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Exhibit 10.21
MCW BRICKYARD COMMERCIAL, L.L.C.
LANDLORD
INTEGRATED INFORMATION SYSTEMS, INC.
TENANT
BANK OF AMERICA BUILDING
OFFICE LEASE AGREEMENT
OCTOBER 5, 1999
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OFFICE LEASE AGREEMENT
BY AND BETWEEN
BRICKYARD COMMERCIAL, L.L.C., LANDLORD
AND
INTEGRATED INFORMATION SYSTEMS, INC., TENANT
DATE: October 5, 1999
TABLE OF CONTENTS
SECTION 1. Fundamental Lease Provisions and Definitions
(a) Landlord
(b) Landlord's Notice Address
(c) Tenant
(d) Tenant's Trade Name
(e) Tenant's Notice Address
(f) Guarantors
(g) Leased Premises
(h) Permitted Use
(i) Initial Term
(j) Lease Commencement Date
(k) Basic Rent
(l) Operating Expense Increases
(m) Tenant's Proportionate Share
(n) Option Term
(o) Security Deposit
(p) Parking
(q) First Right of Refusal to Lease Additional Space
SECTION 2. Exhibits
EXHIBIT "A" - General Site Plan
EXHIBIT "B" - Location and Dimensions of the Leased Premises
EXHIBIT "C" - Tenant Improvements
EXHIBIT "D" - Rules and Regulations
EXHIBIT "E" - Estoppel Certificate
EXHIBIT "F" - Guaranty
EXHIBIT "G" - Confirmation of Lease Commencement Date
and Other Terms
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EXHIBIT "H" - Estimated First Year Operating Expenses
EXHIBIT "I" - Proforma 2000 Budget of Tenant
EXHIBIT "J" - Non-Disturbance, Attornment, Estoppel and
Subordination Agreement
SECTION 3. General Definitions
(a) Additional Charges
(b) Common Areas
(c) Event of Default
(d) Lease Year
(e) "Mortgage"
(f) "Operating Expenses
(g) "Person"
(h) "Prime Rate"
(i) Real Estate Taxes
(j) Requirements
(k) "Shell Improvements"
(l) "Tenant Improvements"
(m) Term
SECTION 4. Lease of Leased Premises
SECTION 5. Completion of Leased Premises; Term
(a) Condition of Premises
(b) Tenant's Possession
(c) Delay
SECTION 6. Rent and Additional Charges; Computation of Operating Expense
Increases
(a) Payment of Rent and Additional Charges
(b) Computation of Operating Expense Increases
(c) Tax Abatement
(d) Interest
(e) Accord and Satisfaction
(f) Late Payment Charge
SECTION 7. Common Areas
SECTION 8. Services and Utilities
(a) Types
(b) Access
SECTION 9. Upkeep of Premises
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SECTION 10. Use of Leased Premises
(a) General Offices
(b) Covenants
(c) Prohibitions
SECTION 11. Rules and Regulations
SECTION 12. Alterations
SECTION 13. Signs
SECTION 14. Insurance
(a) Types; Limits
(b) Policies
(c) Prohibitions
(d) Hold Harmless; Subrogation
SECTION 15. Damage by Fire or Other Casualty
SECTION 16. Condemnation
SECTION 17. Assignment and Subletting
(a) Prohibition
(b) Rent
SECTION 18. Default Provisions
(a) Events of Default
(b) Remedies
(c) Damages
(d) Liquidated Damages
SECTION 19. Bankruptcy Termination Provision
SECTION 20. Landlord May Perform Tenant's Obligations
SECTION 21. Security Deposit
SECTION 22. Subordination; Financing Requirements
(a) Subordination
(b) Requirements
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SECTION 23. Attornment
SECTION 24. Quiet Enjoyment
SECTION 25. Landlord's Right of Access
SECTION 26. Limitation on Landlord's Liability
(a) Limitation
(b) Force Majeure
SECTION 27. Certificates
SECTION 28. Surrender of Leased Premises
SECTION 29. Holding Over
SECTION 30. Leasing Commission
SECTION 31. General Provisions
(a) Binding Effect
(b) Laws
(c) Waiver
(d) Notices
(e) Entirety
(f) Waiver of Jury
(g) Waiver of Venue
(h) Corporations
(i) Time of Essence
(j) Words and Phrases
(k) Limit on Landlord's Liability
(l) Counterparts
(m) No representations Concerning Project
(n) Condominium Acts
SECTION 32 Payment for Tenant Improvements
SECTION 33 Landlord's Representations and Warranties
(a) Zoning
(b) Legal Compliance
(c) Environmental Compliance
(d) Tenant's Use
SECTION 34 Hold Harmless
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SECTION 35 Right to Terminate/Development Commencement
SECTION 36 Miscellaneous
SECTION 37 Renewal Option
SECTION 38 Landlord Right to Reclaim Vacant Leased Premises
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OFFICE LEASE AGREEMENT
SECTION 1. FUNDAMENTAL LEASE PROVISIONS AND DEFINITIONS
(a) Landlord: MCW Brickyard Commercial, L.L.C., an Arizona limited liability company
(b) Landlord's Notice Address: c/o MCW Holdings, L.L.C.
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (mail)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (delivery)
Attn: ▇▇▇▇▇▇▇ ▇. Was, Jr. or ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Rent payments shall be made payable
to Landlord at the address specified
above.
(c) Tenant: Integrated Information Systems, Inc., an Arizona corporation.
(d) Tenant's Trade Name: Integrated Information Systems
(e) Tenant's Notice Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
After the Lease Commencement Date,
the address of the Leased Premises
will be Tenant's notice address.
Copies of all notices to Tenant
shall also be sent to:
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(f) Guarantors: ▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇. The Guaranty will terminate when and if the
original Tenant becomes a publicly traded
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corporation (i.e., whose
stock is traded on a public securities market in the United States).
In addition, provided Tenant fully and timely performs all of its
obligations hereunder or cures any breach within any allowed cure
period, then upon completion of each complete calendar year of the
Term for which Landlord has timely received all rent and charges, the
term for which the Guaranty shall be outstanding shall be reduced by
one calendar year. For example, at the end of the first calendar
year of the Lease Term (i.e., one year from the Lease Commencement
Date), provided there has been no breach or default and Landlord has
timely received all rent and charges, the Guaranty will then be
deemed to expire after the ninth calendar year of the original Lease
Term, provided that there is no breach or default hereunder prior to
end of such ninth calendar year.
(g) Leased Premises: The approximate 71,460 rentable square feet (the "Leased Premises")
to be located on the fourth, fifth and sixth floors of the Bank of
America Building located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇
(the "Building") together with all improvements to be constructed as
part of such interior space. The Leased Premises are shown on
Exhibit "B" attached hereto. The Leased Premises do not include any
facilities or area outside of such Leased Premises, including but not
limited to exteriors of walls, the roof of the Building or any air
space above the Building. The Building is a part of the Brickyard on
Mill, a multiuse project (the "Project") composed of multiple
buildings and an underground parking garage (the "Garage"), and a
site plan of the Building and of the proposed layout of the Project
is attached as "Exhibit "A." In completing design of and
constructing the Building, Landlord may make minor alterations to
layouts, dimensions and other matters. Upon completion of the shell
improvements, the Leased Premises and Building will be remeasured by
Landlord's architect to establish the rentable and useable area of
the Leases Premises pursuant to BOMA standards (Z65.1-1996), and the
rentable area of the Building, with office areas being computed
pursuant to BOMA standards and retail areas being computed to be the
gross leaseable area as determined and consistently applied by
Landlord for all retail areas.
The Tenant will have the right to use (but not to alter or change in
any way) any balconies contiguous to the Leased
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Premises as shown on the
final approved working drawings for the Building, subject to any
reasonable special rules Landlord may adopt for the use of balconies.
Although such balconies are not part of the Leased Premises and therefore
Tenant does not pay rent thereon, all non-rent provisions of this
Lease shall fully apply to such balconies. Prior to use, flooring
approved by Landlord will have to be installed as part of the Tenant
Improvements in the balconies contiguous to the Leased Premises.
NO PENETRATION OF THE FLOORING MAY EVER BE MADE.
(h) Permitted Use: Tenant shall use the Leased Premises solely for general
office uses pursuant to Section 10 below.
(i) Initial Term: The period commencing on the Lease Commencement Date and
ending on the last day of the calendar month which completes ten
(10) full years and zero (0) full months thereafter unless sooner
terminated in accordance with the provisions hereof.
(j) Lease Commencement Date: See Section 5.
(k) Basic Rent:
Period Annual Basic Rent Per Annual Basic Rent Monthly Basic Rent
Rentable Square
Foot
Years 1-3 $ 24.50 $ 1,750,770.00 $ 145,897.50
Years 4-6 26.30 1,879,398.00 156,616.50
Years 7-9 28.25 2,018,745.00 168,228.75
Years 10 plus any partial 30.35 2,168,811.00 180,734.25
month at the end of the Term
For this purpose, the first year
starts with the Lease Commencement
Date and ends one year later. The
rentable area of the Leased Premises
will be established by Landlord's
architect after measurement of the
Building and Leased Premises under
Section 1(g), and the foregoing
amounts shall be adjusted to reflect
the adjusted rentable area.
Notwithstanding the foregoing, until
the TI Payment is made under Section
32 below, the Basic Rent payments
will be reduced by an amount equal
to $2.25 per rentable square foot
per year, prorated appropriately.
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(l) Operating Expense
Increases: Tenant will pay as an Additional Charge hereunder Tenant's
Proportionate Share of Operating Expenses (including Real Estate
Taxes) paid or incurred each calendar year in excess of $8.60 per
square foot ("Expense Stop") payable as more fully provided in
Section 3(b) hereof and commencing with the thirteenth (13th) month
of the Lease Term. However, the increase in "Controllable Operating
Expenses" for any year from the prior year will be limited to five
per cent (5%). For this purpose, "Controllable Operating Expenses"
shall include only those items over which Landlord or the property
manager has discretion or control. For example, but without
limitation, property taxes, utilities and insurance premiums are not
Controllable Operating Expenses.
(m) Tenant's Proportionate
Share: 73.2% (the agreed percentage that the rentable square footage of the
Leased Premises bears to the total rentable square footage of all
office space contained in the Building), subject to adjustment
when final square footages are available under Section 1(g).
(n) Option Term: See Section 37 below.
(o) Security Deposit: $145,897.50 (an amount equal to one (1) month's Basic Rent), payable
one half (1/2) on that date which is six (6) months after full
execution of this Lease and one half (1/2) upon Landlord commencing
Tenant's Tenant Improvements. Landlord will hold the Security
Deposit in an interest-bearing account and credit the interest
thereon to Tenant as received or available.
(p) Parking: Tenant has the right to permits for three (3) unreserved and one (1)
reserved parking spaces per 1,000 square feet of the Leased Premises
at prevailing rates, plus tax, during the Lease Term and subject to
all applicable rules and regulations relating to the Garage, except
that reserved spaces will be $25.00 per month per space and
unreserved spaces will be $12.50 per month for the first two (2)
years of the Lease Term, and $37.50 and $18.75, respectively, for
years 3-5 of the Lease Term, plus tax; and for years 6-10 of the
Lease Term, the lesser of (i) $50.00 and $25.00, respectively, plus
customary increases therein which shall not exceed five per cent (5%)
per year, or (ii) then prevailing charges for such parking the
Project. All of
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these permits will allow for parking from 6:00 a.m.
to 6:00 p.m. Monday through Friday, inclusive of "event days".
Reserved spaces are reserved from 6:00 a.m. to 8:00 p.m. Monday
through Friday, and 8:00 a.m. to 12:00 noon on Saturday, excluding
holidays. During business hours, approximately 100 customer parking
spaces, including valet service, will be provided for the Project on
the P-1 level. Tenant's customers will receive the first 11/2hours
of parking free of charge to the customer and Tenant. Tenant may
purchase validation stickers/rights for its customers for additional
parking, at one half (1/2) of the prevailing posted rates from time to
time, with the initial such posted rate to be $1.50 per hour.
(q) First Right of Refusal to
Lease Additional Space: At such time as Landlord receives a Certificate of Substantial
Completion for the Building, Landlord shall advise Tenant of any
office space in the Building then available for lease, provided that
Tenant is not then in default or breach under this Lease after
expiration of any applicable cure periods. Further, at such time as
any office space within the Building is available for lease and not
subject to rights of any third party and provided Tenant is not then
in default or breach under this Lease, Landlord will give notice to
Tenant of the availability of such office space. If Tenant delivers
a letter of interest within fifteen (15) business days of receipt of
Landlord's notice, and the parties negotiate and execute a new Lease
therefor or an amendment to this Lease dealing with such space within
thirty (30) business days after Tenant receives Landlord's notice,
then Landlord shall not lease such space to any third party, but if
either of these requirements is not met, Landlord shall be free to
lease such office space to any third party and this provision shall
terminate and be of no further force or effect with respect to the
Lease of such office space until it is leased to a third party and
then becomes again available for lease thereafter; provided, however,
that if the proposed lease for a third party is at a lower rental
rate, Landlord shall present that lease to Tenant who may elect to
lease the office space in question in accordance with that lease by
executing the lease within seven (7) calendar days after receipt
thereof.
Each reference in this Lease to any of the Fundamental Lease Provisions
contained in this Section shall be construed to incorporate all of the terms
provided under each such Fundamental
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Lease Provision. In the event of any conflict between any Fundamental Lease
Provision and the balance of the Lease, the former shall control.
SECTION 2. EXHIBITS.
The following drawings and special provisions are attached hereto as exhibits
and made a part of this Lease, being incorporated herein by this reference.
EXHIBIT "A" - General site plan of an integrated retail/office building known as
"The Bank of America Building" which Landlord will construct at Mill Avenue and
7th Street in Tempe, Arizona, and the proposed layout of The Brickyard on Mill,
hereinafter referred to as the "Project." Said site plan shows, among other
things, the principal improvements which comprise said Project.
EXHIBIT "B" - Location and Dimensions of the Leased Premises.
EXHIBIT "C" - Tenant Improvements.
EXHIBIT "D" - Rules and Regulations.
EXHIBIT "E" -Estoppel Certificate.
EXHIBIT "F" - Guaranty.
EXHIBIT "G" - Confirmation of Lease Commencement Date and Other Terms.
EXHIBIT "H" - Estimated First Year Operating Expenses.
EXHIBIT "I" - Pro forma 2000 Budget of Tenant.
EXHIBIT "J" - Non-Disturbance, Attornment, Estoppel and Subordination Agreement.
SECTION 3. GENERAL DEFINITIONS. As used in this Lease, the following words and
phrases shall have the meanings indicated:
(a) Additional Charges. All amounts payable by Tenant to Landlord under this
Lease other than the Basic Rent, including amounts referred to as "additional
rent." All Additional Charges shall be deemed to be additional rent and all
remedies applicable to non-payment of Basic Rent shall be applicable thereto.
(b) Common Areas. All areas and facilities of the Building provided by Landlord
for the mutual, non-exclusive use of all tenants of the Building, including, but
not limited to, all parking areas, sidewalks, driveways, and landscape areas of
the Building, such Common Areas to be under the exclusive control of Landlord.
(c) Event of Default. Any of the events set forth in Section 18 shall be deemed
a default under this Lease.
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(d) Lease Year. The period commencing on the Lease Commencement Date and ending
on the last day of the calendar year in which said Lease Commencement Date
occurs shall constitute the first "Lease Year" as such term is used herein. Each
successive full calendar year during the Term thereafter shall constitute a
"Lease Year" and any portion of the Term remaining after the last full calendar
year shall constitute the last "Lease Year" for the purposes of this Lease.
(e) The word "mortgage," shall mean any mortgage or deed of trust, and the word
"mortgagee" shall mean the holder of any mortgage or the beneficiary of any deed
of trust.
(f) For purposes hereof, the term "Operating Expenses" shall mean all costs and
expenses paid or incurred by Landlord in connection with the ownership,
management, leasing, operation, servicing and maintenance of the office
component of Building as a First Class retail and office building including, but
not limited to, employees' wages, salaries and welfare and fringe benefits;
payroll taxes; business and franchise taxes; Real Estate Taxes; premiums for
fire and casualty, liability, workmen's compensation and other insurance;
electricity, gas, oil, sewer, water, and other fuel or utility charges;
telephone services; exterminating services; detection and security services;
parking lot and sidewalk repaving and trash and snow removal; landscaping
services; repairs, maintenance, additions, replacements and improvements made by
Landlord to the office component of Building (properly depreciating any capital
improvements); building, janitorial and cleaning supplies; uniforms and dry
cleaning; window cleaning; contracts for the servicing and maintenance of
elevators, boilers, HVAC, and other mechanical equipment; administrative costs
and overhead expenses; other miscellaneous expenses which are
management-related; and management fees.
The Building contains office and retail components. Those Building expenses that
are common for the entire Building (for example, exterior maintenance) will be
divided between the office and retail components based on relative rentable
square footages under Section 1(g), with only the office component's share
included in Operating Expenses for this Lease. Those expenses which relate to
services, facilities or functions for one component or the other will be
allocated entirely to that component and those allocated to the office component
will be included in Operating Expenses for this Lease. For example, retail
tenants receive limited services, and do not receive interior janitorial
services and pay for their own electricity. Therefore, expenses for janitorial
and electrical services for the office tenants will be entirely allocated to the
office tenants and will be included in Operating Expenses.
Operating Expenses further include the office component's share of all amounts
paid or incurred by Landlord with respect to the Building under or pursuant to
(a) the Declaration of Covenants, Conditions and Restrictions for The Brickyard
Condominium dated September 13, 1999, as amended, and the Articles, Bylaws and
Rules of or adopted by The Brickyard Association, as amended, and (b) the
"Parking Assessment" and any "O&M Costs" for the Building pursuant to which the
Parking Garage is available to the Building's tenants ("Brickyard Condo
Expenses"). To the extent these charges affect more than the Building, the
Building shall bear and be charged a proportionate share thereof based on the
relative rentable square footages, with that share to be allocated between the
office and retail component per the square footages determined under Section
1(g). The Building is part of Unit 2 of the Condominium. Initially, the
Building's share of the Brickyard Condo Expenses assessed against ▇▇▇▇ ▇ is
80.09%, the ▇▇▇ ▇▇▇▇▇▇ Building's
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share is 8.65% and the Unit 2 portion of the Orchidhouse Building's share is
11.26%, but these are subject to change if building square footages vary.
Landlord agrees that Tenant's Proportionate Share of Operating Expenses that are
Brickyard Condo Expenses will not exceed what would be Tenant's Proportionate
Share of Operating Expenses typically incurred for comparable buildings that are
not part of a condominium taking into account expenses which are avoided in this
Project due to the Building's participation in the Condominium, with appropriate
prorations and adjustments to account for differences in buildings and projects.
To the extent Landlord owns multiple buildings in the Project, some or all
Operating Expenses for all buildings may be aggregated, subject to the terms of
this Lease, with the Building to be allocated a proportionate share thereof
based on relative rentable areas.
The first year's estimated Operating Expenses budget is attached as Exhibit "H"
for illustrative purposes only and (a) the budget is subject to change by
Landlord at any time and (b) Landlord providing an estimated budget does not
constitute a representation or warranty that expenses will, in total or in any
line item, match the budget.
Notwithstanding the foregoing, Operating Expenses shall not include the
following:
(1) Any costs or expenses for which Landlord is or will be
reimbursed or indemnified (whether by an insurer, condemnor, tenant or
otherwise);
(2) Overhead and administrative costs of Landlord not directly
incurred in the operation and maintenance of the Building;
(3) Depreciation or amortization of the original Building or
its original contents or components;
(4) Expenses for the preparation of space or other work which
Landlord performs for any tenant or prospective tenant of the Building;
(5) Expenses for repairs or other work which is caused by
fire, windstorm, casualty or any other insurable occurrence, but
Landlord's insurance deductible will be included in Operating Expenses;
(6) Expenses incurred in leasing or obtaining new tenants or
retaining existing tenants, including leasing commissions, legal
expenses, advertising, entertaining or promotion;
(7) Interest, amortization or other costs, including legal
fees, associated with any mortgage, loan or refinancing of the Building
or any common areas, transfer or recordation taxes and other charges in
connection with the transfer of ownership in the Building, land trust
fees, and rental due under any ground lease relating to the property on
which the Building is located;
(8) Expenses incurred for any necessary replacement of any
item to the extent that it is covered under warranty, and the cost of
correcting defects in the construction of
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the Building or any common areas; provided, however, that repairs
resulting from ordinary wear and tear shall not be deemed to be
defects;
(9) The cost of any item or service which Tenant separately
reimburses Landlord or pays to third parties, or which Landlord
provides selectively to one or more tenants of the Building, other than
Tenant, whether or not Landlord is reimbursed by such other tenant(s).
This category shall include the actual cost of any special electrical,
heating, ventilation or air conditioning required by any tenant that
exceeds normal building standards or is required during times other
than the standard business hours stated in this Lease;
(10) Accounting and legal fees relating to the ownership,
construction, leasing, sale of or relating to any litigation in any way
involving the Building, or any common areas, or to the enforcement of
the terms of any lease, except accounting fees with respect to
computing Operating Expenses;
(11) Any interest or penalty incurred due to the late payment
of any Operating Expense and/or Real Estate Tax;
(12) The cost of correcting any applicable building or fire
code violation(s) or violations of any other applicable law relating to
the Building, or any common areas, and/or the cost of any penalty or
fine incurred for noncompliance with the same, and any costs incurred
to test, survey, cleanup, contain, ▇▇▇▇▇ or remove any environmental or
Hazardous Substances or materials, including asbestos containing
materials from the Building or any common areas or to remedy any breach
or violation of any Environmental Laws;
(13) Any personal property taxes of the Landlord for equipment
or items not used directly in the operation or maintenance of the
Building, nor connected therewith;
(14) Management fees in any year shall not exceed an amount
equal to four per cent (4%) of the gross rental revenue received for
that period. In no event shall the payroll, payroll related and other
expenses related to any employees of Landlord above the Building
Manager or equivalent operational level or not working full-time on the
management or operation of the Building be included in Operating
Expenses, provided that such expenses of part-time workers may be
included if equitably allocated to reflect actual time spent on the
Building;
(15) Any costs or expenses for sculpture, paintings, or other
works of art, including costs incurred with respect to the purchase,
ownership, leasing, repair, and/or maintenance of such works of art,
except those required as part of Tempe's arts program for new
buildings;
(16) All expenses directly resulting from the negligence or
willful misconduct of the Landlord, its agents, servants or other
employees;
(17) All bad debt loss, rent loss, or reserve for bad debt or
rent loss;
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(18) All costs associated with ensuring that the Building
operating and management systems and computer controlled facility
components have been designed or upgraded to accurately process
data/time data from, into and between the twentieth (20th) and
twenty-first (21st) centuries and the years 1999, 2000, and all leap
years;
(19) Payroll and payroll related expenses for any employees in
commercial concessions operated by the Landlord;
(20) Any amount paid to an entity related to Landlord which
exceed the amount that would have been paid for comparable goods or
services in an arms-length transaction between unrelated parties in
said market;
(21) Any expenditure made more than eighteen (18) months prior
to the calendar year covered by Landlord's Operating Expense statement,
except amortization items; and
(22) Capital expenditures including rentals and any other
related expenses incurred in leasing capital items, and contributions
to Operating Expense reserves, except those (i) required by new or
revised Requirements, or (ii) which will improve Operating Expenses,
amortized over the useful life thereof, provided the amortized cost in
any year does not exceed the reasonably estimated savings that would be
lost if that capital item was not incurred.
(g) The word "person" shall mean a natural person, a partnership, a corporation
and any other form of business or legal association or entity.
(h) The words "Prime Rate" shall mean the prime rate of interest charged from
time to time by Bank One Arizona or its successor to its most favored customers
on commercial loans having a 90-day duration.
(i) Real Estate Taxes. All taxes, assessments, water and sewer rents, if any,
and other charges, if any, general, special or otherwise, including all
assessments for schools, public betterments and general or local improvements,
levied or assessed upon or with respect to the ownership of and/or all other
taxable interests in the Building imposed by any public or quasi-public
authority having jurisdiction. Except for taxes, fees, charges and impositions
described in the next succeeding sentence, Real Estate Taxes shall not include
any inheritance, estate, succession, transfer, gift, income or profit tax or
capital levy. If at any time during the Term the methods of taxation shall be
altered so that in addition to or in lieu of or as a substitute for the whole or
any part of any Real Estate Taxes levied, assessed or imposed there shall be
levied, assessed or imposed (i) a tax, license fee, excise or other charge on
the rents received by Landlord, or (ii) any other type of tax or other
imposition in lieu of, or as a substitute for, or in addition to, the whole or
any portion of any Real Estate Taxes, then the same shall be included as Real
Estate Taxes. A tax ▇▇▇▇ or true copy thereof, together with any explanatory or
detailed statement of the area or property covered thereby, submitted by
Landlord to Tenant shall be prima facie evidence of the amount of taxes assessed
or levied, as well as of the items taxed. In the event any building adjacent to
the Building in which Landlord has an interest is not separately assessed and
taxed, Landlord shall have the right to allocate a proportionate share to
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each such building and Landlord's determination thereof shall be binding on the
parties hereto. If any real property tax or assessment levied against the land,
buildings or improvements covered hereby or the rents reserved therefrom, shall
be evidenced by improvement or other bonds, or in other form, which may be paid
in annual installments, only the amount paid or payable in any Lease Year shall
be included as Real Estates Taxes for that Lease Year for purposes of this
Section 3(i).
If, as a result of any application or proceeding brought by or on behalf of
Landlord for reduction in the assessed valuation of the property on which the
Building is located affecting any tax year occurring during the term of this
Lease, there shall be a decrease in Real Estate Taxes for any such tax year,
Landlord's next annual statement following such decrease shall include an
adjustment for such tax year reflecting the tax decrease, less all reasonable
costs and expenses incurred by Landlord in connection with the application or
proceeding to reduce the property taxes for said tax year.
(j) Requirements. All laws, statutes, ordinances, orders, rules, regulations and
requirements of all federal, state and municipal governments, and the
appropriate agencies, offices, departments, boards and commissions thereof, and
the board of fire underwriters and/or the fire insurance rating organization or
similar organization performing the same or similar functions, whether now or
hereafter in force, applicable to the Building or any part thereof and/or the
Leased Premises, and notices from Landlord's mortgagee, as to the manner of use
or occupancy or the maintenance, repair or condition of the Leased Premises
and/or the Building, and the requirements of the carriers of all fire insurance
policies maintained by Landlord on the Building, as well as the Rules and
Regulations attached hereto as Exhibit "D".
(k) The words "Shell Improvements" are defined in Exhibit "C".
(l) The words "Tenant Improvements" are defined in Exhibit "C".
(m) Term. The Initial Term and the extended term(s), if any, as to which Tenant
shall have effectively exercised any right to extend, but in any event the Term
shall end on any date when this Lease is sooner terminated.
SECTION 4. LEASE OF LEASED PREMISES
Landlord hereby leases unto Tenant and Tenant hereby leases and takes from
Landlord, the Leased Premises for the Lease Term, at the Rental, and upon the
covenants and conditions hereinafter set forth. Landlord shall deliver the
Leased Premises to Tenant in substantial conformance with the Improvements to be
constructed in accordance with Exhibit "C".
SECTION 5. COMPLETION OF LEASED PREMISES; TERM.
(a) Condition of Premises. Except to the extent of the Shell Improvements and
Tenant Improvements, Landlord is leasing the Leased Premises to Tenant "as is,"
without any obligation to alter, remodel, improve, repair or decorate any part
of the Leased Premises. Landlord shall cause the Premises to be completed in
accordance with Exhibit "C".
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(b) Tenant's Possession. Tenant's taking possession of any portion of the Leased
Premises shall be conclusive evidence that the Leased Premises was in good
order, repair and condition excepting any outstanding punch list items. If
Landlord authorizes Tenant to take possession of any part of the Leased Premises
prior to the Lease Commencement Date for any purpose, all terms of this Lease
shall apply to such pre-Term possession, excluding Basic Rent.
(c) Commencement Date. The term Commencement Date shall mean the date when all
of the following have occurred: (a) all of the Tenant Improvements to be
constructed by Landlord have been substantially completed in accordance with the
provisions of Exhibit "C" subject only to the completion of minor punch list
items that will not interfere with Tenant's use and operation of the Leased
Premises for the normal conduct of Tenant's business, (b) Tenant is allowed to
use and occupy the Leased Premises in accordance with all building and safety
codes and regulations and (c) Landlord has delivered the Leased Premises to
Tenant.
(d) Delay. If Landlord is unable to deliver the Leased Premises to Tenant, with
the Shell Improvements and Tenant Improvements substantially completed, on or
prior to November 30, 2000, solely because of any reason other than Tenant Delay
as described in Paragraph 4 of Exhibit "C" ("Landlord Delay") then (i) for the
first ninety (90) days of any such Landlord Delay, the Commencement Date shall
be adjusted back for each day of Landlord Delay; (ii) for the ninety-first
(91st) through the one hundred eightieth (180th) day of any such Landlord Delay,
Tenant shall receive a rent credit covering Basic Rent ("Rent Credit") equal to
one day's Basic Rent for each two days of such Landlord Delay and the
Commencement Date shall be adjusted back for each day of Landlord Delay; and,
(iii) in the event of any such Landlord Delay beyond the earlier of (i) one
hundred eight (180) days plus any Force Majeure, delays, or (ii) two hundred
seventy (270) days without extension for Force Majeure, then Tenant shall have
the right to terminate this Lease on written notice to Landlord and any monies
previously paid by Tenant shall be promptly returned to Tenant and the parties
shall have no further duties or obligations under this Lease and all ancillary
documents. The assumption of possession of the Leased Premises by Tenant shall
constitute an acknowledgement by Tenant that the Leased Premises are in good
condition and the work done by Landlord therein is satisfactory and accepted in
their then "as is" condition subject to the completion of any outstanding punch
list items. Within ten (10) days after the Lease Commencement Date, Landlord and
Tenant shall, at the request of either of them, execute a written instrument
setting forth the Lease Commencement Date, date of expiration of the Term,
measured rentable square footage, Basic Rental and Tenant's Proportionate Share
pursuant to Exhibit "G" attached hereto.
SECTION 6. RENT AND ADDITIONAL CHARGES; COMPUTATION OF OPERATING EXPENSE
INCREASES.
(a) Payment of Rent and Additional Charges. Tenant shall pay the Basic Rent in
equal monthly installments in advance on the first day of each month during the
Term, except that if the Lease Commencement Date is not the first day of a
month, Basic Rent for the period commencing on the Lease Commencement Date and
ending on the last day of the month in which the Lease Commencement Date occurs
shall be pro-rated for each day at the rate of one-thirtieth (1/30) of the full
monthly installment of Basic Rent and paid on the Lease Commencement Date. If
any due and owing Basic Rent is underpaid as a result of failure to make any
required adjustment thereto or other cause, after such required adjustment
thereto or other cause, Tenant shall pay such deficiency in its entirety along
with the next monthly payment
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of Basic Rent. Tenant shall also pay Tenant's Proportionate Share of Operating
Expense Increases as provided in Section 6(b) hereof. Except as may otherwise be
provided herein, the Basic Rent and all Additional Charges shall be paid
promptly when due, in lawful money of the United States, without notice or
demand and without deduction, diminution, abatement, counterclaim or setoff of
any amount or for any reason whatsoever, to Landlord at Landlord's Notice
Address or at such other address or to such other person as Landlord may from
time to time designate. Tenant shall further pay, as an Additional Charge, all
sales, excise, rent or other taxes levied or charged on amounts paid by Tenant.
If Tenant makes any payment to Landlord by check, the same shall be by check of
Tenant only, and Landlord shall not be required to accept the check of any other
person, and any check received by Landlord shall be deemed received subject to
collection. If any check is mailed by Tenant, Tenant shall post such check in
sufficient time prior to the date when payment is due so that such check will be
received by Landlord on or before the date when payment is due. Tenant shall
assume the risk of lateness or failure of delivery of the mails. All bank
service charges resulting from any bad checks shall be borne by Tenant. The Rent
reserved under this Lease shall be the total of all Basic Rent and Additional
Charges, increased and adjusted as elsewhere herein provided, payable during the
entire Term and, accordingly, the methods of payment provided for herein,
namely, annual and monthly rental payments, are for convenience only and are
made on account of the total Rent reserved hereunder.
(b) Computation of Operating Expense Increases.
(1) Following the expiration of each calendar year, Landlord shall
submit to Tenant a statement setting forth in reasonable detail the Operating
Expenses for the preceding calendar year and the amount, if any, due to Landlord
from Tenant for such calendar year on account of Operating Expense Increases,
less any estimated amounts thereof paid by Tenant as provided below and taking
into account the limitation on increases in Controllable Operating Expenses set
forth in Section 1(l) above. Such statement shall constitute a final
determination between Landlord and Tenant for the period represented thereby,
and if such statement shows Operating Expense Increases due from Tenant to
Landlord with respect to the preceding calendar year, in excess of any estimated
amounts thereof paid by Tenant, then Tenant shall make payment of any unpaid
portion thereof within ten (10) days after receipt of such statement. If the
estimated payments by Tenant exceed the Operating Expense Increases, Landlord
will credit the excess against the next amounts due from Tenant for Operating
Expense Increases. At any time (but not more than twice during any calendar
year), Landlord may estimate or re-estimate the amount of Operating Expense
Increases to be due for a calendar year and require and adjust monthly
installment payments of the estimated increase, including payment of additional
estimated amounts for prior months upon adjustment of any estimate, as
additional rent. The regular monthly estimated amounts shall be payable on the
first day of each month, and any "catch up" or adjustment payments will be due
within thirty (30) days of Landlord providing a statement thereof. All estimated
payments made shall be credited toward the Operating Expense payment due from
Tenant for the current calendar year, subject to adjustment as and when the
statement for such current calendar year is rendered by Landlord.
(2) If the Lease Commencement Date is not the first day of a calendar
year, then the Operating Expense payment (if any) due hereunder for such first
calendar year shall be a
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proportionate share of said Operating Expense payment for the entire calendar
year, said proportionate share to be based upon the length of time that the Term
was in existence during such first calendar year. Upon the date of expiration or
termination of this Lease, whether the same be the date hereinabove set forth
for the expiration of the Term, or any prior or subsequent date, a proportionate
share of said Operating Expense payment for the calendar year during which such
expiration or termination occurs shall immediately become due and payable by
Tenant to Landlord, if it was not theretofore already billed and paid. The said
proportionate share shall be based upon the length of time that the Term shall
have been in existence during such calendar year. Landlord shall, as soon as
reasonably practicable, cause statements of the Operating Expenses for that
calendar year to be prepared and furnished to Tenant. Landlord and Tenant shall
thereupon make appropriate adjustments of amounts then owing. Landlord's and
Tenant's obligation to make the adjustments referred to in subparagraphs (1) and
(2) of this Section 3(b) shall survive any expiration or termination of this
Lease. Any delay or failure of Landlord in billing any Operating Expense payment
hereinabove provided shall not constitute a waiver of or in any way impair the
continuing obligation of Tenant to pay such Operating Expense payment.
(3) Landlord agrees to maintain complete records of Operating Expenses.
All such records shall be retained following the furnishing by Landlord to
Tenant of Landlord's statement of accounting as to such expenses, for a period
of at least three years. Not more frequently than once per year, and, with
respect to any fiscal year, until the end of one calendar year thereafter,
Tenant, or its representatives, shall have the right to examine and to copy
Landlord's books and records showing such expenses at Tenant's sole cost and
expense and Landlord shall reasonably cooperate in any such inspection or audit.
Such examination will be upon reasonable prior notice to Landlord and during
normal business hours at the office of landlord's Building Manager or such other
place designated by Landlord following Tenant's receipt of the Landlord's
statement. The results of such review shall be for the benefit of Landlord and
Tenant only, shall be maintained in confidence by Tenant and shall not be
disseminated or furnished to any other person or entity. Tenant may use
accountants or other professionals to aid Tenant in conducting the audit, but
Tenant may not use any auditing services or consultants that are paid on a
contingent fee basis or are owned by, affiliated with, employed by or related to
any office building landlords or office building management companies or
services.
If, as a result of Tenant's review, Tenant claims that any particular items were
incorrectly included as Operating Expenses or incorrectly reflected as to the
amount due under this Lease or Tenant claims any mathematical errors exist in
Landlord's statement, Tenant shall promptly give written notice to Landlord
after the audit. Said notice shall clearly reflect the reasons for the
disagreement and the amount claimed by Tenant as owed from Landlord. Tenant and
Landlord shall then meet in an effort to resolve the differences in their
respective findings. If a resolution is not reached within twenty (20) days of
Tenant's written notice, then the parties shall jointly designate an independent
certified public accountant to audit the Operating Expenses for the period in
question. The findings of said accountant shall be binding on both the Landlord
and Tenant. To the extent that the accountant's determination of Operation
Expenses indicates that the expenses reflected on Landlord's statement were
overstated by more than seven percent (7%) of the actual Operating Expenses for
the subject year, then Landlord shall bear the cost of the audit and shall
refund all amounts of over payment made by Tenant with interest at the rate set
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forth in Section 7(d) of the Lease within ten (10) days following receipt of the
accountant's determination.
(c) Tax Abatement. As a financial incentive to the development of the Leased
Premises and other portions of the Building, Landlord received an abatement or
reduction in amounts which would otherwise be payable as taxes to the City of
Tempe, Maricopa County or other taxing authority (the "Tax Abatement"), during
all or part of the Lease Term, in accordance with Arizona Revised Statutes
Section 42-6209, as amended. Even though such Tax Abatement constitutes a
financial benefit to Landlord, Operating Expenses shall be deemed to include, on
an annual basis, an amount equal to Two and 29/100 Dollars ($2.29) multiplied by
the number of square feet of the Leased Premises, as hereinafter adjusted
("Abated Taxes Payment"). The Abated Taxes Payment shall be included in the
Tenant's Proportionate Share of the Operating Expenses. The Abated Taxes Payment
is intended to approximate the Tenant's share of the additional taxes which
would have been payable in the event that Landlord had not obtained the Tax
Abatement. Landlord and Tenant acknowledge and agree that it is difficult to
determine accurately the precise amount of additional taxes which would have
been payable were it not for the Tax Abatement, and, accordingly, Landlord and
Tenant agree that the Abated Taxes Payment is a fair and equitable payment.
Tenant's Proportionate Share of Operating Expenses shall include the Abated
Taxes Payment for as long as Landlord receives the Tax Abatement. For the Tax
Year (as hereinafter defined) in which the Lease Term commences or terminates,
the provisions of this paragraph shall apply, but the liability of Tenant for
its Abated Taxes Payment for such Tax year shall be subject to a pro rata
adjustment based upon the number of days of such Tax Year falling within the
Lease Term.
The Abated Taxes Payment shall be adjusted annually, as of the first day of each
Tax Year (as hereinafter defined), by the percentage increase in real estate
taxes for comparable projects in the City of Tempe as compared to the real
estate taxes for such projects as of the first day of the preceding tax year;
provided, however, that the annual adjustment shall not exceed five percent (5%)
per Tax Year during the Lease Term. Tenant shall be obligated to pay the Abated
Taxes Payment regardless of any difference in tax rates which may be applicable
to different portions of the Project or Building, and regardless of the actual
assessed values and tax rates applicable or allocable to the Leased Premises
and/or the Project or Building.
Landlord shall give to Tenant prior to or during each Tax Year throughout the
Lease Term an estimated Abated Taxes Payment statement in which Landlord shall
estimate the Abated Taxes Payment included in Operating Expenses for such Tax
year ("Abated Taxes Payment Statement").
After each Tax Year, Landlord shall give Tenant notice of the final Abated Taxes
Payment for such Tax Year included in Operating Expenses, and the same will be
reconciled as part of the reconciliation of estimated and actual Operating
Expenses.
"Tax Year" means each twelve (12) month period established as the real estate
tax year by the taxing authorities having lawful jurisdiction over the Building.
(d) Interest. If Tenant fails to pay any Basic Rent or Additional Charges within
10 days after the same becomes due and payable and Tenant has received written
notice of such failure from
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Landlord and has not cured such failure within 5 days of such notice, interest
shall, at Landlord's option, accrue on the unpaid portion thereof at the rate of
one percent (1%) per month or one percentage point above the Prime Rate in
effect on such due date, whichever is higher, but in no event at a rate higher
than the maximum rate allowed by law, and shall be payable on demand. Such
interest shall be deemed additional rent hereunder and shall be collectible as
such.
(e) Accord and Satisfaction. No payment by Tenant or receipt by Landlord of any
lesser amount than the amount stipulated to be paid hereunder shall be deemed
other than on account of the earliest stipulated Basic Rent or Additional
Charges; nor shall any endorsement or statement on any check or letter be deemed
an accord and satisfaction, and Landlord may accept any check or payment without
prejudice to Landlord's right to recover the balance due or to pursue any other
remedy available to Landlord.
(f) Late Payment Charge. If Tenant fails to pay any Basic Rent or Additional
Charges within 10 days after the same become due and payable and Tenant has
received written notice of such failure from Landlord and has not cured such
failure within 5 days of such notice, Tenant shall also pay to Landlord a late
payment service charge (to cover Landlord's administrative and overhead expenses
of processing late payments) equal to the greater of $100.00 or 5% of such
unpaid sum. Such payment shall be deemed liquidated damages and not a penalty,
but shall not excuse the timely payment of rent.
SECTION 7. COMMON AREAS. Throughout the Term, Tenant and its agents, employees
and business invitees shall have the non-exclusive right, in common with others,
to use the Common Areas in the Building. Landlord shall have the right at any
time, without Tenant's consent, to change the arrangement or location of
entrances, passageways, doors, doorways, corridors, stairs, toilet rooms or
other public portions of the Building, or to change the name, number or
designation by which the Building is known. Landlord reserves unto itself the
full and complete ownership of all tangible personal property installed by the
Landlord in the Building which is of the type and character that qualifies for
any depreciation or Investment Tax Credit under the Internal Revenue Code.
Notwithstanding the foregoing, except to the extent required by applicable law
or as a result of casualty, the Common Areas and the entrance and exist to the
Leased Premises and the Building will not be modified, reconfigured, or altered
in any manner that would materially and adversely affect access to or the
appearance and design of the Leased Premises and/or materially and adversely
affect Tenant's use of the Leased Premises without Tenant's prior written
consent (which consent may be withheld in Tenant's sole discretion), nor will
any action be taken by Landlord with respect to the Common Areas the effect of
which would be to (a) materially interfere with Tenant's business operation in
or diminish the use and enjoyment of the Leased Premises, or (b) discriminate
between tenants in the Building, except to the extent required by applicable law
or as a result of casualty.
SECTION 8. SERVICES AND UTILITIES.
(a) Types. Throughout the Term, Landlord agrees that, without additional charge
except as set forth below but subject to Section 1(l) and 26(b) hereof, it will
furnish to Tenant the following services:
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(1) Electricity for normal lighting purposes and the operation of
ordinary office equipment, subject to Section 10(b)(ix) hereof;
(2) Adequate supplies for toilet rooms;
(3) Normal and usual cleaning and janitorial services after business
hours each day except on Saturdays, Sundays and legal holidays recognized by the
United States Government, consistent with customary standards for first class
office buildings;
(4) Hot and cold running water in the bathrooms;
(5) Air cooling/heating, when required, between the hours of 7:00 A.M.
and 6:00 P.M. Mondays through Fridays and between 7:00 A.M. and 1:00 P.M. on
Saturdays, except on legal holidays recognized by the United States Government.
Landlord reserves the right to establish and collect a charge for air
cooling/heating utilized by Tenant during hours and/or days other than those set
forth above, but Landlord's failure to establish and/or collect such charge
shall not be deemed a waiver of Landlord's right to include all costs for air
cooling in the computation of increases in Landlord's Operating Expenses for
purposes of Section l(l) hereof;
(6) Automatically operated elevator service;
(7) All electric bulbs and fluorescent tubes in standard light fixtures
in the Leased Premises and in public areas; and
(8) Twenty (20) keys to the Leased Premises at no cost to Tenant, with
all additional keys at the cost of Tenant.
All services to be provided by Landlord and the management and operation of the
Building shall be at or above a level consistent with that customarily provided
to tenants of comparable First Class office buildings in the Phoenix, Arizona
metropolitan area. Subject to casualty, utility outages and other unplanned
interruptions and occasional customary Building shut downs for maintenance, all
utility and other services to and for the Leased Premises, including, but not
limited to HVAC services, will be available twenty-four (24) hours a day, seven
(7) days a week (provided that if Tenant requires utility, HVAC or other
services outside of the normal hours for building operation as defined in
Section 8(a)(5), Landlord shall have the right to charge Tenant for the actual
out-of-pocket costs incurred by Landlord in providing such services without any
markup). In the event of any interruption of services and utilities, Landlord
shall use its best efforts to promptly restore such services and utilities. If
any failure to provide services or utilities continues for more than forty-eight
(48) hours or materially interferes with Tenant's conduct of business in or use
and operation of the Leased Premises, Tenant shall be entitled to an equitable
abatement of rent for such period of time as the interruption is in effect, as
Tenant's sold remedy. In the event that an interruption of services or utilities
extends beyond a period of thirty (30) consecutive days or more than thirty (30)
days out of any consecutive sixty (60) day period, Tenant shall have the right
to terminate this Lease upon sixty (60) days written notice to Landlord, as
Tenant's sole remedy.
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(b) Access. Landlord shall have access to and reserves the right to inspect,
erect, use, connect to, maintain and repair pipes, ducts, conduits, cables,
plumbing, vents and wires, and other facilities in, to and through the Leased
Premises as and to the extent that Landlord may now or hereafter deem to be
necessary or appropriate for the proper operation and maintenance of the
Building (including the servicing of other tenants in the Building) and the
right at all times to transmit water, heat, air conditioning and electric
current through such pipes, conduits, cables, plumbing, vents and wires and the
right to interrupt the same in emergencies without eviction of Tenant or
abatement of Rent. The parties further agree: (i) Landlord will provide Tenant
reasonable advance notice of any entry to the Leased Premises except in the
event of emergencies, and (ii) nothing will be done hereunder that would
permanently, materially and adversely alter the aesthetics or the utility of the
Leased Premises for Tenant's permitted use without Tenant's prior written
consent. In entering the Leased Premises, Landlord shall use reasonable efforts
to minimize any interference with or disruption of Tenant's operations.
Notwithstanding anything in this Lease to the contrary, if Landlord's entry onto
the Leased Premises or other exercise of its rights under this Lease interferes
with Tenant and such interference causes a material and adverse impact on
Tenant's operations at, use or enjoyment of the Leased Premises and such impact
continues beyond forty-eight (48) hours, Tenant shall be entitled to an
equitable abatement of rent to the extent and for such period of time as the
interference continues, except for casualty governed by Section 15. If such
interference continues beyond one hundred twenty (120) days, Tenant shall be
entitled to terminate this Lease upon written notice to Landlord, except for
casualty governed by Section 15.
SECTION 9. UPKEEP OF PREMISES. Subject to the provisions of Section 12 hereof,
Landlord agrees to maintain the Leased Premises and the Building in good order
and repair to a level appropriate for a First Class office and retail building
throughout the Term, except that Tenant, and not Landlord, shall be responsible
for (i) maintaining any special air conditioning equipment and any other Special
Items located in the Leased Premises, and (ii) reimbursing Landlord for the full
cost of any repairs to the Leased Premises caused by the act or negligence of
Tenant or its agent or employees not covered by insurance, such reimbursement to
be collectible as additional rent hereunder immediately upon demand from
Landlord.
SECTION 10. USE OF LEASED PREMISES.
(a) General Offices. Tenant shall use and occupy the Leased Premises solely for
general office purposes, and shall not use or permit or suffer the use of the
Leased Premises for any other purpose whatsoever without the prior written
consent of Landlord. No outside storage will be allowed by Landlord. Tenant will
have no exclusive right to operate any particular type or kind of business in
the Building.
(b) Covenants. Throughout the Term, Tenant covenants and agrees to: (i) keep the
Leased Premises in a neat and clean condition; (ii) pay before delinquency any
and all taxes, assessments and public charges levied, assessed or imposed upon
Tenant's business, upon the leasehold estate created by this Lease or upon
Tenant's fixtures, furnishings or equipment in the Leased Premises; (iii) not
use or permit or suffer the use of any portion of the Leased Premises for any
unlawful purpose; (iv) not use the plumbing facilities for any purpose other
than that for which they were constructed, or dispose of any foreign substances
therein; (v) not place a load on any
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floor exceeding the floor load per square foot which such floor was designed to
carry in accordance with the plans and specifications of the Building, and not
install, operate or maintain in the Leased Premises any heavy item of equipment
except in such manner as to achieve a proper distribution of weight; (vi) not to
strip, overload, damage or deface the Leased Premises, or the hallways,
stairways, elevators, parking facilities or other public areas of the Building,
or the fixtures therein or used therewith, nor to permit any hole to be made in
any of the same; (vii) not to move any furniture or equipment into or out of the
Leased Premises except at such times and in such manner as Landlord may from
time to time reasonably designate; (viii) not to use any floor adhesive in the
installation of any carpeting; (ix) not to install or operate in the Leased
Premises any electrical heating or refrigeration equipment, electronic data
processing equipment, punch card machines or other equipment not shown on
approved plans without first obtaining the written consent of Landlord which
consent will not be unreasonably withheld or delayed; (x) not to install any
other equipment of any kind or nature which will or may necessitate any changes,
replacements or additions to, or in the use of, the water system, heating
system, plumbing system, air conditioning system or electrical system of the
Leased Premises or the Building, without first obtaining the written consent of
Landlord which consent will not be unreasonably withheld or delayed; and (xi) at
all times to comply with the Requirements.
(c) Prohibitions. Tenant will not use or occupy the Leased Premises in violation
of any Requirement. If any governmental authority, after the commencement of the
Term, shall contend or declare that the Leased Premises are being used for a
purpose which is in violation of any Requirement, then Tenant shall, upon ten
(10) days' notice from Landlord, immediately discontinue such use of the Leased
Premises. If thereafter the governmental authority asserting such violation
threatens, commences or continues criminal or civil proceedings against Landlord
for Tenant's failure to discontinue such use, in addition to any and all rights,
privileges and remedies given to Landlord under this Lease for default therein,
Landlord shall have the right to terminate this Lease forthwith. Tenant shall
indemnify and hold Landlord harmless of and from any and all liability for any
such violation or violations.
SECTION 11. RULES AND REGULATIONS. Tenant and its agents and employees shall
comply with and observe all reasonable rules and regulations concerning the use,
management, operation, safety and good order of the Leased Premises and the
Building which may from time to time be promulgated by Landlord. Initial rules
and regulations, which shall be effective until amended by Landlord, are
attached hereto as Exhibit "D". Tenant shall be deemed to have received notice
of any amendment to the rules and regulations when a copy of such amendment has
been delivered to Tenant at the Leased Premises or has been mailed to Tenant in
the manner prescribed for the giving of notices. Further, Tenant and its agents
and employees shall comply with all fire protective rules and regulations
promulgated by the Landlord for the safety of the Building and its occupants,
including rules prescribing certain types of materials and prohibiting other
types of materials in the Building, Garage rules and regulations and rules and
regulations of the Association, as the same exist from time to time. Landlord
shall not be responsible to Tenant for any violation of the rules and
regulations, or the covenants or agreements contained in any other lease, by any
other tenant of the Building or Project, or its agents or employees, and
Landlord may waive in writing, or otherwise, any or all of the rules or
regulations in respect of any one or more tenants of the Building. Any future or
modified rules or regulations the application of which would (i) conflict with
any provisions of this Lease or with any rights granted to Tenant
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hereunder, or (ii) have a material and adverse impact on Tenant's business
operations and/or use of the Leased Premises, will be deemed waived as to Tenant
to the extent necessary to protect Tenant's interests hereunder. Otherwise,
Landlord will not apply the rules and regulations more strictly as against
Tenant as such rules and regulations are enforced vis a vis other tenants and
occupants, and Landlord will provide Tenant with reasonable advance written
notice of any changes in the rules and regulations.
SECTION 12. ALTERATIONS. Tenant will not make or permit anyone to make any
alterations, additions or improvements, structural or otherwise, in or to the
Leased Premises or the Building (except interior non-structural alterations or
improvements costing $2,500 or less (for which prior notice will be given to
Landlord)) without first obtaining the written consent of Landlord which consent
will not be unreasonably withheld or delayed. In designing and making any
approved changes, Tenant will follow all building standard specifications,
unless otherwise expressly agreed to by Landlord in writing. In the event
Landlord is required to and does consent to any such alterations, etc., Landlord
shall have the right to contract out any work, and in such event Tenant shall be
obligated to pay Landlord the cost thereof plus ten percent (10%) for overhead
payable fifty percent (50%) upon commencement and fifty percent (50%) upon
completion. Such payments shall be deemed to be Additional Charges hereunder. In
the event Landlord grants such consent and permits Tenant to contract out such
work, such alterations shall be performed by adequately insured contractors
approved by Landlord and in a good and workmanlike manner in accordance with all
applicable Requirements, and Tenant shall indemnify and hold harmless Landlord
from and against any and all costs, expenses, claims, liens and damages to
person or property resulting from the making of any such alterations,
decorations, additions or improvements in or to the Leased Premises or the
Building. Tenant shall not permit a mechanic's lien or liens to be placed upon
the Leased Premises or the Building as a result of any alterations or
improvements made by it and agrees, if any such lien be filed on account of the
acts of Tenant, promptly to pay the same. In the event Tenant fails to pay any
such lien, it may be paid by Landlord without releasing Tenant and the cost
charged to Tenant as additional rent under this Lease. If any such alterations,
decorations, additions or improvements are made without the prior written
consent of Landlord, Landlord may correct or remove the same and Tenant shall be
liable for any and all costs and expenses incurred by Landlord in such removal.
TENANT SHALL NOT MAKE OR ALLOW ANY PENETRATIONS OF OR HOLES IN ANY ROOFS, FLOORS
OR WALLS WITHOUT LANDLORD'S EXPRESS WRITTEN CONSENT WHICH WILL NOT BE
UNREASONABLY WITHHELD OR DELAYED, AND COMPLYING WITH LANDLORD'S REQUIREMENTS
THEREFOR IF CONSENT IS GIVEN.
SECTION 13. SIGNS. Tenant shall not inscribe, paint, affix, or otherwise display
any sign, advertisement or notice on any part of the out side or inside of the
Building. Landlord shall provide, at the cost of Tenant, standard exterior
signage to be affixed at the entrance to the Leased Premises. Landlord shall
also prepare and install at Tenant's expense a nameplate designating Tenant on
the directory for the Building. As part of the Tenant Improvements, Landlord
will install Building signage for Tenant mutually approved by the parties,
subject to City of Tempe requirements and approvals, it being agreed that the
signage granted to Tenant shall be as prominent both as to size and location on
the Building as the City will permit. Tenant will obtain and maintain all
required permits therefor. If any other signs, advertisements or
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notices are painted, affixed, or otherwise displayed without the prior approval
of Landlord, Landlord shall have the right to remove the same, and Tenant shall
be liable for any and all costs and expenses incurred by Landlord in such
removal.
SECTION 14. INSURANCE.
(a) Tenant's Insurance. Tenant, at Tenant's sole cost and expense, shall obtain
and maintain in effect at all times during the Term the following policies:
(i) a policy of commercial general public liability insurance
with broad form property damage endorsement, naming Landlord, and (at
Landlord's request) any mortgagee of the Building, any ground landlord
and any other agent as additional named insured(s), protecting
Landlord, Tenant and any such mortgagee, ground landlord and agent
against any liability for bodily injury, death or property damage
occurring upon, in or about any part of the Building, the Leased
Premises or any appurtenances thereto, with such policies to afford
protection of not less than $2,000,000 per occurrence combined single
limit, and with a deductible no greater than $10,000.00 for any single
occurrence;
(ii) special form property insurance policy, including without
limitation fire, sprinkler damage, and theft coverage, written at
replacement cost value and with replacement cost endorsement, covering
all of Tenant's personal property in the Leased premises (including,
without limitation, inventory, trade fixtures, floor coverings,
furniture and other property removable by Tenant under the provisions
of this Lease), with a deductible not exceeding $5,000;
(iii) if and to the extent required by law, Worker's
Compensation policy or similar insurance and other employee benefits in
form and amounts required by law; and
(iv) business interruption insurance that will pay all Rental
due hereunder for at least six (6) calendar months, such insurance to
cover interruptions caused by the usual and customary events described
by such forms and shall include in any event interruption by fire,
flood or other casualty, and interruption due to closure or other
action by any governmental authority.
(b) Landlord's Insurance. Landlord agrees to carry during the entire Lease Term
and any extensions thereof casualty and liability insurance in no event less
than:
(i) Fire and extended coverage insurance on the Building in
the form of an All Risk, Special Form or Direct Damage policy in the
amount of the full replacement cost thereof; and
(ii) Comprehensive liability and property damage insurance
against claims for bodily injury, loss of life or property damage
occurring on or in the Building and on the portion of the streets and
sidewalks adjacent thereto with bodily injury, loss of life and
property damage coverage in a combined single limit of not less than
$2,000,000 for total claims from any one occurrence and $1,000,000 with
respect to any one (1) person, with
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Tenant named as an additional insured and with a deductible no greater
than $10,000 for any single occurrence.
(c) Policies. The insurance policy required to be obtained under this Lease (i)
shall be issued by an insurance company of recognized responsibility licensed to
do business in the jurisdiction in which the Building is located, and (ii) shall
be written as primary policy coverage and not contributing with or in excess of
any other coverage. Neither the issuance of any insurance policy required under
this Lease, nor the minimum limits specified herein with respect to either
party's insurance coverage, shall be deemed to limit or restrict in any way the
other party's liability arising under or out of this Lease. With respect to each
insurance policy required to be obtained by Tenant under this Section, on or
before the Lease Commencement Date, and at least thirty (30) days before the
expiration of any expiring policy or certificate previously furnished, Tenant
shall deliver to Landlord a certificate of insurance therefor, together with
evidence of payment of all applicable premiums. Each insurance policy required
to be carried hereunder by or on behalf of Tenant shall provide (and any
certificate evidencing the existence of each such insurance policy shall
certify) that such insurance policy shall not be canceled unless Landlord shall
have received thirty (30) days' prior written notice of such cancellation.
(d) Prohibitions. Tenant shall not do, permit or suffer to be done any act,
matter, thing or failure to act in respect of the Leased Premises and/or the
Building that will invalidate or be in conflict with fire insurance policies
covering the Building or any part thereof, and shall not do, or permit anything
to be done, in or upon the Leased Premises and/or the Building, or bring or keep
anything therein, which shall increase the rate of fire insurance on the
Building or on any property located therein. If, by reason of the failure of
Tenant to comply with the provisions of this subsection, the fire insurance rate
shall at any time be higher than it otherwise would be, then Tenant shall
reimburse Landlord on demand, for that part of all premiums for any insurance
coverage that shall have been charged because of such violation by Tenant and
which Landlord shall have paid on account of an increase in the rate or rates in
its own policies of insurance.
(e) Hold Harmless; Subrogation. Tenant hereby agrees to indemnify and hold
harmless Landlord, and any mortgagee from and against any and all claims,
losses, actions, damages, liabilities and expenses (including attorneys' fees)
that (i) arise from or are in connection with Tenant's possession, use,
occupation, management, repair, maintenance or control of the Leased Premises,
or any portion thereof, or (ii) arise from or are in connection with any act or
omission of Tenant or Tenant's agents, employees, contractors or invitees, or
(iii) result from any default, breach, violation or non-performance of this
Lease or any provision herein by Tenant, or (iv) result in injury or death to
persons or damage to property sustained in or about the Leased Premises. Tenant
shall, at its own cost and expense, defend any and all actions, suits and
proceedings which may be brought against Landlord, and/or any mortgagee with
respect to the foregoing or in which Landlord, and/or any mortgagee may be
impleaded. Tenant shall pay, satisfy and discharge any and all judgments, orders
and decrees which may be recovered against Landlord, and/or any mortgagee in
connection with the foregoing. Landlord and Tenant each hereby waive any and all
rights of recovery against the other or against the members, managers, officers,
directors, partners, and shareholders of the other, on account of loss or damage
occasioned to such waiving party or its property or any property of others under
its control to the extent that such loss or damage is insured or would be
insured under the insurance required to be
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maintained pursuant to this Lease. Landlord and Tenant will each, upon obtaining
the respective policies of insurance required under this Lease, give notice to
the insurance carrier or carriers that the foregoing mutual waiver of
subrogation is contained in this Lease and obtain from the respective carriers
an endorsement waiving any right of subrogation in favor of the insurer.
SECTION 15. DAMAGE BY FIRE OR OTHER CASUALTY. Tenant shall give prompt notice to
Landlord in case of any fire or other damage to the Leased Premises. If the
Leased Premises or the Building are damaged by fire or other casualty, Landlord
shall diligently and as soon as practicable after such damage occurs (taking
into account the time necessary to effectuate a satisfactory settlement with
Landlord's insurance company) repair such damage at its own expense, and until
such repairs have been completed the Basic Rent and Additional Charges shall be
abated in proportion to the part of the Leased Premises which is rendered
unusable for the normal conduct of Tenant's business. However, if the Leased
Premises or the Building are damaged by fire or other casualty to such an extent
that the damage cannot be fully repaired within one hundred eighty (180) days
from the date such damage occurs, either party shall have the right to terminate
this Lease by giving notice of termination to the other within forty-five (45)
days following the date Landlord notifies Tenant in writing that the estimated
repair period will exceed one hundred eighty (180) days. Notwithstanding
anything contained in this Lease to the contrary, if Landlord fails to complete
such repairs within two hundred forty (240) days after the date of the casualty
(without regard to any force majeure event), Tenant shall have the right to
cancel this Lease by written notice given to Landlord at any time prior to
completion of such repairs.
SECTION 16. CONDEMNATION. If the Leased Premises, or all or substantially all of
the Building (or the use or possession thereof), shall be taken in condemnation
proceedings or by exercise of any right of eminent domain, or by a private
purchase in lieu thereof, then this Lease shall terminate and expire on the date
of such taking or purchase and Tenant shall, in all other respects, keep,
observe and perform all the other terms, covenants and conditions of this Lease
up to the date of such taking. The net proceeds of any award or other
compensation payable in connection with such taking or purchase shall be paid to
Landlord, and Tenant hereby assigns to Landlord all of its right, title and
interest in and to such award or other compensation. Tenant shall have no claim
against Landlord for the value (if any) of personal property in the Leased
Premises or the unexpired Term. Tenant's assignment of its interest in any
condemnation award to Landlord is conditioned upon its legal right to prosecute
a separate claim in the condemnation proceeding for any relocation award to
which it may be entitled or for any furniture, trade fixtures or other fixtures
which Tenant is entitled to remove at the termination of the Lease and which are
subject to the taking, for the unamortized cost of any improvements paid for by
Tenant and for any relocation or other business disruption loss Tenant incurs as
a result of such taking. If Tenant's access to the Leased Premises is taken as a
result of the condemnation, the Lease shall terminate upon the effective date of
the taking unless the parties agree otherwise.
SECTION 17. ASSIGNMENT AND SUBLETTING.
(a) Prohibition. Except as provided in Subsection (c) below, neither Tenant nor
its successors or assigns shall transfer, assign, mortgage or encumber this
Lease, by operation of law or otherwise, or sublet or permit the Leased
Premises, or any part thereof, to be used by
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others, without the prior written consent of Landlord which consent shall not be
unreasonably withheld or delayed. If Tenant is a corporation, any transfer of
any of Tenant's issued and outstanding capital stock or any issuance of
additional capital stock, as a result of which the majority of the issued and
outstanding capital stock of Tenant is held by a corporation, firm, or person or
persons who do not hold a majority of the issued and outstanding capital stock
of Tenant on the date hereof, shall be deemed an assignment under this Section
17; provided that this provision will not apply if Tenant's stock is publicly
traded through a securities exchange. If Tenant is a partnership, any transfer
of any interest in the partnership or any other change in the composition of the
partnership which results in a change in the control of Tenant from the person
or persons managing the partnership on the date hereof, shall be deemed an
assignment under this Section 17. Any attempted transfer, assignment,
subletting, mortgaging or encumbering of this Lease in violation of the
foregoing shall be void and confer no rights upon any third person. No permitted
assignment or subletting shall relieve Tenant of any of its obligations under
this Lease. In any event, all assignees or transferees shall be obligated to
assume in writing "Tenant's" obligations under this Lease.
(b) Rent. If, without complying with the provisions of subsection (a) above,
this Lease is transferred or assigned by Tenant, or if the Leased Premises, or
any part thereof, are sublet or occupied by anybody other than Tenant, whether
as a result of any act or omission by Tenant, or by operation of law or
otherwise, Landlord, whether before or after the occurrence of an Event of
Default, may, in addition to, and not in diminution of or substitution for, any
other rights and remedies under this Lease or pursuant to law to which Landlord
may be entitled as a result thereof, collect rent from the transferee, assignee,
subtenant or occupant and apply the net amount collected to the Basic Rent and
Additional Charges herein reserved so long as any excess is promptly paid to
Tenant, but no such transfer assignment, subletting, occupancy or collection
shall be deemed a waiver of the provisions of this Section or the acceptance of
the transferee, assignee, subtenant, or occupant as Tenant, or a release of
Tenant from the further performance by Tenant of its obligations under this
Lease. Neither the consent by Landlord to any transfer, assignment or subletting
nor the references in any provision of this Lease or in any rules and
regulations to concessionaires and licensees shall in anywise be construed to
relieve Tenant from obtaining, in each instance, the express consent in writing
of Landlord to any further transfer, assignment or subletting or to the granting
of any concession or license for the use of any part of the Leased Premises.
(c) Permitted Assignments and Subleases. Notwithstanding any provision in this
Lease to the contrary, Tenant shall have the right to assign this Lease or
sublet all or a portion of the Leased Premises without Landlord's consent to any
corporation or business entity which controls, is controlled by or is under
common control with Tenant, or to a corporation or other business entity
resulting from a merger or consolidation with Tenant, or to any person or entity
which acquires substantially all of the assets of Tenant's businesses as a going
concern, provided that in the case of an assignment, the assignee assumes in
full the obligations of the Tenant under this Lease and that the use of the
Leased Premises remains unchanged.
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SECTION 18. DEFAULT PROVISIONS.
(a) Events of Tenant Default. Each of the following events shall be deemed to be
a default under this Lease, and is referred to in this Lease as an "Event of
Default":
(1) A default by Tenant in the due and punctual payment of any Basic
Rent or Additional Charges which continues for more than five (5) days after
Tenant has received written notice of the failure to pay such Basic Rent or
Additional Charges when due and payable; or
(2) The neglect or failure of Tenant to perform or observe any of the
terms, covenants or conditions contained in this Lease on Tenant's part to be
performed or observed (other than those referred to above in subsection (1))
which is not remedied by Tenant within twenty (20) days after Landlord shall
have given to Tenant written notice specifying such neglect or failure; provided
that if the failure to perform cannot be reasonably cured within twenty (20)
days, a reasonable additional time shall be granted so long as Tenant has
diligently commenced and is diligently proceeding with the cure within the
twenty (20)-day period; or
(3) The assignment, transfer, mortgaging or encumbering of this Lease
or the subletting of the Leased Premises in a manner not permitted by Section 17
hereof; or
(4) The taking of this Lease or the Leased Premises, or any part
thereof, upon execution or by other process of law directed against Tenant, or
upon or subject to any attachment at the insistence of any creditor of or
claimant against Tenant, which execution or attachment shall not be discharged
or disposed of within thirty (30) days after the levy thereof; or
(5) The abandonment of the Leased Premises by Tenant without payment of
Basic Rent and Additional Charges, and performance of all other obligations of
Tenant.
(b) Remedies. Upon the occurrence of an Event of Default after the expiration of
all applicable notice and cure periods, Landlord shall have the right, at its
election, then or at any time thereafter while such Event of Default shall
continue, either:
(1) To give Tenant written notice that this Lease will terminate on a
date to be specified in such notice, which date shall not be less than three (3)
days after such notice, and on the date specified in such notice Tenant's right
to possession of the Leased Premises shall cease and this Lease shall thereupon
be terminated, but Tenant shall remain liable as provided below in subsection
(c); or
(2) Without demand or notice, to re-enter and take possession of the
Leased Premises, or any part thereof, and repossess the same as of Landlord's
former estate and expel Tenant and those claiming through or under Tenant and
remove its or their effects, either by summary proceedings or by action at law
or in equity or by self-help (if necessary) or otherwise, without being deemed
guilty of any manner of trespass and without prejudice to any remedies for
arrears of rent or preceding breach of covenant. If Landlord elects to re-enter
under this subsection (2), Landlord may terminate this Lease, or, from time to
time, without terminating this Lease, may relet the Leased Premises, or any part
thereof, as agent for Tenant for such term or terms and at
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such rental or rentals and upon such other terms and conditions as Landlord may
deem advisable, with the right to make reasonable alterations and repairs to the
Leased Premises necessary to such reletting. No such re-entry or taking of
possession of the Leased Premises by Landlord shall be construed as an election
on Landlord's part to terminate this Lease unless a written notice of such
intention is given to Tenant under above subsection (1) or unless the
termination thereof be decreed by a court of competent jurisdiction. Tenant also
hereby grants Landlord a lien for any unpaid Rent on all property of Tenant now
or hereafter placed in the Leased Premises.
(c) Damages. If Landlord terminates this-Lease pursuant to above subsection (b),
Tenant shall remain liable (in addition to accrued liabilities) to the extent
legally permissible for (i) (A) all Basic Rent and Additional Charges provided
for in this Lease until the date this Lease would have expired had such
termination not occurred plus the amount of any credit against Basic Rent (such
as free or reduced rent) provided in this Lease adjusted to present value at the
Prime Rate, all accelerated to the date of any such termination, and (B) any and
all reasonable expenses incurred by Landlord in re- entering the Leased
Premises, repossessing the same, making good any default of Tenant, painting,
altering or dividing the Leased Premises, combining the same with any adjacent
space for any new tenants, putting the same in proper repair, reletting the same
(including any and all reasonable attorneys fees and disbursements and
reasonable brokerage fees incurred in so doing), and any and all expenses which
Landlord may incur during the occupancy of any new tenant; less (ii) the net
proceeds of any reletting. Tenant agrees to pay to Landlord the difference
between items (i) and (ii) above with respect to each month during the Term, at
the end of such month. Any suit brought by Landlord to enforce collection of
such difference for any one month shall not prejudice Landlord's right to
enforce the collection of any difference for any subsequent month. In addition
to the foregoing, Tenant shall pay to Landlord such sums as the court which has
jurisdiction thereover may adjudge reasonable as attorneys fees with respect to
any successful law suit or action instituted by Landlord to enforce the
provisions of this Lease. Landlord shall have the right, at its sole option, to
relet the whole or any part of the Leased Premises for the whole of the
unexpired Term, or longer, or from time to time for shorter periods, for any
rental then obtainable, giving such concessions of rent and making such special
repairs, alterations, decorations and painting for any new tenant as Landlord,
in its reasonable discretion, may deem advisable. Landlord's liability as
aforesaid shall survive the institution of summary proceedings and the issuance
of any warrant thereunder. Landlord shall be under no obligation to relet the
Leased Premises, but agrees to use reasonable efforts to do so.
(d) Liquidated Damages. If Landlord terminates this Lease pursuant to above
subsection (b), Landlord shall have the right, at any time, at its option, to
require Tenant to pay to Landlord, on demand, as liquidated and agreed final
damages in lieu of Tenant's liability under above subsection (c), an amount
equal to the difference, discounted to the date of such demand at the rate of
five percent (5%) per annum, between (i) the Basic Rent and Additional Charges,
computed on the basis of the then current annual rate of Basic Rent and
Additional Charges, which would have been payable from the date of such demand
to the date when this Lease would have expired, if it had not been terminated,
and (ii) the then fair market rental value of the Leased Premises for the same
period. Upon payment of such liquidated and agreed final damages, Tenant shall
be released from all further liability under this Lease with respect to the
period after the date of such demand. If, after the Event of Default giving rise
to the termination
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of this Lease, but before presentation of proof of such liquidated damages, the
Leased Premises, or any part thereof, shall be relet by Landlord for a term of
one year or more, the amount of rent reserved upon such reletting shall be
deemed to be the fair rental value for the part of the Leased Premises so relet
during the term of such reletting.
(e) Landlord Default/Tenant Rights. If Landlord fails to perform any of its
obligations or breaches any of its covenants contained in this Lease, and
(unless another time limit is elsewhere in this Lease specifically provided) the
default continues for a period of thirty (30) days after written demand for
performance is given by Tenant, or, if the default is of such a character as to
require more than thirty (30) days to cure and Landlord shall fail to commence
said cure promptly and use reasonable diligence in working to complete such cure
as quickly as reasonably possible, and, if such default has a material adverse
impact on Tenant's use of the Leased Premises, then, Tenant may, in addition to
any other remedies provided in this Lease, at law or in equity (including the
right to ▇▇▇ for damages (but excluding punitive or consequential damages), an
injunction or specific performance), do any one or more of the following,
collectively or individually, concurrently or separately, in any order and as
often as necessary: (a) elect to make such payments and cure such defaults on
behalf of Landlord and, in connection therewith, do all work and make all
payments deemed necessary or appropriate by Tenant, including payment of costs
including reasonable attorneys' fees and charges in connection with any legal
action which may have been commenced or threatened and subject to interest at
the default rate of interest set forth in the Lease from the date of Tenant's
notice, and all sums so expended by Tenant shall, at Tenant's option, be offset
against future rentals due hereunder or reimbursed to Tenant by Landlord on
demand, or (b) terminate this Lease and recover from Landlord all amounts
necessary to compensate Tenant for all the detriment proximately caused by
Landlord's failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom, but excluding
punitive or consequential damages. The exercise of the termination rights
granted Tenant hereunder shall not waive any default by Landlord or limit any
other remedies Tenant may have in law or equity.
SECTION 19. BANKRUPTCY TERMINATION PROVISION. This Lease shall, at Landlord's
option, terminate and expire, without the performance of any act or the giving
of any notice by Landlord, upon the occurrence of any of the following events:
(1) Tenant's admitting in writing its inability to pay its debts generally as
they become due, or (2) the commencement by Tenant of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar law which is
not withdrawn within sixty (60) days of filing, or (3) the entry of a decree or
order for relief by a court having jurisdiction in the premises in respect of
Tenant in an involuntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other applicable federal or state
bankruptcy, insolvency or other similar law, and the continuance of any such
decree or order unstayed and in effect for a period of sixty (60) consecutive
days, or (4) Tenant's making an assignment of all or a substantial part of its
property for the benefit of its creditors, or (5) Tenant's seeking or consenting
to or acquiescing in the appointment of, or the taking of possession by, a
receiver, trustee or custodian for all or a substantial part of its property, or
(6) the entry of a court order without Tenant's consent, which order shall not
be vacated, set aside or stayed within sixty (60) days from the date of entry,
appointing a receiver, trustee or custodian for all or a substantial part of its
property. The provisions of this Section 16 shall be construed with due
recognition for the provisions of the federal bankruptcy laws, where applicable,
but
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shall be interpreted in a manner which results in a termination of this Lease in
each and every instance, and to the fullest extent and at the earliest moment,
that such termination is permitted under the federal bankruptcy laws, it being
of prime importance to the Landlord to deal only with Tenants who have, and
continue to have, a strong degree of financial strength and financial stability.
SECTION 20. LANDLORD MAY PERFORM TENANT'S OBLIGATIONS. If Tenant shall fail to
keep or perform any of its obligations as provided in this Lease in respect to
(a) maintenance of insurance, (b) repairs and maintenance of the Leased
Premises, (c) compliance with the Requirements, or (d) the making of any other
payment or performance of any other obligation, then Landlord may (but shall not
be obligated to do so) upon the continuance of such failure on Tenant's part for
twenty (20) days after written notice to Tenant (or after such additional
period, if any, as Tenant may reasonably require to cure such failure if of a
nature which cannot be cured within said twenty (20) day period) (provided that
in the event of an emergency, only such notice as is reasonably practicable
shall be required) and without waiving or releasing Tenant from any obligation,
and as an additional but not exclusive remedy, make any such payment or perform
any such obligation, and all sums so paid by Landlord and all necessary
incidental costs and expenses, including reasonable attorneys fees, incurred by
Landlord in making such payment or performing such obligation, together with
interest thereon at the rate specified in Section 6(d) hereof from the date of
payment, shall be deemed an Additional Charge and shall be paid to Landlord on
demand, or at Landlord's option may be added to any installment of rent
thereafter falling due, and if not so paid by Tenant, Landlord shall have the
same rights and remedies as in the case of a default by Tenant in the payment of
Rent.
SECTION 21. SECURITY DEPOSIT. Tenant hereby deposits with Landlord the Security
Deposit, as security for the prompt, full and faithful performance by Tenant of
each and every provision of this Lease and of all obligations of Tenant
hereunder. If an Event of Default occurs, Landlord may use, apply or retain the
whole or any part of the Security Deposit for the payment of (i) any Basic Rent
or Additional Charges which Tenant shall not have paid or which may become due
after the occurrence of such Event of Default, (ii) any sum expended by Landlord
on Tenant's behalf in accordance with the provisions of this Lease or (iii) any
sum which Landlord may expend or be required to expend by reason of Tenant's
default, including Tenant's default, including damages or deficiency in the
reletting of the Leased Premises as provided in Section 18 hereof. The use,
application or retention of the Security Deposit, or any portion thereof, by
Landlord shall not prevent Landlord from exercising any other right or remedy
provided by this Lease or by law and shall not operate as a limitation on any
recovery to which Landlord may otherwise be entitled. If any portion of the
Security Deposit is used, applied or retained by Landlord for the purposes set
forth above, Tenant agrees, within ten (10) days after a written demand therefor
is made by Landlord, to deposit cash with Landlord in an amount sufficient to
restore the Security Deposit to its original amount. If Tenant shall fully and
faithfully comply with all of the provisions of this Lease, the Security
Deposit, or any balance thereof, shall be timely returned to Tenant after the
expiration of the Term, without interest. In the absence of evidence
satisfactory to Landlord of any permitted assignment of the right to receive the
Security Deposit, or the remaining balance thereof, Landlord may return the same
to Tenant, regardless of one or more assignments of Tenant's interest in this
Lease or the Security Deposit. In such event, upon the return of the Security
Deposit (or balance thereof) to Tenant, Landlord shall be
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completely relieved of liability under this Section 21. In the event of a
transfer of Landlord's interest in the Leased Premises, Landlord shall have the
right to transfer the Security Deposit to the transferee thereof. In such event,
upon the delivery by Landlord to Tenant of such transferee's written
acknowledgment of its receipt of such Security Deposit, Landlord shall be deemed
to have been released by Tenant from all liability or obligation for the return
of such Security Deposit, and Tenant agrees to look solely to such transferee
for the return of the Security Deposit and the transferee shall be bound by all
provisions of this Lease relating to the return of the Security Deposit. The
Security Deposit shall not be mortgaged, assigned or encumbered in any manner
whatsoever by Tenant without the prior written consent of Landlord.
SECTION 22. SUBORDINATION; FINANCING REQUIREMENTS.
(a) Subordination. Subject to Subsection (c) below, this Lease and Tenant's
interest hereunder shall be subject and subordinate to each and every ground or
underlying lease now existing or hereafter made of the Building and/or
underlying land and to all renewals, modifications, replacements and extensions
thereof, and to the lien of any mortgage now or hereafter placed upon the
Building, and to all renewals, modifications, replacements, consolidations and
extensions thereof and to any and all advances made thereunder and the interest
thereon. Tenant agrees that within fifteen (15) days after written request
therefor from Landlord, it will, from time to time, execute and deliver any
instrument or other document required by any such landlord or mortgagee to
subordinate this Lease and its interest in the Leased Premises to such lease or
the lien of any such mortgage. Upon the written request of Landlord or
Landlord's mortgagee, Tenant will also upon request submit copies of the most
recent audited financial statements or operating reports and copies of available
audited financial statements or operating reports covering the two (2)
immediately preceding years, and Tenant will upon request record this Lease or a
short form thereof if required by Landlord's mortgagee or other lending
institution.
(b) Requirements. In the event that any bank, insurance company, university,
pension or welfare fund, savings and loan association, real estate investment
trust, business trust, or other financial institution providing financing for
the Building requires, as a condition of such financing, that modifications to
this Lease be obtained, and provided that such modifications (i) are reasonably
acceptable to Tenant in its reasonable discretion, (ii) do not adversely affect
Tenant's use of the Leased Premises as herein permitted as determined by Tenant
in its sole but good faith discretion, and (iii) do not increase the rentals and
other sums required to be paid by Tenant hereunder or reduce the usable and
rentable area of the Leased Premises, Landlord shall submit such required
modifications to Tenant, and Tenant shall enter into and execute a written
amendment hereto incorporating such required modifications within twenty (20)
days after the same have been submitted to Tenant by Landlord.
(c) Non-Disturbance. The only holder of a lien of any kind on the Building that
is superior to this Lease (including, without limitation, any lessor under a
ground lease) is Bank One. Prior to the Commencement Date and as a condition to
the effectiveness of Tenant's obligations under this Lease, Landlord will
deliver to Tenant a commercially reasonable non-disturbance agreement executed
by such superior lienholder agreeing in substance that, so long as Tenant is not
in default under the terms of this Lease, its tenancy and all of its rights
hereunder will not be disturbed throughout the term of this Lease and any
extensions thereof, which agreement shall be
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in a form reasonably satisfactory to Tenant. If Tenant is requested to
subordinate its interests under the Lease to the lien of any mortgage or deed of
trust or to any lienholder in the future, Tenant's obligation to subordinate its
interests is conditioned upon any such lienholder or prospective lienholder
providing Tenant with a commercially reasonable non-disturbance agreement in a
form reasonably satisfactory to Tenant which, in substance, agrees that so long
as Tenant is not in default under the terms of this Lease, its tenancy for the
use and purposes herein described and all rights granted to Tenant hereunder
will not be disturbed and will remain in full force and effect throughout the
term of this Lease and any extensions thereof. The form utilized for Bank One,
substantially in the form attached as Exhibit "J", shall be deemed satisfactory
to Tenant for future transactions. Tenant's duties and obligations hereunder
will not be modified in any way without Tenant's prior written consent.
SECTION 23. ATTORNMENT. In the event of (a) a transfer of Landlord's interest in
the Leased Premises, (b) the termination of any ground or underlying lease of
the Building and/or underlying land, or (c) the purchase of the Building or
Landlord's interest therein at a foreclosure sale or by deed in lieu of
foreclosure under any mortgage or pursuant to a power of sale contained in any
mortgage, then in any of such events, Tenant shall, at Landlord's request,
attorn to and recognize the transferee or purchaser of Landlord's interest or
the landlord under the terminated ground or underlying lease, as the case may
be, as landlord under this Lease for the balance then remaining of the Term, and
thereafter this Lease shall continue as a direct lease between such person, as
"Landlord", and Tenant, as "Tenant", but such landlord, transferee or purchaser
shall not be liable for any act or omission of Landlord prior to such lease
termination or prior to such person's succession to title, nor be subject to any
offset, defense or counterclaim accruing prior to such lease termination or
prior to such person's succession to title, nor be bound by any payment of Basic
Rent or Additional Charges prior to such lease termination or prior to such
person's succession to title for more than one month in advance, all of which
shall remain Landlord's liabilities and shall survive any such transfer. Tenant
agrees that, within fifteen (15) days after written request therefor from
Landlord, it will, from time to time, execute and deliver any instrument or
other document required by any mortgagee, transferee, purchaser or other
interested person to confirm such attornment and/or such obligation to attorn.
SECTION 24. QUIET ENJOYMENT. Landlord covenants that Tenant, upon paying the
Basic Rent and the Additional Charges provided for in this Lease, and upon
performing and observing all of the terms, covenants, conditions and provisions
of this Lease on Tenant's part to be kept, observed and performed, shall quietly
hold, occupy and enjoy the Leased Premises during the Term without hindrance,
ejection or molestation by Landlord or any party lawfully claiming through or
under Landlord. Tenant acknowledges that to promote downtown Tempe, the City of
Tempe, the Mill Avenue Merchants Association, the Downtown Tempe Community
and/or other groups, of which Landlord and/or the Building may or may not be
members, may schedule parades, festivals, or other special events that may
disrupt traffic or access, cause noise or disruption or other consequences, for
which Landlord shall have no responsibility.
SECTION 25. LANDLORD'S RIGHT OF ACCESS. Subject to the provisions of Section
8(b), Landlord may, during any reasonable time or times, before and after the
Lease Commencement Date, enter upon the Leased Premises, any portion thereof and
any appurtenance thereto (with laborers and materials, if required) for the
purpose of: (i) inspecting the same; (ii) making such repairs,
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replacements or alterations which it may be required to perform under the
provisions of this Lease or which it may deem desirable for the Leased Premises
or the Building, including but not limited to repairs and improvements to space
above, below and/or on the same floor as the Leased Premises; and (iii) during
the last eighteen (18) months of the Lease Term, showing the Leased Premises to
prospective purchasers or tenants. Landlord agrees to give notice prior to any
such entry except that Landlord may enter without notice in the case of an
emergency. In making such an entry, Landlord agrees to use reasonable efforts to
avoid interfering with the regular and usual conduct of the Tenant's business.
If Tenant shall carpet over the floor of the Leased Premises, Landlord shall
have the right to cut such carpeting in order to make or install any necessary
electrical or telephone equipment or wiring to service other parts of the
Building, without being held liable therefor, provided Landlord shall have the
carpeting re-stitched or replaced in a workmanlike manner.
SECTION 26. LIMITATION ON LANDLORD'S LIABILITY.
(a) Limitation. Except with respect to any damages resulting from the willful or
negligent act or omission of Landlord, its agents and employees, Landlord shall
not be liable to Tenant, its employees, agents, business invitees, licensees,
customers, guests or trespassers for any damage or loss to the property of
Tenant or others located on the Leased Premises or for any accident or injury to
persons in the Leased Premises or the Building resulting from: the necessity of
repairing any portion of the Building; the use or operation (by Tenant or any
other person or persons whatsoever) of any elevators, or heating, cooling,
electrical or plumbing equipment or apparatus; the termination of this Lease by
reason of the destruction of the Building or the Leased Premises; any fire,
robbery, theft and/or any other casualty; any leaking in any part or portion of
the Leased Premises or the Building; any water, wind, rain or snow that may leak
into, or flow from, any part of the Leased Premises or the Building; any acts or
omissions of any occupant of any space adjacent to or adjoining all or any part
of the Leased Premises; any water, gas, steam, fire, explosion, electricity or
falling plaster; the bursting, stoppage or leakage of any pipes, sewer pipes,
drains, conduits, ducts, appliances or plumbing works; the functioning or
malfunctioning of the fire sprinkler system; the functioning or malfunctioning
of any security system installed in the Building or any part thereof.
(b) Force Majeure. Except for Tenant's obligation to pay rent and other charges
due hereunder, and to initially occupy the Leases Premises in accordance with
this Lease, neither party shall be required to perform any of its obligations
under any provision of this Lease, nor be liable for loss or damage for failure
to do so, nor shall the other party be released from any of its obligations
under this Lease because of such failure to perform, where such failure arises
from or through acts of God, strikes, lockouts, labor difficulties, explosions,
sabotage, accidents, riots, civil commotions, acts of war, results of any
warfare or warlike conditions in this or any foreign country, fire and casualty,
Requirements or other causes beyond the reasonable control of the performing
party. If either party is so delayed or prevented from performing any of its
obligations during the Term, the period of such delay or such prevention shall
be deemed added to the time herein provided for the performance of any such
obligation.
SECTION 27. CERTIFICATES. Tenant shall, without charge therefor, at any time and
from time to time, within fifteen (15) days after request therefor by Landlord,
execute, acknowledge and
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deliver to Landlord a written estoppel certificate certifying to Landlord, any
mortgagee, assignee of a mortgagee, or any purchaser of the Building, or any
other person designated by Landlord, as of the date of such estoppel
certificate, any matters relating to this Lease or the Leased Premises any of
such parties may request, including but not limited to (i) that Tenant is in
possession of the Leased Premises, (ii) that this Lease is unmodified and in
full force and effect (or if there have been modifications, that the Lease is in
full force and effect as modified and setting forth such modification); (iii)
whether or not there are then existing any setoffs or defenses against the
enforcement of any right or remedy of Landlord, or any duty or obligation of
Tenant hereunder (and, if so, specifying the same in detail); (iv) the dates
through which Basic Rent and Additional Charges have been paid; (v) that Tenant
has no knowledge of any then uncured defaults on the part of Landlord under this
Lease (or if Tenant has knowledge of any such uncured defaults, specifying the
same in detail); (vi) that Tenant has no knowledge of any event having occurred
that authorizes the termination of this Lease by Tenant (or if Tenant has such
knowledge, specifying the same in detail); (vii) the amount of any Security
Deposit held by Landlord; and (viii) information concerning environmental
matters, as requested. The initial form of estoppel is attached as Exhibit "E",
but such form may be changed at any time by Landlord.
SECTION 28. SURRENDER OF LEASED PREMISES. Tenant shall, on or before the last
day of the Term, (i) peaceably and quietly leave, surrender and yield up to the
Landlord the Leased Premises, free of sub-tenancies, broom clean and, subject to
the provisions of Section 15 hereof, in good order and condition except for
reasonable wear and tear, and (ii) at its expense, remove from the Leased
Premises all movable trade fixtures, furniture, equipment, and other personal
property, provided that Tenant shall promptly repair any damage caused by such
removal. Any of such property not so removed may, at Landlord's election and
without limiting Landlord's right to compel removal thereof, be deemed abandoned
and either may be retained by Landlord as its property or be disposed of,
without accountability, in such manner as Landlord may see fit. All affixed
installations, alterations, additions, betterments and improvements to the
Leased Premises made by either Landlord or Tenant, whether at Landlord's or
Tenant's expense, including, without limitation, all wiring, paneling,
partitions, floor coverings, lighting fixtures, built-in cabinets, bookshelves
affixed to walls, and the like shall become the property of Landlord when
installed and shall remain with the Leased Premises at the expiration or sooner
termination of the Term, except that Landlord shall have the right, by notice to
Tenant given when Tenant requests Landlord's approval for such installation, to
require Tenant, at its expense, to remove any of such property installed by or
at the sole expense of Tenant and to repair any damage caused by such removal.
In the event Tenant fails to perform such removal and repair, as aforesaid,
Landlord may do the same at the cost of Tenant. The provisions of this Section
shall survive any expiration or termination of this Lease.
SECTION 29. HOLDING OVER. If Tenant shall remain in possession of the Leased
Premises after the end of the Term, Tenant shall be deemed to be occupying the
Leased Premises as a tenant from month-to-month, at 150% the Basic Rent in
effect during the last month of the Term and, subject to all the other
conditions, provisions and obligations of this Lease insofar as the same are
applicable to a month-to-month tenancy.
SECTION 30. LEASING COMMISSION. Landlord and Tenant each represent and warrant
to the other that, except for the Leasing Broker identified herein, neither of
them has employed any broker in
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carrying on the negotiations relative to this Lease. Landlord and Tenant shall
each indemnify and hold harmless the other from and against any claim or claims
for brokerage or other fees or commissions arising from or out of any breach of
the foregoing representation and warranty. Landlord recognizes that the Leasing
Broker (if any) is entitled to the payment of a commission for services rendered
in the negotiation and obtaining of this Lease, and Landlord has agreed to pay
such commission pursuant to a separate agreement. The "Leasing Broker" is
Biltmore Management and ▇▇▇ & Associates.
SECTION 31. GENERAL PROVISIONS.
(a) Binding Effect. The covenants, conditions, agreements, terms and provisions
of this Lease shall be binding upon and shall inure to the benefit of the
parties hereof and, subject to the provisions of Section 17 hereof, each of
their respective personal representatives, successors and assigns.
(b) Laws. It is the intention of the parties hereto that this Lease (and the
terms and provisions hereof) shall be construed and enforced in accordance with
the laws of the jurisdiction in which the Building is located.
(c) Waiver. No failure by either party to insist upon the strict performance of
any term, covenant, agreement, provision, condition or limitation of this Lease
or to exercise any right or remedy consequent upon a breach thereof, and no
acceptance by the Landlord of full or partial rent during the continuance of any
such breach, shall constitute a waiver of any such breach or of any such term,
covenant, agreement, provision, condition or limitation. No term, covenant,
agreement, provision, condition or limitation of this Lease to be kept, observed
or performed by Landlord or by Tenant, and no breach thereof, shall be waived,
altered or modified except by a written instrument executed by Landlord or by
Tenant, as the case may be. No waiver of any breach shall affect or alter this
Lease, but each and every term, covenant, agreement, provision, condition and
limitation of this Lease shall continue in full force and effect with respect to
any other existing or subsequent breach thereof. No failure by either party to
insist upon the strict performance of any term, covenant, agreement, provision,
condition or limitation of a lease with any other tenant or to exercise any
right or remedy consequent thereof shall constitute a waiver of any similar
term, covenant, agreement, provision, condition or limitation contained in this
Lease unless the same be incorporated in a written instrument signed by the
waiving party and making specific reference to this Lease and to the other
party's obligations hereunder.
(d) Notices. No notice, request, consent, approval, waiver or other
communication which may be or is required or permitted to be given under this
Lease shall be effective unless the same is in writing and is delivered in
person to a responsible representative of either party, or sent by registered or
certified mail, return receipt requested, first-class postage prepaid, (1) if to
Landlord, at Landlord's Notice Address, or (2) if to Tenant, at Tenant's Notice
Address, or at any other address that may be given by one party to the other by
notice pursuant to this subsection. Such notices, if sent by registered or
certified mail, shall be deemed to have been given three (3) days after the time
of mailing.
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(e) Entirety. It is understood and agreed by and between the parties hereto that
this Lease contains the final and entire agreement between said parties, and
that they shall not be bound by any terms, statements, conditions or
representations, oral or written, express or implied, not herein contained. It
is understood and agreed, however, that, subject to the terms of Section 22(b)
hereof, the terms hereof shall be modified, if so required, for the purpose of
complying with or fulfilling the requirements of any mortgagee secured by a
mortgage that may now be or hereafter become a lien on the Building, provided,
however, that such modification shall not be in substantial derogation or
diminution of any of the rights of the parties hereunder, nor increase any of
the obligations or liabilities of the parties hereunder.
(f) Waiver of Jury. Landlord and Tenant each hereby waives all right to trial by
jury in any claim, action, proceeding or counterclaim by either Landlord or
Tenant and/or Tenant's use or occupancy of the Leased Premises.
(g) Waiver of Venue. Tenant hereby waives any objection to the venue of any
action filed by Landlord against Tenant in any state or federal court of the
jurisdiction in which the Building is located, and Tenant further waives any
right, claim or power, under the doctrine of forum non conveniens or otherwise,
to transfer any such action filed by Landlord to any other court.
(h) Corporations. If Tenant is a corporation, it shall, concurrently with the
signing of this Lease, furnish to Landlord certified copies of the resolutions
of its Board of Directors (or of the executive committee of its Board of
Directors) authorizing Tenant to enter into this Lease; and it shall, if
applicable, furnish to Landlord certified copies of the resolutions of the Board
of Directors (or of the executive committee of such Board of Directors) of any
corporate guarantor, authorizing such corporation to guarantee the obligations
of Tenant under this Lease; and it shall furnish to Landlord evidence
(reasonably satisfactory to Landlord and its counsel) that Tenant is a duly
organized corporation under the laws of the state of its incorporation, is
qualified to do business in the jurisdiction in which the Building is located,
is in good standing under the laws of the state of its incorporation and has the
power and authority to enter into this Lease, and that all corporate action
requisite to authorize Tenant to enter into this Lease has been duly taken.
(i) Time of Essence. Time is of the essence in the performance of all Tenant's
obligations under this Lease.
(j) Words and Phrases. Wherever appropriate herein, the singular includes the
plural and the plural includes the singular and neuter gender references shall
refer to the gender of the particular party.
(k) Limit on Landlord's Liability. Notwithstanding any provision to the
contrary, Tenant shall look solely to the estate and property of Landlord in and
to the Project (or the proceeds received by Landlord on a sale of such estate
and property but not the proceeds of any financing or refinancing thereof) in
the event of any claim against Landlord arising out of or in connection with
this Lease, the relationship of Landlord and Tenant, or Tenant's use of the
Leased Premises, and Tenant agrees that the liability of Landlord arising out of
or in connection with this Lease, the relationship of Landlord and Tenant, or
Tenant's use of the Leased Premises, shall be limited to such estate and
property of Landlord (or sale proceeds). No other properties or assets of
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Landlord shall be subject to levy, execution or other enforcement procedures for
the satisfaction of any judgment (or other judicial process) or for the
satisfaction of any other remedy of Tenant arising out of or in connection with
this Lease, the relationship of Landlord and Tenant or Tenant's use of the
Leased Premises, and if Tenant shall acquire a lien on or interest in any other
properties or assets by judgment or otherwise, Tenant shall promptly release
such lien on or interest in such other properties and assets by executing,
acknowledging and delivering to Landlord an instrument to that effect prepared
by Tenant's attorneys. No partnership relation shall be deemed created hereunder
between Landlord and Tenant. The foregoing provisions of this subsection shall
run to the benefit of Landlord, its successors, assigns, mortgagees and ground
lessors. Notwithstanding anything to the contrary herein, the foregoing
provisions shall not limit Tenant's ability to seek injunctive relief or
specific performance of this Lease or Tenant's rights to recover any insurance
or condemnation proceeds.
(1) Counterparts. This Lease maybe executed in several counterparts, but all
such counterparts shall constitute one and the same instrument.
(m) No representations Concerning Project. Landlord makes no, and shall have no
responsibility for any representations concerning (i) the schedule for
development of the rest of the Project other than the Building, (ii) the
identity, actions, omissions, move in dates or move out dates of any tenants,
users, occupants or owners of any part of the Project, or (iii) any other
matters related to the Project, other than the Building.
(n) Condominium Acts. Tenant agrees, within twenty (20) business days after
receipt of written request therefor from Landlord, to join with Landlord in
executing and acknowledging any and all documents and instruments required by
the provisions of the Arizona Condominium Act or other law at the time in effect
to enable Landlord to submit the Building, or any part thereof, and/or any
adjacent buildings, or any part thereof, in which Landlord has an interest and
Landlord to a condominium regime and to establish the Building and/or Leased
Premises as a separate condominium unit or units under such Act or any and all
documents and instruments required by the applicable governmental authorities to
establish such buildings as independent, subdivided parcel of land under the
local subdivision ordinance; provided however, that such documents and
instruments shall not materially affect any of the rights of Tenant under this
Lease, shall not increase the Basic Rent or decrease the usable or rentable area
of the Leased Premises, shall not increase, in any material respect, the
Additional Charges payable by Tenant under this Lease, and shall not diminish
Landlord's obligations under this Lease.
SECTION 32. PAYMENT FOR TENANT IMPROVEMENTS. Pursuant to Exhibit "C", the Tenant
will pay for the Tenant Improvements. Tenant may obtain a loan for all or a
portion of the amount expended for the Tenant Improvements, which loan will not
be secured by the Leased Premises or the Tenant Improvements in any manner. If
Tenant obtains a loan, Landlord will pay all applicable loan origination points
and/or financing acquisition fees (not exceeding two and one half percent
(2-1/2%) of the loan amount) and reasonable and customary costs of obtaining the
loan for typical commercial bank financing, limited, however, to a loan for the
TI Payment amount described below.
Within thirty (30) days after the earlier of (a) Tenant meets the annual targets
for gross revenue and gross margins projected for year 2000 in accordance with
the pro forma budget attached
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hereto as Exhibit "I" over any four (4) consecutive calendar quarters, or (b)
Tenant has timely paid all Rent and other amounts due hereunder for a period of
five (5) full calendar years, or (c) Landlord's lender otherwise agrees to
disburse the TI Payment described below, then Landlord will pay an amount (the
"TI Payment") to Tenant equal to (i) the amount expended by Tenant for Tenant
Improvements, not exceeding $25.00 per useable square foot of the Leased
Premises, plus interest from the date such amounts were actually disbursed by
Tenant at a rate of one and one half percent (1-1/2%) in excess of Bank One
Arizona's publicly announced Prime Rate in effect from time to time, not
exceeding eleven percent (11%) per annum (the "Interest Rate"), less (ii) an
amount equal to the rent saved because of the $2.25 per square foot discount
described in Section 1(k) of this Lease together with interest on such rent
savings at the Interest Rate from the date each such installment thereof would
have been due.
To the extent Tenant paid more than $25 per useable square foot of the Leased
Premises for Tenant Improvements, Tenant may elect to have the excess, but not
exceeding $10 per useable foot of the Leased Premises, amortized with 12%
interest through Basic Rent increases. Tenant shall advise Landlord of its
election to amortize such amount not later than Commencement of the Tenant
Improvements. In that event Landlord would pay the principal amount to be
amortized to Tenant on the same date when the TI Payment is made. The first $5
per useable square foot of the excess would be amortized over the next five (5)
years of the Lease Term and the remainder would be amortized over the lesser of
the next seven (7) years of the Lease Term or the remainder of the Lease Term.
SECTION 33. LANDLORD REPRESENTATIONS AND WARRANTIES. Landlord represents and
warrants to and covenants with Tenant as follows:
(a) ZONING. The current zoning for the Land and Building in which the
Leased Premises are located will allow Tenant to use the Leased Premises for the
permitted uses set forth in this Lease.
(b) LEGAL COMPLIANCE. The Building (inclusive of the Leased Premises)
currently is, and during the term of this Lease will remain, in compliance with
all Requirements, rules, regulations, ordinances and local codes, including,
without limitation, O.S.H.A. rules and regulations governing asbestos and
asbestos containing materials and the Americans with Disabilities Act and/or any
comparable state statute and all Requirements (as defined in Section 3(j)). The
Building is also in compliance with all private covenants, conditions and
restrictions affecting the Building (the "Deed Restrictions"), copies of which
have been given to Tenant. The Deed Restrictions do not conflict with terms of
this Lease.
(c) ENVIRONMENTAL COMPLIANCE. The Leased Premises are as of the date
hereof and will be upon the commencement of the term of this Lease free from
Hazardous Substances and in full compliance with any applicable Environmental
Law. As used in this paragraph the term "Environmental Law" shall mean any
federal, state or local law, statute, ordinance or regulation pertaining to
health, industrial hygiene or environmental conditions and the term "Hazardous
Substances") shall mean any material, waste, substance, pollutant or contaminant
which may or could pose a risk of injury or threat to health or the environment.
To the best of Landlord's knowledge, any use, storage, treatment, or
transportation of Hazardous Substances which may have occurred in or on the
Leased Premises or the Building or the land on which the Building is
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located prior to the date hereof has been in compliance with all applicable
Environmental Laws. Landlord agrees to defend and shall indemnify and hold
Tenant harmless from any and all claims, damages (excluding punitive or
consequential damages), fines, judgments, penalties, costs, liabilities or
losses (including, without limitation, any and all sums paid for settlement of
claims, attorneys' fees, consultant and expert fees) arising during or after the
Lease Term (as such may be extended) from or in connection with the presence of
Hazardous Substances in or on the Leased Premises or the Building caused by
Landlord or its agents, employees, or contractors and excluding Hazardous
Substances which are present as a result of acts of Tenant, Tenant's agents,
employees, contractors or invitees. This indemnification shall survive the
expiration or earlier termination of this Lease.
(d) TENANT'S USE. The use of the Leased Premises, and Tenant's signage
rights permitted herein are not in violation of any Requirements.
SECTION 34. HOLD HARMLESS. Landlord hereby agrees to indemnify and hold harmless
Tenant from and against any and all claims, losses, actions, damages (excluding
punitive or consequential damages), liabilities and expenses (including
reasonable attorneys' fees) that (i) arise from or are in connection with the
negligence or willful misconduct of Landlord or Landlord's agents, employees,
contractors or invitees, or (ii) result from any default, breach, or violation
or non-performance of this Lease or any provision herein by Landlord. Landlord
shall, at its own cost and expense, defend any and all actions, suits and
proceedings which may be brought against Tenant with respect to the foregoing or
in which Tenant may be impleaded. Landlord shall pay, satisfy and discharge any
and all judgments, orders and decrees which may be recovered against Tenant in
connection with the foregoing. The indemnification and hold harmless provisions
set forth herein shall survive the termination of this Lease with respect to any
claim or liability occurring prior to such termination.
SECTION 35. RIGHT TO TERMINATE/DEVELOPMENT COMMENCEMENT. If Landlord has not
commenced on-site development and construction of the Garage and related
infrastructures ("Development Commencement") by November 1, 1999, either party
may terminate this Lease upon written notice to the other at any time prior to
Development Commencement.
SECTION 36. MISCELLANEOUS.
(a) Any individual executing this Lease on behalf of Landlord and
Tenant is authorized to do so by requisite action of the appropriate board,
partnership, or other entity, as the case may be. Upon written request from the
other party, each party will deliver to the other a copy of the resolution or
other document evidencing such authority. Landlord has good and marketable fee
simple title to the Building, including the Leased Premises, with full right and
authority to grant the state demised herein and to execute and perform all of
the terms and conditions of this Lease.
(b) Following the date of this Lease, Landlord will not record against
the Building or the Leased Premises, or otherwise subject the Building or the
Leased Premises to any restrictions, agreements, easements or rights which could
or would (i) materially and adversely prevent or impair the use of the Leased
Premises for the purposes permitted in this Lease or (ii) materially and
adversely conflict with or diminish the rights herein granted to Tenant.
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SECTION 37. RENEWAL OPTION. Tenant shall have the option to renew the term of
the Lease for two (2) additional five (5) year periods in accordance with the
following provisions. Provided Tenant is not then in breach or default under
this Lease, not later than nine (9) months and not more than twelve (12)months
prior to the end of the original Lease Term (or, in the case of the second
renewal option, the end of the first renewal Term), Tenant may give notice of
its interest in renewing the Term of the Lease ("Tenant's Notice"). If Landlord
timely receives a Tenant's Notice, then:
A. Within ten (10) days after receipt of the Tenant's Notice, Landlord
will give notice to Tenant ("Landlord's Notice") of Landlord's determination of
the market rental for the Leased Premises for the renewal term in question.
B. If Tenant disagrees with the market rental described in Landlord's
Notice, then within ten (10) days after receipt of Landlord's Notice, Tenant
shall appoint a Qualified Agent and give notice thereof to Landlord. If Tenant
does not timely deliver notice of its Qualified Agent to Landlord, Tenant shall
be deemed to accept the rental stated in the Landlord's Notice.
C. If Tenant timely appoints a Qualified Agent under Subsection 37B,
then within ten (10) days thereafter, Landlord shall appoint its Qualified
Agent.
D. Within fifteen (15) days after Landlord appoints a Qualified Agent,
each party's Qualified Agent shall meet with the parties and each other and
review the Leased Premises and give notice to each party of his/her opinion of
the market rental for the Leased Premises for the renewal term in question. If
the two Qualified Agents agree on the market rental, that shall establish the
rental for the renewal term. If the two Qualified Agents do not agree on the
market rental, and the parties do not agree on how to resolve the dispute, then
within five (5) days of the two Qualified Agents giving notice of their opinions
of market rental, the two Qualified Agents will select a third Qualified Agent,
who is in no manner affiliated or associated with either of the other Qualified
Agents. The third Qualified Agent will select one or the other of the two
opinions of market rental, within ten (10) days after appointment. The third
Qualified Agent shall have no authority to modify either opinion of market
rental and must select one or the other opinion "as is", which will establish
the market rental for the renewal term in question.
E. For purposes of this provision, "Qualified Agent" means an Arizona
licensed real estate broker or sales person with at least five (5) years office
leasing experience in the Phoenix metropolitan area, who has not worked for
either party or its affiliates within two (2) years prior to time in question,
and who states in writing an agreement to serve hereunder. Each party will pay
the reasonable fees of the Qualified Agent appointed by it, provided that if a
third Qualified Agent is appointed, the party whose Qualified Agent's opinion is
not selected shall pay all reasonable fees of all three (3) Qualified Agents.
Either party may enforce the procedures set forth in this section in any manner
permitted by law or equity.
F. Not later than six (6) months before the end of the current Lease
Term, and provided Tenant is not then in breach or default under this Lease,
Tenant may elect to renew the Term of the Lease for the five (5) year additional
term at the rental rate established as provided above. Upon renewal, the Lease
Term will be extended for five (5) years. If Tenant fails to
38
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timely give this or any other notice required of Tenant under this Section 37,
the option (and the second option, if applicable) will terminate and be of no
further force or effect.
SECTION 38. LANDLORD'S RIGHT TO RECLAIM VACANT LEASED PREMISES. In the event
Tenant vacates one or more floors of the Leased Premises for a period of ninety
(90) days or more, Landlord may give notice to Tenant of its intent to terminate
the Lease as to all or any of such entire vacant floors ("Landlord's Notice").
With respect to any floor which is the subject of Landlord's Notice, if Tenant
does not give notice to Landlord, within thirty (30) days of receipt of
Landlord's Notice, that Tenant or its permitted transferees under Section 17
will bona fide reoccupy and conduct business on that floor within ninety (90)
days thereafter, or does not actually bona fide reoccupy and conduct business on
that floor within such ninety (90) day period, then at any time thereafter prior
to Tenant or its permitted transferees under Section 17 bona fide reoccupying
and conducting business on that floor, Landlord may give notice terminating this
Lease as to that floor, with Rent and other charges prorated to the date of
termination, and with all other provisions of this Lease applicable to
expiration of the Lease Term to apply to such floor. This section will not apply
for the first twelve months of the Lease Term.
IN WITNESS WHEREOF, Tenant has caused this Lease, including the
attached Addendum, if any, to be signed and attested in its corporate name by
its proper corporate officers and its corporate seal to be affixed as of the day
and year first above written.
LANDLORD:
MCW BRICKYARD COMMERCIAL, L.L.C., an Arizona limited
liability company
By MCW/▇▇▇▇▇ BRICKYARD, L.L.C., an Arizona limited
liability company
Its Manager
By MCW Holdings, L.L.C., an Arizona limited
liability company
Its Manager
By
Its
TENANT:
INTEGRATED INFORMATION SYSTEMS, INC.,
an Arizona corporation
By:
Name:
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Title:
40
47
EXHIBIT "A"
insert copy of site plan of Building and Project
A-1
48
EXHIBIT "B"
LEASED PREMISES
B-1
49
EXHIBIT "C"
TENANT IMPROVEMENTS
WORK LETTER
1. SHELL IMPROVEMENTS. The Leased Premises will include those items
shown or described on the attached Exhibit "C-1" ("Shell Improvements") which
Landlord will provide at its cost. The Shell Improvements are the only
improvement obligations of Landlord within or relating to the Leased Premises.
2. TENANT IMPROVEMENTS. Landlord shall cause to be performed the other
improvements (the "Tenant Improvements") in the Leased Premises in accordance
with construction drawings, plans and specifications approved by Tenant and
Landlord (the "Plans"), which approvals shall not be unreasonably withheld or
delayed, provided such Tenant Improvements comply with the building standard
specifications adopted by Landlord or any modifications thereof approved by
Landlord and Tenant in writing. The current version of the building standard
specifications are attached hereto as Exhibit "C-2", but the same are subject to
change by Landlord at any time, provided, however, that if Landlord changes the
same after the Tenant Improvements are commenced or Tenant has otherwise
expended funds therefor, Landlord will reimburse Tenant for all reasonable costs
incurred to redesign or replace work or materials to the extent required by
Landlord's changes in building standard specifications. The Tenant Improvements
shall be performed at the Tenant's cost, to be paid in draws as required by the
construction contract from (a) funds set aside in a construction escrow at First
American Title prior to Landlord's execution of the construction contract for
the Tenant Improvements pursuant to escrow documents reasonably approved by the
parties and Landlord's lender, with interest on the escrowed funds to accrue to
Tenant's benefit, or (b) set aside of funds to be borrowed by Tenant, pursuant
to a set aside letter and other documents reasonably approved by the parties and
Landlord's lender, executed prior to Landlord's execution of the construction
contract for the Tenant Improvements. Tenant's obligation is limited to the
costs of the contract and bids approved by Tenant through the process described
below, and Change Orders approved by Tenant, including the pricing thereof.
Tenant shall cause the Plans to be prepared, at Tenant's cost, by
▇▇▇▇▇▇ ▇▇▇▇▇▇, or another architect designated by Landlord and reasonably
approved by Tenant, consistent with the space plan to be prepared and approved
by the parties consistent with a schedule to be agreed upon by the parties
within two (2) weeks of Lease execution. Prior to close-of-business on that date
which is eight (8) weeks after receipt from Landlord of all information
reasonably necessary to allow Tenant's architect to prepare the Plans, Tenant
shall furnish the initial complete draft of the Plans to Landlord for Landlord's
review and approval. Landlord shall within two (2) weeks after receipt either
provide comments to such Plans or approve the same. Landlord shall be deemed to
have approved such Plans if it does not timely provide comments on such Plans.
If Landlord provides Tenant with comments to the initial draft of the Plans,
Tenant shall provide revised Plans to Landlord incorporating Landlord's comments
within two (2) weeks after receipt of Landlord's comments and agreement by
Tenant to such changes. If Tenant does not accept
C-1
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Landlord's comments, the parties shall work diligently together to immediately
reach agreement on an acceptable compromise. Landlord shall within one week
after receipt of revised Plans either provide comments to such revised Plans or
approve such Plans. The process described above shall be repeated, if necessary,
until the Plans have been finally approved by Landlord and Tenant. The parties
hereby agree that the Plans for the Tenant Improvements shall comply with all
applicable Requirements. Landlord's approval of any of the Plans (or any
modifications or changes thereto) shall not impose upon Landlord or its agents
or representatives any obligation with respect to the design of the Tenant
Improvements or the compliance of such Tenant Improvements or the Plans with
applicable Requirements, but Landlord shall be responsible to notify Tenant of
any failures to so comply of which Landlord has actual knowledge.
Landlord will solicit bids for the Tenant Improvements from at least
three independent, reputable, qualified contractors, including any proposed by
Tenant against whom neither Landlord nor its contractor has any reasonable
objection. Tenant may review and comment on the bids and bidding process.
Landlord and Tenant will jointly select the contractor. All bids will be based
on an open book basis.
Landlord shall use commercially reasonable efforts to cause the Tenant
Improvements to be substantially completed, except for minor "Punch List" items,
on or before the Commencement Date specified in the Schedule to the Lease,
subject to Tenant Delay (as defined in Section 5 hereof) and Force Majeure.
3. CHANGE ORDERS. If, prior to the Commencement Date, Tenant shall
require improvements or changes (individually or collectively, "Change Orders")
to the Premises in addition to, revision of or substitution for the Tenant
Improvements, Tenant shall deliver to Landlord for its approval plans and
specifications for such Change Orders. If Landlord does not approve of the plans
for Change Orders, Landlord shall advise Tenant of the revisions required. If
Tenant agrees with the suggested revisions, Tenant shall revise and redeliver
the plans and specifications to Landlord within ten (10) business days of
Landlord's advice or Tenant shall be deemed to have abandoned its request for
such Change Orders. If Tenant does not agree with the suggested revisions, the
parties shall work diligently together to immediately reach agreement on tan
acceptable compromise. Tenant shall pay for all preparations and revisions of
plans and specifications, and the construction of all Change Orders, subject to
Landlord's Contribution.
4. COMMENCEMENT DATE DELAY. As provided in Section 5 of the Lease, the
Lease Commencement Date shall be delayed until the Tenant Improvements have been
substantially completed as certified by the Tenant Improvements' contractor or
when Tenant receives possession of the Leased Premises (the "Completion Date"),
except to the extent that there is an actual delay in the aggregated caused by
any one or more of the following (a "Tenant Delay"):
(a) Tenant's request for Change Orders whether or not any such
Change Orders are actually performed; or
(b) Contractor's performance of any Change Orders; or
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(c) Tenant's request for materials, finishes or installations
requiring unusually long lead times; or
(d) Tenant's delay in preparing, reviewing, revising or
approving plans and specifications beyond the periods set forth herein; or
(e) Tenant's delay in providing information critical to the
normal progression of the project. Tenant shall provide such information as soon
as reasonably possible, but in no event longer than one week after receipt of
such request for information from the Landlord; or
(f) Tenant's delay in making payments to Landlord for costs of
the Initial Improvements and/or Change Orders in excess of the Landlord's
Contribution; or
(g) Any other act or omission by Tenant, its agents,
contractors or persons employed by any of such persons which causes actual delay
in completion of construction.
The need to correct Punch List items shall not delay or affect the Completion
Date or Lease Commencement Date. If the Completion Date and Lease Commencement
Date are delayed due to Tenant Delay, then Landlord shall cause the contractor
to certify the date on which the Tenant Improvements would have been completed
but for such Tenant Delay, and the Lease Commencement Date shall be adjusted to
reflect the actual delay caused by Tenant. Similarly, if any act or omission of
Landlord, its agents, contractors or persons employed by any such persons causes
actual delay in the completion of the Building or the Leased Premises, such act
will be considered a "Landlord Delay" for purposes of Section 5 of the Lease.
5. ACCESS BY TENANT PRIOR TO COMMENCEMENT OF TERM. To the extent
possible consistent with the ongoing construction, Landlord and the Contractor
shall allow Tenant and/or Tenant's agents access to the Leased Premises at least
thirty (30) days prior to the substantial completion of the Leased Premises for
the purpose of Tenant and/or Tenant's agents installing furniture, equipment or
fixtures (including Tenant's data and telephone equipment and related cabling)
in the Leased Premises, and for other activities related to Tenant's preparation
for occupying the Leased Premises so long as Tenant and/or Tenant's agents do
not unreasonably interfere with the work to be performed by Landlord or the
Contractor in the Building and the Leased Premises or delay completion thereof,
conditioned upon Tenant's:
(a) working in harmony with Landlord and Landlord's agents,
contractors, workmen, mechanics and suppliers and with other tenants and
occupants of the Building;
(b) obtaining in advance Landlord's approval of the
contractors proposed to be used by Tenant and depositing with Landlord in
advance of any work (i) security satisfactory to Landlord for the completion
thereof, and (ii) the contractor's affidavit for the proposed work and the
waivers of lien from the contractor and all subcontractors and suppliers of
material; and
(c) furnishing Landlord with such insurance as Landlord may
require against liabilities which may arise out of such entry.
C-3
52
Landlord's contractor may enforce jobsite procedures, safety
requirements and similar matters and Tenant and its contractors will comply
therewith. Landlord shall not be liable in any way for any injury, loss or
damage which may occur to any of Tenant's property or installations in the
Leased Premises prior to the Lease Commencement Date. Tenant shall protect,
defend, indemnify and save harmless Landlord from all liabilities, costs,
damages, fees and expenses arising out of the activities of Tenant or its
agents, contractors, suppliers or workmen in the Leased Premises or the
Building. Any entry and occupation permitted under this Section shall be
governed by all terms of the Lease. During the period of construction of the
Tenant Improvements and Tenant's move into the Leased Premises, Tenant and
Tenant's agents shall not be charged, directly or indirectly, for parking,
restrooms, HVAC usage, electricity, water, elevator usage, loading dock usage,
freight elevator usage, security, or similar services, nor will Basic Rent or
Additional Charges be payable.
6. MISCELLANEOUS.
Terms used in this Exhibit "C" shall have the meanings assigned to them
in the Lease. The terms of this Exhibit "C" are subject to the terms of the
Lease.
7. BENEFICIAL PRICING.
Landlord will give Tenant the option of selecting Landlord's Building
Standard items and receiving the same unit prices that Landlord received from
Landlord's vendors including Contractor and the contractor for the Shell
Improvements, if applicable and if then available. Landlord will work with
Tenant in bidding out the Tenant Improvements and in planning the construction
sequencing and all other aspects of the work so as to maximize Tenant' ability
to reduce its costs by taking advantage of volume and other benefits, economies
of scale and discounts accorded to Landlord.
8. CONSTRUCTION.
(b) Process and Schedule. Within ten (10) days after the
selection of the Contractor, Landlord shall cause all necessary permits to be
secured, and shall cause the Contractor to promptly commence and to complete
construction in accordance with the Tenant Improvement Plans. Landlord shall
supervise the completion of the Tenant Improvements and shall use its best
efforts to ensure that the Leased Premises are substantially completed on or
before the date prescribed in Section 5 of the Lease. All work shall be done in
a good and workmanlike manner using quality materials and finishes as specified
in the Plans or as set forth in Exhibit C-2 to this Work Letter as appropriate.
(c) Construction Standards. The Tenant Improvements shall
comply in all respects with the following: (i) Requirements, as each may apply
according to the rulings of the controlling public official, agent or other
authority; (ii) building material manufacturer's specifications; and (iii) the
Plans. Landlord shall obtain and pay for all necessary licenses, permits and
certificates of occupancy required for the work to construct the Leased
Premises.
C-4
53
(c) Warranties. Provided the specifications submitted for bids
so provide, in the construction contract Landlord will obtain a warranty from
the contractor that the Tenant Improvements shall be free from any defects in
workmanship and materials for a period of not less than two (2) years from the
date of completion thereof. Provided the specifications submitted for bids so
provide, the construction contracts entered into by Landlord in connection with
this Work Letter shall provide that each contractor and each subcontractor shall
be responsible for the replacement or repair, without additional charge, of all
work done or furnished in accordance with its contract that shall become
defective within two (2) years after the later to occur of (i) completion of the
work performed by such contractor or subcontractors and (ii) the Commencement
Date of the Lease. The correction of defects in such work shall include, without
additional charge, all additional expenses and damages incurred in connection
with such removal or replacement of all or any part of the Tenant Improvements
and/or the Leased Premises that may be damaged or disturbed thereby. All such
warranties or guarantees as to materials or workmanship or with respect to the
work shall be contained in each contract or subcontract, which contracts shall
be written such that all guarantees and warranties and all other rights and
remedies at law, in equity or by contract with respect to the work performed and
the contractor's or subcontractor's obligations shall inure to the benefit of
both Landlord and Tenant, as their respective interests may appear, and shall be
directly enforceable by either. Landlord covenants to give Tenant any assignment
or other assurances which may be necessary to effect such rights of direct
enforcement.
9. COMPLETION/PUNCH LIST.
The Leased Premises shall not be considered substantially
complete until the Tenant Improvements have been completed in accordance with
the Tenant Improvement Plans subject only to the completion of minor punch-list
items that will not interfere with Tenant's use and occupancy of the Premises
for the normal conduct of Tenant's business. Upon substantial completion of the
Tenant Improvements, Landlord shall notify Tenant in writing and, within ten
(10) business days of Tenant's receipt of such notice, Landlord and Tenant shall
conduct a "walk through" inspection of the Leased Premises and prepare a
punch-list of known or apparent deficiencies or incomplete work required to be
corrected or completed by Landlord pursuant to the Tenant Improvement Plans.
Landlord, at Landlord's sole cost and expense, shall cause all punch-list items
to be repaired or completed as soon as possible, but in no event later than
thirty (30) days following the walk through inspection, unless and to the extent
delays are unavoidable due to materials ordering periods. Latent or hidden
defects in the Tenant Improvements shall be brought to Landlord's attention
promptly upon Tenant's becoming aware of such defects. Landlord, at Landlord's
sole cost and expense, shall promptly cause such defects to be repaired
following receipt of notice thereof and Tenant shall have the same rights with
respect thereto as set forth herein for all other punch-list items. Immediately
prior to the delivery of the Leased Premises to Tenant, Landlord shall remove
all rubbish and debris therefrom and thoroughly clean the Leased Premises.
10. REPRESENTATIVES AND NOTICES.
Landlord and Tenant each appoint the following individuals to act as
their respective representatives in all matters covered by this Work Letter.
C-5
54
Tenant's Representative: ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Landlord's Representative: ▇▇▇▇▇▇▇ ▇▇▇▇▇
MCW Holdings, L.L.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (delivery)
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (mail)
Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
All inquiries, requests, instructions and authorizations and other
communications with respect to the matters covered by this Work Letter will be
submitted to the Landlord's Representative or Tenant's Representative, as the
case may be. Each party may change its representative under this Work Letter at
any time upon three (3) days prior written notice to the other party. Notices
will be given in accordance with the notice provisions set forth in the Lease.
11. ARBITRATION.
With the exception of Tenant's right to terminate under Paragraph 5
above or under Paragraph 2(b) of the Rider, any claim, dispute or other matter
in controversy which cannot be resolved privately ("Dispute") concerning the
matters covered by this Work Letter shall be resolved exclusively by arbitration
in the city where the Building is located, governed by the Federal Arbitration
Act, 9 U.S.C. Section 1 et seq., and administered by the American Arbitration
Association ("AAA") under its Commercial Arbitration Rules and Construction
Industry Rules, as applicable, in effect on the date the Dispute is submitted to
arbitration, except that the arbitrator shall be an architect experienced in
tenant improvement design and construction or an experienced tenant improvement
construction contractor, in each case as appropriate to the matter in dispute,
and, in either case, such arbitrators will be professionally licensed or
certified to practice in their respective fields by the State in which the
Building is located. If the parties cannot agree on a mutually acceptable single
arbitrator from the one or more lists submitted by the AAA, the AAA shall
designate a minimum of three (3) persons, who, in its opinion, meet the criteria
set forth herein. Each party shall be entitled to strike one of such designees
on a preemptory basis, indicating its order of preference with respect to the
remaining designees, and the selection of the arbitrator shall be made from
among such designees not so stricken by either party in accordance with their
indicated order of mutual preference. The arbitrator shall base the arbitration
award on accept design and construction industry customs and practices,
applicable law and judicial precedent and, unless both parties agree otherwise,
shall include in such award the findings of fact and conclusions of law or
industry practice upon which the award is based. Judgment on the award rendered
by the arbitrator may be entered in any court having jurisdiction thereof. The
prevailing party in the arbitration shall be entitled to reasonable attorneys'
fees and expenses incurred in the resolution of said Dispute.
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12. DEFAULT.
Any default under this Work Letter shall be considered a default under
the Lease entitling the parties to the remedies set forth therein.Brickyard on
Mill.
13. SATELLITE DISH.
Subject to Tenant obtaining any required City or other permits, Tenant
shall have the nonexclusive right to install a satellite communication device on
the roof of the Building at a location and in a manner approved by Landlord.
Tenant shall be responsible to maintain the satellite communication device in a
good and safe condition at its sole cost and expense. Further, Tenant shall be
solely responsible for any and all roof or other repairs, modifications, or
supports required as a result of the installation, maintenance, other activities
concerning and/or removal of the satellite dish and to cause all work to be done
in a manner that will not void the applicable roof or other warranties. Tenant
will follow reasonable directions of Landlord and/or its manager and/or roof
contractor with respect to methods and location of access to the roof or other
facilities described herein and the methods for installing, securing, repairing
and removing the satellite communication device. The provisions of Sections 12
and 14 shall apply to all such work done by Tenant. Tenant promptly will pay any
tax, license or permit fees charged pursuant to any law in connection with the
installation, maintenance or operation of any satellite communication device and
comply with all laws applicable to the same.
14. SPACE PLANNING ALLOWANCE.
In addition to the payments described in Section 32 of the Lease, upon
paying the TI Payment, Landlord will also reimburse Tenant for all of its space
planning or other architectural costs for the Leased Premises, not exceeding
fifty cent ($.50) per useable square foot of the Leased Premises.
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EXHIBIT C - 1
OFFICE LANDLORD WORK
The Landlord will construct the Building, including the area designated as the
"Leased Premises" for the Tenant.
The Landlord has prepared or will prepare at its cost, all plans and
specifications (the "Plans") which shall describe the Building, and which shall
be used to obtain the approval of the City of Tempe and for the issuance of a
"Shell Building Permit." The Scope of Work for the Building, which is the sole
responsibility of the Landlord shall be portrayed in the "Plans". All Work
associated with the development of the Building will be completed in accordance
with current Building Codes, and other applicable State and Local Ordinances,
and applicable ADA requirements. The Work shall be installed in a good and
workmanlike manner, utilizing quality materials.
The Scope of Work shall be substantially completed in accordance with the
"Plans".
LANDLORD'S SCOPE OF WORK
All of the items of Work specified herein shall be provided in accordance with
the "Plans". All Work provided shall be installed in accordance with applicable
Codes, as well as complying with all applicable State and Federal Codes and
Ordinances. The term "provided" as used herein shall infer that the item has
been furnished and installed at the sole expense of the Landlord.
BUILDING SHELL
The Landlord shall provide the "shell" building, which shall include:
1. A complete structural systems, including columns, beams, slab-on-grade
or slab-on-slab floor constructions as portrayed in the "Plans";
2. A complete roofing system, including roof deck, substrate, roofing
membrane and insulation as portrayed in the "Plans". Roof systems to
result in a system which is resistant to weather/weather-tight
according to industry standards;
3. A complete exterior wall/skin as shown in the "Plans". All exterior
glazing/storefront; awning; decorative wall treatment; and other
finishes that will be provided by the Landlord, shall be in accordance
with the "Plans";
4. A smooth and level concrete floor slab or slab-on-slab in accordance
with industry standards as shown in the "Plans". Where required and
where shell construction schedule
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allows, and where agreement has been reached between the Landlord and
the Tenant, provisions for under floor or through floor installations
shall be made;
5. 2'x2' Acoustical ceiling grid and tile shall be stockpiled on the
floor;
6. Miniblinds shall be installed at all perimeter glazing;
7. Provisions shall have been installed for the bulk main piping and the
secondary piping of an automatic, calculated, wet-pipe, fire sprinkler
system;
8. Complete and operable landscaping, hardscape, sidewalks and other
amenities as shown in the "Plan";
9. Complete and operable parking areas, including code required lighting,
ventilation, drainage systems and fire suppressions systems shall be
provided as shown in the "Plans";
10. Mechanical, Plumbing and Electrical provisions as described elsewhere
herein: and
11. Designated areas outside the "Leased Premises" which shall accommodate
trash collection points, dumpsters, etc. as portrayed in the "Plans".
PUBLIC UTILITY FACILITIES
The Landlord shall provide the following public utility provisions as shown on
the "Plans", including:
1. Domestic water supply to "Leased Premises" located in the ceiling of
the space as shown in the "Plans," without distribution piping,
fixtures drains or hot water heater, etc.;
2. Sanitary sewer main to "Leased Premises" located below the floor as
shown in the "Plan," without additional piping or fixtures, trim, etc.;
HAVC SYSTEMS
The Landlord shall provide an operable HVAC as shown in the "Plans," including:
1. An engineered heating and cooling system capable of maintaining and
internal environment of 78 Fahrenheit in operational cooling mode
(summer) and 72 Fahrenheit in heating mode (winter). System to be
closed loop, chilled water system with remote air handlers;
2. The condenser loop piping for the HVAC system shall be provided within
the ceiling space of the "Leased Premises," ready for additional piping
and trim work by Tenant.
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3. Installed heat pumps (1 ton per 350 S.F.); Ek piping and primary duct
run will be installed in "Leased Premises".
ELECTRICAL SYSTEM
1. A primary power distribution system as shown in the "Plans;"
2. All connections to HVAC equipment being installed by Landlord in shell;
3. 2X4 Parabolic fluorescent light fixtures (1per 80 usf) Stockpiled on
the floor.
C-10
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OFFICE BUILDING STANDARD SPECIFICATIONS
EXHIBIT C - 2
ITEM PRODUCT DESCRIPTION
---- -------------------
Corridor Partitioning 3-5/8", 25 ga. Metal studs at 24" O.C. with
one layer 5/8" Type X gypsum board one side
and two layers 5/8" type X gypsum board one
side. Partition extends to underside of floor
deck above painted with two coats eggshell
paint and 21/2" rubber straight base on
tenant side of wall. Provide a smooth finish
wall at corridor side of wall. Partition will
include R-11 insulation ▇▇▇▇▇ and acoustical
caulking at floor deck above and floor. Note:
Cost of wall split so building cost includes
half of wall construction and wall finish for
corridor side of wall. Tenant cost includes
half of wall construction and tenant wall
finish.
Demising Partitioning 3 - 5/8", 25 ga. Metal studs at 24" O.C. with
two layers 5/8" gypsum board both sides.
Partition extends to floor deck above.
Partition will include R-11 insulation ▇▇▇▇▇
and acoustical caulking at floor decking
above and floor. Partition painted with two
coats eggshell paint and smooth finished with
21/2 rubber straight base on Tenant side.
Cost of wall will be equally divided between
adjoining tenants.
Tenant Partitioning 3 - 5/8", 25 ga. Metal studs at
24" O.C. with one layer 5/8" gypsum wall
board both sides. Partition to extend from
floor to underside of ceiling grid with
smooth finish and two coats eggshell paint,
21/2" straight rubber base both sides at
carpet and 21/2" coved rubber base at all VCT
areas.
Partial Height Partitioning 3 - 5/8". 25 ga. Metal studs at 24" O.C. 3" x
3" x 1/2" steel tube wall brace at 6'-0" o.c.
for wall lengths over 6'-0" and at each end
of wall with one layer 5/8" gypsum wall board
both sides. Partition to extend from floor to
+ 42" A.F.F. or as indicated per tenant --
drawings, painted with a smooth eggshell
finish and a 21/2" straight rubber base
sides.
C-11
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Tenant Entry Doors Recessed 3'-0" X 8' - 10" X
1-3/4" solid core stained wood veneer door
(species to be determined). Entry door to
include a single, 2'-0" x 8'-10" clear glass
sidelite in frame integral with door. Door
and sidelite to have aluminum frame to match
building storefront finish.
Tenant Interior Doors 3'-0" x 8'-10" solid core
stained wood veneer doors (species to be
determined) in aluminum frame to match
building storefront finish.
Tenant Entry Hardware Lever mortise lockset, satin stainless steel
finish with closer.
Tenant Interior Door Hardware Lever mortise passage latchset, satin
stainless steel finish.
Acoustical Ceiling Stockpiled suspended white 2' x 2' ceiling
tile, non-directional/fissured, beveled edge
tegular, white: Ceiling grid, 9/16 narrow
profile, white.
Ceiling height in all tenant areas and
corridors to be 9'. Stockpiled tile and grid
by Landlord as part of shell building.
Tenant Light Fixtures 2' x 4' recessed parabolic
fluorescent, 3-tube 18-cell fixture,
stockpiled by Landlord as part of shell
building (1 fixture per 80 U.S.F.). Tenant
responsible for additional fixtures in excess
of Landlord provided fixtures.
Light Switches Single pole switch with coverplate and toggle
switch. (White) Duplex wall outlet with
coverplate and plugs.(White)
Electrical Convenience Outlet Duplex wall outlet with coverplate and
plugs. (White)
Telephone Data Outlets Building standard rough-in box. Tenant will
coordinate with their respective
communication equipment company for detailed
requirements for inclusion into construction
plans and schedule.
Telephone Mounting Board 4' x 4' painted plywood mounted board.
Exit Lights Stencil faced fixture to match shell building
signs.
Heating, Venting, Air
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Conditioning (HVAC) Duct work as required, with 2' x 2' diffusers
and thermostat control in Tenant areas. Any
special requirements may result in additional
cost to Tenant.
Floor Coverings (Tenant) Building standard carpet: 30-oz. Cut pile
face weight or equal. Direct glue down
installation.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇" ▇▇▇▇-▇▇▇▇▇▇ installed by Landlord in shell
building.
Fire Protection Sprinkler System Sprinkler heads shall be semi-recessed
pendants with white escutcheons.
Signage Building Standard tenant identification and
suite number in lobby directory and at tenant
entry.
C-13
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EXHIBIT "D"
RULES AND REGULATIONS
Tenant expressly covenants and agrees, at all times during the Term,
and at such other times as Tenant occupies the Leased Premises or any part
thereof, to comply, at its own cost and expense, with the following:
1. Any handling of freight for any purpose, or deliveries to or from
the Leased Premises, shall be made in a manner which is consistent with good
commercial retail and/or office building practices and only at such times, in
such areas, and through such entrances and exits as are from time to time
designated for such purposes by Landlord. Any truck or machine used for handling
freight or making deliveries in the Leased Premises or in the Building shall
have rubber wheels only.
2. All garbage and other refuse shall be kept inside the Leased
Premises in the type of container specified by Landlord until such time as it is
to be collected. All garbage shall be prepared for collection, and collected in
the manner and at the times and places specified by Landlord. If Landlord elects
to furnish or designate any service for the removal of garbage and other refuse,
Tenant shall use such service. Tenant shall not be obligated to pay more for
such service than the prevailing competitive rates charged by reputable,
independent trash removal contractor' for equal service on a direct and
individual basis. If furnished or billed by or through Landlord, Tenant shall
pay for such service monthly as Additional Rent. Landlord may also provide trash
compactors for compacting Tenant's trash and add the cost thereof to Landlord's
Operating Costs. If Landlord does not provide such service, Tenant shall be
solely responsible for contracting for the removal of all garbage and other
refuse from the Leased Premises and shall pay promptly all charges therefor.
3. Tenant shall not (i) suffer, allow or permit any vibration, noise,
odor or flashing or bright light to emanate from the Leased Premises or from any
machine or other installation located therein, or otherwise suffer, allow or
permit the same to constitute a nuisance to or interfere with the safety,
comfort or convenience of Landlord or of any other occupant or user of the
Building; (ii) display, paint, or place any handbills, bumper stickers or other
advertising devices on any vehicle(s) parked in the parking area(s) of the
Building, whether belonging to Tenant, its employee(s), or any other person(s);
(iii) solicit business or distribute any handbills or other advertising
materials in the Common Areas; (iv) conduct or permit any activities in the
Building that might constitute a public or private nuisance; (v) permit the
parking of any vehicles or the placement of any displays, trash receptacles or
other items, so as to interfere with the use of any driveway, fire lane,
corridor, walkway, parking area, mall or any other Common Area; (vi) use or
occupy the Leased Premises or permit anything to be done therein which in any
manner might cause injury or damage in or about the Building; or (vii) use or
occupy the Leased Premises in any manner which is unreasonably annoying to other
tenants in the Building unless directly occasioned by the proper conduct of
Tenant's business in the Leased Premises.
4. Tenant shall secure and protect the Leased Premises, and all
property located within the Leased Premises. Tenant acknowledges and agrees that
it, and not Landlord, is solely
D-1
63
responsible for securing and protecting the Leased Premises, and all property
located within the Premises.
5. Tenant shall use the plumbing within the Leased Premises and the
Building only for the purpose for which it is designed. Tenant shall be solely
responsible for any breakage, stoppage or damage resulting from its violation of
this provision, and shall pay any costs associated therewith to Landlord upon
demand as Additional Rent.
6. Tenant shall contract for and utilize termite and pest extermination
services for the Leased Premises, and with such contractor, as Landlord may from
time to time designate. Tenant shall not be obligated to pay more for such
service than the prevailing competitive rate charged by reputable, independent
contractors. If Landlord does not designate such contractor, Tenant may employ a
reputable contractor of its choosing, subject to Landlord's prior written
consent.
7. Tenant shall install and maintain at all times a display of
merchandise in the display windows (if any) of the Leased Premises and shall
keep such display windows well lighted during all Building business hours and
for at least one (1) hour thereafter. All articles, and the arrangement, style,
color and general appearance thereof, shall be in keeping with the character and
standards of the Building as reasonably determined by Landlord.
8. Tenant shall participate in any window cleaning program that may be
established by Landlord. Tenant shall not be obligated to pay more for its
participation in such window cleaning program than the prevailing competitive
rate charged by reputable independent window cleaning contractors for equal
service on a direct and individual basis.
9. If Tenant undertakes any construction activities which causes any
work stoppage, picketing, labor disruption or dispute, so as to interfere with
the Landlord's construction activity at the Building, Tenant shall, upon request
from Landlord, immediately suspend any construction work being performed in the
Leased Premises giving rise to such labor problems, until such time as Landlord
has completed its construction activity and notified Tenant that Tenant's
construction may resume. Tenant shall have no claim for damages of any nature
against Landlord for such suspension nor shall the Term Commencement Date be
extended as a result thereof.
10. Tenant shall promptly obtain all permits, including occupancy
permits, for the Leased Premises or its use thereof. Tenant shall pay before
delinquency all license and permit fees, and other charges of a similar nature,
for the conduct of any business in, or any use of, the Leased Premises. Upon
request Tenant shall provide to Landlord a copy of all its permits, including
the certificate of occupancy.
11. Tenant shall not conduct or permit to be conducted any auction,
fire, "going out of business" or similar type of sale (whether real or
fictitious) from the Leased Premises; provided, however that this provision
shall not restrict the absolute freedom (as between Landlord and Tenant) of
Tenant to determine its own selling prices nor shall it preclude periodic,
seasonal, promotional or clearance sales held in the ordinary course of
business.
▇-▇
▇▇
▇▇. Tenant shall not place a load on any floor in the Building which
exceeds the load which the floor was designed to carry, or which may result in
improper weight distribution on such floors.
13. Tenant shall not install, operate or maintain in the Leased
Premises, or in any other area of the Building, electrical equipment which does
not bear the Underwriters Laboratories seal of approval, or which would overload
the electrical system or any part thereof beyond its capacity for proper,
efficient and safe operation.
14. To the extent required by Landlord or by any law, rule, regulation,
guideline or order, Tenant shall provide sound barriers for all mechanical
systems serving the Leased Premises.
15. Tenant shall not store, display, sell, or distribute any alcoholic
beverages, dangerous materials, flammable materials, explosives, or weapons in
the Leased Premises, or conduct any unsafe activities therein, unless permitted
pursuant to Section 1.1.
16. Except to the extent permitted in Section 1.1., Tenant shall not
sell, distribute, display or offer for sale (i) any paraphernalia commonly
employed in the use or ingestion of illicit drugs, or (ii) any x-rated,
pornographic, lewd, or so-called "adult" newspaper, book, magazine, film,
picture, video tape or video disk.
17. Tenant shall comply with all statutes, laws, rules, orders,
regulations and ordinances affecting the Leased Premises and all the orders or
recommendations of any insurance underwriters, safety engineers, and loss
prevention consultants as may from time to time be consulted by Landlord. In no
event shall Tenant use the Leased Premises for purposes which are prohibited-,by
zoning or similar laws or regulations, or covenants, conditions or restrictions
of record. Tenant acknowledges and agrees it is solely responsible for
determining if its business complies with the applicable zoning regulations, and
that Landlord makes no representation (explicit or implied) concerning such
zoning regulations.
18. Tenant shall not operate or permit to be operated in the Leased
Premises any automatic teller machines, or any coin or token operated vending
machine or similar device including, without limitation, telephones, lockers,
toilets, scales, amusement devices, and machines for the sale of beverages,
foods, candy, cigarettes or other goods, except for food and drink vending
machines and microwave ovens and similar appliances for employee use.
19. No radio or television aerial or other device may be erected by
Tenant on the roof or on any exterior wall of the Leased Premises, or in the
Building, without Landlord's prior written consent which consent will not be
unreasonably withheld or delayed. Any aerial or other device installed without
such written consent shall be subject to removal by Landlord, at Tenant's sole
risk and expense, without notice.
▇-▇
▇▇
▇▇. Tenant shall comply with all other reasonable rules and regulations
from time to time established by Landlord which apply generally to all other
tenants (other than major tenants) in the Building.
D-4
66
EXHIBIT "E"
ESTOPPEL CERTIFICATE
To:
Gentlemen:
In connection with the sale or mortgage of the ____________________
Building (the "Property"), the undersigned Property tenant ("Tenant"), having
reviewed the provisions of that certain lease pursuant to which Tenant presently
holds a leasehold interest in a portion of the Property (the "Lease"), hereby
agrees to and certifies as follows, except as otherwise stated herein:
1. Buyer or mortgagee may rely on the information set forth in this
Estoppel Certificate in purchasing or lending on the Property.
2. The rentable area under the Lease is approximately ____________
(_________) square feet. The Basic Rent is currently __________ and increases by
_________. The due date of monthly payments under the Lease is the _______
(______) day of each month.
3. The Lease Term commenced on ___________________, ____, and will
expire on _________________, _______. The following fully identifies all options
held by Tenant under the Lease, including, but not limited to, renewal,
expansion, extension and purchase options:
_______________________________________________________________________________
_______________________________________________________________________________
______________________________________________________________________________.
4. Attached to this Estoppel Certificate and incorporated herein by
this reference is a true, correct and complete copy of the Lease, including all
amendments and modifications thereof. The Lease presently is in full force and
effect.
5. Tenant has accepted possession of the premises described in the
Lease; and all improvements and all items of an executory nature pertaining
thereto have been completed to Tenant's satisfaction, and any tenant improvement
or other allowance in the Lease has been paid or satisfied.
6. All utilities required for the use of the premises described in the
Lease are installed and adequate to service Tenant's needs.
7. There is no default or event that with the passing of time and/or
the giving of notice would constitute a default on Tenant's part (or, to the
best of Tenant's knowledge, on the part of the landlord) under the Lease.
▇-▇
▇▇
▇. No rentals are accrued and unpaid or prepaid for more than one (1)
month under the Lease; and there is no free rent or security deposit except as
may be stated in the Lease. Any such security deposit is in the possession of
the landlord in the full amount stated in the Lease.
9. Tenant has no defense, set-off or counterclaim related to its
obligations under the Lease or against the landlord.
10. Other than the matters referred to in the preamble above, Tenant
has not received any notice of any sale, transfer, assignment, hypothecation,
mortgage or pledge of landlord's interest in the Lease.
11. Except as otherwise provided herein, Tenant hereby acknowledges and
agrees that landlord pursuant to the Lease has fulfilled all its obligations and
warranties therein, and that assignment of the Lease to a buyer or as security
to a lender shall not constitute a default or breach of any of the terms and
conditions of the Lease, and that after the assignment, any buyer shall be
substituted in all respects as the landlord under the terms and conditions of
the Lease.
12. Tenant has not assigned or transferred any of its interest in the
Lease nor subleased any portion thereof to another.
DATED AS OF ______________________, _____.
TENANT: ____________________________________
By:_________________________________
Its:______________________________________
E-2
68
EXHIBIT "F"
GUARANTY
RECITALS:
(A) Integrated Information Systems, Inc. ("Tenant") is desirous of
entering into that certain Office Lease Agreement dated October 5, 1999
("Lease"), whereby Tenant will lease from MCW Brickyard Commercial, L.L.C., an
Arizona limited liability company ("Landlord") that certain real property known
as Suite 400, Bank of America Building, 699 South Mill, Tempe, Arizona, and all
improvements located thereon (the "Leased Premises").
(B) Landlord has required ▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇ (collectively
"Guarantor") to execute this Guaranty (the "Guaranty"), as a condition of
Landlord entering into the Lease.
(C) In order to induce Landlord to enter into the Lease which is being
executed simultaneously herewith, the undersigned Guarantor has agreed to
execute this Guaranty.
NOW, THEREFORE, in consideration of the foregoing, together with other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned Guarantor hereby agrees as follows:
AGREEMENT:
FIRST: Guarantor hereby covenants and agrees with Landlord: (i) if not
done by Tenant prior to the expiration of any applicable notice and cure
periods; to make the due and punctual payment of all rent, expenses, costs,
monies and charges expressed to be payable under the Lease; (ii) if not done by
Tenant prior to the expiration of any applicable notice and cure periods, to
render prompt and complete performance of all and each of the terms, covenants,
conditions and provisions contained in the Lease on the part of Tenant to be
kept, observed and performed; and (iii) to indemnify and save harmless Landlord
from any loss, costs or damages arising out of any failure by Tenant to pay the
rent, expenses, costs, monies and charges payable under the Lease or the failure
by Tenant to perform any of the terms, covenants, conditions and provisions
contained in the Lease. This Guaranty will terminate when and if the original
Tenant becomes a publicly traded corporation (i.e., whose stock is traded on a
public securities market in the United States). In addition, provided Tenant
fully and timely performs all of its obligations under the Lease or cures any
breach within any allowed cure period set forth in the Lease, then upon
completion of each complete calendar year of the Term for which Landlord has
timely received all Rent and charges, the term for which this Guaranty shall be
outstanding shall be reduced by one (1) calendar year. For example, at the end
of the first calendar year of the Lease Term (i.e., one (1) year from the Lease
Commencement Date), provided there has been no breach or default and Landlord
has timely received all rent and charges, this Guaranty will then be deemed to
expire after the ninth (9th) calendar year of the original Lease Term, provided
that there is no breach or default hereunder prior to the end of such ninth
(9th) calendar year.
F-1
69
SECOND: Guarantor acknowledges that all of its obligations under this
Guaranty are independent of and joint and several with the obligations of Tenant
under the Lease and, in the event of a default under the Lease, Guarantor waives
any right to require Landlord to: (i) first proceed against Tenant or pursue any
rights or remedies under or with respect to the Lease; (ii) proceed against or
exhaust any security that Landlord holds from Tenant; or (iii) pursue any other
remedy whatsoever in Landlord's power. Landlord shall have the right to enforce
this Guaranty regardless of the acceptance of additional security from Tenant
and regardless of the release or discharge of Tenant by Landlord or by others,
or by operation of law. This is a Guaranty of payment and performance, not of
collection.
In any action to enforce this Guaranty, Guarantor may assert and raise
any defenses available to Tenant relating to (a) negotiations, discussions and
circumstances preceding or surrounding, and related to, the execution of the
Lease and the terms thereof; (b) the terms, provisions, conditions and
requirements of the Lease, including the obligations of Landlord and Tenant
under the Lease; and (c) the nature or condition of the Premises, but Guarantor
may specifically and expressly not assert, raise, rely on or otherwise utilize
or attempt to utilize any other defenses, justifications or excuses for its
nonperformance of this Guaranty, including but not limited to any related to (i)
bankruptcy, reorganization, insolvency, readjustment of debt, winding up,
dissolution, liquidation or receivership by or for Tenant, or (ii) inability of
Tenant to pay or perform its debts or obligations, including but not limited to
Tenant's inability to pay or perform its debts or obligations under or in
connection with the Lease.
THIRD: Guarantor hereby expressly waives (i) notice of the acceptance
of this Guaranty; and (ii) the provisions of A.R.S. Sections 12-1641 and
12-1642 Arizona Rules of Civil Procedure, Rule 17(F), and any successor statutes
or rules. Guarantor waives any homestead or exemption right. Any married person
who is a Guarantor agrees that recourse may be had against all separate and
community property of such person.
FOURTH: Without limiting the generality of the foregoing, the liability
of Guarantor under this Guaranty shall not be deemed to have been waived,
released, discharged, impaired or affected by reason of any waiver or failure to
enforce any of the obligations of the Tenant under the Lease, or assignment of
the Lease, or the subletting of the Premises by Tenant, or the release or
discharge of Tenant in any receivership, bankruptcy, winding-up or other
creditors' proceedings or the rejection, disaffirmance or disclaimer of the
Lease by any party in any action or proceeding, and shall continue with respect
to the periods prior thereto and thereafter. Guarantor's liability for
obligations of Tenant arising or accruing during the term of the Lease shall not
be affected by the subsequent expiration or termination of the term of the
Lease, and after any expiration or termination of the Lease, Guarantor shall be
fully responsible for all post-expiration or post-termination obligations of
Tenant pursuant to the Lease. The liability of the Guarantor shall not be
affected by any repossession of the Premises by Landlord. Guarantor shall pay
when due from Tenant any balance owing to Landlord from time to time,
immediately upon being given written notice of demand by Landlord in the manner
for providing notice set forth in the Lease, at its address set forth below.
FIFTH: The obligation of Guarantor shall not be extended to any
modification of the Lease, unless such modification is expressly consented to by
Guarantor in writing.
F-2
70
SIXTH: Guarantor shall pay Landlord's reasonable attorneys' fees and
all costs and other expenses incurred in any collection or attempted collection
of this Guaranty or in any negotiations relative to the obligations hereby
guaranteed.
SEVENTH: Until all the covenants and conditions in the Lease on
Tenant's part to be performed and observed are fully performed and observed,
Guarantor: (i) shall have no right of subrogation against Tenant by reason of
any payments or acts of performance by the Guarantor in compliance with the
obligations of the Guarantor hereunder; (ii) waives any right to enforce any
remedy which Guarantor now or hereafter shall have against Tenant by reason of
any one or more payments or acts of performance in compliance with the
obligations of Guarantor hereunder; and (iii) subordinates any liability or
indebtedness of Tenant now or hereafter held by Guarantor to the obligations of
Tenant to the Landlord under the Lease.
EIGHTH: The liability of Guarantor under this Guaranty shall continue
until the expiration of all periods within which any amount at any time paid on
account of the obligations guaranteed hereby may be required to be restored or
returned by Landlord upon the bankruptcy, insolvency or reorganization of
Tenant, any other guarantor or any other person. If any amount at any time paid
on account of the obligations guaranteed hereby is required to be restored or
returned by Landlord as a result of any such bankruptcy, insolvency or
reorganization, Guarantor shall be liable under this Guaranty with respect to
such amount as if such amount was never paid.
NINTH: This instrument may not be changed, modified, discharged or
terminated orally or in any manner other than by an agreement in writing signed
by Guarantor and the Landlord.
TENTH: All of the terms, agreements and conditions of this Guaranty
shall extend to and be binding upon Guarantor, and the successors and assigns of
Guarantor and shall inure to the benefit of and may be enforced by Landlord, its
successors and assigns as the owner(s) of the property containing the Leased
Premises, and the holder of any mortgage to which the Premises may be subject at
any time or from time to time. Without limiting the generality of the foregoing,
Landlord may, without notice, assign this Guaranty to any party to whom its
interests in the Lease have been assigned, or have been otherwise transferred,
or to any party succeeding in any manner to the interest of Landlord. Upon
request, Guarantor will execute a new Guaranty, in the form hereof, in favor of
any such successor.
ELEVENTH: The use of the singular herein shall include the plural. This
Guaranty shall be governed by the laws of the State of Arizona. Guarantor
consents to and agrees that the courts in Maricopa County, Arizona shall have
proper jurisdiction and venue for any actions brought to enforce or with respect
to this Guaranty. This is a continuing and irrevocable Guaranty and shall remain
in full force until each of the obligations guaranteed hereby is satisfied in
full.
TWELFTH: Guarantor agrees and acknowledges that Landlord is relying on
the assets of Guarantor as presented by Guarantor to Landlord as of the date of
this Guaranty. Guarantor will not transfer any assets to any affiliated entity,
other affiliate or other party, except upon receipt of reasonable consideration
representing the full value thereof.
F-3
71
DATED: October 5, 1999.
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
"GUARANTOR"
STATE OF ARIZONA )
) ss
County of Maricopa )
The foregoing instrument was acknowledged before me this day of
October, 1999, by ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇.
Notary Public
My Commission Expires:
F-4
72
EXHIBIT "G"
CONFIRMATION OF LEASE COMMENCEMENT DATE
Landlord: MCW Brickyard Commercial, L.L.C.
Tenant: ________________________________
This Confirmation is made by Landlord and Tenant pursuant to that
certain Lease dated as of __________________, ____ (the "Lease") for certain
premises known as Suite ______ in the Building commonly known as ______________
Building (the "Leased Premises"). This Confirmation is made pursuant to Section
5(c) of the Lease.
1. Lease Commencement Date, Termination Date. Landlord and Tenant
hereby agree that the Lease Commencement Date of the Lease is
___________________, ____, and the termination date of the Lease Term is
___________________, 200_.
2. Square Footage; Basic Rent; Tenant's Proportionate Share. Landlord
and Tenant agree that the leaseable square footage of the Leased Premises is
_____________; the initial Basic Rent is $_____________ per month and
$_____________ per year; and Tenant's Proportionate Share is ______%.
3. Acceptance of Premises. Tenant has inspected the Leased Premises and
affirms that the Leased Premises is acceptable in all respects in its current
"as is" condition.
4. Incorporation. This Confirmation is incorporated into the Lease, and
forms an integral part thereof. This Confirmation shall be construed and
interpreted in accordance with the terms of the Lease for all purposes.
TENANT:
________________________________
By _____________________________
Its ___________________
LANDLORD:
MCW BRICKYARD COMMERCIAL, L.L.C.
By _____________________________
Its ___________________
G-1
73
EXHIBIT "H"
ESTIMATED FIRST YEAR OPERATING EXPENSES
H-1
74
EXHIBIT "I"
PRO FORMA 2000 BUDGET OF TENANT
I-1
75
EXHIBIT "J"
NON-DISTURBANCE, ATTORNMENT, ESTOPPEL AND
SUBORDINATION AGREEMENT
J-1