Lease Dated August 30, 1994

STANDARD COMMERCIAL LEASE
NET NET NET


1. PARTIES.
This Lease, dated AUGUST 30, 1994 is entered between ROBERT THORNBURGH ("Landlord") and AMERICAN PACIFIC MARINE, INC., a Delaware Corporation and a subsidiary of AMERICAN OILFIELD DIVERS, INC., ("Tenant").


2. NOTICES.
Any notice required hereunder shall be in writing and served either personally or sent registered or certified United States mail, postage prepaid, addressed as follows: LANDLORD ROBERT THORNBURGH TENANT AMERICAN PACIFIC MARINE
BOX 1053 741 E. ARCTURUS AVENUE
PALOS VERDES ESTATES OXNARD
CALIFORNIA, 90274 CALIFORNIA, 93033


3. PREMISES.
3.1 Landlord leases to Tenant and Tenant leases from Landlord, on the terms and conditions hereinafter set forth, that certain demised premises and other improvements located thereon situated in the City of OXNARD County of VENTURA State of California, commonly known as 741 E. ARCTURUS AVENUE AND ADJOINING 1.44 ACRE VACANT LOT TO THE SOUTH WEST.


3.2 Landlord shall provide Tenant with possession of the Premises on September 1, 1994, and the rent payments as required herein shall commence upon that date. If Tenant causes a delay in planning or construction of standard or above-standard Tenant improvements, then there shall be no adjustment to the commencement date of this Lease nor Tenant's obligation to make rent payments.


3.3 Tenant's Premises consists of two land parcels, one with improvements of approximately 24,000 rentable square feet. The legal description of the Premises is set forth in Exhibit "A" which is attached to this Lease.


4. TERM.
4.1 The term of this Lease is for 3 years 0 months, commencing on September 1, 1994 and ending on August 31, 1997, unless sooner terminated as hereinafter provided.


5. MONTHLY RENT.
5.1 Tenant shall pay Landlord as monthly "base rent" for the Premises the sum of ELEVEN THOUSAND ($11,000,000) dollars per month, in advance of the first day of each month during the term hereof. Rent for any period during the term of this Lease which is for less than one (1) month shall be a prorata portion of the monthly installment. Said proration shall be calculated on the basis of a thirty (30) day month. Rent shall be payable without notice or demand and without any deduction, off-set, or abatement in lawful money of the United States to the Landlord at the address stated herein for notices or to such other persons or such other places as the Landlord designates to Tenant in writing.


6. COST OF LIVING RENTAL ADJUSTMENTS.
6.1 The monthly "base rent" in Article 5 shall be increased on the annual anniversary date of this Lease by the greater of three percent (3%) or the percentage the United States Department of Labor Bureau of Labor Statistics, Consumer Price Index for "all Urban Consumers" (for all items in the Los Angeles/Long Beach/Anaheim areas) ("Index") has increased from the first month of the Lease term through the month in which the rent is to be increased, but shall not exceed five percent (5%) in any one year.


SAMPLE RENT CALCULATION:
a. Assume for purposes of example that the
beginning index number (month number 1 of the
Lease Term) is 208 and extension index


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number (month number 13 of the Lease Term) is
219 and the rent is $1000.00.
b. The fraction would be equal to the extension
index divided by the beginning index, and
would be represented as 219/208 X $1,000.00 =
$1,053.00.
c. The new rent would be $1,053.00. 6.2 The
Index for the month in which the rent is to be increased may not be available on such rental adjustment date. At such time as the Index is available, written notice shall be given by Landlord to Tenant, and the necessary rental adjustment payment shall be made by Tenant to Landlord within fifteen (15) days of said written notice.
6.3 (a) If, at any such rental adjustment date, there does not exist an Index in the same format as herein mentioned or if the components of the Index have been materially changed over the period from the commencement date of the Lease to such rental adjustment date, then the parties shall substitute therefor an official index or indices published by the Bureau of Labor Statistics or its successor that is substantially similar to the Index mentioned herein and which achieves the same intended purpose of that Index.
(b) If the parties are unable to agree upon a substitute or supplemental index, the choice of such index shall be referred to conclusive and binding arbitration pursuant to the rules and regulation of the American Arbitration, the cost of which shall be borne equally by the parties.


7. ANNUAL RENTAL ADJUSTMENT FOR EXPENSES.
7.1 There shall be no adjustments to Tenants base rent for expenses other than those specifically outlined in Article 6 and Article 28 of this lease.


8. SECURITY DEPOSIT.
8.1 Tenant shall deposit with Landlord upon execution of this Lease the sum of ELEVEN THOUSAND ($11,000.00) dollars as a security deposit for the Tenant's faithful performance of the provisions of this Lease. The amount required as security deposit shall be equivalent to ONE (1) months' rent.
8.2 If Tenant fails to pay rent or the charges due hereunder, or otherwise defaults with respect to any provision of this Lease. Landlord may use, apply or retain all or any portion of said deposit for:
(a) the payment of any rent or other charge in default,
or
(b) the payment of any other sum for which Landlord may
become obligated by reason of Tenant's default, or
(c) to compensate Landlord for any loss or damage which
Landlord may suffer thereby.
8.3 Tenant shall immediately upon written demand pay to Landlord the sum equal to that portion of the security deposit expended or applied by Landlord which was provided for in this paragraph so as to maintain the security deposit in the sum initially deposited with Landlord. Tenant's failure to do so shall be a material breach of this Lease. Such reimbursement shall be payable in cash or by way of a certified money order, or cashiers check.
8.4 If Tenant performs all of Tenant's obligations under this Lease, the security deposit or that portion thereof which has not previously been applied by the Landlord, shall be returned to Tenant within twenty one (21) days after the expiration of the term of this Lease, or after Tenant has vacated the Premises, which ever is later.


9. USE AND USES PROHIBITED.
9.1 Tenant shall use the Premises only for GENERAL ENGINEERING CONTRACTING SERVICES and for no other use without the Landlord's prior written consent.
9.2 Tenant shall not do, bring or keep anything in or about the Premises that will cause a cancellation of any insurance covering the Premises or the building in which the Premises are located. If the rate of any insurance carried by the Landlord is increased solely as a result of Tenant's use, Tenant shall pay to Landlord within ten (10) days after written demand from Landlord, the amount of any such increase.
9.3 Tenant shall comply with all laws concerning the Premises or Tenant's use of the Premises, including without limitation, the obligation at Tenant's cost to alter, maintain or restore the Premises in compliance and conformity with all laws relating to the condition, use, or occupancy of the premises by Tenant during the term of this Lease.


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9.4 Tenant shall not use or permit the use of the Premises in any manner that will tend to create waste or a nuisance or, if there shall be more than one Tenant of the building containing the Premises, which shall unreasonably disturb any other Tenant.
9.5 Tenant shall not dump, spill or allow to be dumped or spilled any paint, oil, fuel, waste, toxic waste refuse, or other materials, on, in or around the premises which might adversely affect the environment.


10. TENANT ACCEPTANCE OF PREMISES AND COMPLIANCE WITH LAW.
10.1 Tenant accepts the Premises in their condition existing as of the date that Tenant possesses the Premises, subject to all applicable zoning, municipal, county and state laws, ordinances, regulations governing the use of the Premises and accepts this Lease subject thereto and all matters disclosed thereby.
10.2 Tenant shall be responsible for complying with any such laws, ordinances or regulations prior to taking possession of the Premises.
10.3 Tenant acknowledges that neither Landlord nor its agent(s) has made any representations or warranty as to the condition of the Premises or the suitability of the Premises for the conduct of Tenant's business.
10.4 Tenant acknowledges that the terms of this lease are governed by the laws of the State of California, County of Ventura, and City of Oxnard.


11. TAXES
11.1 Real Property Taxes. Tenant shall pay, prior to delinquency, all real property taxes and assessments levied and assessed against the Premises during the term of this Lease.
11.2 Personal Property Taxes. Tenant shall pay, prior to delinquency, all taxes assessed against and levied upon fixtures, furnishings, walls (which shall be defined as movable walls and partitions). Equipment and all other personal property of Tenant contained in the Premises. Tenant shall cause said fixtures, furnishings, walls, equipment and all other personal property to be assessed and billed separately from the real property of the Landlord. In the event that any or all of Tenant's fixtures, furnishings, walls, equipment or other personal property shall be assessed and taxed with Landlord's real property or with Landlords personal property, Tenant shall pay to Landlord Tenant's share of such taxes within ten (10) days after delivery to Tenant by Landlord of a statement in writing, setting forth the amount of such taxes applicable to the Tenant's personal property.


12. UTILITIES AND SERVICES.
12.1 Tenant shall make all arrangements and pay for all janitorial, landscaping, water, sewer, refuse, gas, heat, light, power, telephone, cable TV, computer linkage, and other utility services supplied to the Premises together with any taxes thereon and for all connection charges.


13. MAINTENANCE AND REPAIRS.
13.1 By entering into the Premises, Tenant shall be deemed to have accepted the Premises as being in good and sanitary order, condition and repair.
13.2 Landlord's Obligations.
(a) Except as provided in Article 19, and except for damage caused by any negligent or intentional act or omission of Tenant, Tenant's agents, employees or invitees, Landlord at its sole cost and expense shall keep in good condition and repair the foundation, exterior walls, exterior roofs, and sidewalks.
13.3 Tenant's Obligations.
(a) Tenant, at Tenant's expense, shall keep in good order, condition and repair the Premises and every part thereof (whether or not the damaged portion of the Premises or the means of repairing same are reasonable or readily accessible to Tenant) including, without limiting the generality of the foregoing, all plumbing, heating, ventilating, air conditioning, and security systems (Tenant shall procure and maintain, at Tenant's expense, ventilating, air conditioning and security system maintenance contracts), electrical and lighting facilities and equipment within the Premises, fixtures, interior walls and interior surfaces of exterior wall, ceilings, windows, doors, plate glass, and skylights located within the Premises. Landlord reserves the right to procure and maintain the ventilating, air conditioning, and security system maintenance contracts and if Landlord so elects, Tenant shall reimburse Landlord, upon demand, for the cost thereof.
(b) Tenant shall resurface and restripe the parking area on or adjacent to the Premises when necessary.


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(c) If Tenant fails to perform Tenants obligations under paragraph 13.3 or under any other paragraph of this lease, Landlord may enter upon the Premises after ten (10) days prior written notice to Tenant (except in the case of emergency, in which no notice shall be required), perform such obligation on Tenant's behalf and put the Premises in good order, condition and repair, and the cost thereof together with interest thereon at the maximum rate then allowable by law shall be due and payable as additional rent to Landlord together with Tenant's next Base Rent installment.


14. ALTERATIONS AND ADDITIONS.
14.1 Tenant shall not, without Landlord's prior written consent, make any alterations, improvements or additions in or about the Premises.
(a) As a condition to giving consent, Landlord may require Tenant to remove, at Tenant's sole cost, any such alterations, improvements, or additions at the expiration of the term, and to restore the Premises to their prior condition by giving Tenant thirty (30) days written notice prior to the expiration of the term that Landlord requires Tenant to remove itself from the Premises.


15. FREE FROM LIENS.
15.1 Tenant shall keep the Premises and the property in or on which the Premises are located free from any liens arising out of any work performed, material furnished, or obligation incurred by Tenant. Tenant shall not record this Lease without Landlord's consent.


16. TENANT'S PERFORMANCE.
16.1 With the exception of rental payments due herein, if Tenant fails to adhere to any time limits set forth in this Lease to complete work or perform any other requirement herein provided to be performed by Tenant during the term of this Lease or prior to the beginning of this Lease, or if Tenant causes a delay in the completion of any work performed by any person on the Premises or its appurtenances, then Landlord shall provide Tenant with written notice of Tenant's violation of this Lease provision.
(a) If the violation is not corrected within ten (10) days after notice, Landlord shall have, in its discretion, the right to exercise any of the legal and equitable remedies set forth in Article 22 or otherwise provided by law.
(b) In addition, Landlord shall be entitled to retain as liquidated damages all security deposits made hereunder and any such alterations, improvements or additions that Tenant may have annexed to the Premises that cannot be removed without damage thereto (subject to the provisions of Article 14 above).


17. FORCE MAJEURE.
17.1 If either party to this Lease is delayed or prevented from the performance of any act required hereunder, including, without limitation, such reason as Acts of God, lockouts, labor strikes, inability to procure materials, restrictive governmental laws, ordinances or regulations, or any other cause which is beyond the control of the party obligated to perform, then performance shall be temporarily excused until such time as performance can be had without such restriction. This shall not be interpreted as excusing Tenant from the prompt and timely payment of rents or other charge(s) due under this Lease.
17.2 Each party shall use reasonable diligence to avoid any delay as described in Paragraph 16.1 and shall resume performance under this Lease as promptly as possible after any such delay.


18. INSURANCE INDEMNITY.
18.1 Fire Insurance.
(a) Tenant at its cost shall maintain during the term of the Lease on the Premises a policy or policies of standard fire and extended coverage insurance to the extent of at least one hundred (100) percent of full replacement value thereof but may include a total of one, one thousand ($1,000.00) dollar deductible provision. Said insurance policies shall be issued in the names of Landlord and Tenant, as their interests may appear.
(b) Tenant at its cost shall maintain during the term of this Lease on all its personal property, Tenant's improvements, and alterations in or about the Premises, a policy of standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements, to the extent of their full replacement value. The proceeds from any such policy shall be used by Tenant for the replacement of personal property or the restoration of Tenant's improvements or alterations.


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18.2 Liability Insurance.
(a) Tenant at its sole cost and expense shall maintain during the term of this Lease general public liability insurance to insure against all liability of Tenant and its authorized representatives arising out of and in connection with Tenant's use or occupancy of the Premises. The single combined liability limitation of such insurance shall be not less than:
(1) Five Hundred Thousand ($500,000.00) Dollars with respect to injury or death of one person, and
(2) One Million ($1,000,000.00) Dollars with respect to any one accident, and
(3) One Hundred Thousand ($100,000.00) Dollars with respect to property damage, including theft and a special rider regarding plate glass windows, if the normal policy does not already cover this item.
(b) The insurance policies shall insure performance by Tenant of the indemnity provisions in paragraph 18.4 below, but the limits of such insurance shall not, however, limit the liability of Tenant hereunder. Both Landlord and Tenant shall be named insureds and the policies shall contain cross-liability endorsements.
(c) If Tenant fails to procure and maintain insurance, Landlord may procure and maintain such policies at the expense and cost of Tenant, bearing interest thereon at the maximum rate permitted by law for an individual to charge, and which shall be due and payable as additional rental to Landlord together with Tenant's next rental installment.
18.3 Waiver of Subrogation. Tenant and Landlord each waives any and all rights of recovery against the other, or against the officers, employees, agents, and representatives of the other, for loss of or damage to such waiving party or its property of others under its control, where such loss or damage is insured against under any insurance policy in force at the time of such loss or damage. Each party shall cause each insurance policy obtained hereunder to provide that the insurance company waives all right of recovery by way of subrogation against either party in connection with any damage covered by any such policy.
18.4 Hold Harmless.
(a) Tenant shall indemnify and hold Landlord harmless from and against any and all claims arising from:
(1) Tenant's use or occupancy of the Premises, or
(2) the conduct of Tenant's business, or (3)
from any activity, work, or things which may be permitted or suffered by Tenant in or about the Premises including all damages, costs, attorney's fees, expenses and liabilities incurred in the defense of any claim or action or proceeding arising therefrom.
(b) Except for Landlord's willful or grossly negligent conduct, Tenant hereby assumes all risk of damage to property or injury to person in or about the Premises from any cause and Tenant hereby waives all claims in respect thereof against Landlord.
18.5 Exemption of Landlord from Liability
(a) Except for Landlord's willful or grossly negligent conduct, Tenant hereby agrees that Landlord shall not be liable for:
(1) any injury to Tenant's business or loss of income therefrom, or
(2) damage to the goods, wares, merchandise, or other property of Tenant, or
(3) injury to Tenant's person, employees, invitees, customers or any person in or about the Premises whether such damage or injury is caused by or results from fire, water or rain, steam, electricity, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air-conditioning, or lighting fixtures, or from any other cause whether such damage results from conditions arising upon the Premises or upon other portion of the building in which the Premises are a part, or from any other source or places.
(b) Landlord shall not be liable to Tenant for any damages arising from any act or neglect of any other Tenant, if any, of the building in wh ...