Exhibit 10.5


 


LEASE AGREEMENT


 


THIS
LEASE AGREEMENT (“Lease”) is made and entered into as of September       ,
2009 by and between EastGroup Properties, L.P., a Delaware limited partnership
(“Landlord”) and CardioNet, Inc., a Delaware corporation (“Tenant”).


 


1.                                       Premises.  Landlord, in consideration of the payment of
rents and the performance by Tenant of all other terms, covenants and
conditions of this Lease, leases to Tenant 10,818 rentable square feet of
space, hereinafter referred to as the “Premises,” as shown on the attached site
plan labeled “Exhibit A”, located within building #3 (the “Building”) of
Sky Harbor Business Park (the “Project”). 
The address of the Premises is 2750 South 18th Place, Suite 100,
Phoenix, Arizona 85034.   Tenant’s
Proportionate Share of the Building is 23.10% and Tenant’s Proportionate Share
of the Project is 4.09%.  The parties
agree that for all purposes of this Lease the square footage of the Premises
shall be as stipulated above.


 


2.                                       Term.  The term of this Lease shall commence  upon substantial completion of the
Improvements currently estimated to be December 1,
2009 (the “Commencement Date”), and ending on the 65th full calendar month thereafter.  This period, including any renewals or
extensions subsequently enacted pursuant to the terms of this Lease, shall be
referred to as the “Lease Term.”


 


3.                                       Base Rent.  Tenant shall pay to Landlord in advance,
without demand, deduction or set-off, monthly installments of Base Rent, in the
amounts set forth below, on or before the first day of each calendar month in
lawful money of the United States at such place as Landlord designates in
writing.  Base Rent for fractional months
shall be prorated.  If Tenant is
delinquent in any monthly installment of Base Rent or estimated Operating
Expenses for more than 5 days, then Tenant shall pay to Landlord a late charge
equal to five percent (5%) of the total sum due.  Said late charge shall be in addition to any
other rights and remedies available to Landlord hereunder or at law and shall
not be construed as a penalty.


 


4.                                       Base Rent
Increases.  Base Rent shall be payable monthly in
accordance with the following schedule:


 




	
  Period

  	
   

  	
  Monthly Amount

  	
   

  
	
  December 1, 2009 – April 30,
  2010

  	
   

  	
  $

  	
  0.00

  	
   

  
	
  May 1, 2010 –
  April 30, 2011

  	
   

  	
  $

  	
  9,736.20

  	
   

  
	
  May 1, 2011 –
  April 30, 2012

  	
   

  	
  $

  	
  9,952.56

  	
   

  
	
  May 1, 2012 –
  April 30, 2013

  	
   

  	
  $

  	
  10,168.92

  	
   

  
	
  May 1, 2013 –
  April 30, 2014

  	
   

  	
  $

  	
  10,385.28

  	
   

  
	
  May 1, 2014 – April 30,
  2015

  	
   

  	
  $

  	
  10,601.64

  	
   

  






 


5.                                       Security
Deposit.  Tenant shall, upon the
execution of this Lease, deposit with Landlord as security for the payment of
rent and the performance of all other covenants to be performed by Tenant, the
sum of $12,000.00.   The Security Deposit
shall be non-interest bearing.  If Tenant
defaults in the payment of any monthly rental installment or fails to perform
any other covenant within ten (10) days after receipt of written demand,
Landlord may apply or retain sufficient sums from the Security Deposit towards
payment thereof.  If Landlord elects to
apply all or a part of the Security Deposit, Tenant shall be obliged to
immediately replenish the Security Deposit for the amount so applied by
Landlord.  The Security Deposit shall not
be applied to rent except upon approval of Landlord.  After all of Tenant’s obligations under this
Lease have been fulfilled, Landlord shall refund the Security Deposit to Tenant
within fifteen (15) days of the Lease Termination Date.


 


6.                                       Improvements.  On the Commencement Date, Landlord shall
deliver the Premises broom clean and free of debris with the HVAC, evaporative
cooling, loading doors, lighting and building systems in good operating
condition.  Landlord shall provide final
improvement floor plans substantially consistent with the schematic drawing
attached hereto as Exhibit C (“Final Plans”).  Landlord shall construct the Improvements
outlined and in accordance with the attached Final Plans in a professional
manner and to Tenant’s reasonable satisfaction. In the event the Improvements
are not completed by Landlord on or before December 1, 2009, and provided (1) the
Landlord produced and delivered the Final Plans to Tenant within 14 business
days following the effective date of this Lease and (2) Tenant completes
its review of the Final Plans within 3 business days, the Term of this Lease
shall be extended for a period equal to the time between December 1, 2009
and the actual Commencement Date and the Base Rent for such additional period
shall be $0.00.


 


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7.                                       Operating
Expenses.  During each
month of the Lease Term, on the same day that Base Rent is due, Tenant shall
pay to Landlord an amount equal to 1/12 of the annual cost, as reasonably
estimated by Landlord, of Tenant’s Proportionate Share of the Operating
Expenses for the Building and the Project. 
Payments for any fractional month shall be prorated.  The term “Operating Expenses” means the
actual out-of-pocket expenses incurred by Landlord with respect to ownership,
maintenance and operation of the Building/Project including Taxes, Insurance,
Common Area Maintenance, and Management Fee as set forth below:


 


(a)                                  Taxes — all taxes,
assessments, and governmental charges (collectively “Taxes”) that accrue
against the property during the Lease Term that are payable by Landlord.  Taxes shall include fees paid to consultants
to reduce Taxes and all sales or privilege taxes based on rents. Tenant shall
pay directly to the authority all personal property taxes charged or levied
against Tenant’s furniture, fixtures and equipment in the Premises.


 


(b)                                 Insurance — the cost
to maintain all insurance required to be maintained by Landlord hereunder, but
excluding any charge for increased premiums due to acts or omissions of other
occupants of the Building/Project because of extra risk which are reimbursed to
Landlord by such other occupants.


 


(c)                                  Common Area
Maintenance - the total annual cost of operating the Building/Project
including, but not limited to, landscaping services; sweeping services;
commonly metered utilities; water and sewer charges; window cleaning; trash
collection; association charges or assessments; maintenance, repair or
replacements to the Building/Project, including, without limitation, paving and
parking areas, roads, driveways, roofs, exterior painting, utility lines,
building mechanical, electrical and plumbing systems; and alterations to comply
with municipal requirements.


 


(d)                                 Management Fee —
property management fees payable at market rates (not to exceed five percent
(5%) of the gross collected rent) to a property manager, including an affiliate
of Landlord.


 


(e)                                  Operating
Expenses” shall not include:  (1) the
cost of redecorating, renovating or special cleaning or similar services to
individual tenant spaces (or vacant space), not provided on a regular basis to
other tenants of the Building; (2) wages or salaries (and taxes
imposed upon employers with respect to such wages and salaries) and fringe
benefits of personnel of Landlord above the level of Building General Manager;
(3) any charge for depreciation or interest paid or incurred by Landlord; (4) leasing
commissions; (5) any charge for Landlord’s income tax, excess profit
taxes, franchise taxes or similar taxes on Landlord’s business; (6) legal
fees for the negotiation or enforcement of leases, the defense of Landlord’s title to or
interest in the Building/Project or any part thereof and other legal expenses
related to Landlord’s financing, re-financing, mortgaging or selling or leasing
the Building/Project or any part thereof;  (7) any
debt service payments (including principal, interest and other charges) or
ground rent; (8) costs incurred due to a breach by Landlord of the terms
and conditions of this Lease or any Ground Lease provided such failure is not
triggered by the act or omission of Tenant; (9) any compensation paid to
clerks, attendants or other persons in, and any other expenses (including
without limitation any utility services and janitorial services) arising from,
commercial concessions operated by Landlord or any manager or any affiliate of
Landlord or such manager that exceed the competitive cost or fair market value
that Landlord would pay to a non-affiliated third party; (10) any fines or
fees or other costs (including without limitation court costs and attorney’s
fees) for Landlord’s late payments or failure to comply with any laws or governmental
requirements which are not caused by Tenant, its employees, agents, subtenants,
invitees or contractors; (11) the costs of remediating, monitoring or
investigating hazardous wastes or hazardous substances in, on or under the
Premises or the Building/Project, except to the extent caused by Tenant, its
agents, employees, contractors, subtenants or invitees or Tenant’s activities
on the Premises; (12) any cost or expense covered by any warranty or guaranty; or (13)
and ground lease rental.


 


If
Tenant’s total payments of estimated Operating Expenses for any year are less
than Tenant’s Proportionate Share of actual Operating Expenses for such year,
then Tenant shall pay the difference to Landlord within 30 days after demand,
and if more, then Landlord shall promptly refund the difference to Tenant or
credit the difference to Tenant’s account. 
For purposes of calculating Operating Expenses, a year shall mean a
calendar year, except the first year, which shall begin on the Commencement
Date, and the last year, which shall end on the expiration of this Lease.
Tenant’s obligation to pay its proportionate share of Operating Expenses
incurred during the Lease Term shall survive the expiration or termination of
this Lease.  If requested by Tenant
within six months of the delivery of the annual reconciliation, Landlord shall
provide or make available the supporting data upon which the actual Operating
Expenses were calculated for Tenant’s review.


 


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Tenant or its representative
shall have the right to examine Landlord’s books and records with respect to
the reconciliation of Operating Expenses for the prior calendar year during
normal business hours at any time within six (6) months following the
delivery by Landlord to Tenant of any such statement of Operating
Expenses.  Any such audit (a) shall
be conducted where such records are customarily maintained during regular
business hours and upon at least ten (10) days advance written notice to
Landlord, and (b) shall not be conducted more than once in any calendar
year.  Unless Tenant shall give Landlord
written notice objecting to said reconciliation and specifying the items in
which said reconciliation is claimed to be incorrect within sixty (60) days
after its examination of Landlord’s books and records, said reconciliation
shall be considered as final and accepted by Tenant.  If such audit shall disclose that Operating
Expenses have been overstated, Tenant shall deliver a letter to Landlord setting
forth Tenant’s position accompanied by a reasonably detailed explanation of and
together with reasonably detailed supporting data evidencing the basis on which
the claim of an overcharge is made (an “Overcharge Notice’).  Upon receipt of an Overcharge Notice,
Landlord shall, within thirty (30) days of receipt of the Overcharge Notice,
either (a) notify Tenant in writing that it agrees with the determination
set forth in the Overcharge Notice and Landlord shall credit Tenant with the
amount of such overcharge against the next succeeding amount of Tenant’s share
of Operating Expenses due from Tenant, or (b) notify Tenant in writing
that it does not agree with the determination set forth in the Overcharge
Notice (“Landlord’s Dispute Notice”).


 


In the event
Landlord provides Tenant with a Landlord’s Dispute Notice, and Landlord and
Tenant, acting in good faith, are not able to resolve the dispute within thirty
(30) days, then the Landlord and Tenant shall, as soon as reasonably
practicable thereafter, select an independent arbitrator, approved from the
American Arbitration Association, to resolve the dispute.


 


Tenant
acknowledges that if the Building is part of a Project, the Project may include
the Building and other buildings either already existing or to be constructed
in the future.  Tenant understands and
agrees that, for the purposes of administering the provisions of this Paragraph
7, so long as the Building is owned and/or managed in conjunction with other
buildings, Operating Expenses and other costs reimbursable by the Tenant may be
paid, recorded and reported on a consolidated overall project basis.  Landlord may equitably increase or decrease
Tenant’s Proportionate Share for any item of expense or cost reimbursable by
Tenant that relates to a repair, replacement, or service that benefits only the
Premises or only a portion of the Building/Project that includes the Premises
or that varies with occupancy or use.


 


8.                                       Utilities.  Tenant shall pay directly to the provider all
utilities that are separately metered. 
If not shared with other tenants as part of Operating Expenses, Tenant
shall arrange and pay for trash collection services at the Premises.  Commonly metered utilities shall be included
as an Operating Expense.  Landlord may
cause at Landlord’s expense any utilities to be separately metered or
sub-metered or charged directly to Tenant by the provider. No interruption or
failure of utilities shall result in the termination of this Lease or abatement
of rent.  Tenant agrees to limit use of
water and sewer for normal restroom use.


 


9.                                       Insurance.  Landlord shall maintain all risk property
insurance covering the full replacement cost of the Building.  Landlord may maintain other insurance
coverage it deems necessary including, but not limited to, commercial liability
insurance and rent loss insurance. 
Tenant shall also reimburse Landlord for any increased premiums or
additional insurance, which Landlord reasonably deems necessary as a result of
Tenant’s use of the Premises.


 


Tenant,
at its expense, shall maintain during the Lease Term commercial liability
insurance with a minimum limit of $2,000,000 for personal injuries, and deaths,
and property damage occurring on the Premises. 
Such insurance shall include contractual liability coverage insuring
Tenant’s indemnity obligations under this Lease. The commercial liability
policy shall name Landlord as an additional insured, be issued by a company
reasonably acceptable to Landlord, provide primary coverage if Landlord’s
policy provides similar coverage, and shall not be cancelable unless thirty day’s
prior written notice is given to Landlord. 
Tenant shall provide Landlord with a certificate of insurance prior to
the Commencement Date and upon each renewal of the policy.


 


Tenant,
at its expense, shall maintain during the Lease Term all risk property
insurance covering the full replacement cost of all property and improvements
installed or placed in the Premises by Tenant at Tenant’s expense, including
its furniture, fixtures, inventory, equipment, supplies and personal property.


 


Landlord
and Tenant each waives any claim, loss or cost it might have against the other
for any personal injury or death, or damage to or theft, destruction, loss, or
loss of use of any property (a “Loss”), to the extent the same is insured or
required to be insured under any all risk property damage insurance policy
covering the Premises, Building, Project, fixtures, personal property,
improvements, or business, regardless of whether the negligence of the other
party caused such Loss.


 


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10.                                 Use.  The Premises shall be used only for the
purpose of receiving, storing and shipping of materials and merchandise made or
distributed by Tenant and related office uses necessitated thereby. Tenant will
use the Premises in a careful, safe and proper manner and will not commit
waste, overload the floor or structure or otherwise damage the Premises.  Tenant shall not permit any objectionable or
unpleasant odors, smoke, dust, gas, noise, or vibrations to emanate from the Premises,
or take any other action that would constitute a nuisance or would disturb,
unreasonably interfere with, or endanger Landlord or other tenants in the
Building or Project. Tenant shall occupy the Premises in compliance with all
laws, codes, ordinances, and regulations now or hereafter applicable to the
Premises or Building.  Outside storage is
prohibited without Landlord’s written consent. 
Tenant may store overnight in the normal course of its business one
operative tractor/trailer or truck for each dock high loading position
contained in the Premises, provided this overnight storage does not interfere
with other tenant’s use of the Building or Project.


 


11.                                 Parking.  Tenant shall be entitled to a minimum of 20
unreserved parking spaces for operative automobiles and pick up trucks in those
areas designated by Landlord for non-reserved parking.  Landlord may allocate parking spaces amongst
Tenant and other tenants in the Building or Project if Landlord determines that
such parking facilities are becoming crowded. 
However, Landlord shall not be responsible for enforcing Tenant’s
parking rights against third parties. No vehicle abandoned or disabled or in a
state of non-operation or disrepair shall be left at the Building or Project;
Landlord reserves the right to remove said vehicle at the owner’s expense.


 


12.                                 Exemption of
Landlord from Liability; Indemnification.  Except to the extent such damage, loss or
injury is the result of the gross negligence or willful misconduct of Landlord,
Tenant hereby agrees that Landlord and its agents and employees shall not be
liable for injury to Tenant’s business including loss of income for damage to
goods, wares, merchandise, or other property of Tenant, Tenant’s employees,
invitees, customers, or any other person in or about the Premises, nor shall
Landlord be liable for injury to the person of Tenant, Tenant’s agents,
employees, contractors, or invitees, whether such damage or injury is caused by
or results from fire, steam, electricity, gas, water, or rain, or from the
breakage, leakage, obstruction, or other defects of pipes, sprinklers, wires,
appliances, plumbing, HVAC, or light fixtures, or from any other cause whether
said damage or injury results from conditions arising upon the Premises or
other portions of the Building or Project, or from other sources or places, and
regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Tenant. 
Landlord shall not be liable for any damages arising from any act or
neglect of any other tenant of the Building or Project.


 


Except
for claims waived in Paragraph 9 above, Tenant shall defend, indemnify (except
to the extent Landlord is compensated by worker’s compensation insurance) and
hold harmless Landlord against and from all liabilities, obligations, damages,
penalties, claims, suits, demands, costs, charges and expenses, including
reasonable attorneys’ fees, which may be imposed upon or incurred by or
asserted against Landlord by reason of any of the following: (a) any work
or act done in, on or about the Premises or any part thereof at the direction
of Tenant, its agents, contractors, subcontractors, servants, employees,
licensees or invitees, except for the Improvements outlined in Exhibit C
or such other work that is done or performed by Landlord or its agents or
employees; (b) any negligence or other wrongful act or omission on the
part of Tenant or any of its agents, contractors, subcontractors, servants,
employees, subtenants, licensees or invitees; and (c) any accident, injury
or damage to any person (including Tenant’s employees and agents) or property
occurring in, on or about the Premises or any part thereof, except only to the
extent that such accident, injury or damage is caused by the gross negligence
or willful misconduct of Landlord. 
Tenant’s indemnity obligations as aforesaid shall not be limited or
affected by the provisions of any Worker’s Compensation Acts, disability
benefits acts or other employee benefits acts or similar acts or statutes.


 


Except
for claims waived in Paragraph 9 above and in this Paragraph 12, Landlord shall
defend, indemnify (except to the extent Tenant is compensated by worker’s
compensation insurance) and hold harmless Tenant and its officers, directors,
shareholders, employees and agents from and against any and all third-party
claims, actions, damages, liability and expense (including all reasonable
attorney’s fees, expenses and liabilities incurred in defense of any such claim
or any action or proceeding brought thereon) arising from any negligence or
willful act of Landlord.  Landlord’s
indemnity obligations as aforesaid shall not be limited or affected by the
provisions of any Worker’s Compensation Acts, disability benefits acts or other
employee benefits acts or similar acts or statutes.


 


13.                                 Repairs.  Landlord shall maintain, at its expense, the
structural soundness of the roof, foundation, and exterior walls of the
Building in good repair, reasonable wear and tear and damages caused by Tenant,
its agents, invitees, and contractors excepted. 
The term “walls” as used in this paragraph shall not include windows,
doors, store-fronts, overhead doors, dock bumpers, dock seals, dock plates, or
dock levelers.  Tenant shall promptly
give Landlord written notice of any repair required by Landlord, and Landlord
shall proceed with due diligence to make such repair.


 


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Tenant,
at its expense, shall repair, replace and maintain in good condition all
portions of the Premises and all areas, improvements and systems exclusively
serving the Premises, including, without limitation, dock and loading areas,
truck doors, plumbing, water and sewer lines up to points of common connection,
fire protection systems, entries, doors, ceilings, roof membrane, windows,
interior walls, demising walls, HVAC systems, and evaporative coolers.  Such repairs and replacements may include
capital expenditures whose benefit may extend beyond the Lease Term.  If Tenant fails to perform any repair or
replacement for which it is responsible, Landlord may perform such work and be
reimbursed by Tenant within 30 days after written demand. If any of Tenant’s
obligations hereunder affect other tenants or portions of the Building/Project,
Landlord may perform the repair or replacement and include the cost as part of
Operating Expenses or allocate the cost to tenants as may be appropriate.


 


Tenant
shall enter into a maintenance service contract with a vendor reasonably
acceptable to Landlord to periodically service the HVAC and evaporative coolers
in the Premises in accordance with a scope of services reasonably prescribed by
Landlord.  Tenant shall supply Landlord a
copy of the contract upon request as evidence of compliance.


 


Notwithstanding
anything to the contrary contained herein, in the event Landlord makes any of
the following major capital replacements to the Building or Project:
replacement of the roof membrane of the Building, resurfacing the parking lot,
replacement of the concrete truck aprons, or full exterior repaint of the
Building, then Tenant shall reimburse Landlord as part of Operating Expenses
its pro rata share of the cost as amortized over the lesser of its useful life
as reasonably determined by Landlord in accordance Generally Accepted
Accounting Principles or ten (10) years.


 


14.                                 Compliance with
Laws and Regulations.  Tenant
shall comply with all Federal, State, County and City laws, ordinances, rules and
regulations affecting or respecting the use or occupancy of the Premises by the
Tenant or the business at any time thereon transacted by the Tenant, and Tenant
shall comply with all rules in effect or which may be hereafter adopted by
Landlord for the protection, welfare and orderly management of the Building and
its tenants or occupants.


 


15.                                 Holding Over.  Tenant has no right to retain possession of
the Premises beyond the expiration or termination of this Lease.  In the event that Tenant holds over, Base
Rent shall be increased to 150% of the Base Rent applicable immediately
preceding the expiration or termination plus all other payments required under
the Lease after the first 30 days of holdover. 
Tenant shall be responsible for all damages incurred by Landlord as a
result of such holding over.  Nothing
contained in this paragraph or Lease shall be construed as Landlord’s consent
to holding over.


 


16.                                 Signs.  Tenant shall not make changes to the exterior
of the Premises, Building or grounds including the installation of signs,
placards or other advertising media without Landlord’s prior written consent
which consent shall not be unreasonably withheld, delayed or conditioned.  Any approved sign shall be installed by
Tenant, at its expense, and shall be in accordance with Landlord’s sign
criteria and applicable municipal regulations. 
Tenant shall maintain signs in good condition and repair any damage upon
removal at the expiration or earlier termination of this Lease.


 


17.                                 Quiet Enjoyment.  Subject to payment of rent and performance by
Tenant of all material terms, conditions and covenants of the Lease, Tenant
shall have peaceful and quiet enjoyment of the Premises during the Lease Term.


 


18.                                 Force Majeure.  Except for Tenant’s obligation to pay rent
and other monetary obligations under this Lease, the parties shall not be held
responsible for delays in the performance of their obligations hereunder when
caused by strikes, lockouts, labor disputes, acts of God, inability to obtain
labor or materials, or reasonable substitutes thereof, governmental
restrictions, governmental regulations, governmental controls, delay in
issuance of permits, acts of war, civil commotion, fire or other casualty, and
other causes beyond the reasonable control of the parties (“Force Majeure”).


 


19.                                 Assignment and
Subletting.  Tenant
shall not assign this Lease nor sublet all or any part of the Premises without
first securing Landlord’s written consent, which consent shall not be
unreasonably withheld, delayed or conditioned.  
In the event of an assignment or subletting, the assignee and/or
subtenant shall first assume in writing all of the obligations of Tenant under
this Lease and Tenant shall, for the full Lease Term, continue to be jointly
and severally liable with such assignee or subtenant for the payment of rents
and the performance of all obligations required of Tenant under this Lease.  Tenant hereby acknowledges that the use to
which the Premises are put, the compatibility of any occupant of the Premises
with other tenants, and the ability to pay rent when due are of prime
importance and significance to the Landlord in the operation and maintenance of
the Building in which the Premises are located. 
Each request for consent to an assignment or subletting shall be in
writing and include a fee of $500 as consideration for Landlord considering and
processing said request. In the event the rent payable by an assignee or
subtenant exceeds the rent payable under this Lease, Tenant shall pay to
Landlord as additional rent one half of the excess rent or other consideration
after Tenant recovers all out of pocket expenses including leasing commissions,
rent concessions tenant improvements and legal fees.  Notwithstanding the above, Tenant may assign
or sublet the Premises to any entity controlling Tenant, controlled by Tenant,
or under common control with Tenant, without the prior consent of Landlord.


 


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20.                                 Casualty and
Restoration.  If during
the Lease Term all or a part of the Premises should be destroyed partially or
totally by fire or other casualty, Landlord shall notify Tenant within 30 days after
such damage as to the amount of time Landlord reasonably estimates it will take
to restore the Premises. If the restoration time is estimated to exceed 180
days, either party may terminate this Lease by promptly notifying the other
party and this Lease shall be terminated effective as of the date of the
casualty. If neither party elects to terminate the Lease or if Landlord
estimates that restoration will take 180 days or less, then Landlord shall,
subject to Force Majeure events and except for improvements made by or paid for
by Tenant, restore Premises within 180 days following such destruction to
substantially the same condition in which it existed at the time immediately
preceding such destruction.  Tenant’s
obligation to pay Base Rent and Operating Expenses shall abate for the period
of repair in proportion, which the area of the Premises that is not useable by
Tenant bears to the total area of the Premises. 
Notwithstanding the foregoing, either party may terminate this Lease if
the Premises are damaged during the last year of the Lease Term and Landlord
reasonably estimates that it will take more than 60 days to repair such damage.


 


21.                                 Eminent Domain.  If the whole of the Premises shall be taken
by any public authority under the power of eminent domain, or if so much of the
Building or grounds shall be taken by any such authority under the power of
eminent domain so that the Tenant cannot continue to operate its business in
the Premises, then the Lease Term of this Lease shall cease as of the day possession
is taken by such public authority and rents shall be paid up to that day with
proportionate refund by Landlord of any such rents as may have been paid in
advance or deposited as security.  The
amount awarded for any taking under the power of eminent domain shall belong to
and be the property of the Landlord. 
Nothing herein shall limit the Tenant’s ability to make an independent
claim for damages or awards.


 


22.                                 Waiver.  No waiver of any of the covenants and
agreements herein contained or of any breach thereof shall be taken to
constitute a waiver of any other subsequent breach of such covenants and
agreements or to justify or authorize the non-observance at any time of the
same or of any other covenants and agreements hereof.


 


23.                                 Limitation of Landlord’s
Liability.               Landlord shall
only be responsible for its obligations under this Lease arising during its
period of ownership of the Building.  Any
liability of the Landlord under this Lease shall be limited solely to its
interest in the Building/Project, and in no event shall any personal liability
be asserted against Landlord in connection with this Lease nor shall any
recourse be had to any other property or assets of Landlord.  In no event shall any obligation or liability
whatsoever of Landlord become personally binding on any partner of Landlord or
officer, director or shareholder of EastGroup Properties, Inc., a Maryland
real estate investment trust.


 


24.                                 Subordination.  Subject to the following paragraph, this
Lease is subject and subordinate to all mortgages, which may now or hereafter
affect the Premises or the Building of which it forms a part, and to all
renewals, modifications, consolidations, replacements and extensions
thereof.  This clause shall be
self-operative and no further instrument of subordination shall be required any
mortgagee, but in confirmation of such subordination, Tenant shall execute
promptly any subordination certificate that Landlord may subsequently request;
provided, however, that Tenant may condition such subordination upon the
execution and delivery by the applicable mortgage holder of a so-called “non-disturbance”
agreement in customary form.


 


For
the benefit of Tenant (and upon Tenant’s request therefor), Landlord shall
obtain from its current mortgagee, if any, on its current mortgagee’s form, a
Subordination, Non-Disturbance and Attornment Agreement (a “SNDA”), to be
entered into between Landlord, Tenant and Landlord’s current mortgagee, under
which, among other things, this Lease and the rights of Tenant hereunder shall
not be adversely affected or modified by foreclosure or the exercise of any
other right or remedy by the mortgagee so long as Tenant shall not be in
default under any of the provisions of this Lease beyond any applicable period
of grace, and under which Tenant shall attorn to and recognize the mortgagee or
any purchaser at foreclosure sale or other successor-in-interest to Landlord as
Tenant’s landlord hereunder.  Landlord
also agrees to use commercially reasonable efforts to obtain a SNDA from each
future mortgagee.  Each SNDA shall be in
the form required by the lender.  Tenant’s
obligations under this Lease shall not be affected by Landlord’s failure to
obtain a SNDA from its current or any future mortgagee.  Tenant covenants and agrees to execute and
deliver to Landlord or to the lender a SNDA within ten (10) days after a
written request therefor.


 


6

















 


25.                                 Alterations and
Trade Fixtures.  Tenant
shall not make any alterations, additions or improvements (“Alterations”) to
the Premises, Building or Project without Landlord’s prior written consent with
the exception of the Improvements outline in Exhibit C hereto.   Alterations approved by Landlord shall
comply with all applicable codes and municipal requirements and be installed
with commercial grade materials in a good and workmanlike manner by a
contractor reasonably acceptable to Landlord. Tenant shall furnish security or
make other arrangements satisfactory to Landlord to assure payment for the completion
of work free and clear of liens and shall provide certificates indicating
insurance sufficient to protect Landlord from any liability or damages during
construction. Upon surrender of the Premises, all Improvements and Alterations
shall remain on the Premises as Landlord’s property, except to the extent
Landlord requires removal at Tenant’s expense. 
Tenant may at any time request in writing Landlord’s determination as to
whether an Improvement or Alteration shall become property of Landlord.   Landlord shall respond to Tenant’s written
request within 10 days or Landlord shall have deemed to have waived its rights.
Such written request shall make reference to the 10 day time limit. Tenant, at
its own cost and expense, may erect shelves, bins, machinery and trade fixtures
(“Trade Fixtures”) in the ordinary course of its business provided that such
items do not alter the basic character of the Premises, do not overload or
damage the Premises, and may be removed without damage to the Premises.  The installation of Trade Fixtures must
comply with all codes and municipal requirements.  Tenant shall remove its Trade Fixtures upon
surrender of the Premises and repair any damage caused by the removal.


 


26.                                 Surrender of
Premises.  Upon
termination of the Lease Term or earlier termination of Tenant’s right of
possession, Tenant shall surrender the Premises to Landlord in the same
condition as received, broom clean and free of debris with the HVAC,
evaporative cooling, loading doors, lighting and building systems in good
operating condition, ordinary wear and tear and casualty loss and condemnation
excepted.  Any Alterations or Trade
Fixtures not removed as required shall be deemed abandoned and may be removed,
stored or disposed of by Landlord at Tenant’s expense.  All obligations of Tenant not fully performed
as of the termination of the Lease Term shall survive the termination of the
Lease Term, including without limitation, indemnity obligations, monetary
obligations, and obligations concerning repair of the Premises.


 


27.                                 Inspection and
Access.  Landlord or its agents shall
have the right to enter the Premises after reasonable notice to Tenant during
normal business hours, except in the case of emergencies where notice and time
restrictions shall not be imposed, to inspect and make repairs to the Premises
or the Building.  Within 9 months prior
to the date of the expiration of the Lease, Landlord or its agents shall have
the right to enter the Premises with reasonable notice during normal business
hours for the purpose of showing the Premises to prospective tenants or
purchasers.  Landlord may grant
easements, make public dedications, designate common areas and create
restrictions on or about the Premises, Building or Project, provided that no
such easement, dedication, designation or restriction materially interferes
with Tenant’s use or occupancy of the Premises. 
At Landlord’s request, Tenant shall execute such instruments as may be
necessary for such easements, dedications, or restrictions.


 


28.                                 Events of
Default.  Each of the following events
shall be an event of default (“Event of Default”) by Tenant under this Lease:


 


(a)                                  Tenant shall
fail to pay Base Rent or any other payment required herein when due, and such
failure shall continue for a period of 5 days following written notice from
Landlord to Tenant.


 


(b)                                 Any insurance
required to be maintained by Tenant pursuant to this Lease shall be terminated
or cancelled or shall expire or shall be reduced below the limits specified in
this Lease.


 


(c)                                  Tenant shall
attempt or there shall occur any assignment, sublease or other transfer of
Tenant’s interest in this Lease except as is otherwise permitted in this Lease.


 


(d)                                 The appointment
of a trustee or a receiver to take possession of all or substantially all of
Tenant’s property, or the attachment, execution or other judicial seizure of
all or substantially all of Tenant’s assets located at the Premises, unless
such appointment, attachment, execution or seizure is discharged within thirty
(30) calendar days after the appointment, attachment, execution or seizure.


 


(e)                                  The institution
of bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or any other proceedings for relief under any bankruptcy or
insolvency law or any other similar law for the relief of debtors, by or
against Tenant, and if instituted against Tenant, the same are not dismissed
within thirty (30) calendar days after the institution of such proceedings.


 


7

















 


(f)                                    Tenant shall
fail to comply with any provision of this Lease other than those specifically
referred to in this Paragraph 28, and except as otherwise expressly provided
herein, such default shall continue for more than 30 days after Landlord shall
have given Tenant written notice of such default (unless such performance due
to the nature of the obligation, requires a period of time in excess of 30
days, then after such period of time as is reasonably necessary).


 


29.                                 Landlord’s
Remedies.  On the
occurrence of any such Event of Default, Landlord shall, in addition to any
other rights or remedies available to Landlord under this Lease and under the
laws of the state in which the Premises are located, have the following rights
and remedies:


 


(a)                                  Termination of
Lease.  Landlord may terminate this
Lease and Tenant’s right of possession by giving Tenant written notice
indicating the date upon which this Lease is terminated.  Upon such termination, Landlord shall be
entitled to recover from Tenant the following amounts: (i) all accrued and
unpaid Base Rent, Operating Expenses, and other sums provided for in this Lease
to the date of such termination; (ii) the unamortized cost to Landlord,
computed and determined in accordance with generally accepted accounting
principles, of the Improvements paid for and installed by Landlord pursuant to
this Lease; (iii) the costs incurred by Landlord to relet the Premises or
a portion thereof, including brokers commissions, repairs, alterations,
improvements, and costs to remove and store Tenant’s property; (iv) the
positive difference, if any, of the present value of the Base Rent pursuant to
this Lease for the remainder of the Lease Term had this Lease not been
terminated less the present value of the then fair market rental value for the
Premises for the remainder of the Lease Term had this Lease not been
terminated, such present value computed in each case using 9%; and (v) any
damages in addition thereto, including reasonable attorneys’ fees, court costs,
and collection services, which Landlord shall have sustained by reason of the
breach of any of the terms, conditions and covenants of this Lease.


 


(b)                                 Re-Entry
Without Termination.  Landlord
may re-enter the Premises without terminating this Lease, and remove all
property from the Premises, and relet the Premises or any part thereof for the
account of Tenant, upon such terms as Landlord in Landlord’s sole discretion
shall determine. Landlord shall not be required to accept any tenant offered by
Tenant or to observe any instructions given by Tenant relative to such
reletting.  In the event of any such
reletting, Landlord may make repairs, alterations, and additions to the
Premises to the extent deemed reasonably necessary by Landlord, and Tenant
shall upon demand pay the cost thereof. 
Landlord may collect the rents from any such reletting and apply the
same first to the payment of the repairs, alterations, additions, expenses of
re-entry, attorney’s fees, court costs, collection services, and leasing
commissions and second to the payment of Base Rent and Operating Expenses
herein provided to be paid by Tenant, and any excess or residue shall operate
only as an offsetting credit against the amount of Base Rent and Operating
Expenses as the same thereafter becomes due and payable hereunder.  No such re-entry or repossession, repairs,
alterations and additions or reletting shall be construed as an eviction or
ouster of Tenant or as an election on Landlord’s part to terminate this Lease
unless a written notice of such intention be given to Tenant, nor shall the
same operate to release the Tenant in whole or in part from any of the Tenant’s
obligations hereunder, and Landlord may, at any time and, from time to time,
sue and recover judgment for any deficiencies from time to time remaining after
the application from time to time of the proceeds of any such reletting.


 


(c)                                  Other.  Landlord may pursue any other remedy now or
hereafter available to Landlord under the laws in which the Premises are
located. The failure of Landlord at any time to enforce its rights under this
Lease shall not be construed as having created a custom that modifies the
terms, conditions or covenants of the Lease. 
The rights, privileges, elections and remedies of Landlord under this
Lease shall be cumulative, and Landlord shall have the right to exercise such
remedies at any time and from time to time singularly or in combination.  If Landlord exercises either of the remedies
provided for in subparagraphs (a) and (b) hereinabove, Tenant shall
surrender possession and vacate the Premises immediately and deliver possession
thereof to Landlord, and Landlord may then or at any time thereafter re-enter
and take complete and peaceful possession of the Premises.


 


30.                                 Liens. Tenant has no
express or implied authority to create or place any lien or encumbrance of any
kind upon, or in any manner to bind the interest of Landlord or Tenant in, the
Premises or to charge the rentals payable hereunder for any claim in favor of
any person dealing with Tenant, including those who may furnish materials or
perform labor for any construction or repairs. 
Tenant covenants and agrees that it will pay or cause to be paid all
sums legally due and payable for labor performed or materials furnished in
connection with any work performed on the Premises and that it will save and
hold Landlord harmless from all loss, cost or expense based on or arising out
of asserted claims or liens against the leasehold estate or against the
interest of Landlord in


 


8

















 


the
Premises under this Lease.  Tenant shall
give Landlord immediate written notice of the placing of any lien or
encumbrance against the Premises and cause such lien or encumbrance to be
discharged within 30 days of the filing or recording; provided, however, Tenant
may contest such liens or encumbrances as long as such contest prevents
foreclosure of the lien or encumbrance and Tenant causes such lien or
encumbrance to be bonded or insured over in a manner satisfactory to Landlord
within such 30 day period.


 


31.                                 Estoppel Certificate.  The parties shall within 10 days after
written notice from the other party execute and deliver an estoppel certificate
confirming to others that this Lease is in full force and effect, that neither
party is in default and other such factual information as may be reasonably
required.


 


32.                                 Hazardous
Material.  Except for
Hazardous Materials contained in products used by Tenant in de minimis
quantities for ordinary cleaning or office purposes, Tenant shall not permit or
cause any party to bring any Hazardous Materials upon the Premises or
transport, store, use, generate, manufacture or release any Hazardous Material
in or about the Premises without Landlord’s prior written consent.  If Hazardous Materials storage is approved by
Landlord, Tenant shall at all times operate in strict compliance with all
applicable federal, state, and local laws, rules, regulations, and orders.  For purposes of this provision, the term “Hazardous
Materials” shall mean and refer to any waste, pollutant, material, or contaminant,
or other substance of any kind or character that are or become regulated as
hazardous or toxic waste or substance, or which require special handling or
treatment, under any applicable local, state, or federal law, rule, regulation,
or order.  Landlord shall at all times
have access to the Premises and a right to perform inspections and tests with
respect to Hazardous Materials. Tenant, at its sole cost and expense, shall
remediate in a manner satisfactory to Landlord any release of Hazardous
Materials at the Building/Project caused by Tenant, its agents, employees,
contractors, subtenants, or invitees.


 


Tenant
shall indemnify, defend, and hold harmless Landlord from and against (a) any
loss, cost, expense, claim, or liability arising out of any investigation,
monitoring, clean-up, containment, removal, storage, or restoration work the
necessity for which was caused or created by Tenant, its agents, employees,
contractors, subtenants or invitees (herein referred to as “Remedial Work”)
required by, or incurred by Landlord or any other person or party in a
reasonable belief that such Remedial Work is required by any applicable
federal, state or local law, rule, regulation or order, or by any governmental
agency, authority, or political subdivision having jurisdiction over the
Premises, and (b) any claims of third parties for loss, injury, expense,
or damage arising out of the presence, release, or discharge of any Hazardous
Materials on, under, in, above, to, or from the Premises which was caused or
created by Tenant, its agents, employees, contractors, subtenants or invitees
..  In the event any Remedial Work is so
required under any applicable federal, state, or local law, rule, regulation or
order, Tenant shall promptly perform or cause to be performed such Remedial
Work in compliance with such law, rule, regulation, or order.  In the event Tenant shall fail to commence
the Remedial Work in a timely fashion, or shall fail to prosecute diligently
the Remedial Work to completion, such failure shall constitute an event of
default on the part of Tenant under the terms of this Lease, and Landlord, in
addition to any other rights or remedies afforded it hereunder, may, but shall
not be obligated to, cause the Remedial Work to be performed, and Tenant shall
promptly reimburse Landlord for the cost and expense thereof upon demand.  Landlord will not assert a claim against
Tenant for Hazardous Materials which are not caused by Tenant, its agents,
employees, contractors, subtenants, assignees or invitees, or which were released
prior to this Lease Term.


 


33.                                 Miscellaneous.


 


(a)                                  The parties
waive their respective rights to a trial by jury in any action or proceeding
involving the Premises or arising out of this Lease.


 


(b)                                 The parties
agree that in the event any clause or provision of this Lease is ruled illegal,
invalid or unenforceable under present or future laws, then such portion shall
be deemed severable, and it shall not invalidate or impair the Lease as a whole
or any other provision of the Lease.


 


(c)                                  All provisions
of this Lease to be observed or performed by the parties are both covenants and
conditions.  In construing this Lease,
all heading and titles are for convenience of the parties only. Whenever
required by the context, the singular shall mean plural and vice versa. The
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Lease.


 


9

















 


(d)                                 Landlord shall
have the right, at any time without liability to Tenant, to make, at Landlord’s
own expense, repairs, alterations, additions and improvements, structural or
otherwise, in or to the Premises, Building or Project, provided that Landlord
shall use commercially reasonable efforts to minimize the inconvenience or
annoyance to Tenant during construction as is dictated by the circumstances.


 


(e)                                  Time is of the
essence of each and every provision of this Lease.


 


(f)                                    This Lease
constitutes the entire agreement between the parties and supersedes all
promises, representations, negotiations and prior agreements.  No waiver, modifications, additions or
addenda to this Lease shall be valid unless in writing and signed by both the
Landlord and the Tenant.


 


(g)                                 This Lease shall
be binding upon and inure to the parties and their respective successors and
assigns, and this Lease shall be governed by and construed in accordance with
the laws of the state in which the Premises are located.


 


(h)                                 Any payments or
charges due from Tenant to Landlord hereunder shall be considered rent for all
purposes of this Lease.


 


(i)                                     Each individual
executing this Lease represents and warrants that he or she is duly authorize
to do so.


 


(j)                                     Preparation and
submission of this Lease by Landlord to Tenant shall not be deemed an
offer.  This Lease is not intended to be
binding until executed and delivered by all parties hereto.


 


(k)                                  If and when
included within the term “Tenant” as used in this instrument, there is more
than one person, firm or corporation, each shall be jointly and severally
liable for the obligations of Tenant.


 


(l)                                     Upon execution
and delivery of the Lease and occupancy of Premises, Landlord shall pay the
following real estate brokers a commission per separate agreement: CB Richard Ellis represents Landlord
exclusively and Cresa Partners represents Tenant exclusively.  The parties represent and warrant to the
other that it has had no dealings with any other broker or brokers except as
listed above in connection with this Lease. 
The parties agree to indemnify, defend and hold the other harmless from
and against any liability or claim for compensation made by any unnamed broker.


 


(m)                               All notices
required under this Lease to be given to Tenant shall be given to it at the
Premises or at such other place as Tenant may designate in writing.  Any such notice to be given to Landlord under
this Lease shall be given to it at 2200 East Camelback Road, Suite 210,
Phoenix, Arizona 85016, Attn: Asset Manager and 190 East Capitol Street, Suite 400,
Jackson, Mississippi 39201, Attn: President or at such other place as Landlord
may designate in writing.  All notices
shall be in writing and shall be sent by certified mail, postage prepaid, or by
personal delivery, or by commercial courier. 
Notices shall be deemed to have been given (i) in the case of
mailing, when postmarked, or (ii) in the case of hand delivery or delivery
by commercial courier, when delivered.


 


34.           Patriot Act.   Each party hereby represents, warrants and
certifies that: (i) neither it nor its officers, directors, or controlling
owners is acting, directly or indirectly, for or on behalf of any person,
group, entity, or nation named by any Executive Order, the United States
Department of Justice, or the United States Treasury Department as a terrorist,
“Specifically Designated National or Blocked Person,” or other banned or
blocked person, entity, nation, or transaction pursuant to any law, order, rule or
regulation that is enforced or administered by the Office of Foreign Assets
Control (“SDN”); (ii) neither it nor its officers, directors or
controlling owners is engaged in this transaction, directly or indirectly on
behalf of, or instigating or facilitating this transaction, directly or
indirectly on behalf of, any such person, group, entity, or nation; and (iii) neither
it nor its officers, directors or controlling owners is in violation of
Presidential Executive Order 13224, the USA PATRIOT Act, (Public Law 107-56),
the Bank Secrecy Act, the Money Laundering Control Act or any regulations promulgated
pursuant thereto.  Each party hereby
agrees to defend, indemnify and hold harmless the other party from and against
any and all claims, damages, losses, risks, liabilities and expenses (including
reasonable attorneys’ fees and costs) arising from or related to any breach of
the foregoing representations, warranties and certifications by the
indemnifying party.  The provisions of
this Paragraph shall survive the expiration or earlier termination of this
Lease.


 


10

















 


35.           Exhibits.  The Exhibits listed below are incorporated
into and made a part of this Lease:


 


Exhibit A
- Premises


Exhibit B
- Rules and Regulations


Exhibit C
– Improvements


Exhibit D
– Renewal Option


 


IN
WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date
written on Page 1.


 


	
  LANDLORD

  	
   

  	
  TENANT

  
	
   

  	
   

  	
   

  
	
  EASTGROUP
  PROPERTIES, L.P.,

  	
   

  	
  CardioNet, Inc.,

  
	
  a
  Delaware limited partnership

  	
   

  	
  a
  Delaware corporation

  
	
  By:
  EastGroup General Partners, Inc.,

  	
   

  	
   

  
	
  a
  Delaware corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  William
  D. Petsas

  	
   

  	
   

  	
  Name:
  

  	
  John
  F. Imperato

  
	
   

  	
  Senior
  Vice President

  	
   

  	
   

  	
  Title:
  

  	
  Senior
  Vice President, Business Operations

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Michael
  P. Sacco, III

  	
   

  	
   

  
	
   

  	
  Vice
  President

  	
   

  	
   

  



 


11

















 


Exhibit A


Premises


 


The
Premises contain 10,818 rentable square feet and is known by the following
street address 2750 South 18th Place, Suite 100, Phoenix,
Arizona 85034.


 





 


12

















 


Exhibit B


Rules and
Regulations


 


1.               The sidewalk, entries, and
driveways of the Project shall not be obstructed by Tenant, or its agents, or
used by them for any purpose other than ingress and egress to and from the
Premises.


 


2.               Tenant shall not place any
objects, including antennas, outdoor furniture, etc., in the parking areas,
landscaped areas or other areas outside of its Premises, or on the roof of the
Project.


 


3.               Except for seeing-eye dogs,
no animals shall be allowed in the offices, halls, or corridors in the Project.


 


4.               Tenant shall not disturb the
occupants of the Project or adjoining buildings by the use of any radio or
musical instrument or by the making of loud or improper noises.


 


5.               If Tenant desires
telegraphic, telephonic or other electric connections in the Premises, Landlord
or its agent will direct the electrician as to where and how the wires may be
introduced; and, without such direct, no boring or cutting of wires will be
permitted.  Any such installation or
connection shall be made at Tenant’s expense.


 


6.               Tenant shall not install or
operate any steam or gas engine or boiler, or other mechanical apparatus in the
Premises, except as specifically approved in the Lease.  The use of oil, gas or inflammable liquids
for heating, lighting or any other purpose is expressly prohibited.  Explosives or other articles deemed extra
hazardous shall not be brought into the Project.


 


7.               Parking any type of
recreational vehicles is specifically prohibited on or about the Project.  Except for the overnight parking of operative
vehicles, no vehicle of any type shall be stored in the parking areas at any
time.  In the event that a vehicle is
disabled, it shall be removed within 48 hours. 
There shall be no “For Sale” or other advertising signs on or about any
parked vehicle.  All vehicles shall be
parked in the designated parking areas in conformity with all signs and other
markings.  All parking will be open
parking, and no reserved parking, numbering or lettering of individual spaces
will be permitted except as specified by Landlord.


 


8.               Tenant shall maintain the
Premises free from rodents, insects and other pests.


 


9.               Landlord reserves the right
to exclude or expel from the Project any person who, in the judgment of
Landlord, is intoxicated or under the influence of liquor or drugs or who shall
in any manner do any act in violation of the Rules and Regulations of the
Project.


 


10.         Tenant shall not cause any
unnecessary labor by reason of Tenant’s carelessness or indifference in the
preservation of good order and cleanliness. 
Landlord shall not be responsible to Tenant for any loss of property on
the Premises, however occurring, or for any damage done to the effects of
Tenant by the janitors or any other employee or person.


 


11.         Tenant shall give Landlord
prompt notice of any defects in the water, lawn sprinkler, sewage, gas pipes,
electrical lights and fixtures, heating apparatus, or any other service
equipment affecting the Premises.


 


12.         Tenant shall not permit
storage outside the Premises or dumping of waste or refuse or permit any
harmful materials to be placed in any drainage system or sanitary system in or
about the Premises.


 


13.         All moveable trash
receptacles provided by the trash disposal firm for the Premises must be kept
in the trash enclosure areas, if any, provided for that purpose.


 


14.         No auction, public or
private, will be permitted on the Premises or the Project.


 


13

















 


15.         No awnings shall be placed
over the windows in the Premises except with the prior written consent of
Landlord.


 


16.         The Premises shall not be
used for lodging, sleeping or cooking or for any immoral or illegal purposes or
for any purpose other than that specified in the Lease.  No gaming devices shall be operated in the
Premises.


 


17.         Tenant shall ascertain from
Landlord the maximum amount of electrical current, which can safely be used in
the Premises, taking into account the capacity of the electrical wiring in the
Project and the Premises and the needs of other tenants, and shall not use more
than such safe capacity.  Landlord’s
consent to the installation of electric equipment shall not relieve Tenant from
the obligation not to use more electricity than such safe capacity.


 


18.         Tenant assumes full
responsibility for protecting the Premises from theft, robbery and pilferage.


 


19.         Tenant shall not install or
operate on the Premises any machinery or mechanical devices of a nature not
directly related to Tenant’s ordinary use of the Premises and shall keep all
such machinery free of vibration, noise and air waves which may be transmitted
beyond the Premises.


 


20.         Tenant shall be allowed to
install an outside trash compactor at one of Tenant’s loading docks.


 


14

















 


Exhibit C


Improvements


 


a)                                      Landlord agrees to furnish
or perform at Landlord’s sole cost and expense those items of construction and
those improvements (the “Improvements”) specified below in accordance with
building standards:


 


·                  Construct
approximately 10,818 square feet of office/production and warehouse area as
depicted on the attached floor plan labeled Exhibit C, Improvements, Floor
Plan.


·                  Install 4 T-5
florescent lights in the warehouse area


 


b)                                     If Tenant shall
desire any changes, after Tenant signs and approves the final construction
drawings Tenant shall so advise Landlord in writing and Landlord shall
determine within 3 days whether such changes can be made in a reasonable and
feasible manner.  Any and all costs of
reviewing any requested changes, and any and all costs of making any changes to
the Improvements which Tenant may request and which Landlord may agree shall be
at Tenant’s sole cost and expense and shall be paid to Landlord upon demand and
before execution of the change order.


 


c)                              Landlord shall proceed
with and complete the construction of the Improvements.  As soon as such Improvements have been
Substantially Completed and Landlord delivers a Certificate of Occupancy from
City of Phoenix to Tenant, Landlord shall notify Tenant in writing of the date
that the Tenant Improvements were Substantially Completed.  Such date, unless an earlier date is
specified as the Commencement Date in the Lease or otherwise agreed to in
writing between Landlord and Tenant, shall be the Commencement Date unless the completion
of such improvements was delayed due to any act or omission of, or delay caused
by, Tenant including, without limitation, Tenant’s failure to approve plans,
complete submittals or obtain permits within the time periods agreed to by the
parties or as reasonably required by Landlord, in which case the Commencement
Date shall be the date such improvements would have been completed but for the
delays caused by Tenant.  The
Improvements shall be deemed substantially completed (“Substantially Completed”)
when, in the opinion of the construction manager (whether an employee or agent
of the Landlord or a third party construction manager), the Premises are
substantially completed except for punch list items which do not prevent in any
material way the use of the Premises for the purposes for which they were
intended and Landlord has delivered to Tenant a Certificate of Occupancy from
the City of Phoenix.  After the
Commencement Date, Tenant shall, upon demand, execute and deliver to Landlord a
letter of acceptance of delivery of the Premises.


 


d)                                     The failure of
Tenant to take possession of or to occupy the Premises shall not serve to
relieve Tenant of the obligations arising on the Commencement Date or delay the
payment of rent by Tenant.  Subject to
applicable ordinances and building codes governing Tenant’s right to occupy or
perform in the Premises.  Tenant shall be
allowed to install its Tenant Improvements, machinery, equipment, fixtures, or
other property on the Premises at least three weeks prior to completion of
construction provided that such permission is granted by the City of Phoenix
building inspector and Tenant does not thereby interfere with the completion of
construction or cause any labor dispute as a result of such installations, and
provided further that property, and all liability, loss, or damage arising from
any injury to the Project or the property of Landlord, its contractors,
subcontractors, or materialmen, and any death or personal injury to any person
or persons arising out of such installations. 
Delay in putting Tenant in possession of the Premises shall not make
Landlord liable for any damages arising therefrom.


 


e)                                      Except for
incomplete punch list items, which shall be completed within 30 days of receipt
of a Certificate of Occupancy Tenant upon the Commencement Date shall have and
hold the Premises as the same shall then be without any liability or obligation
on the part of the Landlord for making any further alterations or improvements
of any kind in or about the Premises.


 


f)                                        Notwithstanding
anything to the contrary contained herein, all manufacturer’s and contractor’s
warranties shall be available for Tenant’s benefit and be for a minimum period
of one year from the Commencement Date.


 


15

















 


Exhibit C


Improvements


Floor
Plan


 





 


NOTE: THIS FLOOR PLAN IS A GENERAL GUIDELINE OF THE
IMPROVEMENTS TO BE CONSTRUCTED AND WILL BE REPLACED WITH THE ARCHITECT’S FINAL
FLOOR PLAN AS MUTUALLY AGREED UPON BETWEEN LANDLORD AND TENANT.


 


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Exhibit D


Renewal Option


 


(a)                                  Provided that
as of the time of the giving of the Extension Notice and the Commencement Date
of the Extension Term, (x) Tenant is the Tenant originally named herein or
is an entity controlling Tenant, controlled by Tenant, or under common control
with Tenant,  (y) Tenant actually
occupies all of the Premises initially demised under this Lease and any space
added to the Premises, and (z) no Event of Default exists or would exist
but for the passage of time or the giving of notice, or both, then Tenant shall
have the right to extend the Lease Term for one additional term of 5 years
(such additional term is hereinafter called the “Extension Term”) commencing on
the day following the expiration of the Lease Term (hereinafter referred to as
the “Commencement Date of the Extension Term”). 
Tenant shall give Landlord written notice (hereinafter called the “Extension
Notice”) of its election to extend the term of the Lease Term at least 6
months, prior to the scheduled expiration date of the Lease Term.


 


(b)                                 The Base Rent payable
monthly by Tenant to Landlord during the Extension Term shall be the greater of
(i) the Base Rent applicable to the last year of the initial Lease term
and (ii) the then prevailing market rate for comparable space in the
Project and comparable buildings in the vicinity of the Project, taking into
account the size of the Lease, the length of the renewal term, market
escalations and the credit of Tenant. 
The Base Rent shall not be reduced by reason of  any costs or expenses saved by Landlord by
reason of Landlord’s not having to find a new tenant for such premises
(including, without limitation, brokerage commissions, costs of improvements,
rent concessions or lost rental income during any vacancy period. In the event
Landlord and Tenant fail to reach an agreement on such rental rate and execute
the Amendment (defined below) at least 4 months prior to the expiration of the
Lease, then Tenant’s exercise of the renewal option shall be deemed withdrawn
and the Lease shall terminate on its original expiration date.


 


(c)                                  The determination of
Base Rent does not reduce the Tenant’s obligation to pay or reimburse Landlord
for Operating Expenses and other reimbursement items as set forth in the Lease,
and Tenant shall reimburse and pay Landlord as set forth in Lease with respect
to such Operating Expenses and other items with respect to the Premises during
the Extension Term without regard to any cap on such expenses set forth in the
Lease.


 


(d)                                 Except for the Base
Rent as determined above, Tenant’s occupancy of the Premises during the
Extension Term shall be on the same terms and conditions as are in effect
immediately prior to the expiration of the initial Lease Term; provided,
however, Tenant shall have no further right to any allowances, credits or
abatements or any options to expand, contract, renew or extend the Lease.


 


(e)                                  Time is of the essence
as to the giving of the Extension Notice. If Tenant does not give the Extension
Notice within the period set forth in paragraph (a) above, Tenant’s right
to extend the Lease Term shall automatically terminate.


 


(f)                                    Landlord shall have no
obligation to refurbish or otherwise improve the Premises for the Extension
Term.  The Premises shall be tendered on
the Commencement Date of the Extension Term in “AS-IS” condition.


 


(g)                         If the Lease is
extended for the Extension Term, then Landlord shall prepare and Tenant shall
execute an amendment to the Lease confirming the extension of the Lease Term
and the other provisions applicable thereto.


 


(h)                                 If Tenant
exercises its right to extend the term of the Lease for the Extension Term
pursuant to this Addendum, the term “Lease Term” as used in the Lease, shall be
construed to include, when practicable, this Extension Term.


 


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