This lease is subject to the additional terms and conditions as follows, to which the parties agree:

Section 1. Occupancy

1.1           Payment of Rent The monthly base rental rate herein stated shall be due and payable by the 1st day of each and every month through the above designated term.  Tenant shall pay the specified base rent, and any other charges due under the lease when due in lawful money of the United States at Landlord’s address stated in this lease, or such other address as Landlord shall designate by notice to Tenant.  Any rent which is not paid within 10 days of the date due shall bear a 5% late charge for each $1.00 and shall be paid to Landlord within 5 days of notice or billing from Landlord as additional rent.

1.2           Condition of Premises Landlord makes no warranty as to the condition of the Premises, or any improvements thereon or the adequacy of the Premises for Tenant’s intended use, and Tenant accepts the Premises “As Is”, except as defined in paragraph 1.2.1, based upon Tenant’s own inspection and not upon any representation by Landlord, or Landlord’s agent, except as may be stated in this lease.

1.2.1        Improvements/Repairs by Landlord :  As weather permits, as determined by Landlord, but no later than June 1, 1996, Landlord agrees to paint the exterior of the building, based upon a mutually acceptable color by Landlord and Tenant, repair the exterior dry rot, and re-stripe and seal coat the parking area.  Landlord will expend $25,000.00, plus a reasonable amount thereafter, not to exceed 10% of the initial amount of $25,000.00, on seismic improvements to the warehouse portion of the building in an effort to bring the warehouse portion of the building into compliance with current seismic code, or building department directives.

1.3           Security Deposit To secure Tenant’s compliance with all terms of this lease, Tenant shall paid Landlord, at the commencement of said lease, the sum of $4,500.00 as a deposit.  The deposit shall be a debt from Landlord owing to Tenant, refundable within 30 days following the expiration of the lease term, or any option term exercised under the lease, or other termination not caused by Tenant’s default.  Landlord shall have the right to offset against the deposit a) for any sums owing from Tenant to Landlord under the lease which have not been paid when due, b) any damages caused by Tenant’s default, c) the cost of curing any failure by Tenant to comply with any term or provision of said lease, should the Landlord elect to do so, d) and the cost of performing any repair or cleanup that is Tenant’s responsibility under this lease.  Offset against the deposit shall not be an exclusive remedy in any of the above cases, but may be invoked by Landlord, at its option, in addition to any other remedy provided by law or this lease for Tenant’s non-performance.  Landlord shall give notice to Tenant each time an offset is claimed against the deposit unless this lease is terminated, Tenant shall within 10 days following such notice deposit with Landlord a sum equal to the amount of the offset so that the total deposit amount, net of offset, shall remain constant throughout the lease term.  Landlord may deliver the funds deposited herein by Tenant to the purchaser or assignee of Landlord’s interest in the leased premises, in the event that such interest be sold or transferred, and thereupon Landlord shall be discharged from any further liability with respect to such deposit.  If tenant exercises their option(s) under paragraph 15.1 of the lease the Landlord at Landlord’s option may increase the

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amount of Tenant’s security deposit to an amount equal to one months rent, which shall be equal to the last months rent due and payable under the option period.

Section 2. Use of the Premises

2.1           Permitted Use   Tenant shall use and permit the Premises to be used for the following purposes only:  To provide telecommunications services and necessary activities associated with Tenants primary business.

Tenant shall operate the above business every business day during the hours and in the manner customary for such businesses, except during the time and to the extent such use is prevented by fire, flood, labor disputes, government edict or any other cause beyond Tenant’s control.

2.2           Restrictions on Use  In connection with its use of the Premises, Tenant shall:

a)              Refrain from conducting any activity or creating any condition on the Premises in violation of any federal, state or municipal laws or orders, which shall include any violation of any applicable environmental laws, regulations, or ordinances;

b)             Refrain from selling alcoholic beverages on the Premises unless expressly permitted by this lease;

c)              Refrain from any activity or the maintenance of any condition that would in any way tend to create a nuisance, damage the reputation of the Premises, or be reasonably offensive to Landlord, or other tenants of the building in which the Premises may be located.

d)             Refrain from any use of the Premises that would cause the fire insurance rate on the Premises or the Building to be increased or that will prevent Landlord from taking advantage of any future ruling of the Oregon Insurance Rating Bureau or its successor that would permit reduced premium rates for long-term fire insurance policies on the Premises.  If Tenant shall fail to comply with this restriction upon reasonable notice from Landlord, Tenant shall pay any resulting extra cost of fire insurance upon receipt of billings from Landlord.

e)              Refrain from any activity or installation that will, in the opinion of a qualified engineer or architect selected by Landlord, overload the floors or create undue stress upon any part of the Premises:

f)              Refrain from the use of any electrical equipment that will, in the opinion of a qualified electrician selected by Landlord, overload the electrical circuits from which Tenant obtains current or interfere with the reasonable use of such circuits by Landlord or other tenants of Landlord using the same circuits.  Any changes to the wiring necessary to prevent Tenant’s use from overloading the circuits shall be paid for by Tenant.

Signs and Attachments   Tenant at Tenants expense shall be responsible for obtaining all necessary permits, and installing Tenant’s signage.  Tenant shall not, without Landlord’s prior written consent, which shall not be unreasonably withheld, place any permanent sign, advertisement, notice, marquee, awning, decoration, aerial or attachment in, on or to the roof, canopy, windows, doors or exterior walls of the Premises or the Building.  Any such sign or attachment placed upon the Premises by Tenant with or without Landlord’s consent shall be removed at Tenant’s expense upon termination of this lease, and all damage caused by installation or removal shall be repaired at Tenant’s expense.  However, Tenant shall be able to

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place any temporary sign, advertisement, notice, marquee, awning, decoration, aerial or attachment on the premises without further consent of the Landlord.

2.3           Removal of Snow, Ice and Debris :  Tenant shall keep the sidewalks abutting the Premises and all pedestrian areas leading to and away from any entrances, include the parking area and driveways free and clear of snow, ice, debris and obstructions of every kind.  If the Premises consist of an entire building, Tenant shall keep the roof and drains leading from the roof free and clear of snow, ice, leaves, garbage, debris, or other obstruction which might overload or endanger the roof or adjoining Premises, sidewalks or streets.  In performing such work, Tenant shall take all necessary precautions to avoid damage to the roof, gutters, downspouts, and drains.

2.4           Alterations  Unless herein stated or agreed upon during the term of the lease, Tenant shall not make any alterations, additions or improvements to the Premises, without Landlord’s prior written consent, which shall not be unreasonably withheld.  Any such additions, alterations or improvements, except for unattached movable trade fixtures, shall at once become part of the realty and belong to Landlord and shall not be removed later by Tenant unless the terms of the applicable consent provide otherwise.

Section 3. Maintenance and Repair

3.1           Tenant’s Obligation to Maintain and Repair  Tenant shall at all times maintain the entire Premises in a neat condition, free of trash and debris and in good order and repair.  Except for those conditions stated in paragraph 1.2.1 and 3.2, Tenant’s responsibilities for maintenance and repair shall include the entire premises, without limitation, the following:

a)              Performance of all necessary maintenance and repair upon the electrical fixtures, interior lighting, interior and exterior lighting fixtures, switches and wiring from the service panel, all doors, windows and related hardware, window coverings, alarm system, concealed and exposed plumbing, indoor ceilings, walls, floors and floor coverings, heating and air conditioning units, and all exterior walls improvements to include the parking lot, exterior shell, and fencing.

b)             With respect to Tenant’s responsibility in performing all routine maintenance and repairs on all heating and air conditioning units Tenant shall maintain a servicing agreement which requires each and every heating and air conditioning unit being used in connection with the premises to be serviced at least semi-annually.

c)              Not permitting or suffering any waste upon the Premises.

d)             No rent abatement shall occur during periods when repairs or replacements are being performed.

e)              Tenant shall be required to comply with current ADA laws relating to the Premises and Tenant’s business activities which shall include all future requirements whether these requirements are associated with the interior space, access to and from the site, access to and from the building, or require modification to the existing structure.

f)              All required repairs and ADA compliance shall be completed whether the condition requiring such repair existed at the execution of this lease or occurs after occupancy.

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3.2           Landlord’s Obligations to Repair :  Landlord shall maintain and keep in good order and repair the roof and existing structural components to the improvements, and shall be responsible for major component replacement, including the HVAC if Tenant has complied with paragraph 3.1.  Landlord shall not be responsible for painting any portion of the interior or exterior of the Premises, except as stated in paragraph 1.2.

Except for repairs or replacements herein required to be made by Tenant, in the event that any repair or replacement requested to the Landlord has a reasonable estimated cost in excess of $3,500, and the remaining lease term, or option period thereof is less than 6 months, Landlord may elect not to make such repair or replacement.  Such election shall be by written notice of Landlord’s option not to perform said work.  Within 30 days following the effective date of such notice, Tenant may elect to terminate the lease or complete said repairs.

3.3           Conditions of Landlord’s Liability :  Landlord shall only be deemed to be in default under the terms of this Lease in the event Landlord shall violate, neglect, or fail to observe, keep or perform any covenant or agreement which is not observed, kept or performed by Landlord within ten (10) days after the receipt by Landlord of written notice by Tenant of such breach which notice shall specifically set out the breach.  Landlord shall not be considered in default so long as Landlord commences to cure the breach in a diligent and prudent manner and is allowed such additional time as reasonably necessary to correct the breach.

Section 4. Utilities, Taxes and Assessments

4.1           Utilities  Tenant shall pay when due all charges for light, heat, water, garbage collection, janitorial service, sewer disposal, monthly alarm monitoring fee, phone, or other utilities of any kind furnished to the Premises.  Tenant shall be responsible to contact all utility companies furnishing utilities to said premises and have said utilities placed in Tenant’s name upon the lease commencement date or occupancy whichever occurs sooner.  If any utility services are provided by or through Landlord, charges to Tenant shall be comparable with prevailing rates for comparable services.  If Landlord receives and pays bills for any utilities furnished to the Premises, Tenant shall reimburse Landlord upon demand.

4.2           Payment of Real Property Taxes :  During the term of this lease, Tenant shall pay as additional rent, when due, all real property taxes assessed against the property directly to Multnomah County, unless directed otherwise by Landlord.  Landlord hereby agrees that it will promptly, upon receipt, furnish Tenant copies of all notices of assessment of taxes.  Should said notices not be received by Tenant, Tenant shall be responsible for obtaining said amounts due directly from Multnomah County prior to the real property taxes becoming due and/or delinquent.  Tenant shall pay, when due, all those taxes assessed against its personal property located on the premises.  In addition to the real property taxes, Tenant shall pay taxes applicable to the demised land and all improvements comprising the demised premises assessed by any additional appropriate taxing authority.  Real property taxes can be further identified by the Multnomah County Assessor under tax account number R-64450-5900.  In addition, on or before March 1, 1996, Tenant shall reimburse Landlord for its pro-rated share of 1995-1996 taxes, 4/12 thereof in the amount $2,316.16.

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4.3           Insurance  Landlord shall maintain building fire and extended coverage insurance to include earthquake coverage at full replacement value of said building and all associated improvements, excluding Tenant’s property and fixtures.  Upon receipt of billing for the annual insurance premium from the Landlord, Tenant shall reimburse Landlord, as additional rent, for the amount paid by Landlord.  Landlord shall prorate any insurance reimbursements due under the lease which does not coincide with a full year lease term in the same manner as taxes as stated in paragraph 4.2.

As to any repairs that are the responsibility of the tenant, but are covered by Landlord’s insurance, and which are necessitated by an occurrence which is defined as an insurable event under Landlord’s coverage, Landlord shall use reasonable efforts to make such repairs as authorized by Landlord’s insurance carrier.  Tenant’s obligation shall be abated to the extent any such repairs are actually completed at the expense of the Landlord’s insurer, less any deductible which shall be paid by Tenant.

4.4           Special Assessments  If an assessment for a public improvement is made against the leased premises landlord shall, if possible, elect to cause such assessment to be paid in installments.  Tenants reimbursement to Landlord shall be treated in the same manner as general real property taxes for purposes of 4.2 provided, however, proration of any assessment not payable in installments shall be prorated over the useful life of the improvement to include a fair market interest for which such assessment is made which shall in no event exceed twenty (20) years.

Section 5. Damage to or Destruction of the Premises

5.1           Partial Damage  Except as described in Section 3.1 if either the Building or the Premises shall be partially damaged by fire, windstorm, or other casualty and paragraph 5.2 does not apply, Landlord shall, subject to paragraph 5.3, repair the damage and restore the Premises to a condition comparable to that existing prior to the damage, but only to the extent of applicable insurance coverage.

Repair shall be accomplished with all reasonable dispatch, subject to interruptions and delays from labor disputes and other causes beyond Landlord’s reasonable control.  Rent shall be abated during the period to the extent the Premises are not reasonably usable for the use permitted by this lease, except where the damage is the fault of Tenant or Tenant is otherwise liable for the cost of repair.

5.2           Destruction  If either the Building or Premises is damaged such that the cost of restoration is reasonably estimated by Landlord to equal or exceed 30 percent of the value of the Premises (or the Building), exclusive of foundations, just prior to the occurrence of the damage, or if the damage occurs when the remaining term of this lease (excluding any optional renewal periods) is 20 percent or less of the original term, then the parties shall proceed as follows:

a)              Landlord may elect to terminate this lease by written notice to Tenant given within 90 days following the date of damage;

b)             Absent such an election, Landlord shall, subject to paragraph 5.3, proceed to restore the Premises (or Building) to condition substantially comparable existing just prior to

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the damage.  Work shall be commenced as soon as reasonably possible following the period for Landlord’s election not to rebuild and thereafter shall proceed in the manner stated in paragraph 5.1.  Rent may be abated in the manner and under the conditions stated in paragraph 5.1.

5.3           Repair of Tenant’s Property  Repair, replacement or restoration of any fixtures and personal property owned by Tenant or any additions or improvements to the Premises constructed or owned by Tenant shall be the responsibility of Tenant regardless of the cause of the damage.  Tenant shall pay all costs of moving its property when this is required in connection with repairs of the Premises for which Landlord or Tenant is responsible.

5.4           Waivers of Subrogation  The parties shall obtain from their respective insurance carriers waivers of Subrogation against the other party.  Neither party shall be liable to the other for any loss nor damage caused by fire nor any of the events enumerated in a standard fire insurance policy with an extended coverage endorsement except to the extent such loss is not actually paid for out of the proceeds of such insurance.

Section 6. Eminent Domain

6.1           Partial Taking  If a portion of the Premises is condemned or purchased in lieu of condemnation and paragraph 6.2 does not apply, this lease shall continue on the following terms:

a)              Landlord shall be entitled to all of the proceeds of condemnation and Tenant shall have no claim against the Landlord as a result of the condemnation.

b)             Subject to paragraph 5.2 relating to Tenant’s improvements and property, Landlord shall proceed as soon as reasonably practical to make such repairs and alterations to the Premises as are necessary to restore the remaining Premises to a condition as comparable as reasonably practicable to that existing just prior to the condemnation.  L