{"id":41788,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/1424-second-street-santa-monica-ca-standard-office.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"1424-second-street-santa-monica-ca-standard-office","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/land\/1424-second-street-santa-monica-ca-standard-office.html","title":{"rendered":"1424 Second Street (Santa Monica, CA) Standard Office Lease-Modified Gross Net &#8211; Downtown Entertainment Associates LP and Encoding.com Inc."},"content":{"rendered":"<pre>                   STANDARD OFFICE LEASE-MODIFIED GROSS NET\n\n1.   Basic Lease Provisions (\"Basic Lease Provisions\").\n\n     1.1  Parties: This Lease, dated, for reference purposes only, November 9,\n1999, is made by and between DOWNTOWN ENTERTAINMENT ASSOCIATES, LP, a California\nlimited partnership (herein called \"Lessor\"), and encoding.com, Inc., a Delaware\ncorporation (herein called \"Lessee\").\n\n     1.2  Premises: Suite 200 on the Building's 2nd floor, consisting of\napproximately 4,632 rentable square feet, more or less, as defined in paragraph\n2 and as shown on Exhibit A hereto (the \"Premises\"). The Premises address is\n1424 Second Street, Suite 200, Santa Monica, CA 90401.\n\n     1.3  Building: Commonly described as being located at 1422-24 Second\nStreet, in the City of Santa Monica, County of Los Angeles, State of California,\nand as defined in paragraph 2.\n\n     1.4  Permitted Use: General office use, subject to paragraph 6.\n\n     1.5  Term: Five (5) years and zero (0) months commencing upon the\nCommencement Date and ending five (5) years thereafter. The \"Commencement Date\" \nis January 1, 2000. \n\n     1.6  Base Rent: For the first year of the Lease Term, the Base Rent shall\nbe Fifteen Thousand Fifty-Four and 00\/100 Dollars ($15,054.00) per month,\npayable on the 1st day of each month, in advance, per paragraph 4.1, subject to\nincrease as provided below.\n\n     1.7  Base Rent Increase: On each annual anniversary of the Commencement\nDate during the term hereof, the monthly Base Rent payable under paragraph 1.6\nabove shall be adjusted as provided in paragraph 4.3 below.\n\n     1.8  Rent Paid Upon Execution: Fifteen Thousand Fifty-Four and 00\/1 00\nDollars ($15,054.00) (first month's rent).\n\n     1.9  Security Deposit: Sixteen Thousand and 00\/1 00 Dollars ($16,000.00),\nplus additional security in the form of an Irrevocable Letter of Credit as set\nforth in paragraph 5.1 hereof.\n\n     1.10  Lessee's Share of Operating Expenses: 17.305%, as defined in\nparagraph 4.2, based on a total of 26,767 rentable square feet in the Building.\n\n     1.11  Base Year: 2000.\n\n     1.12  Guarantor: N\/A\n\n     1.13  Option to Renew. One (1) option to renew for a five (5) year period\npursuant to paragraph 39.5 hereof.\n\n     1.14  Notices. Notices shall be in writing and given pursuant to paragraph\n23 hereof.\n\n                                     page 1\n\n\n \n2.   Premises, Parking and Common Areas.\n\n     2.1  Premises: The Premises are a portion of a building, herein sometimes\nreferred to as the \"Building\" identified in paragraph 1.3 of the Basic Lease\nProvisions. \"Building\" shall include adjacent parking structures used in\nconnection therewith. The Premises, the Building, the Common Areas, the land\nupon which the same are located, along with all other buildings and improvements\nthereon or thereunder, are herein collectively referred to as the \"Building\nProject.\" Lessor hereby leases to Lessee and Lessee leases from Lessor for the\nterm, at the rental, and upon all of the conditions set forth herein, the real\nproperty referred to in the Basic Lease Provisions, paragraph 1.2, as the\n\"Premises,\" including rights to the Common Areas as hereinafter specified.\n\n     2.2  Vehicle Parking: So long as Lessee is not in default, and subject to\nthe rules and regulations attached hereto as Exhibit B, and as established by\nLessor or its parking operator from time to time, Lessor shall use its\ncommercially reasonable efforts to provide Lessee with the right to lease twelve\n(12) monthly parking spaces in the City Parking Structure #6 (across from the\nBuilding) at the prevailing rates. If Lessor is unable to provide twelve (12)\nmonthly parking spaces in Structure #6, then Lessor shall either a) reimburse\nLessee monthly the difference between its hourly parking rates and the then\ncurrent monthly parking rates or b) secure the balance of spaces in any adjacent\nbuilding or surface lot within two blocks of the Building that is mutually\nagreeable to Lessor and Lessee. Lessee shall also have the right to use four (4)\nmonthly valet parking spaces at a monthly cost of $125.00 per space, as long as\nthe spa located at 1422 Second Street is using valet parking services. The valet\nparking cost will be subject to changing valet parking rates as determined by\nthe valet parking company (currently $9.50 per hour per parking attendant).\n\n          2.2.1  Monthly parking fees shall be payable in advance prior to the\nfirst day of each calendar month.\n\n          2.2.2  If Lessee commits, permits or allows any of the prohibited\nactivities, described in the Lease or the rules then in effect, then Lessor or\nits parking operator shall have the right, without notice, in addition to such\nother rights and remedies that it may have, to remove or tow away the vehicle\ninvolved and charge the cost to Lessee, which cost shall be immediately payable\nupon demand by Lessor or its parking operator.\n\n          2.2.3  Lessor agrees to provide any changes in parking rules to Lessee\nin writing, before said rules go into effect.\n\n     2.3  Common Areas - Definition. The term \"Common Areas\" is defined as all\nareas and facilities outside the Premises and within the exterior boundary line\nof the Building Project that are provided and designated by the Lessor from time\nto time for the general non-exclusive use of Lessor, Lessee and of other lessees\nof the Building Project and their respective employees, suppliers, shippers,\ncustomers and invitees, including, but not limited to, common entrances,\nlobbies, corridors, stairways and stairwells, public restrooms, elevators,\nescalators, outdoor eating areas (excluding the deck\/patio adjacent to the\ninterior office space of Suite 200), parking areas to the extent not otherwise\nprohibited by this Lease, loading and unloading areas, trash areas, roadways,\nsidewalks, walkways, parkways, ramps, driveways, landscaped areas and decorative\nwalls.\n\n     2.4  Common Areas - Rules and Regulations. Lessee agrees to abide by and\nconform to the rules and regulations attached hereto as Exhibit B with respect\nto the Building Project and Common Areas, and to cause its employees, suppliers,\nshippers, customers, and invitees to so abide and conform; provided, however,\nthat the terms of this Lease shall control if there is an inconsistency between\nthe terms of this Lease and the terms of any such rules and\n\n                                     page 2\n\n\n \nregulations. Lessor or such other person(s) as Lessor may appoint shall have the\nexclusive control and management of the Common Areas and shall have the right,\nfrom time to time, to reasonably modify, amend and enforce said rules and\nregulations for the safety, care, order, or cleanliness of the Common Areas.\nSuch modifications and amendments shall not unreasonably and materially\ninterfere with Lessee's conduct of its business or Lessee's use and enjoyment of\nthe Premises and shall not require payment of additional moneys. Although Lessor\nis not responsible to Lessee for the non-compliance with said rules and\nregulations by other lessees, their agents, employees and invitees of the\nBuilding Project, Lessor shall not unreasonably enforce the rules and\nregulations against Lessee. Lessor agrees to give Lessee ten (10) days advance\nwritten notice of any changes to the rules and regulations before said changes\ngo into effect.\n\n     2.5  Common Areas - Changes. Lessor shall have the right, from time to\ntime, if such changes do not materially and unreasonably interfere with Lessee's\naccess to or use of the Premises:\n\n          (a) To make changes to the Building interior and exterior and Common\nAreas, including, without limitation, changes in the location, size, shape,\nnumber and appearance thereof, including but not limited to the lobbies,\nwindows, stairways, air shafts, elevators, escalators, restrooms, driveways,\nentrances, parking spaces, parking areas, loading and unloading areas, ingress,\negress, discretion of traffic, decorative walls, landscaped areas and walkways;\nprovided, however, Lessor shall at all times provide the parking facilities\nrequired by applicable law and by the specific terms of this Lease;\n\n          (b) To close temporarily any of the Common Areas for maintenance\npurposes so long as reasonable access to the Premises remains available;\n\n          (c) To designate other land and improvements outside the boundaries of\nthe Building Project to be a part of the Common Areas, provided that such other\nland and improvements have a reasonable and functional relationship to the\nBuilding Project;\n\n          (d) To add additional buildings and improvements to the Common Areas;\n\n          (e) To use the Common Areas while engaged in making additional\nimprovements, repairs or alterations to the Building Project, or any portion\nhereof;\n\n          (f) To do and perform such other acts and make such other changes in,\nto or with respect to the Common Areas and Building Project as Lessor may, in\nthe exercise of sound business judgment deem to be appropriate.\n\n     2.6  Use of Roof for Satellite Antenna. Lessee has requested that it be\npermitted to install a Satellite Antenna on the roof of the Building. Lessor\nrepresents and warrants that:\n\n          (a) There is sufficient space on the roof to accommodate the base of a\nSatellite Antenna meeting the specifications attached as Exhibit E; and\n\n          (b) The roof of the Building is strong enough to provide adequate\nsupport for such Satellite Antenna.\n\n     Lessor covenants that it will grant Lessee access to the roof in connection\nwith the installation and maintenance of the Satellite Antenna, provided that\nLessee installs the Satellite Antenna at Lessee's own expense and complies with\nall applicable laws, ordinances, rules, and regulations of governmental\nauthorities; and, provided further, that such Satellite Antenna will be situated\nso that it will not interfere with any existing antenna, also situated on the\nroof, that\n\n                                     page 3\n\n\n \nbelongs to Pacific Bell. Such Satellite Antenna will occupy the space on the \nroof, as marked on Exhibit F, designated as the approved location.\n\n     Lessee will use the structural engineer of Lessor's Building Project\n(\"Lessor's Structural Engineer\") in engineering the installation of the\nSatellite Antenna. From time to time, Lessee may change the specifications of\nthe Satellite Antenna (including, but not limited to, changes in the quality as\nwell as the number of Satellite Antennas situated on the roof) so long as: (i)\nthe square footage occupied on the roof by such changed specifications does not\nexceed the square footage occupied by a Satellite Antenna meeting the\nspecifications provided in Exhibit D, and (ii) the resulting impact (in terms of\nthe pressure borne by the roof and the structure of the Building) caused by such\nchanged specifications will not exceed the impact of a Satellite Antenna meeting\nthe specifications provided in Exhibit D.\n\n     Lessee shall pay additional rent in the amount of One Thousand and 00\/100\nDollars ($1,000.00) per month for the period during which Lessee in fact\nmaintains a Satellite Antenna upon the roof. Such additional rent, if any, is\nsubject to the Rent Increase provided for in paragraph 4.3. Rent for any period\nwhich is for less than one (1) month shall be prorated based upon the actual\nnumber of days of the calendar month involved. At Lessor's request, Lessee will\nremove the Satellite Antenna at the end of the Lease Term and will repair any\ndamage caused by its removal. In addition, Lessee will indemnify Lessor for any\ndamage to the Building Project caused by such Satellite Antenna (other than\ndamage caused by the roof lacking the strength to provide adequate support for\nthe Satellite Antenna or caused by the gross negligence or willful misconduct of\nLessor's Structural Engineer in the installation thereof).\n\n3.   Term.\n\n     3.1  Term. The term and Commencement Date of this Lease shall be as\nspecified in paragraph 1.5 of the Basic Lease Provisions.\n\n     3.2  Delay in Possession. Lessee may make modifications and changes to the \nplans for the Tenant Improvements, subject to Lessor's reasonable approval. If \nSubstantial Completion of Lessor's Work (as outlined in the Work Letter attached\nhereto as Exhibit C) does not occur within sixty (60) days after receipt, \non-site, of all materials required to complete the Tenant Improvements, there \nshall be an abatement of rent until such time as Substantial Completion of \nLessor's Work is attained. Lessor hereby covenants and agrees to use its \ncommercially reasonable efforts to expeditiously obtain all materials required\nto complete the Tenant Improvements upon specification of the same.\n\n     3.3  Early Possession. If Lessee occupies a portion of the Premises prior\nto said Commencement Date, such occupancy shall be subject to all provisions of\nthis Lease, such occupancy shall not change the termination date, and Lessee\nshall pay rent and other expenses for that portion of the Premises so occupied.\n\n4.  Rent.\n\n                                     page 4\n\n\n \n     4.1  Base Rent. Subject to adjustment as hereinafter provided in paragraph\n4.3, and except as may be otherwise expressly provided in this Lease, Lessee\nshall pay to Lessor the Base Rent for the Premises set forth in paragraph 1 .6\nof the Basic Lease Provisions, without offset or deduction, unless the offset or\ndeduction is made by Lessee as permitted under the express terms of this Lease\n(paragraphs 4.4, 9.5, and 11.5) allowing for abatement of rent. Lessee shall pay\nLessor upon execution hereof the advance Base Rent described in paragraph 1 .8\nof the Basic Lease Provisions. Rent for any period during the term hereof which\nis for less than one month shall be prorated based upon the actual number of\ndays of the calendar month involved. Rent shall be payable in lawful money of\nthe United States to Lessor at the address stated herein or to such other\npersons or at such other places as Lessor may designate in writing.\n\n     4.2  Operating Expenses. Lessee shall pay to Lessor during the term hereof,\nin addition to the Base Rent, Lessee's Share, as hereinafter defined, of all\nOperating Expenses, as hereinafter defined, during each calendar year of the\nterm of this Lease, to the extent the Operating Expenses for any such calendar\nyear exceeds the Operating Expense Stop, as hereinafter defined, in accordance\nwith the following provisions:\n\n          (a) \"Lessee's Share\" is defined, for purposes of this Lease, as the\npercentage set forth in paragraph 1.10 of the Basic Lease Provisions, which\npercentage has been determined by dividing the approximate rentable square\nfootage of the Premises by the total approximate square footage of the rentable\nspace contained in the Building Project. It is understood and agreed that the\nsquare footage figures set forth in the Basic Lease Provisions are\napproximations which Lessor and Lessee agree are reasonable and shall not be\nsubject to revision except in connection with an actual change in the size of\nthe Premises or a change in the space available for lease in the Building\nProject. In the event either the Premises and\/or Building Project is expanded or\nreduced, then Lessee's Share shall be appropriately adjusted, and as to the\ncalendar year in which such change occurs, Lessee's Share shall be determined on\nthe basis of the number of days during that particular calendar year that such\nLessee's Share was in effect. It is further agreed that Lessee shall in no event\nbe entitled to a credit to or adjustment of Lessee's Share of Operating Expenses\npayable hereunder, even if the ratio of Operating Expenses actually paid by\nLessee compared to total Operating Expenses actually paid by other lessees of\nthe Building Project exceeds Lessee's Share (as it might, by way of example only\nand not limitation, if some leases of the Building Project are made on a \"gross\"\nbasis, in which case the lessees under such leases would not directly pay any\nportion of the Operating Expenses).\n\n          (b)  \"Operating Expenses\" means Lessor's operating expenses that are\nreasonable, actual and necessary (as determined by Lessor in its reasonable\ndiscretion), out-of-pocket (except Le~or may use its normal accrual method of\naccounting), obtained at competitive prices, and that are directly attributable\nto the operation, repair, maintenance, and replacement, in neat, clean, safe,\ngood order and condition, of the Building Project, as determined under generally\naccepted accounting principles consistently applied, including the following:\n\n               (i)  The Common Areas, including their surfaces, coverings,\ndecorative items, carpets, drapes and window coverings, and including parking\nareas, loading and unloading areas, trash areas, roadways, sidewalks, walkways,\nstairways, parkways, driveways, landscaped areas, striping bumpers, irrigation\nsystems, Common Area lighting facilities, building exteriors and roofs, fences\nand gates;\n\n               (ii) All heating, air conditioning, plumbing, electrical systems,\nlife safety equipment, telecommunication and other equipment used in common by,\nor for the benefit of, lessees or occupants of the Building Project, including\nelevators and escalators, lessee directories, fire detection systems including\nsprinkler system maintenance and repair;\n\n                                     page 5\n\n\n \n          (iii)     Trash disposal, janitorial and security services for the\nCommon Areas;\n\n          (iv)      Any other service to be provided by Lessor that is elsewhere\nin this Lease stated to be an \"Operating Expense\";\n\n          (v)       The cost of the premiums for the liability and property\ninsurance policies to be maintained by Lessor under paragraph 8 hereof;\n\n          (vi)      The amount of the Real Property Taxes to be paid by Lessor\nunder paragraph 10.1 hereof, however Lessee shall not be responsible for any\nincrease in property taxes due solely from a sale, refinance, or \"change in\nownership\" of the Building during the initial lease Term;\n\n          (vii)     The cost of water, sewer, gas, electricity, and other\npublicly mandated services to the Building Project;\n\n          (viii)    Labor, salaries, and applicable fringe benefits and costs,\nmaterials, supplies, and tools, used in maintaining and\/or cleaning the Building\nProject and accounting and a management fee of five (5%) percent of base rental\nincome attributable to the operation of the Building Project;\n\n          (ix)      Replacing and\/or adding improvements mandated by any\ngovernmental agency and any repairs or removals necessitated thereby amortized\nover its useful life due to a change in law occurring after the Commencement\nDate; and\n\n          (x)       Replacements of equipment or improvements, as amortized on a\nstraight-line basis over such equipment or improvement's useful life.\n\n     (c)  Notwithstanding anything above to the contrary, Operating Expenses\nshall not include the following:\n\n          (i)       Any expenses paid by any lessee directly to third parties,\nor as to which Lessor is otherwise reimbursed by any third party, other lessee,\nor by insurance proceeds;\n\n          (ii)      Legal fees and related costs and disbursements relating to\ndisputes with lessees, Lessor's negligence, the enforcement of leases and\ndefending Lessor's interest in the real property;\n\n          (iii)     Any costs, fines, or penalties incurred because Lessor\nviolated any governmental rule or authority;\n\n          (iv)      Any real estate brokerage commissions, leasing commissions\n(or fees in lieu of commissions), costs, disbursements, and other expenses\nincurred for leasing, renovating, or improving space in order to procure\ntenants;\n\n          (v)       Costs (including permit, license, and inspection fees)\nincurred in renovating, improving, decorating, painting, or redecorating vacant\nor other interior premises space for tenants;\n\n          (vi)      Nonrecurring costs incurred to remedy structural defects in\noriginal construction materials or installations other than those structural\ndefects first discovered more than one (1) year following the Commencement Date;\n\n                                     page 6\n\n\n \n          (vii)     Costs incurred to test, survey, cleanup, contain, abate,\nremove, or otherwise remedy hazardous wastes or asbestos-containing materials\nfrom the Building Project unless the waste or asbestos-containing materials from\nthe Building Project were in or on the Building Project because of Lessee's\nnegligence or intentional acts;\n\n          (viii)    Depreciation and amortization on the Building;\n\n          (ix)      Overhead and profit paid to any affiliate of Lessor for\nmanagement or other services on or to the Property or for supplies or other\nmaterials to the extent that the costs of the services, supplies, or materials\nexceed the competitive costs of the services, supplies, or materials were they\nnot provided by an affiliate;\n\n          (x)       Payments on mortgages or deeds of trust and\/or ground lease\npayments (if any);\n\n          (xi)      Advertising and promotional expenditures;\n\n          (xii)     Utility Additions under paragraph 7.4 which are not for the\nbenefit of Lessee;\n\n          (xiii)    The cost of any water provided for the use of a tenant\noperating a spa; and\n\n          (xiv)     Other expenses that under generally accepted accounting\nprinciples consistently applied would not be considered normal maintenance,\nrepair, management, or operation expenses.\n\n     (d)  Lessee's Share of Operating Expenses to the extent in excess of the\nOperating Expense Stop shall be payable by Lessee within ten (10) days after a\nreasonably detailed statement of actual expenses (\"Statement\") is presented to\nLessee by Lessor. At Lessor's option, however, an amount may be estimated by\nLessor from time to time of Lessee's Share of annual Operating Expenses and the\nsame shall be payable monthly or quarterly, as Lessor shall designate, during\neach calendar year of the Lease term, on the same day as the Base Rent is due\nhereunder. In the event that Lessee pays Lessor's estimate of Lessee's Share of\nOperating Expenses as aforesaid, Lessor shall deliver to Lessee within ninety\n(90) days after the expiration of each calendar year a reasonably detailed\nStatement showing Lessee's Share of the actual Operating Expenses incurred\nduring the preceding year. If Lessee's payments under this paragraph 4.2(d)\nduring said preceding calendar year exceed Lessee's Share as indicated on said\nStatement, Lessee shall be entitled to credit the amount of such overpayment\nagainst Lessee's Share of Operating Expenses next falling due. If Lessee's\npayments under this paragraph during said preceding calendar year were less than\nLessee's Share as indicated on said Statement, Lessee shall pay to Lessor the\namount of the deficiency within thirty (30) days after delivery by Lessor to\nLessee of said Statement.\n\n          (i)       Within one hundred eighty (180) days after receipt of a\nStatement by Lessee (\"Review Period\"), if Lessee disputes the amount set forth\nin the Statement, Lessee's employees or an independent certified public\naccountant (which accountant is a member of a nationally or regionally\nrecognized accounting firm) designated by Lessee, may, after reasonable notice\nto Lessor and at reasonable times, inspect Lessor's records at Lessor's offices,\nprovided that Lessee is not then in default after expiration of all applicable\ncure periods and provided further that Lessee and such accountant or\nrepresentative shall, and each of them shall use their commercially reasonable\nefforts to cause their respective agents and employees to, maintain all\ninformation contained in Lessor's records in strict confidence. Notwithstanding\nthe foregoing, Lessee shall only have the right to review Lessor's records one\n(1)time during any \n\n                                     page 7\n\n\n \ntwelve (12) month period. Lessor's failure to dispute the amounts set forth in\nany Statement within the Review Period shall be deemed to be Lessee's approval\nof such Statement and Lessee, thereafter, waives the right or ability to dispute\nthe amounts set forth in such Statement.\n\n               (ii) If after such inspection, but within thirty (30) days after\nthe Review Period, Lessee notifies Lessor in writing that Lessee still disputes\nsuch amounts, a certification as to the proper amount shall be made, at Lessee's\nexpense, by an independent certified public accountant selected by Lessor and\nwho is a member of a nationally or regionally recognized accounting firm. Lessor\nshall cooperate in good faith with Lessee and the accountant to show Lessee and\nthe accountant the information upon which the certification is to be based.\nHowever, if such certification by the accountant proves that the Operating\nExpenses set forth in the Statement were overstated by more than ten percent\n(10%), then the cost of the accountant and the cost of such certification shall\nbe paid for by Lessor. Promptly following the parties' receipt of such\ncertification, the parties shall make such appropriate payments or\nreimbursements, as the case may be, to each other, as are determined to be owing\npursuant to such certification.\n\n          (e)  If the Building Project is less than ninety-five (95%) percent\noccupied during all or a portion of the Base Year or any Expense Year, as\nhereinafter defined, Lessor shall make an appropriate adjustment to the variable\ncomponents of Operating Expenses for such year or applicable portion thereof,\nemploying sound accounting and management principles, to determine the amount of\nOperating Expenses that would have been paid had the Building Project been\nninety-five (95%) percent occupied; and the amount so determined shall be deemed\nto have been the amount of Operating Expenses for such year, or applicable\nportion thereof. \"Expense Year\" is defined as each calendar year occurring\nduring the Term beginning with the Base Year, which shall be the first Expense\nYear.\n\n          (f)  Lessor shall use reasonable efforts to keep Operating Expenses at\nreasonable amounts, while maintaining a first-class office building.\n\n          (g)  \"Operating Expense Stop\" is defined as the amount of Operating\nExpenses for the Base Year.\n\n     4.3  Rent Increase. At the times set forth in paragraph 1.7 of the Basic\nLease Provisions, the monthly Base Rent payable under paragraph 4.1 of this\nLease shall increase at a fixed rate of three and one-half (3.5%) percent.\n\n     4.4  Rent Abatement. Should Lessee use only $20 per usable square foot of\nthe Tenant Improvement Allowance outlined in the Work Letter (Exhibit C), Lessee\nshall pay 1\/2 rent for the first two months of the Lease Term. Should Lessee use\nonly $15 per usable square foot of the Tenant Improvement Allowance outlined in\nthe Work Letter (Exhibit C), Lessee shall pay 1\/2 rent for the first four months\nof the Lease Term.\n\n5.   Security Deposit. Lessee shall deposit with Lessor the Security Deposit set\nforth in paragraph 1.9 of the Basic Lease Provisions as security for Lessee's\nfaithful performance of Lessee's obligations hereunder. If Lessee fails to pay\nrent or other charges due hereunder, or otherwise defaults with respect to any\nprovision of this Lease, Lessor may use, apply or retain all or any portion of\nsaid deposit for the payment of any rent or other charge in default for the\npayment of any other sum to which Lessor may become obligated by reason of\nLessee's default, or to compensate Lessor for any loss or damage which lessor\nmay suffer thereby. If Lessor so uses or applies all or any portion of said\ndeposit, Lessee shall within ten (10) days after written demand therefor deposit\ncash with Lessor in an amount sufficient to restore said deposit to the full\namount then required of Lessee. If the monthly Base Rent shall, from time to\ntime, increase \n\n                                     page 8\n\n\n\nduring the term of this Lease, Lessee shall, at the time of such increase,\ndeposit with Lessor additional money as a Security Deposit so that the total\namount of the Security Deposit held by Lessor shall at all times bear the same\nproportion to the then current Base Rent as the initial Security Deposit bears\nto the initial Base Rent set forth in paragraph 1.6 of the Basic Lease\nProvisions. Lessor shall not be required to keep said Security Deposit separate\nfrom its general accounts. If Lessee performs all of the Lessee's obligations\nhereunder, said deposit, or so much thereof as has not heretofore been applied\nby Lessor, shall be returned, without payment of interest or other increment for\nits use, to Lessee (or, at Lessor's option, to the last assignee, if any, of\nLessee's interest hereunder) at the expiration of the term hereof, and after\nLessee has vacated the Premises. No trust relationship is created herein between\nLessor and Lessee with respect to said Security Deposit. Lessor shall not be\nrequired to keep the Security Deposit in an interest-bearing account, and any\ninterest accruing shall be earned by Lessor.\n\n     5.1  Additional Lease Security. As additional security for the performance\nof its obligations under this Lease, at or prior to the Commencement Date Lessee\nshall deliver to Lessor an Irrevocable Letter of Credit in substantially the\nform set forth as Exhibit F hereto in the amount of One Hundred Eighty Thousand\nand 00\/1 00 Dollars ($180,000.00), subject to reduction of such amount by Twenty\nThousand and 00\/100 Dollars ($20,000.00) on each anniversary of the Commencement\nDate. By way of example, the Letter of Credit shall be in the amount of\n$180,000.00, until the first (1st) anniversary of the Commencement Date, at\nwhich time it shall be reduced to $160,000.00, until the second (2nd)\nanniversary of the Commencement Date, at which time it shall be reduced to\n$140,000.00, until the third (3rd) anniversary of the Commencement Date, at\nwhich time it shall be reduced to $120,000.00, until the fourth (4th)\nanniversary of the Commencement Date, at which time it shall be reduced to\n$100,000.00, for the duration of the Lease Term. Notwithstanding the foregoing,\nif Lessee becomes a publicly held company with stockholder's equity in excess of\n$25 million, upon submission of a financial statement by a national public\naccounting firm certifying thereto, this requirement shall be waived, and Lessee\nshall have the immediate right to cancel any such Irrevocable Letter of Credit.\n\n6.   Permitted Use.\n\n     6.1  Permitted Use. The Premises shall be used only for the Permitted Use\nset forth in the Basic Lease Information and for no other uses. Lessee shall not\ncommit waste, overload the floors or structure of the Building Project, subject\nthe Premises, the Building Project, or the Common Areas to any use which would\ndamage the same or increase the risk of loss or violate any insurance coverage,\npermit any unreasonable odors, smoke, dust, gas, substances, noise or vibrations\nto emanate from the Premises, take any action which would constitute a nuisance\nor would disturb, obstruct or endanger any other Lessees, take any action which\nwould abrogate any warranties, or use or allow the Premises to be used for any\nunlawful purpose. Lessee shall have the right in common with other Lessees of\nLessor to use the parking facilities of the Building Project. Lessee agrees not\nto overburden the parking facilities and agrees to cooperate with Lessor and\nother Lessees in the use of parking facilities.\n\n     6.2  Compliance with Law.\n\n          (a)  Lessor represents and warrants that, as of the Commencement Date,\nthe building shell and core will be in compliance with the American Disabilities\nAct of 1990 (\"ADA\"). Should it be discovered that said building shell and core\nare not in compliance with the ADA as of the Commencement Date, Lessor shall\ncorrect the same at Lessor's sole cost and expense.\n\n          (b) Lessee shall, at Lessee's expense, promptly comply with all\napplicable statutes, ordinances, rules, regulations, orders, and requirements of\nany fire insurance underwriters or rating bureaus, now in effect or which may\nhereafter come into effect, whether or not they reflect a change in policy from\nthat now existing, during the term or any part of the term \n\n                                     page 9\n\n\n \nhereof, relating in any manner to the occupation and use by Lessee of the\nPremises. Lessee shall conduct its business in a lawful manner and shall not use\nor permit the use of the Premises or the Common Areas in any manner that will\ntend to create waste or a nuisance or shall tend to disturb other occupants of\nthe Building Project. Lessee's aforesaid obligation regarding compliance with\ncovenants and restrictions of record is subject to Lessee's receipt and\nreasonable approval of such covenants and restrictions; provided that Lessee\nshall be deemed to have approved such conditions and restrictions if it does not\nnotify Lessor in writing of its specific objections thereto within ten (10) days\nof its receipt thereof.\n\n     6.3  Condition of Premises.\n\n          Lessor shall deliver the Premises to Lessee on the Commencement Date\n(unless Lessee is already in possession). Lessor represents and warrants that on\nthe Commencement Date, the Premises will comply with all applicable laws,\nordinances, rules, regulations of governmental authorities, covenants and\nrestrictions, and will be zoned to permit general office use. Subject to, and in\nreliance on Lessor's representations and warranties set forth in this paragraph\n6.3, Lessee acknowledges that (i) it has satisfied itself by its own independent\ninvestigation that the Premises are suitable for its intended use, and that\nneither Lessor nor Lessor's agent or agents has made any representation or\nwarranty as to the present or future suitability of the Premises, Common Areas,\nor Building Project for the conduct of Lessee's business, and (ii) Lessee shall\nhave a period of thirty (30) days following the Commencement Date to object to\nthe presence of any latent defects in the portion of the Premises constructed by\nLessor or under Lessor's control by notifying Lessor thereof in writing within\nsuch time period.\n\n\n7.   Maintenance, Repairs, Alterations and Common Area Services.\n\n     7.1  Lessor's Obligations. Lessor shall keep the Building Project,\nincluding the Building's exterior walls, roof, and common areas, in good\ncondition and repair within a reasonable time after receiving notice or having\nactual knowledge of the need for repairs or maintenance; provided, however,\nLessor shall not be obligated to paint, repair or replace wall coverings, or to\nrepair or replace any improvements that are not ordinarily a part of the\nBuilding or are above then Building standards. Lessor shall make the repairs and\nreplacements to maintain the Building in a condition comparable to first class\noffice buildings. Except as provided in paragraph 9.5, there shall be no\nabatement of rent or liability of Lessee on account of any injury or\ninterference with Lessee's business with respect to any improvements,\nalterations or repairs made by Lessor to the Building Project or any part\nthereof, or on account of any interruption of services or of access to the\nPremises, Building or Building Project; provided, however, that if the Premises\nare unusable by an event other than damage or destruction, condemnation or an\nact or omission of Lessee or Lessee's agents, contractors, invitees or\nemployees, and if such condition persists for more than (a) ten (10) consecutive\ndays, then Monthly Base Rent hereunder and all operating expenses and other\nparking costs shall be abated, on a day-by-day basis, for every day thereafter\nthat such condition continues, and (b) ninety (90) consecutive days, then Lessee\nmay terminate this Lease as of such ninetieth (90th) consecutive day by\nproviding Lessor with irrevocable written notice of its election within ten (10)\ndays thereafter. Lessee expressly waives the benefits of any statute now or\nhereafter in effect which would otherwise afford Lessee the right to make\nrepairs at Lessor's expense or to terminate this Lease because of Lessor's\nfailure to keep the Premises in good order, condition and repair.\n\n                                    page 10\n\n\n \n     7.2  Lessee's Obligations.\n\n          (a)  Notwithstanding Lessor's obligation to keep the Premises in good\ncondition and repair, Lessee shall be responsible for payment of the cost\nthereof to Lessor as additional rent for that portion of the cost of any\nmaintenance and repair of the Premises, or any equipment (wherever located) that\nserves only Lessee or the Premises, to the extent such cost is attributable to\ncauses beyond normal wear and tear. Lessee shall be responsible, at its sole\ncost and expense, for painting, repairing or replacing wall coverings, repairing\nand maintaining the interior of the Premises (other than equipment which is part\nof, and affects, the Building's overall systems, such as HVAC, which shall be\nLessor's obligation) and to repair or replace any Premises improvements that are\nnot ordinarily a part of the Building or that are above then Building standards.\nLessor may, at its option, upon reasonable notice, elect to have Lessee perform\nany particular such maintenance or repairs the cost of which is otherwise\nLessee's responsibility hereunder.\n\n          (b)  On the last day of the Term hereof, or on any sooner termination,\nLessee shall surrender the Premises to Lessor in the same condition as received,\nordinary wear and tear excepted, clean and free of debris. Any damage or\ndeterioration of the Premises shall not be deemed ordinary wear and tear if the\nsame could have been prevented by good maintenance practices by Lessee. Lessee\nshall repair any damage to the Premises occasioned by the installation or\nremoval of Lessee's trade fixtures, alterations, furnishings and equipment.\nExcept as otherwise stated in this Lease, and subject to the terms and\nconditions of this Lease, Lessee shall leave the air lines, power panels,\nelectrical distribution systems, lighting fixtures, air conditioning, window\ncoverings, wall coverings, carpets, wall paneling, ceilings and plumbing on the\nPremises and in good operating condition.\n\n                                    page 11\n\n\n \n     7.3  Alterations and Additions.\n\n          (a)  Lessee shall not, without Lessor's prior written consent (which\nconsent shall not be unreasonably withheld or unduly delayed) make any\nalterations, improvements additions, Utility Installations or repairs in, on or\nabout the Premises, or the Building Project. As used in this paragraph 7.3 the\nterm \"Utility Installation\" shall mean carpeting, window and wall coverings,\npower panels, electrical distribution systems, lighting fixtures, air\nconditioning, plumbing, and telephone and telecommunication wiring and\nequipment, but shall not include the Satellite Antenna, if any, that Lessee may\ninstall on the roof of the Building in accordance with the provisions of\nparagraph 2.6 hereof. At the expiration of the term, Lessor may require the\nremoval of any or all of said alterations, improvements, additions or Utility\nInstallations, and the restoration of the Premises and the Building Project to\ntheir prior condition, at Lessee's expense; provided that Lessee shall not be\nrequired to remove alterations, improvements, additions or Utility Installations\nmade pursuant to the terms of the Work Letter and, provided further that, with\nrespect to alterations, improvements, additions or Utility Installations for\nwhich Lessee has requested (and was required pursuant to the terms of the Lease\nto request) Lessor's consent to install, Lessor shall be required to request\ntheir removal at the time Lessor grants its consent if Lessor wishes to require\ntheir removal upon the termination of the Lease. Should Lessor permit Lessee to\nmake its own alterations, improvements, additions or Utility Installations,\nLessee shall use only such contractor as has been expressly approved by Lessor\n(which approval shall not be unreasonably withheld), and Lessor may require\nLessee to provide Lessor, at Lessee's sole cost and expense, a lien and\ncompletion bond in an amount equal to one hundred fifty percent (150%) of the\nestimated cost of such improvements, to insure Lessor against any liability for\nmechanic's and materialmen's liens and to insure completion of the work. Should\nLessee make any alterations, improvements, additions or Utility Installations\nwithout the prior approval of Lessor, or use a contractor not expressly approved\nby Lessor, Lessor may, at any time during the term of this Lease, require that\nLessee remove any part or all of the same.\n\n          (b)  Any alterations, improvements, additions or Utility Installations\nin or about the Premises or the Building Project that Lessee shall desire to\nmake shall be presented to Lessor in written form, with proposed detailed plans.\nIf Lessor shall give its consent to Lessee's making such alteration,\nimprovement, addition or Utility Installation, the consent shall be deemed\nconditioned upon Lessee acquiring a permit to do so from the applicable\ngovernmental agencies, furnishing a copy thereof to Lessor prior to the\ncommencement of the work, and compliance by Lessee with all conditions of said\npermit in a prompt and expeditious manner.\n\n          (c)  Except for work performed by Lessor, Lessee shall pay, when due,\nall claims for labor or materials furnished or alleged to have been furnished to\nor for Lessee at or for use in the Premises, which claims are or may be secured\nby any mechanic's or materialmen's lien against the Premises, the Building or\nthe Building Project, or any interest therein.\n\n          (d)  Lessee shall give Lessor not less than ten (10) days' notice\nprior to the commencement of any work in the Premises by Lessee, and Lessor\nshall have the right to post notices of non-responsibility in or on the Premises\nor the Building as provided by law. Lessee shall at all times keep the Premises,\nthe Building and the Building Project free and clear of liens attributable in\nany way to a work of improvement commissioned by Lessee, or to the acts or\nomissions of Lessee, any of Lessee's employees, agents, or contractors, or any\nof their employees, agents or sub-contractors. If Lessee shall, in good faith,\ncontest the validity of any such lien, claim or demand, then Lessee shall, at\nits sole expense defend itself and Lessor against the same and shall pay and\nsatisfy any such adverse judgment that may be rendered thereon before the\nenforcement thereof against Lessor or the Premises, the Building or the Building\nProject, upon the condition that if Lessor shall require, Lessee shall furnish\nto Lessor a surety bond satisfactory to Lessor in an amount not less than one\nhundred fifty percent (150%) of the amount of such contested lien claim or\ndemand indemnifying Lessor against liability for the\n\n                                    page 12\n\n\n \nsame and holding the Premises, the Building and the Building Project free from\nthe effect of such lien or claim. In addition, Lessor may require Lessee to pay\nLessor's reasonable attorneys' fees and costs in participating in such action if\nLessor shall decide it is to Lessor's best interest so to do.\n\n          (e)  All alterations, improvements, additions and Utility\nInstallations (which do not constitute trade fixtures of Lessee), which may be\nmade to the Premises by Lessee, including but not limited to, floor coverings,\npanelings, doors, drapes, built-ins, moldings, sound attenuation, and lighting\nand telephone or communication systems, conduit, wiring and outlets, shall be\nmade and done in a good and workmanlike manner and of good and sufficient\nquality and materials and shall be the property of Lessor and remain upon and be\nsurrendered with the Premises at the expiration of the lease term, unless Lessor\nrequires their removal pursuant to paragraph 7.3(a). Provided Lessee is not in\ndefault, notwithstanding the provisions of this paragraph 7.3(e), Lessee's\npersonal property and equipment, other than that which is affixed to the\nPremises so that it cannot be removed without material damage to the Premises or\nthe Building, and other than Utility Installations, shall remain the property of\nLessee and may be removed by Lessee subject to the provisions of paragraph 7.2,\nit being understood and agreed that Lessee shall have the right to remove the\nSatellite Antenna provided Lessee repairs any damage caused by its removal.\n\n          (f)  Lessee shall provide Lessor with as-built plans and\nspecifications for any alterations, improvements, additions or Utility\nInstallations.\n\n          7.4  Utility Additions. Lessor reserves the right to install new or\nadditional utility facilities throughout the Building Project for the benefit of\nLessor or Lessee, or any other lessee of the Building Project, including, but\nnot by way of limitation, such utilities as plumbing, electrical systems,\nsecurity systems, communication systems, and fire protection and detection\nsystems, so long as such installations do not unreasonably interfere with\nLessee's use of the Premises.\n\n8.   Insurance; Indemnity.\n\n     8.1  Liability Insurance-Lessee. Lessee shall, at Lessee's expense, obtain\nand keep in force during the term of this Lease a policy of Commercial General\nLiability insurance utilizing an Insurance Services Office standard form with\nBroad Form General Liability Endorsement (GL0404), or equivalent, in an amount\nof not less than $2,000,000 per occurrence of bodily injury and property damage\ncombined or in a greater amount as reasonably determined by Lessor and shall\ninsure Lessee with Lessor as an additional insured against liability arising out\nof the use, occupancy or maintenance of the Premises. Compliance with the above\nrequirement shall not, however, limit the liability of Lessee hereunder. Lessor\nmay only require such increased amounts of insurance if such increased amounts\nare then generally required by owners of comparable first-class office buildings\nin the Santa Monica area.\n\n     8.2  Liability Insurance-Lessor. Lessor shall be required to maintain\ncontractual and comprehensive general liability insurance comparable to such\nliability insurance required of Lessee under paragraph 8.1. Any premiums for\nliability insurance maintained by Lessor relating to the Premises, the Building\nor the Building Project shall be Operating Expenses hereunder.\n\n     8.3  Property Insurance-Lessee. Lessee shall, at Lessee's expense, obtain\nand keep in force during the term of this Lease for the benefit of Lessee,\nreplacement cost all-risks insurance, including without limitation fire and\nextended coverage insurance, with vandalism and malicious mischief, sprinkler\nleakage and earthquake sprinkler leakage endorsements, in an amount sufficient\nto cover not less than 100% of the full replacement costs, as the same may \n\n                                    page 13\n\n\n \nexist from time to time, of all of Lessee's personal property, fixtures,\nequipment and tenant improvements.\n\n     8.4  Property Insurance-Lessor. Lessor shall obtain and keep in force\nduring the term of this Lease a policy or policies of insurance covering loss or\ndamage to the Building Project and improvements thereon, but not Lessee's\npersonal property, fixtures, equipment or tenant improvements, in the amount of\nthe full replacement cost thereof, as the same may exist from time to time,\nutilizing Insurance Services Office standard form, or equivalent providing\nprotection against all perils included within the classification of fire,\nextended coverage, vandalism, malicious mischief, plate glass, and such other\nperils as Lessor deems advisable or may be required by a lender having a lien on\nthe Building Project. In addition, Lessor shall obtain and keep in force, during\nthe term of this Lease, a policy of rental value insurance covering a period of\none year, with loss payable to Lessor, which insurance shall also cover all\nOperating Expenses for said period. Lessee will not be named in any such\npolicies carried by Lessor and shall have no right to any proceeds therefrom.\nThe policies required by these paragraphs 8.2 and 8.4 shall contain such\ndeductibles as Lessor or the aforesaid lender may determine. In the event that\nthe Premises shall suffer an insured loss as defined in paragraph 9.1(f) hereof,\nthe deductible. amounts under the applicable insurance policies shall be deemed\nan Operating Expense. Lessee shall not do or permit to be done anything which\nshall invalidate the insurance policies carried by Lessor. Lessee shall pay the\nentirety of any increase in the property insurance premium for the Building\nProject over what it was immediately prior to the commencement of the term of\nthis Lease if the increase is specified by Lessor's insurance carrier as being\ncaused by the nature of Lessee's occupancy or any act or omission of Lessee.\n\n     8.5  Insurance Policies. Lessee shall deliver to Lessor copies of liability\ninsurance policies required under paragraph 8.1 or certificates evidencing the\nexistence and amounts of such insurance within seven (7) days after the\nCommencement Date of this Lease.\n\n     Each policy required to be obtained by Lessee hereunder shall: (a) be\nissued by insurers authorized to do business in the state in which the Building\nis located and rated not less than financial class X, and not less than\npolicyholder rating A, in the most recent version of Best's Key Rating Guide, or\nthe equivalent rating in any other comparable guide selected by Lessor (provided\nthat, in any event, the same insurance company shall provide the coverages\ndescribed in paragraphs 8.1 and 8.3 above); (b) be in form reasonably\nsatisfactory from time to time to Lessor; (c) name Lessee as named insured\nthereunder and shall name Lessor and, at Lessor's request, Lessor's mortgagees\nand ground lessors of which Lessee has been informed in writing, as additional\ninsureds; (d) not have a deductible amount exceeding Five Thousand Dollars\n($5,000.00); (e) specifically provide that the insurance afforded by such policy\nfor the benefit of Lessor and Lessor's mortgagees and ground lessors shall be\nprimary, and any insurance carried by Lessor or Lessor's mortgagees and ground\nlessors shall be excess and non-contributing; (f) except for worker's\ncompensation insurance, contain an endorsement that the insurer waives its right\nto subrogation as described in paragraph 8.6 below: and (g) contain an\nundertaking by the insurer to notify Lessor (and the mortgagees and ground\nlessors of Lessor who are named as additional insureds) in writing not less than\nthirty (30) days prior to any material change, reduction in coverage,\ncancellation or other termination thereof. Lessee agrees to deliver to Lessor,\nas soon as practicable after the placing of the required insurance, but in no\nevent later than ten (10) days after the date Lessee takes possession of all or\nany part of the Premises, certified copies of each such insurance policy (or\ncertificates from the insurance company evidencing the existence of such\ninsurance and Lessee's compliance with the foregoing provisions of this\nparagraph 8). Lessee shall cause replacement policies or certificates to be\ndelivered to Lessor not less than thirty (30) days prior to the expiration of\nany such policy or policies. If any such initial or replacement policies or\ncertificates are not furnished within the time(s) specified herein, Lessee shall\nbe deemed to be in material default under this Lease without the benefit of any\nadditional \n\n                                    page 14\n\n\n \nnotice or cure period provided herein, and Lessor shall have the right, but not\nthe obligation, to procure such policies and certificates at Lessee's expense.\n\n     8.6  Waiver of Subrogation. Lessee and Lessor each hereby release and\nrelieve the other, and waive their entire right of recovery against the other,\nfor direct or consequential loss or damage arising out of or incident to the\nperils covered by property insurance carried by such party, whether due to the\nnegligence of Lessor or Lessee or their agents, employees, contractors and\/or\ninvitees. If necessary all property insurance policies required under this Lease\nshall be endorsed to so provide.\n\n     8.7  Indemnity. Lessee shall indemnify and hold harmless Lessor and its\nagents, Lessor's master or ground lessor, partners and lenders, from and against\nany and all claims for damage to the person or property of anyone or any entity\narising from Lessee's use of the Building Project, or from the conduct of\nLessee's business or from any activity, work or things done, permitted or\nsuffered by Lessee in or about the Premises or elsewhere and shall further\nindemnify and hold harmless Lessor from and against any and all claims, costs\nand expenses arising from any breach or default in the performance of any\nobligation on Lessee's part to be performed under the terms of this Lease, or\narising from any act or omission of Lessee, or any of Lessee's agents,\ncontractors, employees or invitees and from and against all costs, attorneys'\nfees, expenses and liabilities incurred by Lessor as the result of any such use,\nconduct, activity, work, things done, permitted or suffered, breach, default or\nnegligence, and in dealing reasonably therewith, including but not limited to\nthe defense or pursuit of any claim or any action or proceeding involved\ntherein; and in case any action or proceeding be brought against Lessor by\nreason of any such matter, Lessee upon notice from Lessor shall defend the same\nat Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor\nshall cooperate with Lessee in such defense. Lessor need not have first paid any\nsuch claim in order to be so indemnified. However, notwithstanding the\nforegoing, Lessor shall indemnify and hold Lessee harmless from any loss, cost,\nliability, damage or expense, including, but not limited to, penalties, fines,\nattorneys' fees or costs to any person, property, or entity to the extent\nresulting from the gross negligence or willful misconduct of Lessor, its agents,\ncontractors, employees, or invitees. Lessee, as a material part of the\nconsideration to Lessor, hereby assumes all risk of damage to property of Lessee\nor injury to persons, in, upon or about the Premises arising from any cause and\nLessee hereby waives all claims in respect thereof against Lessor, except to the\nextent such damages or claims result from the gross negligence or willful\nmisconduct of the Lessor, its agents, contractors, employees, or invitees.\n\n     8.8  Exemption of Lessor from Liability. Lessee hereby agrees that Lessor\nshall not be liable for injury to Lessee's business or any loss of income\ntherefrom or for loss of or damage to the goads, wares, merchandise or other\nproperty of Lessee, Lessee's employees, invitees, customers, or any other person\nin or about the Premises or the Building Project, nor shall Lessor be liable for\ninjury to the person of Lessee, Lessee's employees, agents or contractors,\nwhether such damage or injury is caused by or results from theft, fire, steam,\nelectricity, gas, water or rain, or from the breakage, leakage, obstruction or\nother defects of pipes, sprinklers, wires, appliances, plumbing, air\nconditioning or lighting fixtures, or from any other cause, whether said damage\nor injury results from conditions arising upon the Premises or upon other\nportions of the Building Project, or from other sources or places, or from new\nconstruction or the repair, alteration or improvement of any part of the\nBuilding Project, or of the equipment, fixtures or appurtenances applicable\nthereto, and regardless of whether the cause of such damage or injury or the\nmeans of repairing the same is inaccessible, Lessor shall not be liable for any\ndamages arising from any act or neglect of any other lessee, occupant or user of\nthe Building Project, nor from the failure of Lessor to enforce the provisions\nof any other lease of any other lessee of the Building Project except to the\nextent such damages or claims result from the gross negligence or willful\nmisconduct of the Lessor, its agents, contractors, employees, or invitees.\n\n                                    page 15\n\n\n \n     8.9  No Representation of Adequate Coverage. Lessor makes no representation\nthat the limits or forms of coverage of insurance specified in this paragraph 8\nare adequate to cover Lessee's property or obligations under this Lease.\n\n9.   Damage or Destruction.\n\n     9.1  Definitions.\n\n          (a)  \"Premises Damage\" shall mean if the Premises are damaged or\ndestroyed to any extent.\n\n          (b)  \"Premises Building Partial Damage\" shall mean if the Building of\nwhich the Premises are a part is damaged or destroyed to the extent that the\ncost to repair is less than fifty percent (50%) of the then Replacement Cost of\nthe Building.\n\n          (c)  \"Premises Building Total Destruction\" shall mean if the Building\nof which the Premises are a part is damaged or destroyed to the extent that the\ncost to repair is fifty percent (50%) or more of the then Replacement Cost of\nthe Building.\n\n          (d)  \"Building Project Buildings\" shall mean all of the buildings on\nthe Building Project site.\n\n          (e)  \"Building Project Buildings Total Destruction\" shall mean if the\nBuilding Project Buildings are damaged or destroyed to the extent that the cost\nof repair is fifty percent (50%) or more of the then Replacement Cost of the\nBuilding Project Buildings.\n\n          (f)  \"Insured Loss\" shall mean damage or destruction which was caused\nby an event required to be covered by the insurance described in paragraph 8.\nThe fact that an Insured Loss has a deductible amount shall not make the loss an\nuninsured loss.\n\n          (g)  \"Replacement Cost\" shall mean the amount of money necessary to be\nspent in order to repair or rebuild the damaged area to the condition that\nexisted immediately prior to the damage occurring, excluding all improvements\nmade by lessees, other than those installed by Lessor at Lessee's expense.\n\n          (h)  \"Hazardous Material Condition\" shall mean the occurrence or\ndiscovery of a condition involving the presence of, or a contamination by a\nHazardous Material in, on, or under the Premises.\n\n     9.2  Premises Damage; Premises Building Partial Damage.\n\n          (a)  Insured Loss: Subject to the provisions of paragraphs 9.4 and\n9.5, if at any time during the term of this Lease there is damage which is an\nInsured Loss and which falls into the classification of either Premises Damage\nor Premises Building Partial Damage, then Lessor shall, as soon as reasonably\npossible and to the extent insurance proceeds are available and the required\nmaterials and labor are readily available through usual commercial channels, at\nLessor's expense, repair such damage (but not Lessee's fixtures, equipment or\ntenant improvements originally paid for by Lessee) to its condition existing at\nthe time of the damage, and this Lease shall continue in full force and effect.\n\n          (b)  Uninsured Loss: Subject to the provisions of paragraphs 9.4 and\n9.5, if at any time during the term of this Lease there is damage which is not\nan Insured Loss and which falls within the classification of Premises Damage or\nPremises Building Partial Damage, unless \n\n                                    page 16\n\n\n \ncaused by a willful act of Lessee (in which event Lessee shall make the repairs\nat Lessee's expense), which damage prevents Lessee from making any substantial\nuse of the Premises, Lessor may at Lessor's option either (i) repair such damage\nas soon as reasonably possible at Lessor's expense, in which event this Lease\nshall continue in full force and effect, or (ii) give written notice to Lessee\nwithin thirty (30) days after the date of the occurrence of such damage of\nLessor's intention to cancel and terminate this Lease as of the date of the\noccurrence of such damage, in which event this Lease shall terminate as of the\ndate of the occurrence of such damage.\n\n     9.3  Premises Building Total Destruction; Building Project Total\nDestruction. Subject to the provisions of paragraphs 9.4 and 9.5, if at any time\nduring the term of this Lease there is damage, whether or not it is an insured\nLoss, which falls into the classifications of either (i) Premises Building Total\nDestruction, or (ii) Building Project Total Destruction, then Lessor may at\nLessor's option either (i) repair such damage or destruction as soon as\nreasonably possible at Lessor's expense (to the extent the required materials\nare readily available through usual commercial channels) to its condition\nexisting at the time of the damage, but not Lessee's fixtures, equipment or\ntenant improvements, and this Lease shall continue in full force and effect, or\n(ii) give written notice to Lessee within thirty (30) days after the date of\noccurrence of such damage of Lessor's intention to cancel and terminate this\nLease, in which case this Lease shall terminate as of the date of the occurrence\nof such damage.\n\n     9.4  Damage Near End of Term.\n\n          (a)  Subject to paragraph 9.4(b), if at any time during the last\ntwelve (12) months of the term of this Lease there is substantial damage to the\nPremises, Lessor may at Lessor's option cancel and terminate this Lease as of\nthe date of occurrence of such damage by giving written notice to Lessee of\nLessor's election to do so within 30 days after the date of occurrence of such\ndamage.\n\n          (b)  Notwithstanding paragraph 9.4(a), in the event that Lessee has an\noption to extend or renew this Lease, and the time within which said option may\nbe exercised has not yet expired, Lessee shall exercise such option, if it is to\nbe exercised at all, no later than twenty (20) days after the occurrence of an\nInsured Loss falling within the classification of Premises Damage during the\nlast twelve (12) months of the term of this Lease. If Lessee duly exercises such\noption during said twenty (20) day period, Lessor shall, at Lessor's expense,\nrepair such damage, but not Lessee's fixtures, equipment or tenant improvements,\nas soon as reasonably possible and this Lease shall continue in full force and\neffect. If Lessee fails to exercise such option during said twenty (20) day\nperiod, then Lessor may at Lessor's option terminate and cancel this Lease as of\nthe expiration of said twenty (20) day period by giving written notice to Lessee\nof Lessor's election to do so within ten (10) days after the expiration of said\ntwenty (20) day period, notwithstanding any term or provision in the grant of\noption to the contrary.\n\n     9.5  Abatement of Rent; Lessee's Remedies.\n\n          (a)  If, in the event of Premises Damage, Lessor repairs or restores\nthe Building or Premises pursuant to the provisions of this paragraph 9, and any\npart of the Premises are not usable (including loss of use due to loss of access\nor essential services), the rent payable hereunder (including Lessee's Share of\nOperating Expenses) for the period during which such damage, repair or\nrestoration continues shall be abated, provided (1) the damage was not the\nresult of the gross negligence or willful misconduct of Lessee, and (2) such\nabatement shall only be to the extent the operation of Lessee's business from\nthe Premises is adversely affected. Except for said abatement of rent, if any,\nLessee shall have no claim against Lessor for any damage suffered by reason of\nany such damage, destruction, repair or restoration.\n\n                                    page 17\n\n\n \n           (b) If Lessor shall elect or shall be obligated to repair or restore\nthe Premises or the Building under the provisions of this paragraph 9 and shall\nnot commence such repair or restoration within ninety (90) days after such\noccurrence, or if Lessor shall not complete the restoration and repair within\none hundred eighty (180) days after such occurrence, Lessee may at Lessee's\noption cancel and terminate this Lease by giving Lessor written notice of\nLessee's election to do so at any time prior to the commencement or completion,\nrespectively, of such repair or restoration. In such event this Lease shall\nterminate as of the date of such notice.\n\n           (c) Lessee agrees to cooperate with Lessor in connection with any\nsuch restoration and repair, including but not limited to the approval and\/or\nexecution of plans and specifications required.\n\n     9.6   Termination-Advance Payments. Upon termination of this Lease pursuant\nto this paragraph 9, an equitable adjustment shall be made concerning advance\nrent and any advance payments made by Lessee to Lessor. Lessor shall, in\naddition, return to Lessee so much of Lessee's Security Deposit as has not\ntheretofore been applied by Lessor.\n\n     9.7   Waiver. Lessor and Lessee waive the provisions of any statute which\nrelate to termination of leases when leased property is destroyed and agree that\nsuch event shall be governed by the terms of this Lease.\n\n10.  Real Property Taxes.\n\n     10.1  Payment of Taxes. Lessor shall pay the Real Property Tax, as defined\nin paragraph 10.3, applicable to the Building Project subject to reimbursement\nby Lessee of Lessee's Share of such taxes in accordance with the provisions of\nparagraph 4.2, except as otherwise provided in paragraph 10.2.\n\n     10.2  Additional Improvements. Lessee shall not be responsible for paying\nany increase in Real Property Tax specified in the tax assessor's records and\nwork sheets as being caused by additional improvements placed upon the Building\nProject by other lessees or by Lessor for the exclusive enjoyment of any other\nlessee. Lessee shall, however, pay to Lessor at the time that Operating Expenses\nare payable under paragraph 4.2(c) the entirety of any increase in Real Property\nTax if assessed solely by reason of additional improvements placed upon the\nPremises by Lessee or at Lessee's request.\n\n     10.3  Definition of \"Real Property Tax.\" As used herein, the term \"Real\nProperty Tax\" shall include any form of real estate tax or assessment, general,\nspecial, ordinary or extraordinary, and any license fee, commercial rental tax,\nimprovement bond or bonds, levy or tax (other than inheritance, personal income\nor estate taxes) imposed on the Building Project or any portion thereof by any\nauthority having the direct or indirect power to tax, including any city,\ncounty, state or federal government, or any school, agricultural, sanitary,\nfire, street, drainage or other improvement district thereof, as against any\nlegal or equitable interest of Lessor in the Building Project or in any portion\nthereof, as against Lessor's right to rent or other income therefrom, and as\nagainst Lessor's business of leasing the Building Project. The term\" Real\nProperty Tax \" shall also include any tax, fee, levy, assessment or charge (I)\nin substitution of, partially or totally, any tax, fee, levy, assessment or\ncharge hereinabove included within the definition of\" Real Property Tax,\" or\n(ii) the nature of which was hereinabove included within the definition of\" Real\nProperty Tax,\" or (iii) which is imposed for a service or right not charged\nprior to June 1, 1978, or, if previously charged, has been increased since June\n1, 1978, or (iv) which is imposed as a result of a change in ownership, as\ndefined by applicable local statutes for property tax purposes, of the Building\nProject or which is added to a tax or charge hereinbefore included within the\ndefinition of Real Property Tax by reason of such change of ownership, or (v)\nwhich is \n\n                                    page 18\n\n\n \nimposed by reason of this transaction, any modifications or changes hereto, or\nany transfers hereof.\n\n     (a)   The term \"Real Property Tax\" excludes (i) any income taxes, and (ii)\npenalties or interest for late payments except to the extent that such late\npayments were caused by Lessee's failure to make payments of Base Rent and\/or\nLessee's Share of Operating Expenses as and when due pursuant to the provisions\nof this Agreement.\n\n     (b)   If Lessor receives a refund of any portion of Real Estate Taxes that\nwere included in the Operating Expenses paid by Lessee, then Lessor shall\nreimburse Lessee its pro rata share of the refunded taxes, less any expenses\nthat Lessor reasonably incurred to obtain the refund.\n\n     10.4  Joint Assessment. If the improvements or property, the taxes for\nwhich are to be paid separately by Lessee under paragraph 10.2 or 10.5 are not\nseparately assessed, Lessee's portion of that tax shall be equitably determined\nby Lessor from the respective valuations assigned in the assessor's work sheets\nor such other information (which may include the cost of construction) as may be\nreasonably available. Lessor's reasonable determination thereof, in good faith,\nshall be conclusive.\n\n     10.5  Personal Property Taxes.\n\n           (a) Lessee shall pay prior to delinquency all taxes assessed against\nand levied upon trade fixtures, furnishings, equipment and all other personal\nproperty of Lessee contained in the Premises or elsewhere.\n\n           (b) If any of Lessee's said personal property shall be assessed with\nLessor's real property, Lessee shall pay to Lessor the taxes attributable to\nLessee within ten (10) days after receipt of a written statement setting forth\nthe taxes applicable to Lessee's property.\n\n\n11.  Utilities.\n\n     11.1  Services Provided by Lessor. Lessor shall provide heating,\nventilation, air conditioning (\"HVAC\"), and janitorial service as reasonably\nnecessary to maintain comfortable use and occupancy of the Premises given\nLessee's space plan and needs, reasonable amounts of electricity for normal\nlighting and office machines, water for reasonable and normal drinking and\nlavatory use, and replacement light bulbs and\/or florescent tubes and ballasts\nfor standard overhead fixtures. Janitorial service shall be contracted directly\nby Lessee or contracted by Lessor and billed by Lessor, without mark-up or\nadditional cost, to Lessee. Costs incurred by Lessor in providing such services\nshall be Operating Expenses, except for electricity, which shall be individually\nmetered and shall be paid by Lessee as additional rent and janitorial services\nas contracted directly by Lessee. Lessor is aware of Lessee's above normal\nelectrical load and HVAC requirements and will ensure the following:\n\n           (a) There are 400 amps of three-phase current supplied to the\nPremises as of the Commencement Date;\n\n           (b) As of the Commencement Date, there will be two (2) separate\ndedicated 5-ton HVAC units connected to the Premises which are separately\nmetered;\n\n           (c) All electricity (including electricity used to operate the HVAC\nunit) supplied to the Premises is submetered exclusively to the Premises; and\n\n                                    page 19\n\n\n \n           (d) Lessor will assure that there are conduits to the Premises\nsufficient to handle fiber and accommodate two (2) separate T-1 lines (one for\ndata and one for telephone). Lessor represents and warrants that Lessee shall\nhave the right to contract with such carriers or service providers as Lessee\nmay, in its sole discretion, choose for the installation and use of these lines.\n\n     The costs of providing the items in (b) shall be paid for from the Tenant\nImprovement Allowance, provided however, that such costs shall be the\nresponsibility of Lessee if the Tenant Improvement Allowance has been depleted.\n\n     11.2  Services Exclusive to Lessee. Lessee shall pay for all water, gas,\nheat, light, power, telephone and other utilities and services specially or\nexclusively supplied and\/or metered exclusively to the Premises or to Lessee,\ntogether with any taxes thereon. If any such services are not separately metered\nto the Premises, Lessee shall pay at Lessor's option, either Lessee's Share or a\nreasonable proportion to be determined by Lessor of all charges jointly metered\nwith other premises in the Building.\n\n     11.3  Hours of Service. Any utilities provided by Lessor pursuant to\nSection 11.1 shall be provided 24 hours per day, seven (7) days per week. Any\nservices provided by Lessor pursuant to Section 11.1 (exclusive of janitorial\nservices which shall be contracted directly by Lessee, or contracted by Lessor\nand billed by Lessor to Lessee) shall be provided from 8:00 a.m. to 6:00 p.m.,\nMonday through Friday (excluding generally observed national, state or local\nholidays). Services required at other times shall be subject to advance request\nand reimbursement by Lessee to Lessor of the cost thereof.\n\n     11.4  Excess Usage by Lessee. Lessee shall not make connection to the\nutilities except by or through existing outlets and shall not install or use\nmachinery or equipment in or about the Premises that uses excess water, lighting\nor power, or suffer or permit any act that causes extra burden upon the\nutilities or services, including but not limited to security services, over\nstandard office usage for the Building Project; provided that Lessee shall be\nentitled to make connections necessary for excess usage if it does so at its own\ncost and expense, in compliance with all laws and regulations and without\ndetriment to the Leased Premises or the balance of the Building Project. Lessor\nshall require Lessee to reimburse Lessor for any excess expenses or costs that\nmay arise out of a breach of this subparagraph by Lessee. Lessor may, in its\nsole discretion, install at its own expense supplemental equipment and\/or\nseparate metering applicable to Lessee's excess usage or loading.\n\n     11.5  Interruptions. There shall be no abatement of rent and Lessor shall\nnot be liable in any respect whatsoever for the inadequacy, stoppage,\ninterruption or discontinuance of any utility or service, except when the cause\nthereof was within Lessor's control; provided, however, that if the Premises are\nrendered unusable by an event other than damage or destruction, condemnation or\nan act or omission of Lessee or Lessee's agents, contractors, invitees or\nemployees, and if such condition persists for more than (a) ten (10) consecutive\ndays, then Monthly Base Rent hereunder (but not other rent hereunder) shall be\nabated, on a day-by-day basis, for every day thereafter that such condition\ncontinues, and (b) ninety (90) consecutive days, then Lessee may terminate this\nLease as of such ninetieth (90th) consecutive day by providing Lessor with\nirrevocable written notice of its election within ten (10) days thereafter.\n\n                                    page 20\n\n\n \n12.  Assignment and Subletting.\n\n     12.1  Lessor's Consent Required. Lessee shall not voluntarily or by\noperation of law assign, transfer, mortgage, sublet, or otherwise transfer or\nencumber all or any part of Lessee's interest in the Lease or in the Premises,\nwithout Lessor's prior written consent, which cannot be unreasonably withheld.\nLessor shall respond to Lessee's request for consent hereunder in a timely\nmanner and any attempted assignment, transfer, mortgage, encumbrance or\nsubletting without such consent shall be void, and shall constitute a material\ndefault and breach of this Lease without the need for notice to Lessee under\nparagraph 13.1. Neither the use by, nor the subletting to, any majority owned or\ncontrolled (whether directly or indirectly) subsidiary or Affiliate of Lessee of\nall or a portion of the Premises shall be deemed to be an assignment or\nsubletting. An \"Affiliate\" is defined as an entity controlled by, controlling,\nor under common control with Lessee, or an entity resulting from merger,\nconsolidation, or asset acquisition.\n\n     12.2  Terms and Conditions Applicable to Assignment and Subletting.\n\n           (a) No assignment or subletting shall release Lessee of Lessee's\nobligations hereunder or alter the primary liability of Lessee to pay the rent\nand other sums due Lessor hereunder, including the payment of Lessee's Share of\nOperating Expenses, and to perform all other obligations to be performed by\nLessee hereunder.\n\n           (b) Lessor may accept rent from any person other than Lessee pending\napproval or disapproval of such assignment without being deemed to have\nconsented thereto.\n\n           (c) Neither a delay in the approval or disapproval of such assignment\nor subletting, nor the acceptance of rent, shall constitute a waiver or estoppel\nof Lessor's right to exercise its remedies for the breach of any of the terms or\nconditions of this paragraph 12 or this Lease.\n\n           (d) If Lessee's obligations under this Lease have been guaranteed by\nthird parties, then an assignment or sublease, and Lessor's consent thereto,\nshall not be effective unless said Guarantor give their written consent to such\nsublease and the terms thereof.\n\n           (e) The consent by Lessor to any assignment or subletting shall not\nconstitute a consent to any subsequent assignment or subletting by Lessee or to\nany subsequent or successive assignment or subletting by the sublessee. However,\nLessor may consent to subsequent sublettings and assignments of the sublease or\nany amendments or modifications thereto without notifying Lessee or anyone else\nliable on the Lease or sublease and without obtaining their consent and such\naction shall not relieve such persons from liability under this Lease or said\nsublease; provided, however, such persons shall not be responsible to the extent\nany such amendment or modification enlarges or increases the obligations of the\nLessee or sublessee under this Lease or such sublease.\n\n           (f) In the event of any default under this Lease, Lessor may proceed\ndirectly against Lessee, any Guarantor or anyone else responsible for the\nperformance of this Lease, including the sublessee, without first exhausting\nLessor's remedies against any other person or entity responsible therefor to\nLessor, or any security held by Lessor or Lessee.\n\n           (g) Lessor's written consent to any assignment or subletting of the\nPremises by Lessee shall not constitute an acknowledgment that no default then\nexists under this Lease of the obligations to be performed by Lessee nor shall\nsuch consent be deemed a waiver of any then existing default, except as may be\notherwise stated by Lessor at the time.\n\n                                    page 21\n\n\n \n           (h) The discovery of the fact that any financial statement relied\nupon by Lessor in giving its consent to an assignment or subletting was\nmaterially false shall, at Lessor's election, render Lessor's said consent null\nand void.\n\n     12.3  Additional Terms and Conditions Applicable to Subletting\/Assignment.\nRegardless of Lessor's consent, the following terms and conditions shall apply\nto any subletting (and in the case of subparagraph (f), assignment) by Lessee of\nall or any part of the Premises and shall be deemed included in all subleases\nunder this Lease whether or not expressly incorporated therein:\n\n           (a) Lessee hereby assigns and transfers to Lessor all of Lessee's\ninterest in all rentals and income arising from any sublease heretofore or\nhereafter made by Lessee and Lessor may collect such rent and income and apply\nsame toward Lessee's obligations under this Lease; provided, however, that until\na default shall occur in the performance of Lessee's obligations under this\nLease, Lessee may receive, collect and enjoy the rents accruing under such\nsublease. Lessor shall not, by reason of this or any other assignment of such\nsublease to Lessor nor by reason of the collection of the rents from a\nsublessee, be deemed liable to the sublessee for any failure of Lessee to\nperform and comply with any of Lessee's obligations to such sublessee under such\nsublease. Lessee hereby irrevocably authorizes and directs any such sublessee,\nupon receipt of a written notice from Lessor stating that a default exists in\nthe performance of Lessee's obligations under this Lease, to pay to Lessor the\nrents due and to become due under the sublease. Lessee agrees that such\nsublessee shall have the right to rely upon any such statement and request from\nLessor, and that such sublessee shall pay such rents to Lessor without any\nobligation or right to inquire as to whether such default exists and\nnotwithstanding any notice from or claim from Lessee to the contrary. Lessee\nshall have no right or claim against said sublessee or Lessor for any such rents\nso paid by said sublessee to Lessor.\n\n           (b) No sublease entered into by Lessee shall be effective unless and\nuntil it has been approved in writing by Lessor, except when Lessor's consent is\nnot required, as outlined in paragraph 12.1 above. In entering into any\nsublease, Lessee shall use only such form of sublease as is satisfactory to\nLessor, and once approved by Lessor, such sublease shall not be changed or\nmodified without Lessor's prior written consent. Any sublessee shall, by reason\nof entering into a sublease under this Lease, be deemed, for the benefit of\nLessor, to have assumed and agreed to conform and comply with each and every\nobligation herein to be performed by Lessee other than such obligations as are\ncontrary to or inconsistent with provisions contained in a sublease to which\nLessor has expressly consented in writing.\n\n           (c) In the event Lessee shall default in the performance of its\nobligations under this Lease, Lessor, at its option and without any obligation\nto do so, may require any sublessee to attorn to Lessor, in which event Lessor\nshall undertake the obligations of Lessee under such sublease from the time of\nthe exercise of said option to the termination of such sublease; provided,\nhowever, Lessor shall not be liable for any prepaid rents or Security Deposit\npaid by such sublessee to Lessee or for any other prior defaults of Lessee under\nsuch sublease.\n\n           (d) No sublessee shall further assign or sublet all or any part of\nthe Premises without Lessor's prior written consent.\n\n           (e) With respect to any subletting to which Lessor has consented,\nLessor agrees to deliver a copy of any notice of default by Lessee to the\nsublessee. Such sublessee shall have the right to cure a default of Lessee\nwithin three (3) days after service of said notice of default upon such\nsublessee, and the sublessee shall have a right of reimbursement and offset from\nand against Lessee for any such defaults cured by the sublessee.\n\n                                    page 22\n\n\n \n           (f) Notwithstanding anything to the contrary in the foregoing, fifty\npercent (50%) of any rent or other economic consideration received by Lessee as\na result of an assignment or subletting Lease to an entity that is not an\nAffiliate of Lessee resulting in thirty (30%) percent or more of the Premises\noccupied by an entity other than Lessee, as defined in paragraph 12.1 above,\nwhich exceeds, in the aggregate, (i) the total rent which Lessee is obligated to\npay to Lessor under the Lease (prorated to reflect obligations allocable to any\nportion of the Premises subleased), plus (ii) any reasonable and customary\nbrokerage commissions (not to exceed five percent (5%) of base rent payable\nunder the assignment or sublease), and attorneys' fees (not to exceed $750 per\nassignment or subletting), and reasonable, customary and necessary tenant\nimprovement costs actually paid by Lessee in connection with such assignment or\nsubletting, shall be paid to Lessor within ten (10) days after receipt thereof\nas additional rent hereunder, without altering or reducing any other obligations\nof Lessee hereunder.\n\n     12.4  Lessor's Expenses. In the event Lessee shall assign or sublet the\nPremises or request the consent of Lessor to any assignment or subletting or if\nLessee shall request the consent of Lessor for any act Lessee proposes to do\nthen Lessee shall pay Lessor's reasonable costs and expenses incurred in\nconnection therewith, including without limitation attorneys', architects',\nengineers' and other consultants' fees.\n\n     12.5  Conditions to Consent. With respect to transfers for which Lessor's\napproval is required pursuant to this paragraph 12, Lessor reserves the right to\ncondition any approval to assign or sublet upon Lessor's determination that (a)\nthe proposed assignee or sublessee shall conduct a business on the Premises of a\nquality substantially equal to that of Lessee and consistent with the general\ncharacter of the other occupants of the Building Project and not in violation of\nany exclusives or rights then held by other lessees, and (b) the proposed\nassignee or sublessee be at least as financially responsible as Lessee was\nexpected to be at the time of the execution of this Lease or of such assignment\nor subletting, whichever is greater.\n\n13.  Default; Remedies.\n\n     13.1  Default. The occurrence of any one or more of the following events\nshall constitute a material default of this Lease by Lessee:\n\n           (a) The vacation or abandonment of the Premises by Lessee. Vacation\nof the Premises shall include the failure to occupy the Premises for a\ncontinuous period of ninety (90) days or more, whether or not the rent is paid,\nunless Lessee has sublet or assigned the Premises.\n\n           (b) The breach by Lessee of any of the covenants, conditions or\nprovisions of paragraphs 13.1(a) (vacation or abandonment), 13.1(e)\n(insolvency), 13.1(f) (false statement), 16(a) (estoppel certificate), 30.3\n(subordination\/self-operating), 33 (auctions), or 41.1 (easements), all of which\nare hereby deemed to be material, non-curable defaults without the necessity of\nany notice by Lessor to Lessee thereof; the breach by Lessee of any of the\ncovenants, conditions or provisions of paragraphs 7.3(a), (b) or (d)\n(alterations) or 12.1 (assignment or subletting), where such breach shall\ncontinue for a period of fifteen (15) days after written notice thereof from\nLessor to Lessee.\n\n           (c) The failure by Lessee to make any payment of rent or any other\npayment required to be made by Lessee hereunder, as and when due, where such\nfailure shall continue for a period of five (5) days after written notice\nthereof from Lessor to Lessee.\n\n           (d) The failure by Lessee to observe or perform any of the covenants,\nconditions or provisions of this Lease to be observed or performed by Lessee\nother than those \n\n                                    page 23\n\n\n \nreferenced in subparagraphs (b) and (c), above, where such failure shall\ncontinue for a period of thirty (30) days after written notice thereof from\nLessor to Lessee; provided, however, that if the nature of Lessee's\nnoncompliance is such that more than thirty (30) days are reasonably required\nfor its cure, then Lessee shall not be deemed to be in default if Lessee\ncommenced such cure within said thirty (30) day period and thereafter diligently\npursues such cure to completion. To the extent permitted by law, such thirty\n(30) day notice shall constitute the sole and exclusive notice required to be\ngiven to Lessee under applicable Unlawful Detainer statutes.\n\n           (e) (i) The making by Lessee of any general arrangement or general\nassignment for the benefit of creditors; (ii) Lessee becoming a \"debtor\" as\ndefined in 11 U.S.C. (S) 101 or any successor statute thereto (unless, in the\ncase of a petition filed against Lessee, the same is dismissed within ninety\n(90) days; (iii) the appointment of a trustee or receiver to take possession of\nsubstantially all of Lessee's assets located at the Premises or of Lessee's\ninterest in this Lease, where possession is not restored to Lessee within thirty\n(30) days; or (iv) the attachment, execution or other judicial seizure of\nsubstantially all of Lessee's assets located at the Premises or of Lessee's\ninterest in this Lease, where such seizure is not discharged within thirty (30)\ndays. In the event that any provision of this paragraph 13.1(e) is contrary to\nany applicable law, such provision shall be of no force or effect.\n\n           (f) The discovery by Lessor that any financial statement given to\nLessor by Lessee, or its successor in interest or by any guarantor of Lessee's\nobligation hereunder, was materially false.\n\n     13.2  Lessor's Remedies.\n\n           (a) Termination. In the event of any default by Lessee, in addition\nto any other remedies available to Lessor under this Lease, at law or in equity,\nLessor shall have the immediate option to terminate this Lease and all rights of\nLessee hereunder. In the event that Lessor shall elect to so terminate this\nLease, then Lessor may recover from Lessee:\n\n               (i)    the worth at the time of award of any unpaid rent which\n           had been earned at the time of such termination; plus\n\n               (ii)   the worth at the time of the award of the amount by which\n           the unpaid rent which would have been earned after termination until\n           the time of award exceeds the amount of such rental loss that Lessee\n           proves could have been reasonably avoided; plus\n\n               (iii)  the worth at the time of award of the amount by which the\n           unpaid rent for the balance of the term after the time of award\n           exceeds the amount of such rental loss that Lessee proves could be\n           reasonable avoided; plus\n\n               (iv)   any other amount necessary to compensate Lessor for all\n           the detriment proximately caused by Lessee's failure to perform its\n           obligations under this Lease or which, in the ordinary course of\n           things, would be likely to result therefrom including, but not\n           limited to: \"Unreimbursed Leasehold Improvement and Rental Abatement\n           Costs\" (as defined below); attorneys' fees; brokers' commissions; the\n           costs of refurbishment, alterations, renovation and repair of the\n           Premises; and removal (including the repair of damage caused by such\n           removal) and storage (or disposal) of Lessee's personal property,\n           equipment, fixtures, Lessee's alterations, additions, leasehold\n           improvements and any other items which Lessee is required under this\n           Lease to remove but does not remove. As used herein, the term\n           \"Unreimbursed Leasehold Improvement and Rental Abatement Costs\" shall\n           mean the product when multiplying (i) the sum of any \n\n                                    page 24\n\n\n \n           leasehold improvement allowance plus any other costs provided, paid\n           or incurred by Lessor in connection with the design and construction\n           of the initial leasehold improvements installed in the Premises on or\n           prior to the Commencement Date pursuant to the Work Letter, together\n           with the amount, if any, of Abated Rent provided for in Paragraph 4.1\n           hereof, by (ii) the fraction, the numerator of which is the number of\n           months of the term of this Lease not yet elapsed as of the date on\n           which this Lease is terminated (excluding any unexercised renewal\n           options), and the denominator of which is the total number of months\n           of the term of this Lease (excluding any unsecured renewal options).\n           For example, if the total costs paid or incurred by Lessor with\n           respect to the initial leasehold improvements, plus the amount of\n           Abated Rent, was $100,000.00, the Lease term was sixty (60) months,\n           and the Lease was terminated by reason of Lessee's default at the end\n           of twelve (12) months, the Unreimbursed Leasehold Improvement and\n           Rental Abatement Costs would be equal to $80,000.00 (i.e., $80,000.00\n           equals $100,000.00 x 48\/60).\n\n           As used in subparagraphs (i) and (ii), above, the \"worth at the time\nof award\" is computed by allowing interest at the maximum interest rate which\nLessor is permitted by law to charge to Lessee (the \"Lease Rate\"). As used in\nsubparagraph (iii), above, the \"worth at the time of award\" is computed by\ndiscounting such amount at the discount rate of the Federal Reserve Bank of San\nFrancisco at the time of award plus one percent (1%).\n\n           (b) Re-Entry Rights. In the event of any default by Lessee, in\naddition to any other remedies available to Lessor under this Lease, at law or\nin equity, Lessor shall also have the right, with or without terminating this\nLease, to re-enter the Premises and remove all persons and property from the\nPremises; such property may be removed, stored and\/or disposed of pursuant to\nthis Lease or any other procedures permitted by applicable law. No re-entry or\ntaking possession of the Premises by Lessor pursuant to this paragraph 13.2(b),\nand no acceptance of surrender of the Premises or other action on Lessor's part,\nshall be construed as an election to terminate this Lease unless a written\nnotice of such intention be given to Lessee or unless the termination thereof be\ndecreed by a court of competent jurisdiction.\n\n           (c) Continuation of Lease. In the event of any default by Lessee, in\naddition to any other remedies available to Lessor under this Lease, at law or\nin equity, Lessor shall have the right to continue this Lease in full force and\neffect, whether or not Lessee shall have abandoned the Premises. The foregoing\nremedy shall also be available to Lessor pursuant to California Civil Code\nSection 1951.4 and any successor statute thereof in the event Lessee has\nabandoned the Premises. In the event Lessor elects to continue this Lease in\nfull force and effect pursuant to this paragraph 13.2(c), then Lessor shall be\nentitled to enforce all of its rights and remedies under this Lease, including\nthe right to recover rent as it becomes due. Lessor's election not to terminate\nthis Lease pursuant to this paragraph 13.2(c) or pursuant to any other provision\nof this Le~Lease, at law or in equity, shall not preclude Lessor from\nsubsequently electing to terminate this Lease or pursuing any of its other\nremedies.\n\n           (d) Rights and Remedies Cumulative. All rights, options and remedies\nof Lessor contained in this paragraph 13.2 and elsewhere in this Lease shall be\nconstrued and held to be cumulative, and no one of them shall be exclusive of\nthe other, and Lessor shall have the right to pursue any one or all of such\nremedies or any other remedy or relief which may be provided by law or in\nequity, whether or not stated in this Lease. Nothing in this paragraph 13.2\nshall be deemed to limit or otherwise affect Lessee's indemnification of Lessor\npursuant to any provision of this Lease.\n\n     13.3  Default by Lessor. Lessor shall not be in default unless Lessor fails\nto perform obligations required of Lessor within a reasonable time, but in no\nevent later than thirty (30) days \n\n                                    page 25\n\n\n \nafter written notice by Lessee to Lessor and to the holder of any mortgage or\ndeed of trust covering the Premises whose name and address shall have\ntheretofore been furnished to Lessee in writing, specifying wherein Lessor has\nfailed to perform such obligation; provided, however, that if the nature of\nLessor's obligation is such that more than thirty (30) days are required for\nperformance then Lessor shall not be in default if Lessor commences performance\nwithin such 30-day period and thereafter diligently pursues the same to\ncompletion.\n\n     13.4  Late Charges. Lessee hereby acknowledges that late payment by Lessee\nto Lessor of Base Rent, Lessee's Share of Operating Expenses or other sums due\nhereunder will cause Lessor to incur costs not contemplated by this Lease, the\nexact amount of which will be extremely difficult to ascertain. Such costs\ninclude, but are not limited to, processing and accounting charges, and late\ncharges which may be imposed on Lessor by the terms of any mortgage or trust\ndeed covering the Building Project. Accordingly, if any installment of Base\nRent, Operating Expenses, or any other sum due from Lessee shall not be received\nby Lessor or Lessor's designee within ten (10) days after such amount shall be\ndue, then, without any requirement for notice to Lessee, Lessee shall pay to\nLessor a late charge equal to ten (10%) percent of such overdue amount. The\nparties hereby agree that such late charge represents a fair and reasonable\nestimate of the costs Lessor will incur by reason of late payment by Lessee.\nAcceptance of such late charge by Lessor shall in no event constitute a waiver\nof Lessee's default with respect to such overdue amount, nor prevent Lessor from\nexercising any of the other rights and remedies granted hereunder.\n\n14.  Condemnation. If the Premises or any portion thereof or the Building\nProject are taken under the power of eminent domain, or sold under the threat of\nthe exercise of said power (all of which are herein called \"condemnation\"), this\nLease shall terminate as to the part so taken as of the date the condemning\nauthority takes title or possession, whichever first occurs; provided that if so\nmuch of the Premises or the Building Project are taken by such condemnation as\nwould substantially and adversely affect the operation and profitability of\nLessee's business conducted from the Premises, Lessee shall have the option, to\nbe exercised only in writing within thirty (30) days after Lessor shall have\ngiven Lessee written notice of such taking (or in the absence of such notice,\nwithin thirty (30) days after the condemning authority shall have taken\npossession), to terminate this Lease as of the date the condemning authority\ntakes such possession. If Lessee does not terminate this Lease in accordance\nwith the foregoing, this Lease shall remain in full force and effect as to the\nportion of the Premises remaining, except that the rent and Lessee's Share of\nOperating Expenses shall be reduced in the proportion that the floor area of the\nPremises taken bears to the total floor area of the Premises. Common Areas taken\nshall be excluded from the Common Areas usable by Lessee and no reduction of\nrent shall occur with respect thereto or by reason thereof. Lessor shall have\nthe option in its sole discretion to terminate this Lease as of the taking of\npossession by the condemning authority, by giving written notice to Lessee of\nsuch election within thirty (30) days after receipt of notice of a taking by\ncondemnation of any part of the Premises or the Building Project. Any award for\nthe taking of all or any part of the Premises or the Building Project under the\npower of eminent domain or any payment made under threat of the exercise of such\npower shall be the property of Lessor, whether such award shall be. made as\ncompensation for diminution in value of the leasehold or for the taking of the\nfee, or as severance damages; provided, however, that Lessee shall be entitled\nto any separate award for loss of or damage to Lessee's trade fixtures,\nremovable personal property and unamortized tenant improvements that have been\npaid for by Lessee. For that purpose the cost of such improvements shall be\namortized over the original term of this Lease excluding any options. In the\nevent that this Lease is not terminated by reason of such condemnation, Lessor\nshall to the extent of severance damages received by Lessor in connection with\nsuch condemnation, repair any damage to the Premises caused by such condemnation\nexcept to the extent that Lessee has been reimbursed therefor by the condemning\nauthority.\n\n                                    page 26\n\n\n \n15.  Broker's Fee.\n\n     (a) The brokers involved in this transaction are Lee &amp; Associates as \"dual\nagent\", (collectively \"Brokers\"). Lessor shall pay to said brokers a fee as set\nforth in a separate agreement between Lessor and said broker for brokerage\nservices rendered by said broker to Lessor in this transaction. The fee paid by\nLessor shall constitute full satisfaction of amounts claimed by Lee &amp; Associates.\n\n     (b) Lessor agrees to pay said fee not only on behalf of Lessor but also on\nbehalf of any person, corporation, association, or other entity having an\nownership interest in said real property or any part thereof, when such fee is\ndue hereunder. Any transferee of Lessor's interest in this Lease, whether such\ntransfer is by agreement or by operation of law, shall be deemed to have assumed\nLessor's obligation under this paragraph 15. Each listing broker shall be a\nthird party beneficiary of the provisions of this paragraph 15 to the extent of\ntheir interest in any commission arising under this Lease and may enforce that\nright directly against Lessor; provided, however, that all brokers having a\nright to any part of such total commission shall be a necessary party to any\nsuit with respect thereto.\n\n     (c) Lessee and Lessor each represents and warrants to the other that\nneither has had any dealings with any person, firm, broker or finder (other than\nthe person(s), if any, whose names are set forth in paragraph 15(a), above) in\nconnection with the negotiation of this Lease and\/or the consummation of the\ntransaction contemplated hereby, and no other broker or other person, firm or\nentity is entitled to any commission or finder's fee in connection with said\ntransaction and Lessee and Lessor do each hereby indemnify and hold the other\nharmless from and against any costs, expenses, attorneys' fees or liability for\ncompensation or charges which may be claimed by any such unnamed broker, finder\nor other similar party by reason of any dealings or actions of the indemnifying\nparty.\n\n16.  Estoppel Certificate.\n\n     (a) Each party (as \"Responding Party\") shall at any time, upon not less\nthan ten (10) days' prior written notice from the other party (\"Requesting\nParty\") execute, acknowledge and deliver to the Requesting Party a statement in\nwriting (i) certifying that this Lease is unmodified and in full force and\neffect (or, if modified, stating the nature of such modification and certifying\nthat this Lease, as so modified, is in full force and effect) and the date to\nwhich the rent and other charges are paid in advance, if any, and (ii)\nacknowledging that there are not, to the Responding Party's knowledge, any\nuncured defaults on the part of the Requesting Party, or specifying such\ndefaults if any are claimed, and (iii) in the case of Lessee, certify as to such\nother matters as may be requested by Lessor or by a prospective purchaser or\nencumbrancer of all or any part of the Building Project. Any such statement may\nbe conclusively relied upon by any prospective purchaser or encumbrancer of the\nBuilding Project or of the business of Lessee.\n\n     (b) At the Requesting Party's option, the failure to deliver such statement\nwithin such time shall be a material default of this Lease by the party who is\nto respond, without any further notice to such party, or it shall be conclusive\nupon such party that (i) this Lease is in full force and effect, without\nmodification except as may be represented by the Requesting Party, (ii) there\nare no uncured defaults in the Requesting Party's performance, (iii) if Lessor\nis the Requesting Party, not more than one month's rent has been paid in\nadvance, and (iv) if Lessor is the Requesting Party, there are no remaining\nobligations of the Requesting Party under this Lease yet to be performed.\n\n17.  Lessor's Liability. The term \"Lessor\" as used herein shall mean only the\nowner or owners, at the time in question, of the fee title or a Lessee's\ninterest in a ground lease of the \n\n                                    page 27\n\n\n \nBuilding Project, and, in the event of any transfer of such title or interest,\nLessor herein named (and in case of any subsequent transfers then the grantor)\nshall be relieved from and after the date of such transfer of all liability as\nto Lessor's obligations that accrue after a transfer of Lessor's interest,\nprovided that any funds in the hands of Lessor or the then grantor at the time\nof such transfer, in which Lessee has an interest, shall be delivered to the\ngrantee, and that the purchaser of Lessor's interest assumes (by operation of\nlaw or otherwise) Lessor's remaining obligations under this Lease. The\nobligations contained in this Lease to be performed by Lessor shall, subject as\naforesaid, be binding on Lessor's successors and assigns, only during their\nrespective periods of ownership.\n\n18.  Severability. The invalidity of any provision of this Lease as determined\nby a court of competent jurisdiction shall in no way affect the validity of any\nother provision hereof.\n\n19.  Interest on Past-due Obligations. Except as expressly herein provided, any\namount due to Lessor not paid when due shall bear interest at the maximum rate\nthen allowable by law or judgments from the date due. Payment of such interest\nshall not excuse or cure any default by Lessee under this Lease; provided,\nhowever, that interest shall not be payable on late charges incurred by Lessee\nnor on any amounts upon which late charges are paid by Lessee.\n\n20.  Time of Essence. Time is of the essence with respect to the obligations to\nbe performed under this Lease.\n\n21.  Additional Rent. All monetary obligations of Lessee to Lessor under the\nterms of this Lease, including but not limited to Lessee's Share of Operating\nExpense and any other expenses payable by Lessee hereunder shall be deemed to be\nrent.\n\n22.  Incorporation of Prior Agreements; Amendments. This Lease contains all\nagreements of the parties with respect to any matter mentioned herein. No prior\nor contemporaneous agreement or understanding pertaining to any such matter\nshall be effective. This Lease may be modified in writing only, signed by the\nparties in interest at the time of the modification. Except as otherwise stated\nin this Lease, Lessee hereby acknowledges that neither the real estate broker\nlisted in paragraph 15 hereof nor any cooperating broker on this transaction nor\nthe Lessor or any employee or agents of any of said persons has made any oral or\nwritten warranties or representations to Lessee relative to the condition or use\nby Lessee of the Premises or the Building Project and Lessee acknowledges that\nLessee assumes all responsibility regarding the Occupational Safety Health Act,\nthe legal use and adaptability of the Premises and the compliance thereof with\nall applicable laws and regulations in effect during the term of this Lease.\n\n23.  Notices. Any notice required or permitted to be given hereunder shall be\nin writing and may be given by personal delivery or by certified or registered\nmail, and shall be deemed sufficiently given if delivered or addressed to Lessee\nor to Lessor at the address noted below or adjacent to the signature of the\nrespective parties, as the case may be. Mailed notices shall be deemed given\nupon actual receipt at the address required, or forty-eight hours following\ndeposit in the mail, postage prepaid, whichever first occurs. Either party may\nby notice to the other specify a different address for notice purposes except\nthat upon Lessee's taking possession of the Premises, the Premises shall\nconstitute Lessee's address for notice purposes. A copy of all notices required\nor permitted to be given to Lessor hereunder shall be concurrently transmitted\nto such party or parties at such addresses as Lessor may from time to time\nhereafter designate by notice to Lessee. A copy of all notices required or\npermitted to be given to Lessee hereunder shall be concurrently transmitted to\nDavis Wright Tremaine LLP, Los Angeles, California, Attention: Marc E.\nJacobowitz, Esq., at such address as will be provided to Lessor.\n\n24.  Waivers. No waiver by Lessor of any provision hereof shall be deemed a\nwaiver of any \n\n                                    page 28\n\n\n \nother provision hereof or of any subsequent breach by Lessee of the same or any\nother provision. Lessor's consent to, or approval of, any act shall not be\ndeemed to render unnecessary the obtaining of Lessor's consent to or approval of\nany subsequent act by Lessee. The acceptance of rent hereunder by Lessor shall\nnot be a waiver of any preceding breach by Lessee of any provision hereof, other\nthan the failure of Lessee to pay the particular rent so accepted, regardless of\nLessor's knowledge of such preceding breach at the time of acceptance of such\nrent.\n\n25.  Recording. Either Lessor or Lessee shall, upon request of the other,\nexecute, acknowledge and deliver to the other a \"short form\" memorandum of this\nLease for recording purposes.\n\n26.  Holding Over. If Lessee, with Lessor's consent, remains in possession of\nthe Premises or any part thereof after the expiration of the term hereof, such\noccupancy shall be a tenancy from month to month upon all the provisions of this\nLease pertaining to the obligations of Lessee, except that the rent payable\nshall be one hundred twenty-five percent (125%) of the Base Rent in effect for\nthe last month of the Term of this Lease for the first two (2) months of such\nholdover, one hundred fifty percent (150%) of the Base Rent in effect for the\nlast month of the Term of this Lease for the third (3rd) and fourth (4th) months\nof such holdover, and two hundred percent (200%) of the Base Rent in effect for\nthe last month of the Term of this Lease thereafter, and all Options, if any,\ngranted under the terms of this Lease shall be deemed terminated and be of no\nfurther effect during said month to month tenancy.\n\n27.  Cumulative Remedies. No remedy or election hereunder shall be deemed\nexclusive but shall, wherever possible, be cumulative with all other remedies at\nlaw or in equity.\n\n28.  Covenants and Conditions. Each provision of this Lease performable by\nLessee and Lessor shall be deemed both a covenant and a condition.\n\n29.  Binding Effect; Choice of Law. Subject to any provisions hereof\nrestricting assignment or subletting by Lessee and subject to the provisions of\nparagraph 17, this Lease shall bind the parties, their personal representatives,\nsuccessors and assigns. This Lease shall be governed by the laws of the State of\nCalifornia applicable to contracts to be wholly performed within such State.\n\n30.  Subordination.\n\n     30.1  Mortgages and Deeds of Trust. Subject to paragraph 30.2, this Lease\nis subordinate to prior or subsequent mortgages or deeds of trust covering this\nBuilding.\n\n     30.2  Foreclosures. If any mortgage or deed of trust is foreclosed, then:\n\n           (a)  This Lease shall continue;\n\n           (b) Lessee's quiet possession shall not be disturbed if Lessee is not\nin Default;\n\n           (c) Lessee will attorn to and recognize the mortgagee or purchaser at\nforeclosure sale (\"Successor Lessor\") as Lessee's landlord for the remaining\nTerm; and\n\n           (d) The Successor Lessor shall not be bound by:\n\n                                    page 29\n\n\n \n               (i)    any payment of Base Rent or additional rent for more than\none month in advance, except the Security Deposit and free rent, if any,\nspecified in the Lease;\n\n               (ii)   any amendment, modification, or ending of this Lease\nwithout Successor Lessor's consent after the Successor Lessor's name is given to\nLessee unless the amendment, modification, or ending is specifically authorized\nby the original Lease and does not require Lessor's prior agreement or consent;\nand\n\n               (iii)  any liability for any act or omission of a prior lessor.\n\n     30.3  Self-Operating. Paragraph 30 is self-operating. However, Lessee shall\npromptly execute and deliver any documents needed to confirm this arrangement.\nLessee's failure to execute such documents within ten (10) days after written\ndemand shall constitute a material default by Lessee hereunder without further\nnotice to Lessee.\n\n31.  Attorneys' Fees.\n\n     31.1  If either party or the broker(s) named herein bring an action to\nenforce the terms hereof or declare rights hereunder, the prevailing party in\nany such action, trial or appeal thereon, shall be entitled to his reasonable\nattorneys' fees to be paid by the losing party as fixed by the court in the same\nor a separate suit, and whether or not such action is pursued to decision or\njudgment. The provisions of this paragraph shall inure to the benefit of the\nbroker named herein who seeks to enforce a right hereunder.\n\n     31.2  The attorneys' fee award shall not be computed in accordance with any\ncourt fee schedule, but shall be such as to fully reimburse all attorneys' fees\nreasonably incurred in good faith.\n\n     31.3  Lessor shall be entitled to reasonable attorneys' fees and all other\ncosts and expenses incurred in the preparation and service of notices of default\nand consultations in connection therewith, whether or not a legal action is\nsubsequently commenced in connection with such default.\n\n32.  Lessor's Access.\n\n     32.1  Lessor and Lessor's agents shall have the right to enter the Premises\nat reasonable times with 24 hours prior notice, except in case of emergency) for\nthe purpose of inspecting the same, performing any services required of Lessor,\nshowing the same to prospective purchasers, lenders, or lessees (provided that\nthe interior of the Premises will not be shown to prospective lessees until no\nmore than 90 days remain in the scheduled term of the Lease), taking such safety\nmeasures, erecting such scaffolding or other necessary structures, making such\nalterations, repairs, improvements or additions to the Premises or to the\nBuilding Project as Lessor may reasonably deem necessary or desirable and the\nerecting, using and maintaining of utilities, services, pipes and conduits\nthrough the Premises and\/or other premises as long as there is no material\nadverse effect to Lessee's use of the Premises. Lessor may at any time place on\nor about the Building (but not in the interior of the Premises) any ordinary\n\"For Sale\" signs and Lessor may at any time during the last 90 days of the term\nhereof place on or about the Premises any ordinary \"For Lease\" signs.\n\n     32.2  All activities of Lessor pursuant to this paragraph shall be without\nabatement of rent, nor shall Lessor have any liability to Lessee for the same.\n\n                                    page 30\n\n\n \n     32.3  Lessor shall have the right to retain keys to the Premises and to\nunlock all doors in or upon the Premises other than to files, vaults and safes,\nand in the case of emergency to enter the Premises by any reasonably appropriate\nmeans, and any such entry shall not be deemed a forceable or unlawful entry or\ndetainer of the Premises or an eviction. Lessee waives any charges for damages\nor injuries or interference with Lessee's property or business in connection\ntherewith.\n\n33.  Auctions. Lessee shall not conduct, nor permit to be conducted, either\nvoluntarily or involuntarily, any auction upon the Premises or the Common Areas\nwithout first having obtained Lessor's prior written consent. Notwithstanding\nanything to the contrary in this Lease, Lessor shall not be obligated to\nexercise any standard of reasonableness in determining whether to grant such\nconsent. The holding of any auction on the Premises or Common Areas in violation\nof this paragraph shall constitute a material default of this Lease.\n\n34.  Signs. Lessee, at Lessee's sole cost and expense, shall have right to\ninstall a sign adjacent to the main entry door, in a size and location to be\nmutual agreed upon between Lessee and Lessor. Lessor shall have the right to\napprove the fabrication and attachment details of any lessee signage, with such\napproval not to be unreasonably withheld, conditioned or delayed.\n\n     34.1  Lessee shall have the right to place the firm's name, the name of\neach of Lessee's professionals and other employees and the name(s) of any\nsubtenants on the building's directory board in the lobby of the building.\n\n     34.2  Lessee shall not place any sign upon the Premises or the Office\nBuilding Project without Lessor's prior written consent. Under no circumstances\nshall Lessee place a sign on any roof of the Office Building Project.\n\n35.  Merger. The voluntary or other surrender of this Lease by Lessee, or a\nmutual cancellation thereof, or a termination by Lessor, shall not work a\nmerger, and shall, at the option of Lessor, terminate all or any existing\nsubtenancies or may, at the option of Lessor, operate as an assignment to Lessor\nof any or all of such subtenancies.\n\n36.  Consents. Except for paragraphs 33 (auctions) and 34 (signs) hereof,\nwherever in this Lease the consent of one party is required to an act of the\nother party such consent shall not be unreasonably withheld or delayed.\n\n37.  Guarantor. In the event that there is a guarantor of this Lease, as named\nin Section 1.12 hereof, said guarantor shall have the same obligations as Lessee\nunder this Lease, and shall execute a guaranty in the form and substance of\nExhibit E attached hereto, contemporaneous with Lessee's execution of this\nLease.\n\n38.  Quiet Possession. Upon Lessee paying the rent for the Premises and\nobserving and performing all of the covenants, conditions and provisions on\nLessee's part to be observed and performed hereunder, Lessee shall have quiet\npossession of the Premises for the entire term hereof subject to all of the\nprovisions of this Lease. The individuals executing this Lease on behalf of\nLessor represent and warrant to Lessee that they are fully authorized and\nlegally capable of executing this Lease on behalf of Lessor and that such\nexecution is binding upon all parties holding an ownership interest in the\nBuilding Project.\n\n                                    page 31\n\n\n \n39.  Options.\n\n     39.1  Definition. As used in this paragraph the work \"Option\" has the\nfollowing meaning: (1) the right or option to extend the term of this Lease or\nto renew this Lease or to extend or renew any lease that Lessee has on other\nproperty of Lessor; (2) the option or right of first refusal to lease the\nPremises or the right of first offer to lease the Premises or the right of first\nrefusal to lease other space within the Building Project or other property of\nLessor or the right of first offer to lease other space within the Building\nProject or other property of Lessor; (3) the right or option to purchase the\nPremises or the Building Project, or the right of first refusal to purchase the\nPremises or the Building Project or the right or first offer to purchase the\nPremises or the Building Project, or the right or option to purchase other\nproperty of Lessor, or the right of first refusal to purchase other property of\nLessor or the right of first offer to purchase other property of Lessor.\n\n     39.2  Options Personal. Each Option granted to Lessee in this Lease is\npersonal to the original Lessee and may be exercised only by the original Lessee\nwhile occupying the Premises who does so without the intent of thereafter\nassigning this Lease or subletting the Premises or any portion thereof, and may\nnot be exercised or be assigned, voluntarily or involuntarily, by or to any\nperson or entity other than Lessee, except to an assignee which is a majority-\nowned Affiliate or a New Owner. The Options, if any, herein granted to Lessee\nare not assignable separate and apart from this Lease, nor may any Option be\nseparated from this Lease in any manner, either by reservation or otherwise.\n\n     39.3  Multiple Options. In the event that Lessee has any multiple options\nto extend or renew this Lease a later option cannot be exercised unless the\nprior option to extend or renew this Lease has been so exercised.\n\n     39.4  Effect of Default on Options.\n\n           (a)   Lessee shall have no right to exercise an Option,\nnotwithstanding any provision in the grant of Option to the contrary, (i) during\nthe time commencing from the date Lessor gives to Lessee a notice of default\npursuant to paragraph 13.1(c) or 13.1(d) and continuing until the noncompliance\nalleged in said notice of default is cured, or (ii) during the period of time\ncommencing on the day after a monetary obligation to Lessor is due from Lessee\nand unpaid (without any necessity for notice thereof to Lessee) and continuing\nuntil the obligation is paid, or (iii) in the event that Lessor has given to\nLessee three or more notices of default under paragraph 13.1(c), or paragraph\n13.1(d), whether or not the defaults are cured, during the 12-month period of\ntime immediately prior to the time that Lessee attempts to exercise the subject\nOption, (iv) if Lessee has committed any non-curable breach, including without\nlimitation those described in paragraph 13.1(b), or is otherwise in default of\nany of the terms, covenants or conditions of this Lease.\n\n           (b)   The period of time within which an Option may be exercised\nshall not be extended or enlarged by reason of Lessee's inability to exercise an\nOption because of the provisions of paragraph 39.4(a).\n\n           (c)   All rights of Lessee under the provisions of an Option shall\nterminate and be of no further force of effect, notwithstanding Lessee's due and\ntimely exercise of the Option, if, after such exercise and during the term of\nthis Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee\nfor a period of thirty (30) days after such obligation becomes due (without any\nnecessity of Lessor to give notice thereof to Lessee), or (ii) Lessee fails to\ncommence to cure a default specified in paragraph 13.1(d) within thirty (30)\ndays after the date that Lessor gives notice to Lessee of such default and\/or\nLessee fails thereafter to diligently prosecute said cure to completion, (iii)\nLessor gives to Lessee three or more notices of default under paragraph 13.1(c),\n\n                                    page 32\n\n\n \nor paragraph 13.1(d), whether or not the defaults are cured, or (iv) if Lessee\nhas committed any non-curable breach, including without limitation those\ndescribed in paragraph 13.1(b), or is otherwise in default of any of the terms,\ncovenants and conditions of this Lease.\n\n     39.5  Option to Renew\/Fair Market Rental Rate\n\n           (a)   Provided that an Event of Default by Lessee is not then in\nexistence under the Lease, either at the time of the exercise of the Options set\nforth herein or at the time of the commencement of the Extension Periods\nhereunder, Lessee may elect to extend the Term of this Lease (\"Extension\nOption\") for all of the Premises for one (1) additional period of five (5) years\n(the \"Extension Period\"), by delivering to Lessor not later than six (6) months\nnor sooner than nine (9) months before the end of the initial Term of this Lease\na written notice (the \"Option Notice\") of such election. The Extension Period\nshall commence on the day immediately following the last day of the Term and\nshall be subject to all the terms and conditions of this Lease except that the\namount of the Letter of Credit shall be reviewed based on Lessee's then current\nfinancial condition and the rent for the Extension Period shall be determined as\nprovided below.\n\n           (b)   The Extension Options set forth herein are personal to Lessee\nand any Affiliate of Lessee.\n\n           (c)   The Base Rent for the Extension Period shall be the greater of\na) three and one-half (3.5%) over the then current rental rate, and b) 98% of\nFair Market Rental Rate (as hereinafter defined) as of the commencement of the\nExtension Period, as long as no broker represents Lessee in the transaction.\n\n           (d)   For purposes of the Lease, the term \"Fair Market Rental Rate\"\nshall mean the annual amount per rentable square foot that Lessor has accepted\nin current transactions between parties of comparable credit-worthiness, for\ncomparable space, for a comparable use, for a comparable period of time\n(\"Comparable Transactions\") in the Building, or if there are not a sufficient\nnumber of Comparable Transactions in the Building, what a comparable landlord of\na Comparable Building with comparable vacancy factors would accept in Comparable\nTransactions. In any determination of Comparable Transactions appropriate\nconsideration shall be given to the annual rental rates per rentable square\nfoot, the standard of measurement by which the rentable square footage is\nmeasured, the ratio of rentable square feet to usable square feet, the type of\nescalation clause (e.g., whether increases in additional rent are determined on\na net or gross basis, and if gross, whether such increases are determined\naccording to a base year or a base dollar amount expense stop), the extent of\nLessee's liability under the Lease, abatement provisions reflecting free rent\nand\/or no rent during the period of construction or subsequent to the\nCommencement Date as to the space in question, length of the lease term, size\nand location of premises being leased, building standard work letter and\/or\nother generally applicable conditions of tenancy (other than Tenant Improvement\nAllowances) for such Comparable Transactions. The intent is that Lessee will\nobtain the same rent and other economic benefits that Lessor would otherwise\ngive in Comparable Transactions and that Lessor will make, and receive the same\neconomic payments and concessions that Lessor would otherwise make, and receive\nin Comparable Transactions.\n\n     Lessor shall determine the Fair Market Rental Rate by using its good faith\njudgment. Lessor shall provide written notice of such amount within seven (7)\ndays (but in no event later than ten (10) days after Lessee provides the notice\nto Lessor of its interest in exercising Lessee's option rights which require a\ncalculation of the Fair Market Rental Rate). Lessee shall have twelve (12) days\n(\"Lessee's Review Period\") after receipt of Lessor's notice of the new rental\nwithin which to accept such rental or to reasonably object thereto in writing.\nIn the event Lessee objects, Lessor and Lessee shall attempt to agree upon such\nFair Market Rental Rate using their best good faith efforts. If Lessor and\nLessee fail to reach agreement within twelve (12) days\n\n                                    page 33\n\n\n \nfollowing Lessee's Review (\"Outside Agreement Date\"), then each party shall\nplace in a separate sealed envelope their final proposal as to Fair Market\nRental Rate and such determination shall be submitted to arbitration in\naccordance with Subsections (a) through (e) below. Failure of Lessee to so elect\nin writing within Lessee's Review Period shall conclusively be deemed its\nrejection of the Fair Market Rental Rate determined by Lessor.\n\n     In the event that Lessor fails to timely generate the initial written\nnotice of Lessor's opinion of the Fair Market Rental Rate which triggers the\nnegotiation period of this Lease, then Lessee may commence such negotiations by\nproviding the initial notice, in which event Lessor shall have fifteen (15) days\n(\"Lessor's Review Period\") after receipt of Lessee's notice of the new rental\nwithin which to accept such rental. In the event Lessor fails to accept in\nwriting such rental proposed by Lessee, then such proposal shall be deemed\nrejected, and Lessor and Lessee shall attempt in good faith to agree upon such\nFair Market Rental Rate using their best good faith efforts. If Lessor and\nLessee fail to reach agreement within fifteen (15) days following Lessor's\nReview Period (which shall be, in such event, the \"Outside Agreement Date\" in\nlieu of the above definition of such date), then each party shall place in a\nseparate sealed envelope their final proposal as to the Fair Market Rental Rate\nand such determination shall be submitted to arbitration in accordance with\nSubsections (a) through (e) below.\n\n           (a)   Lessor and Lessee shall meet with each other within five (5)\nbusiness days of the Outside Agreement Date and exchange the sealed envelopes\nand then open such envelopes in each other's presence. If Lessor and Lessee do\nnot mutually agree upon the Fair Market Rental Rate within five (5) business\ndays of the exchange and opening of envelopes, then, within ten (10) business\ndays of the exchange and opening of envelopes, Lessee shall decide whether or\nnot to exercise its option based on a rental rate determined by an independent\narbitrator.\n\n           (b)   Should Lessee thereupon provide Lessor written notice\nexercising its option pending decision on rental rate by an independent\narbitrator, Lessor and Lessee shall agree upon and jointly appoint a single\narbitrator who shall by profession be a real estate lawyer or broker who shall\nhave been active over the five (5) year period ending on the date of such\nappointment in the leasing of commercial properties in the vicinity of the\nBuilding. Neither Lessor nor Lessee shall consult with such broker or lawyer as\nto his or her opinion as to Fair Market Rental Rate prior to the appointment.\nThe determination of the arbitrator shall be limited solely to the issue of\nwhether Lessor's or Lessee's submitted Fair Market Rental Rate for the Premises\nis the closest to the actual Fair Market Rental Rate for the Premises as\ndetermined by the arbitrator, taking into account the requirements of this\nLease. Such arbitrator may hold such hearings and require such briefs as the\narbitrator, in his or her sole discretion, determines is necessary. In addition,\nLessor or Lessee may submit to the arbitrator, with a copy to the other party,\nwithin five (5) business days after the appointment of the arbitrator any market\ndata and additional information that such party deems relevant to the\ndetermination of the Fair Market Rental Rate (\"FMRR Data\") and the other party\nmay submit a reply in writing within five (5) business days after receipt of\nsuch FMRR Data.\n\n           (c)   The arbitrator shall, within fifteen (15) days of his or her\nappointment, reach a decision as to whether the parties shall use Lessor's or\nLessee's submitted Fair Market Rental Rate, and shall notify Lessor and Lessee\nof such determination.\n\n           (d)   The decision of the arbitrator shall be binding upon Lessor and\nLessee, except as provided below.\n\n           (e)   If Lessor and Lessee fail to agree upon and appoint an\narbitrator, then the appointment of the arbitrator shall be made by the\nPresiding Judge of the Los Angeles Superior Court, or, if he or she refuses to\nact, by any judge having jurisdiction over the parties.\n\n                                    page 34\n\n\n \n           (f)   The cost of arbitration shall be paid by Lessor and Lessee\nequally.\n\n40.  Security Measures - Lessor's Reservations.\n\n     40.1  Lessee hereby acknowledges that Lessor shall have no obligation\nwhatsoever to provide guard service or other security measures for the benefit\nof the Premises or the Building Project. Lessee assumes all responsibility for\nthe protection of Lessee, its agents, and invitees and the property of Lessee\nand of Lessee's agents and invitees from acts of third parties. Nothing herein\ncontained shall prevent Lessor, at Lessor's sole option, from providing security\nprotection for the Building Project or any part thereof, in which event the cost\nthereof shall be included within the definition of Operating Expenses, as set\nforth in paragraph 4.2(b).\n\n     40.2  Without limiting its rights at law or elsewhere under this Lease,\nLessor shall have the following rights:\n\n           (a)   To change the name, address or title of the Building Project or\nbuilding in which the Premises are located upon not less than 90 days' prior\nwritten notice;\n\n           (b)   To, at Lessee's expense, provide and install Building standard\ngraphics on the door of the Premises and such portions of the Common Areas as\nLessor shall reasonably deem appropriate;\n\n           (c)   To permit any lessee the exclusive right to conduct any\nbusiness as long as such exclusive does not conflict with any rights expressly\ngiven herein;\n\n           (d)   To place such signs, notices or displays as Lessor reasonably\ndeems necessary or advisable upon the roof, exterior of the buildings or the\nBuilding Project or on pole signs in the Common Areas.\n\n     40.3  Lessee shall not:\n\n           (a)   Use a representation (photographic or otherwise) of the\nBuilding or the Building Project or their name(s) in connection with Lessee's\nbusiness;\n\n           (b)   Allow anyone, except in emergency, to go upon the roof of the\nBuilding unless in connection with use of the roof for a Satellite Antenna\npursuant to paragraph 2.6.\n\n41.  Easements.\n\n     41.1  Lessor reserves to itself the right, from time to time, to grant such\neasements, rights and dedications that Lessor deems necessary or desirable, and\nto cause the recordation of Parcel Maps and restrictions, so long as such\neasements, rights, dedications, Maps and restrictions do not unreasonably\ninterfere with the use of the Premises by Lessee. Lessee shall sign any of the\naforementioned documents upon request of Lessor and failure to do so shall\nconstitute a material default of this Lease by Lessee without the need for\nfurther notice to Lessee.\n\n     41.2  The obstruction of Lessee's view, air, or light by any structure\nerected in the vicinity of the Building, whether by Lessor or third parties,\nshall in no way affect this Lease or impose any liability upon Lessor.\n\n42.  Lessor's Right to Perform. Except as specifically provided otherwise in\nthis Lease, all\n\n                                    page 35\n\n\n \ncovenants and agreements by Lessee under this Lease shall be performed by \nLessee at Lessee's sole cost and expense and without any abatement\nor offset of rent. If Lessee shall fail to pay any sum of money (other than\nBasic Rent) or perform any other act on its part to be paid or performed\nhereunder and such failure shall continue for three (3) days with respect to\nmonetary obligations (or ten (10) days with respect to non-monetary obligations)\nthen, notwithstanding anything to the contrary provided elsewhere herein, after\nLessee's receipt of written notice thereof from Lessor, Lessor may, without\nwaiving or releasing Lessee from any of Lessee's obligations, make such payment\nor perform such other act on behalf of Lessee. All sums so paid by Lessor and\nall necessary incidental costs incurred by Lessor in performing such other acts,\ntogether with interest at the Lease Rate, shall be payable by Lessee to Lessor\nwithin five (5) days after demand therefor as additional rent. The foregoing\nrights are in addition to any and all remedies available to Lessor upon Lessee's\ndefault as described in paragraph 13.2.\n\n43.  Limitation on Lessor's Liability. Notwithstanding anything contained in\nthis Lease to the contrary, the obligations of Lessor under this Lease\n(including any actual or alleged breach or default by Lessor) do not constitute\npersonal obligations of the individual partners, directors, officers or\nshareholders of Lessor or Lessor's partners, and Lessee shall not seek recourse\nagainst the individual partners, directors, officers or shareholders of Lessor\nor Lessor's partners, or any of their personal assets for satisfaction of any\nliability with respect to this Lease. In addition, in consideration of the\nbenefits accruing hereunder to Lessee and notwithstanding anything contained in\nthis Lease to the contrary, Lessee hereby covenants and agrees for itself and\nall of its successor and assigns that the liability of Lessor for its\nobligations under this Lease (including any liability as a result of any actual\nor alleged failure, breach or default hereunder by Lessor), shall be limited\nsolely to, and Lessee's and its successors' and assigns' sole and exclusive\nremedy shall be against, Lessor's interest in the Building Project and proceeds\ntherefrom, and no other assets of Lessor.\n\n44.  Toxic Materials.\n\n           (a)   Definitions.\n\n           For purposes of this paragraph 44, \"Hazardous Material\" shall mean\nany substance:\n\n                 (i)   the presence of which requires investigation or\nremediation under any federal, state or local statute, regulation, ordinance,\norder, action or policy; or\n\n                 (ii)  which is or becomes defined as a \"hazardous waste\" or\n\"hazardous substance\" under any federal, state or local statute, regulation,\nordinance or amendments thereto including, without limitation, the Comprehensive\nEnvironmental Response, Compensation and Liability Act (42 U.S.C. section 9601\net seq.) and or the Resource Conservation and-Recovery Act (42 U.S.C. section\n6901 et seq.); or\n\n                 (iii) which is toxic, explosive, corrosive, flammable,\ninfectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous and is\nor becomes regulated by any governmental authority, agency, department,\ncommission, board, agency or instrumentality of the United States, the State of\nCalifornia or any political subdivision thereof; or\n\n                 (iv)  the presence of which on the Premises, Building or\nBuilding Project causes or threatens to cause a nuisance upon the Premises,\nBuilding or Building Project or to adjacent properties or poses or threatens to\npose a hazard to the Premises, Building or Building Project or to the health or\nsafety of persons on or about the Premises, Building or Building Project; or\n\n                                    page 36\n\n\n \n                 (v)   without limitation which contains gasoline, diesel fuel\nor other petroleum hydrocarbons; or\n\n                 (vi)  without limitation which contains polychlorinated\nbipheynols (PCBs), asbestos or urea formaldehyde foam insulation; or\n\n                 (vii) which is or becomes defined as \"medical waste\" under the\nMedical Waste Management Act (Health &amp; Safety Code Sections 25015-25099.3).\n\n           For purposes of this paragraph 44, \"Environmental Requirements\" means\nall applicable present and future statutes, regulations, rules, ordinances,\ncodes, licenses, permits, orders, approvals, plans, authorizations, concessions,\nfranchises and similar items, of all governmental agencies, departments,\ncommissions, boards, bureaus or instrumentalities of the United States, states\nand political subdivisions thereof and all applicable judicial and\nadministrative and regulatory decrees, judgments and orders relating to the\nprotection of human health or the environment, including without limitation:\n\n                 (i)   all requirements, including but not limited to those\npertaining to reporting, licensing, permitting, investigation and remediation of\nemissions, discharges, releases or threatened releases of \"Hazardous Materials,\"\nchemical substances, pollutants, contaminants or hazardous or toxic substances,\nmaterials or wastes whether solid, liquid or gaseous in nature, into the air,\nsurface water, groundwater or land, or relating to the manufacture, processing,\ndistribution, use, treatment, storage, disposal, transport or handling of\nchemical substances, pollutants, contaminants or hazardous or toxic substances,\nmaterials, or wastes, whether solid, liquid or gaseous in nature; and\n\n                 (ii)  all requirements pertaining to the protection of the\nhealth and safety of employees or the public.\n\n           For purposes of this paragraph 44, \"Environmental Damages\" means all\nclaims, judgments, damages, losses, penalties, fines, liabilities (including\nstrict liability), encumbrances, liens, costs and expenses of investigation and\ndefense of any claim, whether or not such claim is ultimately defeated, and of\nany good faith settlement of judgment, of whatever kind or nature, contingent or\notherwise, matured or unmatured, foreseeable or unforeseeable, including without\nlimitation reasonable attorneys' fees and disbursements and consultants' fees,\nany of which are incurred at any time as a result of the existence on or after\nthe date upon which Lessee takes possession of the Premises (the \"Possession\nDate\") of \"Hazardous Material\" upon, about, beneath the Premises, Building or\nBuilding Project or migrating or threatening to migrate to or from the Premises,\nBuilding or Building Project or the existence of a violation of \"Environmental\nRequirements\" pertaining to the Premises, Building or Building Project,\nregardless of whether the existence of such \"Hazardous Material\" or the\nviolation of \"Environmental Requirements\" arose prior to the present ownership\nor operation of the Premises, Building or Building Project, and including\nwithout limitation:\n\n                 (i)   damages for personal injury, or injury to property or\nnatural resources occurring upon or off of the Premises, Building or Building\nProject, foreseeable or unforeseeable, including, without limitation, lost\nprofits, consequential damages, the cost of demolition and rebuilding of any\nimprovements on real property, interest and penalties including but not limited\nto claims brought by or on behalf of employees of Lessee, with respect to which\nLessee waives any immunity to which it may be entitled under any industrial or\nworker's compensation laws;\n\n                 (ii)  fees incurred for the service of attorneys, consultants,\ncontractors, experts, laboratories and all other costs incurred in connection\nwith the investigation \n\n                                    page 37\n\n\n \nor remediation of such \"Hazardous Materials\" or violation of \"Environmental\nRequirements\" including, but not limited to, the preparation of any feasibility\nstudies or reports or the performance of any cleanup, remedial, removal,\nresponse, abatement, containment, closure, restoration or monitoring work\nrequired by any federal, state or local governmental agency or political\nsubdivision or reasonably necessary to make full economic use of the Premises,\nBuilding or Building Project or any other property or otherwise expended in\nconnection with such conditions, and including without limitation any attorneys'\nfees, costs and expenses incurred in enforcing this Lease or collection of any\nsums due hereunder;\n\n                 (iii) liability to any third person or governmental agency to\nindemnify such person or agency for costs expended in connection with the items\nreferenced in subparagraph (ii) herein; and\n\n                 (iv)  diminution in the value of the Premises, Building or\nBuilding Project, and damages for the loss of business and restriction on the\nuse of or adverse impact on the marketing of rentable or usable space or of any\namenity of the Premises, Building or Building Project.\n\n           (b)   Lessee's Obligations.\n\n           Lessee, at its sole cost and expense, shall comply with all\nEnvironmental Requirements relating to the storage, use and disposal of all\nHazardous Materials, including those materials identified in Sections 66680\nthrough 66685 of Title 22 of the California Administrative Code, Division 4,\nChapter 30 (\"Title 22\") as the same may be amended from time to time. If Lessee\ndoes store, use or dispose of any Hazardous Materials, Lessee shall notify\nLessor in writing at least ten (10) days prior to the first appearance of such\nmaterials on the Premises, Building or Building Project, and Lessor shall have\nthe right to disapprove of Lessee's use thereof on the Premises (provided that\nLessor's failure to disapprove thereof shall not constitute Lessor's approval\nthereof or excuse Lessee from complying with the terms of this paragraph 45),\nand Lessee's failure to so notify Lessor shall constitute a default under this\nLease. Lessee shall be solely responsible for and shall protect, defend,\nindemnify, and hold Lessor, its agents and contractors harmless from and against\nall Environmental Damages arising out of or in connection with the storage, use\nand disposal of Hazardous Materials by Lessee, its officers, employees, agents,\nrepresentatives, servants, sublessees, concessionaires, licensees, contractors,\ninvitees or permittees. If the presence of Hazardous Materials on the Premises,\nBuilding or Building Project caused or permitted by Lessee results in\ncontamination or deterioration of water or soil resulting in a level of\ncontamination greater than the levels established by any governmental agency\nhaving jurisdiction over such contamination, then Lessee shall, at its sole cost\nand expense, promptly take any and all action necessary to clean up such\ncontamination if required by law or as a condition to the issuance or continuing\neffectiveness of any governmental approval which relates to the use of the\nPremises, Building or Building Project. If at any time prior to the expiration\nof the Lease term, Lessor shall reach a reasonable good faith determination that\nLessee or its officers, employees, agents, representatives, servants,\nsublessees, concessionaires, Licensees, contractors, invitees or permittees have\nat any time violated any Environmental Requirements, discharged any Hazardous\nMaterial onto the Premises, Building or Building Project, or surrounding areas\nor otherwise subjected Lessor or the Building Project to liability for\nEnvironmental Damages, then Lessor shall have the right to require Lessee to\nconduct appropriate tests of water and soil and to deliver to Lessor the result\nof such tests to demonstrate that no contamination in excess of legally\npermitted levels has occurred as a result of Lessee's use of the Premises,\nBuilding or Building Project. If the presence of Hazardous Materials on the\nPremises, Building or Building Project is caused or permitted by Lessee or its\nofficers, employees, agents, representatives, servants, sublessees,\nconcessionaires, licensees, contractors, invitees or permittees such that Lessor\nor Lessee becomes obligated to conduct the necessary clean-up of such\ncontamination as required above, then, Lessee shall further be solely\n\n                                    page 38\n\n\n \nresponsible for, and shall protect, defend, indemnify and hold Lessor, its\nagents and contractors harmless from and against all claims, costs and\nliabilities, including actual attorneys' fees, expert witness fees and costs,\narising out of or in connection with any removal, cleanup and restoration work\nand materials required hereunder to return the Premises, Building or Building\nProject and any other property of whatever nature to conditions which existed\nprior to Lessee's use thereof and which are within acceptable levels according\nto all Environmental Requirements or any other Federal, State or local\ngovernmental requirements. Lessee's obligations hereunder shall survive the\ntermination of this Lease.\n\n45.  Authority. If Lessee is a corporation, trust, or general or limited\npartnership, Lessee, and each individual executing this Lease on behalf of such\nentity, represent and warrant that such individual is duly authorized to execute\nand deliver this Lease on behalf of said entity. If Lessee is a corporation,\ntrust or partnership, Lessee shall, within thirty (30) days after execution of\nthis Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.\n\n46.  Conflict. Any conflict between the printed provisions, Exhibits or Addenda\nof this Lease and the computer-generated, typewritten or handwritten provisions,\nif any, shall be controlled by the computer-generated, typewritten or\nhandwritten provisions.\n\n47.  No Offer. Preparation of this Lease by Lessor or Lessor's agent and\nsubmission of same to Lessee shall not be deemed an offer to Lessee to lease.\nThis Lease shall become binding upon Lessor and Lessee only when fully executed\nby both parties.\n\n48.  Lender Modification. Lessee agrees to make such reasonable modifications to\nthis Lease as may be reasonably required by an institutional lender in\nconnection with the obtaining of normal financing or refinancing of the Building\nProject, provided that the term and net rental hereunder shall not be affected\nthereby.\n\n49.  Multiple Parties. If more than one person or entity is named as either\nLessor or Lessee herein, except as otherwise expressly provided herein, the\nobligations of the Lessor or Lessee herein shall be the joint and several\nresponsibility of all persons or entities named herein as such Lessor or Lessee,\nrespectively.\n\n50.  Work Letter. This Lease is supplemented by that certain Work Letter of even\ndate executed by Lessor and Lessee attached hereto as Exhibit C and incorporated\nherein by this reference.\n\n51.  Attachments. Attached hereto are the following documents which constitute a\npart of this Lease:\n\nExhibit A:       Description of the Premises\n\nExhibit B:       Rules and Regulations\n\nExhibit C:       Work Letter\n\nExhibit C-1:     Lessee's Space Plans and Specifications\n\nExhibit D:       Specifications for Satellite Antenna \n\nExhibit E:       Letter of Credit \n\nExhibit F:       Satellite Antenna Placement\n\n                                    page 39\n\n\n \nLESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND\nPROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED\nAND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS\nLEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND\nEFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE\nPREMISES.\n\n\n\n<\/pre>\n<table>\n<caption>\nLESSOR                                              LESSEE<\/p>\n<p><s><br \/>\n<c><br \/>\nDOWNTOWN ENTERTAINMENT ASSOCIATES,                  ENCODING.COM, INC.<br \/>\na California limited partnership                    a Delaware corporation<\/p>\n<p>    \/s\/ Steaven K. Jones                               \/s\/ Larry Culver<br \/>\nBy________________________________________          By_____________________________________________<br \/>\nSteaven K. Jones                                    Larry Culver<br \/>\nGeneral Partner                                     Chief Financial Officer<br \/>\nSteaven Jones Family Limited Partnership II         encoding.com<\/p>\n<p>Executed at                                         Executed at<br \/>\n                                                       Kirkland, WA<br \/>\n__________________________________________          _______________________________________________<\/p>\n<p>on________________________________________          on_____________________________________________<\/p>\n<p>Address:                                            Address:<\/p>\n<p>__________________________________________          414 Olive Way, Suite 300<\/p>\n<p>__________________________________________          Seattle, Washington 98101<\/p>\n<p>__________________________________________          _______________________________________________ <\/p>\n<p><\/c><\/s><\/caption>\n<\/table>\n<p>                                    page 40<\/p>\n<p>                                   EXHIBIT A<\/p>\n<p>                          Description of the Premises<\/p>\n<p>                                    page 41<\/p>\n<p>                                   EXHIBIT B<\/p>\n<p>                           RULES AND REGULATIONS FOR<\/p>\n<p>                             STANDARD OFFICE LEASE<\/p>\n<p>Dated: November 9, 1999<\/p>\n<p>By and Between DOWNTOWN ENTERTAINMENT ASSOCIATES, as Lessor,<br \/>\n           and ENCODING.COM, INC., A Delaware corporation, as Lessee<\/p>\n<p>              GENERAL RULES &#8212; IN ALL CASES, CONTRARY PROVISIONS<br \/>\n                  IN THE LEASE SHALL GOVERN OVER INCONSISTENT<br \/>\n                   PROVISIONS IN THESE RULES AND REGULATIONS<\/p>\n<p>     1.   Lessee shall not suffer or permit the obstruction of any Common Areas,<br \/>\nincluding driveways, walkways and stairways.<\/p>\n<p>     2.   Lessor reserves the right to refuse access to any persons Lessor in<br \/>\ngood faith judges to be a threat to the safety, reputation, or property of the<br \/>\nBuilding Project and its occupants.<\/p>\n<p>     3.   Lessee shall not make or permit any noise or odors that annoy or<br \/>\ninterfere with other lessees or persons having business within the Building<br \/>\nProject<\/p>\n<p>     4.   Lessee shall not keep animals or birds within the Building Project,<br \/>\nand shall not bring bicycles, motorcycles or other vehicles into areas not<br \/>\ndesignated as authorized for same.<\/p>\n<p>     5.   Lessee shall not make, suffer or permit litter except in appropriate<br \/>\nreceptacles for that purpose.<\/p>\n<p>     6.   Except as is specifically permitted by the terms of the Lease, no<br \/>\nsign, advertisement of notice shall be displayed, printed or affixed on or to<br \/>\nthe Premises or to the outside or inside of the Building or so as to be visible<br \/>\nfrom outside the Premises or Building without Lessor&#8217;s prior written consent.<br \/>\nLessor shall have the right to remove any non-approved sign, advertisement or<br \/>\nnotice, without notice to and at the expense of Lessee, and Lessor shall not be<br \/>\nliable in damages for such removal. All approved signs or lettering on doors and<br \/>\nwalls shall be printed, painted, affixed or inscribed at the expense of Lessee<br \/>\nby Lessor or by a person selected by Lessor and in a manner and style acceptable<br \/>\nto Lessor.<\/p>\n<p>     7.   The sidewalks, halls, passages, exits, entrances, elevators and<br \/>\nstairways and other portions of the common areas shall not be obstructed by<br \/>\nLessee or used for any purpose other than for ingress and egress from Lessee&#8217;s<br \/>\nPremises.<\/p>\n<p>     8.   Toilet rooms, toilets, urinals, wash bowls and other apparatus shall<br \/>\nnot be used for any purpose other than for which they were constructed and no<br \/>\nforeign substance of any kind whatsoever shall be thrown therein.<\/p>\n<p>     9.   Lessee shall not overload the floor of the Premises or mark, drive<br \/>\nnails, screw or drill into the partitions, ceilings or floor or in any way<br \/>\ndeface the Premises nor shall Lessee suffer<\/p>\n<p>                                    page 42<\/p>\n<p>or permit any thing in or around the Premises or Building that causes excessive<br \/>\nvibration or floor loading in any part of the Building Project. <\/p>\n<p>     10.  Lessor shall have the right to prescribe the weight, size and position<br \/>\nof all safes and other heavy equipment brought into the Building. The times and<br \/>\nmanner of moving the same in and out of the Building shall be prescribed by<br \/>\nLessor, and all such moving must be done under the supervision of Lessor. Lessor<br \/>\nmay exclude from the Building any such heavy or bulky equipment or articles, the<br \/>\nweight of which may exceed the floor load for which the Building is designed, or<br \/>\nsuch equipment or articles as may violate any provisions of the Lease of which<br \/>\nthese rules and regulations are a part. Lessee shall not use any machinery or<br \/>\nother bulky articles on the Premises, even though its installation may have been<br \/>\npermitted, which may cause any noise, or jar, or tremor in the floors or walls,<br \/>\nor which by its weight might injure the floor of the Building. Safes or other<br \/>\nheavy equipment shall, as considered necessary by Lessor, stand on a platform of<br \/>\nsuch thickness as is necessary to properly distribute the weight.<\/p>\n<p>     11.  Lessee shall not use or keep in the Premises, Building or Building<br \/>\nProject any kerosene, gasoline or inflammable, explosive or combustible fluid or<br \/>\nmaterial, or use any method of heating or air-conditioning other than that<br \/>\nsupplied by Lessor.<\/p>\n<p>     12.  Lessee shall not lay linoleum, tile, carpet or other similar floor<br \/>\ncovering so that the same shall be affixed to the floor of the Premises in any<br \/>\nmanner except as approved by Lessor.<\/p>\n<p>     13.  Lessee shall cooperate with Lessor in obtaining maximum effectiveness<br \/>\nof the cooling system by closing drapes when the sun&#8217;s rays fall directly on<br \/>\nwindows of the Premises. Lessee shall not obstruct, alter, or in any way impair<br \/>\nthe efficient operation of Lessor&#8217;s heating, ventilating and air-conditioning<br \/>\nsystem. Lessee shall not tamper with or change the setting of any thermostats or<br \/>\ncontrol valves.<\/p>\n<p>     14.  The Premises shall not be used for manufacturing or for the storage of<br \/>\nmerchandise. Lessee shall not, without Lessor&#8217;s prior written consent, occupy or<br \/>\npermit any portion of the Premises to be occupied or used for the manufacture or<br \/>\nsale of liquor or tobacco in any form, or as a barber or manicure shop, or as an<br \/>\nemployment bureau. The Premises shall not be used for lodging or sleeping or for<br \/>\nany improper, objectionable or immoral purpose. No auction shall be conducted on<br \/>\nthe Premises.<\/p>\n<p>     15.  Lessee shall not make, or permit to be made, any unseemly or<br \/>\ndisturbing noises, or disturb or interfere with occupants of the Building, the<br \/>\nBuilding Project or neighboring buildings or premises or those having business<br \/>\nwith it by the use of any musical instrument, radio, phonographs or unusual<br \/>\nnoise, or in any other way.<\/p>\n<p>     16.  No bicycles, vehicles or animals of any kind shall be brought into or<br \/>\nkept in or about the Premises, and no cooking shall be done or permitted by any<br \/>\nlessee in the Premises, except that the preparation of coffee, tea, hot<br \/>\nchocolate and similar items, and the use of a microwave for reheating items and<br \/>\ncooking popcorn and the like, for lessees, their employees and visitors shall<br \/>\nbe permitted. No lessee shall cause or permit any unusual or objectionable odors<br \/>\nto be produced in or permeate from or throughout the Premises.<\/p>\n<p>     17.  The sashes, sash doors, skylights, windows and doors that reflect or<br \/>\nadmit light and air into the halls, passageways or other public places in the<br \/>\nBuilding shall not be covered or obstructed by any lessee, nor shall any<br \/>\nbottles, parcels or other articles be placed on the windowsills.<\/p>\n<p>                                    page 43<\/p>\n<p>     18.  No additional locks or bolts of any kind shall be placed upon any of<br \/>\nthe doors or windows by any lessee, nor shall any changes be made in existing<br \/>\nlocks or the mechanisms thereof unless Lessor is first notified thereof, gives<br \/>\nwritten approval, and is furnished a key therefor. Each lessee must, upon the<br \/>\ntermination of its tenancy, give the Lessor all keys of stores, offices, or<br \/>\ntoilets and toilet rooms, either furnished to, or otherwise procured by, such<br \/>\nlessee, and in the event of the loss of any keys so furnished, such lessee shall<br \/>\npay Lessor the cost of replacing the same or of changing the lock or locks<br \/>\nopened by such key if Lessor shall deem it necessary to make such change.<\/p>\n<p>     19.  Lessor shall have the right to prohibit any advertising by any lessee<br \/>\nwhich, in Lessor&#8217;s opinion, tends to impair the reputation of the Building or<br \/>\nthe Building Project or its desirability as an office building and upon written<br \/>\nnotice from Lessor any lessee shall refrain from and discontinue such<br \/>\nadvertising.<\/p>\n<p>     20.  Any person employed by any lessee to do janitorial work shall, while<br \/>\nin the Building or the Building Project and outside of the Premises, be subject<br \/>\nto and under the control and direction of the office of the Building Project<br \/>\n(but not as an agent or servant of Lessor, and the lessee shall be responsible<br \/>\nfor all acts of such persons).<\/p>\n<p>     21.  No air conditioning unit or other similar apparatus shall be installed<br \/>\nor used by any lessee without the prior written consent of Lessor. Lessee shall<br \/>\npay the cost of all electricity used for air conditioning in the Premises if<br \/>\nsuch electrical consumption exceeds normal office requirements or is<br \/>\nattributable to after hours use, regardless of whether additional apparatus is<br \/>\ninstalled pursuant to the preceding sentence.<\/p>\n<p>     22.  There shall not be used in any space, or in the public halls of the<br \/>\nBuilding, either by any lessee or others, any hand trucks except those equipped<br \/>\nwith rubber tires and side guards.<\/p>\n<p>     23.  All electrical ceiling fixtures hung in offices or spaces along the<br \/>\nperimeter of the Building must be florescent and\/or of a quality, type, design<br \/>\nand bulb color approved by Lessor.<\/p>\n<p>     24.  Lessee shall be responsible for the inappropriate use of any toilet<br \/>\nrooms, plumbing or other utilities. No foreign substances of any kind are to be<br \/>\ninserted therein.<\/p>\n<p>     25.  Lessee shall not deface the walls, partitions or other surfaces of<br \/>\nthe Premises or Building Project.<\/p>\n<p>     26.  Furniture, significant freight and equipment shall be moved into or<br \/>\nout of the Building only with Lessor&#8217;s knowledge and consent, and subject to<br \/>\nsuch reasonable limitations, techniques and timing, as may be designated by<br \/>\nLessor. Lessee shall be responsible for any damage to the Building Project<br \/>\narising from any such activity.<\/p>\n<p>     27.  Lessee shall not employ any service or contractor for services or work<br \/>\nto be performed in the Building, except as approved by Lessor.<\/p>\n<p>     28.  Lessor reserves the right to close and lock the Building on Saturdays,<br \/>\nSundays and legal holidays, and on other days between the hours of 8 P.M. and<br \/>\n6.30 A.M. of the following day, or such other hours as Lessor may determine. If<br \/>\nLessee uses the Premises during such periods (which shall require advance<br \/>\nwritten notice to Lessor and Lessor&#8217;s prior written consent), Lessee shall be<br \/>\nresponsible for securely locking any doors it may have opened for entry and<br \/>\nshall be required to pay such fee for services as may be charged by Lessor to<br \/>\nother tenants of the Building.<\/p>\n<p>                                    page 44<\/p>\n<p>     29.  No window coverings, shades or awnings shall be installed or used by<br \/>\nLessee.<\/p>\n<p>     30.  No Lessee, employee or invitee shall go upon the roof of the Building.<\/p>\n<p>     31.  Lessee shall not suffer or permit smoking or carrying of lighted<br \/>\ncigars or cigarettes in areas reasonably designated by Lessor or by applicable<br \/>\ngovernmental agencies as non-smoking areas.<\/p>\n<p>     32.  Lessee shall not use any method of heating or air conditioning other<br \/>\nthan as provided by Lessor.<\/p>\n<p>     33.  Lessee shall not install, maintain or operate any vending machines<br \/>\nupon the Premises without Lessor&#8217;s written consent.<\/p>\n<p>     34.  The Premises shall not be used for lodging or manufacturing.<\/p>\n<p>     35.  Lessee shall comply with all safety, fire protection and evacuation<br \/>\nregulations established by Lessor or any applicable governmental agency.<\/p>\n<p>     36.  Lessor reserves the right to waive any one of these rules or<br \/>\nregulations, and\/or as to any particular Lessee, and any such waiver shall not<br \/>\nconstitute a waiver of any other rule or regulation or any subsequent<br \/>\napplication thereof to such Lessee.<\/p>\n<p>     37.  Lessee assumes all risks from theft or vandalism and agrees to keep<br \/>\nits Premises locked as may be required.<\/p>\n<p>     38.  Lessor reserves the right to make such other reasonable<br \/>\nnon-discriminatory rules and regulations, not in conflict with Lessee&#8217;s rights<br \/>\nand obligations under the Lease, as it may from time to time deem necessary<br \/>\nfor the appropriate operation and safety of the Building Project and its<br \/>\noccupants. Lessee agrees to abide by these and such rules and regulations.<\/p>\n<p>     39.  All doors opening onto public corridors shall be kept closed, except<br \/>\nwhen being used for ingress and egress.<\/p>\n<p>     40.  The requirements of lessees will be attended to only upon application<br \/>\nto the Office of the Building.<\/p>\n<p>     41.  Canvassing, soliciting and peddling in the Building are prohibited and<br \/>\neach lessee shall cooperate to prevent the same.<\/p>\n<p>                                 PARKING RULES<\/p>\n<p>     1.   Parking areas shall be used only for parking by vehicles no longer<br \/>\nthan full size, passenger automobiles herein called &#8220;Permitted Size Vehicles.&#8221;<br \/>\nVehicles other than Permitted Size Vehicles are herein referred to as &#8220;Oversized<br \/>\nVehicles.&#8221;<\/p>\n<p>     2.   Lessee shall not permit or allow any vehicles that belong to or are<br \/>\ncontrolled by Lessee or Lessee&#8217;s employees, suppliers, shippers, customers, or<br \/>\ninvitees to be loaded, unloaded, or parked in areas other than those designated<br \/>\nby Lessor for such activities.<\/p>\n<p>     3.   Parking stickers or identification devices shall be the property of<br \/>\nLessor and be returned to Lessor by the holder thereof upon termination of the<br \/>\nholder&#8217;s parking privileges.<\/p>\n<p>                                    page 45<\/p>\n<p>Lessee will pay such replacement charge as is reasonably established by Lessor<br \/>\nfor the loss of such devices.<\/p>\n<p>     4.   Lessor reserves the right to refuse the sale of monthly identification<br \/>\ndevices to any person or entity that willfully refuses to comply with the<br \/>\napplicable rules, regulations, laws and\/or agreements.<\/p>\n<p>     5.   Lessor reserves the right to relocate all or a part of parking spaces<br \/>\nfrom floor to floor, within one floor, and\/or to reasonably adjacent offsite<br \/>\nlocations(s), and to reasonably allocate them between compact and standard size<br \/>\nspaces, as long as the same complies with applicable laws, ordinances and<br \/>\nregulations.<\/p>\n<p>     6.   Users of the parking area will obey all posted signs and park only in<br \/>\nthe areas designated for vehicle parking.<\/p>\n<p>     7.   Unless otherwise instructed, every person using the parking area is<br \/>\nrequired to park and lock his own vehicle. Lessor will not be responsible for<br \/>\nany damage to vehicles, injury to persons or loss of property, all of which<br \/>\nrisks are assumed by the party using the parking area.<\/p>\n<p>     8.   Validation, if established, will be permissable only by such method or<br \/>\nmethods as Lessor and\/or its licensee may establish at rates generally<br \/>\napplicable to visitor parking.<\/p>\n<p>     9.   The maintenance, washing, waxing or cleaning of vehicles in the<br \/>\nparking structure or Common Areas is prohibited.<\/p>\n<p>     10.  Lessee shall be responsible for seeing that all of its employees,<br \/>\nagents and invitees comply with the applicable parking rules, regulations, laws<br \/>\nand agreements.<\/p>\n<p>     11.  Lessor reserves the right to modify these rules and\/or adopt such<br \/>\nother reasonable and non-discriminatory rules and regulations as it may deem<br \/>\nnecessary for the proper operation of the parking area.<\/p>\n<p>     12.  Such parking use as is herein provided is intended merely as a license<br \/>\nonly and no bailment is intended or shall be created hereby.<\/p>\n<p>     13.  Lessor or its agent may tow or otherwise remove any vehicles which<br \/>\nare parked illegally in the parking areas, which are parked in the parking areas<br \/>\nfor more than seventy-two (72) consecutive hours without Lessor&#8217;s prior written<br \/>\nconsent or which constitute a nuisance or annoyance to other users of the<br \/>\nBuilding Project or parking areas. Such towing shall be at the sole cost and<br \/>\nexpense of the lessee which is in any way responsible for the presence of such<br \/>\nvehicle in the parking area (for example, if the vehicle is parked by any<br \/>\nparticular lessee&#8217;s invitee, customer or employer, such lessee shall be<br \/>\nresponsible for the cost of towing such vehicle).<\/p>\n<p>                                 page 46     <\/p>\n<p>                                   EXHIBIT C<\/p>\n<p>                     WORK LETTER TO STANDARD OFFICE LEASE<\/p>\n<p>Dated: November 9, 1999<\/p>\n<p>By and Between: DOWNTOWN ENTERTAINMENT ASSOCIATES, as Lessor,<br \/>\n       and ENCODING.COM, INC. a Delaware corporation, as Lessee   <\/p>\n<p>1.     The Premises shall be constructed by Lessor, with Lessor&#8217;s contribution<br \/>\nof a Tenant Improvement Allowance, as outlined below.<\/p>\n<p>2.     Completion of Tenant Improvements.<\/p>\n<p>       Lessor shall construct and complete the Premises substantially in<br \/>\naccordance with the plans and specifications prepared by Lessor&#8217;s space planner,<br \/>\nattached hereto as Exhibit C-1 (the &#8220;Tenant Improvements&#8221;). The parties hereto<br \/>\ncovenant and agree that, in lieu of the rent abatement provided in Section 4.4<br \/>\nhereof, Lessee may elect, no later than two (2) weeks following the date of<br \/>\nSubstantial Completion, to expend any unused Tenant Improvement Allowance on<br \/>\nadditional improvements to the Premises. If Lessee makes such election, Lessee<br \/>\nshall be responsible for making such improvements and shall submit receipts or<br \/>\nother proof of the expenditures for such improvements to Lessor. Lessor shall,<br \/>\nno later than thirty (30) days following its receipt of such proof reimburse<br \/>\nLessee for the same up to the aggregate amount of any unused Tenant Improvement<br \/>\nAllowance.<\/p>\n<p>3.     Preparation of Plans and Specifications<\/p>\n<p>       Lessor has contracted directly with a space planner to prepare space<br \/>\nplans for the Tenant Improvements. All space planning costs (including but not<br \/>\nlimited to working drawings, engineering plan costs and permit fees) shall be<br \/>\npart of the Tenant Improvement Allowance outlined below. Said space planning<br \/>\ncosts shall not exceed $4,000.00 (Four Thousand Dollars).<\/p>\n<p>4.     Construction.<\/p>\n<p>       Lessor shall contribute a Tenant Improvement Allowance of Ninety Seven<br \/>\nThousand Three Hundred Ten and 92\/100 Dollars ($97,310.92), or $25 per usable<br \/>\nsquare foot, toward the cost of the Tenant Improvements. Lessor shall have the<br \/>\nright to use any portion of the Tenant Improvement Allowance for the hard cost<br \/>\nof tenant improvements. Space planning and design, construction fee, built-in<br \/>\nfurniture and telecommunications\/computer cabling shall not exceed Twenty<br \/>\nThousand dollars ($20,000.00). If Lessee makes any changes to the plans and<br \/>\nspecifications, Lessee shall be responsible for any and all costs exceeding the<br \/>\nTenant Improvement Allowance. Upon receipt of Lessee&#8217;s request to change said<br \/>\nplans and specifications, Lessee must submit a signed change order and the total<br \/>\ncost of the change (in excess of the Tenant Improvement Allowance) to Lessor.<br \/>\nLessor&#8217;s contractor will submit bi-weekly draws to Lessor. Upon Lessee&#8217;s<br \/>\napproval, Lessor will pay the draw, less a ten (10%) percent reserve until the<br \/>\nlien period has expired, out of the Tenant Improvement Allowance within fourteen<br \/>\nworking days, based on the percentage of the Tenant Improvements completed.<br \/>\nLessor will pay Lessor&#8217;s contractor the remaining reserve funds upon expiration<br \/>\nof the lien period. Lessee shall not be entitled to receive, as a cash payment,<br \/>\ncredit against rent or otherwise, any portion of the Tenant Improvement<br \/>\nAllowance not actually expended for the cost of the Tenant Improvements.<\/p>\n<p>                                    page 47<\/p>\n<p>     Lessor shall construct said Tenant Improvements in a good and workmanlike<br \/>\nmanner of good and sufficient materials and in accordance with said approved<br \/>\nfinal plans and specifications, a building permit from the City of Santa Monica,<br \/>\nand all applicable rules, regulations, laws or ordinances.<\/p>\n<p>     As Lessor is engaged as project manager, Lessor shall charge a $1 per<br \/>\nusable square foot fee for the supervision and\/or overhead associated with the<br \/>\nTenant Improvements.<\/p>\n<p>     Lessor shall cause Lessor&#8217;s contractor(s) to provide with certificate(s) of<br \/>\ninsurance showing an insurance policy with liability and workmen&#8217;s compensation<br \/>\ninsurance of no less than $2 million and naming Lessor as additional insured.<br \/>\nLessee shall pay all invoices promptly and shall cause no liens to be placed on<br \/>\nthe Building Project; provided, however, that Lessee will not be required to pay<br \/>\nfor any construction or related costs until all of the Tenant Improvement<br \/>\nAllowance has been expended (subject to the dollar limitations of this paragraph<br \/>\n4).<\/p>\n<p>5.   Completion.<\/p>\n<p>     5.1  Lessor has obtained a building permit to construct the Tenant<br \/>\nImprovements.<\/p>\n<p>     5.2  The term &#8220;Substantial Completion,&#8221; as used in the Lease and this Work<br \/>\nLetter, is hereby defined to mean attainment of all of the following:<\/p>\n<p>          (a)  The City of Santa Monica shall have made a final inspection of<br \/>\nthe Tenant Improvements and authorized a final release of restrictions on the<br \/>\nuse of public utilities in connection therewith, and the Tenant Improvements<br \/>\nshall have been completed so that the only incomplete items are minor or<br \/>\ninsubstantial details of construction, mechanical adjustments, or finishing<br \/>\ntouches like touch-up plastering or painting;<\/p>\n<p>          (b)  Lessee, its employees, agents, and invitees have ready access to<br \/>\nthe Building and Premises through the lobby, entranceways, elevators, and<br \/>\nhallways;<\/p>\n<p>          (c)  The decoration, fixtures, and equipment to be installed by Lessor<br \/>\nas outlined in the space plan are installed and in good operating order;<\/p>\n<p>          (d)  The following items are installed and in good operating order:<br \/>\n(1) building lobby, (ii) hallways on floor on which Premises are located<br \/>\n(including walls, flooring, ceiling, lighting, etc.), (iii) elevators, HVAC,<br \/>\nutilities, and plumbing serving the Premises, and (iv) the doors and hardware;<br \/>\nand<\/p>\n<p>          (e)  The Premises are broom clean.<\/p>\n<p>     5.3  Should Lessee make any changes to the plans and specifications<br \/>\nresulting in a delay to the construction (&#8220;Lessee&#8217;s Delay&#8221;), each said Delay<br \/>\nshall not result in a delay of the Commencement Date.<\/p>\n<p>6.   Taking of Possession of Premises.<\/p>\n<p>     Lessee may enter the Premises after the Commencement Date and prior to<br \/>\nSubstantial Completion for the installation of telephones, computer cabling and<br \/>\nother equipment, as long as said installation does not interfere with the<br \/>\nconstruction thereof.<\/p>\n<p>                                    page 48<\/p>\n<p>7.   Warranties.<\/p>\n<p>     To the extent permitted thereunder, Lessor shall allow Lessee to avail<br \/>\nitself of the benefit of any warranties given to Lessor in connection with work<br \/>\nto the Leased Premises performed by, or at the direction of, Lessor.<\/p>\n<p>                                    page 49<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8079],"corporate_contracts_industries":[9510],"corporate_contracts_types":[9583,9579],"class_list":["post-41788","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-loudeye-technologies-inc","corporate_contracts_industries-technology__programming","corporate_contracts_types-land__ca","corporate_contracts_types-land"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/41788","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=41788"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=41788"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=41788"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=41788"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}