1
Exhibit 10.10
First Floor
LEASE
Dated Sept 7 1999
between
AMBERJACK, LTD.
------------------------------
"LANDLORD"
and Integrated Information Systems, Inc.
------------------------------------
"TENANT"
1
2
INDEX TO LEASE
Section Page
1. TERM.................................................................. 3
2. RENT.................................................................. 3
3. OPERATING EXPENSES.................................................... 4
4. PARKING............................................................... 6
5. SECURITY DEPOSIT...................................................... 7
6. REPAIRS............................................................... 7
7. IMPROVEMENTS AND ALTERATIONS.......................................... 7
8. LIENS................................................................. 8
9. USE OF PREMISES....................................................... 8
10. LANDLORD SERVICES..................................................... 9
11. RULES AND REGULATIONS................................................. 9
12. TAXES................................................................. 9
13. SUBSTITUTED PREMISES.................................................. 9
14. UNTENANTABILITY....................................................... 10
15. EMINENT DOMAIN........................................................ 10
16. ASSIGNMENT AND SUBLEASE............................................... 10
17. ACCESS................................................................ 11
18. SUBORDINATION AND ATTORNMENT.......................................... 11
19. SALE.................................................................. 12
20. INDEMNIFICATION OF LANDLORD........................................... 12
21. TENANTS INSURANCE..................................................... 13
22. ATTORNEY'S FEES....................................................... 14
23. WAIVER................................................................ 14
24. NOTICES............................................................... 14
25. INSOLVENCY OR BANKRUPTCY.............................................. 15
26. DEFAULT............................................................... 15
27. INTEREST ON TENANTS OBLIGATIONS....................................... 16
28. HOLDING OVER.......................................................... 16
29. TIME.................................................................. 16
30. BROKERS............................................................... 16
31. RECORDATION........................................................... 16
32. BUILDING NAME......................................................... 17
33. SIGNS................................................................. 17
34. CHOICE OF LAW......................................................... 17
35. ESTOPPEL CERTIFICATE OF THREE-PARTY AGREEMENT......................... 17
36. ADDITIONAL CONSTRUCTION............................................... 17
37. DEFINED TERMS AND MARGINAL HEADINGS................................... 17
38. HAZARDOUS SUBSTANCES.................................................. 18
EXHIBIT "A" -- DEPICTION OF LEASED PREMISES
EXHIBIT "B" -- SPACE PLAN
EXHIBIT "C" -- STANDARDS FOR UTILITIES AND SERVICES
EXHIBIT "D" -- RULES AND REGULATIONS
EXHIBIT "E" -- INTERIOR IMPROVEMENT SPECIFICATIONS
EXHIBIT "F" -- TELECOMMUNICATIONS REQUIREMENTS
EXHIBIT "G" -- JANITORIAL SPECIFICATIONS
2
3
THIS LEASE made this 7th day of September, 1999 between AmberJack, Ltd.
(hereinafter called "Landlord"), and Integrated Information Systems, Inc.
(hereinafter called "Tenant").
For and in consideration of the rents, covenants and agreements hereinafter
set forth, Landlord hereby leases to Tenant and Tenant hereby agrees to lease
from Landlord those certain premises (the "Leased Premises"), commonly described
as Suite No. 110 and more particularly shown on Exhibit "A" to this Lease, in
that certain building located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ (the "Building") in the
City of Tempe, County of Maricopa, and State of Arizona. Said leasing is upon
and subject to the terms, covenants and conditions set forth in this Lease.
Tenant agrees, as a material part of the consideration for this Lease, to keep
and perform each and all of said terms, covenants and conditions by it to be
kept and performed. Tenant further agrees that this Lease is made upon the
condition of such performance.
1. TERM
(a) The term of this Lease shall be 65 months (unless sooner terminated as
herein provided), which is projected by Landlord to commence on the 1st day of
March, 2000 (the "Commencement Date"), and expire on the 31st day of July, 2005.
(b) If the Landlord is unable to deliver possession of the Leased Premises
within 90 days of the projected Commencement Date this Lease shall be voidable,
at Tenants option. In no event shall Tenant be liable for any rent until such
time as Landlord can and does deliver possession of the Leased Premises to
Tenant. The date upon which Landlord can and does deliver possession of the
Leased Premises to Tenant shall be the Commencement Date of this Lease. If
delivery of possession occurs on other than the first day of a calendar month,
rental for the remainder of that month shall be paid by Tenant on a pro rata
basis.
2. RENT
Tenant agrees to pay as base rent the sum of Forty Four Thousand Nine
Hundred Sixty One & 37/100 ($44,961.37) per month for each and every month of
this Lease (the "Base Monthly Rent"), subject to adjustment, as provided in
paragraph 3 hereof, payable in advance on the first day of each month, without
offset, commencing with the Commencement Date of this Lease. In addition to Base
Monthly Rent, all other sums of any type or kind required to be paid by Tenant
under this Lease to Landlord shall be deemed to be additional rent, whether or
not the same may be designated as such herein.
3
4
3. OPERATING EXPENSES
(a) If the annual Operating Expenses of the Building exceed the Base
Operating Expenses, Tenant shall pay, in addition to the Base Monthly Rent,
Tenant's proportionate share of the Operating Expenses of the Building in excess
of the Base Operating Expenses based on Tenant's Percentage.
(b) As used in this Section, the following defined terms shall have the
following meanings:
(i) "Base Operating Expenses" shall mean total "operating expenses"
for calendar year 2000.
(ii) "Operating Expenses" means, in a calendar year, all costs and
expenses incurred by or on behalf of the Landlord for the
operation, administration, protection, cleaning, repair, and
maintenance of the Building, the parking structure serving the
Building (the "Parking Garage"), and the site on which the
Building and Parking Garage are located (the "Site"), and which
shall include without limitation, the following:
(A) the salary and wages (including cost of uniforms and
worker's compensation and unemployment insurance, vacation pay, pension
and retirement benefits, health care, and other fringe benefits,
whether statutory or otherwise) of employees of the Landlord that are
employed in the operation, maintenance, repair and administration of
the Building, the Parking Garage, and the Site;
(B) the cost of goods, services, equipment and supplies
used in the operation, maintenance, repair and administration of the
Building, the Parking Garage, and the Site including the heating,
ventilating and air conditioning costs, electricity or any other energy
supplied to the Building, the Parking Garage, and the Site elevator
maintenance and operation, and service contracts;
(C) all real estate taxes, and general or special
assessments that may be levied, charged, or assessed against the
Building, the Parking Garage or the Site and all property owner's
association dues, fees, assessments or other charges, if any;
(D) all charges for public services and utilities,
including water, natural gas, sewer, electrical power, or any energy
supplied or used in the Building, the Parking Garage, or on the Site
and for all services performed by any utility company in connection
with such utilities;
4
5
(E) the expense for gardening, landscaping, repainting, rental of signs
and equipment, lighting, sanitary control and garbage removal, curbing and
fencing maintenance, glass maintenance and window cleaning;
(F) the cost of the Landlord's insurance in types and amounts as may
reasonably be carried by a prudent owner, or as required by any lender of
Landlord;
(G) cost of each "Major Expenditure" (as hereinafter defined) as amortized
over the period of the economic life of the Major Expenditure, but not to exceed
fifteen (15) years, using equal monthly installments of principal and interest
at the rate announced by ▇▇▇▇▇ Fargo Bank as its prime rate at the time of
expenditure, plus one-half percent (1/2%), where "Major Expenditure" shall mean
any single expenditure incurred during or subsequent to the calendar year in
which the Lease commences, for modifications or additions to the Building, the
Parking Garage, or the Site if one of the principal purposes of such
modification or addition was to reduce energy consumption or operating expenses,
or was required by governmental law or regulations; and
(H) an administrative or property management fee. The property management
fee shall be three percent (3%) of the gross collected rents from the Building,
the Parking Garage and the Site. The salaries and wages of those persons
referred to in subparagraph 3 (b)(ii)(A) are not deemed to be part of the
property management services for purposes of the limitation contained in this
subparagraph.
(iii) If, in any such calendar year the average Building occupancy is less
than ninety-five percent (95%) of the rentable area thereof during the entire
calendar year, "Operating Expenses" shall mean the amount obtained by adjusting
the actual Operating Expenses that vary with occupancy for such calendar year as
if the Building had been ninety-five percent (95%) occupied during the whole of
such calendar year.
(iv) "Tenant's Percentage" means the percentage determined by converting a
fraction, the numerator of which is the rentable area of the Leased Premises
from time to time, and the denominator of which is the total rentable area of
the Building from time to time. Landlord and Tenant acknowledge that Tenant's
Percentage as of the Commencement Date is twenty three point three nine percent
(23.39%) and is based on the actual rentable area of the Leased Premises and
rentable area of the Building as of the Commencement Date.
5
6
(c) Landlord shall, each year during the term of this Lease, deliver to
Tenant a statement of estimated Operating Expenses for the following calendar
year. If the estimated Operating Expenses are projected to exceed the Base
Operating Expenses, Tenant shall pay to Landlord with each payment of the Base
Monthly Rent, as additional rent hereunder, an amount equal to one-twelfth
(1/12) of the estimated Operating Expenses for such calendar year (less the Base
Operating Expenses) multiplied by the Tenant's Percentage.
(d) Landlord shall, each year during the term of this Lease, deliver to
Tenant a statement of the actual Operating Expenses for the preceding calendar
year, but Landlord's failure to deliver such statement shall not preclude
Landlord's recovery of Operating Expenses. If the actual Operating Expenses for
a calendar year exceed the Base Operating Expenses for such calendar year,
Tenant shall, upon the receipt of such statement, pay to Landlord an amount
equal to the actual Operating Expenses (less the Base Operating Expenses)
multiplied by the Tenant's Percentage; provided, however, that payments by
Tenant, if any, of estimated Operating Expenses pursuant to this Section 3 shall
be credited against the amount due. The actual Operating Expenses shall be
prorated, if applicable, in the case of the first and last years of the term of
the Lease. If the actual Operating Expenses for such calendar year are greater
than the Base Operating Expenses but are less than the estimated Operating
Expenses for such calendar year collected by Landlord pursuant to this Section
3, then Tenant shall receive a credit against future monthly payments of
Tenant's Percentage of estimated Operating Expenses in an amount equal to the
excess of Tenant's Percentage of estimated Operating Expenses.
(e) Notwithstanding anything to the contrary contained herein, the amount
of rent payable under this Lease shall never be less than the Base Monthly Rent.
4. PARKING
(a) Tenant shall be allocated in the Parking Garage 78 covered reserved
spaces. The charge for the covered reserved spaces shall be no charge. Landlord
will provide reasonable means of identifying and controlling vehicles authorized
to be parked in the reserved and unreserved areas of the Parking Garage.
Landlord may make, modify and enforce rules and regulations. Landlord shall
maintain a total parking supply of 5 spaces per 1,000 rentable square feet of
Leased Premises.
6
7
5. SECURITY DEPOSIT
(A) Tenant has paid Landlord at the execution hereof, the sum of One hundred
twenty five thousand & 0/100 ($125,000) as security for the full and faithful
performance and observance by Tenant of all the covenants and conditions on
Tenant's part to be performed and observed in this Lease as well as in all
extensions and renewals hereof. Such deposit shall be returned to Tenant at the
termination of this Lease if Tenant has discharged its obligations to Landlord
in full. Landlord shall not be required to keep this security deposit separate
from its general funds and Tenant shall not be entitled to interest thereon. In
the event of any default by Tenant, Landlord may apply or retain all or any
part of such security deposit to cure any default or to reimburse Landlord for
any sum Landlord may spend by reason of default. In the event of such a default
the Landlord's election to utilize all or any part of said security deposit,
Tenant shall, upon written notice from Landlord, forthwith deposit with
Landlord such sum as is necessary to replenish said security deposit to the
amount specified above.
(b) See Addendum
6. REPAIRS
(a) Landlord shall maintain in good sanitary and neat condition the
structural parts of the Building, including the foundations, bearing and
exterior walls, sub-flooring and roof, and exterior doors, windows, corridors,
and other common areas and shall keep all Building equipment such as elevators,
plumbing, heating, air conditioning and similar equipment in good condition and
repair.
(b) By taking possession of the Leased Premises, Tenant accepts the
Leased Premises as being in the condition in which Landlord is obligated to
deliver them, excluding typical and traditional "punch list" items that arise
by reason of the improvements described on Exhibit "E," if any. Tenant agrees
that it will (i) make all repairs to the Leased Premises not required to be
made by the Landlord, (ii) pay for any repairs to the Leased Premises or the
Building made necessary by any negligence, carelessness or intentional acts of
Tenant or its employees or persons permitted in the Building by Tenant, and
(iii) maintain the Leased Premises in a safe, clean, neat and sanitary
condition, reasonable wear and tear excluded.
7. IMPROVEMENTS AND ALTERATIONS
See Addendum
(b) The Tenant shall not make any alterations, improvements or additions
to the Leased Premises without the Landlord's advance written consent* in each
and every
7
8
instance. In the event Tenant desires to make any alterations, improvements or
additions, Tenant shall first submit to Landlord plans and specifications
therefor. Landlord shall have the option of either hiring a contractor to
perform the work or approving in advance the contractor Tenant proposes to
hire. If Landlord elects to hire the contractor, Landlord shall: (i) obtain a
bid from a contractor selected by Landlord to perform the work specified in the
plans and specifications; (ii) present the contractor's bid or contract price
to Tenant for Tenant's approval, and (iii) require Tenant to supply a deposit
covering all or part of the contractor's bid or contract price. If Landlord
elects to approve the contractor selected by Tenant, Tenant shall: (i) obtain
the contractor's written agreement to not deviate from the plans and
specifications without Landlord's written consent; (ii) obtain the contractor's
written agreement that it must look only to the Tenant for the payment of any
charge for such work and that the contractor has included a provision to that
effect in each subcontract and material contract for such work to be performed;
and (iii) at Landlord's election, obtain and record a payment bond pursuant to
A.R.S. Section 33-1003 or any successor statute. All alterations, improvements
or additions shall become Landlord's property and shall remain upon the Leased
Premises at the termination of this Lease without compensation to Tenant;
* Such consent shall not be unreasonably withheld
8. LIENS
Tenant shall keep the Leased Premises free from any liens arising out of
any work performed, materials furnished, or obligations incurred by Tenant. In
the event that Tenant shall not, within ten (10) days after receiving notice of
the imposition of any such lien, cause the same to be released of record by
payment or posting of a proper bond, Landlord shall have, in addition to all
other remedies provided herein and by law, the right to cause the same to be
released by such means as it shall deem proper, including payment of the claim
giving rise to such lien. All such sums paid by Landlord and all expenses
incurred by it in connection therewith including without limitation costs of
suit and attorney's fees shall be considered additional rent and shall be
payable by Tenant on demand with interest at the rate of ten percent (10%) per
year.
9. USE OF PREMISES
The Leased Premises are to be used for the sole purpose of business and
sales offices of Integrated Information Systems and no other use. Tenant agrees
that it will use the Leased Premises in such manner as not to injure, annoy, or
interfere with other tenants in the Building or use or allow the Leased
Premises to be used for any unlawful, or other purpose. Tenant agrees to comply
with all applicable laws, ordinances and regulations and private covenants,
conditions and restrictions now or hereafter in force in connection with its
use of the Leased Premises, including, without limitation, the Americans with
Disabilities Act. Tenant shall not commit nor suffer the commission of any
waste, overload any floor
8
9
beneath the Leased Premises beyond the load limit established by Landlord, or
knowingly permit any explosives to enter the Building. Tenant shall not do or
permit anything to be done on or about the Leased Premises or bring or keep
anything therein which will in any way increase the fire insurance premium or
other insurance premium upon The Building.
10. LANDLORD SERVICES
Landlord agrees to furnish to the Leased Premises subject to the Standards
for Utilities and Services attached hereto as Exhibit "C" and by this
reference made a part hereof, water, electricity, heating, and air conditioning
suitable for the specified use and occupation of the Leased Premises,
janitorial service, and elevator service. Tenant agrees to abide by all
regulations and requirements that Landlord may prescribe for the proper
functioning and protection of the heating, ventilating, and air conditioning
system. Landlord may make, modify or enforce the Standards for Utilities and
Services at any time provided that such failure does not exceed five (5) days.
Landlord shall have no liability, and Tenant shall not be entitled to any
abatement or reduction of rental, by reason of Landlord's failure to furnish
any services when such failure is caused by accident, breakage, repairs,
strikes, lockouts, labor disturbances or labor disputes, or by any other cause,
similar or dissimilar, beyond the reasonable control of Landlord.
11. RULES AND REGULATIONS
Tenant agrees to abide by all rules and regulations of this Building
imposed by Landlord, a copy of which are attached hereto as Exhibit "D" and by
this reference made a part hereof. These regulations are imposed for the
cleanliness, good appearance, proper maintenance, good order and reasonable use
of the Leased Premises and the Building, and as may be necessary for the proper
enjoyment of the Building by all tenants and their clients, customers and
employees. The rules and regulations may be changed by the Landlord from time to
time, and shall become effective after reasonable notice to Tenant. Failure of
Tenant to comply with the Building Rules and Regulations shall constitute a
default under this Lease.
12. TAXES
Tenant shall, in addition to and at the same time as the payment of the
Base Monthly Rent under this Lease, pay to Landlord the amount of any rental,
or sales, tax (but excepting Landlord's income tax) now or hereafter imposed by
any taxing authority upon Landlord or upon Landlord's receipt of the Base
Monthly Rent and all other amounts payable by Tenant pursuant to the terms of
this Lease.
9
10
14. UNTENANTABILITY
If the Leased Premises are made untenantable in whole or in part by fire or
other casualty, the Base Monthly Rent, until repairs shall be made or the Lease
terminated as hereinafter provided, shall be apportioned on a per diem basis
according to the part of the Leased Premises which is usable by the Tenant, if,
but only if, such fire or other casualty was not caused by the fault or
negligence of the Tenant, its contractors, agents, or employees. If such damage
shall be so extensive that the Leased Premises cannot, in Landlord's opinion,
be restored to tenantability by the Landlord within a period of sixty (60)
days, either party shall have the right to cancel this Lease by notice to the
other given at any time within sixty (60) days after the date of such damage;
except that if such fire or casualty resulted from the Tenants' fault or
negligence, the Tenant shall have no right to cancel. If a portion of the
Building other than the Leased Premises shall be so damaged that in the opinion
of the Landlord the Building should be restored in such a way as to alter the
Leased Premises materially, the Landlord may cancel this Lease by notice to the
Tenant given at any time within sixty (60) days after the date of such damage.
If more than twenty-five percent (25%) of the Building is made untenantable by
fire or other casualty (regardless of whether the Leased Premises are
untenantable), Landlord may terminate this Lease by written notice to Tenant
within one hundred twenty (120) days after the date of such casualty. In the
event of giving effective notice pursuant to this Section, this Lease and the
term and the estate hereby granted shall expire on the date fifteen (15) days
after the giving of such notice as fully and completely as if such date were
the date hereinafter set for the expiration of the term of this Lease. In the
event neither Landlord nor Tenant cancels the Lease, within sixty (60) days and
Landlord wishes to effect such restoration, the Landlord shall, promptly after
adjustment of any relevant insurance claims, commence such restoration at
Landlord's expense. In no event shall Landlord be required to expend funds in
excess of its insurance recovery on such restoration.
15. EMINENT DOMAIN
In the event any portion of the Leased Premises, the Building, the Parking
Garage, or the Site is taken under eminent domain proceeding, Tenant shall have
no right, title or interest to any award for such taking, except for fixtures
and improvements installed by Tenant, if any.
16. ASSIGNMENT AND SUBLEASE
Tenant shall not, either voluntarily or by operation of law, sell, assign,
hypothecate or transfer this Lease, or sublet the Leased Premises or any part
thereof,
10
11
without the prior written consent of Landlord in each instance. Landlord's
consent to an assignment or sublease shall not be withheld, provided the
proposed assignee or sublessee is reasonably satisfactory to Landlord as to
credit and character and will occupy the Leased Premises for office purposes
consistent with Article 9 of this Lease and Landlord's commitments to other
tenants. Any sale, assignment, mortgage, transfer or subletting of this Lease
which is not in compliance with the provisions of this Article 16 shall be void
and shall be a material default of this Lease by Tenant. The consent by
Landlord to any assignment or subletting shall not be construed as relieving
Tenant from obtaining the express written consent of Landlord to any further
assignment or subletting or as releasing Tenant from any liability or
obligation hereunder, whether or not then accrued. The Landlord reserves the
right, should the Tenant request such assignment or subletting, to release the
Tenant from the terms and provisions of this Lease and the Landlord shall have
thirty (30) days to make such determination. Should the Landlord exercise this
right, then the Lease shall terminate as of the date notice is given to Tenant.
Tenant shall make no profit on a sublease or assignment of this Lease and
any increase in rent, bonus or other fee charged or received, which is higher
than, or in addition to, the Monthly Base Rent and other sums due under this
Lease shall be paid to Landlord.
17. ACCESS
Landlord and its agents shall have the right to enter the Leased Premises
at all reasonable times and provided that such entry does not unreasonably
interfere with Tenant's business for the purpose of examining or inspecting the
same, showing the same to prospective purchasers or tenants of the Building,
and as necessary to perform Landlord's obligations under this Lease. Landlord
may erect, use, and maintain scaffolding, pipes, conduits, and other necessary
structures in and through the Leased Premises where reasonably required by the
character of the work performed, provided that the business of Tenant shall not
be unreasonably interfered with. If Tenant shall not personally be present to
open and permit an entry into the Leased Premises at any time when such entry
by Landlord is necessary or permitted hereunder, Landlord may enter by means of
a master key or, in emergencies, may enter forcibly, without liability to
Tenant.
18. SUBORDINATION AND ATTORNMENT
(a) This Lease is automatically junior, subject and subordinate to all
ground leases, mortgages, deeds of trust and other security instruments of any
kind now or hereafter covering the Site, the Building, the Parking Garage
and/or the Leased Premises or any portion thereof or interest therein.
Notwithstanding the foregoing, Tenant covenants and agrees to execute and
deliver upon demand such further instruments evidencing such subordination of
this Lease as may be requested by Landlord. If any mortgagee, trustee, or
ground lessor shall elect to have this Lease prior to the lien of a mortgage,
deed of trust or ground lease, and shall give written notice thereof to Tenant,
this Lease shall be deemed prior to such mortgage, deed of trust or ground
lease, whether
11
12
this Lease is dated prior to or subsequent to the date of said mortgage, deed
of trust or ground lease or the date of recording thereof.
(b) In the event of the enforcement by any mortgagee, trustee under any
deed of trust or holder of any other security instrument of the remedies
provided for by law or by such mortgage, deed of trust or other security
instrument, Tenant will, if requested by such mortgagee, trustee, or beneficiary
or by any person succeeding to the interest of Landlord as a result of said
enforcement, automatically become the tenant of any such successor in interest,
without any change in the terms or other provisions of this Lease. Upon request
by said successor in interest, the Tenant shall execute and deliver an
instrument or instruments confirming its attornment. Nothing herein shall be
construed as a subordination of, or agreement to subordinate, the lien and
charge of any mortgage, deed of trust or other security instrument to the rights
or leasehold estates of the Tenant under this Lease.
19. SALE
This lease shall not be affected by any sale or conveyance by Landlord of
the Building containing the Leased Premises. This Lease shall not be affected by
any such sale, and Tenant agrees to attorn to the purchaser of the Building and
deliver to the purchaser an offset statement and an estoppel certificate in such
form as Landlord may request. If any security deposit has been made by Tenant,
Landlord may transfer such security deposit to the purchaser, and thereupon
Landlord shall be discharged from any further liability in reference thereto.
20. INDEMNIFICATION OF LANDLORD
(a) Tenant shall hold Landlord harmless from, indemnify and defend Landlord
against any and all claims for liability for any injury (including death) or
damage to any person or property whatsoever (i) occurring in, or on the Leased
Premises or any part thereof, or (ii) occurring in or about the Building when
such injury or damage has been caused solely by the act, neglect, fault or
omission of Tenant, its agents, servants, or employees, and from all costs,
attorneys' fees, expenses and liabilities incurred as a result of any such claim
or any action or proceeding brought thereon; and in case any action or
proceeding be brought against Landlord by reason of any such claim, Tenant, upon
notice from Landlord, shall defend the same at Tenant's expense. Tenant, as a
material part of the consideration to Landlord,
12
13
hereby assumes all risk of damage to property or injury to persons (including
death), in, upon or about the Leased Premises from any cause which does not
result from the gross negligence or willful misconduct of Landlord and Tenant
hereby waives all claims in respect thereof against Landlord.
(b) Landlord or anyone authorized to act for Landlord shall not be liable
for any damage to property entrusted to employees of the Building, nor for loss
of or damage to any property by theft or otherwise.* Tenant shall give prompt
notice to Landlord of any fire, accident or defect discovered within the Leased
Premises or the Building.
* Except for the injury or damage caused by the negligence or willfull
misconduct of Landlord's agents, employees, invitees, or customers.
(c) The provisions of this Section 20 shall survive the expiration or
termination of this Lease with respect to any claims or liability occurring
prior to such expiration or termination.
21. TENANTS INSURANCE, WAIVER OF SUBROGATION
(a) Tenant agrees to carry at its own expense throughout the term of the
Lease, commercial general liability insurance insuring Tenant and Landlord, as
an additional insured, against all claims, demands, or actions arising out of,
or in connection with, Tenant's use or occupancy of the Leased Premises or by
the condition of Leased Premises. Such insurance shall have a combined single
limit of liability of $2,000,000.00 for bodily injury or death and property
damage. The limits of said insurance shall not, however, limit the liability of
Tenant hereunder. Said insurance shall be primary and not contributing with any
insurance maintained by Landlord and shall include lessor's protective liability
coverage and shall also include contractual liability coverage covering all
indemnification obligations of Tenant under this Lease. Tenant shall deliver a
Certificate of Insurance, in form reasonably acceptable to Landlord, to Landlord
prior to the date of occupancy of the Leased Premises evidencing said insurance
policy and stating that the insurer agrees to give no less than thirty (30) days
prior written notice to Landlord in the event of modification or cancellation
thereof.
(b) Tenant shall be responsible for its own personal property insurance.
(c) Landlord and Tenant each hereby release the other from any and all
liability or responsibility for any direct or consequential loss, injury or
damage to the Leased Premises, or its contents, caused by fire or any other
casualty, during the term of this Lease, even if such fire or other casualty may
have been caused by the negligence (but not the willful act) of the other party
or one for whom such party may be responsible. Inasmuch as the above mutual
waivers will preclude the assignment of any aforesaid claim by way of
subrogation (or otherwise) to an insurance company (or any other
13
14
person), each party hereto agrees if required by said policies to give each
insurance company which has issued to it fire and other property insurance,
written notice of the terms of said mutual waivers, and to have said insurance
policies properly endorsed, if necessary, to prevent the invalidation of said
insurance coverage by reason of said waivers.
22. ATTORNEY'S FEES
In the event of any legal action or proceeding brought by either party
against the other arising out of this Lease, the prevailing party shall be
entitled to recover reasonable attorneys' fees incurred in such action and such
amount shall be included in any judgment rendered in such proceeding.
23. WAIVER
No waiver by Landlord of any provision of this Lease or of any breach by
Tenant hereunder shall be deemed to be a waiver of any other provision hereof,
or of any subsequent breach by Tenant of the same or any other provision.
Landlord's consent to or approval of any act by Tenant requiring Landlord's
consent or approval shall not be deemed to render unnecessary the obtaining of
Landlord's consent to or approval of any subsequent act of Tenant. No act or
thing done by Landlord or Landlord's agents during the term of this Lease shall
be deemed an acceptance of a surrender of the Leased Premises, unless done in
writing signed by Landlord. The delivery of the keys to any employee or agent of
Landlord shall not operate as a termination of this Lease or a surrender of the
Leased Premises.
24. NOTICES
All notices, demands or other communications in this Lease provided to be
given, made or sent by either party hereto to the other shall be deemed to have
been duly given, made or sent when made in writing and deposited in the United
States mail, certified or registered, postage paid, and addressed as follows:
To Landlord: AmberJack, Ltd.
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ #▇▇▇
-----------------------------------
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-----------------------------------
-----------------------------------
To Tenant: Integrated Information Systems, Inc.
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ #▇▇▇
-----------------------------------
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-----------------------------------
Attn: Legal Department
-----------------------------------
14
15
The address to which any notice, demand or other writing may be given,
made or sent to either party may be changed by written notice given by such
party as above-provided.
25. INSOLVENCY OR BANKRUPTCY
The appointment of a receiver to take possession of all or substantially
all of the assets of Tenant, or an assignment by Tenant for the benefit of
creditors, or any action taken or suffered by Tenant under any insolvency,
bankruptcy, or reorganization act, or if any guarantor of this Lease dies,
revokes, or otherwise terminates, or purports to revoke or otherwise terminate
(by operation of law or otherwise) any guaranty of all or any portion of
Tenant's obligation under this Lease, shall at Landlord's option, constitute a
breach of this Lease by Tenant. Upon the happening of any such event, or at any
time thereafter, this Lease shall terminate five (5) days after written notice
of termination from Landlord to Tenant. In no event shall this Lease be
assigned or assignable by operation of law and in no event shall this Lease be
an asset of Tenant in any receivership, bankruptcy, insolvency, or
reorganization proceedings.
26. DEFAULT
(a) In the event Tenant fails to pay any rental due hereunder or fails to
keep and perform any of the other material terms or conditions hereof, or
otherwise breaches this Lease or defaults hereunder, time being of the essence,
or in the event of the taking by execution or judgment or other process of law
of all or any part of the Tenant's interest in this Lease, then ten (10) days
after receipt of written notice of default from Landlord, Landlord may, if such
default has not been corrected, resort to any and all legal remedies or
combination of remedies which Landlord may desire to assert including, but not
limited to one or more of the following: (1) lock the doors of the Leased
Premises and exclude Tenant therefrom; (3) enter the Leased Premises and remove
all persons and property therefrom; (4) declare this Lease at an end and
terminated; (5) ▇▇▇ for the rent due and to become due under this Lease; (6)
▇▇▇ for any damages sustained by Landlord; and (7) continue this Lease in
effect and relet the Leased Premises on such terms and conditions as Landlord
may deem advisable with Tenant remaining liable for the Base Monthly Rent and
other sums due hereunder plus the reasonable cost of obtaining possession of
the Leased Premises and of any repairs and alterations necessary to prepare the
Leased Premises for reletting, and the cost of reletting. No action of Landlord
shall be construed as an election to terminate this Lease unless written notice
of such intention be given to Tenant. No payment by Tenant or receipt by
Landlord of a lesser amount than the Monthly Base Rent and other sums due
hereunder shall be deemed to be other than on account of the earliest rent or
other sums due, nor shall any endorsement or statement on any check or
accompanying any check or payment be deemed an accord and satisfaction; and
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance of such rent or other sum or pursue any other remedy
provided in this Lease. Notwithstanding the foregoing to the contrary, the
abandonment of the Leased
15
16
Premises by Tenant shall be an incurable default hereunder, entitling Landlord
to immediately resort to the remedies described above.
(b) If Landlord shall default in performing its obligations under this
Lease, Tenant shall give Landlord written notice of the deficiency, and
Landlord shall have ten (10) days after receipt of such notice to correct the
same; provided, however, that if the nature of Landlord's obligation is such
that more than ten (10) days are required for performance, then Landlord shall
not be in breach if Landlord commences performance within such ten (10) day
period and thereafter diligently prosecutes the same to completion. In no event
shall Tenant have the right to terminate this Lease as a result of Landlord's
breach, and Tenant's remedies shall be limited to damages and/or an injunction.
(c) Tenant shall look solely to the equity of Landlord in the Building,
and the rents, issues and profits derived therefrom, and to no other assets of
Landlord, for the satisfaction of the remedies of Tenant in the event of a
breach by Landlord. Tenant will not seek recourse against the individual
shareholders, directors, officers, employees or agents of Landlord or against
the individual members or managers of Landlord's manager or any successors in
interest or any of their personal assets for such satisfaction. It is mutually
agreed that this clause is and shall be considered an integral part of this
Lease.
27. INTEREST ON TENANT'S OBLIGATIONS AND LATE CHARGES
(a) Any amount due from Tenant to Landlord which is not paid when due
shall bear interest of ten percent (10%) per annum until paid, but the payment
of such interest shall not excuse nor cure the default.
(b) Tenant acknowledges that late payment of the Base Monthly Rent or any
other sum required by this Lease to be paid by Tenant to Landlord will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of
such costs being extremely difficult and impracticable to fix. Therefore, if
any payment due from Tenant is not received by Landlord within five (5)
calendar days after its due date, Tenant shall pay to Landlord an additional
sum of three hundred dollars ($300) as a late charge. In addition to the
above-described late charge, Tenant shall pay to Landlord fifty dollars ($50)
for processing and accounting costs together with interest on such amount at
the rate specified above for each occasion that a rental check presented to
Landlord by Tenant is returned by Tenant's bank for insufficient funds or for
any other reason.
28. HOLDING OVER
No holding over by Tenant after the term of this Lease shall operate to
extend the Lease. In the event of any unauthorized holding over, such occupancy
shall be a tenancy at sufferance and Tenant shall indemnify Landlord against
all claims for damages by any other tenant to whom Landlord may have leased all
or any part of the Leased Premises covered hereby effective upon the
termination of this Lease. During any such tenancy at sufferance, Tenant shall
pay a Base Monthly Rent equal to 150% of the most recent Base
16
17
Monthly Rent then in effect plus all other charges payable hereunder. Such
tenancy shall otherwise be upon all the terms hereof applicable to such a
tenancy at sufferance.
29. TIME
Time is of the essence of this Lease in each and all of its provisions.
30. BROKERS
Tenant warrants that it has had no dealing with any real estate broker or
agent in connection with the negotiation of this Lease, excepting only ▇▇▇▇
▇▇▇▇▇; ▇▇▇ & Associates and any broker or agent that Landlord may have employed.
If but only if this Lease is fully executed and Tenant actually takes possession
of the Leased Premises, Landlord shall pay to such brokers or agents a
commission set forth in a separate agreement between Landlord and such brokers
or agents. Except for such brokers or agents, Tenant knows of no other real
estate broker or agent which is or may be entitled to a commission in connection
with this Lease. Tenant agrees to indemnify and hold harmless Landlord from any
claims for commission by brokers or agents not mentioned in this paragraph.
31. RECORDATION
Tenant shall not record this Lease or a short form memorandum thereof
without the prior written consent of Landlord.
32. BUILDING NAME
Tenant shall not use the name of the Building or the development in which
the Building is situated for any purpose other than the address of the business
to be conducted by Tenant in the Leased Premises.
33. SIGNS
(a) Landlord shall have the sole and absolute discretion over all matters
relating to on-premise signs relating to the Building and other Tenant
identification signs and facilities which are intended to be seen by the public
from roads, sidewalks, pedestrian areas and adjoining structures in the vicinity
of the Building.
(b) See Addendum
34. CHOICE OF LAW
This Lease shall be governed by the Laws of the State of Arizona.
35. ESTOPPEL CERTIFICATE OR THREE-PARTY AGREEMENT
At Landlord's request, Tenant will in addition to any other statements or
certificates required to be executed by Tenant, execute and deliver within
ten (10)
17
18
working days, an estoppel certificate and/or three-party agreement among
Landlord, Tenant and any third party dealing with Landlord certifying as to
such facts (if true) and agreeing to such notice provisions and other matters
as such third party may reasonably require in connection with the business
dealings of Landlord and such third party.
36. ADDITIONAL CONSTRUCTION
Tenant acknowledges that buildings other than the Building may be
constructed within the project of which the Building is a part, and, in
connection with such construction, Tenant shall permit Landlord and/or any owner
of the land upon which such additional buildings are being constructed, to enter
the Leased Premises to erect scaffolding and/or protective barriers around the
Leased Premises (but not so as to preclude entry thereto) and to do any act or
thing necessary for the safety or preservation of the Building. Landlord shall
not be liable in any such case for any inconvenience, disturbance, loss of
business or any other annoyance arising from any such construction, but Landlord
shall use its reasonable efforts to see that Landlord or any adjoining owner
will conduct such construction as consistently as possible with accepted
construction practices, so as to minimize inconvenience, annoyance and
disturbance to Tenant.
37. DEFINED TERMS AND MARGINAL HEADINGS
The words "Landlord" and "Tenant" as used herein shall include the plural
as well as the singular. If more than one person is named as Tenant, the
obligations of such persons are joint and several. The marginal headings and
titles the articles of this Lease are not a part of this Lease and shall have no
effect upon the construction or interpretation of any part hereof.
38. TENANT'S RESPONSIBILITY REGARDING HAZARDOUS SUBSTANCES
(a) Hazardous Substances. The term "Hazardous Substances", as used in this
Lease, shall include, without limitation, flammables, explosives, radioactive
materials, asbestos, polychlorinated biphenyls (PCBs), chemicals known to cause
cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes,
toxic substances or related materials, petroleum and petroleum products, and
substances declared to be hazardous or toxic under any law or regulation now or
hereafter enacted or promulgated by any governmental authority.
(b) Tenant's Restrictions. Tenant shall not cause or permit to occur:
(i) Any violation of any federal, state or local law, ordinance, or
regulation now or hereafter enacted, related to environmental
conditions on, under, or about the Leased Premises, or arising
from Tenant's use or occupancy of the Leased Premises, including,
but not limited to, soil and ground water conditions; or
18
19
(ii) The use, generation, release, manufacture, refining,
production, processing, storage or disposal of any Hazardous
Substance on, under or about the Leased Premises, or the
transportation to or from the Leased Premises of any Hazardous
Substance, except as specifically disclosed in this Lease.
(c) Environmental Clean-Up
(i) Tenant shall, at Tenant's own expense, comply with all laws
regulating the use, generation, storage, transportation, or
disposal of Hazardous Substances ("Laws").
(ii) Tenant shall, at Tenant's own expense, make all submissions
to, provide all information required by, and comply with all
requirements of all governmental authorities (the
"Authorities") under the Laws.
(iii) Should any Authority or any third party demand that a clean-up
plan be prepared and that a clean-up be undertaken because of
any deposit, spill, discharge, or other release of Hazardous
Substances that occurs during the term of this Lease, at or
from the Leased Premises, or which arises at any time from
Tenant's use or occupancy of the Leased Premises, the
Building, the Parking Garage, or the Site, then Tenant shall,
at Tenant's own expense, prepare and submit the required
plans, which shall be subject to Landlord's prior approval,
and all related bonds and other financial assurances; and
Tenant shall carry out all such clean-up plans.
(iv) Tenant shall promptly provide all information regarding the
use, generation, storage, transportation, or disposal of
Hazardous Substances that is requested by Landlord. If Tenant
fails to fulfill any duty imposed under this Paragraph (c)
within reasonable time, Landlord may do so; and in such case,
Tenant shall cooperate with Landlord in order to prepare all
documents Landlord deems necessary or appropriate to determine
the applicability of the Laws to the Leased Premises and
Tenant's use thereof, and for compliance therewith, The Tenant
shall execute all documents promptly upon Landlord's request.
No such action by Landlord and no attempt made by Landlord to
mitigate damages under any Law shall constitute a waiver of
any of Tenant's obligations under this Paragraph (c).
(v) Tenant's obligations and liabilities under this Paragraph (c)
shall survive the expiration of this Lease.
19
20
(d) Tenant's Indemnity
(i) Tenant shall indemnify, defend, and hold harmless Landlord,
the manager of the Building, and their respective officers,
directors, beneficiaries, shareholders, partners, agents, and
employees from all fines, suits, procedures, claims, and
actions of every kind, and all costs associated therewith
(including attorneys' and consultants' fees) arising out of or
in any way connected with any deposit, spill, discharge, or
other release of Hazardous Substances which arises at any time
from Tenant's use or occupancy of the Leased Premises, the
Building, the Parking Garage, or the Site or from Tenant's
failure to provide all information, make all submissions, and
take all steps required by all Authorities under the Laws and
all other environmental laws.
(ii) Tenant's obligations and liabilities under this Paragraph (d)
shall survive the expiration of this Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease the day and
year first above written.
TENANT: LANDLORD:
Integrated Information Systems, Inc. Marathon Management and Development
L.L.C., Managers for AmberJack, Ltd.
By /s/ ▇▇▇ ▇▇▇▇▇▇ By /s/ illegible
____________________________________ _____________________________________
Its President & CEO Its C.E.O.
____________________________________ _____________________________________
By By /s/ illegible
____________________________________ _____________________________________
Its Its President
____________________________________ _____________________________________
20
21
LEASE ADDENDUM
This Addendum is attached to and forms part of the Lease Agreement between
AmberJack, Ltd., Landlord, and Integrated Information Systems, Tenant for
the Leased Premises located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇
▇▇▇▇▇.
In the event of a conflict between the terms of the Lease and the terms of
the Addendum, the terms of the Addendum shall prevail.
3. Operating Expenses
Section 4(b)(ii)(I) Operating Expense Items A, and E are subject to a
maximum year to year increase of five percent (5%).
5. Security Deposit
(b) Provided Tenant is not in default of the Lease, Landlord shall reduce
the security deposit to $83,333.00 the beginning of the 13th month of
occupancy and to $41,667.00 at the beginning of the 25th month of
occupancy. Landlord shall return the remaining $41,667.00 of the security
deposit to Tenant at the beginning of the 37th month of occupancy.
Time, in months, shall be measured from the commencement date of the Lease.
7. Improvements and Alterations
(a) Landlord shall provide and perform interior improvements per Tenant
approved space plan, and in accordance with Building Standard Interior
Improvements Specifications (attached as Exhibit "E").
Landlord's maximum contribution to the construction of interior
improvements shall be twenty five & no/100 dollars ($25.00) per rentable
square foot of Leased Premises.
All costs of construction, including architectural and engineering fees,
(excluding space planning costs), City of Tempe plan check and building
permit fees, and construction sales tax shall be paid out of this Landlord
construction fund.
Landlord will allow Tenant to utilize a maximum of $2.00 per rentable
square foot of this allowance for costs associated with cabling and
furniture relocation.
22
All construction costs in excess of the Landlord's maximum contribution
shall be paid by the Tenant to the Landlord prior to the commencement of
the Lease.
None of the Landlord's construction funds shall be used for furnishings,
artwork, trade fixtures, freestanding appliances, or any type of personal
property.
Unused construction funds, if any, shall be applied to Tenant's base
monthly rent obligation.
Tenant and Landlord shall competitively bid the tenant improvements to the
following named general contractors, and also agree that participating
contractors, subcontractors, and suppliers will be qualified and insured to
Landlord's satisfaction. Jokake Construction and Apollo General will bid on
the tenant improvements. Landlord will enter into a contract with the
successful contractor to complete the tenant improvements.
33. Signs
(b) Landlord shall, at Landlord's expense, maintain a Building directory,
and shall furnish Tenant with space on the directory for the identification
of the Tenant. Tenant shall also be permitted to maintain a sign over its
reception desk within the Leased Premises.
39. Lease Term Extension
Provided Tenant is not in default under the terms and conditions of the
Lease, Tenant may negotiate an extension of the Lease for five (5)
additional years. The rental rate and other material terms and conditions
are subject to renegotiations under the then prevailing market.
Tenant shall notify Landlord in writing, not more than six (6) months nor
less than four (4) months prior to the lease expiration of its desire to
extend the Lease.
If Landlord and Tenant are unable to agree on the final lease extension
rental rate, or other material terms and conditions of the lease extension,
then the Lease shall terminate as scheduled, and Tenant shall have no
further right to the Leased Premises.
40. Right of First Refusal
EFFECTIVE MARCH 1, 2000 OR UPON THE COMMENCEMENT DATE OF THIS LEASE and
subject to existing rights of first refusal previously granted by Landlord;
provided Tenant is not in default under the terms of the Lease, Tenant
shall have a right of first refusal to lease any space in the Building
which becomes available during the initial lease term. Upon receipt in
writing by Landlord of a bona fide offer from a
23
third party tenant (the "Third Party Offer") on the Refusal Space, Tenant
shall have ten (10) business days in which to notify Landlord, in writing,
of its election to lease the Refusal Space at the same terms and conditions
as those contained within the Third Party Offer.
Tenant's failure to notify Landlord within the above described time frame
will be deemed to be a waiver of this right of first refusal.
41. Right to Examine
At any time during the Term and within nine (9) months after the expiration
of the Term, upon (5) days prior written notice and during normal business
hours at Landlord's office or such other place as Landlord shall reasonably
designate, Tenant shall be entitled to inspect and examine those books and
records of Landlord relating to the determination of any item of Additional
Rent paid in any calendar year of the Term. If Landlord and Tenant agree
that the examination discloses that an item of Additional Rent billed to
Tenant was incorrect the appropriate party shall pay the other party the
deficiency or overpayment, as applicable. All costs and expenses of the
examination shall be paid for by the Tenant.
42. Telecommunications Link
The Landlord understands that IIS needs telecommunications services between
their existing suite at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the leased
premises located at ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇. In order to accommodate this need
the Landlord shall allow for the construction of new telecommunications
facilities (i.e. underground cabling and equipment in tenant's
telecommunications rooms), between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇ ▇▇▇▇▇. The cost for the above construction shall be paid by the
approved telecommunications vendor or IIS. The Landlord shall not be
responsible for any installation costs.
In the event that the Landlord's telecommunications vendor is unable to
fulfill IIS's need for telecommunications services between the two
buildings the Landlord shall allow the Tenant's vendor to utilize existing
conduit and/or perform necessary construction between the buildings in
order to allow IIS to install the telecommunications facilities. The cost
for the above construction shall be paid by IIS.
All vendors and all proposed construction must be approved by the Landlord
prior to the start of any construction.
It is understood and agreed to that the Landlord is making no
representations or warranties regarding the condition of the existing
underground conduit(s) or that the same are suitable for the Tenant's
desired or intended use.
24
It is further understood and agreed to that, except for the gross
negligence or willful misconduct of the Landlord or its agents or employee,
the Landlord shall not be responsible or liable to the Tenant for the care,
maintenance, or upkeep of the system, nor shall Landlord be held
responsible or liable for any damage to the system, wear and tear of the
system, or failure of the system.
43. Space Planning
Landlord shall provide a space planning allowance of $.10 per rentable
square foot, payable to Tenant's design services firm.
44. Right of First Refusal on Leased Premises Located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇
Provided Tenant is not in default under the terms and conditions of the
Lease Agreement, Tenant shall have the Right of First Refusal to lease up
to 34,678 rentable square feet of space located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇, ▇▇. Upon receipt in writing from Landlord of a copy of a bona fide
offer from a third party, or existing tenant of the Premises, on the
refusal space, Tenant shall have ten (10) days in which to notify Landlord,
in writing, of its election to lease the space upon the same terms and
conditions as those contained within the third party or existing tenant
offer. Tenant's failure to notify Landlord within the above described time
frame will be deemed to be a waiver of this Right of First Refusal.
TENANT LANDLORD
Integrated Information Systems, Inc. Marathon Management & Development, LLC
Managers for AmberJack, Ltd.
By: /s/ ▇▇▇ ▇▇▇▇▇▇ By: /s/ Illegible
----------------------------- -----------------------------
Its: President & CEO Its: C.E.O.
---------------------------- ----------------------------
Date: 9/1/99 Date: 9/7/99
--------------------------- ---------------------------