Exhibit 10.51



 


Exhibit 10.51







LEASE SUMMARY ~ INTUIT, INC.




	 	 	 
	LANDLORD:	 	
Pegasus Aviation, Inc.
	 	 	
4 Embarcadero Center, 35th Floor
	 	 	
San Francisco, CA 94111
	 	 	
Rich Oster, President
	 	 	
(415) 434-3900
	 
	TENANT:	 	
Intuit, Inc.
	 	 	
2632 Marine Way
	 	 	
Mountain View, CA 94043
	 
	PREMISES:	 	
6550 S. Country Club Rd.
	 	 	
Tucson, AZ 85715
	 
	BUILDING SIZE:	 	
50,167 Sq Ft
	 
	LEASE TERM:	 	
2 years
	 
	COMMENCEMENT DATE:	 	
October 1, 2002
	 
	LEASE EXPIRATION DATE:	 	
September 30, 2004
	 
	EARLY TERMINATION:	 	
March 31, 2004, with 90 days prior written notice to Landlord.
	 
	OPTION TO RENEW:	 	
Six options to extend for 6 months each with 90 days prior written
notice to Landlord.




RENTAL RATE




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	YEAR	 	MONTHLY/SQ FT	 	ANNUALLY/SQ FT
	 
	 	 	1	 	 	$	28,494.13	 	 	$	341,929.56	 
	 
	 	 	2	 	 	$	29,348.95	 	 	$	352,187.45	 
	1st & 2nd Option Term
	 	 	3	 	 	$	30,229.42	 	 	$	362,753.07	 
	3rd & 4th Option Term
	 	 	4	 	 	$	31,136.30	 	 	$	373,635.66	 
	5th & 6th Option Term
	 	 	5	 	 	$	32,070.39	 	 	$	384,844.73	 




EXPENSES ON TRIPLE NET BASIS




	 	 	 	 	 	 	 
	MONTHLY	 	ANNUALLY
	$	5,518.00
	 	 	$66,220.00



 









 


TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	ARTICLE	 	PAGE
	NUMBER & TITLE	 	NUMBER
	

	 	1	 	 	Definitions
	 	 	1	 
	 	2	 	 	Demise, Term, Option to Extend and Early Access
	 	 	3	 
	 	3	 	 	Rent
	 	 	3	 
	 	4	 	 	Use of Premises
	 	 	4	 
	 	5	 	 	Leasehold Improvements and Trade Fixtures
	 	 	5	 
	 	6	 	 	Repair and Maintenance
	 	 	5	 
	 	7	 	 	Common Area Charges
	 	 	6	 
	 	8	 	 	Utilities and Services
	 	 	6	 
	 	9	 	 	Insurance
	 	 	7	 
	 	10	 	 	Indemnity and Exculpation
	 	 	8	 
	 	11	 	 	Damage and Destruction
	 	 	10	 
	 	12	 	 	Condemnation
	 	 	11	 
	 	13	 	 	Assignment and Subletting
	 	 	11	 
	 	14	 	 	Default
	 	 	13	 
	 	15	 	 	Signs
	 	 	14	 
	 	16	 	 	Subordination
	 	 	14	 
	 	17	 	 	Termination
	 	 	15	 
	 	18	 	 	General Provisions
	 	 	15	 
	 	19	 	 	Reserved Rights of Landlord
	 	 	18	 
	 	20	 	 	Notice to Landlord’s Lender
	 	 	18	 
	 	21	 	 	Termination
	 	 	18	 
	 	22	 	 	Partial Reimbursement of AIC Moving Expenses
	 	 	18	 





	 	 	 
	EXHlBITS	 	 
	

	Exhibit A-1	 	
Site Plan
	Exhibit A-2	 	
Floor Plan
	Exhibit A-3	 	
Legal Description of Property
	Exhibit B	 	
Work Letter
	Exhibit C	 	
Furniture



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LEASE




	 	 	 
	LANDLORD:	 	
Pegasus Aviation, Inc.
	 	 	
4 Embarcadero Center, 35th Floor
	 	 	
San Francisco, CA 94111
	 	 	
Attention: General Counsel
	 
	TENANT:	 	
Intuit Inc.
	 	 	
2632 Marine Way
	 	 	
Mountain View, CA 94043
	 	 	
Attention: Heather Macdonald
	 
	 	 	
with a copy of all notices to:
	 
	 	 	
Intuit Inc.
	 	 	
2700 Coast Avenue
	 	 	
Mountain View, CA 94043
	 	 	
Attention: General Counsel
	 
	 	 	
with a copy of all notices to Tenant at the Premises
	 
	PREMISES:	 	
6550 S. Country Club Road
	 	 	
Tucson, Arizona 85715
	 
	DATE:	 	
August 16, 2002



 







 



LEASE



     THIS LEASE AGREEMENT, dated August 16, 2002 for reference purposes only,
is made by and between Pegasus Aviation, Inc., a California corporation,
(“Landlord”), and Intuit Inc., a Delaware corporation (“Tenant”).





	1.	 	DEFINITIONS:



Any term that is given a special meaning, by this Article 1 or by any other
provision of this Lease, (including any exhibits attached hereto) shall have
such meaning when used in this Lease, or any addendum, or amendment hereto.





	1.1 	 	Additional Rent: “Additional Rent” means all payments of Rental
other than Basic Rent, including, without limitation, payments of Real Property
Tax, Insurance, Security Deposit, Late Charges, interest, indemnity payments,
payments in respect of condemnation and Casualty.
	 
	1.2 	 	Agreed Interest Rate: “Agreed Interest Rate” means an interest rate
of either (i) the rate of interest per annum publicly announced, quoted or
published, from time to time, by Bank of America, at its Phoenix, Arizona
office, as its “reference rate” plus 2 percentage points, or (ii) the maximum
applicable rate permitted by Law, whichever is less.
	 
	1.3 	 	Base Rent: “Base Rent” is defined in Section 3.1.
	 
	1.4 	 	Building: “Building” means that certain building commonly known as
6550 S. Country Club Road, Tucson, Arizona 85715.
	 
	1.5 	 	Intentionally Deleted.
	 
	16 .	 	Casualty: “Casualty” is defined in Section 10.1.
	 
	1.7 	 	Intentionally Deleted.
	 
	1.8 	 	Commencement Date: “Commencement Date” means October 1, 2002, the
date Rental Payments commence hereunder.
	 
	1.9	 	Default: “Default” is defined in Section 13.1.
	 
	1.10 	 	Force Majeure Delays: “Force Majeure Delays” is defined in Section 17.8.
	 
	1.11 	 	Hazardous Material: “Hazardous Material” means any material or
substance that is now or hereafter prohibited or regulated by any Law or that
is now or hereafter designated by any governmental authority to be radioactive,
toxic, hazardous or otherwise a danger to health, reproduction or the
environment, including, without limitation, asbestos and petroleum products.
	 
	1.12 	 	Law: “Law” means any judicial decision, statute, constitution,
ordinance, resolution, order, or other requirement of any municipal, county,
state, federal, or other government agency or authority having jurisdiction
over the parties to this Lease, the Building, or both, in effect either at the
Commencement Date of this Lease or any time during the Term.
	 
	1.13	 	Lease: “Lease” means this printed lease and all of the exhibits
attached hereto and made a part hereof, as the same may be amended in
accordance with this Lease from time to time.
	 
	1.14 	 	Leasehold Improvements: “Leasehold Improvements” means all
improvements, additions, alterations, and fixtures installed in or on the
Premises by Tenant, at its expense, which are not Trade Fixtures, including,
without limitation, the Work described on Exhibit B.
	 
	1.15 	 	Lender: “Lender” means any beneficiary, mortgagee, secured party, or
other holder of any deed of trust, mortgage or other written security device or
agreement affecting the Building, and the note or other obligations secured by
it.
	 
	1.16 	 	Parking Areas: “Parking Areas” is defined in Section 4.3.



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	1.17 	 	Permitted Use: “Permitted Use” means the use of the Premises for
general office, administrative, training facility, warehouse and engineering
uses and for no other use.
	 
	1.18 	 	Premises: “Premises” means the entirety of the Building, which is to
be occupied by Tenant as outlined on the Floor Plan attached hereto as Exhibit
A-2, and all rights and appurtenances thereto.
	 
	1.19 	 	Property: “Property” means the parcel of real estate located in
Tucson, Arizona, depicted on the Site Plan attached hereto as
Exhibit A-1 and
legally described on Exhibit A-3 attached hereto and incorporated herein by
this reference, together with the office building(s) now or hereafter situated
thereon, the landscaping, parking facilities and all other improvements, rights
and appurtenances thereto.
	 
	1.20 	 	Private Restrictions: “Private Restrictions” means all recorded
covenants, conditions and restrictions, private agreements, and any other
recorded instruments affecting the use of the Building and Common Area, as they
may exist from time to time. Landlord hereby represents and warrants that the
existing Private Restrictions will not prevent or limit Tenant from operating
in the Premises in accordance with the Permitted Use.
	 
	1.21 	 	Real Property Taxes: “Real Property Taxes” means all real property
taxes, assessments and other charges imposed by any governmental or
quasi-governmental authority, which are levied or assessed by reason of the
ownership or use of the Property or the Building or any portion thereof, or any
legal or equitable interest of Landlord or Tenant therein, including, without
limitation, any license taxes, or ad valorem taxes on Landlord’s personal
property located on and used in connection with the Building, any tax for
services provided to the Building, or any taxes, impositions, fees, including,
without limitation, any sales, rental, occupancy, excise, use or transaction
privilege taxes assessed or levied upon Landlord with respect to the amounts
paid by Tenant to Landlord hereunder, as well as all taxes assessed or imposed
upon Landlord’s gross receipts from leasing the Premises to Tenant, including,
without limitation, any tax now or subsequently imposed by the city in which
the Property is located, the County of Pima, the State of Arizona, any other
governmental or municipal body, and any taxes assessed or imposed in lieu of or
in substitution of any of the foregoing taxes. Notwithstanding the foregoing,
the term “Real Property Taxes” shall not include estate, inheritance, transfer,
gift or franchise taxes of Landlord, any federal, state or local income, sales
or transfer tax, penalties and interest for Landlord’s failure to file returns
or pay taxes as and when required, or any increase in Real Property Taxes
resulting from a change of ownership (unless the change in ownership results
from a sale to Tenant). All reasonable costs, expenses, attorneys’ fees and
consulting fees (including, without limitation, the costs of tax consultants)
incurred in good faith by Landlord in connection with attempting to reduce the
assessed valuation of land, buildings and improvements on the Property and/or
in protesting or contesting the amount or validity of any Real Property Taxes
shall also constitute Real Property Taxes for the purposes hereof.
	 
	1.22 	 	Remedial Work: “Remedial
Work” is defined in Section 4.4.
	 
	1.23 	 	Rentals: The term “Rentals” as used in this Lease shall include all
Base Rent and Additional Rent. All Rentals shall be paid to Landlord at the
following address: 4 Embarcadero Center, 35th Floor, San Francisco, CA. Attn:
Controller.
	 
	1.24 	 	Successor Landlord: “Successor Landlord” is defined in Section 15.2.
	 
	1.25 	 	Security Deposit: “Security Deposit” is defined in Section 3.5.
	 
	1.26 	 	Intentionally deleted.
	 
	1.27 	 	Superior Mortgagee: “Superior Mortgagee” is defined in Section 15.1.
	 
	1.28 	 	Tenant’s Share: “Tenant’s Share” means 100%.
	 
	1.29 	 	Term: “Term” means that period of time commencing on the
Commencement Date and ending
on September 30, 2004, as it may be extended or sooner terminated as provided
herein.



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	1.30 	 	Trade Fixtures: “Trade Fixtures” means anything affixed to the
Building by Tenant at its expense for purposes of trade, manufacture, ornament,
or domestic use which can be removed without material structural injury to the
Building.
	 
	1.31 	 	Transfer:
“Transfer” is defined in Section 12.1.
	 
	1.32 	 	Work: “Work” is
defined in the Work Letter attached as Exhibit B. The
cost of performing the Work shall be the responsibility of the Tenant.
	 
	2.	 	DEMISE, TERM, OPTION TO EXTEND AND EARLY ACCESS:
	 
	2.1 	 	Demise of Premises: Landlord leases to Tenant, and Tenant leases from
Landlord, for the Term (as defined in Section 1.29 above) upon the terms and
conditions of this Lease, the Premises.
	 
	2.2 	 	Commencement Date: October 1, 2002.
	 
	2.3 	 	Options to Extend Term: Provided no Default shall have occurred and
be continuing, Landlord grants to Tenant the following options to extend the
Term (the “Extended Term”) on all the provisions contained in this Lease: Six
(6) options to extend the Term, each for an additional term of six (6) months
commencing when the initial or then-existing Extended Term, if applicable,
expires. Tenant may exercise its option(s) of extension by giving written
notice to Landlord at least Ninety (90) days before the expiration of the
initial Term or Extended Term, as the case may be. The Rentals for the Extended
Term shall be as set forth in Article 3 below.
	 
	2.4 	 	Early Access: Notwithstanding anything to the contrary in this Lease,
Tenant shall be granted immediate access to the Premises following full
execution of this Lease in order to install its Leasehold Improvements, Trade
Fixtures and other property, and otherwise to prepare the Premises for Tenant’s
occupancy and use thereof. All the terms of this Lease shall apply during such
period of early access except that no Rentals shall be due for any portion of
such early access period.
	 
	3.	 	RENT:
	 
	3.1 	 	Base Rent: Tenant shall pay to Landlord, as base rent (the “Base Rent”) for
the Premises, one-twelfth (1/12) the applicable annual rental rate in advance
on the first day of each month during the Term. Base Rent for the Term,
beginning on the Commencement Date, and continuing through the end of the
twelfth (12th) full calendar month thereafter, shall be $341,929.56; and each
monthly installment shall be $28,494.13. Base Rent for the thirteenth (13th)
through the twenty-fourth (24th) full calendar months of the Term shall be
$352,187.45; and each monthly installment shall be $29,348.95. If Tenant
exercises its first or second option pursuant to Section 2.3 above, Base Rent
for the first and second Extended Term(s) shall be equal to $362,753.07; and
each monthly installment shall be $30,229.42. If Tenant exercises its third or
fourth option pursuant to Section 2.3 above, Base Rent for the third and fourth
Extended Term(s) shall be equal to $373,635.66; and each monthly installment
shall be $31,136.31. If Tenant exercises its fifth or sixth option pursuant to
Section 2.3 above, Base Rent for the fifth and sixth Extended Term(s) shall be
equal to $384,844.73; and each monthly installment shall be $32,070.39. Base
Rent shall be prorated for any partial month based on the actual number of days
in the partial month.
	 
	3.2 	 	Real Property Tax: Tenant shall pay to Landlord, as Additional Rent,
during the Term, in addition to the Base Rent, Tenant’s Share of the amount of
the Real Property Taxes incurred by Landlord during each calendar year (or
portion thereof if less than a full calendar year).
	 
	3.3 	 	Rental Payments: All Rentals required to be paid in monthly installments
shall be paid in advance on the first day of each calendar month during the
Term. All Rentals shall be paid in lawful money of the United States, to
Landlord at its address set forth in Section 1.23 above or at such other place
as Landlord may designate from time to time by not less than thirty (30) days’
prior written notice to Tenant. Tenant’s obligation to pay Rentals shall be
prorated during any partial month of the Term based on the actual number of
days in the partial month.
	 
	3.4 	 	Late Payment Charge: If any installment of any Rentals or any other
sum due from Tenant is not paid within five (5) days after the date when due,
Tenant shall pay to Landlord an additional sum



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	 	 	equal to five percent (5%) of
the amount overdue as a late charge. The parties agree that the foregoing sums
represent a fair and reasonable estimate of the costs that Landlord will incur
by reason of the late payment by Tenant. Acceptance of any late charge shall
not constitute a waiver of Tenant’s Default with respect to the overdue amount.
The parties further agree that in any twelve (12)-month period Landlord shall
have no obligation to provide more than one written notice of delinquency as a
condition to the foregoing late payment.
	 
	3.5 	 	Security Deposit: None.
	 
	4.	 	USE OF PREMISES:
	 
	4.1 	 	Tenant’s Use of Premises: Tenant may use the Premises for the Permitted Use
only. Tenant shall not commit any waste, or allow any nuisance, on the
Premises.
	 
	4.2 	 	Compliance with Laws and Private Restrictions: Tenant shall observe and
comply with all Laws and Private Restrictions applicable to the Premises;
provided, however, that Landlord shall be responsible at no cost to Tenant to
cure any failure of the Premises, the Building or the Property to comply in all
respects with all Laws in effect at the Commencement Date; and provided also
that Landlord shall make such repairs and improvements as may be necessary to
cause the Premises to comply with all Laws applicable to the condition of
office space generally and not required solely by Tenant’s particular use or
manner of use of the Premises or required by Tenant’s Work at the Premises.
	 
	4.3 	 	Parking and Reservation of Rights: Tenant may use the 293 parking
spaces available at the Property (the “Parking Areas”). Such parking spaces
shall be non designated. No storage of vehicles or parking for more than
twenty-four (24) hours is allowed without Landlord’s prior written consent,
which consent may be withheld in its sole but reasonable discretion. Landlord
shall have the right to establish, and from time to time change, alter and
amend, and to enforce against all users of the Parking Areas, such requirements
and restrictions as Landlord deems necessary and advisable for the proper
operation and maintenance of the Parking Areas, including, without limitation,
designation of particular areas for reserved, visitor and/or employee parking,
and establishment of a reasonable rental charge for the use of the covered
Parking Areas by the general public.
	 
	4.4 	 	Hazardous Materials: Tenant shall not introduce any Hazardous Materials on
or about the Premises, Building or Property without the prior written consent
of the Landlord. Tenant shall notify Landlord of the approximate amount,
nature, and manner of its intended use. Tenant, at its sole cost, shall comply
with all Laws relating to the storage, use, disposal, emission, or release of
any Hazardous Materials by Tenant or its agents, employees or contractors. If
Hazardous Materials stored, used, disposed of, emitted, or released on or about
the Premises, Building or Property by Tenant or its agents, employees,
contractors, invitees, licensees (of the Premises), sublessees or assignees
result in contamination or deterioration of water or soil on or about the
Premises, Building or Property, then Tenant shall promptly take any and all
action necessary to clean up such contamination as required by Law. Tenant
shall perform any monitoring, investigation, clean-up, removal and other
remedial work (collectively, “Remedial Work”) required as a result of any
release or discharge of Hazardous Materials affecting the Premises, the
Building or the Property, or any violation of applicable environmental Laws in
each case by Tenant or any assignee or sublessee of Tenant or their respective
agents, contractors, employees, licensees (of the Premises), or invitees. Prior
to the commencement of any Remedial Work, Tenant shall give Landlord not less
than five (5) days’ prior written notice. Landlord shall have the right to
participate in any governmental action or proceeding involving any Remedial
Work, and to approve performance of such Remedial Work, in order to protect
Landlord’s interests. At any time prior to the expiration of the Term, Tenant
shall have the right to conduct appropriate tests of water and soil and deliver
to Landlord the results of such tests to demonstrate that no contamination has
occurred as a result of Tenant’s use of the Premises. Tenant shall be solely
responsible for, and shall defend, indemnify and hold Landlord harmless for, from and against, all claims,
costs and liabilities, including attorneys’ fees and costs, to the extent
arising out of the disposal or release of Hazardous Materials on or about the
Premises, Building or Property by Tenant or its agents, employees, contractors,
invitees, licensees (of the Premises),



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	 	 	sublessees or assignees. Notwithstanding
anything to the contrary in this Section 4.4, Tenant shall be permitted,
consistent with applicable Laws, to use, store and dispose of at the Premises
standard office and janitorial products in reasonable quantities needed for the
operation of Tenant’s business.
	 
	5.	 	LEASEHOLD IMPROVEMENTS AND TRADE FIXTURES:
	 
	5.1 	 	Leasehold Improvements: Tenant may construct the improvements outlined in
Exhibit B, referred to as the “Work Letter.” Other leasehold improvements may
be made, but only with Landlord’s approval, which approval shall not be
unreasonably withheld or delayed; provided that Landlord’s consent shall not be
required to construct any Leasehold Improvements which do not affect the
structural parts or exterior of the Premises, provided that Tenant provides
Landlord with the proposed architectural and structural plans for all Leasehold
Improvements at least fifteen (15) days prior to start of construction and
provides notice of commencement of such Leasehold Improvements; provided
further that Landlord’s failure to reply to requested leasehold improvements
within five (5) business days shall be deemed Landlord’s approval thereof. If
and when Landlord consents to a Leasehold Improvement or receives notice of
commencement of such Leasehold Improvements, then Landlord shall also notify
Tenant, in writing, of Landlord’s election either to: (i) allow such
improvement to remain at the Premises at the termination of this Lease; or (ii)
require Tenant to remove such improvement at the termination of this Lease. All
such improvements or alterations must conform to, and be in accordance in
quality and appearance, with those improvements and alterations that are
standard for the Building, and upon completion shall be the property of
Landlord (except for personal property, equipment and Trade Fixtures of Tenant,
which may be removed by Tenant so long as Tenant repairs all damage to the
Premises and/or Building caused by such removal). All repairs required of
Tenant pursuant to the provisions of this Article 5 shall be performed in a
manner reasonably satisfactory to Landlord, and shall include, but not be
limited to, repairing plumbing, electrical wiring and holes in walls. restoring
damaged floor and/or ceiling tiles, repairing any other cosmetic damage, and
cleaning the Premises. Tenant shall provide Landlord with evidence that
Tenant’s contractor has procured worker’s compensation, liability and property
damage insurance (naming Landlord as an additional insured) in a form and in an
amount reasonably acceptable to Landlord, and evidence that Tenant’s architect
and/or contractor has procured the necessary permits, certificates and
approvals from the appropriate governmental authorities. Tenant acknowledges
and agrees that any review by Landlord of Tenant’s plans and specifications
and/or right of approval exercised by Landlord with respect to Tenant’s
architect and/or
contractor is for Landlord’s benefit only and Landlord shall not, by virtue of
such review or right of approval, be deemed to make any representation,
warranty or acknowledgment to Tenant or to any other person or entity as to the
adequacy of Tenant’s plans and specifications or as to the ability, capability
or reputation of Tenant’s architect and/or contractor.
	 
	5.2 	 	Trade Fixtures: Tenant may install in the Premises such Trade Fixtures as
it considers advisable for the conduct of its business. All Trade Fixtures
installed by and/or at the expense of Tenant shall remain the property of
Tenant. Upon the Lease termination, Tenant shall remove any Trade Fixtures and
shall repair any damage to the Premises caused by such removal. Tenant shall
have the right throughout the Term to use the office furniture and phone system
listed in Exhibit C hereof which currently exists at the Premises. Tenant
shall, at its sole cost and expense, keep the furniture in good condition and
order and shall repair or replace such furniture, as necessary. Tenant shall
return the furniture to Landlord at the expiration or earlier termination of
the Term in the same condition as delivered, ordinary wear and tear excepted.
Tenant shall give Landlord prompt notice of any material damage or defective
condition of such furniture.
	 
	5.3 	 	Liens: Tenant shall keep the Premises free from any liens arising out of
any work performed, materials furnished, or obligations incurred by Tenant, its
agents, employees or contractors relating to the Premises. If any claim of lien
is recorded, Tenant shall bond against or discharge the same within ten (10)
days after Tenant’s receipt of written notice that the same has been recorded
against the Premises.



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	6.	 	REPAIR AND MAINTENANCE:
	 
	6.1 	 	Repair of the Premises by Landlord: Except for damage caused by Tenant or
Tenant’s agents, employees or invitees, Landlord shall maintain the structural
parts of the Building, including, without limitation, the foundations, columns,
footings, exterior walls, sub-flooring, structural portion of the roof, and all
pipes and conduit (including, without limitation, the fire protection loop) to
the point of entry into the Building. Landlord shall perform its obligations
under this Section 6.1 at its sole cost and expense, except that Tenant shall
pay to Landlord as to any capital repairs or replacements an annual amount
equal to the cost of such capital repair or replacement amortized (with
interest at Landlord’s cost of funds) over the useful life of such repair or
replacement, as reasonably determined by Tenant.
	 
	6.2 	 	Tenant’s Obligations: Except for the portion of the Premises to be
maintained by Landlord, under Section 6.1 above, Tenant shall, at Tenant’s sole
cost and expense, maintain the windows, frames, gutters, downspouts, sidewalks,
curbs, the non-structural portions of the roof, parking lots and common areas
of the Premises in a clean, neat and sanitary condition and shall keep the
Premises and every part thereof (including without limitation, interior
walls, floor coverings, ceilings (including tiles and grid), all Leasehold
Improvements to the Premises, outlets and fixtures in good condition and
repair. Tenant shall maintain electrical, lighting, plumbing, sewage, heating,
ventilating, air-conditioning, emergency fire protection, life safety and
support systems servicing the Premises. Tenant hereby waives all rights to make
repairs at the expense of Landlord as provided by any law, statute or ordinance
now or hereafter in effect. Upon the expiration or earlier termination of the
Term, Tenant shall surrender the Premises, including Tenant’s Leasehold
Improvements, including but not limited to furniture and phone system, as set
forth in Section 5.2, to Landlord, janitorial clean and in the same condition
as when received, ordinary wear and tear and damage from casualty excepted.
Except as set forth in Section 6.1, Landlord has no obligation to construct,
remodel, improve, repair, decorate or paint the Premises or any improvement
thereon or part thereof. Tenant shall pay for any repairs to the Premises, the
Building and the Property made necessary by any action or inaction of Tenant,
its employees, contractors, agents or invitees.
	 
	6.3 	 	No Abatement: Except as specifically provided herein, Landlord
shall have no liability to Tenant, nor shall Tenant’s covenants and obligations
under this Lease, including without limitation, Tenant’s obligation to pay Base
Rent and Additional Rent, be reduced or abated in any manner whatsoever by
reason of any inconvenience, annoyance, interruption or injury to business
arising from Landlord’s making any repairs or changes which Landlord is
required or permitted to make pursuant to the terms of this Lease or by any
other tenant’s Lease or are required by Law to be made in and to any portion of
the Premises, the Building or the Property, provided that Landlord shall use
commercially reasonable efforts to minimize interference with the operation of
Tenant’s business in the Premises.
	 
	7.	 	UTILITIES AND SERVICES:
	 
	7.1 	 	Utilities: Tenant shall pay directly to the applicable provider for all
electric, gas, water, sewer, and other utility services used in the Premises.
	 
	7.2 	 	Building Systems: Landlord shall provide the Premises to Tenant, and,
Tenant accepts the Premises in its “AS IS, WHERE IS” condition, and Landlord
makes no representations, covenants or warranties whatsoever concerning the
condition of the Premises, and, except as set forth in Section 6.1, has no
obligation to construct, remodel, improve, repair, decorate or paint the
Premises or any improvement on or part of the Premises. Tenant represents and
warrants that it has inspected the Premises prior to execution of the Lease,
and that it is relying on its own inspection in executing this Lease and,
except as expressly provided elsewhere in this Lease, not any statement,
representation or warranty of Landlord, its agents, employees or contractors.
Tenant’s taking possession of the Premises shall be deemed conclusive evidence
that as of the date of taking possession the Premises are in good order and
satisfactory condition.
Notwithstanding the foregoing, Landlord shall be responsible for the repair of
(i) any defects in the Building existing prior to the Commencement Date which
are reported to Landlord prior to the thirtieth (30th) day following delivery of
the Premises to Tenant and (ii) any latent defects in the



-6-







 





	 	 	Building existing
prior to the Commencement Date which would not be discovered by a reasonably
thorough visual inspection of the Premises.
	 
	7.3 	 	Abatement: Landlord shall not be liable to Tenant for any interruption or
curtailment in service, nor will any interruption or curtailment constitute
constructive eviction or grounds for abatement of rent, except in the event
there is a utility failure within ninety (90) days after execution of this
Lease arising as a result of the prior use of the Premises by Landlord. In
which event, if such utility failure materially interferes with Tenant’s
ability to conduct normal business at the Premises and such interruption
persists for more than forty-eight (48) hours, the Rentals payable by Tenant
hereunder shall be equitably abated, and if such interruption persists for more
than thirty (30) days, Tenant shall have the right to terminate this Lease.
Landlord agrees to use reasonable efforts to cause the restoration of services
as soon as possible.
	 
	8.	 	INSURANCE:
	 
	8.1 	 	Tenant’s Liability Insurance: Tenant shall, at its cost, during the entire
Term maintain and keep in full force and effect a policy or policies of
commercial general liability insurance, including property damage, against
liability for personal injury, bodily injury, death, and damage to property
occurring in, or resulting from (a) any negligent act or omission by Tenant, or
by any of its agents, contractors, servants or employees anywhere in the
Premises or the Property, (b) the business operated by Tenant in the Premises,
and (c) the contractual liability of Tenant to Landlord pursuant to the
indemnification provisions of Article 10 below with combined single limit
coverage of not less than $2,000,000 per occurrence and $3,000,000.00 combined
single limit. If Landlord shall so reasonably request, Tenant shall increase the
amount of such liability insurance to the amount then customary for premises
and uses similar to the Premises and Tenant’s use thereof. The liability policy
or policies shall contain an endorsement naming Landlord, Landlord’s lender and
management agent (of whom Tenant is given written notice) and any persons,
firms or corporations designated by Landlord who have an insurable interest in
the Premises (of whom Tenant is given written notice) as additional insureds.
Tenant may carry the foregoing coverages under blanket insurance policies.
	 
	8.2 	 	Tenant’s Property Insurance: Tenant shall, during the Term, keep in
full force and effect, a policy or policies of insurance with “Special Form
Coverage,” including coverage for vandalism or malicious mischief, insuring the
Leasehold Improvements and Tenant’s alterations and/or improvements made
pursuant to Article 5 above and Tenant’s stock in trade, furniture, personal
property, Trade Fixtures, equipment and other items in the Premises, with
coverage in an amount
equal to the full replacement cost thereof. Notwithstanding the foregoing,
Tenant is permitted to self-insure for the foregoing risks of physical loss, it
being understood that such permission shall not be deemed to invalidate or
amend any other requirements or conditions of this Lease.
	 
	8.3 	 	Worker’s Compensation Insurance: Tenant shall, during the Term,
keep in full force and effect, a policy or policies of worker’s compensation
insurance with an insurance carrier and in amounts approved by the Industrial
Commission of the State of Arizona.
	 
	8.4 	 	Landlord’s Insurance: Landlord shall maintain on the Premises and the
Building a policy of standard fire and extended coverage in an amount equal to
the full replacement cost thereof (not including any Leasehold Improvements).
Tenant shall reimburse Landlord as Additional Rent, within thirty (30) days of
a billing, the cost of the policies during the Term of the Lease.
	 
	8.5 	 	General Requirements: All insurance required under this Lease
shall: (i) be issued by insurance companies authorized to do business in the
state in which the Premises is located; (ii) be with an insurance company
authorized to do business in the State of Arizona and rated not less than
A-Vlll in the then most current edition of “Best’s Key Rating Guide”; (iii)
contain an endorsement requiring thirty (30) days’ written notice from the
insurance company to both parties before any non-renewal or cancellation of any
such policy. All insurance policies required pursuant to this Article 9 shall
be written as primary policies, not contributing with or in excess of any
coverage which Landlord may carry. If Tenant or any subtenant of Tenant does or
permits to be done
anything which shall increase the cost of any insurance policies maintained by
Landlord, then Tenant shall reimburse Landlord for any additional premiums
attributable to any act or omission



-7-







 





	 	 	or operation of Tenant or any subtenant of
Tenant causing such increase in the cost of insurance. Any such amount shall be
payable as Additional Rent within thirty (30) days after receipt by Tenant of a
bill from Landlord along with reasonable supporting documentation for such
charge.
	 
	8.6 	 	Certificates: A certificate of insurance for each insurance policy
required by this Lease shall be deposited with the other party at the
commencement of the Term, and, if the policy is renewed, not less than ten (10)
days before expiration of the term of the policy.
	 
	8.7 	 	Release and Waiver of Subrogation: Notwithstanding anything to the contrary
in this Lease, the parties hereto release each other, and their respective
agents, employees and subtenants from any liability for damage to property that
arises out of or incident to any peril which is actually insured against, which
is required to be insured against under this Lease, or which would normally be
covered by so called “all risk” property insurance, without regard to the
negligence or willful misconduct of the entity or party so released or any
other cause. Each party shall cause each property insurance policy it obtains
to provide that the insurer thereunder waives all right of recovery by way of
subrogation as required herein in connection with any injury or damage covered
by the policy.
	 
	8.8 	 	Adequacy of Insurance: Landlord makes no representation or warranty to
Tenant that the amount of insurance to be carried by Tenant under the terms of
this Lease is adequate to fully protect Tenant’s interests. If Tenant believes
that the amount of any such insurance is insufficient, Tenant is encouraged to
obtain, at its sole cost and expense, such additional insurance as Tenant may
deem desirable or adequate. Tenant acknowledges that Landlord shall not, by the
fact of approving, disapproving, waiving or accepting any insurance, incur any
liability for or with respect to the amount of insurance carried, the form or
legal sufficiency of such
insurance, the solvency of any insurance companies or the payment or defense of
any lawsuit in connection with such insurance coverage, and Tenant hereby
expressly assumes full responsibility therefor and all liability, if any, with
respect thereto.
	 
	9.	 	INDEMNITY AND EXCULPATION:
	 
	9.1 	 	Indemnity: Tenant shall hold harmless, indemnify and defend Landlord and
its employees and agents, with competent counsel reasonably satisfactory to
Landlord, from all liability, penalties, losses, damages, costs, expenses,
causes of action, claims and/or judgments arising by reason of any death,
bodily injury, personal injury or property damage (i) occurring in or about the
Premises, or the sidewalks adjacent thereto, unless caused solely by the
negligence or willful misconduct of Landlord, its agents or employees, (ii) as
a result of a breach by Tenant of this Lease, or (iii) caused by the negligence
or willful misconduct of Tenant, its agents, employees or contractors.
	 
	9.2 	 	Exculpation: Tenant, as a material part of the consideration to Landlord,
hereby assumes all risk of damage to Tenant’s property, injury and death to
persons and all claims of any other nature resulting from Tenant’s use of all
or any part of the Premises, the Building and/or the Property, and Tenant
hereby waives all claims in respect thereof against Landlord except to the
extent of Landlord’s failure to perform any of its obligations under this Lease
or to the extent of Landlord’s, its agents’ or employees’ negligence or willful
misconduct. Neither Landlord nor its agents or employees shall be liable for
loss of or damage to any property of Tenant by theft or otherwise except to the
extent of the negligence or willful misconduct of Landlord, its agents or
employees. Notwithstanding anything to the contrary contained in this Lease,
Landlord shall not be liable for (i) any injury or damage to persons or
property resulting from any cause, including, but not limited to, fire,
explosion, falling plaster, steam, gas, electricity, sewage, odor, noise, water
or rain which may leak from any part of the Building or from the pipes,
appliances or plumbing works therein, or
from the roof of any structure on the Property, or from any streets or
subsurfaces on or adjacent to the Building or the Property, or from any other
place or resulting
from dampness or any other causes whatsoever, except to the extent of
Landlord’s failure to perform any of its obligations under this Lease or to the
extent of Landlord’s, its agents’ or employees’ negligence or willful
misconduct; or (ii) injury to Tenant’s business or loss of income or profit
therefrom. Except as otherwise expressly set forth in this Lease, neither
Landlord nor its employees or agents shall be liable for any defects in the
Premises, the Building and/or the Property, nor shall Landlord be





-8-









 



	 	 	liable for the negligence or misconduct, including, but not limited to,
criminal acts, by maintenance or other personnel or contractors, serving the
Premises, the Building or the Property, other tenants or unrelated third
parties, unless Landlord is negligent or guilty of willful misconduct. All
property of Tenant kept or stored on the Property shall be so kept or stored at
the risk of Tenant only. None of the events or conditions set forth in this
Article shall be deemed a constructive or actual eviction or result in a
termination of this Lease, nor shall Tenant be entitled to any abatement or
reduction of Base Rent or Additional Rent by reason thereof.
	 
	9.3	 	 Limitations on Liability: Tenant agrees to look solely to Landlord’s
interest in the Property (including rents therefrom and any sales proceeds
thereof) for the recovery of any damages or other sums of money that Landlord
may owe Tenant under or in connection with this Lease. Tenant shall not have
recourse against any other assets of Landlord for the satisfaction of such
obligations. Additionally, the obligations of Landlord shall not constitute the
personal obligations of the officers, directors, trustees, partners, members,
managers, owners, stockholder or other principals of Landlord, and Tenant shall
not have recourse to the assets of such officers, directors, trustees,
partners, members, managers, owners, stockholder or other principals, except to
the extent of their interest in the Property. Notwithstanding anything to the
contrary in this Lease, Landlord and Tenant agree that:
	 
	9.3.1	 	 No Constructive Eviction. None of the following will constitute a
breach of the covenant of quiet enjoyment, an actual or constructive eviction
of Tenant, or a Landlord default, or otherwise give rise to any liability by
Landlord (and Tenant hereby waives and releases all claims, causes of action,
or other rights of recovery it may ever have against Landlord for): (i) the
unavailability, curtailment, interruption, fluctuation, inadequacy, or other
defect in any of the services furnished or to be furnished by Landlord pursuant
to this Lease as a result of any failure or malfunction of, or damage to any
lines, equipment, or other facilities on the property or elsewhere, any act or
omission of any utility company, the requirements of any law, the
unavailability of materials or supplies, or any other circumstance outside of
Landlord’s reasonable control so long as Landlord in good faith attempts to
remedy such circumstances as quickly as reasonably possible, (ii) any design or
other defect in the physical structure of the Building, in the mechanical,
electrical, and plumbing systems of the Property, or in the Leasehold
Improvements, if constructed by Landlord or its agents or any other
improvements on the property so long as Landlord in good faith attempts to
remedy the defect as quickly as reasonably possible; or (iii) any repairs,
replacements, maintenance, alterations, additions, or improvements to any part
of the Property.
	 
	9.3.2	 	 Waiver: Neither Landlord nor its officers, employees, or agents will
be liable and Tenant hereby waives and releases all claims, causes of action,
or other rights of recovery it may ever have against Landlord or its officers,
employees, and agents for (i) theft or other crimes or similar misconduct
on the Property by persons other than Landlord and its officers, employees, and
agents unless Landlord is negligent or guilty of willful misconduct; (ii)
negligent or other acts or omissions by other tenants or occupants of the
Property or their employees, agents, contractors, customers, or visitors; (iii)
loss or damage to property or injury or death to persons resulting to any
extent from any negligent or other act or omission of Tenant or its employees,
agents, or contractors in the Premises or elsewhere on the Property, from any
failure of Tenant to comply with or perform its obligations under this Lease,
or from the use and occupancy of the Premises by Tenant; (iv) any loss of
business or profits of Tenant or other consequential damages; or (v) exemplary,
punitive, or other special damages of any kind.
	 
	9.4 	 	Allocation of Risks: Tenant acknowledges that it has been advised to
have the provisions of this Lease reviewed by an attorney of its own choosing
and that it has done so. Each of the waivers, releases, and other limitations
on liability or claims provided in this article or elsewhere in this Lease
(including without limitation, liability or claims based on negligence or other
fault) has been knowingly and intentionally made and agreed to by Tenant.
	 
	9.5	 	 Landlord Indemnity: Landlord shall hold harmless, indemnify and defend
Tenant and its employees and agents, with competent counsel reasonably
satisfactory to Tenant, from all liability, penalties, losses, damages, costs,
expenses, causes of action, claims and/or judgments arising by reason of any
death, bodily injury, personal injury or property damage (i) arising out of



-9-







 





	 	 	the condition of any portion of the Building or the Property other than
the Premises which is Landlord’s duty to maintain, unless caused by the
negligence or willful misconduct of Tenant, its agents or employees, (ii) as a
result of a breach by Landlord of this Lease, or (iii) caused by the negligence
or willful misconduct of Landlord, its agents, employees or contractors.




10. DAMAGE AND DESTRUCTION:





	10.1	 	 Landlord’s Duty to Restore: If the Building or Premises is damaged in
whole or in part by fire, the elements, or any other cause whatsoever
(collectively, “Casualty”), then Tenant shall promptly notify Landlord in
writing thereof and Landlord shall, at its sole expense, restore the same to
substantially the same condition existing immediately prior to such damage,
unless the Lease is terminated by Landlord pursuant to Section 10.2 or by
Tenant pursuant to Section 10.3. Tenant, at Tenant’s sole cost and expense,
shall be responsible for the repair and restoration of all items of the
Leasehold Improvements and the replacement of Tenant’s stock in trade, Trade
Fixtures, furniture, finishings and equipment. Tenant shall commence the
installation of Trade Fixtures, equipment and merchandise promptly upon
delivery to Tenant of possession of the Premises and shall diligently prosecute
such installation to completion.
	 
	10.2	 	 Landlord’s Right to Terminate: Landlord shall have the option to
terminate this Lease in the event any of the following occurs, which option may
be exercised only by delivery to Tenant of a written notice of election to
terminate within thirty (30) days after the date of such damage:
	 
	10.2.1	 	 The Building is damaged by any peril both (i) not covered by the
type of insurance Landlord is required to carry pursuant to Section 8.4, and
(ii) not actually covered by valid and collectible insurance actually carried
by Landlord and in force at the time of such damage or destruction, to such an
extent that the estimated cost to restore the uninsured damage at the Building
exceeds ten percent (10%) of the then actual replacement cost of the Building,
and Tenant does not agree in writing within fifteen (15) days after its receipt
of a written termination notice from Landlord to fund such excess costs; or
	 
	10.2.2	 	 The Premises are damaged by any peril during the last six (6) months
of the Term and the restoration of the Premises cannot be substantially
completed within one hundred twenty (120) days after the date of such damage;
provided, however, that Landlord may not terminate this Lease pursuant to this
Section 10.2.2 if Tenant, at the time of such damage, has an express written
option to extend the Term and Tenant exercises such option within thirty (30)
days following the delivery to Tenant of Landlord’s written termination notice;
or
	 
	10.2.3 	 	If Landlord determines in good faith that the cost of repairing the
damage is more than one-third of the then-replacement cost of the Building, or
if Landlord has determined in good faith that the required repairs to the
Building
cannot be made within two hundred seventy (270) days of the date of the
damage without the payment of overtime and other premiums, or in the event
Landlord’s Lender requires that all or any material portion of the insurance
proceeds be applied in reduction of the mortgage debt, then Landlord may, by
written notice to Tenant within thirty (30) days after the occurrence of such
damage, terminate this Lease as of the date set forth in Landlord’s notice to
Tenant.
	 
	10.3	 	 Tenant’s Right to Abatement and Termination: If all or any portion of
the Premises or Common Area should become unsuitable for Tenant’s use as a
consequence of fire or other casualty, then Tenant shall be entitled to an
equitable abatement of all Rentals payable hereunder to the extent of the
interference with Tenant’s use of the Premises occasioned thereby. If for any
reason the Premises or Common Area cannot be or are not restored pursuant to
Section 10.1 within nine (9) months after the date of the Casualty, then Tenant
may terminate this Lease by written notice to Landlord, which notice must be
served no later than thirty (30) days after the date that such right to
terminate shall arise.
	 
	10.4 	 	Waiver. Tenant hereby waives any statutory and common law rights of
termination 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, including the provisions of Arizona Revised
Statutes (“ARS”) 33-343.



-10-







 






11. CONDEMNATION:





	11.1 	 	Taking. If the whole of the Building is lawfully and permanently taken by
condemnation or any other manner for any public or quasi-public purpose,
or by deed in lieu thereof, this Lease shall terminate as of the date of
vesting of title in such condemning authority. If any part of the Building
or Property is so taken, or if the whole of the Building is taken, but not
for more than six months, then this Lease shall be unaffected thereby. The
Base Rent and Additional Rent shall be pro rated to the earlier of the
termination of this Lease or such date as Tenant is required to vacate the
Premises by reason of the taking. If this Lease is not terminated as a
result of a partial taking of the Premises, the Base Rent and Additional
Rent shall be equitably adjusted according to the rentable area of the
Premises and Building remaining. Notwithstanding the foregoing, if in
Tenant’s reasonable business judgment, the remaining portion of the
Premises is inadequate for the conduct of Tenant’s business, Tenant shall
have a right to terminate this Lease as of the date of vesting by the
condemning authority.
	 
	11.2 	 	Award: In the event of a taking of all or any part of the Building or the
Property, all of the proceeds or the award, judgment, settlement or
damages payable by the condemning authority shall be and remain the sole
and exclusive property of Landlord, and Tenant hereby assigns all of its
right, title and interest in and to any such award, judgment, settlement
or damages to Landlord. Tenant shall, however, have the right, to the
extent that the same shall not reduce or prejudice amounts available to
Landlord, to claim from the condemning authority, but not from Landlord,
such compensation as may be recoverable by Tenant in its own right for
relocation benefits, moving expenses, loss of goodwill, and damage to
Tenant’s personal property and Trade Fixtures.
	 
	12. ASSIGNMENT AND SUBLETTING:
	 
	12.1	 	 Tenant’s Right to Sublet or
Assign: Tenant shall not assign this Lease or
any of Tenant’s rights hereunder or sublet all or any part of the Premises
without the prior written consent of Landlord, such consent not to be
unreasonably withheld, conditioned or delayed. No transfer or assignment
(whether voluntary or involuntary, by operation of law or otherwise) or
subletting shall be valid or effective without such prior written consent.
Should Tenant make or allow to be made any such transfer, assignment or
subletting (collectively, a “Transfer”), except as aforesaid, or should
any of Tenant’s rights under this Lease be sold or otherwise transferred
by or under court order or legal process or otherwise, then, and in any of
the foregoing events Landlord may, at its option, treat such act as a
Default by Tenant. Should Landlord consent to a Transfer, such consent
shall not constitute a waiver of any of the restrictions or prohibitions
of this Article, and such restrictions or prohibitions shall apply to each
successive Transfer hereunder, if any.
	 
	12.2	 	 Deemed Transfer: For the purposes of this Article 12 (but subject to
Section 12.1), an assignment shall be deemed to include (without
limitation) the following: (a) if Tenant is a partnership, a withdrawal or
change (voluntary, involuntary, by operation of law or otherwise) of any
of the partners thereof a purported assignment, transfer, mortgage or
encumbrance (voluntary, involuntary, by operation of law or otherwise) by
any partner thereof of such partner’s interest in Tenant, or the
dissolution of the partnership; (b) if Tenant consists of more than one
person, a purported assignment, transfer, mortgage or encumbrance
(voluntary, involuntary, by operation of law or otherwise) from one person
to the other or others; (c) if Tenant (or a constituent partner of Tenant)
is a corporation, any dissolution, merger, consolidation or reorganization
of Tenant (or such constituent partner), or any change in the ownership
(voluntary, involuntary, by operation of law, creation of new stock or
otherwise) of 50% or more of its capital stock from the ownership existing
on the date of this Lease; (d) if Tenant is an unincorporated association,
a purported assignment, transfer, mortgage or encumbrance (voluntary,
involuntary, by operation of law or otherwise) of any interest in such
unincorporated association; or (e) if Tenant is a limited liability
company, a withdrawal or change of any of the members thereof, a purported
assignment, transfer, mortgage or encumbrance (voluntary, involuntary, by
operation of law or otherwise) by any member of such member’s interest in
Tenant, or the dissolution of the limited liability company.
Notwithstanding the foregoing to the contrary and for so long as Tenant
remains a publicly traded company on a national stock exchange, this
Article 12 shall not apply to



-11-








 





	 	 	sale of shares of stock in the ordinary course of business on the NASDAQ
National Listings or the New York or American Stock Exchanges.
	 
	12.3	 	 Delivery of Information: If Tenant wishes at any time to Transfer the
Premises or any portion thereof, it shall first notify Landlord of its desire
to do so and shall submit in writing to Landlord: (a) the name of the proposed
subtenant or assignee; (b) the nature of the proposed subtenant’s or assignee’s
business to be carried on in the Premises; (c) the terms and the provisions of
the proposed sublease or assignment; and (d) such financial information as
Landlord may reasonably request concerning the proposed subtenant or assignee.
Landlord shall reply thereto within five (5) days of Tenant’s request for
consent.
	 
	12.4	 	 Recapture: If Tenant proposes to Transfer its interest in more than
fifty percent (50%) of the Premises, then Landlord may, at its option, upon
written notice to Tenant within five (5) days after Landlord’s receipt of the
information specified in Section 12.3 above, elect to recapture such portion of
the Premises that Tenant proposes to Transfer, and within sixty (60) days after
notice of such election has been given to Tenant, this Lease shall terminate as
to the portion of the Premises recaptured, unless within five (5) days after
Tenant’s receipt of Landlord’s recapture notice, Tenant delivers a written
notice to Landlord rescinding such Transfer, in which event this Lease shall
remain in full force and effect and the Transfer request shall be deemed
rescinded. If all or a portion of the Premises is recaptured by Landlord
pursuant to this Section 12.4, Tenant and Landlord shall promptly execute and
deliver a termination agreement setting forth the termination date with respect
to the Premises or the recaptured portion thereof, and prorating the Rentals
and other charges payable hereunder to such date. If Landlord does not elect to
recapture as set forth above or Tenant transfers less than fifty percent (50%)
of the Premises, Tenant may thereafter enter into a valid assignment or
sublease with respect to the Premises, provided that Landlord consents thereto
pursuant to this Article 12, and provided further, that (a) such assignment or
sublease is executed within ninety (90) days after Landlord has given its
consent, (b) Tenant pays all amounts then owed to Landlord under this Lease,
(c) there is not in existence a Default as of the effective date of the
Transfer, (d) there have been no material changes with respect to the financial
condition of the proposed subtenant or assignee or the business such party
intends to conduct in the Premises, and (e) a fully executed original of such
assignment or sublease providing for an express assumption by the assignee or
subtenant of all of the terms, covenants and conditions of this Lease is
promptly delivered to Landlord. In the event that Landlord does not elect to
recapture as provided herein or Tenant transfers less than one hundred percent
(100%) of the Premises, Tenant shall remit to Landlord fifty percent (50%) of
Tenant’s profit derived from such Transfer. For purposes of the foregoing,
profit shall be deemed to include, without limitation, the amount of all rent
payable by such assignee, transferee or sublessee in excess of the Base Rent
and Additional Rent payable by Tenant under this Lease after first deducting
therefrom all costs of improvements made or paid for by the Tenant in
connection with such Transfer, and all design fees, legal fees, leasing
commissions, and all other reasonable and customary costs incurred by the
Tenant in connection with such Transfer. If a part of the consideration for
such Transfer shall be payable other than in cash, the payment to Landlord
shall be in cash for its share of any non-cash consideration based upon the
fair market value thereof.
	 
	12.5	 	 No Release from Liability. Landlord may collect Base Rent and
Additional Rent from the assignee, subtenant, occupant or other transferee, and
apply the amount so collected, first to the monthly installments of Base Rent,
then to any Additional Rent and other sums due and payable to Landlord, but no
such subletting, occupancy, transfer or collection shall be deemed a waiver of
Landlord’s rights under this Article, or the acceptance of the proposed
assignee, subtenant, occupant or transferee; provided, however, that unless and
until Tenant is in Default under this Lease, Tenant may continue to accept such
Rent directly from such assignee, subtenant, occupant or transferee.
Notwithstanding any Transfer (with or without the consent of Landlord), Tenant
shall remain primarily liable under this Lease and shall not be released from
performance of any of the terms, covenants and conditions of this Lease.
	 
	12.6	 	 Landlord’s Expenses. If Landlord consents to the Transfer by Tenant
of all or any portion of Tenant’s interest under this Lease, Tenant shall
reimburse Landlord for Landlord’s reasonable



-12-







 





	 	 	administrative expenses and for reasonable legal, accounting and other
reasonable out of pocket expenses incurred by Landlord in connection with such
Transfer by Tenant, in an aggregate amount not to exceed $1,500.00.
	 
	12.7	 	 Assumption Agreement. If Landlord consents to a Transfer by Tenant of
all or any portion of Tenant’s interest under this Lease, Tenant shall promptly
upon request execute and deliver to Landlord, and cause the transferee to
execute and deliver to Landlord, an instrument in the form and substance
reasonably acceptable to Landlord in which (a) the transferee adopts this Lease
and assumes and agrees to perform, jointly and severally with Tenant, all of
the obligations of Tenant hereunder that are applicable to the proposed
Transfer, (b) Tenant acknowledges that it remains primarily liable for the
payment of Base Rent, Additional Rent and other obligations under this Lease,
and (c) the transferee agrees to use and occupy the Premises solely for the
purpose set forth herein and otherwise in strict accordance with this Lease.
	 
	12.8	 	 Affiliates: Notwithstanding anything to the contrary in this Article
12, Tenant shall have the right to assign Tenant’s interest in this Lease or to
sublet all or any portion of the Premises to any person or entity which is
controlled by, controls, or is under common control with, Tenant (each, an
“Affiliate”) or to any person or entity which (x) is the surviving entity
following the merger, acquisition or reorganization of Tenant or (y) acquires
all or substantially all of the assets of Tenant as a going concern. “Control,”
as such term is used above, shall mean the ownership, directly or indirectly,
of more than fifty percent (50%) of the voting interests of any entity.
	 
	13.
	 	DEFAULT:








	13.1	 	 Tenant’s Default-Definition: Tenant shall be in “Default” under this
Lease if Tenant: (i) fails to pay any Rental when due, if the failure continues
for five (5) days after written notice thereof to Tenant; (ii) fails to perform
any other provision of this Lease, if the failure is not cured within thirty
(30) days after written notice thereof is given by Landlord to Tenant; provided
that if the cure would reasonably take more than thirty (30) days to complete,
Tenant shall not be deemed in Default so long as Tenant commences the cure
within such thirty (30)-day period and thereafter diligently prosecutes such
cure to completion; (iii) files a petition in bankruptcy or insolvency or for
reorganization or arrangement under the bankruptcy laws of the United States or
under any insolvency act of any state, or is dissolved, or makes an assignment
for the benefit of creditors; (iv) involuntary proceedings under any bankruptcy
laws or insolvency act or for the dissolution of Tenant are instituted against
Tenant, or a receiver or trustee is appointed for all, or substantially all, of
Tenant’s property, and the proceeding is not dismissed or the receivership or
trusteeship is not vacated within sixty (60) days after the institution or
appointment; or (v) abandons the Premises during any period in which it is
otherwise in Default.
	 
	13.2	 	 Tenant’s Default-Remedies: Upon the occurrence of a Default under
this Lease by Tenant, Landlord may, without prejudice to any other rights and
remedies available to a Landlord at law, in equity or by statute, exercise one
or more of the following remedies, all of which shall be construed and held to
be cumulative and non-exclusive: (a) terminate this Lease and re-enter and take
possession of the Premises, in accordance with any and all legal due process
requirements, in which event Landlord is authorized to make such repairs,
redecorating, refurbishment or improvements to the Premises as may be necessary
in the reasonable opinion of Landlord acting in good faith for the purposes of
reletting the Premises and the costs and expenses incurred in respect of such
repairs, redecorating and refurbishment and the expenses of such reletting
(including brokerage commissions) shall be paid by Tenant to Landlord within
five (5) days after receipt of Landlord’s statement; or (b) without terminating
this Lease, re-enter and take possession of the Premises, in accordance with
any and all legal due process requirements; or (c) without such re-entry,
recover possession of the Premises in the manner prescribed by any statute
relating to summary process; or (d) without terminating this Lease, Landlord
may relet the Premises as Landlord may see fit without thereby avoiding or
terminating this Lease, and for the purposes of such reletting, Landlord is
authorized to make such repairs, redecorating, refurbishments or improvements
to the Premises as may be necessary in the opinion of Landlord acting in good
faith for the purpose of such reletting, and if a sufficient sum is not
realized from such reletting (after payment of all costs and expenses of such
repairs,



-13-







 





	 	 	redecorating and refurbishments and expenses of such reflecting (including
brokerage commissions) and the collection of rent accruing therefrom) each
month to equal the Base Rent and Additional Rent payable hereunder, then Tenant
shall pay such deficiency each month within five (5) days after receipt of
Landlord’s statement (it being understood that Tenant shall in no event be
liable for any personal injury or property damage claims or causes of action,
or any liability arising out of any breach or default by a subsequent tenant of
the Premises, arising from or in any way out of any such reletting of the
Premises by Landlord); or (e) Landlord may declare immediately due and payable
all the remaining installments of Base Rent and Additional Rent, and such
amount, less the fair rental value of the Premises for the remainder of the
Lease Term, shall be paid by Tenant within thirty (30) days after receipt of
Landlord’s statement or (f) retain and/or liquidate the Security Deposit and all
other payments held by Landlord under this Lease. Landlord shall not by
re-entry or any other act, be deemed to have terminated this Lease, or the
liability of Tenant for the total Base Rent and Additional Rent reserved
hereunder or for any installment thereof then due or thereafter accruing, or
for damages, unless Landlord notifies Tenant in writing that Landlord has so
elected to terminate this Lease. After the occurrence of a Default, the
acceptance of Base Rent or Additional Rent, or the failure to re-enter by
Landlord, shall not be deemed to be a waiver of Landlord’s right to thereafter
terminate this Lease
and exercise any other rights and remedies available to it
(except with respect to any Default related to the Base Rent or Additional Rent
that has been accepted by Landlord), and Landlord may re-enter and take
possession of the Premises. Upon a Default, Tenant shall also pay to Landlord
all costs and expenses incurred by Landlord, including court costs and
attorneys’ fees, in retaking or otherwise obtaining possession of the Premises,
removing and storing all equipment, fixtures and personal property on the
Premises and otherwise enforcing any of Landlord’s rights and remedies arising
as a result of a Default. Notwithstanding anything to the contrary contained
herein, Landlord shall make commercially reasonable efforts to relet the
Premises in the event Landlord shall recover possession of the Premises
pursuant to a Default by Tenant.
	 
	13.3	 	 Interest on Past Due Amounts: In addition to the late charge
described in Section 3.4, if any installment of Rentals is not paid within five
(5) days of the date when due, it shall bear interest at the Agreed Interest
Rate from the date due; provided, however, this provision shall not relieve
Tenant from any default in the making of any payment at the time and in the
manner required by this Lease. The parties agree that in any twelve (12)-month
period, Landlord shall have no obligation to provide more than one written
notice of delinquency as a condition to the foregoing late payment.
	 
	13.4	 	 Waiver of Landlord’s Lien: Landlord waives any right by statute,
common law, contract or otherwise for distraint, landlord’s lien or any other
similar right or remedy with respect to the personal property of Tenant. Within
ten (10) days after Tenant’s request, Landlord shall execute documents in a
form
reasonably satisfactory to Tenant to evidence Landlord’s waiver of any
right, title, lien or interest in the Tenant’s personal property.
	 
	13.5	 	 Landlord’s Default and Tenant’s Remedies: Landlord shall not be
deemed to be in default of its obligations unless Landlord fails to perform any
covenant, condition, or agreement contained in this Lease and fails to cure the
nonperformance within a reasonable time, but not later than thirty (30) days
after receiving written notice of the failure, provided, however, that if the
nature of Landlord’s failure to perform reasonably requires more than thirty
(30) days to cure, then Landlord shall not be deemed in default if Landlord
commences to cure such failure within said thirty (30)-day period and
thereafter diligently and in good faith prosecutes such cure to completion.
	 
	14.	 	SIGNS:







	14.1	 	 Interior Signs: Tenant may at its cost, place, construct as part of the
Work, and maintain signs in the Premises in accordance with applicable Laws.
	 
	14.2	 	 Intentionally deleted.
	 
	14.3	 	 Intentionally deleted.
	 
	14.4	 	 Exterior Signs: Landlord shall control the exterior appearance of the
Building and the exterior appearance of the Premises at all times. However,
Tenant shall be entitled to install prominent



-14-







 





	 	 	identity signage on the Building subject only to compliance with
applicable Law and Landlord’s approval of same, such approval not to be
unreasonably withheld or delayed. Tenant shall not install, or permit to be
installed, any drapes, shutters, lettering, advertising, or any items that will
in any way alter the exterior appearance of the Building or the exterior
appearance of the Premises or the exterior of the Building without Landlord’s
prior written consent, which consent will not be unreasonably withheld or
delayed. Landlord may relocate or remove, at Landlord’s cost, any exterior
signage not previously approved by Landlord. In no event may Tenant utilize
trucks, automobiles or other vehicles on the Property for signage purposes.




15. SUBORDINATION:





	15.1	 	 Subordination: This Lease and all rights of Tenant hereunder shall
be, at the option of Landlord, subordinate to (a) all matters currently of
record, (b) all mortgages and deeds of trust (collectively referred to as the
“mortgages”) which may now or hereafter encumber or affect the Building or the
Property, and (c) all renewals, modifications, amendments, replacements and
extensions of mortgages and to spreaders and consolidations of the mortgages,
whether or not mortgages shall also cover other lands or buildings. The
provisions of this Article shall be self-operative and no further instruments
of subordination shall be required. In confirmation of such subordination,
Tenant shall promptly execute, acknowledge and deliver any instrument that
Landlord, the holder of any mortgage or any of their respective assigns or
successors in interest may reasonably request to evidence such subordination
provided that Tenant shall concurrently receive nondisturbance protection from
such party in form and substance reasonably satisfactory to Tenant. Any
mortgage to which this Lease is subject and subordinate is called a “Superior
Mortgage” and the holder of a Superior Mortgage is called a “Superior
Mortgagee.” If Landlord, a Superior Mortgagee requires that Tenant execute such
instruments, Tenant shall do so within thirty (30) days after Tenant’s receipt
of written request therefor. Tenant’s failure to do so within five (5) days
after its receipt of a second written request from Landlord shall be deemed a
Default under this Lease.
	 
	15.2	 	 Nondisturbance Agreement. Landlord shall use commercially reasonable
efforts to obtain a nondisturbance agreement from its current lender for
Tenant’s benefit in form and substance reasonably satisfactory to Tenant, which
shall assure Tenant of its continued tenancy in the Premises notwithstanding a
foreclosure by such Superior Mortgagee of its Superior Mortgage so long as
Tenant is not in Default under this Lease.
	 
	15.3	 	 Attornment: If any Superior Mortgagee (or any purchaser at a
foreclosure sale) succeeds to the rights of Landlord under this Lease, whether
through possession or foreclosure action, or the delivery of a new lease or
deed (a “Successor Landlord”), Tenant shall attorn to and recognize such
Successor Landlord as Tenant’s landlord under this Lease and shall promptly
execute and
deliver any instrument that such Successor Landlord may reasonably request
to evidence such attornment; provided, however, that Tenant shall receive from
Successor Landlord a commercially reasonable agreement stating that Tenant
shall have quiet possession of the Premises and that the Successor Landlord
shall perform all of Landlord’s obligations and shall honor this Lease as long
as Tenant is not in Default hereunder.




16. TERMINATION:





	16.1	 	 Surrender of the Premises: Immediately prior to the expiration or
upon the earlier termination of this Lease, Tenant shall surrender the Premises
to Landlord in good condition except: (i) for ordinary wear and tear; (ii) as
otherwise provided in Article 6 above; and (iii) for damage or destruction by
any casualty.
	 
	16.2	 	 Holding Over: In the event of any continued occupancy or holding over
of the Premises after the end of the Term, whether in whole or in part, this
Lease shall be deemed a monthly tenancy and Tenant shall pay 125% of the Base
Rent then in effect, in advance at the beginning of the holdover month(s),
plus any Additional Rent or other charges or payments contemplated in this
Lease, and any other costs, expenses, damages, liabilities and attorneys’ fees
incurred by Landlord on account of Tenant’s holding over.



-15-








 






17. GENERAL PROVISIONS:





	17.1	 	 Taxes on Tenant’s Property: Tenant shall pay before delinquency any and
all taxes, assessments, license fees, and public charges levied, assessed, or
imposed against the payment of Rentals, trade fixtures or other personal
property of Tenant situated within the Premises.
	 
	17.2	 	 Miscellaneous: Should any provision of this Lease prove to be invalid or
illegal, such invalidity or illegality shall in no way affect, impair or
invalidate any other provision hereof, and such remaining provisions shall
remain in full force and effect. This Lease shall be governed by the Laws where
the Premises is located. Time is of the essence with respect to the performance
of every provision of this Lease in which time of performance is a factor. This
Lease shall, subject to the provisions regarding assignment, apply to and bind
the respective heirs, successors, executors, administrators and assigns of
Landlord and Tenant. The language in all parts of this Lease shall in all cases
be construed as a whole according to its fair meaning, and not strictly for or
against either Landlord or Tenant. The captions used in this Lease are for
convenience only and shall not be considered in the construction or
interpretation of any provision hereof. When a party is required to do
something by this Lease, it shall do so at its sole cost and expense without
right of reimbursement from the other party unless specific provision is made
therefor. Landlord shall not become or be deemed a partner or a joint venturer
of Tenant by reason of this Lease. This Lease may be executed in counterparts,
each of which shall constitute an original and all of which together shall
constitute one Lease. This Lease and the documents referred to herein
constitute the entire agreement between the parties, and there are no binding
agreements or representations between the parties except as expressed herein.
No subsequent change or addition to this Lease shall be binding unless in
writing and signed by the parties hereto. All exhibits to this Lease shall be
deemed incorporated herein by the individual reference to each such exhibit,
and shall be deemed a part of this Lease as though set forth in full in the
body of the Lease. If either party commences an action against the other in
connection with this Lease or the Premises, the prevailing party shall be
entitled to recover from the losing party reasonable attorneys’ fees and costs
of suit. In the event of a sale or conveyance by Landlord of the Building, and
the assignment of the Lease and the Security Deposit, the same shall operate to
release Landlord from any future liabilities under the covenants, terms and
conditions expressed or implied herein, and in such event, Tenant shall look
solely to the successor in interest to the Landlord in connection with the
performance and obligations of the Lessor hereunder.
	 
	17.3	 	 Waiver: One party’s consent to or approval of any act by the other party
requiring the first party’s consent or approval shall not be deemed to waive or
render unnecessary the first party’s consent to or approval of any subsequent
similar act by the other party. No delay or omission in the exercise of any
right or remedy accruing to either party upon any breach by the other party
under this
Lease shall impair such right or remedy or be construed as a waiver of any such
breach theretofore or thereafter occurring. The waiver by either party of any
breach of any provision of this Lease shall not be deemed to be a waiver of any
subsequent breach of the same or any other provisions herein contained.
	 
	17.4	 	 Estoppel Certificates: Tenant agrees, following any request by Landlord,
promptly to execute and deliver an estoppel certificate upon which the
requesting party and any others it designates may rely (i) certifying that this
Lease is unmodified and in full force and effect, or, if modified, stating the
nature of such modification and certifying that this Lease, as so modified, is
in full force and effect, (ii) stating the date to which the rent is paid in
advance, if any, (iii) acknowledging that there are not, to the certifying
party’s knowledge, any uncured defaults on the part of the other party
hereunder, or if there are stating their nature, and (iv) certifying such other
factual information about the Lease as may be reasonably required by the
requesting party. Tenant’s failure to promptly deliver such statement (and in
any event within thirty (30) days after Tenant has received Landlord’s written
request therefor) shall be conclusive upon Tenant (i) that this Lease is in
full force and effect, without modification except as may be represented by
Landlord; (ii) that there are no uncured defaults in Landlord’s performance
hereunder; (iii) that not more than one month’s installment of Base Rent or
Additional Rent has been paid in advance; (iv) that the Commencement Date and
the scheduled expiration date of the Term are as stated therein; (v) that
Tenant has no rights to extend or renew this Lease or to expand the Premises,
except as



-16-







 





	 	 	otherwise expressly provided herein; (vi) that the Base Rent, Additional
Rent and other charges are as set forth therein, and (vii) that the other
information and facts set forth therein are true and correct.
	 
	17.5	 	 Notices: Any notice required or desired to be given regarding this
Lease shall be in writing and may be personally served, including by overnight
courier service, or in lieu of personal service may be given by mail. If given
by mail, such notice shall be deemed to have been given (i) on the third (3rd)
business day after mailing if such notice was deposited in the United States
mail, certified and postage prepaid, addressed to the party to be served at its
address set forth on the cover page of this Lease, and (ii) in all other cases
when actually received. Either party may change its address by giving notice of
same in accordance with this paragraph. If any notice or other act that is
permitted or required under this Lease shall come due on a Saturday, Sunday or
legal holiday, it shall be deemed to be due on the next business day. The
inability to deliver a notice because of a changed address of which no notice
was given or a rejection or other refusal to accept any notice shall be deemed
to be the receipt of the notice as of the date of such inability to deliver or
rejection or refusal to accept. Any notice to be given by either party hereto
may be given by the legal counsel and/or the authorized agent of such party.
	 
	17.6	 	 Authority: Each individual executing this Lease on behalf of a
corporation, limited liability company or partnership represents and warrants
that he or she is duly authorized to execute and deliver this Lease on behalf
of said corporation, limited liability company or partnership and that this
Lease is binding upon said corporation, limited liability company or
partnership in accordance with its terms.
	 
	17.7	 	 Brokerage Commissions: Except for CB Richard Ellis, who represents
the Landlord; and Picor Commercial Real Estate Services, who represents the
Tenant, each party represents that it has not had any dealings with any real
estate broker, finder, or other person with respect to this Lease. Each party
shall hold harmless the other from all damages or claims that may be asserted
by any broker, finder, or other person with whom the indemnifying party has
purportedly dealt.
	 
	17.8	 	 Force Majeure: Whenever a period of time is herein prescribed for
action (other than the payment of money) to be taken by Landlord or Tenant,
such party shall not be liable or responsible for, and there shall be excluded
from the computation for any such period of time, any delays due to strikes,
riots, acts of God, shortages of labor or materials, war, governmental laws,
regulations or restrictions (collectively, “Force Majeure Delays”).
	 
	17.9	 	 Landlord’s Right of Entry: Landlord, its agents, employees, and
contractors shall have the right to enter the Premises at any reasonable time
upon not less than 24 hours’ prior written notice to Tenant (except in the
event
Tenant is in Default (to the extent allowed by applicable Law) or in the
event of an emergency, whereupon no prior notice or consent is required), for
the purpose of making repairs, replacements and alterations or additions in, to,
or about the Premises or Building as are required under this Lease or as are
necessary for maintenance and operation of the Premises or Building, to cure
any uncured Default of Tenant hereunder that the Landlord elects to cure or is
required to cure, to remove any improvements or property placed in the Premises
in violation of this Lease, and/or to carry out any other applicable provision
of this Lease, and providing Landlord does not interrupt Tenant’s normal
operations. However, that in the event of an emergency, Landlord may enter the
Premises at any time without notice to abate and/or cure the emergency.
Landlord may show the Premises to prospective purchasers and mortgagees, and,
during the six (6) months prior to expiration of this Lease or applicable
renewal or extension period to prospective tenants, during business hours upon
reasonable notice to Tenant, and providing Landlord does not interrupt Tenant’s
normal operations.
	 
	17.10	 	 Environmental, Health &
Safety Audit: Tenant, at Tenant’s expense
and upon written notice to Landlord and with prior consent (not to be
unreasonably withheld or delayed) of Landlord and provided Tenant shall comply
with all reasonable security measures of Landlord and other tenants in the
Building and shall use reasonable efforts to not interfere with the conduct of
the business of the other tenants in the Building, shall have the right but not
the obligation to audit the Premises and the Building for compliance with all
Laws relating to the environmental, health, &



-17-







 





	 	 	safety of the Building and the Premises. The audit shall be performed by
an experienced, qualified, and certified independent agency. The results of any
such audit shall be for the benefit of Landlord and Tenant.
	 
	17.11	 	 Rules and Regulations: Tenant shall abide by all rules and
regulations (the “Rules and Regulations”) of the Building and the Property as
may hereafter reasonably be issued by Landlord. Such Rules and Regulations are
imposed to enhance the cleanliness, appearance, maintenance, order and use of
the Premises, the Building and the Property, and the proper enjoyment of the
Building and the Property by all tenants and their clients, customers and
employees. The Rules and Regulations may be changed from time to time upon ten
(10) days’ notice to Tenant. Breach of the Rules and Regulations by Tenant
shall constitute a Default if such breach is not fully cured within thirty (30)
days after written notice to Tenant by Landlord; provided, however, that if the
cure would reasonably take more than thirty (30) days to complete, Tenant shall
not be deemed in Default so long as Tenant commences the cure within such
thirty (30)-day period and thereafter diligently prosecutes such cure to
completion. To the extent there is any inconsistency between the Rules and
Regulations and the other provisions of this Lease, the other provisions of
this Lease shall govern. Landlord shall not be responsible to Tenant for
nonperformance by any other tenant, occupant or invitee of the Building or the
Property of any Rules or Regulations. Landlord shall not enforce such Rules and
Regulations in a discriminatory fashion.
	 
	17.12	 	 Covenant of Quiet Enjoyment: Landlord covenants that Tenant, upon
paying the Rentals due hereunder and observing the terms and conditions hereof
to be kept by Tenant, shall, throughout the Term, peaceably and quietly have,
hold and enjoy the Premises, free from hindrance by Landlord or any party
claiming by, through or under Landlord.
	 
	17.13	 	 Premises Access: Tenant shall have access to the Premises
twenty-four (24) hours a day, three hundred sixty-five (365) days a year.




18. RESERVED RIGHTS OF LANDLORD:





	 	 	Landlord reserves the following rights, exercisable without liability to
Tenant for damage or injury to property, persons or business and without
effecting an eviction, constructive or actual, or disturbance of Tenant’s use
or possession or giving rise to any claim:
	 
	18.1.1	 	 To name the Building and the Property and to change the name, suite
number of the Premises, or street address of the Building or the Property;
	 
	18.1.2	 	 to exercise control over all signs on the exterior and interior of
the Building and the Property, subject to Article 14; and
	 
	18.1.3	 	 to require Tenant to remove any unusual or extraordinary
alterations to the Premises (such as safes) at the expiration or earlier
termination of the Term.



19.     NOTICE TO LANDLORD’S LENDER: In the event that Tenant at any time or
from time to time receives a written notice from Landlord specifying the name
and address of the Landlord’s Lender under any deed of trust, mortgage or other
security agreement covering the Property, the Building and/or Landlord’s
interest in this Lease, Tenant agrees that, in the event of a default hereunder
by Landlord which would give Tenant the right to terminate this Lease or
declare a total or partial eviction (constructive or otherwise), Tenant shall
not seek to terminate this Lease or so declare an eviction by Landlord until
(i) Tenant shall have given written notice of such default (which notice shall
specify the exact nature of such default and how the same may be cured) to
Landlord and Landlord’s Lender by certified mail, postage prepaid, return
receipt requested, or by overnight courier service, and (ii) thirty (30) days
shall have elapsed following the giving of such notice. If, during such thirty
(30)-day period, Landlord or Landlord’s Lender shall cure or substantially cure
such default, Tenant shall waive its right to either terminate this Lease or
declare an eviction with respect to the default by Landlord specified in such
notice.



20.     TERMINATION: Provided Tenant is not in Default under the terms and
conditions of this Lease, Landlord grants Tenant a one time right to cancel
this Lease effective March 31, 2004 or at any time thereafter, provided Tenant
notices Landlord in writing of its intent at least ninety (90) days prior to
the early termination date.



-18-







 


21.     PARTIAL REIMBURSEMENT OF IAC MOVING EXPENSES: Following presentation
of an invoice for same, Tenant shall promptly reimburse Landlord up to Twelve
Thousand Five Hundred Dollars ($12,500.00) for the costs of relocating its
tenant, International Aero Components, Inc. (“IAC”), from the Premises to its
new location.



22.     TRIPLE NET LEASE: This is a “Triple Net Lease” where Tenant is
responsible for maintenance, repairs, operating costs, insurance and taxes for
the Premises, subject to Section 6.1 above. The Rentals will be paid by Tenant
without deduction or offset. Except as expressly provided to the contrary in
this Lease, Landlord will not be required to make any expenditure, incur any
obligation or incur any liability of any kind in connection with this Lease or
the maintenance, repair or operation of the Premises.



23.     CONTINUED OCCUPANCY AND USE BY LANDLORD. Tenant understands that
Landlord and IAC have not yet concluded negotiations for lease of alternative
space and may not be able fully to vacate the Premises immediately upon
execution of this Lease. If Landlord and IAC are unable fully to vacate the
Premises, immediately upon execution of this Lease, Tenant shall permit
Landlord and IAC to continue to occupy and use portions of the Premises as
needed while Tenant conducts Tenant’s Work in the Premises as provided in the
Work Letter. Landlord shall use diligent efforts to vacate the Premises and to
cause IAC to vacate the Premises as soon as reasonably practicable. In all
events, Landlord and IAC shall vacate the Premises by September 30, 2002,
except that Tenant shall permit Landlord to use approximately 5,000 square feet
of the existing warehouse portion of the Premises for storage of equipment
until October 31, 2002. Landlord and Tenant shall cooperate with one another to
coordinate any continued use and occupancy by Landlord and its subtenant with
the prosecution of Tenant’s Work, to permit Tenant’s Work to proceed
expeditiously, efficiently and economically, while endeavoring to the greatest
extent reasonably practicable under the circumstances to minimize interference
with Landlord’s continued use and occupancy. In the event that
Landlord and IAC have not both fully vacated the Premises by October 1, 2002, all rent
otherwise payable by Tenant under this Lease shall be equitably abated, until
Landlord and IAC both fully vacate the Premises.




Signatures appear on the following page



-19-







 




     IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease with the
intent to be legally bound thereby, to be effective as of the day and year
first set forth above.




	 	 	 	 	 
	 	 	LANDLORD: PEGASUS AVIATION, INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Richard M. Oster     8/20/02
	 	 	 	 	

	 	 	
Name:
	 	RICHARD M. OSTER
	 	 	 	 	

	 	 	
Its:
	 	SVP ADMIN, CFO
	 	 	 	 	

	 	 	 	 	 
	 	 	TENANT: INTUIT INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Greg Santora     8/16/02
	 	 	 	 	

	 	 	
Name:
	 	GREG SANTORA
	 	 	 	 	

	 	 	
Its:
	 	SR. V.P., CFO
	 	 	 	 	





	 	 	 	 	 
	 	 	REVIEWED BY:
	 	 	 
	 	 	
/s/ JS
	 	INITIAL
	 	 	

	 	 
	 	 	
INTUIT
	 	LEGAL



-20-







 



EXHIBIT “A-1”



SITE PLAN



[See Attached]











 





EXHIBIT “A-2”



FLOOR PLAN



[See Attached]















 



 










 






EXHIBIT “A-3"

LEGAL DESCRIPTION OF PROPERTY

[See Attached]



 







 




Exhibit A



All of that portion of the Northeast Quarter of
the Northeast Quarter of the Northeast Quarter of
Section 17, Township 15 South, Range 14 East,
Gila and Salt River Base and Meridian, Pima County, Arizona,
more particularly described as follows, to-wit:




BEGINNING at the Northeast corner of said
Section 17;




THENCE South 0 degrees 46 minutes 12 seconds
East, along the East line of Section 17, a distance of
352.09 feet measured (383.33 feet record) to a point;




THENCE South 89 degrees 21 minutes 45 seconds
West measured (South 89 degrees 22 minutes 50 seconds West
record), a distance of 75.00 feet to a point on the Westerly
right-of-way line of South Country Club Road, said point being
the TRUE POINT OF BEGINNING;




THENCE continuing South 89 degrees
21 minutes 45 seconds West measured (South 89
degrees 22 minutes 50 seconds West record), a distance
of 596.32 feet measured (595.88 feet record) to a point;




THENCE South 0 degrees 44 minutes 38 seconds East
measured (South 0 degrees 44 minutes 47 seconds East
record), a distance of 298.59 feet measured (298.21 feet record)
to a point;




THENCE North 89 degrees 26 minutes 18 seconds
East measured (North 89 degrees 23 minutes 14 seconds East
record), a distance of 811.14 feet measured (611.02 feet record)
to a point;




THENCE North 0 degrees 47 minutes 23 seconds West
measured (North 0 degrees 48 minutes 12 seconds West record)
along the Westerly right-of-way line of South Country Club Road,
a distance of 2.25 feet to a point;




THENCE North 03 degrees 35 minutes 52 seconds
West, along the Westerly right-of-way line of South Country Club
Road, a distance of 297.54 feet to a point, said point being the
TRUE POINT OF BEGINNING.




PG: 10 of 10







 




Exhibit “B”




WORK LETTER





	I.	 	TENANT’S WORK





	 	A.	 	Plans and Specifications





		
	 	     1. Within ten (10) business days of the execution of the Lease,
Tenant, at its sole cost and expense, shall cause its architect and civil
engineer to prepare and deliver to Landlord for its approval two copies
of the plans and specifications for the construction of Tenant’s Work
(the “Plans”) in as much detail as is reasonably required for Landlord to
determine the scope and quality of Tenant’s Work. Within five (5) days
after receipt of the Plans, Landlord shall either approve the Plans or
deliver to Tenant its specific objections to the Plans together with its
proposed solution to each objection. Landlord’s approval of the Plans
shall not be unreasonably withheld, conditioned or delayed. If Landlord
fails to respond within the time period provided, then Landlord shall be
deemed to have approved such Plans. Approval of the Plans by Landlord is
not a representation that the drawings are in compliance with the
requirements of governing authorities, and it shall be Tenant’s
responsibility to meet and comply with all federal, state, and local code
requirements. Approval of the Plans does not constitute assumption of
responsibility by Landlord or its architect for their accuracy,
sufficiency or efficiency, and Tenant shall be totally responsible for
such matters.





		
	 	     2. Upon written
approval by Landlord of the Plans, Tenant shall (i)
submit the Plans to the appropriate governmental agencies; (ii) seek all
necessary approvals and permits; (iii) pay all necessary fees incidental
to Tenant’s Work; and (iv) furnish Landlord such evidence thereof as is
reasonably satisfactory to Landlord. No later than ten (10) days after
receipt of all approvals and permits, Tenant shall cause its licensed
general contractor or contractors to commence Tenant’s Work and prosecute
same diligently to completion.





	 	B.	 	Standard





		
	 	     Tenant, using a contractor or contractors reasonably approved by
Landlord, shall construct Tenant’s Work, at Tenant’s sole cost and
expense, in a good and workmanlike manner, in accordance with the
approved Plans. At all times until Tenant’s Work shall be completed,
Landlord shall have the right to enter upon the Premises for the purpose
of inspecting the same.





	 	C.	 	Cost and Expense





		
	 	     The entire cost and expense of Tenant’s Work shall be borne and paid
by Tenant, and Tenant shall hold and save Landlord harmless from any
liability whatsoever on account thereof. Before the commencement of
Tenant’s Work, Tenant shall give to Landlord written notice thereof.





	II.	 	CONSTRUCTION OF TENANT’S WORK





	 	A.	 	General Requirements





		
	 	     1. Tenant shall deliver to Landlord, prior to the commencement of
construction, the following information:




		
	 	     a. The names and addresses of the contractors Tenant intends
to engage in the construction of the Premises;




EXHIBIT B-1



 







 




		
	 	     b. The date on which Tenant’s construction work will commence,
together with the estimated dates of completion of Tenant’s construction;
and




		
	 	     c. Evidence satisfactory to Landlord of compliance by Tenant with
the insurance requirements of the Lease.





		
	 	     2. All contractors engaged by Tenant shall be bondable, licensed
contractors, possessing good labor relations, capable of performing quality
workmanship and working in harmony with other contractors on the job.





		
	 	     3. Construction shall comply in all respects with applicable federal,
state, county and city statutes, ordinances, regulations, laws and codes. All
required permits, approvals, licenses, authorizations and other permits in
connection with the construction and completion of the Premises, including,
without limitation, building permits and conditional use permits, shall be
obtained and all fees (both one-time and recurring) required in connection with
the construction and completion of Tenant’s Work, including, without
limitation, building and conditional use permit fees, shall be paid for by
Tenant.





		
	 	     4. Tenant shall cause its contractor to provide warranties for not less
than one year against defects in workmanship, materials and equipment.





		
	 	     5. Tenant’s Work shall be subject to the inspection of Landlord and its
supervisory personnel.





	 	B.	 	Landlord’s Right to
Perform Work





		
	 	     Landlord shall have the right, but not the obligation, after providing one
(1) business days’ notice to Tenant, to perform, on behalf of and for the
account of Tenant, subject to reimbursement of the cost thereof by Tenant, any
and all of Tenant’s Work which Landlord determines, in its sole discretion,
should be performed immediately and on an emergency basis for the best interest
of the Premises, including, without limitation, work which pertains to
structural components, mechanical, sprinkler and general utility systems,
roofing and removal of unduly accumulated construction material and debris.





	 	C.	 	As-Built Drawings





		
	 	     Tenant shall cause “As-Built Drawings” to be delivered to Landlord and/or
Landlord’s representative no later than thirty (30) days after the completion
of Tenant’s Work. In the event these drawings are not received by such date,
Landlord may, at its election, cause said drawings to be obtained and Tenant
shall pay to Landlord, as Rent, the cost of producing these drawings.




EXHIBIT B-2



 







 






EXHIBIT “C”

FURNITURE

[See Attached]



EXHIBIT C-1



 







 





EXHIBIT C
(Furniture List)



Note: This list references the accompanying Goodmans Final Overall Plan.




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	AREA	 	DESCRIPTION	 	IAC qty	 	PAI qty	 	 	 	 	 	Common	 	Total
	Aeron Chairs	 	 	 	 	51	 	 	52	 	 	 	 	 	 	 	 	103	 
	 	 	
(throughout, in cubicles,

offices)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Reception	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Reception Cubicle
	 	 	1	 	 	  1	 	 	 	 	 	 	 	 	2	 
	 	 	
Benches
	 	 	3	 	 	  3	 	 	 	 	 	 	 	 	6	 
	 	 	
Coffee Table
	 	 	1	 	 	  1	 	 	 	 	 	 	 	 	2	 
	 	 	
Side Table
	 	 	2	 	 	  1	 	 	 	 	 	 	 	 	3	 
	 
	Conference Room	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Table
	 	 	1	 	 	  1	 	 	 	 	 	 	 	 	2	 
	 	 	
Highback Leather Chairs
	 	 	12	 	 	12	 	 	 	 	 	 	 	 	24	 
	 	 	
Buffet
	 	 	1	 	 	  1	 	 	 	 	 	 	 	 	2	 
	 	 	
Rolling Credenza
	 	 	 	 	 	  2	 	 	 	 	 	 	 	 	2	 
	 
	Complete Cubicles	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Containing
	 	 	27	 	 	45	 	 	 	 	 	 	 	 	72	 
	 	 	
2 overhead credenza’s	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
3 Drawer File Cabinet	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
2 Drawer File Cabinet	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Key Board Tray	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Pedestal Tray	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Taco Tray	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Partial Cubicles	 	 	 	 	4	 	 	  0	 	 	 	 	 	 	 	 	4	 
	 	 	
only partitions exist, no desk	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Executive Offices	 	 	 	 	6	 	 	  6	 	 	 	 	 	 	 	 	12	 
	 	 	
Containing	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Desk
	 	 	1	 	 	  1	 	 	 	 	 	 	 	 	12	 
	 	 	
Side
	 	 	1	 	 	  1	 	 	 	 	 	 	 	 	12	 
	 	 	
2 Drawer File Cabinet & 3 shelf c
	 	 	1	 	 	  1	 	 	 	 	 	 	 	 	12	 
	 	 	
Corner Unit
	 	 	1	 	 	  1	 	 	 	 	 	 	 	 	12	 
	 	 	
Key Board Tray
	 	 	1	 	 	  1	 	 	 	 	 	 	 	 	12	 
	 	 	
3 Drawer File Cabinet
	 	 	1	 	 	  1	 	 	 	 	 	 	 	 	12	 
	 	 	
Guest Table
	 	 	1	 	 	  1	 	 	 	 	 	 	 	 	12	 
	 	 	
Guest Chairs
	 	 	4	 	 	  4	 	 	 	 	 	 	 	 	48	 



 







 



EXHIBIT C
(Furniture List)



Note: This list references the accompanying Goodmans Final Overall Plan.




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	AREA	 	DESCRIPTION	IAC qty	 	 	 	 	PAI qty	 	 	 	Common	 	Total
	Management Offices	 	 	  3	 	 	 	 	 	 	 	 	 	 	 	  3	 
	 	 	
Containing	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Desk
	  1	 	 	 	 	 	 	 	 	 	 	 	3
	 	 	
Side
	  1	 	 	 	 	 	 	 	 	 	 	 	3
	 	 	
2 Drawer File Cabinet
	  1	 	 	 	 	 	 	 	 	 	 	 	3
	 	 	
Guest Chairs
	  2	 	 	 	 	 	 	 	 	 	 	 	6
	 
	Customer Room	 	 	 	 	 	 	 	3	 	 	 	 	 	 	 	 
	 	 	
Table
	 	 	 	 	 	1
	 	 	 	 	 	 	3	 
	 	 	
Chairs
	 	 	 	 	 	4
	 	 	 	 	 	 	12	 
	 
	Training Room	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Table
	 	 	 	 	 	4
	 	 	 	 	 	 	4	 
	 
	Accounting File Room	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
File Cabinets
	 	 	 	 	 	3
	 	 	 	 	 	 	3	 
	 
	Breakroom	 	
 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 
	 	 	
Table
	 	 	 	 	 	 	 	 	 	3
	 	 	3	 
	 	 	
Plastic Chairs
	 	 	 	 	 	 	 	 	 	16
	 	 	16	 
	 
	Engineering	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Desk
	 	 	 	 	 	3
	 	 	 	 	 	 	3	 
	 	 	
Side
	 	 	 	 	 	3
	 	 	 	 	 	 	3	 
	 	 	
2 Drawer File Cabinet w/3 shelf Credenza
	 	 	 	 	 	1
	 	 	 	 	 	 	1	 
	 	 	
2 Drawer File Cabinet
	 	 	 	 	 	2	 	 	 	 	 	 	 	 
	 	 	
Corner
	 	 	 	 	 	3
	 	 	 	 	 	 	3	 
	 	 	
File Cabinet (3 Drawer)	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Table
	 	 	 	 	 	1
	 	 	 	 	 	 	1	 
	 	 	
Guest
	 	 	 	 	 	2
	 	 	 	 	 	 	2	 
	 	 	
4 level book shelf
	 	 	 	 	 	1
	 	 	 	 	 	 	1	 
	 	 	
Holga Filing System
	 	 	 	 	 	1
	 	 	 	 	 	 	1	 
	 	 	
Rolling Buffet
	 	 	 	 	 	1
	 	 	 	 	 	 	1	 
	 

	Scanning Department	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
To be retained by Pegasus