Exhibit

10.15




 




LEASE




 




THIS LEASE is made this 21st day of May, 2003, by and

between SCP PARK MEADOWS, LLC, an Indiana limited liability company, having a

mailing address of 280 East 96th Street, Suite 250, Indianapolis,

Indiana, 46240 (hereinafter referred to as “Landlord”) and REVCARE, INC., a

Nevada corporation, having a mailing address of 5400 Orange Avenue, Suite 200,

Cypress, California 90630 (hereinafter referred to as “Tenant”).




 




WITNESSETH:




 




IN CONSIDERATION of the rent, hereinafter reserved,

and the covenants herein contained, the Landlord and Tenant hereby agree as

follows:




 




ARTICLE I




 




DEMISE




 




Landlord does hereby grant, demise, and lease to

Tenant, and Tenant hereby takes and leases from Landlord, upon the terms and

conditions, hereinafter set forth the premises commonly known as 5400 Orange

Avenue, Cypress, California  90630,

containing approximately 53,471 square feet, a legal description of which is

attached hereto as Exhibit A and by reference made a part hereof (the

“Premises”).




 




ARTICLE II




 




TERM




 




Section 2.1                                      The

term of this Lease shall be for twelve (12) years, (or until sooner terminated

as herein provided) commencing on the       day

of  May, 2003, and ending on the 30th

day of May 2015 (the “Original Term”).




 




Section 2.2                                      Renewal.  Landlord grants to Tenant an option to

extend the Original Term for two (2) additional term(s) of five (5) years each

commencing at the expiration of the Original Term, providing that Tenant shall

not be in default of any of Tenant’s obligations under this Lease at the time

any such option is to be exercised. 

Should Tenant elect to exercise any such option, Tenant shall do so by

written notice received by Landlord at least six (6) months before the

expiration of the Original Term or the previous extension term for which an

option has been exercised.  In the event

Tenant does not exercise an option to extend within the period allowed for the

next successive additional term, all unexercised options shall become null and

void.  The option(s) granted to Tenant

in this Section are personal to Tenant and shall become null and void upon

assignment of this Lease or subletting of the Premises, whether or not either

of which occurs with or without Landlord’s consent.  Any renewal term shall be upon the same terms and conditions as

herein set forth, except that the Base Rent shall be adjusted at the beginning

of each such renewal term to the lesser of (a) the then-prevailing market rent

for similar space in the same general geographical area as the Premises, with

reference to such terms and conditions as would be offered to a Tenant for

similar space, or (b) the Base Rent applicable at the end of the lease year

immediately preceding the commencement of the subject renewal




 





























 




term.  In the absence of the agreement of the

parties as to such rent within sixty (60) days of Tenant’s exercise of the an

extension option, the determination of the Base Rent applicable to such renewal

term shall be made by a real estate appraiser with at least five (5) years

commercial appraisal experience in the County of Orange, approved by mutual

agreement of the parties, or, in the absence thereof, by the mediator selected

in accordance with the provisions of paragraph 19.18 hereof.




 




ARTICLE III




 




OCCUPANCY AND USE




 




Section 3.1                                      Use

and Occupancy.  Tenant shall use and

occupy the Premises only for offices carrying on the business of Tenant as such

business is conducted on April 1, 2003 or for other general, professional

and medical office use and for no other purpose except with the prior written consent

of the Landlord.  Tenant (i) shall use

the Premises for no unlawful purpose or act; (ii) shall commit or permit no

waste or damage to the Premises; (iii) shall materially comply with and obey

all laws, regulations, or orders of any governmental authority or agency;

provided, however, Tenant shall promptly and fully comply with any order or

instruction of any governmental agency or authority specifically directed to

the Premises and (iv) shall not do or permit anything to be done in or about

the Premises which will obstruct or interfere with the rights of parties or

injure or annoy them.  In the event

Tenant does or permits anything to be done which results in an increase in the

rate of casualty insurance upon the Premises, Tenant shall fully pay for any

increased premiums or deductibles and, upon the written request of Landlord,

shall promptly cease and/or cause to be terminated such usage.  Tenant agrees not to modify its current use

or take any action which would decrease the value of the existing improvements

or modify the structure thereof in a way that would decrease the value thereof.




 




Section 3.2                                      Condition

of Premises.  Tenant hereby accepts

the Premises “as-is” in its present condition. Landlord makes no representation

or warranty as to the condition of the Premises and Tenant hereby acknowledges

same.




 




Section 3.3                                      Continuous

Use.  Tenant shall have the right to

cease operating at the Premises; provided that, Tenant shall maintain the

security of the Premises and the exterior appearance of the building located on

the Premises in at least as good as condition as such existed on the date of

this Lease.




 




ARTICLE IV




 




RENT




 




Section 4.1                                      Base

Rent.




 




1.                                       Initial

Rent.  Tenant covenants and agrees

to pay, by cash or good funds, as rent for said Premises (without relief from

valuation and appraisement laws) initially for the first three (3) years of the

Original Term of this Lease, the sum of Fifty Three Thousand Nine Hundred

Thirty Seven and no/100 Dollars ($53,937.00) per month, Six Hundred Forty Seven

Thousand Two Hundred Forty Four and no/100 Dollars




 




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($647,244.00) per annum payable without demand in

advance on the first day of each calendar month during the term of this Lease

at Landlord’s address stated above or such other place as Landlord may from

time to time designate in writing.




 




2.                                       CPI

Adjustments. Commencing on May 1, 2006, and on such date annually

thereafter (the “Adjustment Date”), except as otherwise provided in Section 2.2

with respect to the first year of any renewal term, the Base Rent payable under

this Lease shall be adjusted by the change, if any, from the Base Month (as

defined below), in the Consumer Price Index of the Bureau of Labor Statistics

of the U.S. Department of Labor for CPI U (All Urban Consumers) for Los Angeles

– Anaheim – Riverside, All Items (1982-1984=100) (the “CPI”).  The annual adjustments to Base Rent for each

Lease year described in this Paragraph 2 shall be calculated as follows:  The Base Rent payable for the then-current

Lease year shall be multiplied by a fraction, the numerator of which shall be

the CPI applicable for the month of March occurring prior to the

Adjustment Date, and the denominator of which shall be the CPI in effect during

the immediately preceding Lease year for March 2003 (the “Base Month”)

with an annual minimum increase of three percent (3%) and an annual maximum

increase of seven percent (7%) per year, except in the first lease year of any

renewal term, all as set forth below. 

The sum so calculated shall constitute the Base Rent applicable to the

next 12-month period under the Lease, but in no event shall any such new amount

of Base Rent be less than the Base Rent payable during the Lease year

immediately preceding the Adjustment Date, nor shall the annual percentage

increase in Base Rent over the Base Rent payable for the immediately preceding

Lease year be less than three percent (3%) nor more than seven percent (7%) of

the Base Rent payable prior to such adjustment during the term of the Lease in

any single year, except in the event that there is no annual increase in the

first year of either of the renewal options described in Paragraph 1 of this

Addendum are exercised, in which case the Base Rent for the first Lease year in

such renewal term(s) shall be no lesser than the Base Rent in the immediately

preceding lease year, then, for the remainder of such Lease renewal term, Base

Rent shall be annually adjusted utilizing the same CPI in the same manner with

an annual

minimum increase of three percent (3%) and an maximum increase of seven percent

(7%) per year.  All calculations

of percentage changes in the CPI shall be rounded upwards or downwards, as

applicable, to two decimal points.




 




3.                                       Partial

Months; No Waiver.  In the event

that the tenancy commences on a day other than the first day of any calendar

month, rent covering the period from the commencement of the term hereof to the

first day of the next successive calendar month (calculated on a pro-rata daily

basis) shall be paid with the first regular installment of monthly rent

hereunder. No acceptance by Landlord of a lesser sum than the Base Rent,

reimbursement to Landlord, or any other charge then due shall be deemed to be

other than on account of the earliest installment of same then due, and no

endorsement or statement on any check or any letter accompanying any check or

payment as to same shall be deemed an accord and satisfaction, and Landlord may

accept such check or payment without prejudice to Landlord’s right to recover

the balance of such installment and any other amounts then due or to pursue any

other remedy of Landlord set forth in this Lease.




 




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Section 4.2                                      Additional

Rent.  In addition to the rental set

out in Section 4.1, above, Tenant agrees to pay as directed by Landlord either

directly to third parties (in which event proof of payment shall be immediately

furnished by Tenant to Landlord) or as reimbursement to Landlord immediately

upon written request for payment following Tenant’s failure to pay directly in

accordance with the terms of this Lease or following Landlord’s payment of such

expense (without relief from valuation and appraisement laws) the following:




 




1.                                       Tenant

agrees to pay before they become delinquent all Real Property Taxes (as defined

below) imposed during the term of this Lease either in the name of the Landlord

or Tenant, except taxes upon the franchise, income, estate, inheritance, tax

levied by any jurisdiction in Indiana, or other similar taxes or impositions

which may be levied or assessed against Landlord or its successor in

title.  Evidence of such payment shall

be received by Landlord at least five (5) business days prior to the

delinquency date of such taxes.  If such

evidence is not so received, Landlord may advance such amounts, at Tenant’s

expense, and an Event of Default hereunder shall be deemed to have

occurred.  “Real Property Taxes” means

any form of assessment, license fee, commercial rental tax, levy, penalty, or

tax imposed by an authority having direct or indirect power to tax, including

any city, county, state or federal government, or any school, agricultural,

lighting, drainage or other improvement district thereof, as against the

Premises, as against any legal or equitable interest of Landlord in the              Premises, including all so-called

special assessments, and every other charge, lien or expense accruing or

payable during the term of this Lease in connection with the Premises, and also

all taxes, licenses, fees or charges on account of any use which may be made of

the Premises or any activity thereon during the term of this Lease.  Tenant shall pay prior to delinquency all

taxes assessed and levied upon any equipment, trade fixtures and personal

property of Tenant.




 




2.                                       Any

insurance premiums or deductible amounts for any coverages in connection with

all or any portion of the Premises paid by Landlord on its own behalf for which

Tenant is responsible pursuant to Article IX.




 




3.                                       Any

and all costs and expenses incurred in insuring (including premium costs),

equipping, lighting, repairing, replacing, maintaining and policing the

Premises and any common area constituting a part of the Premises in a first

class condition consistent with the condition of the Premises following the

completion of the tenant improvements described in Article XXIV and any and all

obligations of the Premises resulting from shared ingress/egress and parking

easements and/or rights with any adjoining parcel, including but not limited

to, any dues, fees and/or assessments arising in connection with any and all

documents creating easements and/or obligations with any adjoining parcel,

excluding only items of expense commonly known and designated as carrying

charges, but specifically including, without limitation, items of expense for

or related to:  Real Estate Taxes;

gardening and landscaping; interior and exterior window washing twice a year,

trash collection services; utility systems; sprinkler systems; traffic control;

insurance premiums and deductibles; repairs; painting; lighting; sanitary

control; removal of snow, ice, trash, rubbish, garbage and other refuse;

repair, replacement and maintenance of paving, roofs, canopies, facades and

gutters; electricity for lighting the




 




4





























 




Premises sign or any part thereof; depreciation on or

rentals of machinery and equipment used for maintenance purposes; the cost of

personnel to implement maintenance and/or security services, to direct parking

and maintenance and repair costs and a management fee in the amount of $200.00

per month.




 




It is the purpose and intent of Landlord and Tenant

that this is a net lease and that the Base Rent and all other sums payable by

Tenant under this Lease shall, except as herein otherwise provided, be

absolutely net to Landlord so that this Lease shall yield, net, to Landlord all

sums specified to be received by Landlord, and that all costs, expenses and

obligations of every kind and nature whatsoever relating to the Premises or any

improvements thereon, except as herein otherwise provided in Article XXIV

hereof, which may arise or become due during the term of this Lease shall be

paid by Tenant and that Landlord shall be indemnified and save harmless by

Tenant from and against the same. 

Landlord shall notify Tenant five (5) calendar days in advance (except

in the case of an emergency, in which event no notice shall be required) of any

reimbursable costs being incurred by Landlord. 

Landlord agrees not to incur repair or replacement expenses in

connection with the Premises which are disputed in writing by Tenant unless

such expenses are incurred either (a) in the case of an emergency, or (b) in

order to keep the Premises in the condition required in Section 5.3 hereof.




 




Section 4.3                                      Past

Due Payments.  If any monthly

installment of Base Rent or other payment required under this Lease remains

unpaid after the fifth (5th) day of the calendar month in which it is due, a

one-time late charge equal to five percent (5%) of the accrued and unpaid

amount may be charged by Landlord for the purpose of defraying the additional

expenses incident to the handling of such overdue amount.  If Tenant shall fail to pay, when the same

is due and payable, any other payment owing from Tenant to Landlord pursuant to

this Lease, or if any monthly installment remains unpaid for more than thirty

(30) days after the date due, such unpaid amounts shall bear interest from the

due date thereof to the date of payment at the rate of twelve percent (12%) per

annum but shall not exceed the maximum rate allowed by law.




 




Section 4.4                                      Security

Deposit.  Tenant, contemporaneously

with the execution of this Lease, has deposited with Landlord two (2)

irrevocable unconditional letters of credit from an institution acceptable to

Landlord (the “Letters of Credit”), receipt of which are hereby acknowledged by

Landlord.  The first Letter of Credit

(the “First LC”) shall be in an amount, at all times, equal to Six Hundred

Fifty Thousand Dollars ($650,000), and shall be replaced each year throughout

the Original Term and any renewal term with a like Letter of Credit in such

amount.  The second Letter of Credit

(the “Second LC”) shall be in an amount, at all times, equal to Four Hundred

Thousand Dollars ($400,000) and shall be replaced each year throughout the

Original Term and any renewal term with a like Letter of Credit in such amount;

provided, however, the Second Letter of Credit shall be subject to release

commencing twelve (12) months following the first day for the first full

calendar month of the first lease year and on the first day of each calendar

quarter thereafter commencing October 1, 2004, subject to Buyer’s receipt

of a written request therefor from Tenant (the “Release Notice”), and provided

all of the following conditions are satisfied:




 




1.                                       Tenant’s

most recent audited financial statements have been certified by a firm of

independent accountants, including such accountants’ opinion thereon, and such




 




5





























 




opinion is unqualified; and, Tenant provides Landlord

with a certification that its most recently due tax returns were timely filed

with the federal and state taxing authorities and




 




2.                                       Landlord

has timely received  all monetary

obligations due to Landlord due under this Lease on or before (but not after) the

due date thereof during the 12-month period immediately preceding the

Landlord’s receipt of the Release Notice (any payment made within an applicable

cure period shall not be deemed a payment made “on the due date thereof”); and




 




3.                                       Tenant

is not in breach of this Lease; and




 




4.                                       Tenant’s

EBDA (as defined below) for the 12-month period as of the end of the quarter

immediately preceding the Landlord’s receipt of the Release Notice is at least

Two Hundred Thousand Dollars ($200,000). 

“EBDA” means, with reference to any 12-month period, net income for such

period, as determined in accordance with generally accepted accounting

principals consistently applied (“GAAP”), plus all amounts deducted in arriving

at such net income amount in respect of all amounts properly charged for

depreciation of fixed assets and amortization of intangible assets during such

period.  EBDA shall not include any

extraordinary, one time, nonrecurring gain, income or loss, and




 




5.                                       Tenant timely

filed all reports and financial information with the Securities and Exchange

Commission that may be required under applicable law to be filed by Tenant for

its most recent annual period and the most recently passed quarterly period.




 




Replacement Letters of Credit shall be received by

Landlord at least forty five (45) days prior to the expiration date of the

existing Letter of Credit.  If such

replacement letter is not received, Landlord shall give written notice of such

failure to Tenant.  If such replacement

Letter of Credit is not received by Landlord within ten (10) days from the date

of such notice, Landlord may draw the Letter of Credit.  Upon a draw of a Letter of Credit, Tenant

shall immediately furnish a replacement Letter of Credit to Landlord.  The Security Deposit shall be held by Landlord

without liability for interest.  Tenant

shall be responsible for all fees associated with the issuance and transfer of

the Letters of Credit.  In the event of  Tenant’s failure to keep and

perform any of the terms, covenants, and conditions of this Lease, with all

cure periods, if any, having first expired, or in the event of a material

misrepresentation by Tenant to Landlord of Tenant’s financial condition either

prior to execution hereof or during the term hereof in any written reports or

financial information provided to Landlord by Tenant pursuant to this Lease

(excluding errors or inaccuracies in the Quarterly Financial Statements, as

defined below, which do not constitute intentional fraud in

such statements and excluding the failure to meet any projection provided

as a part of any of the Quarterly Financial Statements), Landlord, at its

option, may appropriate and apply the Security Deposit, or so much thereof as

may be necessary, to compensate Landlord for all loss or damage sustained or

suffered by Landlord by reason thereof. 

Any draw on a Letter of Credit shall cure the default to the extent of

the draw.  Should the entire Security

Deposit or any portion thereof be so appropriated and applied, Tenant, upon

written demand of Landlord forthwith, shall




 




6





























 




restore the full amount of the Letter of Credit, and

Tenant’s failure to do so within five (5) days after receipt of such demand, at

the option of Landlord, shall constitute a breach by Tenant in Tenant’s

obligations under this Lease and Landlord may pursue its remedies set forth in

this Lease without further notice of any kind. 

Except for the failure of Tenant to provide replacement Letters of

Credit (which shall be governed by the first three (3) sentences of this

paragraph), in the event of any breach of this Lease under paragraph 13.1

hereof, Landlord may immediately and without prior notice to Tenant draw either

or both of the Letters of Credit applying such amounts first to any past due

amounts hereunder or losses or damages resulting from any uncured default of

Tenant hereunder, thereafter to Landlord’s costs and expenses in connection

therewith and thereafter to claims of Landlord against Tenant.  The Letters of Credit shall be promptly

returned to Tenant upon the expiration or earlier termination thereof in

accordance with this Section 4.4.




 




Section 4.5                                      Financial

Information.  Upon request of

Landlord, Tenant within fifteen (15) days after such request, shall furnish

Landlord with:




 




1.                                       audited

financial statements satisfactory to Landlord which accurately reflect Tenant’s

and/or Tenant’s affiliates financial condition for the immediately previous

fiscal year of Tenant or Tenant’s affiliates; provided, however, that Tenant

shall not be required to provided such information prior to one twenty (120)

days following its fiscal year end; and




 




2.                                       unaudited

financial statements of Tenant and Tenant’s affiliates as of the end of each

quarterly fiscal period (the “Quarterly Financial Statements”); provided,

however, that Tenant shall not be required to provide such information prior to

forty-five (45) days following such quarter end.




 




ARTICLE V




 




SERVICES, ALTERATIONS, AND REPAIRS




 




Section 5.1                                      Services.  Tenant shall obtain in its own name and pay

directly to the appropriate supplier the cost of all utilities and services

serving the Premises.  Landlord shall

not be liable in damages or otherwise for any failure or interruption of any

utility or other service and no such failure or interruption shall entitle

Tenant to terminate this Lease or withhold sums due hereunder.




 




Section 5.2                                      Alterations

to Premises. Tenant may remove, replace or reconfigure the interior of any

improvements located on the Premises from time to time provided that Tenant

does not take any action which would adversely affect the structural integrity

or decrease the market value of any such improvements or of the Premises

without the prior written consent of Landlord. 

In the absence of a written agreement to the contrary, all alterations,

repairs, or improvements, except unattached movable trade fixtures, office

furniture, and unattached movable equipment of Tenant, shall be and remain the

property of Landlord.




 




7





























 




Section 5.3                                      Upkeep

of Premises. Tenant shall at all times, at Tenant’s sole cost and expense,

keep the Premises and every part thereof in first class condition and repair

consistent with the condition of the Premises following the completion of the

tenant improvements described in Article XXIV, including but not limited to the

interior and exterior washing of windows and other glass at reasonable

intervals but not less than two (2) times per year, ordinary wear and tear and

casualty excepted.




 




Section 5.4                                      Absolute

Triple Net Lease; No Landlord Obligation. 

It is intended by Tenant and Landlord that Landlord shall have no

obligation, in any manner whatsoever, to repair and maintain the Premises, all

of which obligations are intended to be that of Tenant; provided, however, that

if any Capital Repair (defined below) must be made during the last twenty four

(24) months of the term of this Lease, then the cost of the Capital Repair

shall be prorated between the parties, with Tenant paying an amount equal to

the product of multiplying the cost of such Capital Repair by a fraction, the

numerator of which is the number of months remaining on the Lease, and the

denominator of which is the useful life (as determined in accordance with GAAP)

of the Capital Repair, stated in months. For purposes of this Section 5.4,

“Capital Repair” shall mean the replacement of the following equipment and

improvements, if any, if and when installed on the Premises: (i) HVAC equipment

(i.e.; compressor but not filters or other disposables), and (ii) roof.  In the event of the exercise by Tenant

subsequent to such Capital Repair of an option to extend the term of this

Lease, Tenant, concurrent with the commencement of such option, shall reimburse

Landlord for the portion of the Capital Repair, if any, paid for by Landlord

which covered the option term.  It is

the intention of the parties that the terms of this Lease govern the respective

obligations of the parties as to maintenance and repair of the Premises, and

they expressly waive the benefit of any statute now or hereafter in effect to

the extent it is inconsistent with the terms of this Lease.




 




Section 5.5                                      Right

to Re-enter.  Landlord reserves and

at all times shall have the right to re-enter the Premises in any emergency,

and also during regular business hours with reasonable notice to inspect the

same, without abatement of rental.




 




Section 5.6                                      Waiver.  Tenant waives the provisions of Civil Code

§§ 1941 and 1942 and any other law that would require Landlord to maintain the

Premises in a tenantable condition or would provide Tenant with the right to

make repairs and deduct the cost of those repairs from the rent due under this

Lease.




 




ARTICLE VI




 




LIENS




 




Section 6.1                                      Tenant

shall keep the Premises demised hereunder free from any liens, including but

not limited to mechanic’s liens.  In the

event any lien attaches to the Premises by virtue of an act or failure to act

on the part of Tenant, Landlord shall have the right, but not the obligation,

to pay the amount of such lien to cause its release and such amount shall be

considered additional rent to be paid to Landlord by Tenant on demand with

interest at ten percent (10%) per year from the day of such release.  Upon request by Landlord, Tenant shall

immediately cause any lien filed against the Premises to be released or bonded

in a manner reasonably satisfactory to Landlord.




 




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ARTICLE VII




 




ASSIGNMENT AND SUBLETTING




 




Section 7.1                                      Except

for a Permitted Sublease (defined below), Tenant shall not assign this Lease

nor sublet the Premises in whole or in part without the Landlord’s prior

written consent, which shall not be unreasonably withheld or delayed, provided

the transferee has a net worth (computed in accordance with generally accepted

accounting principles) at least substantially similar to the net worth of

Tenant on either the date hereof or the date of such proposed assignment,

whichever results in the greater net worth. 

An assignment or subletting made by Tenant with the prior written

consent of Landlord shall not release, discharge, or otherwise affect the

liability of Tenant under this Lease, nor shall any such assignment or

subletting relieve Tenant from the requirement of obtaining the prior written

consent of Landlord to any subsequent assignment or subletting.  Landlord shall at all times have the right

to sell, assign or transfer, pledge, hypothecate, or otherwise encumber this

Lease or Landlord’s fee interest in the Premises as security or

absolutely.  If Tenant is a corporation

or partnership, the alienation of fifty percent (50%) or more of the ownership

of such entity or its assets by its present owners shall be considered an

assignment of this Lease and shall constitute a default by Tenant in Tenant’s

obligations under this Lease unless the prior written consent of Landlord is

obtained, which consent which shall not be unreasonably withheld or delayed,

provided the transferee has a net worth (computed in accordance with generally

accepted accounting principles) at least substantially similar to the net worth

of Tenant.  Landlord’s consent shall not

be required for a Permitted Sublease.  A

Permitted Sublease shall be a lease which terminates automatically in the event

of a termination of this Lease or the uncured default by Tenant hereunder and

which is (i) any existing sublease as of the date of this Lease, as reflected

on Schedule 1 of this Lease, (ii) any sublease shorter than five (5)

years in duration and (iii) any sublease for less than 5,000 square feet.  Subleases which are in excess of five (5)

years in duration (excluding those entered into with the parties listed in Schedule

1) or in excess of 5,000 square feet shall require Landlord’s prior written

consent, which consent shall not be unreasonably withheld or delayed.  Landlord shall not be deemed unreasonable in

withholding consent to any proposed sublease where the proposed sublease rent

is less than the greater of (a) 95% of the then current market rent, or (b) 90%

of the then current Base Rent.  Tenant

shall furnish Landlord copies of all subleases reflected on Schedule 1

and shall furnish Landlord copies of any future subleases together with contact

information for all subtenants upon execution or commencement of any such

sublease.  In the event of a transfer of

Landlord’s title or interest in the Premises or this Lease, Landlord shall

deliver to the transferee or assignee any unused Security Deposit held by

Landlord.  Upon such transfer or

assignment and delivery of the Security Deposit, the prior Landlord shall be

relieved of all liability with respect to the obligations and/or covenants

under this Lease thereafter to be performed by Landlord.




 




Section 7.2                                      Expense.  Tenant shall reimburse Landlord for the

reasonable time and expense incurred by Landlord in processing any request of

Tenant for approval by Landlord of assignment or subletting pursuant to this

Lease.




 




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ARTICLE VIII




 




LANDLORD’S NON-LIABILITY

AND INDEMNIFICATION OF LANDLORD




 




Section 8.1                                      Non-Liability

of Landlord.  Landlord or its agent

shall not be liable for any injury or damage to persons or to property,

including the property of Tenant, resulting from any cause whatsoever, unless

caused solely by the acts or omissions of Landlord.




 




Section 8.2                                      Indemnification

to Landlord.  Tenant covenants to

indemnify and hold Landlord and/or its agents harmless from and against any and

all liability, damages, expenses, fees, penalties, actions, causes or actions,

suits, costs, claims, or judgments arising from injury during the term of this

Lease to persons or property within or without the Premises occasioned wholly

or in part by an act or acts, omission or omissions of Tenant, its agents,

servants, contractors, employees, visitors, licensees, or any other person or

the condition of the Premises, except to the extent caused solely by the acts

or omissions of Landlord.




 




ARTICLE IX




 




INSURANCE




 




Section 9.1                                      Public

Liability and Property Damage Insurance. 

Tenant, at its sole cost and expense, shall purchase and maintain in

force at all times during the term, public liability and property damage

insurance insuring against loss, cost and expense by reason of injury to or the

death of persons or damage to or the destruction of property arising out of or

in connection with the occupancy or use by Tenant, its employees, agents and

assigns, of the Premises, including, but without limiting the generality of the

foregoing, the sidewalks in front of and in back of the Premises and the

loading and delivery areas for the Premises, such insurance to be obtained and

maintained for the benefit and protection of both Landlord and Tenant, to

include both Landlord and Tenant as named insureds, to be carried with an

insurer acceptable to Landlord, and to have limits of liability of not less

than $5,000,000.00 per occurrence on a combined single limit basis.  Tenant shall also secure and maintain at its

sole cost and expense and at all times during the term of this Lease, as

extended insurance in unlimited amounts to protect itself from claims under

workers or workmen’s compensation acts, occupational disease acts and other

similar laws, and Tenant shall also secure and maintain at all times during the

term insurance in amounts, having deductibles and with insurance carriers or

companies decided upon by Tenant within its sole discretion, insuring the

contents of the Premises and any and all Tenant improvements thereto and

personal property or trade or business fixtures contained therein against loss

or damage by fire and other perils.




 




Section 9.2                                      Insurance

on Building and Improvements. 

Tenant, at its sole costs and expense, shall purchase and maintain in

force at all times during the term, a policy or policies insuring loss or

damage to the Premises and all improvements located on the Premises (including,

without limiting the generality of the foregoing, any and all signs and sign

structures) by fire and other perils normally covered by standard all-risk

insurance or the essential equivalent thereof (subject to the general

availability of such coverage in the insurance industry) (excluding the perils

of flood), in an amount equal to the full replacement costs of the

Premises.  If such insurance coverage

has a deductible clause, the deductible amount shall not exceed




 




10





























 




$10,000.00 per occurrence.  Upon

Landlord’s request, Tenant shall provide earthquake coverage on the Premises,

if a majority of California lending financial institutions would require such

coverage on the Premises, it being understood and agreed by the parties that as

of the date of execution of this Lease the Landlord does not require such

coverage.  In the case of any required

earthquake insurance, such deductible shall not exceed ten percent (10%) of the

loss.




 




Section 9.3                                      Copies

of Policies to be Furnished by Tenant. 

Tenant shall furnish Landlord, upon the execution of this Lease and at

least annually thereafter and upon making any coverage changes, with either a

copy of each of the policies insuring the risks referred to in the foregoing

Sections of this Article or certificates of insurance evidencing such coverage

and renewals thereof, and providing that such policies may not be canceled on

less than thirty (30) days prior written notice to Landlord (or, if Tenant’s

insurance company is unwilling to provide such notice, Tenant shall furnish

Landlord with evidence of payment of the annual premium of such policies at

least thirty (30) days prior to the expiration of such policies).  Should Tenant fail to carry the insurance

required herein and furnish Landlord with the policies or certificates of

insurance within five (5) calendar days after a written request or notice to do

so, Landlord shall have the right to obtain such insurance and collect the cost

thereof from Tenant as additional rent.




 




ARTICLE X




 




HOLDING OVER




 




Section 10.1                                If

Tenant shall retain possession of the Premises with the written consent of

Landlord after the expiration of this Lease, and rent is accepted from Tenant

during such period, such occupancy and payment shall be construed as an

extension of this Lease for a period from month to month only from the date of

such expiration.  In such event, if

either Landlord or Tenant desires to terminate the Lease at the end of any

month, the party desiring to terminate the same shall give the other party at

least thirty (30)-days written notice to that effect.  Failure on the part of the Tenant to give such notice shall

obligate it to pay rent for an additional calendar month, following the month

in which Tenant vacates the Premises. 

If Tenant retains possession of the Premises after the expiration of

this Lease without the written consent of Landlord, Tenant shall pay to

Landlord, as liquidated damages, 150% the amount of Base Rent (including

additional rent, if applicable) specified in this Lease for each month that

Tenant retains possession of the Premises or any part thereof after termination

of this Lease.  This provision shall not

be deemed to waive Landlord’s right to re-entry or any other right hereunder or

at law.




 




ARTICLE XI




 




LANDLORD’S RIGHT OF

ACCESS




 




Section 11.1                                Tenant

shall permit Landlord, or its authorized representatives, to enter the Premises

during usual business hours and upon reasonable notice (or at any time for the

purpose of making emergency repairs) for the purposes of inspection.




 




Section 11.2                                Tenant

shall permit Landlord, or its authorized representatives, to enter the Premises

during the last one hundred eighty (180) days of the term of this Lease for the

purpose




 




11





























 




of showing the Premises to prospective tenants at times which will not

unreasonably interfere with Tenant’s business. 

If Tenant shall vacate the Premises during the last month of the term of

this Lease, Landlord shall have the unrestricted right thereafter to enter the

same to commence preparations for the succeeding tenant or for any other

purpose whatsoever, without affecting Tenant’s obligation to pay rent for the

full term of this Lease.




 




ARTICLE XII




 




SUBORDINATION




 




Section 12.1                                This

Lease shall be subject and subordinate at all times to the lien of any mortgage

or deed of trust which may now or at any time hereafter be or become a lien

upon the Building of which the Premises are a part or upon Landlord’s interest

therein, and to any renewal, extension, modification, or refinancing

thereof.  In confirmation of such

subordination, Tenant shall, at Landlord’s request, promptly execute and

deliver such further instrument or instruments of subordination of this Lease

to the lien of any mortgage or deed of trust.




 




Section 12.2                                In

the event that Landlord transfers title to the Premises, or the Premises are

acquired by another upon the foreclosure or termination of a lien to which this

Lease is subordinated (i) Tenant shall, subject to the non-disturbance

provisions of Section 12.3, attorn to such new owner, and upon request, enter

into a new lease, containing all of the terms and provisions of this Lease,

with such new owner for the remainder of the term hereof, or, at the election

of such new owner, this Lease shall automatically become a new Lease between

Tenant and such new owner, upon all of the terms and conditions hereof, for the

remainder of the term hereof, and (ii) Landlord shall thereafter be relieved of

any further obligations hereunder and such new owner shall assume all of

Landlord’s obligations hereunder, except that such new owner shall not: (a) be

liable for any act or omission of any prior Landlord or with respect to events

occurring prior to acquisition of ownership; (b) be subject to any offsets or

defenses which Tenant might have against any prior Landlord, (c) be bound by

prepayment of more than one month’s rent, or (d) be liable for the return of

any security deposit paid to any prior Landlord, which has not been delivered

to such new owner.




 




Section 12.3                                Tenant’s

subordination of this Lease shall be subject to receiving from Landlord’s

lender a non-disturbance agreement in substantially the form attached hereto as

Exhibit B (a “Non-Disturbance Agreement”), which Non-Disturbance

Agreement provides that Tenant’s possession of the Premises, and this Lease,

including any options, will not be disturbed so long as Tenant is not in breach

hereof and attorns to the record owner of the Premises.  Concurrently upon the execution of this

Lease, Landlord shall obtain a Non-Disturbance Agreement from U.S. National

Bank Association, in the lender’s form attached as referenced above.




 




Section 12.4                                Self-Executing.  Except for the Non-Disturbance Agreement to

be obtained from U.S. National Bank Association pursuant to Section 12.3, the

agreements contained in this Article 12 shall be effective without the

execution of any further documents; provided, however, that, upon

written request from Landlord or a Lender in connection with a sale, financing

or refinancing of the Premises, Tenant and Landlord shall execute such further




 




12





























 




writings as may be reasonably required to separately document any

subordination, attornment and/or Non-Disturbance Agreement provided for herein.




 




ARTICLE XIII




 




DEFAULT




 




Section 13.1                                A

“default” is defined as a failure by the Tenant to comply with or perform any

of the terms, covenants or conditions under this Lease.  A “breach” is defined as the occurrence of

one or more of the following defaults, and the failure of Tenant to cure such

default within any applicable grace period:




 




1.                                       The

abandonment of the Premises.




 




2.                                       The

failure of Tenant to make any payment of rent required to be made by Tenant

hereunder, whether to Landlord or to a third party, when due, when such failure

continues for a period of five (5) days following written notice to Tenant; provided;

however, that Tenant shall not be entitled to notice of nonpayment more

than once in any twelve (12) month period.




 




3.                                       The

failure of Tenant to make any payment of any Security Deposit required to be

made by Tenant hereunder, whether to Landlord or to a third party, when due, or

to provide reasonable evidence of insurance or surety bond, or to fulfill any

obligation under this Lease which endangers or threatens life or property,

where such failure for any of the foregoing other than the failure to pay any

Security Deposit hereunder continues for a period of five (5) days following

written notice to Tenant (except in the case of an endangerment or threat to life

or property in which event no written notice shall be required), or the  material misrepresentation by Tenant to

Landlord of Tenant’s financial condition in any written reports or financial

information provided to Landlord by Tenant pursuant to this Lease (excluding

errors or inaccuracies in the Quarterly Financial Statements, as defined below,

which do not constitute intentional fraud in such statements and

excluding the failure to meet any projection provided as a part of any of the Quarterly

Financial Statements).




 




4.                                       The

failure by Tenant to (i) comply with Section 3.1, (ii) provide evidence of the

rescission of an unauthorized assignment or subletting or (iii) provide a

requested subordination, where any such failure continues for a period of 10

days following written notice to Tenant.




 




5.                                       A

default by Tenant as to the terms, covenants, conditions or provisions of this

Lease, other than those described in subparagraphs 13.1(1), (2) or (3), above,

where such default continues for a period of 30 days after written notice; provided,

however, that if the nature of Tenant’s default is such that more than

30 days are reasonably required for its cure, then it shall not be deemed to be

a breach if Tenant commences such cure within said 30 day period and thereafter

diligently prosecutes such cure to completion.




 




13





























 




6.                                       The

occurrence of any of the following events: (i) the making of any general

arrangement or assignment for the benefit of creditors; (ii) becoming a “debtor

as defined in 11 U.S. . §101 or any successor statute thereto (unless, in the

case of a petition filed against Tenant, the same is dismissed within 60 days);

(iii) the appointment of a trustee or receiver to take possession of

substantially all of Tenant’s assets located at the Premises or of Tenant’s

interest in this Lease, where possession is not restored to Tenant within 30

days; or (iv) the attachment, execution or other judicial seizure of

substantially alt of Tenant’s assets located at the Premises or of Tenant’s

interest in this Lease, where such seizure is not discharged within 30 days; provided,

however, in the event that any provision of this subparagraph (5) is

contrary to any applicable law, such provision shall be of no force or effect,

and not affect the validity of the remaining provisions.




 




7.                                       The

discovery that any financial statement of Tenant given to Landlord pursuant to

this Lease (excluding errors or inaccuracies in the Quarterly Financial

Statements, as defined below, which do not constitute intentional

fraud in such statements and excluding the failure to meet any

projection provided as a part of any of the Quarterly Financial Statements) was

materially false.




 




8.                                       Tenant’s

failure to furnish Landlord with evidence of payment of the annual premium of

the insurance policies as required in Section 9.3 at least thirty (30) days

prior to the expiration of such policies if such policies do not provide that

they may not be canceled on less than thirty (30) days prior written notice to

Landlord.




 




Section 13.2                                In

the event of any breach of this Lease by Tenant or the occurrence of an event

of default for which there is no applicable cure period stated herein,

Landlord, in addition to any other rights or remedies it may have by law or otherwise,

shall have the immediate right of re-entry and may remove all persons and

property from the Premises.  Such

property may be removed and stored at the cost of and for the account of

Tenant.  Should Landlord elect to

re-enter as herein provided, or should Landlord take possession upon the

expiration of this Lease, without terminating this Lease, Landlord may relet

the Premises or any part thereof for such term or terms (which may be for a

term extending beyond the term of this Lease) and at such rental or rentals and

upon such other terms and conditions as Landlord in the exercise of Landlord’s

sole discretion may deem advisable, with the right to make alterations and

repairs to the Premises.  Upon such

reletting (a) Tenant shall be immediately liable to pay to Landlord, in

addition to any indebtedness other than rent due hereunder, the cost and

expense of such reletting and of such alterations and repairs incurred by

Landlord, and the amount, if any, by which the rent reserved in this Lease for

the period of such reletting (up to but not beyond the term of this Lease)

exceeds the amount agreed to be paid as rent for the Premises for such period

of such reletting; or (b) at the option of the Landlord, rents received by the

Landlord from such reletting shall be applied; first, to the payment of any

indebtedness other than rent due hereunder from Tenant to Landlord; second, to

the payment of any costs and expenses of such reletting and of such alterations

an repairs; and third, to the payment of rent due and unpaid hereunder; and the

residue, if any, shall be held by Landlord and applied in payment of future

rent as the same may become due and payable hereunder.




 




Section 13.3                                Landlord

may at any time terminate this Lease for any breach, in addition to any other

remedy Landlord may have, and Landlord may recover from Tenant all damages




 




14





























 




Landlord may incur by reason of such breach, including the cost of

recovering the Premises, and including the rent reserved and charges in this

Lease for the remainder of the stated term, all of which amounts shall be

immediately due and payable along with attorneys’ fees from Tenant to Landlord.




 




Section 13.4                                In

the event of Tenant’s default hereunder, Landlord’s remedies shall be

cumulative, and no remedy expressly provided for herein shall be deemed to

exclude any other remedy set forth herein or allowable by law.




 




Section 13.5                                Default

of Landlord.  Landlord shall in no

event be charged with default in the performance of its obligations under this

Lease unless and until Landlord shall have received written notice from Tenant

specifying wherein Landlord has failed to perform any obligation hereunder, and

Landlord shall have failed to perform such obligation, or remedy such default,

within thirty (30) days (or such additional time as is reasonably required to

correct any such default) after receipt of such notice from Tenant.  In the event Landlord fails to provide

Tenant with a Non-Disturbance Agreement concurrently with any new financing or

refinancing of the Premises, Landlord will cooperate with Tenant and authorize

Tenant to deal directly with the lender of any new financing or refinancing to

attempt to obtain a Non-Disturbance Agreement.




 




Section 13.6                                Status

of Landlord.  Notwithstanding any

other provision of this Lease, Tenant agrees that no officer, director, agent,

partner, member, or employee of Landlord shall be responsible or liable for the

performance or non-performance of any agreement, covenant, or obligation of Landlord

in this Lease in his or her individual or personal capacity, and Tenant agrees

to look solely to the assets of Landlord and its affiliates and successors and

the proceeds of insurance carried or required to be carried by Landlord

hereunder (excluding any claims of Landlord in either of the Letters of Credit

referenced above) for the payment and satisfaction of all obligations and

liabilities of Landlord hereunder.




 




ARTICLE XIV




 




DAMAGE BY FIRE AND

EMINENT DOMAIN




 




Section 14.1                                If,

during the term of this Lease, any improvement upon the Premises, or any part

thereof, is damaged by fire or other casualty, and this Lease is not terminated

pursuant to section 14.2 hereof, Tenant shall repair such damage and restore

the Premises to substantially the same condition in which the Premises existed

before the occurrence of such fire or other casualty, this Lease shall remain

in full force and effect and Tenant shall be required to continue to pay Base

Rent without reduction.  The proceeds of

any insurance award shall immediately be made available to Tenant to the extent

and upon the terms made available to Landlord by its lender.




 




Section 14.2                                If

(a) more than fifty percent (50%) of the Premises is damaged by fire or other

casualty during the term of this Lease (other than by Tenant’s acts or

omissions to act) or (b) the insurance proceeds made available by Landlord

or its lender for disbursement in accordance with then current construction

loan disbursement procedures of Landlord’s lender in respect of the restoration

or repair of such damage are not adequate to pay the entire cost of the repair

and restoration work to be performed by Tenant in accordance with section 14.1

hereof




 




15





























 




(including inadequacy resulting from the requirement of the holder of

any indebtedness secured by a mortgage or deed of trust covering the Premises

that the insurance proceeds be applied to such indebtedness), then, in any such

event, either Landlord or Tenant shall have the right, by giving written notice

to the other within sixty (60) days after the occurrence of such fire or other

casualty, to terminate this Lease as of the date of such notice.  A total destruction of the Property shall

automatically terminate this Lease effective as of the date of such total

destruction.




 




Section 14.3                                Landlord

shall have the right to terminate this Lease if any part of the Premises is

taken by exercise of the power of eminent domain during the term of this

Lease.  Tenant shall have the right to

terminate this Lease if twenty five percent (25%)  or more of the Premises is taken by exercise of the power of

eminent domain during the term of this Lease. 

In each such case, Landlord or Tenant shall exercise such termination

right by giving written notice to the other within sixty (60) days after the

date of such taking.  If either Landlord

or Tenant exercises such right to terminate this Lease in accordance with this

section 14.3, this Lease shall terminate as of the date of such taking.  If neither Landlord nor Tenant exercises

such right to terminate this Lease in accordance with this section 14.3, this

Lease shall terminate as to the portion of the Premises so taken as of the date

of such taking and shall remain in full force and effect as to the portion of

the Premises not so taken, and the Base Rent shall be reduced as of the date of

such taking in the proportion that the area of the Premises so taken bears to

the total area of the Premises.  If all

of the Premises is taken by exercise of the power of eminent domain during the

term of this Lease, this Lease shall terminate as of the date of such taking.




 




Section 14.4                                If

all or any part of the Premises is taken by exercise of the power of eminent

domain, all awards, compensation, damages, income, rent and interest payable in

connection with such taking shall, except as expressly set forth in this

section 14.4, be paid to and become the property of Landlord, and Tenant hereby

assigns to Landlord all of the foregoing. 

Tenant shall have the right to claim and receive directly from the

entity exercising the power of eminent domain only the share of any award

determined to be owing to Tenant for the taking of improvements installed in

the portion of the Premises so taken by Tenant at Tenant’s sole cost and expense

based on the unamortized cost actually paid by Tenant for such improvements,

for the taking of Tenant’s movable furniture, equipment, trade fixtures and

personal property, for loss of goodwill, for interference with or interruption

of Tenant’s business, or for removal and relocation expenses.




 




ARTICLE XV




 




SURRENDER OF PREMISES




 




Section 15.1                                At

the end of the term or any renewal thereof or other sooner termination of this

Lease, Tenant will peaceably deliver to the Landlord possession of this

Premises, together with all improvements thereof or additions thereto, by

whomsoever made, in at least the same condition as received, or first

installed, ordinary wear and tear and damage by fire or other casualty not

caused by the act or negligence of Tenant excepted.  Any property not removed by Tenant shall be deemed abandoned at

the termination of this Lease, and title to the same shall thereupon pass to

Landlord.  Tenant shall indemnify the

Landlord against any loss or liability resulting from delay by Tenant in so

surrendering the Premises, including, without limitation any claims made by any

succeeding Tenant founded on such delay.




 




16





























 




ARTICLE XVI




 




WAIVER




 




Section 16.1                                The

waiver (or failure to insist upon strict performance) by Landlord or Tenant of

any term, covenant, or condition herein contained shall not be deemed to be a

waiver of such term, covenant, or condition or any subsequent breach of the

same or any other term, covenant, or condition herein contained.  The subsequent acceptance of rent hereunder

by Landlord shall not be deemed to be a waiver of any preceding breach by

Tenant of any term, covenant, or condition of this Lease, other than the

failure of Tenant to pay the particular rental so accepted, regardless of

Landlord’s knowledge of such preceding breach at the time of acceptance of such

rent.




 




ARTICLE XVII




 




NOTICES




 




Section 17.1                                All

notices and other communications which may or are required to be given by

either party to the other hereunder shall be in writing and may be delivered in

person (by hand or courier) or by United States Postal Services, registered or

certified  mail, return receipt

requested, postage prepaid, addressed to the Tenant at:  the Premises; and addressed to the Landlord

at: the address stated above or to such other firm or to such other place as

Landlord or agent may from time to time designate in writing, in accordance

with the terms of this paragraph.  Such

notice shall be deemed to have been given and received either on the date of

personal delivery or three (3) days after posting in the United States Postal

Services as set forth above.  If Tenant

is provided with the name and address of any mortgagee of the Premises, Tenant

shall send to such mortgagee a copy of the notice of default or demand for

performance served on Landlord and shall permit such mortgagee to cure such

default or otherwise perform Landlord’s obligations within thirty (30) days

after receipt of such written notice by such mortgagee.




 




ARTICLE XVIII




 




ABANDONMENT




 




Section 18.1                                If

Tenant shall abandon or vacate the Premises before the end of the term or any

other event shall happen entitling Landlord to take possession thereof,

Landlord may take possession of the Premises, relet the same without such

action being deemed an acceptance of a surrender of this Lease or in any way

terminating the Tenant’s liability hereunder, and Tenant shall remain liable to

pay the rent herein reserved less the net amount actually realized from any

such reletting after deduction of any expenses incident to such repossession

and reletting.




 




17





























 




ARTICLE XIX




 




MISCELLANEOUS PROVISIONS




 




Section 19.1                                Governing

Law.  This Lease shall be governed

by the laws of the State of California.




 




Section 19.2                                Writing

Controls.  It is agreed that neither

Landlord nor Tenant has made any statement, promise, or agreement or in any way

modifies, varies, alters, enlarges, or invalidates any of this Lease’s

provisions and that no obligations of Landlord or Tenant shall be implied in

addition to the obligations herein stated.




 




Section 19.3                                Air

and Light.  This Lease does not

grant or guarantee Tenant a continuance of light and air over any property

adjoining the Premises.




 




Section 19.4                                Quiet

Possession.  Landlord covenants that

Tenant, upon paying the rent herein provided and performing all of the

covenants of this Lease by it to be performed, shall have quiet possession of

the Premises during the term hereof except as a result of any condition of the

Premises or title thereto not caused by Landlord or of any act of Tenant in

connection with the Premises either prior to or during the term of this

Lease.  Tenant acknowledges that it sold

the Premises to Landlord and takes its interest herein subject to any and all

restrictions, encumbrances, covenants, leases and other items disclosed of

record, all conditions that would be revealed by a minimum standard survey and

all physical conditions of all or any portion of the Premises and that Landlord

makes no warranty or representation and has no liability in connection

therewith.




 




Section 19.5                                Memorandum

of Lease.  At the request of either

party, the parties agree to execute and record a memorandum of this Lease.




 




Section 19.6                                Partial

Invalidity.  If any term, covenant,

condition, or provision of this Lease, or the application thereof to any person

or circumstance, shall, to any extent, be invalid or unenforceable, the

remainder of this Lease, or the application of such term or provision to

persons or circumstances other than those as to which it is invalid or

unenforceable, shall not be affected thereby, and each term, covenant,

condition, and provision of this Lease shall be valid and be enforced to the

fullest extent permitted by law.




 




Section 19.7                                Dedications,

etc.  Within ten (10) days after

receipt of written request from Landlord, Tenant agrees, at Landlord’s cost and

expense, to execute and deliver to Landlord for recordation any deeds of

utility easements or rights-of-way or other instruments affecting the Premises

which may be requested by Landlord for any purpose, so long as the same shall

not unreasonably interfere with Tenant’s use of Premises.




 




Section 19.8                                Relationship

of Landlord and Tenant.  Landlord

shall in no way be construed or held to be a partner or associate of Tenant in

the conduct of its business, it being expressly understood and agreed that the

relationship between the parties hereto is and shall at all times remain that

of Landlord and Tenant.




 




18





























 




Section 19.9                                Brokerage

Commissions. Broker’s Commission. 

Each party represents and warrants that it has caused or incurred no

claims for brokerage commissions or finder’s fees in connection with the

execution of this Lease, and each party shall indemnify and hold the other

harmless against and from all liabilities arising from any such claims caused

or incurred by it (including without limitation, the cost of attorney fees in

connection therewith).




 




Section 19.10                          Estoppel

Certificates.  Tenant will, at any

time or from time to time, at the request of Landlord, execute, acknowledge,

and deliver to Landlord a certificate by Tenant certifying (i) whether or not

this Lease is unmodified and in full force and effect (or, if there have been

modifications, the extent to which this Lease is in full force and effect as

modified and stating the modifications), (ii) whether or not there are then

existing any off-sets of defenses against the enforcement of any provisions of

this Lease (and, if so, specifying the same), and (iii) the dates, if any, to

which rent and additional rent and other charges have been paid in

advance.  Any such certificate may be

relied upon by any prospective assignee or mortgagee or Landlord’s interest

hereunder.




 




Section 19.11                          Gender

and Number.  Words of any gender

used in this Lease shall be held to include any other gender, and words in the

singular number shall be held to include the plural (and vice versa), when the

sense requires.




 




Section 19.12                          Titles.  The titles and article or paragraph headings

are inserted only for convenience, and are in no way to be construed as a part

of this Lease or as a limitation on the scope of the particular provisions to

which they refer to the benefit of, the respective successors and assigns of

the Landlord and the Tenant.




 




Section 19.13                          Waivers.  No waiver of any condition or covenant in

this Lease by either party shall be deemed to imply or constitute a further

waiver of the same or any other condition or covenant of this Lease.




 




Section 19.14                          Certificates.  Tenant and Landlord agree that, upon request

of the other, it will execute a certificate with respect to the status of this

Lease setting forth that it is in full force and effect and has not been

altered, modified or amended (or specifying the nature of same); that there are

no defaults of the other party known to the party so certifying (or specifying

the nature of any known defaults); and stating the date to which rental has

been paid.




 




Section 19.15                          Relationship

of Parties.  Nothing contained

herein shall be deemed or construed by the parties hereto, nor by any third

party, as creating the relationship of principal and agent, or of partnership,

or of joint venture, between the parties hereto.




 




Section 19.16                          Construction

and Titles.  Whenever a word appears

herein in its singular form, such word shall include the plural; and the neuter

gender shall include the masculine and feminine genders.  This Lease shall be construed without

reference of titles of Articles or Sections, which are inserted for reference only.  If any term, covenant or condition of this

Lease or the application thereof to any person or circumstance shall, to any

extent, be invalid or unenforceable, the remainder of this Lease, or the

application of such term, covenant or condition to persons or circumstances

other than those as to which it is held invalid or unenforceable, shall not be

affected thereby and each term, covenant or condition of this Lease




 




19





























 




shall be valid and be enforced to the full extent permitted by

law.  If Tenant is a partnership or

entity the members of which are subject to personal liability, or if Tenant is

more than one individual, the liability of each such member or individual shall

be joint and several.




 




Section 19.17                          Costs.  The losing party shall pay and indemnify the

other party against all costs and charges, including attorneys’ fees, incurred

in enforcing any covenant or agreement contained in this Lease.




 




Section 19.18                          Binding

Mediation.  Except for the need for

any party to seek a provisional remedy in a court of law to secure or preserve

the rights and benefits conferred in this Lease, including injunctive relief, any controversy or dispute arising out of

this Lease shall be determined by binding mediation.  Mediation hearings shall be held in Orange

County, California, subject to Landlord attending by telephone at Landlord’s

option.  Any such controversy shall be

mediated by a single mediator who shall be a neutral and impartial lawyer with

excellent academic and professional credentials specializing in general

commercial matters, with experience in the field of contract law and

leases.  If the parties cannot agree on

the selection of the mediator within ten (10) calendar days, the mediator shall

be selected in accordance with the Commercial Mediation Rules of the American

Arbitration Association.  The mediator

shall hear and determine said controversy in accordance with applicable law,

the intention of the parties as expressed in this Lease and any amendments hereto,

and upon the evidence produced at any mediation hearing, all based upon such

procedures and rules of limited and expedited discovery as are established by

the mediator.  The award shall be

rendered within twenty (20) days after the conclusion of the final hearing, and

may include attorneys’ fees and costs to the prevailing party pursuant to

Section 19.17.  Judgment may be entered

on the award in any court of competent jurisdiction.




 




Section 19.19                          Financial

Representation.  Tenant hereby

represents and warrants to Landlord that Tenant has closed on the line of

credit in the amount of $2,500,000. 

Tenant represents and warrants to Landlord that the financial statements

of Tenant attached hereto as Exhibit C are true and correct in all

material respects. Tenant further represents and warrants to Landlord that

although the projections attached as a part of Exhibit C are projections

only and subject to change, such projections were prepared by Tenant in good

faith and without knowledge of any material misrepresentation or falsehood.




 




ARTICLE XX




 




INSOLVENCY OR BANKRUPTCY




 




Section 20.1                                Insolvency

or Bankruptcy.  In the event Tenant

shall become a debtor under Chapter 7 of the Federal Bankruptcy Code (“Code”)

or a petition for reorganization or adjustment of debts is filed concerning a

petition for reorganization or adjustment of debts is filed concerning Tenant

under Chapters 11 or 13 of the Code or a proceeding is filed under Chapter 7

and is converted to a proceeding under Chapter 11 or 13, provided this Lease is

in default (other than of a provision relating to the insolvency or financial

condition of the Tenant), the Trustee or Tenant, as Debtor-in-Possession may

not elect to assume this Lease unless, at the time of such assumption, the

Trustee, as Debtor-in-Possession has:




 




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(i)                                     Cured

or provided Landlord “adequate assurance” (as defined below) that:




 




(a)                        within

sixty (60) days from the date of such assumption, the Trustee or

Debtor-In-Possession will cure all monetary defaults under this Lease; and




 




(b)                       Within

ninety (90) days from the date of such assumption, the Trustee or

Debtor-in-Possession will cure all non-monetary defaults under this Lease.




 




(ii)                                  For

purposes of this Section, Landlord and Tenant acknowledge that, in the context

of bankruptcy proceedings of Tenant, at a minimum “adequate assurance” shall

mean the Trustee or Debtor-in-Possession has and will continue to have

sufficient unencumbered assets after the payment of all secured obligations and

administrative expenses to assure Landlord that the Trustee or

Debtor-in-Possession will have sufficient funds to fulfill the obligations of

Tenant under this Lease, and to keep the Premises stocked with merchandise and

properly staffed with sufficient employees to conduct a fully-operational,

actively promoted business in the Premises.




 




Landlord and Tenant expressly agree that (i) and (ii)

above are inapplicable in their entirety if Tenant has not defaulted on this

Lease prior to the filing of any petition and further, that such default must

have been one other than related to the insolvency or financial condition of

Tenant.  If the Trustee or

Debtor-in-Possession has assumed the Lease pursuant to the provisions of this

Section for the purpose of assigning Tenant’s interest hereunder to any other

person or entity, such interest may be assigned only after the Trustee,

Debtor-in-Possession or the proposed assignee have complied with all of the

terms, covenants and conditions of Article IV of this Lease, with Landlord and

Tenant acknowledging that such terms, covenants and conditions are commercially

reasonable in the context of a bankruptcy proceeding of Tenant. When, pursuant

to the code, the Debtor in Possession or Trustee shall be obligated to pay

reasonable use and occupancy charges for the use of the Premises or any portion

thereof, such charges shall not be less than the rent payable by Tenant

hereunder. The rights, remedies and liabilities of Landlord and Tenant set

forth in this Section shall be in addition to those which may now or hereafter

be accorded, or imposed upon, Landlord and Tenant by the Code.




 




ARTICLE XXI




 




ENVIRONMENTAL




 




Section 21.1                                Definitions

and Tenant’s Obligations and Indemnification.  As used herein, the term “Hazardous Material” or “Hazardous

Substance” means any hazardous or toxic substance, material, or waste, or

pollutant or contaminant which is or becomes regulated by any local

governmental authority, the State of California or the United State Government.  “Environmental Laws” means all present of

future federal, state and municipal laws, ordinances, rules and regulations

applicable to the environmental and ecological condition of the Leased

Premises, the rules and regulations of the Federal Environmental Protection

Agency or any other federal, state or municipal agency or governmental board or

entity having jurisdiction over the Premises. 

Tenant shall not cause, allow, or permit any Hazardous Material to be

brought upon,




 




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generated, manufactured, stored, handled, disposed of, or used at, on,

about, or beneath the Premises or any portion of the Premises by Tenant, its

agents, employees, contractors, invitees, or licensees without the prior

written consent of Landlord.  Tenant represents

and warrants to Landlord that during the term hereof shall comply fully with

all federal, state, and local environmental, health, or safety statutes, rules,

regulations, or ordinances.  If Tenant

breaches the obligations stated in this Article XV, or if the presence of

Hazardous Material on the Premises caused or permitted by Tenant results in

contamination of the Premises, or if contamination of the Premises by Hazardous

Material otherwise occurs for which Tenant is legally liable to Landlord for damages

resulting therefrom, then Tenant shall indemnify, defend by counsel reasonably

acceptable to Landlord and hold harmless Landlord, its subsidiaries,

affiliates, successors, and assigns from any and all claims, judgments,

damages, penalties, fines, costs, liabilities, or losses (including, without

limitation, diminution in value of the Premises, damages for the loss or

restriction on use of rentable or usable space or of any amenity of the

Premises, damages arising from any adverse impact on marketing of space, and

sums paid in settlement of claims, attorneys’ fees, consultant fees, and expert

fees) which arise during or after the term of this Lease as a result of such

contamination. Tenant shall have no liability under this Lease with respect to

the migration of any Hazardous Material at, on, about or beneath the Premises

from adjacent properties not caused or contributed to by Tenant; provided,

however, Tenant acknowledges that Landlord purchased the Premises from Tenant

without a break in occupancy or control by Tenant.  Landlord and Tenant agree that any Hazardous Material or

condition found in or about the Premises shall be deemed to have been caused or

contributed to by Tenant unless a third party accepts responsibility or is

found responsible for any required clean up of same. The provisions of this

Article shall survive, and remain in full force and effect after, the date

hereof and termination of the Term.




 




Section 21.2                                Compliance.

 Tenant, at its sole cost and

expense, shall promptly comply with the Environmental Laws including any notice

from any source issued pursuant to the Environmental Laws or issued by any

insurance company which shall impose any duty upon Tenant with respect to the

use, occupancy, maintenance or alteration of the Premises whether such notice

shall be served upon Landlord or Tenant.




 




Section 21.3                                Restrictions

on Tenant.  Tenant shall operate its

business and maintain the Premises in compliance with all Environmental

Laws.  Tenant shall not cause or permit

the use, generation, release, manufacture, refining, production, processing,

storage or disposal of any Hazardous Substances on, under or about the

Premises, or the transportation to or from the Premises of any Hazardous

Substances, except as necessary and appropriate for its permitted use under

Section 3.1 of this Lease, in which case the use, storage or disposal of such

Hazardous Substances shall be performed in compliance with the Environmental

Laws.




 




Section 21.4                                Notices,

Affidavits, Etc.  Tenant shall

immediately notify Landlord of (i) any violation by Tenant, its employees,

agents, representatives, customers, invitees or contractors of the

Environmental Laws on, under or about the Premises, or (ii) the presence or

suspected presence of any Hazardous Substances on, under or about the Premises

and shall immediately deliver to Landlord any notice received by Tenant

relating to (i) and (ii) above from any source.  Tenant shall execute affidavits, representations and the like

within five (5) days of Landlord’s request therefor concerning Tenant’s best

knowledge and belief regarding the presence of any Hazardous Substances on,

under or about the Premises.




 




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Section 21.5                                Landlord’s

Rights.  Landlord and its agents

shall have the right, but not the duty, upon advance notice (except in the case

of emergency when no notice shall be required) to inspect the Premises and

conduct tests thereon to determine whether or the extent to which there has

been a violation of Environmental Laws by Tenant or whether there are Hazardous

Substances on, under or about the Premises. 

In exercising its rights herein, Landlord shall use reasonable efforts

to minimize interference with Tenant’s business but such entry shall not

constitute an eviction of Tenant, in whole or in part, and Landlord shall not

be liable for any interference, loss, or damage to Tenant’s property or

business caused thereby.




 




Section 21.6                                Tenant’s

Indemnification.  Tenant shall

indemnify Landlord and Landlord’s managing agent from any and all claims,

losses, liabilities, costs, expenses and damages, including attorney’s fees,

costs of testing and remediation costs, incurred by Landlord in connection with

any breach by Tenant of its obligations under this Article 21.  The covenants and obligations under this

Article 21 shall survive the expiration or earlier termination of this Lease.




 




ARTICLE XXII




 




OPTION TO REPURCHASE

PREMISES




 




Section 22.1                                Tenant

shall have the right to repurchase the Premises at any time during the period

beginning on the first day of the third year of the Original Term of the Lease

and ending on the last day of fifth year of the Original Term of the

Lease.  Tenant shall exercise any such

right to repurchase the Premises by providing at least sixty (60) days written

notice to Landlord.  If closing has not

occurred within one hundred twenty (120) days from the date of such written

notice, this option to repurchase shall be deemed waived and terminated without

further documentation or notice.  The

purchase price of the Premises shall be equal to the amount determined by

dividing the annual Base Rent that otherwise would have been payable for the

twelve (12) months following the closing of the repurchase of the Premises by

the Tenant by eight and one-half percent (8.5%).  Tenant and Landlord shall effect any such repurchase of the

Premises pursuant to the terms and conditions of a purchase and sale agreement

and escrow instructions substantially in the same form as the purchase and sale

agreement and escrow instructions entered into with respect to Landlord’s

purchase of the Premises, except with respect to the purchase price, which

shall be determined as stated in the preceding sentence.  During the pendency of any such sale upon the

exercise of such repurchase option, Tenant shall continue to occupy the

Premises under the terms of this Lease.




 




ARTICLE XXIII




 




OPTION TO TERMINATE LEASE




 




Section 23.1                                Tenant

shall have the right to terminate this Lease at any time during the period

beginning on the first day of the third year of the Original Term of the Lease

and ending on the last day of fifth year of the Original Term of the

Lease.  Tenant shall exercise any such

right to terminate this Lease by providing at least six (6) months written

notice to Landlord.




 




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Tenant shall pay Landlord a Lease termination fee (the “Termination

Fee”) equal to fifty percent (50%) of the amount equal to the net present value

of the aggregate Base Rent payments remaining through expiration of this Lease

(excluding any unexercised renewal options) at the time of Lessee’s exercise of

such termination option, using a discount rate of 8.5%.  The Termination Fee shall be paid on or

before the termination date of the Lease.




 




ARTICLE XXIV




 




TENANT IMPROVEMENT

ALLOWANCE




 




Section 24.1                                Landlord

shall expend an amount on improvements to the Premises (the “Tenant Improvement

Allowance”) in the amount of Fifty Thousand Dollars ($50,000.00) for the costs

incurred by Landlord for the design and construction of the improvements

required by Landlord (collectively, the “Tenant Improvements”) to be applied by

Landlord in constructing the Tenant Improvements pursuant to this Lease.  In no event shall Landlord be obligated to

make expenditures pursuant to this Lease in a total amount which exceeds the

Tenant Improvement Allowance.  Any

amount of the Tenant Improvement Allowance not utilized by Landlord within six

(6) months of the date of this Lease for construction of the Tenant Improvements

shall be credited by Landlord against the next installment of Base Rent then

due.




 




Section 24.2                                Within

three (3) business days of receipt of an invoice or any supporting

documentation (“Billing Documents”) for construction of the Tenant

Improvements, Landlord shall submit such Billing Documents to Tenant.  Tenant shall review the Billing Documents

and/or work performed and, within three (3) business days after receipt of such

Billing Documents, Tenant shall inform Landlord that it approves the invoice or

that it disputes the invoice.  In the

event Tenant disputes the invoice, such dispute shall be accompanied by a

detailed written explanation of the reasons for Tenant’s disapproval.  As to all disapproved Billing Documents, the

parties shall use best efforts to resolve such dispute promptly.  Failure of Tenant to reasonably disapprove

any Billing Documents within the above-referenced three (3) business day

period, shall be deemed to constitute Tenant’s approval thereof.  All approved invoices for Tenant Improvement

Allowance Items shall be paid by Landlord pursuant to Landlord’s disbursement

process prior to delinquency.




 




[Signature page

follows]




 




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IN WITNESS WHEREOF, the parties have executed this

Lease as of the date first above written.




 




	

   


  	

  SCP PARK MEADOWS, LLC


  
	

   


  	

   


  
	

   


  	

   


  
	

   


  	

  By:


  	

      /s/

  John B. Urbahns


  	

   


  
	

   


  	

  Name:


  	

      John

  B. Urbahns


  	

   


  
	

   


  	

  Title:


  	

        Member


  	

   


  
	

   


  	

   


  
	

   


  	

   


  
	

   


  	

  REVCARE, INC.


  
	

   


  	

   


  
	

   


  	

   


  
	

   


  	

  By:


  	

     /s/

  Fred McGee


  	

   


  
	

   


  	

  Name:


  	

     Fred

  McGee


  	

   


  
	

   


  	

  Title:


  	

        CFO


  	

   


  
						





 




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