Exhibit 10.1

 

 

 

OFFICE LEASE AGREEMENT

 

UNION HILLS OFFICE PLAZA

 

AX UNION HILLS L.P.,

 

a Delaware limited partnership,

 

as Landlord

 

and

 

GREENWOOD HALL, INC.,

 

a Nevada corporation,

 

as Tenant

 

Dated: March 30, 2015

 

 

 

 

 

  

TABLE OF CONTENTS

 

ARTICLE 1 BASIC LEASE PROVISIONS AND CERTAIN DEFINED TERMS 2 ARTICLE 2 DEMISE
AND POSSESSION 4 ARTICLE 3 LEASE TERM; TENANT IMPROVEMENTS 5 ARTICLE 4 RENT 7
ARTICLE 5 ADDITIONAL RENT 8 ARTICLE 6 TAXES 10 ARTICLE 7 COMMON AREAS II ARTICLE
8 SERVICES TO BE FURNISHED BY LANDLORD 11 ARTICLE 9 EXCLUSIVE USE 12 ARTICLE 10
USE OF PREMISES; QUIET CONDUCT 13 ARTICLE 11 HAZARDOUS MATERIALS 13 ARTICLE 12
PARKING 16 ARTICLE 13 UTILITIES 16 ARTICLE 14 ALTERATIONS; MECHANIC’S LIENS 16
ARTICLE 15 INSURANCE 18 ARTICLE 16 WAIVERS OF SUBROGATION 20 ARTICLE 17
INDEMNIFICATION AND WAIVER OF CLAIMS 20 ARTICLE 18 MAINTENANCE AND REPAIRS 21
ARTICLE 19 SIGNS 22 ARTICLE 20 ENTRY BY LANDLORD 23 ARTICLE 21 ABANDONMENT;
SURRENDER 23 ARTICLE 22 DAMAGE 23 ARTICLE 23 ASSIGNMENT, SUBLETTING AND
TRANSFERS OF OWNERSHIP 24 ARTICLE 24 EVENTS OF DEFAULT 26 ARTICLE 25 REMEDIES OF
LANDLORD 27 ARTICLE 26 SURRENDER OF PREMISES NOT MERGER 29 ARTICLE 27 ATTORNEYS’
FEES; COLLECTION CHARGES 29 ARTICLE 28 CONDEMNATION 30 ARTICLE 29 RULES AND
REGULATIONS 30 ARTICLE 30 ESTOPPEL CERTIFICATE 30 ARTICLE 31 SALE BY LANDLORD 31
ARTICLE 32 NOTICES 31 ARTICLE 33 WAIVER 31 ARTICLE 34 HOLDOVER 32 ARTICLE 35
DEFAULT OF LANDLORD; LIMITATION OF LIABILITY 32 ARTICLE 36 SUBORDINATION 33
ARTICLE 37 BROKERS 33 ARTICLE 38 QUIET POSSESSION 33 ARTICLE 39 MISCELLANEOUS
PROVISIONS 33 ARTICLE 40 36

 

EXHIBITS:

A FLOOR PLAN OF PREMISES B STANDARD WORKLETTER C COMMENCEMENT DATE CERTIFICATE D
PARKING RULES AND REGULATIONS E RULES AND REGULATIONS F PROHIBITED USES F-1 UOP
WAIVER OF EXCLUSIVE G JANITORIAL SPECIFICATIONS H SIGNAGE CRITERIA I SAMPLE SNDA

 

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OFFICE LEASE AGREEMENT

 

THIS OFFICE LEASE AGREEMENT is made and entered into as of the Effective Date by
and between AX UNION HILLS L.P., a Delaware limited partnership, as Landlord,
and GREENWOOD HALL, INC., a Nevada corporation, as Tenant.

 

ARTICLE 1

BASIC LEASE PROVISIONS AND CERTAIN DEFINED TERMS

 

Effective Date:   March 30, 2015 (to be completed by Landlord upon Landlord’s
execution of this Lease)       Landlord:   AX UNION HILLS L.P., a Delaware
limited partnership       Landlord’s Notice Address:  

AX UNION HILLS L.P.

16220 North Scottsdale Road, Suite 280

Scottsdale, Arizona 85254

Attn: Philip Martens

 

With a copy to:

 

Artis REIT

300 - 360 Main Street

Winnipeg Manitoba R3C 3Z3

Attn: Jim Green

 

Reinhart Boerner Van Deuren s.c.

16220 North Scottsdale Road, Suite 290

Scottsdale, Arizona 85254

Attn: William (Will) Invie Shroyer

      Tenant:   GREENWOOD HALL, INC., a Nevada corporation       Tenant’s Notice
Address:  

1936 East Deere Avenue, Suite 120

Santa Ana, California 92705

Attn: John Hall

      Building:  

The building commonly known as the Union Hills Office Plaza, at the following
street address:

2550 W. Union Hills Drive

Phoenix, Arizona 85027

      Premises:   Approximately 10,199 rentable square feet located on the
second (2nd) floor of the Building and currently known as Suite 201, as outlined
on the floor plan attached as Exhibit “A” hereto       Rentable Area of
Building:   143,715 rentable square feet       Tenant’s Pro Rata Share:  
7.0967%

 

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Permitted Use:   General office for only use as an educational advising call
center and training facility, and data center for Tenant operations; provided:
(1) in no event shall there be any student instruction provided at the Building;
and (2) in no event shall Tenant violate any Prohibited Use(s) as provided for
herein, and the Permitted Use explicitly excludes any Prohibited Uses; provided,
however, the University of Phoenix has waived certain of its Prohibited Uses, as
described on its consent agreement attached hereto as Exhibit F-1       Lease
Term:   Five (5) years and 6 months, plus any remaining days in the last full
calendar month if the Commencement Date occurs on a date other than the first
day of a calendar month       Estimated Commencement Date:   April 10, 2015    
  Base Monthly Rent:    

 

Period
(months)  Annual Base Rent per
Rentable Square Foot*   Base
Monthly Rent            1-12  $10.75   $9,136.60              13-24  $22.00  
$18,698.17              25-36  $22.50   $19,123.13              37-48  $23.00  
$19,548.08              49-60  $23.50   $19,973.04              61-66  $24.00  
$20,398.00 

 

*Tenant shall also be obligated to pay all taxes imposed upon the Base Monthly
Rent in accordance with the terms of this Lease in addition to the amounts set
forth in this chart.

 

Security Deposit:   Not Applicable       Base Year:   January 1, 2015 to
December 31, 2015.       Initially Required Insurance:   See Section 15.      
Tenant Improvement Allowance:   See Exhibit B.

 

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Building Hours:   7:00 a.m. to 6:00 p.m., Monday through Friday and 8:00 a.m. to
1:00 p.m. on Saturday, excluding recognized federal, state or local holidays    
  Parking:   See Article 12.       Landlord’s Broker:   Jones Lang LaSalle (John
Bonnell)       Tenant’s Broker:   Colliers International (Keith Lambeth)      
Mortgagee:   Not Applicable       Managing Agent:  

Ryan Companies US, Inc.

3900 E. Camelback Road, Suite 130

Phoenix, AZ 85018

Attn: Susan Omosky, CPM/LEED Green Associate

 

ARTICLE 2

DEMISE AND POSSESSION

 

2.1           Landlord leases to Tenant and Tenant leases from Landlord the
Premises for the Lease Term. The Premises shall have an upper boundary of the
underside of the floor slab immediately above the Premises and a lower boundary
of the unfinished upper surface of the floor slab upon which the Premises are
situated. The Premises are part of the Building. The Building is part of a
development that may contain other buildings and structural improvements (the
“Project”).

 

2.2           Landlord and Tenant agree that for all purposes under this Lease
including, without limitation, calculating Rent, Additional Rent and Tenant’s
Pro Rata Share: (i) the Premises will be deemed to contain a rentable area
comprising the number of square feet designated in Article 1, (ii) the Building
will be deemed to contain a rentable area comprising the number of square feet
designated in Article 1, and (iii) the square footage referenced in (i) and (ii)
immediately above are stipulated amounts based on Landlord’s method of
determining such square footage together with a load factor and other
considerations and may not reflect the actual amount of floor space available
for the use of Tenant and will not be adjusted to reflect changes during the
Lease Term in rentable or usable areas as typically calculated using so-called
BOMA standards.

 

ARTICLE 3

LEASE TERM; TENANT IMPROVEMENTS

 

3.1          Except as otherwise provided in this Lease, the Lease Term shall be
for the period set forth in Article 1, subject to earlier commencement as
provided in Section 3.2 below or later commencement as provided in Section 3.3
below.

 

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3.2          Landlord leases to Tenant and Tenant leases from Landlord the
Premises for the Lease Term. The Lease Term shall commence on the “Commencement
Date,” which is defined as the earliest of (a) April 10, 2015 and Landlord shall
use commercially reasonable efforts to promptly achieve Substantially Completion
(as defined in the workletter attached hereto as Exhibit “B” (the “Workletter”))
of the Tenant Improvements (as defined in the Workletter) and tender possession
of the Premises to Tenant, without any liability for loss or damage for any
delay in achieving Substantial Completion by the Commencement Date; or ( b) )
the date on which Tenant takes possession of the Premises (other than early
access to the Premises as described below). Notwithstanding the foregoing,
provided such access does not interfere with construction of the Tenant
Improvements, Tenant may have access to the Premises fifteen (15) days prior to
the Commencement Date for the purpose of performing improvements or installing
furniture, equipment or other personal property. Such early access shall be
subject to the terms and conditions of this Lease, except that Tenant shall not
be obligated to pay Rent (as defined below) to Landlord for such period of time.
By executing this Lease, the parties agree to the terms set forth in the
Workletter.

 

3.3          If Landlord is unable to tender possession of the Premises to
Tenant on or before the Estimated Commencement Date set forth in Article 1 for
any reason whatsoever including, without limitation, Tenant Delays, Landlord
shall not be liable to Tenant for any damages or losses resulting therefrom and
this Lease shall continue in full force and effect. On or about the Commencement
Date, Landlord shall prepare and deliver to Tenant a commencement date notice in
the form of Exhibit “C” attached hereto (the “Commencement Date Notice”), which
Tenant agrees to execute and return to Landlord or return with corrections (as
applicable) within ten (10) days of receipt thereof. Tenant’s failure to return
it to Landlord as provided above shall be deemed to be Tenant’s acceptance of
all the terms in the Commencement Date Notice and shall not affect the validity
of the Commencement Date or this Lease. By taking possession of the Premises,
Tenant acknowledges that the Premises are in good order and satisfactory
condition, that there are no representations or warranties by Landlord regarding
the condition of the Premises or the Building, and that Tenant has examined and
accepts the Premises in its present “as is” condition and configuration, subject
only to any remaining obligations contained in the Workletter.

 

3.5          Provided that: (1) no Event of Default exists under this Lease; and
(2) the original Tenant that executed this Lease and in no event a Transferee
(as hereinafter defined and except as permitted by Section 3.5.3) continues to
be in possession of the entire Premises, both requirements being met as of the
date of exercise of the Renewal Option or as of the Renewal Term Commencement
Date (both as defined below), then Tenant shall have one (1) option to renew
this Lease (“Renewal Option”) for the entire Premises for a period of five (5)
years (“Renewal Term”), commencing on the first day following the expiration of
the initial Lease Term (“Renewal Term Commencement Date”). The Renewal Option is
exercisable only by Tenant giving written notice thereof (“Renewal Notice”) to
Landlord of its exercise of the Renewal Option at least nine (9) months, but not
more than fifteen (15) months, prior to the expiration of the initial Lease Term
or the Renewal Term, as applicable.

 

3.5.1       The Base Monthly Rent payable hereunder for the Premises during the
Renewal Term shall be adjusted to the Fair Market Rental Rate (as defined in
Section 3.5.4) as of the applicable Renewal Term Commencement Date provided,
however, that Base Monthly Rent for the applicable Renewal Term shall not be
less than the Base Monthly Rent payable by Tenant at the expiration of the
initial Lease Term.

 

(1)            Landlord shall give Tenant written notice of Landlord’s
determination of the Fair Market Rental Rate for the Renewal Term (“Landlord’s
Statement”) within thirty (30) days after Landlord’s receipt of the Renewal
Notice. Within fifteen (15) days after Tenant’s receipt of Landlord’s Statement
(“Tenants Review Period”), Tenant shall give Landlord written notice of its
election to either (a) accept the Fair Market Rental Rate set forth in
Landlord’s Statement or (b) reject Landlord’s Statement and request that the
Fair Market Rental Rate be determined by arbitration pursuant to Section
3.5.1(2); provided, however, that prior to submitting the matter to arbitration
as herein provided, the parties shall first attempt in good faith to resolve
their differences in the determination of the Fair Market Rental Rate for a
period ten (10) business days following Landlord’s receipt of Tenant’s notice of
its rejection of Landlord’s Statement. If Tenant fails to give Landlord notice
of its acceptance or rejection of Landlord’s Statement by the expiration of
Tenant’s Review Period, then such failure shall be deemed to be Tenant’s
rejection of the Fair Market Rental Rate set forth in Landlord’s Statement.

 

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(2)            If Tenant gives (or is deemed to have given) Landlord notice that
it elects arbitration pursuant to Section 3.5.1(1), and the parties have failed
to resolve their differences within the required ten (10) business days
thereafter, then, in order to determine the Fair Market Rental Rate for the
Renewal Term, Landlord and Tenant, within fifteen (15) days after Landlord’s
receipt of Tenant’s written notice of election to arbitrate, shall each
simultaneously submit to the other in writing its good faith estimate of the
Fair Market Rental Rate (“Good Faith Estimates”). If the higher of the Good
Faith Estimates is not more than one hundred and five percent (105%) of the
lower of the Good Faith Estimates, the Fair Market Rental Rate in question shall
be deemed to be the average of the submitted rates. If otherwise, then the rate
shall be set by arbitration to be held in Phoenix, Arizona, in accordance with
the Real Estate Valuation Arbitration Rules of the American Arbitration
Association, except that the arbitration shall be conducted by a single
arbitrator selected as follows. Within five (5) business days after the
simultaneous submittal by Landlord and Tenant of their respective Good Faith
Estimates, each shall designate a recognized and independent real estate expert
or broker who shall have at least ten years recent experience in the valuation
of rental properties similar to and in the vicinity of the Building and Project,
which expert or broker shall not be an affiliate of Tenant or Landlord. The two
individuals so designated shall, within ten (10) business days after the last of
them is designated, appoint a third independent expert or broker possessing the
aforesaid qualifications to be the single arbitrator. The third arbitrator so
selected shall, alone, pick one of the two Good Faith Estimates, being the Good
Faith Estimate which is closer to the Fair Market Rental Rate as determined by
the arbitrator using the definition set forth in Section 3.5.4, and such
arbitrator shall be limited to the determination of the Fair Market Rental Rate
and shall have no right to modify the terms or conditions of this Lease or to
select any rate other than one of the two Good Faith Estimates submitted. The
parties agree to be bound by the decision of the arbitrator, which shall be
final and non-appealable, and shall share equally the costs of arbitration, and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.

 

3.5.2       During the Renewal Term, Tenant shall pay Additional Rent in
accordance with the provisions of Article 5.

 

3.5.3       The Renewal Options are personal to Greenwood Hall, Inc. and may not
be assigned, transferred or conveyed to any party, except in connection with a
permitted assignment of the Lease pursuant to Article 23; provided, however,
that if Tenant executes a Transfer that is approved by Landlord and Tenant
remains liable for all obligations hereunder throughout the Renewal Terms, then
Tenant (but not such assignee or subtenant) may exercise the Renewal Options.

 

3.5.4       Fair Market Rental Rate. Subject to Section 3.5.1, the phrase “Fair
Market Rental Rate” shall mean the fair market value annual rental rate that a
comparable tenant would pay and a comparable landlord would accept in an arm’s
length transaction, for delivery on or about the applicable delivery or
effective date, for comparable non-renewal, non-expansion space, for a
comparable use in the Project and in comparable buildings (“Comparable
Transactions”), provided that any Comparable Transactions in the Project during
the preceding six (6) month period will be given the most weight in determining
the Fair Market Rental Rate when comparing the rental rate accepted by owners of
the comparable buildings. In any determination of Comparable Transactions
appropriate consideration shall be given to the annual rental rates per rentable
square foot, the standard of measurement by which the rentable square footage is
measured, the ratio of rentable square feet to usable square feet, the type of
escalation clause (e.g., whether increases in additional rent are determined on
a net or gross basis, and if gross, whether such increases are determined
according to a base year or a base dollar amount expense stop), abatement
provisions reflecting free rent and/or no rent subsequent to the commencement
date as to the space in question, brokerage commissions, length of the lease
term, size and location of premises being leased, building standard work letter
and/or tenant improvement allowances, if any, and other generally applicable
conditions of tenancy for such Comparable Transactions.

  

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ARTICLE 4

RENT

 

4.1           On the first day of every calendar month of the Lease Term
commencing on the Commencement Date, Tenant will pay Rent, without deduction,
offset, prior notice or demand, at the place designated by Landlord.
Notwithstanding the foregoing, an amount equal to the Base Monthly Rent plus
taxes for the first (1st) full calendar month of the Lease Term is due and
payable within five (5) Business Days after the Effective Date of this Lease.
Rent for the month in which the Commencement Date occurs, the Lease Term
expires, or the Rent adjusts, if other than the first or last day of the month,
shall be prorated on a per diem basis.

 

4.2           All payments of Rent shall be in lawful money of the United States
of America by good and sufficient check or by other means (such as automatic
debit or electronic transfer) acceptable to Landlord.

 

4.3           The obligation of Tenant to pay Rent shall be independent of every
other obligation contained in this Lease, and Tenant shall not be entitled to an
offset against Rent for any amounts due or to become due from Landlord.

 

4.4           Notwithstanding any practice of Landlord from time to time of
issuing to Tenant courtesy statements of setting forth Rent due, Tenant’s
obligation to pay Rent by its due date shall not be conditioned on Tenant’s
receipt of any such statement.

 

4.5           Landlord’s acceptance of less than the correct amount of Rent
shall be considered a payment on account of the earliest Rent due.

 

4.6           No payment by Tenant or receipt by Landlord of a lesser amount
than the Rent then due shall be deemed to be other than on account of the Rent,
nor shall any endorsement or statement on any check or any letter accompanying
any check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord’s right to recover
the balance of such Rent or pursue any other remedy provided in this Lease.

 

4.7           Tenant shall also be obligated to pay monthly with the payment of
Base Monthly Rent, any and all transaction privilege and/or rental taxes imposed
upon the Base Monthly Rent and such taxes shall be deemed to be part of Base
Monthly Rent for all purposes under this Lease.

 

ARTICLE 5

ADDITIONAL RENT

 

5.1           All charges payable by Tenant under this Lease other than Base
Monthly Rent are called and shall be deemed “Additional Rent.” Unless this Lease
provides otherwise, Additional Rent then due is to be paid together with the
next installment of Base Monthly Rent. The term “Rent” as used in this Lease
shall mean Base Monthly Rent and Additional Rent.

 

5.2           Commencing on January 1, 2016, Tenant shall pay, as Additional
Rent, Tenant’s Pro Rata Share of the amount, if any, by which Expenses (as
defined below) for each calendar year during the Lease Term after the Base Year
exceed Expenses during the Base Year (the “Expense Excess”). If Expenses in any
calendar year decrease below the amount of Expenses during the Base Year,
Tenant’s Pro Rata Share of Expenses for that calendar year shall be zero dollars
($0). Landlord agrees that for purposes of calculating Expense Excess for
calendar year 2017 and beyond, Controllable Expenses may not increase by more
than five percent (5%) per year on a cumulative basis. “Controllable Expenses”
shall mean all Expenses other than Taxes, insurance premiums, all utilities, and
nonrecurring (basically not annually) improvements (including, without
limitation, LEED Expenses, as hereinafter defined), nonrecurring repairs and
nonrecurring maintenance expenses, whether such expense is amortized or paid in
such year. LEED Expenses are defined herein as any and all expenses paid by
Landlord to repair, replace and/or re-commission the Building and/or the
Premises for re-certification or certification pursuant to the U.S. EPA’s Energy
Star Rating or the U.S. Green Building Council’s Leadership and Energy and
Environmental Design rating system or to support achieving energy and carbon
reduction targets, and any premium paid by Landlord for insurance endorsements
related to such repair, replacement and/or re-commission and/or certification.

 

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5.3           Landlord shall provide Tenant with a good faith estimate of the
Expense Excess for each calendar year during the Lease Term. On or before the
first day of each calendar month during the Lease Term, Tenant shall pay to
Landlord a monthly installment equal to one-twelfth (1/12) of Tenant’s Pro Rata
Share of Landlord’s estimate of the Expense Excess. If Landlord determines at
any time that its good faith estimate of the Expense Excess was incorrect by a
material amount, Landlord may provide Tenant with a revised estimate. After its
receipt of the revised estimate, Tenant’s monthly payments shall be based upon
the revised estimate. If Landlord does not provide Tenant with an estimate of
the Expense Excess before the beginning of any calendar year, Tenant shall
continue to pay monthly installments based on the previous year’s estimate(s)
until Landlord provides Tenant with the new estimate. Upon delivery of the new
estimate, an adjustment shall be made for any month for which Tenant paid
monthly installments based on the previous year’s estimate(s). Any overpayment
shall be credited against the next due future installment(s) of Additional Rent.
Tenant shall pay Landlord the amount of any underpayment within thirty (30) days
after receipt of the new estimate. The terms of the preceding sentence shall
survive the expiration of the Lease Term or earlier termination of the Lease.

 

5.4           No later than April 30 of each calendar year, Landlord shall
furnish Tenant with a statement of the actual Expenses and Expense Excess for
the prior calendar year. If the estimated Expense Excess for the prior calendar
year is more than the actual Expense Excess for the prior calendar year,
Landlord shall apply any overpayment by Tenant against Additional Rent due or
next becoming due, provided if the Lease Term expires or is otherwise terminated
before the determination of the overpayment, Landlord shall refund any
overpayment to Tenant after first deducting any outstanding amount of Rent due.
If the estimated Expense Excess for the prior calendar year is less than the
actual Expense Excess for such prior calendar year, Tenant shall pay Landlord,
within thirty (30) days after Tenant’s receipt of the statement of actual
Expenses, any underpayment for the prior calendar year. Any delay or failure of
Landlord in (i) delivering any estimate or statement described in this Article 5
or (ii) computing or billing Tenant’s Pro Rata Share of Expense Excess, shall
not constitute a waiver of Landlord’s right to require an increase in Additional
Rent, or in any way impair the continuing obligations of Tenant under this
Article 5. The terms of this Section shall survive expiration of the Lease Term
or earlier termination of this Lease.

 

5.5           “Expenses” are all costs, fees and expenses paid, incurred or
imposed by Landlord (whether directly or through Managing Agent or other
independent contractors)    during each calendar year of the Lease Term in
connection with the ownership, operation, maintenance, management, repair,
replacement and insurance of the Project (including in all cases the personal
property used in connection therewith), including, but not limited to, the
following (and subject to the following limitations):

 

5.5.1       All Landlord Services (as defined below) and other services
performed by or on behalf of Landlord in or to the Project.

 

5.5.2       All utilities for the Project, including but not limited to
Electrical Costs (as defined below) and charges for water, gas, steam, sewer,
heating, air-conditioning, ventilation, lighting, and waste disposal, related to
the maintenance and/or operation of the Project. “Electrical Costs” means: (a)
charges paid by Landlord for electricity; and (b) costs incurred in connection
with any energy management program for the Project.

 

5.5.3       Labor costs, including, wages, salaries, social security and
employment taxes, similar government charges, fringe benefits, medical and other
types of insurance, uniforms, training, and retirement and pension plans for all
persons who perform duties in connection with the operation, maintenance and
repair of the Project at or below the level of general manager (except a
supervisor may be allocated at 25% time to the Building, who is currently Susan
Ornosky), provided that if any employee or person performs services in
connection with the Building and other buildings, costs associate with such
employee or person will be proportionately included in Expenses based on the
percentage of time such employee or person spends in connection with the
operation, maintenance, repair, and managing of the Building (it being
understood and agreed that it no event shall Landlord allocate more than 100% of
the compensation and benefits for any single person or employee among the
properties being serviced by such person or employee).

 

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5.5.4       Management fees (not to exceed 5% of total gross revenues from the
Building), the rental value of any office space in the Project used as an office
for the property manager of the Project or any portion thereof, the cost of
equipping and maintaining a management office, accounting and bookkeeping
services, legal fees not attributable to leasing or collection activity,
clerical and supervisory staff, and other administrative costs provided that if
any employee or person performs services in connection with the Building and
other buildings, costs associate with such employee or person will be
proportionately included in Expenses based on the percentage of time such
employee or person spends in connection with the operation, maintenance, repair,
and managing of the Building (it being understood and agreed that it no event
shall Landlord allocate more than 100% of the compensation and benefits for any
single person or employee among the properties being serviced by such person or
employee). Landlord, by itself or through an affiliate, shall have the right to
directly perform or provide any services under this Lease (including management
services), provided that the cost of any such services shall not exceed the cost
that would have been incurred had Landlord entered into an arms-length contract
for such services with an unaffiliated entity of comparable skill and
experience.

 

5.5.5       Taxes (as defined below).

 

5.5.6       All legal and accounting costs and fees for licenses and permits
related to the ownership and operation of the Project.

 

5.5.7       Premiums and deductibles paid by Landlord for insurance, including
workers compensation, fire and extended coverage, casualty, earthquake, general
liability, rental loss, rent abatement, elevator, boiler and other insurance
customarily carried from time to time by owners of comparable office buildings.

 

5.5.8       The amortized cost of capital improvements (as distinguished from
replacement parts or components installed in the ordinary course of business)
that are made to the Project and that: (a) are performed primarily to reduce
operating expense costs or otherwise improve the operating efficiency of the
Project; (b) LEED Expenses; (c) are required by any governmental authority
(including changes in the Project required by the Americans with Disabilities
Act); (d) are required to comply with any laws that are enacted, or first
interpreted to apply to the Project, after the Effective Date; or (e) replace or
repair existing Project equipment or components (including the roofs). The cost
of such capital improvements shall be amortized by Landlord over the useful life
of such improvements or, with respect to improvements described in clause (a)
above, the reasonably estimated period of time that it takes for the cost
savings resulting from a capital improvement to equal the total cost of the
capital improvement, whichever is less. The amortized cost of such capital
improvements may, at Landlord’s option, include actual or imputed interest at
the rate that Landlord would reasonably be required to pay to finance the cost
of the capital improvement.

 

5.5.9       LEED Expenses

 

5.5.10     All fees, costs, expenses or other amounts payable by Landlord to any
association established for the benefit of the Project, whether separately or
combined with other properties, including without limitation common area
maintenance charges paid by Landlord for the Project pursuant to any declaration
of covenants, conditions and restrictions. In addition, if Landlord incurs other
Expenses for the Project together with one or more other buildings or
properties, whether pursuant to a reciprocal easement agreement, common area
agreement or otherwise, the shared costs and expenses shall be equitably
prorated and apportioned between the Project and the other buildings or
properties as determined by Landlord in its reasonable discretion.

 

5.5.11     Any parking charges, utility surcharges, occupancy taxes or any other
costs resulting from statutes or regulations, or interpretations thereof enacted
by any governmental authority in connection with the use or occupancy of the
Project or any part thereof.

  

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5.5.12     Any reasonable fees, costs, expenses or other amounts payable by
Landlord in connection with any cost sharing agreements arising out of the sale,
ground lease or other conveyance of any portion of the Project that benefit the
Premises or the Project.

 

5.5.13     Any other reasonable expenses or charges, whether or not described in
this Section, which would be considered an expense of managing, maintaining,
operating, repairing, replacing or insuring the Project in accordance with
generally accepted accounting principles or common management practices.

 

As used herein, “Expenses” shall not include the cost of capital improvements
(except as set forth above); depreciation; interest (except as provided above
for the amortization of capital improvements); principal payments of mortgage
and other non-operating debts of Landlord; the cost of repairs or other work to
the extent Landlord is reimbursed by insurance or condemnation proceeds; costs
in connection with leasing space in the Project, including brokerage
commissions; lease concessions, including rental abatements and construction
allowances granted to specific tenants; costs incurred in connection with the
sale, financing or refinancing of the Project; fines, interest and penalties
incurred by Landlord due to the late payment of Expenses; organizational
expenses associated with the creation and operation of the entity which
constitutes Landlord; any costs paid or to be paid directly by Tenant or any
other tenant of the Project; any penalties or damages that Landlord pays to
Tenant under this Lease or to other tenants in the Building under their
respective leases; any rent paid on any ground or underlying lease; the cost of
any work or service performed or rendered exclusively for any Tenant;
depreciation franchise or income taxes imposed (not to include a rent tax, which
is Tenant’s obligation herein) on Landlord; fines or penalties incurred by
Landlord for violations of any applicable law; or the cost of any judgment,
settlement or arbitration award resulting from any negligence or misconduct of
Landlord. In no event shall Landlord be entitled to a reimbursement from tenant
for Expenses in excess of 100% of the cost actually paid or incurred in any
applicable calendar year; except as permitted by the gross up Section 5.8
herein.

 

5.6           If there is a change in the rentable area of the Project, the
Building or the Premises during the Lease Term, Tenant’s Pro Rata Share shall be
adjusted accordingly (according to BOMA standards). The rentable square footage
figures set forth in this Lease for the Premises and the Project are approximate
and may be subject to inaccuracy or future change. No amount payable hereunder
shall be adjusted due to any deviation in the actual rentable square footage
figure for the Premises from that set forth herein.

 

5.7           Any Expenses attributable to a period that falls only partially
within the Lease Term shall be prorated, as reasonably calculated by Landlord.

 

5.8           If the Project is not at least ninety-five percent (95%) occupied
during any calendar year or if Landlord is not supplying services to at least
ninety-five percent (95%) of the total rentable area of the Project at any time
during a calendar year, Expenses shall be determined as if the Project had been
ninety-five percent (95%) occupied and Landlord had been supplying services to
ninety-five percent (95%) of the rentable area of the Project during that
calendar year. The extrapolation of Expenses under this Section shall be
performed by appropriately adjusting the cost of those components of Expenses
that are impacted by changes in the occupancy of the Project. Notwithstanding
the foregoing, in no event shall Landlord retain more than the actual Expenses
for the Project after the amount is determined and settled with tenants of the
Project.

 

5.9           Any sum payable by Tenant which would not otherwise be due until
after the date of the termination of this Lease shall, if the exact amount is
uncertain at the time that this Lease terminates, be paid by Tenant to Landlord
upon such termination in an amount to be determined by Landlord, with an
adjustment to be made once the exact amount is known.

 

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ARTICLE 6

TAXES

 

6.1          “Taxes” shall mean: (a) all real estate taxes and other assessments
on the Project, including, but not limited to, assessments for special
improvement districts and building improvement districts, taxes and assessments
levied in substitution or supplementation in whole or in part of any such taxes
and assessments, and the Project’s share of any real estate taxes and
assessments under any reciprocal easement agreement, common area agreement or
similar agreement as to the Project; (b) all personal property taxes for
property that is owned by Landlord and used in connection with the operation,
maintenance and repair of the Project and (c) all out-of-pocket costs and fees
incurred in connection with seeking reductions in any tax liabilities described
in (a) and (b) above, including, without limitation, any reasonable costs
incurred by Landlord for compliance, review and appeal of tax liabilities. Taxes
shall not include any income, profit, capital levy, franchise, capital stock,
gift, estate or inheritance tax. Taxes shall also exclude any interest or
penalties arising by reason of the late payment of same or failure of Landlord
to timely file any report or return required by Landlord or its property manager
for tax purposes. If an assessment is payable in installments, Taxes for a
calendar year shall only include the amount of the installment and any interest
due and payable during such calendar year. For all other real estate taxes,
Taxes for a calendar year shall include the amount accrued, assessed or
otherwise imposed for that calendar year. If a change in Taxes is obtained for
any calendar year of the Lease Term during which Tenant paid Tenant’s Pro Rata
Share, then Taxes for that year will be retroactively adjusted and Landlord
shall provide Tenant with a credit, if any; or, if the foregoing adjustment
results in an increase in the Taxes for such calendar year, then Tenant shall
pay Landlord the amount of Tenant’s Pro Rata Share of any such increase as
Additional Rent within thirty (30) days after Tenant’s receipt of a written
statement from Landlord.

 

6.2           In addition to the foregoing, Tenant will be liable for and pay
before delinquency (a) all taxes and assessments charged against trade fixtures,
furniture, furnishings, equipment or any other personal property belonging to
Tenant, (b) any increase in the assessed value of the Project based on the value
of any such personal property, and (c) any municipal, county, state, or federal
excise tax, sales tax, use tax, transaction privilege tax, gross proceeds tax,
rent tax, or like tax now or hereafter levied or imposed against, or on account
of any amounts payable under this Lease by Tenant or the receipt thereof by
Landlord (but excluding income, capital levy, franchise, capital stock, gift,
estate or inheritance taxes) (collectively, “Tenant’s Direct Tax Obligations”).
Tenant will make all necessary arrangements to have Tenant’s Direct Tax
Obligations billed separately to the extent possible. If any of Tenant’s Direct
Tax Obligations are taxed with the Project, Tenant will pay Landlord the full
amount of such taxes immediately upon demand by Landlord, notwithstanding any
right to appeal Tenant may have. The provisions of the preceding sentence shall
survive expiration of the Lease Term or earlier termination of this Lease.

 

6.3           Audit Rights. Within 120 days after receiving Landlord’s statement
of Expenses (each such period is referred to as the “Review Notice Period”),
Tenant may give Landlord Notice (“Review Notice”) that Tenant intends to review
Landlord’s records of the Expenses for the calendar year to which the statement
applies, and Tenant shall include in such Review Notice a written request
identifying, with a reasonable degree of specificity, the information that
Tenant desires to review (the “Request for Information”). Within a reasonable
time after Landlord’s receipt of a timely Review Notice (which includes a
Request for Information) and executed Audit Confidentiality Agreement
(referenced below), Landlord, as determined by Landlord, shall forward to
Tenant, or make available for inspection at the management office in the
metropolitan Phoenix area, such records (or copies thereof) for the applicable
calendar year that are reasonably necessary for Tenant to conduct its review of
the information appropriately identified in the Review Notice. Within 60 days
after any particular records are made available to Tenant (such period is
referred to as the “Objection Period”), Tenant shall have the right to give
Landlord written notice (an “Objection Notice”) stating in reasonable detail any
objection to Landlord’s statement of Expenses for that year which relates to the
records that have been made available to Tenant. If Tenant provides Landlord
with a timely Objection Notice, Landlord and Tenant shall work together in good
faith to resolve any issues raised in Tenant’s Objection Notice. If Landlord and
Tenant determine that Expenses for the calendar year are less than reported,
Landlord shall provide Tenant with a credit against the next installment of Rent
in the amount of the overpayment by Tenant. Likewise, if Landlord and Tenant
determine that Expenses for the calendar year are greater than reported, Tenant
shall pay Landlord the amount of any underpayment within 30 days.

 

If Tenant retains an agent to review Landlord’s records, the agent must be with
a regionally recognized CPA firm licensed to do business in the state where the
Project is located. Tenant shall be responsible for all costs, expenses and fees
incurred for the audit, except that in the event that Landlord and Tenant
determine that Expenses and Taxes are less than reported by more than 10%,
Landlord, within 30 days after its receipt of paid invoices therefor from
Tenant, shall reimburse Tenant for any reasonable amounts paid by Tenant (in
accordance with this Lease) to third parties in connection with such review by
Tenant. The records and related information obtained by Tenant shall be treated
as confidential, and applicable only to the Project, by Tenant and its auditors,
consultants and other parties reviewing such records on behalf of Tenant
(collectively, “Tenant’s Auditors”), and, prior to making any records available
to Tenant or Tenant’s Auditors, Landlord may require Tenant and Tenant’s
Auditors to each execute a reasonable confidentiality agreement in accordance
with the foregoing.

 

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ARTICLE 7

COMMON AREAS

 

7.1           “Common Areas” are defined as all areas and facilities outside the
Premises and within the exterior boundary line of the Project that are provided
and designated by Landlord from time to time for the non-exclusive use of
Landlord, Tenant and other tenants of the Project and their respective
employees, agents, customers and invitees. Common Areas include, but are not
limited to, all of the following, to the extent applicable and to the extent
that the same are not designated by Landlord for the exclusive use of one or
more tenants of the Project: all parking areas, loading and unloading areas,
trash areas, roadways, sidewalks, walkways, parkways, driveways, common
corridors, lobby areas, vending areas, landscaped areas, public elevators,
public stairways and public restrooms used in common by tenants.

 

7.2           Subject to the Rules and Regulations (as defined hereinafter) and
all of the terms and conditions of this Lease, Tenant and Tenant’s owners,
officers, directors, members, managers, partners, trustees, employees,
representatives, shareholders, affiliates, advisors, agents, contractors,
vendors, consultants, licensees, invitees, heirs, executors, administrators,
customers, clients, assignees, sublessees, successors and assigns (collectively,
“Tenant Parties”) have the non-exclusive right (in common with any other person
granted use by Landlord) to use the Common Areas during the Lease Term.

 

7.3           Landlord shall have the right, from time to time and in its
reasonable discretion, to: (a) make changes to the Common Areas, including,
without limitation, changes in the location, size, shape and number of
driveways, entrances, parking spaces, parking areas, ingress, egress, direction
of driveways, entrances, corridors, parking areas and walkways; (b) close
temporarily any of the Common Areas, so long as reasonable access to the
Premises and to Tenant’s parking as set forth in Section 12 remains available;
(c) add or remove buildings in and improvements to the Common Areas; (d) use the
Common Areas while engaged in making additional improvements, repairs or
alterations to the Project or any portion thereof; and (e) do and perform any
other acts or make any other changes in, to, or with respect to, the Common
Areas and Project as Landlord may, in the exercise of sound business judgment,
deem to be appropriate.

 

ARTICLE 8

SERVICES TO BE FURNISHED BY LANDLORD

 

8.1          Landlord agrees to furnish Tenant with the following services
(“Landlord Services”), the costs and expenses attributable to which shall be
included in the Expenses:

 

8.1.1       Water service for use in the lavatories on each floor on which the
Premises are located and the Premises.

 

8.1.2       Heating, ventilating and air conditioning (“HVAC”) services in
season during Building Hours as set forth in Article 1, at such temperatures and
in such amounts as are standard for comparable buildings or as required by
governmental authority. In addition, Tenant shall have the right to receive HVAC
service during hours other than Building Hours by providing Landlord with not
less than 24 hours prior notice on a business day (excluding weekends and
holidays) and provided Tenant shall pay Landlord the standard charge for the
additional service as reasonably determined by Landlord from time to time.
Landlord shall provide Tenant with at least thirty (30) days prior notice of any
increase in the standard Building uniform charge. Notwithstanding the forgoing,
for server rooms in the Premises, HVAC and electrical use shall be separately
charged, and such costs (equal to $5.00/hour [subject to changes by Landlord
from time to time to reasonably reflect changes in utility charges and other
costs to Landlord] for all hours outside of Building Hours [by way of example,
13 hours per day for all weekdays, 19 hours on all Saturdays, and 24 hours on
all Sundays ) shall be payable directly by Tenant to Landlord, and such hourly
rate will also include tower water, tower maintenance, and related expenses. In
connection with such separate charges, prior to the Commencement Date, Landlord
agrees, that the current Building HVAC service provides for separately zoned
HVAC service solely serving Tenant’s server room (in addition to the standard
HVAC service serving the remaining portion of the Premises). If Tenant installs
any additional HVAC units for the Premises, Tenant shall be solely responsible
for all maintenance and repairs.

 

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8.1.3       Landlord’s Maintenance Obligations (as defined in Section 18.1
below).

 

8.1.4       Exterior painting and cleaning, including windows.

 

8.1.5       Janitor service for the Building and the Premises not less than five
(5) days per week, unless such week includes a legal holiday. See Exhibit G.

 

8.1.6       If Tenant’s use, floor covering or other improvements require
special services in excess of the standard services for the Building, Tenant
shall pay the additional cost attributable to such special services, including
any reasonable and customary markup for profit or overhead.

 

8.1.7       Trash and debris removal related to the maintenance or operation of
the Premises and the Project.

 

8.1.8       Alarm and security services for the Premises and the Building as are
customarily provided from time to time by owners of comparable office buildings
in Landlord’s sole reasonable discretion.

 

8.1.9       Elevator service for the Building.

 

8.1.10     Electricity to the Premises for general office use, in accordance
with and subject to the terms and conditions set forth herein.

 

8.1.11     Such other services as Landlord reasonably determines are necessary
or appropriate for the Premises, the Building and the Project.

 

Landlord’s failure to furnish, or any interruption or termination of services
due to the application of laws, the failure of any equipment, the performance of
repairs, improvements or alterations, or the occurrence of any event or cause
beyond the reasonable control of Landlord shall not render Landlord liable to
Tenant, constitute a constructive eviction of Tenant, give rise to an abatement
of Rent (other than as set forth below), nor relieve Tenant from the obligation
to fulfill any covenant or agreement. In no event shall Landlord be liable to
Tenant for any loss or damage, including without limitation the loss or theft of
any equipment or other property belonging to Tenant or Tenant Parties arising
out of or in connection with the failure of any Landlord Services.; provided,
however, if the Premises, or a material portion of the Premises, are made
untenantable for a period in excess of 3 consecutive business days as a result
of an interruption or termination of services that is reasonably within the
control of Landlord to correct, then Tenant, as its sole remedy, shall be
entitled to receive an abatement of Rent payable hereunder during the period
beginning on the 4th consecutive business day of the interruption or termination
of services and ending on the day the service has been substantially restored.
If the entire Premises have not been rendered untenantable by the interruption
or termination of services, the amount of abatement shall be equitably prorated.

 

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ARTICLE 9

USE OF PREMISES: QUIET CONDUCT

 

The Premises may be used and occupied only for the Permitted Use and for no
other purpose without obtaining Landlord’s prior written consent.
Notwithstanding anything to the contrary provided for herein, Tenant shall not
at any time violate or permit a violation at the Premises of any use prohibited
or excluded use described on Exhibit F attached hereto and incorporated herein.
Tenant will not perform any act or carry on any practice that may injure the
Premises or the Project, including but not limited to the use of equipment that
causes vibration, heat or noise that is not properly insulated, nor shall Tenant
allow any condition or thing to remain on or about the Premises that diminishes
the appearance or aesthetic qualities of the Premises, the Project, or the
surrounding property. Tenant shall observe and comply with, and not use or
permit the Premises to be used in any way that constitutes a violation of the
requirements of any board of fire underwriters or similar body relating to the
Premises or of any law, rule, ordinance, restrictive covenant, governmental
regulation or order now or hereafter in effect. Tenant shall not use or allow
the Premises or the Project to be used (a) in violation of the Rules and
Regulations (defined in Article 29 below), (b) in violation of any certificate
of occupancy issued for the Premises or of any recorded covenants, conditions
and restrictions now or hereafter affecting the Premises or the Project, or (c)
for any improper, immoral, unlawful or reasonably objectionable purpose. Tenant
shall not cause, maintain or permit any nuisance in, on or about the Premises or
the Project nor commit or suffer to be committed any waste in, on or about the
Premises or the Project. Tenant shall obtain and pay for all permits and
licenses and shall promptly take all actions necessary to comply with all
applicable statutes, ordinances, codes, regulations, orders, covenants and
requirements regulating the use by Tenant of the Premises, including, without
limitation, the Occupational Safety and Health Act and the Americans with
Disabilities Act provided that Tenant shall not be responsible for nor incur any
cost or expense for the curing of any violations of any of the foregoing in or
at the Premises that are in effect prior to the Commencement Date, and Landlord
shall be responsible for the curing and the cost and expense of the curing of
all such violations as Tenant’s sole remedy. Except as otherwise provided
herein, Tenant shall have access to the Premises and the Tenant Parking Spaces
(as hereinafter defined) 24 hours a day, 7 days a week, 52 weeks a year.
Landlord shall provide Tenant with 60 access cards to access the Building at no
cost to Tenant. Tenant shall be responsible, at Tenant’s sole cost, to install
an access card system for the Premises, and shall provide Landlord with at least
6 access cards to allow access to the Premises. Tenant shall have the right to
identify the Building as the location of its business and to use photographs of
the Building in its advertising materials for the business of Tenant at the
Building. All such advertising and use of photographs shall be performed in a
first class manner and shall be subject to Landlord’s review and approval prior
to use by Tenant.

 

ARTICLE 10

HAZARDOUS MATERIALS

 

10.1         For purposes of this Lease:

 

10.1.1     “Environmental Requirements” means any federal, state, or local
statutes, acts, laws, ordinances, rules, regulations, requirements, court and
administrative rulings, and other obligations now or hereinafter enacted or
adopted (including, without limitation, consent decrees and administrative
orders) relating to the generation, use, manufacture, treatment, transportation,
storage, disposal, discharge, or release of any Hazardous Materials (as defined
below), or otherwise designed or intended to protect human health or the
environment.

 

10.1.2     “Hazardous Materials” shall mean, collectively, any substance,
compound, material, pollutant, contaminant, chemical, waste, or other matter,
including without limitation asbestos, any petroleum fuel or byproduct, urea
formaldehyde, or any radioactive substance, that is now, or shall hereafter be
listed, defined or regulated as hazardous, extra-hazardous, extremely hazardous,
flammable, explosive, toxic, or otherwise dangerous or which is or becomes
subject to control, regulation or remediation under, or which otherwise may be
the basis for any obligation, fine or penalty under, any applicable
Environmental Requirements.

 

10.2         Tenant and Tenant Parties (as defined in Section 7.2 above) shall:

 

10.2.1     not manufacture, treat, test, process, store, handle, distribute,
transport, use, produce, create, generate, discharge, release or dispose of any
Hazardous Materials in, about, under, on or adjacent to the Project or any part
thereof;

 

10.2.2     not engage in or permit any activity with a reasonable potential to
result in the release or other discharge of any Hazardous Material on, at or
from the Project;

 

10.2.3     not operate at or near the Project in a manner that could lead to the
imposition of liability on Tenant, Tenant Parties, Landlord, or Landlord Parties
(as defined below) or the creation of a lien on the Project under any
Environmental Requirement;

 

10.2.4     notify Landlord promptly of any spill, release, discharge or disposal
of Hazardous Materials into, on, onto, under or from the Project, regardless of
the source, whenever Tenant knows or suspects that such has occurred;

 

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10.2.5     permit Landlord, Managing Agent, or any of Landlord’s owners,
officers, directors, members, managers, partners, trustees, employees,
representatives, shareholders, affiliates, advisors, agents, contractors,
vendors, consultants, licensees, invitees, heirs, executors, administrators,
successors and assigns (collectively with Managing Agent, “Landlord Parties”),
upon 48 hours’ prior notice, access to the Premises to conduct an environmental
site inspection and assessment with respect thereto. If there is a spill or
release at or from the Premises or Project, Tenant agrees to allow Landlord and
Landlord Parties immediate access to the Premises for any work necessary in
relation to any suspected or actual spill or release;

 

10.2.6     immediately take appropriate actions, at Tenant’s sole cost and
expense and in accordance with all applicable Environmental Requirements, to
remove, clean up and remediate any release, discharge, or spill of Hazardous
Materials at, on, under or from the Project or any part thereof caused by Tenant
or Tenant Parties;

 

10.2.7     comply with all Environmental Requirements promulgated as of the
Effective Date and all additional Environmental Requirements, if any, which may
from time to time be enacted thereafter;

 

10.2.8     obtain and maintain in good standing all permits necessary under
Environmental Requirements for the operation of Tenant’s business; and

 

10.2.9     immediately notify Landlord of any inquiry, test, investigation,
enforcement proceeding, or other communication to, by or against Tenant or any
Tenant Parties relating to any Environmental Requirement or any other
environmental matter.

 

10.3         Notwithstanding anything to the contrary set forth in this Article
10, Tenant may use in the conduct of its business at the Premises those
Hazardous Materials in quantity and type customarily used or sold in connection
with the operations of a business engaged in the Permitted Use (and then only if
such Hazardous Materials are used, stored and kept in accordance with applicable
laws, codes and ordinances).

 

10.4         Tenant, for itself and its successors and assigns, shall be solely
responsible for and agrees to protect, indemnify, save, defend (with counsel
reasonably approved by Landlord) and hold harmless Landlord and all Landlord
Parties (collectively, the “Indemnitees”) for, from, and against any and all
claims, demands, liabilities, losses, damages, charges, costs, expenses, fines,
penalties, suits, orders, causes of action, adjudications, and judgments that
any Indemnitee may suffer or incur, including without limitation, investigation
and clean-up costs, reasonable attorneys’ and consultants’ fees and expenses,
and court costs (collectively, “Liabilities”), which arise during or after the
Lease Term as a result of or attributable to: (a) any acts or omissions of
Tenant or any Tenant Parties, (b) the breach by Tenant or any Tenant Parties of
any of the obligations and covenants of Tenant set forth in this Article, (c)
any contamination of the Premises or the Project directly or indirectly arising
from the activities of Tenant, any Tenant Parties, or directly or indirectly
arising from the activities of any other person other than Indemnitees, within
the Premises only (d) the use, generation, storage, release, threatened release,
discharge, or disposal by Tenant or any Tenant Parties of Hazardous Materials
on, under or about the Project or any property adjacent thereto, including
without limitation: (x) consequential damages; (y) the costs of any required or
necessary repairs, remediation, cleanup or detoxification of the Premises or any
property adjacent thereto, and the preparation and implementation of any
closure, remediation or other required plans; and (z) all reasonable expenses of
any Indemnitee in connection with clauses (x) and (y), including without
limitation costs and fees incurred under or as a result of the following:

 

10.4.1     any Environmental Requirement, including the assertion of any lien
thereunder and any suit brought or judgment rendered, regardless of whether the
action was commenced by a citizen (as authorized under any Environmental
Requirement) or by a government agency;

 

10.4.2     any spill or release of, or the presence of, any Hazardous Materials
on or from the Premises, Project or any adjacent property, including any loss of
value of any part of the Project or other property as a result of a spill,
release or presence of any Hazardous Materials;

 

10.4.3     any other matter affecting the Project within the jurisdiction of any
governmental or quasi-governmental agency, including costs of investigations,
remedial action, or other response costs, whether such costs are incurred by
such governmental or quasi-governmental agency or any Indemnitee;

 

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10.4.4     Liabilities under the provisions of any Environmental Requirement;

 

10.4.5     Liabilities for personal injury or property damage arising under any
statutory or common-law tort theory, including, without limitation, damages
assessed for the maintenance of a public or private nuisance, or for the
carrying of an abnormally dangerous activity, and response costs; and

 

10.4.6     any remedial actions by Indemnitees as set forth in this Article 10.

 

10.5         Landlord shall have no obligation to remove, clean up or remediate
any Hazardous Materials which were brought onto the Premises or the Project by
Tenant, or Tenant Parties, or which were brought onto the Premises by any other
persons other than Indemnitees, including but not limited to Hazardous Materials
used in connection with Tenant Improvements, which removal, cleanup and
remediation shall be the obligation of Tenant at its sole cost and expense.
Notwithstanding the foregoing:

 

10.5.1     In the event that Tenant fails to comply with any Environmental
Requirement or any provision of this Article 10, Landlord may, but shall not be
obligated to, take any and all actions that Landlord shall deem necessary or
advisable in order to remediate any spill or release of Hazardous Materials or
cure any failure of Tenant’s compliance, and Tenant shall indemnify Indemnitees
for any expenses (including reasonable attorneys’ fees) incurred as a result
thereof, together with interest at the Default Rate (as defined below); and

 

10.5.2     Landlord shall have the right in good faith to pay, settle,
compromise or litigate any Tenant Liabilities under this Article 10, upon ten
(10) days prior written notice thereof to Tenant, based upon the belief that
Tenant is liable therefor, whether actually liable or not, without the consent
or approval of Tenant, unless Tenant, within such ten (10) day period, shall
protest in writing and simultaneously with such protest deposit with Landlord
collateral in form and substance sufficient, in Landlord’s sole discretion, to
pay and satisfy any penalty, interest, or additional Liabilities which may
accrue as a result thereof All costs and expenses incurred by Landlord in
connection with the foregoing shall be subject to Tenant’s indemnification
obligations set forth in this Article 10.

 

10.6         The provisions of this Article 10 shall survive the expiration of
the Lease Term or earlier termination of this Lease.

 

ARTICLE 11

PARKING

 

Subject to the parking rules and regulations attached hereto as Exhibit “D,” as
such may be amended from time to time (the “Parking Rules and Regulations”),
Tenant shall have the right to use fifty six (56) unreserved surface uncovered
parking spaces in the Common Area (the “Tenant Parking Spaces”). Tenant shall
lease six (6) of its Tenant Parking Spaces located in the covered, reserved,
canopy area (the “Reserved Spaces”) at a charge of $0.00 per month during the
initial Lease Term for each Reserved Space. Subject to availability, as
determined from time to time by Landlord, in is sole discretion, Tenant may
request additional Reserved Spaces, at the rate of $40 per month during the
initial Lease Term for each Reserved Space. The Reserved Spaces rate shall be
adjusted by Landlord during any Renewal Term to market rates (defined as the
rate Landlord is able to charge other users of similar parking spaces at the
Building).

 

Tenant agrees and acknowledges that the quantity, location and charges for the
parking listed above are integral parts of the overall economics of this Lease,
that Tenant has no rights to parking in addition to that set forth above and
that, subject to the paragraph above, any parking rights procured by Tenant from
Landlord after the date of this Lease may be at markedly different rates and in
markedly different locations. Tenant shall obey, and shall be responsible to
enforce with respect to Tenant Parties, the Parking Rules and Regulations.
Landlord reserves the right to modify or change the Parking Rules and
Regulations from time to time with written notice to Tenant. Landlord and
Landlord Parties will not be responsible to Tenant for the failure of any other
tenant, occupant or invitee of the Project to observe the Parking Rules and
Regulations, for damage to any vehicle parked in the parking areas, or for the
theft of any vehicle or personal property from within vehicles while parked in
the parking areas. The terms of the previous sentence shall survive the
expiration of the Lease Term or earlier termination of this Lease.

 

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ARTICLE 12

UTILITIES

 

12.1         Electricity used by Tenant in the Premises shall, at Landlord’s
option, be paid for by Tenant either: (a) through inclusion in Expenses (except
as provided herein for excess usage); (b) by a separate charge payable by Tenant
as Additional Rent; (c) by separate charge billed by the applicable utility
company and payable directly by Tenant; or (d) by any combination of (a), (b)
and (c). Electrical service to the Premises may be furnished by one or more
companies providing electrical generation, transmission, and distribution
services, and the cost of electricity may consist of several different
components or separate charges for such services, such as generation,
distribution and stranded cost charges. Landlord shall have the exclusive right
to select any company providing electrical service to the Project and the
Premises, to aggregate the electrical service for the Project, the Building, or
the Premises with other buildings or properties, to purchase electricity through
a broker and/or buyers group, and/or to change the providers and manner of
purchasing electricity for the Premises. See also section 8.1.2 herein for
treatment of server rooms.

 

12.2         Except as otherwise expressly provided herein, Tenant’s use of
electrical service shall not exceed, either in voltage, rated capacity, use
beyond Building Hours, or overall load, that which Landlord deems to be standard
for the Building. Landlord shall provide electrical service of not less than 6.0
watts per usable square foot within the Premises, exclusive of HVAC and base
building ceiling lighting. If Tenant requests permission to consume excess
electrical service, Landlord may refuse to consent or may condition consent upon
conditions that Landlord reasonably elects (including, without limitation, the
installation of utility service upgrades, meters, submeters, air handlers or
cooling units), and the additional usage (to the extent permitted by law),
installation and maintenance costs shall be paid by Tenant. Landlord shall have
the right to separately meter electrical usage for the Premises and to measure
electrical usage by survey or other commonly accepted methods. Tenant agrees to
comply with energy conservation programs implemented by Landlord from time to

 

12.3         Tenant will contract and pay for all telephone and other service
desired and ordered by Tenant and other services for the Premises, subject to
the provisions of Article 14 hereof entitled “Alterations; Mechanic’s Liens.”

 

ARTICLE 13

ALTERATIONS; MECHANIC’S LIENS

 

13.1         Tenant shall not make or suffer to be made any alterations,
additions or improvements to the Premises or any part thereof, including but not
limited to painting, redecorating, remodeling or the attachment of any fixtures
or equipment (all of such activities being referred to herein as “Alterations”),
without obtaining Landlord’s prior written consent, which consent will not be
unreasonably withheld, conditioned or delayed, except as set forth herein.
Notwithstanding the foregoing, if any proposed Alterations involve modifications
to the structural, mechanical, electrical, plumbing, fire/life safety or
heating, ventilating and air conditioning systems of the Building (each, a
“Structural Alteration”), then Landlord’s consent may be withheld in Landlord’s
sole and absolute discretion. Landlord’s consent shall be contingent upon Tenant
providing Landlord the following items or information, all of which shall be
subject to Landlord’s approval: (a) the name of Tenant’s proposed contractor(s),
(b) evidence of insurance from Tenant’s contractor(s) as set forth in this
Article, (c) detailed plans and specifications for the proposed Alterations (if
applicable, as determined by Landlord), and (d) valid building or other permits
or licenses, as required by the appropriate governing authority. Landlord may
further condition its consent by requiring Tenant to (x) give Landlord
satisfactory proof of Tenant’s financial ability to complete and fully pay for
such Alterations, (y) deposit with Landlord the estimated sum required to
complete such Alterations, and/or (z) provide to Landlord, at Tenant’s sole
expense, a payment and performance bond in form acceptable to Landlord and in a
principal amount of not less than one hundred fifty percent (150%) of the
estimated cost of such Alterations (or such other form of security acceptable to
Landlord in its sole discretion) to insure Landlord against any liability for
Liens (as defined below) and to ensure completion of all work associated
therewith. Landlord’s consent or disapproval shall be given within fifteen (15)
days following Tenant’s written request, with any disapproval specifying the
reasons therefor, and any failure of Landlord to respond to any request within
such fifteen (15) day period shall be deemed Landlord’s disapproval of the
proposed Alteration. All Alterations shall be made in compliance with applicable
municipal, county, state and federal laws, codes and regulations, including
without limitation the Americans With Disabilities Act of 1990 and its related
rules and regulations (“ADA”). Notwithstanding the foregoing, Tenant may make
interior cosmetic Alterations within the Premises, that are not Structural
Alterations, without Landlord’s prior written consent, provided all such
Alterations do not exceed $25,000.00 in the aggregate during any twelve (12)
month period within the Lease Term (the “Minor Alterations”). Tenant shall still
be obligated to comply with items (a), (b) and (d) above prior to commencing any
Minor Alteration. Notwithstanding anything to the contrary, Landlord may not
charge any construction management fee for Minor Alterations, and Landlord’s
construction management fee for Structural Alterations shall not exceed 3% of
the total cost of such Structural Alterations.

 

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13.2         Notwithstanding any other provision hereof, Alterations shall not
include Tenant’s personal property, and Tenant may, with written consent of
Landlord, install trade fixtures, equipment and machinery in conformance with
all applicable ordinances and laws, and they may be removed upon expiration of
the Lease Term or earlier termination of this Lease, provided the Premises are
not damaged by their removal and the Premises is promptly returned to its
original condition by Tenant at Tenant’s expense. Any private telephone systems
and/or other related telecommunications equipment and lines must be installed
within the Premises, and upon expiration of the Lease Term or earlier
termination of this Lease Landlord may, at its sole option, require Tenant to
remove such equipment and lines at Tenant’s expense and restore the Premises to
its condition existing upon the Commencement Date, reasonable wear and tear
excepted. The terms of this Section shall survive the expiration of the Lease
Term or earlier termination of this Lease.

 

13.3         Tenant shall not permit any mechanic’s, materialmen’s or other
liens (each, a “Lien”) to be filed against the Project, the Premises or Tenant’s
leasehold interest therein. Tenant, at its sole expense, shall cause any such
Lien to be released or shall obtain a surety bond to discharge any such Lien
pursuant to Arizona Revised Statutes §33-1004 (or any successor statute(s))
within 30 days after receipt of notice that any such Lien is filed. If Tenant
fails to cause any such Lien to be so released or bonded within thirty (30) days
after Tenant’s receipt of notice thereof, Landlord, without waiving its rights
and remedies based on such failure, may cause such Lien to be released by any
means Landlord reasonably deems proper, including payment in satisfaction of any
claim giving rise to such Lien. Tenant shall pay to Landlord as Additional Rent,
within thirty (30) days after Tenant’s receipt of an invoice from Landlord, any
sum paid by Landlord to remove any such Lien, together with interest at the
Default Rate from the date of such payment by Landlord until paid by Tenant.
Tenant shall have the right to contest any such Lien in good faith provided that
Tenant provides reasonable security in connection therewith. Notice is hereby
given that neither Landlord nor Mortgagee (nor their respective interests in the
Premises or the Project) shall be liable or responsible to persons who furnish
materials or labor for or in connection with the Premises or the Project on
behalf of Tenant, and Landlord shall have the right at all reasonable times to
post on the Premises or the Project and record any notices of non-responsibility
which it deems necessary for protection from such Liens. The terms of this
Section shall survive expiration of the Lease Term or earlier termination of
this Lease.

 

13.4         Tenant hereby agrees to indemnify and hold Landlord harmless from
and against any Liabilities incurred by Landlord, the Project, or the Premises
arising, whether directly or indirectly, from Tenant or Tenant Parties making or
removing any Alterations to the Premises, including without limitation any Liens
arising therefrom. Any Alterations made by Tenant shall become part of the
Premises and shall, without payment of compensation, become the property of
Landlord; provided, however, that Landlord may disclaim such ownership and
require Tenant to remove some or all of the Alterations provided Landlord has
made such removal a condition at the time Landlord provided its consent thereto.
If Landlord requires the removal of any Alterations, Tenant shall, at its sole
cost, promptly remove such at the expiration of the Lease Term or earlier
termination of this Lease, repair any damage to the Premises caused thereby, and
return the Premises or the applicable portion thereof to its condition existing
upon the Commencement Date, reasonable wear and tear excepted. The terms of this
Section shall survive expiration of the Lease Term or earlier termination of
this Lease.

 

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13.5         Provided that reasonable access to the Premises and Tenant’s
parking spaces remain available, Landlord shall have the right, from time to
time and in its sole discretion, to: (a) make changes to the Project, including,
without limitation, changes in the location, size, shape and number of
driveways, entrances, parking spaces, parking areas, ingress, egress, direction
of driveways, entrances, corridors, parking areas and walkways; (b) close
temporarily any portion of the Project for maintenance, replacement or repairs;
(c) construct or permit construction of improvements in or about the Project,
whether for existing or new tenants or otherwise; and (d) do and perform any
other acts or make any other changes in, to, or with respect to, the Project as
Landlord may, in the exercise of sound business judgment, deem to be
appropriate. Notwithstanding anything to the contrary in this Lease, Tenant
understands this right of Landlord and hereby (x) agrees that such construction
will not be deemed to constitute a breach of this Lease by Landlord, and (y)
waives any claim that it might have arising from such construction. The terms of
the previous sentence shall survive the expiration of the Lease Term or earlier
termination of this Lease.

 

ARTICLE 14

INSURANCE

 

14.1         Tenant shall not do or permit anything to be done within or about
the Premises which will increase the existing rate of insurance on the Building
or Project and shall, at its sole cost and expense, comply with any requirements
pertaining to the Premises of any insurance organization insuring the Building
or Project, or any portion thereof. Notwithstanding the foregoing, Tenant agrees
to pay to Landlord, as Additional Rent, any increases in premiums on insurance
policies resulting from Tenant’s use of the Premises if such use increases
Landlord’s premiums or requires extended coverage by Landlord to insure the
Premises. The terms of the previous sentence shall survive the expiration of the
Lease Term or earlier termination of this Lease.

 

14.2         During the Lease Term, Tenant shall maintain and keep in full force
and effect, at its sole expense, the following insurance:

 

14.2.1     Commercial general liability insurance which insures against claims
for bodily injury, personal injury, advertising injury, and property damage
based upon, involving, or arising out of the use, occupancy, or maintenance of
the Premises and the Property. Such insurance shall afford, at a minimum, the
following limits:

 

Each Occurrence  $1,000,000  General Aggregate2,000,000 (which limits can be
accomplished with a combination of a primary general liability policy and an
umbrella policy or a single general liability policy)  Products/Completed
Operations Aggregate   1,000,000  Personal and Advertising Injury Liability 
 1,000,000  Fire Damage Legal Liability   1,000,000  Medical Payments   5,000 

 

Any general aggregate limit shall apply on a per location basis. Tenant’s
commercial general liability insurance shall name Landlord, its trustees,
officers, directors, members, agents, and employees, Landlord’s mortgagees, and
Landlord’s representatives, as additional insureds. This coverage shall be
written on the most current ISO CGL form, shall include blanket contractual,
premises-operations and products-completed operations and shall contain an
exception to any pollution exclusion which insures damage or injury arising out
of heat, smoke, or fumes from a hostile fire. Such insurance shall be written on
an occurrence basis and contain a standard separation of insureds provision.

 

14.2.2     Business automobile liability insurance covering owned, hired and
non-owned vehicles with limits of $1,000,000 combined single limit per
occurrence.

 

14.2.3     Workers’ compensation insurance in accordance with the laws of the
state in which the Premises are located with employer’s liability insurance in
an amount not less than $1,000,000.

 

14.2.4     Umbrella/excess liability insurance, on an occurrence basis, that
applies excess of the required commercial general liability, business automobile
liability, and employer’s liability policies with the following minimum limits:

 

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Each Occurrence  $5,000,000  Annual Aggregate  $5,000,000 

 

These limits shall be in addition to and not including those stated for the
underlying commercial general liability, business automobile liability, and
employers liability insurance required herein. Such excess liability policies
shall name Landlord, its trustees, officers, directors, members, agents, and
employees, Landlord’s mortgagees, and Landlord’s representatives as additional
insureds.

 

14.2.5     All risk property insurance including theft, sprinkler leakage and
boiler and machinery coverage on all of Tenant’s trade fixtures, furniture,
inventory and other personal property in the Premises, and on any alterations,
additions, or improvements made by Tenant upon the Premises all for the full
replacement cost thereof. Tenant shall use the proceeds from such insurance for
the replacement of trade fixtures, furniture, inventory and other personal
property and for the restoration of Tenant’s improvements, alterations, and
additions to the Premises. Landlord shall be named as loss payee with respect to
alterations, additions, or improvements of the Premises.

 

14.2.6     Business income and extra expense insurance with limits not less than
one hundred percent (100%) of all charges payable by Tenant under this lease for
a period of twelve (12) months.

 

All policies required to be carried by Tenant hereunder shall be issued by and
binding upon an insurance company licensed to do business in the state in which
the Property is located with a rating of at least “A, Class VIII,” or better as
set forth in the most current issue of Best’s Insurance Reports, unless
otherwise approved by Landlord. Tenant shall not do or permit anything to be
done that would invalidate the insurance policies required herein. Liability
insurance maintained by Tenant shall be primary coverage without right of
contribution by any similar insurance that may be maintained by Landlord.
Certificates of insurance, acceptable to Landlord, evidencing the existence and
amount of each insurance policy required hereunder shall be delivered to
Landlord prior to delivery or possession of the Premises and ten (10) days
following each renewal date. Certificates of insurance shall include an
endorsement for each policy showing that Landlord, its trustees, officers,
directors, members, agents, and employees, Landlord’s mortgagees, and Landlord’s
representatives are included as additional insureds on liability policies and
that Landlord is named as loss payee on the property insurance as stated in
Section 14.2.5 above. Further, all policies of Tenant’s insurance shall contain
endorsements that the insurer(s) shall give Landlord and its designees at least
(30) days’ advance notice of any cancellation, termination, material change or
lapse of insurance. In the event that Tenant fails to provide evidence of
insurance required to be provided by Tenant in this Lease, prior to the
Commencement Date and thereafter during the Term, within ten (10) days following
Landlord’s written request thereof, and thirty (30) days prior to the expiration
of any such coverage, Landlord shall be authorized (but not required) to procure
such coverage in the amount stated with all costs thereof to be chargeable to
Tenant and payable upon written invoice thereof.

 

The limits of insurance required by this Lease, or as carried by Tenant, shall
not limit the liability of Tenant or relieve Tenant of any obligation
thereunder, except to the extent provided for under Article 15 below. Any
deductibles selected by Tenant shall be the sole responsibility of Tenant.
Tenant insurance requirements stipulated in Section 14.2 are based upon current
industry standards. Landlord reserves the right to require additional coverage
or to increase limits as commercially reasonable industry standards change.

 

14.3         Landlord hereby agrees to insure the Building against casualty, at
a level and subject to deductibles that Landlord reasonably deems appropriate.

 

14.4         Should Tenant engage the services of any contractor to perform work
in the Premises, Tenant shall ensure that such contractor carries commercial
general liability, business automobile liability, umbrella/excess liability,
worker’s compensation and employers liability coverages in substantially the
same amounts as are required of Tenant under this Lease. Contractor shall name
Landlord, its trustees, officers, directors, members, agents and employees,
Landlord’s mortgagees and Landlord’s representatives as additional insureds on
the liability policies required hereunder.

 

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14.4.1    All policies required to be carried by any contractor shall be issued
by and binding upon an insurance company licensed to do business in the state in
which the Property is located with a rating of at least “A, ClassVIII,” or
better as set forth in the most current issue of Best’s Insurance Reports,
unless otherwise approved by Landlord. Certificates of insurance, acceptable to
Landlord, evidencing the existence and amount of each insurance policy required
hereunder shall be delivered to Landlord prior to the commencement of any work
in the Premises. Further, the certificates must include an endorsement for each
policy whereby the insurer agrees not to cancel, non-renew, or materially alter
the policy without at least thirty (30) days’ prior written notice to Landlord.
The above requirements shall apply equally to any subcontractor engaged by
contractor.

 

ARTICLE 15

WAIVERS OF SUBROGATION

 

15.1         Notwithstanding anything to the contrary in this Lease, each of
Landlord and Tenant hereby waives its rights against the other, and waives such
rights as against Landlord Parties and Tenant Parties, as applicable, with
respect to any claims or damages or losses (including any claims for bodily
injury to persons (including death) and/or damage to property) which are caused
by or result from risks: (a) insured against under any insurance policy carried
(as the case may be) pursuant to the provisions of this Lease and enforceable at
the time of such damage, loss and/or injury; (b) which would have been covered
under any insurance required to be obtained and maintained by Tenant under this
Lease had such insurance been obtained and maintained as required in this Lease
or, in the case of Landlord, would have been covered under any insurance if
Landlord were required to maintain commercially reasonable insurance maintained
by owners of properties comparable to the Project; or (c) actually insured
against. Each of Landlord and Tenant agrees that in the event of any such loss
or damage, it shall look solely to its insurance for recovery. The effect of
such waiver is not limited by the amount of such insurance actually carried or
required to be carried, to the actual proceeds received after a loss or to any
deductible applicable thereto (i.e., the insured party is liable for any and all
deductibles in its insurance policies and it shall not be entitled to any
payment or reimbursement thereof), and either party’s failure to carry insurance
required under the Lease shall not invalidate such waiver. The foregoing waiver
shall apply regardless of the cause or origin of any such claim, including,
without limitation, the fault or negligence of either party or such party’s
employees. Each party shall cause the insurance company that issues insurance to
such party to waive any rights of subrogation with respect to such insurance and
shall cause the insurance company to issue an endorsement to evidence compliance
with such waiver of subrogation. Each of Landlord and Tenant shall bear the
costs associated with obtaining such waiver of subrogation from its insurance
company. The foregoing waivers shall be in addition to, and not a limitation of,
any other waivers or releases contained in this Lease, and shall survive the
expiration of the Lease Term or earlier termination of this Lease.

 

15.2         Tenant shall cause each insurance policy required to be obtained by
Tenant under this Lease (except for workman’s compensation insurance) to provide
that the insurer waives all rights of recovery by way of subrogation against
Indemnitees in connection with any Liabilities covered by such policy.

 

ARTICLE 16

INDEMNIFICATION AND WAIVER OF CLAIMS

 

Tenant waives all claims against Indemnitees for Liabilities related to
destruction, damage or injury of or to personal property, business or fixtures
in or about the Premises or loss of use of the Premises and for death or injury
to any persons? in any manner related to (a) (other than gross negligence or
willful misconduct of Indemnitees) any act or neglect by any other tenant or
other third party, any loss of or damage to property by theft or otherwise ;and
(b) any accident or event at the Project, Building or Premises, any injury
(including death) or damage to persons or property resulting from any odors,
infestation, casualty, explosion, or water or rain which may leak from any part
of the Premises, or from the pipes, appliances or plumbing works therein or from
the roof, street or subsurface, or from any other place. Tenant acknowledges
that Landlord is not providing any security whatsoever for the Project, Building
or Premises, and Tenant shall be solely responsible for security for its
employees, customers, invitees and agents. In addition, Tenant waives all claims
against Indemnitees for any consequential or punitive damages resulting from any
acts of Indemnitees under this Lease, whether or not wrongful. Except to the
extent caused by the gross negligence or willful misconduct of Landlord or any
Indemnitees, Tenant will defend, indemnify and hold Indemnitees harmless for,
from and against any and all Liabilities, arising out of, connected with or
resulting from (x) any act or omission in, on, about or arising out of, or in
connection with, the use, operation, maintenance and occupancy of the Project or
the Premises, or any part thereof, by Tenant or Tenant Parties, whether or not
consented to by Landlord, including, without limitation, any failure of Tenant
or Tenant Parties to comply fully with the terms and conditions of this Lease,
or (y) any violation or breach of this Lease by Tenant, whether or not such
violation or breach constitutes an Event of Defaults .Except to the extent
caused by the gross negligence or willful misconduct of Tenant or Tenant
Parties, Landlord will defend, indemnify and hold harmless for, from and against
any and all Liabilities arising out of, connected with or resulting from the
gross negligence or willful misconduct (including violations of applicable law)
of Landlord or the Indemnitees. In case any action or proceeding is brought
against any Indemnitee by reason of any such Liabilities, Tenant, upon notice
from Landlord, shall defend the same at Tenant’s expense using counsel approved
in writing by Landlord, which approval shall not be unreasonably withheld,
conditioned or delayed. In case any action or proceeding is brought against
Tenant or any of Tenant Parties by reason of any such Liabilities, Landlord,
upon notice from Tenant, shall defend the same at Landlord’s expense using
counsel approved in writing by Tenant, which approval shall not be unreasonably
withheld, conditioned or delayed. Tenant’s and Landlord’s covenants, agreements
and indemnification in this Article are not intended to and shall not relieve
any insurance carrier of its obligations under policies required to be carried
by Tenant or Landlord pursuant to the provisions of this Lease. The foregoing
indemnity shall not cover any damage or injury that is the direct result of
intentional wrongful acts by Landlord. The provisions of this Article shall
survive expiration of the Lease Term or earlier termination of this Lease.

 

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ARTICLE 17

MAINTENANCE AND REPAIRS

 

17.1         Landlord shall use commercially reasonable efforts to keep and
maintain in good and sanitary condition, repair and working order and make
repairs to and perform maintenance upon (a) the Project and (b) the Premises and
every part thereof that is not Tenant’s express responsibility under this Lease,
including without limitation:

 

17.1.1     Structural elements of the Project, including without limitation
exterior structural walls, load bearing walls, foundations, and floor slab;

 

17.1.2     Mechanical (including HVAC), electrical, plumbing, boilers, pressure
vessels, clarifiers, and fire/life safety systems and sprinklers, including fire
alarm and/or smoke detectors;

 

17.1.3     Landscaping, irrigation, driveways, parking lots, signs and
directories (except as otherwise expressly set forth herein as Tenant’s
obligations), sidewalks and parkways located in, on, or adjacent to the Project;

 

17.1.4     The roofs of buildings within the Project;

 

17.1.5     Exterior windows of the Project, including plate glass and skylights;

 

17.1.6     Utility lines and connections in and to the Project; and

 

17.1.7     Elevators and escalators serving the Premises

 

(collectively, “Landlord’s Maintenance Obligations”). Landlord shall promptly
make repairs (considering the nature and urgency of the repair) for which
Landlord is responsible.

 

17.2         Tenant shall, at its sole expense, keep the interior of the
Premises in good and sanitary order, condition and repair, reasonable wear and
tear excepted, and promptly perform all maintenance and repairs (whether or not
the portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to Tenant, and whether or not the
need for such repairs occurs as a result of Tenant’s use, the elements or the
age of such portion of the Premises) to (a) floor and window coverings; (b)
interior partitions; (c) doors; (d) the interior sides of demising walls and
ceilings; (e) lighting fixtures and facilities; (f) interior painting and wall
coverings; (g) electronic, phone and data cabling and related equipment that is
installed by or for the exclusive benefit of Tenant; (h) private showers and
kitchens; and (i) any permitted Signs (as defined below). All such work shall be
performed in accordance with the terms and provisions of this Lease, including
without limitation the provisions of Article 13 hereof entitled “Alterations;
Mechanic’s Liens.” If Tenant fails to make any repairs to the Premises for more
than fifteen (15) days after notice from Landlord (although notice shall not be
required if there is an emergency), Landlord may make the repairs, and Tenant
shall pay to Landlord as Additional Rent the reasonable cost of the repairs
within thirty (30) days after receipt of an invoice, together with an
administrative charge in an amount equal to ten percent (10%) of the cost of the
repairs. Tenant’s obligations set forth in the preceding sentence shall survive
expiration of the Lease Term or earlier termination of this Lease.

 

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ARTICLE 18

SIGNS

 

18.1         Landlord shall retain absolute control over the exterior appearance
of the Project and the appearance of the Premises from the exterior thereof. No
sign, placard, picture, advertisement, lettering, name or notice (“Sign”) shall
be inscribed, displayed, printed or affixed on or to any part of the Premises
that can be seen from outside the Premises, and Tenant will not place or
install, or permit the placement or installation of, any Signs, drapes,
shutters, or any other items that will in any way alter the exterior appearance
of the Project or the Premises, without (a) the prior written consent of
Landlord, which consent Landlord may withhold in its sole and absolute
discretion, and (b) to the extent required, the formal approval of any local
municipalities or governing boards, ensuring compliance with applicable
municipal, county and state laws and ordinances as well as applicable covenants,
conditions and restrictions, if any. Tenant shall not place or install any
signage in the Common Areas, including without limitation any temporary signage
such as sandwich board signs, signs on easels and signs affixed to or hanging
from walls, windows or doors. If Tenant is allowed to print or affix or in any
way place a Sign in, on, or about the Premises, upon expiration of the Lease
Term or earlier termination of this Lease, Tenant, at Tenant’s sole cost and
expense, shall both remove such Sign and repair all damage in such manner as to
restore all aspects of the Premises and the Project to the condition existing
prior to the placement of said Sign. All approved Signs on outside doors shall
be printed, painted, affixed or inscribed at the expense of Tenant by a person
approved in advance by Landlord utilizing a method approved in advance by
Landlord. Any work performed by Tenant in contravention to the provisions of
this Lease may be removed by Landlord with or without notice at Tenant’s sole
expense, with all expenses incurred by Landlord in connection therewith,
including payment of fines and repair of any damage, constituting Additional
Rent. Tenant’s obligations set forth in the preceding sentence shall survive
expiration of the Lease Term or earlier termination of this Lease.
Notwithstanding the foregoing, Landlord shall, at Landlord’s sole cost and
expense, install Tenant’s trade name at or near the common exterior entryway to
the Premises as well as Tenant’s trade name and suite number on the Project or
Building directory sign, if any. All such letters or numerals shall be in
accordance with the criteria established by Landlord for the Project and/or
Building. Unless otherwise approved by Landlord, the trade name shall not
include a logo or other graphic representation or symbol of Tenant’s name.

 

18.2         During the Lease Term, subject to all necessary governmental
approvals and permits and subject to the provisions of this Section 19.2, Tenant
shall have the right, at its sole cost and expense, to install and maintain one
(1) identification sign on the Building monument sign (“Exterior Building Sign”)
located along Union Hills Drive (the “Exterior Sign Placard”). Tenant’s signage
right on the Exterior Building Sign is non-exclusive. Landlord shall have the
right to replace, refurbish, redesign or relocate the Exterior Building Sign
from time to time (in which case each reference herein to the Exterior Building
Sign shall be deemed to refer to such replacement or relocated sign), so long as
Landlord does not materially adversely change the visibility, size or location
of Tenant’s signage provided by the existing Exterior Building Sign. All aspects
of the Exterior Sign Placard shall be (a) consistent with Landlord’s signage
criteria attached as Exhibit “H” hereto for the Building, (b) subject to
Landlord’s prior written approval, not to be unreasonably withheld or delayed,
and (c) in compliance with all applicable governmental rules and regulations.
Tenant shall be responsible, at its sole cost and expense, for the installation,
maintenance, repair and replacement of the Exterior Sign Placard. Upon the
expiration or earlier termination hereof, or termination of Tenant’s rights to
maintain the Exterior Sign Placard, Tenant shall, at its sole cost and expense,
remove the Exterior Sign Placard and repair any damage resulting therefrom.
Tenant’s rights to the Exterior Sign and Exterior Sign Placard under this
Section 19.2 are personal to Greenwood Hall Inc. and such rights shall not be
assigned to any other entity or person without Landlord’s consent, which
Landlord may withhold in its sole discretion. Notwithstanding the foregoing,
Tenant shall retain its rights to the Exterior Building Sign and Exterior Sign
Placard under this Section 19.2 only so long as (i) there is no continuing
default by Tenant under this Lease beyond any applicable notice and cure
periods; and (ii) Tenant occupies the entire Premises leased by Tenant under
this Lease; if Tenant fails to maintain its occupancy of the entire Premises
leased under this Lease, then Landlord may require Tenant to remove the Exterior
Sign Placard by giving Tenant at least thirty (30) days’ written notice, after
which case (if not already removed by Tenant), Landlord may remove the Exterior
Sign Placard on behalf of Tenant and Tenant shall reimburse Landlord for the
actual cost thereof within thirty (30) days after Landlord’s invoice therefor is
submitted to Tenant.

 

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ARTICLE 19

ENTRY BY LANDLORD

 

Unless an emergency exists, with at least two (2) business days notice, Tenant
shall permit Landlord and Landlord Parties to enter the Premises during regular
business hours for the purpose of (a) inspecting the Premises, (b) maintaining
the Project or any part thereof, (c) making repairs, alterations or additions to
any portion of the Project, including the erection and maintenance of such
scaffolding, canopies, fences and props as may be required therefor, (d) posting
notices of non-responsibility for Alterations or repairs, (e) showing the
Premises to prospective tenants during the last six (6) months of the Lease
Term, (f) exercising and performing Landlord’s rights and obligations under this
Lease, or (g) placing upon the Project, or any portion thereof, any usual or
ordinary “for sale” signs, all without any right of Tenant to an offset against
or abatement of Rent and without any liability to Tenant for any loss of
occupation or quiet enjoyment of the Premises thereby occasioned. Landlord shall
have the right, at any time within the final nine (9) months of the Lease Term,
to place upon the Premises any usual or ordinary “for lease” signs. In
exercising such entry rights, Landlord shall endeavor to minimize, as reasonably
practicable, the interference with Tenant’s Permitted Use, and shall provide
Tenant with at least two (2) business days advance telephonic notice of such
entry (except in emergency situations, or if an Event of Default has occurred,
or in cases of routine maintenance or cleaning, in which cases no notice shall
be required). Landlord may use any means which Landlord may deem proper to open
and obtain entry to the Premises in an emergency. Any entry to the Premises by
Landlord shall not be construed or deemed to be forcible or unlawful entry into,
or detainer of, the Premises, or an eviction of Tenant from the Premises, or
grounds for any abatement or reduction of Rent.

 

ARTICLE 20

SURRENDER

 

20.1         No act or thing done by Landlord or Landlord Parties shall be
deemed an acceptance of a surrender of the Premises unless such acceptance is
expressed in writing and duly executed by Landlord. The delivery of any keys to
the Premises to Landlord or Landlord Parties shall not operate as a termination
of this Lease or as an acceptance of Tenant’s surrender of the Premises. If
Tenant surrenders the Premises, or is dispossessed by process of law or
otherwise, any personal property left in or about the Premises shall, at the
option of Landlord, be deemed abandoned and title thereto shall pass to Landlord
under this Lease as by a bill of sale; provided, however, that Landlord may, at
its sole discretion, remove all or any part of such personal property from the
Premises and the expenses incurred by Landlord in connection therewith,
including storage costs and the cost of repairing any damage to the Premises
and/or the Project caused by such removal, plus an administrative fee of ten
percent (10%), shall constitute Additional Rent. The obligations of Tenant under
this Section shall survive the expiration or earlier termination of this Lease.

 

20.2         Tenant shall, upon the expiration of the Lease Term or earlier
termination of this Lease, surrender the Premises to Landlord, broom clean and
in the same condition as that existing on the Commencement Date, ordinary wear
and tear excepted, and shall remove any Alterations required to be removed in
accordance with the provisions of Section 13.4. Upon the expiration of the Lease
Term or earlier termination of this Lease, Tenant shall surrender to Landlord
all keys to the Premises.

 

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ARTICLE 21

DAMAGE

 

21.1         In the event the Premises or the Building, or any portion thereof,
shall be damaged by fire or other casualty not caused by the intentional or
negligent acts of Tenant or Tenant Parties, which damage substantially
interferes with Tenant’s use of the Premises, and provided that Tenant shall
have promptly provided notice to Landlord of such damage, this Lease shall
terminate one hundred and eighty (180) days after Landlord’s receipt of notice
of such damage, unless Tenant receives written notice of Landlord’s election to
repair said damage within such period of time, in which case this Lease shall
continue in full force and effect. However, if Landlord is unable to repair said
damage within two hundred and seventy (270) days after Landlord’s receipt of
notice of such damage, then Tenant shall have the right to terminate the Lease
upon written notice to Landlord of such election within 15 days after the
expiration of the two hundred and seventy (270) day period, unless Landlord has
completed such work within such 15 day period. If this Lease is terminated
pursuant to this Section and if an Event of Default has not occurred, Rent shall
be prorated as of the date of termination of this Lease and the Security
Deposit, if any, shall be returned to Tenant, less any offsets permitted
hereunder, and all rights and obligations under this Lease shall cease and
terminate, except as to those that are stated herein to survive expiration of
the Lease Term or termination of this Lease. In the event of any damage to the
Building or the Premises to the extent of twenty-five percent (25%) or more of
the replacement cost of either the Building or the Premises, or in the event the
Project shall be damaged to the extent of twenty-five percent (25%) or more of
the replacement aggregate cost thereof, Landlord may elect to terminate this
Lease upon written notice to Tenant of such election within ninety (90) days
after the occurrence of the event causing the damage.

 

21.2         Landlord’s repairs pursuant to the provisions of this Article, if
any, shall be limited to such repairs as are necessary to place the Project,
Building or Premises in the condition existing on the Commencement Date, and
when placed in such condition the Project, Building and Premises shall be deemed
restored and rendered tenantable and Tenant, at its sole expense, shall
immediately perform, in accordance with the provisions of Article 13 hereof,
entitled “Alterations; Mechanic’s Liens,” any additional work required and
repair or replace its stock in trade, fixtures, furniture, furnishings and
equipment.

 

21.3         All insurance proceeds payable under any fire and/or rental
interruption insurance shall be paid solely to Landlord, and Tenant shall have
no interest therein. Insurance proceeds for Tenant’s separate insured interest,
such as renter’s insurance or business interruption insurance, shall be payable
to Tenant. Tenant shall in no case be entitled to compensation for damages on
account of any annoyance or inconvenience in making repairs under any provision
of this Lease. Provided that Tenant is not in default (after notice and
opportunity to cure), during any period of time that all or a material portion
of the Premises is rendered untenantable as a result of a casualty, the Rent
shall abate for the portion of the Premises that is untenantable and not used by
Tenant.

 

ARTICLE 22

ASSIGNMENT, SUBLETTING AND TRANSFERS OF OWNERSHIP

 

22.1         Tenant will not assign, sublet, license, sell, mortgage, encumber,
convey, hypothecate or otherwise transfer all or any part of Tenant’s interest
in this Lease, or permit the Premises to be occupied by anyone other than Tenant
and Tenant’s employees (each of the foregoing transactions referred to herein as
a “Transfer” and any party with whom a Transfer has occurred referred to herein
as a “Transferee”), without Landlord’s prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed. Tenant shall request
Landlord’s consent to any proposed Transfer at least thirty (30) days prior to
the proposed effective date of such proposed Transfer. Tenant’s written request
shall include at least the following: (a) the name and legal composition of the
proposed Transferee; (b) the nature of the proposed Transferee’s business and
the use to which it intends to put the Premises; (c) the terms and conditions of
the proposed Transfer; (d) information related to the experience and financial
resources of the proposed Transferee; (e) such other information as Landlord may
request to supplement, explain or provide details of the matters submitted by
Tenant pursuant to clauses (a) through (d) above; and (f) funds sufficient to
pay Landlord a $500 administrative fee. Tenant shall also pay Landlord, within
two (2) Business Days after Landlord’s request, an amount equal to the estimate
of the amount necessary to reimburse all reasonable costs incurred by Landlord,
including any attorneys’ fees, architects’ fees and engineering fees, in
connection with evaluating Tenant’s request and preparing any related
documentation in an amount not to exceed $1,500.00 in total; provided Tenant
accepts Landlord’s standard form of Landlord Consent, with only business term
changes made by Landlord and no other changes. Any shortfall between the
estimate from Landlord and the actual costs incurred by Landlord shall be paid
by Tenant to Landlord within five (5) Business Days after request by Landlord
(provided that Tenant shall not be required to pay any amount for legal only in
excess of $1,500.00 in total for such request [provided Tenant accepts
Landlord’s standard form of Landlord Consent, with only business term changes
made by Landlord and no other changes ]including all prior amounts paid), and
any excess between the estimate from Landlord and the actual costs incurred by
Landlord shall be paid by Landlord to Tenant within five (5) days after
completion of such work.

 

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22.2         In the event Landlord consents to a Transfer, any Rent or other
compensation paid to Tenant in excess of the Rent payable to Landlord pursuant
to this Lease for the portion of the Premises subject to the Transfer, as
measured on a per-square-foot basis, less reasonable costs incurred by Tenant in
connection with the Transfer for brokerage fees, attorneys’ fees, tenant
improvements and other concessions reasonably required to induced the
Transferee, shall be paid by Tenant to Landlord as Additional Rent. For purposes
of this Section, the amount due to Tenant by a Transferee will be deemed to
include any lump sum payment or other consideration given to Tenant in
consideration of the Transfer. Tenant’s obligations set forth in this Section
shall survive expiration of the Lease Term or earlier termination of this Lease.

 

22.3         Landlord’s acceptance of Rent from Tenant or any Transferee shall
not constitute a waiver by Landlord of the provisions of this Lease or a release
of Tenant from any of its covenants, duties or obligations stated herein.

 

Notwithstanding anything to the contrary contained in this Lease, if at any time
Tenant makes a written request for Landlord’s consent to a Transfer, Landlord
shall have the right, exercisable by written notice to Tenant within ten (10)
Business Days of Landlord’s receipt of such written request, to (a) terminate
this Lease with respect to only that portion of the Premises that is subject to
the proposed Transfer, in which event this Lease will remain in full force and
effect as to the remainder of the Premises (with an appropriate apportionment of
Rent from and after the effective date of such termination based upon the
rentable square footage remaining in the Premises), or (b) terminate this Lease
in its entirety provided that Tenant, within 10 Business Days after receipt of
Landlord’s notice of termination, shall have the right to withdraw its request
for Landlord’s consent to a Transfer. In such event, this Lease shall continue
in full force and effect as if Tenant had never provided Landlord with a request
for Landlord’s consent to a Transfer.

 

22.4         Any termination occurring in accordance with the preceding sentence
shall be effective as of the effective date of the proposed Transfer, or if no
such effective date was specified, as of a date reasonably determined by
Landlord in its sole discretion.

 

22.5         Notwithstanding anything to the contrary contained in this Article
22, in the event Tenant contemplates a Transfer of all or a portion of the
Premises (or in the event of any other Transfer or Transfers entered into by
Tenant as a subterfuge in order to avoid the terms of this Section 22.5),
Landlord shall have the option, by giving written notice to Tenant within thirty
(30) days after receipt of any Tenant’s Transfer notice, to recapture the space
subject to Tenant’s desired Transfer (the “Contemplated Transfer Space”)
provided that Tenant, within 10 Business Days after receipt of Landlord’s notice
of recapture, shall have the right to notify Landlord of the cancelation of such
contemplated Transfer or unwind such Transfer (if already occurred). In such
event, this Lease shall continue in full force and effect as if Tenant had never
made or contemplated such Transfer. In the event such option is exercised by
Landlord (and Tenant fails to provide notice of cancelation or unwinding of such
Transfer, as applicable, within the time period above), this Lease shall be
canceled and terminated with respect to such Contemplated Transfer Space as of
the contemplated effective date of the Transfer until either (i) the last day of
the term of the contemplated Transfer as set forth in Tenant’s intention to
transfer notice or (ii) the last day of the Lease Term, as Landlord may elect in
its sole discretion.

 

22.6         If a default under this Lease should occur while the Premises or
any part thereof is subject to a Transfer, Landlord may, at its option and in
addition to any other rights or remedies provided for herein, at law or in
equity, collect directly from the Transferee all rent or other consideration
becoming due to Tenant from the Transferee and apply such sums against any Rent
due to Landlord from Tenant. Tenant authorizes and directs any Transferee to
make payment directly to Landlord of any and all sums due to Tenant under any
Transfer upon written notice from Landlord. No direct collection by Landlord
from any Transferee shall be construed to constitute a novation or a release of
Tenant or any Guarantor from the further performance of their respective
obligations hereunder. The terms of this Section shall survive expiration of the
Lease Term or earlier termination of this Lease.

 

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22.7         If Tenant is a corporation, partnership or limited liability
company, the issuance of any additional stock or equity interest and/or the
transfer, assignment or hypothecation of any stock or interest in such
corporation, partnership or limited liability company in the aggregate in excess
of fifty percent (50%) of such stock or interests, as the same may be
constituted as of the date of this Lease, whether directly or indirectly, shall
be deemed to be a Transfer within the meaning of this Article.

 

22.8         Landlord’s express written consent to a Transfer shall not
constitute a release of Tenant from any of its covenants, duties or obligations
hereunder, including Tenant’s obligation to pay Rent when due, whether occurring
before or after such Transfer, nor shall Landlord’s consent to any one Transfer
constitute Landlord’s consent to any other or subsequent Transfers. In addition,
Guarantor shall not be released in the event of any Transfer.

 

22.9         Notwithstanding anything in this Article 22 which may be construed
to the contrary, a Transfer of all or a portion of the Premises to an
“Affiliate” (as hereinafter defined) of Tenant shall be deemed permitted
hereunder (a “Permitted Affiliate Transfer”) without the requirement of
obtaining Landlord’s prior written consent; provided that (i) the Transfer does
not have the effect of reducing the tangible net worth of Tenant from that which
existed immediately prior to the date of Transfer, (ii) such Transfer is not a
subterfuge by Tenant to avoid its obligations under this Lease, (iii) if an
assignment of the Lease, the Transferee assumes, in full, the obligations of
Tenant under this Lease, (iv) Tenant provides Landlord with written notice of
such Permitted Affiliate Transfer within ten (10) days after effecting such
transfer, and (v) Tenant remains fully liable under this Lease. The term
“Affiliate” of Tenant shall mean an entity which is (a) controlled by, controls,
or is under common control with Tenant; (b) any entity resulting from any
merger, consolidation, reorganization or other restructure (provided such
resulting entity has a tangible net worth equal to or greater than that of
Tenant immediately prior to such merger, consolidation, reorganization or other
restructure), or (c) any entity which acquires all or substantially all of the
assets and/or ownership interests of Tenant, and which continues to operate
substantially the same business at the Premises as had been maintained by
Tenant. Sections 22.2, 22.4, 22.5 and 22.7, shall not apply to Permitted
Affiliate Transfers that comply with the terms of this Section 22.9.

 

ARTICLE 23

EVENTS OF DEFAULT

 

23.1         Tenant will be in breach of this Lease (an “Event of Default”) if
at any time during the Lease Term:

 

23.1.1     Tenant fails to make payment of any installment of Rent as and when
due where such failure shall continue for a period of five (5) business days
after Tenant’s receipt of written notice from Landlord;

 

23.1.2     Tenant fails to timely perform any of its material obligations to
obtain and keep in full force and effect the insurance required hereunder, which
failure shall constitute an immediate default hereunder without the requirement
of any notice and cure period, or Tenant fails to perform any of its other
obligations under Article 15 hereof entitled “Insurance,” where such failure
shall continue for a period of ten (10) days after written notice from Landlord;

 

23.1.3     Tenant fails to observe, perform or fulfill any of its other material
duties, covenants, agreements or obligations hereunder as and when due, and such
failure continues for a period of 30 days after Tenant’s receipt of written
notice from Landlord; provided, however, that if the nature of Tenant’s
obligation is such that more than 30 days are reasonably required for its
performance, then Tenant will not be in breach if Tenant commences performance
within such 30 day period and thereafter diligently prosecutes the same to
completion, but in no event shall such time period extend beyond 60 days; or

 

23.1.4     Tenant, any Guarantor, or any Transferee becomes insolvent, makes a
transfer in fraud of its creditors, makes a transfer for the benefit of its
creditors, is the subject of a bankruptcy petition, or is adjudged bankrupt or
insolvent in proceedings filed against it; or a receiver, trustee, or custodian
is appointed for all or substantially all of any such party’s assets; or any
such party fails to pay its debts as they become due, convenes a meeting of all
or a portion of its creditors, or performs any acts of bankruptcy or insolvency,
including the selling of its assets to pay creditors or the attachment,
execution or other judicial seizure of substantially all of such party’s assets
located at the Premises or of such party’s interest in this Lease where such
seizure is not discharged within sixty (60) days.

 

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ARTICLE 24

REMEDIES OF LANDLORD

 

24.1         Nothing contained herein shall constitute a waiver of Landlord’s
right to recover damages by reason of Landlord’s efforts to mitigate damages
following an Event of Default, nor shall anything contained herein adversely
affect Landlord’s right to indemnification against liability for injury or
damages to persons or property occurring prior to expiration of the Lease Term
or earlier termination of this Lease.

 

24.2         All cure periods provided to Tenant herein shall run concurrently
with any mandatory cure periods required to be provided by law.

 

24.3         If a monetary Event of Default exists and remains uncured for ten
(10) days after Landlord provides written notice to Tenant, or non-monetary
Event of Default exists and remains uncured for thirty (30) days after Landlord
provides written notice to Tenant, in addition to any other rights or remedies
provided for herein or at law or in equity, Landlord, at its sole option, shall
have the following rights:

 

24.3.1     The right to obtain a judicial order to declare this Lease at an end,
to reenter the Premises and take possession thereof and to terminate all of the
rights of Tenant, and anyone claiming by, under or through Tenant, in and to the
Premises.

 

24.3.2     The right to terminate Tenant’s right to possession and/or reenter
the Premises without declaring this Lease at an end and to occupy the same, or
any portion thereof, for and on account of Tenant as hereinafter provided, in
which event Tenant shall be liable for and pay to Landlord on demand all such
reasonable expenses as Landlord may have paid, assumed or incurred in recovering
possession of the Premises, including, without limitation, costs, expenses,
reasonable attorneys’ fees and expenditures placing the same in good order, or
preparing or altering the same for reletting, and all other expenses,
commissions and charges paid by Landlord in connection with reletting the
Premises. Any such reletting may be for the remainder of the Lease Term or for a
longer or shorter period. Such reletting shall be for such rent and on such
other terms and conditions as Landlord, in its sole discretion, deems
appropriate. Landlord may execute any lease either in Landlord’s own name or in
the name of Tenant, or assume Tenant’s interest in any existing subleases to any
Transferee, as Landlord may see fit, and Tenant shall have no right or authority
whatsoever to collect any rent from such tenants or Transferee. No re-entry or
taking possession of the Premises or reletting thereof by Landlord pursuant to
this Subsection, and no acceptance of surrender of the Premises or other action
on Landlord’s part, shall be construed as an election to terminate this Lease
unless a written notice of such intention is given to Tenant. In any case, and
whether or not the Premises or any part thereof is relet, Tenant shall be liable
until the end of the Lease Term for Rent less net proceeds, if any, of any
reletting effected for the account of Tenant, and in no event shall Tenant be
entitled to any excess Rent received by Landlord over and above that which
Tenant is obligated to pay hereunder. Landlord reserves the right to bring such
actions for the recovery of any deficits remaining unpaid by Tenant to Landlord
hereunder as Landlord deems advisable from time to time, without being obligated
to await the end of the Lease Term. Commencement or maintenance of one or more
such actions by Landlord shall not bar Landlord from bringing any subsequent
actions for further accruals. The terms of this Subsection shall survive
expiration of the Lease Term or earlier termination of this Lease.

 

24.3.3     Regardless of whether Landlord has relet all or any portion of the
Premises as provided above, Landlord shall have the right at any time to elect
to terminate this Lease for such previous Event of Default on the part of the
Tenant and to terminate all the rights of Tenant in and to the Premises, or to
continue this Lease in full force and effect, whether or not Tenant shall have
vacated the Premises. In the event Landlord elects to continue this Lease in
full force and effect, then Landlord shall be entitled to enforce all of its
rights and remedies under this Lease, including the right to recover Rent as it
becomes due. Landlord’s election not to terminate this Lease shall not preclude
Landlord from subsequently electing to terminate this Lease or pursuing any of
its other remedies.

 

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24.3.4     Pursuant to the rights of re-entry provided above, upon obtaining an
appropriate judicial order, Landlord may remove all persons from the Premises
and may, but shall not be obligated to, (a) remove all property therefrom and
(b) enforce any rights Landlord may have against said property or store the same
in any public or private warehouse or elsewhere at the cost and for the account
of Tenant or the owner or owners thereof. Such action by the Landlord shall not
constitute a termination of this Lease. Tenant agrees to indemnify Indemnitees
and to hold Indemnitees free and harmless for, from and against any liability
whatsoever for the removal and/or storage of any such property, whether
belonging to Tenant or any third party whomsoever. The indemnity set forth in
the preceding sentence shall survive expiration of the Lease Term or earlier
termination of this Lease.

 

24.4         If Tenant shall fail to pay any Rent or perform any other covenant
or obligation on its part to be performed hereunder and such failure is not
cured within the applicable cure period prescribed herein, Landlord may, without
waiving or releasing Tenant from any of Tenant’s obligations or the Event of
Default, make such payment or perform such covenant or obligation on behalf of
Tenant. All reasonable sums paid by Landlord and all necessary incidental costs
incurred by Landlord in performing such covenant or obligation, together with
interest at the Default Rate from the date incurred until paid, shall be paid by
Tenant to Landlord within thirty (30) days after written demand therefor. The
foregoing rights are in addition to any and all remedies available to Landlord
upon an Event of Default. In the event that Tenant shall fail to perform any of
its maintenance and repair obligations set forth herein resulting in an Event of
Default, Landlord may elect, but shall not be obligated, to assume such
obligations of Tenant for the remainder of the Lease Term, in which event Tenant
shall pay to Landlord, in addition to any other sums set forth herein, a
management fee equal to three percent (3%) of the cost of the maintenance and
repair obligations to compensate Landlord for its service obligations so
assumed.

 

24.5         If any payment of Rent payable by Tenant hereunder is not received
by Landlord within five (5) business days after the due date, it shall bear
interest at the Default Rate from the date due until paid.

 

24.6         Tenant acknowledges that, in addition to interest costs, the late
payment by Tenant to Landlord of any Rent will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of such costs being extremely
difficult and impractical to fix. Such other costs include, without limitation,
processing, administrative and accounting charges and late charges that may be
imposed on Landlord by the terms of any mortgage, deed of trust or related loan
documents encumbering the Premises. Accordingly, if any payment of Rent is not
received by Landlord within 5 days of the date upon which such payment is due,
Tenant shall pay to Landlord as a late charge an additional sum equal to the
greater of $250.00 or (b) five percent (5%) of the overdue amount. The parties
agree that such late charge represents a fair and reasonable estimate of the
costs that Landlord will incur by reason of any late payment by Tenant, and the
payment of late charges and interest are distinct and separate in that the
payment of a late charge is to compensate Landlord for Landlord’s processing,
administrative and other costs incurred by Landlord as a result of Tenant’s
delinquent payments. Acceptance of a late charge or interest shall not
constitute a waiver of the Event of Default or prevent Landlord from exercising
any of the other rights and remedies available to Landlord under this Lease.

 

24.7         If Tenant fails to remove by the expiration or earlier termination
of this Lease all of Tenant’s personal property, or any items of Alterations
identified by Landlord for removal, Landlord, in addition to Landlord’s other
rights and remedies under this Lease, may (a) remove and store such items and
(b) upon ten (10) days prior notice to Tenant, sell all or any such items at
private or public sale for such price as Landlord may obtain. Landlord shall
apply the proceeds of any such sale to any amounts due to Landlord under this
Lease from Tenant (including Landlord’s reasonable attorneys’ fees and other
costs incurred in the removal, storage, and/or sale of such items), with the
remainder, if any, to be paid to Tenant. Tenant agrees to indemnify Indemnitees
and to hold Indemnitees free and harmless for, from and against any liability
whatsoever for the removal and/or storage of any such property, whether
belonging to Tenant or any third party whomsoever. In the event there is a cost
to Landlord associated with such removal, storage, and/or sale in excess of any
proceeds of any such sale, then Tenant shall, within thirty (30) days of receipt
of written notice of such cost, pay the full amount of such cost to Landlord.
The provisions of this Section shall survive the expiration or earlier
termination of this Lease.

 

24.8         If Tenant’s right of possession is terminated by Landlord due to an
Event of Default, then this Lease may be terminated by Landlord at its option.
On such termination, Landlord may recover from Tenant, in addition to the
remedies permitted at law:

 

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24.8.1     The worth, at the time of the award, of the unpaid Base Monthly Rent
and Additional Rent which had been earned as of the time this Lease is
terminated;

 

24.8.2     The worth, at the time of the award, of the amount by which the Rent
that would have been earned after the date of termination of this Lease until
the time of award exceeds the amount of the loss of rents that Tenant proves
could be reasonably avoided;

 

24.8.3     The worth, at the time of the award, of the amount by which the Rent
for the balance of the Lease Term after the time of award exceeds the amount of
such rental loss for such period as the Tenant proves could have been reasonably
avoided; and

 

24.8.4     Any other reasonable amount necessary to compensate Landlord for all
detriment caused by the Event of Default, or which in the ordinary course of
events would be likely to result therefrom, including, without limitation, (a)
expenses for cleaning, repairing or restoring the Premises and removal
(including the repair of any damage caused by such removal) and storage (or
disposal) of Tenant’s personal property, equipment, fixtures, Alterations, and
any other items which Tenant is required under this Lease to remove but does not
remove, (b) expenses for altering, remodeling or otherwise improving the
Premises for the purpose of reletting the Premises, (c) brokers’ fees and
commissions, advertising costs and other expenses of reletting the Premises, (d)
costs of carrying the Premises such as taxes, insurance premiums, utilities and
security precautions, (e) expenses of retaking possession of the Premises, (f)
reasonable attorney’s fees and court costs, (g) any unamortized brokerage
commissions paid in connection with this Lease, and (h) reimbursement of any
rental or other concessions granted or made in favor of Tenant in consideration
of this Lease including, but not limited to, any moving allowances,
contributions or payments by Landlord for tenant improvements or buildout
allowances or assumptions by Landlord of any of the Tenant’s previous lease
obligations.

 

24.9         All past due amounts owed by Tenant under this Lease shall bear
interest at the greater of the prime interest rate plus ten percent (10%) per
annum or twelve percent (12%) per annum (the “Default Rate”), however, that the
Default Rate shall in no event exceed the maximum rate (if any) permitted by
applicable law. The terms of this Section shall survive expiration of the Lease
Term or earlier termination of this Lease.

 

24.10       All rights, options and remedies of Landlord contained in this Lease
shall be construed and held to be cumulative, and no one of them shall be
exclusive of the other, and Landlord shall have the right to pursue any one or
all of such remedies or any other remedy or relief which may be provided by law
or in equity, whether or not stated in this Lease. Nothing in this Article shall
be deemed to limit or otherwise affect Tenant’s indemnification of Indemnitees
pursuant to any provision of this Lease. Notwithstanding anything to the
contrary in this Lease, Landlord shall use commercially reasonable efforts to
mitigate its damages.

 

ARTICLE 25

SURRENDER OF PREMISES NOT MERGER

 

The voluntary or other surrender of the Premises by Tenant, or mutual
cancellation of this Lease by Landlord and Tenant, will not be deemed to merge
the interests of Landlord and Tenant in and to the Premises. Any such surrender
or cancellation may, at the option of Landlord, operate as a termination of all
or any existing Transfers or as an assignment to Landlord of any or all of such
Transfers.

 

ARTICLE 26

ATTORNEYS’ FEES; COLLECTION CHARGES

 

26.1         In the event of any legal action, arbitration or proceeding between
the parties hereto, reasonable attorneys’ fees, court costs and expenses of the
prevailing party shall be added to the judgment therein

 

26.2         If Landlord utilizes the services of an attorney or other
professional to enforce any of its rights under or arising from this Lease, if
an Event of Default has occurred, Tenant agrees to pay Landlord’s reasonable
costs and expenses actually incurred, including without limitation, outside
appraisers, accountants, attorneys, and other professional fees, regardless of
the fact that no legal action may be commenced or filed by Landlord and whether
or not any such action is prosecuted to judgment.

 

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26.3         The terms of this Article shall survive expiration of the Lease
Term or earlier termination of this Lease.

 

ARTICLE 27

CONDEMNATION

 

27.1         If twenty-five percent (25%) or more of the square footage of the
Premises is taken for any public or quasi-public purpose by any governmental
power or authority, by exercise of the right of appropriation, reverse
condemnation, condemnation, eminent domain or deed in lieu thereof (such taking
being referred to herein as a “Taking”), and if the remaining portion of the
Premises is not reasonably adequate for the operation of Tenant’s business after
Landlord completes any repairs or alterations that Landlord elects to make, if
any, either Tenant or Landlord may terminate this Lease by notifying the other
party of such election in writing within twenty (20) days after the earlier of
Landlord completes any repairs or alterations that Landlord elects to make, or
Landlord notifies Tenant in writing that it will not be making repairs or
alterations.

 

27.2         If less than twenty-five percent (25%) of the Premises is subject
to a Taking, Landlord at its option may terminate this Lease. If Landlord does
not so elect to terminate this Lease, Landlord will promptly proceed to restore
the Premises to substantially its same condition existing prior to such partial
Taking, allowing for any reasonable effects of such Taking, and a proportionate
allowance based on the loss of square footage will be made to Tenant for the
Rent corresponding to the time during which, and to the part of the Premises
which, Tenant is deprived on account of such Taking and restoration. If the
remaining portion of the Premises is not reasonably adequate for the operation
of Tenant’s business after Landlord completes any repairs or alterations that
Landlord elects to make, Tenant may terminate this Lease by notifying Landlord
of such election in writing within twenty (20) days after Landlord completes any
repairs or alterations that Landlord elects to make.

 

27.3         Tenant may not assert any claim against Landlord or the taking
authority for any compensation because of such Taking ( except that Tenant may
file a separate claim with the taking authority as referenced below), and
Landlord will be entitled to receive the entire amount of any award without
deduction for any estate or interest of Tenant in and to the Premises (except
for Tenant’s claim as referenced below). Tenant shall, however, have the right,
to the extent that the same shall not reduce or prejudice amounts available to
Landlord, to claim from the taking authority, but not from Landlord, such
compensation as may be recoverable by Tenant in its own right for relocation
benefits, moving expenses and damage to Tenant’s personal property and trade
fixtures.

 

ARTICLE 28

RULES AND REGULATIONS

 

Tenant will faithfully observe and comply with, and shall be responsible to
enforce with respect to Tenant Parties, any and all rules and regulations
promulgated by Landlord for the Premises from time to time (the “Rules and
Regulations”). Landlord’s current Rules and Regulations are attached hereto as
Exhibit “E.” Landlord reserves the right to modify and amend the Rules and
Regulations as it deems necessary or desirable, in Landlord’s sole discretion
and with written notice to Tenant. Landlord and Landlord Parties will not be
responsible to Tenant for the failure of any party to observe the Rules and
Regulations except that Landlord agrees that no tenant shall be treated more
favorably with respect to the Rules and Regulations than any other tenant. The
terms of the previous sentence shall survive the expiration of the Lease Term or
earlier termination of this Lease.

 

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ARTICLE 29

ESTOPPEL CERTIFICATE

 

Tenant will execute and deliver to Landlord, within ten (10) Business Days of
Landlord’s written demand, a statement in writing addressed to Landlord or to
any third party selected by Landlord, certifying (a) that this Lease is in full
force and effect and has not been amended or, if amended, certifying copies of
such amendment(s), (b) the amount of Base Monthly Rent and Additional Rent
payable hereunder, (c) the date to which Rent and other charges are paid, (d)
that there are not, to Tenant’s knowledge, any uncured defaults of Landlord
hereunder or specifying such defaults if they are claimed, (e) that Tenant will
not amend, terminate or make prepayment of more than one month’s Rent under this
Lease, (f) that any Notice (as defined below) required hereunder to be given to
Landlord shall be given also to Mortgagee and any right of Tenant hereunder
which is dependent on such Notice shall take effect only after Notice is so
given, and (g) all such other matters as Landlord may reasonably request. Any
such statement may be conclusively relied upon by any prospective purchaser or
encumbrancer of the Premises. Tenant’s failure to deliver such statement within
such ten (10) Business Day period shall be conclusive upon Tenant that (x) this
Lease is in full force and effect, without modification except as may be
represented by Landlord; (y) there are no uncured defaults in Landlord’s
performance; and (z) not more than one (1) month’s Rent has been paid in
advance. Tenant shall indemnify, protect, defend (with counsel reasonably
approved by Landlord in writing) and hold Indemnitees harmless from and against
any and all Liabilities attributable to any failure by Tenant to timely deliver
any such estoppel certificate to Landlord.

 

ARTICLE 30

SALE BY LANDLORD

 

The term “Landlord” as used in this Lease shall be limited to mean and include
only the owner or owners, at the time in question, of the fee title to the
Premises and any and all owners of the fee title to the Premises during the
Lease Term for purposes of the Indemnities with respect to matters arising while
owned by the applicable Landlord. Upon any transfer or conveyance of any such
title or interest (other than a transfer for security purposes only), the
transferor shall be automatically relieved of all covenants and obligations on
the part of the Landlord contained in this Lease, whether express or implied,
ripe or not, and in such event Tenant agrees to look solely to the successor in
interest of Landlord in and to this Lease. This Lease will not be affected by
any such sale, and Tenant agrees to attorn to the Landlord’s successor in
interest. Landlord and Landlord’s transferees and assignees shall have the
absolute right to transfer all or any portion of their respective title and
interest in the Premises and this Lease without the consent of Tenant.

 

ARTICLE 31

NOTICES

 

31.1         All notices to be given under this Lease (“Notices”) shall be in
writing and delivered either (i) personally upon an officer of Landlord or
Tenant, as the case may be, or (ii) by depositing such notice in the United
States mail, certified or registered mail with return receipt requested, postage
prepaid, or (iii) via reputable overnight air courier service (such as Federal
Express or Airborne) and in every case addressed as set forth in page number 1
of this Lease or if no address for Tenant is inserted in page number 1 of this
Lease, addressed to Tenant at Tenant’s present address, and, after occupancy of
the Premises by Tenant, to Tenant at the Premises.

 

31.2         Notice via personal service shall be deemed to have been given when
actually delivered. Notice given by certified or registered mail shall be deemed
to have been given on the second Business Day after the date that the notice is
deposited into the mail postage prepaid. Notice given via air courier shall be
deemed given one (1) Business Day after it is accepted by said courier for next
day delivery.

 

32.3         Either Landlord or Tenant may change the location at which it
receives notices to another location within the United States of America upon
not less than ten (10) days’ notice to the other pursuant to this Article 32.

 

ARTICLE 32

WAIVER

 

The failure of Landlord to insist in any one or more cases upon the strict
performance of any term, covenant or condition of this Lease will not be
construed as a waiver of a subsequent breach of the same or any other term,
covenant or condition. The waiver by Landlord of any Event of Default shall not
be a waiver of any preceding or subsequent Event of Default, and no delay or
omission by Landlord to seek a remedy for any Event of Default hereunder shall
be deemed a waiver by Landlord of its remedies or rights with respect to such
Event of Default, nor shall Landlord’s acceptance of any Rent payment be
construed to be a waiver by Landlord of any preceding Event of Default.

 

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ARTICLE 33

HOLDOVER

 

33.1         Tenant shall vacate the Premises upon the expiration of the Lease
Term or earlier termination of this Lease and shall surrender possession thereof
to Landlord in accordance with the terms hereof Tenant shall indemnify
Indemnitees for, from and against any and all Liabilities incurred by
Indemnitees attributable to any delay hereunder by Tenant. The indemnity set
forth in the preceding sentence shall survive expiration of the Lease Term or
earlier termination of this Lease.

 

33.2         If Tenant remains in possession of the Premises, or any portion
thereof, after the expiration of the Lease Term or earlier termination of this
Lease without the prior written consent of Landlord, such occupancy shall be
deemed a month-to-month tenancy upon all the terms and conditions of this Lease
except that Tenant shall be liable for all actual damages incurred by Landlord
as a result of Tenant’s holdover, and Tenant shall pay Base Monthly Rent equal
to one hundred fifty percent (150%) of the Base Monthly Rent paid by Tenant
during the final month of the Lease Term. Acceptance by Landlord of Rent after
such expiration of the Lease Term or earlier termination of this Lease shall not
constitute consent to a holdover or result in an extension of this Lease and
Tenant shall have no right, whether by purported exercise of any option granted
hereunder or otherwise, to expand the Premises or extend the Lease Term. All
options, rights of first refusal, and/or rights of first offer, if any, granted
under the terms of this Lease shall be terminated and be of no further force or
effect during such month-to-month tenancy. Nothing herein shall limit any of
Landlord’s rights or Tenant’s obligations arising from Tenant’s failure to
timely surrender possession of the Premises, including, without limitation,
Landlord’s right to repossess the Premises and remove Tenant therefrom at any
time after the expiration or earlier termination of this Lease and Tenant’s
obligation to reimburse and indemnify Landlord as provided herein.

 

ARTICLE 34

DEFAULT OF LANDLORD: LIMITATION OF LIABILITY

 

If Landlord defaults in performing any of its obligations under this Lease,
Tenant agrees to promptly give notice of such default to Landlord and to afford
Landlord a reasonable period of time to cure such default, which period of time
shall not be less than thirty (30) days. Landlord shall not be in default in the
performance of any obligation required to be performed by Landlord under this
Lease unless Landlord has failed to perform such obligation within thirty (30)
days after the receipt of written notice from Tenant specifying in detail
Landlord’s failure to perform; provided however, that if the nature of
Landlord’s obligation is such that more than thirty (30) days are required for
its performance, then Landlord shall not be deemed in default if it commences
such performance within such thirty (30) day period and thereafter diligently
pursues the same to completion. If Landlord fails to cure any such default
within such time periods and it has a material and adverse effect on Tenant,
Tenant shall have the right to terminate the Lease as well as any other remedies
available to Tenant pursuant to law; provided such remedies are subject to the
limitations herein, and in no event shall Landlord be liable for any punitive or
consequential damages. Should Tenant give written notice to Landlord to correct
any default and Tenant has written notice of a Mortgagee, then prior to any
cancellation of this Lease or the exercise of any other remedies available to
Tenant hereunder, Tenant shall give the same notice to Mortgagee, initially at
the address set forth in Article 1 hereof, and thereafter at such other
addresses of which Tenant may be notified from time to time, and Mortgagee shall
be given thirty (30) days, or such longer period of time as may be reasonably
necessary, to correct or remedy such failure to perform, but shall have no
obligation to do so. If and when the Mortgagee has made performance on behalf of
Landlord, Landlord’s failure to perform shall be deemed cured. Tenant shall have
no right to terminate this Lease except as expressly provided herein. In the
event of any actual or alleged failure, breach or default hereunder by Landlord,
Tenant’s sole and exclusive remedy will be against the interest of Landlord (and
of any successor landlord) in the Project. Except for an action against the
interest of Landlord (and of any successor landlord) in the Project, Tenant
shall look solely to Landlord’s interest in the Project, and Tenant shall not
pursue any Indemnitee , nor shall any Indemnitees be subject to service of
process or have a judgment obtained against them, in connection with any alleged
breach or default. No writ of execution will be levied against the assets of any
Landlord Parties other than for an action against the interest of Landlord (and
of any successor landlord) in the Project. Notwithstanding anything contained in
this Lease to the contrary, except for an action against the interest of
Landlord (and of any successor landlord) in the Project, the obligations of
Landlord under this Lease (including any actual or alleged breach or default by
Landlord) do not constitute personal obligations of Landlord or the individual
owners, members, partners, directors, officers or shareholders of Landlord, and
Tenant shall not seek recourse against Landlord or the individual owners,
members, partners, directors, officers or shareholders of Landlord or any of
their personal assets for satisfaction of any liability with respect to this
Lease. Tenant hereby covenants and agrees for itself and all of its successors
and assigns that the liability of Landlord for its obligations under this Lease
(including any liability as a result of any actual or alleged failure, breach or
default hereunder by Landlord), shall be limited solely to, and Tenant’s and its
successors’ and assigns’ sole and exclusive remedy shall be against Landlord’s
equity interest in, the Project and proceeds therefrom, and no other assets of
Landlord. The covenants and agreements set forth in this Article are enforceable
by Indemnitees and shall survive the expiration of the Lease Term or earlier
termination of this Lease.

 

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ARTICLE 35

SUBORDINATION

 

Without the necessity of any additional document being executed by Tenant for
the purpose of effecting a subordination, and at the election of Landlord,
Mortgagee, any party holding a deed of trust or mortgage, or any ground lessor
with respect to the Building or the Project, this Lease will be subject and
subordinate at all times to (a) all ground leases or underlying leases which may
now exist or hereafter be executed affecting the Project, and (b) the lien of
any mortgage or deed of trust which may now exist or may hereafter be executed
in any amount for which the Building, Project, ground leases or underlying
leases, or Landlord’s interest or estate therein, is specified as security. In
the event that any ground lease or underlying lease terminates for any reason or
any mortgage or deed of trust is foreclosed or a conveyance in lieu of
foreclosure is made for any reason, Tenant shall, notwithstanding any
subordination and at the option of such successor in interest, attorn to and
become the Tenant of the successor in interest to Landlord. Tenant covenants and
agrees to execute and deliver to Landlord within ten (10) days of Landlord’s
written request any commercially reasonable requested document or instrument
evidencing such subordination of this Lease with respect to any such ground
lease, underlying lease or the lien of any such mortgage or deed of trust,
provided such subordination agreement shall include, without limitation, a
non-disturbance agreement confirming that so long as Tenant is not in default
under this Lease, Tenant’s leasehold interest shall not be disturbed by such
party, and that such subordination agreement shall not permit material
interference with Tenant’s rights hereunder. Notwithstanding anything to the
contrary provided for herein, the parties have attached to this Lease as Exhibit
I a form of SNDA which Landlord has used with one of its lenders in the past
(the “Sample SNDA”). Both parties agree that Sample SNDA is commercially
reasonable and acceptable in form and substance, and Tenant shall, upon written
request from Landlord, execute an SNDA, which is either commercially reasonable
as described above, or substantially consistent with the Sample SNDA within the
time frames described above, as elected by Landlord.

 

ARTICLE 36

BROKERS

 

Tenant warrants that it has had no dealings with any broker or agent in
connection with this Lease except for those set forth in Article 1 hereof and
covenants to pay, hold harmless and indemnify Indemnitees for, from and against
any and all costs, expense or liability for any compensation, commissions and
charges claimed by any other broker or agent with respect to this Lease or its
negotiation. Landlord warrants that it has had no dealings with any broker or
agent in connection with this Lease except for those set forth in Article 1
hereof and covenants to pay, hold harmless and indemnify Tenant and Tenant
Parties for, from and against any and all costs, expense or liability for any
compensation, commissions and charges claimed by any other broker or agent with
respect to this Lease or its negotiation. The terms of this Article shall
survive expiration of the Lease Term or earlier termination of this Lease.

 

ARTICLE 37

QUIET POSSESSION

 

Tenant may quietly have, hold and enjoy the Premises during the Lease Term in
accordance with and subject to the terms and conditions of this Lease without
disturbance from Landlord or from any other person claiming through Landlord.
Landlord represents and warrants to Tenant that as of the Effective Date,
Landlord owns fee title to the Project.

 

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ARTICLE 38

MISCELLANEOUS PROVISIONS

 

38.1         If Tenant executes this Lease as a partnership, each individual
executing this Lease on behalf of the partnership represents and warrants that
he or she is a general partner of the partnership and that this Lease is binding
upon the partnership in accordance with its terms. If Tenant executes this Lease
as a corporation or a limited liability company, each of the persons executing
this Lease on behalf of Tenant covenants and warrants that Tenant is a duly
authorized and existing corporation or limited liability company, that Tenant
has and is qualified to transact business in Arizona, that the corporation or
limited liability company has full right, authority and power to enter into this
Lease and to perform its obligations hereunder, that each person signing this
Lease on behalf of the corporation or limited liability company is authorized to
do so and that this Lease is binding upon the corporation or limited liability
company in accordance with its terms. Each individual executing this Lease on
behalf of Landlord represents and warrants that he or she is properly authorized
to bind the limited partnership and that this Lease is binding upon the limited
partnership in accordance with its terms.

 

38.2         All Exhibits and Addenda attached hereto are incorporated herein by
this reference and made a part this Lease. If any provision contained in an
Exhibit or Addendum is inconsistent with any other provision of this Lease, the
provision contained in the Exhibit or Addendum shall supersede the provisions
contained in herein unless otherwise provided.

 

38.3         This Lease and the Exhibits attached hereto contain all of the
covenants, provisions, agreements, conditions and understandings between
Landlord and Tenant concerning the Premises and any other matter covered or
mentioned in this Lease, and no prior agreement or understanding, oral or
written, express or implied, pertaining to the Premises or any such other matter
shall be effective for any purpose. No provision of this Lease may be amended or
added to except by an agreement in writing signed by the parties hereto or their
respective successors in interest. The parties acknowledge that all prior
agreements, representations and negotiations are deemed superseded by the
execution of this Lease to the extent they are not expressly incorporated
herein. Any warranties or representations not expressly contained herein will in
no way bind either Landlord or Tenant, and Landlord and Tenant expressly waive
all claims for damages by reason of any statement, representation, warranty,
promise or agreement not contained in this Lease. The provisions of this Section
shall survive expiration of the Lease Term or earlier termination of this Lease.

 

38.4         This Lease and the legal relations between the parties hereto shall
be governed by and construed and enforced in accordance with the laws of the
State of Arizona, without regard to its principles of conflicts of law. Any
action brought to interpret, enforce, or construe any provision of this Lease
shall be commenced and maintained in the Maricopa County Superior Court of the
State of Arizona (or, as may be appropriate, in the Justice Courts of Maricopa
County or in the United States District Court for the District of Arizona if,
but only if, the superior court lacks or declines jurisdiction over such
action). The parties irrevocably consent to jurisdiction and venue in such
courts for such purposes and agree not to seek transfer or removal of any action
commenced in accordance with the terms of this Section. Landlord and Tenant
agree that any action or proceeding arising out of this Lease shall be heard by
a court of competent jurisdiction sitting without a jury, and each hereby waives
all rights to trial by jury. The terms of this Section shall survive the
expiration of the Lease Term or earlier termination of this Lease.

 

38.5         The language of this Lease shall be construed to its normal and
usual meaning and not strictly for or against either Landlord or Tenant. Each
party has reviewed and revised this Lease and any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
apply to the interpretation hereof. This Lease shall be construed as a whole and
in accordance with its fair meaning, and shall not be construed more strictly
against one party hereto than against the other party merely by virtue of the
fact that it may have been prepared by counsel for one of the parties. If any
words or phrases in this Lease have been stricken, whether or not replaced by
other words or phrases, this Lease shall be construed (if otherwise clear and
unambiguous) as if the stricken matter never appeared and no inference shall be
drawn from the former presence of the stricken matters in this Lease or from the
fact that such matters were stricken.

 

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38.6         The Section headings of this Lease are for convenience of reference
only and shall not be deemed to modify, explain, restrict, alter or affect the
meaning or interpretation of any provision hereof. Where the context requires
herein, the word “person” will include corporation, firm, partnership, limited
liability company or association, the singular shall be construed as the plural,
and neuter pronouns shall be construed as masculine and feminine pronouns, and
vice versa.

 

38.7         If there is more than one person comprising Tenant hereunder, (a)
each of them is and shall be jointly and severally liable for the covenants,
conditions, provisions and agreements of this Lease to be kept, observed and
performed by Tenant; and (b) the act or signature of, or notice from or to, any
one or more of them with respect to this Lease shall be binding upon each and
all of the persons and entities executing this Lease as Tenant with the same
force and effect as if each and all of them had so acted or signed, or given or
received such notice.

 

38.8         If any provision of this Lease is found to be unenforceable, or is
or becomes illegal because of any present or future law or regulation of any
governmental body or entity effective during the Lease Term, the intention of
the parties is that the remaining provisions of this Lease shall not be affected
thereby.

 

38.9         Time is of the essence of each term and provision of this Lease.

 

38.10       Subject to the terms of Article 23 hereof entitled “Assignment,
Subletting and Transfers of Ownership” and Article 31 hereof entitled “Sale by
Landlord,” the terms and provisions of this Lease are binding upon and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns. Except as otherwise provided herein, any
indemnification or release of Landlord or Tenant hereunder shall include
Landlord Parties or Tenant Parties, as applicable. The terms of the foregoing
sentence shall survive the expiration of the Lease Term or earlier termination
of this Lease.

 

38.11       All covenants and agreements to be performed by Tenant under any of
the terms of this Lease will be performed by Tenant at Tenant’s sole cost and
expense and without any abatement of Rent.

 

38.12       In consideration of Landlord’s covenants and agreements hereunder,
Tenant hereby covenants and agrees not to disclose any terms, covenants or
conditions of this Lease to any other party (other than Tenant’s brokers,
accountants, and legal counsel) without the prior written consent of Landlord.
The terms of this Section shall survive expiration of the Lease Term or earlier
termination of this Lease.

 

38.13       If Tenant shall request Landlord’s consent and Landlord shall fail
or refuse to give such consent, Tenant shall not be entitled to any damages for
any withholding by Landlord of its consent; Tenant’s sole remedy shall be an
action for specific performance or injunction, and such remedy shall be
available only in those cases where Landlord has expressly agreed in writing not
to unreasonably withhold its consent or where as a matter of law Landlord may
not unreasonably withhold its consent. The terms of this Section shall survive
the expiration of the Lease Term or earlier termination of this Lease.

 

38.14       As used herein, the term “Business Day” shall mean a day that is not
a Saturday, Sunday or legal holiday. In the event that the first day a Notice
shall be deemed given under this Lease, or the date for the performance of any
covenant or obligation hereunder, shall fall on a Saturday, Sunday or legal
holiday, the date such Notice shall be deemed given, or the date for performance
of such covenant or obligation, shall be extended to the next Business Day. If
any deadline or Notice date herein is extended to the next Business Day, and
such deadline is used to calculate a subsequent date, the extended date that
falls on the next Business Day shall be used to calculate the subsequent date.
Unless otherwise provided in this Lease, all time periods shall be in calendar
days.

 

38.15       Whenever a day is appointed herein on which, or a period of time is
appointed during which, either party is required to do or complete any act,
matter or thing, the time for the doing or completion thereof shall be extended
by a period of time equal to the number of days on or during which such party is
prevented from, or is reasonably interfered with, the doing or completion of
such act, matter or thing because of labor disputes, civil commotion, war,
warlike operation, sabotage, governmental regulations or control, fire or other
casualty, inability to obtain materials, fuel or energy, weather or other acts
of God, terrorism or other causes beyond such party’s reasonable control
(financial inability excepted) (“Force Majeure”); provided, however, that
nothing contained herein shall excuse Tenant from the prompt payment of any
Rent.

 

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38.16       In addition to the actions recited herein and contemplated to be
performed, executed, and/or delivered by the parties hereunder, each party
shall, whenever and as often as it shall be requested by the other party,
execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such further instruments and documents as may be reasonably necessary
in order to carry out the intent and purpose of this Lease, including without
limitation execution of any documents reasonably requested to allow either party
to deal with governmental entities, utility companies and other third parties
from whom permits or approvals may be required. The terms of this Section shall
survive the expiration of the Lease Term or earlier termination of this Lease.

 

38.17       If any Mortgagee of the Project requests reasonable modifications to
this Lease, Tenant will not unreasonably withhold, delay or defer its written
consent thereto, provided that such modifications do not materially increase the
obligations of Tenant hereunder or materially and adversely affect Tenant’s
leasehold interest or increase the Rent obligations of Tenant in any way.

 

38.18       Throughout the Lease Term (but not more than three times in any
calendar year), and within ten (10) days following Landlord’s written request,
Tenant agrees to deliver (and cause Guarantor, if any to deliver) to Landlord
current financial statements of Tenant and Guarantor, if any, certified by an
officer or principal of Tenant. Landlord shall hold any such information in
confidence and shall use it only for the purpose of evaluating Tenant’s
financial condition; provided, however, that Landlord shall be permitted to
share such information with Mortgagee or other holder of a deed of trust or
mortgagee in the Project, Building or Premises, or prospective purchaser of the
Project, Building or Premises.

 

38.19       Neither this Lease nor any memorandum hereof shall be recorded by
Tenant. At the sole option of Landlord, Tenant and Landlord shall execute, and
Landlord may record, a short form memorandum of this Lease in form and substance
satisfactory to Landlord.

 

38.20       This Lease may be executed in as many counterparts as may be deemed
necessary and convenient, and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same instrument. A party’s
signature on this Lease or any amendment hereto may be provided by facsimile and
shall be effective upon transmission to the other party hereto.

 

[SIGNATURES ON FOLLOWING PAGE]

 

36

 

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date
and year indicated by Landlord’s execution date as written below.

 

LANDLORD:   TENANT:       AX UNION HILLS L.P., a Delaware limited partnership  
 GREENWOOD HALL, INC., a Nevada corporation       By: /s/ Philip Martens   By:
/s/ John Hall         Name: Philip Martens   Name:  John Hall     Its:
Authorized Signatory   Its: CEO          

By: /s/ Kara  Watson         Name:  Kara  Watson       Its: Authorized Signatory
 

 

37

 

 

EXHIBIT “A” 

FLOOR PLAN OF PREMISES

 

[tex10-1pg40.jpg] 

 

A-1

 

 

EXHIBIT “B”

STANDARD WORKLETTER

 

This Workletter describes Landlord’s and Tenant’s obligations regarding the
improvements to be designed and constructed within the Premises (the “Tenant
Improvements”). This Workletter is a part of the Lease and all actions and
obligations hereunder are subject to all terms and conditions of the Lease
unless expressly provided otherwise herein. Capitalized terms which are not
otherwise defined in this Workletter have the meanings set forth in the Lease.
Any breach or default by Tenant hereunder also constitutes a default under the
Lease.

 

1.          In General. Tenant is accepting the Premises in a strictly AS-1S
condition, and Tenant shall be responsible for the costs to design and construct
the Tenant Improvements, subject to Landlord’s obligation to contribute the
Tenant Improvement Allowance toward such costs. Landlord shall manage the
construction and shall be responsible for and engage a general contractor to
construct the Tenant Improvements (the “General Contractor”) in accordance with
the terms of this Workletter.

 

2.          Design Drawings for Tenant Improvements.

 

3.          When approved in writing by Landlord and Tenant, the Final Plans
shall be attached hereto and incorporated herein are as Exhibit B-l (the “Final
Plans”). Exhibit B-l currently only has the Space Plan for the Premises
attached.

 

4.          Tenant Improvement Allowance. Tenant shall be credited with an
allowance (the “Tenant Improvement Allowance”) of eleven and 00/100 Dollars
($11.00) per rentable square foot of the Premises. The Tenant Improvement
Allowance is to be applied against the Cost of Tenant Improvements (as defined
below) and shall be used for the design, including engineering plans,
specifications and permits, purchase, installation, and construction of the
Tenant Improvements. If there is Tenant Improvement Allowance available, Tenant
may use the same for Tenant’s furniture; furnishings; inventory; trade fixtures;
personal property; signage; equipment; computer, data, phone and security
systems for the Premises. Tenant shall not be entitled to any cash payments or
any rent reduction if the Tenant Improvement Allowance exceeds the actual Cost
of Tenant Improvements. The Tenant Improvement Allowance must be utilized by
Tenant within 6 months after the Commencement Date, otherwise the remaining
amount shall be forfeited by Tenant.

 

5.          Cost and Payment of Tenant Improvements.

 

5.1.        Cost of Tenant Improvements. As used herein, the “Cost of Tenant
Improvements” shall include, without limitation but subject to the provisions of
this Section 5 hereof, the following, whether incurred before or after the
execution of the Lease:

 

5.1.1.          Costs and expenses, including those of architectural and
engineering fees and any associated reimbursable expenses incurred by Landlord
or Tenant in preparing, reviewing, revising and approving the Final Plans and
any changes, modifications or alterations thereto;

 

5.1.2.          Landlord’s cost of constructing the Tenant Improvements,
including without limitation labor, materials, overhead, general conditions,
bonds and permits and plan check fees, including but not limited to a
construction management fee equal to three percent (3%) of the Cost of Tenant
Improvements* all fees or costs paid to the City of Phoenix in connection with
the City of Phoenix’s Annual Facilities Permit Program, and fees and costs of
the General Contractor and all subcontractors;

 

5.1.3.          The cost, if any, for any additions or changes to the shell or
core of the Building or any of the Building systems that are required by the
Tenant Improvements (including construction expenses and engineering costs),
including without limitation the cost of providing or upgrading water, heating,
cooling, air or electrical facilities for the Building should the Tenant
Improvements require services, utilities or heating, ventilation or air
conditioning in excess of that provided for premises built out with building
standard improvements;

 

B-1

 

 

5.1.4.          Allowances (as defined below), as finally adjusted;

 

5.1.5.          All costs due to Change Orders (as defined below);

 

5.1.6.          Increases in design and construction costs caused by Tenant or
any of Tenant Parties, including without limitation (a) any Tenant Delays,
including, without limitation, any delays by Tenant to furnish information,
approve any item, or perform any obligation in accordance with the terms of this
Workletter, including the failure to prepare or approve the Final Plans by any
applicable due date, (b) Tenant’s request for improvements or any equipment,
materials, finishes or installations other than those readily available, (c)
Tenant’s request for changes to the Final Plans after initial approval by either
Tenant or Landlord, (d) performance of work in the Premises by Tenant, its
contractors, or any of Tenant Parties during the performance of the Tenant
Improvements, or (e) if the performance of any portion of the Tenant
Improvements depends on the prior or simultaneous performance of work by Tenant,
a delay by Tenant, its contractors, or any of Tenant Parties in the completion
of such work; and

 

5.1.7.          Any applicable state sales or use tax upon the foregoing.

 

Tenant, at its sole expense, shall be responsible for and pay the amount
(“Tenant’s Cost”), if any, by which the actual Cost of Tenant Improvements
exceeds the Tenant Improvement Allowance.

 

5.2.          Tenant Improvements Cost Estimate. Landlord bid the work for the
Tenant Improvements and the party selected by Tenant and Landlord is described
on Exhibit B-l and shall be the “General Contractor” hereunder. The costs for
the Tenant Improvements shall be “open book” so that Tenant may review all such
costs and Landlord shall enter into a stipulated sum contract with the General
Contractor with a five percent (5%) contingency line item (the “GC Contract”).
The GC Contract shall contain a one year warranty against defective workmanship
and materials (the “Warranty”). Tenant shall have the right to, at Tenant’s
request, to enforce the Warranty against the General Contractor, as its sole
remedy for any defective workmanship or materials or latent defects in
connection with the Tenant Improvements, and Landlord shall, upon Tenant’s
written request, assign to Tenant all contract Warranties reasonably necessary
for Tenant to enforce such Warranty. Landlord shall provide Tenant with a
written estimate (the “Estimate”) of the Cost of Tenant Improvements, including
Allowances, based upon the bid received from the General Contractor selected by
Landlord plus Landlord’s invoices or reasonable estimates of its other costs
referred to herein. An “Allowance” is an estimate of cost for an item of work
which is not sufficiently defined in the documents to allow a fixed price to be
determined by the General Contractor and, therefore, for which the actual Cost
of Tenant Improvements will be increased or decreased by the precise amount that
the actual cost of the Allowance item is either in excess of or less than the
amount of the Allowance for that item.

 

5.3.          Improvements Deposit. Tenant shall pay one hundred twenty percent
(120%) of the amount by which the Estimate exceeds the Tenant Improvement
Allowance (the “Improvements Deposit”) to Landlord prior to the commencement of
construction of any Tenant Improvements, and Landlord shall deposit such funds
into Landlord’s general account for payment to the General Contractor in
accordance with the terms of the GC Contract for such Tenant Improvements.
Landlord shall be under no obligation to construct any of the Tenant
Improvements until Landlord has approved the Estimate and Tenant has paid the
Improvements Deposit to Landlord as required herein; provided, however, Landlord
shall have the option to commence and complete the Tenant Improvements at any
time after the Final Plans have been approved.

 

B-2

 

 

4.4.          Payment Reconciliation. Landlord shall promptly notify Tenant in
writing (the “Notice of Cost”) of the actual Cost of Tenant Improvements when
such amount has been finally determined. If Tenant’s Cost, as finally
determined, exceeds the Improvements Deposit, Tenant shall pay the amount of
such difference to Landlord within five (5) Business Days after Tenant’s receipt
of the Notice of Cost. Any failure of Tenant to make any payment or deposit
required hereunder within five (5) Business Days shall constitute a default
under the terms of the Lease in the same manner as a failure to pay installments
of Rent when due. If Tenant’s Cost is less than the Improvements Deposit,
Landlord shall apply the amount of such difference to Tenant’s next
installment(s) of Rent due.

 

6.           Construction of Tenant Improvements.

 

6.1.          Landlord Obligation to Construct. The Tenant Improvements shall be
constructed by the General Contractor in accordance with the Final Plans and
paid for as set forth herein. During construction of Tenant Improvements,
Landlord may, based upon information obtained from the General Contractor and
Landlord, revise construction, including the substitution of materials, systems
and equipment, provided such revisions and substitutions or both do not reduce
the size of the Premises or the quality of any material, construction technique
or component and such revisions and substitutions are approved by Tenant, which
approval shall not be unreasonably withheld.

 

6.2.          Changes, Additions or Alterations. If Tenant shall request any
change, addition or alteration in the Final Plans (“Change Order”), Tenant shall
prepare and submit all necessary plans, specifications and permits with respect
to such requested Change Order for Landlord’s approval. Any such Change Order
shall be subject to the provisions of this Workletter. The General Contractor
shall not proceed with the Change Order until Tenant has paid Landlord’s
reasonable estimate of the additional charges, expenses and costs, if any, of
the Tenant Improvements attributed to such Change Order, including any costs and
expenses incurred by Landlord in approving said changes, modifications or
alterations. Any such payment shall thereafter be deemed part of the
Improvements Deposit. If Tenant does not pay such additional charges within five
(5) Business Days after its receipt of Landlord’s estimate as set forth herein,
Landlord shall have the option to continue construction of the Tenant
Improvements as if such Change Order request had not been submitted.

 

6.3.          Punch List. On or before the date upon which Tenant occupies the
Premises, Landlord shall cause the General Contractor to inspect the Premises
with a representative of Tenant and to complete a written punch list of
unfinished Tenant Improvements items. Tenant’s representative shall execute said
punch list to indicate Tenant’s approval thereof. Such punch list items shall be
completed by the General Contractor as soon as reasonably possible thereafter to
the extent that each such punch list item relates to Tenant Improvements and not
to other work being done at the Premises by or on behalf of Tenant.

 

6.4.          Substantial Completion. The term “Substantial Completion” or
“Substantially Complete or Completed” as used herein means that all of the
following have been satisfied: (a) the General Contractor has completed the
Tenant Improvements pursuant to the Final Plans to the point where only punch
list items remain to be completed; and (b) any Certificate of Occupancy or its
equivalent, if any, required by the local building department or other
governmental agency has been obtained. Notwithstanding the foregoing, the
Premises may be deemed to be Substantially Complete without a Certificate of
Occupancy Premises through a “green tag” or temporary certificate of occupancy
and thereafter Landlord shall continue to use commercially reasonable efforts to
procure the final Certificate of Occupancy as promptly as is reasonably
possible. Tenant shall be obligated to accept the Premises at such time as the
Premises are Substantially Complete as defined herein, even though certain other
portions of the Building or the Project which do not interfere with Tenant’s
efficient conduct of its business may not have been fully completed, and even
though Tenant’s furniture, furniture systems, telephones, telexes, telecopiers,
photocopiers, photocopy machines, computers and other business machines or
equipment may not have been installed.

 

B-3

 

 

7.          Reasonable Diligence; Indemnification. Both Landlord and Tenant
agree to use reasonable diligence in performing all of their respective
obligations and duties under this Workletter and in proceeding with the
construction and completion of the Tenant Improvements. Neither review nor
approval by Landlord of the Final Plans nor Landlord’s supervision or
performance of any work for or on behalf of Tenant shall constitute a
representation or warranty by Landlord or Landlord Parties that the Final Plans
either (a) are complete or suitable for their intended purpose or (b) comply
with applicable laws, ordinances, codes, regulations or any insurance
requirements, it being expressly agreed by Tenant that Landlord assumes no
responsibility or liability whatsoever to Tenant or to any other person or
entity for such completeness, suitability or compliance and that Tenant shall be
responsible for all elements of the design of the Final Plans (including,
without limitation, compliance with law, functionality of design, the structural
integrity of the design, the configuration of the Premises, and the placement of
Tenant’s furniture, appliances and equipment). Tenant agrees that, in connection
with the Tenant Improvements and its use of the Premises prior to the
Commencement Date, Tenant shall have those duties and obligations with respect
thereto that it has pursuant to the Lease during the Lease Term, except the
obligation to pay Rent, and further agrees that Landlord and Landlord Parties
shall not be liable in any way for injury, loss, or damage which may occur to
any of the improvements or installations made in the Premises , or to any
personal property placed therein , the same being at Tenant’s sole risk. Tenant
agrees to indemnify, defend and hold Landlord and Landlord Parties harmless for,
from and against any and all claims arising from Tenant’s use of the Premises,
the conduct of Tenant’s business, or any activity or work done, permitted or
suffered by Tenant or Tenant Parties on or about the Premises, the Building, the
Project or the Common Areas prior to the Commencement Date.

 

8.          Additional Space. This Workletter shall not be deemed applicable to
any additional space added to the Premises at any time or from time to time,
whether by any options under the Lease or otherwise, or to any portion of the
original Premises or any additions to the Premises in the event of a renewal or
extension of the original Lease Term, whether by any options under the Lease or
otherwise, unless expressly so provided in the Lease or any amendment or
supplement thereto.

 

9.          Dispute Resolution. If the parties are unable to reach agreement on
a matter covered by this Workletter, then either party shall be entitled to give
notice to the other electing to have such matter decided by a licensed architect
as provided in this section. Upon delivery and receipt of such notice, Landlord
and Tenant will within five (5) days thereafter mutually appoint a licensed
architect located in the metropolitan Phoenix area who will review the dispute
and rule in favor of either Landlord or Tenant (the “Deciding Architect”). The
Deciding Architect must have at least ten (10) years of full-time commercial
architectural experience with projects comparable to the Building. The Deciding
Architect may not have any material financial or business interest in common
with either of the parties. If Landlord and Tenant are not able to agree upon a
Deciding Architect within such five (5) days, each party will within five (5)
days thereafter separately select an architect meeting the criteria set forth
above, which two architects will, within five (5) days of their selection,
mutually appoint a third architect meeting the criteria set forth above to be
the Deciding Architect. Within seven (7) days of the appointment (by either
method) of the Deciding Architect, Landlord and Tenant will submit to the
Deciding Architect their respective position on the relevant issue. Within ten
(10) days of such appointment of the Deciding Architect, the Deciding Architect
will review each party’s submittal (and such other information as the Deciding
Architect deems necessary) and will select, in total and without modification,
the submittal presented by either Landlord or Tenant. If the Deciding Architect
timely receives one party’s submittal, but not both, the deciding Architect must
designate the submitted proposal as the winning position. In the event the
Deciding Architect rules in favor of Tenant, Landlord shall take such actions as
required and shall pay all costs and expenses of the Deciding Architect and any
delay in the construction shall not be deemed Tenant Delays. In the event the
Deciding Architect rules in favor of Landlord, Tenant shall pay the costs and
expenses of the Deciding Architect and any delay in the construction shall be
deemed Tenant Delays.

 

10.        Tenant Delays. For purposes of this Exhibit B, Tenant Delays shall
include, without limitation: (a) Tenant’s (or Tenant’s Architect’s) failure to
comply with the time frames set forth herein (time being of the essence); and
(b) any other delay otherwise caused by Tenant or Tenant’s Architect after
notice from Landlord and expiration of a two (2) Business Day cure period, which
operates to delay Substantial Completion of the Tenant Improvements, as
reasonably determined by Landlord. If Tenant disputes any claim of Tenant Delays
hereunder, the dispute shall be resolved in accordance with Section 9 of this
Workletter.

 

B-4

 

 

Exhibit B-l

 

(Space Plan)

 

[tex10-1pg45.jpg] 

 

B-5

 

  

Final Plans

 

• [TO BE ATTACHED WHEN AGREED UPON IN WRITING BY BOTH PARTIES]

 

B-6

 

 

EXHIBIT “C”

COMMENCEMENT DATE CERTIFICATE

 

This Commencement Date Certificate is made as of_____________, 201__, by and
between , a Delaware limited liability
company________________________________(“Landlord”) and_______________________,
a(n) GREENWOOD HALL, INC., a Nevada corporation (“Tenant”).

 

A.           Landlord and Tenant have entered into a lease agreement (the
“Lease”) dated as of _____________, 201__, whereby Landlord leased to Tenant and
Tenant leased from Landlord certain real property located in the County of
Maricopa, State of Arizona, as more particularly described in the Lease.

 

B.           Landlord and Tenant desire to set forth the Commencement Date, as
defined in the Lease, and the date of the expiration of the initial term of the
Lease.

 

C.           All capitalized terms used herein but not otherwise defined shall
have the meanings set forth in the Lease.

 

NOW, THEREFORE, Landlord and Tenant certify and agree as follows:

 

1.          That the Commencement Date is ________________; and

 

2.          That the termination date of the Lease Term is________________.

 

LANDLORD:   TENANT:       __________________________, a Delaware limited
liability company.   GREENWOOD HALL, INC., a Nevada corporation

 

By:     By:  

Name:     Name:  

Its:     Its:  

 

C-1

 

 

EXHIBIT “D”

PARKING RULES AND REGULATIONS

 

Capitalized terms used but not defined in this Exhibit shall have the meanings
set forth in each tenant’s lease.

 

Each tenant of the Project shall:

 

·Not make mechanical repairs to vehicles in the parking areas.

·Not park large or oversize vehicles, such as, but not limited to, motor homes,
boats or trailers, in the parking areas.

·Not park in fire lanes, loading zones or any other areas that are not
designated as parking spaces.

·Protect the parking surface under any vehicles that leak excessive fluids.

·Remove or hide any personal items of value from plain sight to avoid vandalism
of vehicles. Exercise added caution when using the parking areas at night and
report any lights out or other possibly dangerous situations to Landlord as soon
as possible.

·Keep vehicles locked at all times.

·Obey all parking control measures effected by Landlord, whether through the use
of signs, identifying decals or otherwise.

 

Visitor Parking: Visitor parking, if designated, is for clients and visitors to
the Project; tenants of the Project and their employees shall not use these
spaces. In some cases, a time limit may be posted.

 

Handicap Parking: Only vehicles displaying handicap plates or official handicap
placards may park in spaces designated as handicap parking.

 

Violation of the Parking Rules and Regulations may result in towing from the
Project. Towing from the Project can be ordered by Landlord or Landlord Parties,
and all charges therefor shall be paid by the owner of the towed vehicle.

 

D-1

 

 

EXHIBIT “E”

RULES AND REGULATIONS

 

Capitalized terms used but not defined in this Exhibit shall have the meanings
set forth in each tenant’s lease. Each tenant of the Project shall:

 

1.          not paint, display, inscribe, maintain or affix any notices or signs
on any part of the Project that can be seen from outside that tenant’s premises
except as expressly permitted by such tenant’s lease. No awning or other
projection shall be attached to the outside walls or windows of the Project, nor
shall any showcases (i.e., A-frame or other types of free-standing signs) or
other articles be put in front of or affixed to any part of the exterior of the
Project or placed in the halls, corridors, vestibules or other public parts of
the Project. Any items installed in violation of the foregoing may be removed by
Landlord at the expense of the tenant who has installed such item.

 

2.          not, without Landlord’s prior written consent, obstruct, encumber or
use the Common Areas for any purpose other than ingress and egress to and from
the premises demised to such tenant.

 

3.          not move any safes, freight, furniture or bulky matter of any
description into or out of the Project except at such time and in such manner as
Landlord may reasonably determine from time to time, and any tenant moving
articles into or out of the Project shall be responsible for any damage or
injury to any portion of the Project or to any person resulting therefrom.
Landlord reserves the right to inspect all freight to be brought into the
Project and to exclude from the Project all freight which violates any of these
rules and regulations or the provisions of such tenant’s lease. Any handcarts
used in the Common Areas shall have rubber wheels and side guards.

 

4.          not place on any floor a load exceeding the floor load per square
foot which such floor was designed to carry and which is allowed by applicable
law. Landlord may direct and control the weight and location of safes and all
other heavy articles and may require, at the tenant’s expense, such
supplementary supports as Landlord may deem necessary to properly distribute
such weight.

 

5.          not install or change signal, communication, alarm or other utility
or similar service connections except as expressly permitted by the Lease
without the prior written approval of Landlord, and then only under Landlord’s
direction and at such tenant’s expense.

 

6.          ascertain from Landlord the maximum amount of electrical current
that can safely be permitted

and not exceed such amount.

 

7.          not install in the Premises any equipment that requires more
electric current than Landlord is required to provide under such tenant’s lease
without Landlord’s prior written consent.

 

8.          not use the drinking fountains, toilet rooms, urinals, washbowls and
other such apparatus for any purpose other than that for which they were
constructed, and not throw foreign substances of any kind whatsoever therein.
The expense of any breakage, stoppage or damage resulting from any violation of
this rule shall be borne by the tenant who, or whose employees or invitees,
shall have caused it.

 

9.          not use utility closets, telephone closets, electrical closets,
storage closets, and other such closets, rooms and areas for any purpose or in
any manner other than that designated by Landlord or use such areas without
Landlord’s prior written consent.

 

10.         not canvas the Project to solicit business or information or to
distribute any article or material to or from other tenants, occupants or
visitors thereof, and not exhibit, sell or offer to sell, use, rent or exchange
any products or services in or from the premises demised to such tenant. No
distribution of handbills shall be permitted.

 

11.         not use any part of the Project as a store for the sale or display
of goods, wares or merchandise of any kind, or as a restaurant, shop, booth or
other stand, or for the conduct of any business or occupation which
predominantly involves direct patronage of the general public.

 

E-1

 

 

12.         not (a) install any internal combustion engine, boiler, machinery,
refrigerating, or heating or air conditioning equipment, (b) operate any of such
items except as expressly permitted by such tenant’s lease, (c) use the Project,
or any part thereof, for housing, lodging or sleeping purposes or for the
washing of clothes, (d) operate any electrical or other device from which may
emanate electrical or other waves which may interfere with or impair radio,
television, microwave, or other broadcasting or reception from or in the Common
Areas or elsewhere in the Project, (e) do anything in or about the Premises
tending to create or maintain a nuisance, (f) do any act tending to injure the
reputation of the Landlord or the Project, (g) throw or permit to be thrown or
dropped any article from any window, door or other opening in any part of the
Project, (h) use or permit in the Project anything that will invalidate or
increase the rate of insurance on any policies of insurance now or hereafter
carried by Landlord or violate any certificate of occupancy, (i) use any portion
of the Project for any purpose that may be dangerous to persons or property
(including but not limited to flammable oils, fluids, paints, chemicals,
firearms or any explosive articles or materials), or (j) do or permit anything
to be done that in any way tends to disturb any other tenant or occupants of the
Project or any neighboring property.

 

13.         not enter upon any of the roofs of any of the buildings in the
Project. In the event that any tenant of the Project enters upon a roof, with or
without Landlord’s consent, such tenant shall be liable for any and all costs,
expenses and damages arising therefrom.

 

14.         except as expressly permitted by such tenant’s lease, not mark,
paint, drill into or in any way deface any part of the Project or the premises
demised to such tenant or occupant. No boring, cutting, or strings of wires
shall be permitted, except with the prior consent of Landlord and as Landlord
may direct.

 

15.         not bring or permit anyone else to bring any bicycles, skateboards
or animals of any kind (except professionally trained assistant animals) into
the Project.

 

16.         not permit any cooking in the premises demised to such tenant,
except the use of coffee makers and microwave ovens for the wanning of prepared
foods and beverages.

 

17.         not cause or permit any unusual or objectionable odors to emanate
from the premises demised to such tenant.

 

18.         not make, or permit to be made, any unseemly or disturbing noises,
or disturb or interfere with other tenants or occupants of the Project or
neighboring properties, whether by whistling, singing, use of any audio device,
or in any other way.

 

19.         not install any radio, telephone, television, microwave or satellite
antenna, loudspeaker, music system or other device on the roof or exterior walls
of the Project or on common walls shared with adjacent tenants.

 

20.         not install or permit to be installed any additional locks or bolts
on any door into or inside of the premises demised to that tenant, nor shall any
changes be made in locks or the mechanisms thereof. Landlord shall be entitled
at all times to possession of a duplicate of all keys to all doors into or
inside of the premises demised to tenants of the Project. All keys shall remain
the property of Landlord. For the purposes of this rule, the term “keys” shall
mean traditional metallic keys, plastic or other key cards, and other lock
opening devices.

 

21.         not smoke in the Project, except in designated smoking areas
established by Landlord from time to time. There shall be no smoking anywhere,
at any time, inside the buildings or building restrooms of the Project.

 

22.         not engage or pay any employee of the Project or Landlord, nor
advertise for day laborers giving an address at the Project.

 

23.         not use any portion of the Project for any immoral or illegal
purpose.

 

24.         see that all entrance doors are locked and all electrical equipment
and lighting fixtures are turned off each time such tenant closes and leaves the
premises demised to such tenant; subject to properly requested after Building
Hours usage.. Tenant shall be responsible for all after Building Hours utility
usage.

 

25.         give prompt notice to Landlord of any accidents to or defects in
plumbing, electrical or HVAC apparatus so that same may be attended to in
accordance with the terms of such tenant’s lease.

 

E-2

 

 

26.         be responsible, at its sole cost and expense, for providing any
additional security desired by such tenant for the premises demised to such
tenant, subject to the reasonable prior written approval of Landlord.

 

27.         cooperate and comply with any reasonable safety or security
programs, and regulations from time to time issued by Landlord, including
without limitation fire drills, air raid drills, and the appointment of “fire
wardens” developed by Landlord or required by law.

 

E-3

 

 

EXHIBIT “F”

PROHIBITED USE

 

Tenant (and any subtenant, successor or assign) shall not: 1. operate or permit
an educational facility within the Building at any time (The University of
Phoenix, Inc has an exclusive to operate an educational facility in the
Building); or 2. (The University of Phoenix, Inc has the right to prohibit this
use in its lease) operate or permit a data center or similar operation within
the Building at any time.

 

Tenant (and any subtenant, successor or assign) shall not: operate within the
Building a “flexible workspace center with executive suites for lease to third
parties other than the tenant and its employees” (the “Exclusive Use”); or lease
space in the Building to any person or entity which is not a current tenant in
the Building as of the Effective Date (a “New Tenant”) whose use would violate
Tenant’s Exclusive Use; or enter into any new leases/sublease or assignment for
space within the Building with New Tenants where the amount of space leased by
such tenant is less than 750 rentable square feet and the term of such lease is
less than 24 months. Regus has the Exclusive Use in the Building.

 

F-1

 

 

EXHIBIT “F-1”

 

WAIVER OF EXCLUSIVE USE RIGHT FOR

2550 WEST UNION HILLS DRIVE, PHOENIX, ARIZONA

 

The undersigned, as fully authorized signatory on behalf of The University of
Phoenix, Inc., and Arizona corporation (“Tenant”), hereby agrees as follows:

 

PHA/Arizona, L.L.C. and Tenant entered into that certain Union Hills Office Park
Lease Agreement dated January 19, 2006, as amended by that certain First
Amendment to Union Hills Office Park Lease Agreement by and between PHA/Arizona,
L.L.C., PHA/Union Hills, LLC, and Tenant dated February 17, 2006, as amended by
that Second Amendment to Lease Agreement by and between PHA/Union Hills, LLC and
Tenant dated August 10, 2007, and as further amended by that Third Amendment to
Lease Agreement by and between Union Hills Member, L.L.C. and Tenant dated
February 2008 and that certain Union Hills Office Park Lease Agreement by and
between Union Hills Member, L.L.C. and Tenant dated May 14, 2008 (collectively,
the “Leases”) for certain premises located in the building commonly known as
2550 West Union Hills Drive, Phoenix, Arizona (“Project”). Capitalized terms not
defined herein shall have the meaning ascribed to them in Leases.

 

The current Landlord under the Leases desires to lease a portion of the Project
to Greenwood Hall, Inc., a Nevada corporation and/or its permitted successors
and assigns (“Greenwood Hall”) under a lease (“Greenwood Lease”) with Landlord
for a portion of the Project. The permitted use for the Greenwood Lease is as
follows: general office for only use as an educational advising call center and
training facility and data center for Tenant’s operation; provided, however, in
no event shall there be any student instruction performed at the Building
(“Greenwood Hall Permitted Use”).

 

The Leases provide Tenant with the exclusive right to operate an educational
facility within the Project, pursuant to the terms and conditions of the Leases.

 

Tenant hereby agrees to allow the Greenwood Hall Permitted Use at the Project,
and Greenwood Hall to operate within the Project, and hereby agrees that such
use and operation shall in no event constitute a default or violation of the
Leases by Landlord.

 

Tenant agrees that this waiver shall be irrevocable, and shall be binding upon
Tenant and its permitted successors and assigns under the Lease, and Tenant will
not challenge or object to the adequacy of consideration for such binding waiver
and agreement. This document and the agreements provided for herein shall be
binding upon Tenant and its permitted successors, heirs and assigns.

 

Approved and agreed to this __17__ day of ___February ________, 2015.

 

  The University of Phoenix, Inc., an Arizona corporation       By:
[tex10-1pg53.jpg]   Its: Apollo Education Group/University of
Phoenix_________________________________, being a fully authorized
representative

 

F-2

 

 

EXHIBIT “G”

 

UNION HILLS OFFICE PLAZA JANITORIAL SPECIFICATIONS

 

Building Exterior     Police entry walkways   Nightly Clean entrance glass doors
and hardware   Nightly empty trash receptacles and replace liners   Nightly
Clean ash urns (replace sand as necessary   Nightly       Common Areas    
Vacuum and spot clean arpets   Nightly Spot clean carpets   Nightly Dust/spot
mop lobby/corridor floors   Nightly Wet mop hard surface floors   Nightly Wipe
walls/doors of elevators   Nightly Wipe directory board   Nightly Clean and
polish drinking fountains   Nightly Spot clean walls (as permitted)   Nightly
Spot clean sidelight glass   Nightly Dust cove base   Weekly Wipe fire
extinguisher cabinets and glass   Weekly High/low dusting (includes mullions)  
Monthly Dust exit signs   Monthly Dust/clean light fixtures and exterior of
covers   Monthly       Office Areas     Empty trash (replace liners as needed)  
Nightly Vacuum traffic lanes   Nightly Dust mop/sweep/spot mop hard surface
floors   Nightly Wipe spots and smudges from entry doors   Nightly Wet mop hard
surface floors   Weekly Detail vacuum (in sections)   Weekly Dust horizontal
surfaces (when clear)   Weekly Low dusting (baseboards, etc)   Weekly Spot clean
glass partitions   Weekly High dusting (to 7 feet)   Monthly Dust window sills
and blinds   Monthly       Break Rooms     Empty trash and replace liners  
Nightly Clean sinks and bright work   Nightly Spot clean cabinets/counters  
Nightly Wipe exterior of appliances   Nightly Wipe table tops and chairs  
Nightly Dust mop/sweep hard surface floors   Nightly Mop hard surface floors  
Nightly Spot clean walls   Weekly

 

G-1

 

 

UNION HILLS OFFICE PLAZA JANITORIAL SPECIFICATIONS (cont’d)

 

Elevators     Vacuum carpets   Nightly Wipe elevator panels   Nightly Vacuum
elevator tracks   Nightly Wipe doors including jams   Nightly Spot clean carpets
  Nightly Clean call buttons and lights   Weekly       Stairwells     Police for
trash   Nightly Wipe handrails   Weekly Sweep/mop steps and landings   Weekly
Spot clean doors   Weekly       Restrooms     Clean and sanitize toilets and
urinals   Nightly Clean and sanitize mirrors, counters and fixtures   Nightly
Clean, sanitize and restock dispensing units   Nightly Sweep and mop floor with
disinfectant cleaner   Nightly Spot clean partitions/walls   Nightly Dust tops
of partitions   Nightly Pour water in floor drains   Weekly Dust air diffusers  
Weekly Wipe and sanitize partitions/walls/trash cans   Weekly Wet clean air
diffusers   Monthly Wipe clean all ceiling lights and fixtures   Monthly      
Miscellaneous     Gym/locker room cleaning   Special request Shower cleaning  
Special request Specialty flooring clean (flagstone, marble, etc)   Special
request Floor scrubbing, sealing or waxing   Special request Suite specific
restroom supplies   Special request Suite carpet cleaning   Special request
Additonal break room/kitchen cleaning   Special request

 

G-2

 

 

EXHIBIT “H”

SIGNAGE CRITERIA

 

[tex10-1pg56.jpg]

 

H-1

 

 

[tex10-1pg57.jpg]

 

H-2

 

 

[tex10-1pg58.jpg]

 

H-3

 

 

[tex10-1pg59.jpg]

 

H-4

 

 

[tex10-1pg60.jpg]

 

H-5

 

 

[tex10-1pg61.jpg]

 

H-6

 

 

[tex10-1pg62.jpg]

 

H-7

 

 

[tex10-1pg63.jpg]

 

H-8

 

 

EXHIBIT “I”

SAMPLE FORM OF SNDA

 

SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

 

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (“Agreement”) is
made as of ________________, 201__, among _____________ a national banking
association (“Lender”), AX UNION HILLSF L.P., a Delaware limited partnership
(“Lessor”), and________________, a ________________ (“Lessee”).

 

Recitals:

 

A.           Lessor and Lessee have entered into that certain lease dated
__________________________, 201 _ (the “Lease”), concerning certain premises
(the “Premises”) in the office building known as (the “Property”), located on
that certain real property in Scottsdale, Arizona, which is legally described on
the attached Exhibit A (the “Land”).

 

B.           As security for a loan from Lender to Lessor in the original
principal amount of $ (the “Loan”), Lessor executed and delivered to Lender a
Combination Deed of Trust, Security Agreement and Fixture Financing Statement
dated __________________________ (as now or hereafter increased, amended,
modified, supplemented, consolidated, replaced, substituted, extended and/or
renewed, the “Mortgage”), currently encumbering, inter alia, the Property.

 

C.           Lender has required the execution of this Agreement as a condition
to making the Loan.

 

D.           Lender, Lessor and Lessee have agreed to the following with respect
to their mutual rights and obligations pursuant to and under the Lease and the
Mortgage.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1.          Subordination. All of Lessee’s right, title and interest in and to
the Premises, the Lease and all rights, remedies and options of Lessee under the
Lease are and shall remain unconditionally subject and subordinate to the
Mortgage and the lien thereof, to all the terms, conditions and provisions of
the Mortgage, to each and every advance made or hereafter made under the
Mortgage, and to all increases, amendments, modifications, supplements,
consolidations, replacements, substitutions, extensions and renewals of the
Mortgage so that at all times the Mortgage shall be and remain a lien on the
Premises prior and superior to the Lease for all purposes.

 

2.          Non-Disturbance. Provided that: (i) the Lease is then in full force
and effect; and (ii) Lessee is not then in default under the Lease beyond any
applicable grace or cure periods provided in the Lease, then the Lease shall not
be extinguished or terminated by an action or proceeding to foreclose or
otherwise enforce the Mortgage or by a conveyance in lieu of foreclosure, but
rather, the Lease shall continue in full force and effect and the owner of the
Premises following a foreclosure sale or conveyance in lieu of foreclosure (“New
Owner”) shall recognize and accept Lessee as tenant under the Lease.

 

3.          Attornment. Upon Lessee’s receipt of notice that Lender or any other
party has become the New Owner, Lessee will attorn to and recognize such New
Owner as its substitute lessor under the Lease. Lessee’s attornment to and
recognition of New Owner pursuant to this Agreement will be effective and
self-operative immediately upon Lessee’s receipt of such notice without the
execution or delivery of any further instrument. Upon New Owner’s request,
Lessee will execute and deliver an instrument acknowledging Lessee’s attornment
to and recognition of New Owner.

 

I-1

 

 

4.          New Owner. New Owner will be bound, as the lessor, to Lessee under
all covenants and conditions of the Lease for the remainder of the term of the
Lease and any renewal or extension thereof pursuant to the terms of the Lease,
except that New Owner:

 

(i)          will not be bound by any provision of the Lease restricting the use
of any properties owned by New Owner other than the Land;

 

(ii)         will not be bound by any amendment, supplement or other
modification of the Lease which was not consented to in writing by Lender;

 

(iii)        will not be liable for any act, omission, or breach by any lessor
under the Lease which occurs prior to the date New Owner acquires title to and
possession of the Property, nor subject to any right of set-off or defense which
Lessee may have against any prior lessor;

 

(iv)        will not be liable for the return of any security deposit given by
Lessee to Lessor except to the extent actually received by New Owner;

 

(v)         will not be liable under any covenant or warranty in the Lease with
regard to the construction of the Premises, including any tenant improvements,
nor for the payment of any tenant improvement allowance, nor for any delays in
completion of construction, nor for any implied warranty relating to the
construction of the Premises and/or the Property; and

 

(vi)        will, upon any sale or other transfer by New Owner of its interest
in the Premises, automatically be released and discharged from all liability
thereafter accruing under the Lease.

 

Lessee shall look only to the estate and property of New Owner in the Land and
the Property for the satisfaction of Lessee’s remedies for the collection of a
judgment (or other judicial process) requiring the payment of money in the event
of any default by New Owner as the lessor under the Lease, and no other property
or assets of New Owner shall be subject to levy, execution or other enforcement
procedure for the satisfaction of Lessee’s remedies under or with respect to the
Lease.

 

5.          Miscellaneous.

 

a.           Notices. Any notice required or permitted to be given by any party
under the terms of this Agreement shall be deemed to have been given on the date
the same is deposited in the United States Mail registered or certified, return
receipt requested, postage prepaid, or deposited with Federal Express, UPS or
another reputable overnight courier, addressed to the party to which the notice
is to be given at the address set forth below, or at any other address specified
in a notice given by such party to the others not less than ten (10) days prior
to the effective date of the address change:

 

If to Lender:                   Real Estate Banking Division  

 

I-2

 

 

With a copy to:                   Attn:           If to Lessor: AX UNION HILLS
L.P.     16220 North Scottsdale Road     Suite 280     Scottsdale, AZ 85254    
Attn: Phil Martens         With a copy to: Artis REIT     300 - 360 Main Street
    Winnipeg Manitoba R3C 3Z3     Attn: Jim Green         And with a copy to:
Reinhart Boerner Van Deuren s.c.     16220 North Scottsdale Road     Suite 205  
  Scottsdale, AZ 85254     Attn: William (Will) Invie Shroyer   If to Lessee:  
                      Attn:    

 

b.           Notice of Default. Lessee will provide to Lender each notice of
default by Lessor, as and when it provides such notice to Lessor, and Lender
will have the right, but not the obligation, to cure any such default within 15
days after the expiration of the time provided in the Lease to Lessor to cure
such default, provided that if Lender, acting with diligence, cannot cure such
default within such 15-day period, Lender’s commencement of a remedy within such
15-day period will be sufficient so long as a cure is effected within a
reasonable time. Lessee agrees not to exercise any of its remedies in connection
with any default notice to Lessor until the expiration of the cure period
provided to Lender by this Agreement, and Lessee hereby agrees to accept any
cure from Lender as if made by Lessor. Notwithstanding the foregoing, unless
Lender otherwise agrees in writing to assume any obligations of Lessor under the
Lease, Lessor shall remain solely liable to perform Lessor’s obligations under
the Lease, both before and after Lender’s exercise of any right or remedy under
this Agreement.

 

c.           No Advance Rent. Lessee will not pay the rent or any other sums due
under the Lease more than one month in advance, except with the written consent
of Lender.

 

d.           Insurance and Condemnation Proceeds. Notwithstanding any provision
of the Lease to the contrary, the Mortgage and the other documents executed in
connection with the Loan shall control the application of insurance or
condemnation proceeds and the restoration of the Premises or the Property in the
event of a casualty loss or a taking.

 

I-3

 

 

e.           Assignment of Rents. Lessor and Lessee acknowledge that Lender is
entitled, pursuant to an Assignment of Leases and Rents executed by Lessor in
favor of Lender, to receive and collect all rent payable under the Lease
directly from Lessee. Lessee agrees to pay all of said rent directly to Lender
upon receipt of a written request from Lender. Until Lessee receives such
request from Lender, Lessee will pay all of said rent to Lessor in accordance
with the provisions of the Lease. Upon Lessee’s receipt of such request, Lessee
will not be required to determine whether Lessor is in default under the Loan or
the Mortgage.

 

f.            No Modification or Termination. Neither Lessor nor Lessee will
cancel or terminate the Lease or amend, modify, supplement, or in any manner
alter any of its terms without the prior written consent of Lender.

 

g.           No Other Subordination. Neither Lessor nor Lessee will, during the
term of the Mortgage, permit the Lease to become subordinate to the lien of any
mortgage or security instrument in favor of any person or entity other than
Lender.

 

h.           Successors and Assigns. This Agreement will be binding upon and
will inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and assigns,
including any New Owner.

 

i.            Governing Law. This Agreement and the Lease will be governed by
and construed and interpreted in accordance with the internal laws of the State
of Arizona.

 

j.            Counterparts. This Agreement may be signed in counterparts and
each counterpart shall be effective as an original when counterparts have been
signed by all parties.

 

[Remainder of Page Intentionally Left Blank]

 

I-4

 

 

IN WITNESS WHEREOF, this Subordination, Non-Disturbance and Attornment Agreement
has been duly executed as of the day and year first above written.

 

  LENDER:         By:     Its:  

 

STATE OF MINNESOTA )           ) ss.       COUNTY OF HENNEPIN )  

 

The foregoing was acknowledged before me this _________ day of
__________________, 201__, by ___________________________ the __________________
of, a national banking association, on behalf of the association.

 

        Notary Public  

 

I-5

 

 

    BORROWER:           AX UNION HILLS L.P., a Delaware limited partnership    
        By:         Philip Martens, Authorized Signatory

 

STATE OF ____________ )           )  ss.         COUNTY OF _____________ )  

 

The foregoing was acknowledged before me this __________ day of
__________________, 201__, by Philip Martens the Authorized Signatory of AX
UNION HILLS L.P., a Delaware limited partnership, on behalf of the partnership.

 

        Notary Public  

 

I-6

 

 

  [LESSEE]       By:       Its:  

 

STATE OF ______________ )           )   ss.         COUNTY OF ____________ )  

 

The foregoing was acknowledged before me this ___________ day of
____________________, 201__ , by ________________________ the __________________
of _______________________, a _______________________, on behalf of the
______________________.

 

        Notary Public  

 

This document was drafted by:              

 

I-7

 

 

EXHIBIT A

 

Legal Description