided that the contractor, the scope of work and the
materials used shall be subject to Lessor&#146;s prior approval, which shall not be unreasonably
withheld or delayed. Without limiting the foregoing, Lessee shall promptly repair
(including paint over) any vandalism; provided, however, Lessee shall have recourse to
insurance carried by Lessor to the extent any such vandalism is an insured risk thereunder.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <U>&#091;Intentionally Omitted.&#093;</U>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <U>Ovens</U>. Lessor acknowledges that Lessee has undertaken such repairs,
recalibrations, modifications or other corrections to Lessee&#146;s bake oven currently existing
in the Building that are intended to avoid any further damage to the roof or any other
portion of the Building; provided, however, notwithstanding such repairs, recalibrations,
modifications and/or other corrections, Lessee shall continue to be solely responsible for
any damage caused by or related to the existence or use of any ovens (including, without
limitation, such bake oven). Without limiting the foregoing and notwithstanding Lease
Paragraph&nbsp;7.4(c), upon expiration or earlier termination of this Lease, Lessee shall, at
Lessee&#146;s sole cost and expense, repair any damage to the Building that has been caused by
any ovens or as a result of any other operations of Lessee.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <U>Capital Expenditures</U>. Subject to any specific treatment of capital
repairs and/or expenditures elsewhere in this Paragraph&nbsp;7.1 and to Lessee&#146;s indemnification of
Lessor as set forth in Paragraph&nbsp;8.7, and without relieving Lessee of any liability resulting from
Lessee&#146;s failure to perform good maintenance, repair and replacement practices, if an item
described in Paragraph&nbsp;7.1(b) that is owned by Lessor cannot be repaired or replaced other than at
a cost in any one instance which is in excess of $25,000 and with a resulting useful life of more
than five (5)&nbsp;years (collectively, a &#147;<B>Capital Repair</B>&#148;), then the following provisions shall apply:



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Lessee shall notify Lessor in writing of the need for such Capital Repair
and shall provide for Lessor&#146;s prior approval, which shall not be unreasonably
withheld, conditioned or delayed, the proposed contractor, plans, scope of work and
cost for such Capital Repair;



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Following Lessor&#146;s approval of the proposed contractor, plans, scope of
work and cost, Lessee shall promptly cause such approved contractor to commence and
diligently perform such approved Capital Repair to completion in accordance with the
approved plans and all Applicable Requirements, and Lessee shall pay all costs
incurred in connection therewith;



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) The approved cost of such Capital Repair shall be amortized over the
useful life of the item in question (not in any event to exceed fifteen (15)&nbsp;years);
and



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) At the expiration of the Term (as it may be extended), Lessor shall pay to
Lessee an amount equal to the unamortized portion, if any, of such approved cost.


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<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the foregoing, the provisions of this Paragraph&nbsp;7.1(j) shall not apply to any
capital replacements or repairs that would otherwise qualify as Capital Expenditures but that were
not, as of the Commencement Date, repaired or replaced as required pursuant to the Existing Lease
(&#147;<B>Deferred Capital Repairs</B>&#148;). Lessee shall continue to be responsible, at Lessee&#146;s sole cost and
expense, under this Lease for the repair or replacement of all Deferred Capital Repairs.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;54.&nbsp;<U><B>Lessor&#146;s Repair and Maintenance Obligations</B></U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is added to Paragraph&nbsp;7.2 of the Lease:




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>In General</U>. Except as expressly set forth in Paragraph&nbsp;7.2 of the Lease
(as amended and supplemented by this Addendum Paragraph&nbsp;54), Lessor shall have no obligation
for the maintenance, replacement or repair of the Premises or any portion thereof. Lessor
shall, during the Term, at Lessor&#146;s sole cost and expense maintain in good, clean, safe, and
lawful order, condition and repair, ordinary wear and tear excepted: (i)&nbsp;the foundation of
the Building, (ii)&nbsp;the structural components of all exterior walls of the Building
(expressly excluding painting, as set forth in Paragraph&nbsp;7.1(g) above), (iii)&nbsp;the roof
structure and roof membrane of the Building as and to the extent provided in Paragraph
7.2(b)(ii), below (but subject to Paragraph&nbsp;7.1(i), above, and effective upon the assignment
of the Roof Warranties as provided below), and (iv)&nbsp;the HVAC as and to the extent provided
in Paragraph&nbsp;7.2(c), below. However, Lessee and not Lessor shall be responsible for the
prompt repair, at Lessee&#146;s sole cost, of any damage to any portion of the foregoing caused
by or through Lessee or its agents, employees, contractors, licensees or business invitees
(whether intentional, negligent or otherwise), including, without limitation, any such
damage caused by or related to the existence or use of Lessee&#146;s oven located within the
Building. Except as provided in Paragraphs 9 and 14 of the Lease, there shall be no
abatement of Rent and in no case shall there be any liability of Lessor to Lessee or any
other individual or entity by reason of (1)&nbsp;any injury to or interference with Lessee&#146;s
business arising from the making of any repairs, alterations or improvements in or to any
portion of the Premises or the Building as required of Lessor (unless such injury is
directly caused by Lessor&#146;s own gross negligence or willful act) or (2)&nbsp;any entry onto the
Premises by Lessor for purposes of making such repairs, alterations or improvements or any
other purpose. The scheduling of Lessor&#146;s repairs shall be reasonably coordinated with
Lessee, and Lessee may require that certain portions of the work be performed at night or on
weekends, provided that Lessee shall pay any incremental costs associated with scheduling
the work at those times. Subject to the effective assignment of the Roof Warranties, during
the Term of this Lease, Lessor shall commence the repair of any roof leaks within two (2)
business days after delivery of a notice thereof to the Roofing Contractor (or a replacement
roofing contractor designated by Landlord) together with a concurrent copy to Lessor.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Roof</U>.



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <U>Required Roof Repairs</U>. Lessee acknowledges that, as of the date of
this Lease, Lessor has to Lessee&#146;s satisfaction, repaired the Building roof
structure and roof to a commercially acceptable condition consistent with comparable
buildings in the general vicinity of the Building. Lessor acknowledges that, as of
the date of this Lease, Lessee has, to Lessor&#146;s satisfaction, commenced repair of
the damage to the roof membrane over Lessee&#146;s &#147;bake oven&#148; located in the factory
portion of the Building (the &#147;<B>Oven Related Repairs</B>&#148;), and Lessee shall diligently
complete the Oven Related Repairs to Lessor&#146;s reasonable satisfaction. Upon
completion of the Oven Related Repairs, Lessee shall assign to Lessor the warranty
for the Oven Related Repairs to be issued by Highland Roofing Company, and any
subcontractors performing any component of the Oven Related Repairs (collectively,
the &#147;<B>Roof Warranties</B>&#148;). During the course of the Oven Related Repairs and upon its
completion, Lessee shall deliver to Lessor all reports and permits issued in
connection with such work.



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <U>Subsequent Roof Repair and Maintenance</U>. Lessor shall procure and
maintain a contract, with copies to Lessee and in customary form and substance, and
with a contractor having the requisite skill and experience, for maintaining,
repairing and replacing, as necessary, the roof structure and roof membrane in a
manner that is consistent with comparable buildings in the same general vicinity as
the Premises. Lessee shall be responsible to pay all costs of such roof
maintenance, repair and replacement on a monthly basis as additional Rent; provided,
however, that during the Original Term, Lessor shall pay, and Lessee shall not be
responsible for, any such costs in excess of twelve thousand dollars ($12,000.00)
during any year of the Term, except that Lessee shall pay any such costs that are
caused by or related to the use or occupancy of the Premises by Lessee, its
employees, agents, contractors, business invitees or licensees. Concurrently with
the execution of this Lease, Lessee shall pay to Lessor the amount of $5,000.00
representing the cost of the roof maintenance contract procured by Landlord for the
period July through December&nbsp;2004.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <U>HVAC</U>. Lessor&#146;s obligations with respect to the HVAC shall be as and to the
extent provided in Paragraph&nbsp;7.1(e) (as set forth above in Paragraph&nbsp;53 of this Addendum).



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <U>Water Seepage</U>. Lessor shall perform work up to a maximum aggregate cost of
$50,000.00 to correct the water seepage problem in the main office area of the first floor
of the front office building, which work shall include the initial work recommended on pages
4 and 5 of that certain Drainage Investigation for Verco &#091;sic&#093; Manufacturing, dated December
17, 2004, prepared by DCA Civil Engineering Group (the &#147;<B>DCA Report</B>&#148;). Pursuant to the
recommendation of the DCA Report, Lessee shall, at Lessee&#146;s expense, cause all irrigation
systems to be checked, repaired and maintained in a good


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<P align="left" style="margin-left:3%; font-size: 10pt">working condition on a regular
schedule and shall keep the watering times along the west side of the Building on the berm
to a minimum.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <U>Trees and Skylights (40-60 Cost Sharing)</U>. Prior to the Commencement
Date, Lessor shall take reasonable steps to correct any problems caused by trees located in
the courtyard of the Building, including, without limitation, removing any trees having
roots causing interference with or damage to the Building&#146;s plumbing system, Premises
drainage, and/or Premises concrete. In addition, on or before the Commencement Date, Lessor
and Lessee shall in good faith jointly identify which skylights in the office area of the
Building are in need of repair or replacement because of breakage or leakage, and, upon such
joint determination, Lessor shall cause such repairs or replacements to be made. All costs
incurred by Lessor in performing the work required under this paragraph shall be paid sixty
percent (60%) by Lessor and forty percent (40%) by Lessee as additional Rent. Lessee&#146;s
payment shall be made within thirty (30)&nbsp;days of completion of such work and receipt by
Lessee of an invoice therefor.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <U>Parking Lots, Driveways and Yard Areas</U>. On a mutually agreeable schedule
within one (1)&nbsp;year following the Commencement Date: (A)&nbsp;Lessor shall repair the yard areas
of the Premises (including any damaged concrete, paving and slurry seal) as and to the
extent set forth in &#147;Parking Lot Maintenance and Repair Job Description&#148; of M&#038;M Contracting,
dated December&nbsp;7, 2004 as Proposal # 10200, a copy of which is attached hereto as
<U>Schedule&nbsp;2</U> (the &#147;<B>M&#038;M Scope of Work</B>&#148;), which costs up to $28,200 shall be borne by
Lessor and which costs above $28,200 for the M&#038;M Scope of Work shall be shared equally
between Lessor and Lessee, and (B)&nbsp;the Parties shall work together in good faith to identify
necessary repairs to the employee/southerly parking lot, the traffic areas, the curbs, and
the office/upper parking lot that are outside of the M&#038;M Scope of Work, including the extent
to which concrete shall be utilized for such repairs rather than asphalt (collectively, the
&#147;<B>Additional Parking Repairs</B>&#148;), Lessor shall diligently commence and complete the agreed upon
Additional Parking Lot Repairs, and one-half (1/2) of the costs of the Additional Parking
Lot Repairs shall be paid by Lessee to Lessor as additional rent within thirty (30)&nbsp;days
following delivery of an invoice therefor together with reasonable supporting documentation.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <U>Tree Trimming</U>. Lessee acknowledges that Lessor has trimmed the trees on
the Premises to the satisfaction of Lessee.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;55.&nbsp;<U><B>Insurance; Waiver of Subrogation</B></U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Paragraph&nbsp;8.1 of the Lease is supplemented to provide that Lessor reserves the right, if
there is a Breach by Lessee, or if required by any future lender having a security interest in all
or any portion of the Premises, to estimate the current actual cost of the insurance and to require
that such amount be paid in advance to Lessor by Lessee monthly in advance with the payment of
Base Rent. If Lessor so requires payment monthly in advance, the monthly payments shall be that
equal monthly amount which, over the number of months remaining before the month in which the
premiums for the insurance become due, would provide a fund large enough to fully pay the insurance
cost. When the actual amount of the applicable insurance cost is known, the amount of such equal
monthly advance payment shall be adjusted as required to provide the funds needed to pay the
applicable insurance cost when due. If the amounts paid to Lessor by Lessee under the provisions
hereof are insufficient to discharge the obligations of Lessee to pay such insurance cost as the
same becomes due, Lessee shall pay to Lessor, upon Lessor&#146;s demand, such additional sums as are
necessary to pay such obligation. If the amounts paid to Lessor by Lessee hereunder exceed the
amounts necessary to discharge the obligations of Lessee to pay such insurance cost, Lessor shall
credit to Lessee such overcharge against the next insurance cost payment that is due. All monies
paid to Lessor hereunder may be intermingled with other monies of Lessor and shall not bear
interest. In the event of a Breach by Lessee in the performance of any obligations of Lessee under
this Lease, then any balance of funds paid to Lessor under the provisions hereof may, at the option
of Lessor, be treated as an additional Security Deposit under Paragraph&nbsp;5.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Paragraph&nbsp;8.6 of the Lease is supplemented to provide that (i)&nbsp;nothing contained in such
Paragraph shall absolve Lessee of its obligations of maintenance and repair and payment of
insurance deductibles under the Lease and (ii)&nbsp;in the event that any loss is due to the act,
omission or negligence or willful misconduct of Lessee or any of its agents, employees,
contractors, sublessees or invitees, Lessee&#146;s liability insurance shall be primary and shall cover
all losses and damages prior to any other insurance.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;56.&nbsp;<U><B>Hazardous Substance Conditions</B></U>. Notwithstanding the provisions of Paragraph
6.2(g) of the Lease, Lessor shall only have obligations under the Lease with respect to a Hazardous
Substance Condition which has been caused by Lessor, and Lessor shall have no liability or expense
to Lessee for a Hazardous Substance Condition which has not been caused by Lessor.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;57.&nbsp;<U><B>Damage or Destruction</B></U>.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is added to Paragraph&nbsp;9 of the Lease:




<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.9 <B>Limited Obligation to Repair; Effect of Termination</B>. Lessor&#146;s obligation, should
it elect or be obligated to repair the Premises hereunder, shall be limited to the basic
shell and any improvements constructed by Lessor, and Lessee shall, at its expense, replace
or fully repair all Lessee&#146;s personal property, Trade Fixtures, Utility Installations,
Lessee Improvements and other items installed by or at the expense of Lessee and existing at
the time of such damage. If the Premises are to be repaired in accordance with the
foregoing, Lessee shall make available to Lessor any portion of insurance proceeds it
receives which are allocable to any Lessee Improvements installed by Lessor. Lessee shall
fully cooperate


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<P align="left" style="margin-left:3%; font-size: 10pt">with Lessor in removing Lessee&#146;s personal property, Trade Fixtures, and any
debris from the Premises to facilitate the making of repairs. If the Lease is terminated
pursuant to this Paragraph&nbsp;9, Lessor shall, subject to the rights of any Lenders, be
entitled to receive and retain all insurance proceeds resulting from or attributable to such
damage or destruction, except for proceeds payable under policies obtained by Lessee which
specifically insure Lessee&#146;s personal property and Trade Fixtures.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;58.&nbsp;<U><B>Utilities</B></U>. Paragraph&nbsp;11 of the Lease is supplemented to provide that (i)&nbsp;Lessee
shall cause all utilities to be placed in Lessee&#146;s name and for all utility charges to be directly
paid by Lessee to the applicable utility providers, and (ii)&nbsp;Lessor shall have no obligation,
liability or responsibility for the provision of utility services to the Premises or for any
interruption in same, and Lessee hereby waives all claims, damages and losses against Lessor
arising therefrom.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;59.&nbsp;<U><B>Lessee Right to Repair</B></U>. Notwithstanding anything to the contrary in Paragraph&nbsp;13
of the Lease, if Lessor fails to perform any of its repair obligations under Paragraph&nbsp;7.2 of the
Lease (as amended and supplemented by Addendum Paragraph&nbsp;54), Lessee is authorized to make repairs
as set forth below in this Paragraph&nbsp;59:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;<U>General Action</U>. If Lessee provides notice (the &#147;<B>First Notice</B>&#148;) to Lessor of an
event or circumstance which pursuant to Paragraph&nbsp;7.2 (as amended and supplemented by Addendum
Paragraph&nbsp;54) of the Lease requires Lessor to repair any element of the Premises (a &#147;<B>Required
Action</B>&#148;), and Lessor fails to provide the Required Action within thirty (30)&nbsp;days after receipt of
Lessee&#146;s First Notice to perform such repair obligation (provided that if the nature of the
Required Action is such that the same cannot be reasonably completed within a thirty (30)&nbsp;day
period, Lessor&#146;s time period for completion shall not be deemed to have expired if Lessor
diligently commences such cure within such period to the extent reasonably possible and thereafter
diligently proceeds to rectify and complete the Required Action, as soon as possible), then Lessee
may proceed to take the Required Action, pursuant to the terms of this Lease, provided Lessee first
delivers to Lessor a second notice specifying that Lessee will take the Required Action (the
"<B>Second Notice</B>&#148;) and Lessor fails to commence the Required Action within five (5)&nbsp;business days
after Lessor&#146;s receipt of the Second Notice (the &#147;<B>Second Cure Period</B>&#148;). To the extent Lessee is
permitted by this Paragraph&nbsp;59 to remedy any Required Action, Lessee shall contract with the
original contractor or, as necessary, the original subcontractor or supplier for the portion of the
Premises that is the subject of the Remedial Action unless such contractor, subcontractor or
supplier is unavailable or unwilling to do the work or supply the equipment, in which case Lessee
shall contract with a licensed and bonded contractor or supplier with at least ten (10)&nbsp;years of
continuous experience in the type of building work that is the subject of the Remedial Action
(each, a &#147;<B>Qualified Contractor</B>&#148;). Lessee shall obtain at least two (2)&nbsp;competitive bids from
Qualified Contractors and select the lowest responsible bid. Notwithstanding expiration of the
Second Cure Period and commencement of the Required Action, Lessor shall have the right at any time
to assume direct responsibility for the Required Action.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;<U>Emergency Action</U>. Notwithstanding the foregoing, if there exists an Emergency
Situation such that the Premises or any portion thereof are rendered untenantable and Lessee&#146;s
personnel are forced to cease the use of such area and if Lessee gives Lessor notice (the
"<B>Emergency Notice</B>&#148;) of Lessee&#146;s intent to take action with respect thereto (the &#147;<B>Necessary
Action</B>&#148;), and the Necessary Action is also a Required Action, and the Emergency Situation could be
cured by such Necessary Action, Lessee may take the Necessary Action through a Qualified Contractor
if Lessor does not commence the Necessary Action within one (1)&nbsp;business day after receipt of the
Emergency Notice (the &#147;<B>Emergency Cure Period</B>&#148;) and thereafter uses its best efforts and due
diligence to complete the Necessary Action as soon as possible; provided, however, notwithstanding
expiration of the Emergency Cure Period, Lessor shall have the right at any time to assume direct
responsibility for the Necessary Action. An &#147;<B>Emergency Situation</B>&#148; shall be any set of
circumstances that poses a direct and immediate threat to the health or safety of persons or and/or
of destruction of significant property.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;<U>Reimbursement for Action</U>. If any Required Action or Necessary Action is taken by
Lessee pursuant to the terms of this Paragraph&nbsp;59 then Lessee shall deliver a detailed written
invoice to Lessor, together with reasonable supporting documentation substantiating the actual
costs incurred by Lessee (the &#147;<B>Lessee Invoice</B>&#148;), and if Lessor does not deliver a written objection
to Lessee within fifteen (15)&nbsp;business days after receipt of the Lessee Notice, then Lessee shall
be entitled to reimbursement from Lessor of the amount set forth in such Lessee Invoice. If,
however, Lessor delivers to Lessee, within fifteen (15)&nbsp;business days after receipt of the Lessee
Invoice, a written objection to the payment of such Lessee Invoice, setting forth Lessor&#146;s reasons
for its claim that such Required Action did not have to be taken by Lessor pursuant to the terms of
this Lease or that the charges are excessive (in which case Lessor shall pay the amount it contends
would not have been excessive), then, as Lessee&#146;s
sole and exclusive remedy, the matter shall proceed to resolution by arbitration pursuant to
the then current commercial arbitration rules of the American Arbitration Association (&#147;<B>AAA</B>&#148;) with
venue in Los Angeles County, California, or if the AAA no longer exists, then a comparable
arbitration service mutually selected by Lessor and Lessee, and the costs of such arbitration shall
be paid to the prevailing party in the arbitration if and to the extent awarded by the arbitrator.
If Lessee obtains a final judgment against Lessor in such an arbitration proceeding and Lessor
fails to make payment to Lessee in the amount of such judgment within ten (10)&nbsp;days following
Lessee&#146;s demand for such payment, then Lessee shall have the right to deduct up to fifty percent
(50%) of the amount of Lessee&#146;s monthly Base Rent payments under this Lease until such time as
Lessee has deducted an amount equal to the amount of such judgment, together with interest on any
unpaid outstanding balance of such judgment that may exist from time to time, at the rate of ten
percent per annum.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;60.&nbsp;<U><B>Option to Extend</B></U>.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <U>Option</U>. Lessee shall have an option to extend the Term of this Lease (the
&#147;<B>Extension Option</B>&#148;) on the basis of each and all of the provisions contained in this Lease
as then amended for one (1)&nbsp;period of five (5)&nbsp;years (the &#147;<B>Extension Period</B>&#148;) commencing on
the day after expiration of the initial


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<P align="left" style="margin-left:3%; font-size: 10pt">Term, and unless sooner terminated pursuant to the
provisions hereof, ending on the last day of the fifth (5th) consecutive year thereafter.
Such option shall be exercised by Lessee, if at all, by giving written notice of exercise
(&#147;<B>Extension Notice</B>&#148;) to Lessor not less than twelve (12)&nbsp;months nor more than fifteen (15)
months prior to the expiration of the Original Term. Notwithstanding the foregoing, in the
event (i)&nbsp;Lessee is in Default under this Lease on the date the Extension Notice is given,
or (ii)&nbsp;Lessor has given Lessee three or more notices regarding Lessee&#146;s failure to pay rent
when due during the twelve months preceding the giving of such notice, or (iii)&nbsp;Lessee is in
Default on the date the Initial Lease Term expires, then in any such event the Extension
Option shall be deemed automatically terminated.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <U>Base Rent During Extension Period </U>. For the Extension Period, the
Base Rent shall be the &#147;Fair Market Rental Rate&#148; at the time the Extension Option is
exercised, which shall be established as follows:



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <U>Fair Market Rental Rate</U>. For the purposes of determining the
rental rate and other considerations during the Extension Period, the term &#147;Fair
Market Rental Rate&#148; shall mean the annual amount per square foot that comparable
lessors have accepted in then current transactions between non-affiliated parties
from non-equity lessees of comparable credit-worthiness, for comparable industrial
facilities, for a comparable use, and for a comparable period of time (&#147;<B>Comparable
Transactions</B>&#148;) within the South Bay Industrial Market of Los Angeles County (the
&#147;<B>Market Area</B>&#148;). In any determination of Comparable Transactions, appropriate
consideration shall be given to the extent of Lessee&#146;s liability under the lease
(including Lessor&#146;s payment obligations of casualty insurance premiums and Real
Property Taxes hereunder), length of the lease term, and the size and location of
premises being leased. Corresponding consideration must be given to abatement
provisions reflecting free rent and/or no rent during the period of construction or
subsequent to the commencement date, Lessee improvement allowances, brokerage
commissions, if any, all of which would be payable by Lessor in similar
transactions, but which would be offset by the actual cost to Lessee of relocating
its business operations from the Premises to other property or properties
(including, without limitation, moving costs, additional construction costs,
employee relocation costs, negotiation costs, administrative expenses, and costs of
business down-time). The determination of Fair Market Rental Rate shall also
include the determination of any periodic rental adjustments in methodology,
frequency, and amount during the Extension Period. The intent is that Lessee will
receive the same effective net economic benefit in the exercise of the Extension
Option that Lessee would receive if Lessee should decide to enter into a Comparable
Transaction.



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) <U>Delivery of Extension Notice</U>. Concurrently with and as a
condition to the effectiveness of the timely delivered Extension Notice, Lessee
shall provide Lessor with its good faith written estimate of the Fair Market Rental
Rate. Lessor shall have ten (10)&nbsp;business days (&#147;<B>Lessor&#146;s Review Period</B>&#148;) after
receipt of the Extension Notice with Lessee&#146;s good faith estimate of the Fair Market
Rental Rate within which to accept such rental or to reasonably object thereto in
writing. Failure of Lessor to so object in writing within Lessor&#146;s Review Period
shall conclusively be deemed its disapproval of the Fair Market Rental Rate
determined by Lessee. In the event Lessor objects, Lessor and Lessee shall attempt
to agree upon such Fair Market Rental Rate, using their best good faith efforts. If
Lessor and Lessee fail to reach agreement within twenty (20)&nbsp;days following Lessor&#146;s
Review Period (&#147;<B>Outside Agreement Date</B>&#148;), then each party shall place in a separate
sealed envelope their final proposal as to Fair Market Rental Rate and such
determination shall be submitted to arbitration in accordance with subsections (1)
through (6)&nbsp;below.



<P align="left" style="margin-left:9%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Lessor and Lessee shall meet with each other within five (5)
business days of the Outside Agreement Date and exchange the sealed
envelopes and then open such envelopes in each other&#146;s presence. If Lessor
and Lessee do not mutually agree upon the Fair Market Rental Rate within
five (5)&nbsp;business days of the exchange and opening of envelopes, then,
within ten (10)&nbsp;business days of the exchange and opening of envelopes
Lessor and Lessee shall each appoint a single arbitrator who shall by
profession be an industrial real estate broker who shall have been active on
a full-time
basis over the immediately preceding five (5)&nbsp;year period ending on the
date of such appointment in the leasing of industrial properties in the
Market Area. Lessor&#146;s broker and Lessee&#146;s broker shall then together
appoint a single arbiter with the foregoing qualifications within five (5)
business days thereafter (the &#147;<B>Arbiter</B>&#148;). Neither Lessor nor Lessee shall
consult with the Arbiter as to his or her opinion as to Fair Market Rental
Rate prior to the appointment. The determination of the Arbiter shall be
limited solely to the issue of whether Lessor&#146;s or Lessee&#146;s submitted Fair
Market Rental Rate for the Premises is the closest to the actual Fair Market
Rental Rate for the Premises as determined by the Arbiter taking into
account the requirements of Paragraph&nbsp;60(b)(i) above. The Arbiter may hold
such hearings and require such briefs as the Arbiter, in his or her sole
discretion, determines is necessary. In addition, Lessor or Lessee may
submit to the Arbiter with a copy to the other party within five (5)
business days after the appointment of the Arbiter any market data and
additional information that such party deems relevant to the determination
of Fair Market Rental Rate (&#147;<B>FMRR Data</B>&#148;) and the other party may submit a
reply in writing within five (5)&nbsp;business days after receipt of such FMRR
Data.


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<P align="left" style="margin-left:9%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The Arbiter shall, within thirty (30)&nbsp;days of his or her
appointment, reach a decision as to whether the parties shall use Lessor&#146;s
or Lessee&#146;s submitted Fair Market Rental Rate, and shall notify Lessor and
Lessee of such determination.



<P align="left" style="margin-left:9%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) The decision of the Arbiter shall be binding upon Lessor and
Lessee.



<P align="left" style="margin-left:9%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) If Lessor&#146;s broker and Lessee&#146;s broker fail to agree upon and
appoint an arbitrator as set for in (a)&nbsp;above, then the appointment of the
arbitrator shall be made by the Presiding Judge of the Los Angeles County
Superior Court, or, if he or she refuses to act, by any judge having
jurisdiction over the parties.



<P align="left" style="margin-left:9%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) The cost of arbitration shall be paid by the party whose estimate
of Fair Market Rental Value is determined to be the farther from the actual
Fair Market Rental Value.



<P align="left" style="margin-left:9%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6) Notwithstanding anything to the contrary in this Paragraph&nbsp;60, in
no event shall the Fair Market Rental Rate determined pursuant to this
Paragraph&nbsp;60 be less than the Base Rent in effect for the last month of the
initial Term.



<P align="left" style="margin-left:6%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) <U>Increase of Base Rent</U>. The Base Rent in effect on the thirtieth
(30<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>) month of the Extension Period shall be increased, effective on the
first (1<SUP style="font-size: 85%; vertical-align: text-top">st</SUP>) day of the thirty-first (31<SUP style="font-size: 85%; vertical-align: text-top">st</SUP>) month of the
Extension Period, by an amount equal to the greater of (A)&nbsp;three percent (3%) per
annum, compounded, from the first (1<SUP style="font-size: 85%; vertical-align: text-top">st</SUP>) day of the Extension Period
through the end of the thirtieth (30<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>) month of the Extension Period,
<U>or</U> (B)&nbsp;the annual percentage increase, if any, compounded, in Index.
However, the amount of such increase shall not exceed six percent (6%) per annum,
compounded, from the first (1<SUP style="font-size: 85%; vertical-align: text-top">st</SUP>) day of the Extension Period through the
end of the thirtieth (30<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>) month of the Extension Period.


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<P align="center" style="font-size: 10pt"><U><B>EXHIBIT A</B></U>



<P align="center" style="font-size: 10pt"><U><B>WORK LETTER AGREEMENT</B></U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the lease to which this Work Letter Agreement is attached (the &#147;<B>Lease</B>&#148;),
and in consideration of the mutual covenants hereinafter contained, Lessor and Lessee agree as
follows:


<P align="left" style="font-size: 10pt">1. <U>IMPROVEMENTS</U>.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1 <U>Delivery of Premises &#147;As-Is&#148;</U>. Lessor shall deliver possession of the Premises to
Lessee upon execution of the Lease, and Lessee shall accept the Premises and the condition of the
Building from Lessor, in their existing &#147;as-is&#148; condition as of the date possession of the Premises
is delivered by Lessor to Lessee, with all defects and faults, without any obligation on Lessor&#146;s
part to pay or provide for any improvements, refurbishment or demolition work for the Premises or
the Building, subject to Lessor&#146;s contribution of the Lessee Improvement Allowance (as defined
below) and Lessor&#146;s performance of Lessor&#146;s obligations pursuant to Paragraph&nbsp;54 of the Addendum.
Lessee shall be solely responsible, at its sole cost and expense as part of the Lessee Improvements
(defined below), subject to Lessor&#146;s contribution of the Lessee Improvement Allowance, for any
modifications required to be made to the existing HVAC systems (including connection to
distribution from the Building&#146;s HVAC systems) and electrical systems. Lessee shall be solely
responsible for bringing the Premises into compliance with the requirements of the ADA except to
the extent (a)&nbsp;the Premises were not in compliance with the requirements of the ADA in effect prior
to Lessee&#146;s first occupancy of the Premises pursuant to the Existing Lease and (b)&nbsp;required
compliance was not affected or triggered by Lessee&#146;s use of or work in the Premises.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2 <U>Lessee Improvements</U>. The tenant improvements for the Premises, which shall be
constructed by Lessee at Lessee&#146;s sole cost and expense (except as provided in Paragraph&nbsp;2.2 below
with respect to the Lessee Improvement Allowance), shall include interior office wall coverings and
painted surfaces, new carpet, new or refurbished bathrooms, exterior and interior lighting
enhancement, window and skylight treatments, interior office ceilings and removable office
partitions (the &#147;<B>Lessee Improvements</B>&#148;). Except to the extent set forth in the immediately
preceding sentence, the Lessee Improvements shall not include and the Lessee Improvement Allowance
shall not be used for items such as Lessee&#146;s furniture, furnishings, equipment, computer systems,
work stations, telephones, and/or other personal property which are Lessee&#146;s personal property or
which would normally be considered to be personal property items belonging to a tenant, whether or
not affixed to the Premises. Lessee may install non-Lessee Improvement items during the same time
period as the construction of the Lessee Improvements.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3 <U>Permits</U>. Lessee shall be responsible for obtaining and maintaining any necessary
governmental permits, including applicable building permits and approvals, relating to the Lessee
Improvements.


<P align="left" style="font-size: 10pt">2. <U>TENANT IMPROVEMENT COSTS/ALLOWANCE</U>.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1 <U>Lessee Improvement Costs</U>. As used herein, the term &#147;<B>Lessee Improvement Costs</B>&#148;
shall mean all of the costs to design, construct and install the Lessee Improvements, but expressly
excluding any costs of Lessee&#146;s systems or equipment, which actually constitute or would normally
constitute Lessee&#146;s personal property; such personal property-type items, together with Lessee&#146;s
furniture, equipment and other personal property (collectively, &#147;<B>FF&#038;E</B>&#148;), are not and shall not be
considered part of the Lessee Improvements. The FF&#038;E shall be paid for by Lessee at its sole cost
and expense and not out of the Improvement Allowance. The Lessee Improvement Costs shall also
include the cost difference between asphalt and concrete if Lessee elects to replace damaged
asphalt in the yard with concrete as provided in Paragraph&nbsp;7.2(f).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2 <U>Lessee Improvement Allowance</U>. Lessee shall be solely responsible for payment on a
timely, lien-free basis the entire Lessee Improvement Costs; provided, however, that Lessor shall
contribute for the benefit of Lessee an allowance of up to, but not exceeding, one hundred
twenty-five thousand dollars ($125,000.00) (the &#147;<B>Lessee Improvement Allowance</B>&#148;) to pay the Lessee
Improvement Costs. The Lessee Improvement Allowance shall be disbursed in the manner described in
Paragraph&nbsp;2.3, below, and shall be used solely to assist Lessee in the payment of the Lessee
Improvement Costs. All items of Lessee Improvements, whether or not the cost thereof is covered by
the Lessee Improvement Allowance, shall become the property of Lessor upon their installation in
the Premises and shall remain on the Premises at all times during and upon expiration of the Term.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3 <U>Disbursement of Lessee Improvement Allowance</U>. The Lessee Improvement Allowance
shall be paid in up to three (3)&nbsp;disbursements on the basis set forth below. Lessee shall submit
to Lessor, upon or following payment to the contractor(s) from Lessee&#146;s own funds, a written
request for disbursement of all or a portion of the Lessee Improvement Allowance (&#147;<B>Request</B>&#148;). The
Request shall include a copy of all bills and invoices (&#147;<B>Bills and Invoices</B>&#148;) which Lessee has or
is required to pay and a certification from any contractors that performed any of the Lessee
Improvement work that the amount set forth in the Request has been paid, together with a copy of
appropriate (as determined by Lessor in its reasonable discretion) final or partial lien releases
and waivers, as the case may be, and all other information reasonably requested by Lessor. Upon
Lessor&#146;s (a)&nbsp;receipt of such Bills and Invoices, information, and lien releases and waivers, (b)
Lessor&#146;s determination that no person or entity has any right to file a mechanic&#146;s, materialmen&#146;s
or design professional&#146;s lien against the Premises, (c)&nbsp;determination that no substandard work
exists which adversely affects the Building systems or the structural or exterior appearance of the
Building, and (d)&nbsp;with respect to the disbursement of the last 20% of the Lessee Improvement
Allowance, determination that the Lessee Improvements are finally complete, Lessor shall issue a
check equal to the sum of the Bills and Invoices but not to exceed the amount of the Lessee
Improvement Allowance. Notwithstanding anything to the contrary in the Lease or in this Work
Letter Agreement, Lessor shall have no obligation to pay, and Lessee


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<DIV style="font-family: 'Times New Roman',Times,serif">



<P align="left" style="font-size: 10pt">shall have no right to receive, any portion of the Lessee Improvement Allowance if all of the
conditions set forth in the immediately preceding sentence have not been satisfied by the date that
is one (1)&nbsp;year after the date of this Lease.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4 <U>Credit For Unused Portion of the Lessee Improvement Allowance</U>. Any unused portion
of the Lessee Improvement Allowance upon completion of the Lessee Improvements shall not be
refunded to Lessee.


<P align="left" style="font-size: 10pt">3. <U>CONSTRUCTION OF TENANT IMPROVEMENTS</U>.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 <U>Lessee&#146;s Agents</U>. All contractors, subcontractors, laborers, material suppliers
used by Lessee are referred to herein, collectively, as &#147;<B>Lessee&#146;s Agents.</B>&#148;


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 <U>Lessor&#146;s General Conditions for Lessee&#146;s Agents and Lessee Improvement Work</U>.
Lessee&#146;s and Lessee&#146;s Agent&#146;s shall not, in any way, interfere with, obstruct, or delay, any other
work in the Building.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3 <U>Governmental Compliance</U>. Lessee shall cause Lessee&#146;s Agents to construct the
Lessee Improvements in compliance with the following: (i)&nbsp;all state, federal, city or quasi
governmental laws, codes, ordinances and regulations, as each may apply according to the rulings of
the controlling public official, agent or other person; (ii)&nbsp;applicable standards of the American
Insurance Association (formerly, the National Board of Fire Underwriters) and the National
Electrical Code; and (iii)&nbsp;building material manufacturer&#146;s specifications.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4 <U>Notice of Completion</U>. Within ten (10)&nbsp;days after Substantial Completion of
construction of the Lessee Improvements, Lessee shall property mail a Notice of Completion and
cause such Notice of Completion to be recorded in the office of the Recorder of the County of Los
Angeles in accordance with Section&nbsp;3093 of the Civil Code of the State of California or any
successor statute, and shall furnish a copy thereof to Lessor upon such recordation. If Lessee
fails to do so, Lessor may execute, mail and file the same on behalf of Lessee as Lessee&#146;s agent
for such purpose, at Lessee&#146;s sole cost and expense.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5 <U>Construction of Lessee Improvements</U>. Following Lessee&#146;s obtaining of all
applicable permits and governmental approvals, Lessee shall cause the Lessee Improvements to be
diligently and expeditiously constructed, lien free and asbestos free, in accordance such permits
and approvals. If in the reasonable judgment of Lessor the presence of Lessee&#146;s Agents and the
work that is being performed by Lessee&#146;s Agents unreasonably and materially disrupts work being
performed by Lessor in the Building, or cause labor difficulties, Lessor shall have the right, on
twenty-four (24)&nbsp;hours written notice to Lessee, to order any or all of Lessee&#146;s work to cease for
as long as reasonably required by Lessor.


<P align="left" style="font-size: 10pt">4. <U>INSURANCE REQUIREMENTS</U>.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1 <U>General Coverages</U>. All of Lessee&#146;s Agents shall carry worker&#146;s compensation
insurance covering all of their respective employees, and shall also carry public liability
insurance, including property damage, all with limits, in form and with companies as are required
to be carried by Lessee as set forth in the Lease, and the policies therefor shall insure Lessor,
Lessor&#146;s managing agent and Lessee as their interests may appear.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2 <U>Special Coverages</U>. Lessee shall carry &#147;Builder&#146;s All Risk&#148; insurance in an amount
approved by Lessor covering the construction of the Lessee Improvements and such other insurance as
Lessor may require. Such insurance shall be in amounts and shall include such extended coverage
endorsements as may be reasonably required by Lessor.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3 <U>General Terms</U>. Certificates for all insurance carried pursuant to this Paragraph
4.3 shall be delivered to Lessor before the commencement of construction of the Lessee
Improvements. All such policies of insurance must contain a provision that the company writing the
policy will give Lessor thirty (30)&nbsp;days prior written notice of any cancellation or lapse of the
effective date or any reduction in the amounts of such insurance. In the event that the Lessee
Improvements are damaged by any cause during the course of the construction thereof, Lessee shall
immediately repair the same at Lessee&#146;s sole cost and expense. Lessee&#146;s Agents shall maintain all
of the foregoing insurance coverage in force until the Lessee Improvements are fully completed.
All insurance, except Workers&#146; Compensation, maintained by Lessee&#146;s Agents shall preclude
subrogation claims by the insurer against anyone insured thereunder. Such insurance shall provide
that it is primary insurance as respects the owner and that any other insurance maintained by owner
is excess and noncontributing with the insurance required hereunder. The requirements for the
foregoing insurance shall not derogate from the provisions for indemnification of Lessor by Lessee
under Paragraph&nbsp;5 of this Work Letter Agreement.

<P align="left" style="font-size: 10pt">5. <U>INDEMNITY</U>. Lessee&#146;s indemnities of Lessor as set forth in the Lease shall also apply
with respect to any and all costs, losses, damages, injuries and liabilities related in any way to
any act or omission of Lessee or Lessee&#146;s Agents, or anyone directly or indirectly employed by any
of them, or in connection with Lessee&#146;s non-payment of any amount arising out of the Lessee
Improvements required to be paid by Lessee. Such indemnities by Lessee shall also apply with
respect to any and all costs, losses, damages, injuries and liabilities related in any way to
Lessor&#146;s performance of any ministerial acts reasonably necessary, (i)&nbsp;to permit Lessee to complete
the Lessee Improvements, and (ii)&nbsp;to enable Lessee to obtain any building permit, temporary
certificate of occupancy or certificate of occupancy for the Premises, except to the extent that
such costs, losses, damages, injuries or liabilities are caused by Lessor&#146;s gross negligence or
willful misconduct.



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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt">6. <U>COMMENCEMENT DATE; SUBSTANTIAL COMPLETION</U>.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1 <U>Commencement Date</U>. The Commencement Date shall be as set forth in the Lease,
notwithstanding that the Lessee Improvements are not yet substantially complete as of that date.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2 <U>Substantial Completion</U>. For purposes hereof, &#147;<B>Substantial Completion</B>&#148; of the
Lessee Improvements shall occur (i)&nbsp;upon the completion of construction of the Lessee Improvements
pursuant to the approved Plans, with the exception of any punchlist items and any Lessee fixtures,
furniture, equipment or other personal property, and (ii)&nbsp;any and all inspections, certificates of
occupancy or other approvals have been performed, issued or given for the Premises by the
appropriate governmental authorities.


<P align="left" style="font-size: 10pt">7. <U>MISCELLANEOUS</U>.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1 <U>Clean-Up Expenses</U>. Following Substantial Completion of the Lessee Improvements,
Lessee shall, at its cost, be responsible for all clean-up of the interior and exterior to the
Premises necessitated by construction of the Lessee Improvements.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2 <U>Lessee&#146;s Lease Default</U>. Notwithstanding any provision to the contrary contained in
this Lease, if a default by Lessee as described in the Lease, or a default by Lessee under this
Work Letter Agreement, has occurred at any time on or before Substantial Completion of the Lessee
Improvements, and such default remains uncured after the applicable notice and cure periods under
the Lease, then (a)&nbsp;in addition to all other rights and remedies granted to Lessor pursuant to the
Lease, Lessor shall have the right to withhold payment of all or any portion of the Lessee
Improvement Allowance, and/or Lessor may cause the Lessee&#146;s Agents to cease the construction of the
Lessee Improvements (in which case Lessee shall be responsible for any delay in the Substantial
Completion of the Lessee Improvements caused by such work stoppage), and (b)&nbsp;all other obligations
of Lessor under the terms of this Work Letter Agreement shall be forgiven until such time as such
default is cured pursuant to the terms of the Lease.


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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><U><B>EXHIBIT B</B></U>



<P align="left" style="font-size: 10pt">RECORDING REQUESTED BY AND<BR>
WHEN RECORDED MAIL TO:

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" >&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Attn:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR><TD>&nbsp;</TD></TR>
<TR style="font-size: 1px">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" >&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="right" style="font-size: 10pt">(SPACE ABOVE THIS LINE FOR RECORDER&#146;S USE)



<P align="center" style="font-size: 10pt"><U>SUBORDINATION, NON-DISTURBANCE</U><BR>
<U>AND ATTORNMENT AGREEMENT</U>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;&nbsp;&nbsp;</TD>
    <TD>THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (&#147;<B>Agreement</B>&#148;) is entered into as of
&#95;&#95;&#95;, 2004, among VIRCO MFG. CORPORATION, a Delaware corporation (&#147;<B>Tenant</B>&#148;), FHL GROUP, a
California corporation (&#147;<B>Borrower</B>&#148;), 1219 Morningside Drive, Suite&nbsp;213, Manhattan Beach, CA 90266,
and &#95;&#95;&#95;(&#147;<B>Lender</B>&#148;), whose address is &#95;&#95;&#95;.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt"><U>RECITALS:</U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;Tenant is the lessee or successor o the lessee and Borrower is the lessor or successor to
the lessor of a certain lease dated &#95;&#95;&#95;, 2004 (the &#147;<B>Lease</B>&#148;).


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;Lender has made, or will make, to Borrower a mortgage loan to be secured by a Mortgage,
Deed to Secure a Debt, or Deed of Trust and Security Agreement from Borrower to Lender (the
&#147;<B>Mortgage</B>&#148;) on the fee title and/or leasehold interest in the real estate, wherein the premises
covered by the Lease are located, as described in <U>Exhibit&nbsp;A</U> attached hereto.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;Borrower and Lender have executed, or will execute, an Absolute Assignment of Leases and
Rents (the &#147;<B>Assignment</B>&#148;) pursuant to which the Lease is assigned to Lender.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;Lender has required the execution of this Agreement by Borrower and Tenant as a condition
to Lender making the requested mortgage loan or consenting to the Lease.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;E.&nbsp;Tenant acknowledges as its consideration for entering into this Agreement that Tenant will
benefit by entering into an agreement with Lender concerning their relationship in the event of
foreclosure of the Mortgage by Lender.


<P align="center" style="font-size: 10pt"><U>AGREEMENT:</U>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce Lender to make the requested mortgage loan or consent to the
Lease, Tenant, Borrower, and Lender hereby agree and covenant as follows:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;<U>Assignment of Rents</U>. Borrower hereby acknowledges, confirms, and agrees that the
Lease has been, or will be, assigned to Lender pursuant to the Assignment, and Lender acknowledges
that the Assignment contains a license back to Borrower permitting Borrower to collect all rents,
income, and other sums payable under the Lease.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;<U>Revocation of License-Back</U>. Upon revocation, pursuant to the Assignment, of the
license back, Borrower acknowledges that all rents, income, and other sums payable under the Lease
shall be paid to Lender.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;<U>Covenants for Benefit of Lender</U>. Tenant and Borrower agree for the benefit of
Lender that:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>Tenant shall not pay and Borrower shall not accept, any rent or
additional rent more than one month in advance; and</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(b)&nbsp;&nbsp;</TD>
    <TD>Tenant and Borrower will not enter into any agreement for the
cancellation, surrender, amendment, or modification of the Lease without
Lender&#146;s prior written consent. Tenant will not terminate the Lease because of
a default thereunder by Borrower unless Tenant shall have first given Lender
notice and a reasonable opportunity to cure such default.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;<U>Subordination</U>. Tenant and Lender hereby agree that the Lease is and shall at all
times be subject and subordinate in all respects to the Mortgage and to all renewals,
modifications, and extensions thereof, subject to the terms and conditions hereinafter set forth in
this Agreement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;<U>Non-Merger</U>. Borrower, Tenant, and Lender agree that unless Lender shall otherwise
consent in writing, the fee title to, or any leasehold interest in, the real estate and the
leasehold estate created by the Lease shall not merge but shall remain separate and distinct,
notwithstanding the union of said estates either in the Borrower or the Tenant or any third party
by purchase, assignment, or otherwise.


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U>Non-Disturbance and Attornment</U>. If the interests of Borrower in the real estate
are acquired by Lender or any third party purchaser by foreclosure, deed in lieu of foreclosure, or
any other method:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>If Tenant shall not then be in default in the payment of rent
or other sums due under the Lease or be otherwise in material default under the
Lease, Lender agrees that the Lease and the rights of Tenant thereunder shall
continue in full force and effect and shall not be terminated or disturbed
except in accordance with the terms of the Lease or this Agreement;</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(b)&nbsp;&nbsp;</TD>
    <TD>Tenant agrees to attorn to Lender as its lessor; Tenant shall
be bound under all of the terms, covenants, and conditions of the Lease for the
balance of the term thereof remaining, including any renewal options which are
exercised in accordance with the terms of the Lease;</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(c)&nbsp;&nbsp;</TD>
    <TD>The interests so acquired shall not merge with any other
interests of Lender in the real estate if such merger would result in the
termination of the Lease; and</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(d)&nbsp;&nbsp;</TD>
    <TD>If, notwithstanding any other provisions of this Agreement, the
acquisition by Lender of the interest of Borrower in the real estate results,
in whole or part, in the termination of the Lease, there shall be deemed to
have been created a lease between Lender and Tenant on the same terms and
conditions as the Lease for the remainder of the term of the Lease, with
renewal options, if any.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">The provisions of this paragraph shall be effective and self-operative immediately upon Lender
succeeding to the interests of Borrower without the execution of any other instrument.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;<U>Liability of Lender as Landlord</U>. If the interests of Borrower in the real estate
are acquired by Lender by foreclosure, deed in lieu of foreclosure or any other method, Lender
shall be bound to Tenant under all of the terms, covenants, and conditions of the Lease, and Tenant
shall, from and after Lender&#146;s acquisition of the interests of Borrower in the real estate, have
the same remedies against Lender for the breach of the Lease that Tenant would have had under the
Lease against Borrower if Lender had not succeeded to the interests of Borrower, provided, however,
that Lender shall not be:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(a)&nbsp;&nbsp;</TD>
    <TD>Liable for any act or omission of any landlord (including
Borrower) prior to the date of Lender&#146;s acquisition of the interests of
Borrower in the real estate; or</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(b)&nbsp;&nbsp;</TD>
    <TD>Subject to any offsets or defenses which Tenant might have
against any landlord (including Borrower) prior to the date of Lender&#146;s
acquisition of the interests of Borrower in the real estate; or</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(c)&nbsp;&nbsp;</TD>
    <TD>Liable for the return of any security deposit under the Lease
unless such security deposit shall have been actually deposited with Lender; or</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">(d)&nbsp;&nbsp;</TD>
    <TD>Liable to Tenant, whether before or after Lender acquires
Borrower&#146;s interest in the real estate, (i)&nbsp;under any indemnification
provisions set forth in the Lease (including, without limitation, any
environmental indemnification) or (ii)&nbsp;for any damages Tenant may suffer as a
result of any representation set forth in the Lease, the breach of any warranty
set forth in the Lease, or any act of, or failure to act by any party other
than Lender and its agents, officers, and employees.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;<U>Miscellaneous</U>. This Agreement may not be modified orally or in any other manner
except by an agreement in writing signed by the parties hereto or their respective
successors-in-interest. This Agreement shall inure to the benefit of and be binding upon the
parties hereto, their respective heirs, successors, and assigns. Upon recorded satisfaction of the
Mortgage this Agreement shall become null and void and be of no further effect.

<P align="left" style="font-size: 10pt">IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first
above written.



<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">TENANT: &nbsp;</TD>
    <TD colspan="3" align="left">VIRCO MFG. CORPORATION,<BR><BR>
a Delaware corporation<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-bottom: 1px solid #000000">Its:</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">BORROWER: &nbsp;</TD>
    <TD colspan="3" align="left">FHL GROUP,<BR>
a California corporation<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Henry J. Harper, Jr.&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">President&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">LENDER:&nbsp;</TD>
    <TD colspan="3" align="left"><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-bottom: 1px solid #000000">Its:</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><U><B>SCHEDULE 1</B></U>



<P align="center" style="font-size: 10pt"><U><B>&#147;WAREHOUSE CONDITION&#148;</B></U>




<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Schedule is intended to supplement and provide clarification to the definition of &#147;Warehouse
Condition&#148;. The parties agree that it is their general intent that, upon surrender of the
Premises, Lessee will leave the Building in &#147;Warehouse Condition&#148; as itemized below. The parties
acknowledge that this surrender condition of the Premises will reflect the condition of the
Building had Lessee&#146;s predecessor been permitted to continue to remove all items in the remainder
of the Building to the same extent as it removed all improvements as reflected in the &#147;condition of
the eastern warehouse section of the Building&#148; (as set forth in Exhibit&nbsp;D of the Existing Lease) on
its delivery to Lessee pursuant to the Existing Lease. (<I>i.e., </I>the previous tenant had removed all
items related to its operation and left little more than the original Building lights and
sprinklers in this section; had the previous tenant continued its restoration, then the entire
facility would have been restored like the eastern section.)


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accordingly, without limiting Section&nbsp;7.3(c) of the Lease, Lessee shall, at its sole cost and
expense, upon the expiration or earlier termination of the Lease, perform the following:


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Removal of the following to restore facility to &#147;Warehouse Condition&#148;:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">1.&nbsp;&nbsp;</TD>
    <TD>Tool crib and related contents. Work to include removing wire mesh
fencing, racks, data and phone, air and power drops (lighting to remain).</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">2.&nbsp;&nbsp;</TD>
    <TD>Product testing area and contents. Work to include removing wire mesh
fencing, racks, data and phone. Remove extensions for high bay lights.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">3.&nbsp;&nbsp;</TD>
    <TD>Demag brand overhead crane and crane rails. Work to include removing Rails,
hoist and power.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">4.&nbsp;&nbsp;</TD>
    <TD>All wall racks and storage bins. Work to include Tubemill bay racks and
all other racks and bins installed before or after the commencement of the Existing
Lease.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">5.&nbsp;&nbsp;</TD>
    <TD>Tube mill area and Hazmat storage area. Test soil under oil pits and fill
pits. Remove any oil saturated concrete or dirt.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">6.&nbsp;&nbsp;</TD>
    <TD>All guard rails, posts, fencing, etc. Fencing work to include fencing
around the front of the building (South and West side of Traffic perking lot),
marketing storage area, and model shop. Fencing work excludes East, North and West
perimeter of building. At election of Lessor, outside perimeter fencing may remain.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">7.&nbsp;&nbsp;</TD>
    <TD>All overhead/wall mounted/column mounted/roof mounted utility runs,
abandoned or otherwise. This is to include air, gas, water, electrical, ventilation.
Clearing shall include removal of all hangers and brackets affixing them to beams,
columns, walls and all sub-panels servicing machinery. High bay lighting panels to
remain, panels providing power to office areas and restrooms, emergency lighting
panels, along with panels providing power to PIV and air conditioners.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">8.&nbsp;&nbsp;</TD>
    <TD>All underground utilities that are not needed for emergency services,
lighting or offices areas will be disconnected. The utility risers through the
concrete for these disconnected utilities will be removed and filled will the
appropriate material.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">9.&nbsp;&nbsp;</TD>
    <TD>All ventilation ducting and ventilation equipment with associated repairs
to any penetrations made. Work to include factory and warehouse exhaust / makeup air
and vacuum lines, wood grinder, along with dust collection system in wood shop and
any additions made after lease commencement. However, all gas powered space heaters
mounted high on columns and associated gas line runs in the manufacturing areas are
to remain.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">10.&nbsp;&nbsp;</TD>
    <TD>Plastic top area. Mezzanine assembly including lower level sprinklers and
fluorescent lighting.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">11.&nbsp;&nbsp;</TD>
    <TD>All roof mounted equipment (<U>e.g.</U>, cooling towers, exhaust motors,
utility runs, paint line chains and rails) and repair of all roof penetrations.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">12.&nbsp;&nbsp;</TD>
    <TD>Blue surf oven and support mezzanine, utility runs, sprinklers and
conveyor.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">13.&nbsp;&nbsp;</TD>
    <TD>Outside forklift and cardboard shed areas. Work to include removing
forklift shop; cardboard shed; Gas storage area tanks, racks and walls; propane
storage area; and utilities for these areas and repair of asphalt as needed.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">14.&nbsp;&nbsp;</TD>
    <TD>Finishing System to include: All parts conveyors including hangers,
tracks, chain, motors, safety pans, drive units.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">15.&nbsp;&nbsp;</TD>
    <TD>Washer. Clear entire room, repair foils, fill in trench and pits and add
high bay lighting.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">16.&nbsp;&nbsp;</TD>
    <TD>Dry off oven. Clear entire room, repair foils. and add high bay lighting</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">17.&nbsp;&nbsp;</TD>
    <TD>Powder coating room. Clear entire room from equipment tracks and lighting.
Add high bay lighting.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">18.&nbsp;&nbsp;</TD>
    <TD>Bake ovens. Remove all &#150; enclosure, heaters, controls, ventilation stacks,
repair roof, leave only the steel column supported platform under ovens and modified
sprinklers at normal roof height.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">19.&nbsp;&nbsp;</TD>
    <TD>Finishing Line area. Clear equipment, including booths, conveyors and
fluorescent lighting complete, fill in floor conveyor tracks</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">20.&nbsp;&nbsp;</TD>
    <TD>Woodshop area. Fill in all pits after testing soil under any oil or liquid
filled pits (plant wide requirement).</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">21.&nbsp;&nbsp;</TD>
    <TD>Mezzanine in assembly area. Remove it and all related sprinklers,
utilities and lighting under mezzanine.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">22.&nbsp;&nbsp;</TD>
    <TD>Restore door #30 at wood grinder.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">23.&nbsp;&nbsp;</TD>
    <TD>Remove small spray booth and stack at lower level under upholstery area.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">24.&nbsp;&nbsp;</TD>
    <TD>Install walls made of drywall and galvanized studs under upholstery
mezzanine. Wall will contain no utilities.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">25.&nbsp;&nbsp;</TD>
    <TD>Remove outside compressor room in its entirety, except for panels that may
supply power to utilities that are to remain.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="left">26.&nbsp;&nbsp;</TD>
    <TD>Remove upholstery office, final assembly office and tool and die office.</TD>
</TR>

</TABLE>

<P align="left" style="font-size: 10pt">The drawing of the Premises attached hereto as <U>Attachment 1</U> setting forth additional detail
is incorporated by reference.




<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><U><B>ATTACHMENT 1</B></U>



<P align="center" style="font-size: 10pt"><U><B>&#147;DRAWING OF PREMISES&#148;</B></U>




<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><U><B>SCHEDULE 2</B></U>



<P align="center" style="font-size: 10pt"><U><B>&#147;M&#038;M CONTRACTING PROPOSAL FOR PARKING LOT REPAIRS&#148;</B></U>




<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


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