LEASE AGREEEMENT

LEASE AGREEMENT



THIS LEASE AGREEMENT, is executed in duplicate as of this 1st day of September 1 1997, between HAYTER PROPERTIES, INC., a Utah corporation ("Landlord"), and IOMED, INC., a Utah corporation ("Tenant").



WITNESSETH:



In consideration of the mutual covenants and agreements of the parties hereinafter set forth, it is agreed as follows:



1. Leased Premises. Landlord has and does hereby lease to Tenant, the entire premises, including all appurtenances and improvements located at 3385-3395 West 1820 South, Salt Lake City, Utah, comprised of approximately 17,986.94 square feet of office, manufacturing, assembly and warehouse space, for the term and upon the rental, conditions and covenants as the parties herein set forth.



2. Term. The initial term of this lease shall be twenty-eight (28) months, commencing September 1, 1997, and ending at midnight, December 31, 1999. Tenant shall have the option to extend this lease for two (2) successive one-year options (option periods) upon giving Landlord six months prior written notice before each such exercise. All terms and conditions for the option periods shall be the same as the initial term, as provided herein, except that the rent for said option periods may be increased as set forth in paragraph 3 below.



3. Rent. Rent hereunder shall be payable as follows:



(a) Rent Over Initial Term: Tenant agrees to pay as rent to Landlord the sum of Two Hundred Twenty-four Thousand Dollars ($224,000.00) payable at the rate of Eight Thousand Dollars ($8,000.00) per month for the 28 months of the initial lease term;



(b) Base Rent Over Option Periods: Rent over each of the option periods granted hereunder shall continue at the rate of Ninety-Six Thousand Dollars ($96,000.00) per year, to which shall be added an amount equal to the total sum (if any) by which real property taxes, assessments and yearly premiums for insurance procured by Landlord under paragraph 16(a) of the Lease, and payable by Landlord during the twelve months immediately preceding the option period exceeds the total of such taxes, assessments and insurance paid by Landlord during calendar year 1997. In no event, however, shall any single annual increase during the option periods exceed Three Percent (3%) of the total rent payable over the twelve months immediately preceding the effective option period.)



(c) All rent shall be paid in legal tender of the United States, deposited to the account of Hayter Properties, Inc., at First Security Bank of Utah, account no. 051-017-9856, or at such other place or by such other method as Landlord may direct in writing. Each payment hereunder is due on the first day of each calendar month of the term herein. Any payment received after the 15th day of the month it is due shall bear and include interest at an annual rate of 18% (as provided in paragraph 30 below), calculated from the 1st day of said month.



4. Authorized Uses. Tenant shall use the leased premises to conduct business in medical and consumer product research, development and manufacturing, and for no other purposes without the written consent of Landlord first being had and obtained, which consent shall not be unreasonably withheld or delayed. All such use shall be subject to restrictions of applicable zoning ordinances and restrictions and all relevant codes, laws and statutes.



5. Prohibited Uses. Tenant will not keep, use or sell, or allow to be kept, used or sold in or about the leased premises, any article or material which is prohibited by law or which would render the fire insurance policies in force with respect to the premises void or voidable. Tenant will further strictly observe all environmental laws and regulations, together with all other laws and regulations governing the storage of toxic substances and will not dispose of such substances on or near the leased premises.



6. Repair and Care of Building.



(a) Tenant will not commit any waste of the demised premises, nor shall it use or permit the use of the premises in violation of any present or future law of the United States or of the State of Utah, or in violation of any municipal ordinance or regulation applicable thereto.



(b) Tenant agrees to keep and maintain the interior and exterior of the building and all the improvements on the premises and the grounds, including sprinklers, landscaping and asphalt surfacing, in good condition and repair, and, at its cost, to effect any necessary repairs to the electrical wiring, heating, ventilation, air conditioning and plumbing systems, and to clean and paint the interior and exterior of the leased premises as the same may or might be necessary in order to maintain said premises in a clean, attractive and sanitary condition. Tenant shall keep all driveways reasonably free from ice and snow and shall maintain all lawns and landscaping, except as hereinafter expressly set forth. Any alterations or improvements to the leased premises shall become the property of Landlord at the expiration or sooner termination of the lease, except as herein otherwise provided.



(c) Tenant agrees to repair all damage to the premises, including any damage to foundation, roof or structure, resulting from acts of the Tenant or Tenant's representatives. Except for Tenants maintenance obligations contained in paragraphs 6(b) and 6(c), Landlord agrees to maintain the structure and foundation of the building in good condition and repair. Tenant shall promptly notify Landlord of any repairs to structure or foundation arising from other than acts of Tenant or Tenant's representatives and which Tenant believes are necessary. Landlord, at its discretion, and from time to time as it receives notice of needed repairs within the scope of its obligation as Landlord, may request and authorize Tenant to obtain bids and to contract directly for any such necessary repairs and to credit the cost of such repairs against lease payments due hereunder. Absent such specific authorization, however, or unless otherwise agreed in writing, Tenant shall have no authority to undertake repairs for or on behalf of Landlord or to otherwise credit lease payments for the costs of any repairs.



(d) Landlord and Tenant acknowledge that the roof on the premises is approaching the end of its serviceable period and that Landlord has contracted to replace the roof prior to or shortly after the commencement of the initial lease term hereunder. Until such time as the roof is replaced, Landlord agrees to undertake responsibility for repair and maintenance thereof as outlined in subparagraph (e) above, and Tenant agrees to keep Landlord reasonably advised, in writing, of the condition of the roof and to allow representatives of Landlord reasonable access thereto, for purposes of inspection and repair, as necessary. Tenant assumes responsibility for all roof maintenance, consistent with the provisions of subparagraph (c) above, from and after the date of installation and final acceptance of a new roof.



7. Erection of Partitions, Fixtures and Other Appurtenances; Alterations and Construction.



(a) Tenant shall have the right to erect at Tenant's sole cost and expense such temporary partitions, including office partitions, and to alter existing partitions and to erect shelves, bins, fixtures, machinery, electrical fixtures, additional lights and wiring and other trade appliances, all as may be necessary to facilitate the handling of Tenants business. With the exception of open office modules, movable partitions, tools, machinery, specialized environmental control systems, deionized water systems, specialty production and plumbing fixtures and other specialty manufacturing fixtures, any such partitions or fixtures installed by Tenant shall remain with the leased premises and become the property of Landlord upon expiration of the lease. Damage caused by removal of tools and machinery shall be repaired by Tenant so as to return the premises to the condition and configuration existing before installation of said fixtures.



(b) Tenant, at its own cost or expense, may make such additional alterations in the budding as Tenant may reasonably require to conduct its business, subject to the following conditions: (i) no such improvements may materially alter the basic character of the building or existing improvements or weaken any structure of the premises; (ii) all such construction shall be done in a good and workmanlike manner and in accordance with plans and specifications having the prior written approval of Landlord, which consent shall not be unreasonably withheld; (iii) all such construction shall be done free of any liens for labor or materials; and (iv) Tenant shall indemnify, save and hold Landlord harmless from, and defend Landlord against, any loss, liability, damage or lien resulting from such construction.



8. Erection and Removal of Signs. Tenant shall have the nonexclusive right to place suitable signs on the leased premises in areas designated by Landlord for the purpose of identifying Tenant or otherwise indicating the nature of the business carried on by the Tenant in said premises; provided, however, that such signs and their locations shall be in keeping with other signs in the district where the leased premises are located, and shall be subject to the prior approval of Landlord, which shall not be unreasonably withheld. Damage to the leased premises caused by the removal of such signs shall be repaired by Tenant.



9. Glass. Tenant agrees to replace all glass broken or damaged during the term of its lease with glass of the same quality as that broken or damaged.



10. Right of Entry by Landlord. Tenant at any time during the term of this lease shall permit inspection of the demised premises during normal business hours by Landlord or Landlord's agents or representatives for the purpose of ascertaining the condition of the demised premises. One Hundred Eighty (180) days prior to the expiration of this lease, Landlord may post suitable notice on the demised premises that the same are "for sale" or are "for rent or lease" and may show the premises to prospective tenants or purchasers at reasonable times. Landlord shall not, however, thereby unnecessarily interfere with the use of the demised premises by Tenant.



11. Payment of Utilities. Tenant shall pay all charges for water, heat, gas, sewer, electricity, telephone and any and all other utilities used on the leased premises.



12. Payment of Taxes and Other Assessments. General real property taxes and assessments on the leased property shall be paid by Landlord, in consideration of the rent payable by Tenant hereunder. Tenant shall pay all other taxes, assessments, license fees and charges incidental to the conduct of Tenants business on the leased premises during the term of this lease, and any extensions thereof, including any taxes assessed on Tenants personal property situated on the premises, and shall preserve the leased premises free and clear of any liens or charges attributable thereto; provided, however, that Tenant may contest or dispute any such tax, or the amount thereof, upon providing sufficient surety for the payment thereof.



13. Assignment and Subletting. Neither this lease nor any interest herein may be assigned by Tenant voluntarily, involuntarily or by operation of law, without the prior written consent of Landlord, and neither all nor any part of the leased premises shall be sublet by Tenant without the prior written consent of Landlord. However, Landlord agrees not to withhold or delay its consent unreasonably. Landlord further agrees not to withhold or delay its consent to an assignment if the proposed assignee's financial standing and responsibility at the time of the proposed assignment is sufficient to give Landlord reasonable assurance of the payment of all rents and other amounts required under this lease, and of compliance with all of the terms, covenants, provisions, and conditions hereof Upon such assignment Tenant shall be released from all liability arising or accruing hereunder after the effective date of the assignment, provided that the assignee shall execute, acknowledge and deliver to Landlord an assumption agreement, in form and substance satisfactory to Landlord in the good faith exercise of its reasonable judgment whereby such assignee agrees to observe, perform, and keep all of the terms, provisions, covenants and conditions required to be observed, performed and kept as tenant hereunder.



14. Damage, Destruction or Condemnation. If the demised premises or any part thereof shall be damaged or destroyed by fire or other casualty, Landlord, to the extent of available insurance proceeds, shall promptly repair all such damage and restore the demised premises without expense to Tenant, subject to delays due to adjustment of insurance claims, strikes and other causes beyond Landlord's control. If such damage or destruction shall render the premises untenantable in whole or in part, the rent shall be abated wholly or proportionately as the case may be until the damage shall be repaired and the ...