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EXHIBIT 10.20    
    


 
  STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE—MODIFIED NET
  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION    
    


1.    Basic
Provisions ("Basic Provisions"). 


        1.1   Parties:
This Lease ("Lease"), dated for reference purposes only, July 13, 1999 is made by and between Michael L. Hightower (MLH) ("Lessor") and
NuVasive Inc. a California corporation ("Lessee"), (collectively the "Parties," or individually a "Party"). 


        1.2(a) Premises:
That certain portion of the Building, including all improvements therein or to be provided by Lessor under the terms of this Lease, commonly known by the
street address of 10065 Old Grove Road, Ste A, B, D, located in the City of San Diego , County of San Diego , State of California , with zip code 92131 , as outlined on Exhibit A attached
hereto ("Premises"). The "Building" is that certain building containing the Premises and generally described as (describe briefly the nature of the Building): approximately 20,000 square feet, two
story office/R&D building, The Premises containing approximately 16,720 square feet on the first and second floors of the Building consists of Suites A, B and the Garage. In addition to Lessee's
rights to use and occupy the Premises as hereinafter specified, Lessee shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as hereinafter
specified, but shall not have any rights to the roof, exterior walls or utility raceways of the Building or to any other buildings in the Industrial Center. The Premises, the Building, the Common
Areas, the land upon which they are located, along with all other buildings and improvements thereon, are herein collectively referred to as the "Industrial Center." (Also see Paragraph 2.) 



        1.2(b) Parking:
67 unreserved vehicle parking spaces ("Unreserved Parking Spaces"); and the exclusive use of the Garage of the Building depicted on Exhibit A reserved
vehicle parking spaces ("Reserved Parking Spaces"). (Also see Paragraph 2.6.) 


        1.3   Term:
five (5) years and 0 months ("Original Term") commencing December 1, 1999 ("Commencement Date") and ending 11-30-04
("Expiration Date"). (Also see Paragraph 3.) 


        1.4   Early
Possession: 1999 ("Early Possession Date"). (Also see Paragraphs 3.2 and 3.3.) 



        1.5   Base
Rent: $(see Paragraph 49) per month ("Base Rent"), payable on the 1st day of each month commencing December 1, 1999 (Also see Paragraph 4.) 


ý    If
this box is checked, this Lease provides for the Base Rent to be adjusted per Paragraph 49. 


        1.6(a) Base
Rent Paid Upon Execution: $20,064 as Base Rent for the period December, 1999 . 


        1.6(b) Lessee's
Share of Common Area Operating Expenses: eighty-four percent (84%) ("Lessee's Share") as determined by 


ý    prorata square footage of the Premises as compared to the total square footage of the Building or
[    ] other criteria as described in Addendum            , 


        1.7   Security
Deposit: $20,064.00 ("Security Deposit"). (Also see Paragraph 5.) 


        1.8   Permitted
Use: General office and light assembly ("Permitted Use") (Also see Paragraph 6.) 


        1.9   Insuring
Party. Lessor is the "Insuring Party." (Also see Paragraph 8.) 


        1.10(a) Real
Estate Brokers. The following real estate broker(s) (collectively, the "Brokers") and brokerage relationships exist in this transaction and are consented to by
the Parties (check applicable boxes): No brokers 


o    represents Lessor exclusively ("Lessor's Broker"); 



o    represents Lessee exclusively ("Lessee's Broker"); or 


o    represents both Lessor and Lessee ("Dual Agency"). (Also see Paragraph 15.) 





 



        1.10(b) Payment
to Brokers. Upon the execution of this Lease by both Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares as they may mutually
designate in writing, a fee as set forth in a separate written agreement between Lessor and said Broker(s) (or in the event there is no separate written agreement between Lessor and said Broker(s),
the sum of $       per agreement for brokerage services rendered by said Broker(s) in connection with this transaction. 


        1.11 Guarantor.
The obligations of the Lessee under this Lease are to be guaranteed by N /A ("Guarantor"). (Also see Paragraph 37.) 


        1.12 Addenda
and Exhibits. Attached hereto is an Addendum or Addenda consisting of Paragraphs 49 through 52 and Addendum No. 1, and Exhibits A and C , all of which
constitute a part of this Lease. 


2.    Premises, Parking and Common Areas. 



        2.1   Letting.
Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon all of the terms, covenants and
conditions set forth in this Lease. Unless otherwise provided herein, any statement of square footage set forth in this Lease, or that may have been used in calculating rental and/or Common Area
Operating Expenses, is an approximation which Lessor and Lessee agree is reasonable and the rental and Lessee's Share (as defined in Paragraph 1.6(b)) based thereon is not subject to revision
whether or not the actual square footage is more or less. 


        2.2   Condition.
Lessor shall deliver the Premises to Lessee clean and free of debris and Hazardous Substances on the Commencement Date and warrants to Lessee that the
existing plumbing, electrical systems, fire sprinkler system, lighting, air conditioning and heating systems and loading doors, if any, in the Premises, other than those constructed by Lessee, shall
be in good operating condition on the Commencement Date. If a non-compliance with said warranty exists as of the Commencement Date, Lessor shall, except as otherwise provided in this
Lease, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, rectify same at Lessor's expense. If Lessee does
not give Lessor written notice of a non-compliance with this warranty within thirty (30) days after Lessee's discovery thereof, correction of that non-compliance shall
be the obligation of Lessee at Lessee's sole cost and expense. *INSERT 2.2 


        *
NOTE: All inserts incorporated herein are contained in Addendum No. 1 attached hereto. 


        2.3   Compliance
with Covenants, Restrictions and Building Code. Lessor warrants that any improvements (other than those constructed by Lessee or at Lessee's direction) on or
in the Premises which have been constructed or installed by Lessor or with Lessor's consent or at Lessor's direction shall comply with all applicable covenants or restrictions of record and applicable
building codes, regulations and ordinances in effect on the Commencement Date. Lessor further warrants to Lessee that Lessor has no knowledge of any claim having been made by any governmental agency
that a violation or violations of applicable building codes, regulations, or ordinances exist with regard to the Premises as of the Commencement Date. Said warranties shall not apply to any
Alterations or Utility Installations (defined in Paragraph 7.3(a)) made or to be made by Lessee. If the Premises do not comply with said warranties, Lessor shall, except as otherwise provided
in this Lease, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, take such action, at Lessor's expense, as
may be reasonable or appropriate to rectify the non-compliance. *INSERT 2.3 


        2.4   *INSERT
2.4 


        2.5   Leases
as Prior Owner/Occupant. The warranties made by Lessor in this Paragraph 2 shall be of no force or effect if immediately prior to the date set forth in
Paragraph 1.1 Lessee was the owner or occupant of the Premises. In such event, Lessee shall, at Lessee's sole cost and expense, correct any non-compliance of the Premises with said
warranties. 


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        2.6   Vehicle
Parking. Lessee shall be entitled to use the number of Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph 1.2(b) on those
portions of the Common Areas designated from time to time by Lessor for parking. Lessee shall not use more parking spaces than said number. Said parking spaces shall be used for parking by vehicles no
larger than full-size passenger automobiles or pick-up trucks, herein called "Permitted Size Vehicles." Vehicles other than Permitted Size Vehicles shall be parked and loaded
or unloaded as directed by Lessor in the Rules and Regulations (as defined in Paragraph 40) issued by Lessor. (Also see Paragraph 2.9.) Additionally, Lessee shall have exclusive use of
the Garage of the Building. 



        (a)   Lessee
shall not permit or allow any vehicles that belong to or are controlled by Lessee or Lessee's employees, suppliers, shippers, customers, contractors or invitees
to be loaded, unloaded, or parked in areas other than those designated by Lessor for such activities. 


        (b)   If
Lessee permits or allows any of the prohibited activities described in this Paragraph 2.6, then Lessor shall have the right, without notice, addition to such
other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor. 


        (c)   Lessor
shall at the Commencement Date of this Lease, provide the parking facilities required by Applicable Law. 




        2.7   Common
Areas—Definition. The term "Common Areas" is defined as all areas and facilities outside the Premises and within the exterior boundary line of the
Industrial Center and interior utility raceways within the Premises that are provided and designated by the Lessor from time to time for the general non-exclusive use of Lessor, Lessee and
other lessees of the Industrial Center and their respective employees, suppliers, shippers, customers, contractors or invitees, including parking areas, loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways, driveways and landscaped areas. *INSERT 2.7 


        2.8   Common
Areas—Lessee's Rights. Lessor hereby grants to Lessee, for the benefit of Lessee and its employees, suppliers, shippers, contractors, customers and
invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas as they exist from time to time, subject to any
rights, powers, and privileges reserved by Lessor under the terms hereof or under the terms of any rules and regulations or restrictions governing the use of the Industrial Center. Under no
circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property, temporarily or permanently, in the Common Areas. Any such storage shall be
permitted only by the prior written consent of Lessor or Lessor's designated agent, which consent may be revoked at any time. In the event that any unauthorized storage shall occur then Lessor have
the right without notice, in addition to such other rights and remedies that it may have, to remove the property and charge the cost to Lessee, which cost shall be immediately payable upon demand by
Lessor. 


        2.9   Common
Areas—Rules and Regulations. Lessor or such other person(s) as Lessor may appoint shall have the exclusive control and management of the Common Areas
and shall have the right, from time to time, to establish, modify, amend and enforce reasonable Rules and Regulations with respect thereto in accordance with Paragraph 40. Lessee agrees to
abide by and conform to all such Rules and Regulations, and to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Lessor shall not be responsible to
Lessee for the non-compliance with said rules and regulations by other lessees of the Industrial Center. 


        2.10 Common
Areas—Changes. Lessor shall have the right, in Lessor's sole discretion, from time to time: 



        (a)   To
make changes to the Common Areas, including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking
areas, loading 



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and
unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility raceways; 



        (b)   To
close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Premises remains available; 


        (c)   To
designate other land outside the boundaries of the Industrial Center to be a part of the Common Areas; 


        (d)   To
add additional buildings and improvements to the Common Areas; 


        (e)   To
use the Common Areas while engaged in making additional improvements, repairs or alterations to the Industrial Center, or any portion thereof; and 



        (f)    To
do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Industrial Center as Lessor may, in the exercise of sound
business judgment, deem to be appropriate. 




3.    Term.



        3.1   Term.
The Commencement Date, Expiration Date and Original Term of this Lease are as specified in Paragraph 1.3. 


        3.2   Early
Possession. If an Early Possession Date is specified in Paragraph 1.4 and if Lessee totally or partially occupies the Premises after the Early Possession
Date but prior to the Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early occupancy. All other terms of this Lease, however, (including but not limited to
the obligations to pay Lessee's Share of Common Area Operating Expenses and to carry the insurance required by Paragraph 8) shall be in effect during such period. Any such early possession
shall not affect nor advance the Expiration Date of the Original Term. 


        3.3   Delay
in Possession. If for any reason Lessor cannot deliver possession of the Premises to Lessee by the Early Possession Date, if one is specified in
Paragraph 1.4, or if no Early Possession Date is specified, by the Commencement Date, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validly of this
Lease, or the obligations of Lessee hereunder, or extend the term hereof, but in such case, Lassos shall not except as otherwise provided herein, be obligated to pay rent or perform any other
obligation of Lessee under the terms of this Lease until Lessor delivers possession of the Premises to Lessee. It possession of the Premises is not delivered to Lessee within sixty (60) days
after the Commencement Date, Lessee may, at its option, by notice in writing to Lessor within ten (10) days after the end of said sixty (60) day period, cancel this Lease, in which event
the parties shall be discharged from all obligations hereunder; provided further, however, that if such written notice of Lessee is not received by Lessor within said ten (10) day period,
Lessee's right to cancel this Lease hereunder shall terminate and be of no further force or effect. Except as may be otherwise provided, and regardless of when the Original Term actually commences, if
possession is not tendered to Lessee when required by this Lease and Lessee does not terminate this Lease, as aforesaid, the period free of the obligation to pay Base Rent, if any, that Lessee would
otherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to the period during which the Lessee would have otherwise enjoyed under the terms hereof, but
minus any days of delay caused by the acts, changes or omissions of Lessee. 


4.    Rent.



        4.1   Base
Rent. Lessee shall pay Base Rent and other rent or charges, as the same may be adjusted from time to time, to Lessor in lawful money of the United States, without
offset or deduction, on or before the day on which it is due under the terms of this Lease. Base Rent and all other rent and charges for any period during the term hereof which is for less than one
full month 


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shall
be prorated based upon the actual number of days of the month involved. Payment of Base Rent and other charges shall be made to Lessor at its address stated herein or to such other persons or at
such other addresses as Lessor may from time to time designate in writing to Lessee. 



        4.2   Common
Area Operating Expenses. Subject to the Lessor's obligations pursuant to section 51 below, Lessee shall pay to Lessor during the term hereof, in addition
to the Base Rent, Lessee's Share (as specified in Paragraph 1.6(b)) of any annual increase in the Common Area Operating Expenses above the Base Year Operating Expenses incurred by Lessor during
the 1999 Calendar Year as hereinafter defined, during each calendar year of the term of this Lease, in accordance the following provisions: 



        (a)   "Common
Area Operating Expenses" are defined, for purposes of this Lease, as all costs incurred by Lessor relating to the ownership and operation of the Industrial
Center, including, but not limited to, the following: 



        (i)    The
operation, repair and maintenance, in neat, clean, good order and condition, of the following: 



        (aa) The
Common Areas, including parking areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways, parkways, driveways, landscaped areas, striping,
bumpers, irrigation systems, Common Area lighting facilities, fences and gates, elevators and roof. 



        (bb) Exterior
signs and any tenant directories. 


        (cc) Fire
detection and sprinkler systems. 




        (ii)   The
cost of water, gas, electricity and telephone to service the Common Areas. 


        (iii)  Trash
disposal, property management and security services and the costs of any environmental inspections. 


        (iv)  Real
Property Taxes (as defined in Paragraph 10.2) to be paid by Lessor for the Building and the Common Areas under Paragraph 10 hereof. 



        (v)   The
cost of the premiums for the insurance policies maintained by Lessor under Paragraph 8 hereof. 


        (vi)  Any
deductible portion of an insured loss concerning the Building or the Common Areas. 


        (vii) Any
other services to be provided by Lessor that are stated elsewhere in this Lease to be a Common Area Operating Expense. *INSERT 4.2 




        (b)   Any
Common Area Operating Expenses and Real Property Taxes that are specifically attributable to the Building or to any other building in the Industrial Center or to the
operation, repair and maintenance thereof, shall be allocated entirely to the Building or to such other building. However, any Common Area Operating Expenses and Real Property Taxes that are not
specifically attributable to the Building or to any other building or to the operation, repair and maintenance thereof, shall be equitably allocated by Lessor to all buildings in the Industrial
Center. 


        (c)   The
inclusion of the improvements, facilities and services set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor to either have said
improvements or facilities or to provide those services unless the Industrial Center already has the same, Lessor already provides the services, or Lessor has agreed elsewhere in this Lease to provide
the same or some of them. 



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        (d)   Lessee's
Share of increases in Common Area Operating Expenses shall be payable by Lessee within ten (10) days after a reasonably detailed statement of actual
expenses and related Base Year Operating Expenses is presented to Lessee by Lessor. Lessor shall deliver to Lessee within sixty (60) days after the expiration of each calendar year a reasonably
detailed statement showing Lessee's Share of the actual Common Area Operating Expenses incurred during the preceding year. If Lessee's payments under this Paragraph 4.2(d) during said preceding
year exceed Lessee's Share as indicated on said statement, Lessee shall be credited the amount of such overpayment against Lessee's Share of Common Area Operating Expenses next becoming due. If
Lessee's payments under this Paragraph 4.2(d) during said preceding year were less than Lessee's Share as indicated on said statement, Lessee shall pay to Lessor the amount of the deficiency
within ten (10) days after delivery by Lessor to Lessee of said statement. *INSERT 4.2(e) 




5.    Security
Deposit. Lessee shall deposit with Lessor upon Lessee's execution hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee's faithful performance
of Lessee's obligations under this Lease. If Lessee falls to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults under this Lease (as defined in Paragraph 13.1). Lessor
may use, apply or retain all or any portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or compensate Lessor for any liability, cost, expense, loss or damage
(including attorneys' fees) which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or any portion of said Security Deposit, Lessee shall within ten (10) days after
written request therefore deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. Lessor shall not be required to keep all or any part of the
Security Deposit separate from its general accounts. Lessor shall, at the expiration or earlier termination of the term hereof and after Lessee has vacated the Premises, return to Lessee (or, at
Lessor's option, to the last assignee, if any, of Lessee's interest heroin), that portion of the Security Deposit not used or applied by Lessor. Unless otherwise expressly agreed in writing by Lessor,
no part of the Security Deposit shall be considered to be held in trust, to bear interest or other increment for its use, or to be prepayment for any monies to be paid by Lessee under this Lease.
*INSERT 5 


6.    Use.



        6.1   Permitted
Use. 



        (a)   Lessee
shall use and occupy the Premises only for the Permitted Use set forth in Paragraph 1.8 or any other legal use which is reasonably comparable thereto, and
for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates waste or a nuisance, or that disturbs owners and/or occupants of, or causes damage to
the Premises or neighboring premises or properties. 


        (b)   Lessor
hereby agrees to not unreasonably withhold or delay its consent to any written request by Lessee, Lessee's assignees or subtenants, and by prospective assignee
and subtenants of Lessee, its assignees and subtenants, for a modification of said Permitted Use, so long as the same will not impair the structural integrity of the improvements on the Premises or in
the Building or the mechanical or electrical systems therein, does not conflict with uses by other lessees, is not significantly more burdensome to the Premises or the Building and the improvements
thereon, and is otherwise permissible pursuant to this Paragraph 6. If Lessor elects to withhold such consent, Lessor shall within five (5) business days after such request give a
written notification of same, which notice shall include an explanation of Lessor's reasonable objections to the change in use. 




        6.2   Hazardous
Substances. 



        (a)   Reportable
Uses Require Consent. The term "Hazardous Substance" as used in this Lease shall mean any product, substance, chemical, material or waste whose presence,
nature, quantity and/or intensity of existence, use, manufacture, disposal, transportation, spill, release or 



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effect,
either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment, or
the Premises; (ii) regulated or monitored by any governmental authority; or (iii) a basis for potential liability of Lessor to any governmental agency or third party under any applicable
statute or common law theory. Hazardous Substance shall include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any products or by-products thereof. Lessee shall
not engage in any activity in or about the Premises which constitutes a Reportable Use (as hereinafter defined) of Hazardous Substances without the express prior written consent of Lessor and
compliance in a timely manner (at Lessee's sole cost and expense) with all Applicable Requirements (as defined in Paragraph 6.3). "Reportable Use" shall mean (i) the installation or use
of any above or below ground storage tank, (ii) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with respect to
which a report, notice, registration or business plan is required to be filed with, any governmental authority, and (iii) the presence in, on or about the Premises of a Hazardous Substance with
respect to which any Applicable Laws require that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may, without Lessor's
prior consent, but upon notice to Lessor and in compliance with all Applicable Requirements, use any ordinary and customary materials reasonably required to be used by Lessee in the normal course of
the Permitted Use, so long as such use is not a Reportable Use and does not expose the Premises or neighboring properties to any meaningful risk of contamination or damage or expose Lessor to any
liability therefor. In addition, Lessor may (but without any obligation to do so) condition its consent to any Reportable Use of any Hazardous Substance by Lessee upon Lessee's giving Lessor such
additional assurances as Lessor, in its reasonable discretion, deems necessary to protect itself, the public, the Premises and the environment against damage, contamination or injury and/or liability
therefor, including but not limited to the installation (and, at Lessor's option, removal on or before Lease expiration or earlier termination) of reasonably necessary protective modifications to the
Premises (such as concrete encasements) and/or the deposit of an additional Security Deposit under Paragraph 5 hereof. 


        (b)   Duty
to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located in, on, under or about the Premises or the
Building, other than as previously consented to by Lessor, Lessee shall immediately give Lessor written notice thereof, together with a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action, or proceeding given to, or received from, any governmental authority or private party concerning the presence, spill, release, discharge of,
or exposure to, such Hazardous Substance including but not limited to all such documents as may be involved in any Reportable Use involving the Premises. Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under or about the Premises (including, without limitation, through the plumbing or sanitary sewer system). 


        (c)   Indemnification.
Lessee shall indemnify, protect, defend and hold Lessor, its agents, employees, lenders and ground lessor, if any, and the Premises, harmless from and
against any and all damages, liabilities, judgments, costs, claims, liens, expenses, penalties, loss of permits and attorneys' and consultants' fees arising out of or involving any Hazardous Substance
brought onto the Premises by or for Lessee or by anyone under Lessee's control. Lessee's obligations under this Paragraph 6.2(c) shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of investigation (including consultants' and attorneys' fees and testing), removal,
remediation, restoration and/or abatement thereof, or of any contamination therein involved, and shall survive the expiration or earlier termination of this Lease. No termination, cancellation or
release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to 



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Hazardous
Substances, unless specifically so agreed by Lessor in writing at the time of such agreement. *INSERT 6.2(c) 




        6.3   Lessee's
Compliance with Requirements. Lessee shall, at Lessee's sole cost and expense, fully, diligently and in a timely manner, comply with all "Applicable
Requirements," which term is used in this Lease to mean all laws, rules, regulations, ordinances, directives, covenants, easements and restrictions of record, permits, the requirements of any
applicable fire insurance underwriter or rating bureau, relating in any manner to the Premises (including but not limited to matters pertaining to (i) industrial hygiene,
(ii) environmental conditions on, in, under or about the Premises, including soil and groundwater conditions, and (iii) the use, generation, manufacture, production, installation,
maintenance, removal, transportation, storage, spill, or release of any Hazardous Substance), now in effect or which may hereafter come into effect. Lessee shall, within five (5) days after
receipt of Lessor's written request, provide Lessor with copies of all documents and information, including but not limited to permits, registrations, manifests, applications, reports and
certificates, evidencing Lessee's compliance with any Applicable Requirements reasonably specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents
involved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or involving failure by Lessee or the Premises to comply with any Applicable Requirements. 



        6.4   Inspection;
Compliance with Law. Lessor, Lessor's agents, employees, contractors and designated representatives, and the holders of any mortgages, deeds of trust or
ground leases on the Premises ("Lenders") shall have the right to enter the Premises at any time in the case of an emergency, and otherwise at reasonable times and upon 24 hours advance notice
for the purpose of inspecting the condition of the Premises and for verifying compliance by Lessee with this Lease and all Applicable Requirements (as defined in Paragraph 6.3), and Lessor
shall be entitled to employ experts and/or consultants in connection therewith to advise Lessor with respect to Lessee's activities, including but not limited to Lessee's installation, operation, use,
monitoring, maintenance, or removal of any Hazardous Substance on or from the Premises. The costs and expenses of any such inspections shall be paid by the party requesting same, unless a violation of
Applicable Requirements or a contamination, caused or materially contributed to by Lessee, is found to exist or to be imminent, or unless the inspection is ordered by a governmental authority as the
result of any such existing or imminent violation or contamination. In such case, Lessee shall upon request reimburse Lessor or Lessor's Lender, as the case may be, for the costs and expenses of such
inspections. 


7.    Maintenance,
Repairs, Utility Installations, Trade Fixtures and Alterations. 


        7.1   Lessee's
Obligations. 



        (a)   Subject
to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's Obligations), 9 (Damage or
Destruction), and 14 (Condemnation), Lessee shall, at Lessee's sole cost and expense and at all times, keep the Premises and every part thereof in good order, condition and repair (whether or not such
portion of the Premises requiring repair, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of
Lessee's use, any prior use, the elements or the age of such portion of the Premises), including, without limiting the generality of the foregoing, all equipment or facilities separately serving the
Premises, such as plumbing, heating, air conditioning, ventilating, electrical, lighting facilities, boilers, fired or unfired pressure vessels, fire hose connections if within the Premises, fixtures,
interior walls, interior surfaces of exterior walls, ceilings, floors, windows, doors, plate glass, and skylights, but excluding any items which are the responsibility of Lessor pursuant to
Paragraph 7.2 below. Lessee, in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices. 



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        (b)   If
Lessee falls to perform Lessee's obligations under this Paragraph 7.1, Lessor may enter upon the Premises after ten (10) days' prior written notice to
Lessee (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Lessee's behalf, and put the Premises in good order, condition and repair, in
accordance with Paragraph 13.2 below. 




        7.2   Lessor's
Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code), 4.2 (Common Area
Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order,
condition and repair the foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire sprinkler and/or standpipe and hose (if located in the Common Areas) or other
automatic fire extinguishing system including fire alarm and/or smoke detection systems and equipment, fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs and
utility systems serving the Building and Common Areas and all parts thereof, as well as providing the services for which there is a Common Area Operating Expense pursuant to Paragraph 4.2.
Lessor shall not be obligated to paint the exterior or interior surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or replace windows, doors or plate glass of the Premises.
Lessee expressly waives the benefit of any statute now or hereafter in effect which would otherwise afford Lessee the right to make repairs at Lessor's expense or to terminate this Lease because of
Lessor's failure to keep the Building, Industrial Center or Common Areas in good order, condition and repair. *INSERT 7.2 


        7.3   Utility
Installations, Trade Fixtures, Alterations. 



        (a)   Definitions;
Consent Required. The term "Utility Installations" is used in this Lease to refer all air lines, power panels, electrical distribution, security, fire
protection systems, communications systems, lighting fixtures, heating, ventilating and air conditioning equipment, plumbing, and fencing in, on or about the Premises. The term "Trade Fixtures" shall
mean Lessee's machinery and equipment which can be removed without doing material damage to the Premises. The term "Alterations" shall mean any modification of the improvements on the Premises which
are provided by Lessor under the terms of this Lease, other than Utility Installations or Trade Fixtures. "Lessee-Owned Alterations and/or Utility Installations" are defined as Alterations and/or
Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make nor cause to be made any Alterations or Utility Installations in, on,
under or about the Premises without Lessor's prior written consent which shall not be unreasonably withheld. Lessee may, however, make non-structural Utility Installations to the Interior
of the Premises (excluding the roof) without Lessor's consent but upon notice to Lessor, so long as they are not visible from the outside of the Premises, do not involve puncturing, relocating or
removing the roof or any existing walls, or changing or interfering with the fire sprinkler or fire detection systems and the cumulative cost thereof during the term of this Lease as extended does not
exceed $2,500.00. 


        (b)   Consent.
Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written
form with detailed plans. All consents given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent, shall be deemed conditioned upon: (i) Lessee's acquiring
all applicable permits required by governmental authorities; (ii) the furnishing of copies of such permits together with a copy of the plans and specifications for the Alteration or Utility
Installation to Lessor prior to commencement of the work thereon; and (iii) the compliance by Lessee with all conditions of said permits in a prompt and expeditious manner. Any Alterations or
Utility Installations by Lessee during the term of this Lease shall be done in a good and workmanlike manner, with good and sufficient materials; and be in compliance with all Applicable Requirements.
Lessee shall promptly upon completion thereof furnish Lessor with as-built plans and specifications therefor. Lessor may, 



9





 




(but
without obligation to do so) condition its consent to any requested Alteration or Utility Installation that costs $2,500.00 or more upon Lessee's providing Lessor with a lien and completion bond
in amount equal to one and one-half times the estimated cost of such Alteration or Utility Installation. *INSERT 7.3 


        (c)   Lien
Protection. Lessee shall pay when due all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises,
which claims are or may be secured by any mechanic's or materialmen's lien against the Premises or any interest therein. Lessee shall give Lessor not less than ten (10) days' notice prior to
the commencement of any work in, on, or about the Premises, and Lessor shall have the right to post notices of non-responsibility in or on the Premises as provided by law. If Lessee shall,
in good faith, contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense, defend and protect itself, Lessor and the
Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof against the Lessor or the Premises. If Lessor shall require,
Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to one and one-half times the amount of such contested lien claim or demand, indemnifying Lessor
against liability for the same, as required by law for the holding of the Premises free from the effect of such lien or claim. In addition, Lessor may require Lessee to pay Lessor's reasonable
attorneys' fees and costs in participating in such action if Lessor shall decide it is to its best interest to do so. 




        7.4   Ownership,
Removal, Surrender, and Restoration. 



        (a)   Ownership.
Subject to Lessor's right to require their removal and to cause Lessee to become the owner thereof as hereinafter provided in this Paragraph 7.4, all
Alterations and Utility Installations made to the Premises by Lessee shall be the property of and owned by Lessee, but considered a part of the Premises. Unless otherwise instructed per Subparagraph
7.4(b) hereof, all Lessee-Owned Alterations and Utility Installations shall, at the expiration or earlier termination of this Lease, become the property of Lessor and remain upon the Premises and be
surrendered with the Premises by Lessee. 


        (b)   Removal.
Unless otherwise agreed in writing. Lessor may *INSERT 7.4(b) require that any or all Lessee-Owned Alterations or Utility Installations be removed by the
expiration or earlier termination of this Lease, notwithstanding that their Installation may have been consented to by Lessor. Lessor may require the removal at any time of all or any part of any
Alterations or Utility Installations made without the required consent of Lessor. 



        (c)   Surrender/Restoration.
Lessee shall surrender the Premises by the end of the last day of the Lease term or any earlier termination date, clean and free of debris and in
good operating order, condition and state of repair, ordinary wear and tear excepted and subject to Paragraph 9 below. Ordinary wear and tear shall not include any damage or deterioration that
would have been prevented by good maintenance practice or by Lessee performing all of its obligations under this Lease. Except as otherwise agreed or specified herein, the Premises, as surrendered,
shall include the Alterations and Utility Installations. The obligation of Lessee shall include the repair of any damage occasioned by the installation, maintenance or removal of Lessee's Trade
Fixtures, furnishings, equipment and Lessee-Owned Alterations and Utility Installations, as well as the removal of any storage tank installed by or for Lessee, and the removal, replacement, or
remediation of any soil, material or ground water contaminated by Lessee, all as may then be required by Applicable Requirements and/or good practices. Lessee's Trade Fixtures shall remain the
property of Lessee and shall be removed by Lessee subject to its obligation to repair and restore the Premises per this Lease. *INSERT 7.4(c) 



10





 





8.    Insurance;
Indemnity. 


        8.1   Payment
of Premiums. The cost of the premiums for the insurance policies maintained by Lessor under this Paragraph 8 shall be a Base Year Common Area Operating
Expense pursuant to Paragraph 4.2 hereof. Premiums for policy periods commencing prior to, or extending beyond, the term of this Lease shall be prorated to coincide with the corresponding
Commencement Date or Expiration Date. 


        8.2   Liability
Insurance. 



        (a)   Carried
by Lessee. Lessee shall obtain and keep in force during the term of this Lease a Commercial General Liability policy of insurance protecting Lessee, Lessor and
any Lender(s) whose names have been provided to Lessee in writing (as additional insureds) against claims for bodily injury, personal injury and property damage based upon, involving or arising out of
the ownership, use, occupancy or maintenance of the Premises as and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less
than $1,000,000 per occurrence with an "Additional Insured-Managers or Lessors of Premises" endorsement and contain the "Amendment of the Pollution Exclusion" endorsement for damage caused by heat,
smoke or fumes from a hostile fire. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this
Lease as an "insured contract" for the performance of Lessee's indemnity obligations under this Lease. The limits of said insurance required by this Lease or as carried by Lessee shall not however,
limit the liability of Lessee nor relieve Lessee of any obligation hereunder. All insurance to be carried by Lessee shall be primary to and not contributory with any similar insurance carried by
Lessor, whose insurance shall be considered excess insurance only. 


        (b)   Carried
by Lessor. Lessor shall also maintain liability insurance described in Paragraph 8.2(a) above, in addition to and not in lieu of, the insurance required
to be maintained by Lessee. Lessee shall not be named as an additional insured therein. 




        8.3   Property
Insurance-Building, Improvements and Rental Value. 



        (a)   Building
and Improvements. Lessor shall obtain and keep in force during the term of this Lease a policy or policies in the name of Lessor, with loss payable to Lessor
and to any Lender(s), insuring against loss or damage to the Premises. Such insurance shall be for full replacement cost as the same shall exist from time to time, or the amount required by any
Lender(s), but in no event more than the commercially reasonable and available insurable value thereof if, by reason of the unique nature or age of the improvements involved, such latter amount is
less than full replacement cost. Lessee-Owned Alterations and Utility Installations, Trade Fixtures and Lessee's personal property shall be insured by Lessee pursuant to Paragraph 8.4. If the
coverage is available and commercially appropriate, Lessor's policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for any additional costs resulting from debris removal and reasonable amounts of coverage for the enforcement of any ordinance or law regulating the
reconstruction or replacement of any undamaged sections of the Building required to be demolished or removed by reason of the enforcement of any building, zoning,
safety or land use laws as the result of a covered loss, but not including plate glass insurance. Said policy or policies shall also contain an agreed valuation provision in lieu of any
co-insurance clause, waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located. 


        (b)   Rental
Value. Lessor shall also obtain and keep in force during the term of this Lease a policy or policies in the name of Lessor, with loss payable to Lessor and any
Lender(s), insuring 



11





 




the
loss of the full rental and other charges payable by all lessees of the Building to Lessor for one year (including all Real Property Taxes, Insurance costs, Lessee's share of any increases in
Common Area Operating Expenses and any scheduled rental increases). Said insurance may provide that in the event the Lease is terminated by reason of an insured loss, the period of indemnify for such
coverage shall be extended beyond the date of the completion of repairs or replacement of the Premises, to provide for one full year's loss of rental revenues from the date of any such loss. Said
insurance shall contain an agreed valuation provision in lieu of any co-insurance clause, and the amount of coverage shall be adjusted annually to reflect the projected rental income, Real
Property Taxes, insurance premium costs and other expenses, if any, otherwise payable, for the next 12-month period. Common Area Operating Expenses shall include any commercially-
reasonable deductible amount in the event of such loss. 


        (c)   Adjacent
Premises. Lessee shall pay for any increase in the premiums for the property insurance of the Building and for the Common Areas or other buildings in the
Industrial Center if said increase is caused by Lessee's acts, omissions, use or occupancy of the Premises. 


        (d)   Lessee's
Improvements. Since Lessor is the Insuring Party, Lessor shall not be required to insure Lessee-Owned Alterations and Utility Installations unless the item in
question has become the property of Lessor under the terms of this Lease. 




        8.4   Lessee's
Property Insurance. Subject to the requirements of Paragraph 8.5, Lessee at its cost shall either by separate policy or, at Lessor's option, by
endorsement to a policy already carried, maintain insurance coverage on all of Lessee's personal property, Trade Fixtures and Lessee-Owned Alterations and Utility Installations in, on, or about the
Premises similar in coverage to that carried by Lessor as the Insuring Party under Paragraph 8.3(a). 



        8.5   Insurance
Policies. Insurance required hereunder shall be in companies duty licensed to transact business in this state where the Premises are located, and maintaining
during the policy term a "General Policyholders Rating" of at least B+, V, or such other rating as may be required by a Lender, as set forth in the most current issue of "Best's Insurance Guide."
Lessee shall not do or permit to be done anything which shall invalidate the insurance policies referred to in this Paragraph 8. Lessee shall cause to be delivered to Lessor, within seven
(7) days after the earlier of the Early Possession Date or the Commencement Date certified copies of, or certificates evidencing the existence and amounts of, the insurance required under
Paragraph 8.2(a) and 8.4. No such policy shall be cancelable or subject to modification except after thirty (30) days' prior written notice to Lessor. Lessee shall at least thirty
(30) days prior to the expiration of such policies, furnish Lessor with evidence of renewals or "insurance binders" evidencing renewal thereof, or Lessor may order such insurance and charge the
cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demand. 


        8.6   Waiver
of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to
recover damages (whether in contract or in tort) against the other, for loss or damage to their property arising out of or incident to the perils required to be insured against under
Paragraph 8. The effect of such releases and waivers of the right to recover damages shall not be limited by the amount of insurance carried or required, or by any deductibles applicable
thereto. Lessor and Lessee agree to have their respective insurance companies issuing property damage insurance waive any right to subrogation that such companies me have against Lessor or Lessee, as
the case may be, so long as the insurance is not invalidated thereby. 


        8.7   Indemnity.
Except for Lessor's negligence, willful misconduct and/or breach of this Lease, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents, Lessor's master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, costs, liens, judgments, penalties, loss of permits,
attorneys' and consultants' fees, expenses and/or liabilities arising out of, involving, or in connection with, the occupancy of the Premises by Lessee, the conduct at Lessee's business, any act,
omission or neglect of Lessee, its agents, contractors, 


12





 



employees
or invitees, and out of any Default or Breach by Lessee in the performance in a timely manner of any obligation on Lessee's part to be performed under this Lease. The foregoing shall
include, but not be limited to, the defense or pursuit of any claim or any action or proceeding involved therein, and whether or not (in the case of claims made against Lessor) litigated and/or
reduced to judgment. In case any action or proceeding be brought against Lessor by reason of any of the foregoing matters. Lessee upon notice from Lessor shall defend the same at Lessee's expense by
counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be so indemnified. 


        8.8   Exemption
of Lessor from Liability. Except for Lessor's, or its employees' or agents' negligence, willful misconduct or breach of this Lease, Lessor shall not be liable
for injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee's employees, contractors, invitees, customers, or any other person in or about the Premises, whether
such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other cause, whether said injury or damage results from conditions arising upon the Premises or upon other portions of the
Building of which the Premises are a part, from other sources or places, and regardless of whether the cause of such damage or injury or the means of repairing the same is accessible or not. Lessor
shall not be liable for any damages arising from any act or neglect of any other lessee of Lessor nor from the failure by Lessor to enforce the provisions of any other lease in the Industrial Center. 



9.    Damage
or Destruction. 


        9.1   Definitions. 



        (a)   "Premises
Partial Damage" shall mean damage or destruction to the Premises, other than Lessee-Owned Alterations and Utility Installations, the repair cost of which
damage or destruction is less than fifty percent (50%) of the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises (excluding Lessee-Owned Alterations and Utility
Installations and Trade Fixtures) immediately prior to such damage or destruction. 



        (b)   "Premises
Total Destruction" shall mean damage or destruction to the Premises, other than Lessee-Owned Alterations and Utility Installations, the repair cost of which
damage or destruction is fifty percent (50%) or more of the then Replacement Cost of the Premises (excluding Lessee-Owned Alterations and Utility Installations and Trade Fixtures) immediately prior to
such damage or destruction. In addition, damage or destruction to the Building, other than Lessee-Owned Alterations and Utility Installations and Trade Fixtures of any lessees of the Building, the
cost of which damage or destruction is fifty percent (50%) or more of the then Replacement Cost (excluding Lessee-Owned Alterations and Utility Installations and Trade Fixtures of any lessees of the
Building) of the Building shall, at the option of Lessor, be deemed to be Premises Total Destruction. 



        (c)   "Insured
Loss" shall mean damage or destruction to the Premises, other than Lessee-Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an
event required to be covered by the insurance described in Paragraph 8.3(a) irrespective of any deductible amounts or coverage limits involved. 


        (d)   "Replacement
Cost" shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior
thereto, including demolition, debris removal and upgrading required by the operation of applicable building codes, ordinances or laws, and without deduction for depreciation. 



13





 




        (e)   "Hazardous
Substance Condition" shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance as defined
in Paragraph 6.2(a), in, on, or under the Premises. 




        9.2   Premises
Partial Damage—Insured Loss. If Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage
(but not Lessee's Trade Fixtures or Lessee-Owned Alterations and Utility Installations) an soon as reasonably possible and this Lease shall continue in full force and effect. In the event, however,
that there is a shortage of insurance proceeds and such shortage is due to the fact that, by reason of the unique nature of the improvements in the Premises, full replacement cost insurance coverage
was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof, within ten (10) days following receipt of written notice of such shortage and request therefor. If Lessor receives
said funds or adequate assurance thereof within said ten (10) day period, Lessor shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within said period, Lessor may nevertheless elect by written notice to Lessor within ten (10) days thereafter to make such restoration and repair
as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and effect. If Lessor does not receive such funds or assurance within
such ten (10) day period, and if Lessor does not so elect to restore and repair, then this Lease shall terminate sixty (60) days following the occurrence of the damage or destruction.
Unless otherwise agreed, Lessee shall in no event have any right to reimbursement from Lessor for any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due
to flood or earthquake shall be subject to Paragraph 9.3 rather than Paragraph 9.2, notwithstanding that there may be some insurance coverage, but the not proceeds of any such insurance
shall be made available for the repairs if made by either Party. 


        9.3   Partial
Damage—Uninsured Loss. If Premises Partial Damage that is not an Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in which
event Lessee shall make the repairs at Lessee's expense and this Lease shall continue in full force and effect), Lessor may at Lessor's option, either (i) repair such damage as soon as
reasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect, or (ii) give written notice to Lessee within thirty (30) days after receipt by
Lessor of knowledge of the occurrence of such damage of Lessor's desire to terminate this Lease as of the date sixty (60) days following the date at such notice. In the event Lessor elects to
give such notice of Lessor's intention to terminate this Lease, Lessee shall have the right within ten (10) days after the receipt of such notice to give written notice to Lessor of Lessee's
commitment to pay for the repair of such damage totally at Lessee's expense and without reimbursement from Lessor. Lessee shall provide Lessor with the required funds or satisfactory assurance thereof
within thirty (30) days following such commitment from Lessee. In such event this Lease shall continue in full force and effect, and Lessor shall proceed to make such repairs as soon as
reasonably possible after the required funds are available. If Lessee does not give such notice and provide the funds or assurance thereof within the times specified above, this Lease shall terminate
as of the date of the occurrence of such damages. 


        9.4   Total
Destruction. Notwithstanding any other provision hereof, if Premises Total Destruction occurs (including any destruction required by any authorized public
authority), this Lease shall as of the date of such Premises Total Destruction, whether or not the damage or destruction is an Insured Loss or was caused by a negligent or willful act of Lessee. In
the event, however, that the damage or destruction was caused by Lessee, Lessor shall have the right to recover Lessor's damages from Lessee except as released and waived in Paragraph 9.7. 



        9.5   Damage
Near End of Term. If at any time during the last six (6) months of the term of this Lease there is damage for which the cost to repair exceeds two month's
Base Rent, whether or not an 


14





 



Insured
Loss, either party may terminate this Lease effective sixty (60) days following the date or occurrence of such damage by giving written notice to the other party of its election to do
so within thirty (30) days after the date of occurrence of such damage. Provided, however, if Lessee at that time has an exercisable option to extend this Lease or to purchase the Premises,
then Lessee may preserve this Lease by (a) exercising such option, and (b) providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the
repairs on or before the earlier of (i) the date which is ten (10) days after Lessee's receipt of Lessor's written notice purporting to terminate this Lease, or (ii) the day prior
to the date upon which such option expires. If Lessee duly exercises such option during such period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance
proceeds, Lessor shall, at Lessor's expense repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee falls to exercise such option and
provide such funds or assurance during such period, then this Lease shall terminate as of the date set forth in the first sentence of this Paragraph 9.5. 


        9.6   Abatement
of Rent; Lessee's Remedies. 



        (a)   In
the event of (i) Premises Partial Damage or (ii) Hazardous Substance Condition for which Lessee is not legally responsible, the Base Rent, Common Area
Operating Expenses and other charges, if any, payable by Lessee hereunder for the period during which such damage or condition, its repair, remediation or restoration continues, shall be abated in
proportion to the degree to which Lessee's use of the Premises is impaired. Except for abatement of Base Rent, Common Area Operating Expenses and other charges, if any, as aforesaid, all other
obligations of Lessee hereunder shall be performed by Lessee, and Lessee shall have no claim against Lessor for any damage suffered by reason of any such damage, destruction, repair, remediation or
restoration. *INSERT 9.6(a) 


        (b)   If
Lessor shall be obligated to repair or restore the Premises under the provisions of this Paragraph 9 and shall not commence, in a substantial and meaningful
way, the repair or restoration of the Premises within ninety (90) days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give
written notice to Lessor and to any Lenders of which Lessee has actual notice of Lessee's election to terminate this Lease on a date not less than sixty (60) days following the giving of such
notice. If Lessee gives such notice to Lessor and such Lenders and such repair or restoration is not commenced within thirty (30) days after receipt of such notice, this Lease shall terminate
as of the date specified in said notice. If Lessor or a Lender commences the repair or restoration of the Premises within thirty (30) days after the receipt of such notice, this Lease shall
continue in full force and effect. "Commence" as used in this Paragraph 9.6 shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the
actual work on the Premises, whichever occurs first. *INSERT 9.6(b) 




        9.7   Hazardous
Substance Conditions. If a Hazardous Substance Condition occurs, unless Lessee is legally responsible therefor (in which case Lessee shall make the
investigation and remediation thereof required by Applicable Requirements and this Lease shall continue in full force and effect but subject to Lessor's rights under Paragraph 6.2(c) and
Paragraph 13). Lessor may at Lessor's option either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor's expense. In
which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to investigate and remediate such condition exceeds twelve (12) times the then monthly Base
Rent or $100,000 whichever is greater, give written notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition of
Lessor's desire to terminate the Lease as of the date sixty (60) days following the date of such notice. In the event Lessor elects to give such notice of Lessor's intention to terminate this
Lease, Lessee shall have the right within ten (10) days after the receipt of such notice [*INSERT 9.7] to give written notice to Lessor of Lessee's commitment to pay for
the excess cost of (a) investigation and 


15





 

remediation
of such Hazardous Substance Condition to the extent required by Applicable Requirements, over (b) an amount equal to twelve (12) times the then monthly Base Rent or $100,000,
whichever is greater. Lessee shall provide Lessor with the funds required of Lessee or satisfactory assurance thereof within thirty (30) days following said commitment by Lessee. In such event
this Lease shall continue in full force and effect and Lessor shall proceed to make such investigation and remediation as soon as reasonably possible after the required funds are available. If Lessee
does not give such notice and provide the required funds or assurance thereof within the time period specified above, this Lease shall terminate as of the date specified in Lessor's notice of
termination. 


        Termination—Advance
Payments. Upon termination of this Lease pursuant to this Paragraph 9, Lessor shall return to Lessee any advance payment made by Lessee to Lessor
and so much of Lessee's Security Deposit as has not been, or is not then required to be, used by Lessor under the terms of this Lease. 



        9.8   Waiver
of Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the effect of any damage to or destruction of the Premises and the Building with
respect to the termination of this Lease and hereby waive the provisions of any present or future statute to the extent it is inconsistent herewith. 


10.    Real
Property Taxes. 


        10.1 Payment
of Taxes. Lessor shall pay the Real Property Taxes, as defined in Paragraph 10.2, applicable to the Industrial Center, and except as otherwise provided
in Paragraph 10.3, any such amounts shall be included in the calculation Base Year Common Area Operating Expenses in accordance with the provision of Paragraph 4.2. 



        10.2 Real
Property Tax Definition. As used herein, the term "Real Property Taxes" shall include any form of real estate tax or assessment, general, special, ordinary or
extraordinary, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income or estate taxes) imposed upon the Industrial Center by any
authority having the direct or indirect power to tax, including any city, state or federal government, or any school, agricultural, sanitary, fire, street drainage, or other improvement district
thereof, levied against any legal or equitable interest of Lessor in the Industrial Center or any portion thereof, Lessor's right to rent or other income therefrom, and/or Lessor's business of leasing
the Premises. The term "Real Property Taxes" shall also include, any tax, fee, levy, assessment or charge, or any increase therein, imposed by reason of events occurring, or changes in Applicable Law
taking effect, during the term of this Lease, including but not limited to a change in the ownership of the Industrial Center or in the improvements thereon, the execution of this Lease, or any
modification, amendment or transfer thereof, and whether or not contemplated by the Parties. In calculating Real Property Taxes for any calendar year, the Real Property Taxes for any real estate tax
year shall be included in the calculation of Real Property Taxes for such calendar year based upon the number of days which such calendar year and tax year have in common. *INSERT 10.2 



        10.3 Additional
Improvements. Common Area Operating Expenses shall not include Real Property Taxes specified in the tax assessor's records and work sheets as being caused by
additional improvements placed upon the Industrial Center by other lessees or by Lessor for the exclusive enjoyment of such other lessees. Notwithstanding Paragraph 10.1 hereof, Lessee shall,
however, pay to Lessor at the time Lessee's share of any increase in Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property Taxes if
assessed solely by reason of Alterations, Trade Fixtures or Utility Installations placed upon the Premises by Lessee or at Lessee's request. 



        10.4 Joint
Assessment. It the Building is not separately assessed, Real Property Taxes allocated to the Building shall be an equitable proportion of the Real Property Taxes
for all of the land and 


16





 



improvements
included within the tax parcel assessed, such proportion to be determined by Lessor from the respective valuations assigned in the assessor's work sheets or such other information as may
be reasonably available. Lessor's reasonable determination thereof, in good faith, shall be conclusive. 



        10.5 Lessee's
Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee-Owned Alterations and Utility Installations, Trade
Fixtures, furnishings, equipment and all personal property of Lessee contained in the Premises or stored within the Industrial Center. When possible, Lessee shall cause its Lessee-Owned Alterations
and Utility Installations, Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. It any of Lessee's said
property shall be assessed with Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee's property within ten (10) days after receipt of a written statement setting
forth the taxes applicable to Lessee's property. 


11.    Utilities.
Lessee shall pay directly for all utilities and services separately-metered to the Premises, including but not limited to electricity, telephone, security, gas and cleaning
of the Premises, together with any taxes thereon. If any such utilities or services are not separately metered to the Premises or separately billed to the Premises, Lessee shall pay to Lessor a
reasonable proportion as part of the Common Area Operating Expenses subject to Paragraph 51. 


12.    Assignment
and Subletting 


        12.1 Lessor's
Consent Required. 



        (a)   Lessee
shall not voluntarily or by operation of law assign, transfer, mortgage or otherwise transfer or encumber (collectively, "assign") or sublet all or any part of
Lessee's interest in this Lease or in the Premises without Lessor's prior written consent given under and subject to the terms of Paragraph 36. 


        (b)   Except
for a Permitted Transfer (as defined below) a change in the control of the Lessee shall constitute an assignment requiring Lessor's consent. *INSERT 12.1(b). 


        (c)   The
involvement of Lessee or its assets in any transaction, or series of transactions (by way of merger, sale, acquisition, financing, refinancing, transfer, leveraged
buy-out or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessee's assets occurs, which results or will result in a reduction of the Net Worth of Lessee,
as hereinafter defined, by an amount equal to or greater than twenty-five percent (25%) of such Net Worth of Lessee as it was represented to Lessor at the time of full execution and
delivery of this Lease or at the time of the most recent assignment to which Lessor has consented, or as it exists immediately prior to said transaction or transactions constituting such reduction, at
whichever time said Net Worth of Lessee was or is greater, shall be considered an assignment of this Lease by Lessee to which Lessor may reasonably withhold its consent "Net Worth of Lessee" for
purposes of this Lease shall be the net worth of Lessee (excluding any Guarantors) established under generally accepted accounting principles consistently applied. 



        (d)   Except
for a Permitted Transfer an assignment or subletting of Lessee's interest in this Lease without Lessor's specific prior written consent shall, at Lessor's option,
be a Default curable after notice per Paragraph 13.1, or a non-curable Breach without the necessity of any notice and grace period. If Lessor elects to treat such unconsented to
assignment or subletting as a non-curable Breach, Lessor shall have the right to either: (i) terminate this Lease, or (ii) upon thirty (30) days' written notice
("Lessor's Notice"), increase the monthly Base Rent for the Premises to the greater of the then fair market rental value of the Premises, as reasonably determined by Lessor, or one hundred ten percent
(110%) of the Base Rent then in effect. Pending determination of the new fair market rental value, if disputed by Lessee, Lessee shall pay the amount set forth in Lessor's Notice, with any overpayment
credited against the next installment(s) of Base Rent coming due, and any underpayment for the period retroactively to the 



17





 




effective
date of the adjustment being due and payable immediately upon the determination thereof. Further, in the event of such Breach and rental adjustment (i) the purchase price of any
option to purchase the Premises held by Lessee shall be subject to similar adjustment to the then fair market value as reasonably determined by Lessor (without the Lease being considered an
encumbrance or any deduction for depreciation or obsolescence, and considering the Premises at its highest and best use and in good condition) or one hundred ten percent (110%) of the price previously
in effect, (ii) any index-oriented rental or price adjustment formulas contained in this Lease shall be adjusted to require that the base index be determined with reference to the index
applicable to the time of such adjustment, and (iii) any fixed rental adjustments scheduled during the remainder of the Lease term shall be increased in the same ratio as the new rental bears
to the Base Rent in effect immediately prior to the adjustment specified in Lessor's Notice. 


        (e)   Lessee's
remedy for any breach of this Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief. 




        12.2 Terms
and Conditions Applicable to Assignment and Subletting. 



        (a)   Regardless
of Lessor's consent, any assignment or subletting shall not (i) be effective without the express written assumption by such assignee or sublessee of
the obligations of Lessee under this Lease, (ii) release Lessee of any obligations hereunder, nor (iii) alter the primary liability of Lessee for the payment of Base Rent and other sums
due Lessor hereunder or for the performance of any other obligations to be performed by Lessee under this Lease. 



        (b)   Lessor
may accept any rent or performance of Lessee's obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in
the approval or disapproval of such assignment nor the acceptance of any rent for performance shall constitute a waiver or estoppel of Lessor's right to exercise its remedies for the Default or Breach
by Lessee of any of the terms, covenants or conditions of this Lease. 


        (c)   The
consent of Lessor to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting by Lessee, or to any subsequent or
successive assignment or subletting by the assignee or sublessee. However, Lessor may consent to subsequent sublettings and assignments of the sublease or any amendments or modifications thereto
without notifying Lessee or anyone else liable under this Lease or the sublease and without obtaining their consent, and such action shall not relieve such persons from liability under this Lease or
the sublease. 


        (d)   In
the event of any Default or Breach of Lessee's obligation under this Lease. Lessor may proceed directly against Lessee, any Guarantors or anyone also responsible for
the performance of the Lessee's obligations under this Lease, including any sublessee, without first exhausting Lessor's remedies against any other person or entity responsible, therefor to Lessor. or
any security hold by Lessor. 


        (e)   Each
request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Lessor's determination as to the financial and
operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modification of the Premises. Lessee agrees to
provide Lessor with such other or additional information and/or documentation as may be reasonably requested by Lessor. 


        (f)    Any
assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment or entering into such sublease, be deemed, for the benefit of Lessor, to
have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease,
other than such obligations as are contrary to or inconsistent with provisions of an assignment of sublease to which Lessor has specifically consented in writing. 



18





 





        12.3 Additional
Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises
and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein: 



        (a)   Lessee
hereby assigns and transfers to Lessor all of Lessee's interest in all rentals and income arising from any sublease of all or a portion of the Premises heretofore
or hereafter made by Lessee, and Lessor may called such rent and income and apply same toward Lessee's obligations under this Lease; provided, however, that until a Breach (as defined in
Paragraph 13.1) shall occur in the performance of Lessee's obligations under this Lease, Lessee may, except as otherwise provided in this Lease, receive, collect and enjoy the rents accruing
under such sublease. Lessor shall not, by reason of the foregoing provision or any other assignment of such sublease to Lessor, nor by reason of the collection of the rents from a sublessee, be deemed
liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee's obligations to such sublessee under such Sublease. Lessee hereby irrevocably authorizes and directs any
such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee's obligations under this Lease, to pay to Lessor the rents and other charges due
and to became due under the sublease. Subleases shall rely upon any such statement and request from Lessor and shall pay such rents and other charges to Lessor without any obligation or right to
inquire as to whether such Breach exists and notwithstanding any notes from or claim from Lessee to the contrary. Lessee shall have no right or claim against such subleases, or, until the Breach has
been cured, against Lessor, for any such rents and other charges so paid by said subleases to Lessor. 



        (b)   In
the event of a Breach by Lessee in the performance of its obligations under this Lease, Lessor, at its option and without any obligation to do so, may require any
sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such
sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any other prior defaults or breaches of such sublessor
under such sublease. 


        (d)   No
sublessee under a sublease approved by Lessor shall further assign or sublet all or any part of the Premises without Lessor's prior written consent. 



        (e)   Lessor
shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace
period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee. 




13.    Default;
Breach; Remedies. 


        13.1 Default;
Breach. Lessor and Lessee agree that if an attorney is consulted by Lessor in connection with a Lessee Default or Breach (as hereinafter defined), $350.00 is a
reasonable maximum sum per such occurrence for legal services and costs in the preparation and service of a notice of Default, and that Lessor may include the cost of such services and costs in said
notice as rent due and payable to cure said default. A "Default" by Lessee is defined as a failure by Lessee to observe, comply with or perform any of the terms, covenants, conditions or rules
applicable to Lessee under this Lease. A "Breach" by Lessee is defined as the occurrence of any one or more of the following Defaults, and, where a grace period for cure after notice is specified
herein, the failure by Lessee to cure such Default prior to the expiration of the applicable grace period, and shall entitle Lessor to pursue the remedies set forth in Paragraphs 13.2 and/or 13.3: 



        (a)   The
vacating of the Premises without the intention to reoccupy same, or the abandonment of the Premises. 



19





 

        (b)   Except
as expressly otherwise provided in this Lease, the failure by Lessee to make any payment of Base Rent, Lessee's Share of Increases in Common Area Operating
Expenses, or any other monetary payment required to be made by Lessee hereunder as and when due, the failure by Lessee to provide Lessor with reasonable evidence of insurance or surety bond required
under this Lease, or the failure of Lessee to fulfill any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of five
(5) business days following written notice thereof by or on behalf of Lessor to Lessee. 


        (c)   Except
as expressly otherwise provided in this Lease, the failure by Lessee to provide Lessor with reasonable written evidence (in duty executed original form, if
applicable) of (i) compliance with Applicable Requirements per Paragraph 6.3, (ii) the inspection, maintenance and service contracts required under Paragraph 7.1(b),
(iii) the rescission of an unauthorized assignment or subletting per Paragraph 12.1, (iv) a Tenancy Statement per Paragraphs 16 or 37, (v) the subordination or
non-subordination of this Lease per Paragraph 30, (vi) the guaranty of the performance of Lessee's obligations under this Lease if required under Paragraphs 1.11 and 37,
(vii) the execution of any document requested under Paragraph 42 (easements), or (viii) any other documentation or information which Lessor may reasonably require of Lessee under
the terms at this lease, where any such failure continues for a period of ten (10) days following written notice by or on behalf of Lessor to Lessee. 


        (d)   A
Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof that are to be observed,
compiled with or performed by Lessee, other than those described in Subparagraphs 13.1(a), (b) or (c), above, where such Default continues for a period of thirty (30) days after written
notice thereof by or on behalf of Lessor to Lessee; provided, however, that if the nature of Lessee's Default is such that more than thirty (30) days are reasonably required for its cure, then
it shall not be deemed to be a Breach of this Lease by Lessee
if Lessee commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion. 


        (e)   The
occurrence of any of the following events: (i) the making by Lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code Section 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed
within sixty (60) days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this
Lease, where possession is not restored to Lessee within thirty (30) days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where such seizure is not discharged within thirty (30) days; provided, however, in the event that any provision of this Subparagraph 13.1(e)
is contrary to any applicable law, such provision shall be of no force or effect, and shall not affect the validity of the remaining provisions. 



        (f)    The
discovery by Lessor that any financial statement of Lessee or of any Guarantor, given to Lessor by Lessee or any Guarantor, was materially false. 


        (g)   If
the performance of Lessee's obligations under this Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's liability
with respect to this Lease other then in accordance with the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a bankruptcy filing, (iv) a Guarantor's
refusal to honor the guaranty, or (v) a Guarantor's breach of its guaranty obligation on an anticipatory breach basis, and Lessee's failure, within sixty (60) days following written
notice by or on behalf of Lessor to Lessee of any such event, to provide Lessor with written alternative assurances of security, which, when coupled with the then existing resources of Lessee, equals
or exceeds the combined financial resources of Lessee and the Guarantors that existed at the time of execution of this Lease. 



20





 





        13.2 Remedies.
If Lessee fails to perform any affirmative duty or obligation of Lessee under this Lease, within ten (10) days after written notice to Lessee (or in
case of an emergency, without notice), Lessor may at its option (but without obligation to do so), perform such duty or obligation on Lessee's behalf, including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. The costs and expenses of any such performance by Lessor shall be due and payable by Lessee to Lessor
upon invoice therefor. If any check given to Lessor by Lessee shall not be honored by the bank upon which it is drawn, Lessor, at its own option, may require all future payments to be made under this
Lease by Lessee to be made only by cashier's check *INSERT 13.2. In the event of a Breach of this Lease by Lessee (as defined in Paragraph 13.1), with or without further notice or demand, and
without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach, Lessor may: 



        (a)   Terminate
Lessee's right to possession of the Premises by any lawful means, in which case this Lease and the term hereof shall terminate and Lessee shall immediately
surrender possession of the Premises to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the worth at the time of the award of the unpaid rent which had been earned at
the time of termination; (ii) 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 that the Lessee proves could have been reasonably avoided; (iii) 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 exceed the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment
proximately caused by the Lessee's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the
cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys' fees, and that portion of any leasing
commission paid by Lessor in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provision (iii) of the
immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco or the Federal Reserve Bank District in which the Premises
are located at the time of award plus one percent (1%). Efforts by Lessor to mitigate damages caused by Lessee's Default or Breach of this Lease shall not waive Lessor's right to recover damages under
this Paragraph 13.2. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding the unpaid rent and
damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit for such rent and/or damages. If a notice and grace period required under
Subparagraph 13.1(b), (c) or (d) was not previously given, a notice to pay rent or quit or to perform or quit, as the case may be, given to Lessee under any statute authorizing the
forfeiture of leases for unlawful detainer shall also constitute the applicable notice for grace period purposes required by Subparagraph 13.1(b),(c) or (d). In such case, the applicable grace period
under the unlawful detainer status shall run concurrently after the one such statutory notice, and the failure of Lessee to cure the Default within the greater of the two (2) such grace periods
shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute. 


        (b)   Continue
the Lease and Lessee's right to possession in effect (in California under California Civil Code Section 1951.4) after Lessee's Breach and recover the
rent as it becomes due, provided Lessee has the right to sublet or assign, subject only to reasonable limitations. Lessor and Lessee agree that the limitations on assignment and subletting in this
Lease are reasonable. Acts of maintenance or preservation, efforts to relet the Premises, or the appointment of a receiver to protect the Lessor's interest under this Lease, shall not constitute a
termination of the Lessee's right to possession. 



21





 




        (c)   Pursue
any other remedy now or hereafter available to Lessor under the laws or judicial decisions of the state wherein the Premises are located. 



        (d)   The
expiration or termination of this Lease and/or the termination of Lessee's right to possession shall not relieve Lessee from liability under any indemnity provisions
at this Lease as to matters occurring or accruing during the term hereof or by reason of Lessee's occupancy of the Premises. 




        13.3 Inducement
Recapture in Event of Breach. Any agreement by Lessor for free or abated rent or other charges applicable to the Premises, or the giving or paying by Lessor
to or for Lessee of any cash or other bonus, inducement or consideration for Lessee's entering into this Lease, all of which conditions are hereinafter referred to as "Inducement Provisions" shall be
deemed conditioned upon Lessee's full and faithful performance of all of terms, covenants and conditions of this Lease to be performed or observed by Lessee during the term hereof as the same may be
extended. Upon the occurrence of a Breach (as defined in Paragraph 13.1) of this Lease by Lessee, any such Inducement Provision shall automatically be deemed deleted from this Lease and of
further force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated, given or paid by Lessor under such an Inducement Provision shall be immediately due and
payable by Lessee to Lessor, and recoverable by Lessor, as additional rent due under this Lease, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or the
cure of the Breach which initiated the operation of this Paragraph 13.3 Shall be deemed a waiver by Lessor of the provisions of this Paragraph 13.3 unless specifically so stated in
writing by Lessor at the time at such acceptance. 


        13.4 Late
Charges. Lessee hereby acknowledges that late payment by Lessee to Lessor of rent and other sums due hereunder will cause Lessor incur costs not contemplated by
this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, process and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or dead of trust covering the Premises. Accordingly, if any installment of rent or other sum due from Lessee shall not be received by Lessor or
Lessor's designee within ten (10) days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a late charge equal to six percent (6%) of
such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of late payment by Lessee. Acceptance of such
late charge by Lessor shall in no event constitute a waiver of Lessee's Default or Breach with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, three (3) consecutive installments of Base Rent, then notwithstanding Paragraph 4.1 or
any other provision of this Lease to the contrary, Base Rent shall, Lessor's option, become due and payable quarterly in advance. 



        13.5 Breach
by Lessor. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by
Lessor. For purposes of this Paragraph 13.5, a reasonable time shall in no event be less than thirty (30) days after receipt by Lessor and by any Lender(s) whose name and address shall
have been furnished to Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessor's
obligation is such that more than thirty (30) days after such notice are reasonably required for its performance, then Lessor shall not be in breach of this Lease if performance is commenced
within such thirty (30) day period and thereafter diligently pursued to completion. 


14.    Condemnation.
If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (all of which are herein called
"condemnation"), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than ten percent (10%) of the
floor 


22





 



area
of the Premises, or more than twenty-five percent (25%) of the portion of the Common Areas designated for Lessee's parking, is taken by condemnation, Lessee may, at Lessee's option,
to be exercised in writing within ten (10) days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within ten (10) days after the
condemning authority shall have taken possession, terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, the Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in the same proportion as the rentable floor area of
the Premises taken bears to the total rentable floor area of the Premises. No reduction of Base Rent shall occur if the condemnation does not apply to any portion of the Premises. Any award for the
taking of all or any part of the Premises under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Lessor, whether such award shall be
made as compensation for diminution of value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that Lessee shall be entitled to any compensation, separately
awarded to Lessee for Lessee's relocation expenses and/or loss of Lessee's Trade Fixtures. In the event that this Lease is not terminated by reason of such condemnation, Lessor shall to the extent of
its not severance damages received, over and above Lessee's Share of the legal and other expenses incurred by Lessor in the condemnation matter, repair any damage to the Premises caused by such
condemnation authority. Lessee shall be responsible for the payment of any amount in excess of such net severance damages required to complete such repair. 



15.    Brokers'
Fees. 


        15.1 Procuring
Cause. The Broker(s) named in Paragraph 1.10 is/are the procuring cause of this Lease. 


        15.2 Additional
Terms. Unless Lessor and Broker(s) have otherwise agreed in writing, Lessor agrees that: (a) if Lessee exercises any Option (as defined in
Paragraph 39.1) granted under this Lease or any Option subsequently granted, or (b) if Lessee acquires any rights to the Premises or other premises in which Lessor has an interest or
(c) if Lessee remains in possession of the Premises with the consent of Lessor after the expiration of the term at this Lease after having failed to exercise an Option, or (d) if said
Brokers are this procuring cause of any other lease or sale entered into between the Parties pertaining to the Premises and/or any adjacent property in which Lessor has an interest or (e) if
Base Rent is increased, whether by agreement or operation of an escalation clause herein, then as to any of said transactions, Lessor shall pay said Broker(s) a fee in accordance with the schedule of
said Broker(s) in effect at the time of the execution of this Lease. 


        15.3 Assumption
of Obligations. Any buyer or transferee of Lessor's interest in this Lease, whether such transfer is by agreement or by operation of law, shall be deemed to
have assumed Lessor's obligation under this Paragraph 15. Each Broker shall be an intended third party beneficiary of the provisions of Paragraph 1.10 and of this Paragraph 15 to
the extent of its interest in any commission arising from this Lease and may enforce that right directly against Lessor and its successors. 


        15.4 Representations
and Warranties. Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker or finder other than
as named in Paragraph 1.10(a) in connection with the negotiation of this Lease and/or the consummation of the transaction contemplated hereby, and that no broker or other person, firm or entity
other than said named Broker(s) is entitled to any commission or finder's fee in connection with said transaction. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the
other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the
Indemnifying Party, including any costs, expenses, and/or attorneys' fees reasonably incurred with respect thereto. 


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16.    Tenancy
and Financial Statements. 


        16.1 Tenancy
Statement. Each Party (as "Responding Party") shall within ten (10 days after written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in a commercially-reasonable form requesting such factual information, confirmation and/or statements as may be reasonably
requested by the Requesting Party. 


        16.2 Financial
Statement. If Lessor desires to finance, refinance, or sell the Premises or the Building, or any part thereof, Lessee and all Guarantors shall deliver to any
potential lender or purchaser designated by Lessor such unaudited financial statements of Lessee and such Guarantors as may be reasonably required by such lender or purchaser, including but not
limited to Lessee's financial statements for the past three (3) years. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used
only for the purposes herein set forth. 


17.    Lessor's
Liability. The term "Lessor" as used herein shall mean the owner or owners at the time in question of the fee title to the Premises. In the event of a transfer of Lessor's
title or interest in the Premises or in this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15.3, upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with
respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to be performed by the
Lessor shall be binding only upon the Lessor as hereinabove defined. *INSERT 17 


18.    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. 


19.    Interest
on Past-Due Obligations. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor within ten (10) days following the date
on which it was due, shall bear interest from the date due at the prime rate charged by the largest state chartered bank in the state in which the Premises are located plus four percent (4%) per
annum, but not exceeding the maximum rate allowed by law, in addition to the potential late charge provided for in Paragraph 13.4. 



20.    Time
of Essence. Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease. 


21.    Rent
Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease are deemed to be rent. 


22.    No
Prior or other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or
contemporaneous agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to the Brokers that it has made, and is relying solely upon, its own investigation as to
the nature, quality, character and financial responsibility of the other Party to this Lease and as to the nature, quality and character of the Premises. Brokers have no responsibility with respect
thereto or with respect to any default or breach hereof by either Party. Each Broker shall be an intended third party beneficiary of the provisions of this Paragraph 22. 


23.    Notices.



        23.1 Notice
Requirements. All notices required or permitted by this Lease shall be in writing and may be delivered in person (by hand or by messenger or courier service) or
may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission during normal business hours, and shall be deemed
sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for delivery or mailing
of notice purposes. Either Party may by written notice to 


24





 



the
other specify a different address for notice purposes, except that upon Lessee's taking possession of the Premises, the Premises shall constitute Lessee's address for the purpose of mailing or
delivering notices to Lessee. A copy of all notices required or permitted to be given to Lessor hereunder shall be concurrently transmitted to such party or parties at such addresses as Lessor may
from time to time hereafter designate by written notice to Lessee. 


        23.2 Date
of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or
if no delivery date is shown, the postmark thereon. If sent by regular mail, the notice shall be deemed given forty-eight (48) hours after the same is addressed as required herein and mailed
with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantees next day delivery shall be deemed given twenty-four (24) hours after
delivery of the same to the United States Postal Service or courier. If any notice is transmitted by facsimile transmission or similar means, the same shall be deemed served or delivered upon
telephone or facsimile confirmation of receipt of the transmission thereof, provided a copy is also delivered via delivery or mail. If notice is received on a Saturday or a Sunday or a legal holiday,
it shall be deemed received on the next business day. 


24.    Waivers.
No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or
of any subsequent Default or Breach by Lessee of the same or any other term, covenant or condition hereof. Lessor's consent to, or approval of, any such act shall not be deemed to render unnecessary
the obtaining of Lessor's consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease
requiring such consent. Regardless of Lessor's knowledge of a Default or Breach at the time of accepting rent, the acceptance of rent by Lessor shall not be a waiver of any Default or Breach by Lessee
of any provision hereof. Any payment given Lessor by Lessee may be accepted by Lessor on account of moneys or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee
in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such
payment. 


25.    Recording.
Either Lessor or Lessee shall, upon request of the other, execute, acknowledge and deliver to the other a short form memorandum of the Lease for recording purposes. The
Party requesting recordation shall be responsible for payment of any fees or taxes applicable thereto. 



26.    No
Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or earlier termination of this Lease. In the event that Lessee
holds over in violation of this Paragraph 26 then the Base Rent payable from and after the time of the expiration or earlier termination of this Lease shall be increased to one hundred fifty
percent (150%) of the Base Rent applicable during the month immediately preceding such expiration or earlier termination and shall accrue on a daily basis for the first 30 days of such holdover
tenancy. Nothing contained herein shall be construed as a consent by Lessor to any holding over by Lessee. 


27.    Cumulative
Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with other remedies and law or in equity. 



28.    Covenants
and Conditions. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. 


29.    Binding
Effect; Choice of Law. This Lease shall be binding upon the Parties, their personal representatives, successors and assigns and be governed by the laws of the State in which
the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located. 


25





 



30.    Subordination;
Attornment; Non-Disturbance. 


        30.1 Subordination.
This Lease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or
security device (collectively, "Security Device"), now or hereafter placed by Lessor upon the real property of which the Premises are a part, to any and all advances made on the security thereof, and
to all renewals, modifications, consolidations, replacements and extensions thereof. Lessee agrees that the Lenders holding any such Security Device shall have no duty, liability or obligation to
perform any of the obligations of Lessor under this Lease, but that in the event of Lessor's default with respect to any such obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default pursuant to Paragraph 13.5. If any Lender shall elect to have this Lease and/or any Option granted hereby superior to the
lien of its Security Device and shall give written notice thereof to Lessee, this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the
documentation or recordation thereof. 


        30.2 Attornment.
Subject to the non-disturbance provisions of Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and that in the event of such foreclosure, such new owner shall not: (i) be liable for any act or omission of any
prior lessor or with respect to events occurring prior to acquisition of ownership, (ii) be subject to any offsets or defenses which Lessee might have against any prior lessor, or
(iii) be bound by prepayment of more than one month's rent. 


        30.3 Non-Disturbance.
With respect to Security Devices entered into by Lessor after the execution of this lease, Lessee's subordination of this Lease shall be
subject to receiving assurance (a "non-disturbance agreement") from the Lender that Lessee's possession and this Lease, including any options to extend the term hereof, will not be
disturbed so long as Lessee is not in Breach hereof and attorns to the record owner of the Premises. 



        30.4 Self-Executing.
The agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however,
that upon written request from Lessor or a Lender in connection with a sale, financing or refinancing of Premises, Lessee and Lessor shall execute such further writings as may be reasonably required
to separately document any such subordination or non-subordination, attornment and/or non-disturbance agreement as is provided for herein. 


31.    Attorneys'
Fees. If any Party or Broker brings an action or proceeding to enforce the terms hereof or declare rights hereunder, the Prevailing Party (as hereafter defined) in any such
proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a separate suit" whether or not such action or
proceeding is pursued to decision or judgment. The term "Prevailing Party" shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may
be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys' fee award shall not be computed in accordance with any court
fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred. Lessor shall be entitled to attorneys' fees, costs and expenses incurred in preparation and service of
notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach. Broker(s) shall be intended
third party beneficiaries of this Paragraph 31. 


32.    Lessor's
Access; Showing Premises; Repairs. Lessor and Lessor's agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise at reasonable
times for the purpose of showing the same to prospective purchasers, lenders, or lessees, and making such alterations, repairs, improvements or additions to the Premises or to the Building, as Lessor
may reasonably deem necessary. Lessor may at any time place on or about the Premises or Building any ordinary "For Sale" signs and Lessor may at any time during the last one hundred eighty
(180) days of 


26





 



the
term hereof place on or about the Premises any ordinary "For Lease" signs. All such activities of Lessor shall be without abatement of rent or liability to Lessee. 


33.    Auctions.
Lessee shall not conduct, nor permit to be conducted, either voluntarily or involuntarily, any auction upon the Premises without first having obtained Lessor's prior written
consent. Notwithstanding anything to the contrary in this Lease, Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to grant such consent. 


34.    Signs.
Lessee shall not place any sign upon the exterior of the Premises or the Building, except that Lessee may, with Lessor's prior written consent, install (but not on the roof)
such signs as are reasonably required to advertise Lessee's own business so long as such signs are in a location designated by Lessor and comply with Applicable Requirements and the signage criteria,
established for the Industrial Center by Lessor. The installation of any sign on the Premises by or for Lessee shall be subject to the provisions of Paragraph 7 (Maintenance, Repairs, Utility
Installations, Trade Fixtures and Alterations). Unless otherwise expressly agreed herein, Lessor reserves all rights to the use of the roof of the Building, and the right to install advertising signs
on the Building, including the roof, which do not unreasonably interfere with the conduct of Lessee's business; Lessor shall be entitled to all revenues from such advertising signs. 



35.    Termination;
Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation
hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, Lessor shall, in the event of any such
surrender, termination or cancellation, have the option to continue any one or all of any existing subtenancies. Lessor's failure within ten (10) days following any such event to make a written
election to the contrary by written notes to the holder of any such lesser interest, shall constitute Lessor's election to have such event constitute the termination of such interest. 



36.    Consents. 



        (a)   Except
for Paragraph 33 hereof (Auctions) or as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other
Party, such consent shelf not be
unreasonably withheld or delayed. Lessor's actual reasonable costs and expenses (including but not limited to architects', attorneys', engineers' and other consultants' fees) incurred in the
consideration of, or response to, a request by Lessee for any Lessor consent pertaining to this Lease or the Premises, including but not limited to consents to an assignment a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee to Lessor upon receipt of an invoice and supporting documentation therefor. In addition to the deposit described in
Paragraph 12.2(a), Lessor may, as a condition to considering any such request by Lessee, require that Lessee deposit with Lessor an amount of money (in addition to the Security Deposit held
under Paragraph 5) reasonably calculated by Lessor to represent the cost Lessor will incur in considering and responding to Lessee's request. Any unused portion of said deposit shall be
refunded to Lessee without interest. Lessor's consent to any act, assignment of this Lease or subletting of the Premises by Lessee shall not constitute an acknowledgment that no Default or Breach by
Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such
consent. 


        (b)   All
conditions to Lessor's consent authorized by this Lease are acknowledged by Lessee as being reasonable. The failure to specify herein any particular condition to
Lessor's consent shall not preclude the impositions by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which
consent is being given. 



27





 





37.    Guarantor. 


        37.1 Form
of Guaranty. If there are to be any Guarantors of this Lease per Paragraph 1.11, the form of the guaranty to be executed by each such Guarantor shall be in
the form most recently published by the American Industrial Real Estate Association, and each such Guarantor shall have the same obligations as Lessee under this lease, including but not limited to
the obligation to provide the Tenancy Statement and information required in Paragraph 16. 


        37.2 Additional
Obligations of Guarantor. It shall constitute a Default of the Lease under this Lease if any such Guarantor fails or refuses, upon reasonable request by
Lessor to give: (a) evidence of the due execution of the guaranty called for by this Lease, including the authority of the Guarantor (and of the party signing on Guarantor's behalf) to obligate
such Guarantor on said guaranty, and resolution of its board of directors authorizing the making of such guaranty, together with a certificate of incumbency showing the signatures of the persons
authorized to sign on its behalf, (b) current financial statements of Guarantor as may from time to time be requested by Lessor, (c) a Tenancy Statement, or (d) written
confirmation that the guaranty is still in effect. 


38.    Quiet
Possession. Upon payment by Lessee of the rent for the Premises and the performance of all of the covenants, condition and provisions on Lessee's part to be observed and
performed under this
Lease, Lessee shall have quiet possession of the Premises for the entire term hereof subject to all of the provisions of this Lease. 


39.    Options.



        39.1 Definition.
As used in this Lease, the word "Option" has the following meaning: (a) the right to extend the term of this Lease or to renew this Lease or to
extend or renew any lease that Lessee has on other property of Lessor; (b) the right of first refusal to lease the Premises or the right of first offer to lease the Premises or the right of
first refusal to lease other property of Lessor or the right of first offer to lease other property of Lessor; (c) the right to purchase the Premises, or the right of first refusal to purchase
the Premises, or the right of first offer to purchase the Premises, or the right to purchase other property of Lessor, or the right of first refusal to purchase other property of Lessor, or the right
of first offer to purchase other property of Lessor. 


        39.2 Options
Personal to Original Lessee. Each Option granted to Lessee in this Lease is personal to the original Lessee named in Paragraph 1.1 hereof, and cannot be
voluntarily or involuntarily assigned or exercised by any person or entity other than said original Lessee while the original Lessee is in full and actual possession of the Premises and without the
intention of thereafter assigning or subletting. The Options, if any, herein granted to Lessee are not assignable, either as a part of an assignment of this Lease or separately or apart therefrom, and
no Option may be separated from this Lease in any manner, by reservation or otherwise. 


        39.3 Multiple
Options. In the event that Lessee has any multiple Options to extend or renew this Lease, a later option cannot be exercised unless the prior Options to extend
or renew this Lease have been validly exercised. 


        39.4 Effect
of Default on Options. 



        (a)   Lessee
shall have no right to exercise an Option, notwithstanding any provision in the grant of Option to the contrary; (i) during the period commencing with the
giving of any notice of Default under Paragraph 13.1 and continuing until the noticed Default is cured, or (ii) during the period of time any monetary obligation due Lessor from Lessee
is unpaid (without regard to whether notice thereof is given Lessee), or (iii) during the time Lessee is in Breach of this Lease, or (iv) in the event that Lessor has given to Lessee
three (3) or more notices of separate Defaults under Paragraph 13.1 during the twelve (12) month period immediately preceding the exercise of the Option, whether or not the
Defaults are cured. 



28





 

        (b)   The
period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee's inability to exercise an Option because of the
provisions of Paragraph 39.4(a) 


        (c)   All
rights of Lessee under the provisions of an Option shall terminate and be of no further force or effect, notwithstanding Lessee's due and timely exercise of the
Option, if, after such exercise and during the term of this Lease, (i) Lessee falls to pay to Lessor a monetary obligation of Lessee for a period of thirty (30) days after such
obligation becomes due (without any necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to Lessee three (3) or more notices of separate Defaults under
Paragraph 13.1 during any twelve (12) month period, whether or not the Defaults are cured, or (iii) if Lessee commits a Breach of this Lease. 




40.    Rules
and Regulations. Lessee agrees that it will abide by, and keep and observe all reasonable rules and regulations ("Rules and Regulations") which Lessor may make from time to time
for the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or tenants
of the Building and the Industrial Center and their Invitees. 


41.    Security
Measures. Lessee hereby acknowledges that the rental payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall
have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties. 


42.    Reservations.
Lessor reserves the right, from time to time, to grant, without the consent or joinder of Lessee, such easements, rights of way, utility raceways, and dedications that
Lessor deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights of way, utility raceways, dedications, maps and restrictions do not reasonably
interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement rights, dedication, map or restrictions. 


43.    Performance
Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against
whom the obligation to pay the money is asserted shall have the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment and there shall survive the right on
the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party
shall be entitled to recover such sum or to much thereof as it was not legally required to pay under the provisions of this Lease. 


44.    Authority.
If either Party hereto is a corporation, trust, or general or limited partnership, each individual executing this Lease on behalf of such entity represents and warrants
that he or she is duly authorized to execute and deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor, deliver to Lessor evidence satisfactory to Lessor of such authority. 



45.    Conflict.
Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions. 


46.    Offer.
Preparation of this Lease by either Lessor or Lessee or Lessor's agent or Lessee's agent and submission of same to Lessee or Lessor shall not be deemed an offer to Lease. This
Lease is not intended to be binding until executed and delivered by all Parties hereto. 


47.    Amendments.
This Lease may be modified only in writing, signed by the parties in interest at the time of the modification. The Parties shall amend this Lease from time to time to
reflect any adjustments that are made to the Base Rent or other rent payable under this Lease. As long as they do not materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable 


29





 



non-monetary
modifications to this Lease as may be reasonably required by an institutional insurance company or pension plan Lender in connection with the obtaining of normal financing or
refinancing of the property of which the Premises are a part. 


48.    Multiple
Parties. Except as otherwise expressly provided herein, if more than one person or entity is named herein as either Lessor or Lessee, the obligations of such multiple parties
shall be the joint and several responsibility of all persons or entities named herein as such Lessor or Lessee. 


ADDENDUM




	49.


	 	Base Rent:


	 	Months
	 	Rate
	 	Monthly Rental

	 	 	 	 	1—12	 	$1.20	 	$20,064.00 Full service plus utilities and janitorial to be paid for by tenant
	

 	
 	

 	
 	

13—24	
 	

$1.24	
 	

$20,733.00 Full service plus utilities and janitorial to be paid for by tenant
	

 	
 	

 	
 	

25—36	
 	

$1.28	
 	

$21,402.00 Full Service plus utilities and janitorial to be paid for by tenant
	

 	
 	

 	
 	

37—48	
 	

$1.32	
 	

$22,070.00 Full service plus utilities and janitorial to be paid for by tenant
	 	 	 	 	 	 	 	 	 



30





 


	

 	
 	

 	
 	

49—60	
 	

$1.36	
 	

$22,739.00 Full service plus utilities and janitorial to be paid for by tenant





50.    Tenant
Improvements: See attached item #50 addendum. Landlord shall commence the work of installing said handicapped elevator no later than August 1, 1999 and shall diligently
and promptly complete such work no later than December 1, 1999. In performing such work Landlord shall cause its contractors, subcontractors and agents to act reasonably and at such times as
will minimize any adverse effect on Tenant's use and occupancy of the premises, including, without limitation, performing any loud and disruptive work of construction after normal business hours. 


51.    Operating
Expenses. All operating expenses except for separately-metered utilities and janitorial, of the building are to be paid by the Landlord. Increases in building operating
expenses over a 1999 base year will be "passed through" to Tenant equal to its pro-rata share of the project not to exceed 8% per year increase over the previous calendar year in any
calendar year of the Lease Term. 


52.    Right
of First Refusal. During the term of this lease, should additional office space become available for lease on the ground floor of the building known as 10065 Old Grove Rd.,
Michael L. Hightower will notify NuVasive, Inc., in writing, 30 days prior to public notification of the space availability as well as the proposed lease rate. NuVasive, Inc. will
notify in writing, Michael L. Hightower within 10 days following written notification of additional space available, of it's intention to accept or reject the opportunity to lease the
additional available space. If NuVasive, Inc. chooses to reject the opportunity to lease additional office space within the building at 10065 Old Grove Rd., Michael L. Hightower will lease the
additional space to a lessee of his choosing at a lease rate not less than the lease rate proposed by Lessor to Lessee. 


LESSOR
AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE
PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE 1S EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES. 


IF
THIS LEASE BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR ATTORNEYS REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE THE CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF
ASBESTOS, UNDERGROUND STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKERS OR THEIR
CONTRACTORS, AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES: THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS IN A STATE OTHER THAN CALIFORNIA, AN ATTORNEY
FROM THE STATE WERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED. 


31





 

The
parties hereto have executed this Lease at the place and on the dates specified above their respective signatures. 



	Executed at:	 	San Diego, CA
	 	Executed at:	 	San Diego, California

	On:	 	7-13-99
	 	On:	 	7/13/99

	By LESSOR:	 	Michael L. Hightower	 	By LESSEE:	 	NuVasive, Inc.

a California Corporation
	
	 	

	/s/ Michael L. Hightower 7-13-99
	 	  

	By:	 	Michael L. Hightower
	 	By:	 	/s/ James McKenley

	Name Printed:	 	Michael L. Hightower
	 	Name Printed:	 	James T. McKinley

	Title:	 	Owner/Landlord
	 	Title:	 	President

	By:	 	  
	 	 	 	 	 	 
	By:	 	  
	 	 	 	 	 	 
	Name Printed:	 	  
	 	Name Printed:	 	  

	Title:	 	  
	 	Title:	 	President

	Address:	 	10065 Old Grove Road
	 	Address:	 	17560 Skyline Blvd.

	 	 	San Diego, CA 92131
	 	 	 	Woodside, CA 94062

	Telephone:	 	(619) 549-8633
	 	Telephone:	 	(650) 851-2181

	Facsimile:	 	  
	 	Facsimile:	 	(650) 851-8302





32







 
 

ADDENDUM NO. 1 TO STANDARD INDUSTRIAL/COMMERCIAL LEASE—
  MODIFIED NET
  
    BETWEEN
  
    MICHAEL L. HIGHTOWER
  
    AND
  
    NUVASIVE, INC., A CALIFORNIA CORPORATION    




        This Addendum No. 1 to Lease ("Lease Addendum") is attached to and made a part of the Lease between MICHAEL L. HIGHTOWER, as "Lessor," and
NUVASIVE, INC., a California corporation, as "Lessee," and constitutes additional covenants and agreements thereto as set forth in the Lease, with the covenants agreements contained herein to
prevail in the event of any conflicts between the covenants and agreements contained herein and those in the Lease. 



53.    Option
to Extend. 


        (a)   Lessee
shall have the option to extend the Term of this Lease for one (1) additional period of five (5) years (the "Option"). The period of the Option is
referred to herein as the "Option Term." Lessee shall have no right or interest to exercise the Option unless, not later than one hundred fifty (150) days prior to the end of the Original Term,
Lessee provides Lessor with (a) written notice of its exercise of the Option (the "Extension Notice"). Lessee shall have no right or interest to either exercise the Premises Option or the First
Offer Space Option unless: (a) no Event of Default on the part of Lessee under this Lease is then continuing under this Lease or the lease demising the First Offer Space, if applicable; and
(b) during the Term of the Lease, (i) Lessee has not filed for or sought protection under any bankruptcy statute, and (ii) Lessee has not failed to obtain a vacation from any
involuntary bankruptcy proceeding within one hundred twenty (120) days of such filing. Base Rent payable during the first year of the Option Term shall be an amount equal to "Market Rent" (as
defined in 53(b) below) All of the terms, covenants, conditions, provisions and agreements of the Lease shall apply to the Option, except that Lessee shall have no additional option to extend the
Term. Lessee's failure to exactly comply with any of the time or other requirements herein, shall cause the Option to automatically expire and, in such event, this Lease shall terminate upon the
expiration of the Original Term. 


        (b)   As
used herein, "Market Rent" shall mean the price that a ready and willing tenant would pay, at commencement of the Option Term, as monthly base rent to a ready and
willing Lessor if such office space were offered for lease on the open market for a reasonable period of time and be the sum of the fair market monthly rental rate per rentable square foot multiplied
by the rentable area of the Premises, determined as follows: (a) as mutually agreed by Lessor and Lessee within ten (10) days of Lessor's delivery to Lessee of Lessor's opinion of the
Market Rent for the Option Term ("Lessor Rent Notice", which shall be delivered to Lessee within ten (10) days of receipt of Lessee's written Extension Notice); or (b) in the event that
Lessor and Lessee are unable to so agree within such ten (10) day period, the Market Rent shall be determined by concurrent appraisals pursuant to Section 53(c) below. The Market Rent
shall be determined by considering (i) the highest and best use of the Premises, (ii) the duration of the Option Term, (iii) the quality and prestige of the Premises (as then
improved and maintained as required by the terms and conditions of this Lease), (iv) recent monthly rental rates for buildings of similar size and location, (v) anticipated CPI Index
changes during the Option Term; (vi) the condition and quality of comparable tenant improvements in buildings of similar quality and location, (vii) real estate leasing commissions in
the San Diego market, (viii) the Lessee's credit, and (x) all other relevant terms and conditions of this Lease. 


        (c)   Market Rent Appraisal Procedure. 



        (1)   If
Lessee rejects the Market Rent proposed by Lessor in Lessor's Rent Notice, Lessor and Lessee shall attempt to agree in good faith upon a single appraiser not later
than five (5) days after the Lessor receives notice of Lessee's rejection of Lessor's proposed Market Rent ("Lessee's Rejection Notice"), which date of receipt shall be within ten
(10) days of Lessor's delivery of 






 

Lessor's
Rent Notice. If Lessor and Lessee are unable to agree upon a single appraiser within such time period, then Lessor and Lessee shall each appoint one appraiser not later than ten
(10) days after Lessor's receipt of Lessee's Rejection Notice. Within five (5) days thereafter, the two appointed appraisers shall appoint a third appraiser. Lessor and Lessee shall
instruct the appraiser(s) to complete the determination of the Market Rent not later than fifteen (15) days after all appraisers have been appointed. 



        (2)   If
either Lessor or Lessee fails to appoint its appraiser within the prescribed time period, the single appraiser appointed shall determine the Market Rent of the
Premises for the Option Term. If both parties fail to appoint appraisers within the prescribed time periods, then the first appraiser thereafter selected by a party shall determine the Market Rent of
the Premises for the Option Term. 


        (3)   Lessor
and Lessee shall each bear the cost of its own appraiser and the parties shall share equally the cost of the single or third appraiser, if applicable. All
appraisers so designated herein shall have at least five (5) years' experience in the appraisal of similar office buildings in the San Diego area and shall be members of professional
organizations such as MAI or equivalent. If a single appraiser is chosen, then such appraiser shall determine the Market Rent of the Premises for the Option Term. Otherwise, the Market Rent of the
Premises for the Option Term shall be the arithmetic average of (2) of the three (3) appraisals which are closest in amount, and the third appraisal shall be disregarded. 




I.    The
following inserts are hereby incorporated into the Lease where indicated by starred numerals in the Lease: 



	A.
	Insert 2.2



Paragraph 2.2—Condition. Add the following to the end of the Paragraph: 



Notwithstanding
the foregoing, on or before the Early Possession Date, Lessor shall make the following improvements to Suite "B" of the Premises (as depicted on Exhibit "A"): (i) install new
carpeting and base in Suite "B," similar in quality to the existing carpeting in Suite "A" of the Premises; (ii) paint Suite "B" with fresh paint in the color to be chosen by Lessee no later
than ten (10) days following the execution of this Lease; (iii) install new doors on existing door frames throughout the entire Suite "B" (approximately 16 doors). 



	B.
	Insert 2.3




Paragraph 2.3—Compliance with Covenants. etc. Add the following to the end of the Paragraph: 



In
the event of any zoning change or change in any other law or ordinance, which prevents Lessee from using the Premises for light assembly or scientific research and development, Lessee shall have
the right to terminate this Lease upon not less than ninety (90) days prior written notice to Lessor. 



	C.
	Insert 2.4




Paragraph 2.4—Acceptance of Premises. Replace Paragraph 2.4 with the following: 



Lessor
warrants that, as of the Commencement Date, no deferred maintenance is required to be performed on any of the electrical, plumbing or mechanical systems in the Premises and that such systems
are in good working order. Lessee shall have the right to notify Lessor of any such deferred maintenance of or required repairs to the electrical, plumbing and mechanical systems within sixty
(60) days following the Commencement Date and Lessor shall be responsible for performance thereof or repairs thereto within fifteen (15) days following Lessee's timely delivery to Lessor
of such notice. 




2





 


Lessee
shall, at Lessee's sole cost and expense, comply with all of the requirements of municipal, county, state, federal and other applicable governmental authorities now in force, or which may
hereafter be in force, pertaining to Lessee's business operations in the Premises, including, without limitation, the costs and expenses of compliance of Lessee's alterations, additions or
improvements to the Premises with all requirements of applicable governmental authorities, and Lessee shall secure any necessary permits therefor and shall faithfully observe, in the Lessee's business
operations in the Premises, all municipal, county, state, federal and other applicable governmental entities' requirements which are now in force, or which may hereafter be in force. Without limiting
the generality of the foregoing sentence, Lessor agrees that Lessor shall be responsible for making alterations to the Premises which Lessor is required to maintain or repair if such alterations are
required by changes in the law after the Term Commencement Date, and are not required as a result of (i) Lessee's particular manner of occupancy or business operations in the Premises, or
(ii) any alterations, additions or improvements made by Lessee to the Premises (including, without limitation, the installation of Lessee's trade fixtures, equipment and furnishings in the
Premises). Lessee shall pay for all costs and expenses of any alterations required as a result of (i) Lessee's particular manner of occupancy or business operations in the Premises, or
(ii) any alterations, additions or improvements made by Lessee to the Premises (including, without limitation, the installation of Lessee's trade fixtures, equipment and furnishings in the
Premises. 


Lessor
warrants that the offices, rooms, structures and surrounding common areas owned by Lessor, including all parking lots, walkways, entrances, hallways and other public spaces, elevators, and
other devices or pathways for ingress and exit to the Premises, that might be used by customers, clients, invitees of Lessee and the general public, conform to all the requirements of the American
with Disabilities Act and all regulations issued by the U.S. Attorney General or other authorized agencies under the authorization of the Americans with Disabilities Act. The Lessor promises to
reimburse and indemnify and defend the Lessee for any expenses incurred because of the failure of the Premises and the Common Areas to conform with the above cited law and regulations, including the
costs of making any alterations, renovations, or accommodations required by the American with Disabilities Act, or any governmental enforcement agency, or any court, any and all fines, civil
penalties, and damages awarded against the Lessee resulting from violations of the above cited law and regulations, and all reasonable legal expenses incurred in defending claims made under the above
cited law and regulations, including reasonable attorney's fees. 



	D.
	Insert 2.7




Paragraph 2.7—Common Area. Add the following at the end of Paragraph 2.7: 



The
Common Areas of the Building are those portions of the Building not included within the Premises or the adjacent Suite "C." Lessee shall have the non-exclusive right to use the Common
Areas in accordance with the terms and conditions of this Lease, any such safety and security requirements which Lessor reasonably determines to be necessary in addition to the Industrial Center rules
and regulations as set forth in Exhibit "C" attached hereto and incorporated herein ("Rules and Regulations"). Both Lessor and Lessee hereby agree to be bound by and to ensure that their respective
agents, employees, contractors and invitees are familiar with and abide by the Rules and Regulations. 



	E.
	Insert 4.2




Paragraph 4.2—Operating Expenses. Add the following at the end of Subparagraph 4.2(a): 



Lessee's
Share of Common Area Operating Expenses is hereby mutually agreed to be that percentage set forth in the Subparagraph 1.6(b). Unless otherwise provided herein, Lessee 




3





 


shall
not be obligated to pay for any Common Area Operating Expenses for the 1999 Base Calendar Year. Commencing January 2000, Lessee shall pay as Additional Rent Lessee's Share of Common Area
Operating Expenses to the extent that Common Area Operating Expenses exceed the Common Area Operating Expenses for the 1999 Base Calendar Year. In the event the Commencement Date occurs before the
first day of the 1999 Base Calendar Year, Operating Expenses for the 1999 Base Calendar Year shall be reasonably annualized to reflect the 12-month period of the 1999 Base Calendar Year. 


The
cost of any capital improvements, replacements and repairs reimbursed by Lessee as Common Area Operating Expenses pursuant to the foregoing obligations shall be amortized on a
straight-line basis (together with interest at the interest rate of ten percent (10%) per annum on the unamortized balance of such costs) over a period equal to the greater of
15 years or the useful life of the item (as determined by reference to the vendor's or manufacturer's suggested useful
life for such capital item or, where such reference does not exist, by reference to generally accepted accounting principals, consistently applied). 



Notwithstanding
the provisions of this Paragraph 4.3, the following shall not be included within Operating Expenses: (i) any depreciation on the Premises; (ii) costs incurred due
to Lessor's violation of any terms or conditions of this Lease or any other lease relating to the Premises; (iii) any structural repairs to or replacements of the foundations, roof structure
and structural walls of the Building; (iv) damage and repairs covered under any insurance policy carried by Lessor in connection with the Building; (v) damage and repairs necessitated by
the negligence or willful misconduct of Lessor or Lessor's employees, agents or contractors; (vi) reserves for the repair, replacement or improvement of the Premises; (vii) all
principal, interest, loan fees, and other carrying costs related to any mortgage or deed of trust and all rental and other payable due under any ground or underlying lease, unless such costs are
directly attributable to Lessee's, its agents' or employees' activities in the Premises, or as a result of a Lessee's breach or default under this Lease; (viii) costs, including permit, license
and inspection costs, incurred with respect to the installation of other tenants or other occupants in the Premises, improvements made for other tenants or other occupants of the Premises or incurred
in improving, decorating, painting or redecorating vacant space for other tenants or other occupants of the Premises; (ix) any costs, fines, or penalties incurred due to violations by Lessor or
by any other tenant of the Premises (other than Lessee) of any governmental rule or authority, this Lease or any other lease of the Premises, or due to Lessor's negligence or willful misconduct;
(x) Lessor's costs of conforming the Common Areas or the Building to the requirements of the American with Disabilities Act and all regulations issued by the U.S. Attorney General or other
authorized agencies under the authorization of the Americans with Disabilities Act (unless necessitated by Lessee's particular use of, or improvements or alterations to, the Premises);
(xi) Lessor's wages, salaries or other compensation, general corporate overhead and administrative expenses; and (xii) the cost of repairing any structural defects in the Premises and
repairing any material defects in the design, materials or workmanship of the Premises, including, without limitation, the Building. 


In
the event that the cost of any insurance carried by Lessor is not included in the Operating Expenses for the Base Calendar Year, and Lessor elects to procure such insurance after the Base Calendar
Year, the Base Calendar Year Operating Expenses shall be adjusted to reflect the Operating Expenses Lessor would have paid had Lessor carried such insurance in the Base Calendar Year. 




4





 





	F.
	Insert 4.2(e)




Paragraph 4.2(e)—Audit Rights. Add the following at the end of Subparagraph 4.2(e): 



At
any time within twelve (12) months of Lessee's receipt of any statement from Lessor relating to Lessee's Share of Common Area Operating Expenses, Lessor shall furnish Lessee following
Lessee's written request therefor, but no more than twice in any calendar year, including invoices and other source documents relating to such reimbursable expenses. Such audit shall be limited to the
items necessary to a determination of the applicable reimbursable expenses. In any event, if it is determined that Lessee was overcharged by more than four percent (4%), such overcharge shall entitle
Lessee to credit against its next payment of Lessor's reimbursable expenses the amount of the overcharge and the costs associated with the audit (and, if such credit occurs following the expiration of
the Term, Lessor shall promptly pay the amount of such credit to Lessee). If the audit determines that the Lessee was overcharged less than four percent (4%), such overcharge shall entitle Lessee to
credit against its next payment of Lessor's reimbursable expenses the amount of the overcharge and Lessee shall pay for all costs associated with the audit. If the audit shall determine that Lessee
was undercharged for the Lessor's reimbursable expenses, Lessee shall promptly pay the amount of such undercharge to Lessor and Lessee shall pay for all costs associated with the audit. 



	G.
	Insert 5




Paragraph 5—Security Deposit. Add the following at the end of Paragraph 5: 



From
and after the tenth (10th) day following the expiration or earlier termination of this Lease, the Security Deposit shall accrue interest at the rate set forth in Paragraph 19 of this
Lease. 



	H.
	Insert 6.2(c)




Subparagraph 6.2(c)—Indemnification. Add the following at the end of Subparagraph 6.2(c): 



Notwithstanding
any other provision of this Lease, Lessor represents that it is unaware of any Hazardous Substances, including but not limited to any solvents, metals, petroleum,
lead-based paint, PCBs, or asbestos in the Building or Premises. Notwithstanding this representation, Lessor shall indemnify and hold Lessee harmless against and from all liability and
claims of any kind for loss or damage to Lessee, its employees or agents, and for expenses and fees of Lessee (including but not limited to costs, expenses and attorneys' fees), incurred, directly or
indirectly, as a result of (1) the negligence, willful misconduct or breach of this Lease by any of Lessor, its agents, employees or contractors; and (2) the existence of Hazardous
Substances in, on, under or about the Premises as of the commencement of this Lease. 



	I.
	Insert 7.2



Paragraph 7.2—Lessor's Obligations. Add the following at the end of Paragraph 7.2: 



Lessor,
subject to reimbursement in accordance with Paragraph 4.2 and Paragraph 51, shall keep in good order, condition and repair the foundations, exterior walls, structural condition
of interior bearing walls, exterior roof, parking lots, sidewalks, parkways, driveways, landscaping, fences and retaining walls located in, on, about, or adjacent to the Premises. The cost of all
capital improvements, repairs, replacements, equipment and tools incurred by Lessor pursuant to the foregoing obligations shall be amortized on a straight-line basis over a period equal to
the useful life of the item (as determined by reference to the vendor's or manufacturer's suggested useful life for such capital improvements or, where such reference does not exist, by reference to
generally accepted accounting principals, consistently applied). 




5





 


Lessor
shall not be obligated to paint the interior surfaces of exterior walls, nor shall Lessor be obligated to maintain, repair, or replace windows, doors or plate glass of the Premises. If Lessor
fails to perform Lessor's obligations under this paragraph 7.2, and such failure materially interferes with Lessee's use of the Premises and continues for more than five (5) business
days after Lessee provides Lessor with notice of such failure, Lessee may perform such obligations on Lessor's behalf, and if Lessee so elects, Lessor shall reimburse Lessee, upon demand, for the
costs thereof. 



	J.
	Insert 7.3




Paragraph 7.3—Alterations. Add the following to the end of Paragraph 7.3(b): 



Notwithstanding
the foregoing, Lessor hereby consents to Lessee's relocation/removal of non-load bearing walls of the Premises, in accordance with all applicable laws and building codes.
Such work of relocation removal shall be performed by Lessor for Lessee, at Lessee's sole cost and expense, at the pass-through costs incurred by Lessor for such work. 



	K.
	Insert 7.4(b)






Subparagraph 7.4(b)—Removal. In the first line of subparagraph 7.4(b), insert between "may" and "require" the following: 



...
(at the time Lessor gives its consent to the installation of such Lessee-Owned Alterations or Utility Installations)... 



	L.
	Insert 7.4(c)



Subparagraph 7.4(c)—Surrender/Restoration. Add the following at the end of subparagraph 7.4.(c): 



Any
Trade Fixtures and Equipment purchased by Lessee and installed in the Premises, which Lessee intends to remove from the Premises upon the expiration or earlier termination of this Lease, shall be
and remain the sole property of Lessee. Said Trade Fixtures and Equipment may be removed from the Premises by Lessee at any time during the term of this Lease, and may be subject to the security
interest of any person providing financing for the leasing or acquisition of such property. 



	M.
	Insert 9.6(a)




Subparagraph 9.6(a)—Abatement of Rent; Lessee's Remedies. Add the following at the end of subparagraph 9.6(a): 



...,except
for damages connected with Lessor's negligence, willful misconduct, or breach of this Lease. 



	N.
	Insert 9.6(b)




Subparagraph 9.6(b)—Abatement of Rent; Lessee's Remedies. Add the following at the end of subparagraph 9.6(b): 



If
Lessor reasonably determines that repairs will require more than one hundred eighty (180) days to complete, or if repairs are not substantially completed within one hundred eighty
(180) days following the commencement thereof, Lessee may, at its option, terminate this Lease by giving at least thirty (30) days prior written notice to Lessor specifying the
termination date. 




6





 



	O.
	Insert 9.7




Paragraph 9.7—Hazardous Substance Conditions. Add the following in line 7 of paragraph 9.7, at the end of the first sentence: 



...
In which event Lessor shall reimburse Lessee for the actual cost of Lessee's relocation to replacement Premises. 



	P.
	Insert 10.2




Paragraph 10.2—Definition of "Real Property Taxes". Add the following at the end of paragraph 10.2: 



Notwithstanding
the foregoing, Real Property Taxes shall not include (a) inheritance, estate or franchise taxes imposed upon or assessed against the Premises and (b) taxes on the net
income of the Lessor. 



	Q.
	Insert 12.1(b)




Paragraph 12.1—Permitted Transfers. Add the following at the end of Subparagraph 12.1(b): 



Any
provision in this Lease to the contrary notwithstanding, Lessor's consent shall not be required for a Transfer to any person or entity who controls, is controlled by or is under common control
with Lessee, or to any corporation resulting from the merger or consolidation with Lessee or to any person or legal entity which acquires all the assets of Lessee as a going concern of the business
being conducted on the Premises (each of the foregoing is hereinafter referred to as a "Lessee Affiliate"); provided that before such assignment shall be effective, (a) said Lessee Affiliate
shall assume, in full, the obligations of Lessee under this Lease, (b) Lessor shall be given written notice of such assignment and assumption and (c) the use of the Premises by the
Lessee Affiliate shall be as set forth in Paragraph 1.8. For purposes of this paragraph, the term "control" means possession, directly or indirectly, of the power to direct or cause the
direction of the management, affairs and policies of anyone, whether through the ownership of voting securities, by contract or otherwise. 



	R.
	Insert 13.2



Paragraph 13.2—Remedies. Add the following in line 6 of paragraph 13.2 after "cashier's check": 



...;
provided, however, that Lessee shall not be required to make future payments by cashier's check if, no more than once in any calendar year, Lessee cures such Breach by providing Lessor with Funds
in the amount of the full payment due Lessor within twenty-four (24) hours following Lessee's receipt of Lessor's notice that a check given by Lessee has not been honored by the
bank upon which it is drawn. 



	S.
	Insert 17



Paragraph 17—Lessor's Liability. Add the following at the end of paragraph 17: 



Notwithstanding
the foregoing, a Lessor whose interest in this Lease or the Premises is foreclosed by a foreclosure or execution sale shall not be relieved of liability unless the party who acquires
the Lessor's interest agrees to recognize Lessee's interest and rights in and under this Lease and not to disturb Lessee's possession hereunder so long as Lessee is not in default hereunder. 




7





 




AGREED
AND ACCEPTED 



	LESSOR:	 	LESSEE:
	

MICHAEL L. HIGHTOWER	
 	

NUVASIVE, INC., a California corporation
	

/s/ Michael L. Hightower
 Michael L. Hightower	
 	

/s/ James McKinley

	

 	
 	

 	
 	

By:	
 	

James T. McKinley

	

 	
 	

 	
 	

Title: President
	

Date Signed:	
 	

6-18-99
	
 	

Date Signed:	
 	

7/13/99





8







 
 

Exhibit A
  10065 OLD GROVE ROAD, STE A
  PREMISES
  
  

  FLOOR PLAN    
    





 
 

Exhibit A (continued)
  
  

  FLOOR PLAN
  
  
  2nd FLOOR    
    







 
 

EXHIBIT C
  
    RULES AND REGULATIONS    
    



        1.     The
sidewalks, entrances, lobby, elevators, stairways and public corridors shall be used only as a means of ingress and egress and shall remain unobstructed at all times.
The entrance and exit doors of all suites are to be kept closed at all times except as required for orderly passage to and from a suite. Loitering in any part of the Building or obstruction of any
means of ingress or egress shall not be permitted. Doors and windows shall not be covered or obstructed. 


        2.     Plumbing
fixtures shall not be used for any purposes other than those for which they were constructed, and no rubbish, newspapers, trash or other substances of any kind
shall be thrown into them. Walls, floors and ceilings shall not be defaced in any way and no one shall be permitted to mark, drive nails, screws or drill into, paint, or in any way mar any Building
surface, except that pictures, certificates, licenses and similar items normally used in Lessee's business may be carefully attached to the walls by Lessee in a manner to be prescribed by Lessor. Upon
removal of such items by Lessee any damage to the walls or other surfaces, except minor nail holes, shall be repaired by Lessee. 


        3.     No
awning, shade, sign, advertisement or notice shall be inscribed, painted, displayed or affixed on, in or to any window, door or balcony or any other part of the
outside or inside of the Building or the demised premises unless provided by Lessor or approved by Lessor in writing. No window displays or other public displays shall be permitted without the prior
written consent of Lessor. All lessee identification on public corridor doors beyond building standard will be installed by Lessor for Lessee but the cost shall be paid by Lessee. No lettering or
signs other than the name of Lessee will be permitted on public corridor doors with the size and type of letters to be prescribed by Lessor. The directory of the Building will be provided exclusively
for the display and location of Lessee only and Lessor reserves the right to exclude all other names therefrom. All requests for listing on the Building directory shall be submitted to the office of
Lessor in writing. Lessor reserves the right to approve all listing requests. Any change requested by Lessee of Lessor of the name or names posted on directory, after initial posting, will be charged
to Lessee. 


        4.     The
cost of any special electrical circuits for items such as copying machines, computers, microwaves, etc, shall be borne by Lessee unless the same are part of the
building standard improvements. Prior to installation of equipment Lessee must receive written approval from Lessor. 


        5.     The
weight, size and position of all safes and other unusually heavy objects used or placed in the Building shall be prescribed by Lessor and shall, in all cases, stand
on metal-plates of such size as shall be prescribed by Lessor. The repair of any damage done to the Building or property therein by putting in or taking out or maintaining such safes or other
unusually heavy objects shall be paid for by Lessee. 


        6.     Except
for Lessee's initial move into to the Premises, during normal business hours Lessee shall not intentionally permit its freight, fixtures or other personal
deliveries to block the entrance of the Building or the Premises, impede passage through the entrance door of to block any passageways or doors in the Building, nor shall Lessee permit its agents,
employees or invitees to place obstructions in front of the Building or any Building doors unless due to emergency and or scheduled necessary repairs. All freight, furniture, fixtures and other
personal property shall be moved into, within and out of the Building so as not interfere with any other lessee's conduct of business or quiet enjoyment of the Project. In no event will Lessor be
responsible for any loss or damage to such freight, furniture, fixtures or personal property from any cause. 


        7.     No
improper noises, vibrations or odors will be permitted in the Building. No person will be permitted to bring or keep within the Building any animal, bird or bicycle or
any toxic or flammable substances without Lessor's prior permission. No person shall throw trash, refuse, cigarettes or other substances of any kind any place within or out of the Building except in
the refuse containers provided therefor. Lessee shall not be permitted to interfere in any way with lessees or those having business with them. Lessor reserves the right to exclude or expel from the
Building any person who, in the 





 



judgment
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 Project. 


        8.     Lessor
shall provide Lessee with an initial set of security access cards for the card access system, if any. All re-keying of office doors, changes to the
card access system and replacement of lost or stolen keys or security access cards, after occupancy, will be at the expense of Lessee. Lessee shall provide Lessor with copies of all keys to doors of
the Premises for emergency access. 


        9.     If
Lessee uses the Premises after regular business hours or on non-business days, Lessee shall lock any entrance doors to the Building used by Lessee or take
such other steps as are necessary to secure the Building's doors immediately after entering or leaving the Building. 


        10.   Lessee
shall not waste electricity, water or air-conditioning and agrees to cooperate fully with Lessor to assure the most effective operation of the
Building's heating and air-conditioning. 


        11.   At
Lessor's sole cost and expense (including reimbursement of Lessee's expenses arising therefrom), Lessor reserves the right, exercisable following thirty
(30) days advance written notice to Lessee, to change the name and street address of the Building. 


        12.   Lessee
shall not retail any goods on the Premises (except for telemarketing activities directly related to Lessee's Permitted Use). 


        13.   Lessee
shall not install any radio or television antenna, loudspeaker or other device on the roof or exterior walls of the Building. Lessee shall not interfere with
radio or television broadcasting or reception from or in the Building elsewhere. Canvassing, soliciting and distribution of handbills or any other written material, and peddling in the Building are
prohibited, and each lessee shall cooperate to prevent same. 


        14.   Lessee
shall not use in any space or in the public hails of the Building any hand trucks except those equipped with rubber tires and side guards or such other
material-handling equipment as Lessor may approve. Lessee shall not bring any other vehicles of any kind into the Building. 


        15.   Lessee
shall not park its vehicles in any parking areas designated by Lessor as areas for parking by visitors to the Project. Lessee shall not leave vehicles in the
Project parking areas overnight nor park any vehicles in the Project parking areas other than automobiles, motorcycles, motor driven or non-motor driven bicycles or
four-wheeled trucks. Lessor may, in its sole discretion, designate separate areas for bicycles and motorcycles. 


        16.   Lessee
shall not use Project's or Building's interior or exterior common areas to conduct its business or as a waiting room. 


        17.   Lessor
may waive any one or more of these Rules and Regulations for the benefit of Lessee or any other lessee, but no such waiver by Lessor shall be construed as a
waiver of such Rules and Regulations in favor of Lessee or any other lessee, nor prevent Lessor from thereafter enforcing any such Rules and Regulations against any or all of the lessees of the
Project; provided, however, that Lessor shall not unreasonably discriminate against any lessee in making any such waiver. 


        19.   Lessee
shall be deemed to have read these Rules and Regulations and to have agreed to abide by them as a condition to his occupancy of the Premises and shall be
responsible for the observance of all the rules by Lessee's employees, agents, clients, customers, invitees and guests. 


2









QuickLinks



EXHIBIT 10.20


STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE—MODIFIED NET AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION



ADDENDUM NO. 1 TO STANDARD INDUSTRIAL/COMMERCIAL LEASE— MODIFIED NET BETWEEN MICHAEL L. HIGHTOWER AND NUVASIVE, INC., A CALIFORNIA CORPORATION


Exhibit A 10065 OLD GROVE ROAD, STE A PREMISES FLOOR PLAN

Exhibit A (continued) FLOOR PLAN 2nd FLOOR


EXHIBIT C RULES AND REGULATIONS