Exhibit 10.29

 

OFFICE LEASE

 

by and between

 

SKY PEAK, LLC,

an Arizona limited liability company

 

(“Landlord”)

 

and

 

Cipherloc

a Texas Corporation

 

(“Tenant”)

 

Dated as of

 

July 12

___________________________, 2018

 

   

 

 

Office lease

 

THIS OFFICE LEASE is made between SKY PEAK, LLC, an Arizona limited liability
company (“Landlord”), and the Tenant described in Item 1 of the Basic Lease
Provisions.

 

LEASE OF PREMISES

 

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, subject
to all of the terms and conditions set forth herein, those certain premises (the
“Premises”) described in Item 3 of the Basic Lease Provisions and as shown in
the drawing attached hereto as Exhibit A-4. The Premises are located in the
Building described in Item 2 of the Basic Lease Provisions. The Building is
located on that certain land (the “Land”) more particularly described on Exhibit
A-1 attached hereto, which is also improved with landscaping, parking facilities
and other improvements, fixtures and common areas and appurtenances now or
hereafter placed, constructed or erected on the Land (sometimes referred to
herein as the “Project”).

 

BASIC LEASE PROVISIONS

 

1. Tenant: Cipherloc (“Tenant”)       2. Building:

7320 E. Butherus Drive

Scottsdale, Arizona 85260

      3. Description of Premises: Suite(s): 103         Rentable Area:
Approximately 1,005 square feet         Building Size: 34,830 square feet
(subject to Paragraph 18)       4. Tenant’s Proportionate Share: 20% (6,056 sf /
28,774 sf) (See Paragraph 3)       5. Basic Annual Rent*: (See Paragraph 2)    
   

Months 1 to 12 , inclusive:

Monthly Installment:

Each Lease Year:

$1,608.00

$19,874.88

       

Months 13 to 24 , inclusive:

Monthly Installment:

Each Lease Year:

$1,656.24

$19,874.88

       

Months 25 to 36 , inclusive:

Monthly Installment:

Each Lease Year:

$1,705.49

$20,465.82

        * The Basic Annual Rent schedule set forth above does not include
applicable rental tax.

 

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6.

Installment Payable

Upon Execution:

$22,274.30 consisting of: (i) $19,710.86 [e.g. First Monthly Installment, plus
rental tax]; (ii) $1,742.15 [Security Deposit]; and (iii) $821.29 [Pro Rated
month of July].       7.

Security Deposit

Payable Upon Execution:

$1,705.49 (See Paragraph 2(c)) (the Sum of Basic Monthly Rent payable for the
first and last months’ of the Lease Term)       8. Base Year for Operating
Costs: 2018 (See Paragraph 3)         Base Year for Real Estate Taxes: 2018 (See
Paragraph 3)         Base Year for Utilities: 2018 (See Paragraph 3)       9.
Initial Term: Thirty-six (36) months, commencing on the Commencement Date. If
the Commencement Date occurs on a date other than the first day of a calendar
month, the Initial Term shall be for a period of thirty-six (36) months, plus
the remaining portion of the month in which the Commencement Date occurs (See
Paragraph 1)       10. Estimated Commencement Date: July 15, 2018       11.
Estimated Termination Date: July 31, 2021       12. Broker(s) (See Paragraph
19(k)):           Landlord’s Broker:

Randy Shell

Designated Broker

Shell Commercial

        Tenant’s Broker:

John Quatrini

Associate Broker

Shell Commercial

    13. Addresses for Notices:           To: TENANT: To: LANDLORD:    

Cipherloc

Attn:Michael De La Garza

825 Main Street, Ste. 100

Phone: (702) 818 9011

Email: mdlg@cipherloc.net

 

Sky Peak, LLC

Attn: Moshe Bar

7320 E. Butherus Dr., Ste 204

Scottsdale, AZ 85260

Phone: (480) 483-8107

lorraine@aisairpark.com

 

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  With a copy to: With a copy also to:    

 

Ronald Hatcher

Dickinson Wright PLLC

1850 N. Central Ave, Ste 1400

Phoenix, AZ 85004

Phone: (602) 285-5059

Email: Rhatcher@dickinsonwright.com

      14. Covered Parking: Tenant shall be provided 1 covered, reserved parking
space(s) (“Covered Reserved Spaces”) in the location shown on Exhibit “A-2”
attached hereto. The Covered Reserved Space is included within the Basic Annual
Rent; provided that Landlord, in its sole discretion, will consider Tenant’s
request to utilize 1 additional Covered Reserved Space on a month-to-month basis
at the rate of $50.00 per stall per month (See Paragraph 18 and Exhibit “A-2”).
      15. Place of Payment: All payments payable under this Lease shall be made
out to the partnership name of the Building, and shall be sent to Landlord at
7320 E. Butherus Dr., Ste 204, Scottsdale, AZ 85260, or to such other address as
Landlord may designate in writing.       16. Guarantor: Form Guaranty attached
as Exhibit H hereto.       17. Date of this Lease: See cover page       18.
Tenant’s Improvements: If Applicable (See Exhibit B)       19. The “State” is
the State of Arizona.  

 

This Lease consists of the foregoing introductory paragraphs and Basic Lease
Provisions, the provisions of the Standard Lease Provisions (the “Standard Lease
Provisions”) (consisting of Paragraphs 1 through 19 which follow) and Exhibits
A-1 through A-5 and Exhibits B through Exhibit G, and the following Addenda:
_____N/A__________, all of which are incorporated herein by this reference. In
the event of any conflict between the provisions of the Basic Lease Provisions
and the provisions of the Standard Lease Provisions, the Standard Lease
Provisions shall control.

 

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STANDARD LEASE PROVISIONS

 

1.TERM

 

(a)       The Initial Term of this Lease and the Rent (defined below) shall
commence on the date that the Premises are delivered to Tenant as provided
herein (the “Commencement Date”). Unless earlier terminated in accordance with
the provisions hereof, the Initial Term of this Lease shall be the period shown
in Item 9 of the Basic Lease Provisions. As used herein, “Lease Term” shall mean
the Initial Term referred to in Item 9 of the Basic Lease Provisions, subject to
any extension of the Initial Term hereof exercised in accordance with the terms
and conditions expressly set forth herein. This Lease shall be a binding
contractual obligation effective upon execution hereof by Landlord and Tenant,
execution and delivery by Tenant of the Guaranty, and satisfaction of the
Conditions Precedent (defined below), notwithstanding any later commencement of
the Initial Term of this Lease.

 

(b)       The Premises will be delivered to Tenant upon Lease execution and
delivery by Tenant to Landlord of all amounts due at such time, including,
without limitation, the Security Deposit (defined in Section 2(c) below), if
applicable.

 

2.BASIC ANNUAL RENT AND SECURITY DEPOSIT

 

(a)       Tenant agrees to pay during each Lease Year (defined below) of the
Lease Term as Basic Annual Rent (“Basic Annual Rent”) for the Premises the sums
shown for such periods in Item 5 of the Basic Lease Provisions. For purposes of
this Lease, a “Lease Year” shall be each twelve (12) calendar month period
commencing on the Commencement Date (or anniversary thereof).

 

(b)       Except as expressly provided to the contrary herein, Basic Annual Rent
shall be payable in equal consecutive monthly installments, in advance, without
demand, deduction or offset, commencing on the Commencement Date and continuing
on the first day of each calendar month thereafter until the expiration of the
Lease Term. The first full monthly installment of Basic Annual Rent shall be
payable upon Tenant’s execution of this Lease. The obligation of Tenant to pay
Rent and other sums to Landlord and the obligations of Landlord under this Lease
are independent obligations. If the Commencement Date is a day other than the
first day of a calendar month, then the Rent for such partial month shall be
calculated on a per diem basis based on an average rate of the Basic Annual Rent
due during the Term. In the event Landlord delivers possession of the Premises
to Tenant prior to the Commencement Date, Tenant agrees it shall be bound by and
subject to all terms, covenants, conditions and obligations of this Lease during
the period between the date possession is delivered and the Commencement Date,
other than the payment of Basic Annual Rent, in the same manner as if delivery
had occurred on the Commencement Date.

 

(c)       Simultaneously with the execution of this Lease, Tenant has paid or
will pay Landlord the security deposit (the “Security Deposit”) in Item 7 of the
Basic Lease Provisions as security for the performance of the provisions hereof
by Tenant. Landlord shall not be required to keep the Security Deposit separate
from its general funds and Tenant shall not be entitled to interest thereon.

 

If Tenant defaults with respect to any provision of this Lease, including,
without limitation, the provisions relating to the payment of Rent or the
cleaning of the Premises upon the termination of this Lease, Landlord may, but
shall not be required to, use, apply or retain all or any part of the Security
Deposit (i) for the payment of any Rent or any other sum in default, (ii) for
the payment of any other amount which Landlord may spend or become obligated to
spend by reason of Tenant’s default hereunder, or (iii) to compensate Landlord
for any other loss or damage which Landlord may suffer by reason of Tenant’s
default hereunder, including, without limitation, costs and reasonable
attorneys’ fees incurred by Landlord to recover possession of the Premises
following a default by Tenant hereunder. If any portion of the Security Deposit
is so used or applied, Tenant shall, upon demand therefor, deposit cash with
Landlord in an amount sufficient to restore the Security Deposit to the
appropriate amount, as determined hereunder. If Tenant shall fully perform every
provision of this Lease to be performed by it, the Security Deposit or any
balance thereof shall be returned to Tenant (or, at Landlord’s option, to the
last assignee of Tenant’s interest hereunder) within sixty (60) days following
the expiration of the Lease Term; provided, however, that Landlord may retain
the Security Deposit until such time as any amount due from Tenant in accordance
with Paragraph 3 below has been determined and paid to Landlord in full.
Anything to the contrary notwithstanding, in the event any portion of the
Security Deposit remains at the end of the Lease Term, Tenant shall not be
relieved of its obligations to timely pay Rent or any other amounts due under
this Lease.

 

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(d)       The parties agree that for all purposes hereunder the Premises shall
be stipulated to contain the number of square feet of Rentable Area described in
Item 3 of the Basic Lease Provisions. Upon the request of Landlord, Landlord’s
Space Planner shall verify the exact number of square feet of Rentable Area in
the Premises. In the event there is a variation of five percent (5%) or more
from the number of square feet specified in Item 3 of the Basic Lease
Provisions, Landlord and Tenant shall execute an amendment to this Lease for the
purpose of making appropriate adjustments to the Basic Annual Rent, the Security
Deposit, Tenant’s Proportionate Share and such other provisions hereof as shall
be appropriate under the circumstances. Landlord calculated the Rentable Area
described in Item 3 of the Basic Lease Provisions using the definition of
Rentable Area contained in Exhibit A-5 of this Lease.

 

3.ADDITIONAL RENT

 

(a)       If Operating Costs (defined below) for the Project for any calendar
year during the Lease Term exceed Base Operating Costs (defined below), Tenant
shall pay to Landlord as additional rent (“Operating Costs Additional Rent”) an
amount equal to Tenant’s Proportionate Share (defined below) of such excess
(“Operating Costs Excess”). If Real Estate Taxes (defined below) for the Project
for any calendar year during the Lease Term exceed Base Real Estate Taxes
(defined below), Tenant shall pay to Landlord as additional rent (“Taxes
Additional Rent”) an amount equal to Tenant’s Proportionate Share of such excess
(“Taxes Excess”). If Utilities (defined below) for the Project for any calendar
year during the Lease Term exceed Base Utilities (defined below), Tenant shall
pay to Landlord as additional rent (“Utility Additional Rent”) an amount equal
to Tenant’s Proportionate Share of such excess (“Utility Excess”). The term
“Additional Rent” shall mean, collectively, the Operating Costs Additional Rent,
Taxes Additional Rent and the Utility Additional Rent.

 

(b)       “Tenant’s Proportionate Share” is, subject to the provisions of
Paragraph 18, the percentage number described in Item 4 of the Basic Lease
Provisions. Tenant’s Proportionate Share represents, subject to the provisions
of Paragraph 18, a fraction, the numerator of which is the number of square feet
of Common Area in the Premises and the denominator of which is the number of
square feet of Rentable Area in the Project, as determined by Landlord pursuant
to Paragraph 18.

 

(c)       The term “Base Operating Costs” means all Operating Costs incurred or
payable by Landlord during the calendar year specified as Tenant’s Base Year for
Operating Costs in Item 8 of the Basic Lease Provisions. The term “Base Real
Estate Taxes” shall mean all Real Estate Taxes incurred or payable by Landlord
during the calendar year specified as Tenant’s Base Year for Real Estate Taxes
in Item 8 of the Basic Lease Provisions. The term “Base Utilities” shall mean
all Utilities incurred or payable by Landlord during the calendar year specified
as Tenant’s Base Year for Utilities in Item 8 of the Basic Lease Provisions.

 

(d)       “Operating Costs” means all costs, expenses and obligations incurred
or payable by Landlord in connection with the operation, ownership, management,
repair or maintenance of the Building and the Project during or allocable to the
Lease Term, including without limitation, the following:

 

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(i)       The cost of fuel, supplies, equipment, tools, materials, service
contracts, janitorial services, waste and refuse disposal, gardening and
landscaping; insurance, including, but not limited to, public liability, fire,
property damage, flood, rental loss, rent continuation, boiler machinery,
business interruption, contractual indemnification and All Risk coverage
insurance for up to the full replacement cost of the Project and such other
insurance as is customarily carried by operators of other similar class office
buildings in the city in which the Project is located, to the extent carried by
Landlord in its discretion, and the deductible portion of any insured loss
otherwise covered by such insurance); the cost of compensation, including
employment, welfare and social security taxes, paid vacation days, disability,
pension, medical and other fringe benefits of all persons (including independent
contractors) who perform services connected with the operation, maintenance,
repair or replacement of the Project; personal property taxes on and maintenance
and repair of equipment and other personal property used in connection with the
operation, maintenance or repair of the Project; repair and replacement of
window coverings provided by Landlord in the premises of tenants in the Project;
such reasonable auditors’ fees and legal fees as are incurred in connection with
the operation, maintenance or repair of the Project; reasonable costs incurred
for administration and management of the Project; the maintenance of any
easements or ground leases benefitting the Project, whether by Landlord or by an
independent contractor; a reasonable allowance for depreciation of personal
property used in the operation, maintenance or repair of the Project; license,
permit and inspection fees; all costs and expenses required by any governmental
or quasi-governmental authority or by applicable law, for any reason, including
capital improvements, whether capitalized or not, and the cost of any capital
improvements made to the Project by Landlord that improve life-safety systems or
reduce operating expenses (such costs to be amortized over such reasonable
periods as Landlord shall reasonably determine); the cost of air conditioning,
heating, ventilating, plumbing, elevator maintenance, and repair (to include the
replacement of components) and other mechanical and electrical systems repair
and maintenance; sign maintenance; and Common Area (defined below) repair,
resurfacing, operation and maintenance; and the cost of providing security
services, if any, deemed appropriate by Landlord.

 

The following items shall be excluded from Operating Costs:

 

(A)       leasing commissions, attorneys’ fees, costs and disbursements and
other expenses incurred in connection with leasing, renovating or improving
vacant space in the Project for tenants or prospective tenants of the Project;

 

(B)       costs (including permit, license and inspection fees) incurred in
renovating or otherwise improving or decorating, painting or redecorating space
for tenants or vacant space;

 

(C)       Landlord’s costs of any services sold to tenants for which Landlord is
entitled to be reimbursed by such tenants as an additional charge or rental over
and above the Basic Annual Rent and Operating Costs payable under the lease with
such tenant or other occupant;

 

(D)       any depreciation or amortization of the Project except as expressly
permitted herein;

 

(E)       costs incurred due to a violation of Law (defined below) by Landlord
relating to the Project;

 

(F)       interest on debt or amortization payments on any mortgages or deeds of
trust or any other debt for borrowed money;

 

(G)       all items and services for which Tenant or other tenants reimburse
Landlord outside of Operating Costs;

 

(H)       repairs or other work occasioned by fire, windstorm or other work paid
for through insurance or condemnation proceeds (excluding any deductible); and

 

(I)       repairs resulting from any defect in the original design or
construction of the Project.

 

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(e)       All real property taxes, assessments, license fees, excises, levies,
charges, assessments, both general and special assessments, or impositions and
other similar governmental ad valorem or other charges levied on or attributable
to the Project or its ownership, operation or transfer, and all taxes, charges,
assessments or similar impositions imposed in lieu of the same (collectively,
“Real Estate Taxes”). Real Estate Taxes shall also include all taxes,
assessments, license fees, excises, levies, charges or similar impositions
imposed by any governmental agency, district, authority or political subdivision
(A) on any interest of Landlord, any mortgagee of Landlord or any interest of
Tenant in the Project, the Premises, or on the occupancy or use of space in the
Project or the Premises; (B) for the provision of amenities, services or rights
of use, whether or not exclusive, public, quasi-public or otherwise made
available on a shared use basis, including amenities, services or rights of use
such as fire protection, police protection, street, sidewalk, lighting, sewer or
road maintenance, refuse removal or janitorial services or for any other
service, without regard to whether such services were formerly provided by
governmental or quasi-governmental agencies to property owners or occupants at
no cost or at minimal cost; and (C) related to any transportation plan, fund or
system instituted within the geographic area of the Project or otherwise
applicable to the Premises, the Project or any portion thereof. Real Estate
Taxes shall not include any estate, inheritance successor, transfer, gift,
franchise, corporation, income or profit tax imposed by the State or Federal
government on Landlord unless such income, franchise, transfer or profit taxes
are in substitution for any Real Estate Taxes payable hereunder. Real Estate
Taxes shall expressly include any tax, assessment or similar charge on the rents
or profits from the Premises or Building levied against Landlord and/or the
Project in lieu of ad valorem taxes on the Project or otherwise as a result of
property tax reform in the State of Arizona; and

 

(f)       The term “Utilities” shall mean all electricity, gas, water, sewer and
other utility costs incurred by Landlord in each calendar year in connection
with operating the Building and the Project.

 

(g)       Operating Costs and Utilities for any calendar year during which
actual occupancy of the Project is less than ninety percent (90%) of the
Rentable Area of the Project shall be appropriately adjusted to reflect ninety
percent (90%) occupancy of the existing Rentable Area of the Project during such
period. In determining Operating Costs and Utilities, if any services or
Utilities are separately charged to tenants of the Project or others, Operating
Costs and/or Utilities, as applicable, shall be adjusted by Landlord to reflect
the amount of expense which would have been incurred for such services or
Utilities on a full time basis for normal Project operating hours. Operating
Costs for the Tenant’s Base Year for Operating Costs (as defined in Item 8 of
the Basic Lease Provisions) and Utilities for the Tenant’s Base Year for
Utilities shall not include Operating Costs or Utilities, as the case may be,
attributable to temporary market-wide labor-rate increases and/or utility rate
increases due to extraordinary circumstances, including, but not limited to
Force Majeure, conservation surcharges, boycotts, embargoes, or other shortages.
In no event shall the components of Utilities for any calendar year related to
electrical costs be less than the components of electrical costs in the Base
Year for Utilities. In the event (i) the Commencement Date shall be a date other
than January 1, (ii) the date fixed for the expiration of the Lease Term shall
be a date other than December 31, (iii) of any early termination of this Lease,
or (iv) of any increase or decrease in the size of the Premises, then in each
such event, an appropriate adjustment in the application of this Paragraph 3
shall, subject to the provisions of this Lease, be made to reflect such event on
a basis determined by Landlord to be consistent with the principles underlying
the provisions of this Paragraph 3.

 

(h)       Prior to the commencement of each calendar year of the Lease Term
following the Commencement Date, Landlord shall have the right to give to Tenant
a written estimate of Tenant’s Proportionate Share of the Operating Costs
Excess, Taxes Excess and Utility Excess, if any, for the Project for the ensuing
year. Tenant shall pay such estimated amount to Landlord in equal monthly
installments, in advance on the first day of each month. Within a reasonable
period after the end of each calendar year, Landlord shall furnish Tenant a
statement indicating in reasonable detail the excess of (i) Operating Costs over
Base Operating Costs for such period, (ii) Real Estate Taxes over Base Real
Estate Taxes for such period and (iii) Utilities over Base Utilities for such
period, and the parties shall, within thirty (30) days thereafter, make any
payment or allowance necessary to adjust Tenant’s estimated payments to Tenant’s
actual share of such excess as indicated by such annual statement. Any payment
due Landlord shall be payable by Tenant on demand from Landlord. Any amount due
Tenant shall be credited against installments next becoming due under this
Paragraph 3(f) or refunded to Tenant, if requested by Tenant.

 

(i)       All capital levies or other taxes assessed or imposed on Landlord upon
the rents payable to Landlord under this Lease and any excise, transaction,
sales or privilege tax, assessment, levy or charge measured by or based, in
whole or in part, upon such rents from the Premises and/or the Project or any
portion thereof shall be paid by Tenant to Landlord monthly in estimated
installments or upon demand, at the option of Landlord, as additional rent to be
allocated to monthly Operating Costs, Real Estate Taxes and/or Utilities, as
applicable.

 

(j)       Tenant shall pay ten (10) days before delinquency, all taxes and
assessments (i) levied against any personal property, tenant improvements or
trade fixtures of Tenant in or about the Premises and (ii) based upon this Lease
or any document to which Tenant is a party creating or transferring an interest
in this Lease or an estate in all or any portion of the Premises. If any such
taxes or assessments are levied against Landlord or Landlord’s property or if
the assessed value of the Project is increased by the inclusion therein of a
value placed upon such personal property or trade fixtures, Tenant shall upon
demand reimburse Landlord for the taxes and assessments so levied against
Landlord, or such taxes, levies and assessments resulting from such increase in
assessed value.

 

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(k)       Any delay or failure of Landlord in (i) delivering any estimate or
statement described in this Paragraph 3, or (ii) computing or billing Tenant’s
Proportionate Share of excess Operating Costs, excess Real Estate Taxes and/or
excess Utilities shall not constitute a waiver of its right to require an
increase in Rent, or in any way impair, the continuing obligations of Tenant
under this Paragraph 3. In the event of any dispute as to any Additional Rent
due under this Paragraph 3, an officer of Tenant or Tenant’s certified public
accountant shall have the right after reasonable notice and at reasonable times
to inspect Landlord’s accounting records at Landlord’s accounting office. If
after such inspection, Tenant still disputes such Additional Rent, upon Tenant’s
written request therefor, a certification as to the proper amount of Operating
Costs, Real Estate Taxes and/or Utilities and the amount due to or payable by
Tenant shall be made by an independent certified public accountant mutually
agreed to by Landlord and Tenant. If Landlord and Tenant cannot mutually agree
to an independent certified public accountant, then the parties agree that
Landlord shall choose an independent certified public accountant to conduct the
certification as to the proper amount of Tenant’s Proportionate Share of
Operating Costs, Real Estate Taxes, and/or Utilities due by Tenant for the
period in question; provided, however, such certified public accountant shall
not be the accountant who conducted Landlord’s initial calculation of Operating
Costs, Real Estate Taxes and/or Utilities to which Tenant is now objecting. Such
certification shall be final and conclusive as to all parties. If the
certification reflects that Tenant has overpaid Tenant’s Proportionate Share of
Operating Costs, Real Estate Taxes and/or Utilities for the period in question,
then Landlord shall credit such excess to Tenant’s next payment of Operating
Costs, Real Estate Taxes and/or Utilities and conversely, if Tenant has
underpaid Tenant’s Proportionate Share of Operating Costs, Real Estate Taxes
and/or Utilities, Tenant shall promptly pay such additional Operating Costs Real
Estate Taxes and/or Utilities to Landlord. Tenant agrees to pay the cost of such
certification and the investigation with respect thereto and no adjustments in
Tenant’s favor shall be made unless it is determined that Landlord’s original
statement was in error in Landlord’s favor by more than five percent (5%).
Tenant waives the right to dispute any matter relating to the calculation of
Operating Costs, Real Estate Taxes, Utilities or Additional Rent under this
Paragraph 3 if any claim or dispute is not asserted in writing to Landlord
within one hundred eighty (180) days after delivery to Tenant of the original
billing statement with respect thereto.

 

(l)       Even though the Lease Term has expired and Tenant has vacated the
Premises, when the final determination is made of Tenant’s Proportionate Share
of excess Operating Costs, Real Estate Taxes and/or Utilities for the year in
which this Lease terminates, Tenant shall immediately pay any increase due over
the estimated Operating Costs, Real Estate Taxes and/or Utilities paid, and
conversely, any overpayment made by Tenant shall be promptly refunded to Tenant
by Landlord.

 

(m)       Landlord and Tenant agree that each provision of this Lease for
determining charges, amounts, and Additional Rent payments by Tenant is
commercially reasonable.

 

(n)       The Basic Annual Rent, as adjusted pursuant to Paragraphs 2, 3 and 7,
and other amounts required to be paid by Tenant to Landlord hereunder (including
the Operating Costs Excess, Taxes Excess and Utility Excess), are sometimes
collectively referred to as, and shall constitute, “Rent”.

 

4.IMPROVEMENTS AND ALTERATIONS

 

(a)       Tenant acknowledges that it has thoroughly and adequatly inspected the
Premises, is satisfied with the condition thereof and accepting the same in its
AS IS condition. Landlord shall be under no obligation to make any alterations,
improvements or otherwise perform any other work to the Premises or any other
portion of the Property.

 

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(b)       Any alterations, additions, or improvements made by or on behalf of
Tenant to the Premises (“Alterations”) shall be subject to Landlord’s prior
written consent. Tenant shall cause, at its sole cost and expense, all
Alterations to comply with insurance requirements and with Laws and shall
construct, at its sole cost and expense, any alteration or modification required
by Laws as a result of any Alterations. All Alterations shall be constructed at
Tenant’s sole cost and expense and in a good and workmanlike manner by
contractors reasonably acceptable to Landlord and only good grades of materials
shall be used. All plans and specifications for any Alterations shall be
submitted to Landlord for its approval, which approval will not be unreasonably
withheld, delayed or conditioned. Landlord may monitor construction of the
Alterations. Landlord’s right to review plans and specifications and to monitor
construction shall be solely for its own benefit, and Landlord shall have no
duty to see that such plans and specifications or construction comply with
applicable laws, codes, rules and regulations. Landlord shall have the right, in
its sole discretion, to instruct Tenant to remove those improvements or
Alterations from the Premises which (i) were not approved in advance by
Landlord, (ii) were not built in conformance with the plans and specifications
approved by Landlord, or (iii) Landlord specified during its review of plans and
specifications for Alterations would need to be removed by Tenant upon the
expiration of this Lease. If Landlord approved the construction of Alterations,
then Tenant shall not be obligated to remove such Alterations at the expiration
of this Lease. Landlord shall not unreasonably withhold or delay its approval
with respect to what improvements or Alterations Landlord may require Tenant to
remove at the expiration of the Lease. If upon the termination of this Lease
Landlord requires Tenant to remove any or all of such Alterations from the
Premises, then Tenant, at Tenant’s sole cost and expense, shall promptly remove
such Alterations and improvements and Tenant shall repair and restore the
Premises to its original condition as of the Commencement Date, reasonable wear
and tear excepted. Any Alterations remaining in the Premises following the
expiration of the Lease Term or following the surrender of the Premises from
Tenant to Landlord, shall become the property of Landlord unless Landlord
notifies Tenant otherwise. Tenant shall provide Landlord with the identities and
mailing addresses of all persons performing work or supplying materials, prior
to beginning such construction, and Landlord may post on and about the Premises
notices of non-responsibility pursuant to applicable law. Tenant shall assure
payment for the completion of all work free and clear of liens and shall provide
certificates of insurance for worker’s compensation and other coverage in
amounts and from an insurance company reasonably satisfactory to Landlord
protecting Landlord against liability for bodily injury or property damage
during construction. Upon completion of any Alterations and upon Landlord’s
reasonable request, Tenant shall deliver to Landlord: (i) sworn statements
setting forth the names of all contractors and subcontractors who did work on
the Alterations;(ii) final lien waivers from all such contractors and
subcontractors; (iii) a complete set of “As-Built” building plans (if
applicable); and (iv) a Certificate of Occupancy for the Premises (if
applicable).

 

(c)       Tenant shall keep the Premises, the Building and the Project free from
any and all liens arising out of any Alterations, work performed, materials
furnished, or obligations incurred by or for Tenant. In the event that Tenant
shall not, within ten (10) days following the imposition of any such lien, cause
the same to be released of record by payment or posting of a bond in a form and
issued by a surety acceptable to Landlord, Landlord shall have the right, but
not the obligation, to cause such lien to be released by such means as it shall
deem proper (including payment of or defense against the claim giving rise to
such lien); in such case, Tenant shall reimburse Landlord for all amounts so
paid by Landlord in connection therewith, together with all of Landlord’s costs
and expenses, with interest thereon at the Default Rate (defined below) and
Tenant shall indemnify each and all of the Landlord Indemnitees (defined below)
against any damages, losses or costs arising out of any such claim. Tenant’s
indemnification of Landlord contained in this Paragraph shall survive the
expiration or earlier termination of this Lease. Such rights of Landlord shall
be in addition to all other remedies provided herein or by law.

 

5.REPAIRS

 

(a)       Landlord shall keep the Common Areas of the Building and the Project
in a clean and neat condition. Subject to subparagraph (b) below, Landlord shall
make all necessary repairs, within a reasonable period following receipt of
notice of the need therefor from Tenant, to the exterior walls, exterior doors,
exterior locks on exterior doors and windows of the Building, and to the Common
Areas and to public corridors and other public areas of the Project not
constituting a portion of any tenant’s premises and shall use reasonable efforts
to keep all Building standard equipment used by Tenant in common with other
tenants in good condition and repair and to replace same at the end of such
equipment’s normal and useful life, reasonable wear and tear and casualty loss
excepted. Except as expressly provided in Paragraph 9 of this Lease, there shall
be no abatement of Rent and no liability of Landlord by reason of any injury to
or interference with Tenant’s business arising from the making of any repairs,
alterations or improvements in or to any portion of the Premises, the Building
or the Project.

 

 9 

 

 

(b)       Tenant, at its expense, (i) shall keep the Premises and all fixtures
contained therein in a safe, clean and neat condition, and (ii) shall bear the
cost of maintenance, repair and replacement, by contractors selected by
Landlord, of all facilities which are not expressly required to be maintained or
repaired by Landlord and which are located in the Premises, including, without
limitation, lavatory, shower, toilet, wash basin and kitchen facilities, and
supplemental heating and air conditioning systems (including all plumbing
connected to said facilities or systems installed by or on behalf of Tenant or
existing in the Premises at the time of Landlord’s delivery of the Premises to
Tenant). Tenant shall make all repairs to the Premises not required to be made
by Landlord under subparagraph (a) above with replacements of any materials to
be made by use of materials of equal or better quality. Tenant shall do all
decorating, remodeling, alteration and painting required by Tenant during the
Lease Term. Tenant shall pay for the cost of any repairs to the Premises, the
Building or the Project made necessary by any negligence or willful misconduct
of Tenant or any of its assignees, subtenants, employees or their respective
agents, representatives, contractors, or other persons permitted in or invited
to the Premises or the Project by Tenant. If Tenant fails to make such repairs
or replacements within fifteen (15) days after written notice from Landlord,
Landlord may at its option make such repairs or replacements, and Tenant shall
upon demand pay Landlord for the cost thereof.

 

(c)       Upon the expiration or earlier termination of this Lease, Tenant shall
surrender the Premises in a safe, clean and neat condition, normal wear and tear
excepted. Except as otherwise set forth in Paragraph 4(b) of this Lease, Tenant
shall remove from the Premises all trade fixtures, furnishings and other
personal property of Tenant and all computer and phone cabling and wiring from
the Premises, shall repair all damage caused by such removal, and shall restore
the Premises to its original condition, reasonable wear and tear excepted. In
addition to all other rights Landlord may have, in the event Tenant does not so
remove any such fixtures, furnishings or personal property, Tenant shall be
deemed to have abandoned the same, in which case Landlord may store the same at
Tenant’s expense, appropriate the same for itself, and/or sell the same in its
discretion.

 

6.USE OF PREMISES

 

(a)       Tenant shall use the Premises only for general office uses and shall
not use the Premises or permit the Premises to be used for any other purpose.
Landlord shall have the right to deny its consent to any change in the permitted
use of the Premises in its sole and absolute discretion.

 

(b)       Tenant shall not at any time use or occupy the Premises, or permit any
act or omission in or about the Premises in violation of any law, statute,
ordinance or any governmental rule, regulation or order (collectively, “Law” or
“Laws”) and Tenant shall, upon written notice from Landlord, discontinue any use
of the Premises which is declared by any governmental authority to be a
violation of Law. If any Law shall, by reason of the nature of Tenant’s use or
occupancy of the Premises, impose any duty upon Tenant or Landlord with respect
to (i) modification or other maintenance of the Premises, the Building or the
Project, or (ii) the use, alteration or occupancy thereof, Tenant shall comply
with such Law at Tenant’s sole cost and expense. This Lease shall be subject to
and Tenant shall comply with all financing documents encumbering the Building or
the Project and all covenants, conditions and restrictions affecting the
Premises, the Building or the Project, including, but not limited to, Tenant’s
execution of any subordination agreements requested by a mortgagee of the
Premises, the Building or the Project.

 

(c)       Tenant shall not at any time use or occupy the Premises in violation
of the certificates of occupancy issued for or restrictive covenants pertaining
to the Building or the Premises, and in the event that any architectural control
committee or department of the State or the city or county in which the Project
is located shall at any time contend or declare that the Premises are used or
occupied in violation of such certificate or certificates of occupancy or
restrictive covenants, Tenant shall, upon five (5) days’ notice from Landlord or
any such governmental agency, immediately discontinue such use of the Premises
(and otherwise remedy such violation). The failure by Tenant to discontinue such
use shall be considered a default under this Lease and Landlord shall have the
right to exercise any and all rights and remedies provided herein or by Law. Any
statement in this Lease of the nature of the business to be conducted by Tenant
in the Premises shall not be deemed or construed to constitute a representation
or guaranty by Landlord that such business will continue to be lawful or
permissible under any certificate of occupancy issued for the Building or the
Premises, or otherwise permitted by Law.

 

(d)       Tenant shall not do or permit to be done anything which may invalidate
or increase the cost of any fire, All Risk or other insurance policy covering
the Building, the Project and/or property located therein and shall comply with
all rules, orders, regulations and requirements of the appropriate fire codes
and ordinances or any other organization performing a similar function. In
addition to all other remedies of Landlord, Landlord may require Tenant,
promptly upon demand, to reimburse Landlord for the full amount of any
additional premiums charged for such policy or policies by reason of Tenant’s
failure to comply with the provisions of this Paragraph 6.

 

 10 

 

 

(e)       Tenant shall not in any way interfere with the rights or quiet
enjoyment of other tenants or occupants of the Premises, the Building or the
Project. Tenant shall not use or allow the Premises to be used for any improper,
immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain, or
permit any nuisance in, on or about the Premises, the Building or the Project.
Tenant shall not place weight upon any portion of the Premises exceeding the
structural floor load (per square foot of area) which such area was designated
(and is permitted by Law) to carry or otherwise use any Building system in
excess of its capacity or in any other manner which may damage such system or
the Building. Tenant shall not create within the Premises a working environment
with a density of greater than five (5) persons per 1,000 square feet of
Rentable Area. Business machines and mechanical equipment shall be placed and
maintained by Tenant, at Tenant’s expense, in locations and in settings
sufficient in Landlord’s reasonable judgment to absorb and prevent vibration,
noise and annoyance. Tenant shall not commit or suffer to be committed any waste
in, on, upon or about the Premises, the Building or the Project.

 

(f)       Tenant shall take all reasonable steps necessary to adequately secure
the Premises from unlawful intrusion, theft, fire and other hazards, and shall
keep and maintain any and all security devices in or on the Premises in good
working order, including, but not limited to, exterior door locks for the
Premises and smoke detectors and burglar alarms located within the Premises and
shall cooperate with Landlord and other tenants in the Project with respect to
access control and other safety matters.

 

(g)       As used herein, the term “Hazardous Material” means any hazardous or
toxic substance, material or waste which is or becomes regulated by any local
governmental authority, the State or the United States Government, including,
without limitation, any material or substance which is (A) defined or listed as
a “hazardous waste,” “pollutant,” “extremely hazardous waste,” “restricted
hazardous waste,” “hazardous substance” or “hazardous material” under any
applicable federal, state or local Law or administrative code promulgated
thereunder, (B) petroleum, or (C) asbestos.

 

(i)       Tenant agrees that all operations or activities upon, or any use or
occupancy of the Premises, or any portion thereof, by Tenant, its assignees,
subtenants, and their respective agents, servants, employees, representatives
and contractors (collectively referred to herein as “Tenant Affiliates”),
throughout the term of this Lease, shall be in all respects in compliance with
all federal, state and local Laws then governing or in any way relating to the
generation, handling, manufacturing, treatment, storage, use, transportation,
release, spillage, leakage, dumping, discharge or disposal of any Hazardous
Materials.

 

(ii)       Tenant agrees to indemnify, defend and hold Landlord and its
Affiliates (defined below) harmless for, from and against any and all claims,
actions, administrative proceedings (including informal proceedings), judgments,
damages, punitive damages, penalties, fines, costs, liabilities, interest or
losses, including reasonable attorneys’ fees and expenses, court costs,
consultant fees, and expert fees, together with all other costs and expenses of
any kind or nature that arise during or after the Lease Term directly or
indirectly from or in connection with the presence, suspected presence, or
release of any Hazardous Material in or into the air, soil, surface water or
groundwater at, on, about, under or within the Premises, or any portion thereof
caused by Tenant or Tenant Affiliates.

 

(iii)       In the event any investigation or monitoring of site conditions or
any clean-up, containment, restoration, removal or other remedial work
(collectively, the “Remedial Work”) is required under any applicable federal,
state or local Law, by any judicial order, or by any governmental entity as the
result of operations or activities upon, or any use or occupancy of any portion
of the Premises by Tenant or Tenant Affiliates, Landlord shall perform or cause
to be performed the Remedial Work in compliance with such Law or order at
Tenant’s sole cost and expense. All Remedial Work shall be performed by one or
more contractors, selected and approved by Landlord, and under the supervision
of a consulting engineer, selected by Tenant and approved in advance in writing
by Landlord. All costs and expenses of such Remedial Work shall be paid by
Tenant, including, without limitation, the charges of such contractor(s), the
consulting engineer, and Landlord’s reasonable attorneys’ fees and costs
incurred in connection with monitoring or review of such Remedial Work.

 

(iv)       Each of the covenants and agreements of Tenant set forth in this
Paragraph 6(g) shall survive the expiration or earlier termination of this
Lease.

 

 11 

 

 

7.UTILITIES AND SERVICES

 

(a)       Provided that Tenant is not in default hereunder, Landlord shall
furnish, or cause to be furnished to the Premises, the utilities and services
described in Exhibit C attached hereto, subject to the conditions and in
accordance with the standards set forth therein and in this Lease.

 

(b)       Tenant agrees to cooperate fully at all times with Landlord and to
comply with all regulations and requirements which Landlord may from time to
time prescribe for the use of the utilities and services described herein and in
Exhibit C. Landlord shall not be liable to Tenant for the failure of any other
tenant, or its assignees, subtenants, employees, or their respective invitees,
licensees, agents or other representatives to comply with such regulations and
requirements.

 

(c)       If Tenant requires utilities or services in quantities greater than or
at times other than that generally furnished by Landlord pursuant to Exhibit C,
Tenant shall pay to Landlord, upon receipt of a written statement therefor,
Landlord’s charge for such use. In the event that Tenant shall require
additional electric current, water or gas for use in the Premises and if, in
Landlord’s judgment, such excess requirements cannot be furnished unless
additional risers, conduits, feeders, switchboards and/or appurtenances are
installed in the Building, subject to the conditions stated below, Landlord
shall proceed to install the same at the sole cost of Tenant, payable upon
demand in advance. The installation of such facilities shall be conditioned upon
Landlord’s consent, and a determination that the installation and use thereof
(i) shall be permitted by applicable Law and insurance regulations, (ii) shall
not cause permanent damage or injury to the Building or adversely affect the
value of the Building or the Project, and (iii) shall not cause or create a
dangerous or hazardous condition or interfere with or disturb other tenants in
the Building. Subject to the foregoing, Landlord shall, upon reasonable prior
notice by Tenant, furnish to the Premises additional elevator, heating, air
conditioning and/or cleaning services upon such reasonable terms and conditions
as shall be determined by Landlord, including payment of Landlord’s charge
therefor. In the case of any additional utilities or services to be provided
hereunder, Landlord may require a switch and metering system to be installed so
as to measure the amount of such additional utilities or services. The cost of
installation, maintenance and repair thereof shall be paid by Tenant upon
demand.

 

(d)       Landlord shall not be liable for, and Tenant shall not be entitled to,
any damages, abatement or reduction of Rent, or other liability by reason of any
failure to furnish any services or utilities described herein or in Exhibit C
for any reason (other than Landlord’s gross negligence or willful misconduct),
including, without limitation, when caused by accident, breakage, repairs,
Alterations or other improvements to the Project, strikes, lockouts or other
labor disturbances or labor disputes of any character, governmental regulation,
moratorium or other governmental action, inability to obtain electricity, water
or fuel, or any other cause beyond Landlord’s control. Landlord shall be
entitled to cooperate with the energy conservation efforts of governmental
agencies or utility suppliers. No such failure, stoppage or interruption of any
such utility or service shall be construed as an eviction of Tenant, nor shall
the same relieve Tenant from any obligation to perform any covenant or agreement
under this Lease. In the event of any failure, stoppage or interruption thereof,
Landlord shall use reasonable efforts to attempt to restore all services
promptly. No representation is made by Landlord with respect to the adequacy or
fitness of the Building’s ventilating, air conditioning or other systems to
maintain temperatures as may be required for the operation of any computer, data
processing or other special equipment of Tenant.

 

(e)       Landlord reserves the right from time to time to make reasonable and
nondiscriminatory modifications to the above standards (including, without
limitation, those described in Exhibit C) for utilities and services.

 

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8.NON-LIABILITY AND INDEMNIFICATION OF LANDLORD; INSURANCE

 

(a)       Landlord shall not be liable for any injury, loss or damage suffered
by Tenant or to any person or property occurring or incurred in or about the
Premises, the Building or the Project from any cause, EVEN IF SUCH LIABILITIES
ARE CAUSED SOLELY OR IN PART BY THE NEGLIGENCE OF ANY LANDLORD INDEMNITEE
(DEFINED BELOW), BUT NOT TO THE EXTENT SUCH LIABILITIES ARE CAUSED BY THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY SUCH LANDLORD INDEMNITEE (DEFINED
BELOW). Without limiting the foregoing, neither Landlord nor any of its
partners, officers, trustees, affiliates, directors, employees, contractors,
agents or representatives (collectively, “Affiliates”) shall be liable for and
there shall be no abatement of Rent (except in the event of a casualty loss or a
condemnation as set forth in Paragraphs 9 and 10 of this Lease) for (i) any
damage to Tenant’s property stored with or entrusted to Affiliates of Landlord,
(ii) loss of or damage to any property by theft or any other wrongful or illegal
act, or (iii) any injury or damage to persons or property resulting from fire,
explosion, falling plaster, steam, gas, electricity, water or rain which may
leak from any part of the Building or the Project or from the pipes, appliances,
appurtenances or plumbing works therein or from the roof, street or sub-surface
or from any other place or resulting from dampness or any other cause whatsoever
or from the acts or omissions of other tenants, occupants or other visitors to
the Building or the Project or from any other cause whatsoever, (iv) any
diminution or shutting off of light, air or view by any structure which may be
erected on lands adjacent to the Building, whether within or outside of the
Project, or (v) any latent or other defect in the Premises, the Building or the
Project. Tenant shall give prompt notice to Landlord in the event of (i) the
occurrence of a fire or accident in the Premises or in the Building, or (ii) the
discovery of a defect therein or in the fixtures or equipment thereof. This
Paragraph 8(a) shall survive the expiration or earlier termination of this
Lease.

 

(b)       Tenant hereby agrees to indemnify, protect, defend and hold harmless
Landlord and its designated property management company, and their respective
partners, members, affiliates and subsidiaries, and all of their respective
officers, directors, shareholders, employees, servants, partners,
representatives, insurers and agents (collectively, “Landlord Indemnities”) for,
from and against all liabilities, claims, fines, penalties, costs, damages or
injuries to persons, damages to property, losses, liens, causes of action,
suits, judgments and expenses (including court costs, attorneys’ fees, expert
witness fees and costs of investigation), of any nature, kind or description of
any person or entity, directly or indirectly arising out of, caused by, or
resulting from (in whole or part) (1) Tenant’s construction of or use, occupancy
or enjoyment of the Premises, (2) any activity, work or other things done,
permitted or suffered by Tenant and its agents and employees in or about the
Premises, (3) any breach or default in the performance of any of Tenant’s
obligations under this Lease, (4) any act, omission, negligence or willful
misconduct of Tenant or any of its agents, contractors, employees, business
invitees or licensees, or (5) any damage to Tenant’s property, or the property
of Tenant’s agents, employees, contractors, business invitees or licensees,
located in or about the Premises (collectively, “Liabilities”); EVEN IF SUCH
LIABILITIES ARE CAUSED SOLELY OR IN PART BY THE NEGLIGENCE OF ANY LANDLORD
INDEMNITEE, BUT NOT TO THE EXTENT SUCH LIABILITIES ARE CAUSED BY THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY SUCH LANDLORD INDEMNITEE. This Paragraph
8(b) shall survive the expiration or earlier termination of this Lease.

 

(c)       Tenant shall promptly advise Landlord in writing of any action,
administrative or legal proceeding or investigation as to which this
indemnification may apply, and Tenant, at Tenant’s expense, shall assume on
behalf of each and every Landlord Indemnitee and conduct with due diligence and
in good faith the defense thereof with counsel reasonably satisfactory to
Landlord; provided, however, that any Landlord Indemnitee shall have the right,
at its option, to be represented therein by advisory counsel of its own
selection and at its own expense. In the event of failure by Tenant to fully
perform in accordance with this Paragraph, Landlord, at its option, and without
relieving Tenant of its obligations hereunder, may so perform, but all costs and
expenses so incurred by Landlord in that event shall be reimbursed by Tenant to
Landlord, together with interest on the same from the date any such expense was
paid by Landlord until reimbursed by Tenant, at the rate of interest provided to
be paid on judgments, by the law of the jurisdiction to which the interpretation
of this Lease is subject. The indemnification provided in Paragraph 8(b) shall
not be limited to damages, compensation or benefits payable under insurance
policies, workers’ compensation acts, disability benefit acts or other
employees’ benefit acts.

 

 13 

 

 

(d)       Insurance.

 

(i)       Tenant at all times during the Lease Term shall, at its own expense,
keep in full force and effect (A) commercial general liability insurance
providing coverage against bodily injury and disease, including death resulting
therefrom, bodily injury and property damage to a combined single limit of
$2,000,000 to one or more than one person as the result of any one accident or
occurrence, which shall include provision for contractual liability coverage
insuring Tenant for the performance of its indemnity obligations set forth in
this Paragraph 8 and in Paragraph 6(g)(ii) of this Lease, (B) worker’s
compensation insurance to the statutory limit, if any, and employer’s liability
insurance to the limit of $1,000,000 per occurrence, (C) All Risk or special
purpose personal property insurance covering full replacement value of all of
Tenant’s personal property, trade fixtures and improvements in the Premises and
(D) flood insurance covering full replacement value of all of Tenant’s personal
property, trade fixtures and improvements in the Premises. Landlord and its
designated property management firm shall be named an additional insured on each
of said policies (excluding the worker’s compensation policy) and said policies
shall be issued by an insurance company or companies authorized to do business
in Arizona and which have policyholder ratings not lower than “A-” and financial
ratings not lower than “VII” in Best’s Insurance Guide (latest edition in effect
as of the Date of Lease and subsequently in effect as of the date of renewal of
the required policies). EACH OF SAID POLICIES SHALL ALSO INCLUDE A WAIVER OF
SUBROGATION PROVISION OR ENDORSEMENT IN FAVOR OF LANDLORD, AND AN ENDORSEMENT
PROVIDING THAT LANDLORD SHALL RECEIVE THIRTY (30) DAYS PRIOR WRITTEN NOTICE OF
ANY CANCELLATION OF, NONRENEWAL OF, REDUCTION OF COVERAGE OR MATERIAL CHANGE IN
COVERAGE ON SAID POLICIES. Tenant hereby waives its right of recovery against
any Landlord Indemnitee of any amounts paid by Tenant or on Tenant’s behalf to
satisfy applicable worker’s compensation laws. The policies or duly executed
certificates showing the material terms for the same, together with satisfactory
evidence of the payment of the premiums therefor, shall be deposited with
Landlord on the date Tenant first occupies the Premises and upon renewals of
such policies not less than fifteen (15) days prior to the expiration of the
term of such coverage. If certificates are supplied rather than the policies
themselves, Tenant shall allow Landlord, at all reasonable times, to inspect the
policies of insurance required herein.

 

(ii)       It is expressly understood and agreed that the coverages required
represent Landlord’s minimum requirements and such are not to be construed to
void or limit Tenant’s obligations contained in this Lease, including without
limitation Tenant’s indemnity obligations hereunder. Neither shall (A) the
insolvency, bankruptcy or failure of any insurance company carrying Tenant, (B)
the failure of any insurance company to pay claims occurring nor (C) any
exclusion from or insufficiency of coverage be held to affect, negate or waive
any of Tenant’s indemnity obligations under this Paragraph 8 and Paragraph
6(g)(ii) or any other provision of this Lease. With respect to insurance
coverages, except worker’s compensation, maintained hereunder by Tenant and
insurance coverages separately obtained by Landlord, all insurance coverages
afforded by policies of insurance maintained by Tenant shall be primary
insurance as such coverages apply to Landlord, and such insurance coverages
separately maintained by Landlord shall be excess, and Tenant shall have its
insurance policies so endorsed. The amount of liability insurance under
insurance policies maintained by Tenant shall not be reduced by the existence of
insurance coverage under policies separately maintained by Landlord. Tenant
shall be solely responsible for any premiums, assessments, penalties, deductible
assumptions, retentions, audits, retrospective adjustments or any other kind of
payment due under its policies.

 

(iii)       Tenant’s occupancy of the Premises without delivering the
certificates of insurance shall not constitute a waiver of Tenant’s obligations
to provide the required coverages. If Tenant provides to Landlord a certificate
that does not evidence the coverages required herein, or that is faulty in any
respect, such shall not constitute a waiver of Tenant’s obligations to provide
the proper insurance.

 

(iv)       Throughout the Lease Term, Landlord agrees to maintain: (i) fire and
extended coverage insurance on the insurable portions of Building and the
remainder of the Project in an amount not less than the fair replacement value
thereof, subject to reasonable deductibles; (ii) boiler and machinery insurance
amounts and with deductibles that would be considered standard for similar class
office building in Phoenix, Arizona metropolitan area; and (iii) commercial
general liability insurance with a combined single limit coverage of at least
$1,000,000.00 per occurrence. All such insurance shall be obtained from insurers
Landlord reasonably believes to be financially responsible in light of the risks
being insured. The premiums for any such insurance shall be a part of Operating
Costs.

 

(e)       Mutual Waivers of Recovery. Landlord, Tenant, and all parties claiming
under them, each mutually release and discharge each other from responsibility
for that portion of any loss or damage paid or reimbursed by an insurer of
Landlord or Tenant under any fire, extended coverage or other property insurance
policy maintained by Tenant with respect to its Premises or by Landlord with
respect to the Building or the Project (or which would have been paid had the
insurance required to be maintained hereunder been in full force and effect), no
matter how caused, including negligence, and each waives any right of recovery
from the other including, but not limited to, claims for contribution or
indemnity, which might otherwise exist on account thereof. Any fire, extended
coverage or property insurance policy maintained by Tenant with respect to the
Premises, or Landlord with respect to the Building or the Project, shall
contain, in the case of Tenant’s policies, a waiver of subrogation provision or
endorsement in favor of Landlord, and in the case of Landlord’s policies, a
waiver of subrogation provision or endorsement in favor of Tenant, or, in the
event that such insurers cannot or shall not include or attach such waiver of
subrogation provision or endorsement, Tenant and Landlord shall obtain the
approval and consent of their respective insurers, in writing, to the terms of
this Lease. Tenant agrees to indemnify, protect, defend and hold harmless each
and all of the Landlord Indemnitees from and against any claim, suit or cause of
action asserted or brought by Tenant’s insurers for, on behalf of, or in the
name of Tenant, including, but not limited to, claims for contribution,
indemnity or subrogation, brought in contravention of this paragraph. The mutual
releases, discharges and waivers contained in this provision shall apply EVEN IF
THE LOSS OR DAMAGE TO WHICH THIS PROVISION APPLIES IS CAUSED SOLELY OR IN PART
BY THE NEGLIGENCE OF LANDLORD OR TENANT.

 

 14 

 

 

(f)       Business Interruption. Landlord shall not be responsible for, and
Tenant releases and discharges Landlord from, and Tenant further waives any
right of recovery from Landlord for, any loss for or from business interruption
or loss of use of the Premises suffered by Tenant in connection with Tenant’s
use or occupancy of the Premises, EVEN IF SUCH LOSS IS CAUSED SOLELY OR IN PART
BY THE NEGLIGENCE OF LANDLORD.

 

(g)       Adjustment of Claims. Tenant shall cooperate with Landlord and
Landlord’s insurers in the adjustment of any insurance claim pertaining to the
Building or the Project or Landlord’s use thereof.

 

(h)       Increase in Landlord’s Insurance Costs. Tenant agrees to pay to
Landlord any increase in premiums for Landlord’s insurance policies resulting
from Tenant’s use or occupancy of the Premises.

 

(i)       Failure to Maintain Insurance. Any failure of Tenant to obtain and
maintain the insurance policies and coverages required hereunder or failure by
Tenant to meet any of the insurance requirements of this Lease shall constitute
an event of default hereunder, and such failure shall entitle Landlord to
pursue, exercise or obtain any of the remedies provided for in Paragraph 12(b),
and Tenant shall be solely responsible for any loss suffered by Landlord as a
result of such failure. In the event of failure by Tenant to maintain the
insurance policies and coverages required by this Lease or to meet any of the
insurance requirements of this Lease, Landlord, at its option, and without
relieving Tenant of its obligations hereunder, may obtain said insurance
policies and coverages or perform any other insurance obligation of Tenant, but
all costs and expenses incurred by Landlord in obtaining such insurance or
performing Tenant’s insurance obligations shall be reimbursed by Tenant to
Landlord, together with interest on same from the date any such cost or expense
was paid by Landlord until reimbursed by Tenant, at the rate of interest
provided to be paid on judgments, by the law of the jurisdiction to which the
interpretation of this Lease is subject.

 

9.FIRE OR CASUALTY

 

(a)       Subject to the provisions of this Paragraph 9, in the event the
Premises, or access thereto, is wholly or partially destroyed by fire or other
casualty, Landlord shall (to the extent permitted by Law and covenants,
conditions and restrictions then applicable to the Project) rebuild, repair or
restore the Premises and access thereto to substantially the same condition as
existing immediately prior to such destruction and this Lease shall continue in
full force and effect. Notwithstanding the foregoing: (i) Landlord’s obligation
to rebuild, repair or restore the Premises shall not apply to any personal
property, above-standard tenant improvements or other items installed or
contained in the Premises; and (ii) Landlord shall have no obligation whatsoever
to rebuild, repair or restore the Premises with respect to any damage or
destruction occurring during the last twelve (12) months of the term of this
Lease or any extension of the term.

 

(b)       Landlord may elect to terminate this Lease in any of the following
cases of damage or destruction to the Premises, the Building or the Project: (i)
where the cost of rebuilding, repairing and restoring (collectively,
“Restoration”) of the Building or the Project, would, regardless of the lack of
damage to the Premises or access thereto, in the reasonable opinion of Landlord,
exceed twenty percent (20%) of the then replacement cost of the Building; (ii)
where, in the case of any damage or destruction to any portion of the Building
or the Project by uninsured casualty, the cost of Restoration of the Building or
the Project, in the reasonable opinion of Landlord, exceeds $200,000; (iii)
where, in the case of any damage or destruction to the Premises or access
thereto by uninsured casualty, the cost of Restoration of the Premises or access
thereto, in the reasonable opinion of Landlord, exceeds twenty percent (20%) of
the replacement cost of the Premises; or (iv) if Landlord has not obtained
appropriate zoning approvals for reconstruction of the Project, Building or
Premises. Any such termination shall be made by thirty (30) days’ prior written
notice to Tenant given within ninety (90) days of the date of such damage or
destruction. If this Lease is not terminated by Landlord and as the result of
any damage or destruction, the Premises, or a portion thereof, are rendered
untenantable, the Basic Annual Rent shall abate reasonably during the period of
Restoration (based upon the extent to which such damage and Restoration
materially interfere with Tenant’s business in the Premises). This Lease shall
be considered an express agreement governing any case of damage to or
destruction of the Premises, the Building or the Project.

 

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10.EMINENT DOMAIN

 

In the event the whole of the Premises, the Building or the Project shall be
taken under the power of eminent domain, or sold to prevent the exercise thereof
(collectively, a “Taking”), this Lease shall automatically terminate as of the
date of such Taking. In the event a Taking of a portion of the Project, the
Building or the Premises shall, in the reasonable opinion of Landlord,
substantially interfere with Landlord’s operation thereof, Landlord may
terminate this Lease upon thirty (30) days’ written notice to Tenant given at
any time within sixty (60) days following the date of such Taking. For purposes
of this Lease, the date of Taking shall be the earlier of the date of transfer
of title resulting from such Taking or the date of transfer of possession
resulting from such Taking. In the event that a portion of the Premises is so
taken and this Lease is not terminated, Landlord shall, with reasonable
diligence, use commercially reasonable efforts to proceed to restore (to the
extent permitted by Law and covenants, conditions and restrictions then
applicable to the Project) the Premises (other than Tenant’s personal property
and fixtures, and above-standard tenant improvements) to a complete, functioning
unit. In such case, the Basic Annual Rent shall be reduced proportionately based
on the portion of the Premises so taken. If all or any portion of the Premises
is the subject of a temporary Taking, this Lease shall remain in full force and
effect and Tenant shall continue to perform each of its obligations under this
Lease; in such case, Tenant shall be entitled to receive the entire award
allocable to the temporary Taking of the Premises. Except as provided herein,
Tenant shall not assert any claim against Landlord or the condemning authority
for, and hereby assigns to Landlord, any compensation in connection with any
such Taking, and Landlord shall be entitled to receive the entire amount of any
award therefor, without deduction for any estate or interest of Tenant. Nothing
contained in this Paragraph 10 shall be deemed to give Landlord any interest in,
or prevent Tenant from seeking any award against the condemning authority for
the Taking of personal property, fixtures, above standard tenant improvements of
Tenant or for relocation or moving expenses recoverable by Tenant from the
condemning authority. This Paragraph 10 shall be Tenant’s sole and exclusive
remedy in the event of a Taking.

 

11.ASSIGNMENT AND SUBLETTING

 

(a)       Tenant shall not directly or indirectly, voluntarily or involuntarily,
by operation of law or otherwise, assign, sublet, mortgage, hypothecate or
otherwise encumber all or any portion of its interest in this Lease or in the
Premises or grant any license in or suffer any person other than Tenant or its
employees to use or occupy the Premises or any part thereof without obtaining
the prior written consent of Landlord, which consent may be conditioned or
withheld in Landlord’s sole discretion. Any such attempted assignment,
subletting, license, mortgage, hypothecation, other encumbrance or other use or
occupancy without the consent of Landlord shall be null and void and of no
effect. Any mortgage, hypothecation or encumbrance of all or any portion of
Tenant’s interest in this Lease or in the Premises and any grant of a license or
sufferance of any person other than Tenant or its employees to use or occupy the
Premises or any part thereof shall be deemed to be an “assignment” of this
Lease. In addition, as used in this Paragraph 11, the term “Tenant” shall also
mean any entity that has guaranteed Tenant’s obligations under this Lease, and
the restrictions applicable to Tenant contained herein shall also be applicable
to such guarantor. Landlord’s agreement to not unreasonably withhold its consent
shall only apply to the first assignment or sublease under the Lease.

 

(b)       No permitted assignment or subletting shall relieve Tenant of its
obligation to pay the Rent and to perform all of the other obligations to be
performed by Tenant hereunder. The acceptance of Rent by Landlord from any other
person shall not be deemed to be a waiver by Landlord of any provision of this
Lease or to be a consent to any subletting or assignment. Consent by Landlord to
one subletting or assignment shall not be deemed to constitute a consent to any
other or subsequent attempted subletting or assignment. If Tenant desires at any
time to assign this Lease or to sublet the Premises or any portion thereof, it
shall first notify Landlord of its desire to do so and shall submit in writing
to Landlord all pertinent information relating to the proposed assignee or
sublessee, all pertinent information relating to the proposed assignment or
sublease, and all such financial information as Landlord may reasonably request
concerning the proposed assignee or subtenant. Any approved assignment or
sublease shall be expressly subject to the terms and conditions of this Lease.

 

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(c)       At any time within thirty (30) days after Landlord’s receipt of the
information specified in subparagraph (b) above, Landlord may by written notice
to Tenant elect to terminate this Lease as to the portion of the Premises so
proposed to be subleased or assigned (which may include all of the Premises),
with a proportionate abatement in the Rent payable hereunder, and may in
addition elect to recapture such Premises and re-lease such Premises to such
proposed assignee or sublessee directly at a rental rate and on terms reasonably
consistent with space reasonably similar to such Premises in the surrounding
area.

 

(d)       [intentionally omitted]

 

(e)       Notwithstanding any assignment or subletting, Tenant and any guarantor
or surety of Tenant’s obligations under this Lease shall at all times during the
initial term and any subsequent renewals or extensions remain fully responsible
and liable for the payment of the rent and for compliance with all of Tenant’s
other obligations under this Lease. In the event that the Rent due and payable
by a sublessee or assignee (or a combination of the rental payable under such
sublease or assignment, plus any bonus or other consideration therefor or
incident thereto) exceeds the Rent payable under this Lease, then Tenant shall
be bound and obligated to pay Landlord, as additional rent hereunder, all such
excess Rent and other excess consideration within ten (10) days following
receipt thereof by Tenant.

 

(f)       If this Lease is assigned or if the Premises is subleased (whether in
whole or in part), or in the event of the mortgage, pledge, or hypothecation of
Tenant’s leasehold interest, or grant of any concession or license within the
Premises, or if the Premises are occupied in whole or in part by anyone other
than Tenant, then upon a default by Tenant hereunder Landlord may collect Rent
from the assignee, sublessee, mortgagee, pledgee, party to whom the leasehold
interest was hypothecated, concessionee or licensee or other occupant and,
except to the extent set forth in the preceding paragraph, apply the amount
collected to the next Rent payable hereunder; and all such Rent collected by
Tenant shall be held in deposit for Landlord and immediately forwarded to
Landlord. No such transaction or collection of Rent or application thereof by
Landlord, however, shall be deemed a waiver of these provisions or a release of
Tenant from the further performance by Tenant of its covenants, duties, or
obligations hereunder.

 

(g)       Should Tenant request of Landlord the right to assign or sublet,
Landlord shall charge Tenant One Thousand Five Hundred and No/100 Dollars
($1,500.00) as an administration fee.

 

(h)       Notwithstanding any provision of this Lease to the contrary, in the
event this Lease is assigned to any person or entity pursuant to the provisions
of the Bankruptcy Code, any and all monies or other consideration payable or
otherwise to be delivered in connection with such assignment shall be paid or
delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute the property of Tenant or Tenant’s estate within the
meaning of the Bankruptcy Code. All such money and other consideration not paid
or delivered to Landlord shall be held in trust for the benefit of Landlord and
shall be promptly paid or delivered to Landlord.

 

12.DEFAULT

 

(a)       Events of Default. The following events shall be deemed to be events
of default (herein so called) by Tenant under this Lease: (i) Tenant shall fail
to pay Rent or any other rental or sums payable by Tenant hereunder when due;
(ii) Tenant shall fail to comply with or observe any other provision of this
Lease and such failure shall continue for ten (10) days after written notice to
Tenant (or, in the case of Tenant’s failure to comply with or observe any other
single provision of this Lease more than two (2) times during the Lease Term,
upon the occurrence of the third and all subsequent such failures, without
notice from Landlord); (iii) Tenant or any guarantor of Tenant’s obligations
hereunder shall make a general assignment for the benefit of creditors; (iv) any
petition shall be filed by or against Tenant or any guarantor of Tenant’s
obligations hereunder under the United States Bankruptcy Code, as amended, or
under any similar law or statute of the United States or any state thereof, and
such petition shall not be dismissed within sixty (60) days of filing, or Tenant
or any guarantor of Tenant’s obligations hereunder shall be adjudged bankrupt or
insolvent in proceedings filed thereunder; (v) a receiver or trustee shall be
appointed for all or substantially all of the assets of Tenant or any guarantor
of Tenant’s obligations hereunder, and such appointment shall not be vacated or
otherwise terminated, and the action in which such appointment was ordered
dismissed, within sixty (60) days of filing; (vi) Tenant shall fail to take
possession of or shall desert, abandon or vacate the Premises; (vii) the death
of any guarantor; or (viii) the occurrence of an event described in clause (iv)
or (v) of this Paragraph (without regard to any cure periods contained therein),
and the failure thereafter of Tenant (A) to timely and fully make any payment of
Rent or any other sum of money due hereunder or (B) to perform or observe any
other covenant, condition or agreement to be performed or observed by it
hereunder.

 

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(b)       Remedies. Upon the occurrence of any event of default specified in
this Lease, Landlord shall have the option to pursue any (i) one or more of the
following remedies without any notice or demand whatsoever and without releasing
Tenant from any obligation under this Lease; or (ii) other remedy offered
Landlord in law or in equity:

 

(i)       Landlord may enter the Premises without terminating this Lease and
perform any covenant or agreement or cure any condition creating or giving rise
to an event of default under this Lease and Tenant shall pay to Landlord on
demand, as additional rent, the amount expended by Landlord in performing such
covenants or agreements or satisfying or observing such condition. Landlord, or
its agents or employees, shall have the right to enter the Premises, and such
entry and such performance shall not terminate this Lease or constitute an
eviction of Tenant.

 

(ii)       Landlord may terminate this Lease by written notice to Tenant (and
not otherwise) or Landlord may terminate Tenant’s right of possession without
terminating this Lease. In either of such events Tenant shall surrender
possession of and vacate the Premises immediately and deliver possession thereof
to Landlord, and Tenant hereby grants to Landlord full and free license to enter
the Premises, in whole or in part, with or without process of law and to expel
or remove Tenant and any other person, firm or entity who may be occupying the
Premises or any part thereof and remove any and all property therefrom, using
such lawful force as may be necessary.

 

(iii)       In the event Landlord elects to re-enter or take possession of the
Premises after Tenant’s default, with or without terminating this Lease,
Landlord may change locks or alter security devices and lock out, expel or
remove Tenant and any other person who may be occupying all or any part of the
Premises without being liable for any claim for damages.

 

(iv)       Notwithstanding anything herein to the contrary, if Landlord
terminates Tenant’s right to possession without terminating this Lease after an
event of default, Landlord shall, if required by State law, use commercially
reasonable efforts to relet the Premises and mitigate damage as set forth in
Paragraph 12(c) below.

 

(v)       Notwithstanding any prior election by Landlord to not terminate this
Lease, Landlord may at any time, including subsequent to any re-entry or taking
of possession of the Premises as allowed hereinabove, elect to terminate this
Lease. Tenant shall be liable for and shall immediately pay to Landlord the
amount of all Basic Annual Rent and other sums of money due under this Lease as
may have accrued as of the date of termination. Tenant shall also immediately
pay to Landlord, as agreed and liquidated damages, an amount of money equal to
the Basic Annual Rent and other amounts due for the remaining portion of the
Lease Term (had such term not been terminated by Landlord prior to the
expiration of the Lease Term), less the fair rental value of the Premises for
the residue of the Lease Term, both discounted to their present value based upon
an interest rate of eight percent (8%) per annum. In determining fair rental
value, Landlord shall be entitled to take into account the time and expenses
necessary to obtain a replacement tenant or tenants, including lost rental
revenues and anticipated expenses hereinafter described relating to recovery,
preparation and reletting of the Premises. If Landlord elects to relet the
Premises, or any portion thereof, before presentation of proof of such
liquidated damages, the amount of rent reserved upon such reletting shall be
deemed prima facie evidence of the fair rental value of the portion of the
Premises so relet.

 

Landlord and Tenant agree that because of the difficulty or impossibility of
determining Landlord’s damages from the loss of anticipated Additional Rent and
other lease charges from the Tenant, there shall be included as a component of
Tenant’s annual total rent obligation (for the calculation of Landlord’s
remedies), an amount equal to the average monthly Additional Rent paid by Tenant
for the twelve (12) full calendar months immediately preceding the event of
default (or such lesser period of the term if the event of default occurs prior
to the twelfth (12th) full calendar month of the term) multiplied by the number
of months remaining in the Lease Term.

 

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(vi)       In addition to any sum provided to be paid above, Tenant shall also
be liable for and shall immediately pay to Landlord all broker’s fees incurred
by Landlord in connection with any reletting of the whole or any part of the
Premises, the costs of removing and storing Tenant’s or any other occupant’s
property, the cost of repairing, altering, remodeling, renovating or otherwise
putting the Premises into a condition acceptable to a new tenant or tenants, the
cost of removal and replacement of Tenant’s signage and all reasonable expenses
by Landlord in enforcing Landlord’s remedies, including reasonable attorneys’
fees.

 

(vii) Landlord may apply Tenant’s Security Deposit to the extent necessary to
make good any rent arrearage, to pay the cost of remedying Tenant’s default or
to reimburse Landlord for expenditures made or damages suffered as a consequence
of Tenant’s default, without prejudice to any other remedies Landlord may have
under this Lease. Following any such application of the Security Deposit, Tenant
shall pay to Landlord on demand the amount so applied in order to restore the
Security Deposit to its original amount.

 

(viii)       In addition to any remedy described herein, Landlord may recapture
any and all concessions, awards, credits, free rent, rent abatements or similar
benefits conferred upon Tenant.

 

(c)       Mitigation of Damages.

 

(i)       In the event of a default under the Lease, Landlord and Tenant shall
each use commercially reasonable efforts to mitigate any damages resulting from
a default of the other party under this Lease.

 

(ii)       Landlord’s obligation to mitigate damages after a default by Tenant
shall be satisfied in full if Landlord undertakes to lease the Premises to
another tenant (a “Substitute Tenant”) in accordance with the following
criteria:

 

(A)       Landlord shall have no obligation to solicit or entertain negotiations
with any other prospective tenant for the Premises until Landlord obtains full
and complete possession of the Premises including, without limitation, the final
and unappealable legal right to relet the Premises free of any claim of Tenant.

 

(B)       Landlord shall not be obligated to offer the Premises to a Substitute
Tenant when other premises in the Project suitable for that prospective tenant’s
use are (or soon will be) available.

 

(C)       Landlord shall not be obligated to lease the Premises to a Substitute
Tenant for a rental less than the current fair market rental then prevailing for
similar space, nor shall Landlord be obligated to enter into a new lease under
other terms and conditions that are unacceptable to Landlord under Landlord’s
then current leasing policies for comparable space.

 

(D)       Landlord shall not be obligated to enter into a lease with any
proposed tenant whose use would:

 

a.       Disrupt the tenant mix or balance of the Project;

 

b.       Violate any restriction, covenant, or requirement contained in the
lease of another tenant of the Project;

 

c.       Adversely affect the reputation of the Project; or

 

d.       Be incompatible with the operation of the Project.

 

(E)       Landlord shall not be obligated to enter into a lease with any
proposed Substitute Tenant (a “Substitute Lease”) which does not have, in
Landlord’s reasonable opinion, sufficient financial resources or operating
experience to operate the Premises in a first-class manner.

 

 19 

 

 

(F)       Landlord shall not be required to expend any amount of money to alter,
remodel, or otherwise make the Premises suitable for use by a proposed
Substitute Tenant unless:

 

a.       Tenant pays any such sum to Landlord in advance of Landlord’s execution
of a Substitute Lease with such Substitute Tenant (which payment shall not be in
lieu of any damages or other sums to which Landlord may be entitled as a result
of Tenant’s default under this Lease); or

 

b.       Landlord, in Landlord’s sole discretion, determines that any such
expenditure is financially justified in connection with entering into any such
Substitute Lease.

 

(iii)       Upon compliance with the above criteria regarding the releasing of
the Premises after a default by Tenant, Landlord shall be deemed to have fully
satisfied Landlord’s obligation to mitigate damages under this Lease and under
any law or judicial ruling in effect on the date of this Lease or at the time of
Tenant’s default, and Tenant waives and releases, to the fullest extent legally
permissible, any right to assert in any action by Landlord to enforce the terms
of this Lease, any defense, counterclaim, or rights of setoff or recoupment
respecting the mitigation of damages by Landlord, unless and to the extent
Landlord maliciously or in bad faith fails to act in accordance with the
requirements of this Paragraph 12(c).

 

(iv)       Tenant’s right to seek damages from Landlord as a result of a default
by Landlord under this Lease shall be conditioned on Tenant taking all actions
reasonably required, under the circumstances, to minimize any loss or damage to
Tenant’s property or business, or to any of Tenant’s officers, employees,
agents, invitees, or other third parties that may be caused by any such default
of Landlord.

 

(d)       Effect of Suit or Partial Collection. Institution of a forcible
detainer action to re-enter the Premises shall not be construed to be an
election by Landlord to terminate this Lease. Landlord may collect and receive
any Rent due from Tenant and the payment thereof shall not constitute a waiver
of or affect any notice or demand given, suit instituted or judgment obtained by
Landlord, or be held to waive or alter the rights or remedies which Landlord may
have at law or in equity or by virtue of this Lease at the time of such payment.

 

(e)       Remedies Cumulative. All rights and remedies of Landlord herein or
existing at law or in equity are cumulative and the exercise of one or more
rights or remedies shall not be taken to exclude or waive the right to the
exercise of any other.

 

(f)       Late Payment Charge and Interest Payable. Landlord may, without
further notice to Tenant, impose a late payment charge equal to five percent
(5%) of any amount due if any amount due under this Lease is not paid within
five (5) days from the date required to be paid hereunder. In addition, any
payment due under this Lease not paid within ten (10) days after the date herein
specified to be paid shall bear interest from the date such payment is due to
the date of actual payment at the rate of eighteen percent (18%) per annum or
the highest lawful rate of interest permitted by Arizona or federal law,
whichever rate of interest is lower.

 

(g)       Cashier’s Check. If Tenant fails to timely make two (2) consecutive
payments of Basic Annual Rent or any two (2) such payments are returned for
insufficient funds, then, in addition to any other remedy Landlord may have,
Landlord may require that all future payments be made by cashier’s check or
money order.

 

(h)       No Counterclaim by Tenant. If Landlord commences any proceedings for
nonpayment of rent or other charges payable by Tenant under this Lease, Tenant
agrees it will not interpose any counterclaim of any nature or description in
any such proceedings. This shall not, however, be construed as a waiver of the
Tenant’s right to assert such claims in any separate action or actions brought
by the Tenant.

 

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13.ACCESS; CONSTRUCTION

 

Landlord reserves the right to use the roof and exterior walls of the Premises
and the area beneath, adjacent to and above the Premises, together with the
right to install, use, maintain, repair, replace and relocate equipment,
machinery, meters, pipes, ducts, plumbing, conduits and wiring through the
Premises, which serve other portions of the Building or the Project in a manner
and in locations which do not unreasonably interfere with Tenant’s use of the
Premises. In addition, Landlord shall have free access to any and all mechanical
installations of Landlord or Tenant, including, without limitation, machine
rooms, telephone rooms and electrical closets. Tenant agrees that there shall be
no construction of partitions or other obstructions which materially interfere
with or which threaten to materially interfere with Landlord’s free access
thereto, or materially interfere with the moving of Landlord’s equipment to or
from the enclosures containing said installations. Upon at least twenty-four
(24) hours’ prior notice (except in the event of an emergency, when no notice
shall be necessary), Landlord reserves and shall at any time and all times have
the right to enter the Premises to inspect the same, to supply janitorial
service and any other service to be provided by Landlord to Tenant hereunder, to
exhibit the Premises to prospective purchasers, lenders or tenants, to post
notices of non-responsibility, to alter, improve, restore, rebuild or repair the
Premises or any other portion of the Building, or to do any other act permitted
or contemplated to be done by Landlord hereunder, all without being deemed
guilty of an eviction of Tenant and without liability for abatement of Rent or
otherwise. For such purposes, Landlord may also erect scaffolding and other
necessary structures where reasonably required by the character of the work to
be performed. Landlord shall conduct all such inspections and/or improvements,
alterations and repairs so as to minimize, to the extent reasonably practical
and without additional expense to Landlord, any interruption of or interference
with the business of Tenant. 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
thereby. For each of such purposes, Landlord shall at all times have and retain
a key with which to unlock all of the doors in, upon and about the Premises
(excluding Tenant’s vaults and safes, access to which shall be provided by
Tenant upon Landlord’s reasonable request). Landlord shall have the right to use
any and all means which Landlord may deem proper in an emergency in order to
obtain entry to the Premises or any portion thereof, and Landlord shall have the
right, at any time during the Lease Term, to provide whatever access control
measures it deems reasonably necessary to the Project, without any interruption
or abatement in the payment of Rent by Tenant. Any entry into the Premises
obtained by Landlord by any of such means shall not under any circumstances be
construed to be a forcible or unlawful entry into, or a detainer of, the
Premises, or any eviction of Tenant from the Premises or any portion thereof. No
provision of this Lease shall be construed as obligating Landlord to perform any
repairs, Alterations or decorations to the Premises or the Project except as
otherwise expressly agreed to be performed by Landlord pursuant to the
provisions of this Lease.

 

14.BANKRUPTCY

 

(a)       If at any time on or before the Commencement Date there shall be filed
by or against Tenant in any court, tribunal, administrative agency or any other
forum having jurisdiction, pursuant to any applicable law, either of the United
States or of any state, a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver, trustee or conservator of
all or a portion of Tenant’s property, or if Tenant makes an assignment for the
benefit of creditors, this Lease shall ipso facto be canceled and terminated and
in such event neither Tenant nor any person claiming through or under Tenant or
by virtue of any applicable law or by an order of any court, tribunal,
administrative agency or any other forum having jurisdiction, shall be entitled
to possession of the Premises and Landlord, in addition to the other rights and
remedies given by Paragraph 12 hereof or by virtue of any other provision
contained in this Lease or by virtue of any applicable law, may retain as
damages any Rent, Security Deposit or moneys received by it from Tenant or
others on behalf of Tenant.

 

(b)       If, after the Commencement Date, or if at any time during the term of
this Lease, there shall be filed against Tenant in any court, tribunal,
administrative agency or any other forum having jurisdiction, pursuant to any
applicable law, either of the United States or of any state, a petition in
bankruptcy or insolvency or for reorganization or for the appointment of a
receiver, trustee or conservator of all or a portion of Tenant’s property, and
the same is not dismissed after sixty (60) calendar days, or if Tenant makes an
assignment for the benefit of creditors, this Lease, at the option of Landlord
exercised within a reasonable time after notice of the happening of any one or
more of such events, may be canceled and terminated and in such event neither
Tenant nor any person claiming through or under Tenant or by virtue of any
statute or of an order of any court shall be entitled to possession or to remain
in possession of the Premises, but shall forthwith quit and surrender the
Premises, and Landlord, in addition to the other rights and remedies granted by
Paragraph 12 hereof or by virtue of any other provision contained in this Lease
or by virtue of any applicable law, may retain as damages any Rent, Security
Deposit or moneys received by it from Tenant or others on behalf of Tenant.

 

 21 

 

 

(c)       In the event of the occurrence of any of those events specified in
this Paragraph 14, if Landlord shall not choose to exercise, or by applicable
law, shall not be able to exercise, its rights hereunder to terminate this Lease
upon the occurrence of such events, then, in addition to any other rights of
Landlord hereunder or by virtue of applicable law, (i) Landlord shall not be
obligated to provide Tenant with any of the utilities or services specified in
Paragraph 7, unless Landlord has received compensation in advance for such
utilities or services, and the parties agree that Landlord’s reasonable estimate
of the compensation required with respect to such services shall control, and
(ii) neither Tenant, as debtor-in-possession, nor any trustee or other person
(hereinafter collectively referred to as the “Assuming Tenant”) shall be
entitled to assume this Lease unless on or before the date of such assumption,
the Assuming Tenant (x) cures, or provides adequate assurance that the latter
will promptly cure, any existing default under this Lease, (y) compensates, or
provides adequate assurance that the Assuming Tenant will promptly compensate
Landlord for any pecuniary loss (including, without limitation, attorneys’ fees
and disbursements) resulting from such default, and (z) provides adequate
assurance of future performance under this Lease, it being covenanted and agreed
by the parties that, for such purposes, any cure or compensation shall be
effected by the immediate payment of any monetary default or any required
compensation, or the immediate correction or bonding of any nonmonetary default.
For purposes of this Lease, (i) any “adequate assurance” of such cure or
compensation shall be effected by the establishment of an escrow fund for the
amount at issue or by the issuance of a bond, and (ii) “adequate assurance” of
future performance shall be effected by the establishment of an escrow fund for
the amount at issue or by the issuance of a bond.

 

15.SUBSTITUTION OF PREMISES

 

Subject to the conditions specified in this Paragraph 15, Landlord reserves the
right without Tenant’s consent, on thirty (30) days’ prior written notice to
Tenant, to substitute other premises within the Project for the Premises. In
each such case, the substituted premises shall (a) contain at least the same
Rentable Area as the Premises, (b) contain comparable tenant improvements, and
(c) be made available to Tenant at the then current rental rate for such space,
which in no event, shall exceed the per square foot rental rate in effect at the
time of such substitution. Landlord shall pay all reasonable moving expenses of
Tenant incidental to such substitution of premises.

 

16.SUBORDINATION; ATTORNMENT; ESTOPPEL CERTIFICATES

 

(a)       Tenant agrees that this Lease and the rights of Tenant hereunder shall
be subject and subordinate to any and all deeds of trust, security interests,
mortgages, master leases, ground leases or other security documents and any and
all modifications, renewals, extensions, consolidations and replacements thereof
(collectively, “Security Documents”) which now or hereafter constitute a lien
upon or affect the Project, the Building or the Premises. Such subordination
shall be effective without the necessity of the execution by Tenant of any
additional document for the purpose of evidencing or effecting such
subordination. In addition, Landlord shall have the right to subordinate or
cause to be subordinated any such Security Documents to this Lease and in such
case, in the event of the termination or transfer of Landlord’s estate or
interest in the Project by reason of any termination or foreclosure of any such
Security Documents, Tenant shall, notwithstanding such subordination, attorn to
and become the Tenant of the successor in interest to Landlord at the option of
such successor in interest. Furthermore, Tenant shall within fifteen (15) days
of demand therefor execute any instruments or other documents which may be
required by Landlord or the holder of any Security Document and specifically
shall execute, acknowledge and deliver within fifteen (15) days of demand
therefor a subordination of lease or subordination of deed of trust, in the form
required by the holder of the Security Document requesting the document; the
failure to do so by Tenant within such time period shall be a material default
hereunder; provided, however, the new landlord or the holder of any Security
Document shall agree that Tenant’s quiet enjoyment of the Premises shall not be
disturbed as long as Tenant is not in default under this Lease.

 

(b)       If any proceeding is brought for default under any ground or master
lease to which this Lease is subject or in the event of foreclosure or the
exercise of the power of sale under any mortgage, deed of trust or other
Security Document made by Landlord covering the Premises, at the election of
such ground lessor, master lessor or purchaser at foreclosure, Tenant shall
attorn to and recognize the same as Landlord under this Lease, provided such
successor expressly agrees in writing to be bound to all future obligations by
the terms of this Lease, and if so requested, Tenant shall enter into a new
lease with that successor on the same terms and conditions as are contained in
this Lease (for the unexpired term of this Lease then remaining).

 

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(c)       In addition to any statutory lien for Rent in Landlord’s favor
(including the provisions of Arizona Revised Statutes § 33-362), Landlord (the
secured party for purposes hereof) shall have and Tenant (the debtor for
purposes hereof) hereby grants to Landlord, an express contract lien and a
continuing security interest to secure the payment of all Rent due hereunder
from Tenant, upon all goods, wares, equipment, fixtures, furniture, inventory
and other personal property of Tenant (and any transferees or other occupants of
the Premises) presently or hereafter situated on the Premises and upon all
proceeds of any insurance which may accrue to Tenant by reason of damage or
destruction of any such property. In the event of a default under this Lease,
Landlord shall have, in addition to any other remedies provided herein or by
law, all rights and remedies under the Uniform Commercial Code of the state in
which the Premises is located, including without limitation the right to sell
the property described in this paragraph at public or private sale upon ten (10)
days’ notice to Tenant, which notice Tenant hereby agrees is adequate and
reasonable. Tenant hereby agrees to execute such other instruments necessary or
desirable in Landlord’s discretion to perfect the security interest hereby
created. Any statutory lien for Rent is not hereby waived, the express
contractual lien herein granted being in addition and supplementary thereto.
Landlord and Tenant agree that this Lease and the security interest granted
herein serve as a financing statement, and a copy or photographic or other
reproduction of this paragraph of this Lease may be filed of record by Landlord
and have the same force and effect as the original. Tenant warrants and
represents that the collateral subject to the security interest granted herein
is not purchased or used by Tenant for personal, family or household purposes.
Tenant further warrants and represents to Landlord that the lien granted herein
constitutes a first and superior lien and that Tenant will not allow the placing
of any other lien upon any of the property described in this paragraph without
the prior written consent of Landlord.

 

(d)       Tenant shall, upon not less than fifteen (15) days’ prior notice by
Landlord, execute, acknowledge and deliver to Landlord a statement in writing
certifying to those facts for which certification has been requested by Landlord
or any current or prospective purchaser, holder of any Security Document, ground
lessor or master lessor, including, but without limitation, that (i) 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), (ii) the dates to which the Basic Annual Rent, Additional Rent
and other charges hereunder have been paid, if any, and (iii) whether or not to
the best knowledge of Tenant, Landlord is in default in the performance of any
covenant, agreement or condition contained in this Lease and, if so, specifying
each such default of which Tenant may have knowledge. The form of the statement
attached hereto as Exhibit E is hereby approved by Tenant for use pursuant to
this subparagraph (d); however, at Landlord’s option, Landlord shall have the
right to use other forms for such purpose. Tenant’s failure to execute and
deliver such statement within such time shall, at the option of Landlord,
constitute a material default under this Lease and, in any event, shall be
conclusive upon Tenant that this Lease is in full force and effect without
modification except as may be represented by Landlord in any such certificate
prepared by Landlord and delivered to Tenant for execution. Any statement
delivered pursuant to this Paragraph 16 may be relied upon by any prospective
purchaser of the fee of the Building or the Project or any mortgagee, ground
lessor or other like encumbrancer thereof or any assignee of any such
encumbrance upon the Building or the Project.

 

17.SALE BY LANDLORD; TENANT’S REMEDIES; NONRECOURSE LIABILITY

 

(a)       In the event of a sale or conveyance by Landlord of the Building or
the Project, Landlord shall be released from any and all liability under this
Lease. If the Security Deposit has been made by Tenant prior to such sale or
conveyance, Landlord shall transfer the Security Deposit to the purchaser, and
upon delivery to Tenant of notice thereof, Landlord shall be discharged from any
further liability in reference thereto. Anything to the contrary in this Lease
notwithstanding, in the event Landlord enters into an agreement for the sale of
the Building or any portion thereof and a condition precedent to the sale is the
termination of this Lease, Landlord may terminate this Lease upon Ninety (90)
days’ prior written notice to Tenant and this Lease shall be deemed terminated
upon the termination date set forth in such notice. Tenant acknowledges and
agrees that the termination right set forth in the immediately preceding
sentence is a material consideration and condition precedent to Landlord
entering into this Lease and Landlord’s obligations hereunder, and that Landlord
would not have entered into this Lease without such right.

 

(b)       Landlord shall not be in default of any obligation of Landlord
hereunder unless Landlord fails to perform any of its obligations under this
Lease within thirty (30) days after receipt of written notice of such failure
from Tenant; provided, however, that if the nature of Landlord’s obligation is
such that more than thirty (30) days are required for its performance, Landlord
shall not be in default if Landlord commences to cure such default within the
thirty (30) day period and thereafter diligently prosecutes the same to
completion. All obligations of Landlord under this Lease will be binding upon
Landlord only during the period of its ownership of the Premises and not
thereafter. All obligations of Landlord hereunder shall be construed as
covenants, not conditions; and, except as may be otherwise expressly provided in
this Lease, Tenant may not terminate this Lease for breach of Landlord’s
obligations hereunder.

 

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(c)       Any liability of Landlord for a default by Landlord under this Lease,
or a breach by Landlord of any of its obligations under the Lease, shall be
limited solely to its interest in the Project, and in no event shall any
personal liability be asserted against Landlord and/or any Landlord Indemnitee
in connection with this Lease nor shall any recourse be had to any other
property or assets of Landlord. Tenant’s sole and exclusive remedy for a default
or breach of this Lease by Landlord shall be either (i) an action for damages,
or (ii) an action for injunctive relief; Tenant hereby waiving and agreeing that
Tenant shall have no offset rights or right to terminate this Lease on account
of any breach or default by Landlord under this Lease. Under no circumstances
whatsoever shall Landlord ever be liable for punitive, consequential or special
damages or loss of profits under this Lease and Tenant waives any rights it may
have to such damages under this Lease in the event of a breach or default by
Landlord under this Lease.

 

(d)       As a condition to the effectiveness of any notice of default given by
Tenant to Landlord, Tenant shall also concurrently give such notice under the
provisions of Paragraph 17(b) to each beneficiary under a Security Document
encumbering the Project of whom Tenant has received written notice (such notice
to specify the address of the beneficiary). In the event Landlord shall fail to
cure any breach or default within the time period specified in subparagraph (b),
then prior to the pursuit of any remedy therefor by Tenant, each such
beneficiary shall have an additional thirty (30) days within which to cure such
default, or if such default cannot reasonably be cured within such period, then
each such beneficiary shall have such additional time as shall be necessary to
cure such default, provided that within such thirty (30) day period, such
beneficiary has commenced and is diligently pursuing the remedies available to
it which are necessary to cure such default (including, without limitation, as
appropriate, commencement of foreclosure proceedings).

 

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18.PARKING; COMMON AREAS

 

(a)       Provided Tenant is not in default under this Lease, and provided
further that Tenant pays all Parking Fees, plus tax and other related charges,
and provided further that Tenant complies with and abides by any parking rules
and regulations from time to time in effect, Tenant shall have a license to park
not more than the number of parking spaces located in the parking areas of the
Project specified in Item 14 of the Basic Lease Provisions (which is based on a
maximum parking ratio of approximately one (1) covered parking space(s) per
1,000 square feet of Rentable Area of the Premises) for the parking of
operational motor vehicles used by Tenant, its officers and employees only. The
total covered parking spaces allocated of no more than 2 spaces (“Covered
Reserved Spaces”) shall be in reserved, covered spaces in the areas provided and
designated by Landlord from time to time. Notwithstanding anything to the
contrary in this Paragraph, provided that Landlord, in its sole discretion, will
consider Tenant’s request to utilize up to 1 additional Covered Reserved Spaces
on a month-to-month basis at the rate of $50.00 per stall per month. Tenant
shall pay a monthly fee at the rate of $50.00 per space per month (“Parking
Fees”) for each Covered Reserved Parking Space. All Parking Fees shall be
payable, in advance and without demand, together with each monthly installment
of Basic Annual Rent. Landlord reserves the right, at any time upon written
notice to Tenant, to designate the location of Tenant’s parking spaces as
determined by Landlord in its reasonable discretion. The use of such spaces
shall be subject to the rules and regulations adopted by Landlord from time to
time for the use of the parking areas. Landlord further reserves the right to
make such changes to the parking system as Landlord may deem necessary or
reasonable from time to time; i.e., Landlord may provide for one or a
combination of parking systems, including, without limitation, self-parking,
single or double stall parking spaces, and valet assisted parking. Tenant shall
pay such reasonable amounts as may be charged by Landlord to Tenant for such
right of use from time to time. Tenant agrees that Tenant, its officers and
employees shall not be entitled to park in any reserved or specially assigned
areas designated by Landlord from time to time in the Project’s parking areas.
Landlord may require execution of an agreement with respect to the use of such
parking areas by Tenant and/or its officers and employees in form satisfactory
to Landlord as a condition of any such use by Tenant, its officers and
employees. A default by Tenant, its officers or employees in the payment of such
charges, the compliance with such rules and regulations, or the performance of
such agreement(s) shall constitute a material default by Tenant hereunder.
Tenant shall not permit or allow any vehicles that belong to or are controlled
by Tenant or Tenant’s officers, employees, suppliers, shippers, customers or
invitees to be loaded, unloaded or parked in areas other than those designated
by Landlord for such activities. If Tenant permits or allows any of the
prohibited activities described in this Paragraph, then Landlord shall have the
right, without notice, in addition to such other rights and remedies that it may
have, to remove or tow away the vehicle involved and charge the cost to Tenant,
which cost shall be immediately payable upon demand by Landlord. Subject to
subparagraph (c) below and the remaining provisions of this Lease, Tenant shall
have the nonexclusive right, in common with others, to the use of such
entrances, lobbies, restrooms, elevators, ramps, drives, stairs, and similar
access ways and service ways and other common areas and facilities in and
adjacent to the Building and the Project as are designated from time to time by
Landlord for the general nonexclusive use of Landlord, Tenant and the other
tenants of the Project and their respective employees, agents, representatives,
licensees and invitees (“Common Areas”). The use of such Common Areas shall be
subject to the rules and regulations contained herein and the provisions of any
covenants, conditions and restrictions affecting the Building or the Project.
Tenant shall keep all of the Common Areas free and clear of any obstructions
created or permitted by Tenant or resulting from Tenant’s operations, and shall
use the Common Areas only for normal activities, parking and ingress and egress
by Tenant and its employees, agents, representatives, licensees and invitees to
and from the Premises, the Building or the Project. If, in the reasonable
opinion of Landlord, unauthorized persons are using the Common Areas by reason
of the presence of Tenant in the Premises, Tenant, upon demand of Landlord,
shall correct such situation by appropriate action or proceedings against all
such unauthorized persons. Nothing herein shall affect the rights of Landlord at
any time to remove any such unauthorized persons from said areas or to prevent
the use of any of said areas by unauthorized persons. Landlord reserves the
right to make such changes, alterations, additions, deletions, improvements,
repairs or replacements in or to the Building, the Project (including the
Premises) and the Common Areas as Landlord may reasonably deem necessary or
desirable, including, without limitation, constructing new buildings and making
changes in the location, size, shape and number of driveways, entrances, parking
spaces, parking areas, loading areas, landscaped areas and walkways; provided,
however, that there shall be no unreasonable permanent obstruction of access to
or use of the Premises resulting therefrom. In the event that the Project is not
completed on the date of execution of this Lease, Landlord shall have the sole
judgment and discretion to determine the architecture, design, appearance,
construction, workmanship, materials and equipment with respect to construction
of the Project. Notwithstanding any provision of this Lease to the contrary, the
Common Areas shall not in any event be deemed to be a portion of or included
within the Premises leased to Tenant and the Premises shall not be deemed to be
a portion of the Common Areas. This Lease is granted subject to the terms
hereof, the rights and interests of third parties under existing liens, ground
leases, easements and encumbrances affecting such property, all zoning
regulations, rules, ordinances, building restrictions and other laws and
regulations now in effect or hereafter adopted by any governmental authority
having jurisdiction over the Project or any part thereof.

 

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(b)       Notwithstanding any provision of this Lease to the contrary, Landlord
specifically reserves the right to redefine the term “Project” for purposes of
allocating and calculating Operating Costs, Real Estate Taxes and Utilities so
as to include or exclude areas as Landlord shall from time to time determine or
specify (and any such determination or specification shall be without prejudice
to Landlord’s right to revise thereafter such determination or specification).
In addition, Landlord shall have the right to contract or otherwise arrange for
amenities, services (the cost of which is included within Operating Costs) or
Utilities to be on a common or shared basis to both the Project (i.e., the area
with respect to which Operating Costs and Utilities are determined) and adjacent
areas not included within the Project, so long as the basis on which the cost of
such amenities, services or Utilities is allocated to the Project is determined
on an arms-length basis or some other basis reasonably determined by Landlord.
In the case where the definition of the Project is revised for purposes of the
allocation or determination of Operating Costs, Real Estate Taxes, and/or
Utilities, Tenant’s Proportionate Share shall be appropriately revised to equal
the percentage share of all Rentable Area contained within the Project (as then
defined) represented by the Premises. Notwithstanding the foregoing, Landlord
agrees that in no event shall Tenant’s Proportionate Share of Operating Costs,
Real Estate Taxes and/or Utilities increase due to Landlord redefining the term
“Project.” Landlord shall have the sole right to determine which portions of the
Project and other areas, if any, shall be served by common management,
operation, maintenance and repair. Landlord shall also have the right, in its
sole discretion, to allocate and prorate any portion or portions of the
Operating Costs, Real Estate Taxes and/or Utilities on a building-by-building
basis, on an aggregate basis of all buildings in the Project, or any other
reasonable manner, and if allocated on a building-by-building basis, then
Tenant’s Proportionate Share shall, as to the portion of the Operating Costs,
Real Estate Taxes and/or Utilities so allocated, be based on the ratio of the
Rentable Area of the Premises to the Rentable Area of the Building.

 

19.MISCELLANEOUS

 

(a)       Attorneys’ Fees. In the event of any legal action or proceeding
brought by either party against the other arising out of this Lease, the
prevailing party shall be entitled to recover reasonable attorneys’ fees and
costs (including, without limitation, court costs and expert witness fees and
costs) incurred in such action. Such amounts shall be included in any judgment
rendered in any such action or proceeding.

 

(b)       Waiver. No waiver by Landlord of any provision of this Lease or of any
breach by Tenant hereunder shall be deemed to be a waiver of any other provision
hereof, or of any subsequent breach by Tenant. Landlord’s consent to or approval
of any act by Tenant requiring Landlord’s consent or approval under this Lease
shall not be deemed to render unnecessary the obtaining of Landlord’s consent to
or approval of any subsequent act of Tenant. No act or thing done by Landlord or
Landlord’s agents during the term of this Lease shall be deemed an acceptance of
a surrender of the Premises, unless in writing signed by Landlord. The delivery
of the keys to any employee or agent of Landlord shall not operate as a
termination of the Lease or a surrender of the Premises. The acceptance of any
Rent by Landlord following a breach of this Lease by Tenant shall not constitute
a waiver by Landlord of such breach or any other breach unless such waiver is
expressly stated in a writing signed by Landlord.

 

(c)       Notices. Any notice, demand, request, consent, approval, disapproval
or certificate (“Notice”) required or desired to be given under this Lease shall
be in writing and given by certified mail, return receipt requested, by personal
delivery or by Federal Express or a similar nationwide overnight delivery
service providing a receipt for delivery. Notices may not be given by facsimile.
The date of giving any Notice shall be deemed to be the date upon which delivery
is actually made by one of the methods described in this Section 19(c) (or
attempted if said delivery is refused or rejected). If a Notice is received on a
Saturday, Sunday or legal holiday, it shall be deemed received on the next
business day. All notices, demands, requests, consents, approvals, disapprovals,
or certificates shall be addressed at the address specified in Item 13 of the
Basic Lease Provisions or to such other addresses as may be specified by written
notice from Landlord to Tenant and if to Tenant, at the Premises. Either party
may change its address by giving reasonable advance written Notice of its new
address in accordance with the methods described in this Paragraph; provided,
however, no notice of either party’s change of address shall be effective until
fifteen (15) days after the addressee’s actual receipt thereof.

 

(d)       Access Control. Landlord shall be the sole determinant of the type and
amount of any access control or courtesy guard services to be provided to the
Project, if any. IN ALL EVENTS, LANDLORD SHALL NOT BE LIABLE TO TENANT, AND
TENANT HEREBY WAIVES ANY CLAIM AGAINST LANDLORD, FOR (I) ANY UNAUTHORIZED OR
CRIMINAL ENTRY OF THIRD PARTIES INTO THE PREMISES, THE BUILDING OR THE PROJECT,
(II) ANY DAMAGE TO PERSONS, OR (III) ANY LOSS OF PROPERTY IN AND ABOUT THE
PREMISES, THE BUILDING OR THE PROJECT, BY OR FROM ANY UNAUTHORIZED OR CRIMINAL
ACTS OF THIRD PARTIES, REGARDLESS OF ANY ACTION, INACTION, FAILURE, BREAKDOWN,
MALFUNCTION AND/OR INSUFFICIENCY OF THE ACCESS CONTROL OR COURTESY GUARD
SERVICES PROVIDED BY LANDLORD.

 

(e)       Storage. Any storage space at any time leased to Tenant hereunder
shall be used exclusively for storage. Notwithstanding any other provision of
this Lease to the contrary, (i) Landlord shall have no obligation to provide
heating, cleaning, water or air conditioning therefor, and (ii) Landlord shall
be obligated to provide to such storage space only such electricity as will, in
Landlord’s judgment, be adequate to light said space as storage space.

 

(f)       Holding Over. If Tenant retains possession of the Premises after the
termination of the Lease Term, unless otherwise agreed in writing, such
possession shall be subject to immediate termination by Landlord at any time,
and all of the other terms and provisions of this Lease (excluding any expansion
or renewal option or other similar right or option) shall be applicable during
such holdover period, except that Tenant shall pay Landlord from time to time,
upon demand, as Basic Annual Rent for the holdover period, an amount equal to
One Hundred Fifty Percent (150%) the Basic Annual Rent in effect on the
termination date, computed on a monthly basis for each month or part thereof
during such holding over. All other payments shall continue under the terms of
this Lease. In addition, Tenant shall be liable for all damages incurred by
Landlord as a result of such holding over. No holding over by Tenant, whether
with or without consent of Landlord, shall operate to extend this Lease except
as otherwise expressly provided, and this Paragraph shall not be construed as
consent for Tenant to retain possession of the Premises.

 

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(g)       Condition of Premises. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
LEASE, LANDLORD HEREBY DISCLAIMS ANY EXPRESS OR IMPLIED REPRESENTATION OR
WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT’S INTENDED PURPOSE OR USE,
WHICH DISCLAIMER IS HEREBY ACKNOWLEDGED BY TENANT. THE TAKING OF POSSESSION BY
TENANT SHALL BE CONCLUSIVE EVIDENCE THAT TENANT:

 

(i)       ACCEPTS THE PREMISES, THE BUILDING AND LEASEHOLD IMPROVEMENTS AS
SUITABLE FOR THE PURPOSES FOR WHICH THE PREMISES WERE LEASED;

 

(ii)       ACCEPTS THE PREMISES AND PROJECT AS BEING IN GOOD AND SATISFACTORY
CONDITION;

 

(iii)       WAIVES ANY DEFECTS IN THE PREMISES AND ITS APPURTENANCES EXISTING
NOW OR IN THE FUTURE, EXCEPT THAT TENANT’S TAKING OF POSSESSION SHALL NOT BE
DEEMED TO WAIVE LANDLORD’S COMPLETION OF MINOR FINISH WORK ITEMS THAT DO NOT
INTERFERE WITH TENANT’S OCCUPANCY OF THE PREMISES; AND

 

(iv)       WAIVES ALL CLAIMS BASED ON ANY IMPLIED WARRANTY OF SUITABILITY OR
HABITABILITY.

 

(h)       Quiet Possession. Upon Tenant’s paying the Rent reserved hereunder and
observing and performing all of the covenants, conditions and provisions on
Tenant’s part to be observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the term hereof without hindrance or ejection by
any person lawfully claiming under Landlord, subject to the provisions of this
Lease and to the provisions of any (i) covenants, conditions and restrictions,
(ii) master lease, or (iii) Security Documents to which this Lease is
subordinate or may be subordinated.

 

(i)       Matters of Record. Except as otherwise provided herein, this Lease and
Tenant’s rights hereunder are subject and subordinate to all matters affecting
Landlord’s title to the Project recorded in the Real Property Records of the
County in which the Project is located, prior to and subsequent to the date
hereof, including, without limitation, all covenants, conditions and
restrictions. Tenant agrees for itself and all persons in possession or holding
under it that it will comply with and not violate any such covenants, conditions
and restrictions or other matters of record. Landlord reserves the right, from
time to time, to grant such easements, rights and dedications as Landlord deems
necessary or desirable, and to cause the recordation of parcel maps and
covenants, conditions and restrictions affecting the Premises, the Building or
the Project, as long as such easements, rights, dedications, maps, and
covenants, conditions and restrictions do not materially interfere with the use
of the Premises by Tenant. At Landlord’s request, Tenant shall join in the
execution of any of the aforementioned documents.

 

(j)       Successors and Assigns. Except as otherwise provided in this Lease,
all of the covenants, conditions and provisions of this Lease shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns. Tenant shall attorn to
each purchaser, successor or assignee of Landlord.

 

(k)       Brokers. Tenant and Landlord warrant to each other that they have had
no dealings with any real estate broker or agent in connection with the
negotiation of this Lease, excepting only the brokers named in Item 12 of the
Basic Lease Provisions and that they know of no other real estate broker or
agent who is or might be entitled to a commission in connection with this Lease.
Tenant hereby agrees to indemnify, defend and hold Landlord harmless for, from
and against all claims for any brokerage commissions, finders’ fees or similar
payments by any persons other than those listed in Item 12 of the Basic Lease
Provisions and all costs, expenses and liabilities incurred in connection with
such claims, including reasonable attorneys’ fees and costs.

 

(l)       Name. Landlord shall have the exclusive right at all times during the
Lease Term to change, modify, add to or otherwise alter the name, number, or
designation of the Building and/or the Project, and Landlord shall not be liable
for claims or damages of any kind which may be attributed thereto or result
therefrom.

 

(m)       Examination of Lease. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for lease,
and it is not effective as a lease or otherwise until execution by and delivery
to both Landlord and Tenant.

 

(n)       Time. Time is of the essence of this Lease and each and all of its
provisions.

 

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(o)       Defined Terms and Marginal Headings. The words “Landlord” and “Tenant”
as used herein shall include the plural as well as the singular and for purposes
of Articles 5, 7, 13 and 18, the term Landlord shall include Landlord, its
employees, contractors and agents. If more than one person is named as Tenant
the obligations of such persons are joint and several. The marginal headings and
titles to the articles of this Lease are not a part of this Lease and shall have
no effect upon the construction or interpretation of any part hereof.

 

(p)       Conflict of Laws; Prior Agreements; Separability. This Lease shall be
governed by and construed pursuant to the laws of the State of Arizona. This
Lease contains all of the agreements of the parties hereto with respect to any
matter covered or mentioned in this Lease. No prior agreement, understanding or
representation pertaining to any such matter shall be effective for any purpose.
No provision of this Lease may be amended or added to except by an agreement in
writing signed by the parties hereto or their respective successors in interest.
The illegality, invalidity or unenforceability of any provision of this Lease
shall in no way impair or invalidate any other provision of this Lease, and such
remaining provisions shall remain in full force and effect.

 

(q)       Authority. If Tenant is a corporation, each individual executing this
Lease on behalf of Tenant hereby covenants and warrants that Tenant is a duly
authorized and existing corporation, that Tenant has and is qualified to do
business in the State, that the corporation has full right and authority to
enter into this Lease, and that each person signing on behalf of the corporation
is authorized to do so. If Tenant is a partnership or trust, each individual
executing this Lease on behalf of Tenant hereby covenants and warrants that he
is duly authorized to execute and deliver this Lease on behalf of Tenant in
accordance with the terms of such entity’s partnership or trust agreement.
Tenant shall provide Landlord on demand with such evidence of such authority as
Landlord shall reasonably request, including, without limitation, resolutions,
certificates and opinions of counsel.

 

(r)       Joint and Several Liability. If two or more individuals, corporations,
partnerships or other business associations (or any combination of two or more
thereof) shall sign this Lease as Tenant, the liability of each such individual,
corporation, partnership or other business association to pay Rent and perform
all other obligations hereunder shall be deemed to be joint and several, and all
notices, payments and agreements given or made by, with or to any one of such
individuals, corporations, partnerships or other business associations shall be
deemed to have been given or made by, with or to all of them. In like manner, if
Tenant shall be a partnership or other business association, the members of
which are, by virtue of statute or federal law, subject to personal liability,
then the liability of each such member shall be joint and several.

 

(s)       Rental Allocation. For purposes of Section 467 of the Internal Revenue
Code of 1986, as amended from time to time, Landlord and Tenant hereby agree to
allocate all Rent to the period in which payment is due, or if later, the period
in which Rent is paid.

 

(t)       Rules and Regulations. Tenant agrees to comply with all rules and
regulations of the Building and the Project imposed by Landlord as set forth on
Exhibit D attached hereto, as the same may be changed from time to time upon
reasonable notice to Tenant. Landlord shall not be liable to Tenant for the
failure of any other tenant or any of its assignees, subtenants, or their
respective agents, employees, representatives, invitees or licensees to conform
to such rules and regulations.

 

(u)       Joint Product. This Agreement is the result of arms-length
negotiations between Landlord and Tenant and their respective attorneys.
Accordingly, neither party shall be deemed to be the author of this Lease and
this Lease shall not be construed against either party.

 

(v)       Financial Statements. Upon Landlord’s written request, Tenant shall
promptly furnish Landlord, from time to time, with the most current audited
financial statements prepared in accordance with generally accepted accounting
principles, certified by Tenant and an independent auditor to be true and
correct, reflecting Tenant’s then current financial condition.

 

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(w)       Force Majeure. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, acts of war, terrorism, terrorist
activities, inability to obtain services, labor, or materials or reasonable
substitutes therefore, governmental actions, civil commotions, fire, flood,
earthquake or other casualty, and other causes beyond the reasonable control of
the party obligated to perform, except with respect to the obligations imposed
with regard to Rent and other charges to be paid by Tenant pursuant to this
Lease and except as to Tenant’s obligations under Article 6 and Article 8 of
this Lease and Section 19(f) of this Lease and any extension of the Construction
Termination Date as set forth in Paragraph (d) of Exhibit B to this Lease
(collectively, a “Force Majeure”), notwithstanding anything to the contrary
contained in this Lease, shall excuse the performance of such party for a period
equal to any such prevention, delay or stoppage and, therefore, if this Lease
specifies a time period for performance of an obligation of either party, that
time period shall be extended by the period of any delay in such party’s
performance caused by a Force Majeure.

 

(x)       Counterparts. This Lease may be executed in several counterparts, each
of which shall be deemed an original, and all of which shall constitute but one
and the same instrument.

 

(y)       APPRAISED VALUE. TENANT HEREBY WAIVES ALL RIGHTS TO PROTEST THE
APPRAISED VALUE OF THE PROJECT OR TO APPEAL THE SAME AND ALL RIGHTS TO RECEIVE
NOTICES OF REAPPRAISALS.

 

(z)       Waiver of Arizona Revised Statutes Section 33-343. Tenant hereby
waives any statutory and common law rights of termination (including the
provisions of Arizona Revised Statutes § 33-343) which may arise by reason of
any partial or total destruction of the Premises which Landlord is obligated to
restore or may restore under any of the provisions of this Lease.

 

(aa) Waiver of Trial by Jury. Landlord and Tenant waive their right to trial by
jury in any action, proceeding or counterclaim brought by either of the parties
hereto against the other (except for personal injury or property damage) on any
matters whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant’s use of or occupancy of the
Premises, and any emergency statutory or any other statutory remedy.

 

(bb) Patriot Act. Tenant represents and warrants to, and covenants with,
Landlord that neither Tenant nor any of its respective constituent owners or
affiliates currently are, or shall be at any time during the Lease Term, in
violation of any laws relating to terrorism or money laundering, including
without limitation Executive Order No. 13224 on Terrorist Financing, effective
September 24, 2001, and relating to Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
and/or the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)
(“USA Patriot Act”).

 

[SIGNATURE PAGE TO FOLLOW]

 

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IN WITNESS WHEREOF, the parties have executed this Lease to be effective as of
the Date of this Lease.

 

“LANDLORD”   “TENANT”           SKY PEAK, LLC,   Cipherloc Corporation an
Arizona limited liability company   a Texas Corporation           By: /s/ Moshe
Bar   By: /s/ Michael De La Garza Name: Moshe Bar   Name: Michael De La Garza
Title: POA   Title: CEO and Chairman

 

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