EXHIBIT 10.1

 

ASSIGNMENT AND ASSUMPTION OF LEASE

 

This ASSIGNMENT AND ASSUMPTION OF LEASE (“Assignment”) is made as of the 8th day
of May, 2006 (“Effective Date”), by and between B.G. ASSOCIATES, INC., an
Arizona corporation (“Assignor”), and POORE BROTHERS, INC., a Delaware
corporation (“Assignee”).

 

RECITALS

 

1.             Assignor is the tenant under The 5050 Building Lease Agreement
entered into by and between 5050 North 40th St., L.L.C., an Arizona limited
liability company, and Assignor, as of November 22, 2000, attached as Exhibit A
hereto, as amended by the First Amendment to The 5050 Building Lease Agreement
entered into by and between REG Phoenix, LLC, as successor in interest to 5050
North 40th St., L.L.C., and Assignor, as of November 5, 2005, attached as
Exhibit B hereto (collectively the “Lease”).

 

2.             Assignor desires to assign its rights and obligations under the
Lease to Assignee and Assignee desires to assume Assignor’s rights and
obligations under the Lease.

 

For good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:

 

AGREEMENT

 

1.             Assignment of Lease. Assignor hereby assigns to Assignee all of
Assignor’s rights and obligations under the Lease arising as of and after the
Effective Date.

 

2.             Assumption of Obligations. Assignee hereby assumes from Assignor
all of Assignor’s rights and obligations under the Lease and agrees to fully and
timely perform all of Assignor’s obligations under the Lease arising as of and
after the Effective Date.

 

3.             Indemnity by Assignor. Assignor agrees to indemnify, defend and
hold harmless Assignee from and against any and all claims, damages,
liabilities, losses, costs and expenses (including, without limitation,
reasonable attorneys’ fees and expenses) asserted against or suffered or
incurred by Assignee as a result of or in connection with any liabilities or
obligations arising under or related to the Lease and pertaining to periods
prior to the Effective Date.

 

4.             Indemnity by Assignee. Assignee agrees to indemnify, defend and
hold harmless Assignor from and against any and all claims, damages,
liabilities, losses, costs and expenses (including, without limitation,
reasonable attorneys’ fees and expenses) asserted against or suffered or
incurred by Assignor as a result of or in connection with any liabilities or
obligations arising under or relating to the Lease and pertaining to periods
from and after the Effective Date.

 

5.             Joint Representation. Assignor and Assignee hereby acknowledge
that The Henderson Law Firm has prepared this Assignment on behalf of both
parties and that each has had the opportunity to retain separate counsel to
review this Assignment. Assignor and Assignee hereby consent to the joint
representation of both parties by The Henderson Law Firm in connection with the
preparation of this Assignment.

 

6.             Successors and Assigns. Subject to the provisions of the Lease,
this Assignment shall be binding upon and inure to the benefit of the successors
and assigns of the parties hereto.

 

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7.             Attorneys’ Fees. If there is any action or suit brought by a
party hereto against another party hereunder by reason of any alleged breach of
any of the covenants, conditions, agreements or provisions on the part of the
other party arising out of this Assignment, the prevailing party shall be
entitled to recover from the other party all costs and expenses of the action or
suit, including reasonable attorneys’ fees.

 

8.             Governing Law. This Assignment shall be governed by, interpreted
under, and construed and enforced in accordance with, the laws of the State of
Arizona.

 

9.             Counterparts. This Assignment may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have executed this Assignment as of the
Effective Date.

 

 

“Assignor”

B.G. ASSOCIATES, INC.,

 

an Arizona corporation

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

“Assignee”

POORE BROTHERS, INC.,

 

a Delaware corporation

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

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CONSENT BY LANDLORD

 

REG Phoenix, LLC, an Arizona limited liability company, without waiving any of
its rights as landlord under the Lease, hereby consents to this Assignment.

 

 

REG PHOENIX, L.L.C.,

 

an Arizona limited liability company

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

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EXHIBIT A

 

THE 5050 BUILDING LEASE AGREEMENT

 

THIS LEASE AGREEMENT, dated this 22nd day of November, 2000 (this “Lease”), is
entered into between 5050 NORTH 40TH ST., L.L.C., an Arizona limited liability
company (“Landlord”), and B.G. ASSOCIATES, INC., an Arizona corporation
(“Tenant”).

 

ARTICLE 1. PREMISES

 

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, on the
terms and conditions herein set forth, the premises designated as Suite 300 and
cross-hatched on Exhibit A attached hereto and made a part hereof (the
“Premises”), consisting of approximately 5,602 square feet of rentable area
measured according to BOMA standards within that certain building known as The
5050 Building and situated at 5050 North 40th Street, Phoenix, Arizona (the
“Building”), The measurement of the rentable area of the Premises is made
according to the definition of such area employed by the Building Owners and
Managers Association.

 

ARTICLE 2. TERM

 

The Term of this Lease shall be five (5) years commencing on the date that is
not later than the 1st day of February, 2001 (the “Commencement Date”) and
ending on the 31st day of January, 2006 (the “Termination Date”), Commencement
of this Lease is conditioned, and Tenant acknowledges that this Lease is
conditioned, upon the successful termination of the lease agreement of the
Premises to Ceridian Corporation, as successor to Matthews, Malone & Associates.
If this prior lease agreement is not terminated by December 1, 2000, this Lease
shall be void as if never made in the first instance. In the event the
termination and the tenant improvements for the Premises are completed prior to
February 1, 2001, in that event the Commencement Date shall be the date upon
which Landlord delivers keys to the Premises to Tenant along with a copy of the
Premises’ certificate of occupancy; provided, Landlord shall provide at least
one (1) business day notice of the intention to make such delivery. Subject to
the provisions of Article 26, notwithstanding anything herein to the contrary,
the rights of Tenant hereunder are wholly derivative of the rights of Landlord
under the Ground Lease (as defined below), including the rights of occupancy of
the Premises.

 

ARTICLE 3. RENT

 

Tenant shall pay to Landlord, as fixed rent for the Premises during the Term of
this Lease, the total sum of Six Hundred Sixty Three Thousand Eight Hundred
Thirty Seven Dollars ($663,837) over the five (5) year term of this Lease, based
upon the rate of Twenty-Three Dollars and Fifty Cents ($23.50) per square foot
within the Premises for each of the first three years of the Term, yielding
annual rent of $131,647 plus applicable tax, in monthly installments, and
Twenty-Four Dollars ($24.00) per square foot within the Premises for the fourth
and fifth years of the Term, yielding annual rent for each of those years of
$134,448, plus applicable tax. Rent is due on or before the first day of each
calendar month, commencing on the commencement date; provided, however, the
first month’s rent shall be paid by Tenant upon execution of this Lease.

 

Rent due for a period of less than a full month shall be prorated on the basis
of a thirty (30) day month. Rent shall be paid to Landlord, without deduction or
offset, in lawful money of the United States of America and shall be paid to
Landlord at the address designated herein or

 

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at such other place as Landlord may, from time to time, designate. Tenant shall
also pay to Landlord with the payments of rent above required, as additional
rent, any privilege, excise, sales, gross proceeds, rent or other tax now or
hereafter levied, assessed or imposed, directly or indirectly, by any
governmental authority upon any rent or other payments required by this Lease.

 

ARTICLE 4. SECURITY DEPOSIT

 

Tenant shall deposit with Landlord or its agent the sum of Twenty One Thousand
Nine Hundred Forty-One and no/100 Dollars ($21,941), as partial security for
Tenant’s full and faithful performance of each and every term, condition,
covenant and provision of this Lease. Thereafter, in the event Tenant defaults
in the performance of any term, condition, covenant or provision hereof,
following the applicable Tenant cure period’s lapse, Landlord may use, apply or
retain the whole or any part of such Security Deposit for the payment of any
rent or other charge in default or for the payment of any other sum which
Landlord may incur or for which Landlord may become obligated by reason of
Tenant’s default, or to compensate Landlord for any other loss or damage that
Landlord may suffer because of Tenant’s default. Under no circumstances shall
the Security Deposit be deemed to be the last month’s rent payable hereunder.

 

Any use, application or retention of the Security Deposit by Landlord shall be
in addition to, and not in substitution of or as an alternative to, any other
rights or remedies Landlord may have at law or under this Lease, shall not
prevent Landlord from pursuing its other rights and remedies hereunder or at law
or equity, and shall not prevent Landlord from recovering damages in case of
default(s) in excess of the amount of the Security Deposit used, applied or
retained. If any portion of the Security Deposit is so used, applied or
retained, then, not later than ten (10) days after notice to Tenant; Tenant
shall deposit a sufficient sum in cash with Landlord to restore the Security
Deposit to the full amount initially deposited, and Tenant’s failure to do so
shall be a material breach of this Lease.

 

If Tenant, at the end of the Term hereof, including extensions and holdover
periods, if any, and after vacating the Premises shall have fully and faithfully
complied with all of the terms and provisions of this Lease, the Security
Deposit or any balance thereof not used, applied or retained by Landlord
hereunder within thirty (30) days of the date of Tenant’s compliance, shall be
returned to Tenant, or at Landlord’s option, to the last assignee of Tenant’s
interest hereunder. No interest or other payment shall be made to Tenant on or
for the use of the Security Deposit nor shall any trust relationship be created
by the deposit of the Security Deposit. Tenant agrees that if Landlord shall
sell or otherwise dispose of the Building, Landlord shall be relieved of its
obligation to return the Security Deposit provided that Landlord’s transferee
assumes in writing the obligations of Landlord with respect to such Security
Deposit. Landlord shall not be required to keep the Security Deposit separate
from its general funds. Notwithstanding the first sentence of this paragraph,
should Tenant timely exercise its option to renew, Landlord shall reduce the
balance of the Security Deposit to one (1) month’s rent, and shall return the
excess to Tenant within thirty (30) days of Tenant’s commencement of the
extension period.

 

ARTICLE 5. RENTAL ADJUSTMENT

 

For the purpose of this Article the terms herein are defined as follows:

 

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Expense Statement: An annual statement from Landlord setting forth the actual
Direct Expenses for the Building for the calendar year ending on the prior
December 31 and Tenant’s Proportionate Share thereof and setting forth the
estimated Direct Expenses that will be incurred by Landlord for the Building
during the current calendar year ending on the next following December 31 and
Tenant’s Proportionate Share thereof.

 

Tenant’s Proportionate Share: Additional rent in an amount equal to Seven and
eighty-two hundredths (7.82%) of the amount of Direct Expenses that exceed the
amount of Direct Expenses for the Base Year, as defined herein. In determining
Tenant’s Proportionate Share, Landlord uses a load factor of 12.5%.

 

Direct Expenses: All direct costs of operation and maintenance of the Building,
parking areas and adjoining property, which shall include, but shall not be
limited to, the following costs: real property taxes and assessments, personal
property taxes levied on equipment, fixtures and other property of Landlord
located in the Building and used in connection with the operation thereof, and
any other taxes imposed by any federal, state, county, municipal or other
governmental entity, whether assessed against Landlord and/or Tenant (except any
tax payable by Tenant pursuant to Articles 3 and 46); water and sewer charges;
insurance premiums for reasonable and customary insurance, including, but not
limited to, fire and other casualty insurance and public liability insurance;
utility expenses, including, without limitation, expenses for gas, electricity
and telephone; janitorial expenses; expenses for landscaping and other services;
reasonable and customary costs incurred in the management of the Building,
including, without limitation, management fees, air conditioning maintenance and
repair and elevator maintenance and repair, the costs of supplies, materials,
equipment and tools used in the operation of the Building and adjoining areas,
the wages and salaries of employees used in the management, operation, and
maintenance of the Building; and taxes (other than net income taxes) or
assessments of any type whether or not now customary or within the contemplation
of the parties hereto, including expenditures for improvements normally
designated as capital improvements, which are imposed or required by or result
from statutes or regulations, or interpretations thereof implemented after the
date hereof, and promulgated by any federal, state, county, municipal or other
governmental body or agency of any type performing any governmental or other
function (including, but not limited to, the Environmental Protection Agency and
the authority administering the Occupational Safety and Health Act, or any
successor agencies performing the same or similar functions); provided, however,
the cost of any such capital improvements made necessary by the actions of any
governmental authority shall be amortized over the useful life to Landlord of
such improvement according to sound accounting practice and only the portion of
such amortization applicable to any calendar year or if applicable any partial
calendar year, shall be included as a Direct Expense for such calendar year or
partial calendar year.

 

Except as above provided, Direct Expenses shall not include any of the
following: (a) cost incurred in connection with construction or refurbishing of
the Building, except as provided In the preceding paragraph and except that
refurbishment of the common areas of the Building shall be included in Direct
Expenses as follows: (i) if such refurbishments are less than $5,000 in a
calendar year, such refurbishment expenses shall be entirely included in Direct
Expenses for such year, and (ii) if such refurbishment expenses in a calendar
year are $5,000 or more, the cost of any such refurbishments shall be amortized
over the useful life to Landlord of such improvement (but in all events over no
less than five years) according to sound accounting practice and only the
portion of such amortization applicable to any calendar year shall be included
as a Direct Expense for such calendar year; (b) cost of leasehold/ construction
improvements for Tenant or any other tenant including changes, additions,
repairs,

 

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replacements, alterations, painting, decorating or other costs to the Premises,
the premises of other tenants or in preparation for a tenant’s new or continued
occupancy; (c) legal fees, space planning fees, architectural fees, engineering
fees, real estate commissions, marketing, advertising or any expenses incurred
in connection with the development of or leasing of the Building; (d) any cost
included in operation expenses (including management fees) representing an
amount paid to a person, firm, corporation or other entity related to Landlord
which is in excess of the amount which would have been paid absent such
relationship; (e) cost of selling, syndicating, financing, mortgaging or
hypothecating any of Landlord’s interest in the Building or the improvements
located on the Building; (f) cost associated with the operation of the business
of the legal entity which constitutes Landlord as the same is separate and
apart from the cost and operation of the Building, including legal entity
formation, internal equity account and legal matters; (g) costs of disputes
between Landlord and any third party; (h) the cost of any disputes between
Landlord and any employee or agent of Landlord; (i) cost of defending any
lawsuits with mortgagees or ground lessors; (j) any late fees, penalties,
interest charges or similar fees; (k) interest, principal payments and other
costs of any indebtedness and rental under any ground lease or other underlying
lease; (l) any debt losses, rent losses or reserves for bad debt; (m) the cost
for any repair resulting from casualty and condemnation of the Premises or
Building that is reimbursed by insurance proceeds; (n) income, excess profits or
franchise taxes or other such taxes imposed on income of Landlord from the
operation of the Building other than the taxes described in Sections 3 and 46 or
the taxes described in the preceding paragraph; (o) wages, costs and salaries
associated with home office and off-site employees, except when they provide
professional services which would otherwise be provided by outside
professionals; (p) the cost of any items for which the Landlord is reimbursed by
insurance proceeds, condemnation awards, a tenant or otherwise except through
the participation of Tenant; (q) legal expenses arising out of the construction,
occupancy or maintenance of the Building or the enforcement of the provisions of
any agreements affecting the Building, including this Lease; and (r) unrecovered
expenses resulting from the gross negligence or willful misconduct of the
Landlord, its agents, servants or employees.

 

Base Year: Calendar Year 2001; if Tenant exercises its option to renew, the Base
Year for the extension period shall be calendar year 2006. In all events, if
during any calendar year (including calendar year 2001), the Building is less
than fully occupied, to determine Tenant’s Proportionate Share, Direct Expenses
fluctuating with Building occupancy shall be “grossed up” to the amount, using
commercially reasonable projections, that normally would be expected if the
Building were 95% occupied for that entire year.

 

Landlord shall endeavor to give to Tenant on or before April 1 of each calendar
year throughout the Term of the Lease, an Expense Statement as set forth herein,
but Landlord’s failure to provide Tenant with an Expense Statement by said dates
shall not constitute a waiver by Landlord of its right to require payment by
Tenant of Tenant’s Proportionate Share of estimated Direct Expenses or actual
Direct Expenses.

 

Tenant’s Proportionate Share of estimated Direct Expenses for the calendar year
in which the Expense Statement is received shall be divided by 12 and one such
installment shall be paid concurrently with each rental payment thereafter until
receipt by Tenant of the next Expense Statement. In addition, Tenant shall pay
in full concurrently with the first monthly rent payment due following receipt
of the Expense Statement an amount equal to the excess of the monthly
installment required to be paid under the most current Expense Statement over
the monthly installment made under the preceding Expense Statement (if any)
multiplied by the number of months elapsing from January through the month in
which the Expense Statement is received by Tenant.

 

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If Tenant’s Proportionate Share exceeds the payments made by Tenant for that
calendar year, then concurrently with the first monthly rent payment due
following receipt by Tenant of the Expense Statement, Tenant shall pay in full
an amount equal to such excess. If Tenant’s Proportionate Share as shown on the
Expense Statement is less than the payments made by Tenant for that calendar
year, the amount of such overpayment shall be credited against the next monthly
rent payment(s) falling due.

 

Even though the Term has expired and the Tenant has vacated the Premises when
the final determination is made of Tenant’s Proportionate Share for the calendar
year in which the Lease expires, Tenant shall promptly following written demand
pay the amount by which Tenant’s Proportionate Share obligation for the portion
of such year in which Tenant was in occupancy exceeds the estimated payments
made by Tenant for that calendar year; conversely, any overpayment made shall be
promptly rebated by Landlord to Tenant. If Tenant elects at its sole expense to
audit Landlord’s books and records pertaining to Direct Expenses, such audit:
(i) shall cover a period not longer than the current and immediately preceding
calendar years; (ii) shall be performed at Landlord’s office for retaining such
records; and (iii) accountant’s reports and worksheets shall be provided at no
expense to Landlord for Landlord’s examination; provided, however, if Landlord’s
Expense Statement is off by more than five percent (5%), Landlord shall pay for
the cost of such audit.

 

Notwithstanding anything to the contrary contained in this Article, Tenant’s
rental payment shall in no event be less than the rent specified in Article 3
hereof. Expense Statements shall be prepared in accordance with generally
recognized and established accounting practices and each such annual
determination and statement, certified by Landlord, subject to Tenant’s
foregoing audit rights, shall be final and conclusive on both parties.

 

ARTICLE 6. COMPLETION OF PREMISES

 

Landlord shall pay for Tenant’s tenant improvements up to Ten Dollars ($10.00)
per rentable square foot in the Premises. The contract for those improvements
shall be subject to Tenant’s approval, which shall not unreasonably be withheld,
delayed or conditioned. If Tenant does not approve (or give written reasons for
its disapproval of) the contract within three (3) business days after Landlord
delivers it to Tenant, Tenant agrees that the Commencement Date shall be delayed
one (1) day for each day thereafter that Tenant delays its approval of the
contract. The parties acknowledge and agree that no costs for tenant
improvements shall be charged to Tenant unless both Landlord and Tenant approve
in writing any such charge, which approvals shall not be unreasonably withheld
or delayed.

 

Any additional interior improvements, additions or alterations required by
Tenant and approved by Landlord shall be furnished and installed at Tenant’s
sole cost and expense. Any such additional work which is normally furnished and
installed by the construction trades shall be furnished and installed by
Landlord’s general contractor or other contractor employed by Landlord at such
cost and on such terms as shall have been agreed to between Landlord and Tenant.

 

In order for Landlord to prepare the necessary construction plans required to
accomplish the Completion of the Premises, including the building standard
tenant improvements hereinabove described, as well as any additional
construction work required by Tenant, Tenant shall, within ten (10) days
following the execution of this Lease, furnish to Landlord in writing such full
and complete information as will be required to complete said construction
plans. Said full and complete information shall include, without limitation, the
following details:

 

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(a)           Exact location of telephone and electrical outlets.

 

(b)           Interior wall finish specifications.

 

(c)           Detailed plans and specifications of all non-standard construction
work to be accomplished within the Premises by Landlord’s general contractor or
other contractor employed by Landlord.

 

All work to be performed on the Premises which is not within the scope of work
normally performed by the construction trades, such as the furnishing and
installing of furniture, telephones, office equipment, etc., shall be furnished
and installed by Tenant at Tenant’s expense. Agents, contractors and employees
obtained by Tenant to accomplish such non-construction installations shall be
subject to Landlord’s approval and to the administrative supervision of
Landlord’s general contractor. Landlord shall allow access to the Premises
during the construction of the Premises during the last two weeks preceding
commencement of the Lease Term to Tenant’s agents, contractors and employees for
the purpose of enabling Tenant to prepare the Premises for Tenant’s use and
occupancy. All such non-construction work performed by Tenant’s agents,
contractors or employees shall be accomplished in such a manner as not to
interfere unreasonably with or delay the work of Landlord’s general contractor
in the completion of the Premises.

 

Tenant agrees that in the event Tenant shall have failed by the time hereinabove
specified to furnish Landlord with the necessary information to complete the
Premises or should Tenant, its agents, contractors or employees otherwise cause
delay in Landlord’s preparation of the Premises, thereby delaying Tenant’s
occupancy of the Premises beyond the Commencement Date, then Landlord may at its
option require Tenant to commence payment of rental on the stated Commencement
Date of the Lease.

 

ARTICLE 7. POSSESSION

 

If Landlord, for any reason whatsoever, except for that reason noted in the
final paragraph of Article 6, cannot deliver possession of the Premises to
Tenant on the Commencement Date, this Lease shall not be void or voidable
(except as hereinafter provided) nor shall Tenant have a claim for any loss or
damage resulting therefrom, but as Tenant’s sole remedy, all rent due hereunder
shall be abated during the period between the Commencement Date and the time
when Landlord delivers possession, and the first day of the Term of this Lease
and the final day of the Term of this Lease shall both be extended by a period
equal to the period of such delay. If Landlord shall not have delivered
possession of the Premises by May 1, 2001, Tenant shall have the option to
cancel this Lease on or before June 1, 2001, by giving ten (10) days’ written
notice to Landlord, in which event (a) this Lease shall be null and void and of
no further force or effect and except as stated in (b), neither Landlord nor
Tenant shall have further liability or obligation to the other hereunder, and
(b) Landlord shall pay Tenant’s rent at its present location (as of the date
hereof) for the month of May, 2001, as Tenant’s liquidated damages, so long as
the reason for the delay beyond May 1, 2001, is not due to a breach by Tenant of
Article 6 above. For purposes of this Article 7, “possession of the Premises”
shall be deemed to occur when the tenant improvements contemplated by Article 6
are completed and a copy of a certificate of occupancy therefor has been
delivered to Tenant.

 

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ARTICLE 8. USE OF PREMISES

 

The Premises are to be used for general office use and for no other purpose or
purposes (the “Permitted Use”) without the prior written consent of Landlord in
Landlord’s sole discretion.

 

Tenant shall not do or permit anything to be done in or about the Premises which
will in any way increase the risk of fire to the Premises beyond that inherent
or reasonably necessary to the Permitted Use, nor keep or bring anything therein
which will in any way increase the existing rate of or affect any policy of
fire, extended coverage or any other insurance covering the Building or any of
its contents, or cause a cancellation of any of the same. Tenant shall not do or
permit anything to be done in or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the
Building or injure or annoy them, or use or allow the Premises to be used for
any improper, immoral, unlawful or objectionable purpose, or maintain or permit
any nuisance in, on or about the Premises or permit anything to be done which
may injure or damage the Premises. Tenant shall not damage, deface or commit or
suffer to be committed any waste in or upon the Premises.

 

As used in this Lease, the term “Hazardous Material” means any flammable items,
explosives, radioactive materials, hazardous or toxic substances, material or
waste or related materials, any dangerous or poisonous substances, chemicals,
drugs or materials, and including any substances defined as or Included in the
definition of “hazardous substances”, “hazardous wastes”, “infectious wastes”,
“hazardous materials”, “toxic substances”, “dangerous substances”, “poisonous
substances” or “controlled substances” now or subsequently regulated, controlled
or prohibited under any federal, state or local laws, statutes, ordinances,
orders or regulations (collectively “Hazardous Materials Laws”) including,
without limitation, oil, petroleum-based products, paints, poisons, harmful
drugs, solvents, lead, cyanide, DDT, printing inks, acids, pesticides, ammonia
compounds and other chemical products, asbestos, PCBs and similar compounds, and
including any different products and materials which are subsequently found to
have adverse effects on the environment or the health and safety of persons.
Tenant shall not cause or permit any Hazardous Material to be generated,
produced, brought upon, used, stored, treated, discharged, released, spilled or
disposed of on, in, under or about the Premises by Tenant, its affiliates,
agents, employees, contractors, sublessees, assignees, except only for such
Hazardous Material as is necessary to and commonly used in Tenant’s business and
the industry with which Tenant’s business is associated, as Tenant is licensed
and legally authorized to handle and as is permitted under and subject to the
terms and conditions of this Lease including without limitation the permitted
use of the Premises set forth in this Lease. Any Hazardous Material necessary to
Tenant’s business as permitted by and subject to the permitted use set forth
above in this Lease shall in each and every instance be utilized, handled,
transported, stored, used, held and disposed of in a safe, harmless, nontoxic
and proper manner and further in a manner which compiles with all Hazardous
Materials Laws whether now or hereafter existing.

 

Tenant shall and does hereby indemnify, defend and hold Landlord harmless from
and against any and all actions (including, without limitation, remedial or
enforcement actions of any kind, administrative or judicial proceedings, and
orders or judgments arising out of or resulting therefrom), costs, claims,
damages (including, without limitation, punitive damages), expenses (including
without limitation, attorneys’, consultants’ and experts’ fees, court costs and
amounts paid in settlement of any claims or actions), fines, forfeitures or
other civil, administrative or criminal penalties, injunctive or other relief
(whether or not based upon personal injury, property damage, or contamination
of, or adverse effects upon, the environment, water tables or natural
resources), liabilities or losses arising from a breach of any of the
provisions, terms or

 

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agreements of this Article by Tenant, its affiliates, agents, employees,
contractors, sublessees or assignees.

 

In the event that Hazardous Materials are discovered upon, in, or under the
Premises as a result of the actions of Tenant or its assignees, sublessees or
Premises occupants after the Commencement Date or arising from Tenant’s
fixturizing the Premises prior thereto, and any governmental agency or entity
having Jurisdiction over the Building requires the removal or disposal of such
Hazardous Materials, or any remediation of any discharge of or contamination by
any such Hazardous Materials, Tenant shall be solely responsible for removing
those Hazardous Materials or remediating any unlawful discharge or contamination
of or from any Hazardous Materials arising out of or related to the use or
occupancy of the Premises or Building by Tenant or its affiliates, agents,
employees, contractors, sublessees or assignees. Notwithstanding the foregoing,
Tenant shall not take any remedial action in or about the Premises or the
Building without first notifying Landlord of Tenant’s intention to do so and
affording Landlord the opportunity to protect Landlord’s interest with respect
thereto. Tenant Immediately shall notify Landlord in writing of any of the
following of which Tenant has knowledge: (j) any spill, release, discharge,
disposal or contamination of or by any Hazardous Material in, on or under the
Premises, the Building or any portion thereof; (ii) any enforcement, cleanup,
removal or other governmental or regulatory action instituted, contemplated, or
threatened (if Tenant has notice thereof) pursuant to any Hazardous Materials
Laws; (iii) any claim made or threatened by any person against Tenant, the
Premises, or the Building relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from or claimed to result from any
Hazardous Materials; and (iv) any reports made to any governmental agency or
entity arising out of or in connection with any Hazardous Materials in, on,
under or about or removed from the Premises or the Building, including any
complaints, notices, warnings, reports or asserted violations in connection
therewith. Tenant also shall supply to Landlord as promptly as possible, and in
any event within five (5) business days after Tenant first receives or sends the
same, copies of all claims, reports, complaints, notices, warnings or asserted
violations relating in any way to the Premises, the Building or the Permitted
Use. Without limiting the foregoing indemnity, Tenant shall be responsible to
pay for, or reimburse Landlord for, the cost of any investigations, studies,
cleanup or corrective action initiated or undertaken on account of any action or
inaction of Tenant in violation of any Hazardous Materials Laws at or affecting
the Premises and/or Building. Further, Landlord reserves the right to enter into
and upon the Premises from time to time with or without notice for purposes of
inspecting, reviewing, analyzing or checking the Premises and in the event that
Landlord shall determine the same to be necessary or desirable, Landlord
may from time to time commission and cause to be made or conducted such studies,
reports, tests, samples, inspections, monitoring, remediation, removals and/or
disposals of or relating to Hazardous Materials or actual, threatened or
potential contamination by or from Hazardous Materials as Landlord shall deem
reasonably necessary, the cost of which shall be paid by Tenant if Tenant is
otherwise liable therefor hereunder.

 

ARTICLE 9. COMPLIANCE WITH LAW

 

Tenant shall at its sole cost and expense promptly comply with all laws,
statutes, ordinances and governmental rules, regulations or requirements now in
force governing the Premises and Tenant’s parking stalls or which may hereafter
be in force and with the requirements of any board of fire underwriters or other
similar body relating to or affecting the condition, use or occupancy of the
Premises, excluding structural changes not related to or affected by Tenant’s
improvements or acts, but including the Americans With Disabilities Act and all
state and local statutes and regulations of similar import.

 

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ARTICLE 10. RULES AND REGULATIONS

 

Landlord has established Building Rules and Regulations which are attached to
this Lease as Exhibit B. Landlord may from time to time make such modifications,
additions and deletions in the Building Rules and Regulations as in the sole
judgment of Landlord are necessary or convenient for the management and
operation of the Building, so long as such modifications, additions and
deletions (i) are consistent with current comparable office building operation
conventions, (ii) do not increase Tenant’s obligations or conflict with express
provisions of this Lease, or (iii) are not enforced in a discriminatory manner.
Landlord shall notify Tenant from time to time of modifications, additions, or
deletions in the Building Rules and Regulations, and any such modification,
addition, or deletion shall be effective after Landlord gives five (5) days’
written notice thereof to Tenant; provided, however, if an emergency arises
which in the sole judgment of Landlord makes it impracticable to give five
(5) days’ written notice, such modification, addition, or deletion shall become
effective immediately upon implementation by Landlord, with the written notice
to be subsequently given. Tenant agrees to faithfully observe and comply with
the Building Rules and Regulations and all modifications, additions or deletions
thereto and the breach of any Building Rule and Regulation by Tenants shall
constitute a material breach of this Lease. Landlord shall not be responsible to
Tenant for the nonperformance by any other tenant or occupant of the Building of
any such Building Rules and Regulations, but the Building Rules and Regulations
from time to time in effect shall be uniformly applicable to all tenants and
occupants similarly situated.

 

ARTICLE 11. ALTERATIONS

 

Tenant shall not make or permit to be made any alterations, additions,
improvements, or installations at the Premises or any part thereof without the
prior written consent of Landlord, which consent shall not unreasonably be
withheld so long as such activities are not structural and do not impact the
Building’s utility systems. Any alterations, additions, improvements, or
installations to or of the Premises, except movable furniture and trade
fixtures, shall at once become a part of the realty and belong to Landlord. In
the event Landlord consents to alterations, additions, improvements, or
installations, pursuant to this Article, the same shall be made by Tenant at
Tenant’s sole cost and expense and selection by Tenant of any person or entity
to construct or install the same shall be subject to the prior written consent
of Landlord, which consent may be conditioned upon (1) Tenant, providing
Landlord, at Tenant’s sole cost and expense, a lien and completion bond in an
amount equal to one and one-half times the estimated cost of all of such
alterations, additions, improvements or installations and (2) acquisition by
Tenant of all permits needed to authorize such alterations, additions,
improvements or installations from the appropriate governmental agencies,
furnishing a copy thereof to Landlord at least ten (10) days prior to the
commencement of such work and complying with all of the conditions of such
permits in a prompt manner. It shall be a material breach hereof for Tenant to
make any alterations, additions, improvements or installations without the prior
consent of Landlord, and in addition to any other remedies Landlord may have,
Landlord may require that Tenant remove any or all of the same within thirty
(30) days of receipt by Tenant of a notice demanding such removal. Upon the
expiration or sooner termination of the Term hereof and upon demand by Landlord,
Tenant, at Tenant’s sole cost and expense, shall forthwith and with all due
diligence remove any such alterations, additions, improvements, or installations
designated by Landlord to be removed and repair any damage to the Premises
caused by such removal.

 

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ARTICLE 12. REPAIRS

 

Tenant and its agents shall have been given full opportunity to inspect and
examine the Premises and, by entry hereunder, Tenant accepts the Premises in its
present “as is” condition and without any warranty as to the condition of the
Premises or the Building. Tenant shall, at Tenant’s sole cost and expense, keep
the Premises and every part thereof in good condition and repair, ordinary wear
and tear and damage thereto by fire, earthquake, act of God or the elements
excepted. If Tenant does not commence such repairs after Landlord’s written
demand for same and the passage of five (5) business days, except in an
emergency affecting other tenants of the Building (in which event Tenant shall
immediately commence repairs), Landlord may make such repairs and Tenant shall
pay the costs thereof and any accrued interest thereon upon demand. Tenant
hereby waives all rights to make repairs at the expense of Landlord as provided
by any law, statute or ordinance now or hereafter in effect.

 

Landlord shall, at Landlord’s expense, keep the structural portion, roof and
parking lot of the Building in good order, condition and repair; provided,
however, that in the event any damage to the structural portion of the Building
is caused by the acts or omissions of Tenant, its agents, contractors or
employees, Landlord shall, at Tenant’s sole cost and expense, complete the
repairs necessary to place the Building in good order, condition and repair and
Tenant shall pay the costs thereof upon demand.

 

Upon the expiration or sooner termination of the Term hereof, Tenant shall
surrender the Premises to Landlord in the same condition as when received,
ordinary wear and tear and damage thereto by fire, earthquake, act of God or the
elements excepted.

 

ARTICLE 13. ABANDONMENT

 

Tenant shall not vacate or abandon the Premises at any time prior to the
expiration or earlier termination of the Term hereof. In the event Tenant shall
abandon, vacate or surrender the Premises, or be dispossessed by process of law,
or otherwise, any personal property belonging to Tenant and left on the Premises
shall be deemed to have been abandoned. The absence of Tenant for a period of
thirty (30) consecutive days during the Term of this Lease shall automatically
be deemed an abandonment of the Premises, and such period of absence shall be
the exclusive test for a determination that Tenant has vacated or abandoned the
Premises.

 

ARTICLE 14. LIENS

 

Tenant shall keep the Premises and the Building free from any vendor’s,
mechanic’s, materialmen’s or like liens arising out of any work performed,
materials furnished or obligations incurred by Tenant. Landlord shall have the
right at all times to post notices of non-responsibility on the Premises and
record verified copies thereof in connection with all work of any kind upon the
Premises.

 

ARTICLE 15. ASSIGNMENT AND SUBLETTING

 

Neither Tenant nor anyone claiming by, through or under Tenant shall assign,
transfer, mortgage, pledge, hypothecate or encumber this Lease, or any interest
therein, nor sublet the Premises or any part thereof, or any right or privilege
appurtenant thereto, or permit any other person (the agents and servants of
Tenant excepted) to occupy or use the Premises or any part thereof (a
“Transfer”), without the prior written consent of Landlord. Notwithstanding the

 

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foregoing, it shall not be deemed a Transfer if Tenant permits persons not
employed by Tenant to occupy up to two (2) of Tenant’s offices and Tenant’s
conference room from time to time; therefore Tenant shall be jointly and
severally responsible with such occupants under Articles 8 through 12,
inclusive, for the activities of such occupants. A consent to one Transfer shall
not be deemed a consent to any subsequent Transfer and no such Transfer shall
relieve Tenant of any liability or obligation hereunder. Any of the foregoing
acts without Landlord’s consent shall be void and shall constitute a default of
Tenant under this Lease. Tenant shall pay Landlord’s reasonable attorneys’ fees
incurred in connection with any Transfer or request for consent to Transfer. If
Tenant requests an assignment or sublease of the entire Premises, Landlord shall
have the right, without obligation, to terminate this Lease and to enter into a
direct lease with the proposed assignee or subtenant; upon the commencement date
of the new tenancy, Tenant’s obligations hereunder (and Guarantors’ obligations
under the Lease Guaranty) shall cease.

 

In no event shall this Lease or any interest therein be assigned or assignable
by operation of law without the prior written consent of Landlord or by
voluntary or involuntary bankruptcy proceedings or otherwise and in no event
shall this Lease or any rights or privileges hereunder be an asset of Tenant
under any bankruptcy, insolvency or reorganization proceedings. If a sublease of
a portion of the Premises results in a higher per-square foot rent from the
sublessee to Tenant that the then-current fixed rent reserved herein for the
same space, Tenant shall pay one-half of such excess to Landlord.

 

In the event of default by any assignee of Tenant or any successor of Tenant in
the performance of any of the terms hereof, Landlord may proceed directly
against Tenant without the necessity of exhausting or pursuing any remedies
against said assignee or successor. Landlord may consent to subsequent Transfers
of this Lease or amendments or modifications to this Lease with assignees or
successors of Tenant without prior or subsequent notice to Tenant, and without
obtaining its or their consent thereof, and such action shall not relieve Tenant
of any liability or obligation under this Lease.

 

ARTICLE 16. INDEMNIFICATION OF PARTIES: INSURANCE

 

Tenant agrees to indemnify Landlord against, and hold Landlord, the Premises and
the Building free and harmless from, any and all penalties, costs, expenses
(including attorneys’ fees), claims, demands and causes of action, including
imputed negligence due to ownership of the Building, arising out of or in
connection with (a) any accident or other occurrence in or on the facilities
(including, without limiting the generality of the term “facilities,” stairways,
passageways or hallways) the use of which Tenant may have in conjunction with
other tenants of the Building, when such injury or damage shall be caused in
part or in whole by the act or omission of Tenant, its agents, contractors,
servants, employees, licensees, permittees and clients, (b) the condition of, or
any defect in, the Premises or any part thereof or any improvements thereof, to
the extent caused by Tenant or its agents, contractors, servants, employees,
licensees, permittees, clients, assignees, sublessees and Premises occupants,
(c) the condition of, or any defect in, Tenant’s fixtures or equipment or any
part thereof, (d) the use or occupancy of the Premises by Tenant or any tenant
of Tenant, or (e) any breach or default in the performance of any obligation on
Tenant’s part to be performed under the terms of this Lease.

 

If any action or proceeding be brought against Landlord for any of the foregoing
reasons, Tenant, upon notice from Landlord shall defend the same at Tenant’s
expense by counsel satisfactory to Landlord.

 

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Tenant shall at its own costs and expense procure and maintain during the entire
Term and any extensions thereof, workmen’s compensation insurance as required by
statute as well as comprehensive public liability insurance covering the
Premises and their surrounding areas and naming Landlord as an additional
insured in such amounts as Landlord may from time to time reasonably require.
The initial liability coverage under Tenant’s comprehensive public liability
insurance shall not be less than One Million Dollars ($1,000,000) for any one
person injured or killed, Two Million Dollars ($2,000,000) for injury or death
to persons in any one incident and Five Hundred Thousand Dollars ($500,000) for
damage to property in any one incident (“Initial Coverage”). Said comprehensive
public liability insurance shall also contain cross liability endorsements and
insure performance by Tenant of the indemnity provisions provided above. The
limits of said insurance shall not, however, limit the liability of Tenant under
the first paragraph of this Article. The originals of all policies shall remain
in possession of Tenant; provided, however, that Landlord shall have the right
to receive from Tenant, upon written demand, a duplicate policy or policies of
any or all policies. All policies of insurance shall provide that such insurance
will not be canceled or subject to reduction of coverage or other modification
except after thirty (30) days written notice to Landlord. Tenant shall furnish
policy renewals to Landlord not less than ten (10) days prior to the expiration
of any policy required hereunder. Landlord shall keep the Building insured with
comprehensive public liability and property insurance in such amounts and with
such deductibles as from time to time are typical for office buildings like the
Building, and at the Commencement Date Landlord’s public liability coverage
shall be at a minimum in the amounts of the Initial Coverage. All insurance
policies procured shall be issued by a responsible company or companies
authorized to do business in the State of Arizona and reasonably satisfactory to
Landlord.

 

ARTICLE 17. DENIAL OF SUBROGATION RIGHTS

 

Neither Landlord nor Tenant shall be liable to the other for any business
interruption or any loss or damage to property or injury to or death of persons
occurring on the Premises, or in any manner growing out of or connected with the
Tenant’s use and occupation of the Premises, or the condition thereof whether or
not caused by the negligence or other fault of the Landlord or the Tenant, or of
their respective agents, employees, subtenants, licensees, or assignees. This
release shall apply only to the extent that such business interruption, loss or
damage to property, or injury to or death of persons is covered by insurance,
regardless of whether such insurance is payable to or protects the Landlord or
the Tenant or both. Nothing in this Article shall be construed to impose any
other or greater liability upon either Landlord or Tenant than would have
existed in the absence of this Article. This release shall be in effect only so
long as the applicable insurance policies contain a clause to the effect that
this release shall not affect the right of the insured to recover under such
policies.

ARTICLE 18. SERVICES

 

Landlord agrees to furnish to the Premises during reasonable hours of generally
recognized business days, which hours and days shall be determined by Landlord
and subject to the Building Rules and Regulations, water and electricity
suitable for the use of the Premises and five-day janitorial service. Tenant
may have its own janitorial service but Tenant agrees to pay for the total cost
of such service. Landlord shall maintain the common stairs, corridors, entries,
and toilet rooms in the Building in a safe, neat and clean condition. Landlord
shall not be liable for, and Tenant shall not be entitled to, any abatement or
reduction of rent by reason of Landlord’s failure to furnish any of the
foregoing when such failure is caused by accidents, breakage, repairs, strikes,
labor disturbances of any character, governmental order, material shortages,
energy or fuel shortages, or by any other cause, similar or dissimilar, beyond
the

 

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reasonable control of Landlord, so long as Landlord acts with reasonable
diligence to correct the failure to furnish such service after receiving written
notice of the absence of such service. Landlord shall not be liable under any
circumstances for loss of or injury to property occurring through or in
connection with or incidental to Landlord or Landlord’s agents’, contractors’ or
employees’ failure to furnish any of the foregoing services, except in the
instance of Landlord’s willful misconduct. Wherever heat generating machines or
equipment are used in the Premises which materially affect the temperature
otherwise maintained by the air conditioning systems, Landlord reserves the
right to install supplementary air conditioning units in the Premises or
Building and the cost thereof, including the cost of installation and the cost
of operation and maintenance thereof, shall be paid by Tenant to Landlord as
additional rent upon demand by Landlord. For Tenant’s use of Building’s air
conditioning system after 6:00 p.m. on weekdays, after Noon on Saturdays and any
time on Sundays and national holidays, Tenant shall pay all costs, not to exceed
Ten Dollars ($10) per hour per zone within the Premises.

 

Tenant will not, without the prior written consent of Landlord, use any
apparatus or device in the Premises, including, without limitation, machines
using current in excess of 110 volts, e.g., electronic data processing machines,
mainframe computers or mini-computers, which will in any way increase the amount
of electricity or water usually furnished or supplied for use in the Premises as
general office space; nor shall Tenant connect with electric current, except
through existing electrical outlets in the Premises, any apparatus, water pipe
or other device for the purposes of using electric current or water. If Tenant
shall require water or electric current in excess of that usually furnished or
supplied for use of the Premises as general office space and shall have obtained
the consent of Landlord for such excess use, Landlord may cause a water meter or
electric current meter to be installed in the Premises to measure the amount of
such excess water or electric current consumed. The cost of any such meters and
of installation, maintenance and repair thereof shall be paid by Tenant and
Tenant agrees to pay to Landlord as additional rent promptly upon demand
therefor the cost of all such water and electric current consumed as shown by
said meters, at the rates charged for such services by the local public utility
furnishing the same, plus any additional bookkeeping expense in connection
therewith.

 

ARTICLE 19. ENTITY TENANT

 

If Tenant is a corporation, Tenant shall, at the time of execution of this
Lease, deliver to Landlord a certified resolution of its board of directors
authorizing the execution of this Lease on behalf of the Tenant. If at any time
during the Term of this Lease any part or all of the corporate shares of Tenant
shall be transferred by sale, assignment, bequest, inheritance, operation of law
or other disposition, or new shares shall be issued, so as to result in a change
in the present effective voting control of Tenant by the person or persons
having such control as of the date of this Lease, Tenant shall promptly notify
Landlord, in writing of such change, and Landlord may terminate this Lease at
any time within ninety (90) days after receipt of such notice by giving Tenant
not less than thirty (30) days prior written notice of such termination. The
preceding sentence shall not apply in the instance of Tenant’s ESOP or of
Tenant’s succession plan, for so long as James O’Connor retains management
control of Tenant while he is alive, affiliated with Tenant and able-bodied.

 

If Tenant is a partnership or limited liability company, Tenant shall, at the
time of execution of this Lease, deliver to Landlord a copy of the partnership
or operating agreement and any amendments thereto establishing the partnership
or limited liability company, designating all of the partners or members therein
evidencing the authority of the partnership or limited liability company to
enter into this Lease, designating the person or persons authorized

 

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to execute this Lease on behalf of the partnership or limited liability company,
and indicating the persons having effective operating control of the partnership
or limited liability company. If at any time during the Term of this Lease more
than twenty-five percent (25%) of the general partnership or membership
interests in Tenant are transferred by sale, assignment, bequest, inheritance,
operation of law or other disposition, or if new partners or members shall be
admitted so as to result in a change in the effective operating control of
Tenant by the person or persons having such control as of the date of this
Lease, Tenant shall promptly notify Landlord in writing of such change, and
Landlord may terminate this Lease within ninety (90) days after receipt of such
notice by giving Tenant not less than thirty (30) days prior written notice of
such termination.

 

ARTICLE 20. HOLDING OVER

 

Tenant shall not hold over after the termination or expiration of this Lease
without Landlord’s written consent. If Tenant holds possession of the Premises
after the Term of this Lease with Landlord’s consent, Tenant shall become a
tenant from month to month upon the terms herein specified except at a rental
rate to be determined by Landlord. In no event shall such rental rate be less
than one hundred fifty percent (150%) of the rental rate in effect immediately
prior to the expiration of the Term of this Lease. The rent shall be payable in
advance on or before the first day of each month. Tenant shall continue in
possession until such tenancy shall be terminated by either Landlord or Tenant
giving written notice of termination to the other party at least thirty (30)
days prior to the effective date of termination.

 

ARTICLE 21. ENTRY BY LANDLORD

 

Landlord shall have the right to enter the Premises at any time to inspect the
same or to cure any default (including a breach of the Building Rules and
Regulations), to supply any service to be provided by Landlord hereunder, to
submit the Premises to prospective purchasers, tenants or mortgagees, to post
notices of non-responsibility, and to alter, improve or repair the Premises and
any portion of the Building without abatement of rent, and may for the purposes
of repair and alteration erect scaffolding and other necessary structures where
reasonably required by the character of the work to be performed, providing that
the business of Tenant shall not be interfered with unreasonably. Tenant hereby
waives any claim for damages for any injury or inconvenience to or interference
with Tenant’s business, any loss of occupancy or quiet enjoyment of the
Premises, and any other loss occasioned by Landlord’s entry for any of the
aforesaid purposes, so long as Landlord’s interference with Tenant’s business is
not unreasonable.

 

For each of the aforesaid purposes, Landlord shall at all times have and retain
a key with which to unlock all of the doors upon the Premises, excluding
Tenant’s vaults, and Landlord shall have the right to use any and all means to
open said doors in an emergency in order to obtain entry to the Premises and any
such entry to the Premises obtained by Landlord shall not under any
circumstances constitute forcible or unlawful entry into or a detainer of the
Premises or an eviction of Tenant from the Premises or any portion thereof.
Landlord shall not be liable for the consequences of admitting by passkey or
refusing to admit to the Premises Tenant or any agent or employee of Tenant.

 

ARTICLE 22. DEFAULT

 

Notwithstanding anything to the contrary herein, Tenant shall not be deemed to
be in default or breach under this Lease except in the case of the occurrence of
any of the following

 

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events of default by Tenant: (a) the failure of Tenant to pay rent (including
additional rent) or any part thereof or any other sums payable pursuant to this
Lease as and when due hereunder; (b) the failure of Tenant to observe or
perform any of the covenants or agreements contained in this Lease to be
observed or performed by Tenant, other than those described in
Article 22(a) hereof, where such failure shall continue for thirty (30) days
after written notice of such failure from Landlord, provided, if the nature of
the default requires more than thirty (30) calendar days to cure, Tenant has
commenced the cure within such period and diligently pursues the cure
thereafter, Tenant shall have a longer period, not to exceed a total of ninety
(90) calendar days, to complete the cure; (c)(i) the making by Tenant of any
general assignment, or general arrangement for the benefit of creditors; (ii)
the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt
or a petition for reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of a petition filed against Tenant, the same is
dismissed within ninety (90) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Tenant’s assets or of
Tenant’s interest in this Lease where possession is not restored to Tenant
within sixty (60) days; or (iv) the attachment, execution or judicial seizure of
substantially all of Tenant’s assets or of Tenant’s interest in this Lease,
where such seizure is not discharged within thirty (30) days; (d) the default by
Tenant under any other lease agreement between Landlord and Tenant; (e) the
passage or other devolution of Tenant’s interest in this Lease to any person or
entity except that named as Tenant herein, by law or otherwise, without the
prior written consent of Landlord; (f) the vacating or abandoning the Premises
by Tenant for more than thirty (30) days; or (g) the discovery by Landlord that
any financial statement given to Landlord by Tenant, any assignee of Tenant, any
subtenant of Tenant, or any successor in interest of Tenant, or any of them, was
materially false. Notwithstanding Article 22(a) above, on the first instance in
any twelve (12) consecutive month period of the event described in
Article 22(a) above, Tenant shall not be in default if Tenant pays its rent on
or before the second (2nd) business day following the receipt of written notice
of late payment from Landlord.

 

ARTICLE 23. REMEDIES

 

In the event of any such material default or breach by Tenant that is not fully
cured within the applicable cure periods set forth in this Lease, Landlord
may at any time thereafter, with or without notice or demand and without
limiting Landlord in the exercise of any right or remedy which Landlord may have
by reason of such default or breach:

 

(a)             Terminate Tenant’s right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Premises to Landlord. In such event
Landlord shall be entitled to recover from Tenant all damage incurred by
Landlord by reason of Tenant’s breach or default including, but not limited to
the cost of recovering possession of the Premises; expenses of reletting,
including the cost of necessary renovation and alteration of the Premises,
reasonable attorneys’ fees and any real estate commissions actually paid; the
amount by which the total of the unpaid rent and other sums due hereunder for
the balance of the term hereof exceeds the total amount of the greater of (i)
any payments of like character to be received by Landlord from any subsequent
tenant or tenants or (ii) the fair market rental value of the Premises during
the same period; and that portion applicable to the unexpired term of this Lease
of any commission paid by Landlord to a real estate broker or agent as a result
of this Lease;

 

(b)             Maintain Tenant’s right to possession in which event this Lease
and all obligations of Tenant hereunder shall continue in effect, except that
the Landlord, at its

 

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option, may give notice to Tenant that all of the rent to become due during the
Term hereof (reduced to present value by applying a discount factor of five
percent (5%), compounded annually), less the greater of (i) any sums obtained by
reletting the Premises or (ii) the fair market rental value of the Premises
during the same period, is due and payable immediately, in which event Tenant
shall pay the sum within ten (10) days of receipt of such notice;

 

(c)            Re-enter the Premises without terminating this Lease and relet
the Premises or any part thereof for such term or terms and at such rental or
rentals and upon such other terms and conditions as Landlord in its sole
discretion may deem advisable with the right to make alterations and repairs to
said Premises. Rentals received by Landlord from such reletting shall be applied
as follows: first, to the payment of the cost of such reletting as more
specifically set forth in subsection (1) above; second, to the payment of the
cost of any alterations and repairs to the Premises; third, to the payment of
any indebtedness, other than rent, due hereunder; and the residue, if any, shall
be held by Landlord and applied in payment of future rent as the same may become
due and payable hereunder, Should such rentals received from such reletting
during any month be less than that agreed to be paid during that month by Tenant
hereunder, then Tenant shall pay such deficiency to Landlord. Such deficiency
shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon
as ascertained, the costs and expenses incurred by Landlord in such reletting or
in making such alterations and repairs. No such re-entry or taking possession of
the Premises by Landlord shall be construed as an election on its part to
terminate this Lease unless a written notice of such intention be given to
Tenant or unless the termination thereof be decreed by a court of competent
jurisdiction. Notwithstanding any such reletting without termination, Landlord
may at any time thereafter elect to terminate this Lease for such previous
breach, and

 

(d)           Pursue any other remedy now or hereafter available to Landlord
under the laws or judicial decisions of the State of Arizona.

 

Tenant hereby acknowledges that late payment by Tenant to Landlord of rent or
other sums due hereunder will cause Landlord to incur costs not contemplated by
this Lease, the exact amounts of which will be extremely difficult to ascertain.
Such costs include, but are not limited to, processing and accounting charges,
and late charges which may be imposed on Landlord by the terms of any mortgage
or deed of trust covering the Building or any part thereof. Accordingly, if any
such payment due from Tenant shall not be received by Landlord within five
(5) business days after notice is provided to Tenant that it is due, Tenant
shall pay to Landlord a late charge equal to five percent (5%) of such overdue
amount plus any attorneys’ fees incurred by Landlord by reason of Tenant’s
failure to pay such rent and/or other charges when due hereunder. The parties
hereby agree that such late charge represents a fair and reasonable estimate of
the costs Landlord will incur by reason of late payment by Tenant. Acceptance of
such late charge by Landlord shall in no event constitute a waiver of Tenant’s
default with respect to such overdue amount, nor prevent Landlord from
exercising any of the other rights and remedies granted hereunder.

 

ARTICLE 24. DAMAGE OR DESTRUCTION

 

Except as otherwise provided in this Lease, in the event the Premises or the
Building are damaged by fire or other casualty covered by Landlord’s insurance,
such damage shall be repaired by and at the expense of Landlord and this Lease
shall remain in full force and effect

 

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except that Tenant shall be entitled to a proportionate reduction of rent while
such repairs are being made, such proportionate reduction to be based upon the
extent to which the making of such repairs shall materially interfere with
Tenant’s business.

 

In the event such repairs cannot, in the reasonable opinion of Landlord, be
substantially completed within sixty (60) days after the occurrence of such
damage (without the payment of overtime or other premiums), Landlord may, at its
option, exercisable by giving written notice to Tenant within thirty (30) days
after the occurrence of such damage, make such repairs within a reasonable time
and shall proceed to make such repairs with reasonable dispatch. In such event,
this Lease shall continue in full force and effect and the rent payable by
Tenant hereunder shall be determined as provided in the first paragraph of this
Article. In the event Landlord does not elect to repair the damage, as provided
above, either Landlord or Tenant, by written notice given to the other within
ten (10) additional days, may terminate this Lease effective as of the date of
the occurrence of such damage. In the event Landlord terminates this Lease,
pursuant to this Article, all proceeds of Landlord’s insurance shall belong to
and become the sole property of Landlord. In the event such repairs are not
completed within one hundred eighty (180) days after the occurrence of such
damage, then either party may terminate this Lease.

 

In the event of (a) damage to or destruction of five percent (5%) of the
Premises insurable replacement value or of twenty-five percent (25%) or more of
the then insurable replacement value of the Building, as applicable, from any
cause not covered by insurance, or (b) a declaration of any governmental
authority that the Premises or the Building are unsafe or unfit for occupancy
and would require repairs exceeding twenty-five percent (25%) or more of the
then insurable replacement value of the Building, Landlord shall have the right
to terminate this Lease by written notice to Tenant given within thirty (30)
days after the date of such damage, destruction or declaration. Upon the giving
of any such notice, this Lease shall terminate. In the event of damage to or
destruction of all or any portion of the Premises or the Building to an extent
less than five percent (5%) of the then insurable replacement value of the
Premises or the Building, as applicable, from any cause not covered by
insurance, or in the event Landlord does not elect to terminate this Lease in
accordance with this paragraph, the Lease shall remain in full force and effect
except that rent shall be proportionately reduced as provided above and the
Premises shall be repaired and rebuilt with reasonable dispatch.

 

Notwithstanding anything to the contrary contained herein, in the event the
Premises or the Building shall be damaged by fire or other casualty due to the
grossly negligent or willful acts of Tenant or its agents, officers, employees,
contractors, servants or occupants and the Lease is not terminated as
hereinabove provided, then, without prejudice to any other rights and remedies
of the Landlord, there shall be no abatement of rent.

 

With respect to any damage which Landlord is obligated to repair or elects to
repair, Tenant waives the provisions of Arizona Revised Statutes Section 33-343
(which Section deals with Tenant’s right to termination in the event of damage
to or destruction of the Premises).

 

Landlord shall not under any circumstances be required to make any repairs to or
replacements of any paneling, decoration, office fixtures, railings, ceilings or
floor coverings, partitions or any other property installed in the Premises by
Tenant.

 

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ARTICLE 25. EMINENT DOMAIN

 

If at any time during the Term of this Lease the entire Premises or any
part thereof shall be taken as a result of the exercise of the power of eminent
domain or sold under threat of the exercise of such power (a “taking”), this
Lease shall terminate as to the part so taken as of the date the condemning
authority takes possession or title, whichever occurs first.

 

If all or any substantial portion of the Premises, or any portion of the
Building other than the Premises, shall be taken, Landlord may terminate this
Lease, at its option, by giving Tenant written notice of such termination within
thirty (30) days of such taking. If all or a portion of the Premises in excess
of twenty percent (20%) of the floor area thereof shall be taken with the result
that Tenant’s use of the Premises is substantially impaired, Tenant
may terminate this Lease at its option by giving Landlord written notice of such
termination within thirty (30) days of such taking. If neither party terminates
this Lease pursuant to this Article, this Lease shall remain in full force and
effect except that the rent payable by Tenant hereunder shall be reduced in the
same proportion as the floor area taken in the Premises bears to the total floor
area in the Premises.

 

Landlord shall be entitled to and Tenant hereby assigns to Landlord the entire
amount of any award or payment made in connection with a taking; provided,
however, that Tenant shall be entitled to any payment or award attributable to
the taking of removable personal property or trade fixtures belonging to Tenant.

 

ARTICLE 26. SUBORDINATION: ATTORNMENT

 

This Lease, at Landlord’s option, shall be subordinate to any ground lease,
mortgage, deed of trust, or any other hypothecation for security now or
hereafter placed upon the Building or any part thereof and to any and all
advances made on the security thereof and to all renewals, modifications,
consolidation replacements and extensions thereof, including that certain Ground
Lease dated June 4, 1980 relating to the land on which the Building is located,
as amended by that certain First Amendment to Ground Lease dated December 17,
1980, that certain Second Amendment to Ground Lease dated August 14, 1989 and
that certain Third Amendment to Ground Lease executed in 1995 but undated (as
amended, the “Ground Lease”). If any mortgagee, trustee or ground lessor shall
elect to have this Lease prior to the lien of its mortgage, deed of trust or
ground lease, and shall give written notice thereof to Tenant, this Lease shall
be deemed prior to such mortgage, deed of trust, or ground lease regardless of
whether this Lease is dated prior or subsequent to the date of said mortgage,
deed of trust or ground lease or the date of recording thereof. Tenant agrees to
execute any documents required to effectuate such subordination or to make this
Lease prior to the lien of any mortgage, deed of trust or ground lease, as the
case may be, so long as such document(s) contain commercially reasonable
assurances that the other party shall not disturb Tenant’s tenancy and by
failing to do so within ten (10) days after written demand therefor shall
automatically make, constitute and irrevocably appoint Landlord as Tenant’s
attorney-in-fact and in Tenant’s name, place and stead to do so.

 

Tenant agrees that in the event any proceedings are brought for the foreclosure
of, or in the event of exercise of the power of sale under any mortgage or deed
of trust affecting the Premises whether or not the Lease is terminated by such
foreclosure or sale, Tenant will, upon request by the purchaser, attorn to the
purchaser under any such foreclosure or sale and recognize such purchaser as
Landlord under this Lease, so long as such purchaser grants to Tenant
non-disturbance assurances.

 

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For the first ten years of Tenant’s occupancy of the Premises under this Lease,
Landlord will not allow the Ground Lease to be terminated unless Landlord has
obtained for Tenant from the then ground lessor under the Ground Lease a
non-disturbance agreement reasonably acceptable to Tenant and such ground
lessor. If Landlord fails to obtain such a non-disturbance agreement for
Tenant’s benefit from the ground lessor under the Ground Lease and Landlord
terminates the Ground Lease, then notwithstanding the provisions of Article 29
or any other provision limiting Landlord’s liability to Tenant hereunder,
Landlord shall be personally liable to Tenant to the extent of any loss or
damage incurred by Tenant as a result thereof. The parties acknowledge that this
paragraph shall have no force or effect after the first ten years of this Lease.

 

ARTICLE 27. NOTICES

 

All notices, demands, consents and statements which may or are required to be
given by either party to the other hereunder shall be in writing. All notices
and demands by Landlord to Tenant shall be personally delivered or sent by
United States certified mail, postage prepaid and addressed to Tenant at the
address set forth herein. All notices and demands by Tenant to Landlord shall be
personally delivered or sent by United States certified mail, postage prepaid,
addressed to Landlord at the address set forth herein. Either party may change
its address by notice given to the other in the manner set forth in this
paragraph. Notices, demands, and statements shall be deemed given and received
when personally delivered or two (2) days after they are mailed as above
provided.

 

ARTICLE 28. LANDLORD’S RIGHT TO CURE DEFAULTS

 

All covenants and agreements to be performed by Tenant under any of the terms of
this Lease shall be at its sole cost and expense and, except as otherwise
specifically provided herein, without any abatement of rent. If Tenant shall
fall to pay any sum of money owing to a party other than Landlord required to be
paid by it hereunder or shall fail to perform any other act on its part to be
performed hereunder, after the lapse of any cure period set forth herein (except
there shall be no cure period with regard to Hazardous Substance cleanup and
remediation caused by Tenant or its assignees, sublessees or Premises occupants,
it being understood that any release caused by Tenant or its assignees,
sublessees or Premises occupants must be addressed on the same business day as
it is identified, failing which Landlord may intervene), Landlord may, but shall
not be obligated to and without waiving any rights of Landlord or releasing
Tenant from any obligations of Tenant hereunder, make such payment or
perform such other act, to be made or performed by Tenant hereunder. Tenant
covenants to reimburse Landlord for such sums and Landlord shall have (in
addition to any other right or remedy of Landlord) the same rights and remedies
in the event of the nonpayment thereof by Tenant as in the case of default by
Tenant in the payment of any sums due Landlord hereunder. All sums so paid or
expenses incurred by Landlord and all necessary incidental costs together with
interest thereon at the rate of fifteen percent (15%) per annum from the date of
such payment by Landlord until paid shall be considered as rent owing hereunder
and shall be payable to Landlord on demand or, at the option of Landlord, may be
added to any rent then due or thereafter becoming due under this Lease.

 

ARTICLE 29. DELAYS. DEFAULT BY LANDLORD

 

Landlord shall not be responsible for any delay or failure in the observance or
performance of any term or condition of this Lease to be observed or performed
by Landlord to the extent that such delays result from action or order of
governmental authorities: civil

 

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commotions; strikes, fires, acts of God or the public enemy; act or default of
any Tenant in the Building; inability to procure labor, material, fuel,
electricity, or other forms of energy; or any other cause beyond the reasonable
control of Landlord, whether or not similar to the matters herein specifically
enumerated. Any delay shall extend by like time any period of performance by
Landlord and shall not be deemed a breach of or failure to perform this Lease or
any provisions hereof.

 

In the event of any default under this Lease by Landlord, Tenant, before
exercising any rights that it may have at law to cancel this Lease, shall have
given notice of such default to Landlord and shall have offered Landlord a
reasonable opportunity to correct and cure the default. Tenant also agrees to
give the holders of any mortgages or deeds of trust (“mortgagees”) by registered
mail, a copy of any notice of default served upon the Landlord, provided that
prior to such notice Tenant has been notified in writing (by way of Notice of
Assignment of Rents and Leases, or otherwise) of the addresses of such
mortgagees. Tenant further agrees that if Landlord shall have failed to cure or
commence to cure such default within the aforesaid time limit, then the
mortgagees shall have an additional thirty (30) days within which to cure such
default or if such default cannot be cured within that time, then such
additional time as may be necessary if within thirty (30) days any mortgagee has
commenced and is diligently pursuing the remedies necessary to cure such default
(including, but not limited to, commencement of foreclosure proceedings if
necessary to effect such cure) in which event this Lease shall not be terminated
while such remedies are being so diligently pursued.

 

Except as otherwise expressly set forth in this Lease, Tenant agrees and
understands that Tenant shall look solely to the estate and property of Landlord
in the Premises and Building including, but not limited to, all rents, profits
and proceeds therefrom, for the enforcement of a Judgment (or other judicial
decree) requiring the payment of money by Landlord to Tenant by reason of
default, breach or event of default of Landlord in performance of its
obligations under this Lease, it being intended that there will be absolutely no
personal liability on the part of any other assets of Landlord or its investors
or of Landlord’s members or managers.

 

ARTICLE 30. TRANSFER OF LANLORD’S INTEREST;

 

In the event Landlord transfers its reversionary interest in the Premises or the
Building (other than a transfer for security purposes only), Landlord shall be
relieved of all obligations accruing hereunder after the effective date of such
transfer, including, but not limited to, the return of the Security Deposit or
other funds held by Landlord, provided that such obligations have been expressly
assumed in writing by the transferee.

 

Tenant agrees at any time and from time to time upon ten (10) days prior request
by the Landlord, to execute, acknowledge and deliver to the Landlord a statement
in writing certifying that this Lease Is unmodified and in full force and effect
(or if there have been modifications, that the same is in full force and effect
as modified and stating the modifications), and the dates to which the rent and
any other charges have been paid in advance, if any, and acknowledging that
there are not, to Tenant’s knowledge, any uncured defaults on the part of
Landlord hereunder, or specifying such defaults if any are claimed. Any such
statement delivered pursuant to this paragraph may be conclusively relied upon
by any prospective purchaser, mortgagee or assignee of any mortgage of the
Premises or the Building.

 

If Tenant fails to deliver such statement within such time, any prospective
purchaser or encumbrance holder may conclusively assume: (i) that this Lease is
in full force and effect, without modification except as may be represented by
Landlord, (ii) that there are no uncured

 

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defaults in Landlord’s performance, and (iii) that not more than one month’s
rent and no other charges have been paid in advance, and such failure shall
constitute a material default by Tenant under this Lease.

 

If Landlord desires to finance, refinance or sell the Building or any
part thereof, Tenant hereby agrees to deliver to any prospective lender or
purchaser designated by Landlord such financial statements of Tenant as may be
reasonably required by such prospective lender or purchaser. Such statements
shall include the past three years’ financial statements of Tenant. All such
financial statements shall be received in confidence and shall be used only for
the purposes herein set forth.

 

ARTICLE 31. SUCCESSORS AND ASSIGNS

 

Subject to all limitations on assignment and subletting set forth herein, all of
the terms and provisions of this Lease shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto.

 

ARTICLE 32. ATTORNEYS’ FEES

 

Should either party be required to commence legal proceedings relating to this
Lease, the prevailing party shall be entitled to receive reimbursement for its
reasonable attorneys’ fees and costs of suit.

 

ARTICLE 33. OPTION TO RENEW

 

Provided that no Event of Default exists at the time of exercise, Tenant shall
have the right to extend the Lease Term for a single period of five (5) years,
beginning upon the expiration of the initial Lease Term. If Tenant desires so to
extend the Lease Term, Tenant shall give written notice of its intention at
least two hundred seventy (270) calendar days in advance of the Termination Date
to Landlord. The foregoing right shall exist so long as (i) no Event of Default
exists at the time of exercise, (ii) Tenant timely and properly gives notice to
Landlord of its Intention to extend the Lease Term, and (iii) Tenant will use
the Premises for the uses specified in Article 8 hereof. Such extension of the
Lease Term will be on the same terms, covenants and conditions as in this Lease,
other than rent. Rent will be the fair market fixed rent rate of the Premises,
as reasonably determined by Landlord in relation to comparable (in quality,
location and size) space located in the proximity of Camelback Road between 32nd
and 40th Streets, taking into account length of the term, tenant improvement
allowances, commissions to be paid, operating expense stops, etc. Landlord’s
determination of such fair market monthly fixed rent rate will be delivered to
Tenant not later than thirty (30) days after Landlord receives Tenant’s exercise
notice. If Tenant disputes Landlord’s determination of the fair market fixed
rent rate of the Premises for the extension of the Lease Term, Tenant will
deliver notice of such dispute. The parties will then attempt in good faith to
agree upon such fair market fixed rent rate. If Landlord and Tenant fail to
agree within fifteen (15) days thereafter, they will within seven (7) days
thereafter mutually appoint an appraiser to determine the fair market fixed rent
rate. The appraiser must have at least five (5) years of full-time commercial
appraisal experience, be a member of the American Institute of Real Estate
Appraisers and not have worked for either Landlord or Tenant in the past five
(5) years. If Landlord and Tenant are unable to agree upon an appraiser within
such seven (7) day period, the parties will within five (5) days thereafter
apply to the president of the local Board of Realtors for the selection of an
appraiser, who has not acted in any capacity of either party within the prior
two (2) years. Within seven (7) days of the appointment (either by agreement or
neutral selection) of the

 

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appraiser, Landlord and Tenant will submit to the appraiser their respective
determinations of the fair market fixed rent rate and any related information.
Within twenty (20) days thereafter, the appraiser will review each party’s
submittal (and such other information as the appraiser deems necessary) and will
determine the fair market fixed rent rate to be used for the extension of the
Lease term as the rent rate, provided, however, in no event shall the annual
fixed rent be less than the fixed rent for the last year of the Initial term
hereof. Tenant will pay upon demand to Landlord one-half (1/2) of the cost of
the appraisal and Landlord will then pay the appraiser in full.

 

ARTICLE 34. DISPOSITION OF TENANTS PROPERTY

 

Any and all of Tenant’s property which may be removed from the Premises by
Landlord pursuant to the provisions of this Lease or of law, shall be handled,
removed and stored by Landlord at the sole risk, cost and expense of Tenant.
Tenant shall pay to Landlord, within five. (5) days of written demand by
Landlord given to Tenant, any and all charges for storage of such property
incurred by Landlord. Any such property of Tenant not removed from the Premises
or retaken from storage by Tenant within fifteen (15) days after Tenant’s right
to possession of the Premises has terminated shall be conclusively considered to
have been abandoned by Tenant and shall become the property of Landlord with
Landlord in its sole discretion having the right to sell or otherwise dispose of
such property without further liability to Tenant therefor.

 

ARTICLE 35. COMMISSIONS

 

Tenant represents and warrants that it has not entered into any contracts with
any brokers or finders, or obligated itself to pay any real estate commissions
or finders’ fees on account of the execution of this Lease or the transaction
contemplated hereby except for Lee & Associates (Michael Garlick). Landlord
represents and warrants that it has not entered into any contracts with any
brokers or finders, or obligated itself to pay any real estate commissions or
finders’ fees on account of the execution of this Lease or the transaction
contemplated hereby, except for Lee & Associates (R. Craig Coppola), to whom
Landlord shall pay a commission under a separate agreement that provides for
payment to Tenant’s broker identified in this Article. Based on such
representations and warranties, each party hereby agrees to indemnify, defend
and hold the other party harmless from and against all claims, damages,
expenses, liabilities, liens or judgments (including costs, expenses and
attorneys’ fees in defending the same) which arise on account of any claim made
against the indemnifying party that real estate commissions or finders’ fees are
payable and have not been discharged in their entirety.

 

ARTICLE 36. SURRENDER OF PREMISES

 

The voluntary or other surrender of this Lease by Tenant, or a mutual
cancellation thereof, shall not work a merger, and shall, at the option of
Landlord, terminate all or any existing subtenancies, or may, at the option of
Landlord, operate as an assignment to it of any or all such subtenancies.

ARTICLE 37. WAIVER

 

No waiver of any term, covenant, condition, or obligation of this Lease, or any
breach thereof, shall be effective unless granted in writing. The waiver by
Landlord of any term, covenant, condition or obligation herein contained or any
breach thereof shall not be deemed to be a waiver of any other term, covenant,
condition or obligation herein contained. The subsequent acceptance of rent
hereunder by Landlord shall not constitute a waiver of any

 

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preceding breach by Tenant, regardless of Landlord’s knowledge of such preceding
breach at the time of acceptance of such rent.

 

ARTICLE 38. GOVERNING LAW

 

This Lease shall be governed by and construed in accordance with Arizona law,
and the invalidity or unenforceability of any provision of this Lease shall not
affect or impair the validity of any other provision hereof.

 

ARTICLE 39. DEFINITIONS AND MARGINAL HEADINGS

 

The term “Tenant” as used herein shall include the plural as well as the
singular and shall include the masculine, feminine and neuter. If there is more
than one Tenant, the obligations of Tenant hereunder shall be joint and several.
Article headings in this Lease are for convenience only and shall not define or
limit the scope or intent of any provision hereof.

 

ARTICLE 40. TIME OF ESSENCE

 

Time is of the essence of this Lease and each and every provision hereof.

 

ARTICLE 41. PARKING

 

Tenant hereby also rents up to nine (9) reserved parking spaces in the garage
parking area adjoining the Building. From and after the Commencement Date, the
rent for such reserved spaces during the initial term shall be Fifty Dollars
($50) per month per reserved stall. Covered unreserved parking shall at all
times during the initial Term shall be available for rent by Tenant at the rate
of Twenty-Five Dollars ($25) per month per unreserved stall up to fifteen (15)
stalls. Landlord shall have the right to designate where such parking spaces
shall be located, but shall not, except for reserved spaces, be required to mark
specific spaces. Landlord shall have the further right to double deck any
surface parking areas from time to time during the Term of this Lease. If
additional garage parking is requested by Tenant during the Term of this Lease,
Landlord shall make such space available to Tenant, on the terms, conditions and
rates then applicable to the other garage parking spaces, if in Landlord’s sole
discretion adequate garage parking is available to the other tenants in the
Building. If Tenant does not use all nine (9) reserved stalls by December 31,
2001, then Tenant nonetheless shall pay rent on at least six (6) reserved stalls
beginning January 1, 2002, Tenant shall not have the right to assign or sublet
its interest in any of parking stalls without the prior written consent of
Landlord. All parking spaces rented by Tenant shall be considered part of the
Premises for the purposes of Tenant’s obligations and Landlord’s rights under
Articles 8, 9, 10, 14, 16 and 17 hereof, and the rental owing for such spaces
shall be considered additional rent under the Lease. The parking areas referred
to herein, except for reserved spaces, shall be used on a non-exclusive basis
with occupants of the Building.

 

Tenant also acknowledges that there are parking spaces in an uncovered parking
area adjoining the Building. Visitors of the Building may park in such spaces
without charge; provided, however, if at any time after the conclusion of the
initial term, validated parking becomes, in the opinion of Landlord, common
practice among similar offices in the vicinity of the Building, Tenant shall
participate in such validated parking on the same basis as other Tenants in the
Building and Landlord shall charge a competitive parking charge for such spaces.

 

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Tenant’s use of all parking areas shall be subject to any rules and regulations
relating thereto included from time to time in the Building Rules and
Regulations, including regulations governing the designation of specific parking
spaces for use by Tenant and its guests and invitees, the hours during which
such parking spaces may be used, the size of such parking spaces, and the
traffic flow in the parking areas. Landlord shall not be responsible for any
vandalism or other damages from any cause occurring to automobiles or their
contents while located in such parking spaces or while moving in the parking
area. Landlord agrees to maintain a ratio of at least 3.5 stalls per 1,000
square feet of rentable area in the Building at all times during the term
hereof.

 

ARTICLE 42. COVENANTS AND CONDITIONS

 

Each provision of this Lease to be performed by Tenant shall be deemed both a
covenant and a condition.

 

ARTICLE 43. RECORDING

 

Tenant shall not record this Lease without Landlord’s prior written consent, and
such recording shall, at the option of Landlord, constitute a non-curable
default by Tenant. Tenant shall, upon request of the Landlord, execute,
acknowledge and deliver to Landlord a “short form” memorandum of this Lease for
recording purposes.

 

ARTICLE 44. INTEREST ON PAST DUE OBLIGATIONS

 

Any amount due Landlord not paid when due shall bear interest at the rate of
fifteen percent (15%) per annum from the date due or, if said rate is not a
lawful one, the highest rate permitted by law. Payment of such interest shall
not excuse or cure any default by Tenant under this Lease; provided, however,
that interest shall not be payable on late charges assessed against Tenant.

 

ARTICLE 45. SEVERABILlTY

 

The invalidity of any provision of this Lease as determined by a court of
competent jurisdiction shall in no way affect the validity of any other
provision hereof.

 

ARTICLE 46. PERSONAL PROPERTY TAXES

 

Tenant shall pay when due all taxes assessed against and levied upon tenant
alterations and any property of Tenant contained in, on or about the Premises or
any part thereof. When possible, Tenant shall cause all such taxes to be levied
and assessed separately from taxes upon the Premises.

 

ARTICLE 47. EXPANSION RIGHT

 

During the initial term of this Lease or renewal period, as a space is vacated
by its then tenant, if Landlord shall desire to lease the adjoining unleased
space in the Building (the “Expansion Space”), Landlord, if Tenant is not then
in default hereunder beyond any applicable cure period, and subject to any
existing rights of expansion or of first refusal possessed by any person, shall
promptly transmit to Tenant in writing the basic terms and conditions of its
intended Expansion Space leasing offer. Tenant shall have five (5) business days
after receipt of Landlord’s notice to indicate to Landlord in writing Tenant’s
agreement to lease the

 

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Expansion Space on the basic terms and conditions stated in Landlord’s notice,
and if Tenant so agrees, Landlord shall lease the Expansion Space to Tenant on
the basic terms and conditions stated in the notice. The non-monetary terms of
the Expansion Space lease shall mirror the terms hereof (except with regard to
renewal options), but the termination date with respect to the Expansion Space
shall be coextensive with the Termination Date hereof in any event.

 

If Tenant does not indicate its agreement with said five (5) business days,
Tenant’s right of first opportunity on the Expansion Space described in
Landlord’s notice shall expire and forever be of no further force and effect;
provided, however, in the event Landlord intends to accept an offer to lease the
Expansion Space at a rental rate which is less than 95% of the rental rate
offered to Tenant pursuant to this Article 47, Landlord shall first offer such
space to Tenant at the lower price pursuant to this Article prior to accepting
any such offer.

 

ARTICLE 48. SIGNS AND COMMUNICATIONS FACILITIES

 

A.            Signs.

 

Tenant shall be entitled to “building standard” signage for the suite entry door
and Building tenant directory, but Tenant may not have any other signage of any
kind except as follows;

 

1.             In the event Landlord decides to permit additional Building
exterior wall signs for tenants, Tenant shall be permitted to have a sign with
dimensions in proportion to its square footage relative to the square footage of
other Building tenants which, as of the Commencement Date, do not have exterior
wall signs, so long as Tenant’s wall sign is approved in all respects by the
City of Phoenix. Tenant shall pay all costs of the application for a Phoenix
wall sign permit, all costs of sign design and installation, and all
damage-repair costs associated with installation and removal of the wall sign at
the termination of this Lease. If Landlord decides to permit additional Building
wall signs but Phoenix will not permit multiple additional tenants to have wall
signs on the Building, Tenant’s priority for wall sign Installation shall be
below that of (a) existing tenants having wall signs and (b) any other tenant
that does not then have a wall sign, leases a larger premises than the Premises
and wants a wall sign. Nothing in this Article shall constitute a promise or
agreement by Landlord that Tenant ever shall have a wall sign on the Building
exterior.

 

2.             In the event Landlord decides (and Phoenix approves Landlord’s
request) to ‘install a monument sign on the exterior of the Building, Tenant
shall be permitted to have a sign panel with dimensions in proportion to its
square footage relative to the square footage of other Building tenants that
desire to have a panel on such monument sign. Tenant shall pay all costs of any
monument sign permit, all costs of fabricating and installing the panel, and all
damage-repair costs associated with installing (unless Landlord performs the
installation) and removing the panel at the termination of this Lease. In the
event responses to Landlord’s invitation for panel erection on a monument sign
exceed the available number of bins for panels, Tenant’s priority for installing
its panel shall be below that of all affirmatively-responding tenants of the
Building having larger premises than Tenant’s other than tenants that have wall
signage at such time, it being agreed that Tenant’s priority for monument
signage shall be greater than any other tenants of the Building then having wall
signage. Nothing in this Article shall constitute a

 

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promise or agreement by Landlord that Tenant ever shall have a monument sign
panel installed.

 

B.            Communications; Equipment.

 

Landlord and Tenant acknowledge that, as a condition to the effectiveness of
this Lease, on or before the Commencement Date Tenant requires a satellite dish
to be mounted on the roof of the Building and cabling from such satellite dish
to Tenant’s Premises to make its contemplated system operational. If Tenant
desires to install a satellite dish or any other equipment related to fixed
wireless, local telephony, broadband infrastructure and similarly, purposed
communications services (collectively, the “apparati”) on the roof of the
Building, the following requirements shall be observed;

 

(a)            The apparati and all cabling, wiring, risers and
similarly-purposed installations appurtenant to the apparati, whether located on
the roof or elsewhere in the Building (collectively, the “Wiring”) shall in all
respects concerning dimensions and aesthetics (including screening) comply with
the City of Phoenix Zoning Ordinance.

 

(b)            Tenant shall have access to the Building roof only through the
licensed and bonded contractor(s) it hires to install the apparati and Wiring.
Such contractor shall coordinate all installation with the Building manager.

 

(c)            The location of the apparati and Wiring shall be approved in
advance by Landlord. The location of the apparati on the Building roof is
subject to change in the sole discretion of Landlord; provided, however, any
relocation of the apparati at Landlord’s request shall not adversely affect the
transmission and reception of communications signals for Tenant’s purposes.
Landlord shall pay the cost of any re-location of the apparati (and for any
extension or replacement of Wiring needed) that Landlord requires after initial
placement on the roof, and Landlord shall pay for any damage done to the roof,
the Building or the apparati caused by such Landlord-required re-location. In
all events, the apparati and Wiring used by Tenant will not be interfered with
by Landlord during American financial market business hours on business days.

 

(d)            Tenant shall be responsible for all damage to the roof or
Building caused by the installation or removal by Tenant of the apparati and
Wiring, subject only to the terms of subparagraph (c) above pertaining to
re-location obligations.

 

(e)            On or before thirty (30) days prior to the scheduled expiration
of this Lease, or within ten (10) days after any other termination of this
lease, Landlord may elect by written notice to Tenant to:

 

(i) Retain any or all Wiring;

 

(ii) Remove any or all such Wiring and, to the extent affected only by such
removal, restore the Premises and risers to their condition existing prior to
the installation of the Wiring (“Wire Restoration Work”), and Landlord shall
perform such Wire Restoration Work at Tenant’s sole cost and expense within
fifteen (15) business days of the Termination Date; or

 

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(iii) Require Tenant to perform the Wire Restoration Work at Tenant’s sole cost
and expense, within fifteen (15) business days of the Termination Date, as same
may be extended or truncated.

 

(f)            The provisions of this Article 48B shall survive the expiration
or sooner termination of the Lease.

 

(g)           In the event Landlord timely elects to retain the Wiring (pursuant
to subparagraph (e)(i) hereof), Tenant covenants that:

 

(i) Tenant shall be the sole owner of such Wiring, that Tenant shall have the
right to surrender such Wiring, and that such Wiring shall be free of all liens
and encumbrances; and

 

(ii) Tenant shall not thereafter take any action which adversely affects the
Wiring.

 

(h)           Notwithstanding anything to the contrary in Article 4, Landlord
may retain Tenant’s Security Deposit after expiration or sooner termination of
the Lease until the earliest of the following:

 

(i) Landlord elects to retain the Wiring pursuant to subparagraph (e)(i), if
applicable;

 

(ii) Landlord elects to perform the Wire Restoration Work pursuant to
subparagraph (e)(ii), the Wire Restoration Work is complete, and Tenant has
fully reimbursed Landlord for all costs related thereto; or

 

(iii) Landlord elects to require the Tenant to perform the Wire Restoration Work
pursuant to subparagraph (e)(iii), the Wire Restoration Work is complete, and
Tenant has paid for all costs related thereto.

 

In the event Tenant fails or refuses to pay all costs of the Wire Restoration
Work within ten (10) days of Tenant’s receipt of Landlord’s notice (accompanied
by Landlord’s contractor’s invoices) requesting Tenant’s reimbursement for or
direct payment of such costs, Landlord may apply all or any portion of Tenant’s
Security Deposit toward the payment of such unpaid costs relative to the Wire
Restoration Work. The application of such Security Deposit by Landlord pursuant
to this Article 48B does not constitute a limitation on or waiver of Landlord’s
right to seek further remedies under law or equity if the Security Deposit is
Insufficient to pay the Landlord in full for the Wire Restoration Work.
Notwithstanding anything to the contrary herein, any portion of Tenant’s
Security Deposit not applied pursuant to this Article 48B on or before one month
after the Termination Date shall be immediately paid by Landlord to Tenant.

 

ARTICLE 49. ENTIRE AGREEMENT

 

This Lease, the Building Rules and Regulations, and any addendum attached hereto
and executed by the parties, constitute the entire agreement of the parties and
supersede all prior agreements or understandings between the parties with
respect to the subject matter hereof. No prior agreement or understanding shall
be effective. This Lease may not be modified or amended except by written
agreement of the parties.

 

27

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date
first above written.

 

LANDLORD:

TENANT:

 

 

5050 NORTH 40TH ST., L.L.C., an
Arizona limited liability company

B.G. ASSOCIATES, INC., an Arizona corporation

 

 

 

 

By

[ILLEGIBLE]

 

By

/s/ James H. O’Connor

 

 

Its

MANAGING MEMBER

 

 

James H. O’Connor, President/CEO

 

 

 

Address of Tenant prior to the Commencement
Date:

 

 

 

P.O. Box 36155
Phoenix, Arizona 85067-6155

 

 

 

Address of Tenant after the Commencement
Date:

 

 

 

5050 North 40th Street, Suite 300
Phoenix, Arizona 85018

 

 

 

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EXHIBIT “B”

 

BUILDING RULES AND REGULATIONS

 

1.             No sign, placard, picture, picture, advertisement, name or notice
shall be inscribed, displayed, printed or affixed on or to any part of the
outside or inside of the Building, other than on the inside of the Premises,
subject to the second succeeding sentence, or the surrounding area without the
written consent of the Landlord being first obtained. If such consent is given
by Landlord, Landlord may regulate the manner of display of the sign, placard,
picture, advertisement, name or notice. Landlord shall have the right to remove
any sign, placard, picture, advertisement, name or notice which has, not been
approved by Landlord or is being displayed in a non-approved manner without
notice to and at the expense of the Tenant. All approved signs or lettering on
doors shall be printed, painted, affixed or inscribed at the expense of Tenant
by a person approved by Landlord.

 

Tenant shall not place anything or allow anything to be placed near the glass of
any window, door, partition or wall which may appear unsightly from outside of
the Premises; provided, however, that Landlord is to furnish and install
building standard window blinds at all exterior windows. Landlord shall have the
right to control all internal lighting that may be visible from the Building’s
exterior.

 

2.             The bulletin board or directory of the Building will be provided
exclusively for the display of the name and location of tenants only, and
Landlord reserves the right to exclude any other names therefrom.

 

3.             The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by any of the tenants or used by them for any
purpose other than for ingress to and egress from their respective premises. The
halls, passages, exits, entrances, elevators, stairways, balconies and roof are
not for the use of the general public and Landlord shall in all cases retain the
right to control thereof and prevent access thereto by all persons whose
presence in the judgment of Landlord shall be prejudicial to the safety,
character, reputation and interests of the Building or its tenants; provided,
however, that nothing herein contained shall be construed to prevent access by
persons with whom Tenant normally deals in the ordinary course of Tenant’s
business unless such persons are engaged in illegal activities. No tenant and no
employees or invitees of any tenant shall go upon the roof of the Building.

 

4.             Tenant shall not alter any lock or install any new additional
locks or any bolts on any door of the Premises without the written consent of
Landlord.

 

5.             The toilet rooms, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed and
no foreign substance of any kind whatsoever shall be thrown therein. The expense
of any breakage, stoppage or damage resulting from a violation of this
rule shall be borne by the tenant who, or whose employees or invitees, shall
have caused it.

 

6.             Tenant shall not overload the floor of the Premises, shall not
mark on or drive nails, screw or drill into the partitions, woodwork or plaster
(except as may be incidental to the

 

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hanging of wall decorations), and shall not in any way deface the Premises or
any part thereof.

 

7              No furniture, freight or equipment of any kind shall be brought
into the Building without the consent of Landlord and all moving of the same
into or out of the Building shall be done at such time and in such manner as
Landlord may designate. Landlord shall have the right to prescribe the weight,
size and position of all safes and other heavy equipment brought into the
Building and also the times and manner of moving the same in and out of the
Building. Safes or other heavy objects shall, if considered necessary by
Landlord, stand on wood strips of such thickness as shall be necessary to
properly distribute the weight. Landlord will not be responsible for loss of or
damage to any such safe or property from any cause and all damage done to the
Building by moving or maintaining any such safe or other property shall be
repaired at the expense of Tenant. There shall not be used in any Premises, or
in the public halls of the Building, either by any tenant or others, any hand
trucks except those equipped with rubber tires and side guards.

 

8              Tenant shall not employ any person or persons other than the
janitor of Landlord for the purpose of cleaning the Premises unless otherwise
agreed to by Landlord. Except with the written consent of Landlord, no person or
persons other than those approved by Landlord shall be permitted to enter the
Building for the purpose of cleaning the same. Tenant shall not cause any
unnecessary labor by reason of Tenant’s carelessness or indifference in the
preservation of good order and cleanliness. Landlord shall in no way be
responsible to any Tenant for any loss of property on the Premises, however
occurring, or for any damage done to the effects of any Tenant, by or as a
result of the acts of the janitor, any other employee or contractor of Landlord,
or any other person. Janitor service shall include ordinary dusting and cleaning
by the janitor assigned to such work and shall not include cleaning of carpets
or rugs, except normal vacuuming, or moving of furniture and other special
services.

 

9.             Tenant shall not use, keep or permit to be used or kept any
noxious gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to the Landlord or other
occupants of the Building by reason of noise, odors and/or vibrations, or
interfere in anyway with other tenants or those having business in the Building.
No animals or birds shall be brought in or kept in or about the Premises or the
Building. No tenant shall make or permit to be made any disturbing noises or
disturb or interfere with occupants of this or neighboring buildings or
premises, or with those having business with such occupants, by the use of any
musical instrument, radio, phonograph, unusual noise, or in any other way. No
tenant shall throw anything out of doors or down the passageways. No cooking
shall be done or permitted by Tenant in the Premises.

 

10.           The Premises shall not be used for manufacturing or for the
storage of merchandise except as such storage may be incidental to the uses of
the Premises for general office purposes. No tenant shall occupy or permit any
portion of his Premises to be occupied for the manufacture or sale of liquor,
narcotics, or tobacco in any form, or as a medical office, or as a barber shop
or manicure shop except with prior written consent of Landlord. No tenant shall
advertise for laborers giving an address at the Premises. The Premises shall not
be used for lodging or sleeping or for illegal purposes.

 

2

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11.           Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline or inflammable or combustible fluid or material or use any
method of heating or air conditioning other than that supplied by Landlord.

 

12.           Landlord will direct electricians as to where and how telephone
and telegraph wires are to be introduced. No boring or cutting for or stringing
of wires will be allowed without the consent of Landlord. The location of
telephones, call boxes and other office equipment affixed to the Premises shall
be subject to the approval of Landlord.

 

13.           All keys to the Building, offices, rooms and toilet rooms shall be
obtained from Landlord’s office and Tenant shall not from any other source
duplicate or obtain, keys or have keys made. Tenant, upon termination of the
tenancy, shall deliver to Landlord the keys to the Building, offices, rooms, and
toilet rooms which shall have been furnished and shall pay Landlord the cost of
replacing any lost key or of changing the lock or locks opened by such lost key
if Landlord deems it necessary to make such a change.

 

14.           No tenant shall lay linoleum, tile, carpet or other similar floor
coverings so that the same shall be affixed to the floor of the Premises in any
manner except as approved by the Landlord. The expense of repairing any damage
resulting from a violation of this rule or removal of any floor covering shall
be borne by the tenant by whom, or by whose contractors, employees or Invitees,
the floor covering shall have been laid.

 

15.           During all hours on Saturdays Sundays, legal holidays and on
weekdays between the hours of 6:00 p.m. and 7:00 a.m. the following day, access
to the Building or to the halls, corridors, or stairways in the Building or to
the Premises may be refused unless the person seeking access is known to any
person or employee of the building in charge and has a pass or is property
identified. Landlord shall in no case be liable for damages for any error with
regard to the admission to or exclusion from the Building of any person. In case
of invasion, mob, riot, public excitement, or other commotion, Landlord reserves
the right to prevent access to the Building during the continuance of the same,
by closing the doors or otherwise, for the safety of the tenants and protection
of the Building and property located therein. Landlord reserves the right to
close and keep locked all entrance and exit doors of the Building during all
hours on Saturdays, Sundays, legal holidays and on weekdays between the hours of
6.00 p.m. and 7:00 a.m. the following day, and during such further hours as
Landlord may deem advisable for the adequate protection of the Building and the
property of its tenants. Anything to the foregoing notwithstanding, Landlord
shall have no duty to provide security protection for the Building at any time
or to monitor access thereto.

 

16.           Tenant shall see that the doors of the Premises are closed and
securely locked before leaving the Building and that all water faucets, water
apparatus and electricity are entirely shut off before Tenant or Tenant’s
employees leave the Building. Tenant shall be responsible for any damage to the
Building or other tenants caused by a failure to comply with this rule.

 

17.           Landlord reserves the right to exclude or expel from the Building
any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of the rules and regulations of the Building.

 

3

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18.           Any requests of Tenant will be considered only upon application at
the office of Landlord. Employees of Landlord shall not be requested to
perform any work or do anything outside of their regular duties unless under
special instructions from Landlord.

 

19.           No vending machine shall be installed, maintained or operated upon
the Premises without the written consent of the Landlord.

 

20.           Landlord shall have the right, exercisable without notice and
without liability to Tenant, to change the name and the street address of the
Building of which the Premises are a part.

 

21.           Tenant agrees that it shall comply with all fire regulations that
may be issued from time to time by Landlord and Tenant also shall provide
Landlord with the name of a designated responsible employee to represent Tenant
in all matters pertaining to fire regulations.

 

22.           Landlord reserves the right by written notice to Tenant to
rescind, alter or waive any rule or regulation at any time prescribed for the
Building when, in Landlord’s judgment, it is necessary, desirable or proper for
the best interest of the Building or its tenants, in accordance with the Lease.

 

23.           Tenant shall not disturb, solicit, or canvas any occupant of the
Building and shall cooperate to prevent same.

 

24.           Without the written consent of Landlord, Tenant shall not use the
name of the Building in connection with or in promotion or advertising the
business of Tenant except as Tenant’s address.

 

25.           Tenant shall be entitled to use the number of parking spaces
provided in the lease during working hours, the exact location of which shall be
designated by Landlord. Tenant shall not park in driveways or loading areas nor
reserved parking spaces of other tenants. Landlord or its agents shall have the
right to cause to be removed any car of Tenant, its employees or agents that
may be parked In unauthorized areas, and Tenant agrees to save and hold harmless
Landlord, its agents and employees from any and all claims, losses, damages and
demands asserted or arising in respect to or in connection with the removal of
any such vehicle and for all expenses incurred by Landlord in connection with
such removal. Tenant will from time to time, upon request of Landlord, supply
Landlord with a list of license plate numbers of vehicles owned or operated by
its employees and agents.

 

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[g92511kg03i001.jpg]

 

EXHIBIT “A”

 

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NOV 05 2005

 

FIRST AMENDMENT TO THE
THE 5050 BUILDING LEASE AGREEMENT

 

THIS FIRST AMENDMENT TO LEASE AGREEMENT is dated this __ day of October, 2005
(this “Amendment”), is entered into between REG PHOENIX, L.L.C., an Arizona
limited liability company (“Landlord”), and B.G. ASSOCIATES, INC., an Arizona
corporation (“Tenant”).

 

RECITALS:

 

Landlord’s predecessor in interest, 5050 NORTH 40TH STREET, L.L.C., leased to
Tenant and Tenant leased from Landlord’s predecessor, on the terms and
conditions set forth in that certain 5050 Building Lease dated as of
November 22, 2000 (the “Lease”), the premises designated as Suite 300 (the
“Premises”), consisting of approximately 5,602 square feet of rentable area
within that certain building known as The 5050 Building, situated at 5050 North
40th Street, Phoenix, Arizona (the “Building”). The Lease has a scheduled
expiration date of January 31, 2006, and Landlord and Tenant desire to extend
the term of the Lease for an additional five (5) years beyond such date, to
lapse on January 31, 2011.

 

NOW THEREFORE, in consideration of the mutual promises contained herein, the
parties hereto hereby agree as follows:

 

AGREEMENT:

 

1.             Extended Term. The Term of the Lease is extended so that the
Termination Date, as defined in the Lease, subject to earlier termination as
provided in the Lease, shall be January 31, 2011.

 

2,             Rent. The annual fixed rent for the Premises during the period of
February 1, 2006, through the extended Termination Date shall be as follows:

 

Year 1: $22.50 per rentable square foot, full service* or $126,045 per year

Year 2: $23.00 per rentable square foot, full service* or $128,846 per year

Year 3: $23.50 per rentable square foot, full service* or $131,647 per year

Year 4: $24.00 per rentable square foot, full service* or $134,448 per year

Year 5: $24.50 per rentable square foot, full service* or $137,249 per year, and

 

*Each year of fixed rent shall bear transaction privilege tax at the
then-prevailing rate, payable

by Tenant with each monthly installment of fixed rent.

 

3. Base Year.

 

The Base Year for the extension Term shall be calendar year 2006. If during any
calendar year the Building is less than fully occupied, to determine Tenant’s
Proportionate Share, Direct Expenses fluctuating with Building occupancy shall
be “grossed up” to the amount, using commercially reasonable projections, that
normally would be expected if the Building were ninety five percent (95%)
occupied for that entire calendar year; the load factor of 12.5% shall remain in
place

 

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4. Security Deposit.

 

Anything to the contrary notwithstanding in the Lease, the Security Deposit (no
less than $21,941.00) shall be returned to Tenant upon the execution of this
amendment, so long as Tenant is not then in default under the Lease.

 

 

 

5. Improvement Allowance.

 

Landlord shall pay for Tenant’s Interior Improvements upon the presentation of a
contractor’s invoices with reasonable supporting documentation in the amount not
to exceed Eight Dollars ($8.00) per rentable square foot in the Premises for the
extension Term; and any unexpended excess of the allowance over the actual costs
of improvements shall be credited to the annual fixed rent In the month and/or
months immediately following. Tenant shall submit all Invoices for reimbursement
within six (6) months of the date of the commencement of the extension Term.
Tenant shall be entitled to use the Improvement Allowance for technology related
items including audio/visual equipment, cabling and wiring.

 

 

 

6. Parking Charges.

 

Tenant’s rent for covered reserved parking spaces during the extension Term
shall be Thirty-Five Dollars ($35) per month per reserved stall. Covered
unreserved parking shall at all times during the extension Term shall be
available for rent by Tenant at the rate of Twenty Dollars ($20) per month per
unreserved stall, up to fifteen (15) stalls.

 

 

 

7. Commissions.

 

Lee & Associates Arizona (Michael Garlick), Tenant’s broker, shall be paid a
three percent (3%) fee and Landlord’s broker, Lee & Associates Arizona (Craig
Coppola), shall be paid a one and one-half percent (1.5%) fee, based on total
lease consideration to be paid during the extension Term, but not for any option
that may later be exercised by Tenant, unless and until Tenant remains in
occupancy of the Premises after that option period commences in February of
2011.

 

 

 

8. Affirmation.

 

Except as otherwise set forth in this Amendment, the Lease is ratified,
confirmed and approved in all respects.

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of the
date first above written.

 

LANDLORD:

TENANT:

 

 

REG PHOENIX, L.L.C., an
Arizona limited liability company as
Successor to 5050 NORTH 40TH STREET,
L.L.C.

B.G. ASSOCIATES, INC., an Arizona
corporation

 

 

By

/s/ Robert Gray

 

By

/s/ James H. O’Connor

 

Robert Gray, Manager

 

 

James H. O’Connor, President/CEO

 

 

 

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