Document:

exv10w13

 

Exhibit 10.13

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

STANDARD INDUSTRIAL/COMMERCIAL TENANT LEASE – NET

Basic Provisions (“Basic Provisions”)

	1.1	 	Parties: this Lease
(“Lease”), dated for reference purposes only, April 2, 2003, is made by and between IPERS BREA/GOLDEN STATE
BUSINESS PARKS, INC., a Delaware corporation (“Lessor”) and INVIVO
CORPORATION, a Delaware corporation, successor in interest to Medical Data
electronics, a California corporation (“Lessee”) (collectively the
“parties,” or individually a “Party”).
	 
	1.2	 	Premises: That certain real property, including all improvements therein
or to be provided by lessor under the terms of this lease, and commonly
known by the street address of 12723 Wentworth Street, Arleta, CA
91331 located in the County of Los Angeles, State of California, and generally described as (describe
briefly the nature of the property) approximately 35,840 square feet of
industrial space as indicated by crosshatched/pink on Exhibit “A” attached
hereto and made a part hereof.
	 
	1.3	 	Term: Two (2) years
and 0 months (“Original Term”) commencing July 1,
2003 (“Commencement Date”) and ending June 30,
2005 (“Expiration Date”). (See Paragraph 3 for further provisions.)
	 
	1.4	 	Early Possession: N/A (“Early
Possession Date”). (See Paragraphs 3.2 and 3.3 for further provisions.)
	 
	1.5	 	Base Rent: $20,070.40 per
month (“Base Rent”), payable on the first (1st) day of each month commencing on the Commencement date.
See Paragraph 1.5 of the Addendum attached hereto. (See Paragraph 4 for
further provisions.) If this box is checked, there are provisions in
this Lease for the Base Rent to be adjusted.
	 
	1.6	 	Base Rent Paid Upon Execution:
$none as Base Rent for the period See Paragraph 1.5 of Addendum attached hereto.
	 
	1.7	 	Security Deposit:
$29,788.40*** (“Security Deposit”), (See Paragraph 5 for further provisions.)
	 
	1.8	 	Permitted Use: General offices, manufacturing and distribution of
electronic medical instrumentation and related legal uses and for no other
purpose. (See Paragraph 6 for further provisions.)
	 
	1.9	 	Insuring Party: lessor is the “Insuring Party” unless otherwise stated
herein. (See Paragraph 8 for further provisions.)
	 
	1.10	 	Real Estate Brokers: the following real estate brokers (collectively,
the “Brokers”) and brokerage relationships exist in this transaction and
are consented to by the Parties (check applicable boxes): RREEF MANAGEMENT
COMPANY represents Lessor exclusively (“Lessor’s
Broker”); X both lessor and Lessee, and Lessee exclusively (“Lessee’s Broker”); both lessee and lessor.
(See paragraph 15 for further provisions.)
	 
	1.11	 	Guarantor. The obligations of the Lessee under this Lease are to be
guaranteed by None (“Guarantor”). See Paragraph 37 for
further provisions.)
	 
	1.12	 	Addends. Attached hereto is an
Addendum or Addenda consisting of
paragraphs 1.5, 6.1, 6.2, 7.2, 8.2, 26, 39, 49, 50, 51, 52, 53 and
Exhibits A through D all of which constitute a part of this lease.
	 
	2.	 	Premises.
	 
	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 the Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease,
or that may have been used in calculating rental, is and approximation
which lessor and Lessee agree is reasonable and the rental bases thereon
is not subject to revision whether or not the actual square footage of the
premises is more or less.
	 
	2.2	 	Lessee 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.
Lessee acknowledges that Lessee was the occupant of the Premises prior to
this Lease**
	 
	3.	 	Term
	 
	3.1	 	Term. The Commencement Date, Expiration Date and original Term of this
lease are as specified in Paragraph 1.3.

**under the Lease by and between IPERS BREA/GOLDEN STATE BUSINESS PARKS, INC.,
a Delaware corporation (Lessor) and Medical Data Electronics, a California
corporation (Lessee).

***Lessor currently holds a Security Deposit equal to $29,788.40 from Lessee’s
prior Lease dated June 11, 1992. the $29,788.40 will be transferred to this
Lease on July 1, 2003.

4.  Rent.

4.1  Base Rent. Lessee shall cause payment of Base Rent and other rent or
charges, as the same may be adjusted from time to time, to be received by
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 (1) full calendar month shall be prorated based upon the actual
number of days of the calendar 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.

5.  Security Deposit. Lessee shall deposit with Lessor upon 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 ton (10) days after written request therefore
deposit moneys with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. My time the Base Rent Increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit
additional moneys with Lessor sufficient to maintain the slime ratio between
the Security Deposit and the Base Rent as those amounts are specified in the
Basic Provisions. 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 herein), 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 moneys to be paid by Lessee under this Lease.

 

 

6.  Use. See Paragraph 6.1 of the Addendum attached hereto.

6.1  Use. Lessee shall use and occupy the Premises only for the purposes set
forth in Paragraph 1.8, or any other use which Is comparable thereto, and for
no other purpose. Lessee shall not use or permit the use of the Premises In a
manner that creates waste or a nuisance, or that disturbs owners and/or
occupants of, or causes damage to, neighboring premises or properties. Lessor
hereby agrees to not unreasonably withhold or delay Its consent to any written
request by Lessee, Lessees assignees or subtenants, and by prospective
assignees and subtenants of the Lessee, its assignees and subtenants, for a
modification of said permitted purpose for which the premises may be used or
occupied, so long as the same will not Impair structural Integrity of the
Improvements on the Premises, the mechanical or electrical systems therein, Is
not significantly more burdensome to the Premises 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 give a
written notification of the same, which notice shall include an explanation of
Lessor’s reasonable objections to the change in use.

6.2  Hazardous Substances. See Paragraph 6.2 of the Addendum attached hereto.

6.3  Lessee’. Compliance with Law. Except as otherwise provided In this Lease,
Lessee, shall, at Lessee’s sole cost and expense, fully, diligently and In a
timely manner, comply with all Applicable Law, which term Is used In this Lease
to Include all laws, rules, regulations, ordinances, directives, covenants,
easements and restrictions of record, permits, the requirements of any
applicable fire Insurance underwriter or rating bureau, and the recommendations
of Lessor’s engineers and/or consultants, relating In any manner to the
Premises (including but not limited to matters pertaining to (i) industrial
hygiene, (i1) 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 or storage tank), now In
effect or which may hereafter come Into effect, and whether or not reflecting a
change In policy from any previously existing policy. 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 Law 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 reporting pertaining to or involving failure by Lessee
or the Premises to comply with any Applicable Law.

6.4  Inspection; Compliance. Lessor and Lessor’s Lander(s) (as defined In
Paragraph 8.3(a)) 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
Inspecting the condition of the Premises and for verifying compliance by Lessee
with this Lease and all Applicable Laws (as defined in Paragraph 6.3), and to
employ experts and/or consultants In connection therewith and/or to advise
Lessor with respect to Lessee’s activities, Including but not limited to the
Installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance or storage tank on or from the Promises. The costs and
expenses of any such inspections shall be paid by the party requesting same,
unless a Default or Breach of this Lease, violation of Applicable Law, or a
contamination, caused or materially contributed to by Lessee Is found to exist
or be Imminent, or unless the Inspection is requested or ordered by a
governmental authority as the result of any such existing or Imminent violation
or contamination. In any 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.

Subject to the provisions of Paragraphs 2.2 (Lessor’s warranty as to
condition), 2.3 (Lessor’s warranty as to compliance with covenants, ate), 7.2
(Lessor’s obligations to repair), 9 (damage and 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, structural and non-structural (whether or not such portion of the
Premises requiring repairs, 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 suit 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 serving the Premises, such as
plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire sprinkler and/or
standpipe and hose or other automatic fire extinguishing system, Including firs
alarm and/or smoke detection systems and equipment, fire hydrants, fixtures,
walls (interior and exterior), foundations, ceilings, roofs, floors, windows,
doors, plate glass, skylights*, landscaping, driveways, parking lots, fences,
retaining walls, signs, sidewalks and parkways located In, on, about, or
adjacent to the Premises. Lessee shall not cause or permit any Hazardous
Substance to be spilled or released In, on, under or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly,
at Lessee’s expense, take all Investigatory and/or remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of
any contamination of, and for the maintenance, security and/or monitoring of
the Premises, the elements surrounding same, or neighboring properties, that
was caused or materially contributed to by Lessee, or pertaining to or
Involving any Hazardous Substance and/or storage tank brought onto the Premises
by or for Lessee or under its control. Lessee, In keeping the Premises in good
order, condition and repair, shall exercise and perform good maintenance
practices. Lessee’s obligations shall include restorations, replacements or
renewals when necessary to keep the Premises and all Improvements thereon or a
part thereof in good order, condition and state of repair. See Paragraph 7.2 of
the Addendum attached hereto.

Lessee shall, at Lewes’s sole cost and expense, procure and maintain contracts,
with copies to Lessor, In customary form and substance for, and with
contractors specializing and experienced in, the inspection, maintenance and
service of the following equipment and improvements, if any, located on the
Premises: (i) heating, air conditioning and ventilation equipment, (ii) boiler,
fired or unfired pressure vessels, (ii) fire sprinkler and/or standpipe and
hose or other automatic fire extinguishing systems, including fire alarm and/or
smoke detection.

7.2  Lessor’s Obligations. Except for the warranties and agreements of Lessor
contained in Paragraphs 2.2 (relating to condition of the Premises), 2.3
(relating to compliance with covenants, restrictions and building code), 9
(relating to destruction of the Premises) and 14 (relating to condemnation of
the Premises), it Is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, the
Improvements located thereon, or the equipment therein, whether structural or
non structural, all of which obligations are Intended to be that of the Lessee
under Paragraph 7.1 hereof. 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. Lessee and Lessor expressly waive the
benefit of any statute now or hereafter In effect to the extent It Is
Inconsistent with the terms of this Lease with respect to, or which affords
Lessee the right to make repairs at the expense of Lessor or to terminate this
Lease by reason of, any needed repairs. See Paragraph 7.2 of the Addendum
attached hereto.

7.3  Utility Installations; Trade Fixtures; Alterations.

Definitions; Consent Required. The term “Utility Installations” is used in this
Lease to refer to all carpeting, window coverings, air lines, power panels,
electrical distribution, security, fire protection systems, communication
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 that can be removed
without doing material damage to the Premises. The term “Alterations” shall
mean any modification of the improvements on the Premises from that which are
provided by Lessor under the terms of this Lease, other than Utility
Installations or Trade Fixtures,

 

 

whether by addition or deletion. “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 as defined in Paragraph 7.4(a). Lessee
shall not make any Alterations or Utility Installations in, on, under or about
the Premises without Lessor’s prior written consent. Lessee may, however, make
non-structural Utility Installations to the Interior of the Premises (excluding
the roof), as long as they are not visible from the outside, do not involve
puncturing, relocating or removing the roof or any existing walls, and the
cumulative cost thereof during the term of this Lease as extended does not
exceed $25,000.

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 proposed 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 in compliance with all
Applicable Law. Losses shall promptly upon completion thereof furnish Lessor
with as-built plans and specifications therefore. Lessor may (but without
obligation to do so) condition its consent to any requested Alteration or
Utility Installation that costs $10,000 or more upon Lessee’s providing Lessor
with a lien and completion bond in an amount equal to one and one-half times
the estimated cost of such Alteration or Utility Installation and/or upon
Lessee’s posting an additional Security Deposit with Lessor under Paragraph 36
hereof.

Indemnification. 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 mechanics’ 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 attorney’s 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.

Ownership. Subject to Lessor’s right to require their removal or become the
owner thereof as hereinafter provided In this Paragraph 7.4, all Alterations
and Utility Additions made to the Premises by Lessee shall be the property of
and owned by Lessee, but considered a part of the Premises. Lessor may, at any
time and at Its option, elect in writing to Lessee to be the owner of all or
any specified part of the Lessee Owned Alterations and Utility Installations.
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 and be
surrendered by Lessee with the Premises.

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

Surrender/Restoration. Lessee shall surrender the Premises by the end of the
last day of the Lease term or any earlier termination date, with all of the
Improvements, parts and surfaces thereof clean and free of debris and in good
operating order, condition and state of repair, ordinary wear and tear
excepted. “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 in writing by Lessor, the Premises, as surrendered, shall
Include the 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 Alterations and/or 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
Law and/or good practice. 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.

8.  Insurance; Indemnity.

8.1  Payment For Insurance. Regardless of whether the Lessor or Lessee Is the
Insuring Party, Lessee shall pay for all insurance required under this
Paragraph 8. Premiums for policy periods commencing prior to or extending
beyond the Lease term shall be prorated to correspond to the Lease term.
Payment shall be made by Lessee to Lessor on a monthly basis with Base Rent.

8.2  Liability Insurance. See Paragraph 8.2 of the Addendum attached hereto.

(b)  Carried By Lessor. In the event Lessor Is the Insuring Party, 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.

Building and Improvements. The Insuring Party 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 the holders of any mortgages, deeds of trust or
ground leases on the Premises (“Lender(s)”), insuring loss or (*all roll up
doors, ramps dock equipment including without limitation dock bumpers, dock
plates, dock seals, dock levelers, dock lights, sump pump and all Lessee’s
signage.) damage to the Premises. The amount of such Insurance shall be equal
to the full replacement cost except with regard to earthquake, and/or flood
where Insurance may be (or a lesser amount of the Premises, as the same shall
exist from time to time, or the amount required by Lenders, but In no event
more than the commercially reasonable and available Insurable value thereof If,
by reason of the unique nature or age f the improvements Involved, such latter
amount is less than full replacement cost. If Lessor Is the Insuring Party,
however, Lessee Owned Alterations an Utility Installations shall be Insured by
Lessee under Paragraph 8.4 rather than by Lessor. If the coverage is available
and commercially appropriate, such 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 or at Lessor’s discretion, 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 Premises
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 cause of
loss. Said policy or policies shall also contain an agreed valuation provision
in lieu of any coinsurance clause, waiver of subrogation.

 

 

Rental Value. The Insuring Party shall, in addition, 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 Lender’s), Insuring the loss of the full rental and
other charges payable by Lessee to Lessor under this Lease for one (1) year
(Including all real estate taxes, Insurance costs, and any scheduled rental
Increases). Said insurance shall provide that In the event the Lease Is
terminated by reason of an Insured loss, the period of Indemnity 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 coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected rental Income,
property taxes, Insurance premium costs and other expenses, if any, otherwise
payable by lessee, for the next twelve (12) month period. Lessee shall be
liable for any deductible amount In the event of such loss.

Adjacent Premises. If the Premises are part of a larger building, or if the
Premises are part of a group of buildings owned by Lessor which are adjacent to
the Premises, the Losses shall pay for any Increase In the premiums for the
property Insurance of such building or buildings If said Increase Is caused by
Lessee’s acts, omissions, use or occupancy of the Premises.

Tenant’s Improvements. If the Lessor Is the Insuring Party, the 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. If Losses Is the Insuring Party, the policy carried by Lessee
under this Paragraph 8.3 shall Insure Lessee Owned Alterations and Utility
Installations.

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, Lessee Owned Alterations and Utility
Installations In, on, or about the Premises similar In coverage to that carried
by the Insuring Party under Paragraph 8.3. Such insurance shall be full
replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such Insurance shall be used by Lessee for
the replacement of personal property or the restoration of Lessee Owned
Alterations and Utility Installations. Lessee shall be the Insuring Party with
respect to the Insurance required by this Paragraph 8.4 and shall provide
Lessor with written evidence that such Insurance Is In force.

8.5  Insurance Policies. Insurance required hereunder shall be in companies duly
licensed to transact business in the 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 having a lien on the
Premises, 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. If Losses Is the Insuring
Party, Losses shall cause to be delivered to Lessor certified copies of
policies of such Insurance or certificates evidencing the existence and amounts
of such Insurance with the insureds and loss payable clauses as required by
this Lease. 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. If the Insuring Party
shall fail to procure and maintain the insurance required to be carried by the
Insuring Party under this Paragraph 8, the other Party may, but shall not be
required to, procure and maintain the same, but at Lessee’s expense.

8.6  Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor (“Waiving Party’s 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 of or damage to the Waiving Party’s 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.

8.7  Indemnity. Except to the extent caused by or arising from the gross
negligence or willful misconduct of Lessor or it’s agents, employees or
contractors, Lessee shall Indemnity, protect, defend and hold harmless the
Premises, Lessor and it 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, permits, attorney’s and consultant’s fees,
expenses and/or liabilities arising out of, Involving, or In dealing with, the
occupancy of the Premises by Lessee, the conduct of Lessee’s business, any act,
omission or neglect of Lessee, Its agents, contractors, employees or Invitees,
and out of any Default or reach 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 of 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, and
whether well founded or not. In case any action or proceeding be brought
against Lessor by reason of any of a 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 r from Liability. 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 the 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, or from other sources or places, and regardless of whether the cause of
such damage or Injury or the means of repairing the me is accessible or not.
Lessor shall not be liable for any damages arising from any act or neglect of
any other tenant of Lessor. Notwithstanding Lessor’s negligence or breach of
this Lease, Lessor shall under no circumstances be liable for Injury to
Lessee’s business or for any loss of Income or profit therefrom.

9.  Damage or Destruction.

9.1  Definitions.

“Premises Partial Damage” shall mean damage or destruction to the improvements
on the Premises, other than Lessee Owned Alterations and Utility Installations,
the repair cost of which damage or destruction Is less than 50% of the then
Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations,

“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 50% or more of the then Replacement Cost of
the Premises Immediately prior to such damage or destruction, excluding from
such calculation the value of the land and Lessee Owned Alterations and Utility
Installations.

“Insured Loss” shall mean damage or destruction to Improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations, 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.

“Replacement Cwt” 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.

“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 8.2’a), in, on, or under the Premises.

9.2  Partial Damage — Insured Loss. If a 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 Lasses Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the total cost to repair
of which Is $10,000 or less, and, In such event, Lessor shall make the Insurance
proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required Insurance

 

 

was not In force or the Insurance proceeds are not
sufficient to effect such repair, the Insuring Party shall promptly contribute
the shortage in proceeds (except as to the deductible which Is Lessee’s
responsibility) as and when required to complete said repairs. In the event,
however, the shortage in proceeds was due to the fact that, by reason of the
unique nature of the improvements, 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 Losses 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 therefore, If Lessor receives said
funds or adequate assurance thereof within said ten (10) day period, the party
responsible for making the repairs 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 Lessee 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 In such case Lessor does not so elect, then this Lease shall
terminate sixty (60) days following the occurrence of the damage or
destruction, Unless otherwise agreed, Losses 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 net proceeds of any such
Insurance shall be made available for the repairs if made by either Party.
9.3 Partial Damage — Uninsured Loss. If a Premises Partial Damage that is not
an Insured Loss occurs, unless caused by a negligent or willful act of Lessee
(In which sent Lessee shall make the repairs at Lessee’s expense and this Lease
shall continue In full force and effect, but subject to Lessor’s rights under
Paragraph 13), 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 giving 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 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 Lessee’s said commitment. 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 and the required
funds am available. If Lessee does not gin such notice and provide the funds or
assurance thereof within the times specified above, this Lease shall terminate
as of the date specified In Lessor’s notice of termination.

9.4  Total Destruction. Notwithstanding any other provision hereof, H a Premises
Total Destruction occurs (Including any destruction required by any authorized
public authority), this Lease shall terminate sixty (80) days following the
date of such Premises Total Destruction, whether or not the damage or
destruction is an Insured Lose 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 8.6.

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 one
(1) month’s Base Rent, whether or not an Insured Loss, Lessor may, at Lessor’s
option, terminate this Lease effective sixty (80) days following the date of
occurrence of such damage by giving written notice to Lessee of Lessor’s
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, H Losses at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by, within twenty (20) days following the occurrence of the damage, or
before the expiration of the time provided In such option for its exercise,
whichever Is earlier (“Exercise Period”), (I) exercising such option and (II)
providing Lessor with any shortage In Insurance proceeds (or adequate assurance
thereof) needed to make the repairs. If Lessee duly exercises such option
during said Exercise 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 said Exercise Period, then
Lessor may at Lessor’s option terminate this Lease as of the expiration of said
sixty (60) day period following the occurrence of such damage by giving written
notice to Lessee of Lessor’s election to do so within ten (10) days after the
expiration of the Exercise Period, notwithstanding any term or provision In the
grant of option to the contrary.

9.6  Abatement of Rent; Lessee’s Remedies.
In the event of damage described In Paragraph 9.2 (Partial Damage — Insured),
whether or not Lessor or Lessee repairs or restores the Premises, the Base
Rent, Real Property Taxes, Insurance premiums, and other charges, If any,
payable by Lessee hereunder for the period during which such damage, its repair
or the restoration continues (not to exceed the period for which rental value
Insurance Is required under Paragraph 8.3(b)), shall be abated in proportion to
the degree to which Lessee’s use of the Premises Is Impaired. Except for
abatement of Base Rent, Real Property Taxes, insurance premiums, 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 repair or restoration.

(b)  H 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, Losses 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. H 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 receipt of such notice, this Lease shall
continue in full force and effect. ‘Commence as used in this Paragraph shall
mean either the unconditional authorization of the preparation of the required
plans, or the beginning of the actual work on the Premises, whichever first
occurs.

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 Law and this
Lease shall continue in full force and effect, but subject to Lessor’s rights
under Paragraph 13), Lessor may at Lessor’s option either (1) Investigate and
remediate such Hazardous Substance Condition, H 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 Rant 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 this Lease as of
the date sixty (60) days following the giving 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 to give written node@ to Lessor of Lessee’s commitment to pay for
the investigation and remediation of such Hazardous Substance Condition totally
at Lessee’s expense and without reimbursement from Lessor except to the extent
of 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
Lessee’s said commitment. 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 and the required funds are available. If Lessee
does not give such notice and provide the required funds or assurance thereof
within the times specified above, this Lease shall terminate as of the date
specified In Lessor’s nodes of termination. If a Hazardous Substance Condition
occurs for which Lessee is not legally responsible, there shall be abatement of
Lessee’s obligations under this Lease to the same extent as provided in
Paragraph 9.6(a) for a period of not to exceed twelve (12) months.

9.8  Termination — Advance Payments. Upon termination of this Lease pursuant to
this Paragraph 9, an equitable adjustment shall be made concerning advance Base
Rent and any other advance payments made by Lessee to Lessor. Lessor shall, In
addition, return to Lessee 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.

9.9  Waive Statutes. Lessor and Losses agree that the terms of this Lease shall
govern the effect of any damage to or destruction of the Premises with respect
to the termination of this Lease and hereby waive the provisions of any present
or future statute to the extent Inconsistent herewith.

10.  Real Property Taxes.

10.1  Payment of Taxes. Lasses shall pay the Real Property Taxes, as defined In
Paragraph 10.2, applicable to the Premises during the term of this Lease.
Subject to Paragraph 10.1(b).

Advance Payment. In order to insure payment when due and before delinquency of
any or all Real Property Taxes, Lessor shall estimate the current Real Property
Taxes applicable to the Premises, and to require such current year’s Real
Property Taxes to be paid In advance to Lessor by Lessee, monthly In advance
with the payment of the Base Rent. The monthly payment shall be that equal
monthly amount which, over the number of months remaining before the month In
which the applicable tax

 

 

installment would become delinquent (and without
Interest thereon), would provide a fund large enough to fully discharge before
delinquency the estimated Installment of taxes to be paid. When the actual
amount of the applicable tax bill is known, the amount of such equal monthly
advance payment shall be adjusted as required to provide the fund needed to pay
the applicable taxes before delinquency. If the amounts paid to Lessor by
Lessee under the provisions of this Paragraph are Insufficient to discharge the
obligations of Lessee to pay such Real Property Taxes as the same become due,
Lasses shall pay to Lessor, upon Lessor’s demand, such additional sums as are
necessary to pay such obligations. All moneys paid to Lessor under this
Paragraph may be intermingled with other moneys of Lessor and shall not bear
Interest. In the event of a Breach by Lessee in the performance of the
obligations of Lessee under this Lease, then any balance of funds paid to
Lessor under the provisions of this Paragraph may, subject to proration as
provided in Paragraph 10.1(a), at the option of Lessor, be treated u an
additional Security Deposit under Paragraph 5.

10.2  Definition of “Real Properly Taxes.” 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 Premises 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 Premises or In the real property. of which
the Premises are a part, hoot’s right to rent or other Income therefrom, and/or
Lessor’s business of leasing the Premises. The term ‘Real Properly 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 Premises 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.

10.3  Joint Assessment. If the Premises are not separately assessed, Lessee’s
liability shall be an equitable proportion of the Real Property Taxes for all
of the land and 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.

10.4  Personal Property Taxes. Lessee shall pay prior to delinquency all taxes
assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained In the Premises or elsewhere. When possible, Losses shall
cause its Trade Fixtures, furnishings, equipment and all other personal
property to be assessed and billed. Separately from the real property of
Lessor. If any of Lessee’s said personal property shall be assessed with
Lessor’s real property, Lessee shall pay Lessor the taxes attributable to
Lessee within ten (10) days after receipt of a written statement setting forth
the taxes applicable to Lessee’s property or, at Lessor’s option, as provided
In Paragraph 10.1(b).

11.  Utilities. Sec Paragraph 50 of the Addendum attached hereto.

12.  Assignment and Subletting.

12.1  Lessor’s Consent Required.

Lessee shall not voluntarily or by operation of law assign, transfer, mortgage
or otherwise transfer or encumber (collectively, “assignment”) 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 38.
A change in the control of Lessee shall constitute an assignment requiring
Lessor’s consent the transfer, on a cumulative basis, of twenty-five percent
(25%) or more of the voting control of Lessee shall constitute a change in
control for this purpose.

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 the execution by Lessor
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.

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(c), or a noncurable Breach without the
necessity of any notice and grace period. If Lessor elects to treat such
unconsented to assignment or subletting as a noncurable Breach, Lessor shall
have the right to either: (t) terminate this Lease, or (1i) upon thirty (30)
days written notice (‘Lessor’s Notice’), increase the monthly Base Rent to fair
market rental value or one hundred ten percent (110%) of the Base Rent then in
effect, whichever is greater. Pending determination of the new fair market
rental value, If disputed by Lessee, Losses shall pay the amount set forth In
Lessor’s Notice, with any overpayment credited against the next Installment(s)
of Be” Rent coming due, and any underpayment for the period retroactively to
the effective date of the adjustment being due and payable immediately upon the
determination thereof. Further, In the event of such Breach and market value
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
(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, whichever is greater, (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 Lea” term shall be increased
In the same ratio as the new market rental bears to the Base Rent In effect
immediately prior to the market value adjustment.

Lessee’s remedy for any breach of this Paragraph 12.1 by Lessor shall be
limited to compensatory damages and 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 Lea”, 01) release Lessee of
any obligations hereunder, or (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 or 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 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 on the Lease or sublease and without obtaining their consent, and such
action shall not relieve such persons from liability under this Lease or
sublease.

(d)  In the event of any Default or Breach of Lessee’s obligations under this
Lease, Lessor may proceed directly against Lessee, any Guarantors or any one
else responsible for the performance of the Lessee’s obligations under this
Lea”, including the subleases, without first exhausting Lessor’s remedies
against any other person or entity responsible therefore to Lessor, or any
security held by Lessor or Losses.

(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, if any, together with a non-refundable deposit of
$1,000 or ten percent (10%) of the current monthly Base Rent, whichever is
greater, as reasonable consideration for Lessor’s considering and processing
the request for consent. 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 subleases under, this Lea” 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 or sublease to which Lessor has specifically consented in writing.

(g)  The occurrence of a transaction described in Paragraph 12.1(c) shall give
Lessor the right (but not the obligation) to require that the Security Deposit
be Increased to an amount equal to six (6) times the then monthly Base Rent,
and Lessor may make the actual receipt by Lessor of the amount required to
establish such Security Deposit a condition to Lessor’s consent to such
transaction.

(h)  Lessor, as a condition to giving its consent to any assignment or
subletting, may require that the amount and adjustment structure of the rent
payable under this Lease be adjusted to what Is then the market value and/or
adjustment structure for property similar to the Premises as then constituted.

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 Lea” 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 collect 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 Lea”, Lessee may,
except as otherwise provided In this Lea”, receive, collect and enjoy the rents
accruing under such sublease. Lessor shall not, by reason of this 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
subleases, 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 duo and to become due under the sublease.
Sublessee 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 notice from or
claim from Lessee to the contrary. Lessee shall have no right or claim against
said sublessee, or, unto the Breach has been cured, against Lessor, for any
such rents and other charges so paid by said sublessee 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 subleases 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. .

(c)  Any matter or thing requiring the consent of the sublessor under a sublease
shall also require the consent of Lessor herein.

(d)  No sublessee 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 subleases 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 Losses Default or Breach (as hereinafter
defined), $350.00 Is a reasonable minimum 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” Is defined as a failure
by the Losses to observe, comply with or perform any of the terms, covenants,
conditions or rules applicable to Lessee under this Lease. A “Breach” 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, 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.

(b)  Except as expressly otherwise provided in this Lease, the failure by Lessee
to make any payment of Base Rent or any other monetary payment required to be
made by Lessee hereunder, whether to Lessor or to a third party, 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 three (3) 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 duly executed original
form, If applicable) of (i) compliance with Applicable Law per Paragraph 6.3,
(1) the Inspection, maintenance and service contracts required under Paragraph
7.1(b), (ii) the recission of an unauthorized assignment or subletting per
Paragraph 12.1(b), (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 Leases under the terms of
this Lease, where any such failure continues for a period of ton (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, complied with or performed by Losses, other than those described in
subparagraphs (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.C. 1101 or any successor
statute thereto (unless, In the case of a petition filed against Losses, 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 (e) Is contrary to any applicable law, such
provision shall be of no force or effect, and not affect the validity of the
remaining provisions.

(f)  The discovery by Lessor that any financial statement given to Lessor by
Lessee or any Guarantor of Lessee’s obligations hereunder 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 than 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
assurance or 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.

13.2  Remedies. If Lessee fails to perform any affirmative duty or obligation of
Losses 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
option, may require all future payments to be made under this Lease by Lasses
to be made only by cashier’s check. 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 Promises 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: () 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 exceeds the
amount of such rental loss that the Lessee proves could be reasonably avoided;
and (v) 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 the
leasing commission paid by Lessor applicable to the unexpired term of this
Lease. The worth at the time of award of the amount referred to In Provision
(11) of the prior sentence shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco 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. 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 therein 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 subparagraphs 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 Losses under any statute authorizing the forfeiture of leases for
unlawful detainer shall also constitute the applicable notice for grace period
purposes required by subparagraphs 13.1(b), (c) or (d). In such case, the
applicable grace period under subparagraphs 13.1(b), (c) or (d) and under the
unlawful detainer statute shall run concurrently after the one such statutory
notice, and the failure of Lessee to cure the Default within the greater of the
two 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 (n California
under California Civil Code Section 1951.4) after Lessee’s Breach and
abandonment and recover the rent as it becomes due, provided Lessee has the
right to sublet or assign, subject only to reasonable limitations. See
Paragraphs 12 and 36 for the limitations on assignment and subletting which
limitations Losses and Lessor agree 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 the Lease, shall not constitute a
termination of the Lessee’s right to possession.

(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 of 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 for 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 concessions
are hereinafter referred to as “Inducement Provisions,” shall be deemed
conditioned upon Lessee’s full and faithful performance of all of the 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 of this Lease by Lessee, as defined in Paragraph 13.1, any such
inducement Provision shall automatically be deemed deleted from this Lease and
of no 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 shall not be deemed a waiver by Lessor of the provisions of this
Paragraph unless specifically so stated in writing by Lessor at the time of
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 to 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, processing
and accounting charges, and late charges which may be Imposed upon Lessor by
the terms of any ground lease, mortgage or trust deed covering the Premises.
Accordingly, if any Installment of rent or any other sum due from Lessee shall
not be received by Lessor or Lessor’s designee within five (5) days after such
amount shall be due, then, without any requirement for notice to Lessee, Losses
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, for three (3) consecutive Installments of Base Rent, then
notwithstanding Paragraph 4.1 cc any other provision of this Lease to the
contrary, Base Rent shall, at 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 falls within a reasonable time td perform an obligation required
td 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 the holders of any ground lease, mortgage or deed of trust covering the
Premises whose name and address shall have been furnished Losses 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 td 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
td 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
area of the Premises, or more than twenty-five percent (25%) of the land area
not occupied by any building, Is taken by condemnation, Lessee may, at Lessee’s
option, td 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, this Lease shall remain in full force and effect as to the portion
of the Premises remaining, except that the Base Renew 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 building located on the Premises. No reduction
of Base Renew shall occur if the only portion of the Premises taken is land on
which there is no building. My 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 In 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 Lessees
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 net severance damages received, over and above the legal and
other expenses Incurred by Lessor In the condemnation matter, repair any damage
to the Premises caused by such condemnation, except to the extent that Lessee
has been reimbursed therefore by the condemning authority. Lessee shall be
responsible for the payment of any amount In excess of such net severance
damages required to complete such repair.

15.  Broker’s Fee.

15.1  The Brokers named In Paragraph 1.10 are the procuring causes of this
Lease.

15.5 Lessee and Lessor each represent and warrant to the other that it has had
no castings with any person, firm, broker or finder joiner men ore Brokers, If
any named in Paragraph 1.10) 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 Brokers 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, attorneys’ fees reasonably Incurred with respect thereto.

15.6  Lessor and Lessee hereby consent to and approve all agency relationships,
Including any dual agencies, Indicated in Paragraph 1.10.

16.  Tenancy Statement.

16.1  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 form
similar to the then most current “Tenancy Statement” form published by the
American Industrial Real Estate Association, plus such additional Information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.

16.2  If Lessor desires to finance, refinance, or sell the Premises, any part
thereof, or the building of which the Premises are a part, Lessee and all
Guarantors of Lessee’s performance hereunder shall deliver to any potential
lender or purchaser designated by Lessor such 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, or, If this
Is a sublease, of the Lessee’s interest in the prior lease. 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, 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.

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. My monetary payment due Lessor hereunder,
other than late charges, not received by Lessor within thirty (30) days
following the date on which it was due, shall bear Interest from the
thirty-first (31st) day after It was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, In addition to the 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.

23.  Notices.

23.1  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, 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 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  My notice sent by registered or certified mall, 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 confirmation of receipt of the transmission thereof,
provided a copy is also delivered via delivery or mall. If notice is received
on a Sunday or 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 of any other term, covenant or condition hereof. Lessor’s
consent to, or approval of, any act shall hot 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 Lasso 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 preceding Default or
Breach by Lessee of any provision hereof, other than the failure of lessee to
pay the particular rent so accepted. My 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 this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or takes applicable thereto.

26.  No Right To Holdover. Lasses has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. See Paragraph 26 of the Addendum attached hereto.

27.  Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies
at 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. My litigation
between the Parties hereto concerning this Lease shall be Initiated in the
county in which the Premises are located.

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 and
allow such Lender thirty (30) days following receipt of such notice for the
cure of said default before invoking any remedies Lessee may have by reason
thereof. 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: () be liable for any
act or omission of any prior lessor or with respect to events occurring prior
to acquisition of ownership, (I) 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 (1) 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 the 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.  Attorney’s 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)
or Broker In any such proceeding, action, or appeal thereon, shall be entitled
to reasonable attorney’s 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
attorney’s fees award shall not be computed in accordance with any court fee
schedule, but shall be such as to fully reimburse all attorney’s fees
reasonably incurred. Lessor shall be entitled to attorney’s fees, costs and
expenses Incurred In the 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.

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 of which they are a part, 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 twenty
(120) days of 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 Premises, 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. 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 and the right to install, and
all revenues from the Installation of, such advertising signs on the Premises,
Including the roof, as do not unreasonably Interfere with the conduct of
Lessee’s business.

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
notice 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 shall not be unreasonably withheld or delayed.
Lessor’s actual reasonable costs and expenses (including but not limited to
architects’, attorneys’, engineers’ or 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,
practice or storage tank, shall be paid by Lessee to Lessor upon receipt of an
invoice and supporting documentation therefor.
Subject to Paragraph 12.2(e) (applicable to assignment or subletting), Lessor
may, as a condition to considering any such request by Lessee, require that
Lessee deposit with Lessor an amount of money (n 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.
Except as otherwise provided, 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
acknowledgement 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 Imposition 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.

37.  Guarantor.

37.1  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 said 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 called for by Paragraph 16.

37.2  It shall constitute a Default of the Lessee 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 Including
In the case of a corporate Guarantor, a certified copy of a resolution of Its
board of directors authorizing the making of such guaranty, together with a
certificate of incumbency showing the signature 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 observance and performance of all of the covenants, conditions 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. See Paragraph 39 of the Addendum attached hereto.

40.  Multiple Buildings. If the Premises are part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by, keep and observe’
all reasonable 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 such other buildings and their
invitees, and that Lessee will pay its fair share of common expenses Incurred
in connection therewith.

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 to Itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably 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 so 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, Losses 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 Lessor or Lessor’s agent and submission
of same to Louse shall not be deemed an offer to lease to Lessee. This Lease is
not Intended to be binding until executed 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 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.

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 IS 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 HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR
ATTORNEY FOR HIS APPROVAL FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE THE
CONDITION OF THE PROPERTY AS TO THE POSSIBLE PRESENCE OF ASBESTOS, STORAGE
TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS MADE BY
THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER(S)
OR THEIR 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 LOCATED IN A STATE OTHER
THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED
SHOULD BE CONSULTED.

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

	 	 	 
	LESSOR:	 	
LESSEE:
	IPERS BREA/GOLDEN STATE	 	
INVIVO CORPORATION
	BUSINESS PARKS, INC.,	 	
A DELAWARE CORPORATION, successor in
	a Delaware corporation	 	
interest to Medical Data Electronics,
	 	 	
a California corporation

	 	 	 	 	 	 	 
	BY:	 	
RREEF MANAGEMENT COMPANY

A Delaware corporation	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	BY:	 	 	 	BY:	 
	 	 	
	 	 	

	 	 	
Karen Saitta
	 	 	 	James B. Hawkins
	TITLE:	 	
Vice President
	 	TITLE:
	 	Chief Executive officer
	 	 	 	 	 	 	 
	Dated:	 	
4-21-03
	 	Dated:
	 	4-21-03
	 	 	 	 	 	 	 
	 	 	 	 	BY:	 
	 	 	 	 	 	

	 	 	 	 	 	 	John F. Glenn
	 	 	 	 	TITLE:
	 	Chief Financial Officer
	 	 	 	 	 	 	 
	 	 	 	 	Dated:
	 	4-10-03

	 	 	 
	NOTICE ADDRESS:	 	
NOTICE ADDRESS:
	Karen Saitta	 	
James B. Hawkins
	RREEF Management Company	 	
INVIVO CORPORATION
	14724 Ventura Blvd., Ste. 401	 	
12723 Wentworth Street
	Sherman Oaks, California 91403	 	
Arleta, CA 91331

 

 

ADDENDUM NO. 1

THIS ADDENDUM NO. 1 (“Addendum”) is attached to and hereby made a part of that
certain AIR Lease, dated, for reference purposes only, April 2, 2003, between
IPERS BREA/GOLDEN STATE BUSINESS PARKS, INC., a Delaware corporation, as
Lessor, and INVIVO CORPORATION, a Delaware corporation, successor in interest
to Medical Data Electronics, a California corporation, as Lessee for the
Premises known as 12723 Wentworth Street, Arleta, California 91331. All of the
following terms and conditions are hereby incorporated in the Lease and made a
part thereof. In the event of any conflict between any of the terms and
conditions contained in the standard printed form Lease as compared to the
terms and conditions contained in the Addendum, the terms and conditions
contained in this Addendum shall be controlling. The term “Lease” as used
herein shall mean the printed form Lease as modified by any Exhibits and
Addenda. Unless defined otherwise, all capitalized terms used herein shall have
the same meanings as defined in the printed form Lease.

1.5     MONTHLY INSTALLMENTS OF BASE RENT.

Lessee agrees to pay the annual Base Rent by paying the monthly installments of
Base Rent pursuant to Paragraph 4 on or before the first day of each month of
the Term. The monthly amount due is as follows:

For the period from July 1, 2003 through June 30, 2004, Twenty Thousand Seventy
and 40/100 ($20,070.40) Dollars per month.

For the period from July 1, 2004 through June 30, 2005, Twenty Thousand Eight
Hundred Seventy-Three and 22/100 ($20,873.22) Dollars per month.

6.1     USE.

The Premises are to be used solely for the purposes stated in Paragraph 1.8 and
Paragraph 6 of this Lease. Lessee shall not do or permit anything to be done in
or about the Premises which will in any way obstruct or interfere with the
rights of other Lessees or occupants of the Building and Industrial Center or
injure, annoy, or disturb them or allow the Premises to be used for any
improper, immoral, unlawful, or objectionable purpose. Lessee shall not do,
permit or suffer in, on or about the Premises the sale of any alcoholic liquor
without the written consent of Lessor first obtained , or the commission of any
waste.

Lessor shall comply with all governmental laws, ordinances and regulations
applicable to the use of the Premises and its occupancy and shall promptly
comply with all governmental orders and directions for the correction,
prevention and abatement of any violations in or upon, or in connection with,
the Premises, all at Lessee’s sole expense. Lessee shall not do or permit
anything to be done on or about the Premises or bring or keep anything into the
Premises which will in any way increase the rate of, invalidate or prevent the
procuring of any insurance protecting against loss or damage to the Building or
the Industrial Center or any of its contents by fire or other casualty or
against liability for damage to property or injury to persons in or about the
Building or the Industrial Center or any part thereof.

Lessee shall not, and shall not direct, suffer or permit any of its agents,
contractors, employees, licensees or invitees to at any time handle, use,
manufacture, store or dispose of in or about the Premises or the Building and
the Industrial Center any (collectively “Hazardous Material”) flammables,
explosives, radioactive materials, hazardous waste or materials, toxic wastes
or materials, or other similar substances, petroleum products or derivatives or
any substance subject to regulation by or under any federal, state and local
laws and ordinances relating to the protection of the environment or the
keeping, use or disposition of environmentally hazardous materials, substances
or wastes, presently in effect or hereafter adopted, all amendments to any of
them, and all rules and regulation issued pursuant to any of such laws or
ordinances (collectively “Environmental Laws”), nor shall Lessee suffer or
permit any Hazardous Materials to be used in any manner not fully in compliance
with all Environmental Laws, in the Premises or the Building and the Industrial
Center appurtenant land or allow the environment to become contaminated with
Hazardous Materials. Notwithstanding the foregoing, and subject to Lessor’s
prior consent, Lessee may handle, store, use or dispose of products containing
small quantities of Hazardous Materials (such as aerosol cans containing
insecticides, toner for copiers, paints, paint remover and the like) to the
extent customary and necessary for the use of the Premises for general office
purposes; provided that Lessee shall always handle, store, use, and dispose of
any such Hazardous Materials in a safe and lawful manner and never allow such
Hazardous Materials to contaminate the Premises, Building or Industrial Center
and appurtenant and or the environment. Lessee shall protect, defend ,
indemnify and hold each of the Lessor Entities (as defined in Paragraph 30)
harmless from and against any and all of loss, claims, liability or costs
(including court costs and attorney’s fees) incurred by reason of any actual or
asserted failure of Lessee to fully comply with all applicable Environmental
Laws or the presence, handling, use or disposition in or from the Premises of
any Hazardous Materials (even though permissible under all applicable
Environmental Laws or the Provisions of this Lease), or by reason of any actual
or asserted failure of Lessee to keep, observe, or perform any provision of
this section.

6.2     HAZARDOUS SUBSTANCE.

(a)  Lessee agrees that Lessee, its agents and contractors, licensees, or
invitees shall not handle, use, manufacture, store or dispose of any
flammables, explosives, radioactive materials, hazardous wastes or materials,
toxic wastes or materials, or other similar substances, petroleum products or
derivatives (collectively “Hazardous Materials”) on, under, or about the
Premises, without Lessor’s prior written consent (which consent shall not be
unreasonably withheld as long as Lessee demonstrates and documents to Lessor’s
reasonable satisfaction (i) that such Hazardous Materials (A) are necessary or
useful to Lessee’s business; and (B) will be used, kept, stored and disposed of
in compliance with all laws relating to any Hazardous Materials so brought or
used or kept in or about the Premises; and (ii) that Lessee will give all
required notices concerning the presence in or on the Premises or the release
of such Hazardous Materials from the Premises) provided that Lessee may handle,
store, use or dispose of products containing small quantities of Hazardous
Materials, which products are of a type customarily found in offices and
households (such as aerosol cans containing insecticides, toner for copies,
paints, paint remover, and the like), provided further that Lessee shall
handle, store, use and dispose of any such Hazardous Materials in a safe and
lawful manner and shall not allow such Hazardous Materials to contaminate the
Premises or the environment.

(b)  Lessee further agrees that Lessee will not permit any substance suspected
of causing cancer or reproductive toxicity to come into contact with
groundwater under the Premises. Any such substance coming into contact with
groundwater shall be considered a Hazardous Material for purposes of this
Addendum.

(c)  (i) Notwithstanding the provisions of Paragraph (a), Lessee may handle,
store, and use Hazardous Materials, limited to the types, amounts, and use
identified in the Hazardous Materials Exhibit attached hereto. If no Hazardous
Materials Exhibit is attached to this Lease, then this Paragraph (c) shall be
of no force and effect. Lessee hereby certifies to Lessor that the information
provided by Lessee pursuant to this Paragraph

 

 

is true, correct, and complete.
Lessee covenants to comply with the use restrictions shown on the attached
Hazardous Materials Exhibit. Lessee shall secure and abide by all permits
necessary for Lessee’s operations on the Premises. Lessee shall give or post
all notices required by all applicable laws pertaining to Hazardous Materials.
If Lessee shall at any time fail to comply with this Paragraph, Lessee shall
immediately notify Lessor in writing of such noncompliance.

(ii)  Lessee shall provide Lessor with copies of any Material Safety Data Sheets
(as required by the Occupational Safety and Health Act) relating to any
Hazardous Materials to be used, kept, or stored at or on the Premises, at least
30 days prior to the first use, placement, or storage of such Hazardous
Material on the Premises. Lessor shall have 10 days following delivery of such
Material Safety Data Sheets to approve or forbid, in its sole discretion
subject to the limitation contained in Paragraph (a) above, such use,
placement, or storage of a Hazardous Material on the Premises.

(iii)  Lessee shall not store hazardous wastes on the Premises for more than 90
days; “hazardous waste” has the meaning given it by the Resource Conservation
and Recovery Act of 1976, as amended. Lessee shall not install any underground
or above ground storage tanks on the Premises. Lessee shall not dispose of any
Hazardous Material or solid waste on the Premises. In performing any
alterations of the Premises permitted by the Lease, Lessee shall not install
any Hazardous Material in the Premises without the specific consent of Lessor
attached as an exhibit to this Addendum.

(iv)  Any increase in the premiums for necessary insurance on the Property which
arises from Lessee’s use and/or storage of Hazardous Materials shall be solely
at Lessee’s expense. Lessee shall procure and maintain at its sole expense such
additional insurance as may be necessary to comply with any requirement of any
Federal, State or local governmental agency with jurisdiction.

(d)  If Lessor, in its sole discretion, believes that the Premises or the
environment have become contaminated with Hazardous Materials that must be
removed under the laws of the state where the Premises are located, in breach
of the provisions of this Lease, or the prior Multi-Tenant Industrial Lease
dated June 11, 1992 as modified by the First Amendment to Lease dated September
25, 1992, as modified by the Second Amendment to Lease dated February 28, 1995,
as modified by the Third Amendment to Lease dated December 16, 1999, as
modified by the Fourth Amendment to Lease dated September 27, 2001
(collectively the “Lease”) Lessor, in addition to its other rights under this
Lease, may enter upon the Premises and obtain samples from the Premises,
including without limitation the soil and groundwater under the Premises, for
the purposes of analyzing the same to determine whether and to what extent the
Premises or the environment have become so contaminated. Lessee shall reimburse
Lessor for the costs of any inspection, sampling and analysis that discloses
contamination for which Lessee is liable under the terms of this Addendum.
Lessee may not perform any sampling, testing, or drilling to locate any
Hazardous Materials on the Premises without Lessor’s prior written consent.

(e)  Without limiting the above, Lessee shall reimburse, defend, indemnify and
hold Lessor harmless from and against any and all claims, losses, liabilities,
damages, costs and expenses, including without limitation, loss of rental
income, loss due to business interruption, and attorneys fees and costs,
arising out of or in any way connected with the use, manufacture, storage, or
disposal of Hazardous Materials by Lessee, its agents or contractors on ,finder
or about the Premises including, without limitation, the costs of any required
or necessary investigation, repair, cleanup or detoxification and the
preparation of any closure or other required plans in connection herewith,
whether voluntary or compelled by governmental authority.

6.2     HAZARDOUS SUBSTANCES. (CONTINUED)

The indemnity obligations of Lessee under this clause shall survive any
termination of the Lease. At Lessor’s option, Lessee shall perform any required
or necessary investigation, repair, cleanup, or detoxification of the Premises.
In such case, Lessor shall have the right, in its sole discretion, to approve
all plans, consultants, and cleanup standards. Lessee shall provide Lessor on a
timely basis with (i) copies of all documents, reports, and communications with
governmental authorities; and (ii) notice and an opportunity to attend all
meetings with regulatory authorities. Lessee shall comply with all notice
requirements and Lessor and Lessee agree to cooperate with governmental
authorities seeking access to the Premises for purposes of sampling or
inspection.

No disturbance of Lessee’s use of the Premises resulting from activities
conducted pursuant to this Paragraph shall constitute an actual or constructive
eviction of Lessee from the Premises. In the event that such cleanup extends
beyond the termination of the Lease, Lessee’s obligation to pay rent (including
additional rent, if any) shall continue until any cleanup required under this
Lease is completed and any certificate of clearance or similar document from
the applicable governmental agency has been delivered to Lessor. Rent during
such holdover period shall be at market rent; if the parties are unable to
agree upon the amount of such market rent, then Lessor shall have the option of
(a) increasing the rent for the period of such holdover based upon the increase
in the cost-of-living from the third month preceding the commencement date to
the third month preceding the start of the holdover period, using such indices
and assumptions and calculations as Lessor in its sole reasonable judgment
shall determine are necessary; or (b) having Lessor and Lessee each appoint a
qualified MAI appraiser doing business in the area; in turn, these two
independent MAI appraisers shall appoint a third MAI appraiser and the majority
shall decide upon the fair market rental for Premises as of the expiration of
the then current term.

Lessor and Lessee shall equally share in the expense of this appraisal except
that in the event the rent is found to be within fifteen percent of the
original rate quoted by Lessor, then Lessee shall bear the full cost of all the
appraisal process. In no event shall the rent be subject to determination or
modification by any person, entity, court, or authority other than as set forth
expressly herein, and in no event shall the rent for any holdover period be
less than the rent due in the preceding period.

(f)  Notwithstanding anything set forth in this Lease, Lessee shall only be
responsible for contamination of Hazardous Materials or any cleanup resulting
directly therefrom, resulting from matters occurring or Hazardous Materials
deposited (other than by contractors, agents or representatives controlled by
Lessor) during the Lease term, and any other period of time during which Lessee
is in actual or constructive occupancy of the Premises. Lessee shall take
reasonable precautions to prevent the contamination of the Premises with
Hazardous Materials by third parties.

(g)  It shall not be unreasonable for Lessor to withhold its consent to any
proposed Assignment or Sublease if (i) the proposed Assignee’s or Sublessee’s
anticipated use of the premises involves the generation, storage, use,
treatment or disposal of Hazardous Materials; (ii) the proposed Assignee or
Sublessee has been required by any prior lessor, lender, or governmental
authority to take remedial action in connection with Hazardous Materials
contaminating a property if the contamination resulted from such Assignee’s or
Sublessee’s actions or use of the property in question; or (iii) the proposed
Assignee or Subleases is subject to an enforcement order issued by any
governmental authority in connection with the use, disposal, or storage of a
hazardous material.

(h) Any of Lessee’s insurance insuring against claims of the type dealt with in
this Addendum shall be considered primary coverage for claims against the
Property arising out of or under this Paragraph.

(i) In the event of (i) any transfer of Lessee’s interest under this Lease; or
(ii) the termination of this Lease, by lapse of time or otherwise, Lessee

 

 

shall be solely responsible for compliance with any and all then effective federal,
state or local laws concerning (i) the physical condition of the Premises,
Building, or Property; or (ii) the presence of hazardous or toxic materials in
or on the Premises, Building, or Property (for example, the
New Jersey Environmental Cleanup Responsibility Act, the Illinois Responsible
Property Transfer Act, or similar applicable state laws), including but not
limited to any reporting or filing requirements imposed by such laws. Lessee’s
duty to pay rent, additional rent, and percentage rent shall continue until the
obligations imposed by such laws are satisfied in full and any certificate of
clearance or similar document has been delivered to Lessor.

(j)  No consent shall be binding, enforceable or effective against Lessor unless
in writing and signed by Lessor and attached as an amendment to this Lease. If
such consents are not in writing and signed by Lessor and attached to this
Lease, then such consents will be deemed withheld.

(k)  Duty to inform Lessor.
If Lessee knows, or has reasonable cause to believe, that a Hazardous
Substance, or a condition involving or resulting from same, has come to be
located in, on, under or about the Premises, other than as previously consented
to by Lessor, Lessee shall immediately give written notice of such fact to
Lessor.

Lessee shall also immediately give Lessor 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, or persons entering or occupying the Premises, concerning the
presence, spill, release, discharge of, or exposure to, any Hazardous Substance
or contamination in, on, or about the Premises, including but not limited to
all such documents as may be involved in any Reportable Uses involving the
Premises.

7.2     COMMON AREA MAINTENANCE.

The Premises are a part of the industrial center commonly known as Golden State
Business Park (“Park”) more particularly described on Exhibit A attached
hereto. Lessor shall be responsible for all landscape maintenance and repair or
replacement in the Park including, but not limited to, all landscape plantings,
and landscape sprinkler systems, common area janitorial and sweeping services,
and replacement and repairs, as necessary, to all sidewalk surfaces, parking
areas (repairs, slurry coat and stripe), roadways and miscellaneous exterior
building maintenance and repair, including light maintenance, roof repairs and
clearing of roof debris, roof membrane maintenance and exterior painting. The
cost of such maintenance, services, and repairs shall be designated as (“Common
Area Costs”) and shall include all sums expended by Lessor for the maintenance,
repair and operations of the common area of the Park as hereinabove indicated.

All costs to supervise and administer said common areas, parking lots,
sidewalks, driveways, and other areas used in common by the Lessee or occupants
of the Park including the insurance on the common area shall be designated as
Common Area Costs. Said Common Area Costs shall include such fees as may be
paid to a third party in connection with same and shall in any event include a
fee to Lessor to supervise and administer same in an amount equal to fifteen
percent (15%) of the total Common Area Costs referenced above.

In addition to the Base Rent and commencing on the Commencement Date of this
Lease, Lessee shall pay to Lessor as additional rent an amount estimated by
Lessor to be Lessee’s share of Common Area Costs, on the first day of each
month. Lessee’s Proportionate Share shall be that fraction, the numerator of
which shall be the total square footage in the Premises, and the denominator of
which shall be the total leaseable square footage in the Park. Lessee’s
Proportionate Share may change from time to time as the leaseable footage
and/or configuration of the Park is changed. Common Area Costs that cover a
period not within the term of this Lease shall be prorated.

LESSEE’S TRASH.

Lessee at Lessee’s expense shall be responsible for Lessee’s trash removal.
Lessee shall keep Lessee’s trash bin(s) either inside Lessee’s Premises or
outside the Premises in the Park in an area acceptable to Lessor.

MAINTENANCE OF BUILDING STRUCTURE.

Notwithstanding anything in this Lease to the contrary, Lessor agrees that at
all times during the Term of this Lease, it will maintain the structural
portions of the Premises, including without limitation, the foundation, floor,
slab, exterior walls, columns, beams, shafts (collectively “Building
Structure”) and all common areas of the Park in good condition and repair. The
cost of said maintenance and repair of the Building Structure and complete roof
replacement shall be paid by Lessor unless damage is due to Lessee’s negligence
or willful misconduct. Notwithstanding anything in the Lease to the contrary,
Lessee shall not be required to make any repair to, modification of, or
addition to the Building Structure except and to the extent required because of
Lessee’s negligence or use of the Premises.

Lessee shall not make any alterations, additions or improvements effecting or
impacting the roof or roof structure without Lessor’s written consent to
prevent the violation of the roof warranty and structural integrity of the
roof.

8.2     LIABILITY INSURANCE.

Lessee shall keep in force throughout the Term: (a) a Commercial General
Liability insurance policy or policies to protect the Lessor Entities against
any liability to the public or to any invitee of Lessee or a Lessor Entity
incidental to the use of or resulting from any accident occurring in or upon
the Premises with a limit of not less than $1,000,000.00 per occurrence and not
less than $2,000,000.00 in the annual aggregate, or such larger amount as
Lessor may prudently require from time to time, covering bodily injury and
property damage liability and $1,000,000 products/completed operations
aggregate; (b) Business Auto Liability covering owned, non-owned and hired
vehicles with a limit of not less than $1,000,000 per accident; (c) insurance
protecting against liability under Worker’s Compensation Laws with limits at
least as required by statute with Employers Liability with limits of $500,000
each accident, $500,000 disease policy limit, $500,000 disease—each employee;
(d) All Risk or Special Form coverage protecting Lessee against loss of or
damage to Lessee’s alterations, additions, improvements, carpeting, floor
coverings, panelings, decorations, fixtures, inventory and other business
personal property situated in or about the Premises to the full replacement
value of the property so insured; and, (e) Business Interruption Insurance with
limit of liability representing loss of at least approximately six (6) months
of income.

The aforesaid policies shall (a) be provided at Lessee’s expense; (b) name the
Lessor Entities as additional insureds (General Liability) and loss payee
(Property-Special Form); (c) be issued by an insurance company with a minimum
Best’s rating of “A:VII” during the Term; and (d) provide that said insurance
shall not be canceled unless thirty (30) days prior written notice (ten days
for non-payment of premium) shall have been given to Lessor; a certificate of
Liability insurance on Accord Form 25 and a certificate of Property insurance
on Accord Form 27 shall be delivered to Lessor by Lessee upon the Commencement
Date and at least thirty (30) days prior to each renewal of said insurance.

Whenever Lessee shall undertake any alterations, additions or improvements in,
to or about the Premises (“Work”) the aforesaid insurance protection must
extend to and include injuries to persons and damage to property arising in
connection with such Work, without limitation including liability under any
applicable structural work act, and such other insurance as Lessor shall
require; and the policies of or certificates evidencing

 

 

such insurance must be
delivered to Lessor prior to the commencement of any such Work.

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 Two Hundred percent (200%) of the Base Rent applicable
during the month immediately preceding such expiration or earlier termination.
Nothing contained herein shall be construed as a consent by Lessor to any
holding over by Lessee.

39.     OPTION TO RENEW.

Lessee shall, provided the Lease is in full force and effect and Lessee is not
in default under any of the other terms and conditions of the Lease at the time
of notification or commencement, have one (1) successive option to renew this
Lease for a term of two (2) years, for the portion of the Premises being leased
by Lessee as of the date the renewal term is to commence, on the same terms and
conditions set forth in the Lease, except as modified by the terms, covenants
and conditions as set forth below.

39.1     If Lessee elects to exercise said option, then Lessee shall provide Lessor
with written notice no earlier than the date which is two hundred forty (240)
days prior to the expiration of the then current term of the Lease but no later
than the date which is one hundred eighty (180) days prior to the expiration of
the then current term of this Lease. If Lessee fails to provide such notice,
Lessee shall have no further or additional right to extend or renew the term of
the Lease.

39.2     The annual Base Rent and monthly installment of Base Rent in effect at the
expiration of the then current term of the Lease shall be increased to reflect
the greater of current fair market rental for comparable space in the Center
and in other similar industrial centers in the same rental market as of the
date the renewal term is to commence, taking into account the specific
provisions of the Lease which will remain constant. In no event shall the
monthly Base Rent be less than that paid for the last month, increased by four
percent (4%). The Base Rent so established for the first (1st) month of the
extended term shall be increased every (12) months by the Fair Market increases
in effect at that time, but in no event shall any annual increase be less than
four percent (4%) per annum of the Base Rent in effect immediately prior to the
date of the adjustment. Lessor shall advise Lessee of the new annual Base Rent
and monthly installment of Base Rent for the Premises no later than thirty (30)
days after receipt of Lessee’s written request therefore. Said request shall be
made no earlier than thirty (30) days prior to the first date on which Lessee
may exercise its option under this Paragraph. If Lessee and Lessor are unable
to agree on a mutually acceptable rental rate not later than sixty (60) days
prior to the expiration of the then current term, then Lessor and Lessee shall
each appoint a qualified MAI appraiser doing business in the area, in turn
those two independent MAI appraisers shall appoint a third MAI appraiser and
the majority shall decide upon the fair market rental for the Premises as of
the expiration of the then current term. set forth above and that in no event
will any assignee or sublessee have any rights to exercise the aforesaid option
to renew.

Lessor and Lessee shall equally share in the expense of this appraisal except
that in the event the Annual Rent and Monthly Installment of Base Rent is found
to be within fifteen percent (15%) of the original rate quoted by Lessor, then
Lessee shall bear the full cost of all the appraisal process. In no event shall
the Annual Rent and Monthly Installment of Base Rent for any option period be
less than the Annual Rent and Monthly Installment of Base Rent in the preceding
period.

39.2     Upon exercise of the renewal option provided for above, Lessee shall have no further right to extend the term of the Lease.

39.3     This option is not transferable; the parties hereto acknowledge and agree
that they intend that the aforesaid option to renew this Lease shall be
“personal” to Lessee as set forth above and that in no event will any assignee
or sublessee have any rights to exercise the aforesaid Option to Renew.

49.     OUTSIDE STORAGE.

No material is to be stored outside the building of the Park at any time. The
prohibition against outside storage includes, but is not limited to, equipment,
materials, inoperative vehicles, campers, trailers, boats, barrels, pallets and
trash (other than in containers provided by commercial trash collectors which
are picked up on a regularly scheduled basis subject to 7.2 above).

50.     UTILITIES.

Lessee shall be solely responsible for and shall promptly pay all charges for
heat, air conditioning, water (including water for the landscape on the
parcel), gas, electricity, fire life safety equipment (including
telephone)/monitoring, telephone or any other utility used, consumed or
provided in, furnished to or attributable to the Premises or the Parcel at the
rates charged by the supplying utility companies with any taxes/assessments
thereon. Should Lessor elect to supply any or all of such utilities, Lessee
agrees to purchase and pay for the same as additional rent as apportioned by
Lessor. The rate to be charged by Lessor to Lessee shall not exceed the rate
charged to Lessor by any supplying utility. Lessee shall reimburse Lessor
within thirty (30) days of billing for fixture charges and/or water tariffs, if
applicable, which are charged to Lessor by local utility companies. This charge
will increase or decrease with current charges being levied against Lessor or
the Premises by the local utility company, and will be due as additional rent.
In no event shall Lessor be liable for any interruption or failure in the
supply of any such utility services to Lessee.

51.     VEHICLE PARKING.

Lessor grants to Lessee and Lessee’s customers, suppliers, employees and
invitees the exclusive use of the parking area as shown on Exhibit “A-l” in the
crosshatched area during the term of this Lease (“Lessee’s Exclusive Parking
Area”). Prior to the Expiration Date or any Earlier termination of the Lease,
Lessee agrees to restripe Lessee’s Exclusive Parking Area in a manner which
yields access to all roll-up doors which is acceptable to Lessor. Said
reconfiguration will be performed at Lessee’s cost. Lessee’ hereby agrees to
indemnify and hold Lessor harmless from any liability resulting from (i) the
damage to any vehicles parked overnight, illegally parked or parked inside of
Lessee’s Exclusive Parking Area or (ii) the parking of vehicles in excess of
the number allowed by any and all applicable rules, regulations, ordinances or
laws relating to parking or Lessee’s Exclusive Parking Area. Lessor has no
obligation to obtain any additional parking area or spaces for Lessee’s use.
Lessor reserves the right at any time to grant similar non-exclusive use to
other lessees, to promulgate rules and regulations relating to the use of such
parking areas, including reasonable restrictions on parking by lessees and
employees, to designate specific spaces for the use of any lessee, to make
changes in the parking layout from time to time, and to establish reasonable
time limits on parking. 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 set forth in Exhibit C of this Lease.

52.     FINANCIAL STATEMENTS.

Lessee acknowledges that it has provided Lessor with its financial statement(s)
as a material inducement to Lessor’s agreement to lease the Premise to Lessee,
and that Lessor has relied on the accuracy of said financial statement(s) in
entering into this Lease. Lessee represents and warrants that the information
contained in said financial statement(s) is true, complete and correct in all
material aspects, and agrees that the foregoing representation and warranty
shall be a precondition to the Lease. At any time during the term of this
Lease, within five (5) days of Lessor’s request, Lessee shall furnish to Lessor
financial statement(s) of a similar nature for Lessee’s most recent fiscal year
available and shall represent and warrant the accuracy of such information.

53.     LIMITATION OF LESSOR’S LIABILITY.

Redress for any claims against Lessor under this Lease shall only be made
against Lessor to the extent of Lessor’s interest in the Park of which the
leased Premises are a part. The obligations of Lessor under this lease shall
not be personally binding on, nor shall any resort be had to the private
properties of, any of its trustees or board of directors and officers, as the
case may be, the general partners thereof or any beneficiaries, stockholders,
employees or agents of Lessor, or its investment manager.

	 	 	 
	LESSOR:	 	
LESSEE:
	IPERS BREA/GOLDEN STATE	 	
INVIVO CORPORATION
	BUSINESS PARKS, INC.,	 	
A DELAWARE CORPORATION, successor in
	a Delaware corporation	 	
interest to Medical Data Electronics,
	 	 	
a California corporation

	 	 	 	 	 	 	 
	BY:	 	
RREEF MANAGEMENT COMPANY	 	 	 	 
	 	 	
A Delaware corporation	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	BY:	 	 	 	BY:	 
	 	 	
	 	 	

	 	 	
Karen Saitta
	 	 	 	James B. Hawkins
	TITLE:	 	
Vice President
	 	TITLE:
	 	Chief Executive officer
	 	 	 	 	 	 	 
	Dated:	 	
4-21-03
	 	Dated:
	 	4-21-03
	 	 	 	 	 	 	 
	 	 	 	 	BY:	 
	 	 	 	 	 	

	 	 	 	 	 	 	John F. Glenn
	 	 	 	 	TITLE:
	 	Chief Financial Officer
	 	 	 	 	Dated:
	 	4-10-03

	 	 	 
	NOTICE ADDRESS:	 	
NOTICE ADDRESS:
	Karen Saitta	 	
James B. Hawkins
	RREEF Management Company	 	
INVIVO CORPORATION
	14724 Ventura Blvd., Ste. 401	 	
12723 Wentworth Street
	Sherman Oaks, California 91403	 	
Arleta, CA 91331

 

 

EXHIBIT A

Exhibit A attached to and made a part of Lease bearing the Lease Reference Date
of April 2, 2003, between IPERS BREA/GOLDEN STATE BUSINESS PARKS, INC., a
Delaware corporation, as Lessor, and INVIVO CORPORATION, a Delaware
corporation, successor in interest to Medical Data Electronics, a California
corporation, as Lessee for Premises known as 12723 Wentworth Street, Arleta,
California 91331, consisting of approximately 35,840 square feet.

PREMISES

     Exhibit A is intended only to show the general layout of the Premises as
of the beginning of the Term of this Lease. It does not in any way supersede
any of Lessor’s rights with respect to arrangements and/or locations of public
parts of the Park and changes in such arrangements and/or locations. It is not
to be scaled; any measurements or distances shown should be taken as
approximate.

     This site plan is intended only to show the general layout of the property
or a part thereof. Lessor reserves the right to alter, vary, add to or omit in
whole or in part any structures and/or common areas and/or land area shown on
this site plan. All measurements and distances are approximate. This plan is
not to be scaled.

 

 

EXHIBIT A-1

PARKING AREA

Exhibit A-1 attached to and made a part of Lease bearing the Lease Reference
Date of April 2, 2003, between IPERS BREA/GOLDEN STATE BUSINESS PARKS, INC., a
Delaware corporation, as Lessor and INVIVO CORPORATION, a Delaware corporation,
successor in interest to Medical Data Electronics, a California corporation, as
Lessee for Premises known as 12723 Wentworth Street, Arleta, California, 91331,
consisting of approximately 35,840 square feet.

This site plan is intended only to show the general layout of the property or a
part thereof. Lessor reserves the right to alter, vary, add to or omit in whole
or in part any structures and/or common areas and/or land area shown on this
site plan. All measurements and distances are approximate. This plan is not to
be scaled.

 

 

EXHIBIT B

Exhibit B attached to and made a part of Lease bearing the Lease
Reference Date of April 2, 2003, between IPERS BREA/GOLDEN STATE BUSINESS
PARKS, INC., a Delaware corporation, as Lessor and INVIVO CORPORATION, a
Delaware corporation, successor in interest to Medical Data Electronics, as
Lessee for Premises known as 12723 Wentworth Street, Arleta, California
91331, consisting of approximately 35,840 square feet.

WORK LETTER

This Work Letter is attached to and hereby made a part of that certain AIR
Lease dated April 2, 2003, by and between the above-named parties. In the
event of any conflict between the Lease and any of the terms and conditions
contained in the Work Letter, the Work Letter shall be controlling. The
purpose of this Work Letter is to set forth the work which Lessee is
obligated to perform in connection with the completion of the Lessee
Improvements to the Premises.

INITIAL ALTERATIONS

Lessor’s Work

Lessee shall accept the Premises in its “as is” condition as of the
Commencement Date.

It is expressly understood and agreed that Lessor shall have no
responsibility or obligation to perform any work with respect to the shell,
floor, entrance, walls, ceiling, lighting fixtures, HVAC system, toilet
room, utilities systems, or otherwise with respect to the Premises.

All improvements shall be at Lessee’s expense and done in accordance with
Paragraph 7.3 of this Lease, Utility Installations; Trade Fixtures;
Alterations.

 

 

EXHIBIT B-1

Exhibit B-1 attached to and made a part of Lease bearing the Lease Reference
Date of April 2, 2003, between IPERS BREA/GOLDEN STATE BUSINESS PARKS, INC., a
Delaware corporation, as Lessor and INVIVO CORPORATION, a Delaware
corporation, successor in interest to Medical Data Electronics, a California
corporation, as Lessee for Premises known as 12723 Wentworth Street, Arleta,
California, 9133, consisting of approximately 35,840 square feet.

 

 

 

 

This plan (provided by Lessee) is intended only to show the general layout of
the building or a part thereof. All measurements and distances are approximate.
This plan is not to be scaled.

 

 

EXHIBIT C

Exhibit C attached to and made a part of Lease bearing the Lease Reference
Date of April 2, 2003, between IPERS BREA/GOLDEN STATE BUSINESS PARKS,
INC., a Delaware corporation, as Lessor and INVIVO CORPORATION, a Delaware
corporation, successor in interest to Medical Data Electronics, a
California corporation, as Lessee for Premises known as 12723 Wentworth
Street, Arleta, California 91331, consisting of approximately 35,840 square
feet.

     RULES AND REGULATIONS

Lessee hereby agrees to the following:

     1.     No sign, placard, picture, advertisement, name or notice shall be
installed or displayed on any part of the outside or inside of the building or
Premises without the prior written consent of the Lessor. Lessor shall have the
right to remove, at Lessee’s expense and without notice, any sign installed or
displayed in violation of this rule. All approved signs or lettering on doors
and walls shall be printed, painted, affixed or inscribed at the expense of
Lessee. In addition, Lessor reserves the right after the initial term to change
from time to time the format of the signs or lettering and to require
previously approved signs or lettering to be appropriately altered.

     2.     Lessee shall not install any curtains, blinds, shades or screens
attached to or hung in or used in connection with any window or door of the
Premises without Lessor’s prior written approval. No awning shall be permitted
on any part of the Premises unless approved in writing by Lessor. Lessee shall
not place anything or allow anything to be placed against or near any glass
partitions or doors or windows which may appear unsightly, in the opinion of
Lessor, from outside the Premises.

     3.     Lessee shall not obstruct any sidewalks, passages, exits, and entrances
that are for the general public, and Lessor shall in all cases retain the right
to control and prevent access thereto of all persons whose presence in the
judgment of Lessor would be prejudicial to the safety, character, reputation
and interests of the Project and its lessees provided that nothing herein
contained shall be construed to prevent such access to persons with whom any
Lessee normally deals in the ordinary course of its business, unless such
persons are engaged in illegal activities. Lessee and no employee or invitee of
Lessee shall go upon the roof of the building.

     4.     All cleaning and maintenance services for the exterior and common areas
of the Project shall be provided exclusively through Lessor. Lessee shall not
cause any unnecessary labor by carelessness or indifference to the good order
and cleanliness of the building. Lessor shall not in any way be responsible to
any Lessee for any loss of property on the Premises, however occurring, or for
any damage to any Lessee’s property by the maintenance personnel or any other
employee or any other person.

     5.     Lessor will furnish Lessee free of charge with two keys to the front
exterior doors in the Premises. Lessor may make a reasonable charge for any
additional keys. Lessee, upon the termination of its tenancy, shall deliver to
Lessor all of the keys to all doors in the Premises including but not limited
to the front exterior door and all interior locking doors and locking
cabinetry.

     6.     If Lessee requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Lessor’s instructions in
their installation.

     7.     Lessee shall not place a load upon any floor which exceeds the load
per square foot which such floor was designed to carry and which is allowed by
law. Heavy objects shall, stand on such platforms as determined by Lessor to
be necessary to properly distribute the weight. Business machines and
mechanical equipment belonging to Lessee which cause noise or vibration that
may be transmitted to the structure of the building or to any space therein to
such a degree as to be objectionable to Lessor or to other lessees shall be
placed and maintained by Lessee, at Lessee’s expense, on vibration eliminators
or other devices sufficient to eliminate noise or vibration. Lessor will not
be responsible for loss of, or damage to, any such equipment or other property
from any cause, and all damage done to the building by maintaining or moving
such equipment or other property shall be repaired at the expense of Lessee.

     8.     Lessee shall not use any method of heating or air conditioning other
than that supplied by Lessor.

     9.     Lessee shall close and lock the doors of its Premises and entirely
shut off all water faucets or other water apparatus and electricity, gas or
air outlets before Lessee and its employees leave the Premises. Lessee shall
be responsible for any damage or injuries sustained by other lessees or
occupants of the building or by Lessor for noncompliance with this rule.

     10.     The toilet rooms, toilets, urinals, wash bowls and other
apparatus shall not be used for any purpose other than that for which they
were constructed, no foreign substance of any kind whatsoever shall be
thrown therein, and the expense of any breakage, stoppage or damage
resulting from the violation of this rule shall be borne by the Lessee
who, or whose employees or invitees, shall have caused it.

     11.     No aerial shall be erected on the roof or exterior walls of the
Premises, or on the grounds, without in each instance, the written consent
of the Lessor. Any aerial so installed without such written consent shall
be subject to removal by Lessor without notice to Lessee and the cost for
said removal by Lessor will be billed to Lessee and paid by Lessee to
Lessor in accordance with Paragraph 4.

 

 

EXHIBIT C — RULES AND REGULATIONS (continued)

     12.     No loud speakers, televisions, phonographs, radios, or other
devices shall be used in a manner so as to be heard or seen outside of the
Premises without the prior written consent of the Lessor.

     13.     Except as approved by Lessor, Lessee shall not mark, drive nails,
screw or drill into the partitions, woodwork or plaster or in any way deface
the Premises. Lessee shall not cut or bore holes for wires. Lessee shall not
affix any floor covering to the floor of the Premises in any manner except as
approved by Lessor. Lessee shall repair any damage resulting from noncompliance
with this rule.

     14.     Lessee shall not install, maintain or operate upon the Premises any
vending machines unless said vending machines are for Lessee’s employees’
exclusive use.

     15.     No cooking shall be done or permitted by any Lessees on the Premises,
except that use by the Lessee of Underwriters’ Laboratory approved equipment
for brewing coffee, tea, hot chocolate and similar beverages shall be permitted
including a UL approved microwave oven, provided that such equipment and use is
in accordance with all applicable federal, state and city laws, codes,
ordinances, rules and regulations.

     16.     Lessee shall not wash, change the oil, or repair vehicles or equipment
in the common areas of the Park or the Premises.

     17.     Lessee shall be entitled to park in common with other lessees of
Lessor. Lessee agrees not to overburden the parking facilities and agrees to
cooperate with Lessor and other Lessees in the use of parking facilities.
Lessor reserves the right in the absolute discretion to determine whether
parking facilities are becoming crowed and, in such event, to allocate parking
spaces among Lessee or to designate areas within which Lessee must park.

     18.     Lessee shall not use the name of the building in connection with or
in promoting or advertising the business of Lessee except as Lessee’s address.

     19.     Lessor may waive any one or more of these Rules and Regulations for
the benefit of any particular
lessee or lessees, but no such waiver by Lessor shall be construed as a waiver
of such Rules and Regulations in favor of any other lessee or lessees, nor
prevent Lessor from thereafter enforcing any such Rules and Regulations against
any or all of the lessees of the building.

     20.     Pets — No birds, fish, reptiles or animals shall be brought into or
kept in or about the Premises/building or Industrial Center.

     21.     Lessor reserves the right from time to time to amend or supplement the
foregoing Rules and Regulations, and to adopt and promulgate additional
reasonable rules and regulations applicable to the Premises and/or the Park.
Notice of such rules and regulations and amendments and supplements thereto, if
any, shall be given to the Lessee.

 

 

EXHIBIT D

HAZARDOUS MATERIALS QUESTIONNAIRE

This Exhibit D is attached to and made a part of Lease bearing the Lease
Reference Date April 2, 2003, between IPERS BREA/GOLDEN STATE BUSINESS PARKS,
INC., a Delaware corporation, as Lessor and INVIVO CORPORATION, a Delaware
corporation, successor in interest to Medical Data Electronics, a California
corporation, as Lessee, for the Premises commonly known as 12723 Wentworth
Street, Arleta, CA 91331, consisting of approximately 35 840 square feet.

This questionnaire is designed to solicit information regarding your
proposed use of hazardous or toxic materials. Please complete the
questionnaire and return it to RREEF Management Company for evaluation. if
your use of materials or generation of wastes is considered to be
significant, further information may be requested regarding your plans for
hazardous and toxic materials management.

Your cooperation in this matter is appreciated. If you have any questions
do not hesitate to call for assistance.

I.     PROPOSED LESSEE OR TENANT

Invivo Corporation, a Delaware corporation

Name (Corporation, Individual, Corporate or
Individual d.b.a., or Public
Agency)

5047

Standard Industrial Classification Code (SIC)

12723 Wentworth Street, Arleta, CA 91331

 

	Street Address	 	
City,       State, Zip Code

Contact Person & Title:       Larry Young, Chief Operating Officer

	 	 	 	 	 
	Telephone: (818 ) 768-6411	 	
Fax: ( 818 ) 768-0736
	 	E-mail: lyoung@emailmde.com

II.     LOCATION AND ADDRESS OF PROPOSED LEASE

12723 Wentworth Street, Arleta, CA 91331

	Street Address	 	
City,       State, Zip Code

III.     DESCRIPTION OF PROPOSED FACILITY USE

Describe proposed use and operation of Premises including principal products
or services to be conducted at facility: Manufacturing and assembly of durable
medical equipment used for patient monitoring

     Does the operation of your business involve the use, generation, treatment,
storage, transfer or disposal of hazardous
complete Section IV.

IV.     PERMIT DISCLOSURE

Does the operation of your business require permits, license or plan approval
from any of the following agencies?

	 	 	 
	U.S. Environmental Protection Agency	 	
Air Quality Management District
	City or County Sanitation District	 	
Bureau of Alcohol, Firearms and Tobacco
	State Department of Health Services	 	
City or County Fire Department
	U.S. Nuclear Regulatory Commission	 	
Regional Water Quality Control Board

Indicate permit or license numbers, issuing agency and expiration
date or renewal date, if applicable. U.S. Environmental Protection
Agency, ID # CAL000257300 Air Quality Management District, Permit
#47268 A/N 393397

If your answer is yes to any of the above questions, please complete Sections V
and VI.

 

 

V.     HAZARDOUS MATERIALS DISCLOSURE

Will any hazardous or toxic materials or substances be stored
onsite? Yes _X No . If yes, please
describe the materials or substances to be stored, quantities and
proposed method of storage (i.e. drums, aboveground or underground
storage tanks, cylinders, other), and whether the material is a Solid
(S), Liquid (L) or Gas (G):

	 	 	 
	Solder (Bar, Paste)	
Cardboard, plastic, metal
	12.5 lbs
	Flux	
Plastic, metal
	1.5 gal

Attach additional sheets if necessary.

Is any facility modification required or planned to mitigate the release
of toxic or hazardous substance or wastes into the environment? Yes No X
_. If yes, please describe the proposed facility modifications:

VI.     HAZARDOUS WASTE DISCLOSURE

	a)	 	Will any hazardous waste, including recyclable waste, be generated by the
operation of your business?
Yes X     or No-. If yes, please list the hazardous waste which will be
generated at the facility, its hazard class and volume/frequency of
generation on a monthly basis:

	 	 	 
	Waste Name	
Hazard Class
	Volume/Month
	Solder dross	
Class D2B
	8.5 lbs
	Flux	
Class B2, D1 A, D2B
	1.0 gal

Attach additional sheets if necessary.

	b)	 	If yes, please also indicate if any such wastes are to be stored
within the Premises and the proposed method of storage (i.e. drums,
aboveground or underground storage tanks, cylinders, other):

	 	 	 
	Waste Name	 	Storage Method
	Solder Dross	 	
Plastic container, drums
	Flux	 	
Metal Containers

c) It yes, please also describe the method(s) of disposal for each waste.
indicate wade disposal win tan%, p.a..., a.... method of transportation to be
used:

Hazardous materials are stored in a metal cabinet for that purpose. Hazardous
waste is moved to a sequestered, limited access area on the outside of the
facility. Outside contractors are used dispose of hazardous waste
approximately annually; P Kay Metal Ihc of Los Angeles, CA and Pollution
Control Industries of Rancho Cordova, CA were used most recently.

d) Is any treatment or processing of hazardous wastes to be conducted onsite?

Yes No X . If yes, please describe proposed treatment/processing methods:

e) Which agencies are responsible for monitoring and evaluating compliance with
respect to the storage and disposal of hazardous materials or wastes at or from
the Premises?

(Please list all agencies)

U.S. Environmental Protection Agency

Air Quality Management District

f) Have there been any agency enforcement actions regarding the company
facilities, or any existing company facilities, or any past, pending or
outstanding administrative orders or consent decrees? Yes     No     X     . If yes,
have there been any continuing compliance obligations imposed on your company
as a result of decrees or orders? Yes     No     . If yes, please describe:

g) Has the company been the recipient of requests for information, notices and
demand letters, cleanup and abatement orders or cease and desist orders or
other administrative inquiries? Yes No     X     . If yes, please describe:

 

 

h) Are there any pending citizen lawsuits, or have any notices of violations
been provided to the company or any existing facilities pursuant to the
citizens suite provisions of any statute? Yes     No     X     .

i) Have there been any previous
lawsuits against the company regarding
environmental concerns? Yes     No     X     .
If yes, please describe how these lawsuits were resolved:

j) Has an environmental audit ever been conducted at any of your company’s
existing facilities? Yes     X     No     . If yes, please describe:

A subsurface investigation was conducted by Applied Geosciences Inc. of tustin,
CA in July 1995. soil samples tested were within allowable limits. A site
inspection specific to waste discharge was performed by the California Regional
Water Quality control Board in December 1995. they concluded that there was no
impact on groundwater.

k) Does your company carry environmental impairment insurance? Yes     No     X     .
If yes, what is the name of the carrier and what are the effective periods and
monetary limits of such coverage?

This Hazardous Materials questionnaire is certified as being true and accurate
and has been completed by the party whose signature appears below on behalf of
tenant as of the date set forth below.

	 	 	 	 
	Dated: 4-15-03	Signature	 	 
	 	 	

	 	Print Name	 	F. Larry Young
	 	Title	 	Chief Operating Officer<PAGE>

                                  EXHIBIT 10.2

                         HOME LOAN FINANCIAL CORPORATION
                      1998 STOCK OPTION AND INCENTIVE PLAN

      1. PURPOSE. The purpose of the Home Loan Financial Corporation 1998 Stock
Option and Incentive Plan (this "Plan") is to promote and advance the interests
of Home Loan Financial Corporation (the "Company") and its shareholders by
enabling the Company to attract, retain and reward directors, managerial and
other employees of the Company and any Subsidiary (hereinafter defined), and to
strengthen the mutuality of interests between such directors and employees and
the Company's shareholders by providing the directors and employees with a
proprietary interest in pursuing the long-term growth, profitability and
financial success of the Company.

      2. DEFINITIONS. For purposes of this Plan, the following terms shall have
the meanings set forth below:

            (a) "Board" means the Board of Directors of the Company.

            (b) "Code" means the Internal Revenue Code of 1986, as amended, or
      any successor thereto, together with the rules, regulations and
      interpretations promulgated thereunder.

            (c) "Committee" means the Committee of the Board constituted as
      provided in Section 3 of this Plan.

            (d) "Common Shares" means the common shares, without par value, of
      the Company or any security of the Company issued in substitution, in
      exchange or in lieu thereof.

            (e) "Company" means Home Loan Financial Corporation, an Ohio
      corporation, or any successor corporation.

            (f) "Employment" means regular employment with the Company or a
      Subsidiary and does not include service as a director only.

            (g) "Exchange Act" means the Securities Exchange Act of 1934, as
      amended, or any successor statute.

            (h) "Fair Market Value" shall be determined as follows:

                  (i) If the Common Shares are traded on a national securities
            exchange at the time of grant of the Stock Option, then the Fair
            Market Value shall be the average of the highest and the lowest
            selling prices on such exchange on the date such Stock Option is
            granted or, if there were no sales on such date, then on the next
            prior business day on which there was a sale.

                  (ii) If the Common Shares are quoted on either The Nasdaq
            National Market or The Nasdaq Small Cap Market at the time of the
            grant of the Stock Option, then the Fair Market Value shall be the
            mean between the closing high bid and low asked quotation with
            respect to a Common Share on such date on such market.

                  (iii) If the Common Shares are not traded on a national
            securities exchange or quoted on The Nasdaq National Market or The
            Nasdaq Small Cap Market, then the Fair Market Value shall be as
            determined by the Committee.

                                                                             31.
<PAGE>
      (i) "Incentive Stock Option" means any Stock Option granted pursuant to
the provisions of Section 7 of this Plan that is intended to be and is
specifically designated as an "incentive stock option" within the meaning of
Section 422 of the Code.

      (j) "Non-Qualified Stock Option" means any Stock Option granted pursuant
to the provisions of Section 6 of this Plan that is not an Incentive Stock
Option.

      (k) "OTS" means the Office of Thrift Supervision, Department of the
Treasury.

      (l) "Participant" means an employee or director of the Company or a
Subsidiary who is granted a Stock Option under this Plan. Notwithstanding the
foregoing, for the purposes of any Incentive Stock Option under this Plan, the
term "Participant" shall include only employees of the Company or a Subsidiary.

      (m) "Plan" means the Home Loan Financial Corporation 1998 Stock Option and
Incentive Plan, as set forth herein and as it may be hereafter amended from time
to time.

      (n) "Stock Option" means an option to purchase Common Shares granted
pursuant to the provisions of Section 7 of this Plan.

      (o) "Subsidiary" means any corporation or entity in which the Company
directly or indirectly controls 50% or more of the total voting power of all
classes of its stock having voting power and includes, without limitation, The
Home Loan Savings Bank.

      (p) "Terminated for Cause" means any removal of a director or discharge of
an employee for personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of a material provision of any law, rule or regulation
(other than traffic violations or similar offenses), a material violation of a
final cease-and-desist order or any other action of a director or employee which
results in a substantial financial loss to the Company or a Subsidiary.

3. ADMINISTRATION.

      (a) This Plan shall be administered by the Committee, which shall be
comprised of not less than three of the members of the Board. The members of the
Committee shall be appointed from time to time by the Board. Members of the
Committee shall serve at the pleasure of the Board and the Board may from time
to time remove members from, or add members to, the Committee. A majority of the
members of the Committee shall constitute a quorum for the transaction of
business. An action approved in writing by a majority of the members of the
Committee then serving shall be fully as effective as if the action had been
taken by unanimous vote at a meeting duly called and held.

      (b) The Committee is authorized to construe and interpret this Plan and to
make all other determinations necessary or advisable for the administration of
this Plan. The Committee may designate persons other than members of the
Committee to carry out its responsibilities under such conditions and
limitations as it may prescribe. Any determination, decision or action of the
Committee in connection with the construction, interpretation, administration,
or application of this Plan shall be final, conclusive and binding upon all
persons participating in this Plan and any person validly claiming under or
through persons participating in this Plan. The Company shall effect the
granting of Stock Options under this Plan in accordance with the determinations
made by the Committee, by execution of instruments in writing in such form as
approved by the Committee.

                                                                             32.
<PAGE>
      4. TERM OF PLAN. This Plan shall terminate on the date which is ten (10)
years from the effective date of this Plan, except with respect to Stock Options
then outstanding. Notwithstanding the foregoing, no Incentive Stock Option may
be granted under this Plan after the date which is ten (10) years from the date
on which this Plan is adopted by the Board or the date on which this Plan is
approved by the shareholders of the Company, whichever is earlier.

      5. COMMON SHARES SUBJECT TO PLAN. The maximum number of Common Shares in
respect of which Stock Options may be granted under this Plan, subject to
adjustment as provided in Section 10 of this Plan, shall be ten percent of the
total Common Shares sold in connection with the conversion of The Home Loan
Savings Bank from mutual to stock form.

      For the purpose of computing the total number of Common Shares available
for Stock Options under this Plan, there shall be counted against the foregoing
limitations the number of Common Shares subject to issuance upon the exercise or
settlement of Stock Options as of the dates on which such Stock Options are
granted. If any Stock Options are forfeited, terminated or exchanged for other
Stock Options, or expire unexercised, the Common Shares which were theretofore
subject to such Stock Options shall again be available for Stock Options under
this Plan to the extent of such forfeiture, termination or expiration of such
Stock Options.

      Common Shares which may be issued under this Plan may be either authorized
and unissued shares or issued shares which have been reacquired by the Company.
No fractional shares shall be issued under this Plan.

      6. ELIGIBILITY AND GRANTS. Persons eligible for Stock Options under this
Plan shall consist of directors and managerial and other employees of the
Company or a Subsidiary who hold positions with significant responsibilities or
whose performance or potential contribution, in the judgment of the Committee,
will benefit the future success of the Company or a Subsidiary. In selecting the
directors and employees to whom Stock Options will be awarded and the number of
shares subject to such Stock Options, the Committee shall consider the position,
duties and responsibilities of the eligible directors and employees, the value
of their services to the Company and the Subsidiaries and any other factors the
Committee may deem relevant.

      7. STOCK OPTIONS. Stock Options granted under this Plan may be in the form
of Incentive Stock Options or Non-Qualified Stock Options, and such Stock
Options shall be subject to the following terms and conditions, as the Committee
shall deem desirable:

            (a) Grant. Stock Options may be granted under this Plan on terms and
      conditions not inconsistent with the provisions of this Plan and in such
      form as the Committee may from time to time approve and shall contain such
      additional terms and conditions, not inconsistent with the express
      provisions of this Plan, as the Committee shall deem desirable; provided,
      however, that no more than 25% of the shares subject to Stock Options may
      be awarded to any individual who is an employee of the Company or a
      Subsidiary, no more than 5% of such shares may be awarded to any director
      who is not an employee of the Company or a Subsidiary and no more than 30%
      of such shares may be awarded to non-employee directors of the Company or
      a Subsidiary in the aggregate.

            (b) Stock Option Price. The per share option exercise price of a
      Stock Option shall be determined by the Committee at the time of grant;
      provided, however, that in no event shall the exercise price of a Stock
      Option be less than 100% of the Fair Market Value of the Common Shares on
      the date of the grant of such Stock Option. Notwithstanding the foregoing,
      in the case of a Participant who owns Common Shares representing more than
      10% of the outstanding Common Shares at the time an Incentive Stock Option
      is granted, the option exercise price shall in no event be less than 110%
      of the Fair Market Value of the Common Shares at the time an Incentive
      Stock Option is granted to such Participant.

                                                                             33.
<PAGE>
      (c) Stock Option Terms. Subject to the right of the Company to provide for
earlier termination in the event of any merger, acquisition or consolidation
involving the Company, the term of each Stock Option shall be fixed by the
Committee; except that the term of an Incentive Stock Option will not exceed ten
years after the date the Incentive Stock Option is granted; provided, however,
that in the case of a Participant who owns a number of Common Shares
representing more than 10% of the Common Shares outstanding at the time an
Incentive Stock Option is granted, the term of the Incentive Stock Option
granted to such Participant shall not exceed five years.

      (d) Exercisability. Except as set forth in Section 7(f) and Section 8 of
this Plan, Stock Options awarded under this Plan shall become exercisable at the
rate of not more than one-fifth per year commencing on the date that is one year
after the date of the grant of the Stock Option and shall be subject to such
other terms and conditions as shall be determined by the Committee at the date
of grant.

      (e) Method of Exercise. A Stock Option may be exercised, in whole or in
part, by giving written notice of exercise to the Company specifying the number
of Common Shares to be purchased. Such notice shall be accompanied by payment in
full of the purchase price in cash or, if acceptable to the Committee in its
sole discretion, in Common Shares already owned by the Participant, or by
surrendering outstanding Stock Options. The Committee may also permit
Participants, either on a selective or aggregate basis, to simultaneously
exercise Stock Options and sell Common Shares thereby acquired, pursuant to a
brokerage or similar arrangement, approved in advance by the Committee, and use
the proceeds from such sale as payment of the purchase price of such shares.

      (f) Special Rule for Incentive Stock Options. With respect to Incentive
Stock Options granted under this Plan, to the extent the aggregate Fair Market
Value (determined as of the date the Incentive Stock Option is granted) of the
number of shares with respect to which Incentive Stock Options are exercisable
under all plans of the Company or a Subsidiary for the first time by a
Participant during any calendar year exceeds $100,000, or such other limit as
may be required by the Code, such Stock Options shall be Non-Qualified Stock
Options to the extent of such excess.

8. TERMINATION OF EMPLOYMENT OR DIRECTORSHIP.

      (a) Except in the event of the death or disability of a Participant, upon
the resignation, removal or retirement from the board of directors of any
Participant who is a director of the Company or a Subsidiary or upon the
termination of Employment of a Participant who is not a director of the Company
or a Subsidiary, any Stock Option which has not yet become exercisable shall
thereupon terminate and be of no further force or effect and, subject to
extension by the Committee, any Stock Option which has become exercisable shall
terminate if it is not exercised within 12 months of such resignation, removal
or retirement.

      (b) Unless the Committee shall specifically state otherwise at the time a
Stock Option is granted, all Stock Options granted under this Plan shall become
exercisable in full on the date of termination of a Participant's employment or
directorship with the Company or a Subsidiary because of his death or
disability, and, subject to extension by the Committee, all Stock Options shall
terminate if not exercised within 12 months of the Participant's death or
disability.

      (c) In the event the Employment or the directorship of a Participant is
Terminated for Cause, any Stock Option which has not been exercised shall
terminate as of the date of such termination for cause.

                                                                             34.
<PAGE>
      9. NON-TRANSFERABILITY OF STOCK OPTIONS. No Stock Option under this Plan
and no rights or interests therein shall be assignable or transferable by a
Participant except by will or pursuant to the laws of descent and distribution.
During the lifetime of a Participant, Stock Options are exercisable only by, and
payments in settlement of Stock Options will be payable only to, the Participant
or his or her legal representative.

      10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

            (a) The existence of this Plan and the Stock Options granted
      hereunder shall not affect or restrict in any way the right or power of
      the Board or the shareholders of the Company to make or authorize the
      following: any adjustment, recapitalization, reorganization or other
      change in the Company's capital structure or its business; any merger,
      acquisition or consolidation of the Company; any issuance of bonds,
      debentures, preferred or prior preference stocks ahead of or affecting the
      Company's capital stock or the rights thereof; the dissolution or
      liquidation of the Company or any sale or transfer of all or any part of
      its assets or business; or any other corporate act or proceeding,
      including any merger or acquisition which would result in the exchange of
      cash, stock of another company or options to purchase the stock of another
      company for any Stock Option outstanding at the time of such corporate
      transaction or which would involve the termination of all Stock Options
      outstanding at the time of such corporate transaction.

            (b) In the event of any change in capitalization affecting the
      Common Shares of the Company, such as a stock dividend, stock split,
      recapitalization, merger, consolidation, spin-off, split-up, combination
      or exchange of shares or other form of reorganization, or any other change
      affecting the Common Shares, such proportionate adjustments, if any, as
      the Board in its discretion may deem appropriate to reflect such change
      shall be made with respect to the aggregate number of Common Shares for
      which Stock Options in respect thereof may be granted under this Plan, the
      maximum number of Common Shares which may be sold or awarded to any
      Participant, the number of Common Shares covered by each outstanding Stock
      Option, and the exercise price per share in respect of outstanding Stock
      Options.

            (c) The Committee may also make such adjustments in the number of
      shares covered by, and the exercise price or other value of, any
      outstanding Stock Options in the event of a spin-off or other distribution
      (other than normal cash dividends) of Company assets to shareholders. In
      the event that another corporation or business entity is being acquired by
      the Company and the Company agrees to assume outstanding employee stock
      options and/or the obligation to make future grants of options or rights
      to employees of the acquired entity, the aggregate number of Common Shares
      available for Stock Options under Section 5 of this Plan may be increased
      accordingly.

      11. AMENDMENT AND TERMINATION OF THIS PLAN. Without further approval of
the shareholders, the Board may at any time terminate this Plan or may amend it
from time to time in such respects as the Board may deem advisable, except that
the Board may not, without approval of the shareholders, make any amendment
which would (a) increase the aggregate number of Common Shares which may be
issued under this Plan (except for adjustments pursuant to Section 10 of this
Plan), (b) materially modify the requirements as to eligibility for
participation in this Plan, or (c) materially increase the benefits accruing to
Participants under this Plan. The above notwithstanding, the Board may amend
this Plan to take into account changes in applicable securities, federal income
tax and other applicable laws.

      12. MODIFICATION OF OPTIONS. The Board may authorize the Committee to
direct the execution of an instrument providing for the modification of any
outstanding Stock Option which the Board believes to be in the best interests of
the Company; provided, however, that no such modification,

                                                                            35.
<PAGE>
extension or renewal shall reduce the exercise price or confer on the holder of
such Stock Option any right or benefit which could not be conferred on him by
the grant of a new Stock Option at such time and shall not materially decrease
the Participant's benefits under the Stock Option without the consent of the
holder of the Stock Option, except as otherwise permitted under this Plan.

      13. MISCELLANEOUS.

            (a) Tax Withholding. The Company shall have the right to deduct from
      any settlement made under this Plan, including the delivery or vesting of
      Common Shares, any federal, state or local taxes of any kind required by
      law to be withheld with respect to such payments or to take such other
      action as may be necessary in the opinion of the Company to satisfy all
      obligations for the payment of such taxes. If Common Shares are used to
      satisfy tax withholding, such shares shall be valued based on the Fair
      Market Value when the tax withholding is required to be made.

            (b) No Right to Employment. Neither the adoption of this Plan nor
      the granting of any Stock Option shall confer upon any employee of the
      Company or a Subsidiary any right to continued Employment with the Company
      or a Subsidiary, as the case may be, nor shall it interfere in any way
      with the right of the Company or a Subsidiary to terminate the Employment
      of any of its employees at any time, with or without cause.

            (c) Annulment of Stock Options. The grant of any Stock Option under
      this Plan payable in cash is provisional until cash is paid in settlement
      thereof. The grant of any Stock Option payable in Common Shares is
      provisional until the Participant becomes entitled to the certificate in
      settlement thereof. In the event the Employment or the directorship of a
      Participant is Terminated for Cause, any Stock Option which is provisional
      shall be annulled as of the date of such termination.

            (d) Other Company Benefit and Compensation Programs. Payments and
      other benefits received by a Participant under a Stock Option made
      pursuant to this Plan shall not be deemed a part of a Participant's
      regular, recurring compensation for purposes of the termination indemnity
      or severance pay law of any country and shall not be included in, nor have
      any effect on, the determination of benefits under any other employee
      benefit plan or similar arrangement provided by the Company or a
      Subsidiary unless expressly so provided by such other plan or arrangement,
      or except where the Committee expressly determines that a Stock Option or
      portion of a Stock Option should be included to accurately reflect
      competitive compensation practices or to recognize that a Stock Option has
      been made in lieu of a portion of competitive annual cash compensation.
      Stock Options under this Plan may be made in combination with or in tandem
      with, or as alternatives to, grants, stock options or payments under any
      other plans of the Company or a Subsidiary. This Plan notwithstanding, the
      Company or any Subsidiary may adopt such other compensation programs and
      additional compensation arrangements as it deems necessary to attract,
      retain and reward directors and employees for their service with the
      Company and its Subsidiaries.

            (e) Securities Law Restrictions. No Common Shares shall be issued
      under this Plan unless counsel for the Company shall be satisfied that
      such issuance will be in compliance with applicable federal and state
      securities laws. Certificates for Common Shares delivered under this Plan
      may be subject to such stock-transfer orders and other restrictions as the
      Committee may deem advisable under the rules, regulations, and other
      requirements of the Securities and Exchange Commission, any stock exchange
      upon which the Common Shares are then listed, and any applicable federal
      or state securities law. The Committee may cause a legend or legends to be
      put on any such certificates to make appropriate reference to such
      restrictions.

                                                                             36.
<PAGE>
            (f) Stock Option Agreement. Each Participant receiving a Stock
      Option under this Plan shall enter into an agreement with the Company in a
      form specified by the Committee agreeing to the terms and conditions of
      the Stock Option and such related matters as the Committee shall, in its
      sole discretion, determine.

            (g) Cost of Plan. The costs and expenses of administering this Plan
      shall be borne by the Company.

            (h) Governing Law. This Plan and all actions taken hereunder shall
      be governed by and construed in accordance with the laws of the State of
      Ohio, except to the extent that federal law shall be deemed applicable.

            (i) Effective Date. This Plan shall be effective upon the later of
      adoption by the Board and approval by the Company's shareholders. This
      Plan shall be submitted to the shareholders of the Company for approval at
      an annual or special meeting of shareholders to be held no sooner than six
      months after the effective date of the conversion of The Home Loan Savings
      Bank from mutual to stock form.

                                                                             37.

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