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EXHIBIT 10.18
MOUNTAIN VISTA COMMERCIAL CENTER LEASE
1. BASIC LEASE TERMS
a. DATE OF LEASE: October 20, 1999
b. TENANT: QUALITY CARE SOLUTIONS, INC., A NEVADA CORPORATION.
Address (Leased Premises): 14647 South 50TH Street, Phoenix, Arizona
85044.
Building/Unit: 1/150
Address (For Notices): QUALITY CARE SOLUTIONS, INC.
14647 SOUTH 50TH STREET, BUILDING 1,
SUITE 150
PHOENIX, ARIZONA 85044
c. LANDLORD: PRINCIPAL DEVELOPMENT INVESTORS, L.L.C., a Delaware
Limited Liability Company, dba PDI-Mountain Vista Commercial Center.
Address for notices and payment of rent: Metro Commercial
Properties, 4411 South Rural Road, #201, Tempe, Arizona, 85282, or
to such other place as Landlord may from time to time designate by
notice to Tenant.
d. TENANT'S USE OF PREMISES: Administrative office.
e. PREMISES AREA: Approximately 35,000 square feet, to be adjusted to
an "As-Built" measurement. The Square Footage is measured from the
"face of glass or dominant wall;" in other words, the building
exterior, or outside face, sometimes referred to as the "drip line"
to the middle of the demising wall.
f. PROJECT AREA: 132,000 SQUARE FEET
g. TERM OF LEASE: Commencement: APRIL 1, 2000 Expiration: MARCH 31,
2010, OR UPON RECEIPT OF A CERTIFICATE OF OCCUPANCY FROM THE CITY OF
PHOENIX.
Number of Months: 120 Months
h. BASE MONTHLY RENT: $40,600.00, PLUS APPLICABLE TAXES
i. RENT ADJUSTMENT:
Step Increase. If this provision is utilized the step adjustment
provisions of Section 4.b apply as follows:
Effective Date of New Base
Rent Increase Monthly Rent
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April 1, 2000 $40,600.00, plus applicable taxes
October 1, 2002 $42,700.00, plus applicable taxes
April 1, 2005 $44,450.00, plus applicable taxes
October 1,2007 $46,550.00, plus applicable taxes
j. ANNUAL EXPENSE BASE:
EXPENSE RATE: 2000 BASE YEAR
PREMISES AREA SQUARE FEET: X 35,000 sf
PRO RATA SHARE 27% %
k. PREPAID RENT: $ 0.00
l. SECURITY DEPOSIT: SECURITY DEPOSIT HAS BEEN WAIVED.
m. BROKER: METRO COMMERCIAL PROPERTIES AND COLDWELL BANKER COMMERCIAL
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n. GUARANTOR(S): SEE EXHIBIT "H".
o. INITIAL RENT: $40,600.00 PLUS TAX FOR THE PERIOD APRIL 1, 2000
THROUGH APRIL 30, 2000.
p. ADDITIONAL SECTIONS: Additional section(s) of this lease numbered 29
AND 30 is/are attached hereto and made a part hereof. If none, so
state in the following space [omitted in original].
q. ADDITIONAL EXHIBITS: Additional exhibits lettered A through I are
attached hereto and made a part hereof. If none, so state in the
following space [omitted in original].
2. PREMISES. Landlord leases to Tenant the premises described in Section 1
and in Exhibit A (the "Premises"), located in this project described on
Exhibit B (the "Project"). By entry on the Premises, Tenant acknowledges
that it has examined the Premises and accepts the Premises in their
present condition, subject to any additional work Landlord has agreed to
do in writing attached as Exhibit C. Tenant represents and warrants that
it agrees with the square footage specified for the Premises in Section 1
and will not hereafter challenge such determination and agreement.
3. TERM. The term of this lease is for the period set forth in Section 1,
commencing on the date in Section 1. If Landlord, for any reason, cannot
deliver possession of the Premises to Tenant upon commencement of the
term, this Lease shall not be void or voidable, nor shall Landlord be
liable to Tenant for any loss or damage resulting from such delay. In that
event, however, there shall be a rent abatement covering the period
between the commencement of term and the time when Landlord delivers
possession to Tenant, and all other terms and conditions of this Lease
shall remain in full force and effect, provided, however, that if Landlord
cannot deliver possession of the Premises to Tenant, this Lease shall be
void. If a delay in possession is caused by Tenant's failure to perform
any obligation in accordance with this Lease, the term shall commence as
set forth in Section 1 and there shall be no reduction of rent between the
commencement of the term and the time Tenant takes possession.
4. RENT
a. BASE RENT. Tenant shall pay Landlord monthly base rent in the
initial amount in Section 1 which shall be payable monthly in
advance on the first day of each and every calendar month ("base
Monthly Rent") provided, however, the first month's rent and any
partial month's rent is due and payable upon execution of this
Lease.
For purposes of Section 467 of the Internal Revenue Code, the
parties to this Lease hereby agree to allocate the stated rents,
provided herein, to the periods which correspond to the actual rent
payments as provided under the terms and conditions of this
agreement.
b. RENT ADJUSTMENT.
STEP INCREASE. If Section 1.i. is utilized, the Base Monthly Rent
shall be increased periodically to the amounts and at the times set
forth in Section 1.i.
c. EXPENSES. The purpose of this Section 4.c is to ensure that Tenant
bears a share of all Expenses related to the use, maintenance,
repair or replacement, and insurance of the Project. Accordingly,
beginning on the first of the calendar year following the date Lease
Commencement Date, Tenant shall pay to Landlord that portion of
Tenant's Share (as defined below) of Expenses related to the Project
which is in excess of the Annual Expense Base shown in Section 1.
Tenant's prorata share of the operating expenses shall be determined
on a occupancy level of no less than ninety-five percent (95%).
Property taxes to be calculated as a fully leased office building
for one year.
(1) EXPENSE DEFINED. The term "Expenses" shall mean all costs and
expenses of the operation, maintenance, repair or replacement, and
insurance of the Project, including without limitation, the
following costs:
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(a) All supplies, materials, labor, equipment, and utilities used in or
related to the operation and maintenance of the Project;
(b) All maintenance, management, common area janitorial, accounting,
insurance, and service agreement costs related to the Project;
(c) All maintenance, replacement and repair costs relating to the areas
within or around the Project, including, without limitation, air
conditioning systems, sidewalks, landscaping, service areas,
driveways, parking areas (including resurfacing and restriping
parking areas), walkways, building exteriors (including painting),
signs and directories, repairing and replacing roofs, walls, etc.
(d) Amortization (along with reasonable financing charges) of capital
improvements made to the Project which may be required by any
government authority or which will improve the operating efficiency
of the Project (provided, however, that the amount of such
amortization for improvements not mandated by government authority
shall not exceed in any year the amount of costs reasonably
determined by Landlord in its sole discretion to have been saved by
the expenditure either through the reduction or minimization of
increases which would have otherwise occurred).
(e) Real Property Taxes including all taxes, assessments (general and
special) and other impositions or charges which may be taxed,
charged, levied, assessed or imposed upon all or any portion of or
in relation to the Project or any portion thereof, any leasehold
estate in the Premises or measured by rent from the Premises
including any increase caused by the transfer, sale or encumbrance
of the Project or any portion thereof. "Real Property Taxes" shall
also include any form of assessment, levy, penalty, charge or tax
(other than estate, inheritance, net income, or franchise taxes)
imposed by any authority having a direct or indirect power to tax or
charge, including, without limitation, any city, county, state
federal or any improvement or other district, whether such tax is
(1) determined by the value of the Project or the rent or other sums
payable under this Lease; (2) upon or with respect to any legal or
equitable interest of Landlord in the Project or any part thereof;
(3) upon this transaction or any document to which Tenant is a party
creating a transfer in any interest in the Project; (4) in lieu of
or as a direct substitute in whole or in part of or in addition to
any real property taxes on the Project; (5) based on any parking
spaces or parking facilities provided in the Project; or (6) in
consideration for services, such as police protection, fire
protection, street, sidewalk and roadway maintenance, refuse removal
or other services that may be provided by any governmental or
quasi-governmental agency from time to time which were formerly
provided without charge or with less charge to property owners or
occupants.
(f) The cost of any tax protest incurred in Landlord's attempt to reduce
real estate taxes.
(2) ANNUAL ESTIMATE OF EXPENSES - TENANT'S SHARE. When Tenant takes possession
of the Premises, Tenant's share of Expenses for the remainder of the
calendar year shall be zero. At the commencement of each calendar year
thereafter, Landlord shall estimate Tenant's Share of Expenses for the
coming year by multiplying the estimated annual Project Expenses in excess
of the Annual Expense Base shown in Section 1 by the Premises area and
dividing this product by 132,000, the total rentable square footage of the
Project.
(3) MONTHLY PAYMENT OF EXPENSES. If Tenant's portion of said estimate of
Expenses shows an increase for subsequent calendar years over the Annual
Expense Base, as set forth in Section 1, Tenant shall pay to Landlord, as
additional rent, such estimated increase in monthly installments of
one-twelfth (1/12) beginning on January 1 of the forthcoming calendar
year, and one-twelfth (1/12) on the first day of each succeeding calendar
month. Landlord shall prepare an accounting of actual Expenses incurred
during the prior calendar year by March 31st of present year and such
accounting shall reflect Tenant's Share of Expenses. If the additional
rent paid by Tenant under this Section 4.c.3 during the preceding calendar
year was less than the actual amount of Tenant's Share of Expenses,
Landlord shall so notify Tenant and Tenant shall pay such amount to
Landlord within 30 days of receipt of such notice. Such amount shall be
deemed to have accrued during the prior calendar year and shall be due and
payable from Tenant even though the term of this Lease
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has expired or this Lease has been terminated prior to Tenant's
receipt of this notice. Tenant shall have thirty (30) days from
receipt of such notice to contest the amount due; failure to so
notify Landlord shall represent final determination of Tenant's
Share of Expenses. If Tenant's payments were greater than the actual
amount, then such overpayment shall be credited by Landlord to all
present rent due under this Section 4.c.3.
(4) RENT WITHOUT OFFSET AND LATE CHARGE. All rent shall be paid by
Tenant to Landlord monthly in advance on the first day of every
calendar month, at the address shown in Section 1, or such other
place as Landlord may designate in writing from time to time. All
rent shall be paid without prior demand or notice and without any
deduction or offset whatsoever. All rent shall be paid in lawful
currency of the United States of America. Proration of rent due for
any partial month shall be calculated by dividing the number of days
in the month for which rent is due by the actual number of days in
that month and multiplying by the applicable monthly rate. Tenant
acknowledges that late payment by Tenant to Landlord of any rent or
other sums due under this Lease will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of such cost being
extremely difficult and impractical to ascertain. Such costs
include, without limitation, processing and accounting charges and
late charges that may be imposed on Landlord by the terms of any
encumbrance or note secured by the Premises. Therefore, if any rent
or other sum due from Tenant is not received when due, Tenant shall
pay to landlord an additional sum equal to ten (10%) percent of such
overdue payment. Landlord and Tenant hereby agree that such late
charge represents a fair and reasonable estimate of the costs that
Landlord will incur by reason of any such late payment and that the
late charge is in addition to any and all remedies available to the
Landlord and that the assessment and/or collection of the late
charges shall not be deemed a waiver of any other default.
Additionally, all such delinquent rent or other sums, plus this late
charge, shall bear interest at the rate of eighteen (18%) percent
per annum. If the interest rate specified in this Lease is higher
than the rate permitted by law, the interest rate is hereby
decreased to the maximum legal interest rate permitted by law. Any
payments of any kind returned for insufficient funds will be subject
to an additional $25.00 charge. Should a second payment be returned,
Tenant agrees to make all future payments by cashier's check, money
order, or certified check.
5. FIRST MONTH'S RENT. Upon the execution of this Lease, Tenant shall pay to
Landlord the prepaid rent set forth in Section 1, and if Tenant is not in
default of any provisions of this Lease, such prepaid rent shall be
applied toward the rent due for the first month of the term.
6. DEPOSIT. Upon execution of this Lease, Tenant shall deposit a security
deposit fee as set forth in Section 1 with Landlord. If Tenant is in
default, Landlord can use the security deposit or any portion of it to
cure the default or to compensate Landlord for any damages sustained by
Landlord resulting from Tenant's default. Upon demand, Tenant shall
immediately pay to Landlord a sum equal to the portion of the security
deposit expenses or applied by Landlord to restore the security deposit to
its full amount. In no event will Tenant have the right to apply any part
of the security deposit to any rent or other sums due under this Lease. If
Tenant is not in default at the expiration or termination of this Lease,
Landlord shall return the security deposit to Tenant. Landlord's
obligations with respect to the deposit are those of a debtor and not of a
trustee, and Landlord can commingle the security deposit with Landlord's
general funds. Landlord shall not be required to pay Tenant interest on
the deposit. Landlord shall be entitled to immediately endorse and cash
Tenant's prepaid deposit; however, such endorsement and cashing shall not
constitute Landlord's acceptance of the Lease. In the event Landlord does
not accept this Lease, Landlord shall return said prepaid deposit.
7. USE OF PREMISES AND PROJECT FACILITIES. Tenant shall use the Premises
solely for the purposes set forth in Section 1 and for no other purpose
without obtaining the prior written consent of Landlord. Tenant
acknowledges that neither Landlord nor any agent of Landlord has made any
representation or warranty with respect to the Premises or with respect to
the suitability of the Premises or the Project for the conduct of Tenant's
business, nor has Landlord agreed to undertake any modification,
alteration or improvement to the Premises or the Project, except as
provided in writing in this Lease. Tenant acknowledges that Landlord may
from time to time, at its sole discretion, make such modifications,
alterations, deletions or improvements to the Project as Landlord may deem
necessary or desirable, without
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compensation or notice to Tenant. Tenant shall promptly comply with all
laws, ordinances, orders and regulations affecting the Premises and the
Project, including, without limitation, any rules and regulations that may
be attached to this Lease and to any reasonable modifications to these
rules and regulations as Landlord may adopt from time to time. Tenant
shall not do or permit anything to be done in or about the Premises or
bring or keep anything in the Premises that will in any way increase the
premiums paid by Landlord on its insurance related to the Project or which
will in any way increase the premiums for fire or casualty insurance
carried by other tenants in the Project. Tenant will not perform any act
or carry on any practices that may injure the Premises or the Project;
that may be a nuisance or menace to other tenants in the Project; or that
shall in any way interfere with the quiet enjoyment of such other tenants.
Tenant shall not use the Premises for sleeping, washing clothes, or the
preparation, manufacture or mixing of anything that might emit any
objectionable odor, noises, vibrations or lights onto such other tenants.
If sound insulation is required to muffle noise produced by Tenant on the
Premises, Tenant at its own cost shall provide all necessary insulation.
Tenant shall not do anything on the premises which will overload any
existing parking or service to the Premises. Pets and/or animals of any
type shall not be kept on the Premises.
8. EMISSIONS; STORAGE, USE AND DISPOSAL OF WASTE.
8.1. DEFINITIONS.
A. "Hazardous Material" means any substance, whether solid, liquid or
gaseous in nature:
(i) the presence of which requires investigation or remediation
under any federal, state or local statute, regulation,
ordinance, order, action, policy or common law, or
(ii) which is or becomes defined as a "hazardous waste", "hazardous
substance", pollutant or contaminant under any federal, state
or local statute, regulation, rule or ordinance or amendments
thereto including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42
U.S.C. section 9601 et seq.) and/or the Resource Conservation
and Recovery Act (42 U.S.C. section 6901 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. section 1801
et seq.), the Federal Water Pollution Control Act (33 U.S.C.
section 1251 et seq.), the Clean Air Act (42 U.S.C. section
7401 et seq.), the Toxic Substances Control Act, as amended
(15 U.S.C. section 2601 et seq.), and the Occupational Safety
and Health Act (29 U.S.C. section 651 et seq.), as these laws
have been amended or supplemented; or
(iii) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous
or is or becomes regulated by any governmental authority,
agency, department, commission, board, agency or
instrumentality of the United States, the State of Arizona or
any political subdivision thereof; or
(iv) the presence of which on the Property causes or threatens to
cause a nuisance upon the Property or to adjacent properties
or poses or threatens to pose a hazard to the health or safety
of persons on or about the Property; or
(v) the presence of which on adjacent properties could constitute
a trespass by Tenant; or
(vi) without limitation which contains gasoline, diesel fuel or
other petroleum hydrocarbons; or
(vii) without limitation which contains polychlorinated biphenyls
(PCBs), asbestos or urea formaldehyde foam insulation; or
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(viii) without limitation which contains radon gas.
B. "Environmental Requirements" means all applicable present and
future:
(i) statutes, regulations, rules, ordinances, codes, licenses,
permits, orders, approvals, plans, authorizations,
concessions, franchises, and similar items (including, but not
limited to those pertaining to reporting, licensing,
permitting, investigations and remediation), of all
Governmental Agencies; and
(ii) all applicable judicial, administrative, and regulatory
decrees, judgments, and orders relating to the protection of
human health or the environment, including, without
limitation, all requirements pertaining to emissions,
discharges, releases, or threatened releases of Hazardous
Materials or chemical substances into the air, surface water,
groundwater or land, or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling of Hazardous Materials or chemical
substances.
C. "Environmental Damages" means all claims, judgments, damages,
losses, penalties, fines, liabilities (including strict liability),
encumbrances, liens, costs, and expenses (including the expense of
investigation and defense of any claim, whether or not such claim is
ultimately defeated, or the amount of any good faith settlement or
judgment arising from any such claim) of whatever kind or nature,
contingent or otherwise, matured or unmatured, foreseeable or
unforeseeable (including without limitation reasonable attorneys'
fees and disbursements and consultants' fees) any of which are
incurred at any time as a result of the existence of Hazardous
Material upon, about, or beneath the Property or migrating or
threatening to migrate to or from the Property, or the existence of
a violation of Environmental Requirements pertaining to the Property
and the activities thereon, regardless of whether the existence of
such Hazardous Material or the violation of Environmental
Requirements arose prior to the present ownership or operation of
the Property. Environmental Damages include, without limitation:
(i) damages for personal injury or injury to property or natural
resources occurring upon or off of the Property, including,
without limitation, lost profits, consequential damages, the
cost of demolition and rebuilding of any improvements on real
property, interest, penalties and damages arising from claims
brought by or on behalf of employees of Tenant (with respect
to which Tenant waives any right to raise as a defense against
Landlord any immunity to which it may be entitled under any
industrial or worker's compensation laws);
(ii) fees, costs or expenses incurred for the services of
attorneys, consultants, contractors, experts, laboratories and
all other costs incurred in connection with the investigation
or remediation of such Hazardous Materials or violation of any
feasibility studies or reports or the performance of any
cleanup, remediation, removal, response, abatement,
containment, closure, restoration or monitoring work required
by any Governmental Agency or reasonably necessary to make
full economic use of the Property or any other property in a
manner consistent with its current use or otherwise expended
in connection with such conditions, and including without
limitation any attorneys' fees, costs and expenses incurred in
enforcing the provisions of this Lease or collecting any sums
due hereunder;
(iii) liability to any third person or Governmental Agency to
indemnify such person or Governmental Agency for costs
expended in connection with the items referenced in
subparagraph (ii) above; and
(iv) diminution in the fair market value of the Property,
including, without limitation, any reduction in fair market
rental value or life expectancy of the
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Property or the improvements located thereon or the
restriction on the use of or adverse impact on the marketing
of the Property or any portion thereof.
D. "Governmental Agency" means all governmental agencies, departments,
commissions, boards, bureaus or instrumentalities of the United
States, states, counties, cities and political subdivisions thereof.
E. The "Tenant Group" means Tenant, Tenant's successors, assignees,
guarantors, officers, directors, agents, employees, invitees,
permitees or other parties under the supervision or control of
Tenant or entering the Property during the term of this Lease with
the permission or knowledge of Tenant other than Landlord or its
agents or employees.
8.2. PROHIBITIONS.
A. Other than commercially reasonable quantities of general office
supplies and except as specified on Exhibit "F" attached hereto
provided Tenant's use complies with all Environmental Requirements
and is incidental to Tenant's operation of its business, Tenant
shall not cause, permit or suffer any Hazardous Material to be
brought upon, treated, kept, stored, disposed of, discharged,
released, produced, manufactured, generated, refined or used upon,
about or beneath the Property by the Tenant Group, without the prior
written consent of Landlord. From time to time during the term of
this Lease, Tenant may request Landlord's approval of Tenant's use
of other Hazardous Materials, which approval may be withheld in
Landlord's sole discretion. Tenant shall, prior to the Commencement
Date, provide to Landlord for those Hazardous Materials described on
Exhibit "F" (a) a description of handling, storage, use and disposal
procedures, and (b) all "community right to know" plans or
disclosures and/or emergency response plans which Tenant is required
to supply to local governmental agencies pursuant to any
Environmental Requirements.
B. Tenant shall not cause or permit the commission by the Tenant Group,
of a violation of any Environmental Requirements upon, about or
beneath the Property.
C. Tenant shall neither create, cause to be created, allow nor permit
the Tenant Group to create any lien, security interest or other
charge or encumbrance of any kind with respect to the Property,
including without limitation, any lien imposed pursuant to section
107(f) of the Superfund Amendments and Reauthorization Act of 1986
(42 U.S.C. section 9607(1) or any similar state statute.
D. Tenant shall not install, operate or maintain any above or below
grade tank, sump, pit, pond, lagoon or other storage or treatment
vessel or devise on the Property, without Landlord's prior written
consent, which consent may be withheld in Landlord's sole
discretion.
8.3. INDEMNITY.
A. In addition to indemnity provision in Section 8 of this Lease,
Tenant, its successors, assigns and guarantors, agree to indemnify,
defend, reimburse and hold harmless:
(i) Landlord; and
(ii) any other person who acquires title to all or a portion of the
Premises in any manner (including purchase at a foreclosure
sale) or who becomes entitled to exercise the rights and
remedies of Landlord under this Lease; and
(iii) the directors, officers, shareholders, employees, partners,
agents, contractors, subcontractors, experts, licensees,
affiliates, lessees, mortgagees, trustees, heirs, devisees,
successors, assigns and invitees of such persons,
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from and against any and all Environmental Damages which exist as a
result of the activities and negligence of the Tenant Group during
Tenant's occupancy of the Property or which exist as a result of the
breach of any warranty or covenant or the inaccuracy of any
representation of Tenant contained in this Lease, or by Tenant's
remediation of the Property or failure to meet its remediation
obligations contained in this Lease.
B. The obligations contained in this Section 8 shall include, but not
be limited to, the burden and expense of defending all claims, suits
and administrative proceedings, even if such claims, suits or
proceedings are groundless, false or fraudulent, and conducting all
negotiations of any description, and paying and discharging, when
and as the same become due, any and all judgments, penalties,
consequential damages or other sums due against such indemnified
persons. Landlord, at its sole expense, may employ additional
counsel of its choice to associate with Tenant's counsel.
C. Landlord shall have the right, but not the obligation, to join and
participate in, and control, if it so elects, any legal proceedings
or actions initiated in connection with Tenant's activities.
Landlord may also negotiate, defend, approve and appeal any action
taken or issued by any applicable governmental authority with regard
to contamination of the Property by a Hazardous Material.
D. The obligations of Tenant under this paragraph shall not be affected
by any investigation by or on behalf of Landlord, or by any
information which Landlord may have or obtain with respect thereto.
8.4. OBLIGATION TO REMEDIATE.
In addition to the obligation of Tenant to indemnify Landlord pursuant to
this Lease, Tenant shall, upon approval and demand of Landlord, at its
sole cost and expense and using contractors approved by Landlord, promptly
take all actions to remediate the Property which are required by any
Governmental Agency, or which are reasonably necessary to mitigate
Environmental Damages or to allow full economic use of the Property, which
remediation is necessitated from the presence upon, about or beneath the
Property, at any time during or upon termination of this Lease, of a
Hazardous Material or a violation of Environmental Requirements, existing
as a result of the activities or negligence of the Tenant Group. Such
actions shall include, but not be limited to, the investigation of the
environmental condition of the Property, the preparation of any
feasibility studies, reports or remedial plans, and the performance of any
cleanup, remediation, containment, operation, maintenance, monitoring or
restoration work, whether on or off the Property, which shall be performed
in a manner approved by Landlord. Tenant shall take all actions necessary
to restore the Property to the condition existing prior to the
introduction of Hazardous Material upon, about or beneath the Property,
notwithstanding any lesser standard of remediation allowable under
applicable law or governmental policies.
8.5. RIGHT TO INSPECT.
Landlord shall, have the right in its sole and absolute discretion, but
not the duty, to enter and conduct an inspection of the Property,
including invasive tests, at any reasonable time to determine whether
Tenant is complying with the terms of the Lease, including but not limited
to the compliance of the Property and the activities thereon with
Environmental Requirements and the existence of Environmental Damages as a
result of the condition of the Property or surrounding properties and
activities thereon. Landlord shall have the right, but not the duty, to
retain any independent professional consultant (the "Consultant") to enter
the Property to conduct such an inspection or to review any report
prepared by or for Tenant concerning such compliance. The cost of the
Consultant shall be paid by Landlord unless such investigation discloses a
violation of any Environmental Requirement by the Tenant Group or the
existence of a Hazardous Material on the Property or any other property
caused by the activities or negligence of the Tenant Group (other than
Hazardous Materials used in compliance with all Environmental Requirements
and previously approved by Landlord), in which case Tenant shall pay the
cost of the Consultant.
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Tenant hereby grants to Landlord, and the agents, employees, consultants
and contractors of Landlord the right to enter the Property and to perform
such tests on the Property as are reasonably necessary to conduct such
reviews and investigations. Landlord shall use its best efforts to
minimize interference with the business of Tenant.
8.6. NOTIFICATION.
If Tenant shall become aware of or receive notice or other communication
concerning any actual, alleged, suspected or threatened violation of
Environmental Requirements, or liability of Tenant for Environmental
Damages in connection with the Property or past or present activities of
any person thereon, including, but not limited to, notice or other
communication concerning any actual or threatened investigation, inquiry,
lawsuit, claim, citation, directive, summons, proceeding, complaint,
notice, order, writ, or injunction, relating to same, then Tenant shall
deliver to Landlord within ten (10) days of the receipt of such notice or
communication by Tenant, a written description of said violation,
liability, or actual or threatened event or condition, together with
copies of any documents evidencing same. Receipt of such notice shall not
be deemed to create any obligation on the part of Landlord to defend or
otherwise respond to any such notification.
If requested by Landlord, Tenant shall disclose to Landlord the names and
amounts of all Hazardous Materials other than general office supplies
referred to in this Section 8.2, which were used, generated, treated,
handled, stored or disposed of on the Property or which Tenant intends to
use, generate, treat, handle, store or dispose of on the Property. The
foregoing in no way shall limit the necessity for Tenant obtaining
Landlord's consent pursuant to Section 8.2 of this Lease.
8.7. SURRENDER OF PREMISES.
In the ninety (90) days prior to the expiration or termination of the
Lease Term, and for up to ninety (90) days after Tenant fully surrenders
possession of the Property, Landlord may have an environmental assessment
of the Property performed in accordance with Section 8.5 of this Lease.
Tenant shall perform, at its sole cost and expense, any clean-up or
remedial work recommended by the Consultant which is necessary to remove,
mitigate or remediate any Hazardous Materials and/or contaminations of the
Property caused by the activities or negligence of the Tenant Group.
8.8. ASSIGNMENT AND SUBLETTING.
In the event the Lease provides that Tenant may assign the Lease or sublet
the Property subject to Landlord's consent and/or certain other
conditions, and if the proposed assignee's or sublessee's activities in or
about the Property involve the use, handling, storage or disposal of any
Hazardous Materials other than those used by Tenant and in quantities and
processes similar to Tenant's uses in compliance with the Lease, (i) it
shall be reasonable for Landlord to withhold its consent to such
assignment or sublease in light of the risk of contamination posed by such
activities and/or (ii) Landlord may impose an additional condition to such
assignment or sublease which requires Tenant to reasonably establish that
such assignee's or sublessee's activities pose no materially greater risk
of contamination to the Property than do Tenant's permitted activities in
view of the (a) quantities, toxicity and other properties of the Hazardous
Materials to be used by such assignee or sublessee, (b) the precautions
against a release of Hazardous Materials such assignee or sublessee agrees
to implement, (c) such assignee's or sublessee's financial condition as it
relates to its ability to fund a major clean-up and (d) such assignee's or
sublessee's policy and historical record respecting its willingness to
respond to the clean up of a release of Hazardous Materials. Landlord
shall also have its approval rights as set forth in Section 19.
8.9. SURVIVAL OF HAZARDOUS MATERIALS OBLIGATION.
Tenant's breach of any of its covenants or obligations under this Lease
shall constitute a material default under the Lease. The obligations of
Tenant under this Lease shall survive the expiration or earlier
termination of the Lease without any limitation, and shall constitute
obligations that are independent and severable from Tenant's covenants and
obligations to pay rent under the Lease.
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9. SIGNAGE. All signage shall comply with rules and regulations as set forth
by City of Phoenix and the rules and regulations as set forth by Landlord,
as may be modified from time to time. Current rules and regulations
relating to signs are described on Exhibit D. Tenant shall place no window
covering (e.g., shades, blinds, curtains, drapes, screens, paper,
cardboard, or tinting materials), stickers, signs, lettering, banners or
advertising or display material on or near exterior windows or doors if
such materials are visible from the exterior of the Premises, without
Landlord's prior written consent. Similarly, Tenant may not install any
alarm boxes, foil protection tape or other security equipment on the
Premises without Landlord's prior written consent. Any material violating
this provision may be destroyed by Landlord without compensation to
Tenant.
10. PERSONAL PROPERTY TAXES. Tenant shall pay before delinquency all taxes,
assessments, license fees and public charges levied, assessed or imposed
upon its business operations as well as upon all trade fixtures, leasehold
improvements, merchandise and other personal property in or about the
Premises.
11. PARKING. Landlord grants to Tenant and Tenant's customers, suppliers,
employees and invitees, a non-exclusive license to use the designated
parking areas in the Project for the use of motor vehicles during the term
of this Lease. Landlord reserves the right at any time to grant similar
non-exclusive use to other tenants, to promulgate rules and regulations
relating to the use of such parking areas, including reasonable
restrictions on parking by tenants and employees, to designate specific
spaces for the use of any tenant, to make changes in the parking layout
from time to time, and to establish reasonable time limits on parking.
Overnight parking is prohibited and any vehicle violating this or any
other vehicle regulation adopted by Landlord is subject to removal at the
owner's expense. Tenant shall have forty (40) covered reserved spaces at a
charge of Thirty and 00/100 Dollars ($30.00) per month, per space. The
spaces shall be provided free of charge for the first three (3) years of
this Lease Agreement.
12. UTILITIES. Tenant shall pay for all heat, light, power, electricity,
telephone or other service metered, chargeable or provided to the Premises
and Tenant's Share of Expenses as defined in Section 4.c. Landlord
reserves the right to install separate meters for any such utility and to
charge Tenant for the cost of such installation.
13. MAINTENANCE. Landlord shall maintain, in good condition, the structural
parts of the Premises, which shall include only the foundations, bearing
and exterior walls (excluding glass), subflooring and roof (excluding
skylights), the unexposed electrical, plumbing and sewerage systems,
including those portions of the systems lying outside the Premises,
gutters and down spouts on the Building and the heating, ventilating and
air conditioning system servicing the Premises; provided, however, the
cost of all such maintenance shall be considered "Expenses" for purposes
of Section 4.c. Except as provided above, Tenant shall maintain and repair
the Premises in good condition, including, without limitation, maintaining
and repairing all walls, lights, storefronts, floors, ceilings, interior
and exterior doors, exterior and interior windows and fixtures and
interior plumbing as well as damage caused by Tenant, its agents,
employees or invitees. Upon expiration or termination of this Lease,
Tenant shall surrender the Premises to Landlord in the same condition as
existed at the commencement of the term, except for reasonable wear and
tear or damage caused by fire or other casualty for which Landlord has
received all funds necessary for restoration of the Premises from
insurance proceeds.
14. ALTERATIONS. Tenant shall not make any alterations to the Premises, or to
the Project, including any changes to the existing landscaping, without
Landlord's prior written consent. If Landlord gives its consent to such
alterations, Landlord may post notices in accordance with the laws of the
state in which the premises are located. Any alterations made shall remain
on and be surrendered with the Premises upon expiration or termination of
this Lease, except that Landlord may, within 30 days before or 30 days
after expiration of the term, elect to require Tenant to remove any
alterations which Tenant may have made to the Premises. If Landlord so
elects, at its own cost Tenant shall restore the Premises to the condition
designated by Landlord in its election, before the last day of the term or
within 30 days after notice of its election is given, whichever is later.
Should Landlord consent in writing to Tenant's alteration of the Premises,
Tenant shall contract with a contractor approved by Landlord for the
construction of such alterations, shall secure all appropriate
governmental approvals and permits, and shall complete such alterations
with due diligence in compliance
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with plans and specifications approved by Landlord. All such construction
shall be performed in a manner which will not interfere with the quiet
enjoyment of other tenants of the Project. Tenant shall pay all costs for
such construction and shall keep the Premises and the Project free and
clear of all mechanics' liens which may result from construction by
Tenant.
15. RELEASE AND INDEMNITY. As material consideration to Landlord, Tenant
agrees that Landlord shall not be liable to Tenant for any damage to
Tenant or Tenant's property from any cause, and Tenant waives all claims
against Landlord for damage to persons or property arising for any reason,
except for damage resulting directly from Landlord's breach of its express
obligations under this Lease which Landlord has not cured within a
reasonable time after receipt of written notice of such breach from
Tenant. Tenant shall indemnify and hold Landlord harmless from all damages
arising out of any damage to any person or property occurring in, on or
about the Premises or Tenant's use of the Premises or Tenant's breach of
any term of this Lease.
16. INSURANCE. Tenant, at its cost, shall maintain public liability and
property damage insurance and products liability insurance with a single
combined liability limit of $1,000,000, insuring against all liability of
Tenant and it representatives, employees, invitees, and agents arising out
of or in connection with Tenant's use or occupancy of the Premises. Public
liability insurance, products liability insurance and property damage
insurance shall insure performance by Tenant of the indemnity provisions
of Section 15. Landlord and the Property Manager shall be named as
additional insured and the policy shall contain cross-liability
endorsements. On all its personal property, at its costs, Tenant shall
maintain a policy of standard fire and extended coverage insurance with
vandalism and malicious mischief endorsements and "all risk" coverage on
all Tenant's improvements and alterations, including without limitation,
all items of Tenant responsibility described in Section 13 in or about the
Premises, to the extent of at least 90% of their full replacement value.
The proceeds from any such policy shall be used by Tenant for the
replacement of personal property and the restoration of Tenant's
improvements or alterations. All insurance required to be provided by
Tenant under this Lease shall release Landlord from any claims for damage
to any person or the Premises and the Project, and to Tenant's fixtures,
personal property, improvements and alterations in or on the Premises or
the Project, caused by or resulting from risks insured against under any
insurance policy carried by Tenant in force at the time of such damage.
All insurance required to be provided by Tenant under this Lease: (a)
shall be issued by Insurance companies authorized to do business in the
state in which the premises are located with a financial rating of at
least an A+ XII status as rated in the most recent edition of Best's
Insurance Reports; (b) shall be issued as a primary policy; and (c) shall
contain an endorsement requiring at least 30 days prior written notice of
cancellation to Landlord and Landlord's lender, before cancellation or
change in coverage, scope or amount of any policy. Tenant shall deliver a
certificate or copy of such policy together with evidence of payment of
all current premiums to Landlord within 30 days of execution of this
Lease. Tenant's failure to provide evidence of such coverage to Landlord
may, in Landlord's sole discretion, constitute a default under this Lease.
Landlord shall provide proof of insurance upon written request by the
Tenant.
17. DESTRUCTION. If during the term of this Lease, the Premises or Project are
more than 10% destroyed from any cause, or rendered inaccessible or
unusable from any cause, Landlord may, in its sole discretion, terminate
this Lease by delivery of notice to Tenant within 30 days of such event
without compensation to Tenant. If in Landlord's estimation, the Premises
cannot be restored within 90 days following such destruction, the Landlord
shall notify Tenant and Tenant may terminate this Lease by delivery of
notice to Landlord within 30 days of receipt of Landlord's notice. If
Landlord does not terminate this Lease and if in Landlord's estimation the
Premises can be restored within 90 days, then Landlord shall commence to
restore the Premises in compliance with then existing laws and shall
complete such restoration with due diligence. In such event, this Lease
shall remain in full force and effect, but there shall be an abatement of
rent between the date of destruction and the date of completion of
restoration, based on the extent to which destruction interferes with
Tenant's use of the Premises.
18. CONDEMNATION.
a. Definitions. The following definitions shall apply. (1)
"Condemnation" means (a) the exercise of any governmental power of
eminent domain, whether by legal proceedings or otherwise by
condemnor and (b) the voluntary sale or transfer by Landlord to any
condemnor either under
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threat of condemnation or while legal proceedings for condemnation
are proceeding; (2) "Date of Taking" means the date the condemnor
has right to possession of the property being condemned; (3) "Award"
means all compensation, sums or anything of value awarded, paid or
received on a total or partial condemnation; and (4) "Condemnor"
means any public or quasi-public authority, or private corporation
or individual, having power of condemnation.
b. Obligations to be Governed by Lease. If during the term of the Lease
there is any taking of all or any part of the Premises or the
Project, the rights and obligations of the parties shall be
determined pursuant to this Lease.
c. Total or Partial Taking. If the Premises are totally taken by
condemnation, this Lease shall terminate on the date of taking. If
any portion of the Premises is taken by condemnation, this Lease
shall remain in effect, except that Tenant can elect to terminate
this Lease if the remaining portion of the Premises is rendered
unsuitable for Tenant' s continued use of Premises. If Tenant elects
to terminate this Lease, Tenant must exercise its right to terminate
by giving notice to Landlord within 30 days after the nature and
extent of the taking have been finally determined. If Tenant elects
to terminate this Lease, Tenant shall also notify Landlord of the
date of termination, which date shall not be earlier than 30 days
nor later than 90 days after Tenant has notified Landlord of its
election to terminate; except that this Lease shall terminate on the
date of taking if the date of taking falls on a date before the date
of termination as designated by Tenant. If any portion of the
Premises is taken by condemnation and this Lease remains in full
force and effect, on the date of taking the rent shall be reduced by
an amount in the same ratio as the total number of square feet in
the Premises taken bears to the total number of square feet in the
Premises immediately before the date of taking.
19. ASSIGNMENT OR SUBLEASE. Tenant shall not assign or encumber its interest
in this Lease or the Premises or sublease all or any part of the Premises
or allow any other person or entity (except Tenant's authorized
representatives, employees, invitees or guests) to occupy or use all or
any part of the Premises without first obtaining Landlord's consent which
consent Landlord may withhold or condition in its sole discretion. Any
assignment, encumbrance or sublease without Landlord's written consent
shall be voidable and at Landlord's election, shall constitute a default.
If Tenant is a partnership, a withdrawal or change, voluntary, involuntary
or by operation of law of any partner, or the dissolution of the
partnership, shall be deemed a voluntary assignment. If Tenant consists of
more than one person, a purported assignment, voluntary or involuntary or
by operation of law from one person to the other shall be deemed a
voluntary assignment. If Tenant is a corporation, any dissolution, merger,
consolidation or other reorganization of Tenant, or sale or other transfer
of a controlling percentage of the capital stock of Tenant, or the sale of
at least 25% of the value of the assets of Tenant shall be deemed a
voluntary assignment. The phrase "controlling percentage" means ownership
of and right to vote stock possessing at least 25% of the total combined
voting power of all classes of Tenant's capital stock issued, outstanding
and entitled to vote for election of directors. This Section 19 shall not
apply to corporation the stock of which is traded through an exchange or
over the counter. All rent received by Tenant from its subtenants in
excess of the rent payable by Tenant to Landlord under this Lease shall be
paid to Landlord, or any sums to be paid by an assignee to Tenant in
consideration of the assignment of this Lease shall be paid to Landlord.
If Tenant requests Landlord to consent to a proposed assignment or
subletting, Tenant shall pay to Landlord, whether or not consent is
ultimately given, $100 or Landlord's reasonable attorneys fees incurred in
connection with such request, whichever is greater. No interest of Tenant
in this Lease shall be assignable by involuntary assignment through
operation of law (including without limitation the transfer of this Lease
by testacy or intestacy). Each of the following acts shall be considered
an involuntary assignment: (a) if Tenant is or becomes bankrupt or
insolvent, makes an assignment for the benefit of creditors, or institutes
proceedings under the Bankruptcy Act in which Tenant is the bankrupt; or
if Tenant is a partnership or consists of more than one person or entity,
if any partner of the partnership or the person or entity is or becomes
bankrupt or insolvent, or makes an assignment for the benefit of
creditors; or (b) if a writ of attachment or execution is levied on this
Lease; or if in any proceeding or action to which Tenant is a party, a
receiver is appointed with authority to take possession of the Premises.
An involuntary assignment shall constitute a default by Tenant and
Landlord shall have the right to elect to terminate this Lease, in which
case this Lease shall not be treated as an asset of Tenant.
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20. DEFAULT. The occurrence of any of the following shall constitute a default
by Tenant: (a) a failure to pay rent or other charge when due and Landlord
has sent to Tenant a three-day written notice of non payment; (b)
abandonment and vacation of the Premises (failure to occupy and operate
the Premises for ten consecutive days shall be deemed an abandonment and
vacation); or (c) failure to perform any other provision of this Lease.
21. LANDLORD'S REMEDIES. Landlord shall have the following remedies if Tenant
is in default. (These remedies are not exclusive; they are cumulative and
in addition to any remedies now or later allowed by law): Landlord may
terminate Tenant's rights to possession of the Premises at any time. No
act by Landlord other than giving notice to Tenant shall terminate this
Lease. Acts of maintenance, efforts to relet the Premises, or the
appointment of a receiver on Landlord's initiative to protect Landlord's
interest under this Lease shall not constitute a termination of Tenant's
right to possession. Upon termination of Tenant's right to possession,
Landlord has the light to recover from Tenant: (1) the worth of the unpaid
rent that had been earned at the time of termination of Tenant's right to
possession; (2) the worth of the amount of the unpaid rent that would have
been earned after the date of termination of Tenant's right to possession;
(3) any other amount, including but not limited to, expenses incurred to
relet the premises, court, attorney and collection costs, necessary to
compensate Landlord for all detriment caused by Tenant's default. "The
Worth," as used for Item 21(1) in this Paragraph 21 is to be computed by
allowing interest at the rate of 18 percent per annum. If the interest
rate specified in this Lease is higher than the rate permitted by law, the
interest rate is hereby decreased to the maximum legal interest rate
permitted by law. The Worth is used for Item 21(2) in this Paragraph 21 is
to be computed by discounting the amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of termination of
Tenant's right of possession.
22. ENTRY ON PREMISES. Landlord and its authorized representatives shall have
the right to enter the Premises at all reasonable times for any of the
following purposes: (a) to determine whether the Premises are in good
condition and whether Tenant is complying with its obligations under this
Lease; (b) to do any necessary maintenance and to make any restoration to
the Premises or the Project that Landlord has the right or obligation to
perform; (c) to post "for sale" signs at any time during the term, to post
"for rent" or "for lease" signs during the last 90 days of the term, or
during any period while Tenant is in default; (d) to show the Premises to
prospective brokers, agents, buyers, tenants or persons interested in
leasing or purchasing the Premises, at any time during the term; or (e) to
repair, maintain or improve the Project and to erect scaffolding and
protective barricades around and about the Premises but not so as to
prevent entry to the premises and to do any other act or thing necessary
for the safety or preservation of the Premises or the Project. Landlord
shall not be liable in any manner for any inconvenience, disturbance, loss
of business, nuisance or other damage arising out of Landlord's entry onto
the Premises as provided in this Section 22. Tenant shall not be entitled
to an abatement or reduction of rent if Landlord exercises any rights
reserved in this Section 22. Landlord shall conduct his activities on the
Premises as provided herein in a manner that will cause the least
inconvenience, annoyance or disturbance to Tenant. For each of these
purposes, Landlord shall at all times have and retain a key with which to
unlock all the doors in, upon and about the Premises, excluding Tenant's
vaults and safes. Tenant shall not alter any lock or install a new or
additional lock or bolt on any door of the Premises without prior written
consent of Landlord. If Landlord gives its consent, Tenant shall furnish
Landlord with a key for any such lock.
23. SUBORDINATION. Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, and at
the election of Landlord or any mortgagee or any beneficiary of a Deed of
Trust with a lien on the Project or any ground lessor with respect to the
Project, this Lease shall be subject and subordinate at all times to (a)
all ground leases or underlying leases which may now exist or hereafter be
executed affecting the Project, and (b) the lien of any mortgage or deed
of trust which may now exist or hereafter be executed in any amount for
which the Project, ground leases or underlying leases, or Landlord's
interest or estate in any of said items is specified as security. In the
event that any ground lease or underlying lease terminates for any reason
or any mortgage or Deed of Trust is foreclosed or a conveyance in lieu of
foreclosure is made for any reason, Tenant shall, notwithstanding any
subordination, attorn to and become the Tenant of the successor in
interest to Landlord, at the option of such successor in interest. Tenant
covenants and agrees to execute and deliver, upon demand by Landlord and
in the form requested by Landlord any additional documents evidencing the
priority or subordination of this Lease with respect to any such ground
lease or underlying leases or the lien of any such mortgage or
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Deed of Trust. Tenant hereby irrevocably appoints Landlord as
attorney-in-fact of Tenant to execute, deliver and record any such
document in the name and on behalf of Tenant.
Tenant, within ten days from notice from Landlord, shall execute and
deliver to Landlord, in recordable form, certificates stating that this
Lease is not in default, is unmodified and in full force and effect, or in
full force and effect as modified, and stating the modifications. This
certificate should also state the amount of current monthly rent, the
dates to which rent has been paid in advance, and the amount of any
security deposit and prepaid rent. Failure to deliver this certificate to
Landlord within ten days shall be conclusive upon Tenant that this Lease
is in full force and effect and has not been modified except as may be
represented by Landlord.
24. NOTICE. Any notice, demand, request, consent, approval or communication
desired by either party or required to be given, shall be in writing and
served either personally or sent by prepaid certified first class mail,
addressed as set forth in Section 1. Either party may change its address
by notification to the other party. Notice shall be deemed to be
communicated 48 hours from the time of mailing, or from the time of
service as provided in this Section 24.
25. WAIVER. No delay or omission in the exercise of any right or remedy by
Landlord shall impair such right or remedy or be construed as a waiver. No
act or conduct of Landlord, including without limitation, acceptance of
the keys to the Premises, shall constitute an acceptance of the surrender
of the Premises by Tenant before the expiration of the term. Only written
notice from Landlord to Tenant shall constitute acceptance of the
surrender of the Premises and accomplish termination of the Lease.
Landlord's consent to or approval of any act by Tenant requiring
Landlord's consent or approval shall not be deemed to waive or render
unnecessary Landlord's consent to or approval of any subsequent act by
Tenant. Any waiver by Landlord of any default must be in writing and shall
not be a waiver of any other default concerning the same or any other
provision of the Lease.
26. SURRENDER OF PREMISES; HOLDING OVER. Upon expiration of the term, Tenant
shall surrender to Landlord the Premises and all Tenant improvements and
alterations in good condition, except for ordinary wear and tear and
alterations Tenant has the right or is obligated to remove under the
provisions of Section 14 herein. Tenant shall remove all personal property
from the premises and, if required by Landlord at Landlord's option, shall
remove including, without limitation, all wallpaper, paneling, and other
decorative improvements or fixtures and shall perform all restoration made
necessary by the removal of any alterations or Tenant's personal property
before the expiration of the term, including for example, restoring all
wall surfaces to their condition prior to the commencement of this Lease.
Landlord can elect to retain or dispose of in any manner Tenant's personal
property not removed from the Premises by Tenant prior to the expiration
of the term. Tenant waives all claims against Landlord for any damage to
Tenant resulting from Landlord's retention or disposition of Tenant's
personal property. Tenant shall be liable to Landlord for Landlord's costs
for storage, removal or disposal of Tenant's personal property. If Tenant,
with Landlord's consent, remains in possession of the Premises after
expiration or termination of the term, or after the date in any notice
given by Landlord to Tenant terminating this Lease, such possession by
Tenant shall be deemed to be a month-to-month tenancy terminable on
written 30 day notice at any time, by either party. All provisions of this
Lease, except those pertaining to term and rent, shall apply to the
month-to-month tenancy. Tenant shall pay monthly rent in an amount equal
to 125% of Rent for the last full calendar month during the regular term
plus 100% of said last month's estimate of Tenant's share of Expenses
pursuant to Section 4.c.3. If Tenant remains without consent, Landlord
shall receive rent in an amount equal to 300% of rent for the last full
month plus 100% at said last month's expenses pursuant to 4.c.3 plus all
damages and costs associated with the unauthorized occupancy and forcible
eviction process.
27. LIMITATION OF LIABILITY. In consideration of the benefits accruing
hereunder, Tenant agrees that in the event of any actual or alleged
failure, breach or default of this Lease by Landlord, if Landlord is a
partnership:
a. The sole and exclusive remedy shall be against the partnership and
its partnership assets;
b. No partner of Landlord shall be sued or named as a party in any suit
or action;
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c. No service of process shall be made against any partner of Landlord;
d. No partner of Landlord shall be required to answer or otherwise
plead to any service or process;
e. No judgment may be taken against any partner of Landlord;
f. Any judgment taken against any partner of Landlord shall be vacated
and set aside at any time without hearing;
g. No writ of execution will ever be levied against the assets of any
partner of Landlord;
h. These covenants and agreements are enforceable both by Landlord and
also by any partner of Landlord.
Tenant agrees that each of the foregoing provisions shall be applicable to
any covenant or agreement either expressly contained in this Lease or
imposed by statute or at common law.
28. MISCELLANEOUS PROVISIONS.
a. TIME OF ESSENCE. Time is of the essence of each provision of this
Lease.
b. SUCCESSOR. This Lease shall be binding on and inure to the benefit
of the parties and their successors, except as provided in Section
19 herein.
c. LANDLORD'S CONSENT. Any consent required by Landlord under this
Lease must be granted in writing and may be withheld or conditioned
by Landlord in its sole and absolute discretion.
d. COMMISSIONS. Each party represents that it has not had dealings with
any real estate broker, finder or other person with respect to this
Lease in any manner, except for the broker identified in Section 1,
who shall be compensated by Landlord.
e. OTHER CHARGES. If Landlord becomes a party to any litigation
concerning this Lease, the Premises or the Project, by reason of any
act or omission of Tenant or Tenant's authorized representatives,
Tenant shall be liable to Landlord for reasonable attorney's fees
and court costs incurred by Landlord in the litigation. Should the
court render a decision which is thereafter appealed by any party
thereto, Tenant shall be liable to Landlord for reasonable
attorney's fees and court costs incurred by Landlord in connection
with such appeal.
If either party commences any litigation against the other party or
files an appeal of a decision arising out of or in connection with
the Lease, the prevailing party shall be entitled to recover from
the other party reasonable attorney's fees and cost of suit. If
Landlord employs a collection agency to recover delinquent charges,
Tenant agrees to pay all collection agency and attorneys' fees
charged to Landlord in addition to rent, late charges, interest and
other sums payable under this Lease. Tenant shall pay a charge of
$75 to Landlord for preparation of a demand for delinquent rent.
f. LANDLORD'S SUCCESSORS. If in the event of a sale or conveyance by
Landlord of the Project, the same shall operate to release Landlord
from any liability under this Lease, and in such event Landlord's
successor in interest shall be solely responsible for all
obligations of Landlord under this Lease.
g. INTERPRETATION. This lease shall be construed and interpreted in
accordance with the laws of the state in which the premises are
located. This Lease constitutes the entire agreement between the
parties with respect to the Premises and the Project, except for
such guarantees or modifications as may be executed in writing by
the parties from time to time. When required by the context of this
Lease, the singular shall include the plural, and the masculine
shall include the feminine and/or neuter. "Party" shall mean
Landlord or Tenant. If more than one person or entity constitutes
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Landlord or Tenant, the obligations imposed upon that party shall be
joint and several. The enforceability, invalidity or illegality of
any provision shall not render the other provisions unenforceable,
invalid or illegal.
29. LEASE CANCELLATION OPTION: Tenant shall be given the one-time right to
cancel this Lease at the end of the seventy-second (72nd) month, March 31,
2006, by notifying Landlord, in writing, of its desire to cancel this
Lease no later than nine (9) months prior to the cancellation date or June
30, 2005. If Tenant elects to cancel on March 31, 2006, Tenant must
surrender possession of said real property to Landlord together with all
improvements thereon, except as may be hereinafter set forth:
a. Tenant shall be entitled to remove as its sole separate property
from the Premises covered by said Lease all trade fixtures,
furnishings, furniture and equipment located on said Premises and
owned by Tenant provided, however, all of the foregoing shall be
removed from the premises by no later than March 31, 2006.
b. If Tenant elects to cancel this Lease on March 31, 2006, Tenant
shall pay to Landlord a penalty fee of $44,450.00, which is equal to
one (1) month's rent (plus all applicable taxes) and all unamortized
tenant improvement and lease commission expense.
30. RIGHT OF FIRST OFFER:
(1) OFFER SPACE. During the first six (6) years of this Lease and
subject to the prior rights of any existing tenants, Tenant shall
have a one-time right of first offer ("Right of First Offer") to
lease all, but not part, of the space located in Building #1, as
shown crosshatched on Exhibit "B" (the "Offer Space") in an "as is"
condition and subject to Paragraphs 2 through 9 of this section.
(2) CONDITIONS. At both the time Tenant exercises the Right of First
Offer and at the Commencement Date for the Offer Space (defined in
paragraph 7(a) below):
(a) The Lease must be in full force and effect;
(b) Tenant shall not be in default under the Lease; and
(c) Tenant's then current financial condition, as revealed by its most
recent financial statements (which shall include quarterly and
annual financial statements, including income statements, balance
sheets, and cash flow statements), must demonstrate that either:
(i) Tenant's tangible net worth is at least equal to its tangible
net worth at the time this Lease was signed: or
(ii) Tenant meets the financial criteria reasonably acceptable to
Landlord. In addition, with respect to each guaranty of the
Lease (if any), Tenant shall deliver to Landlord an original,
signed, and notarized reaffirmation of each guarantor's
personal guaranty, in form and substance satisfactory to
Landlord.
(3) SPACE SUBJECT TO OFFER. Subject to the other terms of this section,
after the entire Offer Space has "become available" for leasing by
the Landlord (defined in paragraph 3(a)), Landlord shall not, during
the Term of this Lease or any renewal or extension thereof, lease
the Offer Space to another tenant without first offering Tenant the
right to lease the Offer Space.
(a) AVAILABLE SPACE. The Offer Space shall be deemed to "become
available" when the lease(s) or any options relating thereto for
any current tenant(s) of all of the Offer Space expires or will
expire within 6 months or is otherwise terminated.
(b) SPACE THAT'S NOT AVAILABLE. Notwithstanding Paragraph 3(a), Offer
Space shall not be deemed to "become available" if the space is:
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(i) Assigned or subleased by the current tenant of the space; or
(ii) Re-let by the current tenant of the space by renewal,
extension, or renegotiation; or
(iii) Leased or transferred among entities or persons related to
Landlord (including, but not limited to, partners if Landlord
is a partnership, and shareholders if Landlord is a
corporation); or
(iv) Sold, including without limitation, a sale-and-leaseback.
(4) LANDLORD NOTICE. Consistent with paragraph 3 above, Landlord shall not
lease the Offer Space to another tenant unless and until Landlord has
first offered the Offer Space to Tenant in writing (the "First Offer
Leasing Notice") and Tenant rejects such offer or Tenant fails to satisfy
any conditions of this section or a period of five (5) business days has
elapsed from the date of the First Offer Leasing Notice without Tenant
having notified Landlord in writing of its unconditional acceptance of
such First Offer Leasing Notice and supplied Landlord with current
financial statements pursuant to Paragraph 2(c), whichever event occurs
first. The First Offer Leasing Notice shall contain the following
information:
(a) A copy of Exhibit B of this Lease showing the location of the Offer Space;
(b) The date on which the Landlord expects the Offer Space to become
available;
(c) The increase in Rent as calculated pursuant to Paragraph 7(d) and the new
Rent; and
(d) The Tenant's increased pro rata share of common area maintenance expenses
(CAM) including insurance and property taxes.
(5) TENANT ACCEPTANCE. If Tenant timely delivers to Landlord, in accordance
with the conditions of this section, written notice of Tenant's exercise
of the Right of First Offer for all of the Offer Space (along with
Tenant's financial statements pursuant to Paragraph 2(c) and Landlord
determines that Tenant meets all of the conditions provided in this
Clause, then the Offer Space shall be deemed added to the Premises and
shall be subject to the terms and conditions in the Lease with the
exception of those Lease modifications set forth in paragraph 7 below.
(6) TENANT'S REJECTION OR FAILURE TO MEET CONDITIONS. Tenant's Right of First
Offer is a one-time right only. If Tenant declines or fails to duly and
timely exercise its Right of First Offer or fails to meet all of the
conditions provided in this section, Landlord shall thereafter be free to
lease the Offer Space in portions or in its entirety to any third-party
tenant at any time without regard to the restrictions in this section and
on the terms and conditions contained in the First Offer Leasing Notice or
on any other terms and conditions that Landlord thereafter negotiates,
without further obligation to Tenant.
(7) CHANGES TO LEASE. If Tenant leases the Offer Space pursuant to the terms
of this section, all the obligations, terms, and conditions under the
Lease shall also apply to the Offer Space except that:
(a) COMMENCEMENT DATE. The commencement date for the Lease for the Offer Space
(the "Commencement Date for the Offer Space") shall be the day the Offer
Space is delivered to the Tenant broom clean, free of tenants or other
occupants, and in its then "as is" condition;
(b) THE PREMISES. As of the Commencement Date for the Offer Space, the Offer
Space shall be deemed part of the Premises;
(c) PRO RATA SHARE. As of the Commencement Date for the Offer Space, Tenant's
pro rata share of common area maintenance expenses (CAM) plus insurance
and real estate taxes shall be increased to an amount computed by dividing
the amount deemed by Landlord to be the total of the rentable square
footage of the Premises, including the Offer Space, by the amount deemed
by Landlord to be the rentable
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square footage of the Property, and expressing the fraction as a
percentage;
(d) RENT. As of the Commencement Date for the Offer Space, the Rent shall be
increased to an amount computed by multiplying the square footage dollar
amount that Landlord desires to charge for such Offer Space by the number
of rentable square feet deemed by Landlord to be contained in the Offer
Space;
(e) CANCEL LEASE CLAUSES. The following clauses and paragraphs of the Lease
shall not apply to the Offer Space: Not Applicable.
(8) CONFIRMING LEASE AMENDMENT. Within thirty (30) days after the Commencement
Date for the Offer Space, Landlord and Tenant shall confirm the following
in a written amendment to the Lease:
(a) The Commencement Date for the Offer Space;
(b) The location and size of the Offer Space that was leased by Tenant with an
exhibit annexed showing that space crosshatched;
(c) The new Rent to be paid by Tenant; and
(d) Tenant's increased pro rata share of common area maintenance expenses
(CAM) plus insurance and property taxes.
(9) INVALID AFTER ASSIGNMENT/SUBLEASE. This Right of First Offer is personal
to the Tenant and shall become null and void upon the occurrence of an
assignment of the Lease or a sublet of all or a part of the Premises,
regardless of whether Landlord approves such assignment or sublease.
[Remainder of this page left intentionally blank]
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31. WAIVER OF SUBROGATION. Each policy of insurance which Tenant obtains
for the Premises and which Landlord obtains for the Building shall
include a clause or endorsement denying the insurer any right of
subrogation against the other party hereto to the extent rights have
been waived by the insured party prior to the occurrence of injury
or loss. If this endorsement is unobtainable without additional
premium or charge, then the insured party shall immediately notify
the other party and the other party shall have the right to pay the
additional premium or charge for this endorsement. Landlord and
Tenant each waive any rights of recovery against the other for
injury or loss due to hazards covered by its own insurance, to the
extent of the injury or loss covered thereby. Landlord and Tenant
each waive any rights of recovery against the other for injury or
loss due to hazards covered by its own insurance, to the extent of
the injury or loss covered thereby unless injury or loss is due to
the other party's intentional conduct or gross negligence.
EXECUTED BY LANDLORD, this 9th day of November, 1999.
PRINCIPAL DEVELOPMENT INVESTORS, L.L.C, A DELAWARE LIMITED LIABILITY COMPANY
By: Principal Life Insurance Company, an Iowa Corporation, Member
By: /s/
________________________________________
Jon M. Jacobsen
Title: Director, C.R.E. Equities
By: /s/
________________________________________
Ted E. McWilliams
Title: Assistant Director, Appraisal Services
EXECUTED BY TENANT, this ____ day of _______________, 19___.
QUALITY CARE SOLUTIONS, INC., A NEVADA CORPORATION.
By: /s/
________________________________________
Gregory S. Anderson
Title: President and CEO
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EXHIBIT "A"
THE PREMISES
Space Plan for approximately - 35,000 square feet at Mountain Vista Commercial
Center 14647 South 50th Street, Building 1 Suite 150 , Phoenix, Arizona, 85044.
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EXHIBIT "C"
TENANT IMPROVEMENTS
Please see Work Letter (Exhibit "G") and Space Plan Drawings (Exhibit "I") for
complete information regarding the Tenant Improvements. T.
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EXHIBIT "D"
SIGN CRITERIA
BUTTES BUSINESS CENTER I & II, TEMPE
PLEASE SEE ATTACHED INFORMATION.
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EXHIBIT "E"
CERTIFIED COPY OF CORPORATE RESOLUTION TO LEASE
This undersigned, as Secretary of Quality Care Solutions, Inc., a
corporation organized and existing under the laws of the state of Nevada, hereby
certifies that at a meeting of the Board of Directors of such corporation, duly
called and held on the day of September 14, 1999, at which meeting a quorum of
said Board was present and acting throughout, the following resolution was duly
adopted by the unanimous vote of all the Directors present, and the same has not
since been rescinded or modified, and is presently in full force and effect;
WHEREAS, this corporation desires to enter into a lease (the
Lease") with PRINCIPAL DEVELOPMENT INVESTORS, L.L.C.,
(Landlord") wherein Landlord will lease to this corporation as
tenant the premises commonly known as 14647 South 50th Street,
Building #3, Suite #150, Phoenix, Arizona;
NOW, THEREFORE, BE IT RESOLVED, that the President, any Vice
President, any Assistant Vice President, the Secretary, the
Treasurer or any Assistant Secretary or Assistant Treasurer of
this corporation, acting together or any one acting alone, be,
and they hereby are, authorized on behalf of and in the name
of this corporation to enter into the Lease, for such time and
upon such terms as such officers, or any one of them acting
alone, may agree upon in their or his discretion.
RESOLVED FURTHER, that the President, any Vice President, any
Assistant Vice President, the Secretary, the Treasurer or any
Assistant Secretary or Assistant Treasurer of this corporation
are authorized to execute the Lease, and such other
instruments or documents as such officer or officers in their
discretion may deem necessary or desirable in connection with
such Lease.
RESOLVED FURTHER, that this corporation ratifies the actions
previously taken by the officers of this corporation, or any
one of them acting alone, in connection with the obtaining of
said Lease, actions taken to comply with requirements of
Landlord, and all other actions taken incidental thereto.
RESOLVED FURTHER, that the authority conferred upon the
aforesaid officers by this resolution shall remain in full
force and effect until written notice of revocation by further
resolution of the Board of Directors shall have been received
by said Landlord, and that a copy of this resolution certified
by the Secretary be delivered to said Landlord.
The undersigned further certifies that the officers of
this corporation hereunder set forth have been duly elected and hold the
officers specified with this corporation, and that the signature set forth
beside each person's name is the true signature of such person:
TITLE TYPED NAME SIGNATURE
President & CEO Gregory S. Anderson /s/
Executive VP, Founder J. Mikel Echeverria /s/
Senior VP, CFO Robert F. Theilmann /s/
IN WITNESS WHEREOF, this certification has been signed on behalf of this
corporation by its Secretary as of this ___________ day of
________________________, 19___.
/s/
__________________________________
Secretary
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EXHIBIT "F"
HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE
Your cooperation in this matter is appreciated. Initially, the information
provided by you in this Hazardous Materials Disclosure Certificate is necessary
for the Landlord (identified below) to evaluate and finalize a lease agreement
with you as Tenant. After a lease agreement is signed by you and the Landlord
(the Lease Agreement), on an annual basis in accordance with the provisions of
Section 8 of the signed Lease Agreement, you are to provide an update to the
information initially provided by you in this certificate. The information
contained in the initial Hazardous Materials Disclosure Certificate and each
annual certificate provided by you thereafter will be maintained in
confidentiality by Landlord subject to release and disclosure as required by (i)
any lenders and owners and their respective environmental consultants, (ii) any
prospective purchaser(s) of all or any portion of their property on which the
Premises are located, (iii) Landlord to defend itself or its lenders, partners
or representatives against any claim or demand, and (iv) any laws, rules
regulations, orders, decrees, or ordinances, including, without limitation,
court orders or subpoenas. Any and all capitalized terms used herein, which are
not otherwise defined herein, shall have the same meaning ascribed to such term
in the signed Lease Agreement. Any questions regarding this certificate should
be directed to, and when completed, the certificate should be delivered to:
Landlord: PRINCIPAL DEVELOPMENT INVESTORS, L.L.C.
C/O METRO COMMERCIAL PROPERTIES
4411 SOUTH RURAL ROAD, SUITE 201
TEMPE, ARIZONA 85282
Attn: Patrick H. Althoff, Property Manager
Phone: 480-838-8820
Name of (Prospective) Tenant: Quality Care Solutions, Inc.
Mailing Address:
Contact Person, Title and Telephone Number(s):
Contact Person for Hazardous Waste Materials Management and Manifests and
Telephone Number(s):
Address of (Prospective) Premises: 14647 South 50" Street, Building 1, Suite
150, Phoenix, Arizona, 85044.
Length of (Prospective) initial Term: 120 Months
1. GENERAL INFORMATION:
Describe the initial proposed operations to take place in, on, or about
the Premises, including, without limitation, principal products processed,
manufactured or assembled, services and activities to be provided or otherwise
conducted. Existing Tenants should describe any proposed changes to ongoing
operations. (Attach additional sheets if necessary).
2. USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS
2.1 Will any Hazardous Materials be used , generated , stored , or
disposed of in, on or about the Premises? (Note: Generally all storage will be
required to be fully contained). Existing Tenants should describe any Hazardous
Materials which continue to be used, generated, stored or disposed of in, on or
about the Premises.
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Wastes Yes [ ] No [X]
Chemical Products Yes [ ] No [X]
Other Yes [ ] No [X]
If yes is marked attach all MSD's and please explain: (MSDS's
Attached [ ]),
2.2 If yes is marked in Section 2.1, attach a list of any
Hazardous Materials to be used, generated, stored or
disposed of in, on or about the Premises, including the
applicable hazard class and an estimate of the
quantities of each such Hazardous Materials at any given
time; estimated annual throughout; the proposed
location(s) and method of storage, including container
sizes and types (excluding nominal amounts of ordinary
household cleaners and janitorial supplies which are not
regulated by any Environmental Law); and the proposed
location(s) and method of disposal for each Hazardous
Material, including, the estimated frequency, and the
proposed contractors or subcontractors. Existing Tenants
should attach a list of setting forth the information
requested above and such list should include actual data
from ongoing operations and the identification of any
variations in such information from the prior year's
certificate. Attach a Site Plan indicating all storage
areas - (Attached [ ]).
3. STORAGE TANKS AND SUMPS
3.1 Is any above or below ground storage of gasoline,
diesel, petroleum, or other Hazardous Materials in tanks
or sumps proposed in, on or about the Premises? Existing
Tenants should describe any such actual or proposed
activities, including any required SPCC Plan.
Yes [ ] No [X]
If yes, please explain:
4. WASTE MANAGEMENT
4.1 Has your company been issued an EPA Hazardous Waste
Generator I.D. Number? Existing Tenants should describe
any additional identification numbers issued since the
previous certificate.
Yes [ ] No [X]
Describe RCRA status:
4.2 Has your company filed a biennial or quarterly report as
a hazardous waste generator? Existing Tenants should
describe any new reports filed.
Yes [ ] No [X]
If yes, attach a copy of the most recent report filed.
(Attached [ ]).
5. WASTEWATER TREATMENT AND DISCHARGE
5.1 Will your company discharge wastewater or other wastes to:
__________ Storm drain? __________ Sewer?
__________ Surface water? __________ Facility treatment plant?
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__________ Grounds __________ No wastewater or other
(i.e., compressor wastes discharged
blow-down)
Existing Tenants should indicate any actual discharges. If so,
describe the nature of any proposed or actual discharge(s).
(Note: Generally, discharges to storm drains will be
prohibited without prior review and approval from Landlord).
6. AIR DISCHARGES
6.1 Do you plan for any air filtration systems or stacks to
be used in your company's operations in, on or about the
Premises that will discharge into the air; and will such
air emissions be monitored? Existing Tenants should
indicate whether or not there are any such air
filtration systems or stacks in use in, on or about the
Premises which discharge into the air and whether such
air emissions are being monitored.
Yes[ ] No[X]
If yes, please explain:
6.2 Do you propose to operate any of the following types of
equipment, or any other equipment requiring an air
emissions permit? Existing Tenants should specify any
such equipment being operated in, on or about the
Premises.
__________ Spray booths(s) __________ Incinerator(s)
__________ Dip Tank(s) __________ Dry-cleaning
__________ Drying oven(s) __________ Other (please describe)
__________ No equipment Requiring Air Permits
If yes, please explain:
6.3 Do any of your operations generate an obvious odor:
Yes [ ] No [X]
If yes, please explain:
7. HAZARDOUS MATERIALS DISCLOSURES
7.1 Has your company prepared or will it be required to
prepare a Hazardous Materials management plan
("Management Plan") pursuant to Fire Department or other
governmental or regulatory agencies' requirements.
Existing Tenants should indicate whether or not a
Management Plan in required and has been prepared.
Yes [ ] No [X]
If yes, attach a copy of the Management Plan. Existing
Tenants should attach a copy of any required updates to
the Management Plan.
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7.2 (CA Only) Are any of the Hazardous Materials, and in
particular chemicals, proposed to be used in your
operations in or about the premises regulated under
Proposition #65? Existing tenants should indicate
whether or not there are any new hazardous materials
being used which are regulated under Proposition #65.
Yes [ ] No [X]
If yes, please explain:
8. ENFORCEMENT ACTIONS AND COMPLAINTS
8.1 With respect to Hazardous Materials or Environmental
Laws, has your company ever been subject to any agency
enforcement actions, administrative orders, or consent
decrees designated as a PRP or has your company received
requests for information, notice or demand letters
(cited in violation of any environmental regulation), or
any other inquiries regarding its operations? Existing
Tenants should indicate whether or not any such actions,
orders or decrees have been, or are in the process of
being, undertaken or if any such requests have been
received.
Yes [ ] No [X]
If yes, describe the actions, orders or decrees and any
continuing compliance obligations imposed as a result of
these actions, orders or decrees and also describe any
requests, notices or demands, and attach a copy of all
such documents. Existing Lessees should describe and
attach a copy of any new actions, orders, decrees,
requests, notices or demands not already delivered to
Landlord pursuant to the provisions of Section 8 of the
signed Lease Agreement.
8.2 Have there ever been, or are there now pending, any
lawsuits against your company regarding any
environmental or health and safety concerns?
Yes [ ] No [X]
If yes, describe any such lawsuits and attach copies of
the complaint(s), cross-complaint(s),s pleadings and all
other documents related thereto as requested by
Landlord. Existing Tenants should describe and attach a
copy of any new complaint(s), cross-complaint(s),
pleadings and other related documents not already
delivered to Landlord pursuant to the provisions of
Section 8 of the signed Lease Agreement.
8.3 Have there been any problems or complaints from the past
or current landlords, adjacent tenants, owners or other
neighbors at your company's current facility with regard
to environmental or health and safety or odor concerns?
Existing Tenants should indicate whether or not there
have been any such problems or complaints from adjacent
tenants, owners or other neighbors at, about or near the
Premises.
Yes [ ] No [X]
If yes, please describe. Existing Tenants should
describe any such problems or complaints not already
disclosed to lessor under the provisions of the signed
lease.
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8.4 Please provide the addresses for each space leased by
your Company in the past ten years the name and phone
number of each Landlord.
5030 E. Sunrise
Phoenix, AZ 85044
9. PERMITS AND LICENSES
9.1 Attach copies of all Hazardous Materials permits and
licenses issued to your company with respect to its
proposed operations in, on or about the Premises,
including, without limitation, any wastewater discharge
permits, air emissions permits, and use permits or
approvals. Existing Tenant should attach copies of any
new permits and licenses as well as any renewals of
permits or licenses previously issued.
10. STATE AND LOCAL REQUIREMENTS
10. 1 (This Section reserved for any requirements unique to a State
or Local control agency)
The undersigned hereby acknowledges and agrees that this Hazardous
Materials Disclosure Certificate is being delivered in connection
with, and as required by, Lessor in connection with the evaluation
and finalization of a Lease Agreement and will be attached thereto
as an exhibit. The undersigned further acknowledges and agrees that
this Hazardous Materials Disclosure Certificate is being delivered
in accordance with, and as required by, the provisions of Section 8
of the Lease Agreement. The undersigned further acknowledges and
agrees that the Landlord and its partners, lenders and
representatives may, and will, rely upon the statements,
representations, warranties, and certifications made herein and the
truthfulness thereof in entering into the Lease Agreement and the
continuance thereof throughout the term, and any renewals thereof,
of the Lease Agreement. I _________________________ acting with full
authority to bind the (proposed) Tenant and on behalf of the
(proposed) Tenant, certify, represent and warrant that the
information contained in this certificate is true and correct.
QUALITY CARE SOLUTIONS, INC., a Nevada Corporation
By: /s/
________________________________________
Title: ______________________________________
Date ________________________________________
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EXHIBIT "G"
WORK LETTER AGREEMENT
THIS WORK LETTER AGREEMENT is entered into as of the 20th day of October, 1999
by and between PRINCIPAL DEVELOPMENT INVESTORS, L.L.C., an Iowa corporation,
("Landlord') and QUALITY CARE SOLUTIONS, INC., a Nevada corporation, ("Tenant").
RECITALS:
A. Concurrently with the execution of this Work Letter Agreement, Landlord
and Tenant have entered into a lease (the "Lease) covering certain
premises (the Premises') more particularly described in Exhibit A attached
to the Lease.
B. In order to induce Tenant to enter into the Lease (which is hereby
incorporated by reference to the extent applicable) and in consideration
of the mutual covenants hereinafter contained, Landlord and Tenant hereby
agree as follows:
1. COMPLETION SCHEDULE. With ten (10) days after the execution of the Lease
and this Work Letter Agreement by Landlord and Tenant, Landlord shall
deliver to Tenant, for Tenant's review and approval, a schedule (the "Work
Schedule") setting forth a timetable for the planning and completion of
the installation of the Tenant Improvements (as defined in Paragraph 2
below) to be constructed in the Premises, and the estimated Commencement
Date for the Term of the Lease. The Work Schedule shall set forth each of
the various items of work to be done by or approval to be given by
Landlord and Tenant in connection with the completion of the Tenant
Improvements. The Work Schedule shall be submitted to Tenant for its
approval and, upon approval by both Landlord and Tenant, the approved Work
Schedule shall become the basis for completing the Tenant Improvements. If
Tenant shall fail to approve the Work Schedule as it may be modified after
discussions between Landlord and Tenant, within five (5) business days
after the date the Work Schedule is first received by Tenant, Landlord
may, at its option, terminate the lease and all of its obligations
thereunder, and in the event of such a lease termination Tenant shall be
responsible for all costs incurred hereunder and under the Lease,
including but not limited to the cost of Tenant Improvements, lease
commissions and design fees:
2. Tenant Improvement Allowance.
a. Reference herein to "Tenant Improvements" shall include any or all
of the following work to be done in the Premises pursuant to the
Tenant Improvement Plans (defined in Paragraph 3 below):
(i) Installation within the Premises of all partitioning, doors,
floor coverings, ceiling, painting, millwork and similar
items;
(ii) All electrical wiring, lighting fixtures, outlets and
switches, and other electrical work to be installed within the
Premises, and additional panels or transformers to accommodate
Tenant's requirements;
(iii) The furnishing and installation of all duct work, terminal
boxes, diffusers and accessories required for the completion
of the heating, ventilation and air conditioning systems
within the Premises;
(iv) All fire and life safety control systems, such as fire walls,
sprinklers, halon, fire alarms, including piping, wiring and
accessories, installed within the Premises;
(v) All plumbing, fixtures, pipes and accessories to be installed
within the Premises;
(vi) Testing and inspection costs;
(vii) Contractor's fees, including but not limited to any fees based
on general conditions; and
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(viii) Construction management by Landlord's representative for the
supervision of the tenant improvement installation.
In no event, however, shall the Tenant Improvements include trade
fixtures, furniture or equipment of the Tenant.
(b) Landlord hereby grants to Tenant a "Tenant Improvement Allowance" of
Twenty-five and no/100 Dollars ($25.00) per square foot. Landlord's
maximum contribution towards the Tenant Improvements shall be limited to
said Tenant Improvement Allowance. The Tenant Improvement Allowance shall
only be used for.
(i) Payment of the cost of preparing the space plan and the Tenant
Improvement Plans, including mechanical, electrical, plumbing and
structural drawings and of all other aspects necessary to complete
the Tenant Improvement Plans. The Tenant Improvement Allowance will
not be used for the payment of extraordinary design work or
extraordinary or over standard improvements not included within the
scope of Landlord's Building Standards or for payments to any other
consultants, designers or architects other than Landlord's architect
and/or space planner.
(ii) The payment of plan check, permit and license fees relating to
construction of the Tenant Improvements.
(iii) Construction of the Tenant Improvements; provided, however, that the
Tenant Improvement Allowance will not be used for Non-Standard
Improvements, if any, unless Landlord , in its sole discretion,
agrees in writing to payment of some or all of the Non-Standard
Improvements out of the Tenant Improvement Allowance.
(iv) All other costs expended by Landlord in the construction of the
Tenant Improvements, including those costs incurred by Landlord for
construction of elements of the Tenant Improvements in the Premises,
which construction was performed by Landlord prior to execution of
this Lease by Landlord and Tenant, which construction is for the
benefit of tenants and is customarily performed by Landlord prior to
execution of leases for space in the Project for reasons of
economics (examples of such construction would include, but not be
limited to, the extension of mechanical [including heating,
ventilating and air condition systems] and electrical distribution
systems outside of the core of the Building, wall construction,
column enclosures and painting outside of the core of the Building,
ceiling hanger wires and window treatment).
(c) The costs of each item referenced in Paragraph 2(b) above shall be charged
against the Tenant Improvement Allowance. In the event that the cost of
installing the Tenant Improvements, as established by Landlord's final
pricing schedule, shall exceed the Tenant Improvement Allowance, or if any
of the Tenant Improvements are not to be paid out of the Tenant Allowance
as provided in Paragraph 2(b) above, the excess shall be paid by Tenant to
Landlord prior to the commencement of construction of the Tenant
Improvements
(d) In the event that, after the Tenant Improvement Plans have been prepared
and a price therefore established by Landlord, Tenant shall require any
changes or substitutions to the Tenant Improvement Plans, any additional
costs related hereto shall be paid by Tenant to Landlord prior to the
commencement of construction of the Tenant Improvements. Landlord shall
have the right to decline Tenant's request for a change to the Tenant
Improvement Plans if such changes are inconsistent with the provisions of
Paragraph 3 and 4 below, or if the change would, in Landlord's opinion,
unreasonably delay construction of the Tenant Improvements.
(e) Any unused portion of the Tenant Improvement Allowance upon completion of
the Tenant Improvements shall not be refunded to Tenant or be available to
Tenant as a credit against any obligations of Tenant under the Lease.
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3. TENANT IMPROVEMENT PLANS. Immediately after the execution of the Lease and
this Work Letter Agreement and subject to the time frames required by the
Work Schedule, Tenant agrees to meet with Landlord's architect and/or
space planner for the purpose of promptly finalizing a space plan for the
layout of the Premises. Based upon such space plan, Landlord's architect
shall prepare final working drawings and specifications for the Tenant
Improvements. Such final working drawings and specifications are referred
to herein as the "Tenant Improvement Plans." The Tenant Improvement Plans
must be consistent with Landlord's standard specifications for tenant
improvements for the project (the "Building Standard"), as the same may be
changed from time to time by Landlord.
4. NON-STANDARD TENANT IMPROVEMENTS. Landlord shall permit Tenant to deviate
from the Building Standards for the Tenant Improvements (the "Non Standard
Improvements"), provided that (a) the deviations shall not be of a lesser
quality than the Building Standards; (b) the total lighting for the
Premises shall not exceed 1.65 watts per Rentable Square Foot of the
Premises; (c) the deviations conform to applicable governmental
regulations and necessary governmental permits and approvals have been
secured; (d) the deviations do not require building service beyond the
levels normally provided to other tenants in the Project; and (e) Landlord
has determined in its sole discretion that the deviations are of a nature
and quality that are consistent with the overall objectives of Landlord
for the Project.
Any Non-Standard improvements made shall remain on and be surrendered with
the Premises upon expiration of the Term, except that Landlord may, within
30 days before or 30 days after expiration of the Term, elect to require
Tenant to remove any Non-Standard Improvements which may have been made to
the Premises. If Landlord so elects, at its own cost Tenant shall restore
the Premises to the condition designated by Landlord in its election,
before the last day of the term or within. 60 days after notice of its
election is given, whichever is later.
5. FINAL PRICING AND DRAWING SCHEDULE. After the preparation of the
preliminary tenant improvement plan (attached as Exhibit "I") and after
Tenant's written approval thereof, in accordance with the Work Schedule,
Landlord shall cause its architect to prepare and submit to Tenant the
Tenant Improvement Plans. The Tenant Improvement Plans shall be approved
by Landlord and Tenant in accordance with the Work Schedule and shall
thereafter be submitted to the appropriate governmental body by Landlord's
architect for plan checking and the issuance of a building permit.
Landlord, with Tenant's cooperation, shall cause to be made to the Tenant
Improvement Plans any changes necessary to obtain the building permit.
Concurrent with the plan checking, Landlord shall have prepared a final
pricing for Tenant's approval, in accordance with the Work Schedule,
taking into account any modifications which may be required to reflect
changes in the Tenant Improvement Plans required by the City or County in
which the Premises are located. After final approval of the Tenant
Improvement Plans, no further changes may be made thereto without the
prior written approval from both Landlord and Tenant, and then only after
agreement by Tenant to pay any excess costs resulting from the design
and/or construction of such changes. Tenant hereby acknowledges that any
such changes shall be subject to the terms of Paragraph 7 below.
6. CONSTRUCTION OF TENANT IMPROVEMENTS. After the Tenant Improvement Plans
have been prepared and approved, the final pricing has been approved and a
building permit for the Tenant Improvements has been issued, Landlord
shall cause its contractor to begin installation of the Tenant
Improvements in accordance with the Tenant Improvement Plans. Landlord
shall supervise the completion of such work and shall use reasonable
commercial efforts to secure substantial completion of the work in
accordance with the Work Schedule. The cost of such work shall be paid as
provided in Paragraph 2 above. Landlord shall not be liable for any
damages, whether direct or consequential, as a result of delays in
construction beyond Landlord's reasonable control, including, but not
limited to, war, civil unrest, strike, labor troubles, unusually inclement
weather, governmental delays, inability to secure governmental approvals
or permits, governmental restrictions, availability of materials or labor,
acts of God, or delays by Tenant (or its architect or anyone performing
services on behalf of Tenant).
7. COMPLETION AND RENTAL COMMENCEMENT DATE. The commencement of the Term of
the Lease and Tenant's obligation for the payment of rent under the Lease
shall commence as of the date referred to in Section 1g of the Lease
provided, however, that if there shall be a delay in substantial
completion of the Tenant Improvements as a result of:
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(a) Tenant's failure to approve any items or perform any other
obligation in accordance with and by the date specified in the Work
Schedule;
(b) Tenant's request for materials, finishes or installations other than
those readily available;
(c) Tenant's changes in the Tenant Improvement Plans after the previous
approval of the Tenant Improvement Plans by Tenant; or
(d) Tenant's request to deviate from the Building Standards for the
Tenant Improvements;
then the commencement of the Term of the Lease and the rent commencement
date shall be accelerated by the number of days of such delay. The Tenant
Improvements shall be deemed substantially complete notwithstanding the
fact that minor details of construction, mechanical adjustments or
decorations which do not materially interfere with Tenant's use and
enjoyment of the Premises remain to be performed (items normally referred
to as "Punch List" items).
8. CERTIFICATE OF OCCUPANCY. Upon completion of the Tenant Improvements and
the issuance by the City or other relevant government agency of a
Certificate of Occupancy or other comparable certificate authorizing
occupancy of the Premises, Tenant will promptly provide Landlord with a
copy of the Certificate of Occupancy or other such certificate.
[The remainder of this page is left intentionally blank.]
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9. FORCE MAJEURE. Landlord shall have no liability whatsoever to Tenant
on account of the inability or delay of Landlord in fulfilling any
of Landlord's obligations under this Work Letter by reason of
strike, other labor trouble, governmental controls in connection
with a national or other public emergency, or shortages of fuel,
supplies or labor resulting therefrom or any other cause, whether
similar or dissimilar to the above, beyond Landlord's reasonable
control. If this Work Letter specifies a time period for performance
of an obligation of Landlord, that time period shall be extended by
the period of any delay in Landlord's performance caused by any of
the events of force majeure described above.
IN WITNESS WHEREOF, this Work Letter Agreement is entered into as of the date
first written above.
EXECUTED BY LANDLORD, this 9th day of November, 1999
PRINCIPAL DEVELOPMENT INVESTORS, AN IOWA LIMITED LIABILITY COMPANY
By: PRINCIPAL LIFE INSURANCE COMPANY, an Iowa Corporation, Member
By: /s/
________________________________________
Jon M. Jacobsen
Title: Director, C.R.E. Equities
________________________________________
By: /s/
________________________________________
Ted E. McWilliams
Title: Assistant Director, Appraisal Services
________________________________________
QUALITY CARE SOLUTIONS, INC., A NEVADA CORPORATION
By: /s/
________________________________________
Title: President and CEO
________________________________________
Address:
________________________________________
City/State/Zip:
________________________________________
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EXHIBIT H
PERSONAL GUARANTY OF LEASE
In consideration of the execution of that certain Lease Agreement between
PRINCIPAL DEVELOPMENT INVESTORS, L.L.C., as Lessor, QUALITY CARE SERVICES, INC.,
as Lessee, dated October 20, 1999, the following individual(s): GREG ANDERSON
hereby guarantee to said Lessor, it's successor and assigns the full performance
and observance of all the covenants, conditions and agreements therein provided
to be performed and observed by lessee, its successors and assigns, and
expressly agrees that the validity of this Guaranty, and the obligation of the
undersigned hereunder shall in no way be terminated, affected or impaired by
reason of any assertion of Lessor, its successors or assigns, or failure to
enforce any of the terms, covenants or conditions of said Lease Agreement or the
Guaranty, or the granting of any indulgence or extension of time to Lessee, all
of which may be given or done without notice to the undersigned. Mr. Anderson
will provide a personal guarantee for the amount of Three Hundred Fifty Thousand
and no/100 Dollars ($350,000.00). Quality Care Services, Inc., may replace Mr.
Anderson's personal guarantee at any time with an Irrevocable Letter of Credit
for the same amount. The amount of the personal guarantee, or Letter of Credit
if replaced, shall be reduced by twenty percent (20%) per year and will retire
after five (5) years, as long as the Tenant is not in default to any and all
terms in the lease document.
The undersigned agrees that the obligations of Guarantor hereunder shall not be
released by Lessor's receipt, application or release of any security given for
the performance and observance of any covenant or condition contained in the
Lease to be kept, performed or observed by Lessee, nor by any modification of
the Lease, regardless of whether Guarantor consents thereto or receives notice
thereof.
The undersigned agrees that it may be joined in any action against Lessee in
connection with the said obligations of Lessee and recovery may be had against
Guarantor in any such action. Lessor may enforce the obligations of Guarantor
hereunder without first taking any action whatsoever against Lessee or its
successors and assigns, or may pursue any other remedy or apply any security it
may hold, and Guarantor hereby waives all right to assert or plead at any time
any statue of limitations relating to the Lease, the obligations or Guarantor
hereunder and any and all surety or other defenses in the nature thereof.
The undersigned agrees that in the event Lessee shall become insolvent or shall
be adjudicated a bankrupt, or shall file a petition for reorganization,
arrangement or similar relief under any present or future provision of the
National Bankruptcy Act, or if such a petition filed by creditors of Lessee
shall be approved by a Court, or if Lessee shall seek judicial readjustment of
the rights of its creditors under any present or future federal state law or if
a receiver of all or part of its property and assets is appointed by any state
or federal court, and in any such proceeding the aforesaid Lease Agreement shall
be terminated or rejected, or the obligations of Lessee thereunder shall be
modified the undersigned will immediately (a) pay to Lessor, or its successors
or assigns, an amount equal to all unpaid fixed and additional rent accrued to
the date of such termination, rejection or modification not to exceed the
guaranteed amount mentioned above, plus (b) at the option of Lessor, its
successors and assignees, either (i) pay to Lessor, or its successors or
assignees, an amount equal to the then cash value of the rent and additional
rent, not to exceed the guaranteed amount mentioned above, which would be have
been payable under said Lease Agreement for the unexpired portion of the term
thereby demised if it had not been terminated, rejected or modified, less the
then cash rental value of the leased premises for such unexpired portion of the
term of said Lease Agreement, taking into consideration the Lease Agreement is
modified, if such is the case, or (ii) if term of said Lease Agreement is
terminated, rejected, executed and delivered to said Lessor, or its successors
or assignees as Lessor, a new Lease agreement shall be delivered to the
undersigned as Lessee for the balance of the term and upon the same terms and
conditions as are set forth in the said Lease Agreement for the balance of the
term then remaining as provided in said Lease Agreement, and will pay Lessor
interest on the amounts which become payable and are designated in (a) and (b)
(i) above, not to exceed guaranteed amount mentioned above, at twelve percent
(12%) per annum from the date of such termination, rejection or modification to
the date of payment.
Neither the undersigned's obligation to make payment in accordance with the
terms of this Agreement nor any remedy for the enforcement thereof shall be
impaired, modified, changed, released, or limited in any manner whatsoever by an
impairment, modification, change, release or limitation of the liability of
Lessee or its estate in bankruptcy or of any remedy for the enforcement thereof,
resulting from the operation of any present or future provision of the National
Bankruptcy Act or other statute, or from the decision of any Court.
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If there is more than one undersigned, the term Guarantor, as used herein, shall
include all of the undersigned; each and every provision of this Guaranty shall
be binding on each and every one of the undersigned; they shall be jointly and
severally liable hereunder, and Lessor shall have the right to join one or all
of them in any proceeding or to proceed against them in any order.
The undersigned have caused this Guaranty to be executed on
/s/
- ---------------------------
GREG ANDERSON, Individually
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