Document:

Exhibit 10.8

 

FIFTH AMENDMENT TO STANDARD INDUSTRIAL NET LEASE

 

THIS FIFTH AMENDMENT TO STANDARD INDUSTRIAL NET LEASE (this “Amendment”) is entered into as of this 14th day of May, 2014 (the “Execution Date”), by and between BMR-COAST 9 LP, a Delaware limited partnership (“Landlord,” as successor-in interest to JBC Sorrento West, LLC (“Original Landlord”)), and TROVAGENE, INC., a Delaware corporation (“Tenant,” as successor-by-merger to Xenomics, Inc. (“Original Tenant”)).

 

RECITALS

 

A.            WHEREAS, Original Landlord and Original Tenant entered into that certain Standard Industrial Net Lease dated as of October 28, 2009, as amended by that certain First Amendment to Standard Industrial Net Lease dated as of September 28, 2011, that certain Second Amendment to Standard Industrial Net Lease dated as of December 27, 2011, that certain Third Amendment to Standard Industrial Net Lease dated as of October 22, 2012 (the “Third Amendment”) and that certain Fourth Amendment to Standard Industrial Net Lease dated as of December 2, 2013 (the “Fourth Amendment”) (collectively, and as the same may have been heretofore further amended, amended and restated, supplemented or modified from time to time, the “Existing Lease”), whereby Tenant leases certain premises (the “Existing Premises”) from Landlord at 11055 Flintkote Avenue in San Diego, California (the “11055 Building”);

 

B.            WHEREAS, Landlord and Tenant desire to expand the Existing Premises to include additional space in the building located at 11120 Roselle Street in San Diego, California (the “11120 Building”); and

 

C.            WHEREAS, Landlord and Tenant desire to modify and amend the Existing Lease only in the respects and on the conditions hereinafter stated.

 

AGREEMENT

 

NOW, THEREFORE, Landlord and Tenant, in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, agree as follows:

 

l.              Definitions. For purposes of this Amendment, capitalized terms shall have the meanings ascribed to them in the Existing Lease unless otherwise defined herein. The Existing Lease, as amended by this Amendment, is referred to collectively herein as the “Lease.”

 

2.             11120 Premises. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, that certain space located on the first (1st) floor of the 11120 Building with a Rentable Square Footage of approximately four thousand seven hundred fifty-one (4,751) square feet (as more particularly described on Exhibit A attached hereto, the “11120 Premises”). From and after the 11120 Premises Commencement Date (as defined below), all references in the Lease to the “Building,” shall mean and refer, individually and/or collectively (as the context may require), tn the t 1055 Building and/or the 11120 Building.

 

 

2.1             11120 Premises Lease Term. The Lease Term with respect to the 11120 Premises (the “11120 Premises Lease Term”) shall commence on the 11120 Premises Commencement Date (as defined below), and shall thereafter be coterminous with the Existing Premises such that the Lease Term for the 11120 Premises and the Lease Term for the Existing Premises shall expire on the Expiration Date (as defined in Section 2 of the Third Amendment (i.e., December 31, 2017)). From and after the 11120 Premises Commencement Date, the term “Premises” as used in the Lease shall mean the Existing Premises plus the 11120 Premises.

 

2.2             Condition of 11120 Premises. Tenant acknowledges that (a) it is fully familiar with the condition of the 11120 Premises and, notwithstanding anything to the contrary in the Lease, agrees to take the same in its condition “as is” as of the 11120 Premises Commencement Date, (b) Landlord has not made and does not hereby make any representations or warranties of any kind whatsoever, express or implied, regarding the 11120 Premises, including (without limitation) any representation or warranty that the 11120 Premises are suitable for Tenant’s intended use and (c) Landlord shall have no obligation to alter, repair or otherwise prepare the 11120 Premises for Tenant’s occupancy of the 11120 Premises or to pay for any improvements to the 11120 Premises, except with respect to the 11120 Tenant Improvements (as defined below). The 11120 Premises have not undergone inspection by a Certified Access Specialist. Tenant’s taking possession of the 11120 Premises on the 11120 Premises Commencement Date shall, except as otherwise agreed to in writing by Landlord and Tenant, conclusively establish that the 11120 Premises and the 11120 Building were at such time in good, sanitary and satisfactory condition and repair. Notwithstanding anything to the contrary (but subject to the last grammatical sentence of this Section 2.2), Landlord hereby represents and warrants that, as of the 11120 Premises Commencement Date, (x) the roof of the 11120 Building shall be in good condition and repair, and (y) the life-safety, plumbing, electrical and heating, ventilating and air conditioning systems serving the 11120 Premises, shall be in good working order, condition and repair; provided, however, that Tenant’s sole and exclusive remedy fur a breach of such representation and warranty shall be to deliver notice to Landlord (“Repair Notice”) on or before the date that is twelve (12) months after the 11120 Premises Commencement Date (such date, the “Warranty Date”) detailing the nature of such breach. In the event that Landlord receives a Repair Notice on or before the Warranty Date, Landlord shall promptly make any repairs reasonably necessary to correct the breach described in the Repair Notice (but only to the extent that Landlord reasonably determines that the breach described in the Repair Notice constitutes an actual breach of the representation and warranty provided by Landlord in subsections (x) and (y)). The representation and warranty provided by Landlord in subsections (x) and (y) above shall expire, and be of no further force or effect, on the Warranty Date and Landlord shall not have any further obligations or liabilities in connection with such representation and warranty (except with respect to any actual breaches identified in a Repair Notice delivered by Tenant to Landlord on or before the Warranty Date).

 

2.3             Permitted Use of 11120 Premises. Notwithstanding anything to the contrary in the Lease, Tenant shall be permitted to use the 11120 Premises only for office use (and for no other purposes) in conformity with all federal, state, municipal and local laws, codes, ordinances, rules and regulation of governmental authorities, committees, associations, or other regulatory committees, agencies or governing bodies having jurisdiction over the 11120

 

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Premises, the 11120 Building, the Center, Landlord or Tenant, including both statutory and common law and hazardous waste rules and regulations (“Applicable Laws”).

 

2.4             Tenant’s Pro Rata Share. Notwithstanding anything to the contrary in the Lease, commencing on the 11120 Premises Commencement Date, the chart in Section 3 of the Fourth Amendment is hereby deleted in its entirety and replaced with the following chart:

 

	
 
    	
 
    	
Means the Following (As of the 11120
    
	
Definition or Provision
    	
 
    	
Premises Commencement Date)
    
	
Approximate   Rentable Area of Existing Premises
    	
 
    	
8,303   square feet
    
	
Approximate   Rentable Area of 11120 Premises
    	
 
    	
4,751   square feet
    
	
Approximate   Rentable Area of 11055 Building
    	
 
    	
20,563   square feet
    
	
Approximate   Rentable Area of 11120 Building
    	
 
    	
l0,140   square feet
    
	
Approximate   Rentable Area of Project
    	
 
    	
162,074   square feet
    
	
Tenant’s   Pro Rata Share of 11055 Building
    	
 
    	
40.38%
    
	
Tenant’s   Pro Rata Share of 11120 Building
    	
 
    	
46.85%
    
	
Tenant’s   Pro Rata Share of Project
    	
 
    	
8.05%
    

 

*For purposes of clarity, the term “Project” as used in the Lease shall have the same  meaning as Center.

 

2.5          11120 Premises Minimum Monthly Rent. Notwithstanding anything to the contrary in the Lease, commencing on the 11120 Premises Commencement Date, initial monthly installments of Minimum Monthly Rent for the 11120 Premises shall equal:

 

	
Dates
    	
 
    	
Rentable Square
   Footage
    	
 
    	
Minimum Monthly Rent
   Rate per Square Foot of
   Rentable Area
    	
 
    	
Minimum
   Monthly
   Rent
    	
 
    
	
Month l -Month 12
    	
 
    	
4,751
    	
 
    	
$
    	
2.20
    	
 
    	
$
    	
10,452.20
    	
 
    
										

 

2.5.1       11120 Premises Minimum Monthly Rent Adjustments. Notwithstanding anything to the contrary in the Lease, Minimum Monthly Rent for the 11120 Premises shall be subject to an annual upward adjustment of three percent (3%) of the then current Minimum Monthly Rent for the 11120 Premises. The first such adjustment shall become effective commencing on the first (1st) annual anniversary of the 11120 Premises Commencement Date, and subsequent adjustments shall become effective on every successive annual anniversary throughout the 11120 Premises Lease Term.

 

2.5.2       11120 Premises Minimum Monthly Rent Abatement. Provided that Tenant is not then in default of the Lease (beyond any applicable cure period), then during

 

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the first (1st), second (2nd) and third (3rd) months of the 11120 Premises Lease Term (the “11120 Premises Minimum Monthly Rent Abatement Period”), Tenant shall not be obligated to pay any Minimum Monthly Rent otherwise attributable to the 11120 Premises (the “11120 Premises Minimum Monthly Rent Abatement”). Tenant acknowledges and agrees that the 11120 Premises Minimum Monthly Rent Abatement has been granted to Tenant as additional consideration for entering into this Amendment, and for agreeing to pay the rent and performing the terms and conditions otherwise required under the Lease. If Tenant shall be in default under the Lease, and shall fail to cure such default within the notice and cure period, if any, permitted for cure pursuant to terms and conditions of the Lease, or if the Lease is terminated for any reason other than Landlord’s breach of the Lease, then the dollar amount of the unapplied portion of the 11120 Premises Minimum Monthly Rent Abatement as of the date of such default or termination, as the case may be, shall be converted to a credit to be applied to the Minimum Monthly Rent for the 11120 Premises applicable at the end of the 11120 Premises Lease Term and Tenant shall immediately be obligated to begin paying Minimum Monthly Rent for the 11120 Premises in full. Nothing in this Section shall work to abate or reduce Tenant’s obligations under the Lease with respect to Additional Rent including (without limitation) Tenant’s obligations with respect to Tenant’s Share of Operating Costs.

 

2.6          Additional Rent. In addition to Minimum Monthly Rent, from and after the 11120 Premises Commencement Date, Tenant shall pay to Landlord, Additional Rent (as defined in the Lease) with respect to the 11120 Premises and all other amounts that Tenant assumes or agrees to pay under the provisions of the Lease with respect to the 11120 Premises that are owed to Landlord, including any and all other sums that may become due by reason of any default of Tenant or failure on Tenant’s part to comply with the agreements, terms, covenants and conditions of the Lease to be performed by Tenant, after notice and the lapse of any applicable cure periods.

 

2.7          11120 Premises Commencement Date. The “11120 Premises Commencement Date” shall be the day Landlord tenders possession of the 11120 Premises to Tenant with the 11120 Tenant Improvements (as defined below) Substantially Complete (as defined below). If possession is delayed by action of Tenant, then the 11120 Premises Commencement Date shall be the date that the 11120 Premises Commencement Date would have occurred but for such delay. Landlord shall endeavor to provide written notice to Tenant of any act or omission of Tenant that Landlord believes constitutes such a delay. Tenant shall execute and deliver to Landlord written acknowledgment of the actual 11120 Premises Commencement Date within ten (10) days after Tenant takes occupancy of the 11120 Premises, in the form attached as Exhibit C hereto (the “Acknowledgement” ). Failure to execute and deliver the Acknowledgment, however, shall not affect the 11120 Premises Commencement Date or Landlord’s or Tenant’s liability hereunder. Failure by Tenant to obtain validation by any medical review board or other similar governmental licensing of the 11120 Premises required for the Permitted Use (with respect to the 11120 Premises) by Tenant shall not serve to extend the 11120 Premises Commencement Date.

 

2.8          11120 Tenant Improvements. Land lord shall use commercially reasonable efforts to tender possession of the 11120 Premises to Tenant on October 1, 2014 (the “Estimated

 

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11120 Premises Commencement Date”), with the work (the “11120 Tenant Improvements”) required of Landlord on Exhibit B attached hereto (the “11120 Tenant Improvement Plans”). Tenant agrees that in the event such work is not Substantially Complete on or before the Estimated 11120 Premises Commencement Date for any reason, then (a) neither this Amendment nor Tenant’s lease of the 11120 Premises shall be void or voidable, (b) Landlord shall not be liable to Tenant for any loss or damage resulting therefrom and (c) Tenant shall not be responsible for the payment of any Minimum Monthly Rent with respect to the 11120 Premises until the actual 11120 Premises Commencement Date as described in Section 2.7 occurs. The term “Substantially Complete” or “Substantial Completion” means that the 11120 Tenant Improvements are substantially complete in accordance with the 11120 Tenant Improvement Plans, except for minor punch list items. Notwithstanding anything in the Lease to the contrary, Landlord’s obligation to timely achieve Substantial Completion shall be subject to extension on a day-for-day basis as a result of Force Majeure (as described in Section 24.13 of the Lease). Landlord hereby represents and warrants that, as of the 11120 Premises Commencement Date, the 11120 Premises shall be in compliance with all Applicable Laws.

 

2.8.1       In the event that Landlord permits (in Landlord’s reasonable discretion during the twenty-one (21) day period immediately prior to the 11120 Premises Commencement Date) Tenant to enter upon the 11120 Premises prior to the 11120 Premises Commencement Date for the purpose of installing improvements or the placement of personal property, Tenant shall furnish to Landlord evidence satisfactory to Landlord that insurance coverages required of Tenant under the Lease are in effect with respect to the 11120 Premises, and such entry shall be subject to all the terms and conditions of the Lease; and provided, further, that if the 11120 Premises Commencement Date is delayed due to such early access, then the 11120 Premises Commencement Date shall be the date that the 11120 Premises Commencement Date would have occurred but for such delay.

 

2.8.2       Subject to all of the terms, conditions, provisions and agreements set forth in the Lease, Landlord shall cause the 11120 Tenant Improvements to be constructed in the 11120 Premises in accordance with the 11120 Tenant Improvement Plans at Landlord’s sole cost and expense. All costs incurred by Landlord in connection with the 11120 Tenant Improvements including, without limitation, costs of (a) construction, (b) [intentionally omitted], (c) space planning, architect, engineering and other related services, (d) building permits and other taxes, fees, charges and levies by governmental authorities for permits or for inspections of the 11120 Tenant Improvements, and (e) costs and expenses for labor, material, attached equipment and attached fixtures shall be referred to in this Amendment as the “11120 Tenant Improvement Costs.” In the event that Tenant fails to comply with any of its obligations under the Lease and such failure causes Landlord to incur additional 11120 Tenant Improvement Costs, Tenant shall pay to Landlord as Additional Rent the amount of any such additional costs within thirty (30) days of receiving an invoice from Landlord.

 

2.8.3       Notwithstanding anything to the contrary, if Substantial Completion has not occurred by the date that is sixty (60) days after the Estimated 11120 Premises Commencement Date (such date, the “Outside Date”), then the 11120 Premises Minimum Monthly Rent Abatement Period shall be increased by one (1) day for each day

 

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thereafter that Substantial Completion has not occurred; provided, however, that the Outside Date shall be subject to extension on a day-for-day basis as a result of (a) Force Majeure (as described in Section 24.13 of the Lease) and (b) any actual delay caused by any action or inaction of Tenant (including, without limitation, any actual delay caused by a Tenant Change or a Tenant Change Request). By way of example (and without limiting the generality of the foregoing), if Substantial Completion occurs on the date that is five (5) days after the Outside Date, then the 11120 Premises Minimum Monthly Rent Abatement Period shall be increased by five (5) days such that it would consist of (x) the first (1st), second (2nd) and third (3rd) months of the 11120 Premises Lease Term, plus (y) the first five (5) days of the fourth (4th) month of the 11120 Premises Lease Term.

 

2.9          Tenant Changes. Any changes to the 11120 Tenant Improvement Plans requested by Tenant (each, a “Tenant Change”) shall be requested and instituted in accordance with the provisions of this Section 2.9 and shall be subject to the written approval of Landlord.

 

2.9.l        Tenant may request Tenant Changes by notifying Landlord in writing in substantially the same form as the AIA standard change order form (a “Tenant Change Request”), which Tenant Change Request shall detail the nature and extent of any requested Tenant Changes.

 

2.9.2       All Tenant Change Requests shall be subject to Landlord’s prior written approval, which approval Landlord shall not unreasonably withhold (provided, however, that, in the event any Tenant Change would, in Landlord’s sole but reasonable judgment, (a) delay the Substantial Completion of the Tenant Improvements, (b) increase the 11120 Tenant Improvement Costs, (c) affect the structure of the 11120 Premises or the 11120 Building, (d) affect the mechanical, electrical, plumbing or other systems within or serving 11120 Building, (t) affect the prior of the 11120 Building or (t) trigger any requirement under Applicable Laws that would require Landlord to make any alteration or improvement to the 11120 Premises, the 11120 Building or the Project, Landlord may withhold its approval with respect thereto in its sole and absolute discretion). Landlord shall have five (5) days after receipt of a Tenant Change Request to notify Tenant in writing of Landlord’s approval or rejection of the Tenant Change. Landlord’s failure to respond within such five (5) day period shall be deemed approval by Landlord. In the event that Landlord approves a Change Request in accordance with this Section, Landlord shall, concurrently with such approval, notify Tenant if Landlord reasonably believes the corresponding Change will result in a delay in Substantial Completion.

 

2.9.3       Notwithstanding anything to the contrary in the Lease, Tenant shall be solely responsible for all costs and expenses actually incurred by Landlord related to any Tenant Changes. Tenant shall, within thirty (30) days of receiving an invoice therefore, pay to Landlord the amount of any such costs.

 

2.9.4       The Tenant Improvement Plans shall be automatically updated to include any Tenant Changes approved by Landlord in accordance with this Section 2.9.

 

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2.10        Landlord Changes. Landlord shall be permitted to make changes to the 11120 Tenant Improvement Plans (each, a “Landlord Change”) subject to the terms, conditions and provisions of this Section 2.10. Landlord shall be solely responsible for all costs and expenses related to any Landlord Changes (and Landlord shall not be permitted to include such costs in Tenant’s Share of Operating Costs).

 

2.10.1     Landlord may request Landlord Changes by notifying Tenant in writing in substantially the same form as the AIA standard change order form (a “Landlord Change Request”), which Landlord Change Request shall detail the nature and extent of any requested Landlord Changes.

 

2.10.2     Subject to Section 2.10.3 below, all Landlord Change Requests shall be subject to Tenant’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant shall have five (5) days after receipt of a Landlord Change Request to notify Landlord in writing of Tenant’s approval or rejection of the Landlord Change. Tenant’s failure to respond within such five (5) day period shall be deemed approval by Tenant.

 

2.10.3     Notwithstanding anything to the contrary in the Lease, Landlord shall be permitted to make Landlord Permitted Changes (as defined below) without obtaining Tenant’s consent. “Landlord Permitted Changes” shall mean (a) minor field changes and (b) changes required by Applicable Laws or by a governmental authority.

 

2.10.4     The 11120 Tenant Improvement Plans shall be automatically updated to include any Landlord Permitted Changes or other Landlord Changes approved by Tenant in accordance with this Section 2.10.

 

3.             Right of First Refusal. Tenant shall have a right of first refusal (“ROFR”) as to any rentable premises in the 11120 Building that is immediately adjacent to the 11120 Premises and for which Landlord is seeking a tenant (“Available ROFR Premises”). To the extent that Landlord renews or extends a then-existing lease with any then-existing tenant or subtenant of any space, or enters into a new lease with such then-existing tenant or subtenant (for the same space), the affected space shall not be deemed to be Available ROFR Premises. In the event Landlord intends to lease Available ROFR Premises to a bona fide third party, Landlord shall provide written notice thereof to Tenant (the “Notice of Offer”), specifying the agreed upon economic terms and conditions of the proposed lease (with respect to the Available ROFR Premises) with such bona fide third party.

 

3.1          Within seven (7) days following its receipt of a Notice of Offer, Tenant shall advise Landlord in writing whether Tenant elects to lease all (not just a portion) of the Available ROFR Premises on the terms and conditions set forth in the Notice of Offer. If Tenant fails to notify Landlord of Tenant’s election within such seven (7) day period, then Tenant shall be deemed to have elected not to lease the Available ROFF Premises.

 

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3.2          If Tenant timely notifies Landlord that Tenant elects to lease the Available ROFR Premises on the terms and conditions set forth in the Notice of Offer, then Landlord shall lease the Available ROFR Premises to Tenant upon the terms and conditions set forth in the Notice of Offer.

 

3.3          If Tenant notifies Landlord that Tenant elects not to lease the Available ROFR Premises on the terms and conditions set forth in the Notice of Offer, or if Tenant fails to notify Landlord of Tenant’s election within the seven (7)-day period described above, then Landlord shall have the right to consummate the lease of the Available ROFR Premises on the same terms as set forth in the Notice of Offer following Tenant’s election (or deemed election) not to lease the Available ROFR Premises.

 

3.4          Notwithstanding anything in this Article to the contrary, Tenant shall not exercise the ROFR during such period of time that Tenant is in default under any provision of the Lease. Any attempted exercise of the ROFR during a period of time in which Tenant is so in default shall be void and of no effect. In addition, Tenant shall not be entitled to exercise the ROFR if Landlord has given Tenant two (2) or more notices of default under the Lease, whether or not the defaults are cured, during the twelve (12) month period prior to the date on which Tenant seeks to exercise the ROFR.

 

3.5          Notwithstanding anything in the Lease to the contrary, Tenant shall not assign or transfer the ROFR, either separately or in conjunction with an assignment or transfer of Tenant’s interest in the Lease, without Landlord’s prior written consent, which consent Landlord may withhold in its sole and absolute discretion.

 

3.6          If Tenant exercises the ROFR, Landlord does not guarantee that the Available ROFR Premises will be available on the anticipated commencement date for the Lease as to such Available ROFR Premises due to a holdover by the then-existing occupants of the Available ROFR Premises or for any other reason beyond Landlord’s reasonable control.

 

3.7          Notwithstanding anything to the contrary, Tenant’s rights under this Article 3 are subject and subordinate to any rights of renewal, extension, offer, refusal or any other rights of any other tenant at the Center as of the Execution Date.

 

3.8          Article 26 of the Existing Lease is hereby deleted in its entirety and is no longer of any further force or effect.

 

4.             Option to Extend Lease Term. Tenant shall have the option (“Option”) to extend the Lease Term by five (5) years (as to either the 11120 Premises or the Existing Premises or both) upon the following terms and conditions. Any extension of the Term pursuant to the Option shall be on all the same terms and conditions as the Lease, except as follows:

 

4.1          Minimum Monthly Rent at the commencement of the Option term shall equal the then-current fair market value for comparable office and laboratory space in the Scrrento Valley submarket of comparable age, quality, level of finish and proximity to amenities and public transit (“FMV”), and shall be further increased on each annual anniversary of the Option term commencement date by three percent (3%). Tenant may, no more than twelve (12)

 

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months prior to the date the Lease Term is then scheduled to expire, request Landlord’s estimate of the FMV for the Option term. Landlord shall, within fifteen (15) days after receipt of such request, give Tenant a written proposal of such FMV. If Tenant gives written notice to exercise the Option, such notice shall specify whether Tenant accepts Landlord’s proposed estimate of FMV. If Tenant does not accept the FMV, then the parties shall endeavor to agree upon the FMV, taking into account all relevant factors, including (a) the size of the Premises (or portion thereof that is being extended, as applicable), (b) the length of the Option term, (c) rent in comparable buildings in the relevant submarket, including concessions offered to new tenants, such as free rent, tenant improvement allowances and moving allowances, (d) Tenant’s creditworthiness and (e) the quality and location of the Project. In the event that the parties are unable to agree upon the FMV within thirty (30) days after Tenant notifies Landlord that Tenant is exercising the Option, then either party may request that the same be determined as follows: a senior officer of a nationally recognized leasing brokerage firm with local knowledge of the Sorrento Valley laboratory/research and development leasing submarket (the “Baseball Arbitrator”) shall be selected and paid for jointly by Landlord and Tenant. If Landlord and Tenant are unable to agree upon the Baseball Arbitrator, then the same shall be designated by the local chapter of the American Arbitration Association or any successor organization thereto (the “AAA”). The Baseball Arbitrator selected by the parties or designated by the AAA shall (y) have at least ten (10) years’ experience in the leasing of laboratory/research and development space in the Sorrento Valley submarket and (z) not have been employed or retained by either Landlord or Tenant or any affiliate of either for a period of at least ten (10) years prior to appointment pursuant hereto. Each of Landlord and Tenant shall submit to the Baseball Arbitrator and to the other party its determination of the FMV. The Baseball Arbitrator shall grant to Landlord and Tenant a hearing and the right to submit evidence. The Baseball Arbitrator shall determine which of the two (2) FMV determinations more closely represents the actual FMV. The arbitrator may not select any other FMV other than one submitted by Landlord or Tenant. The FMV selected by the Baseball Arbitration shall be binding upon Landlord and Tenant and shall serve as the basis for determination of Minimum Monthly Rent payable for the Option term. If, as of the commencement date of the Option term, the amount of Minimum Monthly Rent payable during the Option term shall not have been determined, then, pending such determination. Tenant shall pay Minimum Monthly Rent equal to the Minimum Monthly Rent payable with respect to the last year of the then-current Lease Term. After the final determination of Minimum Monthly Rent payable for the Option term, the parties shall promptly execute a written amendment to the Lease specifying the amount of Minimum Monthly Rent to be paid during the Option term. Any failure of the parties to execute such amendment shall not affect the validity of the FMV determined pursuant to this Section.

 

4.2                               The Option is not assignable separate and apart from the Lease.

 

4.3                               The Option is conditional upon Tenant giving Landlord written notice of its election to exercise the Option at least nine (9) months prior to the end of the expiration of the then-current Lease Term. Time shall be of the essence as to Tenant’s exercise of the Option. Tenant assumes full responsibility for maintaining a record of the deadlines to exercise the Option. Tenant acknowledges that it would be inequitable to require Landlord to accept any exercise of the Option after the date provided for in this Section.

 

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4.4                               Notwithstanding anything contained in this Article to the contrary, Tenant shall not have the right to exercise the Option:

 

4.4.l                         During the time commencing from the date Landlord delivers to Tenant a written notice that Tenant is in default under any provisions of the Lease and continuing until Tenant has cured the specified default to Landlord’s reasonable satisfaction; or

 

4.4.2                     At any time after any Event of Default as described in Article 21 of the Existing Lease (provided, however, that, for purposes of this Section 4.4.2, Landlord shall not be required to provide Tenant with notice of such Event of Default) and continuing until Tenant cures any such Event of Default, if such Event of Default is susceptible to being cured; or

 

4.4.3                     In the event that Tenant has defaulted in the performance of its obligations under the Lease two (2) or more times and a service or late charge has become payable under Section 22.4 of the Existing lease for each of such defaults during the twelve (12)-month period immediately prior to the date that Tenant intends to exercise the Option, whether or not Tenant has cured such defaults.

 

4.5                               The period of time within which Tenant may exercise the Option shall not be extended or enlarged by reason of Tenant’s inability to exercise such Option because of the provisions of Section 4.4 above.

 

4.6                               All of Tenant’s rights under the provisions of the Option shall terminate and be of no further force or effect even after Tenant’s due and timely exercise of the Option if, after such exercise, but prior to the commencement date of the new term, (a) Tenant fails to pay to Landlord a monetary obligation of Tenant for a period of twenty (20) days after written notice from Landlord to Tenant, (b) Tenant fails to commence to cure a default (other than a monetary default) within thirty (30) days after the date Landlord gives notice to Tenant of such default or (c) Tenant has defaulted under the Lease two (2) or more times and a service or late charge under Section 22.4 of the Existing Lease has become payable for any such default, whether or not Tenant has cured such defaults.

 

4.7                               Article 27 of the Existing Lease is hereby deleted in its entirety and is no longer of any further force or effect.

 

5.                                      11120 Building Roof Replacement.  In the event that Landlord replaces the roof on the 11120 Building during the initial 11120 Premises Lease Term, the costs of such replacement shall be excluded from Tenant’s Share of Operating Costs during the initial 11120 Premises Lease Term.

 

6.                                      Operating Costs.  Notwithstanding anything to the contrary in the Lease, in the event that (a) any portion of the Common Area of the Center is not in compliance with Applicable Laws as of the Execution Date, and (b) Landlord makes a capital expenditure (after the Execution Date) to remedy such non-compliance, the costs of such capital expenditure shall not be includable in Tenant’s Share of Operating Costs.

 

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7.                                      Security Deposit.  On or before the Execution Date, Tenant shall deposit with Landlord an amount equal to Ten Thousand Four Hundred Fifty-Two and 20/100 Dollars ($10,452.20) as an increase to the required Security Deposit under the Lease (“Increased Security Deposit Amount”).  From and after the Execution Date, the required Security Deposit under the Lease shall be increased by the Increased Security Deposit Amount.

 

8.                                      Broker.  Tenant represents and warrants that it has not dealt with any broker or agent in the negotiation for or the obtaining of this Amendment, other than Hughes Marino (“Broker”), and agrees to reimburse, indemnify, save, defend (at Landlord’s option and with counsel reasonably acceptable to Landlord, at Tenant’s sole cost and expense) and hold harmless the Landlord Related Entities for, from and against any and all cost or liability for compensation claimed by any such broker or agent, other than Broker, employed or engaged by it or claiming to have been employed or engaged by it. Broker is entitled to a leasing commission in connection with the making of this Amendment, and Landlord shall pay such commission to Broker pursuant to a separate agreement between Landlord and Broker.

 

9.                                      No Default.  Landlord and Tenant represent, warrant and covenant that, to the best of their knowledge, Landlord and Tenant are not in default of any of their respective obligations under the Lease and no event has occurred that, with the passage of time or the giving of notice (or both) would constitute a default by either Landlord or Tenant thereunder.

 

l0.                                   Notices.  Tenant confirms that, notwithstanding anything in the Lease to the contrary, notices delivered to Tenant pursuant to the Lease should be sent to:

 

Trovagene, Inc.

11055 Flintkote Avenue, Suite B
 San Diego, California 92121
 Attn: Keith McCormick

 

11.                               Effect of Amendment.  Except as modified by this Amendment, the Existing Lease and all the covenants, agreements, terms, provisions and conditions thereof shall remain in full force and effect and are hereby raiified and affinneJ. in the event of any conflict between the terms contained in this Amendment and the Existing Lease, the terms herein contained shall supersede and control the obligations and liabilities of the parties. From and after the date hereof, the term “Lease” as used in the Lease shall mean the Existing Lease, as modified by this Amendment.

 

12.                               Successors and Assigns.  Each of the covenants, conditions and agreements contained in this Amendment shall inure to the benefit of and shall apply to and be binding upon the parties hereto and their respective heirs, legatees, devisees, executors, administrators and permitted successors and assigns and sublessees.  Nothing in this section shall in any way alter the provisions of the Lease restricting assignment or subletting.

 

13.                               Miscellaneous.  This Amendment becomes effective only upon execution and delivery hereof by Landlord and Tenant. The captions of the paragraphs and subparagraphs in this Amendment are inserted and included solely for convenience and shall not be considered or

 

11

 

given any effect in construing the provisions hereof. All exhibits hereto are incorporated herein by reference. Submission of this instrument for examination or signature by Tenant does not constitute a reservation of or option for a lease, and shall not be effective as a lease, lease amendment or otherwise until execution by and delivery to both Landlord and Tenant.

 

14.                               Authority.  Tenant guarantees, warrants and represents that the individual or individuals signing this Amendment have the power, authority and legal capacity to sign this Amendment on behalf of and to bind all entities, corporations, partnerships, limited liability companies, joint venturers or other organizations and entities on whose behalf such individual or individuals have signed.

 

15.                               Counterparts: Facsimile and PDF Signatures.  This Amendment may be executed in one or more counterparts, each of which, when taken together, shall constitute one and the same document. A facsimile or portable document format (PDF) signature on this Amendment shall be equivalent to, and have the same force and effect as, an original signature.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

12

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of the date and year first above written.

 

	
LANDLORD:
    	
 
    
	
 
    	
 
    
	
BMR-COAST 9 LP,
    	
 
    
	
a Delaware limited   partnership
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Kevin M. Simonsen
    	
 
    
	
Name:
    	
Kevin M. Simonsen
    	
 
    
	
Title:
    	
VP Real Estate Legal
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
TENANT:
    	
 
    
	
 
    	
 
    
	
TROVAGENE, INC.,
    	
 
    
	
a Delaware corporation
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Stephen Zaniboni
    	
 
    
	
Name:
    	
Stephen Zaniboni
    	
 
    
	
Title:
    	
CFO
    	
 
    

 

 

EXHIBIT A

 

11120 PREMISES

 

 

 

 

EXHIBIT B

 

11120 TENANT IMPROVEMENT PLANS

 

 

 

 

EXHIBIT C

 

ACKNOWLEDGEMENT OF 11120 PREMISES COMMENCEMENT DATE

 

THIS ACKNOWLEDGEMENT OF 11120 PREMISES COMMENCEMENT DATE is entered into as of [           ], 20[   ], with reference to that certain Fifth Amendment to Standard Industrial Net Lease (the “Amendment”) dated as of [           ], 20[   ], by TROVAGENE, INC., a Delaware corporation (“Tenant”), in favor of BMR-COAST 9 LP, a Delaware limited partnership (“Landlord”). All capitalized terms used herein without definition shall have the meanings ascribed to them in the Amendment.

 

Tenant hereby confirms the following:

 

1.     Tenant accepted possession of the 11120 Premises for use in accordance with the Permitted Use (with respect to the 11120 Premises) on [           ], 20[   ]. Tenant first occupied the 11120 Premises for the Permitted Use (with respect to the 11120 Premises) on [           ], 20[   ].

 

2.     The 11120 Premises are in good order, condition and repair.

 

3.     The 11120 Tenant Improvements are Substantially Complete.

 

4.     All conditions of the Lease to be performed by Landlord as a condition to the full effectiveness of Tenant’s lease of the 11120 Premises have been satisfied, and Landlord has fulfilled all of its duties in the nature of inducements offered to Tenant to lease the 11120 Premises.

 

5.     In accordance with the provisions of the Amendment, the 1 l 120 Premises Commencement Date is [           ], 20[   ].

 

6.     The Lease is in full force and effect, and the same represents the entire agreement between Landlord and Tenant concerning the 11120 Premises.

 

7.     Tenant has no existing defenses against the enforcement of the Lease by Landlord, and there exist no offsets or credits against rent owed or to be owed by Tenant.

 

8.     The obligation to pay rent for the 11120 Premises is presently in effect and all rent obligations on the part of Tenant under the Lease with respect to the 11120 Premises commenced to accrue on [           ], 20[   ], with Minimum Monthly Rent for the 11120 Premises payable on the dates and amounts set forth in the chart below:

 

	
Dates
    	
 
    	
Rentable Square
   Footage
    	
 
    	
Minimum Monthly Rent
   Rate Per Square Foot of
   Rentable Area
    	
 
    	
Minimum Monthly
   Rent
    	
 
    
	
Month 1 -Month 12
    	
 
    	
4,751
    	
 
    	
$
    	
2.20
    	
 
    	
$
    	
10,452.20
    	
 
    
										

 

 

9.     The undersigned Tenant has not made any prior assignment, transfer, hypothecation or pledge of the Lease or of the rents thereunder or sublease of the 11120 Premises or any portion thereof.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, Tenant has executed this Acknowledgment of 11120 Premises Commencement Date as of the date first written above.

 

	
TENANT:
    	
 
    
	
 
    	
 
    
	
TROVAGENE, INC..,
    	
 
    
	
a Delaware corporation
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:Exhibit 10.1

CHANGE IN CONTROL SEVERANCE AGREEMENT

 

THIS CHANGE IN CONTROL
SEVERANCE AGREEMENT (“Agreement”) entered into this 1st day of July, 2011 (“Effective Date”), by and
between Wells Federal Bank, FSB (the “Bank”) and James D. Moll (the “Employee”).

 

WHEREAS, the Employee is
currently employed by the Bank as Executive Vice President and Chief Financial Officer; and

 

WHEREAS, the parties desire
by this writing to set forth the rights and responsibilities of the Bank and Employee if the Bank should undergo a change in control
(as defined hereinafter in the Agreement) after the Effective Date.

 

NOW, THEREFORE, it is AGREED as follows:

 

1.          Employment.
The Employee is employed in the capacity as Executive Vice President and Chief Financial Officer of the Bank. The Employee shall
render such administrative and management services to the Bank, its subsidiaries, and any parent bank holding company ("Parent")
as are currently rendered and as are customarily performed by persons situated in a similar executive capacity. The Employee's
other duties shall be such as the Board of Directors for the Bank (the “Board of Directors” or “Board”)
may from time to time reasonably direct, including normal duties as an officer of the Bank and the Parent.

 

2.          Term
of Agreement. The term of this Agreement shall be for the period commencing on the Effective Date and ending thirty-six (36)
months thereafter. Additionally, on, or about, each annual anniversary date from the Effective Date, the term of this Agreement
may be extended for an additional one year period beyond the then effective expiration date upon a determination and resolution
of the Board of Directors that the performance of the Employee has met the requirements and standards of the Board, and that the
term of such Agreement shall be extended.

 

3.          Termination
of Employment in Connection with or Subsequent to a Change in Control.

 

(a)      Notwithstanding
any provision herein to the contrary, in the event of the involuntary Termination of Employment under this Agreement, absent Just
Cause, in connection with, or within twelve (12) months after, any Change in Control of the Bank or Parent, Employee shall be paid
an amount equal to 1.50 times the average of the annualized base salary for the 5 most recent calendar years completed. If the
employee has not completed five (5) years of employment, employee shall be paid 1.50 times the average of the annualized base salary
for the most recent calendar years completed.

 

    	 

    	 

    

 

Said sum, shall be paid
in one (1) lump sum on such date of Termination of Employment, and such payment shall be in lieu of any other future payments which
the Employee would be otherwise entitled to receive. Notwithstanding the forgoing, all sums payable hereunder shall be reduced
in such manner and to such extent so that no such payments made hereunder when aggregated with all other payments to be made to
the Employee by the Bank or the Parent shall be deemed an “excess parachute payment” in accordance with Section 280G
of the Internal Revenue Codes of 1986, as amended (the “Code") and be subject to the excise tax provided at Section
4999(a) of the Code.

 

"Change in Control"
shall mean: (i) a change in ownership of the Bank or the Parent under paragraph (a) below, or (ii) a change in effective control
of the Bank or the Parent under paragraph (b) below, or (iii) a change in the ownership of a substantial portion of the assets
of the Bank or the Parent under paragraph (c) below:

 

(a) CHANGE IN THE OWNERSHIP
OF THE BANK OR THE PARENT. A change in the ownership of the Bank or the Parent shall occur on the date that any one person, or
more than one person acting as a group (as defined in paragraph (b)), acquires ownership of stock of the corporation that, together
with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power
of the stock of such corporation. However, if any one person or more than one person acting as a group, is considered to own more
than 50 percent of the total fair market value or total voting power of the stock of a corporation, the acquisition of additional
stock by the same person or persons is not considered to cause a change in the ownership of the corporation (or to cause a change
in the effective control of the corporation (within the meaning of paragraph (b) below). An increase in the percentage of stock
owned by any one person, or persons acting as a group, as a result of a transaction in which the corporation acquires its stock
in exchange for property will be treated as an acquisition of stock for purposes of this section. This paragraph (a) applies only
when there is a transfer of stock of a corporation (or issuance of stock of a corporation) and stock in such corporation remains
outstanding after the transaction.

 

(b) CHANGE IN THE EFFECTIVE
CONTROL OF THE BANK OR THE PARENT. A change in the effective control of the Bank or the Parent shall occur on the date that either
(i) any one person, or more than one person acting as a group (as determined below), acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing
30 percent or more of the total voting power of the stock of such corporation; or (ii) a majority of members of the corporation's
board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority
of the members of the corporation's board of directors prior to the date of the appointment or election, provided that for purposes
of this paragraph (b)(ii), the term corporation refers solely to a corporation for which no other corporation is a majority shareholder.
In the absence of an event described in paragraph (i) or (ii), a change in the effective control of a corporation will not have
occurred. If any one person, or more than one person acting as a group, is considered to effectively control a corporation (within
the meaning of this paragraph (b)), the acquisition of additional control of the corporation by the same person or persons is not
considered to cause a change in the effective control of the corporation (or to cause a change in the ownership of the corporation
within the meaning of paragraph (a)). Persons will not be considered to be acting as a group

 

    	2

    	 

    

 

solely because they purchase
or own stock of the same corporation at the same time, or as a result of the same public offering.

 

(c) CHANGE IN THE OWNERSHIP
OF A SUBSTANTIAL PORTION OF THE BANK'S OR THE PARENT’S ASSETS. A change in the ownership of a substantial portion of the
Bank's or the Parent’s assets shall occur on the date that any one person, or more than one person acting as a group (as
determined below), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such
person or persons) assets from the corporation that have a total gross fair market value equal to or more than 40% of the total
gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this
purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of,
determined without regard to any liabilities associated with such assets. There is no Change in Control event under this paragraph
(c) when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after
the transfer.

 

(d) Each of the sub-paragraphs
(a) through (c) above shall be construed and interpreted consistent with the requirements of Section 409A of the Code and any Treasury
regulations or other guidance issued thereunder.

 

(b)          Notwithstanding
any other provision of this Agreement to the contrary except as provided at Sections 4(b), 4(c), 4(d), 4(e) and 5, Employee may
voluntarily terminate his employment under this Agreement within twelve (12) months following a Change in Control of the Bank or
Parent for Good Reason (as defined thereafter) and Employee shall thereupon be entitled to receive the payment and benefits described
in Section 3(a) of this Agreement. The Employee must provide written notice to the Bank of the existence of the event or condition
constituting such Good Reason within ninety (90) days of the initial occurrence of the event or the condition alleged to constitute
“Good Reason.” Upon delivery of such notice by the Employee, the Bank shall have a period of thirty (30) days thereafter
during which it or they may remedy in good faith the condition constituting such Good Reason, and the Employee's employment shall
continue in effect during such time so long as the Bank makes diligent efforts during such time to cure such Good Reason. In the
event that the Bank shall remedy in good faith the event or condition constituting Good Reason, then such notice of termination
shall be null and void, and the Bank shall not be required to pay the amount due to the Employee under this Section 3(b). The Bank’s
remedy of any Good Reason event or condition with or without notice from the Employee shall not relieve the Bank from any obligations
to the Employee under this Agreement or otherwise and shall not affect the Employee's rights upon the reoccurrence of the same,
or the occurrence of any other, Good Reason event or condition.

 

“Good Reason”
shall exist if, without Employee’s express written consent, the Bank materially breaches any of their respective obligations
under this Agreement. Without limitation, such a material breach shall be deemed to occur upon the occurrence any of the following:

 

(1)         a
material diminution in the Employee's base compensation;

 

(2)         a
material diminution in the Employee’s authority, duties, or responsibilities;

 

    	3

    	 

    

 

(3)         a
material diminution in the budget over which the Employee retains authority;

 

(4)         a
material change in the geographic location of the Employee’s office location; or

 

(5)         any
other action or inaction that constitutes a material breach by the Bank of this Agreement.

 

4.            Other
Changes in Employment Status.

 

(a)          Except
as provided for at Section 3, herein, the Board of Directors may terminate the Employee's employment at any time. If such Termination
of Employment takes place prior to and not in anticipation of a Change in Control, as defined in this Agreement, the Employee shall
receive severance pay in accordance with the Bank’s existing severance policy, if any, that is applicable to all employees;
provided in no event shall severance be paid following Termination of Employment for Just Cause.

 

In the event of the Employee’s
Termination of Employment for reasons other than Just Cause prior to and not in anticipation of a Change in Control, and within
90 days after such date of Termination of Employment the Bank or the Parent enters into an agreement for a Change in Control, the
Employee shall be entitled to compensation in accordance with Section 3(a) under the terms of this Agreement, less any severance
pay, if any, previously received. The Employee shall have no right to receive compensation or other benefits for any period after
termination for Just Cause. Termination for “Just Cause” shall include termination because of the Employee's dishonesty,
incompetence, willful misconduct, breach of fiduciary duty regarding personal profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease and desist
order, or material breach of any provision of the Agreement.

 

(b)          If
the Employee is removed and/or permanently prohibited from participating in the conduct of the Bank affairs by an order issued
under Sections 8 (e) (4) or 8 (g) (1) of the Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. 1818 (e) (4) and (g)
(1) ), all obligations of the Bank under this Agreement shall terminate, as of the effective date of the order, but the vested
rights of the parties shall not be affected.

 

(c)          If
the Bank is in default (as defined in Section 3 (x) (1) of FDIA) all obligations under this Agreement shall terminate as of the
date of default, but this paragraph shall not affect any vested rights of the contracting parties.

 

(d)          All
obligations under this Agreement shall be terminated, except to the extent determined that continuation of this Agreement is necessary
for the continued operation of the Bank: (i) by the Director of the Office of Thrift Supervision (“Director of OTS”),
or his or her designee, at the time that the Federal Deposit Insurance Corporation (“FDIC”) enters into an agreement
to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of FDIA; or (ii) by the Director
of the OTS, or his or her designee, at the time that the Director of the OTS, or his or her designee approves a supervisory merger
to resolve problems related to operation of the Bank or when the Bank is determined by the Director of the

 

    	4

    	 

    

 

OTS to be in an unsafe or unsound condition.
Any rights of the parties that have already vested, however, shall not be affected by such action.

 

(e)          Notwithstanding
anything herein to the contrary, any payments made to the Employee pursuant to the Agreement, or otherwise, shall be subject to
and conditioned upon compliance with 12 USC §1828(k) and any regulations promulgated thereunder.

 

5.           Suspension
of Employment. If the Employee is suspended and/or temporarily prohibited from participating in the conduct of the Bank’s
affairs by a notice served under Section 8 (e) (3) or (g) (1) of the FDIA (12 U.S.C. 1818 (e) (3) and (g) (1) ), the Bank's obligations
under the Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the
notice are dismissed, the Bank on shall, (i) pay the Employee all or part of the compensation withheld while its contract obligations
were suspended and (ii) reinstate any of its obligations which were suspended.

 

6.           Successors
and Assigns.

 

(a)          This
Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Bank which shall acquire, directly
or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Bank.

 

(b)          The
Employee shall be precluded from assigning or delegating his rights or duties hereunder without first obtaining the written consent
of the Bank.

 

7.          Amendments.
No amendments or additions to this Agreement shall be binding upon the parties hereto unless made in writing and signed by both
parties, except as herein otherwise specifically provided.

 

8.          Applicable
Law. This agreement shall be governed by all respects whether as to validity, construction, capacity, performance or otherwise,
by the laws of the State of Minnesota, except to the extent that Federal law shall be deemed to apply.

 

9.          Severability.
The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect
the validity or enforceability of the other provisions hereof.

 

10.         Arbitration.
Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the rules then in effect of the district office of the American Arbitration Association (“AAA”) nearest
to the home office of the Bank, and judgment upon the award rendered may be entered in any court having jurisdiction thereof, except
to the extent that the parties may otherwise reach a mutual settlement of such issue. The Bank shall incur the cost of all fees
and expenses associated with filing a request for arbitration with the AAA, whether such filing is made on behalf of the Bank or
the Employee, and the costs and administrative fees associated with employing the arbitrator and related administrative expenses
assessed by the AAA. The Bank shall reimburse Employee for all costs and expenses, including reasonable attorneys' fees, arising
from such dispute, proceedings or actions, following the delivery of the decision of the arbitrator finding in favor of the Employee
or settlement of the matter. Such settlement to be approved by the Board of the

 

    	5

    	 

    

 

Bank or the Parent may include a provision
for the reimbursement by the Bank or Parent to the Employee for all costs and expenses, including reasonable attorneys' fees, arising
from such dispute, proceedings or actions, or the Board of the Bank or the Parent may authorize such reimbursement of such costs
and expenses by separate action upon a written action and determination of the Board. Such reimbursement shall be paid within ten
(10) days of Employee furnishing to the Bank or Parent evidence, which may be in the form, among other things, of a canceled check
or receipt, of any costs or expenses incurred by Employee.

 

11.         Entire
Agreement. This Agreement together with any understanding or modifications thereof as agreed to in writing by the parties,
shall constitute the entire agreement between the parties hereto.

 

12.         This
Agreement shall terminate and rescind any prior Change in Control Severance Agreement previously entered into by the parties hereto.

 

13.         Effect
of Code Section 409A.

 

(a)          This
Agreement shall be amended to the extent necessary to comply with Section 409A of the Code and regulations promulgated thereunder.
Prior to such amendment, and notwithstanding anything contained herein to the contrary, this Agreement shall be construed in a
manner consistent with Section 409A of the Code and the parties shall take such actions as are required to comply in good faith
with the provisions of Section 409A of the Code such that payments shall not be made to the Employee at such time if such payments
shall subject the Employee to the penalty tax under Code Section 409A, but rather such payments shall be made by the Bank to the
Employee at the earliest time permissible thereafter without the Employee having liability for such penalty tax under Section Code
409A.

 

(b)          Notwithstanding
anything in this Agreement to the contrary, if the Bank in good faith determines, as of the effective date of Employee’s
Termination of Employment that the Employee is a “specified employee” within the meaning of Section 409A of the Code
and if the payment under Sections 3 or 4(a) do not qualify as a short-term deferral under Code Section 409A and Treas. Reg. §1.409A-1(b)(4)
(or any similar or successor provisions), and that an amount (or any portion of an amount) payable to Employee hereunder, is required
to be suspended or delayed for six months (“Six-Month Delay”)in order to satisfy the requirements of Section 409A of
the Code, then the Bank will so advise Employee, and any such payment (or the minimum amount thereof) shall be suspended and accrued
for six months, whereupon such amount or portion thereof shall be paid to Employee in a lump sum (together with interest thereon
at the then-prevailing prime rate) on the first day of the seventh month following the effective date of Employee’s Termination
of Employment. The limitations of this Six-Month Delay shall only be effective if the stock of the Bank or the Parent is publicly
traded as set forth at Section 409A(a)(2)(B)(i) of the Code.

 

"Specified Employee"
means, for an applicable twelve (12) month period beginning on April 1, a key employee (as described in Code Section 416(i), determined
without regard to paragraph (5) thereof) during the calendar year ending on the December 31 immediately preceding such April 1.

 

    	6

    	 

    

 

“Termination of Employment"
shall have the same meaning as "separation from service", as that phrase is defined in Code Section 409A (taking into
account all rules and presumptions provided for in the Code Section 409A regulations).

 

(c)          Notwithstanding
the Six-Month Delay rule, if applicable, as set forth in Section 13(b) above:

 

(i)          To
the maximum extent permitted under Code Section 409A and Treas. Reg. §1.409A-1(b)(9)(iii) (or any similar or successor provisions),
the Bank will pay the Employee an amount equal to the lesser of two times (1) the maximum amount that may be taken into account
under a qualified plan pursuant to Code Section 401(a)(17) for the year in which the Employee’s Termination of Employment
occurs, and (2) the sum of the Employee’s annualized compensation based upon the annual rate of pay for services provided
to the Bank for the taxable year of the Employee preceding the taxable year of the Employee in which his Termination of Employment
occurs (adjusted for any increase during that year that was expected to continue indefinitely if the Employee had not had a Termination
of Employment); provided that amounts paid under this Section 13(c) must be paid no later than the last day of the second taxable
year of the Employee following the taxable year of the Employee in which occurs the Termination of Employment and such amounts
paid will count toward, and will not be in addition to, the total payment amount required to be made to the Employee by the Bank
under Sections 3 or 4(a); and

 

(ii)         To
the maximum extent permitted under Code Section 409A and Treas. Reg. §1.409A-1(b)(9)(v)(D) (or any similar or successor provisions),
within ten (10) days of the Termination of Employment, the Bank will pay the Employee an amount equal to the applicable dollar
amount under Code Section 402(g)(1)(B) for the year of the Employee’s Termination of Employment; provided that the amount
paid under this Section 13(c) will count toward, and will not be in addition to, the total payment amount required to be made to
the Employee by the Bank under Sections 3 or 4(a).

 

(d)          To
the extent that any reimbursements or in-kind payments are subject to Code Section 409A, then such expenses (other than medical
expenses) must be incurred before the last day of the second taxable year following the taxable year in which the termination occurred,
provided that any reimbursement for such expenses be paid before the Employee’s third taxable year following the taxable
year in which the termination occurred. For medical expenses, to the extent the Agreement entitles the Employee to reimbursement
by the Bank of payments of medical expenses incurred and paid by the Employee but not reimbursed by a person other than the Bank
and allowable as a deduction under Code Section 213 (disregarding the requirement of Code Section 213(a) that the deduction is
available only to the extent that such expenses exceed 7.5 percent of adjusted gross income), then the reimbursement applies during
the period of time during which the Employee would be entitled (or would, but for the Agreement, be entitled) to continuation coverage
under a group health plan of the Bank under Code Section 4980B (COBRA) if the Employee elected such coverage and paid the applicable
premiums.

 

    	7

    	 

    

 

IN WITNESS WHEREOF,
the parties have executed this Agreement on the date first hereinabove written.

  

	 	 	Wells Federal Bank, FSB
	 	 	 	 
	ATTEST:	 	By:	/s/ Lonnie R.
    Trasamar
	 	 	 	Lonnie R. Trasamar, Chairman
	 	 	 	 
	/s/ Richard A. Mueller	 	 	 
	Richard
        A. Mueller, Secretary

        
	 	 	 
	 	 	 	 
	WITNESS:	 	 	 
	 	 	 	 
	/s/ Dianne Walk	 	/s/ James D.
    Moll
	 	 	James D. Moll, Employee
	 	 	Executive Vice President/CFO

 

    	8

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