1
STANDARD FORM
MULTI-TENANCY INDUSTRIAL LEASE
(TRIPLE NET)
Landlord HEWSON/BRECKNER AIRPARK, L.L.C., an Arizona limited
liability company
Tenant MAXAM GOLD CORPORATION, a Utah corporation
Dated as of October 8, 1997
TABLE OF CONTENTS
1. Defined Terms . . . . . . . . . 1
2. Leased Premises . . . . . . . . 2
(a) Property to be Leased . . . . . . 2
(b) Common Areas . . . . . . . . 2
(c) Reserved Rights of Landlord . . . . . 2
3. Completion of Premises . . . . . . . 3
(a) Plans . . . . . . . . . 3
(b) Scheduled Commencement Date . . . . . 3
(c) Remedy . . . . . . . . . 3
(d) Changes . . . . . . . . . 3
(e) Ready for Occupancy . . . . . . . 3
(f) Construction Representative . . . . . 4
(g) Early Entry . . . . . . . . 4
(h) Quality of Construction . . . . . . 4
4. Term . . . . . . . . . . . 4
5. Rent . . . . . . . . . . . 4
(a) Fixed Rent . . . . . . . . 4
(b) Adjustments . . . . . . . . 4
(c) Pro Rata Rent . . . . . . . . 5
(d) Net Lease . . . . . . . . . 5
(e) Reimbursable Expenses . . . . . . 5
6. Security . . . . . . . . . . 6
(a) Security Deposit . . . . . . . 6
(b) Lien and Security Interest . . . . . 7
7. Use . . . . . . . . . . . 7
(a) General . . . . . . . . . 7
(b) Compliance with Law . . . . . . . 7
(c) Existing Title and Condition of Premises . . 7
(d) Signs . . . . . . . . . 7
(e) Governmental Regulation . . . . . . 8
(f) Security Devices . . . . . . . 8
8. Maintenance and Repairs . . . . . . . 8
(a) Operating Expenses . . . . . . . 8
(b) Tenant's Maintenance . . . . . . 8
(c) Landlord's Obligations to Repair . . . . 9
(d) Surrender . . . . . . . . . 9
(e) Cleaning Deposit . . . . . . . 9
9. Utilities . . . . . . . . . . 9
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10. Alterations and Additions . . . . . . 10
(a) Limitation . . . . . . . . 10
(b) Liens . . . . . . . . . 10
(c) Removal . . . . . . . . . 10
(i) Tenant Improvement Allowance . . . . 4(a)
(j) Sunshade . . . . . . . . 4(b)
11. Insurance . . . . . . . . . . 10
(a) General Liability . . . . . . . 10
(b) Extended Coverage . . . . . . . 10
(c) Policies . . . . . . . . . 11
(d) Waiver of Subrogation . . . . . . 11
(e) Tenant's Contents . . . . . . . 11
(f) Workmen's Compensation . . . . . . 11
12. Indemnity; Exemption of Landlord from Liability . . 12
(a) General . . . . . . . . . 12
(b) Tenant's Business . . . . . . . 12
13. Damage or Destruction; Obligation to Rebuild . . . 12
(a) Landlord's Obligation to Rebuild . . . . 12
(b) Abatement of Rent . . . . . . . 12
(c) Option to Terminate . . . . . . . 12
(d) Uninsured Casualties . . . . . . 13
(e) Tenant's Waiver . . . . . . . 13
14. Taxes . . . . . . . . . . 13
(a) Tenant's Share of Property Taxes . . . . 13
(b) Tenant's Personal Property . . . . . 13
(c) Rent Tax . . . . . . . . . 13
15. Condemnation . . . . . . . . . 14
(a) Rent Reduction or Lease Termination . . . 14
(b) Award . . . . . . . . . 14
(c) Temporary Condemnation . . . . . . 14
16. Assignment and Subletting . . . . . . 14
(a) Consent . . . . . . . . . 14
(b) Tenant's Continuing Liability . . . . . 15
(c) Information . . . . . . . . 15
(d) Excess Sublease Rental . . . . . . 15
(e) Release . . . . . . . . . 15
(f) Controlled Entity . . . . . . . 16
(g) Attorneys' Fees . . . . . . . 16
17. Defaults; Remedies . . . . . . . . 16
(a) Defaults . . . . . . . . . 16
(b) Remedies . . . . . . . . . 17
(c) Late Charges . . . . . . . . 19
(d) Payment or Performance by Landlord . . . . 19
18. Miscellaneous . . . . . . . . . 19
(a) Estoppel Certificate . . . . . . 19
(b) Landlord's Liability . . . . . . 20
(c) Construction . . . . . . . . 20
(d) Interest on Past-Due Obligations . . . . 20
(e) Time of Essence . . . . . . . 20
(f) Counterparts . . . . . . . . 20
(g) Incorporation of Prior Agreements; Amendments . 20
(h) Notices . . . . . . . . . 20
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(i) Waivers . . . . . . . . . 20
(j) Recording . . . . . . . . . 21
(k) Holding Over . . . . . . . . 21
(l) Covenants and Conditions . . . . . . 21
(m) Binding Effect . . . . . . . . 21
(n) Subordination . . . . . . . . 21
(o) Attorneys' Fee . . . . . . . . 21
(p) Landlord's Access . . . . . . . 21
(q) Auctions . . . . . . . . . 22
(r) Merger . . . . . . . . . 22
(s) Joint and Several Liability . . . . . 22
(t) Individual Liability . . . . . . 22
(u) Attornment . . . . . . . . 22
(v) Lenders Right to Cure . . . . . . 22
(w) Revisions to Lease . . . . . . . 22
(x) Administrative Charge . . . . . . 22
(y) Substituted Premises . . . . . . 23
19. Toxic Materials . . . . . . . . 23
(a) Definitions . . . . . . . . 23
(b) Prohibition on Hazardous Materials . . . . 23
(c) Exception to Prohibition . . . . . . 24
(d) Compliance with Environmental Laws . . . . 24
(e) Environmental Notices . . . . . . 24
(f) Environmental Indemnity . . . . . . 24
(g) Remedial Work . . . . . . . . 25
(h) Landlord's Option . . . . . . . 25
(I) Injunctive Relief . . . . . . . 25
(j) Self-Help . . . . . . . . . 25
(k) Other Tenants . . . . . . . . 25
(l) Environmental Inspection . . . . . . 25
(m) Surrender of Premises
Environmental Considerations . . . . . 26
20. Additional Security . . . . . . . 26(a)
Exhibit A The Premises
Exhibit B Preliminary Plans
Exhibit C Tenant Improvements
Exhibit D Hazardous Materials
Exhibit E Letter of Credit Requirements
1. Defined Terms. Each reference in this Lease to any of
the following terms shall incorporate the data stated for that
term. Other terms are as defined in the Lease.
(a) Landlord and Landlord's Hewson/Breckner Airpark, L.L.C.
Address (subparagraph c/o Hewson Properties, Inc.
18(h)): 4636 East University Drive
Suite 265
Phoenix, Arizona 85034
(b) Tenant and Tenant's Maxam Gold Corporation
Address for Notices 528 Fon du Lac Drive
(subparagraph 18(h)): East Peoria, Illinois 61611
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(c) Street Address of Pre- 15500 Greenway-Hayden Loop
mises (paragraph 2): Scottsdale, Arizona 85260
(d) Approximate Square 12,039 square feet
Footage of Premises
(paragraph 2):
(e) Project in which Pre- N/A
mises are located
(paragraph 2):
(f) Landlord's Construction Mr. Steven Schwarz
Representative (subpara-
graph 3(f)):
(g) Tenant's Construction Mr. Dale Runyon and Michael
Representative (subpara- Runyon-Davis
graph 3(f)):
(h) Term (paragraph 4): Sixty (60) months
(i) Scheduled Commencement 12:01 a.m. on December 1, 1997
Date (paragraph 4): (Initialed by parties)
(j) Fixed Rent (subpara- $12,039 per month, plus applicable
graph 5(a)): sales tax per month
(k) Rental Period (sub- A calendar month during the lease
paragraph 5(a)): Term
(l) Security Deposit (sub- $12,500
paragraph 6(a)):
(m) Permitted Uses (para- General office; the storage of
graph 7): vehicles, equipment, ore sample,
and other material associated with
mining of precious metals or
minerals; and a laboratory used
solely for the testing of precious
metals and minerals
(n) Cleaning Deposit (sub- -0-
paragraph 8(e)):
(o) Tenant's Share of 27.64%; provided, however, if any
Operating Expenses such Expenses or Taxes are not
(paragraph 8), In- specifically identifiable as attri-
surance Expense (para- butable solely to the Building and
graph 11) and Property the real property immediately
Taxes (paragraph 14); adjacent to the Building but are
attributable to the Project,
Tenant's Share of such Expenses and
Taxes shall be N/A %
(p) Liability Insurance $2,000,000
(subparagraph 11(a)):
2. Leased Premises. (a) Property to be Leased. Landlord
hereby leases to Tenant, and Tenant hereby leases from Landlord,
subject to the terms and conditions contained herein certain
floor space (the "Premises") located in the building (the
"Building") located (or to be constructed) on that certain real
property located at the street address set forth in paragraph 1
hereof (the "Property"). The Building is located in Landlord's
Project set forth in paragraph 1 above. The Premises, which are
more particularly described on Exhibit A attached hereto and
incorporated herein by this reference, shall be deemed to extend
from the top surface of subfloor to the bottom surface of
ceilings above but shall not include the common stairways,
stairwells, hallways, accessways, and pipes, ducts, conduits,
wires and appurtenant fixtures serving exclusively or in common
other parts of the Building, and (if the Premises include less
than the entire rentable area of any floor) shall not include the
remainder of the Floor Common Area (as defined below). The
Approximate Square Footage of the Premises is set forth in
paragraph 1 above.
(b) Common Areas. Tenant shall have, as appurtenant to the
Premises, rights to use in common, subject to reasonable rules
from time to time made by Landlord of which Tenant is given
notice:
(i) The common stairways and accessways, loading docks
and platforms and any passageways thereto, and the common
pipes, ducts, conduits, wires and appurtenant equipment
serving the Premises;
(ii) If the Premises include less than the entire
rentable area of any floor, the common lobbies, hallways,
toilets and other common facilities (the "Floor Common
Area"); and
(iii) Common walkways, sidewalks, and driveways
necessary for access to the Building; greenbelt areas; and,
except for parking spaces which may be reserved for persons
other than Tenant, parking spaces or area from time to time
maintained on the Project for use by tenants in and visitors
to the Building and, to the extent from time to time
arranged by Landlord, maintained on adjacent real property
for such use. Twenty (20) parking spaces shall be available
for Tenant and Tenant's employees and visitors free of
charge throughout the Term of this Lease. Nine (9) of such
spaces shall be covered and reserved for the Tenant and
eleven (11) of such spaces shall be uncovered and
unreserved.
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(c) Reserved Rights of Landlord. Notwithstanding the
foregoing, Landlord reserves the right from time to time, without
unreasonable interference with Tenant's use:
(i) To install, use, maintain, repair and replace
pipes, ducts, conduits, wires and appurtenant meters and
equipment for service to other parts of the Building above
the ceiling surfaces, below the floor surfaces, within the
walls and in the central core areas, and to replace any
pipes, ducts, conduits, wires and appurtenant meters and
equipment included in the Premises which are so located or
located elsewhere outside the Premises;
(ii) To alter or relocate any other common facility;
provided, however, that substitutions are substantially
equivalent or better in quality; and
(iii) To alter the boundaries of the Property, grant
easements on the Property and dedicate for public use
portions thereof without Tenant's consent, provided that no
such grant or dedication shall unreasonably interfere with
Tenant's use of the Premises or otherwise cause Tenant to
incur cost or expense.
3. Completion of Premises. (a) Plans. Landlord and
Tenant have approved the preliminary plans and outline
specifications (the "Preliminary Plans") identified in Exhibit B
for the construction of improvements in and to the Premises, the
("Tenant Improvements"), which Tenant Improvements are listed on
Exhibit C attached hereto and by this reference made a part
hereof. If necessary, Landlord shall cause to be prepared final
plans and specifications (the "Final Plans") substantially in
conformity with the Preliminary Plans, which need not include
working detail drawings. The term "Plans" shall hereinafter mean
the Preliminary Plans and, if and when prepared, the Final Plans.
The Final Plans, if necessary, shall be delivered to Tenant as
soon as reasonably possible from the date hereof, subject to any
period of delay encountered by Landlord in such preparation as a
result of requests by Tenant for changes in the Final Plans
subsequent to the date hereof. Within ten (10) days after
delivery of the Final Plans, Tenant shall set forth in writing,
with particularity and precision, any corrections or changes
necessary to bring the Final Plans into substantial conformity
with the Preliminary Plans, except that Tenant may not object to
any logical development or refinement of the Preliminary Plans.
Failure to deliver to Landlord written notice of any such
corrections or changes within said ten (10) day period shall
constitute approval of the Final Plans by Tenant. Following such
approval of the Final Plans, both parties shall endorse approval
for filing purposes thereon, in duplicate, and thereafter changes
may be made only in accordance with subparagraph (d) below.
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(b) Scheduled Commencement Date. Landlord, at its sole
expense, shall proceed diligently with construction and
completion of the Premises substantially in accordance with the
Plans. Landlord shall complete the Premises and they shall be
Ready for Occupancy (as defined below) by Tenant not later than
the Scheduled Commencement Date set forth in paragraph 1 above;
provided, however, that such Scheduled Commencement Date shall be
extended for a period of time equal to the period of any delay or
delays encountered by Landlord affecting construction because of
fire, earthquake, inclement weather, or other acts of God, acts
of the public enemy, riot, insurrection, governmental regulations
of the sales of materials or supplies or the transportation
thereof, strikes or boycotts, shortages of material or labor,
Tenant's early entry under the provisions of subparagraph (g)
below, changes in the Plans pursuant to subparagraph (d) below,
or any other cause beyond the control of Landlord.
(c) Remedy. If the Premises are not completed on or before
the Scheduled Commencement Date as extended pursuant to
subparagraph (b) above, the sole remedy of either party shall be
the option to terminate this Lease by the delivery to the other
party of written notice within ten (10) days after the day three
(3) months following the Scheduled Commencement Date, as
extended.
(d) Changes. Tenant shall have the right to request
changes in the Plans, which request shall not be unreasonably
denied, provided, however, that: (i) such right shall not be
exercised unreasonably, (ii) no such request shall affect any
structural change in the Premises, (iii) Tenant shall pay any
additional cost or economic detriment incurred by Landlord
required to implement or incurred as a result of such request or
change, including without limitation loss of rents, architecture
fees, increase in construction costs and any other charges
payable hereunder caused by delay, with all said costs, and
detriments, to be paid immediately upon demand by Landlord, and
(iv) such requests shall constitute an agreement on the part of
Tenant to accept any delay in completion caused by reviewing,
processing and implementing any such changes.
(e) Ready for Occupancy. The Premises shall be deemed to
be ready for occupancy ("Ready for Occupancy") when the architect
or engineer in charge of the work of construction certifies: (i)
that the work of construction has been substantially completed in
accordance with the Plans; and (ii) the date of such completion.
Landlord shall diligently complete, as soon as reasonably
possible, any items of work and adjustment not completed when the
Premises are Ready for Occupancy.
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(f) Construction Representative. In connection with the
original construction of the Premises each party shall be bound
by its Construction Representative set forth in paragraph 1
above. A party may designate a substitute Construction
Representative by giving written notice to the other party.
(g) Early Entry. With the prior written consent of
Landlord, Tenant may, at any time prior to the commencement of
the Term, at its sole risk, enter upon and install such trade
fixtures and equipment in the Premises as it may elect; provided,
however, that (i) Tenant's early entry shall not interfere with
Landlord's work of construction or cause labor difficulties; (ii)
Tenant shall execute an indemnity agreement in favor of Landlord
in form and substance satisfactory to Landlord; (iii) Tenant
shall pay for and provide evidence of insurance satisfactory to
Landlord; and (iv) Tenant shall pay utility charges reasonably
allocated to Tenant by Landlord. Tenant shall not use the
Premises for the storage of inventory or otherwise commence the
operation of business prior to the commencement of the Term
without the express prior written consent of Landlord.
(h) Quality of Construction. All work shall be done in a
good and workmanlike manner and in compliance with all applicable
laws and lawful ordinances, bylaws, regulations and orders of
governmental authority and of the insurers of the Improvements.
Landlord assumes no liability for special, consequential or
incidental damages of any kind. There are no representations,
warranties or guaranties, express or implied, including
warranties of merchantability or use of the Premises, except as
are expressly set forth herein. Tenant hereby waives the benefit
of any rule that disclaimers of warranty shall be construed
against Landlord.
(i) Tenant Improvement Allowance. The cost of constructing
the Tenant Improvements shall be paid by Landlord; provided,
however, if the amount charged to the Landlord by Landlord's
general contractor (the "Contractor") for acquisition,
construction and installation of the Tenant Improvements, plus
architectural fees and permits relating to such construction and
installation, is more than $216,702, Tenant hereby agrees to pay
for all costs incurred in connection with the Tenant Improvements
except for $216,702, which is the Landlord's entire monetary
obligation for the Tenant Improvements ("Landlord's Portion").
In the event that the initial contract amount charged by the
Contractor, plus architectural fees and permits, indicates that
the total cost of the Tenant Improvements will be greater than
Landlord's Portion, Tenant shall be obligated to make the first
payments for the Tenant Improvements up to an amount equal to the
difference between the initial contract amount, plus
architectural fees and permits, and the Landlord's Portion
("Tenant's Initial Payment"). Tenant shall make Tenant's Initial
Payment based upon requisitions setting forth in reasonable
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detail the work performed and containing invoices, together with
any other information reasonably requested by Tenant, and shall
be paid by Tenant within ten (10) business days of receipt of
each such requisition and other information. After Tenant has
met its initial obligation by paying all of the Tenant's Initial
Payment, the Landlord shall be obligated to pay the Landlord's
Portion. In the event that change orders or other events cause
the final cost of the Tenant Improvements to be less than the sum
of the Landlord's Portion and Tenant's Initial Payment, then
Landlord shall reimburse Tenant such excess up to the amount of
Tenant's Initial Payment. In the event that change orders or
other events cause the final cost of the Tenant Improvements to
be more than the sum of the Landlord's Portion and Tenant's
Initial Payment, then Tenant shall pay each such increase as soon
as any such increase is determined in accordance with the same
procedures as for the payment of Tenant's Initial Payment.
Except as otherwise provided above, Tenant shall have complete
responsibility for the cost of the Tenant Improvements and for
the construction of any other improvements and alterations to the
Premises in connection with Tenant's occupancy thereof, Tenant
agreeing to accept the same "AS IS", subject only to the
construction of the Tenant Improvements.
It is contemplated that the Contractor will be Bjerk
Builders, Inc. ("Bjerk"). Landlord shall furnish Tenant with
estimates of the costs of the various Tenant Improvements
promptly after receipt thereof from Bjerk and of Bjerk's total
bid price for the construction of the Tenant Improvements. If
Tenant is dissatisfied with such estimates or bid, Tenant may
exercise its rights under subparagraph 3(d) above to request a
change in the Plans. In addition, if Tenant believes that lower
costs may be obtainable for the Tenant Improvements, Tenant may,
by a written request received by Landlord within five (5)
business days after the furnishing to Tenant any such estimate or
bid (and prior to commencement of the Tenant Improvements)
request that Landlord seek bids for the construction of the
Tenant Improvements from other general contractors. Upon receipt
of such request for rebidding and after consultation with Tenant,
Landlord shall request bids from not less than two (2)
alternative general contractors for the construction of the
Tenant Improvements and Landlord will consider the results of
such bids in determining, along with the Tenant, the general
contractor who will construct the Tenant Improvements; provided,
however, Landlord (1) may consider reasonable factors other than
price in determining the general contractor to be selected,
including but not limited to the willingness of the general
contractor to execute the standard construction contract used by
Landlord and its affiliates, and (2) may also permit Bjerk to
reduce its bid. Tenant also agrees to accept any delays, costs
and charges resulting from the requesting of such additional bids
and use of any substituted general contractor or Bjerk, if
applicable, with the same force and effect as if Tenant had
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requested a change in the Plans as provided in subparagraph 3(d)
above. Landlord shall execute a construction contract with Bjerk
or other bidder, as applicable, to be the Contractor, with the
Contract Sum to be based on the bid made by the selected general
contractor.
(j) Sunshade. In addition to the Tenant Improvements
Landlord shall also cause to be installed a sunshade for the
glass curtain wall constructed by Landlord as a part of the
Building (the "Sunshade"). The Sunshade shall be selected by
Tenant, subject to Landlord's approval, which approval shall not
be unreasonably withheld, and installed by the Contractor. The
cost of acquiring, installing, and constructing the Sunshade
shall be paid by Landlord; provided, however, if the amount
charged to the Landlord by the Contractor for acquisition,
construction and installation of the Sunshade is more than
$7,000, Tenant hereby agrees to pay for all costs incurred in
connection with the Sunshade except for $7,000 which is the
Landlord's entire monetary obligation for the Sunshade. In the
event that the amount charged by the Contractor is or will be
greater than $7,000, Tenant shall be obligated to pay to Landlord
the amount equal to the difference between the cost thereof and
$7,000. Tenant shall make such payment(s) based upon
requisitions setting forth in reasonable detail the cost of the
Sunshade and any other information reasonably requested by Tenant
and shall be paid by Tenant within ten (10) business days of
receipt of each such requisition and other information. For all
purposes of this Lease except paragraph 3 the Sunshade shall be
considered as a Tenant Improvement installed by Landlord.
4. Term. The Term of this Lease, which shall be for the
period set forth in paragraph 1 above, shall commence on the
first to occur of the following dates (the "Commencement Date")
(it being agreed that if the Term of this Lease shall not
commence within one (1) year of the Scheduled Commencement Date
this Lease shall terminate and be of no further force and
effect):
(a) The Scheduled Commencement Date set forth in paragraph
1 above (as it may be extended pursuant to the terms of paragraph
3 above);
(b) The date on which the Premises are Ready for Occupancy;
or
(c) The date upon which Tenant actually commences to do
business in the Premises.
5. Rent. (a) Fixed Rent. Tenant shall pay Landlord as
fixed rent for the Premises a sum equal to the Fixed Rent set
forth in paragraph 1 on or before the first day of each and every
calendar month during the Term of this Lease, except that Fixed
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Rent for the first full calendar month of the Term shall be
payable simultaneously with the execution of this Lease by
Tenant.
(b) Adjustments. Commencing on the thirty-first (31st)
Rental Period of the Term of this Lease and continuing thereafter
through the sixtieth (60th) Rental Period of the Term of this
Lease (the "Adjustment Period"), in addition to the Fixed Rent
due pursuant to subparagraph (a) above, Tenant shall pay as
additional rent an additional amount (the "Adjustment") to be
determined in accordance with the variations, if any, in the
costs of living as shown by the Consumer Price Index for all
Urban Consumers (average of all cities), as published by the
Bureau of Labor Statistics, United States Department of Labor, or
any successor agency (the "CPI"). Except as hereinafter
provided, the Adjustment for each Rental Period of the Adjustment
Period shall be an amount equal to (i) the product obtained by
multiplying the Fixed Rent by a fraction, the numerator of which
shall equal the CPI reported for the calendar month occurring
three (3) months prior to the first day of such Adjustment Period
(e.g., if the first day of the Adjustment Period shall be June 1,
the CPI used shall be that of the immediately preceding month of
March) and the denominator of which shall equal the CPI reported
for the calendar month occurring three (3) months prior to the
first day of the month in which the Commencement Date shall occur
less (ii) the Fixed Rent; provided, however, the Adjustment shall
not be less than the amount determined by accruing interest on
the Fixed Rent at a rate of three percent (3%) per annum,
compounded annually, during the period from the Commencement Date
until the first day of the Adjustment Period and not more than
the amount determined by accruing interest on the Fixed Rent at a
rate of six percent (6%) per annum, compounded annually, during
the period from the Commencement Date until the first day of the
Adjustment Period.
(c) Pro Rata Rent. Rent for any period during the Term
which is for less than one month shall be a pro rata portion of
the Rental Period installment. Rent shall be payable, without
deduction or offset, in lawful money of the United States to
Landlord at the address stated herein or to such other persons or
at such other places as Landlord may designate in writing.
(d) Net Lease. This Lease is what is commonly called a
"net lease", it being understood that Landlord shall receive the
Rent set forth in this paragraph free and clear of any and all
impositions, taxes, liens, charges or expenses of any nature
whatsoever in connection with its ownership and leasing of the
Premises. In addition to the Rent provided in this paragraph,
Tenant shall pay all impositions, taxes, insurance premiums,
operating charges, costs and expenses which arise or may be
contemplated under any provisions of this Lease during the Term.
All of such charges, costs and expenses shall constitute
additional rent, and upon the failure of Tenant to pay any of
such costs, charges or expenses, Landlord shall have the same
rights and remedies as otherwise provided in this Lease for the
failure of Tenant to pay Rent. It is the intention of the
parties hereto that Tenant shall in no event be entitled to any
abatement of or reduction in Rent or additional rent payable
hereunder, except as expressly provided herein. Any present or
future law to the contrary shall not alter this agreement of the
parties.
(e) Reimbursable Expenses. The sums payable by Tenant for
Operating Expenses, Insurance Expenses and Property Taxes
(hereinafter sometimes cumulatively referred to as the
"Reimbursable Expenses") under subparagraphs 8(a), 11(b) and
14(a) of this Lease shall be paid in accordance with the
following procedures:
(i) Landlord shall prepare an annual statement (the
"Annual Statement") setting forth the sum of the
Reimbursable Expenses for the calendar year ending on the
prior December 31 and Tenant's Share thereof and setting
forth the estimated Reimbursable Expenses that will be
incurred by Landlord during the current calendar year ending
on the next following December 31 and Tenant's Share
thereof.
(ii) Landlord shall endeavor to give to Tenant such
Annual Statement on or before March 1 of each calendar year
throughout the Term of the Lease, but Landlord's failure to
provide Tenant with an Annual Statement by said date shall
not constitute a waiver by Landlord of its right to require
payment by Tenant of Tenant's Share of estimated
Reimbursable Expenses or actual Reimbursable Expenses.
(iii) Tenant's Share of estimated Reimbursable
Expenses for the calendar year in which the Annual Statement
is received shall be divided by twelve (12) and one such
installment shall be paid concurrently with each rental
payment thereafter until receipt by Tenant of the next
Annual Statement. In addition, Tenant shall pay in full
concurrently with the first monthly rent payment due
following receipt of the Annual Statement an amount equal to
the excess of the monthly installment required to be paid
under the most current Annual Statement over the monthly
installment made under the preceding Annual Statement (or
the amount specified in subparagraph (v) below, as
applicable) multiplied by the number of months from January
through the month in which the Annual Statement is received
by Tenant.
(iv) If Tenant's Share of actual Reimbursable Expenses
for the past calendar year as shown on the Annual Statement
is greater than the payments made by Tenant for that
calendar year, then concurrently with the first monthly rent
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payment due following receipt by Tenant of the Annual
Statement, Tenant shall pay in full an amount equal to such
excess. If Tenant's Share of actual Reimbursable Expenses
for the past calendar year as shown on the Annual Statement
is less than the payments made by Tenant for that calendar
year, the amount of such overpayment shall be credited
against the next monthly rent payment(s) falling due.
(v) An Annual Statement need not be given during the
period from the Commencement Date (or implementation of this
monthly payment program) until December 31 of the year in
which the Commencement Date (or implementation of this
monthly payment program) occurs and estimated payments of
Reimbursable Expenses during such period and until the first
Annual Statement is issued to Tenant in the next calendar
year shall be in the amount specified by Landlord.
(vi) Even though the Term has expired and the Tenant
has vacated the Premises when the final determination is
made of Tenant's Share for the calendar year in which the
Lease expires, Tenant shall immediately pay the excess of
Tenant's Share for the portion of such year in which Tenant
was in occupancy over the estimated payments made by Tenant
for that calendar year and, conversely, any overpayment made
shall be immediately rebated by Landlord to Tenant.
(vii) An administrative charge equal to five percent
(5%) of the Reimbursable Expenses shall be added to each
installment payment due under this subparagraph (e)
(including the estimated payments and any reconciliation
payment), which administrative charge shall be reflected in
the Annual Statement, shall be payable in addition to the
Reimbursable Expenses and shall be intended to compensate
Landlord for supervision, administrative and clerical costs.
(viii) Each Annual Statement shall be prepared in
accordance with generally recognized and established
accounting practices and each determination and Annual
Statement, certified by Landlord, shall be final and
conclusive on both parties, including any determination made
by Landlord of the appropriate estimated payment during the
period prior to issuance of the first Annual Statement to
Tenant.
6. Security. (a) Security Deposit. Tenant shall deposit
with Landlord upon execution hereof the Security Deposit set
forth in paragraph 1 above as security for Tenant's faithful
performance of Tenant's obligations hereunder. If Tenant fails
to pay Rent or any other charges payable by Tenant hereunder, or
otherwise defaults with respect to any provision of this Lease,
Landlord may at its option use, apply or retain all or any
portion of the Security Deposit (i) to remedy Tenant's defaults
in the payment of Rent or any other sums payable by Tenant
pursuant to the terms hereof, (ii) to repair any damage to the
Premises, (iii) to clean and otherwise maintain the Premises, or
(iv) to compensate Landlord for any other loss or damage which
Landlord may suffer thereby. If Landlord so uses or applies all
or any portion of the Security Deposit, Tenant shall, within ten
(10) days after written demand therefor, deposit cash with
Landlord in an amount sufficient to restore the Security Deposit
to the full amount hereinabove stated and Tenant's failure to do
so shall be a breach of and a default under this Lease. Landlord
shall not be required to keep the Security Deposit separate from
its general accounts. If Tenant performs all of Tenant's
obligations hereunder, the Security Deposit, or so much thereof
as has not theretofore been applied by Landlord, shall be
returned, without payment of interest or other increment for its
use, to Tenant (or, at Landlord's option, to the last assignee,
if any, of Tenant's interest hereunder) at the expiration of the
Term hereof, after Tenant has vacated the Premises.
(b) Lien and Security Interest. Tenant hereby grants to
Landlord a lien and security interest upon all property of Tenant
now or hereafter placed in or about the Premises to secure
payment of all rents and other sums payable to Landlord hereunder
and the payment of any damages or losses suffered by Landlord by
reason of Tenant's breach of this Lease. Landlord, as secured
party, shall be entitled to all rights and remedies afforded a
secured party under the Arizona Uniform Commercial Code, such
rights and remedies to be in addition to and cumulative of any
landlord's lien granted by law or elsewhere in this Lease.
Tenant shall execute appropriate UCC forms upon request by
Landlord.
7. Use. (a) General. The Premises shall be used and
occupied only for the Permitted Uses set forth in paragraph 1
above and for no other purpose.
(b) Compliance with Law. Tenant shall, at Tenant's sole
cost and expense, comply with all present and future laws,
ordinances, orders, declarations of covenants and restrictions,
rules, regulations and requirements of all federal, state and
municipal governments, courts, departments, commissions, boards
and officers, and any national or local Board of Fire
Underwriters, or any other body exercising functions similar to
those of any of the foregoing, foreseen or unforeseen, ordinary
as well as extraordinary, which may be applicable to the
Premises, the Building, and the Property or to the use or manner
of use of the Premises. Tenant shall obtain any required
certificate of occupancy with respect to its use of the Premises,
the Building and the Property within thirty (30) days from the
Commencement Date and shall deliver a copy thereof to Landlord
within such thirty (30) day period; provided, however, Landlord
shall obtain any certificate of occupancy required for the shell
15
of the Building and any improvements to the Premises to be made
by Landlord pursuant to paragraph 3 above. Tenant shall not use
or permit the use of the Premises in any manner that will tend to
create waste or a nuisance.
(c) Existing Title and Condition of Premises. Tenant
hereby accepts the Premises in their condition existing as of the
Commencement Date and also accepts the Premises and this Lease
subject to all applicable zoning, municipal, county and state
laws, ordinances and regulations governing and regulating the use
of the Premises, subject to all covenants, conditions and
restrictions affecting the Property, Project or Premises and
subject to all liens, claims and encumbrances currently existing
against the Premises or any part thereof, including all matters
disclosed by any of the foregoing or by any exhibits attached
hereto; provided, however, Tenant shall be deemed to have
consented to private covenants, conditions and restrictions in
favor of third parties and private liens, claims or encumbrances
asserted by third parties only if copies thereof have been
furnished to Tenant or such items are referred to in a title
insurance commitment or title report furnished by Landlord to
Tenant; Landlord, in accordance with (and except as otherwise
provided in) subparagraph 8(c) below, shall be responsible for
causing the roof and bearing walls of the Premises to be in good
condition and repair at the Commencement Date and shall also
cause the heating, ventilating and air conditioning system, the
plumbing system and the electrical system to be in operating
condition as of the Commencement Date. All such systems shall be
deemed in the condition required at the Commencement Date unless
Tenant gives Landlord written notice of any defects in such
systems on or before ten (10) days after the Commencement Date.
Except for any representation or warranty which may be
specifically set forth in this Lease, Tenant acknowledges that
neither Landlord nor Landlord's agents have made any
representations or warranties as to the Premises, including
without limitation, any representation or warranty as to
condition or fitness of the Building or the suitability of the
Building for the conduct of Tenant's business.
(d) Signs. Tenant shall not erect or install on any
exterior or interior window, any door, or any exterior wall any
signs, advertising media, placards, trademarks, drapes, screens,
tinting materials, shades, blinds or similar items, without first
securing Landlord's written permission. It is contemplated,
however, that Landlord will consent to the installation of
exterior building signs, flag poles and monument signs which
otherwise comply with the covenants, conditions and restrictions
of record and with the requirements of this subparagraph (d) and,
with respect to all signage on the Building, are of a size which
does not exceed (on a cumulative basis) that percentage of all
signage on the Building which is equal to the percentage which
the Premises is of all of the leasable space in the Building.
Landlord will also not permit other lessees of space in the
16
Building to have exterior signage which would, under applicable
governmental restrictions, prevent Tenant from having signage
area on the Building which is a percentage of all of the signage
area on the Building that is less than the percentage which the
Premises is of all leasable space in the Building. All signs
shall comply with all applicable governmental requirements, shall
conform to the design, motif and decor of the Property and shall
be in good taste, as determined in Landlord's reasonable
discretion. Landlord may also establish such sign criteria as
Landlord deems appropriate for the Property and Tenant shall
cause all signs which are located on the Premises and are visible
from outside the Premises to conform to such sign criteria.
Tenant shall properly maintain all approved signs. Upon
expiration of the Lease, Tenant promptly shall remove all signs
placed in and around the Premises by Tenant and shall repair any
damage to the Premises, Building or other portions of the Project
caused by the removal of such signs. Landlord may also require
Tenant to erect an exterior identifying sign in form and
substance satisfactory to Landlord, which sign shall also be
subject to all of the other provisions of this subparagraph (d).
(e) Governmental Regulation. In addition to the general
obligation of Tenant to comply with laws and without limitation
thereof, Landlord shall not be liable to Tenant nor shall this
Lease be affected if any parking privileges appurtenant to the
Premises, the Building and the Property are impaired by reason of
any moratorium, initiative, referendum, statute, regulation, or
other governmental decree or action which could in any manner
prevent or limit the parking rights of Tenant hereunder. Any
governmental charges or surcharges or other monetary obligations
imposed relative to parking rights with respect to the Premises,
the Building and the Property shall be considered as Property
Taxes and shall be payable by Tenant under the provisions of
paragraph 14 hereof.
(f) Security Devices. Tenant may not install any alarm
boxes, foil protection tape or other security equipment on the
Premises without Landlord's prior written consent, which consent
shall not be unreasonably withheld with respect to a commercial
security system of a type in typical use in the Phoenix
metropolitan area but may be conditioned upon compliance with
reasonable requirements set forth for the protection of the
Building and adjoining property.
8. Maintenance and Repairs. (a) Operating Expenses. As
additional rent during the Term, Tenant shall pay to Landlord an
amount equal to the product obtained by multiplying (i) Tenant's
Share of Operating Expenses (as set forth in paragraph 1 above)
by (ii) the amount which Landlord expends for Operating Expenses
for the Term hereof. "Operating Expenses" shall include all
reasonable and necessary expenses actually incurred by Landlord
for the operation, cleaning, maintenance (including but not
17
limited to preventive maintenance), repair and property
management of the Building and the Property and, if applicable,
the Project, including, without limitation, the roof and walls
(other than for the structural repair of such roof and walls),
utility systems and related equipment serving all of the Building
or the Project and all walks, driveways, parking areas, loading
areas, lawns and landscaping. Among the items included in
Operating Expenses under the foregoing definition are expenses
for utilities furnished to the common areas of the Building and
Property and fees and charges paid to the property manager for
the Building; provided, however, the amount of the property
manager's fee included in Operating Expenses of the Building for
any calendar year shall not exceed an amount equal to five
percent (5%) of the gross receipts received by Landlord from the
Building for such calendar year. If Landlord determines that a
utility system and related equipment or portion thereof serves
one or more tenant suites in addition to the Premises but less
than all of the tenant suites in the Building or the Project, the
system and equipment or portion thereof, as applicable, which
serves the Premises and such additional suites, to the extent the
operation, cleaning, maintenance, repair and/or replacement
thereof is not the responsibility of the applicable utility
company, shall be deemed a part of the Building and the Project
for the purposes of this subparagraph 8(a), except that the
amount of the reimbursement by Tenant to Landlord for such items
shall be separately stated and shall be determined by multiplying
the reasonable and necessary expenses incurred by Landlord for
such items by the percentage which the Premises is of the total
space leased or available for lease which is served by such
systems and equipment or portion thereof instead of by the
Tenant's Share of Operating Expenses as set forth in paragraph 1.
Sums payable by Tenant pursuant to this subparagraph shall be
paid in accordance with the provisions of subparagraph 5(e)
above. Landlord may enter upon the Premises to the extent
necessary or appropriate to do any work described in this
subparagraph 8(a), Landlord shall not be liable for any
inconvenience, annoyance, disturbance, loss of business or other
damage of Tenant by reason of performing any such work or on
account of bringing materials, tools, supplies or equipment into
or through the Premises during the course thereof, and the
obligations of Tenant under this Lease shall not be affected
thereby.
(b) Tenant's Maintenance. Tenant shall, at Tenant's sole
cost and expense, keep and maintain the Premises, subfloors and
floor coverings in good repair and in a clean and safe condition,
casualties covered by insurance coverage excepted to the extent
of proceeds received by Landlord. Tenant's obligations shall
include the cleaning, operation, maintenance, repair and
replacement of all utility systems and related equipment and
portions thereof located within the Premises except to the extent
Landlord performs such cleaning, operation, maintenance, repair
18
and/or replacement under subparagraph 8(a) above because all or
portions of the system and equipment serve more than one tenant
suite. Tenant shall, at Tenant's own expense, immediately
replace all interior, exterior or other glass in or about the
Premises that may be broken during the Term with glass at least
equal to the specification and quality of the glass so replaced.
If Tenant fails to perform Tenant's obligations under this
subparagraph, Landlord may at its option enter upon the Premises
after ten (10) days prior written notice to Tenant and put the
same in good order, condition and repair, and the cost thereof
together with interest thereon at the rate of fifteen percent
(15%) per annum shall become due and payable as additional rental
to Landlord together with Tenant's next monthly Rent payment.
Nothing herein shall imply any duty upon the part of Landlord to
do any such work and the performance thereof by Landlord shall
not constitute a waiver of Tenant's default in failing to perform
the same. Landlord may, during the progress of any such work in
or on the Premises, keep and store therein all necessary
materials, tools, supplies and equipment. Landlord shall not be
liable for the inconvenience, annoyance, disturbance, loss of
business or other damage of Tenant by reason of making such
repairs or the performance of any such work, or on account of
bringing materials, tools, supplies or equipment into or through
the Premises during the course thereof, and the obligations of
Tenant under this Lease shall not be affected thereby.
(c) Landlord's Obligations to Repair. Landlord shall, at
its expense, after written notice from Tenant, repair in a prompt
and diligent manner any damage to structural portions of the roof
and bearing walls of the Premises; provided, however, that if
such damage is caused by an act or omission of Tenant or Tenant's
agents, invitees, employees or contractors, then such repairs
shall be at Tenant's expense, payable to Landlord pursuant to
this paragraph. There shall be no abatement of Rent during the
performance of such work. Landlord shall not be liable to Tenant
for injury or damage that may result from any defect in the
construction or conditions of the Premises and Tenant shall seek
recovery for such injury or damage solely from Tenant's insurance
and/or any other persons or entities which may be liable to
Tenant. Tenant waives any right to make repairs at the expense
of Landlord under any law, statute or ordinance now or hereafter
in effect unless Tenant has given Landlord written notice of the
need for such repairs, such repairs are the obligation of
Landlord under this Lease and Landlord has failed to make the
needed repairs within a reasonable period of time after the
receipt of such notice.
(d) Surrender. On the last day of the Term, or on any
sooner termination of this Lease, Tenant shall surrender the
Premises to Landlord in the same condition as when received,
broom clean, ordinary wear and tear alone excepted. Tenant shall
repair any damage to the Premises, the Building and the Project
19
occasioned by the removal of Tenant's alterations and
improvements (including, without limitation, its trade fixtures,
furnishings and equipment), which repair shall include, without
limitation, the patching and filling of holes and repair of
structural damage.
(e) Cleaning Deposit. Tenant shall deposit with Landlord
upon execution hereof the Cleaning Deposit set forth in paragraph
1 above, which Cleaning Deposit shall be nonrefundable and may be
used by Landlord for general cleaning and restoration of the
Premises after termination of this Lease. Such Cleaning Deposit
shall not affect the obligation of Tenant to surrender the
Premises to Landlord upon termination of this Lease in the
condition required by subparagraph 8(d) above and shall not be
deemed a part of, or in lieu of, the Security Deposit.
9. Utilities. Tenant shall pay for water, gas, heat,
light, power, telephone and other utilities and services supplied
to the Premises, together with any taxes thereon. If any such
services are not separately metered to Tenant, when the Tenant
Improvements have been completed, Tenant shall pay a reasonable
proportion to be determined by Landlord of all charges jointly
metered with other premises, and Landlord's determination
thereof, in good faith, shall be conclusive; provided, however,
if feasible Tenant may, after commencement of the Term and with
Landlord's approval, which approval shall not be unreasonably
withheld, install separate meters for the furnishing to Tenant of
any such jointly metered services in accordance with the
provisions of paragraph 10 below; Landlord reserves the right to
grant easements on the Premises, and to dedicate for public use
portions thereof, without Tenant's consent provided that no such
grant or dedication shall interfere with Tenant's use of the
Premises or otherwise cause Tenant to incur cost or expense.
From time to time upon Landlord's demand, Tenant shall execute,
acknowledge and deliver to Landlord, in accordance with
Landlord's instructions, any and all documents or instruments
necessary to effect Tenant's covenants herein.
10. Alterations and Additions. (a) Limitation. Tenant
shall not, without Landlord's prior written consent, make any
alterations, improvements, additions, or utility installations
(which term "utility installations" shall include ducting, power
panels, fluorescent fixtures, space heaters, conduits and wiring)
in, on or about the Premises, except for interior nonstructural
alterations to the Premises costing less than Ten Thousand
Dollars ($10,000) in the aggregate over any one (1) year period.
As a condition to giving such consent, Landlord may require that
Tenant agree to (i) remove any such alterations, improvements,
additions or utility installations at the expiration of the Term
and restore the Premises to their prior condition or, in the
alternative, (ii) require that such alterations, improvements,
additions or utility installations shall become the property of
20
Landlord and shall be left by Tenant upon the expiration of the
Term. As a further condition to giving such consent, Landlord
may require Tenant to provide Landlord, at Tenant's sole cost and
expense, lien and completion bonds in an amount equal to one
hundred five percent (105%) of the estimated cost of such
improvements to insure Landlord against any liability for
mechanics' and materialmen's liens and to insure completion of
the work.
(b) Liens. Tenant shall pay, when due, all claims for
labor or materials furnished or alleged to have been furnished to
or for Tenant at or for use on or in connection with the
Premises, which claims are or may be secured by any mechanics' or
materialmens' lien against the Premises or any interest therein.
Tenant shall give Landlord not less than ten (10) days notice
prior to the commencement of any work on the Premises, and
Landlord shall have the right to post notices of
non-responsibility in or on the Premises as provided by law.
(c) Removal. Unless Landlord requires their removal as set
forth in subparagraph (a) above or otherwise consents to such
removal, all alterations, improvements, additions and utility
installations which may be made on or to the Premises shall
become the property of Landlord and remain upon and be
surrendered with the Premises at the expiration of the Term.
Notwithstanding the provisions of this subparagraph (c), Tenant's
machinery and equipment, other than that which is affixed to the
Premises so that it cannot be removed without material damage to
the Premises, shall remain the property of Tenant and may be
removed by Tenant subject to the provisions of paragraph 8(d)
above.
11. Insurance. (a) General Liability. Tenant at its sole
cost and expense shall maintain commercial general liability
insurance ("Liability Insurance") on an "occurrence basis"
against claims for "personal injury," including without
limitation, bodily injury, death or property damage, occurring
upon, in or about the Premises, the Building and the Property,
such insurance to afford immediate minimum protection, at the
time of the inception of this Lease, and at all times during the
Term, to a limit of not less than Two Million Dollars
($2,000,000) with respect to personal injury or death to any one
or more persons or to damage to property. Such insurance shall
designate, and be for the benefit of, Tenant as the named insured
and Landlord as an additional insured. Such insurance shall also
include coverage against liability for bodily injury or property
damage arising out of the use, by or on behalf of Tenant, or any
other person or organization, of any owned, non-owned, leased or
hired automotive equipment in the conduct of any and all
operations called for under this Lease. The limits of said
insurance shall not, however, limit the liability of Tenant
hereunder.
21
(b) Extended Coverage. During the Term, Landlord shall
procure and maintain in full force and effect with respect to the
Building, a policy or policies of fire insurance with extended
coverage endorsement attached, including vandalism and malicious
mischief coverage, and any other endorsements (such as earthquake
coverage) which Landlord may elect to obtain or which may be
required by the holder of any fee or leasehold mortgage, which
insurance coverage may be in an amount up to one hundred percent
(100%) of the full insurance replacement value (replacement cost
new, including debris removal and demolition) thereof. Landlord
shall further obtain rental abatement insurance against abatement
or loss of Rent in case of fire or other casualty, in an amount
at least equal to the amount of the Rent payable by Tenant during
one (1) year next ensuing as reasonably determined by Landlord.
Tenant shall pay to Landlord, in accordance with the provisions
of subparagraph 5(e) above, an amount equal to Tenant's Share of
Insurance Expenses multiplied by the premium or premiums on
insurance maintained by Landlord pursuant to this subparagraph
("Insurance Expenses"), with appropriate proration at the
beginning and end of the Term.
(c) Policies. Insurance required hereunder shall be by
companies rated AX or better in "Best's Insurance Guide" licensed
to do business in the state in which the Premises are located and
acceptable to Landlord and the holder of any mortgage or deed of
trust on the Premises or any part or portion thereof. Tenant
shall deliver to Landlord copies of policies of such insurance or
certificates evidencing the existence and amounts of such
insurance with loss payable clauses satisfactory to Landlord. No
such policy shall be cancelable or subject to reduction of
coverage or other modification except after thirty (30) days
written notice to Landlord. Tenant shall, within ten (10) days
of the expiration of such policies, furnished Landlord with
renewals or "binders" thereof, or Landlord may order such
insurance and charge the cost thereof to Tenant, which amount
shall be payable by Tenant upon demand. Each such policy or
certificate therefor issued by the insurer shall to the extent
obtainable contain (i) a provision that no act or omission of
Tenant which would otherwise result in forfeiture or reduction of
the insurance therein provided shall affect or limit the
obligation of the insurance company to pay the amount of any loss
sustained and (ii) an agreement by the insurer that such policy
shall not be canceled without at least thirty (30) days prior
written notice by registered mail to Landlord. Tenant shall not
do or permit to be done anything which shall invalidate the
insurance policies referred to herein. If Tenant shall fail to
procure and maintain any insurance required to be maintained by
it by virtue of any provision of this paragraph, Landlord may,
but shall not be required to, procure and maintain the same, but
at the expense of Tenant.
22
(d) Waiver of Subrogation. Landlord and Tenant each hereby
waive any and all rights of recovery against the other, or
against the partners, officers, employees, agents and
representatives of the other, for loss of or damage to such
waiving party or its property or the property of the other under
its control to the extent that such loss or damage is insured
against under any insurance policy in force at the time of such
loss or damage. Tenant shall, upon obtaining the policies of
insurance required hereunder, give notice to the insurance
carrier or carriers that the foregoing mutual waiver of
subrogation is contained in this Lease.
(e) Tenant's Contents. Tenant shall assume the risk of
damage to any fixtures, goods, inventory, merchandise, equipment,
furniture and leasehold improvements which remain the property of
Tenant or as to which Tenant retains the right of removal from
the Premises, and Landlord shall not be liable for injury to
Tenant's business or any loss of income therefrom relative to
such damage. Tenant shall maintain the following insurance
coverage with respect to such items during the Term:
(i) Against fire, extended coverage, and vandalism and
malicious mischief perils in an amount not less than ninety
percent (90%) of the full replacement cost thereof;
(ii) Broad form boiler and machinery insurance on a
blanket repair and replacement basis with limits per
accident not less than the replacement cost of all leasehold
improvements and of all boilers, pressure vessels, air
conditioning equipment, miscellaneous electrical apparatus
and all other insurable objects owned or operated by the
Tenant or by others (other than Landlord) on behalf of
Tenant in the Premises, or relating to or serving the
Premises; and;
(iii) Business interruption insurance in such an
amount as will reimburse Tenant for direct or indirect loss
of earnings attributable to all such perils insured against
in subparagraphs 11(e)(i) and (ii) hereinabove.
(f) Workmen's Compensation. Tenant shall, at its own cost
and expense, keep and maintain in full force and effect during
the Term, a policy or policies of workmen's compensation
insurance covering all Tenant's employees working in the
Premises, and shall furnish Landlord with certificates thereof.
12. Indemnity; Exemption of Landlord from Liability. (a)
General. In addition to any other obligations of Tenant
hereunder, including the obligations of Tenant to provide
insurance, Tenant shall indemnify and hold Landlord harmless for,
from and against any and all claims arising from Tenant's use of
the Premises, or from the conduct of Tenant's business or from
23
any activity, work or things done, permitted or suffered by
Tenant in or about the Premises or elsewhere and shall further
indemnify and hold Landlord harmless for, from and against any
and all claims arising from any breach or default in the
performance of any obligation on Tenant's part to be performed
under the terms of this Lease, or arising from any negligence of
Tenant, or any of Tenant's agents, contractors, or employees, and
for, from and against all costs, attorneys' fees, expenses and
liabilities incurred in the defense of any such claim or any
action or proceeding brought thereon; and in case any action or
proceeding be brought against Landlord by reason of any such
claim, Tenant upon notice from Landlord shall defend the same at
Tenant's expense by counsel satisfactory to Landlord; provided,
however, the foregoing indemnity shall not apply to claims made
as a result of the sole negligence or intentional misconduct of
Landlord. Tenant, as a material part of the consideration to
Landlord for Landlord's execution of this Lease, also hereby
assumes all risk of damage to property or injury to persons in,
upon or about the Premises arising from any cause whatsoever;
hereby waives all claims in respect thereof against Landlord; and
agrees that all claims with respect thereto shall be made solely
against any insurance carried by Tenant and/or against any other
persons or entities which may be liable for such claims.
(b) Tenant's Business. In addition to any other obligation
of Tenant hereunder, including any obligation of Tenant to
provide insurance, Tenant hereby agrees that Landlord shall not
be liable for injury to Tenant's business or any loss of income
therefrom or for damage to the goods, wares, merchandise or other
property of Tenant, Tenant's employees, invitees, customers, or
any other person in or about the Premises, nor shall Landlord be
liable for injury to the person of Tenant or Tenant's employees,
agents or contractors, whether such damage or injury is caused by
or results from fire, steam, electricity, gas, water or rain, or
from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air conditioning
or lighting fixtures, or from any other cause whatsoever,
resulting from conditions arising upon the Premises, or from
other sources or places, and regardless of whether the cause of
such damage or injury or the means of repairing the same is
inaccessible to Tenant. Instead, Tenant shall seek recovery for
any such injury, loss or damage solely from any insurance carried
by Tenant and/or from any other persons or entities which may be
liable to Tenant for such injury, loss or damage.
13. Damage or Destruction; Obligation to Rebuild. (a)
Landlord's Obligation to Rebuild. If the Premises are damaged or
destroyed during the Term, Landlord shall, except as hereinafter
provided, diligently repair or rebuild them to substantially the
condition in which they existed immediately prior to such damage
or destruction; provided that any damage which is estimated in
good faith by Landlord to be under Two Thousand Five Hundred
24
Dollars ($2,500.00) shall be repaired by Tenant, and Landlord
shall reimburse Tenant upon demand for expenses incurred in such
repair work to the extent of any proceeds received by Landlord
from extended coverage insurance maintained pursuant to paragraph
11 above.
(b) Abatement of Rent. Rent due and payable hereunder
shall be abated, but only to the extent of any proceeds received
by Landlord from rental abatement insurance maintained pursuant
to paragraph 11 above, during the period commencing with such
damage or destruction and ending with a substantial completion by
Landlord of the work of repair or reconstruction which Landlord
is obligated or undertakes to do.
(c) Option to Terminate. If the Building or the Premises
are damaged or destroyed to the extent that Landlord determines
that the same cannot, with reasonable diligence, be fully
repaired or restored by Landlord within one hundred eighty (180)
days after the date of the damage or destruction, the sole right
of both Landlord and Tenant shall be the option to terminate this
Lease as hereinafter provided; provided, however, Tenant shall
not have the right to terminate this Lease unless Landlord
determines that the Premises cannot be so repaired or restored
within such one hundred eighty (180) day period of time.
Landlord shall determine whether the Building and, if applicable,
the Premises can be fully repaired or restored within the one
hundred eighty (180) day period, and Landlord's determination
shall be conclusive on Tenant. Landlord shall notify Tenant of
its determination, in writing, within thirty (30) days after the
date of the damage or destruction. If Landlord determines that
the Building, including the Premises, can be fully repaired or
restored within the one hundred eighty (180) day period, or if it
is determined that such repair or restoration cannot be made
within said period but no party having the right to do so elects
to terminate within thirty (30) days from the date of said
determination, this Lease shall remain in full force and effect
and Landlord shall diligently repair and restore the damage as
soon as reasonably possible.
(d) Uninsured Casualties. Notwithstanding anything
contained herein to the contrary, in the event of damage to or
destruction of all or any portion of the Building which is not
fully covered (except for deductible amounts) by the insurance
proceeds received by Landlord under the insurance policies
required to be maintained pursuant to paragraph 10 above, or in
the event that any portion of such insurance proceeds must be
paid over to or are retained by the holder of any mortgage or
deed of trust on the Property or Premises, Landlord may terminate
this Lease by written notice to Tenant, given within thirty (30)
days after the date of notice to Landlord that said damage or
destruction is not so covered or that the proceeds are not
available for repair of the damage or destruction. If Landlord
25
does not elect to terminate this Lease, the Lease shall remain in
full force and effect and the Building shall be repaired and
rebuilt in accordance with the provisions for repair set forth in
this paragraph 13.
(e) Tenant's Waiver. With respect to any destruction which
Landlord is obligated to repair or may elect to repair under the
terms of this paragraph, Tenant hereby waives all right to
terminate this Lease pursuant to rights otherwise presently or
hereafter accorded by the provisions of Arizona Revised Statutes
Section 33-343 or other applicable laws to tenants, except as
expressly otherwise provided herein.
14. Taxes. (a) Tenant's Share of Property Taxes. Tenant
shall pay to Landlord Tenant's Share of Property Taxes (as set
forth in paragraph 1 hereof) multiplied by the sum of the
following: all real estate taxes and all other taxes relating to
the Premises, the Building and the Property, all other taxes
which may be levied in lieu of real estate taxes, assessments,
and other governmental charges, or levies, general and special,
ordinary and extraordinary, unforeseen as well as foreseen, of
any kind and nature for public improvements, services or benefits
(collectively, "Property Taxes"), which are assessed, levied,
confirmed, imposed or become a lien upon the Premises, the
Building or the Property, or become payable during the Term;
provided, however that:
(i) any Property Taxes shall be prorated between
Landlord and Tenant so that Tenant shall pay only that
proportion thereof which the part of such period within the
Term bears to the entire period; and
(ii) any such sum payable by Tenant, which would not
otherwise be due until after the date of the termination of
this Lease, shall be paid by Tenant to Landlord upon such
termination.
Any sum payable by Tenant pursuant to this subparagraph for any
period during the Term shall be paid by Tenant in accordance with
the provisions of subparagraph 5(e) above.
(b) Tenant's Personal Property. Tenant shall pay prior to
delinquency all taxes assessed against and levied upon trade
fixtures, furnishings, equipment and all other personal property
of Tenant contained on the Premises or elsewhere. Tenant shall
cause such trade fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the
Premises, the Building and the Property.
(c) Rent Tax. Tenant shall pay to Landlord a sum equal to
the amount which Landlord is required to pay or collect by reason
of any privilege tax, sales tax, gross proceeds tax, rent tax, or
26
like tax levied, assessed or imposed by any governmental
authority or subdivision thereof, upon or measured by any Rent,
Reimbursable Expense, or other charges or sums required to be
paid or improvements to be made by Tenant under this Lease. Such
sum shall be paid simultaneously with the payment by Tenant to
Landlord of the Fixed Rent or other charge to which such tax is
attributable or, in the case of a tax not attributable to Fixed
Rent or other charges, at such time as Landlord shall demand
payment thereof. Nothing contained in this Lease shall require
Tenant to pay any franchise, corporate, estate, inheritance,
succession, or transfer tax of Landlord or any tax upon the net
income of Landlord.
15. Condemnation. (a) Rent Reduction or Lease Termination.
If the Premises or any portion thereof is taken under the power
of eminent domain, or sold under the threat of the exercise of
said power (all of which are herein called "condemnation"), this
Lease shall terminate as to the part so taken as of the date the
condemning authority takes title or possession, whichever first
occurs (the "Condemnation Date") and the Rent shall be reduced
(as of the Condemnation Date) as provided below. If (i) more
than ten percent (10%) of the Premises is taken by condemnation
and (ii) if the balance of the Premises remaining after such
condemnation is not reasonably suitable for the use to which the
Premises were being put immediately prior to the condemnation,
Landlord or Tenant may, at either's option, to be exercised in
writing only within ten (10) days after Landlord shall have given
Tenant written notice of such taking (or in the absence of such
notice, within ten (10) days of the Condemnation Date) terminate
this Lease as of the Condemnation Date. If neither Landlord nor
Tenant terminates this Lease in accordance with the foregoing, or
in the event that that portion of the Premises taken by
condemnation is not sufficiently large so as to give rise to the
right to terminate this Lease as above provided, this Lease shall
remain in full force and effect as to the portion of the Premises
remaining, except that the Fixed Rent shall be reduced (as of the
Condemnation Date) in the proportion that the area taken by
condemnation bears to the total area of the Premises.
(b) Award. Any award for the taking of all or any part of
the Premises under the power of eminent domain or any payment
made under threat of the exercise of such power shall be the
property of Landlord, whether such award shall be made as
compensation for diminution in value of the leasehold or for the
taking of the fee, or as severance damages; provided, however,
that Tenant shall be entitled to any award specifically
attributed by the condemning authority to loss or damage to
Tenant's trade fixtures and removable personal property or to
Tenant's relocation costs. In the event that this Lease is not
terminated by reason of such condemnation, Landlord shall, to the
extent of severance damages received by Landlord in connection
with such condemnation and not paid to or retained by the holder
27
of any mortgage or deed of trust on the Property or the Premises,
repair any damage to the Premises caused by such condemnation
except to the extent that Tenant has been reimbursed therefor by
the condemning authority (in which event such reimbursement to
Tenant shall also be applied to such repair). Tenant shall pay
any amount in excess of such severance damages required to
complete such repair; provided, however, if the severance damages
are not sufficient to pay all of the repair costs and if any
specific item of repair work shall be expected to have a useful
life which extends beyond the term of this Lease (including the
term of any options which Tenant may have the right to exercise),
then Tenant shall be obligated to pay with respect to the
identifiable cost of such item of repair only the portion of the
total cost of such item of repair which bears the same ratio to
the total cost of such item of repair as the remaining term of
this Lease (as determined on the Condemnation Date and including
the term of any options which the Tenant may have the right to
exercise) bears to the reasonably anticipated useful life of such
item of repair.
(c) Temporary Condemnation. If the temporary use of the
whole or any part of the Premises shall be taken by condemnation,
the Term shall not be reduced or affected in any way, and Tenant
in such event shall continue to pay in full the Rent and other
charges herein reserved, without reduction or abatement, and,
except to the extent that Tenant is prevented from so doing by
reason of any order of the condemning authority, shall continue
to perform and observe all of the other covenants, conditions and
agreements of this Lease to be performed or observed by Tenant as
though such taking had not occurred. In the event of any such
temporary condemnation Tenant shall, so long as it is otherwise
in compliance with the provisions of this Lease, be entitled to
receive for itself any and all awards or payments made for such
use of that portion of the Premises so taken; provided, however,
that Tenant shall repair any and all damages to the Premises
(whether or not covered by any award to Tenant) caused by such
temporary condemnation.
16. Assignment and Subletting. (a) Consent. Tenant shall
not voluntarily or by operation of law assign, transfer,
mortgage, sublet, or otherwise transfer or encumber all or any
part of Tenant's interest in this Lease or in the Premises
without Landlord's prior written consent, which consent Landlord
shall not unreasonably withhold. Landlord may, however, withhold
its consent to such assignment, transfer, mortgage, subletting or
other transfer or encumbrance pursuant to the preceding sentence
for substantive reasons including, without limitation, the
financial condition of the proposed assignee or transferee. Any
attempted assignment, transfer, mortgage, subletting or
encumbrance without such consent shall be void and shall
constitute a breach of this Lease. The consent of Landlord to
any one assignment, transfer, mortgage, subletting, or
28
encumbrance shall not be deemed to be a consent to any subsequent
assignment, transfer, mortgage, subletting, or encumbrance.
Subject to the provisions of subparagraph 16(f) below, the
transfer of more than fifty percent (50%) of the stock or other
ownership interest in Tenant, or the merger or consolidation of
Tenant with or into another firm or entity, shall be deemed to be
a transfer of Tenant's interest under this Lease and shall be
subject to the provisions of this subparagraph (a).
(b) Tenant's Continuing Liability. Regardless of
Landlord's consent, no subletting or assignment shall alter the
primary liability of Tenant to pay the Rent or release Tenant of
Tenant's obligation to perform all other obligations to be
performed by Tenant hereunder unless Landlord's written consent
shall so specifically provide, and Landlord under no
circumstances shall be obligated to release Tenant from any such
liability. The acceptance of rent by Landlord from any other
person shall not be deemed to be a waiver by Landlord of any
provision hereof.
(c) Information. In connection with any proposed
assignment or sublease, Tenant shall submit to Landlord in
writing:
(i) The name of the proposed assignee or sublessee;
(ii) Such information as to the financial
responsibility and standing of said assignee or sublessee as
Landlord may reasonably require; and
(iii) All of the terms and conditions upon which the
proposed assignment or subletting is to be made.
(d) Excess Sublease Rental. If for any sublease or
assignment, Tenant receives rent or other consideration, either
directly or indirectly (by performance of Tenant's obligations or
otherwise) and either initially or over the Term of the sublease
or assignment, in excess of the Fixed Rent, Adjustments and
additional rent called for hereunder, or in the case of the
sublease or assignment of a portion of the Premises, in excess of
such Fixed Rent, Adjustments and additional rent fairly allocable
to such portion, after appropriate adjustments to assure that all
other payments called for hereunder are appropriately taken into
account, Tenant shall pay to Landlord, at the same time as Fixed
Rent is due hereunder, one-half (1/2) of the excess of each such
payment of rent or other consideration received by Tenant
promptly after its receipt.
(e) Release. Whenever Landlord conveys its interest in the
Premises, Landlord shall be automatically released from the
further performance of covenants on the part of Landlord herein
contained, and from any and all further liability, obligations,
29
costs and expenses, demands, causes of action, claims or
judgments arising from or growing out of, or connected with this
Lease after the effective date of said release. The effective
date of said release shall be the date the assignee executes an
assumption of such an assignment whereby the assignee expressly
agrees to assume all of Landlord's obligations, duties,
responsibilities and liabilities with respect to this Lease. If
requested, Tenant shall execute a form of release and such other
documentation as may be required to effect the provisions of this
paragraph.
(f) Controlled Entity. Notwithstanding the provisions of
this paragraph 16, Tenant may assign or sublet the Premises, or
any portion thereof, without Landlord's consent, after written
notice to Landlord, to any entity which controls, is controlled
by, or is under common ownership with Tenant, or to any entity
resulting from the merger or consolidation with Tenant, or to any
person or entity which acquires all the assets of Tenant as a
going concern of the business that is being conducted on the
Premises, provided that said assignee assumes, in full, the
obligations of Tenant under this Lease. Any such assignment
shall not, in any way, affect or limit the liability of Tenant
under the terms of this Lease even if after such assignment or
subletting the terms of this Lease are materially changed or
altered without the consent of Tenant, the consent of whom shall
not be necessary for such change or alteration.
(g) Attorneys' Fees. In the event that Landlord shall
consent to a sublease or assignment under subparagraph (a) above,
Tenant shall pay Landlord's reasonable attorneys' fees incurred
in connection with the giving of such consent and review of the
information submitted by Tenant.
17. Defaults; Remedies. (a) Defaults. The occurrence of
any one or more of the following events shall constitute a
material default and material breach of this Lease by Tenant:
(i) The vacating or abandonment of the Premises by
Tenant;
(ii) The failure by Tenant to make any payment of Rent
or any other payment required to be made by Tenant
hereunder, as and when due, where such failure shall
continue for a period of three (3) working days after
written notice thereof from Landlord to Tenant;
(iii) The failure by Tenant to observe or perform any
of the covenants, conditions or provisions of this Lease to
be observed or performed by Tenant, other than those
described in subparagraph (ii) above, where such failure
shall continue for a period of ten (10) days after written
notice thereof from Landlord to Tenant; provided, however,
30
that if the nature of Tenant's default is such that it is
capable of being cured but more than ten (10) days are
reasonably required for its cure, then Tenant shall not be
deemed to be in default if Tenant commences such cure within
such ten (10) day period and thereafter diligently
prosecutes such cure to completion; or
(iv) The making by Tenant of any general assignment for
the benefit of creditors, the filing by or against Tenant of
a petition for order of relief in bankruptcy for the purpose
of bankruptcy liquidation or reorganization under any law
relating to bankruptcy whether now existing or hereafter
enacted (including, without limitation, any petition filed
by or against Tenant under any one or more of the following
Chapters of the Bankruptcy Reform Act of 1978, 11 U.S.C.
Sec. 101-1330 ("Bankruptcy Code") as amended: Chapter 7 or
Chapter 9 or Chapter 11 or Chapter 12 or Chapter 13) except
that, in the case of a filing against Tenant of such a
petition, such filing shall not be a default if the petition
is dismissed or discharged on or before one-hundred twenty
(120) days after the filing thereof; the appointment of a
trustee or receiver to take possession of all or
substantially all of Tenant's assets located at the Premises
or of Tenant's interest in this Lease, where possession is
not restored to Tenant within sixty (60) days; or the
attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises
or of Tenant's interest in this Lease, where such seizure is
not discharged within sixty (60) days. Unless Landlord's
express written consent thereto is first obtained, in no
event shall this Lease, or any interest herein or hereunder
or any estate created hereby, be assigned or assignable by
operation of law or by, in or under voluntary or involuntary
bankruptcy liquidation or reorganization proceedings or
otherwise and in no event shall this Lease or any rights or
privileges hereunder be an asset of Tenant under any
bankruptcy liquidation or reorganization proceedings. Any
purported assignment or transfer in violation of the
provisions of this subparagraph (iv) shall constitute a
material default and breach of this Lease by Tenant and in
connection with any such default and breach Landlord shall
have the rights and remedies described in subparagraph (b)
below, including, without limitation, the election to
terminate this Lease. As used in this subparagraph (iv) the
words "bankruptcy liquidation or reorganization proceedings"
shall include any proceedings under any law relating to
bankruptcy whether now existing or hereafter enacted
(including, without limitation, proceedings under any one or
more of the Bankruptcy Code as amended: Chapter 7 or
Chapter 9 or Chapter 11 or Chapter 12 or Chapter 13).
31
(b) Remedies.
(i) In the event of any default and breach by Tenant
of any of its obligations under this Lease and
notwithstanding the vacation or abandonment of the Premises
by Tenant, this Lease shall continue in effect so long as
Landlord does not expressly terminate Tenant's right to
possession in any of the manners specified in this paragraph
and Landlord may, at Landlord's option and without limiting
Landlord in the exercise of any other rights or remedies
which it may have by reason of such default and breach,
exercise all of its rights and remedies hereunder,
including, without limitation:
(A) The right to declare the Term ended and to reenter
the Premises and take possession thereof and remove all
persons therefrom, and Tenant shall have no further claim in
or to the Premises or under this Lease; or
(B) The right without declaring this Lease ended to
reenter the Premises, take possession thereof, remove all
persons therefrom and occupy or lease the whole or any part
thereof for and on account of Tenant and upon such terms and
conditions and for such rent as Landlord may deem proper and
to collect such rent or any other rent that may hereafter
become payable and apply the same as provided in
subparagraph (ii) below; or
(C) The right, even though Landlord may have relet the
Premises or brought an action to collect Rent and other
charges without terminating this Lease, to thereafter elect
to terminate this Lease and all of the rights of Tenant in
or to the Premises; or
(D) The right, without terminating this Lease, to
bring an action or actions to collect Rent and other charges
hereunder which are from time to time past due and unpaid or
to enforce any other provisions of this Lease imposing
obligations on Tenant, it being understood that the bringing
of any such action or actions shall not terminate this Lease
unless written notice of termination is given.
(ii) Should Landlord relet the Premises under the
provisions of subparagraph (b)(i)(B) above, Landlord may
execute any lease either in its own name or in the name of
Tenant, but Tenant hereunder shall have no right or
authority whatever to collect any rent from the new tenant.
The proceeds of any such reletting shall first be applied to
the payment of the costs and expenses of reletting the
Premises, including without limitation, reasonable brokerage
commissions and alterations and repairs which Landlord, in
its sole discretion, deems reasonably necessary and
32
advisable and to the payment of reasonable attorneys' fees
incurred by Landlord in connection with the Tenant's
default, the retaking of the Premises and such reletting
and, second, to the payment of any indebtedness, other than
Rent, due hereunder, including, without limitation, storage
charges owing from Tenant to Landlord. When such costs and
expenses of reletting have been paid, and if there is no
such indebtedness or such indebtedness has been paid, Tenant
shall be entitled to a credit for the net amount of rental
received from such reletting each month during the unexpired
balance of the Term, and Tenant shall pay Landlord monthly
on the first day of each month as specified herein such sums
as may be required to make up the rentals provided for in
this Lease. Nothing contained herein shall be construed as
obligating Landlord to relet the whole or any part of the
Premises.
(iii) Should Landlord elect to terminate this Lease
under the provisions of subparagraphs (b)(i)(A) or (C)
above, Landlord shall be entitled to recover immediately
from Tenant (in addition to any other amounts recoverable by
Landlord as provided by law), the following amounts:
(A) The worth at the time of award of the unpaid rent
which had been earned at the time of termination;
(B) The worth at the time of award of the amount by
which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of
such rental loss that Tenant proves could have been
reasonably avoided;
(C) The worth at the time of award of the amount by
which the unpaid rent for the balance of the Term after the
time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided; and
(D) Any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure
to perform its obligations under the Lease or which in the
ordinary course of things would be likely to result
therefrom.
For purposes of computing "the worth at the time of the
award" of the amount specified in subparagraph (b)(iii)(C)
above, such amount shall be discounted at the discount rate
of the Federal Reserve Bank of San Francisco at the time of
award. For purposes of computing "the worth at the time of
the award" under subparagraphs (b)(iii)(A) and (b)(iii)(B)
above, an interest rate of ten percent (10%) per annum shall
be utilized.
33
(iv) If Landlord shall elect to reenter the Premises
as provided above, Landlord shall not be liable for damages
by reason of any reentry. Tenant hereby waives all claims
and demands against Landlord for damages or loss arising out
of or in connection with any reentering and taking
possession of the Premises and waives all claims for damages
or loss arising out of or in connection with any destruction
of or damage to the Premises, or for any loss of property
belonging to Tenant or to any other person, firm or
corporation which may be in or upon the Premises at the time
of such reentry.
(v) Landlord shall not be deemed to have terminated
this Lease, Tenant's right to possession of the Premises or
the liability of Tenant to pay Rent thereafter to accrue or
its liability for damages under any of the provisions hereof
by any reentry hereunder or by any action in unlawful
detainer or otherwise to obtain possession of the Premises,
unless Landlord shall notify Tenant in writing that Landlord
has so elected to terminate this Lease. Tenant agrees that
the service by Landlord of any notice pursuant to the
unlawful detainer statutes or comparable statutes of the
state or locality in which the Premises are located and the
surrender of possession pursuant to such notice shall not
(unless Landlord elects to the contrary at the time of or at
any time subsequent to the service of such notice and such
election shall be evidenced by a written notice to Tenant)
be deemed to be a termination of this Lease or of Tenant's
obligations hereunder. No reentry or reletting under this
paragraph shall be deemed to constitute a surrender or
termination of this Lease, or of any of the rights, options,
elections, powers and remedies reserved by Landlord
hereunder, or a release of Tenant from any of its
obligations hereunder, unless Landlord shall specifically
notify Tenant, in writing, to that effect. No such
reletting shall preclude Landlord from thereafter at any
time terminating this Lease as herein provided.
(vi) All fixtures, furnishings, goods, equipment,
chattels or other personal property of Tenant remaining on
the Premises at the time that Landlord takes possession
thereof may at Landlord's election be stored at Tenant's
expense or sold or otherwise disposed of by Landlord in any
manner permitted by applicable law.
(vii) All rights, options, elections, powers and
remedies of Landlord under the provisions of this Lease are
cumulative of each other and of every other right, option,
election, power or remedy which Landlord may otherwise have
at law or in equity and all or any of which Landlord is
hereby authorized to exercise. The exercise of one or more
rights, options, elections, powers or remedies shall not
34
prejudice or impair the concurrent or subsequent exercise of
other rights or remedies Landlord may have upon a breach and
default under this Lease and shall not be deemed to be a
waiver of Landlord's rights or remedies thereupon or to be a
release of Tenant from Tenant's obligations thereon unless
such waiver or release is expressed in writing and signed by
Landlord.
(viii) In the event of the exercise by Landlord of any
one or more of its rights and remedies hereunder, Tenant
hereby expressly waives any and all rights of redemption, if
any, granted by or under any present or future laws.
(c) Late Charges. Tenant hereby acknowledges that late
payment by Tenant to Landlord of Rent and other sums due
hereunder will cause Landlord to incur costs not contemplated by
this Lease, the exact amount of which will be extremely difficult
to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be
imposed on Landlord by the terms of any mortgage or trust deed
covering the Premises. Accordingly, if any installment of rent
or any other sum due from Tenant shall not be received by
Landlord or Landlord's designee within ten (10) days after such
amount shall be due, Tenant shall pay to Landlord a late charge
equal to five percent (5%) of such overdue amount. The parties
hereby agree that such late charge represents a fair and
reasonable estimate of the costs Landlord will incur by reason of
late payment by Tenant. Acceptance of such late charge by
Landlord shall in no event constitute a waiver of Tenant's
default with respect to such overdue amount, nor prevent Landlord
from exercising any of the other rights and remedies granted
hereunder.
(d) Payment or Performance by Landlord. Landlord may, at
Landlord's option and without any obligation to do so, pay any
sum or do any act which Tenant has failed to pay or do at the
time Tenant was obligated to make such payment or perform such
act and Landlord shall be entitled to recover from Tenant, upon
demand, all sums expended by Landlord in making such payment or
performing such act, together with interest thereon at the rate
provided in subparagraph 18(d) from the date of expenditure until
repaid by Tenant. Such sum and interest shall be deemed
additional rent under this Lease.
18. Miscellaneous. (a) Estoppel Certificate.
(i) Tenant shall at any time upon not less than ten
(10) days prior written notice from Landlord execute,
acknowledge, and deliver to Landlord a statement in writing
certifying that this Lease is unmodified and in full force
and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified,
35
is in full force and effect) and the date to which the Rent
and other charges are paid in advance, if any, and
acknowledging that there are not, to Tenant's knowledge, any
uncured defaults on the part of Landlord hereunder, or
specifying such defaults if any are claimed. Any such
statement may be conclusively relied upon by any person to
whom it shall be delivered by Landlord including any
prospective purchaser or encumbrancer of the Premises, the
Building, the Property, or any part thereof.
(ii) Tenant's failure to deliver such statement within
such time shall be conclusive upon Tenant that this Lease is
in full force and effect, without modification except as may
be represented by Landlord; that there are no uncured
defaults in Landlord's performance; and that not more than
one month's Rent has been paid in advance.
(iii) If Landlord desires to finance or refinance the
Premises, the Building, the Property, or any part thereof,
Tenant hereby agrees to deliver to any lender designated by
Landlord such financial statements of Tenant as may be
reasonably required by such lender. Such statements shall
include the past three years financial statements of Tenant.
All such financial statements shall be received by Landlord
in confidence and shall be used only for the purposes herein
set forth.
(b) Landlord's Liability. The term "Landlord" as used
herein shall mean only the owner or owners at the time in
question of the fee title (or the lessee's interest in any ground
or master lease) to the Premises and in the event of any transfer
of such title, Landlord herein named (and in case of any
subsequent transfers, the then grantor) shall be relieved from
and after the date of such transfer of all liability as respects
Landlord's obligations thereafter to be performed, provided that
any funds in the hands of Landlord or the then grantor at the
time of such transfer in which Tenant has an interest shall be
delivered to the grantee. The obligations contained in this
Lease to be performed by Landlord shall, subject as aforesaid, be
binding on Landlord's successors and assigns only during their
respective periods of ownership.
(c) Construction. Paragraph captions are solely for the
convenience of the parties and shall not be deemed to or be used
to define, construe, or limit the terms hereof. As used in this
Lease, the masculine, feminine and neuter genders shall be deemed
to include the others, and the singular number shall be deemed to
include the plural, whenever the context so requires. The
invalidity of any provisions of this Lease as determined by a
court of competent jurisdiction shall in no way affect the
validity of any other provision hereof. This Lease shall be
governed by the laws of the state in which the Premises are
located.
36
(d) Interest on Past-Due Obligations. Except as expressly
herein provided, any amount due to Landlord not paid when due
shall bear interest at the lesser of (i) fifteen percent (15%)
per annum or (ii) the maximum rate permitted by law, from the
date due until the date such amount is paid. Payment of such
interest shall be made when such amount is paid. Payment of such
interest shall not excuse or cure any default by Tenant under
this Lease.
(e) Time of Essence. Time is of the essence of this Lease
and all of the covenants and obligations hereof.
(f) Counterparts. This Lease may be executed in two or
more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same Lease.
(g) Incorporation of Prior Agreements; Amendments. This
Lease contains all agreements of the parties with respect to any
matter mentioned herein. No prior agreement or understanding
pertaining to any such matter shall be effective. This Lease may
be modified in writing only, which writing shall be signed by the
parties in interest at the time of the modification.
(h) Notices. Any notices, approvals, agreements,
certificates, other documents or communications between the
parties hereto required or permitted under this Lease shall be in
writing. Any such communications shall be deemed to have been
duly given or served if delivered in hand or forty-eight (48)
hours after deposit in the United States mail, certified or
registered, postage and fees prepaid, return receipt requested,
addressed to the parties at the addresses set forth in paragraph
1 of this Lease. The address to which any such communications
shall be sent may be changed by either party hereto from time to
time by a notice mailed as aforesaid.
(i) Waivers. No waiver by Landlord of any provision hereof
shall be deemed a waiver of any other provision hereof or of any
subsequent breach by Tenant of the same or any other provision.
Landlord's consent to or approval of any act shall not be deemed
to render unnecessary the obtaining of Landlord's consent to or
approval of any subsequent act by Tenant. The acceptance of Rent
hereunder by Landlord shall not be a waiver of any preceding
breach by Tenant of any provision hereof, other than the failure
of Tenant to pay the particular Rent so accepted, regardless of
Landlord's knowledge of such preceding breach at the time of
acceptance of such Rent.
(j) Recording. Tenant shall not record this Lease without
Landlord's prior written consent and such recordation shall, at
the option of Landlord, constitute a noncurable default of Tenant
hereunder. Landlord and Tenant shall, upon the request of either
party, execute, acknowledge and deliver to the other a "short
form" memorandum of this Lease for recording purposes.
37
(k) Holding Over. If Tenant remains in possession of the
Premises or any part thereof after the expiration of the Term or
sooner termination of this Lease with the express written consent
of Landlord and without executing a new lease, such occupancy
shall be construed as a tenancy from month-to-month at a rental
equal to one hundred fifty percent (150%) of the last monthly
Rent plus all other charges payable hereunder, and upon all the
terms hereof insofar as the same are applicable to a
month-to-month tenancy. Nothing contained in this subparagraph
shall be construed to grant Tenant the right to holdover without
the express written consent of Landlord.
(l) Covenants and Conditions. Each provision of this Lease
performable by Tenant shall be deemed both a covenant and a
condition.
(m) Binding Effect. Subject to any provisions hereof
restricting assignment or subletting by Tenant and subject to the
provision of subparagraph (b) above, this Lease shall bind the
parties and their personal representatives, successors and
assigns.
(n) Subordination.
(i) This Lease, at Landlord's option, shall be
subordinate to any ground lease, mortgage, deed of trust, or
any other hypothecation for security now or hereafter placed
upon the Premises, the Building or the Property, or any part
or parts thereof, and to any and all advances made on the
security thereof and to all renewals, modifications,
consolidations, replacements and extensions thereof;
provided, however, Tenant's obligation to subordinate this
Lease to future ground leases, mortgages, deeds of trust or
other hypothecations shall be conditioned upon the creditor
under each such security transaction granting to Tenant a
non-disturbance right which provides that the rights of
Tenant under this Lease shall not be disturbed by such
creditor so long as Tenant is not in default under this
Lease. If any present or future mortgagee, trustee or
ground lessor shall at any time elect to have this Lease
prior to the lien of its mortgage, deed of trust or ground
lease, and written notice of such election shall be given to
Tenant, this Lease shall be deemed prior to such mortgage,
deed of trust, or ground lease, whether this Lease is dated
prior or subsequent to the date of said mortgage, deed of
trust or ground lease or the date of recording thereof.
(ii) Tenant agrees to execute any documents required to
effectuate such subordination or to make this Lease prior to
the lien of any mortgage, deed of trust or ground lease, as
the case may be, and failing to do so within ten (10) days
after written demand, does hereby make, constitute and
38
irrevocably appoint Landlord as Tenant's attorney in fact
and in Tenant's name, place and stead, to do so.
(o) Attorneys' Fee. If either party brings an action to
enforce the terms hereof or declare rights under this Lease, the
prevailing party in the final adjudication of any such action, on
trial or appeal, shall be entitled to its costs and expenses of
suit, including, without limitation, its actual attorneys' fees,
to be paid by the losing party as fixed by the court. In any
situation in which a dispute is settled other than by action or
proceeding, Tenant shall pay all Landlord's costs and attorneys'
fees relating thereto.
(p) Landlord's Access. Landlord and Landlord's agents
shall have the right to enter the Premises at reasonable times
for the purpose of inspecting the same, showing the same to
prospective purchasers or lenders, and making such alterations,
repairs, improvements or additions to the Premises or the
improvements as Landlord may deem necessary or desirable.
Landlord may at any time place on or about the Premises any
ordinary "For Sale" signs and Landlord may at any time during the
last one hundred twenty (120) days of the Term place on or about
the Premises any ordinary "For Lease" signs, all without rebate
of rent or liability to Tenant.
(q) Auctions. Tenant shall not conduct any auction on the
Premises without Landlord's prior written consent.
(r) Merger. The voluntary or other surrender of this Lease
by Tenant, or a mutual cancellation thereof, shall not work a
merger, and shall, at the option of Landlord, terminate all or
any existing subtenancies or may, at the option of Landlord,
operate as an assignment to Landlord of any or all of such
subtenancies. During any period while Tenant is in default under
this Lease, Landlord, in addition to any other rights and
remedies it may have under this Lease, shall have the right to
collect directly from any subtenant all rentals owing to Tenant
under any subtenancy and to apply such rentals to any amounts
owing to Landlord by Tenant and the payment of such amounts by
the subtenant directly to Landlord shall not be a default under
the subtenancy.
(s) Joint and Several Liability. Each party signing this
Lease as Tenant shall be jointly and severally liable for the
failure on the part of Tenant to pay any sums due under the terms
of this Lease or for the breach by Tenant or any of the covenants
or obligations of Tenant contained herein.
(t) Individual Liability. The obligations of Landlord
under this Lease do not constitute personal obligations of the
individual partners, directors, officers, or shareholders of
Landlord, and Tenant shall look solely to the real estate that is
39
the subject of this Lease and to no other assets of Landlord for
satisfaction of any liability in respect of this Lease and will
not seek recourse against the individual partners, directors,
officers or shareholders of Landlord or any of their personal
assets for such satisfaction.
(u) Attornment. Tenant shall, in the event any proceedings
are brought for the foreclosure of, or in the event of exercise
of the power of sale under any mortgage or deed of trust made by
the Landlord, its successors or assigns, encumbering the
Premises, or any part thereof, or in the event of termination of
the ground lease, if any, and if so requested, attorn to the
purchaser upon such foreclosure or sale or upon any grant of a
deed in lieu of foreclosure and shall recognize such purchaser as
the Landlord under this Lease.
(v) Lenders Right to Cure. Tenant agrees to give the
holder of any mortgage or trust deed encumbering the Premises, by
registered mail, a copy of any notice of default or
nonperformance served upon Landlord, provided that prior to such
notice, Tenant has been notified in writing (by way of Assignment
of Rents and Leases or otherwise) of the address of such
mortgagee or trust deed holder. Tenant further agrees that
Landlord shall not be in default under this Lease unless (i)
Tenant has given a written notice to Landlord stating that
Landlord has failed to perform Landlord's obligations under this
Lease and (ii) specifying with particularity the obligations
which Landlord has failed to perform, and Landlord thereafter
fails to perform any of its obligations so specified within a
reasonable time after Landlord's receipt of such notice. If
Landlord shall fail to cure such nonperformance in a timely
manner, then such mortgagee or trust deed holder shall have an
additional thirty (30) days within which to cure the default, or,
if such default cannot be cured within that time, then such
additional time as may be necessary if within such thirty (30)
days such mortgagee or trust deed holder has commenced and is
diligently pursuing the remedies necessary to cure such default
(including but not limited to commencement of foreclosure
proceedings, if necessary to effect such cure), in which event
this Lease shall not be terminated by Tenant while such remedies
are being so diligently pursued.
(w) Revisions to Lease. Tenant hereby agrees to make any
reasonable revisions to this Lease which may be required in good
faith by a bona fide construction, interim or permanent lender in
connection with the financing of the Premises so long as such
revisions do not adversely affect rights granted to and
obligations imposed upon Tenant under this Lease or the economic
benefits of Tenant hereunder.
40
(x) Administrative Charge. In addition to Fixed Rent,
Adjustments and other charges hereunder, Tenant shall pay to
Landlord an overall administrative charge of five percent (5%) of
any charge which is Tenant's responsibility to pay, which
Landlord pays on behalf of Tenant and for which Landlord
subsequently bills Tenant.
19. Toxic Materials. (a) Definitions.
(i) As used in this Lease, the term "Hazardous
Material[s]" means any oil, flammable items, explosives,
radioactive materials, hazardous or toxic substances,
material or waste or related materials including, without
limitation, any substances that pose a hazard to the
Premises or to persons on or about the Premises and any
substances defined as or included in the definition of
"hazardous substance," "hazardous waste," "hazardous
material," "toxic substance," "extremely hazardous waste,"
"restricted hazardous waste" or words of similar import, now
or subsequently regulated in any way under applicable
federal, state or local laws or regulations, including
without limitation, petroleum-based products, paints,
solvents, lead, cyanide, DDT, printing inks, acids,
pesticides, ammonia compounds and other chemical products,
asbestos, PCBs, urea formaldehyde foam insulation,
transformers or other equipment containing dielectric fluid,
levels of polychlorinated biphenyls, or radon gas, and
similar compounds, and including any different products and
materials which are subsequently found to have adverse
effects on the environment or the health and safety of
persons.
(ii) As used herein, the term "Environmental Law[s]"
means any one or all of the following: the Comprehensive
Environmental Response, Compensation and Liability Act, as
amended by the Superfund Amendments and Reauthorization Act
of 1986 (42 U.S.C. SEC. 9601 et seq.); the Resource
Conservation and Recovery Act as amended (42 U.S.C. Sec.
6901 et seq.); the Safe Drinking Water Act as amended (42
U.S.C. Sec. 300f et seq.); the Clean Water Act as amended
(33 U.S.C. Sec. 1251 et seq.); the Clean Air Act as amended
(42 U.S.C. Sec. 7401 et seq.); the Toxic Substances Control
Act as amended (15 U.S.C. Sec. 136 et seq.); the Solid Waste
Disposal Act as amended (42 U.S.C. Sec. 3251 et seq.); the
Hazardous Materials Transportation Act (49 U.S.C. Sec. 1801
et seq.); the regulations promulgated under any of the
foregoing; and all other laws, regulations, ordinances,
standards, policies, and guidelines now in effect or
hereinafter enacted by any governmental entity (whether
local, state or federal) having jurisdiction or regulatory
authority over the Premises or the Project or over
activities conducted therein and which deal with the
44
regulation or protection of human health, industrial hygiene
or the environment, including the soil, subsurface soil,
ambient air, groundwater, surface water, and land use.
(iii) As used herein, the term "Environmental
Activity[ies]" means any generation, manufacture,
production, pumping, bringing upon, use, storage, treatment,
release, discharge, escaping, emitting, leaching, disposal
or transportation of Hazardous Materials.
(b) Prohibition on Hazardous Materials. Except as
specifically provided in subparagraph (c) below, Tenant shall not
cause or permit any Environmental Activities in, on or about the
Premises by Tenant or Tenant's agents, employees, contractors,
assignees, sublessees or invitees (hereinafter cumulatively
referred to as "Tenant's Agents") without the prior written
consent of Landlord. Landlord shall be entitled to take into
account such factors or facts as Landlord may reasonably
determine to be relevant in determining whether to consent to
Tenant's proposed Environmental Activity and Landlord may attach
conditions to any such consent if such conditions are reasonably
necessary to protect Landlord's interests in avoiding potential
liability upon Landlord or damage to Landlord's property arising
from any Environmental Activity by Tenant or Tenant's Agents. In
no event shall Landlord be required to consent to the
installation or use of any storage tanks on the Property.
(c) Exception to Prohibition. Notwithstanding the
prohibition set forth in subparagraph (b) above, but subject to
Tenant's covenant to comply with all Environmental Laws and with
the other provisions of this paragraph 19, Tenant may bring upon,
keep and use in the Premises (but not outside the Premises) (i)
general office supplies typically used in an office or warehouse
in the ordinary course of business, such as copier toner, liquid
paper, glue, ink and janitorial supplies, so long as such
supplies are used in the manner for which they were designed and
in such amounts as may be normal for the business operations
conducted by Tenant in the Premises; (ii) those Hazardous
Materials, if any, described on Exhibit D attached hereto and by
this reference made a part hereof so long as Tenant has delivered
to Landlord a description of the handling, storage, use and
disposal procedures to be utilized by Tenant with respect
thereto; and (iii) those Hazardous Materials, if any, as to which
(A) Tenant hereafter requests approval from Landlord for Tenant
to bring upon, keep upon and use in the Premises such items; (B)
Landlord grants such requested approval, which approval shall not
be unreasonably withheld; and (C) Tenant delivers to Landlord a
description of the handling, storage, use and disposal procedures
to be utilized therewith.
42
(d) Compliance with Environmental Laws. Tenant shall keep
and maintain the Premises in compliance with, and shall not cause
or permit the Premises to be in violation of, any Environmental
Laws. All Tenant's activities at the Premises shall be in
accordance with all Environmental Laws. Additionally, Tenant
shall obtain any and all necessary permits for Tenant's
activities at the Premises. Tenant's obligations and liabilities
under this paragraph 19 shall continue so long as Landlord bears
any liability or responsibility under the Environmental Laws for
any action that occurs on the Premises during the term of this
Lease.
(e) Environmental Notices. Tenant shall immediately notify
Landlord of, and upon Landlord's request shall provide Landlord
with copies of, the following:
(i) Any correspondence, communication or notice, oral
or written, to or from any governmental entity regarding the
application of Environmental Laws to the Premises or
Tenant's operations on the Premises including, without
limitation, notices of violation, notices to comply and
citations;
(ii) Any reports filed pursuant to any Environmental
Law or self-reporting requirements;
(iii) Any permits and permit applications; and
(iv) Any change in Tenant's operations on the Premises
that will change or has the potential to change Tenant's or
Landlord's obligations or liabilities under Environmental
Laws.
Tenant shall also notify the Landlord of the release of any
Hazardous Material in, on, under, about or above the Premises,
the Building, the Property or the Project.
(f) Environmental Indemnity. Tenant shall protect,
indemnify, defend (with counsel satisfactory to Landlord) and
hold harmless Landlord and its directors, officers, partners,
employees, agents, lenders, and ground lessees, if any, and their
respective successors and assigns for, from and against any and
all losses, damages, claims, costs, expenses, penalties, fines
and liabilities of any kind (including, without limitation, the
cost of any investigation, remediation and cleanup, and
attorneys' fees) which, in Landlord's reasonable opinion, are
attributable to (i) any Environmental Activity on the Property or
Project or in the Building or Premises undertaken or committed by
Tenant or Tenant's Agents or caused by the negligence of such
persons during the Term of this Lease, (ii) any remedial or
clean-up work undertaken by or for Tenant in connection with
Tenant's Environmental Activities or Tenant's compliance with
43
Environmental Laws, or (iii) the breach by Tenant of any of its
obligations and covenants set forth in this paragraph 19.
Landlord shall have the right but not the obligation to join and
participate in, and control, if it so elects, any legal
proceedings initiated in connection with the Environmental
Activities of Tenant or Tenant's Agents. Landlord may also
negotiate, defend, approve and appeal any action taken or issued
by any applicable governmental authority with regard to
contamination of the Premises or any portion of the Property or
Project by a Hazardous Material. Any costs or expenses incurred
by Landlord for which Tenant is responsible under this paragraph
19 or for which Tenant has indemnified Landlord shall be
reimbursed by Tenant on demand, as additional rent and with
interest thereon, as provided by subparagraph 17(d) of this
Lease. This indemnity shall survive the termination of this
Lease.
(g) Remedial Work. If (i) any Environmental Activity
undertaken by Tenant or Tenant's Agents results in contamination
of the Premises, Building, Property or Project or any portion
thereof, or the soil or groundwater thereunder, or (ii) any
investigation, site monitoring, containment, cleanup, removal,
restoration or other remedial work of any kind or nature
("Remedial Work") is necessary or appropriate due to or in
connection with Tenant's use or occupancy of the Premises, then,
subject to Landlord's prior written approval and any conditions
imposed by Landlord, Tenant shall promptly perform all Remedial
Work, at Tenant's sole expense and without abatement of rent, as
is necessary to return the affected portion of the Premises,
Building, Property and/or Project and the soil and groundwater to
the condition existing prior to the introduction of the
contaminating Hazardous Material and to otherwise comply with all
applicable Environmental Laws. Landlord's approval of such
Remedial Work shall not be unreasonably withheld so long as such
actions will not cause a material adverse effect on the Premises,
Building, Property or Project after expiration of the Lease Term
or any material adverse effect on the Premises, Building,
Property or Project. Landlord shall also have the right to
approve any and all contractors hired by Tenant to perform such
Remedial Work. All such Remedial Work shall be performed in
compliance with all applicable laws, ordinances and regulations
and in such a manner as to minimize any interference with the use
and enjoyment of the Premises, Building, Property and Project.
All costs and expenses of such Remedial Work shall be paid by
Tenant including, without limitation, the charges of such
contractor(s), and the reasonable fees and costs of the attorneys
and consultants for Landlord incurred in connection with
monitoring or review of such Remedial Work.
(h) Landlord's Option. Landlord may elect, at Landlord's
sole discretion, to perform any Remedial Work. Landlord and
Landlord's agents shall have the right to enter the Premises at
44
all reasonable times to inspect, monitor and/or perform Remedial
Work. All expenses incurred by Landlord in connection with
performing Remedial Work are payable by Tenant, upon Landlord's
demand, with interest thereon, as provided by subparagraph 17(d).
(i) Injunctive Relief. Tenant's failure to abide by the
terms of this paragraph 19 shall be restrainable by injunction.
(j) Self-Help. Landlord shall have the right of
"self-help" or similar remedy in order to minimize any damages,
expenses, penalties and related fees or costs arising from or
related to a violation of any Environmental Law with respect to
the Premises or the Project.
(k) Other Tenants. Other tenants of the Project may be
using, handling or storing certain Hazardous Materials in
connection with such tenants' use of their premises. The failure
of another tenant to comply with applicable laws and procedures
could result in a release of Hazardous Materials and
contamination to improvements within the Project or the soil and
groundwater thereunder. In the event of such a release, the
tenant responsible for the release, and not Landlord, shall be
responsible for any claim, damage or expense incurred by Tenant
by reason of such contamination and Tenant shall exhaust all its
remedies against such other tenant without any right to seek any
recovery against Landlord.
(l) Environmental Inspection. Tenant shall, if reasonably
required by Landlord on account of the activities or suspected
activities of Tenant or Tenant's Agents, retain a recognized
environmental consultant (the "Consultant") acceptable to
Landlord to conduct an investigation of the Premises and of other
portions of the Project deemed appropriate by Landlord
("Environmental Assessment") (i) for Hazardous Materials
contamination in, about or beneath the Premises, the Building or
the Project as a result of such activities and (ii) to assess all
Environmental Activities of Tenant and Tenant's Agents on the
Premises or the Project for compliance with all applicable laws,
ordinances and regulations and for the use of procedures intended
to reasonably reduce the risk of a release of Hazardous
Materials. The Environmental Assessment shall be performed in a
manner reasonably calculated to discover the presence of
Hazardous Materials contamination and shall be of a scope and
intensity reflective of the general standards of professional
environmental consultants who regularly provide environmental
assessment services in connection with the transfer or leasing of
real property. Additionally, the Environmental Assessment shall
take into full consideration the past and present uses of the
Property and Project and other factors unique to the Property and
Project. If Landlord obtains the Environmental Assessment
because of the activities of Tenant or Tenant's Agents, Tenant
shall pay Landlord on demand the cost of the Environmental
45
Assessment, with interest thereon, as additional rent and in
accordance with subparagraph 17(d). If Landlord so requires,
Tenant shall comply, at its sole cost and expense, with all
recommendations contained in the Environmental Assessment,
including any recommendation with respect to the precautions
which should be taken with respect to Environmental Activities on
the Premises or the Project or any recommendations for additional
testing and studies to detect the presence of Hazardous
Materials. Tenant covenants to reasonably cooperate with the
Consultant and to allow entry and reasonable access to all
portions of the Premises for the purpose of Consultant's
investigation.
(m) Surrender of Premises - Environmental Considerations.
Prior to or after the expiration or termination of the Lease
Term, Landlord may have an Environmental Assessment of the
Property performed in accordance with subparagraph (l) above.
Tenant shall perform, at its sole cost and expense, any Remedial
Work recommended by the Consultant which is necessary to remove,
mitigate or remediate any Hazardous Materials contamination of
the Premises, Building, Property or Project in connection with
any Environmental Activities of Tenant or Tenant's Agents. Prior
to surrendering possession of the Premises, Tenant shall also,
unless otherwise directed by Landlord, remove any personal
property, equipment, fixture (except for any fixture installed by
Landlord) and/or storage device or vessel on or about the
Premises, Building, Property and/or Project which is contaminated
by or contains Hazardous Materials as a result of the activities
of Tenant or Tenant's Agents and repair all damage to the
Premises, the Building and the Project caused by such removal.
20. Additional Security. (a) Letter of Credit. In
addition to the Security Deposit required by subparagraph 6(a) of
this Lease, Tenant shall deliver, or cause to be delivered, to
Landlord, simultaneously with the execution and delivery of this
Lease (the "LC Date") and in accordance with the provisions of
this paragraph 20, a Letter of Credit satisfying the requirements
set forth in Exhibit E attached hereto and by this reference made
a part hereof (the "Letter of Credit"). Tenant shall, subject to
renewal, substitution or release as specifically provided in
Exhibit E, cause the Letter of Credit to remain in full force and
effect from the date of execution of this Lease until thirty (30)
days after the expiration of the Term of this Lease. If Tenant
fails to have on deposit with Landlord at any time required
hereunder a Letter of Credit fully satisfying the requirements of
Exhibit E, such failure shall constitute a default under this
Lease. Landlord shall have all remedies under subparagraph 17(b)
of the Lease in the event of such a default. If the financial
institution issuing the Letter of Credit for any reason indicates
that the Letter of Credit will be terminated or expire prior to
the date specified in Exhibit E, even if such a termination or
expiration would be wrongful, Landlord may, in addition to any
46
other rights and remedies it may have under this Lease or the
Letter of Credit, draw upon the Letter of Credit, treat the
entire amount of the proceeds of such drawing as an increase in
the amount of the Security Deposit under this Lease, and retain
and/or apply such proceeds in the same manner as the initial
Security Deposit may be retained and/or applied.
(b) Use of Proceeds. If Tenant fails to pay Rent or any
other charges payable by Tenant hereunder, or otherwise defaults
with respect to any provision of this Lease (including but not
limited to Tenant's obligation to have the Letter of Credit in
effect as provided in subparagraph 20(a), Landlord may, in
addition to any other rights and remedies it may have, at its
option and from time to time draw upon the Letter of Credit and
apply amounts received under the Letter of Credit (i) to remedy
Tenant's defaults in the payment of Rent or any other sums
payable by Tenant pursuant to the terms of this Lease; (ii) to
repair any damage to the Premises, (iii) to clean and otherwise
maintain the Premises, or (iv) to compensate Landlord for any
other loss or damage which Landlord may suffer thereby.
(c) Additional Rights and Remedies. In the event of any
termination of this Lease pursuant to this paragraph 20 or
pursuant to any other default by Tenant, (i) Landlord shall have
no further obligation to complete the Premises or to lease the
Premises to Tenant; (ii) Landlord shall be entitled to
reimbursement from Tenant of, and Tenant shall promptly pay to
Landlord, all expenses of Landlord incurred in connection with
the preparation and negotiation of this Lease and construction of
the Tenant Improvements through the date of such termination; and
(iii) Landlord may deduct the reimbursement amount determined
under clause (ii) above from any or all of the proceeds from a
drawing under the Letter of Credit, the Security Deposit and/or
any prepaid rent deposited with Landlord prior to refunding the
Letter of Credit, the Security Deposit or prepaid rent to Tenant,
but none of the Letter of Credit, the prepaid rent or Security
Deposit shall in any manner limit Tenant's liability for the full
amount of the reimbursement to which Landlord is entitled under
clause (ii) above. In addition, if this Lease is not terminated
as provided in this paragraph 20, Landlord may, at its option,
extend the Scheduled Commencement Date by a period of time equal
to the period between the LC Date and any subsequent date that
the Letter of Credit (in compliance with the foregoing
requirements) is furnished to and accepted by Landlord.
Upon reimbursement for the cost of the Tenant Improvements
as provided in clause (ii) above and any transaction privilege
tax applicable thereto, the Fixed Rent owing under the Lease
shall, for purposes of determining additional sums to be received
by Landlord after termination of this Lease as a result of
Tenant's default, be deemed reduced to that amount which would
reasonably have been charged to Tenant as Fixed Rent under this
47
Lease if the Premises had originally been leased to Tenant
without any obligation on the part of Landlord to make the Tenant
Improvements.
(d) Remedies Not Exclusive. The rights and remedies of
Landlord set forth in this paragraph 20 are in addition to any
other rights and remedies of Landlord set forth in this Lease and
Landlord may pursue all or any of such rights and remedies in any
order Landlord may elect. In particular, and not by way of
limitation, Landlord may, at its option, exercise the rights and
remedies set forth in paragraph 6 of this Lease at any time and
from time to time, in whole or in part, even though additional
security for the performance of Tenant's obligations has been
furnished to Landlord pursuant to this paragraph 20. Moreover,
Landlord shall not be required to exercise its rights under this
paragraph 20 even if there has been a default under the Lease and
Landlord may elect to exercise any other rights and remedies it
may have as a result of the occurrence of such default.
(e) Return of Letter of Credit and Stock. If not
previously returned to Tenant under the provisions hereof or
applied to Tenant's obligations under this Lease, the Letter of
Credit if still held by Landlord and/or any proceeds from the
drawing(s) upon the Letter of Credit shall be returned to Tenant
at the same time as the Security Deposit would be returned.
IN WITNESS WHEREOF, the undersigned have executed this Lease
as of the date and year first above written.
HEWSON/BRECKNER AIRPARK, L.L.C., a California
corporation
BY: HEWSON PROPERTIES, INC., an Arizona
corporation, its Manager
BY: /s/ Michael J. Corbett
Its: Executive Vice President
MAXAM GOLD CORPORATION, a Utah corporation
BY: Alan E. Hubbard
Its: President
48
TENANT ACKNOWLEDGMENTS:
CORPORATE
STATE OF ARIZONA )
) ss.
County of Maricopa )
On this the 23rd day of September, 1997, before me, the
undersigned Notary Public, personally appeared Alan E. Hubbard,
who acknowledged himself to be the President of MAXAM GOLD
CORPORATION, a Utah corporation, and that he, as such officer,
being authorized so to do, executed the foregoing instrument for
the purposes therein contained, by signing the name of the
corporation, by himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official
seal.
/s/ Catherine Wochner
Notary Public
My Commission Expires:
December 15, 1998
LANDLORD ACKNOWLEDGMENTS:
STATE OF ARIZONA )
) ss.
County of Maricopa )
On this the 26th day of September, 1997, before me, the
undersigned Notary Public, personally appeared Michael J.
Corbett, who acknowledged himself to be the Executive Vice
President of HEWSON PROPERTIES, INC., a California corporation
and Manager of HEWSON/BRECKNER AIRPARK, L.L.C., an Arizona
limited liability company, and that he, as such officer, being
authorized so to do, executed the foregoing instrument for the
purposes therein contained, by signing the name of the
corporation as manager of Hewson/Breckner Airpark, L.L.C., by
himself as such officer.
IN WITNESS WHEREOF, I hereunto set my hand and official
seal.
J. Marie Burns
Notary Public
My Commission Expires:
May 13, 2000
49
EXHIBIT A
Diagram, not included for EDGAR filing.
EXHIBIT B
Diagram, not included for EDGAR filing.
EXHIBIT C
CERTAIN TENANT IMPROVEMENTS
* Space programming, planning, contract drawings and complete
architectural and engineering services.
* Building permits and associated fees.
* Standard office partitions, doors, door frames and
associated hardware.
* Drop ceiling grid with acoustical tiles.
* Recessed fluorescent light fixtures.
* Carpet and other typical finished floor coverings.
* Heating, ventilating and air conditioning equipment and
associated work ("HVAC").
* Roof insulation.
* Standard toilet rooms and plumbing fixtures.
* Evap-cooled warehouse area of approximately 3,132 s.f.
* Fluorescent strip light fixtures.
* Demising wall.
* Nine (9) covered parking spaces in the rear of the building.
* Tenant's signage.
EXHIBIT D
HAZARDOUS MATERIALS
NONE
50
EXHIBIT E
15500 GREENWAY - HAYDEN LOOP, SCOTTSDALE, ARIZONA
LETTER OF CREDIT REQUIREMENTS
Except as hereinafter provided, Tenant shall keep in full
force and effect, from the date of execution of this Lease until
thirty (30) days after the expiration of this Lease, an
unconditional and irrevocable letter of credit in favor of
Landlord which satisfies all of the following requirements (the
"Letter of Credit"):
(a) The Letter of Credit shall have a term expiring not
less than one (1) month after the scheduled expiration of the
term of this Lease; provided, however, the Letter of Credit may
have a term of not less than one (1) year if the Letter of Credit
provides that it will automatically renew on an annual basis
throughout the above specified period unless written notice of a
non-renewal is furnished to Landlord on or before sixty (60) days
prior to the expiration of the then current term of the Letter of
Credit. If such a notice of non-renewal is given to Landlord,
Landlord may, at any time during the period commencing thirty
(30) days prior to the expiration of the Letter of Credit until
expiration of the Letter of Credit, draw upon the Letter of
Credit and treat the proceeds as an increase in the amount of the
Security Deposit hereunder unless Tenant, on or before such
drawing by Landlord, delivers to Landlord a substitute Letter of
Credit complying with all of the requirements of this Exhibit E.
(b) The Letter of Credit shall be in an amount not less
than $220,000.00; provided, however, if no default by Tenant has
occurred prior to the commencement of the fifth (5th) year of the
Term of this Lease, the amount of the Letter of Credit may be
reduced at any time thereafter, but only prior to the occurrence
of a default, to the amount of $150,000.
(c) The Letter of Credit shall be transferable by Landlord
and by any subsequent Landlord under this Lease in connection
with any assignment of this Lease to a new owner of the Premises.
(d) The Letter of Credit shall be issued by Bank One,
Arizona, NA, or other financial institution incorporated or
chartered under the laws of the United States or any state
thereof and approved by Landlord, which approval shall not be
unreasonably withheld or delayed so long as Tenant furnishes to
Landlord such information concerning the creditworthiness and
financial stability of such institution as Landlord shall
reasonably request, and shall otherwise be in form and substance
satisfactory to Landlord.
51
(e) The Letter of Credit may be drawn upon from time to
time by Landlord upon presentation by the Landlord of the Letter
of Credit and a statement signed by Landlord certifying that
Landlord is entitled to draw upon the Letter of Credit in the
amount requested.
Tenant may, at any time during the term of this Lease that Tenant
is not in default under this Lease, furnish to Landlord annual
financial statements for a period of three (3) consecutive years,
which financial statements shall be audited and certified by a
certified public accounting firm and for each year shall include
but not be limited to a balance sheet, annual income statement
and statement of change in financial position, together with a
request that Landlord release the Letter of Credit. If such
financial statements reflect three (3) consecutive years of
profitable operations by the Tenant and at least two (2) of such
years are within the Term of this Lease, then the Landlord will
undertake a review to determine if Landlord will release the
Letter of Credit. If Tenant's financial condition, history of
operations, forecast of anticipated operations, and record of
performance under this Lease, as evidenced by such annual
financial statements and other information as may be available to
or required by Landlord, have reached a level where Landlord
would, in accordance with practices then being utilized by
Landlord, not require any security other than the Security
Deposit provided in subparagraph 1(l) of this Lease for the
performance of a tenant's obligation under a lease for space
similar in size, location and rental obligation to this Lease,
Landlord will release the Letter of Credit to the extent not
drawn upon previously.