Kenyon Center NET OFFICE LEASE

Xxxxxx Center

TABLE OF CONTENTS

1.	SALIENT LEASE TERMS	1
2.	DEFINITIONS	3
3.	PREMISES	8
4.	TERM	9
5.	PRE-TERM POSSESSION	10
6.	DELAY IN DELIVERY OF POSSESSION	10
7.	MINIMUM RENT	10
8.	ADDITIONAL RENT	11
9.	ACCORD AND SATISFACTION	13
10.	SECURITY DEPOSIT	14
11.	USE	14
12.	COMPLIANCE WITH LAWS AND REGULATIONS	15
13.	SERVICE AND EQUIPMENT	20
14.	WASTE	22
15.	ALTERATIONS	23
16.	PROPERTY INSURANCE	25
17.	INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION	26
18.	LIABILITY INSURANCE	28
19.	INSURANCE POLICY REQUIREMENTS	28
20.	LESSEE INSURANCE DEFAULT	29
21.	FORFEITURE OF PROPERTY AND XXXXXX’X XXXX	29
22.	MAINTENANCE AND REPAIRS	30
23.	DESTRUCTION	31
24.	CONDEMNATION	32
25.	ASSIGNMENT AND SUBLETTING	34
26.	ABANDONMENT	37
27.	ENTRY BY LESSOR	38
28.	SIGNS	38
29.	DEFAULT	38
30.	REMEDIES UPON DEFAULT	39
31.	BANKRUPTCY	41

32.	SURRENDER OF LEASE	43
33.	LESSOR’S EXCULPATION	43
34.	ATTORNEYS’ FEES	43
35.	NOTICES	44
36.	SUBORDINATION	44
37.	ESTOPPEL CERTIFICATES	45
38.	WAIVER	45
39.	HOLDING OVER	46
40.	SUCCESSORS AND ASSIGNS	46
41.	TIME	46
42.	EFFECT OF XXXXXX’S CONVEYANCE	46
43.	COMMON AREAS	46
44.	TRANSFER OF SECURITY	47
45.	LATE CHARGES	47
46.	CORPORATE AUTHORITY	47
47.	MORTGAGEE PROTECTION	47
48.	WAIVER OF STATUTES	48
49.	MISCELLANEOUS PROVISIONS	48

NET OFFICE LEASE

THIS LEASE is dated for reference purposes only this 20th day of October, 2009.

1. SALIENT LEASE TERMS

1.1	Rent Payment:	Xxxxxx Center LLC c/o Wesmar Investments 0000 00xx Xxxxxx XX Xxxxx 000 Xxxxxx Xxxxxx, XX 00000.

1.2	Parties and Notice Address:	Lessor: Xxxxxx Center LLC c/o Wesmar Investments 0000 00xx Xxxxxx XX Xxxxx 000 Xxxxxx Xxxxxx, XX 00000

		Lessee: ITEX Corporation, a Nevada corporation Xxxxxx Center, Suite 100 0000 000xx Xxxxxx XX Xxxxxxxx, XX (After Lease Commencement) ITEX Corporation, a Nevada corporation Xxxxxx Center, Suite 000 0000 000xx Xxxxxx XX Xxxxxxxx, XX (Section 35.1)

1.3	Premises:	(A) Name and Location of Complex: Xxxxxx Center 0000 000xx Xxxxxx XX Xxxxxxxx, XX (B) Leased Premises: First (1st) Floor, Suite 100 (C) Approximately 7,035 rentable square feet. (Section 3.2)

1.4	Term:	(A) Commencement Date: May 1, 2010 (Section 2.1(c)) (B) Sixty (60) months (Section 4.1) (C) Tenant has a one-time early termination right effective as of Month 37 (Article II of the Addendum) (D) Xxxxxx has a one-time 3-year renewal right (Article I of the Addendum)

1.5	Rent:	(A) Minimum Rent: Months 01 – 12: $7,914 NNN Months 13 – 24: $8,208 NNN Months 25 – 36: $8,501 NNN Months 37 – 48: $8,794 NNN Months 49 – 60: $9,087 NNN (B) Advance Rent: $12,897.50 (Section 7.2)

1.6	Initial Security Deposit:	$14,070 (last month’s rent) (Section 10.1)

1.7	Use:	Premises used solely for general office and administration purposes, including sales and presentation purposes, data administration, training and service operations. (Section 11.1)

1.8	Initial Pro Rata Percent:	7.79% (Section 2.1(l)) (Section 16.3)

1.9	Declaration of Restrictions:	Date of Recordation May 13, 1980 Recording Number 8005130448 (Section 3.5)

1.10	Contents:	This Lease consists of: Pages 1 through 50 Sections 1 through 49.16 Addenda: Pages 1-4 Exhibits: A – Legal Description of Complex B – Plan of the Complex C – Floor Plan of the Leased Premises D – Construction Obligations E – Acknowledgment of Commencement F – Rules & Regulations

2. DEFINITIONS

2.1 The terms defined in this Article 2 shall, for all purposes of this Lease and all agreements supplemental hereto, have the meanings herein specified unless expressly stated otherwise.

(a) “Building” shall mean the structure which contains the Leased Premises, as further defined in Exhibit D hereto.

(b) “Building Standard Work” shall mean the typical interior improvements in the Building Shell (as defined in Exhibit D hereto) constructed or to be constructed by Lessor, which are of the nature and quality required by specifications developed for the Complex by Xxxxxx’s architect. The Tenant Improvements (as defined in Exhibit D hereto) to be constructed pursuant to Exhibit D, unless otherwise specified pursuant to the terms and conditions of Exhibit D, shall be Building Standard Work.

(d) “Common Areas” shall mean all areas and facilities outside the Leased Premises within the exterior boundaries of the Complex of which the Leased Premises form a part, that are provided and designated by Lessor from time to time for the general use and convenience of Lessee and of other tenants of Lessor having the common use of such areas, and their respective authorized representatives and invitees. Common Areas include, without limitation, corridors, stairways, elevator shafts, janitor rooms, driveways, parking areas, and landscaped areas all as generally described on Exhibit B attached hereto. Exhibit B is tentative and Lessor reserves the right to make alterations thereto from time to time as long as Lessee is not materially adversely affected in its ability to use the Leased Premises and the Complex, including the parking areas.

(e) “Complex” is that parcel of real property of which the Leased Premises forms a part, together with the parcels in common ownership therewith, and contiguous thereto, which property is described with particularity in Exhibit A attached hereto and made a part hereof by reference.

(f) “Lease Year” means any calendar year, or portion thereof, following the commencement hereof, the whole or any part of which period is included within the Term.

(g) “Leased Premises” shall mean the portion of space leased to Lessee hereunder.

(h) “Lines” shall mean communications, computer, audio and video, security and electrical (other than electrical wiring terminating at or connected to Building standard electrical outlets), cables, wires, lines, duct work, sensors, switching equipment, control boxes and related improvements at the Complex, Building or the Leased Premises.

(i) “Major Vertical Penetrations” shall mean stairs, elevator shafts, flues, pipe shafts, vertical ducts, and the like, and their enclosing walls, which serve more than one floor of the Building, but shall not include stairs, dumbwaiters, lifts, and the like, exclusively serving a tenant occupying offices on more than one floor.

(j) “Occupied Floor Area” means that portion of the Rentable Area of the Complex which is leased and occupied.

(k) “Operating Costs” means the total amounts paid or payable, whether by Lessor or others on behalf of Lessor, in connection with the ownership, maintenance, repair, replacement and operations of the Complex (including, without limitation, all areas and facilities within the exterior boundaries of the Complex) as determined by standard accounting procedures. Operating Costs shall include, but not be limited to, the aggregate of the amount paid for all fuel used in heating and air conditioning of the Building; the amount paid or payable for all electricity furnished by Lessor to the Complex (other than electricity furnished to and paid for by other lessees by reason of their extraordinary consumption of electricity); the cost of periodic relamping and reballasting of lighting fixtures; the amount paid or payable for all hot and cold water (other than that chargeable to individual tenants by reason of their extraordinary consumption of water); the amount paid or payable for all labor and/or wages and other payments, including the reasonable cost to Lessor of workers’ compensation and disability insurance, payroll taxes, welfare and fringe benefits made to janitors, caretakers, and other employees, contractors and subcontractors of Lessor (including wages of the Building manager which shall be paid out of the 4% management fee described herein) to the extent involved in the operation, maintenance and repair of the Complex; painting of exterior walls of the buildings in the Complex; managerial and administrative expenses; the total charges of any independent contractors employed in the repair, care, operation, maintenance, and cleaning of the Complex; the amount paid or payable for all supplies occasioned by everyday wear and tear; the costs of climate control, window and exterior wall cleaning, telephone and utility costs; the cost of accounting services necessary to compute the rents and charges payable by tenants of the Complex and to keep the books and records for the Complex; fees for legal, accounting, inspection and consulting services; the cost of operating, repairing and maintaining the Building elevators and the utility systems, including Lines, of the Complex; the cost of porters, guards and other protection services (if established); the cost of establishing and maintaining the Building’s directory board; payments for general maintenance and repairs to the plant and equipment supplying climate control; the cost of supplying all services pursuant to Article 13 hereof to the extent such services are not paid by individual tenants; amortization of the costs, including repair and replacement, of all maintenance and cleaning equipment and master utility meters and of the costs incurred for repairing or replacing all other fixtures, equipment and facilities serving or comprising the Complex which by their nature require periodic or substantial repair or replacement, and which are not charged fully in the year in which they are incurred, but instead are amortized into the Operating Costs over their useful life as reasonably determined by Lessor in accordance with sound accounting principles; the net cost and expenses for liability and property insurance for which Lessor is responsible hereunder or which Lessor or its lenders deems necessary in connection with the operation of the Complex (including, without limitation, self-insurance and the payment of deductible amounts under insurance policies); assessments and property owners’ assessments which may be imposed upon Lessor by virtue of any recorded instrument affecting title to the Complex; and costs of complying with all governmental regulations, rules, laws, ordinances and codes which costs if any shall be amortized over the useful life of the improvement as reasonably determined by Lessor in accordance with sound accounting principles. In addition, Operating Costs shall include any Real Estate Taxes as defined in Paragraph 2.1(o) hereof, and an administrative/management fee payable to Lessor in the amount of four percent (4%) of the gross revenues received by Lessor from the Complex. Operating Costs shall also include, without limitation, the repair and replacement, resurfacing and repaving of any paved areas, curbs, gutters or other surfaces or areas within the Complex, the repair and replacement of any equipment or facilities located within or serving the Complex, and the cost of any capital repairs, replacements or improvements made by Lessor to the Complex (“Capital Costs”). However, certain Capital Costs (the “Restricted Capital Costs”) shall be includable in Operating Costs each year only to the extent of that fraction allocable to the year in question calculated by amortizing such Restricted Capital Costs over the reasonably useful life of the improvement resulting therefrom, as determined by Lessor, with interest on the unamortized balance at the higher of (i) seven percent (7%) per annum; or (ii) the interest rate as may have been paid by Lessor for the funds borrowed for the purpose of performing the work for which the Restricted Capital Costs have been expended, but in no event to exceed the highest rate permissible by law. The Restricted Capital Costs subject to such amortization procedure are the following: (x) those costs for capital improvements to the Complex of a type which do not normally recur more frequently than every five (5) years in the normal course of operation and maintenance of facilities such as the Complex (specifically excluding painting of all or a portion of the Complex); (y) costs incurred for the purpose of reducing other operating expenses or utility costs, and (z) expenditures by Lessor that are required by governmental law, ordinance, regulation or mandate, including, without limitation, any Environmental Laws (as such term is defined in Article 12), which were not applicable to the Complex at the time of the original construction. Operating Costs shall not include legal or accounting expenses incurred expressly for negotiating a lease with a particular tenant, or as a result of a default of a specific tenant, which negotiation or default does not affect the operation of the Complex. Operating Costs shall not include any of the following items: (i) interest, principal, points and fees on, and any other costs relating to, any debt instrument encumbering, or any other financing relating to, all or any portion of the Building or the Complex, and depreciation and/or costs which would normally be considered of a capital nature under generally accepted accounting principles (“GAAP”), except those d Capital Costs that may be included in Operating Expenses as expressly permitted under Section 2.1(k); (ii) ground lease rental; (iii) cost for utilities, services and other benefits that are provided selectively to other tenants or occupants for their benefit and not provided to Lessee; (iv) costs which are payable or reimbursable to Lessor by warranties or guarantees, insurers or governmental authorities, Lessee, other tenants or occupants or otherwise; (v) leasing brokers’ and other fees and commissions, attorneys’ fees, court costs and other legal expenses, space preparation costs, leasing inducements and concessions, and other costs incurred in connection with leasing of the Building and/or the Complex or negotiations or disputes with past, present, future or prospective tenants or other occupants; (vi) Lessor’s overhead expenses for offsite personnel and offices, provided, however Lessor may include an administrative/management fee payable to Lessor and/or a third party property management service for operation of comparable projects in the vicinity; (vii) tenant improvement costs and other costs (including permit, license, inspection and other fees) incurred in renovating or otherwise improving, decorating, painting or altering space for Lessee, other tenants or occupants; (viii) damage and repairs caused by or necessitated by the negligence or willful misconduct of Lessor or Lessor’s agents, employees or contractors; (ix) compensation, benefits and other costs of executives and employees above the grade of building manager; (x) compensation, benefits and other costs of all personnel to the extent and in proportion that such personnel are providing services unrelated to the operation or maintenance of the Complex; (xi) interest, penalties or other costs out of Lessor’s failure to make timely payment and performance of its obligations; (xii) costs (including expert and consulting fees and expenses incurred to test, monitor, survey, cleanup, contain, xxxxx, remove or otherwise remedy Hazardous Materials from the Building and/or Complex; (xiii) any duplication of costs between Operating Expenses and Real Estate Taxes (or Taxes); (xiv) any allocation of Operating Expenses which exceeds the amount which would equitably be allocated to Lessee based upon the Rentable Area of the Leased Premises as compared to the Rentable Area of the Complex as a whole except as otherwise provided in Sections 2.1(l) and 8.2(a); and (xv) any costs which, when aggregated with costs charged to other tenants and occupants of the Building and/or Complex, would provide Lessor with a recovery of greater than 100% of such actual costs to Lessor.

(l) “Pro Rata Percent” shall be that fraction (converted to a percentage) the numerator of which is the Usable Area of the Leased Premises multiplied by the R/U Ratio and the denominator of which is the number of square feet of Occupied Floor Area of all floors (or leased premises if the Complex is on a single floor) rentable to tenants in the Complex. Lessee’s Pro Rata Percent as of the commencement of the Term hereof is specified in Section 1.8. Said Pro Rata Percent shall be recalculated as may be required effective as at the commencement of any period to which the calculation is applicable in this Lease. Notwithstanding the preceding provisions of this Section 2.1(l), Xxxxxx’s Pro Rata Percent as to certain expenses may be calculated differently to yield a higher percentage share for Lessee as to certain expenses in the event Lessor permits other tenants in the Complex to directly incur such expenses rather than have Lessor incur the expense in common for the Complex (such as, by way of illustration, wherein a tenant performs its own janitorial services). In such case Lessee’s Pro Rata Percent of the applicable expense shall be calculated as having as its denominator the Occupied Floor Area of all floors (or leased premises if the Complex is on a single floor) rentable to tenants in the Complex less the Rentable Area of tenants who have incurred such expense directly. Furthermore, in the event Lessee consumes extraordinary amounts of any provided utility or other service as determined in Lessor’s good faith judgment, Lessee’s Pro Rata Percent for such utility or service may, at Lessor’s election, be based on usage as opposed to Occupied Floor Area, that is, Lessee’s Pro Rata Percent of such a utility or service would be calculated as having as its denominator the total usage of such utility or service in the Complex (or Building as the case may be), and having as its numerator Lessee’s usage of such utility or service, as determined by Lessor in its sole good faith judgment. In any case in which Lessee, with Xxxxxx’s consent, incurs such expenses directly, Xxxxxx’s Pro Rata Percent will be calculated specially so that expenses of the same character which are incurred by Lessor for the benefit of other tenants in the Complex shall not be prorated to Lessee. If repairs are required for systems exclusively serving the Leased Premises (whether within or outside of said Leased Premises), Lessee shall pay one hundred percent (100%) of such repair costs. Nothing herein shall imply that Lessor will permit Lessee or any other tenant of the Complex to incur any Operating Costs directly. Any such permission shall be in the sole discretion of the Lessor, which Lessor may grant or withhold in its arbitrary judgment.

(m) “R/U Ratio” (an abbreviation for Rentable/Usable Ratio) shall mean that fraction the numerator of which is Rentable Area and the denominator of which is Usable Area.

(n) “Real Estate Taxes” or “Taxes” shall mean and include all general and special taxes, assessments, fees of every kind and nature, duties and levies, charged and levied upon or assessed by any governmental authority against the Complex including the land, the Building, any other improvements situated on the land other than the Building, the various estates in the land and the Building, any Tenant Improvements, fixtures, installations, additions and equipment, whether owned by Lessor or Lessee; except that it shall exclude any taxes of the kind covered by Section 8.1 hereof to the extent Lessor is reimbursed therefor by any tenant in the Building. Real Estate Taxes shall also include the reasonable cost to Lessor of contesting the amount, validity, or the applicability of any Taxes mentioned in this Section. Further included in the definition of Taxes herein shall be general and special assessments, license fees, commercial rental tax, levy or tax (other than inheritance or estate taxes) imposed by any authority having the direct or indirect power to tax, as against any legal or equitable interest of Lessor in the Leased Premises or in the Complex or on the act of entering into this Lease or, as against Lessor’s right to rent or other income therefrom, or as against Lessor’s business of leasing the Leased Premises or the Complex; any tax, fee, or charge with respect to the possession, leasing, transfer of interest, operation, management, maintenance, alteration, repair, use, or occupancy by Lessee, of the Leased Premises or any portion thereof or the Complex; or any tax imposed in substitution, partially or totally, for any tax previously included within the definition of Taxes herein, or any additional tax related to the Complex, the Building or the land they are situated on, the nature of which may or may not have been previously included within the definition of Taxes. Further, if at any time during the Term of this Lease the method of taxation or assessment of real estate or the income therefrom prevailing at the time of execution hereof shall be, or has been, altered so as to cause the whole or any part of the Taxes now or hereafter levied, assessed or imposed on real estate to be levied, assessed or imposed upon Lessor, wholly or partially, as a capital levy, business tax, fee, permit or other charge, or on or measured by the Rents received therefrom, then such new or altered taxes, regardless of their nature, which are attributable to the land, the Building, the Complex or to other improvements on the land shall be deemed to be included within the term Real Estate Taxes for purposes of this Section, whether in substitution for, or in addition to any other Real Estate Taxes, save and except that such shall not be deemed to include any enhancement of said tax attributable to other income of Lessor. With respect to any general or special assessments which may be levied upon or against the Leased Premises, the Complex, or the underlying realty, or which may be evidenced by improvement or other bonds, and may be paid in annual or semi-annual installments, only the amount of such installment, prorated for any partial year, and statutory interest shall be included within the computation of Taxes for which Lessee is responsible hereunder.

(o) “Rent,” “rent” or “rental” means Minimum Rent and all other sums required to be paid by Lessee pursuant to the terms of this Lease.

(p) “Rentable Area.” The Rentable Area of a floor shall mean all areas available or held for the exclusive use and occupancy of occupants or future occupants of the Complex, measured from the inside finished surface of the dominant portion of the permanent outer Building walls, excluding any Major Vertical Penetrations of the floor. No deductions shall be made for columns and projections necessary to the Building. The Rentable Area of an office on the floor shall be computed by multiplying the Usable Area of that office by the R/U Ratio described in Section 2.1(m) for the floor.

(q) “Structural” as herein used shall mean any portion of the Leased Premises or Complex which provides bearing support to any other integral member of the Complex such as, by limitation, the roof structure (trusses, joists, beams), posts, load bearing walls, foundations, girders, floor joists, footings, and other load bearing members constructed by Lessor.

(r) “Tenant Improvements” shall mean the aggregate of the Building Standard Work and the Building nonstandard work, as further defined in the work letter agreement which is attached hereto as Exhibit D.

(s) “Term” shall mean the term of the Lease as specified in Article 4 hereof, including any partial month at the commencement of the Term.

(t) “Total Building Area” is the total gross leasable area of the Building.

(u) “Usable Area.” The Usable Area of an office shall be the number of square feet computed by measuring to the finished surface of the office side of corridor and other permanent walls, to the center of partitions that separate the office from adjoining Usable Areas, and to the inside finished surface of the permanent outer Building walls. No deductions shall be made for the columns and projections necessary to the Building. The Usable Area of a floor shall be equal to the sum of all Usable Areas on that floor.

3. PREMISES

3.1 Demising Clause. Lessor hereby leases to Lessee, and Lessee hires from Lessor a portion of the Complex as hereinafter defined.

3.2 Description. The Complex, as defined in Section 2.1(e), is described generally in Section 1.3(A) hereof. The premises leased herein are described in Section 1.3(B) and are delineated on Exhibit C which is attached hereto and made a part hereof by reference, consisting of the approximate amount of square footage as specified in Section 1.3(C) hereof (the “Leased Premises.”) The term “Building” shall refer to the Building in which the Leased Premises are located. Lessee acknowledges that Lessor may change the shape, size, location, number and extent of the improvements to any portion of the Complex without consent of Lessee and without affecting Xxxxxx’s obligations hereunder. Lessor reserves the area beneath and above the Building as well as the exterior thereof together with the right to install, maintain, use, repair and replace pipes, ducts, conduits, wires, and structural elements leading through the Leased Premises serving other parts of the Complex, so long as such items are concealed by walls, flooring or ceilings. Such reservation in no way affects the maintenance obligations imposed herein, nor shall such reservation alter the parties’ responsibilities and obligations set forth in this Lease regarding Hazardous Materials (as defined in Section 12.3(a) below).

3.3 Reserved.

3.4 Covenants, Conditions and Restrictions. The parties agree that this Lease is subject to the effect of (a) any covenants, conditions, restrictions, easements, mortgages or deeds of trust, ground leases, rights of way of record, and any other matters or documents of record; (b) any zoning laws of the city, county and state where the Complex is situated; and (c) general and special taxes not delinquent. Lessee agrees that as to its leasehold estate, Lessee and all persons in possession or holding under Lessee will conform to and will not violate the terms of any covenants, conditions or restrictions of record which may now or hereafter encumber the property (hereinafter the “restrictions”). This Lease is subordinate to the restrictions and any amendments or modifications thereto.

3.5 Declaration of Restrictions. The Leased Premises are subject to a Declaration of Restrictions as referenced in Section 1.9 hereof.

4. TERM

4.1 Commencement Date. The Term of this Lease shall commence on the date specified in Section 1.4(A) hereof and shall be for the term specified in Section 1.4(B) hereof, plus any partial month at the commencement of the Term.

4.2 Acknowledgment of Commencement. After delivery of the Leased Premises to Lessee, Xxxxxx shall execute a written acknowledgment of the date of commencement in the form attached hereto as Exhibit E, and by this reference it shall be incorporated herein.

5. PRE-TERM POSSESSION

5.1 Pre-Term Agreement. Prior to the Commencement Date, Lessee shall continue to be subject to the terms and conditions of that certain Sublease by and between SBC Telecom, Inc. ("Sublessor") and the Lessee, dated as of November 3, 2006, as consented to by Xxxxxx in the “Landlord Consent to Sublease” dated as of November __, 2006 (“Existing Sublease”). The Existing Sublease shall terminate immediately prior to the Commencement Date.

5.2 Conditions of Entry. Lessor shall use commercially reasonable efforts to complete construction of the Tenant Improvements prior to the Commencement Date. It is acknowledged that Lessee will be occupying the Leased Premises pursuant to the Existing Sublease while some or all of such construction is occurring. The parties shall work together in good faith to coordinate the construction work with Xxxxxx’s continuing occupancy of the Premises so as to minimize the disruption of Xxxxxx’s business operations while allowing Lessor to efficiently proceed with construction of the Tenant Improvements.

6. Reserved.

7. MINIMUM RENT

7.1 Payment. Lessee shall pay to Lessor at the address specified in Section 1.1, or at such other place as Lessor may otherwise designate, as “Minimum Rent” for the Leased Premises the amount specified in Section 1.5(A) hereof, payable in advance on the first day of each month during the Term. If the Term commences on other than the first day of a calendar month, the rent for the first partial month shall be prorated accordingly.

All payments of Minimum Rent (including sums defined as rent in Section 2.1(o)) shall be in lawful money of the United States, and payable without deduction, setoff, offset, counterclaim, recoupment, notice or demand.

7.2 Advance Rent. The amount specified in Section 1.5(B) hereof is paid herewith to Lessor upon execution of this Lease as advance rent, receipt of which is hereby acknowledged, provided, however, that such amount shall be held by Lessor as a “Security Deposit” pursuant to Section 10.1 hereof until it is applied by Lessor to the first Minimum Rent due hereunder.

7.3 Late Payment. If during any twelve (12) month period Lessee fails on more than one occasion to make any payment of Minimum Rent to Lessor on the date when it is due, then Lessor may, by giving written notice to Lessee, require that Lessee pay the Minimum Rent to Lessor quarterly in advance.

8. ADDITIONAL RENT

8.1 Personal Property, Gross Receipts, Leasing Taxes. This Section 8.1 is intended to deal with impositions or taxes directly attributed to Lessee or this transaction, as distinct from Real Property Taxes attributable to the Complex which are to be allocated among various tenants and others and which are included in Operating Costs. In addition to the Minimum Rent and additional charges to be paid by Lessee hereunder, Xxxxxx shall reimburse Lessor upon demand for any and all taxes required to be paid by Lessor (excluding state, local or federal personal and corporate income taxes measured by the income of Lessor from all sources, and estate and inheritance taxes) whether or not now customary or within the contemplation of the parties hereto:

(a) Upon, measured by, or reasonably attributable to the cost or value of Lessee’s equipment, furniture, fixtures and other personal property located in the Leased Premises or by the cost or value of any Tenant Improvements made in or to the Leased Premises by or for Lessee, other than Building Standard Work, regardless of whether title to such improvements shall be in Lessee or Lessor;

(b) Upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Lessee of the Leased Premises or any portion thereof to the extent such taxes are not included as Real Estate Taxes as defined in Section 2.1(n);

(c) Upon this transaction or any document to which Lessee is a party creating or transferring an interest or an estate in the Leased Premises; and

(d) In connection with any testing, investigation, abatement, remediation, removal, transportation and/or disposal of any Hazardous Materials by Lessee, its employees, agents representatives, contractors, invitees, subtenants and/or assigns (or by Lessor, pursuant to any provision of this Lease granting to Lessor the right to do any of the foregoing on behalf of Lessee and to bill Lessee therefor).

For purposes of this Section 8.1, the term “taxes” shall include, but not be limited to, any fees, charges, fines, penalties and costs (including, without limitation, permit, approval or licensing fees, charges or costs).

In the event that it shall not be lawful for Lessee so to reimburse Lessor for any Real Property Taxes or any other taxes specified in this Section 8.1, the Minimum Rent payable to Lessor under this Lease shall be increased to net Lessor (i.e., after payment of the Real Property Taxes or other taxes for which Lessor may not receive reimbursement from Lessee) the amount of Minimum Rent plus reimbursement for Real Property Taxes or other taxes which would have been receivable by Lessor if such Real Property Taxes or other taxes had been reimbursed to Lessor by Xxxxxx as contemplated herein. All Real Property Taxes or other taxes payable by Lessee under this Section shall be deemed to be, and shall be paid as, additional Rent.

8.2 Operating Costs.

(a) Lessee shall pay to Lessor, as additional rent, its Pro Rata Percent of the Operating Costs for the Complex for any Lease Year, calculated on the basis of the greater of (i) actual Operating Costs; or (ii) as if the Complex were one hundred percent (100%) occupied and operational for the whole of such Lease Year.

(b) If any Lease Year of less than twelve (12) months is included within the Term, the amount payable by Lessee for such period shall be prorated on a per diem basis (utilizing a three hundred sixty [360] day year).

8.3 Method of Payment. Any additional Rent payable by Lessee under Sections 8.1 and 8.2 hereof shall be paid as follows, unless otherwise provided:

(a) During the Term, Lessee shall pay to Lessor monthly, in advance with its payment of Minimum Rent, one-twelfth (1/12) of the amount of such additional Rent as reasonably estimated by Xxxxxx in advance, in good faith, to be due from Lessee.

(b) Annually, as soon as is reasonably possible after the expiration of each Lease Year, but in no event later than six (6) months after the expiration of the previous Lease Year, Lessor shall prepare in good faith and deliver to Lessee a comparative statement, which statement shall be conclusive between the parties hereto, setting forth (1) the Operating Costs for such Lease Year, and (2) the amount of additional Rent owed by Xxxxxx as determined in accordance with the provisions of this Article 8.

(c) If the aggregate amount of such estimated additional Rent payments made by Lessee in any Lease Year should be less than the additional Rent due for such year, then Lessee shall pay to Lessor as additional Rent upon demand the amount of such deficiency. If the aggregate amount of such additional Rent payments made by Lessee in any Lease Year of the Term should be greater than the additional Rent due for such year, then should Lessee not be otherwise in default hereunder, the amount of such excess will be applied by Lessor to the next succeeding installments of such additional Rent due hereunder; and if there is any such excess for the last year of the Term, the amount thereof will be refunded by Lessor to Lessee, provided Lessee is not otherwise in default under the terms of this Lease.

8.4 Lessee’s Right to Audit. Subject to the limitations and restrictions below, Xxxxxx shall have the right, at its sole cost and expense, upon at least thirty (30) days prior written notice, to audit Lessor’s books and records pertaining to the Operating Costs for the Complex for the immediately preceding calendar year. Xxxxxx’s rights of audit is further subject and conditioned upon the following:

(a) Lessee must elect to conduct its audit within six (6) months following Xxxxxx’s receipt of Lessor’s annual statement of Operating Costs for the Complex (but no more than once in any calendar year), time being deemed of the essence (and failing which, the annual reconciliation statement from Lessor shall be deemed correct);

(b) The audit shall be conducted at Lessor’s (or its property manager’s) designated office;

(c) If Lessee undertakes an audit for any calendar year, then Lessee shall provide Lessor with a copy of the audit report.

(d) The audit shall be conducted by an independent certified accounting firm licensed to do business in the State of Washington and retained by Xxxxxx on a non-contingent fee basis.

In the event that any such audit reveals that Xxxxxx has overpaid its proportionate share of Operating Costs for the Complex for such calendar year, then as Xxxxxx’s sole remedy, there shall be a prompt adjustment between Lessor and Xxxxxx, and Lessor shall reimburse Lessee that amount of the overpayment, together with interest calculated at six (6%) percent within thirty (30) days following Xxxxxx’s invoice to Lessor for such overpayments. Lessee may, alternatively, elect to have the amount of any overpayment applied to future payments falling due under this Lease. If Lessee has overpaid in excess of five percent (5%) of its proportionate share of Operating Costs for the Complex in any calendar year, then Lessor shall pay to Lessee the reasonable cost of performing the audit.

9. ACCORD AND SATISFACTION

9.1 Acceptance of Payment. No payment by Lessee or receipt by Lessor of a lesser amount of Minimum Rent or any other sum due hereunder as additional Rent or any other payment shall be deemed to be other than on account of the earliest due Rent or payment, nor shall any endorsement or statement on any check or any letter accompanying any such check or payment be deemed an accord and satisfaction, and Lessor may accept such check or payment without prejudice to Lessor’s right to recover the balance of such Rent or payment or pursue any other remedy available in this Lease, at law or in equity. Lessor may accept any partial payment from Lessee without invalidation of any contractual notice required to be given herein (to the extent such contractual notice is required) and without invalidation of any notice required to be given pursuant to any applicable statute or other law of the State of Washington.

10. SECURITY DEPOSIT

10.1 Payment on Lease Execution. Lessee shall pay Lessor upon execution hereof the sum specified in Section 1.6. This sum is designated as a Security Deposit and shall remain the sole and separate property of Lessor until actually repaid to Lessee (or at Lessor’s option the last assignee, if any, of Xxxxxx’s interest hereunder), said sum not being earned by Lessee until all conditions precedent for its payment to Lessee have been fulfilled. As this sum both in equity and at law is Xxxxxx’s separate property, Lessor shall not be required to (1) keep said deposit separate from its general accounts, or (2) pay interest, or other increment for its use. If Lessee fails to pay Rent or other charges when due hereunder, or otherwise defaults with respect to any provision of this Lease, including and not limited to Lessee’s obligation to restore or clean the Leased Premises following vacation thereof, Lessee, at Lessor’s election, shall be deemed not to have earned the right to repayment of the Security Deposit, or those portions thereof used or applied by Lessor for the payment of any Rent or other charges in default, or for the payment of any other sum to which Lessor may become obligated by reason of Xxxxxx’s default, or to compensate Lessor for any loss or damage which Lessor may suffer thereby. Lessor may retain such portion of the Security Deposit as it reasonably deems necessary to restore or clean the Leased Premises following vacation by Xxxxxx, reasonable wear and tear excepted. The Security Deposit is not to be characterized as Rent until and unless so applied in respect of a default by Xxxxxx. Notwithstanding the foregoing, provided Lessee remains in full compliance of this Lease and Xxxxxx leaves the Leased Premises as described above, Lessor shall refund the Security Deposit to Lessee within thirty (30) days of the expiration or sooner termination of this Lease.

10.2 Restoration of Deposit. If Lessor elects to use or apply all or any portion of the Security Deposit as provided in Section 10.1, Lessee shall within ten (10) days after written demand therefor pay to Lessor in cash, an amount equal to that portion of the Security Deposit used or applied by Lessor, and Xxxxxx’s failure to so do shall be a material breach of this Lease. The ten (10) day notice specified in the preceding sentence shall insofar as not prohibited by law, constitute full satisfaction of notice of default provisions required by law or ordinance.

11. USE

11.1 Permitted Use. The Leased Premises may be used and occupied only for the purposes specified in Section 1.7 hereof, and for no other purpose or purposes. Lessee shall promptly comply with all laws, ordinances, orders and regulations affecting the Leased Premises, their cleanliness, safety, occupation and use.

11.2 Safes, Heavy Equipment. Lessee shall not place a load upon any floor of the Leased Premises which exceeds fifty (50) pounds per square foot live load. Lessor reserves the right to prescribe the weight and position of all safes and heavy installations which Xxxxxx wishes to place in the Leased Premises so as properly to distribute the weight thereof, or to require plans prepared by a qualified structural engineer at Xxxxxx’s sole cost and expense for such heavy objects. Notwithstanding the foregoing, Lessor shall have no liability for any damage caused by the installation of such heavy equipment or safes.

11.3 Machinery. Business machines and mechanical equipment belonging to Lessee which cause noise and/or vibration that may be transmitted to the structure of the Building or to any other leased space to such a degree as to be objectionable to Lessor or to other tenants in the Complex shall be placed and maintained by the party possessing the machines or equipment, at such party’s expense, in settings of cork, rubber or spring type noise and/or vibration eliminators, and Lessee shall take such other measures as needed to eliminate vibration and/or noise. If the noise or vibrations cannot be eliminated, Lessee must remove such equipment within ten (10) days following written notice from Lessor.

11.4 Hazardous Activities. Lessee shall not engage in any activities or permit to be kept, used, or sold in or about the Leased Premises any article, which may be prohibited by the standard form of fire insurance policies. Lessee shall, at its sole cost and expense, comply with any and all requirements pertaining to the Leased Premises, its occupation and/or use, of any insurance organization or company, necessary for the maintenance of reasonable fire and public liability insurance covering the Building, the Complex and appurtenances.

12. COMPLIANCE WITH LAWS AND REGULATIONS

12.1 Lessee’s Obligations. Lessee, shall, at its sole cost and expense, comply with all of the requirements of all municipal, state and federal authorities now in force, or which may hereafter be in force, pertaining to the Leased Premises, and shall faithfully observe in the use of the Leased Premises all municipal ordinances and state and federal statutes and regulations now in force or which may hereafter be in force, including, without limitation, the Environmental Laws (as hereinafter defined), and the Americans with Disabilities Act, 42 U.S.C. §§ 12101-12213 (and any rules, regulations, restrictions, guidelines, requirements or publications promulgated or published pursuant thereto, collectively herein referred to as the “ADA”), whether or not any of the foregoing were foreseeable or unforeseeable at the time of the execution of this Lease. The judgment of any court of competent jurisdiction, or the admission of Lessee in any action or proceeding against Lessee, whether Lessor be a party thereto or not, that any such requirement, ordinance, statute or regulation pertaining to the Leased Premises has been violated, shall be conclusive of that fact as between Lessor and Lessee. Within five (5) days after receipt of notice or knowledge of any violation or alleged violation of any Environmental Law(s) and/or the ADA pertaining to the Complex, any governmental or regulatory proceedings, investigations, sanctions and/or actions threatened or commenced with respect to any such violation or alleged violation, and any claim made or commenced with respect to such violation or alleged violation, Lessee shall notify Lessor thereof and provide Lessor with copies of any written notices or information in Lessee’s possession.

12.2 Condition of Leased Premises. Subject to Lessor’s work, if any, as referred to in Exhibit D to this Lease, Lessee hereby accepts the Leased Premises in the condition existing as of the date of occupancy, subject to all applicable zoning, municipal, county and state laws, ordinances, rules, regulations, orders, restrictions of record, and requirements in effect during the Term or any part of the Term hereof regulating the Leased Premises, and without representation, warranty or covenant by Lessor, express or implied, as to the condition, habitability or safety of the Leased Premises, the suitability or fitness thereof for Xxxxxx's intended purposes, or any other matter.

12.3 Hazardous Materials.

(a) Hazardous Materials Defined. As used herein, the term “Hazardous Materials” shall mean any wastes, materials or substances (whether in the form of liquids, solids or gases, and whether or not air-borne), which are or are deemed to be pollutants or contaminants, or which are or are deemed to be hazardous, toxic, ignitable, reactive, corrosive, dangerous, harmful or injurious, or which present a risk, to public health or to the environment, or which are or may become regulated by or under the authority of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq.; the Hazardous Materials Transportation Act, 39 U.S.C. Section 1801, et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.; the Federal Clean Water Act, 33 U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; or under any other applicable local, Washington State or federal laws, judgments, ordinances, orders, rules, regulations, codes or other governmental restrictions, guidelines or requirements, any amendments or successor(s) thereto, replacements thereof or publications promulgated pursuant thereto (collectively “Environmental Laws”), including, without limitation, any waste, material or substance which is:

(i) defined as a “hazardous substance” or “pollutant or contaminant” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq.;

(ii) listed as an “extremely hazardous substance,” “hazardous chemical,” or “toxic chemical” pursuant to the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq.;

(iii) listed as a “hazardous substance” in the United States Department of Transportation Table, 49 C.F.R. 172.101 and amendments thereto, or by the Environmental Protection Agency (or any successor agency) in 40 C.F.R. Part 302 and amendments thereto;

(iv) defined, listed or designated by regulations promulgated pursuant to any Environmental Law; or

(v) any of the following: pesticide; flammable explosive; petroleum, including crude oil or any fraction thereof; asbestos or asbestos-containing material; polychlorinated biphenyl; radioactive material; or urea formaldehyde.

In addition to the foregoing, the term Environmental Laws shall be deemed to include, without limitation, local, state and federal laws, judgments, ordinances, orders, rules, regulations, codes and other governmental restrictions, guidelines and requirements, any amendments and successors thereto, replacements thereof and publications promulgated pursuant thereto, which deal with or otherwise in any manner relate to, air or water quality, air emissions, soil or ground conditions or other environmental matters of any kind.

(b) Use, etc. of Hazardous Materials. Lessee agrees that during the Term, there shall be no use, presence, disposal, storage, generation, leakage, treatment, manufacture, import, handling, processing, release or threatened release of Hazardous Materials on, from or under the Leased Premises by Lessee, its employees, agents, representatives, contractors, invitees, subtenants and/or assigns (hereinafter collectively, "Lessee's Parties.") The use, presence, disposal, storage, generation, leakage, treatment, manufacture, import, handling, processing, release or threatened release of Hazardous Materials by Xxxxxx's Parties are sometimes hereinafter individually or collectively referred to as “Hazardous Use.” Lessee shall not be entitled to install any tanks under, on or about the Leased Premises for the storage of Hazardous Materials without the express written consent of Lessor, which may be given or withheld in Lessor’s sole arbitrary judgment.

(c) Hazardous Materials Report; When Required. In the event that Xxxxxx agrees in writing that Lessee or Xxxxxx's Parties may make some Hazardous Use of the Leased Premises, Lessee shall submit to Lessor a written report with respect to Hazardous Materials (“Report”) in the form prescribed in subparagraph (d) below on the following dates:

(i) Within ten (10) days after the Commencement Date,

(ii) Within ten (10) days after each anniversary of the Commencement Date during the Term,

(iii) At any time within ten (10) days after written request by Xxxxxx, and

(iv) At any time when there has been or is planned any condition which constitutes or would constitute a change in the information submitted in the most recent Report, including any notice of violation as referred to in subparagraph (d)(vii) below.

(d) Hazardous Materials Report; Contents. The Report shall contain, without limitation, the following information:

(i) Whether on the date of the Report and (if applicable) during the period since the last Report there has been any Hazardous Use on, from or under the Leased Premises.

(ii) If there was such Hazardous Use, the exact identity of the Hazardous Materials, the dates upon which such materials were brought upon the Leased Premises, the dates upon which the Hazardous Materials were removed therefrom, and the quantity, location, use and purpose thereof.

(iii) If there was such Hazardous Use, any governmental permits maintained by Lessee with respect to such Hazardous Materials, the issuing agency, original date of issue, renewal dates (if any) and expiration date. Copies of any such permits and applications therefor shall be attached.

(iv) If there was such Hazardous Use, any governmental reporting or inspection requirements with respect to such Hazardous Materials, the governmental agency to which reports are made and/or which conducts inspections, and the dates of all such reports and/or inspections (if applicable) since the last Report. Copies of any such Reports shall be attached.

(v) If there was such Hazardous Use, identification of any operation or business plan prepared for any government agency with respect to any Hazardous Use.

(vi) Any liability insurance carried by Lessee with respect to Hazardous Materials, the insurer, policy number, date of issue, coverage amounts, and date of expiration. Copies of any such policies or certificates of coverage shall be attached.

(vii) Any notices of violation of Environmental Laws, written or oral, received by Xxxxxx from any governmental agency since the last Report, the date, name of agency, and description of violation. Copies of any such written notices shall be attached.

(viii) Any knowledge, information or communication which Lessee has acquired or received relating to (x) any enforcement, cleanup, removal or other governmental or regulatory action threatened or commenced against Lessee or with respect to the Leased Premises pursuant to any Environmental Laws; (y) any claim made or threatened by any person or entity against Lessee or the Leased Premises on account of any alleged loss or injury claimed to result from any alleged Hazardous Use on or about the Leased Premises or Complex; or (z) any report, notice or complaint made to or filed with any governmental agency concerning any Hazardous Use on or about the Leased Premises or Complex. The Report shall be accompanied by copies of any such claim, report, complaint, notice, warning or other communication that is in the possession of or is available to Lessee.

(ix) Such other pertinent information or documents as are reasonably requested by Xxxxxx in writing.

(e) Release of Hazardous Materials: Notification and Cleanup. If at any time during the Term Lessee knows or believes that any release of any Hazardous Materials by Xxxxxx's Parties has come or will come to be located upon, about or beneath the Leased Premises or the Complex, then Lessee shall immediately, either prior to the release or following the discovery thereof by Xxxxxx, give verbal and follow-up written notice of that condition to Lessor. Lessee covenants to investigate, clean up and otherwise remediate any release of Hazardous Materials by Xxxxxx's Parties at Lessee’s cost and expense; such investigation, clean-up and remediation shall be performed only after Xxxxxx has obtained Lessor’s written consent, which shall not be unreasonably withheld; provided, however, that Lessee shall be entitled to respond immediately to an emergency without first obtaining Lessor’s written consent. All clean-up and remediation shall be done in compliance with Environmental Laws and to the reasonable satisfaction of Xxxxxx. Notwithstanding the foregoing, whether or not such work is prompted by the foregoing notice from Lessee or is undertaken by Lessor for any other reason whatsoever, Lessor shall have the right, but not the obligation, in Lessor’s sole and absolute discretion, exercisable by written notice to Lessee at any time, to undertake within or outside the Leased Premises all or any portion of any investigation, clean-up or remediation with respect to Hazardous Materials brought onto, used, or released on, under or around the Leased Premises or the Complex by Xxxxxx's Parties (or, once having undertaken any of such work, to cease same, in which case Lessee shall perform the work), all at Lessee’s cost and expense, which shall be paid by Lessee as additional Rent within ten (10) days after receipt of written request therefor by Lessor (and which Lessor may require to be paid prior to commencement of any work by Lessor). No such work by Lessor shall create any liability on the part of Lessor to Lessee or any other party in connection with such Hazardous Materials or constitute an admission by Lessor of any responsibility with respect to such Hazardous Materials. It is the express intention of the parties hereto that Lessee shall be liable under this Section 12.3(e) for any and all conditions covered hereby which were caused or created (i) by any of Lessee's Parties, or (ii) by any Hazardous Materials brought onto the Leased Premises or the Complex by or for the benefit of Xxxxxx's Parties. Lessee shall not enter into any settlement agreement, consent decree or other compromise with respect to any claims relating to any Hazardous Materials in any way connected to the Leased Premises or the Complex without first (i) notifying Lessor of Xxxxxx’s intention to do so and affording Lessor the opportunity to participate in any such proceedings, and (ii) obtaining Lessor’s prior written consent.

(f) Inspection and Testing by Lessor. Lessor shall have the right at all times during the Term to (i) inspect the Leased Premises, as well as Xxxxxx’s books and records related to Hazardous Materials, and to (ii) conduct tests and investigations to determine whether Lessee is in compliance with the provisions of this Section. Except in case of emergency, Lessor shall give reasonable notice to Lessee before conducting any inspections, tests, or investigations. The cost of all such inspections, tests and investigations shall be borne by Xxxxxx, if such tests reveal a violation of the provisions of this Article 12 by any of Xxxxxx's Parties. Neither any action nor inaction on the part of Lessor pursuant to this Section 12.3(f) shall be deemed in any way to release Lessee from, or in any way modify or alter, Lessee’s responsibilities, obligations, and/or liabilities incurred pursuant to Section 12.3 hereof.

12.4 Indemnity. Lessee shall indemnify, hold harmless, and, at Xxxxxx’s option (with such attorneys as Lessor may approve in advance and in writing), defend Xxxxxx and Xxxxxx’s officers, directors, shareholders, trustees, partners, employees, contractors, agents and mortgagees or other lien holders, from and against any and all claims, demands, expenses, actions, judgments, damages (whether consequential, direct or indirect, known or unknown, foreseen or unforeseen), penalties, fines, liabilities, losses of every kind and nature (including, without limitation, property damage, diminution in value of Lessor’s interest in the Leased Premises or the Complex, damages for the loss or restriction on use of any space or amenity within the Leased Premises or the Complex, damages arising from any adverse impact on marketing space in the Complex, sums paid in settlement of claims and any costs and expenses associated with injury, illness or death to or of any person), suits, administrative proceedings, costs and fees, including, but not limited to, attorneys’ and consultants’ fees and expenses, and the costs of cleanup, remediation, removal and restoration (all of the foregoing being hereinafter sometimes collectively referred to as “Losses”), arising from or related to any violation or alleged violation of any of the requirements, ordinances, statutes, regulations or other laws referred to in this Article, including, without limitation, the Environmental Laws, by any of Xxxxxx's Parties; any breach of the provisions of this Article 12 by any of Xxxxxx's Parties; or any Hazardous Use on, about or from the Leased Premises or the Complex by Xxxxxx's Parties. Lessee warrants that it is leasing the Leased Premises “as-is, where-is,” that it has thoroughly inspected the Leased Premises prior to execution of this Lease, and that it intends to act as an insurer with respect to any Hazardous Use on, under or about the Leased Premises or the Complex by Xxxxxx's Parties.

12.5 Release and Assumption of Risk.

(a) Lessee, for itself, and its officers, directors, shareholders, partners, agents, contractors, attorneys, brokers, servants, employees, sublessees, lessees, invitees, concessionaires, licensees and representatives (hereinafter referred to as “Releasors”), hereby waives, releases, acquits and forever discharges Lessor and its officers, directors, trustees, shareholders, partners, agents, contractors, attorneys, brokers, servants, employees, lessees, invitees, licensees and representatives (hereinafter referred to as “Releasees”) of and from any and all Losses, which are in any way connected with, based upon, related to or arising out of (i) any Hazardous Materials on or about the Leased Premises or the Complex, (ii) any violation by or relating to the Leased Premises or the Complex (or the ownership, use, condition, occupancy or operation thereof), or by the Releasors or any other persons or entities, of any Environmental Laws affecting the Leased Premises or the Complex, or (iii) any investigation, inquiry, order, hearing, action or other proceeding by or before any governmental agency or any court in connection with any of the matters referred to in clauses (i) or (ii) above (collectively, the “Released Matters”), except to the extent caused by the gross negligence or willful misconduct of the Releasees. Releasors hereby expressly assume any and all risk of Losses based on or arising out of or pertaining to the Released Matters.

(b) Xxxxxx agrees, represents and warrants that the Released Matters are not limited to matters which are known, disclosed or foreseeable, and Xxxxxx realizes and acknowledges that factual matters now unknown to it may have given, or may hereinafter give, rise to Losses which are presently unknown, unanticipated and unsuspected. Xxxxxx further agrees, represents and warrants that the provisions of this Section 12.5 have been negotiated and agreed upon in light of that realization and that Xxxxxx nevertheless hereby intends to release, discharge and acquit the Releasees from any such unknown Losses which are in any way related to this Lease or the Complex.

13. SERVICE AND EQUIPMENT

13.1 Climate Control. So long as Lessee is not in default under any of the covenants of this Lease, Lessor, as part of Operating Costs, shall provide climate control to the Leased Premises from 7:00 a.m. to 6:00 p.m. (the “Climate Control Hours”) on weekdays (Saturdays, Sundays and holidays excepted) to maintain a temperature adequate for comfortable occupancy, provided that Lessor shall have no responsibility or liability for failure to supply climate control service when making repairs, alterations or improvements or when prevented from so doing by strikes or any other cause beyond Lessor’s reasonable control. Any climate control furnished for periods not within the Climate Control Hours pursuant to Xxxxxx’s request shall be at Xxxxxx’s sole cost and expense in accordance with rate schedules promulgated by Lessor from time to time, and which as of the date of execution of this Lease has been established at $40.00 per hour. Lessee acknowledges that Lessor has installed in the Building a system for the purpose of climate control. Any use of the Leased Premises not in accordance with the design standards or any arrangement of partitioning which interferes with the normal operation of such system may require changes or alterations in the system or ducts through which the climate control system operates. Any changes or alterations so occasioned, if such changes can be accommodated by Lessor’s equipment, shall be made by Lessee at its cost and expense but only with the written consent of Lessor first had and obtained, and in accordance with drawings and specifications and by a contractor first approved in writing by Xxxxxx. If installation of partitions, equipment or fixtures by Lessee necessitates the re-balancing of the climate control equipment in the Leased Premises, the same will be performed by Lessor at Xxxxxx’s expense. Xxxxxx acknowledges that up to three (3) months may be required after Xxxxxx has fully occupied the Leased Premises in order to adjust and balance the climate control systems. Any charges to be paid by Lessee hereunder shall be due within ten (10) days of receipt of an invoice from Lessor, which invoice may precede Xxxxxx’s expenditure for the benefit of Xxxxxx.

13.2 Elevator Service. Lessor, as part of Operating Costs, shall provide elevator service (which may be with or without operator at Lessor’s option) during normal business hours provided that Lessee, its employees, and all other persons using such services shall do so at their own risk.

13.3 Cleaning Public Areas. Lessor, as part of Operating Costs, shall maintain and keep clean the street level lobbies, sidewalks, truck dock, public corridors and other public portions of the Building.

13.4 Refuse Disposal. Lessee shall pay Lessor, within ten (10) days of being billed therefor, for the removal from the Leased Premises and the Building of such refuse and rubbish of Lessee as shall exceed that ordinarily accumulated daily in the routine of business office occupancy.

13.5 Janitorial Service. Lessor, as part of Operating Costs, shall provide cleaning and janitorial service in and about the Complex and Leased Premises from time to time on weekdays (Saturdays, Sundays and holidays excepted) in accordance with standards in first-class office buildings in the city in which the Building is located.

To the extent that Lessee shall require special or more frequent cleaning and/or janitorial service (hereinafter referred to as “Special Cleaning Service”) Lessor may, upon reasonable advance notice from Lessee, elect to furnish such Special Cleaning Service and Lessee agrees to pay Lessor, within ten (10) days of being billed therefor, Lessor’s charge for providing such additional service.

Special Cleaning Service shall include but shall not be limited to the following:

(a) The cleaning and maintenance of Lessee eating facilities, including the removal of refuse and garbage therefrom.

(b) The cleaning and maintenance of Lessee computer centers, including peripheral areas, and removal of waste paper therefrom.

(c) The cleaning and maintenance of special equipment areas, kitchen areas, private toilets and locker rooms, medical centers and large scale duplicating rooms.

(d) The cleaning and maintenance in areas of special security such as storage units.

(e) The provision of consumable supplies for private toilet rooms.

13.6 Interruptions. Lessor does not warrant that any of the services referred to above or any other services and/or utilities which Lessor may supply or are supplied will be free from interruption and/or the need for maintenance and repairs or replacement. Lessee acknowledges that any one or more such services may be temporarily suspended or reduced by reason of repairs, alterations or improvements necessary to be made, by strikes or accidents, by any cause beyond the reasonable control of Lessor, by orders or regulations of any federal, state, county or municipal authority, or by any other cause or reason. Upon being notified in writing by Lessee of an interruption in services or utilities, Lessor shall use reasonable efforts to have such interrupted services or utilities restored. In addition, Lessor shall have no liability for damages arising from, and Lessor does not warrant that Lessee’s use of any Lines will be free from, (a) any eavesdropping or wire-tapping by unauthorized parties, (b) any failure of any Lines to satisfy Lessee’s requirements, or (b) any shortages, failures, variations, interruptions, disconnections, loss or damage caused by installation, maintenance, replacement, use or removal of Lines by or for other occupants of the Complex, by any failure of the environmental conditions or the power supply for the Building to conform to any requirements for the Lines or any associated equipment or any other problems associated with any Lines by any other cause.

Any such interruption or suspension of services shall not be deemed an eviction or disturbance of Xxxxxx’s use and possession of the Leased Premises or any part thereof, nor render Lessor liable to Lessee for damages by abatement of Rent or otherwise, nor relieve Lessee of performance of Xxxxxx’s obligations under this Lease.

14. WASTE

14.1 Waste or Nuisance. Lessee shall not commit, or suffer to be committed, any waste upon the Leased Premises, or any nuisance, or other act or thing which may disturb the quiet enjoyment of any other tenant or occupant of the Complex in which the Leased Premises are located.

15. ALTERATIONS

15.1 Consent of Lessor; Ownership. Lessee shall not make, or suffer to be made, any alterations to the Leased Premises, the Building, or the Complex, and/or Lines, systems and facilities therein, or any part thereof, without the written consent of Lessor first had and obtained. Notwithstanding the preceding sentence, Lessee shall not be required to obtain Lessor’s consent to make minor alterations to the interior of the Leased Premises if (i) such minor alterations do not exceed $10,000 in cost, (ii) such minor alterations do not in any way affect the structural, mechanical, or electrical components of the Building or Complex or any Common Area elements, and (iii) Lessor receives notice of such minor alterations at least ten (10) days prior to the commencement of construction of such minor alterations. Any additions to or alterations of the Leased Premises (except trade fixtures) shall, immediately upon being made, constitute a part of the realty and Lessor’s property, and shall, at the expiration or earlier termination of this Lease, remain upon the Leased Premises without compensation to Lessee, excerpt and to the extent that Lessor requires such items to be removed prior to Lease expiration or termination, as provided in Section 15.4, below. Except as otherwise provided in this Lease, Lessee shall have the right to remove its trade fixtures placed upon the Leased Premises, provided that Lessee restores the Leased Premises as indicated below. Any and all costs incurred by Lessor, whether in complying with laws, governmental requirements or otherwise, as a result of any “alterations” (as hereinafter defined), or as a result of request by Lessee for increased Lines or other utility capacity above that presently existing (or, in the event the Building is to be constructed or substantially altered by Lessor prior to the delivery date, above that which is planned by Lessor for the Building) shall be paid by Lessee within ten (10) days after demand therefor by Lessor.

15.2 Requirements. Any alterations, additions or installations performed by Xxxxxx in the Leased Premises or Building (hereinafter collectively “alterations”) shall be subject to strict conformity with the following requirements:

(a) All alterations shall be at the sole cost and expense of Xxxxxx;

(b) Prior to commencement of any work of alteration, Lessee shall submit detailed plans and specifications, including working drawings (hereinafter referred to as “Plans”), of the proposed alterations, which shall be subject to the consent of Lessor in accordance with the terms of Section 15.1 above;

(c) Following approval of the Plans by Xxxxxx, Lessee shall give Lessor at least ten (10) days’ prior written notice of commencement of work in the Leased Premises so that Lessor may post notices of non-responsibility in or upon the Leased Premises as provided by law;

(d) No alterations shall be commenced without Lessee having previously obtained all appropriate permits and approvals required by and of governmental agencies;

(e) All alterations shall be performed in a skillful and workmanlike manner, consistent with the best practices and standards of the construction industry, and pursued with diligence in accordance with the Plans previously approved by Lessor and in full accord with all applicable laws and ordinances. All material, equipment, and articles incorporated in the alterations are to be new and of recent manufacture and of the most suitable grade for the purpose intended;

(f) Lessee must obtain the prior written approval from Lessor for Xxxxxx’s contractor before the commencement of the work. Lessor may require that Lessee use subcontractors designated by Lessor as to specified portions of the work. Lessee’s contractor shall maintain all of the insurance reasonably required by Lessor, including, without limitation, commercial general liability, workers’ compensation, builder’s risk and course of construction insurance. The limits of such insurance shall, at a minimum, be the same as those specified in Article 18;

(g) As a condition of approval of the alterations, Lessor may require performance and labor and materialmen’s payment bonds issued by a surety approved by Xxxxxx, in a sum equal to the cost of the alterations guarantying the completion of the alterations free and clear of all liens and other charges in accordance with the Plans. Such bonds shall name Lessor as beneficiary;

(h) The alterations must be performed in a manner such that they will not interfere with the quiet enjoyment of the other lessees in the Complex;

(i) Lessor shall have the right to condition any approval of the alterations upon (i) submission by Lessee of a Report with respect to Hazardous Materials, and/or (ii) the performance by Lessee at Lessee’s cost and expense of such investigation, clean-up and remediation with respect to Hazardous Materials as Lessor may request, in Lessor’s sole and absolute discretion; provided, however, that Lessor shall have the right, but not the obligation, to undertake all or any portion of such investigation, clean-up or remediation at Xxxxxx’s cost and expense in accordance with the provisions of Section 12.3(e) above. Xxxxxx acknowledges and agrees that Xxxxxx shall have the right, in its sole and absolute discretion, to disapprove the making of any such alterations based upon the results of any investigation with respect to Hazardous Materials.

15.3 Liens. Lessee shall keep the Leased Premises and the Complex in which the Leased Premises are situated free from any liens arising out of any work performed, materials furnished or obligations incurred by Lessee. In the event a mechanic’s or other lien is filed against the Leased Premises or the Complex of which the Leased Premises form a part as a result of a claim arising through Lessee, Lessor may demand that Lessee furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to at least one hundred fifty percent (150%) of the amount of the contested lien claim or demand, indemnifying Lessor against liability for the same and holding the Leased Premises free from the effect of such lien or claim. Such bond must be posted within ten (10) days following notice from Lessor. In addition, Lessor may require Lessee to pay Lessor’s attorneys’ fees and costs in participating in any action to foreclose such lien if Lessor shall decide it is to its best interest to do so. Lessor may pay the claim prior to the enforcement thereof, in which event Xxxxxx shall reimburse Lessor in full, including attorneys’ fees, for any such expense, as additional rent, with the next due rental.

15.4 Restoration. Lessee shall return the Leased Premises to Lessor at the expiration or earlier termination of the Term of this Lease in good and sanitary order, condition and repair, free of rubble and debris, broom clean, reasonable wear and tear excepted. However, Lessee shall ascertain from Lessor at least thirty (30) days prior to the expiration or earlier termination of the Term of this Lease, whether Lessor desires the Leased Premises, or any part thereof, restored to its condition prior to the making of permitted alterations, and if Lessor shall so desire, then Lessee shall forthwith restore said Leased Premises or the designated portions thereof as the case may be, to its original condition, entirely at its own expense, excepting normal wear and tear. Landlord will require Tenant to remove all their trade fixtures including, but not limited to, vault(s), teller cabinetry, ATM or night drop box, as well as the exterior awning and exterior entrance. All damage to the Leased Premises caused by the removal of such trade fixtures and other personal property that Xxxxxx is permitted to remove under the terms of this Lease and/or such restoration shall be repaired by Lessee at its sole cost and expense prior to termination. Notwithstanding the foregoing, the initial Construction Obligations outlined in Exhibit D attached hereto, and the existing condition of the Premises as of the date of this Lease shall not be required to be removed, restored, or modified upon the expiration or sooner termination of the Term of this Lease.

16. PROPERTY INSURANCE

16.1 Use of Premises. No use shall be made or permitted to be made on the Leased Premises, nor acts done, which will increase the existing rate of insurance upon the Building in which the Leased Premises are located or upon any other building or improvement in the Complex or cause the cancellation of any insurance policy covering the Building or any other building or improvement in the Complex, or any part thereof, nor shall Lessee sell, or permit to be kept, used or sold, in or about the Leased Premises or the Complex, any article which may be prohibited by the standard form of “All Risk” fire insurance policies. Lessee shall, at its sole cost and expense, comply with any and all requirements of any insurance organization or company, pertaining to the Leased Premises, necessary for the maintenance of reasonable property damage and commercial general liability insurance, covering the Leased Premises, the Building, or the Complex.

16.2 Increase in Premiums. Xxxxxx agrees to pay to Lessor directly, as additional Rent and not as part of Operating Costs, any increase in premiums on policies which may be carried by Lessor on the Leased Premises, the Building or the Complex, or any blanket policies which include the Building or Complex, covering damage thereto and loss of Rent caused by fire and other perils, resulting from the nature of Lessee’s occupancy or any act or omission of Lessee. All payments of additional Rent by Lessee to Lessor pursuant to this Section 16.2 shall be made within ten (10) days after receipt by Lessee of Xxxxxx’s billing therefor. Lessee shall also pay its Pro Rata Percent of all premiums for insurance carried by Lessor on the Leased Premises, the Building and the Complex as part of Operating Costs.

16.3 Personal Property Insurance. Lessee shall maintain in full force and effect on all of its fixtures, furniture, equipment and other business personal property in the Leased Premises a policy or policies providing protection against any peril included within the classification “All Risk” to the extent of at least ninety percent (90%) of their replacement cost, or that percentage of the replacement cost required to negate the effect of a coinsurance provision, whichever is greater. No such policy shall have a deductible in a greater amount than ONE THOUSAND DOLLARS ($1,000.00). Lessee shall also insure in the same manner the physical value of all its leasehold improvements and alterations in the Leased Premises. During the Term, the proceeds from any such policy or policies of insurance shall be used for the repair or replacement of the fixtures, equipment, and leasehold improvements so insured. Lessor shall have no interest in said insurance, and will sign all documents necessary or proper in connection with the settlement of any claim or loss by Xxxxxx. Lessee shall also maintain business interruption insurance and insurance for all plate glass upon the Leased Premises. All insurance specified in this Section 16.3 to be maintained by Lessee shall be maintained by Lessee at its sole cost.

16.4 Waiver of Loss of Income/Business Interruption Insurance Requirements and Claims. In exchange for Lessor agreeing not to require Lessee to maintain business interruption/loss of income insurance, Lessee, on behalf of itself and its successors and assigns, hereby fully and unconditionally waives, disclaims and releases any and all claims and causes of action it may have against Lessor for business interruption, loss of income, lost overhead, lost profits, lost business opportunities and consequential damages regardless of the underlying cause.

17. INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION

17.1 Intent and Purpose. This Article 17 is written and agreed to in respect of the intent of the parties to assign the risk of loss, whether resulting from negligence of the parties or otherwise, to the party who is obligated hereunder to cover the risk of such loss with insurance. Thus, the indemnity and waiver of claims provisions of this Lease have as their object, so long as such object is not in violation of public policy, the assignment of risk for a particular casualty to the party carrying the insurance for such risk, without respect to the causation thereof.

17.2 Waiver of Subrogation. Lessor and Lessee release each other, and their respective authorized representatives, from any claims for (i) damage to the Leased Premises and the Building and other improvements in which the Leased Premises are located, and to the furniture, fixtures, and other business personal property, Lessee’s improvements and alterations of either Lessor or Lessee, in or on the Leased Premises and the Building and other improvements in which the Leased Premises are located, and (ii) for loss of business or income of either Lessor or Lessee, that are caused by or result from risks insured or required under the terms of this Lease to be insured against under any property insurance policies carried or to be carried by either of the parties.

17.3 Form of Policy. Each party shall cause each such property insurance policy obtained by it to provide that the insurance company waives all rights of recovery by way of subrogation against either party in connection with any damage covered by such policy. Neither party shall be liable to the other for any damage caused by any peril included within the classification “All Risk” which is insured against under any property insurance policy carried under the terms of this Lease.

17.4 Indemnity. Lessee, as a material part of the consideration to be rendered to Lessor, shall indemnify, defend, protect and hold harmless Lessor against all actions, claims, demands, damages, liabilities, losses, penalties, or expenses of any kind which may be brought or imposed upon Lessor or which Lessor may pay or incur by reason of injury to person or property or business, from whatever cause, all or in any way connected with the acts and omissions of Lessee, and the condition or use of the Leased Premises, or the improvements or personal property therein or thereon, including without limitation any liability or injury to the person or property or business of Lessee, its agents, officers, employees or invitees. Xxxxxx agrees to indemnify, defend and protect Xxxxxx and hold it harmless from any and all liability, loss, cost or obligation on account of, or arising out of, any such injury or loss however occurring, including breach of the provisions of this Lease and the negligence of the parties hereto. Notwithstanding the foregoing, nothing contained herein shall obligate Lessee to indemnify Lessor against Xxxxxx's sole or gross negligence or willful misconduct of Lessor to the extent the injury of damage was caused by the sole or active negligence or willful misconduct of Lessor, or Lessor’s agents, contractors, employees, or representatives. For the sole purpose of giving full force and effect to the indemnification obligations under this Agreement and not for the benefit of any employees of Lessee or any third parties unrelated to the parties indemnified under this Agreement, Lessee specifically and expressly waives any immunity that may be granted it under the Washington State Industrial Insurance Act, Title 51 RCW. (LESSEE’S INITIALS __________).

17.5 Defense of Claims. In the event any action, suit or proceeding is brought against Lessor by reason of any occurrence covered by Section 17.4, above, Xxxxxx, upon Xxxxxx’s request, will at Xxxxxx’s expense resist and defend such action, suit or proceeding, or cause the same to be resisted and defended by counsel designated either by Xxxxxx or by the insurer whose policy covers the occurrence and in either case reasonably approved by Lessor. The obligations of Lessee under this Section arising by reason of any occurrence taking place during the Term shall survive any termination of this Lease.

17.6 Waiver of Claims. Xxxxxx, as a material part of the consideration to be rendered to Lessor, hereby waives all claims against Lessor for damages or injury, as described below, from any cause arising at any time, including the negligence of the parties hereto:

(a) damages to goods, wares, merchandise and loss of business or income in, upon or about the Leased Premises and injury to Lessee, its agents, employees, invitees or third persons, in, upon or about the Leased Premises; and

(b) (notwithstanding anything to the contrary contained in this Lease, including, without limitation, the definition of Operating Costs in Section 2.1(k), which includes “policing”) damages to goods, wares, merchandise and loss of business, in, upon or about the Leased Premises or the Complex, and injury to Lessee, its agents, employees, invitees or third persons in, upon or about the Leased Premises or the Complex, where such damage or injury results from Lessor’s failure to police or provide security for the Complex or Lessor’s negligence in connection therewith.

Notwithstanding the foregoing, in no event shall Lessee be deemed to have waived any claims as against Lessor where such claims are based upon, or arise out of, the gross negligence or willful misconduct of Lessor.

Xxxxxx expressly acknowledges and agrees that the provisions of Section 12.6(b) above apply fully with respect to the matters waived pursuant to this Section 17.6, and, for such purpose, the term Released Matters, as used in Section 12.5(b), shall be deemed to include the matters waived pursuant to this Section 17.6.

17.7 References. Wherever in this Article the term Lessor or Lessee is used and such party is to receive the benefit of a provision contained in this Article, such term shall refer not only to that party but also to its officers, directors, shareholders, employees, contractors, partners, agents and mortgagees or other lien holders.

18. LIABILITY INSURANCE

18.1 Lessee’s Insurance. Lessee shall, at Lessee’s expense, obtain and keep in force during the Term, a commercial general liability insurance policy insuring Lessee against the risks of, bodily injury and property damage, personal injury, contractual liability, completed operations, products liability, host liquor liability, owned and non-owned automobile liability arising out of the ownership, use, occupancy or maintenance of the Leased Premises and all areas appurtenant thereto. Such insurance shall be a combined single limit policy in an amount not less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence with a TWO MILLION DOLLAR ($2,000,000.00) annual aggregate; and an umbrella policy of ONE MILLION DOLLARS ($1,000,000.00) any one occurrence. Lessor and any lender or other party in interest designated by Lessor shall be named as additional insured(s). The policy shall contain cross liability endorsements and shall insure performance by Lessee of the indemnity provisions of this Lease; shall be primary, not contributing with, and not in excess of coverage which Lessor may carry; shall state that Lessor is entitled to recovery for the negligence of Lessee even though Lessor is named as an additional insured; shall provide for severability of interest; shall provide that an act or omission of one of the insured or additional insureds which would void or otherwise reduce coverage shall not void or reduce coverages as to the other insured or additional insured; and shall afford coverage after the Term (by separate policy or extension if necessary) for all claims based on acts, omissions, injury or damage which occurred or arose (or the onset of which occurred or arose) in whole or in part during the Term. The limits of said insurance shall not limit any liability of Lessee hereunder. Not more frequently than every three (3) years, if, in the reasonable opinion of Xxxxxx, the amount of liability insurance required hereunder is not adequate, Lessee shall promptly increase said insurance coverage as required by Xxxxxx.

18.2 Workers’ Compensation Insurance. Lessee shall carry Workers’ Compensation insurance as required by law, including an employers’ liability endorsement.

19. INSURANCE POLICY REQUIREMENTS

19.1 General Requirements. All insurance policies required to be carried by Xxxxxx (except Xxxxxx’s business personal property insurance) hereunder shall conform to the following requirements:

(a) The insurer in each case shall carry a designation in “Best’s Insurance Reports” as issued from time to time throughout the Term as follows: Policyholders’ rating of A; financial rating of not less than VII;

(b) The insurer shall be qualified to do business in the state in which the Leased Premises are located;

(d) Certificates of insurance shall be delivered to Lessor at commencement of the Term and certificates of renewal at least thirty (30) days prior to the expiration of each policy;

(e) Each policy shall require that Lessor be notified in writing by the insurer at least thirty (30) days prior to any cancellation or expiration of such policy, or any reduction in the amounts of insurance carried.

20. LESSEE INSURANCE DEFAULT

20.1 Rights of Lessor. In the event that Lessee fails to obtain any insurance required of it under the terms of this Lease, Lessor may, at its option, but is not obligated to, obtain such insurance on behalf of Lessee and xxxx Xxxxxx, as additional rent, for the cost thereof. Payment shall be due within ten (10) days of receipt of the billing therefor by Xxxxxx.

21. FORFEITURE OF PROPERTY AND XXXXXX’X XXXX

21.1 Removal of Personal Property. Xxxxxx agrees that as at the date of termination of this Lease or repossession of the Leased Premises by Lessor, by way of default or otherwise, it shall remove all personal property to which it has the right to ownership pursuant to the terms of this Lease. Any and all such property of Lessee not removed by such date shall, at the option of Lessor, irrevocably become the sole property of Lessor. Lessee waives all rights to notice and all common law and statutory claims and causes of action which it may have against Lessor subsequent to such date as regards the storage, destruction, damage, loss of use and ownership of the personal property affected by the terms of this Article. Xxxxxx acknowledges Xxxxxx’s need to relet the Leased Premises upon termination of this Lease or repossession of the Leased Premises and understands that the forfeitures and waivers provided herein are necessary to aid said reletting, and to prevent Lessor incurring a loss for inability to deliver the Leased Premises to a prospective lessee.

22. MAINTENANCE AND REPAIRS

22.1 Lessor’s Obligations. Subject to the other provisions of this Lease imposing obligations in this respect upon Lessee, Lessor shall repair, replace and maintain the external and Structural parts of the Complex which do not comprise a part of the Leased Premises and are not leased to others, janitor and equipment closets and shafts within the Leased Premises designated by Lessor for use by it in connection with the operation and maintenance of the Complex, and all Common Areas. Lessor shall perform such repairs, replacements and maintenance with reasonable dispatch, in a good and workmanlike manner; but Lessor shall not be liable for any damages, direct, indirect or consequential, or for damages for personal discomfort, illness or inconvenience of Lessee by reason of failure of equipment, Lines, facilities or systems or reasonable delays in the performance of such repairs, replacements and maintenance, unless caused by the deliberate act or omission of Lessor, its servants, agents, or employees. The cost for such repairs, maintenance and replacement shall be included in Operating Costs in accordance with Section 2.1(k) hereof.

22.2 Negligence of Lessee. If the Building, the elevators, boilers, engines, pipes or apparatus used for the purpose of climate control of the Building or operating the elevators, or if the water pipes, drainage pipes, electric lighting or other equipment, Lines, systems and/or facilities of the Building or the Complex, or the roof or the outside walls of the Building, fall into a state of disrepair or become damaged or destroyed through the negligence, carelessness or misuse of Lessee, its agents, employees or anyone permitted by it to be in the Complex, or through it in any way, the cost of the necessary repairs, replacements or alterations shall be borne by Lessee who shall pay the same to Lessor as additional charges forthwith on demand.

22.3 Lessee’s Obligations. Lessee shall maintain and repair the interior portions of the Leased Premises, including without limiting the generality of the foregoing, all interior partitions and walls, fixtures; all Tenant Improvements and alterations in the Leased Premises; all electrical and telephone outlets and conduits not concealed by floors, walls or ceilings; all fixtures and shelving; and all special mechanical and electrical equipment (which equipment is not a normal part of the Leased Premises) installed by or for Lessee; reasonable wear and tear, damage with respect to which Lessor has an obligation to repair as provided in Section 22.1 and Section 23.2 hereof only excepted. Prior to commencement of any repairs, Lessee shall give Lessor at least ten (10) days’ prior written notice thereof so that Lessor may post notices of non-responsibility in or upon the Leased Premises as provided by law. Lessee must obtain the prior written approval from Lessor for Xxxxxx’s contractor before the commencement of the repair, which approval shall not be unreasonably withheld or delayed. Lessor may require that Lessee use a specific contractor for certain types of repairs. Lessor may enter and view the state of repair and Lessee will repair in a good and workmanlike manner according to notice in writing. Notwithstanding the foregoing, Lessee shall not make any repairs to the equipment, Lines, facilities or systems of the Building or Complex which are outside of the Leased Premises or which do not exclusively serve the Leased Premises.

22.4 Cleaning. Xxxxxx agrees at the end of each business day to leave the Leased Premises in a reasonably clean condition for the purpose of the performance of Xxxxxx’s cleaning services referred to herein. Lessee shall maintain the appearance of the Leased Premises in a manner consistent with the character, use and appearance of the Complex.

22.5 Reserved.

22.6 Acceptance. It is acknowledged and agreed that Lessor has no obligation to perform any work or make any alterations to the Building or the Premises to make the Premises ready for Lessee’s occupancy and Lessee shall accept the Leased Premises in “as is” condition as of the date of execution of this Lease by Xxxxxx, and Lessee acknowledges that the Leased Premises in such condition are in good and sanitary order, condition and repair.

23. DESTRUCTION

23.1 Rights of Termination. In the event the Leased Premises suffers (a) an “uninsured property loss” (as hereinafter defined) or (b) a property loss which cannot be repaired within one hundred ninety five (195) days from the date of destruction under the laws and regulations of state, federal, county or municipal authorities, or other authorities with jurisdiction, Lessor may terminate this Lease as at the date of the damage upon written notice to Lessee following the property loss. In the event of a property loss to the Leased Premises which cannot be repaired within one hundred ninety-five (195) days of the occurrence thereof, Lessee shall have the right to terminate the Lease by written notice to Lessor within twenty (20) days following notice from Lessor that the time for restoration shall exceed one hundred ninety-five (195) days, which notice shall be given by Lessor within ten (10) business days following the time which Lessor determines that the property loss cannot be repaired within the one-hundred ninety-five (195) day period. For purposes of this Lease, the term “uninsured property loss” shall mean any loss arising from a peril not covered by the standard form of “All Risk” property insurance policy.

23.2 Repairs. In the event of a property loss which may be repaired within one hundred ninety-five (195) days from the date of the damage, or, in the alternative, in the event the parties do not elect to terminate this Lease under the terms of Section 23.1 above, then this Lease shall continue in full force and effect and Lessor shall forthwith undertake to make such repairs to reconstitute the Leased Premises to as near the condition as existed prior to the property loss as practicable. Such partial destruction shall in no way annul or void this Lease except that Lessee shall be entitled to a proportionate reduction of Minimum Rent and additional Rent following the property loss and until the time the Leased Premises are restored. Such reduction shall be an amount which reflects the degree of interference with Xxxxxx’s business. So long as Lessee conducts its business in the Leased Premises, there shall be no abatement until the parties agree on the amount thereof. If the parties cannot agree within forty-five (45) days of the property loss, the matter shall be submitted to arbitration under the rules of the American Arbitration Association. Upon the resolution of the dispute, the settlement shall be retroactive and Lessor shall within ten (10) days thereafter refund to Lessee any sums due in respect of the reduced rental from the date of the property loss. Lessor’s obligations to restore shall in no way include any construction originally performed by Lessee or subsequently undertaken by Lessee, but shall include solely that property constructed by Lessor prior to commencement of the Term, including without limitation, any Tenant Improvements.

23.3 Repair Costs. The cost of any repairs to be made by Lessor pursuant to Section 23.2 of this Lease shall be paid by Lessor utilizing available insurance proceeds, and Lessor shall have no obligation to restore the Leased Premises or the Complex to the extent that the cost of such repairs or restoration is not covered by insurance proceeds actually received by Lessor in connection with such damage or destruction. If the lack of adequate funds means that Lessor is not able to restore the Leased Premises to a condition substantially the same as existed prior to the property loss, then Lessee may terminate this Lease.

23.4 Waiver. Lessee hereby waives all statutory or common law rights of termination in respect to any partial destruction or property loss which Lessor is obligated to repair or may elect to repair under the terms of this Article. Further, in event of a property loss occurring during the last two (2) years of the original Term hereof or of any extension, Lessor need not undertake any repairs and may cancel this Lease unless Lessee has the right under the terms of this Lease to extend the Term for an additional period of at least five (5) years and does so within thirty (30) days of the date of the property loss.

23.5 Lessor’s Election. In the event that the Complex or Building in which the Leased Premises are situated be destroyed to the extent of not less than thirty-three and one-third percent (33-1/3%) of the replacement cost thereof, Lessor may elect to terminate this Lease, whether the Leased Premises be injured or not, in the same manner as in Section 23.1 above. At all events, a total destruction of the Complex of which the Leased Premises form a part, or the Leased Premises itself, shall terminate this Lease.

24. CONDEMNATION

24.1 Definitions.

(a) “Condemnation” means (i) the exercise of any governmental power, whether by legal proceedings or otherwise, by a condemnor and/or (ii) a voluntary sale or transfer by Xxxxxx to any condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending.

(b) “Date of taking” means the date the condemnor has the right to possession of the property being condemned.

(c) “Award” means all compensation, sums or anything of value awarded, paid or received on a total or partial condemnation.

(d) “Condemnor” means any public or quasi-public authority, or private corporation or individual, having the power of condemnation.

24.2 Total Taking. If the Leased Premises are totally taken by condemnation, this Lease shall terminate on the date of taking.

24.3 Partial Taking; Common Areas.

(a) If any portion of the Leased Premises is taken by condemnation, this Lease shall remain in effect, except that Lessee can elect to terminate this Lease if thirty-three and one-third percent (33-1/3%) or more of the total number of square feet in the Leased Premises is taken.

(b) If any part of the Common Areas of the Complex is taken by condemnation, this Lease shall remain in full force and effect so long as there is no material interference with the access to or parking for the Leased Premises, except that if thirty percent (30%) or more of the Common Areas is taken by condemnation, either party shall have the election to terminate this Lease pursuant to this Section.

(c) If fifty percent (50%) or more of the Building in which the Leased Premises are located is taken, Lessor shall have the election to terminate this Lease in the manner prescribed herein.

24.4 Termination or Abatement. If either party elects to terminate this Lease under the provisions of Section 24.3 (such party is hereinafter referred to as the “Terminating Party”), it must terminate by giving notice to the other party (the “Nonterminating Party”) within thirty (30) days after the nature and extent of the taking have been finally determined (the “Decision Period”). The Terminating Party shall notify the Nonterminating Party of the date of termination, which date shall not be earlier than sixty (60) days after the Terminating Party has notified the Nonterminating Party of its election to terminate nor later than the date of taking. If Notice of Termination is not given within the Decision Period, the Lease shall continue in full force and effect except that Minimum Rent and additional Rent shall be reduced by subtracting therefrom an amount calculated by multiplying the Minimum Rent and additional Rent in effect prior to the taking by a fraction, the numerator of which is the number of square feet taken from the Leased Premises and the denominator of which is the number of square feet in the Leased Premises prior to the taking.

24.5 Restoration. If there is a partial taking of the Leased Premises and this Lease remains in full force and effect pursuant to this Article, Lessor, at its cost, shall accomplish all necessary restoration so that the Leased Premises is returned as near as practical to its condition immediately prior to the date of the taking, but in no event shall Lessor be obligated to expend more for such restoration than the extent of funds actually paid to Lessor by the condemnor.

24.6 Award. Any award arising from the condemnation or the settlement thereof shall belong to and be paid to Lessor, except that Lessee shall receive from the award compensation for the following if specified in the award by the condemning authority, so long as it does not reduce Lessor’s award in respect of the real property: Xxxxxx’s trade fixtures, tangible personal property, loss of business and relocation expenses. At all events, Lessor shall be solely entitled to all award in respect of the real property, including the bonus value of the leasehold. Lessee shall not be entitled to any award until Xxxxxx has received the above sum in full.

25. ASSIGNMENT AND SUBLETTING

25.1 Lease is Personal. The purpose of this Lease is to transfer possession of the Leased Premises to Lessee for Xxxxxx’s personal use in return for certain benefits, including rent, to be transferred to the Lessor. Xxxxxx’s right to assign or sublet as stated in this Article is subsidiary and incidental to the underlying purpose of this Lease. Xxxxxx acknowledges and agrees that it has entered into this Lease in order to acquire the Leased Premises for its own personal use and not for the purpose of obtaining the right to convey the leasehold to others.

25.2 “Transfer of the Leased Premises” Defined. The terms “Transfer of the Leased Premises” or “Transfer” as used herein shall include any assignment of all or any part of this Lease (including assignment by operation of law), subletting of all or any part of the Leased Premises or transfer of possession, or granting of the right of possession or contingent right of possession of all or any portion of the Leased Premises including, without limitation, license, concession, mortgage, devise, hypothecation, agency, franchise or management agreement, or suffering any other person (the agents and servants of Lessee excepted) to occupy or use the Leased Premises or any portion thereof. If Lessee is a corporation which is not deemed a public corporation, or is an unincorporated association or partnership, or Lessee consists of more than one party, the transfer, assignment or hypothecation of any stock or interest in such corporation, association, partnership or ownership interest, in the aggregate in excess of fifty percent (50%), shall be deemed a Transfer of the Leased Premises.

25.3 No Transfer Without Consent. Lessee shall not suffer a Transfer of the Leased Premises or any interest therein, or any part thereof, or any right or privilege appurtenant thereto without the prior written consent of Lessor which shall not be unreasonably withheld or delayed, and a consent to one Transfer of the Leased Premises shall not be deemed to be a consent to any subsequent Transfer of the Leased Premises. Any Transfer of the Leased Premises without such consent shall (i) be voidable, and (ii) terminate this Lease, in either case, at the option of Lessor.

25.4 When Consent Granted.

(a) The consent of Lessor to a Transfer shall not be unreasonably withheld or delayed, provided that it is agreed to be reasonable for Lessor to consider any of the following reasons, which list is not exclusive, in electing to consent or to deny consent:

(i) Financial strength of the proposed transferee is not at least equal to that of Xxxxxx at the time of execution of this Lease;

(ii) A proposed transferee whose occupation of the Leased Premises would cause a diminution in the reputation of the Complex or the other businesses located therein;

(iii) A proposed transferee whose impact on the common facilities or the other occupants of the Complex would be disadvantageous;

(iv) A proposed transferee whose use presents a risk of violation of Article 12;

(v) A proposed transferee whose occupancy will require a variation in the terms of this Lease (for example, a variation in the use clause) or which otherwise adversely affects any interest of Lessor;

(vi) A proposed transferee who is or is likely to be, or whose business is or is likely to be, subject to compliance with additional laws or other governmental requirements beyond those to which Lessee or Lessee’s business is subject; or

(vii) That the validity of the Transfer is conditioned on the conformity of the Lessee and transferee with all provisions of this Lease at the time of Transfer, including, without limitation, the requirement that there be no uncured notices of default under the terms of this Lease.

(b) Notwithstanding the foregoing, Lessee shall have the right, without the consent of Lessor, but upon prior written notice to Lessor, to assign this Lease to a company incorporated or to be incorporated by Xxxxxx, provided that Lessee owns or beneficially controls all the issued and outstanding shares of capital stock of the company; further provided, however, that in the event that at any time following such assignment, Lessee wishes to sell, mortgage, devise, hypothecate or in any other manner whatsoever transfer any portion of the ownership or beneficial control of the issued and outstanding shares in the capital stock of such company, such transaction shall be deemed to constitute a Transfer and shall be subject to all of the provisions of this Article 25 with respect to a Transfer of the Premises including, by specific reference, the provisions of Section 25.8.

25.5 Procedure for Obtaining Consent.

(a) Lessor need not commence its review of any proposed Transfer, or respond to any request by Xxxxxx with respect to such, unless and until it has received from Lessee reasonable descriptive information concerning the transferee, the business to be conducted by the transferee, the transferee’s financial capacity, and such other information as may reasonably be required in order to form a prudent judgment as to the acceptability of the proposed Transfer, including, without limitation, the following:

(i) The past two years’ Federal Income Tax returns of the proposed transferee (or in the alternative the past two years’ audited annual Balance Sheets and Profit and Loss statements, certified correct by a Certified Public Accountant if available);

(ii) Banking references of the proposed transferee;

(iii) A resume of the business background and experience of the proposed transferee;

(iv) At least five (5) business and three (3) personal references for the proposed transferee;

(v) An executed copy of the instrument by which Xxxxxx proposes to effectuate the Transfer.

(b) Xxxxxx shall reimburse Lessor as additional Rent for Lessor’s reasonable costs and attorneys’ fees incurred in conjunction with the processing and documentation of any proposed Transfer of the Leased Premises, whether or not consent is granted.

25.6 Recapture.

(a) By written notice to Lessee (the “Termination Notice”) within ten (10) business days following submission to Lessor by Xxxxxx of the information specified in Section 25.5, Lessor may terminate this Lease in the event of a proposed assignment of this Lease or sublet of the entire Leased Premises, or terminate this Lease as to the portion of the Leased Premises to be sublet, if the proposed sublet is to be of less than the entire Leased Premises. In the event Lessor elects to terminate this Lease as to that portion of the Leased Premises to be sublet, an amendment to this Lease shall be executed whereby the description of the Leased Premises is restated and Lessee’s obligations for rent and other charges are reduced in proportion to the reduction in Rentable Area of the Leased Premises caused thereby.

(b) In the event that Lessor terminates this Lease or terminates this Lease as to that portion of the Leased Premises proposed to be sublet, Lessor may, if it elects, enter into a new lease covering the Leased Premises or the affected portion thereof with the intended assignee or sublessee on such terms as Lessor and such person may agree, or enter into a new lease covering the Leased Premises with any other person; in such event, Lessee shall not be entitled to any portion of the profit if any which Lessor may realize on account of such termination and reletting. From and after the date of such termination of this Lease, the parties shall have no further obligations to each other under this Lease except for matters occurring or obligations arising prior to the date of such termination.

25.7 Reasonable Restriction. The restrictions on Transfer described in this Article 25 are acknowledged by Lessee to be reasonable for all purposes.

25.8 Effect of Transfer. If Lessor consents to a Transfer, the following conditions shall apply:

(a) Each and every covenant, condition or obligation imposed upon Lessee by this Lease and each and every right, remedy or benefit afforded Lessor by this Lease shall not be impaired or diminished as a result of such Transfer.

(b) Lessee shall pay to Lessor on a monthly basis, fifty percent (50%) of the excess of any sums of money, or other economic consideration received by Lessee from the Transferee in such month (whether or not for a period longer than one month), including higher rent, bonuses, key money, or the like over the aggregate, of (i) the amortized portion of the reasonable expenses actually paid by Lessee to unrelated third parties for brokerage commissions, tenant improvements to the Leased Premises, or design fees incurred as a direct consequence of the Transfer, and, (ii) the total sums which Lessee pays Lessor under this Lease in such month, or the prorated portion thereof if the portion of the Leased Premises transferred is less than the entire Leased Premises. The amount so derived shall be paid with Xxxxxx’s payment of Minimum Rent. The term “amortized portion” is that portion of the applicable expenses derived by dividing such expenses by the number of months in the original term of the Transfer transaction.

(c) No Transfer, whether or not consent of Xxxxxx is required hereunder, shall relieve Xxxxxx of its primary obligation to pay the Rent and to perform all other obligations to be performed by Lessee hereunder. The acceptance of Rent by Lessor from any person shall not be deemed to be a waiver by Lessor of any provision of this Lease or to be a consent to any Transfer of the Leased Premises.

(d) If Lessor consents to a sublease, such sublease shall not extend beyond the expiration of the Term.

(e) No Transfer shall be valid and no transferee shall take possession of the Leased Premises or any part thereof unless, within ten (10) days after the execution of the documentary evidence thereof, Lessee shall deliver to Lessor a duly executed duplicate original of the Transfer instrument in form reasonably satisfactory to Lessor which provides that (i) the transferee assumes Lessee’s obligations for the payment of Rent and for the full and faithful observance and performance of the covenants, terms and conditions contained herein, (ii) such transferee will, at Lessor’s election, attorn directly to Lessor in the event Xxxxxx’s Lease is terminated for any reason on the terms set forth in the instrument of transfer and (iii) such instrument of Transfer contains such other assurances as Lessor reasonably deems necessary.

26. ABANDONMENT

26.1 Lessee to Occupy. Lessee shall not abandon the Leased Premises at any time during the Term and if Xxxxxx shall abandon or surrender the Leased Premises, or be dispossessed by process of law, or otherwise, any personal property belonging to Xxxxxx and remaining on the Leased Premises after such abandonment, surrender or dispossession shall, at the option of Lessor, be deemed abandoned. Notwithstanding the foregoing, the term “abandon” shall not apply in the event Lessee continues to pay Rent and complies with all other covenants and conditions of this Lease.

27. ENTRY BY XXXXXX

27.1 Rights of Lessor. Lessee shall permit Lessor and Lessor’s agents to enter the Leased Premises at all reasonable times and with reasonable notice (except in the case of an emergency) for the purpose of inspecting the same or for the purpose of maintaining the Building and the Lines, systems and facilities therein, or for the purpose of making repairs, replacements, alterations or additions to any portion of the Building and the Lines, systems and facilities therein, including the erection and maintenance of such scaffolding, canopies, fences and props as may be required, or for the purpose of posting notices of non-responsibility for alterations, additions or repairs, or for the purpose of placing upon the Building any usual or ordinary “for sale” signs, or for the purpose of showing the Building or the Leased Premises to any potential purchasers, lenders or tenants, without any rebate of Rent and without any liability to Lessee for any loss of occupation or quiet enjoyment of the Leased Premises thereby occasioned, and shall permit Lessor, at any time with reasonable notice within ninety (90) days prior to the expiration of this Lease, to place upon the Leased Premises any usual or ordinary “to let” or “to lease” signs. This Section in no way affects the maintenance obligations of the parties hereto.

28. SIGNS

28.1 Approval, Installation and Maintenance. Lessee shall not place on the Leased Premises or the Complex any exterior signs or advertisements, nor any interior signs or advertisements that are visible from the exterior of the Leased Premises, without Lessor’s prior written consent, which Lessor reserves the right to withhold for any aesthetic reason in its sole judgment. The cost of installation and regular maintenance of any such signs approved by Lessor shall be at the sole expense of Lessee. At the termination of this Lease, or any extension thereof, Lessee shall remove all its signs, and all damage caused by such removal shall be repaired at Lessee’s expense.

29. DEFAULT

29.1 Definition. The occurrence of any of the following shall constitute a material default and breach of this Lease by Xxxxxx:

(a) Any failure by Lessee to pay the Rent or to make any other payment required to be made by Lessee hereunder when due where such failure continues for five (5) days after written notice has been provided to Xxxxxx;

(b) The abandonment of the Leased Premises by Xxxxxx in violation of Section 26.1 hereof;

(c) Any failure by Xxxxxx to provide executed documents as and when required under the provisions of Section 36.2 and/or Section 37.1;

(d) A failure by Lessee to observe and perform any other provision of this Lease to be observed or performed by Lessee, where such failure continues for thirty (30) days after written notice thereof by Lessor to Lessee; provided, however, that if the nature of the default is such that the same cannot reasonably be cured within the thirty (30) day period allowed, Lessee shall not be deemed to be in default if Lessee shall, within such thirty (30) day period, commence to cure and thereafter diligently prosecute the same to completion;

(e) Either (1) the appointment of a receiver (except a receiver appointed at the instance or request of Lessor) to take possession of all or substantially all of the assets of Lessee, or (2) a general assignment by Xxxxxx for the benefit of creditors, or (3) any action taken or suffered by Lessee under any insolvency or bankruptcy act shall constitute a breach of this Lease by Xxxxxx. In such event, Lessor may, at its option, declare this Lease terminated and forfeited by Xxxxxx, and Lessor shall be entitled to immediate possession of the Leased Premises. Upon such notice of termination, this Lease shall terminate immediately and automatically by its own limitation.

(f) Any two (2) noticed failures by Xxxxxx to observe and perform any provision of this Lease during any twelve (12) month period of the Term, as such may be extended, shall constitute, at the option of Lessor, a separate and noncurable default.

30. REMEDIES UPON DEFAULT

30.1 Termination and Damages. In the event of any default by Xxxxxx, then in addition to any other remedies available to Lessor herein or at law or in equity, Lessor shall have the immediate option to terminate this Lease and all rights of Lessee hereunder by giving written notice of such intention to terminate. In the event that Lessor shall elect to so terminate this Lease, then Lessor may recover from Lessee:

(a) The worth at the time of award of any unpaid rent which had been earned at the time of such termination; plus

(b) The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss Lessee proves could have been reasonably avoided; plus

(c) The worth at the time of award of the amount by which the unpaid rent for the balance of the Term after the time of award exceeds the amount of such rental loss that Lessee proves could be reasonably avoided; plus

(d) Any other amount necessary to compensate Lessor for all the detriment proximately caused by Xxxxxx’s failure to perform its obligations under this Lease or which in the ordinary course of events would be likely to result therefrom; and

(e) At Lessor’s election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by the applicable law in the state in which the Leased Premises are located.

30.2 Definition. As used in subSections 30.1(a) and (b) above, the “worth at the time of award” is computed by allowing interest at the rate of ten percent (10%) per annum. As used in subSection 30.1(c) above, the “worth at the time of award” is computed by discounting such amount at the discount rate of the Federal Reserve Bank for the region in which the Complex is located at the time of award plus one percent (1%).

30.3 Personal Property.

(a) In the event of any default by Lessee, Lessor shall also have the right, with or without terminating this Lease, to reenter the Leased Premises and remove all persons and property from the Leased Premises; such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Lessee.

30.4 Recovery of Rent; Reletting.

(a) Lessor may continue Lease in effect after Xxxxxx’s breach and abandonment and recover rent as it becomes due. In the event of the abandonment of the Leased Premises by Xxxxxx, or in the event that Lessor shall elect to reenter as provided in Section 30.3 above, or shall take possession of the Leased Premises pursuant to legal proceeding or pursuant to any notice provided by law, then if Lessor does not elect to terminate this Lease as provided in Section 30.1 above, this Lease shall continue in effect for so long as Lessor does not terminate Lessee’s right to possession, and Lessor may enforce all its rights and remedies under this Lease, including, without limitation, Lessor’s right from, time to time, without terminating this Lease, to either recover all Rental as it becomes due or relet the Leased Premises or any part thereof for such term or terms and at such rental or rentals and upon such other terms and conditions as Lessor, in its sole discretion, may deem advisable, with the right to make alterations and repairs to the Leased Premises. Acts of maintenance or preservation or efforts to relet the Leased Premises or the appointment of a receiver upon initiation of Lessor or other legal proceeding granting Lessor or its agent possession to protect Xxxxxx’s interest under this Lease shall not constitute a termination of Xxxxxx’s right to possession.

(b) In the event that Lessor shall elect to so relet, then rentals received by Lessor from such reletting shall be applied: first, to the payment of any indebtedness other than Rent due hereunder from Lessee to Lessor; second, to the payment of any cost of such reletting; third, to the payment of the cost of any alterations and repairs to the Leased Premises ; fourth, to the payment of Rent due and unpaid hereunder; and the residue, if any, shall be held by Xxxxxx and applied in payment of future Rent as the same may become due and payable hereunder. Should that portion of such rentals received from such reletting during any month, which is applied by the payment of Rent hereunder, be less than the Rent payable during that month by Lessee hereunder, then Lessee shall pay such deficiency to Lessor immediately upon demand therefor by Xxxxxx. Such deficiency shall be calculated and paid monthly. Lessee shall also pay to Lessor, as soon as ascertained, any costs and expenses incurred by Lessor in such reletting or in making such alterations and repairs not covered by the rentals received from such reletting so long as such amount does not exceed the unamortized monies spent in the original Lease between Lessor and Lessee.

(c) No reentry or taking possession of the Leased Premises or any other action under this Section shall be construed as an election to terminate this Lease unless a written notice of such intention be given to Lessee or unless the termination thereof be decreed by a court of competent jurisdiction. Notwithstanding any reletting without termination by Lessor because of any default by Xxxxxx, Lessor may at any time after such reletting elect to terminate this Lease for any such default.

30.5 No Waiver. Efforts by Lessor to mitigate the damages caused by Xxxxxx’s default in this Lease shall not constitute a waiver of Xxxxxx’s right to recover damages hereunder.

30.6 Curing Defaults. Should Lessee fail to repair, maintain, keep clean, and/or service the Leased Premises, or any part or contents thereof at any time or times, or perform any other obligations imposed by this Lease, then after having given Lessee reasonable notice of the failure or failures and a reasonable opportunity which in no case shall exceed thirty (30) days, to remedy the failure (provided, however, that if the nature of the failure or default is such that the same cannot reasonably be cured within the thirty (30) day period allowed, Lessee shall not be deemed to be in default and Lessor shall not exercise its rights under this Section 30.6 if Lessee shall, within such thirty (30) day period, commence to cure and thereafter diligently prosecute the same to completion), Lessor may enter upon the Leased Premises and perform or contract for the performance of the repair, maintenance, or other Lessee obligation, and Lessee shall pay Lessor for all direct and indirect costs incurred in connection therewith within ten (10) days of receiving a bill therefor from Lessor.

30.7 Cumulative Remedies. The various rights, options, election powers, and remedies of Lessor contained in this Article and elsewhere in this Lease shall be construed as cumulative and no one of them exclusive of any others or of any legal or equitable remedy which Lessor might otherwise have in the event of breach or default, and the exercise of one right or remedy by Lessor shall not in any way impair its right to any other right or remedy.

31. BANKRUPTCY

31.1 Bankruptcy Events. If at any time during the Term there shall be filed by or against Lessee in any court pursuant to any statute either of the United States or of any state a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Lessee’s property, or if a receiver or trustee takes possession of any of the assets of Lessee, or if the leasehold interest herein passes to a receiver, or if Xxxxxx makes an assignment for the benefit of creditors or petitions for or enters into an arrangement (any of which are referred to herein as “a bankruptcy event”), then the following provisions shall apply:

(a) At all events any receiver or trustee in bankruptcy or Lessee as debtor in possession (“debtor”) shall either expressly assume or reject this Lease within sixty (60) days following the entry of an Order for Relief.

(b) In the event of an assumption of the Lease by a debtor, receiver or trustee, such debtor, receiver or trustee shall immediately after such assumption (1) cure any default or provide adequate assurances that defaults will be promptly cured; and (2) compensate Lessor for actual pecuniary loss or provide adequate assurances that compensation will be made for actual pecuniary loss; and (3) provide adequate assurance of future performance.

For the purposes of this Section 31.1(b), adequate assurance of future performance of all obligations under this Lease shall include, but is not limited to:

(i) Written assurance that rent and any other consideration due under the Lease shall first be paid before any other of Lessee’s costs of operation of its business in the Leased Premises are paid;

(ii) Written agreement that assumption of this Lease will not cause a breach of any provision hereof including, but not limited to, any provision relating to use or exclusivity in this or any other Lease, or agreement relating to the Leased Premises, or if such a breach is caused, the debtor, receiver or trustee will indemnify Lessor against such loss (including costs of suit and attorneys’ fees), occasioned by such breach;

(c) Where a default exists under the Lease, the party assuming the Lease may not require Lessor to provide services or supplies incidental to the Lease before its assumption by such trustee or debtor, unless Lessor is compensated under the terms of the Lease for such services and supplies provided before the assumption of such Lease.

(d) The debtor, receiver, or trustee may only assign this Lease in accordance with the terms of Article 25 and if adequate assurance of future performance by the assignee is provided, whether or not there has been a default under the Lease. For the purpose hereof, adequate assurance of future performance means written agreement that assignment of this Lease will not cause a breach of any provision hereof including, but not limited to, any provision relating to use or exclusivity in this or any other Lease or agreement relating to the Leased Premises, and that if such a breach is caused, the debtor, receiver or trustee will indemnify Lessor against such loss (including costs of suit and attorney’s fees), occasioned by such breach. Any consideration paid by any assignee in excess of the rental reserved in the Lease shall be the sole property of, and paid to, Lessor. Upon assignment by the debtor or trustee, the obligations of the Lease shall be deemed to have been assumed and the assignee shall execute an assumption agreement on request of Xxxxxx.

(e) Lessor shall be entitled to the fair market value for the Leased Premises and the services provided by Lessor (but in no event less than the rental reserved in the Lease) subsequent to the commencement of a bankruptcy event.

(f) Lessor specifically reserves any and all remedies available to Lessor in Article 30 hereof or at law or in equity in respect of a bankruptcy event by Lessee to the extent such remedies are permitted by law.

32. SURRENDER OF LEASE

32.1 No Merger. The voluntary or other surrender of this Lease by Xxxxxx, or a mutual cancellation thereof, shall not work as a merger, and shall, at the option of Lessor, terminate all or any existing subleases or subtenancies, or may, at the option of Lessor, operate as an assignment to it of any or all such subleases or subtenancies.

33. LESSOR’S EXCULPATION

33.1 Limited Liability. In the event of default, breach, or violation by Lessor (which term includes Lessor’s partners, co-venturers, co-tenants, officers, directors, trustees, employees, agents, or representatives) of any of Lessor’s obligations under this Lease, Lessor’s liability to Lessee shall be limited to its ownership interest in the Complex or the proceeds of a public sale of such interest pursuant to foreclosure of a judgment against Lessor.

33.2 No Recourse. Lessor (as defined in Section 33.1) shall not be personally liable for any deficiency beyond its interest in the Complex. All personal liability of all trustees, their employees, agents or representatives, is expressly waived by Xxxxxx.

34. ATTORNEYS’ FEES

34.1 Actions, Proceedings, etc. Xxxxxx hereby agrees to pay, as additional rent, all attorneys’ fees and disbursements, and all other court costs or expenses of legal proceedings or other legal services which Lessor may incur or pay out by reason of, or in connection with:

(a) Any action or proceeding brought by Lessor wherein Lessor obtains a final judgment or award against Xxxxxx (including arbitration) on account of any default by Xxxxxx in the observance or performance of any obligation under this Lease including, but not limited to, matters involving payment of Rent and additional Rent, alterations or other Xxxxxx’s work and subletting or assignment;

(b) Any action or proceeding brought by Xxxxxx against Xxxxxx (or any officer, partner, or employee of Lessor) in which Xxxxxx fails to secure a final judgment against Xxxxxx;

(c) Any other appearance by Xxxxxx (or any officer, partner, or employee of Xxxxxx) as a witness or otherwise in any action or proceeding whatsoever involving or affecting Lessee or this Lease;

(d) Any assignment, sublease, or leasehold mortgage proposed or granted by Xxxxxx (whether or not permitted under this Lease), and all negotiations with respect thereto; and

(e) Any alteration of the Leased Premises by Xxxxxx, excluding the Initial Tenant Improvements, and all negotiations with respect thereto.

In any action or proceeding referred to in Section 34.1, Lessee shall be entitled to recover its reasonable attorneys’ fees and costs if Lessee is the prevailing party against Lessor.

34.2 Survival. Lessee’s obligations under this Section shall survive the expiration or any other termination of this Lease. This Section is intended to supplement (and not to limit) other provisions of this Lease pertaining to indemnities and/or attorneys’ fees.

35. NOTICES

35.1 Writing. All notices, demands and requests required or permitted to be given or made under any provision of this Lease shall be in writing and shall be given or made by (i) personal service, or (ii) by mailing same by registered or certified mail, return receipt requested, postage prepaid, or (iii) by reputable courier which provides written evidence of delivery, addressed to the respective party at the address set forth in Section 1.2 of this Lease or at such other address as the party may from time to time designate, by a written notice sent to the other in the manner aforesaid.

35.2 Effective Date. Any such notice, demand or request (“notice”) given by registered or certified mail shall be deemed given or made upon receipt or refusal to receive. Any notice given by personal delivery to the party at its address as aforesaid shall be deemed given on the day on which delivery is made. Notice given by a reputable courier service which provides written evidence of delivery shall be deemed given upon receipt or refusal to receive.

35.3 Authorization to Receive. Each person and/or entity whose signature is affixed to this Lease as Lessee or as guarantor of Xxxxxx’s obligations (“obligor”) designates such other obligor its agent for the purpose of receiving any notice pertaining to this Lease or service of process in the event of any litigation or dispute arising from any obligation imposed by this Lease.

36. SUBORDINATION

36.1 Priority of Encumbrances. This Lease, at Lessor’s option, shall be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation for security now or hereafter placed upon the real property of which the Leased Premises are a part and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof. Notwithstanding such subordination, Xxxxxx’s right to quiet possession of the Leased Premises shall not be disturbed if Lessee is not in default and so long as Lessee shall pay the rent and observe and perform all the provisions of this Lease, unless this Lease is otherwise terminated pursuant to its terms. If any mortgagee, trustee or ground lessor shall elect to have this Lease prior to the lien of its mortgage, deed of trust or ground lease, and shall give written notice thereof to Lessee, this Lease shall be deemed prior to such mortgage, deed of trust or ground lease, whether this Lease is dated prior or subsequent to the date of said mortgage, deed of trust or ground lease or the date of recording thereof.

36.2 Execution of Documents. Xxxxxx agrees to execute any documents required to effectuate such subordination or to make this Lease prior to the lien of any mortgage, deed of trust or ground lease, as the case may be, and failing to do so within ten (10) days after written demand, does hereby make, constitute and irrevocably appoint Lessor as Xxxxxx’s attorney-in-fact and in Xxxxxx’s name, place and stead, to do so. It is understood by all parties that Xxxxxx’s failure to execute the subordination documents referred to above may cause Lessor serious financial damage by causing the failure of a financing or sale transaction.

36.3 Attornment. Lessee shall attorn to any purchaser at any foreclosure sale, or to any grantee or transferee designated in any deed given in lieu of foreclosure.

37. ESTOPPEL CERTIFICATES

37.1 Execution by Xxxxxx. Within ten (10) days of request therefor by Lessor, Lessee shall execute a written statement acknowledging the commencement and termination dates of this Lease, that it is in full force and effect, has not been modified (or if it has, stating such modifications) and providing any other pertinent information as Lessor or its agent might reasonably request. Failure to comply with this Article shall be a material breach of this Lease by Xxxxxx giving Lessor all rights and remedies under Article 30 hereof, as well as a right to damages caused by the loss of a loan or sale which may result from such failure by Xxxxxx.

37.2 Financing, Sale or Transfer. No more than once per calendar year, if Lessor desires to finance, refinance, sell, ground lease or otherwise transfer the Leased Premises, or any part thereof, or the Building, Lessee hereby agrees, within ten (10) days of request therefor by Lessor, to deliver to any lender or to any prospective buyer, ground lessor or other transferee designated by Lessor such financial statements of Lessee, any guarantor of this Lease and Lessee's parent company, if any, as may be reasonably required by such party. Such statements shall include the past three (3) years’ financial statements of Xxxxxx. All such financial statements shall be received by Lessor in confidence and shall be used only for the purposes herein set forth.

38. WAIVER

38.1 Effect of Waiver. The waiver by Lessor of any breach of any Lease provision shall not be deemed to be a waiver of such Lease provision or any subsequent breach of the same or any other term, covenant or condition therein contained. The subsequent acceptance of rent hereunder by Lessor shall not be deemed to be a waiver of any preceding breach by Xxxxxx of any provision of this Lease, other than the failure of Lessee to pay the particular rental so accepted, regardless of Lessor’s knowledge of such preceding breach at the time of acceptance of such rent.

39. HOLDING OVER

39.1 Month-to-Month Tenancy on Acceptance. If Lessee should remain in possession of the Leased Premises after the expiration of the Term and without executing a new Lease, then, upon acceptance of Rent by Lessor, such holding over shall be construed as a tenancy from month-to-month, subject to all the conditions, provisions and obligations of this Lease as existed during the last month of the Term hereof, so far as applicable to a month to month tenancy, except that the Minimum Rent shall be equal to one hundred fifty percent (150%) of the Minimum Rent payable immediately prior to the expiration or earlier termination of the Lease.

40. SUCCESSORS AND ASSIGNS

40.1 Binding Effect. The covenants and conditions herein contained shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of all of the parties hereto; and all of the parties hereto shall be jointly and severally liable hereunder.

41. TIME

41.1 Time of the Essence. Time is of the essence of this Lease with respect to each and every article, section and subsection hereof.

42. EFFECT OF XXXXXX’S CONVEYANCE

42.1 Release of Lessor. If, during the Term, Lessor shall sell its interest in the Building or Complex of which the Leased Premises form a part, or the Leased Premises, then from and after the effective date of the sale or conveyance, provided that the transferee of Lessor assumes all of the Lessor's obligations hereunder from and after the date of such sale or conveyance, Lessor shall be released and discharged from any and all obligations and responsibilities under this Lease, except those already accrued.

43. COMMON AREAS

43.1 Lessor shall, in Lessor’s sole discretion, maintain the Common Areas (subject to reimbursement of Operating Costs pursuant to Article 8 hereof), establish and enforce reasonable rules and regulations concerning such areas, close any of the Common Areas to whatever extent required in the opinion of Lessor’s counsel to prevent a dedication of any of the Common Areas or the accrual of any rights of any person or of the public to the Common Areas, close temporarily any of the Common Areas for maintenance purposes, and make changes to the Common Areas including, without limitation, changes in the location of driveways, corridors, entrances, exits, vehicular parking spaces, parking area, the designation of areas for the exclusive use of others, the direction of the flow of traffic or construction of additional buildings thereupon. Lessor may provide security for the Common Areas but is not obligated to do so.

44. TRANSFER OF SECURITY

44.1 Transfer to Purchaser. If any security be given by Xxxxxx to secure the faithful performance of all or any of the covenants of this Lease on the part of Lessee, Lessor may transfer and/or deliver the security, as such, to the purchaser of the reversion, in the event that the reversion be sold, and thereupon Lessor shall be discharged from any further liability in reference thereto.

45. LATE CHARGES

45.1 Late Payment by Xxxxxx. Xxxxxx acknowledges that late payment by Xxxxxx to Lessor of rent or any other payment due hereunder will cause Lessor to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult and impractical to fix. Such costs include, without limitation, processing and accounting charges, and late charges that may be imposed on Lessor by the terms of any encumbrance and note secured by any encumbrance covering the Leased Premises. Therefore, if any installment of rent, or any other payment due hereunder from Xxxxxx is not received by Lessor when due, Lessee shall pay to Lessor an additional sum of five percent (5%) of such rent or other charge as a late charge. The parties agree that this late charge represents a fair and reasonable estimate of the cost that Lessor will incur by reason of late payment by Xxxxxx. Acceptance of any late charge shall not constitute a waiver of Lessee default with respect to the overdue amount, or prevent Xxxxxx from exercising any other rights or remedies available to Lessor. Notwithstanding the foregoing, once per calendar year, Lessee shall have a five (5) business day grace period before such five percent (5%) late charge is applied.

46. CORPORATE AUTHORITY

46.1 Authorization to Execute. If Lessee is a corporation, each individual executing this Lease on behalf of said corporation represents and warrants that he is duly authorized to execute and deliver this Lease on behalf of said corporation in accordance with a duly adopted resolution of the Board of Directors of said corporation or in accordance with the Bylaws of said corporation, and that this Lease is binding upon said corporation in accordance with its terms. Further, Lessee shall, within thirty (30) days after execution of this Lease, deliver to Lessor a certified copy of a resolution of the Board of Directors of said corporation authorizing or ratifying the execution of this Lease.

47. MORTGAGEE PROTECTION

47.1 Notice and Right to Cure Default. Xxxxxx agrees to give any mortgagee(s) and/or trust deed holders, by registered mail, a copy of any notice of default served upon Lessor, provided that prior to such notice Lessee has been notified, in writing (by way of Notice of Assignment of Rents and Leases, or otherwise), of the address of such mortgagees and/or trust deed holders. Xxxxxx further agrees that if Lessor shall have failed to cure such default within the time provided for in this Lease, then the mortgagees and/or trust deed holders shall have an additional thirty (30) days within which to cure such default or, if such default cannot be cured within that time, then such additional time as may be necessary if, within such thirty (30) days, any mortgagee and/or trust deed holder has commenced and is diligently pursuing the remedies necessary to cure such default (including but not limited to commencement of foreclosure proceedings, if necessary to effect such cure), in which event this Lease shall not be terminated while such remedies are being so diligently pursued.

48. WAIVER OF STATUTES

48.1 Waiver by Xxxxxx. In this Lease, numerous provisions have been negotiated by the parties, some of which provisions are covered by statute. Whenever a provision of this Lease and a provision of any statute or other law cover the same matter, the provisions of this Lease shall control. This waiver applies to future statutes enacted in addition to or in substitution for the statutes specified herein.

49. MISCELLANEOUS PROVISIONS

49.1 Captions. The captions of this Lease are for convenience only and are not a part of this Lease and do not in any way limit or amplify the terms and provisions of this Lease.

49.2 Number and Gender. Whenever the singular number is used in this Lease and when required by the context, the same shall include the plural, the plural shall include the singular, and the masculine gender shall include the feminine and neuter genders, and the word “person” shall include corporation, firm or association. If there be more than one Lessee, the obligations imposed under this Lease upon Lessee shall be joint and several.

49.3 Modifications. This instrument contains all of the agreements, conditions and representations made between the parties to this Lease and may not be modified orally or in any other manner than by an agreement in writing signed by all of the parties to this Lease.

49.4 Payments. Except as otherwise expressly stated, each payment required to be made by Lessee shall be in addition to and not in substitution for other payments to be made by Lessee.

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

49.6 No Offer. The preparation and submission of a draft of this Lease by either party to the other shall not constitute an offer, nor shall either party be bound to any terms of this Lease or the entirety of the Lease itself until both parties have fully executed a final document and an original signature document has been received by both parties. Until such time as described in the previous sentence, either party is free to terminate negotiations with no obligation to the other.

49.7 Disputed Sums. Under the terms of this Lease numerous charges are and may be due from Lessee to Lessor including, without limitation, Operating Costs which include Real Property Taxes, insurance reimbursement and other items of a similar nature including, at Lessor’s option, advances made by Lessor in respect of Xxxxxx’s default. In the event that at any time during the Term there is a bona fide dispute between the parties as to the amount due for any of such charges claimed by Lessor to be due, the amount demanded by Lessor shall be paid by Xxxxxx until the resolution of the dispute between the parties or by litigation. Failure by Xxxxxx to pay the disputed sums until resolution shall constitute a default under the terms of the Lease.

49.8 Lessee’s Remedies. Notwithstanding anything to the contrary contained in this Lease, if any provision of this Lease expressly or impliedly obligates Lessor not to unreasonably withhold its consent or approval, an action for declaratory judgment or specific performance will be Xxxxxx’s sole right and remedy in any dispute as to whether Lessor has breached such obligation.

49.9 Light, Air and View. No diminution of light, air, or view by any structure which may hereafter be erected (whether or not by Lessor) shall entitle Lessee to any reduction of Rent, result in any liability of Lessor to Lessee, or in any other way affect this Lease or Xxxxxx’s obligations hereunder.

49.10 Public Transportation. Lessee shall comply with all requirements of any local transportation management ordinance.

49.11 Rules and Regulations. Xxxxxx agrees to comply with all reasonable rules and regulations adopted and promulgated by Lessor and applicable to all tenants in the Complex for the lawful, orderly, clean, safe, aesthetic, quiet, and beneficial use, operation, maintenance, management, and enjoyment of the Complex. Lessor shall have no liability for violation by any other tenant in the Complex of any rules or regulations, nor shall such violation or waiver thereof excuse Lessee from compliance. The initial rules and regulations concerning the Complex are attached hereto as Exhibit X. Xxxxxx reserves the right to make additional reasonable rules affecting the Complex throughout the Term hereof. All delivery and dispatch of supplies, fixtures, equipment and furniture shall be by means and during hours established by Lessor. Lessee shall not at any time park its trucks or other delivery vehicles in the Common Areas, except in such parts thereof as from time to time designated by Lessor.

49.12 Joint and Several Liability. Should Lessee consist of more than one person or entity, they shall be jointly and severally liable on this Lease.

49.13 Survival of Obligations. All obligations of Lessee which may accrue or arise during the Term or as a result of any act or omission of Xxxxxx during said Term shall, to the extent they have not been fully performed, satisfied or discharged, survive the expiration or termination of this Lease.

49.14 Real Estate Brokers. Lessor and Lessee each represents and warrants to the other party that it has not authorized or employed, or acted by implication to authorize or employ, any real estate broker or salesman to act for it in connection with this Lease other than Xxxxxxx & Xxxxxxxxx of Washington, Inc, who represents Lessee and Xxxxxxxxx Group, Inc. who represents Lessor. Xxxxxx and Xxxxxx shall each indemnify, defend and hold the other party harmless from and against any and all claims by any real estate broker or salesman whom the indemnifying party authorized or employed, or acted by implication to authorize or employ, to act for the indemnifying party in connection with this Lease.

49.15 Nonliability of Lessor for Approvals. Except as may otherwise be expressly stated by a provision of this Lease, and only to the extent so stated, the consent or approval, whether express or implied, or the act, failure to act or failure to object, by Lessor in connection with any plan, specification, drawing, proposal, request, act, omission, notice or communication (collectively, “act”) by or for, or prepared by or for, Lessee, shall not create any responsibility or liability on the part of Lessor, and shall not constitute a representation by Lessor, with respect to the completeness, sufficiency, efficacy, propriety, quality or legality of such act.

49.16 Interest On Past Due Amounts. If any sum due Lessor from Lessee is not received by Lessor within five (5) calendar days after the date such sum is due and payable, such sum shall bear interest from the due date until paid by Lessee at the rate of two percent (2%) above the Prime Rate (as herein defined), not to exceed the maximum rate of interest allowed by law in the state where the Leased Premises are located, and such interest shall be deemed to be additional rent. “Prime Rate” means the highest rate charged by Bank of America NT&SA, San Francisco Main Office, on short-term unsecured loans to its most creditworthy corporate borrowers.

IN WITNESS WHEREOF, Xxxxxx and Xxxxxx have executed this Lease as of the day and year first written above.

LESSOR:		LESSEE:

XXXXXX CENTER LLC,		ITEX CORPORATION,
a Washington limited liability company		a Nevada corporation

By:	/s/ Xxxx Xxxxxxxx	By:	/s/ Xxxxxx Xxxxx
Name: Xxxx Xxxxxxxx		Name: Xxxxxx Xxxxx
Title: Manager		Title: CEO

STATE OF ____________	)
	) ss.
COUNTY OF __________	)

I certify that I know or have satisfactory evidence that ____________________ is the person who appeared before me, and said person acknowledged that said person signed this instrument, on oath stated that said person was authorized to execute the instrument and acknowledged it as the ________________ of XXXXXX CENTER LLC, the limited liability company that executed the within and foregoing instrument, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument.

Dated this _____ day of __________, 2009.

(print or type name)

NOTARY PUBLIC in and for the State of

__________, residing at __________

My Commission expires: __________

[Seal or Stamp]

STATE OF ____________	)
	) ss.
COUNTY OF __________	)

I certify that I know or have satisfactory evidence that ____________________ is the person who appeared before me, and said person acknowledged that said person signed this instrument, on oath stated that said person was authorized to execute the instrument and acknowledged it as the ________________ of ITEX CORPORATION, the corporation that executed the within and foregoing instrument, to be the free and voluntary act of such party for the uses and purposes mentioned in the instrument.

Dated this _____ day of __________, 2009.

(print or type name)

NOTARY PUBLIC in and for the State of

__________, residing at __________

My Commission expires: __________

EXHIBIT A

LEGAL DESCRIPTION OF COMPLEX

All that certain land situated in the County of King, State of Washington, and described as follows:

Lots 1 and 2, Block I, CC&F I-90 Bellevue Business Park, Division No. 1, according to the Plat recorded in Volume 121 Plats, Pages 1-2-3, in King County, Washington.

EXHIBIT B

PLAN OF THE COMPLEX

EXHIBIT C

FLOOR PLAN OF THE LEASED PREMISES

EXHIBIT D

CONSTRUCTION OBLIGATIONS

As soon as reasonably possible after the execution of the Lease, Lessor shall, at Xxxxxx’s sole cost and expense, construct the tenant improvements identified in and in accordance with the drawings prepared by JPC Architects dated August 25, 2009 and the corresponding cost estimate prepared by Xxxxxxx and Associates dated September 3, 2009, which have been approved by both Lessor and Xxxxxx in writing ("Tenant Improvements"). To the extent possible on a commercially reasonable basis, Lessor shall cause the construction of the Tenant Improvements to occur outside normal business hours.

EXHIBIT E

ACKNOWLEDGEMENT OF COMMENCEMENT

This Acknowledgement of Commencement is made as of _______________, 2010, with reference to that certain Lease Agreement (hereinafter referred to as the "Lease") dated _____________, 2009, by and between Xxxxxx Center, LLC, as "Lessor" therein, and ___________________ as "Lessee", for the Leased Premises situated at ________________________________________.

The undersigned xxxxxx confirms the following:

1. That the Lessee accepted possession of the Leased Premise on _______________, 2010 and acknowledges that the Leased Premises are as represented by Lessor and in good order, condition and repair, and that the improvements, if any, required to be constructed for Lessee by Lessor under the Lease have been so constructed and are satisfactorily completed in all respects.

2. That all conditions of said Lease to be performed by Lessor prerequisite to the full effectiveness of said Lease have been satisfied and that the Lessor has fulfilled all of its duties of an inducement nature.

3. That in accordance with the provisions of said Lease the commencement date of the Term is ________________________ , and that, unless sooner terminated, the original Term thereof expires on ________________________.

4. That said Xxxxx is in full force and effect and that the same represents the entire agreement between Xxxxxx and Xxxxxx concerning said Xxxxx.

5. That there are no existing defenses which Lessee has against the enforcement of said Lease by Xxxxxx, and no offsets or credits against rentals.

6. That the minimum rental obligation of said Lease is presently in effect and that all rentals, charges and other obligations on the part of Lessee under said lease commenced to accrue on _____________________.

7. That the undersigned has not made any prior assignment, hypothecation or pledge of said Lease or of the rents hereunder.

LESSEE:

By:

Date:

EXHIBIT F

RULES AND REGULATIONS

1. No sign, placard, picture, advertisement, name or notice shall be inscribed, displayed or printed or affixed on the Building or to any part thereof, or which is visible from the outside of the Building, without the written consent of Lessor, first had and obtained and Lessor shall have the right to remove any such sign, placard, picture, advertisement, name or notice without notice to and at the expense of Lessee. All approved signs or lettering on doors shall be printed, affixed or inscribed at the expense of Lessee by a person approved by Xxxxxx.

2. If a directory is located at the Building, it is provided exclusively for the display of the name and location of Lessee only and Lessor reserves the right to exclude any other names therefrom.

3. The sidewalks, passages, exits, entrances, and stairways in and around the Building shall not be obstructed by Lessee or used by it for any purpose other than for ingress to and egress from the Premises. The passages, exits, entrances, stairways and roof are not for the use of the general public and Lessor shall in all cases retain the right to control and prevent access thereto by all persons whose presence in the judgement of Lessor shall be prejudicial to the safety, character, reputation and interests of the Building and its tenants, provided that nothing herein contained shall be construed to prevent such access to persons with whom Xxxxxx normally deals in the ordinary course of Lessee's business unless such persons are engaged in illegal activities. Neither Lessee nor any employees or invitees of Lessee shall go upon the roof of the Building.

4. Lessee shall not be permitted to install any additional lock or locks on any door in the Building unless written consent of Lessor shall have first been obtained. Two keys will be furnished by Lessor for every room.

5. The toilets and urinals shall not be used for any purpose other than those for which they were constructed, and no rubbish, newspapers or other substances of any kind shall be thrown into them. Waste and excessive or unusual use of water shall not be allowed. Lessee shall be responsible for any breakage, stoppage or damage resulting from the violation of this rule by Lessee or its employees or invitees.

6. Lessee shall not overload the floor of the Leased Premises or mark, drive nails, screw or drill into the partitions, woodwork or plaster or in any way deface the Leased Premises or any part thereof.

7. Lessee shall not use, keep or permit to be used or kept any foul or noxious gas or substance in the Premises, or permit or suffer the Premises to be occupied or used in any manner offensive or objectionable to Lessor or other occupants of the Building by reason of noise, odors and/or vibrations, or interfere in any way with Lessees or those having business therein.

8. The Leased Premises shall not be used for the storage of merchandise, for washing clothes, for lodging, or for any improper, objectionable or immoral purposes.

9. Lessee shall not use or keep in the Leased Premises or the Building any kerosene, gasoline, or inflammable or combustible fluid or material, or use any method of heating or air conditioning other than that supplied by Lessor.

10. Lessor will direct electricians as to the manner and location in which telephone and telegraph wires are to be introduced. No boring or cutting for wires will be allowed without the consent of Lessor. The location of telephones, call boxes, and other office equipment affixed to the Premises shall be subject to the approval of Lessor.

11. Lessee shall not lay linoleum, tile, carpet or other similar floor covering so that the same shall be affixed to the floor of the Leased Premises in any manner except as approved by Lessor. The expense of repairing any damage resulting from a violation of this rule or removal of any floor covering shall be borne by Lessee.

12. Any window covering desired by Lessee shall be approved by Lessor.

13. Lessor reserves the right to exclude or expel from the Building any person who, in the judgement of Lessor, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation of the rules and regulations of the Building.

14. Canvassing, soliciting and peddling is prohibited in the Building and Lessee shall cooperate to prevent the same. Lessee shall not disturb, solicit, or canvass any occupant of the Building.

15. Without the written consent of Lessor, Lessee shall not use the name of the Building in connection with or in promoting or advertising the business of Lessee except as Xxxxxx's address.

16. Lessee shall not permit any contractor or other person making any alterations, additions or installations within the Leased Premises to use the hallways, lobby, or corridors as storage or work areas without the prior written consent of Lessor. Lessee shall be liable for and shall pay the expense of any additional cleaning or other maintenance required to be performed by Lessor as a result of the transportation or storage of material or work performed within the Building by or for Lessee.

17. Lessee shall be entitled to use parking spaces as mutually agreed upon between Xxxxxx and Lessor subject to such reasonable conditions and regulations as may be imposed from time to time by Xxxxxx. Lessee agrees that vehicles of Lessee or its employees or agents shall not park in driveways nor occupy parking spaces or other areas reserved for any use such as Visitors, Delivery, Loading, or other tenants. Lessor or its agents shall have the right to cause or be removed any car of Lessee, its employees or agents, that may be parked in unauthorized areas, and Xxxxxx agrees to save and hold harmless Lessor, its agents and employees from any and all claims, losses, damages and demands asserted or arising in respect to or in connection with the removal of any such vehicle. Lessee, its employees, or agents shall not park campers, trucks or cars on the Building parking areas overnight or over weekends. Lessee will from time to time, upon request of Lessor, supply Lessor with a list of license plate numbers of vehicles owned or operated by its employees and agents.

18. Lessor is not responsible for the violation of any rule contained herein by any tenants.

19. Lessor may waive any one or more of these rules for the benefit of any particular tenant, but no such waiver shall be construed as a waiver of Lessor's right to enforce these rules against any or all tenants occupying the Building.

20. Lessee is responsible for purchasing and installing a security system if required by law or ordinance. The cost of purchasing , installing, maintaining and operating any such system shall be at the sole cost and expense of Lessee.

21. The display, carrying, and use of pistols, rifles, shotguns and other firearms is prohibited in and about the Building , the parking lots and other common areas, except for authorized municipal, state and federal law enforcement personnel. Lessee and its employees, agents and invitees shall not display, carry or use any firearms within the Building, parking lots or other common areas.

22. Lessor reserves the right to make modifications hereto and such other and further rules and regulations as in its sole judgement may be required for the safety, care and cleanliness of the Leased Premises and the Building and for the preservation of good order therein. Xxxxxx agrees to abide by all such rules and regulations.

ADDENDUM TO LEASE AGREEMENT

Between

XXXXXX CENTER, LLC (“Lessor”)

and ITEX CORPORATION (“Lessee”)

THIS ADDENDUM (“Addendum”) is executed concurrently with and amends the Lease between XXXXXX CENTER, LLC, as Lessor, and ITEX CORPORATION, as Lessee, dated as of October 20, 2009 for the property known as the Xxxxxx Center. In the event of any conflict between the terms of the Lease and this Addendum, the terms of this Addendum shall control.

I. Option to Extend the Terms – Negotiated Rental

1. Notice to Exercise. Lessee shall have the right to extend the initial term hereof for one additional period of three (3) years (“Extended Term”) upon the same terms and conditions as stated herein, except for Minimum Monthly Rent. Minimum Monthly Rent for the option period shall be at the higher of (a) Fair Market Rental, as defined and determined below, or (b) the Minimum Monthly Rent in effect immediately prior to the commencement date of the Extended Term. Lessee must exercise its right, if at all, by written notification (the “Notice of Exercise”) to Lessor not less than nine (9) months prior to the expiration of the initial term, provided that Lessee is not then in default of any of the provisions of this Lease beyond any applicable notice and cure period.

2. Options are Personal. The option to extend granted herein is personal to original Lessee executing this Lease, or such Transferee where Xxxxxx’s consent is not required, and notwithstanding anything to the contrary contained in the Lease, the rights contained in this Addendum are not assignable or transferable by such original Lessee except to such Transferee when Xxxxxx’s consent is not required. Lessor grants the rights contained herein to Lessee in consideration of Xxxxxx’s strict compliance with the provisions hereof, including, without limitation, the manner of exercise of this option.

3. Fair Market Rental. The term “Fair Market Rental” means the Minimum Monthly Rent chargeable for the Leased Premises as of the date of the commencement of such Extended Term, determined pursuant to the procedures hereinafter set forth with reference to rental rates being charged a lessee entering into a lease renewal for comparable space as to location, configuration, size and use, in a comparable building as to quality, reputation and age (excluding improvements made to the Leased Premises at Lessee’s expense) which is located in the Bellevue, Washington area, with a comparable build-out and a comparable term assuming Lessee will continue to pay its Pro Rata Percent of Operating Costs in accordance with the terms and conditions of this Lease.

The Fair Market Rental evaluation may include provision for further rent adjustments during the Extended Term if such adjustments are commonly required in the market place for similar types of leases.

4. Determination of Fair Market Rent. Upon exercise of the right to extend the term, and included within the Notice of Exercise, Lessee shall notify Lessor of its opinion of Fair Market Rental as above defined for the Extended Term. If Lessor disagrees with Xxxxxx’s opinion of the Fair Market Rental and believes the Fair Market Rental would be higher than the Minimum Monthly Rent in effect immediately prior to the commencement date of the Extended Term , it shall so notify Lessee (“Lessor’s Value Notice”) within thirty (30) days after receipt of Xxxxxx’s Notice of Exercise. If the parties are unable to resolve their differences within ten (10) business days thereafter, Lessee may withdraw its Notice of Exercise (in which case the term of this Lease shall not extend). If Lessee does not withdraw its Notice of Exercise but does send Lessor notice that it does not agree to Lessor’s Value Notice, either party may apply for Arbitration as provided below. If neither party applies for Arbitration and Lessee has not withdrawn its Notice of Exercise within ten (10) business days after receipt by Lessee of Lessor’s Value Notice, Lessee shall be bound to the Fair Market Rental stated in Lessor’s Value Notice. Should either party elect to arbitrate, and if the arbitration is not concluded before the commencement of the Extended Term, Lessee shall pay Minimum Monthly Rent to Lessor in an amount equal to the Fair Market Rental set forth in Lessor’s Value Notice, until the Fair Market Rental is determined in accordance with the arbitration provisions hereof (“Arbitration”). If the Fair Market Rental as determined by Arbitration differs from that stated in Lessor’s Value Notice, then any adjustment required to correct the amount previously paid by Lessee shall be made by payment by the appropriate party within thirty (30) days after the determination of Fair Market Rental by Arbitration has been concluded, as provided herein. Lessee shall be obligated to make payment during the entire Extended Term of the Minimum Monthly Rent determined in accordance with the Arbitration procedures hereunder.

5. Arbitration. In the event either party seeks Arbitration of Fair Market Rental under the provisions hereof for the Extended Term, the other party shall be bound to submit the matter for determination by Arbitration. The Arbitration shall be conducted and determined in the County where the Leased Premises are located.

6. Demand for Arbitration. A party demanding Arbitration hereunder shall make its demand in writing (“Demand Notice”) within ten (10) business days after service of Lessor’s Value Notice and provided Lessee has not withdrawn its Notice of Exercise. A copy of the Demand Notice shall be sent to the President of the Real Estate Board for the county in which the Leased Premises are located. If there is no Real Estate Board or Board President for the county in which the premises are located, then a copy of the Demand Notice shall be sent to the Presiding Judge of the highest trial court in such county for the state in which the Leased Premises are located. The Board President, or Presiding Judge, whichever is applicable, is hereinafter referred to as the “Appointer”.

The Appointer, acting in his personal, private capacity, shall appoint within ten (10) days thereafter a disinterested, independent real estate appraiser who is a member of the American Institute of Real Estate Appraisers with at least seven (7) years experience appraising properties in the same county for the general type of use to which the Leased Premises are devoted under the terms of this Lease, i.e., Shopping Center, Office, Retail. The Arbitrator shall be a person who would be qualified to serve as an expert witness and to give opinion testimony addressed to the issue in a court of competent jurisdiction. Such a party is hereinafter referred to as the “Arbitrator”. The parties may, however, before sending the Demand Notice to the Appointer, mutually agree upon an Arbitrator of their own choice, in which event such appointment shall nullify the necessity of appointment of an Arbitrator by an Appointer.

7. Decision of the Arbitrator. The Arbitrator so selected shall, within twenty (20) days after his appointment, state in writing his determination as to whether Xxxxxx’s valuation, or Xxxxxx’s valuation of Fair Market Rental, most closely approximates his own. The Arbitrator may not state his own opinion of Fair Market Rental, but is strictly limited to the selection of Lessor’s Fair Market Rental evaluation as stated in Lessor’s Value Notice or Lessee’s Fair Market Rental evaluation as stated in the Notice of Exercise. The Arbitrator shall have the right to consult experts and competent authorities with factual information or evidence pertaining to a determination of Fair Market Rental, but any such consultation shall be made in the presence of both parties with full right to cross examine. The Arbitrator shall have no right to propose a middle ground or any modification of either of the proposed valuations, and shall have no power to modify the provisions of this Lease. The valuation so chosen as most closely approximating that of the Arbitrator shall constitute the decision of the Arbitrator and shall render a decision and award in writing, with counterpart copies to each party and judgment thereon may be entered in any court of competent jurisdiction.

8. Successor Arbitrator: Fees and Expenses: In the event of failure, refusal, or inability of the Arbitrator to act in a timely manner, a successor shall be appointed in the same manner as such Arbitrator was first chosen hereunder. The fees and expenses of the Arbitrator and the administrative hearing fee, if any, shall be divided equally between the parties. Each party shall bear its own attorneys’ fee and other expenses including fees for witnesses in presenting evidence to the Arbitrator.

II. Early Termination:

Tenant shall have a one-time option to terminate this Lease effective as of the first day of the thirty-seventh (37th) month to the Lease Term, by providing at least nine (9) months advance written notice to Landlord. For the early termination to take effect, Tenant must pay to Landlord a termination fee on or before the date of early termination, which termination fee shall equal the unamortized balance of (a) all leasing commissions paid by Lessor, and (b) the Tenant Improvement cost paid by Lessor, calculated over the initial Term of the Lease using an per annum interest rate of eight percent (8%) per annum compounded annually.

III. Parking:

Lessor will maintain and Lessee shall have the right to use twenty-eight (28) parking spaces, including four (4) covered and reserved stalls. The parking spaces shall be provided at no additional cost to Lessee.

LESSOR:		LESSEE:

XXXXXX CENTER LLC,		ITEX CORPORATION,
a Washington limited liability company		a Nevada corporation

By:	/s/ Xxxx Xxxxxxxx	By:	/s/ Xxxxxx Xxxxx
Name: Xxxx Xxxxxxxx		Name: Xxxxxx Xxxxx
Title: Manager		Title: CEO

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