General overview of the Lease Agreement

The Lease Agreement

The main Lease Agreement was concluded on 28.12.2007 between Tau on line d.o.o. and Medilab
d.o.o. (further TOL and MEDILAB) and signed by Nenad Bakić as Member of the Management
Board for TOL and Marko Džepina as Member of the Management Board of MEDILAB.

Total of m2 leased by TOL as stated in the Agreement is 1848 together with 20 parking spaces out of
which 5 are placed in front of the building and 15 are placed in the garage. The lease price is 13,75 €
per m2, that is 25.410,00 € per month. The price of parking places, the terrace of 170m2, and the
reception of 34,8 m2 is included in price without additional lease charges. The amount agreed for
monthly maintenance is 1.000 € which includes maintenance of heating and cooling system, air
condition system, electrical installation, outer layer and roof of the building and technical attestation of
all equipment related to work security (elevator, alarm system etc.)

The lease period is 5 years starting from 15.4.2008 (the moving in date) and during that period, in
according the lease agreement the price of m2 is the same.

As a security for lease payment TOL has issued a security note in the amount of 125 000 € which will
be replaced in the following order:

• After expiry of the second year the security note will be replaced by the security note in the
amount of 75.000,00 € until the end of the third year of the lease period;

• After expiry of the third year of the lease period that security note will be replaced by the
security note in the amount of 50.000,00 € until the end of the fourth year of the lease period

• After expiry of the fourth year of the lease period the security note of 50.000,00 € will be
replaced by the security note in the amount of 25.000,00 € until the end of the fifth year.

The amounts of the security notes are corresponding to the agreed contractual penalty concluded in the
lease agreement for earlier termination: penalty of 125 000 € if the termination occurs in the first two
years of the lease period, 75.000 € for termination in third year, 50.000 € in the fourth year and 25 000
€ for termination in the fifth year.

In addition to the security note issued by TOL Nenad Bakić has issued a personal blank security note
which will be effective only if the security notes of TOL can not be charged.

The lease agreement is concluded in the form of a Public Notary enforcement document, which in
accordance to Croatian law can be enforceable, that is security notes can be charged without any
judicial procedure such as litigation.

Other regulations of the Lease Agreement refer to the standard lease regulation relating to the payment
date, bank accounts, general regulation in relation to TOL rights to adjust the building according to its
needs, move in date, etc.
Annex 1 of the Lease agreement

Annex 1 of the Lease Agreement was concluded at the same date as the main agreement and refers to
the detailed description of the maintenance obligations of MEDILAB for the price of 1.000 € per
month.

Annex 2 of the Lease Agreement

The Annex 2 refers to the changes in the m2 and the number of parking places and was concluded at
14.7.2008.

In relation to change of the m2, TOL has concluded a measuring after moving and discovered that the
actual surface is not 1848 m2 as stated in the Lease Agreement but 1724m2 so this Annex reduces the
total lease price from 25.410 € per month to 23.705 € per month.

Further, the number of parking places was increased from 20 to 30 for the price of 100€ per parking
place per month.

After this Annex total lease price was 24.705€ per month for 1724 m2 and 30 parking places (the
terrace of 170 m2, 20 parking places and the reception of 34,8 m2 is included in price).

Annex 3 of the Lease Agreement

Annex 3 was concluded on 30.4.2009 and relates to reduction of the lease price by 15%. The price
reduction in accordance with this Annex is reduced by 15% in the period between 1.5.2009 until
31.12.2009 and relates to reduction of the price per m2 but not to maintenance price and the price of
additional garage places from Annex 2.

However, this period, during which the price is reduced by 15% in not included in the lease period of
5 years.

Annex 4 of the Lease Agreement

Similarly as the previous Annex, Annex 4 concluded on 17.11.2009 prolongs the period of price
reduction by 15% until 31.12.2010 and as stated above this period is not included in the lease period of
five years as stated in the main agreement.

The expired lease period

The lease period of five years was consumed by TOL only in the period between 15.4.2008 until
1.5.2009 and therefore the contractual penalty of 125 000 € will be applicable since the lease period
was stopped by the price reduction period starting from 1.5.2009.

Sublease Agreements concluded by TOL

TOL has concluded several lease Agreements with Croatian Centre for Agriculture, Altiora Ltd, and
other companies owned by Nenad Bakić. Total monthly income of the sublease is cca 65% of the total
lease price.
Possible solutions for termination of the Lease Agreement

Termination in accordance with the Croatian Obligatory law

Croatian obligatory law namely Article 369 states as follows:

Amendment or termination of the agreement due to changed circumstances

Circumstances for termination
Article 369.
(1) If, due to extraordinary circumstances that arises after the conclusion of the agreement and these
circumstances could not be predicted in the time the agreement was concluded, the fulfilment of the
obligation for one party will be to difficult or could cause serious loss, this party can request the
change in the agreement or even the termination of the agreement.
(2) Changes or termination in the agreement can not be requested by the party that calls upon changed
circumstances if those circumstances where such that they could be predicted or overcome.
(3) The party that requires the change of the agreement due to changed circumstances con not call
upon changed circumstances if they are arising after the date which is stated as the date of fulfilment
of obligation arising from the agreement.
(4) When one party requires the termination of the agreement, the agreement will not be terminated if
the other party offers or accepts the amendments to the agreement in a rightful way.
(5) If the court terminates the agreement, the court could order to the party asking the termination to
pay to the other party rightful damages.

In accordance with the article stated above TOL could seek the changes to the lease agreement due to
circumstances that could not be predicted in the time of conclusion of the agreement which is the
financial crisis and general reduction of the lease price and since TOL was forced to terminate several
employment contracts during this period it is reasonable to discuss that fulfilment of our obligation
arising from the Lease Agreement could cause „serious losses“to TOL. Such request for changes
should be discussed with MEDILAB or even layer who will represent TOL on court.

Termination of the Lease agreement in accordance with the Law on Leases

In accordance with the Lease Law when the Lessor (MEDILAB) is not fulfilling its obligations in
accordance with the maintenance agreement the Lessee (TOL) could terminate the Lease contract
without any delays: since the building was leaking several times due to rain and poor maintenance of
the water pluming, TOL could call a certified judicial expert who will confirm that such leaking
occurred in a certified report which then will be a official evidence if MEDILAB tries to charge the
security note issued by TOL.

In both of these cases it should be noted that MEDILAB has a security notes issued by TOL which
could be charged under certain conditions, however the reasons listed above should be a good starting
pint for new negotiations with MEDILAB and TOLs’ request for amendments to the Lease
Agreement.