Document:

Exhibit 10.21

 

Fourth Amendment

to

Lease Agreement

for

1035 Cindy Lane, Carpinteria, California

 

Browne Trust Number Two, Lessor
and INAMED Corporation, Lessee, of that real property commonly known as 1035
Cindy Lane, Carpinteria, California (Santa Barbara County Assessors parcel
number 001-190-55-00), herewith agree to the following changes to Section three
(3) of the original lease agreement, dated April 4, 1987.  Section three shall be amended and modified
to read as follows.

 

3a.     Under the Third Amendment to this Lease
Agreement, Lessee and Lessors agreed to extend the term of the lease for a
period of one year effective January 15, 1995 and ending on January 15, 1996.

 

3b.    At the request of the Lessee the Lessors
hereby agree, effective September 1, 1996, that the Lessee will be granted a
six (6) month tenancy of the premises. 
This six month tenancy will renew automatically the first of each
month.  In return for the granting of
this flexible tenancy, the parties agree that either party will have the right
to terminate the lease, upon giving the other party six (6) months notification
of such intention.  Such notification
shall be conveyed by registered mail by the initiating party and acknowledged
by registered mail by the receiving party.

 

3c.     During the six (6) month period preceding
the end of the lease and the vacating of the property, the Lessee agrees to
allow Lessor’s designated agent(s) full access to the premises during regular
working hours, for the purpose of physical inspections and the showing of the
premises to prospective tenants.  It is
also agreed that the Lessor will have the right to display a “For Lease” sign
in front of the premises during this period. 
Upon vacating the premises the Lessor agrees to leave the property in
neat and orderly condition, subject only to normal wear and tear.  Openings created in floors and ceilings and
walls by the removal of mechanical and electrical equipment will be returned to
their original condition.

 

3d.    It is agreed, by both parties, that all
other terms and conditions of the original Lease Agreement will remain in
effect throughout this month-to-month tenancy period.

 

3e.     This agreement to be signed by Lessee and
returned to Lessor no later than August 30, 1995.

 

	
  LESSOR

  	
  LESSEE

  
	
  Browne Trust Number Two

  	
  INAMED Corporation

  
	
   

  	
   

  
	
  By 

  	
  /s/ Lawrence
  T. Browne

  	
   

  	
  By

  	
  /s/ Michael
  Doty

  	
   

  
	
   

  	
   

  
	
  Date

  	
  August 21,
  1995

  	
   

  	
  Date

  	
  August 31,
  1995

  	
   

  
										

 

 

LEASE AGREEMENT

For

1035 CINDY LANE, CARPINTERIA, CALIFORNIA

 

1.      Parties: 
This lease is made and entered into this fourth
day of April 1987 by and between Lawrence and Susan Browne, hereinafter
referred to as Lessor and INAMED Corporation, hereinafter referred to as
Lessee.

 

2.      Premises: 
This Lessor hereby leases to Lessee and Lessee
hereby leases from Lessor, on the terms and conditions hereinafter set forth,
that certain real property, buildings, and improvements located thereon,
situated in the City of Carpinteria, State of California, commonly known as
1035 Cindy Lane (Assessors Parcel 001-190-55-00), consisting of approximately
18,700 square feet of office and research facilities in two commercial
buildings on a 50,000 square foot commercial lot.  Said real property is hereinafter known as the “Premises”.

 

3.      Term: 
The term of this Lease shall be for five (5)
years, commencing on June 1, 1987 and ending on May 31, 1992. Lessee shall have
the option to extend the term of this lease for a period of an additional five
(5) years until May 31, 1997.  Lessee
shall notify Lessor of its intention to exercise this extension option or
intention to vacate the premises, at least six months prior to the expiration
of the initial lease period.

 

4.      Rent: 
Lessee shall pay to Lessor as initial rent for
the Premises, the sum of Eleven Thousand Dollars ($11,000.00) per month, in
advance, on the first day of each month during the term hereof.  Rent shall be payable without notice or
demand and without any deduction, off-set, or abatement, in lawful money of the
United States to the Lessor at the address stated herein for notices, or to
such other persons or such other places as the Lessor may designate to Lessee
in writing.  This monthly rental amount
will be adjusted annually on June 1st to reflect the annual percentage increase
in the Los Angeles Consumer Price Index for the preceeding twelve calendar
months starting April 1st and ending March 31st.

 

5.      Taxes: 
Lessee shall pay or reimburse Lessor for all
property taxes and general assessments levied and assessed against the Premises
during the term of this lease.  Lessee
shall pay all taxes assessed against and levied upon its own personal property
and equipment located in said premises. 
Taxes for the first six months of 1987 will be prorated and billed
directly by the Lessor to both MCT Corporation and INAMED Corporation based
upon their respective occupancy of said property.

 

2

 

6.      Insurance:  Lessee shall pay or reimburse Lessor for
all Fire and Liability Insurance on the building structures and real
property.  Fire and Property Insurance
Coverage will be a minimum of $1,000,000. 
Liability Insurance coverage will be a minimum of $1,000,000.  Fire and Property Coverage will be adjusted
every two years to reflect the change in the Los Angeles Consumer Price
Index.  Lessee shall be responsible for
insurance relating to its own personal property, manufacturing inventory,
manufacturing operations and product liabilities.

 

7.      Utilities:  Lessee shall be responsible for the
payment of all electrical, gas , water, trash and telephone utilities supplied
to the Premises.

 

8.      Structure:  Lessor shall be responsible for
maintenance of the building foundations, structural walls, and weather
integrity of all roofs.

 

9.      Maintenance:  Lessee shall be responsible for all
other maintenance of exterior areas of the complex including building
exteriors, landscaping, walkways and parking areas.  Lessee shall be responsible for the maintenance of all spaces
that it occupies in an organized and sanitary manner.  Lessee will not permit its employees or operations to generate
excess sound, noxious odors, or exterior storage that will negatively impact
the environment of the property or neighbors.

 

10.    Initial Condition:  Lessor will be responsible for insuring
that the air conditioning, heating, and two air compressor units are in good
working order prior to initial occupancy of the building.  Lessor will be responsible for the painting
of the interiors of both buildings with colors selected by the Lessee.  This work will be completed prior to May 1,
1987 for the 4,900’ front building and prior to June 1, 1987 for the 13,800’
back building.  Lessor shall replace all
broken floor tiles, discolored and missing ceiling tiles and all improperly
functioning florescent  bulbs and
ballasts.  Lessor shall repair the front
awning fringe.  Lessor shall grant
Lessee a $2,000.00 credit toward the installation of new carpeting, carpet
cleaning, and waxing of tile floors.

 

11.    Alterations and Additions:  Lessee shall not
make any alterations, improvements or additions in or about the premises
without the Lessor’s prior written consent. 
Consent to make such improvements will not be unreasonably withheld.

 

3

 

12.    Hold Harmless:  Lessee shall indemnify and hold Lessor
harmless for and against any and all claims arising from the Lessee’s use or
occupancy of the premises, or from the conduct of its business, or from any
activity, work, or things which may be permitted or suffered by Lessee in or
about the Premises, including all damages, costs, attorney’s fees, expenses and
liabilities incurred in the defense of any claim or action or proceeding
arising therefrom, except for the Lessor’s willful or grossly negligent
conduct.  Lessee hereby assumes all risk
of damage to its Premises or injury to persons in and about those Premises.

 

13.    Assignment and Subletting:  Lessee shall not
voluntarily or by any operation of law assign, transfer, sublet mortgage, or
otherwise transfer or encumber all or any part of the Lessee’s interest in this
Lease or the Premises so occupied, without the Lessor’s prior written
consent.  This consent will not be
unreasonable withheld by the Lessor.

 

14.    Default: 
It is agreed between the parties hereto that if
any rent shall be due hereunder and unpaid, or if the Lessee shall default and
breach any other covenant or provision of the Lease, then the Lessor, after
giving proper notice required by law, may re-enter the Premises and remove any
property and persons therefrom in the manner allowed by law.  Lessor may, at his option, either maintain
this lease in full force and effect and recover the rent and other charges as
they become due, or in the alternative, terminate this Lease.  In addition, the Lessor may recover all
rentals and any other damages and pursue any other rights and remedies that the
Lessor may have against the Lessee by reason of such default as provided by
law.

 

15.    Surrender: 
On the last day of the term of this Lease or
any extension thereof, the Lessee shall surrender the Premises to the Lessor in
good condition, broom clean, with all carpets cleaned, with ordinary wear and
tear excepted.

 

16.    Parking: 
Lessee is herewith granted the right to all
forty-one (41) parking spaces of the total of forty-one (41) that are
available.  Additional on street parking
is available on a first come basis.

 

17.    Holding Over:  If the Lessee, with the Lessor’s
consent, remains in possession of the Premises after expiration or termination
of the term of this Lease, such possession by the Lessee shall be deemed to be
a tenancy from month-to-month at a rental in the amount of the last monthly
rental paid plus annual Consumer Price Index adjustments.  Other charges payable under provisions of
this Lease will be applicable to such tenancy.

 

4

 

18.    Binding on Successors and Assigns:  Each provision of
this Lease performable by the Lessee shall be deemed both a covenant and a
condition.  The terms, conditions and
covenants of this Lease shall be binding upon and shall inure to the benefit of
each of the parties hereto, their heirs, personal representatives, successors
and assigns.

 

19.    Option to Purchase:  As consideration
for signing a five year lease, Lessee shall be granted a three year option to
purchase said property (Assessors Parcel 001-190-55-00).  During 
the first year of the lease the price will be $1,475,000 cash.  During the second year and third year of the
lease the price will be adjusted annually on June 1st to reflect the percentage
increase in the Los Angeles Consumer Price Index for the prior twelve month
period beginning April 1st and ending March 31st.  Lessee’s Option to Purchase will only remain in effect during the
period in which Lessee remains in compliance with the terms of this Lease
Agreement and shall be null and void in the event of non compliance.  When exercising this Option To Purchase
Lessee shall notify the Lessor in writing a minimum of six months in advance of
the intended purchase date, to allow Lessor sufficient time to locate alternate
investment property(s).  Lessee Agrees
to participate in an I.R.S. Section 1031 Tax Deferred Exchange at no cost to
Lessee.

 

20.    First Right of Refusal:  Lessee shall be
granted a First Right of Refusal to purchase said property during the fourth
and fifth year of the initial lease period and any extensions thereof. Should
the Lessor receive an acceptable offer to purchase said property, Lessor shall
notify Lessee within three (3) days of their intent to complete a sales
transaction and the terms thereof. 
Lessee shall be given a minimum of ten (10) working days to sign a
purchase offer at the same terms negotiated with the outside buyer.  Lessee’s failure to sign an offer within the
ten day period will cause the First Right of Refusal will remain in effect only
as long as Lessee remains in compliance with the terms of this Lease Agreement
and will become null and void in the event of non compliance.

 

21.    MCT Corporation Sublease:   Lessee shall have  the right to sublease the 4,900’ front office building from the
current Lessee, MCT Corporation during the period May 1, 1987 to May 31,
1987.  Rent will be $3,667.00 and will
be paid directly to MCT Corporation on or before May 1, 1987.  Effective at midnight May 31st, 1987 the
lease between Lawrence and Susan Browne and the MCT Corporation shall be
terminated and this lease will become effective.

 

5

 

22.    Notices: 
Whenever under this Lease a provision is made
for any demand, notice or declaration of any kind, it shall be in writing and
served either personally or sent by registered or certified United State mail,
postage prepaid, to the addresses as set forth below.  Such notice shall be deemed to have been received within forty-eight
(48) hours from the time of mailing, if mailed as provided.

 

	
  LESSOR

  	
  LESSEE

  
	
   

  	
   

  
	
   

  	
  Lawrence or
  Susan Browne

  690 El Rancho Road

  Santa Barbara, CA 93108

  	
   

  	
   

  	
  INAMED
  Corporation

  1035 Cindy Lane

  Carpinteria, CA 93013

  	
   

  
						

 

22.    Waivers: 
No waiver by Lessor of any provision hereof
shall be deemed a waiver of any other provision hereof or of any subsequent
breach by the Lessee of the same or any other provisions.

 

23.    Time: 
Time is of the essence of this Lease.  Acceptance of this Lease Agreement shall be
made on or before April 7th 1987, by the return of one signed copy of the Lease
Agreement to the Lessor, with a check in the net amount of $20,000.00, as
prepayment against the first and last month of rent due, less the $2,000.00
carpet and floor credit given to Lessee.

 

	
  LESSOR

  	
  LESSEE

  
	
  Lawrence or Susan Browne

  	
  INAMED Corporation

  
	
   

  	
   

  
	
  By 

  	
  /s/
  [ILLEGIBLE]

  	
   

  	
  By

  	
  /s/ Donald
  McGhan

  	
   

  
	
   

  	
   

  
	
  Date

  	
  APRIL 4,
  1987

  	
   

  	
  Date

  	
  APRIL 7,
  1987

  	
   

  
								

 

6Exhibit 10.22

 

AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION

 

STANDARD
SUBLEASE

(Long-form
to be used with pre-1996 AIR leases)

 

                1.             Parties.  This Sublease, dated, for reference purposes
only, February 23, 2000, is made by and between  OAD, Inc. a Delaware Corporation (“Sublessor”) and Bio Enterics
Corporation (“Sublessee”)

 

                2.             Premises. 
Sublessor hereby subleases to Sublessee and Sublessee hereby subleases
from Sublessor for the term, at the rental, and upon all of the conditions set
forth herein, that certain real property, including all improvements therein,
and commonly known by the street address of 
6420 Via Real, Suite 8 & 9 located in the County of  Santa Barbara, State of California and
generally described as (describe briefly the nature of the property) two
contiguous units consisting of approximately 2,496 square feet, (“Premises”).

 

                3.             Term.

 

                                3.1          Term. 
The term of this Sublease shall be for two (2) years and ten (10) months
commencing on March 1, 2000 and ending on 
January 31, 2003, unless sooner terminated pursuant to any provision
hereof.

 

                                3.2          Delay in Commencement.  Sublessor agrees to use reasonable efforts
to deliver possession of the Premises by the commencement date.  If, despite said efforts, Sublessor is
unable to deliver possession as agreed, Sublessee agrees that Sublessor shall
not be liable whatsoever for such failure to deliver possession.

 

                4.             Rent.

 

                                4.1          Base rent. 
Sublessee shall pay to Sublessor as Base Rent for the Premises equal
monthly payments of $3,369.60, in advance, on the first day of each month of
the term hereof.  Sublessee shall pay
Sublessor upon the execution hereof $3,369.60 as Base Rent for March 1-31,
2000.  Base Rent for any period during
the term hereof which is for less than one month shall be a pro rata portion of
the monthly installment.

 

                                4.2          Rent Defined.  All monetary obligations of Sublessee to Sublessor under the
terms of this Sublease (except for the Security Deposit) are deemed to be rent
(“Rent”).  Rent shall be payable in lawful money of the
United States to Sublessor at the address stated herein or to such other
persons or at such other places as Sublessor may designate in writing.

 

                5.             Security
Deposit.  Sublessee shall
deposit with Sublessor upon execution hereof $3,369.60 as security for Sublessee’s
faithful performance of Sublessee’s obligations hereunder.  If Sublessee fails to pay Rent or other
charges due hereunder, or otherwise defaults with respect to any provision of
this Sublease, Sublessor may use, apply or retain all or any portion of said
deposit for the payment of any Rent or other charge in default or for the
payment of any other sum to which Sublessor may become obligated by reason of
Sublessee’s default, or to compensate Sublessor for any loss or damage which
Sublessor may suffer thereby.  If
Sublessor so uses or applies all or any portion of said deposit, Sublessee
shall within ten days after written demand therefore forward to Sublessor an
amount sufficient to restore said Deposit to the full amount provided for
herein and Sublessee’s failure to do so shall be a material breach of this
Sublease.  Sublessor shall not be
required to keep said Deposit separate from its general accounts.  If Sublessee performs all of Sublessee’s
obligations hereunder, said Deposit, or so much thereof as has not therefore
been applied by Sublessor, shall be returned, without payment of interest to
Sublessee (or at Sublessor’s option, to the last assignee, if any, of
Sublessee’s interest hereunder) at the expiration of the term hereof, and after
Sublessee has vacated the Premises.  No
trust relationship is created herein between Sublessor and Sublessee with
respect to said Security Deposit.

 

                6.             Use.

 

                                6.1  Agreed Use.  The Premises shall be used and occupied only
for general office use and for no other purpose.

 

 

                                6.3          Acceptance
of Premises and Lessee. 
Sublessee acknowledges that:

 

                                (a)           it has been advised by Brokers to
satisfy itself with respect to the condition of the Premises (including but not
limited to the electrical, HVAC and fire sprinkler systems, security,
environmental aspects, and compliance with Applicable Requirements), and their
suitability for Sublessee’s intended use,

 

                                (b)           Sublessee has made such investigation
as it deems necessary with reference to such matters and assumes all
responsibility therefor as the same relate to its occupancy of the Premises,
and

 

                                (c)           neither Sublessor, Sublessor’s
agents, nor any Broker has made any oral or written representations or
warranties with respect to said matters other than as set forth in this
Sublease.

 

In addition, Sublessor acknowledges that:

 

                                (a)           Broker has made no representations,
promises or warranties concerning Sublessee’s ability to honor the Sublease or
suitability to occupy the Premises, and

 

                                (b)           it is Sublessor’s sole responsibility
to investigate the financial capability and/or suitability of all proposed
tenants.

 

                7.             Master
Lease

 

                                7.1          Sublessor is the lessee of the
Premises by virtue of a lease, hereinafter the “Master Lease”, a copy of which is attached hereto marked
Exhibit 1, wherein William D. and Edna J. Wright dba South Coast Business Park
is the lessor, herinafter the “Master Lessor”

 

                                7.2          This
Sublease is and shall be at all times subject and subordinate to the Master
Lease and shall be subject to consent of Master Lessor.

 

                                7.3          The
terms, conditions and respective obligations of Sublessor and Sublessee to each
other under this Sublease shall be Subordinate to the terms and conditions of
the Master Lease. Therefore, for the purposes of this Sublease, wherever in the
Master Lease the word “Lessor” is used it shall be deemed to mean the Sublessor
herein and wherever in the Master Lease the word “Lessee” is used it shall be
deemed to mean the Sublessee herein.

 

                                7.4          During
the term of this Sublease and for all periods subsequent for obligations which
have arisen prior to the termination of this Sublease, Sublessee does hereby
expressly assume and agree to perform and comply with, for the benefit of
Sublessor and Master Lessor, each and every obligation of Sublessor under the
Master Lease except for the following paragraphs which are excluded therefrom:

 

                                7.5          The
obligations that Sublessee has assumed under paragraph 7.4 hereof are
hereinafter referred to as the “Sublessee’s
Assumed Obligations”. The obligations that sublessee has not assumed
under paragraph 7.4 hereof are hereinafter referred to as the “Sublessor’s Remaining Obligations”.

 

                                7.6          Sublessee
shall hold Sublessor free and harmless from all liability, judgments, costs,
damages, claims or demands, including reasonable attorneys fees, arising out
of  Sublessee’s failure to comply with
or perform Sublessee’s Assumed Obligations.

 

 

                                7.7          Sublessor
agrees to maintain the Master Lease during the entire term of this Sublease,
subject, however, to any earlier termination of the Master Lease without the
fault of the Sublessor, and to comply with or perform Sublessor’s Remaining
Obligations and to hold Sublessee free and harmless from all liability,
judgments, costs, damages, claims or demands arising out of  Sublessor’s failure to comply with or
perform Sublessor’s Remaining Obligations.

 

                                7.8          Sublessor
represents to Sublessee that the Master Lease is in full force and effect and
that to Sublessor’s knowledge no default exists on the part of any Party to the
Master Lease.

 

                8.             Assignment
of Sublease and Default

 

                                8.1          Sublessor
hereby assigns and transfers to Master Lessor the Sublessor’s interest in this
Sublease, subject however to the provisions of the Paragraph 8.2 hereof.

 

                                8.2          Master
Lessor, by executing this document, agrees that until a Default shall occur in
the performance of Sublessor’s Obligations under the Master Lease, that
Sublessor may receive, collect and enjoy the Rent accruing under this Sublease.
However, if Sublessor shall Default in the performance of its obligations to
Master Lessor then Master Lessor may, at its option, receive and collect,
direct from Sublessee, all Rent owing and to be owed under this Sublease.  Master Lessor shall not, by reason of this
assignment of the Sublease nor by reason of the collection of the Rent from the
Sublessee, be deemed liable to Sublessee for any failure of the Sublessor to
perform and comply with the Sublessor’s Remaining Obligations.

 

 

2

 

                                8.3         
Sublessor hereby irrevocably authorizes and directs Sublessee upon receipt of
any written notice from the Master Lessor stating that a Default exists in the
performance of Sublessor’s obligations under the Master Lease, to pay to Master
Lessor the Rent due and to become due under the Sublease.  Sublessor agrees that Sublessee shall have
the right to rely upon any such statement and request from Master Lessor, and
the Sublessee shall pay such Rent to Master Lessor without any obligation or
right to inquire as to whether such Default exists and notwithstanding any
notice from or claim from Sublessor to the contrary and Sublessor shall have no
right or claim against Sublessee for any such Rent so paid by Sublessee.

 

                                8.4          No
changes or modifications shall be made to this Sublease without the consent of
Master Lessor.

 

                9.             Consent of Master Lessor.

 

                                9.1          In
the event that the Master Lease requires that Sublessor obtain the consent of
Master Lessor to any subletting by Sublessor then, this Sublease shall not be
effective unless, within ten days of the date hereof,  Master Lessor signs this Sublease thereby giving its consent to
this Subletting.

 

                                9.2          In
the event that the obligations of the Sublessor under the Master Lease have
been guaranteed by third parties then neither this Sublease, nor the Master
Lessor’s consent, shall be effective unless, within 10 days of the date hereof,
said guarantors sign this Sublease thereby giving their consent to this
Sublease.

 

                                9.3          In
the event that Master Lessor does give such consent then:

 

                                                (a)  Such consent shall not release Sublessor of
its obligations or alter the primary liability of Sublessor to pay the Rent and
perform and comply with all of the obligations of Sublessor to be performed
under the Master Lease.

 

                                                (b)  The acceptance of Rent by Master Lessor from
Sublessee or anyone else liable under the Master Lease shall not be deemed a
waiver by Master Lessor of any provisions of the Master Lease.

 

                                                (c)  The consent to this Sublease shall not
constitute a consent to any subsequent subletting or assignment.

 

                                                (d)  In the event of any Default of Sublessor
under the Master Lease, Master Lessor may proceed directly against Sublessor,
any guarantors or anyone else liable under the Master Lease or this Sublease
without first exhausting Master Lessor’s remedies against any other person or
entity liable thereon to Master Lessor.

 

                                                (e)  Master Lessor may consent to subsequent
sublettings and assignments of the Master Lease or this Sublease or any
amendments or modifications thereto without notifying Sublessor or anyone else liable
under the Master Lease and without obtaining their consent and such action
shall not relieve such persons from liability.

 

                                                (f)  In the event that Sublessor shall Default in
its obligations under the Master Lease, then Master Lessor, at its option and
without being obligated to do so, may require Sublessee to attorn to Master
Lessor in which event Master Lessor shall undertake the obligations of
Sublessor under this Sublease from the time of the exercise of said option to
termination of this Sublease but Master Lessor shall not be liable for any
prepaid Rent nor any Security Deposit paid by Sublessee, nor shall Master
Lessor be liable for any other Defaults of the Sublessor under the Sublease.

 

                                9.4          The
signautres of the Master Lessor and any Guarantors of Sublessor at the end of
this document shall constitute their consent to the terms of this Sublease.

 

                                9.5          Master
Lessor acknowledges that, to the best of Master Lessor’s knowledge, no Default
presently exists under the Master Lease of obligations to be performed by
Sublessor and that the Master Lease is in full force and effect.

 

                                9.6          In
the event that Sublessor Defaults under its obligations to be performed under
the Master Lease by Sublessor, Master Lessor agrees to deliver to Sublessee a
copy of any such notice of default.  
Sublessee shall have the right to cure any Default of Sublessor
described in any notice of default within ten days after service of such notice
of default on Sublessee.  If such
Default is cured by Sublessee then Sublessee shall have the right of
reimbursement and offset from and against Sublessor.

 

                10.          Brokers Fee.

 

                                10.1        Upon
execution hereof by all parties, Sublessor shall pay to Pacifica Commercial
Realty a licensed real estate broker, (“Broker”), a fee as set forth in a
separate agreement between Sublessor and Broker, or in the event there is no
such separate agreement, the sum of $6,362.25 for brokerage services rendered
by Broker to Sublessor in this transaction.

 

                                10.4        Any
fee due from Sublessor or hereunder shall be due and payable upon the exercise
of any option to extend or renew, upon the execution of any new lease, or, in
the event of a puchase, at the close of escrow.

 

                                10.5        Any
transferee of Sublessor’s interest in this, by accepting an assignment thereof,
shall be deemed to have assumed the obligations of Sublessor under this
Paragraph 10.

 

                11.          Attorney’s Fees.  If any party or the Broker named herein brings an action to
enforce the terms hereof or to declare rights hereunder, the prevailing party
in any such action, on trial and appeal, shall be entitled to his reasonable
attorney’s fees to be paid by the losing party as fixed by the Court.

 

                12.          Additional Provisions.  (If there are no additional provisions, draw
a line from this point to the next printed word after the space left here.  If there are additional provisions place the
same here.) see paragraph 13 on next page.

 

 

3

 

ATTENTION:  NO REPRESENTATION OR RECOMMENDATION IS MADE
BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY REAL ESTATE BROKER
AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS SUBLEASE
OR THE TRANSACTION TO WHICH IT RELATES. 
THE PARTIES ARE URGED TO:

 

1. 
SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
SUBLEASE.

 

2. 
RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION
OF THE PREMISES.  SAID INVESTIGATION
SHOULD INCLUDE, BUT NOT BE LIMITED TO: 
THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE
PROPERTY, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING
SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR SUBLESSEE’S INTENDED USE.

 

WARNING:  IF THE SUBJECT PROPERTY IS LOCATED IN A
STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE SUBLEASE MAY NEED TO BE
REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.

 

	
  Executed at:

  	
   

  	
   

  	
  Q. A. D., Inc., a Delaware
  Corporation

  
	
  on:

  	
  3/6/00

  	
   

  	
  By:

  	
  /s/ Mike Dale, DIRECTOR,
  REAL ESTATE AND FACILITIES

  
	
  Address:

  	
  6267 Carpinteria Ave.,
  Suite 100

  	
   

  	
  By:

  	
   

  
	
   

  	
  Carpinteria, CA  93103

  	
   

  	
  “Sublessor” (Corporate
  Seal)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executed at:

  	
   

  	
   

  	
  Bio Enterics Corporation

  
	
  on:

  	
  7/1/2000

  	
   

  	
  By:

  	
  /s/ Rich Marek

  
	
  Address:

  	
  1035 Cindy Lane

  	
   

  	
  By:

  	
   

  
	
   

  	
  Carpinteria, CA  93103

  	
   

  	
  “Sublessee” (Corporate
  Seal)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Executed at:

  	
   

  	
   

  	
  William D. and Edna J.
  Wright, dba

  South Coast Business Park

  
	
  on:

  	
  3/3/00

  	
   

  	
  By:

  	
  /s/ Jeanne
  Wright-Bortolozzo, Agent

  
	
  Address:

  	
  130 Garden Street

  	
   

  	
  By:

  	
   

  
	
   

  	
  Santa Barbara, CA  93101

  	
   

  	
  “Master Lessor” (Corporate
  Seal)

  
										

 

 

 

NOTE: 
These forms are often modified to meet changing requirements of law and
needs of the industry.  Always write or
call to make sure you are utilizing the most current form:  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION,
700 So. Flower St., Suite 600, Los Angeles, CA 
90017, (213) 687-8777.

 

13.                                 Rent
Adjustments:  On March 1, 2001 and March
1, 2002 the base rent shall be adjusted by the change, if any, in the Consumer
Price Index (All Items for All Urban Consumers 1982 -84 =100 Base) of the
United States Department of Labor, Bureau of Labor Statistics for Los Angeles -
Anaheim - Riverside, CA (the “Index”). 
The adjustment shall be calculated according to the following formula:

 

	
  X = 

  	
  A x B/C

  
	
   

  	
   

  
	
  X = 

  	
  Adjusted Rent

  
	
   

  	
   

  
	
  A = 

  	
  Base Rent of the first
  month of the Sublease term

  
	
   

  	
   

  
	
  B = 

  	
  The monthly index for the
  third month immediately preceding the Adjustment Date

  
	
   

  	
   

  
	
  C = 

  	
  The monthly index for the
  third month immediately preceding the first month of the sublease term

  

 

 

                                                The monthly
rent as so adjusted shall be payable for each month commencing with the
Adjustment Date and continuing until the next Adjustment Date.

 

4

STANDARD INDUSTRIAL LEASE—MULTI-TENANT

AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION

[LOGO]

 

1.             Parties.
This Lease, dated, for reference purposes only, January 20, 1998, is made by
and between William D & Edna J. Wright dba South Coast Business Park
(herein called “Lessor”) and O.A.D., Inc., a California Corporation (herein
called “Lessee”).

 

2.             Premises,
Parking and Common Areas.

 

                2.1          Premises. Lessor hereby leases to Lessee
and Lessee leases from Lessor for the term, at the rental, and upon all of the
conditions set forth herein, real property situated in the County of Santa
Barbara, State of California commonly known as South Coast Business Park, Phase
I & II (46,198 + 14000 = 60,198 s. f. ) and described as 6420 Via Real, Suite’s
8 & 9 (Building B), Carpinteria, CA, consisting of approximately 2,496
square feet (See Exhibit “A” attached) herein referred to as the “Premises”, as
may be outlined on an Exhibit attached hereto, including rights to the Common
Areas as hereinafter specified but not including any rights to the roof of the
Premises or to any Building in the Industrial Center. The Premises are a
portion of a building, herein referred to as the “Building.” The Premises, the
Building, the Common Areas, the land upon which the same are located, along
with all other buildings and improvements thereon, are herein collectively
referred to as the “Industrial Center.”

 

                2.2          Vehicle Parking. Lessee shall be entitled
to 4 vehicle parking spaces, unreserved and unassigned, on those portions of
the Common Areas designated by Lessor for parking. Lessee shall not use more
parking spaces than said number. Said parking spaces shall be used only 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 are herein referred to as “Oversized Vehicles.”

 

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

 

                                2.2.2       If
Lessee permits or allows any of the prohibited activities described in
paragraph 2.2 of this Lease, then Lessor shall have the right, without notice,
in addition to such other rights and remedies that it may have, to remove or
tow away the vehicle involved and charge the cost to Lessee, which cost shall
be immediately payable upon demand by Lessor.

 

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

 

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

 

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

 

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

 

                                (a)
To make changes to the Common Areas, including, without limitation, changes in
the location, size, shape and number of driveways, entrances, parking spaces,
parking areas, loading and unloading areas, ingress, egress, direction of
traffic, landscaped areas and walkways; (b) To close temporarily any of the
Common Areas for maintenance purposes so long as reasonable access to the
Premises remains available; (c) To designate other land outside the boundaries
of the Industrial Center to be a part of the Common Areas; (d) To add
additional buildings and improvements to the Common Areas; (e) To use the
Common Areas while engaged in making additional improvements, repairs or
alterations to the Industrial Center, or any portion thereof; (f) To do and
perform such other acts and make such other changes in, to or with respect to
the Common Areas and Industrial Center as Lessor may, in the exercise of sound
business judgment, deem to be appropriate.

 

                                2.6.1       Lessor
shall at all times provide the parking facilities required by applicable law
and in no event shall the number of parking spaces that Lessee is entitled to
under paragraph 2.2 be reduced.

 

3.             Term.

 

                3.1          Term. The term of this Lease shall be for
Sixty (60) months commencing on February 1, 1998 and ending on January 31, 2003
unless sooner terminated pursuant to any provision hereof. See Addendum. RENT
TO COMMENCE MARCH 1, 1998

 

                3.2          Delay in Possession. Notwithstanding said
commencement date, if for any reason Lessor cannot deliver possession of the
Premises to Lessee on said date, Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease or the obligations
of Lessee hereunder or extend the term hereof, but in such case, Lessee shall
not be obligated to pay rent or perform any other obligation of Lessee under
the terms of this Lease, except as may be otherwise provided in this Lease,
until possession of the Premises is tendered to Lessee.

 

                3.3          Early Possession. If Lessee occupies the
Premises prior to said commencement date, such occupancy shall be subject to
all provisions of this Lease, such occupancy shall not advance the termination
date, and Lessee shall pay rent for such period at the initial monthly rates
set forth below.

 

4.             Rent.

 

                4.1          Base
Rent. Lessee shall pay to Lessor, as Base Rent for the Premises,
without any offset or deduction, except as may be otherwise expressly provided
in this Lease, on the 1st day of each month of the term hereof, monthly
payments in advance of $3,244.80. See Addendum for cost of living adjustments
to Base Rent, and determination of rent during Extension Periods. Lessee shall
pay Lessor upon execution hereof $3,244.80 as Base Rent for March 1, 1998 thru
March 31, 1998. Rent for any period during the term hereof which is for less
than one month shall be a pro rata portion of the Base Rent. Rent shall be
payable in lawful money of the United States to Lessor at the address stated
herein or to such other persons or at such other places as Lessor may designate
in writing.

 

                4.2          Operating Expenses. Lessee shall pay to
Lessor during the term hereof, in addition to the Base Rent, Lessee’s Share, as
hereinafter defined, of all Operating Expenses, as hereinafter defined, during
each calendar year of the term of this Lease, in accordance with the following
provisions:

                                (a)      “Lessee’s Share” is defined, for
purposes of this Lease, as 4.15 percent.

                                (b)      “Operating Expenses” is defined, for
purposes of this Lease, as all costs incurred by Lessor, if any, for:

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

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

                                                                (bb)
Trash disposal services;

                                                                (cc)
Tenant directories;

                                                                (dd)
Fire detection systems including sprinkler system maintenance and repair;

 

	
   

  	
  Initials:

  	
  BA

  
	
   

  	
   

  	
  JWB

  

 

 

                                                                (ee)         Security services:

                                                                (ff)           Any other service to be provided by
Lessor that is elsewhere in this Lease stated to be an “Operating Expense.”

                                                                (gg)         Property management expenses:

                                                (ii)           Any deductible portion of an insured
loss concerning any of the items of matters described in this paragraph 4.2:

                                                (iii)          The cost of the premiums for the
liability and property insurance policies to be maintained by Lessor under
paragraph 8 thereof:

                                                (iv)          The amount of the real property tax to
be paid by Lessor under paragraph 10.1 hereof:

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

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

                                (d)           Lessee’s Share of Operating Expenses,
shall be payable by Lessee within ten (10) days after a reasonably detailed
statement of actual expenses is presented to Lessee by Lessor.  At Lessor’s option, however, an amount may
be estimated by Lessor from time to time of Lessee’s Share of annual Operating
Expenses and the same shall be payable monthly or quarterly, as Lessor shall
designate, during each twelve-month period of the Lease term, on the same day
as the Base Rent is due hereunder.  In
the event that Lessee pays Lessor’s estimate of Lessee’s Share of Operating Expenses
as aforesaid.  Lessor shall deliver to
Lessee within sixty (60) days after the expiration of each calendar year a
reasonably detailed statement showing Lessee’s Share of the actual Operating
Expenses incurred during the preceding year. 
If Lessee’s payments under this paragraph 4.2(d) during said preceding
year exceed Lessee’s Share as indicated on said statement, Lessee shall be
entitled to credit the amount of such overpayment against Lessee’s Share of
Operating Expenses next falling due.  If
Lessee’s payments under this paragraph during said preceding year were less
than Lessee’s Shares as indicated on said statement, Lessee shall pay to Lessor
the amount of the deficiency within ten (10) days after delivery by Lessor to
Lessee of said statement.

 

5.             Security Deposit.  Lessee shall deposit with Lessor upon
execution hereof $3,244.80 as security for Lessee’s faithful performance of
Lessee’s obligations hereunder.  If
Lessee fails to pay rent or other charges due hereunder, or otherwise defaults
with respect to any provision of this Lease, Lessor may use, apply or retain
all or any portion of said deposit for the payment of any rent or other charge
in default or for the payment of any other sum to which Lessor may become
obligated by reason of Lessee’s default, or to compensate Lessor for any loss
or damage which Lessor may suffer thereby. 
If Lessor so uses or applies all or any portion of said deposit, Lessee
shall within ten (10) days after written demand therefor deposit cash with
Lessor in an amount sufficient to restore said deposit to the full amount then
required of Lessee.  If the monthly rent
shall, from time to time, increase during the term of the Lease, Lessee shall,
at the time of such increase, deposit with Lessor additional money as a security
deposit so that the total amount of the security deposit held by Lessor shall
at all times bear the same proportion to the then current Base Rent as the
initial security deposit bears to the initial Base Rent set forth in paragraph
4.  Lessor shall not be required to keep
said security deposit separate from its general accounts.  If Lessee performs all of Lessee’s
obligations hereunder, said deposit, or so much thereof as has not theretofore
been applied by Lessor, shall be returned without payment of interest or other
Increment for its use, to Lessee (or, at Lessor’s option, to the last assignee,
if any, of Lessee’s interest hereunder) at the expiration of the term hereof,
and after Lessee has vacated the Premises. 
No trust relationship is created herein between Lessor and Lessee with
respect to said Security Deposit.

 

6.             Use.

 

                6.1          Use. The Premises shall be used and occupied only
for the purpose of manufacturing, developing and marketing of computer software
and for no other use without Lessor’s prior written consent.  See Addendum for additional terms.

 

                6.2          Compliance with Law.

 

                                (a)           Lessor warrants to Lessee that the
Premises, in the state existing on the date that the Lease term commences, but
without regard to the use for which Lessee will occupy the Premises, does not
violate any covenants or restrictions of record, or any applicable building
code, regulation or ordinance in effect on such Lease term commencement
date.  In the event it is determined
that this warranty has been violated, then it shall be the obligation of the
Lessor, after written notice from Lessee, to promptly, at Lessor’s sole cost
and expense, rectify any such violation. 
In the event Lessee does not give to Lessor written notice of the
violation of this warranty within six months from the date that the Lease term
commences, the correction of same shall be the obligation of the Lessee at
Lessee’s sole cost.  The warranty
contained in this paragraph 6.2(a) shall be of no force of effect if, prior to
the date of this Lease, Lessee was an owner or occupant of the Premises and, in
such event, Lessee shall correct any such violation at Lessee’s sole cost.

 

                                (b)           Except as provided in paragraph
6.2(a) Lessee shall, at Lessee’s expense, promptly comply with all applicable
statutes, ordinances, rules, regulations, orders, covenants and restriction of
record, and requirements of any fire insurance underwriters or rating bureaus,
now in effect or which may hereafter come into effect, whether or not they
reflect a change in policy from that now existing, during the term or any part
of the term hereof, relating in any manner to the Premises and the occupation
and use by Lessee of the Premises and of the Common Areas.  Lessee shall not use nor permit the use of
the Premises or the Common Areas in any manner that will tend to create waste
or a nuisance or shall tend to disturb other occupants of the Industrial
Center.

 

                6.3          Condition
of Premises.

 

                                (a)           Lessor shall deliver the Premises to
Lessee clean and free of debris on the Lease commencement date (unless Lessee
is already in possession) and Lessor warrants to Lessee that the plumbing,
lighting, air conditioning, heating, and loading doors in the Premises shall be
in good operating condition on the Lease commencement date.  In the event that it is determined that this
warranty has been violated, then it shall be the obligation of Lessor, after
receipt of written notice from Lessee setting forth with specificity the nature
of the violation, to promptly, at Lessor’s sole cost, rectify such
violation.  Lessee’s failure to give
such written notice to Lessor within thirty (30) days after the Lease
commencement date shall cause the conclusive presumption that Lessor has
complied with all of Lessor’s obligations hereunder.  The warranty contained in this paragraph 6.3(a) shall be of no
force or effect if prior to the date of this Lease, Lessee was an owner or
occupant of the Premises.  See Addendum.

 

                                (b)           Except as otherwise provided in this
Lease, Lessee hereby accepts the Premises in their condition existing as of the
Lease commencement date or the date that Lessee takes possession of the
Premises, whichever is earlier, subject to all applicable zoning, municipal,
county and state laws, ordinances and regulations governing and regulating the
use of the Premises, and any covenants or restrictions of record, and accepts
this Lease subject thereto and to all matters disclosed thereby and by any
exhibits attached hereto.  Lessee
acknowledges that neither Lessor nor Lessor’s agent has made any representation
or warranty as to the present or future suitability of the Premises for the
conduct of Lessee’s business.

 

7.             Maintenance, Repairs, Alterations
and Common Area Services.

 

                7.1          Lessor’s Obligations.  Subject to the provisions of paragraphs 4.2 (Operating Expenses),
6 (Use), 7.2 (Lessee’s Obligations) and 9 (Damage or Destruction) and except
for damage caused by any negligent or intentional act or omission of Lessee,
Lessee’s employees, suppliers, shippers, customers, or invitees, in which event
Lessee shall repair the damage, Lessor, at Lessor’s expense, subject to
reimbursement pursuant to paragraph 4.2, shall keep in good condition and
repair the foundations, exterior walls, structural condition of interior
bearing walls, and roof of the Premises, as well as the parking lots, walkways,
driveways, landscaping, fences, signs and utility installations of the Common
Areas and all parts thereof, as well as providing the services for which there
is an Operating Expense, pursuant to paragraph 4.2.  Lessor shall not, however, by obligated to paint the exterior or
interior surface of exterior walls, nor shall Lessor be required to maintain,
repair or replace windows, doors or plate glass of the Premises.  Lessor shall have no obligation to make
repairs under this paragraph 7.1 until an reasonable time after receipt of
written notice from Lessee of the need for such repairs.  Lessee expressly waives the benefits of any
statute now or hereafter in effect which would otherwise afford Lessee the
right to make repairs at Lessor’s expense or to terminate this Lease because of
Lessor’s failure to keep the Premises in good order, condition and repair.  Lessor shall not be liable for damages or
loss of any kind or nature by reason of Lessor’s failure to furnish any Common
Area services when such failure is caused by accident, breakage, repairs,
strikes, lockout, or other labor disturbances or disputes of any character, or
by any other cause beyond the reasonable control of Lessor.

 

                7.2          Lessee’s Obligations.

 

                                (a)           Subject to the provision of
paragraphs 6 (Use), 7.1 (Lessor’s Obligations), and 9 (Damage or Destruction),
Lessee, at Lessee’s expense, shall keep in good order, condition and repair the
Premises and every part thereof (whether or not the damaged portion of the
Premises or the means of repairing the same are reasonably or readily
accessible to Lessee) including, without limiting the generality of the
foregoing, all plumbing, heating, ventilating and air conditioning systems
(Lessee shall procure and maintain, at Lessee’s expense, a ventilating and air
conditioning system maintenance contract), electrical and lighting facilities
and equipment within the Premises, fixtures, interior walls and interior
surfaces of exterior walls, ceilings, windows, doors, plate glass, and
skylights located within the Premises.  Lessor reserves the right to procure and maintain the ventilating
and air conditioning system maintenance contract and if Lessor so elects,
Lessee shall reimburse Lessor, upon demand, for the cost thereof.  Lessee shall be responsible for clean-up of
all hazardous waste occurring in or about the premises.

 

                                (b)           If Lessee fails to perform Lessee’s
obligations under this paragraph 7.2 or under any other paragraph of the Lease,
Lessor may enter upon the Premises after ten (10) days’ prior written notice to
Lessee (except in the case of emergency, in which no notice shall be required),
perform such obligations on Lessee’s behalf and put the Premises in good order,
condition and repair, and the cost thereof together with interest thereon at
the maximum rate than allowable by law shall be due and payable as additional
rent to Lessor together with Lessee’s next Base Rent installment.

 

                                (c)           On the last day of the term hereof,
or on any sooner termination, Lessee shall surrender the Premises to Lessor in
the same condition as received, ordinary wear and tear excepted, clean and free
of debris.  Any damage or deterioration
of the Premises shall not be deemed ordinary wear and tear if the same could
have been prevented by good maintenance practices.  Lessee shall repair any damage to the Premises occasioned by the
installation or removal of Lessee’s trade fixtures, alterations, furnishings
and equipment.  Notwithstanding anything
to the contrary otherwise stated in this Lease, Lessee shall leave the air
lines, power panels, electrical distribution systems, lighting fixtures, space
heaters, air conditioning, plumbing and fencing on the Premises in good
operating condition.

 

                7.3          Alterations and Additions.

 

                                (a)           Lessee shall not, without Lessor’s
prior written consent make any alterations, improvements, additions, or Utility
Installations in, on or about the Premises, or the Industrial Center, except
for nonstructural alterations to the Premises not exceeding $2,500 in
cumulative costs, during the term of this Lease, in any event, whether or not
in excess of $2,500 in cumulative cost, Lessee shall make no change or
alteration to the

 

	
   

  	
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2

 

exterior of the Premises nor the exterior of
the Building nor the Industrial Center without Lessor’s prior written
consent.  As used in this paragraph 7.3
the term “Utility Installation” shall mean carpeting, window coverings, air
lines, power panels, electrical distribution systems, lighting fixtures, space
heaters, air conditioning, plumbing, and fencing.  Lessor may require that Lessee remove any or all of said
alterations, improvements, additions or Utility installations at the expiration
of the term, and restore the Premises and the Industrial Center to their prior
condition.  Lessor may require Lessee to
provide Lessor, at Lessee’s sole cost and expense, a lien and completion bond
in an amount equal to one and one-half times the estimated cost of such
improvements, to insure Lessor against any liability for mechanic’s and
materialmen’s liens and to insure completion of the work.  Should Lessee make any alterations,
improvements, additions or Utility Installations without the prior approval of
Lessor, Lessor may, at any time during the term of this Lease, require that
Lessee remove any or all of the same.

 

                (b)   Any
alterations, improvements, additions or Utility Installations in or about the
Premises or the Industrial Center that Lessee shall desire to make and which
requires the consent of the Lessor shall be presented to Lessor in written
form, with proposed detailed plans.  If
Lessor shall give its consent, the consent shall be deemed conditioned upon
Lessee acquiring a permit to do so from appropriate governmental agencies, the
furnishing of a copy thereof to Lessor prior to the commencement of the work
and the compliance by Lessee of all conditions of said permit in a prompt and
expeditious manner.

 

                (c)   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 in the Premises, which claims are or may be secured by any
mechanic’s or materialmen’s lien against the Premises, or the Industrial
Center, or any interest therein.  Lessee
shall give Lessor not less than ten (10) days’ notice prior to the commencement
of any work in the Premises, and Lessor shall have the right to post notices of
non-responsibility in or on the Premises or the Building 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 itself and Lessor against
the same and shall pay and satisfy any such adverse judgment that may be
rendered thereon before the enforcement thereof against the Lessor of the
Premises of the Industrial Center, upon the condition that if Lessor shall
require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in
an amount equal to such contested lien claim or demand indemnifying Lessor
against liability for the same and holding the Premises and the Industrial
Center free from the effect of such lien or claim.  In addition, Lessor may require Lessee to pay Lessor’s attorneys
fees and costs in participating in such action if Lessor shall decide it is to
Lessor’s best interest to do so.

 

                (d)   Alterations, improvements, additions and
Utility installations (whether or not such Utility installations constitute
trade fixtures of Lessee), which may be made on the Premises, shall be the
property of Lessor and shall remain upon and be surrendered with the Premises
at the expiration of the Lease term, unless Lessor requires their removal
pursuant to paragraph 7.3(a). 
Notwithstanding the provisions of this paragraph 7.3(d), Lessee’s
machinery and equipment, other than that which is affixed to the Premises so
that it cannot be removed without material damage to the Premises, and other
than Utility Installations, shall remain the property of the Lessee and may be
removed by Lessee subject to the provisions of paragraph 7.2.

 

       7.4 
Utility Additions.  Lessor reserves
the right to install new or additional utility facilities throughout the
Building and the Common Areas for the benefit of Lessor or Lessee, or any other
Lessee of the Industrial Center, including, but not by way of limitation, such
utilities as plumbing, electrical systems, security systems, communication
systems, and fire protection and detection systems, so long as such
installations do not unreasonably interfere with Lessee’s use of the Premises.

 

8.             Insurance; Indemnity.

 

                8.1          Liability Insurance — Lease

 

                                                                                See
page 8 after article number 49

 

                8.2          Liability Insurance — Lessor.  Lessor shall obtain and keep in force during
the term of this Lease a policy of Combined Single Limit Bodily Injury and
Property Damage Insurance, insuring Lessor, but not Lessee, against any liability
arising out of the ownership, use, occupancy or maintenance of the Industrial
Center in an amount not less than $1,000,000 per occurrence.

 

                8.3          Property Insurance.  Lessor shall obtain and keep in force during the term of this
Lease a policy or policies of insurance covering loss or damage to the
Industrial Center improvements, but not Lessee’s personal property, fixtures,
equipment or tenant improvements, in an amount not to exceed the full
replacement value thereof, as the same may exist from time to time, providing
protection against all perils included within the classification of fire,
extended coverage, vandalism, malicious mischief, flood (in the event same is
required by a lender having a lien on the Premises) special extended perils
(“all risk”, as such term is used in the insurance industry), plate glass
insurance and such other insurance as Lessor deems advisable.  In addition, Lessor shall obtain and keep in
force, during the term of this Lease, a policy of rental value insurance
covering a period of one year, with loss payable to Lessor, which insurance
shall also cover all Operating Expenses for said period.  In the event that the Premises shall suffer
an insured loss as defined in paragraph 9.1(g) hereof, the deductible amounts
under the casualty insurance policies relating to the Premises shall be paid by
Lessee.

 

                8.4          Payment of Premium Increase.

 

                                (a)   After the term of this Lease has commenced,
Lessee shall not be responsible for paying Lessee’s Share of any increase in
the property insurance premium for the Industrial Center specified by Lessor’s
insurance carrier as being caused by the use, acts or omissions of any other
lessee of the Industrial Center, or by the nature of such other lessee’s
occupancy which create an extraordinary or unusual risk.

 

                                (b)   Lessee, however, shall pay the entirety of
any increase in the property insurance premium for the Industrial Center over
what it was immediately prior to the commencement of the term of this Lease if
the increase is specified by Lessor’s insurance carrier as being caused by the
nature of Lessee’s occupancy or any act or omission of Lessee.

 

                8.5          Insurance Policies.  Insurance required hereunder shall be in companies holding a
“General Policyholders Rating” of at least B plus, 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 carried by Lessor. 
Lessee shall deliver to Lessor copies of liability insurance policies
required under paragraph 8.1 or certificates evidencing the existence and
amounts of such insurance within seven (7) days after the commencement date of
this Lease.  No such policy shall be
cancelable or subject to reduction of coverage or other 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 renewals or “binders”
thereof.

 

                8.6          Waiver of Subrogation.  Lessee and Lessor each hereby release and relieve the other, and
waive their entire right of recovery against the other for loss of damage
arising out of or incident to the perils insured against which perils occur in,
on or about the Premises, whether due to the negligence of Lessor or Lessee or
their agents, employees, contractors and/or invitees.  Lessee and Lessor shall, upon obtaining the policies of insurance
required give notice to the insurance carrier or carriers that the foregoing
mutual waiver of subrogation is contained in this Lease.

 

                8.7          Indemnity.  Lessee shall indemnify and hold harmless Lessor from and against
any and all claims arising from Lessee’s use of the Industrial Center, or from
the conduct of Lessee’s business or from any activity, work or things done,
permitted or suffered by Lessee in or about the Premises or elsewhere and shall
further indemnify and hold harmless Lessor from and against any and all claims
arising from any breach or default in the performance of any obligation on
Lessee’s part to be performed under the terms of this Lease, or arising from
any act or omission of Lessee, or any of Lessee’s agents, contractors, or
employees, and from and against all costs, attorney’s fees, expenses and
liabilities incurred in the defense of any such claim or any action or
proceeding brought thereon; and in case any action or proceeding be brought
against Lessor by reason of any such claim. 
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, Lessee, as a material part of the consideration to
Lessor, hereby assumes all risk of damage to property of  Lessee or injury to persons, in, upon or
about the Industrial Center arising from any cause and Lessee hereby waives all
claims in respect thereof against Lessor. 
See Addendum.

 

                8.8          Exemptions
of Lessor from Liability. 
Lessee hereby agrees that Lessor shall not be liable for injury to
Lessee’s business or any loss of income therefrom or for damage to the goods,
wares, merchandise or other property of Lessee, Lessee’s employees, invitees,
customers, or any other person in or about the Premises or the Industrial
Center, nor shall Lessor be liable for injury to the person of Lessee, Lessee’s
employees, agents or contractors, 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, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether said damage or injury results from conditions arising upon the
Premises or upon the other portions of the Industrial Center, or from other
sources or places and regardless of whether the cause of such damage or injury
or the means of repairing the same is inaccessible to Lessee.  Lessor shall not be liable for any damages
arising from any act or neglect of any other lessee, occupant or user of the
Industrial Center, nor from the failure of Lessor to enforce the provisions of
any other lease of the Industrial Center.

 

9.             Damage of Destruction.

 

                9.1          Definitions.

 

                                (a)  “Premises Partial Damage” shall mean if the
Premises are damaged or destroyed to the extent that the cost of repair is less
than fifty percent of the then replacement cost of the Premises.

                                (b)  “Premises Total Destruction” shall mean if
the Premises are damaged or destroyed to the extent that the cost of repair is
fifty percent or more of the then replacement cost of the Premises.

                                (c)  “Premises Building Partial Damage” shall
mean if the Building of which the Premises are a part is damaged or destroyed
to the extent that the cost to repair is less than fifty percent of the then
replacement cost of the Building.

                                (d)  “Premises Building Total Destruction” shall
mean if the Building of which the Premises are a part is damaged or destroyed
to the extent that the cost to repair is less than fifty percent or more of the
then replacement cost of the Building.

                                (e)  “Industrial Center Buildings” shall mean all
the buildings on the Industrial Center site.

                                (f)  “Industrial Center Buildings Total
Destruction” shall mean if the Industrial Center Buildings are damaged or destroyed
to the extent that the cost of repair is fifty percent or more of the then
replacement cost of the Industrial Center Buildings.

 

 

	
   

  	
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                                (g)  “Insured loss” shall mean damage or
destruction which was covered by an event required to be covered by the
insurance described in paragraph 8. The fact that an Insured Loss has a
deductible amount shall not make the loss an uninsured loss.

                                (h)  “Replacement Cost” shall mean the amount of
money necessary to be spent in order to repair or rebuild the damaged area to
the condition that existed immediately prior to the damage occurring excluding
all improvements made by lessees.

 

                9.2          Premises Partial Damages; Premises Building Partial Damage.

 

                                (a)  Insured Loss: Subject to the provisions of
paragraphs 9.4 and 9.5, if at any time during the term of this lease there is
any damage which is an Insured Loss and which falls into the classification of
either Premises Partial Damage or Premises Building Partial Damage, then Lessor
shall, at Lessor’s expense, repair such damage to the Premises, but not
Lessee’s fixtures, equipment or tenant improvements, as soon as reasonably
possible and this Lease shall continue in full force and effect.

                                (b)  Uninsured Loss:  Subject to the provisions of paragraphs 9.4 and 9.5, if at any
time during the term of this Lease there is damage which is not an Insured Loss
and which falls within the classification of Premises Partial Damage or
Premises Building Partial Damage, unless caused by a negligent or willful act
of Lessee (in which event Lessee shall make the repairs at Lessee’s expense),
which damage prevents Lessee from using the Premises, 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 the date of
the occurence of such damage of Lessor's intention to cancel and terminate this
Lease as of the date of the occurence of such damage. In the event Lessor
elects to give such notice of Lessor’s intention to cancel and 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 intention to repair
such damages at Lessee’s expense, without reimbursement from Lessor, in which
event this Lease shall continue in full force and effect, and Lessee shall
proceed to make such repairs as soon as reasonably possible. If Lessee does not
give such notice within such 10-day period this Lease shall be cancelled and
terminated as of the date of the occurence of such damage.

 

                9.3          Premises
Total Destruction; Premises Building Total Destruction; Industrial Center
Buildings Total Destruction.

 

                                (a)  Subject to the provisions of paragraphs 9.4
and 9.5, if at any time during the term of this Lease there is damage, whether
or not it is an Insured Loss, and which falls into the classifications of
either (i) Premises Total Destruction, or (ii) Premises Building Total
Destruction, or (iii) Industrial Center Buildings Total Destruction, then
Lessor may at Lessor’s option either (i) repair such damage or destruction, but
not Lessee’s fixtures, equipment or tenant improvements, as soon as reasonably
possible at Lessor’s expense, and this Lease shall continue in full force and
effect, or (ii) give written notice to Lessee within thirty (30) days after the
occurence of such damage of Lessor’s intention to cancel and terminate this
Lease, in which case this Lease shall be cancelled and terminated as of the
date of the occurence of such damage.

 

                9.4          Damage
Near End of Term.

 

                                (a)  Subject to paragraph 9.4 (b), if at any time
during the last six months of the term of this Lease there is substantial
damage, whether or not an Insured Loss, which falls within the classification
of Premises Partial Damage, Lessor may at Lessor’s option cancel and terminate
this Lease as of the date of occurence of such damage by giving written notice
to Lessee of Lessor’s election to do so within thirty days after the date of
occurence of such damage.

 

                                (b)  Notwithstanding paragraph 9.4 (a), in the
event that Lessee has an option to extend or renew this Lease, and the time
within which said option may be exercised has not yet expired, Lessee shall
exercise such option, if it is to be exercised at all, no later than twenty
(20) days after the occurence of an Insured Loss falling within the
classification of Premises Partial Damage during the last six months of the
term of the Lease. If Lessee duly exercises such option during said twenty
(20)  day period, Lessor shall, at
Lessor’s expense, repair such damage, but not Lessee’s fixtures, equipment or
tenant improvements, as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option
during said twenty (20) day period, then Lessor may at Lessor’s option
terminate and cancel this lease as of the expiration of said twenty (20) day
period by giving written notice to Lessee of Lessor’s election to do so within
ten (10) days after the expiration of said twenty (20) day period,
notwithstanding any term or provision in the grant of option to the contrary.

 

                9.5          Abatement
of Rent; Lessee’s Remedies.

 

                                (a)  In the event Lessor repairs or restores the
Premises pursuant to the provisions of this paragraph 9, the rent payable
hereunder for the period during which such damage, repair or restoration
continues shall be abated in proportion to the degree to which Lessee’s use of
the premises is impaired. Except for abatement of rent, if any, Lessee shall
have no claim against Lessor for any damage suffered by reason of any such
damage, destruction, repair or restoration.

 

                                (b)  If Lessor shall be obligated to repair or
restore the Premises under the provisions of this paragraph 9 and shall not
commence such repair or restoration within ninety (90) days after such
obligation shall accrue, Lessee may at Lessee’s option cancel and terminate
this Lease by giving Lessor written notice of Lessee’s election to do so at any
time prior to the commencement of such repair or restoration. In such event
this Lease shall terminate as of the date of such notice.

 

                9.6          Termination
— Advance Payments.  Upon
termination of this Lease pursuant to this paragraph 9, an equitable adjustment
shall be made concerning advance rent and any advance payments made by Lessee
to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee’s
security deposit as has not theretofore been applied by Lessor.

 

                9.7          Waiver.  Lessor and Lessee waive the
provisions of any statute which relate to termination of leases when leased
property is destroyed and agree that such event shall be governed by the terms
of this Lease.

 

10.          Real Property Taxes.

 

                10.1        Payment of Taxes.  Lessor shall
pay the real property tax, as defined in paragraphy 10.3, applicable to the
Industrial Center subject to reimbursement by Lessee of Lessee’s Share of such
taxes in accordance with the provisions of paragraph 4.2, except as otherwise
provided in paragraph 10.2.

 

                10.2        Additional
Improvements.  Lessee shall
not be responsible for paying Lessee’s Share of any increase in real property
tax specified in the tax assessor’s records and work sheets as being caused by
additional improvements placed upon the Industrial Center by other lessees or
by Lessor for the exclusive enjoyment of such other lessees. Lessee shall,
however, pay to Lessor at the time that Operating Expenses are payable under
paragraph 4.2(c) the entirety of any increase in real property tax if assessed
solely by reason of additional improvements placed upon the Premises by Lessee
or at Lessee’s request.

 

                10.3        Definition
of “Real Property Tax.”  As
used herein, the term “real property tax” 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 on the Industrial Center
or any portion thereof by any authority having the direct or indirect power to
tax, including any city, county, state or federal government, or any school,
agricultural, sanitary, fire, street, drainage or other improvement district
thereof, as against as against any legal or equitable interest of Lessor in the
Industrial Center or in any portion therof, as against Lessor’s right to rent
or other income therefrom, and as against Lessor’s business of leasing the
Industrial Center. The term “real property tax” shall also include any tax,
fee, levy, assessment or charge (i) in substitution of, partially or totally,
any tax, fee, levy, assessment or charge hereinabove included within the
definition of “real property tax,” or (ii) the nature of which was hereinbefore
included within the definition of “real property tax,” or (iii) which is
imposed for a service or right not charged prior to June 1, 1978, or, if
previously charged, has been increased since June 1, 1976, or (iv) which is
imposed as a result of a transfer, either partial or total, of Lessor’s
interest in the Industrial Center or which is added to a tax or charge
hereinbefore included within the definition of real property tax by reason of
such transfer, or (v) which is imposed by reason of this transaction, any
modifications or changes hereto, or any transfers hereof.

 

                10.4        Joint
Assessment.  If the
Industrial Center is not separately assessed, Lessee’s Share of the real
property tax 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.

 

                10.5        Personal
Property Taxes.

 

                         (a)  Lessee shall pay prior to delinquincy all
taxes possessed against and levied upon trade fixtures, furnishings, equipment
and all other personal property of Lessee contained in the Premises or
elsewhere. When possible, Lessee shall cause said trade fixtures, furnishings,
equipment and all other personal property to be assessed and billed separately
from the real property of the Lessor.

 

                         (b)  If any of Lessee’s said personal property shall be
assessed with Lessor’s real property, Lessee shall pay to 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.

 

11.  Utilities. 
Lessee shall pay for all water, gas, heat, light, power, telephone and
other utilities and services supplied to the Premises, together with any taxes
thereon, if any such services are not separately metered to the Premises.
Lessee shall pay at Lessor’s option, either Lessee’s Share or a reasonable
proportion to be determined by Lessor of all charges metered with other
premises in the Building.

 

12.  Assignment and Subletting.

 

                12.1        Lessor’s Consent Required. 
Lessee shall not voluntarily or by operation of law assign, transfer,
mortgage, sublet, or otherwise transfer or encumber all or any part of Lessee’s
interest in the Lease or in the Premises, without Lessor’s prior written
consent, which Lessor shall not unreasonably withhold. Lessor shall respond to
Lessee’ request for consent hereunder in a timely manner and any attempted
assignment transfer, mortgage, encumbrance or subletting without such consent
shall be void, and shall constitute a breach of this Lease without the need for
notice to Lessee under paragraph 13.1 
See Addendum for additonal terms.

 

 

	
   

  	
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                12.3        Terms
and Conditions of Assignment.  Regardless of Lessor’s consent, no assignment shall release
Lessee of Lessee’s obligations hereunder or alter the primary liability of
Lessee to pay the Base Rent and Lessee’s Share of Operating Expenses, and to
perform all other obligations to be performed by Lessee hereunder.  Lessor may accept rent from any person other
than Lessee pending approval or disapproval of such assignment.  Neither a delay in the approval or
disapproval of such assignment nor the acceptance of rent shall constitute a
waiver or estoppel of Lessor’s right to exercise its remedies for the breach of
any of the terms or conditions of this paragraph 12 or this Lease.  Consent to one assignment shall not be
deemed consent to any subsequent assignment. 
In the event of default by any assignee of Lessee or any successor of
Lessee, in the performance of any of the terms hereof, Lessor may proceed
directly against Lessee without the necessity of exhausting remedies against
said assignee.  Lessor may consent to
subsequent assignments of this Lease or amendments or modifications to this
Lease with assignees of Lessee, without notifying Lessee, or any successor of
Lessee, and without obtaining its or their consent thereto and such actions
shall not relieve Lessee of liability under this Lease.

 

12.4        Terms and
Conditions Applicable to Subletting.  Regardless of Lessor’s consent, the following terms and
conditions shall apply to any subletting by Lessee of all or any part of the
Premises and shall be included in subleases:

 

(a)           Lessee hereby assigns and transfers to Lessor all of
Lessee’s interest in all rentals and income arising from any sublease
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 default shall occur in the performance of Lessee’s
obligations under this Lease, Lessee may 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 sublessee, upon receipt of a written notice from Lessor
stating that a default exists in the performance of Lessee’s obligations under
this Lease, to pay to Lessor the rents due and to become due under the
sublease.  Lessee agrees that such
sublessee shall have the right to rely upon any such statement and request from
Lessor, and that such sublessee shall pay such rents to Lessor without any
obligation or right to inquire as to whether such default exists and
notwithstanding any notice from or claim from Lessee to the contrary.  Lessee shall have no right or claim against
such sublessee or Lessor for any such rents so paid by said sublessee to
Lessor.

 

(b)           No sublease entered into by Lessee shall be effective
unless and until it has been approved in writing by Lessor.  In entering into any sublease, Lessee shall
use only such form of sublease as is satisfactory to Lessor, and once approved
by Lessor, such sublease shall not be changed or modified without Lessor’s
prior written consent.  Any sublessee
shall, by reason of entering into a sublease under this Lease, be deemed, for
the benefit of Lessor, to have assumed and agreed to conform and comply with
each and every obligation herein to be performed by Lessee other than such
obligations as are contrary to or inconsistent with provisions contained in a
sublease to which Lessor has expressly consented in writing.

 

(c)           If Lessee’s obligations under this Lease have been
guaranteed by third parties, then a sublease, and Lessor’s consent thereto,
shall not be effective unless said guarantors give their written consent to
such sublease and the terms thereof.

 

(d)           The consent by Lessor to any subletting shall not release
Lessee from its obligations or after the primary liability of Lessee to pay the
rent and perform and comply with all of the obligations of Lessee to be
performed under this Lease.

 

(e)           The consent by Lessor to any subletting shall not
constitute a consent to any subsequent subletting by Lessee or to any
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.

 

(f)            In the event of any default under this Lease, Lessor may
proceed directly against Lessee, any guarantors or any one else responsible for
the performance of this Lease, including the sublessee, without first
exhausting Lessor’s remedies against any other person or entity responsible
therefor to Lessor, or any security held by Lessor or Lessee.

 

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

 

(h)           Each and every consent required of Lessee under a sublease
shall also require the consent of Lessor.

 

(i)            No sublessee shall further assign or sublet all or any
part of the Premises without Lessor’s prior written consent.

 

(j)            Lessor’s written consent to any subletting of the
Premises by Lessee shall not constitute an acknowledgement that no default then
exists under this Lease of the obligations to be performed by Lessee nor shall
such consent be deemed a waiver of any then existing default except as may be
otherwise stated by Lessor at the time.

 

(k)           With respect to any subletting to which Lessor has
consented, Lessor agrees to deliver a copy of any notice of default by Lessee
to the sublessee.  Such sublessee shall
have the right to cure a default of Lessee within ten (10) days after service
of said notice of default upon such sublessee, and the sublessee shall have a
right of reimbursement and offset from and against Lessee for any such defaults
cured by the sublessee.

 

12.5        Attorney’s
Fees.  In the event Lessee shall
assign or sublet the Premises or request the consent of Lessor to any
assignment or subletting or if Lessee shall request the consent of Lessor for
any act Lessee proposes to do then Lessee shall pay Lessor’s reasonable
attorneys fees incurred in connection therewith, such attorneys fees not to
exceed $350.00 for each such request.

 

13.          Default; Remedies.

 

13.1        Default.  The occurrence of any one or more of the following
events shall constitute a material default of this Lease by Lessee:

 

(a)           The vacating or abandonment of the Premises by Lessee.

 

(b)           The failure by Lessee to make any payment of rent or any
other payment required to be made by Lessee hereunder, as and when due, where
such failure shall continue for a period of three (3) days after written notice
thereof from Lessor to Lessee.  In the
event that Lessor serves Lessee with a Notice to Pay Rent or Quit pursuant to
applicable Unlawful Detainer statutes such Notice to Pay Rent or Quit shall
also constitute the notice required by this subparagraph.

 

(c)           Except as otherwise provided in this Lease, the failure by
Lessee to observe or perform any of the covenants, conditions or provisions of
this Lease to be observed or performed by Lessee, other than described in
paragraph (b) above, where such failure shall continue for a period of thirty
(30) days after written notice thereof from Lessor to Lessee; provided,
however, that if the nature of Lessee’s noncompliance is such that more than
thirty (30) days are reasonably required for its cure, then Lessee shall not be
deemed to be in default if Lessee commenced such cure within said thirty (30)
day period and thereafter diligently prosecutes such cure to completion.  To the extent permitted by law, such thirty
(30) day notice shall constitute the sole and exclusive notice required to be
given to Lessee under applicable Unlawful Detainer statutes.

 

(d)           (i)            The
making by Lessee of any general arrangement or general assignment for the
benefit of creditors; (ii) Lessee becomes a “debtor” as defined in 11 U.S.C.
§101 or any successor statute thereto (unless, in the case of a petition filed
against Lessee, the same is dismissed within sixty (60) days); (iii) the appointment
of a trustee or receiver to take possession of substantially all of Lessee’s
assets located at the Premises or of Lessee’s interest in this Lease, where
possession is not restored to Lessee within thirty (30) days: or (iv) the
attachment, execution or other judicial seizure of substantially all of
Lessee’s assets located at the Premises or of Lessee’s interest in this Lease,
where such seizure is not discharged within thirty (30) days.  In the event that any provision of this
paragraph 13.1(d) is contrary to any applicable law, such provision shall be of
no force or effect.

 

(e)           The discovery by Lessor that any financial statement given
to Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any
successor in interest of Lessee or any guarantor of Lessee’s obligation
hereunder, was materially false.  See
Addendum.

 

13.2        Remedies.  In the event of any such material default by
Lessee, Lessor may at any time thereafter, with or without notice or demand and
without limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such default:

 

(a)           Terminate Lessee’s right to possession of the Premises by
any lawful means, in which case this Lease and the term hereof shall terminate
and Lessee shall immediately surrender possession of the Premises to
Lessor.  In such event Lessor shall be
entitled to recover from Lessee all damages incurred by Lessor by reason of
Lessee’s default 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 attorney’s fees, and any real estate
commission actually paid; the worth at the time of award by the court having
jurisdiction thereof of the amount by which the unpaid rent for the balance of
the term after the time of such award exceeds the amount of such rental loss
for the same period that Lessee proves could be reasonably avoided; that
portion of the leasing commission paid by Lessor pursuant to paragraph 15
applicable to the unexpired term of this Lease.

 

(b)           Maintain Lessee’s right to possession in which case this
Lease shall continue in effect whether or not Lessee shall have vacated or
abandoned the Premises.  In such event
Lessor shall be entitled to enforce all of Lessor’s rights and remedies under
this Lease, including the right to recover the rent as it becomes due
hereunder.

 

(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.  Unpaid installments of
rents and other unpaid monetary obligations of Lessee under the terms of this
Lease shall bear interest from the date due at the maximum rate then allowable
by law.  Lessor’s remedies shall include
the relief set forth in Section 1951.2 of the California Civil Code.

 

13.3        Default by
Lessor.  Lessor shall not be in
default unless Lessor fails to perform obligations required of Lessor within a
reasonable time, but in no event later than thirty (30) days after written
notice by Lessee to Lessor and to the holder of any first mortgage or deed of
trust covering the Premises whose name and address shall have theretofore been
furnished to Lessee in writing, specifying wherein Lessor has failed to perform
such obligation; provided, however, that if the nature of Lessor’s obligation
is such that more than thirty (30) days are required for performance then
Lessor shall not be in default if Lessor commences performance within such
thirty (30) day period and thereafter diligently prosecutes the same to
completion.

 

 

	
   

  	
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5

 

                13.4        Late
Charges.  Lessee hereby
acknowledges that late payment by Lessee to Lessor of Base Rent, Lessee’s Share
of Operating Expenses or 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 on Lessor by the terms of any mortgage or
trust deed covering the Property. 
Accordingly, if any installment of Base Rent, Operating Expenses, or any
other sum due from Lessee shall not be received by Lessor or Lessor’s designee
within ten (10) days after such amount shall be due, then, without any
requirement for notice to Lessee, Lessee shall pay to Lessor a late charge
equal to 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 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 any of the aforesaid
monetary obligations of Lessee, then Base Rent shall automatically become due
and payable quarterly in advance, rather than monthly, notwithstanding
paragraph 4.1 or any other provision of this Lease to the contrary.

 

14.          Condemnation.  If the Premises or any portion thereof or
the Industrial Center are taken under the power of eminent domain, or sold
under the threat of the exercise of said power (all of which are herein called
“condemnation”), this Lease shall terminate as to the part so taken as of the
date the condemning authority takes title or possession, whichever first
occurs.  If more than ten percent of the
floor area of the Premises, or more than twenty-five percent of that portion of
the Common Areas designated as parking for the Industrial Center is taken by
condemnation, Lessee may, at Lessee’s option, to be exercised in writing only
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 rent shall be
reduced in the proportion that the floor area of the Premises taken bears to
the total floor area of the Premises. 
No reduction of rent shall occur if the only area taken is that which
does not have the Premises located thereon. 
Any award for the taking of all or any part of the Premises under the
power of eminent domain or any payment made under threat of the exercise of
such power shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that the Lessee shall be
entitled to any award for loss of or damage to Lessee’s trade fixtures and
removable personal property.  In the
event that this Lease is not terminated by reason of such condemnation, Lessor
shall to the extent of severance damages received by Lessor in connection with
such condemnation, repair any damage to the Premises caused by such
condemnation except to the extent that Lessee has been reimbursed therefor by
the condemning authority.  Lessee shall
pay any amount in excess of such severance damages required to complete such
repair.

 

15.          Broker’s Fee.

 

                (a)           Upon execution of this Lease by both
parties, Lessor shall pay to       N/A

      
N/A            Licensed real
estate broker(s) a fee as set forth in a separate agreement between Lessor and
said broker(s), or in the event there is no separate agreement between Lessor
and said broker(s), the sum of $     
N/A       , for brokerage services
rendered by said broker(s) to Lessor in this transaction.

 

                (b)           Lessor agrees to pay said fee not
only on behalf of Lessor but also on behalf of any person, corporation,
association, or other entity having an ownership interest in said real property
or any part thereof, when such fee is due hereunder.  Any transferee of Lessor’s interests in this Lease, whether such
transfer is by agreement or by operation of law, shall be deemed to have
assumed Lessor’s obligation under this paragraph 15.  Said broker shall be a third party beneficiary of the provisions
of this paragraph 15.

 

16.          Estoppel Certificate.

 

                (a)           Each party (as “responding party”)
shall at any time upon not less than ten (10) days’ prior written notice from
the other party (“requesting party”) execute, acknowledge and deliver to the
requesting party a statement in writing (i) certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification and certifying that this Lease, as so modified, is in full
force and effect) and the date to which the rent and other charges are paid in
advance, if any, and (ii) acknowledging that there are not, to the responding
party’s knowledge, any uncured defaults on the part of the requesting party, or
specifying such defaults if any are claimed. 
Any such statement may be conclusively relied upon by any prospective
purchaser or encumbrancer of the Premises or of the business of the requesting
party.

 

                (b)           At the requesting party’s option, the
failure to deliver such statement within such time shall be a material default
of this Lease by the party who is to respond, without any further notice to
such party, or it shall be conclusive upon such party that (i) this Lease is in
full force and effect, without modification except as may be represented by the
requesting party, (ii) there are no uncured defaults in the requesting party’s
performance, and (iii) if Lessor is the requesting party, not more than one
month’s rent has been paid in advance.

 

                (c)           If Lessor desires to finance,
refinance, or sell the Property, or any part thereof, Lessee hereby agrees to
deliver to any lender or purchaser designated by Lessor such financial
statements of Lessee as may be reasonably required by such lender or
purchaser.  Such statements shall
include the past three (3) years’ financial statements of Lessee.  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
only the owner or owners, at the time in question, of the fee title or a
lessee’s interest in a ground lease of the Industrial Center, and except as
expressly provided in paragraph 15.  In
the event of any transfer of such title or interest, Lessor herein named (and
in case of any subsequent transfers then the grantor) shall be relieved from
and after the date of such transfer of all liability as respects Lessor’s
obligations thereafter to be performed, provided that any funds in the hands of
Lessor or the then grantor at the time of such transfer, in which Lessee has an
interest, shall be delivered to the grantee. 
The obligations contained in this Lease to be performed by Lessor shall,
subject as aforesaid, be binding on Lessor’s successors and assigns, only
during their respective periods of ownership.

 

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.  Except as expressly herein provided, any
amount due to Lessor not paid when due shall bear interest at the maximum rate
then allowable by law from the date due. 
Payment of such interest shall not excuse or cure any default by Lessee
under this Lease provided, however, that interest shall not be payable on late
charges incurred by Lessee nor on any amounts upon which late charges are paid
by Lessee.

 

20.          Time of Essence.  Time is of the essence with respect to the
obligations to be performed under this Lease.

 

21.          Additional Rent.  All monetary obligations of Lessee to Lessor
under the terms of this Lease, including but not limited to Lessee’s Share of
Operating Expenses and insurance and tax expenses payable shall be deemed to be
rent.

 

22.          Incorporation of Prior Agreements;
Amendments.  This Lease
contains all agreements of the parties with respect to any matter mentioned
herein.  No prior or contemporaneous
agreement or understanding pertaining to any such matter shall be
effective.  This lease may be modified
in writing only, signed by the parties of interest at the time of the
modification.  Except as otherwise
stated in this Lease, Lessee hereby acknowledges that neither the real estate
broker listed in paragraph 15 hereof nor any cooperating broker on this
transaction nor the Lessor or any employee or agents of any of said persons has
made any oral or written warranties or representations to Lessee relative to
the condition or use by Lessee of the Premises or the Property and Lessee
acknowledges that Lessee assumes all responsibility regarding the Occupational
Safety Health Act, the legal use and adaptability of the Premises and the
compliance thereof with all applicable laws and regulations in effect during
the term of this Lease except as otherwise specifically stated in this Lease.

 

23.          Notices.  Any notice required or permitted to be given hereunder shall be
in writing and may be given by personal delivery or by certified mail, and if
given personally or by mail, shall be deemed sufficiently given if addressed to
Lessee or to Lessor at the address noted below the signature of the respective
parties, as the case may be.  Either
party may by 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 notice purposes.  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 notice to Lessee.

 

24.          Waivers.  No waiver by Lessor or any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. 
Lessor’s consent to, or approval of, any act shall not be deemed to
render unnecessary the obtaining of Lessor’s consent to or approval of any
subsequent act by Lessee.  The
acceptance of rent hereunder by Lessor shall not be a waiver of any preceding
breach by Lessee of any provision hereof, other than the failure of Lessee to
pay the particular rent so accepted, regardless of Lessor’s knowledge of such
preceding breach at the time of acceptance of such rent.

 

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.

 

26.          Holding Over.  If Lessee, with Lessor’s consent, remains in
possession of the Premises or any part thereof after the expiration of the term
hereof, such occupancy shall be a tenancy from month to month upon all the
provisions of this Lease pertaining to the obligations of Lessee, but all
Options, if any, granted upon the terms of this Lease shall be deemed
terminated and be of no further effect during said month to month tenancy.

 

 

	
   

  	
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6

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.  Each provision of this Lease performable by
Lessee shall be deemed both a covenant and a condition.

 

29.          Binding Effect; Choice of Law.  Subject to any provisions hereof restricting
assignment or subletting by Lessee and subject to the provisions of paragraph
17, this Lease shall bind the parties, their personal representatives,
successors and assigns.  This Lease
shall be governed by the laws of the State where the Industrial Center is
located and any litigation concerning this Lease between the parties hereto
shall be initiated in the county in which the Industrial Center is located.

 

30.          Subordination.

 

                (a)           This Lease, and any Option granted
hereby, at Lessor’s option, shall be subordinate to any ground lease, mortgage,
deed of trust, or any other hypothecation or security now or hereafter placed
upon the Industrial Center and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof.  Notwithstanding
such subordination, Lessee’s right to quiet possession of the Premises shall
not be disturbed if Lessee is not in default and so long as Lessee shall pay
the rent and observe and perform all of the provisions of this Lease, unless
this Lease is otherwise terminated pursuant to its terms.  If any mortgagee, trustee or ground lessor
shall elect to have this Lease and any Options granted hereby prior to the lien
of its mortgage, deed of trust or ground lease, and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior to such
mortgage, deed of trust or ground lease, whether this Lease or such Options are
dated prior or subsequent to the date of said mortgage, deed of trust or ground
lease or the date of recording thereof.

 

                (b)           Lessee agrees to execute any
documents required to effectuate an attornment, a subordination or to make this
Lease or any Option granted herein prior to the lien of any mortgage, deed of
trust or ground lease, as the case may be. 
Lessee’s failure to execute such documents within ten (10) days after
written demand shall constitute a material default by Lessee hereunder without
further notice to Lessee or, at Lessor’s option, Lessor shall execute such
documents on behalf of Lessee as Lessee’s attorney-in-fact.  Lessee does hereby make, constitute and
irrevocably appoint Lessor as Lessee’s attorney-in-fact and in Lessee’s name,
place and stead, to execute such documents in accordance with this paragraph 30(b).

 

31.          Attorney’s Fees.  If either party or the broker(s) named
herein bring an action to enforce the terms hereof or declare rights hereunder,
the prevailing party in any such action, on trial or appeal, shall be entitled
to his reasonable attorney’s fees to be paid by the losing party as fixed by
the court.  The provisions of this
paragraph shall inure to the benefit of the broker named herein who seeks to
enforce a right hereunder.

 

32.          Lessor’s Access.  Lessor and Lessor’s agents shall have the
right to enter the Premises at reasonable times for the purpose of inspecting
the same, 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 part as Lessor may deem necessary or
desirable.  Lessor may at any time place
on or about the Premises or the Building any ordinary “For Sale” signs and
Lessor may at any time during the last 120 days of the term hereof place on or
about the Premises any ordinary “For Lease” signs.  All activities of Lessor pursuant to this paragraph shall be
without abatement of rent, nor shall Lessor have any liability to Lessee for
the same.

 

33.          Auctions.  Lessee shall not conduct, nor permit to be
conducted, either voluntarily or involuntarily, any auction upon the Premises
or the Common Areas 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 or the
Industrial Center without Lessor’s prior written consent.  Under no circumstances shall Lessee place a
sign on any roof of the Industrial Center.

 

35.          Merger.  The voluntary or other surrender of this Lease by Lessee, or a
mutual cancellation thereof, or a termination by Lessor, shall not work a
merger, and shall, at the option of Lessor, terminate all or any existing subtenancies
or may, at the option of Lessor, operate as an assignment to Lessor of any or
all such subtenancies.

 

36.          Consents.  Except for paragraph 33 hereof, wherever in
this Lease the consent of one party is required to an act of the other party
such consent shall not be unreasonably withheld or delayed.

 

37.          Guarantor.  In the event that there is a guarantor of
this Lease, said guarantor shall have the same obligations as Lessee under this
Lease.

 

38.          Quiet Possession.  Upon Lessee paying the rent for the Premises
and observing and performing all of the covenants, conditions and provisions on
Lessee’s part to be observed and performed hereunder, Lessee shall have quiet
possession of the Premises for the entire term hereof subject to all of the
provisions of this Lease.  The
individuals executing this Lease on behalf of Lessor represent and warrant to
Lessee that they are fully authorized and legally capable of executing this
Lease on behalf of Lessor and that such execution is binding upon all parties
holding an ownership interest in the Property.

 

39.          Options.

 

                39.1        Definition.  As used in this paragraph the word “Option” has the following
meaning: (1) the right or option to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (2) the option or right of first refusal to lease the Premises or the
right of first offer to lease the Premises or the right of first refusal to
lease other space with the Industrial Center or other property of Lessor or the
right of first offer to lease other space within the Industrial Center or other
property of Lessor; (3) the right or option to purchase the Premises or the
Industrial Center, or the right of first refusal to purchase the Premises or
the Industrial Center, or the right of first offer to purchase the Premises or
the Industrial Center, or the right or option to purchase other property of
Lessor, or the right of first refusal to purchase other property of Lessor or
the right of first offer to purchase other property of Lessor.

 

                39.2        Options Personal.  Each Option granted to Lessee in this Lease is personal to the
original Lessee and may be exercised only by the original Lessee while
occupying the Premises who does so without the intent of thereafter assigning this
Lease or subletting the Premises or any portion thereof, and may not be
exercised or be assigned, voluntarily or involuntarily, by or to any person or
entity other than Lessee, provided, however, that an Option may be exercised by
or assigned to any Lessee Affiliate as defined in paragraph 12.2 of this
Lease.  The Options, if any, herein
granted to Lessee are not assignable separate and apart from this Lease, nor
may any Option be separated from this Lease in any manner, either by reservation
or otherwise.

 

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

 

                39.4        Effect of Default on Options.

 

                                (a)  Lessee shall have no right to exercise an
Option, notwithstanding any provision in the grant of Option to the
contrary,  (i) during the time
commencing from the date Lessor gives to Lessee a notice of default pursuant to
paragraph 13.1(b) or 13.1(c) and continuing until the noncompliance alleged in
said notice of default is cured, or (ii) during the period of time commencing
on the date after a monetary obligation to Lessor is due from Lessee and unpaid
(without any necessity for notice thereof to Lessee) and continuing until the
obligation is paid, or (iii) at any time after an event of default described in
paragraphs 13.1(a), 13.1(d), or 13.1(e) (without any necessity of Lessor to
give notice of such default to Lessee), nor (iv) in the event that Lessor has
given to Lessee three or more notices of default under paragraph 13.1(b), or
paragraph 13.1(c), whether or not the defaults are cured, during the 12 month
period of time immediately prior to the time that Lessee attempts to exercise
the subject Option.

 

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

 

                                (c)  All rights of Lessee under the provisions of
an Option shall terminate and be of no further force or effect, notwithstanding
Lessee’s due and timely exercise of the Option, if, after such exercises and
during the term of this Lease, (i) Lessee fails to pay to Lessor a monetary
obligation of Lessee for a period of thirty (30) days after such obligation
becomes due (without any necessity of Lessor to give notice thereof to Lessee),
or (ii) Lessee fails to commence to cure a default specified in paragraph
13.1(c) within thirty (30) days after the date that Lessor gives notice to
Lessee of such default and/or Lessee fails thereafter to diligently prosecute
said cure to completion, or (iii) Lessee commits a default described in
paragraph 13.1(a), 13.1(d) or 13.1(e) (without any necessity of Lessor to give
notice of such default to Lessee), or (iv) Lessor gives to Lessee three or more
notices of default under paragraph 13.1(b), or paragraph 13.1(c), whether or
not the defaults are cured.

 

40.          Security Measures.  Lessee hereby acknowledges that Lessor shall
have no obligation whatsoever to provide guard service or other security
measures for the benefit of the Premises or the Industrial Center.  Lessee assumes all responsibility for the
protection of Lessee, its agents, and invitees and the property of Lessee and
of Lessee’s agents and invitees from acts of third parties.  Nothing herein contained shall prevent
Lessor, at Lessor’s sole option, from providing security protection for the
Industrial Center or any part thereof, in which event the cost thereof shall be
included within the definition of Operating Expenses, as set forth in paragraph
4.2(b).

 

41.          Easements.  Lessor reserves to itself the right, from
time to time, to grant such easements, rights, and dedications that Lessor
deems necessary or desirable, 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 shall sign any of the aforementioned documents upon request of
Lessor and failure to do so shall constitute a material default of this Lease
by Lessee without the need for further notice to Lessee.

 

42.          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.

 

 

	
   

  	
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                43.          Authority. If Lessee 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 behalf of said entity. If
Lessee is a corporation, trust or partnership, Lessee shall, within thirty (30)
days after execution of this Lease, deliver to Lessor evidence of such
authority satisfactory to Lessor.

 

                44.          Conflict. Any conflict between the
printed provisions of this Lease and the typewritten or handwritten provisions,
if any, shall be controlled by the typewritten or handwritten provisions.

 

                48.          Offer. Preparation of this Lease
by Lessor or Lessor’s agent and submission of same to Lessee shall not be
deemed an offer to lease. This Lease shall become binding upon Lessor and
Lessee only when fully executed by Lessor and Lessee.

 

                46.          Addendum. Attached hereto is an
addendum of addenda containing paragraphs         A        through         H        which constitute a part of this Lease.

 

                47.          Modification For Lender.  If in connection with obtaining financing for the building, the
Lender shall request reasonable modifications in this Lease as a condition to
such financing, Lessee will not unreasonably withhold, delay, or defer its
consent thereto, provided that such modifications do not increase the
obligations of Lessee hereunder or materially adverse affect the leasehold
interest hereby created.

 

                48.          Lessor Option to Relocate Lessee.  At any time after Lessee’s execution of this
Lease, Lessor shall have the right, upon providing Lessee thirty (30) days
notice in writing, to provide and furnish Lessee with space elsewhere in the
building of approximately the same size as said Premises, and to move and place
Lessee in such new space at Lessor’s expense. In the event Lessor moves Lessee
to such new space, then this Lease and each and all of the terms and covenants
and conditions hereof shall thereupon remain in full force and effect and be
deemed applicable to such new space except that a revised Exhibit “A” shall
become a part of this Lease and shall reflect the location of the new space and
Paragraphs 4.1, 4.2 and 5 shall be amended to show correct data. Should Lessee
refuse to permit Lessor to move Lessee to such new space at the end of said
thirty (30) day period, Lessor shall have the right to terminate this Lease by
notice to such effect given to Lessee in writing within ten (10) days following
the end of said thirty (30) day period, which termination shall be effective
sixty (60) days after the date of the original relocation by Lessor.

 

                49.          Mortgage Protection.  Lessee agrees to give any mortgages and/or trust deed holders, as
to all or a potion of the Premises, by registered mail, a copy of any notice of
default served upon Lessor, provided that prior to such notice Lessee has been
notified in writing (by way of notice or assignment of rents and leases, or
otherwise) of the addresses of such mortgages and/or trust deed holders. Lessee
agrees not to exercise any remedies available by virtue of a default unless
Lessor shall have failed to cure such default within thirty (30) days after receipt
of notice of default or such additional time as may be reasonably necessary to
cure the default in the case of a default incapable of being cured within
thirty (30) days. Lessee further agrees that the morgages and/or trust deed
holder shall have an additional thirty (30) days within which to cure such
default, or if such default cannot be cured within that time, then such
additional time as may be necessary if within such thirty (30) days of any
mortgagee and/or trust deed holder has commenced and is diligently pursuing the
remedies necessary to cure such default (including but not limited to
commencement or foreclosure proceedings if necessary to effect such cure), in
which event such right, if any, as Lessee might otherwise have to terminate the
Lease shall not be exercised while such remedies are being so diligently
pursued.

 

                                8.1          Liability Insurance—Lessee.  Lessee shall, at Lessee’s expense obtain and
keep in force during the term of this Lease a policy of Comprehensive General
Liability insurance utilizing an Insurance Services Office standard form with
Broad Form General Liability Endorsement (GL0404), or equivalent, in an amount
of not less than 1) $1,000,000 per occurrence of Bodily Injury and Property
Damage combined single limit with a $1,000,000 excess liability policy, or 2)
$1,000,000 per occurrence of Bodily Injury and Property Damage with a
$2,000,000 General Aggregate Bodily Injury and Property Damage, and shall
insure Lessee with Lessor as an additional insured against liability arising out
of the use, occupancy or maintenance of the Premises. The policy shall insure
performance by Lessee of the indemnity provisions of this paragraph 8.  The limits of said insurance shall not,
however, limit the liability of  Lessee
hereunder.

 

 

 

 

 

 

LESSOR AND LESSEE HAVE CAREFULLY READ AND
REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN AND, BY
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.

 

THIS LEASE HAS BEEN PREPARED
FOR SUBMISSION TO YOUR ATTORNEY FOR APPROVAL. NO REPRESENTATION OR
RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY
THE REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY,
LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING
THERETO: THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL
COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

 

	
  LESSOR

  	
   

  	
  LESSEE

  
	
   

  	
   

  	
   

  
	
  William D & Edna J. Wright dba

  South Coast Business Park

  	
   

  	
  

  Q. A. D., Inc., a California Corporation

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/ Jeanne
  Wright-Bortolozzo, Agent

  	
   

  	
  By

  	
  /s/ Barry Anderson

  
	
   

  	
   

  	
   

  	
   

  	
  Vice President
  Administration

  
	
   

  	
   

  	
   

  
	
  By______________________________________

  	
   

  	
  By______________________________________

  
	
   

  	
   

  	
   

  
	
  Executed on

  	
       2/11/98

  	
   

  	
  Executed on
  ______________________________

  
	
   

  	
   

  	
   

  
	
  ADDRESS
  FOR NOTICES AND RENT

  	
   

  	
  ADDRESS

  
	
   

  	
   

  	
   

  
	
  130 Garden Street

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Santa Barbara, California 
  93101

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
						

 

 

8

 

ADDENDUM TO LEASE

 

This ADDENDUM is attached to
and forms a part of that certain Standard Industrial Lease dated for reference
purposes January 20, 1998, by and between William D & Edna J. Wright dba
South Coast Business Park (“Lessor”), and Q.A.D., Inc., a California
Corporation (“Lessee”).  The said
Standard Industrial Lease is hereby modified/supplemented (and as modified/supplemented
is hereinafter referred to as “this Lease”) in the following particulars only:

 

A.      Option to Extend
Term of Lease.  Lessee is
hereby granted the option to extend the term of this Lease for two (2)
additional successive periods of two (2) years each.  The options shall be exercised by the delivery of written notice
to Lessor no earlier than two hundred seventy (270) days and no later than one
hundred eighty (180) days prior to the expiration of the lease term then in
effect.  Any extentions granted hereunder
shall be on the same terms and conditions applicable to the initial term except
as to rent, which shall be increased in accordance with Paragraph B(2)
below.  Lessee’s right to exercise the
options granted herein is subject to the terms and conditions set forth in
Paragraph 39 of this Lease.

 

B.      Adjustments to
Base Rent.

(1)              Cost of
Living Adjustments to Base Rent.   The Base Rent payable pursuant to Paragraph
4.1 shall be subject to further adjustment as of March 1, 1999, and as of the
same date each year thereafter during the initial lease term and any extension
period.  Said date is hereinafter
referred to as the “Adjustment Date.” 
The adjustment shall be made as follows:

 

The Base Rent for the
Premises shall be adjusted by the same percentage as the increase, if any, in
the Consumer Price Index (All Items for All Urban Consumers 1982-84=100 Base),
of the United States Department of Labor, Bureau of Labor Statistics for Los
Angeles-Anaheim-Riverside, CA (the “Index”). 
The adjustment shall be calculated according to the following formula:

 

X = A X B/C

 

X = Adjusted rent

 

A = Base Rent as of the
first month of the term then in effect.

 

B = The monthly index for
the third month immediately preceding the Adjustment Date.

 

C = The monthly index for
the third month immediately preceding the first month of the term then in
effect.

 

The monthly rent as so adjusted shall be
payable for each month commencing with the Adjustment Date and continuing until
the next Adjustment Date.

 

	
   

  	
  Initials:

  	
  BA

  
	
   

  	
   

  	
  JWB

  

 

 

If the Index is discontinued
or revised during the term of this Lease, such other government Index or
computation with which it is replaced shall be used in order to obtain
substantially the same result as would be obtained if the Index had not been
discontinued or revised.

 

(2)              Determination
of Base Rent During Extension Periods.  In the event
Lessee exercises the option to extend granted in Paragraph (a) above, the Base
Rent payable at the commencement of the applicable Extension Period shall be
the then prevailing market rate for a triple net lease of comparable lease
Premises in the surrounding geographical area. 
Prevailing market rate shall be determined by mutual agreement of Lessor
and Lessee on the basis of the value which will be obtained in an arms-length
transaction between an informed and willing tenant (other than a tenant
currently in possession of the demised Premises) and an informed and willing
landlord (other than the then existing landlord of demised Premises) under no
compulsion to lease.  If Lessor and
Lessee have not agreed upon the prevailing market rental rate by the date which
is thirty (30) days prior to the expiration of the lease term then in effect,
then the option to extend will automatically cease and be deemed
extinguished.  The base monthly rent as
determined pursuant to this Paragraph B(2) shall thereafter be subject to
further cost of living adjustments pursuant to the terms of Paragraph B(1)
above.

 

C.      Construction of
Tenant Improvements.

                SEE
ADDENDUM TO LEASE NUMBER TWO ATTACHED HERETO

 

 

	
   

  	
  Initials:

  	
  BA

  
	
   

  	
   

  	
  JWB

  

 

 

2

 

D.      Use.  Paragraph 6 of this Lease is hereby
supplemented as follows:

(1)  Prohibited Uses.  Lessee shall not do or permit anything to be
done in or about the Premises nor bring or keep anything therein which will in
any way increase the existing rate of or affect any fire or other insurance
upon the Premises or any of its contents, or cause a cancellation of any
insurance policy covering the Premises or any part thereof or any of its
contents.  Lessee shall not commit or
suffer to be committed any nuisance or waste in or upon the Premises.  Lessee shall not use the Premises or permit
anything to be done in or about the Premises which will in any way conflict
with any law, statute, ordinance or governmental rule or regulation now in
force or which may hereafter be enacted or promulgated.  Lessee shall not keep any animals or pets on
the Premises.  Lessee shall not use or
store “hazardous materials or wastes” on the Premises, as such terms are
defined by applicable federal and state law, without Lessor’s prior written
consent.  If such consent is given,
Lessee shall comply with governmental laws, rules and regulations pertaining to
hazardous materials and wastes.  Lessor
shall have a right of re-entry upon the Premises on reasonable notice and at
reasonable times for purposes of inspection, contamination testing and
remediation.

 

(2)  Installation of
Specialized Equipment and Use of Lessee’s Possessions on the Premises.  Lessee shall not install on the Premises any
specialized equipment requiring the use of a power source (including, but not
limited to, computer hardware or software) without the prior written consent of
Lessor.  Lessor shall give its consent
to such installation provided the conditions contained herein are
satisfied.  Lessor shall not be liable
to Lessee for damage to Lessee or Lessee’s possessions, including but not
limited to furniture, fixtures, equipment (specialized or otherwise), and
inventory, from any cause.  Lessee
waives all claims against Lessor for damage to Lessee’s possessions arising for
any reason.  Lessee shall comply with
all laws, regulations and ordinances relating to the condition and use of any
and all of Lessee’s possessions on the Premises, including laws requiring the
alteration, maintenance and restoration of the Premises, as a result of
Lessee’s particular use.  Provided,
however, any required alterations to the Premises shall be conditioned upon
Lessor’s prior written consent.  The
Premises shall not be electrically overloaded. 
No equipment, machinery, apparatus or other appliance shall be used or
operated on the Premises in such a manner that such equipment will in any way
injure, vibrate or shake the Premises, or place an excessive burden on power
sources installed on the Premises.

 

E.      Assignment and
Subletting.  Lessee
hereby understands and agrees that Lessor may withhold its consent to any
requested assignment or subletting, and such withholding of consent shall be
deemed reasonable, in the event that the proposed assignee or sublessee intends
to use or store hazardous wastes or materials on the Premises.  Also, it is a requirement that Lessor
receive seventy five percent (75%) of any consideration or increase in rent
received or to be received by Lessee for such assignment or sublease.  Please note that the term of the sublease
may not exceed the term of the “master” lease.

 

F.      Indemnity.  The indemnification of Lessor by Lessee
pursuant to Paragraph 8.7 of this Lease shall also include and extend to any
violation by Lessee of applicable state, federal and local laws pertaining to
the use, storage and discharge of hazardous materials and wastes.

 

G.      Default.  Paragraph 13.1 of this Lease is supplemented
to provide that the release or discharge by Lessee of any hazardous material or
wastes in or about the Premises, or violation of any law or deviation from
prescribed

 

 

	
   

  	
  Initials:

  	
  BA

  
	
   

  	
   

  	
  JWB

  

 

 

3

 

procedures in the use or storage of hazardous
materials or wastes, shall constitute a material default of this Lease by
Lessee.  Wherever used in this Lease,
the terms hazardous wastes and/or hazardous materials shall include all
definitions of hazardous wastes and materials provided by both federal and
California law.

 

 

	
   

  	
  Initials:

  	
  BA

  
	
   

  	
   

  	
  JWB

  

 

 

4

 

IN WITNESS WHEREOF, Lessor
and Lessee have each caused this Addendum to be executed concurrently with the
Lease of which this Addendum forms a part.

 

LESSOR:

 

	
  WILLIAM D & EDNA J.
  WRIGHT dba

  	
   

  	
   

  
	
  SOUTH COAST BUSINESS PARK

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  	
  Dated: 

  	
  2/11/98

  	
   

  
							

 

LESSEE:

 

	
  Q.A.D., Inc.,

  	
   

  	
   

  
	
  a California Corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  	
  Dated: 

  	
  1/22/98

  	 

	
   

  	
  Douglas Marsh,
  V.P.Operations

  	
   

  	
   

  	
   

  
	
  BY:

  	
   

  	
   

  	
  Dated:

  	
   

  	
   

  
							

 

5

 

Addendum
to Lease

Number
Two

 

6420
Via Real, Suite’s 8 & 9 (Building B)

 

This Addendum is attached to and forms a part
of that certain Standard Industrial Lease dated for reference purposes January
20, 1998 by and between William D & Edna J. Wright dba South Coast Business
Park (“Lessor”), and Q.A.D., Inc., a California Corporation (“Lessee”).  The said Standard Industrial Lease is hereby
modified/supplemented in the following particulars only:

 

Lessee shall hire and pay contractor and
engineers to perform the desired tenant improvements for said space.

 

Lessor shall reimburse Lessee for the costs
of said improvements up to $14.00 per square foot of leased space being
improved (2,496 square feet).

 

LESSOR:

 

	
  William D Wright dba

  	
   

  	
   

  
	
  South Coast Business Park

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
  /s/ Jeanne
  Wright-Bortolozzo

  	
   

  	
   

  	
   

  
					

 

LESSEE:

 

	
  Q.A.D., Inc., a California
  Corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
  /s/ Barry Anderson

  	
   

  	
   

  	
   

  
	
   

  	
  Barry Anderson, Vice
  President Administration

  
					

 

 

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