Exhibit 10.1


 


LEASE AGREEMENT


 


 


between


 


 


PCCP HC Kierland, LLC,


a Delaware limited liability company,


 


as “Landlord”


 


 


and


 


 


The Ryland Group, Inc.,


a Maryland corporation,


 


as “Tenant”


 


 


Ryan Kierland Corporate Center


Scottsdale, Arizona


 

















 


TABLE OF CONTENTS


 


	
  SECTION

  	
   

  	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  PREMISES

  	
   

  	
  4

  
	
  2.

  	
   

  	
  TERM; POSSESSION

  	
   

  	
  4

  
	
  3.

  	
   

  	
  RENT; SECURITY DEPOSIT

  	
   

  	
  7

  
	
  4.

  	
   

  	
  RENTAL TAXES

  	
   

  	
  12

  
	
  5.

  	
   

  	
  USE AND COMPLIANCE WITH LAWS

  	
   

  	
  12

  
	
  6.

  	
   

  	
  TENANT IMPROVEMENTS AND
  ALTERATIONS

  	
   

  	
  16

  
	
  7.

  	
   

  	
  MAINTENANCE AND REPAIRS

  	
   

  	
  17

  
	
  8.

  	
   

  	
  TENANT’S PERSONAL PROPERTY
  TAXES

  	
   

  	
  18

  
	
  9.

  	
   

  	
  UTILITIES AND SERVICES

  	
   

  	
  18

  
	
  10.

  	
   

  	
  EXCULPATION AND
  INDEMNIFICATION

  	
   

  	
  20

  
	
  11.

  	
   

  	
  INSURANCE

  	
   

  	
  21

  
	
  12.

  	
   

  	
  DAMAGE OR DESTRUCTION

  	
   

  	
  24

  
	
  13.

  	
   

  	
  CONDEMNATION

  	
   

  	
  25

  
	
  14.

  	
   

  	
  ASSIGNMENT AND
  SUBLETTING

  	
   

  	
  27

  
	
  15.

  	
   

  	
  DEFAULT AND REMEDIES

  	
   

  	
  29

  
	
  16.

  	
   

  	
  LATE CHARGE AND
  INTEREST

  	
   

  	
  32

  
	
  17.

  	
   

  	
  WAIVER

  	
   

  	
  32

  
	
  18.

  	
   

  	
  ENTRY,
  INSPECTION AND CLOSURE

  	
   

  	
  33

  
	
  19.

  	
   

  	
  SURRENDER AND
  HOLDING OVER

  	
   

  	
  34

  
	
  20.

  	
   

  	
  ENCUMBRANCES

  	
   

  	
  34

  
	
  21.

  	
   

  	
  ESTOPPEL
  CERTIFICATES

  	
   

  	
  35

  
	
  22.

  	
   

  	
  NOTICES

  	
   

  	
  36

  
	
  23.

  	
   

  	
  ATTORNEYS’
  FEES

  	
   

  	
  36

  
	
  24.

  	
   

  	
  QUIET
  POSSESSION

  	
   

  	
  36

  
	
  25.

  	
   

  	
  SECURITY
  MEASURES

  	
   

  	
  36

  
	
  26.

  	
   

  	
  FORCE
  MAJEURE

  	
   

  	
  37

  
	
  27.

  	
   

  	
  RULES AND
  REGULATIONS

  	
   

  	
  37

  
	
  28.

  	
   

  	
  LANDLORD’S
  LIABILITY

  	
   

  	
  37

  
	
  29.

  	
   

  	
  CONSENTS AND
  APPROVALS

  	
   

  	
  38

  
	
  30.

  	
   

  	
  WAIVER OF
  RIGHT TO JURY TRIAL

  	
   

  	
  38

  
	
  31.

  	
   

  	
  BROKERS

  	
   

  	
  38

  
	
  32.

  	
   

  	
  INTENTIONALLY
  DELETED

  	
   

  	
  38

  
	
  33.

  	
   

  	
  PARKING

  	
   

  	
  39

  
	
  34.

  	
   

  	
  ENTIRE
  AGREEMENT

  	
   

  	
  39

  
	
  35.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  39

  
	
  36.

  	
   

  	
  AUTHORITY

  	
   

  	
  40

  



 


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  37.

  	
   

  	
  SIGNAGE

  	
   

  	
  40

  
	
  38.

  	
   

  	
  RIGHT OF
  FIRST OFFER

  	
   

  	
  40

  
	
  39.

  	
   

  	
  LEASE
  CONTINGENCY

  	
   

  	
  41

  
	
  39.

  	
   

  	
  LEASE
  CONTINGENCY

  	
   

  	
  41

  



 


ii

















 


BASIC LEASE INFORMATION


 


	
  Lease Date:

  	
   

  	
  For identification purposes only, the date of this Lease is February
  28, 2006.

  
	
   

  	
   

  	
   

  
	
  Landlord:

  	
   

  	
  PCCP HC Kierland, LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
  Tenant:

  	
   

  	
  The Ryland Group, Inc., a Maryland corporation

  
	
   

  	
   

  	
   

  
	
  Project:

  	
   

  	
  Ryan Kierland Corporate Center

  
	
   

  	
   

  	
   

  
	
  Building Address:

  	
   

  	
  14635 North Kierland Boulevard, Scottsdale, Arizona 85254

  
	
   

  	
   

  	
   

  
	
  Rentable Area of Building:

  	
   

  	
  106,548 rentable square feet

  
	
   

  	
   

  	
   

  
	
  Premises:

  	
   

  	
  Floor: Second  

  Suite Number: 200  

  Rentable Area: 56,608 rentable square feet  

  Usable Area: 53,225 usable square feet

  
	
   

  	
   

  	
   

  
	
  Initial Term:

  	
   

  	
  Seventy-six (76) full calendar months (plus any partial month at the
  beginning of the Term)

  
	
   

  	
   

  	
   

  
	
  Renewal Terms:

  	
   

  	
  Two (2) additional periods of sixty (60) months each (for a total if
  all Renewal Terms are exercised of one hundred twenty (120) months)

  
	
   

  	
   

  	
   

  
	
  Commencement Date:

  	
   

  	
  The date that is one hundred twenty (120) days following Landlord’s
  delivery of the Premises to Tenant in accordance with Section 2.1 below

  
	
   

  	
   

  	
   

  
	
  Expiration Date:

  	
   

  	
  The last day of the seventy-sixth (76th) full calendar
  month in the Term

  
	
   

  	
   

  	
   

  
	
  Base Rent:

  	
   

  	
   

  



 


	
   

  	
   

  	
  Monthly Installments of 

  Base Rent

  	
   

  	
  Annual Base Rent per rentable 

  square foot of the Premises

  	
   

  
	
  Months 01 through 04

  	
   

  	
  $

  	
  0.00

  	
   

  	
  $

  	
  0.00

  	
   

  
	
  Months 05 through 16

  	
   

  	
  $

  	
  125,009.33

  	
   

  	
  $

  	
  26.50

  	
   

  
	
  Months 17 through 28

  	
   

  	
  $

  	
  127,368.00

  	
   

  	
  $

  	
  27.00

  	
   

  
	
  Months 29 through 40

  	
   

  	
  $

  	
  129,726.67

  	
   

  	
  $

  	
  27.50

  	
   

  
	
  Months 41 through 52

  	
   

  	
  $

  	
  132,085.33

  	
   

  	
  $

  	
  28.00

  	
   

  
	
  Months 53 through 64

  	
   

  	
  $

  	
  134,444.00

  	
   

  	
  $

  	
  28.50

  	
   

  
	
  Months 65 through 76

  	
   

  	
  $

  	
  136,802.67

  	
   

  	
  $

  	
  29.00

  	
   

  



 


1

















 


	
  Security Deposit:

  	
   

  	
  $0.00

  
	
   

  	
   

  	
   

  
	
  Tenant’s Share:

  	
   

  	
  Approximately 53.13%

  
	
   

  	
   

  	
   

  
	
  Operating Costs Expense Stop:

  	
   

  	
  An amount equal to the Operating Costs incurred by Landlord during
  calendar year 2006.

  
	
   

  	
   

  	
   

  
	
  Improvement Allowance:

  	
   

  	
  $35.00 multiplied by the Usable Area of the
  Premises (or $1,862,875.00 based on a Premises consisting of 53,225 usable
  square feet), subject to reduction based upon the costs incurred by Landlord
  in connection with the Data Room Floor Construction as more particularly
  described under Section 25 of Exhibit C to this Lease.

  
	
   

  	
   

  	
   

  
	
  Covered Reserved Parking Spaces:

  	
   

  	
  Fifty-three (53) covered/reserved parking stalls

  
	
   

  	
   

  	
   

  
	
  Landlord’s Address for Payment of Rent:

  	
   

  	
  PCCP HC Kierland, LLC  

  c/o Transwestern Commercial Services  

  10040 North 25th Avenue, Suite 125  

  Phoenix, Arizona 85021  

  Attn: Joanne Damman

  
	
   

  	
   

  	
   

  
	
  Business Hours:

  	
   

  	
  Between 7:00 a.m. and 6:00 p.m., Monday through Friday, and between
  8:00 a.m. and noon on Saturday

  
	
   

  	
   

  	
   

  
	
  Landlord’s Address  For Notices:

  	
   

  	
  PCCP HC Kierland, LLC  

  c/o Transwestern Commercial Services  

  10040 North 25th Avenue, Suite 125  

  Phoenix, Arizona 85021  

  Attn: Joanne Damman

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  PCCP HC Kierland, LLC  

  c/o Hibernia Capital Advisors, LLC  

  2398 East Camelback Road, Suite 245  

  Phoenix, Arizona 85016  

  Attn: Richard A. O’Brien

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Mr. R. Michael Valenzuela  

  Valenzuela Law Group, PLC  

  2398 East Camelback Road, Suite 760  

  Phoenix, Arizona 85016

  



 


2

















 


	
  Tenant’s Address  For Notices:

  	
   

  	
  The Ryland Group, Inc.  

  6300 Canoga Avenue, 14th Floor  

  Woodlands, California 91367  

  Attn: Eric Menyuk

  
	
   

  	
   

  	
   

  
	
  Landlord’s Broker:

  	
   

  	
  Lee & Associates (Tom Boyle)

  
	
   

  	
   

  	
   

  
	
  Tenant’s Broker:

  	
   

  	
  Travers Realty Company (Jim Travers) and Core Realty Advisors (Mike
  Cavanaugh)

  
	
   

  	
   

  	
   

  
	
  Property Manager:

  	
   

  	
  Transwestern Commercial Services

  



 


	
  Exhibits:

  	
   

  	
   

  
	
  Exhibit A:

  	
   

  	
  Legal Description of the Land

  
	
  Exhibit B:

  	
   

  	
  The Premises

  
	
  Exhibit C:

  	
   

  	
  Construction Rider

  
	
  Exhibit D:

  	
   

  	
  Building Rules

  
	
  Exhibit E:

  	
   

  	
  Subordination, Non-Disturbance and Attornment Agreement

  
	
  Exhibit F:

  	
   

  	
  Operating Costs Exclusions

  
	
  Exhibit G:

  	
   

  	
  Exterior Building Signage Locations

  
	
  Exhibit G-1:

  	
   

  	
  Landlord Approved Signage

  



 


The Basic Lease Information set forth above
is part of the Lease. In the event of any conflict between any provision in the
Basic Lease Information and the Lease, the Lease shall control.


 


3

















 


THIS LEASE is made as of the Lease Date set
forth in the Basic Lease Information, by and between the Landlord identified in
the Basic Lease Information (“Landlord”), and
the Tenant identified in the Basic Lease Information (“Tenant”).
Landlord and Tenant hereby agree as follows:


 


1.             PREMISES.
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, upon
the terms and subject to the conditions of this Lease, the space identified in
the Basic Lease Information as the Premises (the “Premises”),
in the Building located at the address specified in the Basic Lease Information
(the “Building”). The land upon which the
Building is located is described on Exhibit A (the “Land”).
The approximate configuration and location of the Premises is shown on
Exhibit B. Landlord and Tenant agree that, for all purposes of this Lease,
the Rentable Area of the Premises, the Usable Area of the Premises and the
Rentable Area of the Building shall be as specified in the Basic Lease
Information. For purposes
of Landlord’s determination of the Rentable Area and Usable Area, the load
factor (the Floor R/U Ratio) is six and four-tenths percent (6.4%). The Building, the Land, and all improvements thereon (collectively, the
“Property”) are part of the Project
identified in the Basic Lease Information (the “Project”).


 


2.             TERM;
POSSESSION.


 


2.1           Term.
The term of this Lease (the “Term”) shall
commence on the Commencement Date as described below and, unless sooner
terminated, shall expire on the Expiration Date set forth in the Basic Lease
Information (the “Expiration Date”).
Subject to the timely satisfaction of the contingencies set forth in Sections
39 and 40 below, Landlord will deliver the Premises to Tenant on or before
April 1, 2006 so that Tenant may cause the Tenant Improvements to be
constructed therein as soon as is reasonably practicable thereafter. Tenant
acknowledges and agrees that, subject to Landlord’s representations and
warranties concerning the Base Building as described in the Construction Rider
attached as Exhibit C (the “Construction Rider”),
the Premises are being leased to Tenant in an “AS IS” condition, without
representation, warranty or covenant of or from Landlord and without any
obligation of Landlord to construct any tenant improvements of any kind or
character whatsoever. Tenant further acknowledges that, except as expressly set
forth to the contrary in this Lease, Landlord has made no representations or
warranties, express or implied, concerning the tenant improvements presently
existing at, or the condition of, the Premises, and Tenant further acknowledges
that it has had adequate opportunity to inspect and approve, and has adequately
inspected and approved, the tenant improvements presently existing at, and the
condition of, the Premises. The “Commencement Date”
shall be the date that is one hundred twenty (120) days following
Landlord’s delivery of the Premises to Tenant as specified above in this
Section notwithstanding the actual date of Substantial
Completion of the Tenant Improvements. Tenant shall not do anything that could
delay Substantial Completion of the Tenant Improvements and, in the event the
Tenant Improvements are not Substantially Completed on or before the
Commencement Date, then in that event Tenant shall complete the Tenant
Improvements at the earliest practicable date thereafter. When the Commencement
Date has been established, Landlord and Tenant shall confirm the Commencement
Date and the Expiration Date in writing.


 


4

















 


2.2           Tenant’s
Property. Tenant agrees that Landlord shall not be liable in any way for
any injury, loss or damage which may occur to any of Tenant’s property placed
upon or installed in the Premises prior to the Commencement Date, the same
being at Tenant’s sole risk, and Tenant shall be liable for all injury, loss or
damage to persons or property arising as a result of such entry into the
Premises by Tenant or its Representatives (as hereinafter defined).


 


2.3           Occupancy
of Premises. Tenant shall have the right to occupy the Premises throughout
the Term, seven (7) days a week, twenty-four (24) hours a day, subject to all
of the terms of this Lease, including, without limitation, casualty,
condemnation, Force Majeure or other events beyond the control of Landlord. From
and after the Commencement Date, during any period that
Tenant is not occupying and operating the Premises, Tenant will keep those
portions of the Premises visible from Common Areas (as hereinafter defined)
from appearing abandoned, including, without limitation, keeping such areas
lighted during Business Hours, free of stored materials, clean and otherwise
maintained such that it is not apparent that business is not being conducted
therein.


 


2.4           Renewal Options. In the absence of an Event of Default by Tenant
when it exercises a Renewal Option or when a Renewal Term begins, Tenant has
the option (each, a “Renewal Option”)
to renew this Lease for the number of successive terms set forth in the Basic
Lease Information (each, a “Renewal Term”)
(for a total if all Renewal Options are exercised of ten (10) years) by giving
notice of exercise of a Renewal Option to Landlord at least nine (9) months
before the end of the then-current Term. If Tenant fails to deliver timely
written notice of exercise of a Renewal Option to Landlord, all remaining
Renewal Options shall lapse and Tenant will have no further privilege to extend
the Term. Time is of the essence of this provision. The terms of the Renewal
Terms are as follows:


 


(a)           Each Renewal Term shall be on the
same terms and conditions of this Lease (unless clearly inapplicable), except
that Base Rent during each Renewal Term shall be based upon the fair market
rental rate for comparable space in buildings of similar size, type, quality,
age and location prevailing at the start of each Renewal Term (“Market Rental Rate”). Within thirty (30) days after Landlord
receives Tenant’s notice of exercise of a Renewal Option, Landlord will
reasonably calculate the Market Rental Rate and will notify Tenant of same.
Determination of the effective Market Rental Rate will give appropriate
consideration to rental rates for renewals, rental escalations, common area
charges, operating costs, and other terms that would affect the economics in a
similar lease renewal at a competing building in the area.


 


(b)           If Tenant disputes Landlord’s
determination of the Market Rental Rate for a Renewal Term, Tenant will deliver
notice of such dispute, together with Tenant’s proposed Market Rental Rate, to
Landlord within five days of Tenant’s receipt of Landlord’s determination. The
parties will then attempt in good faith to agree upon the Market Rental Rate.
If they fail to agree within fifteen (15) days, they will within seven days
thereafter mutually appoint an appraiser to select the 


 


5

















 


Market Rental Rate in the
manner set forth below. The appraiser must have at least five years of
full-time commercial appraisal experience with projects comparable to the
Project and be a member of the American Institute of Real Estate Appraisers or
a similar appraisal association. The appraiser shall not have any material
financial or business interest in common with either of the parties. If
Landlord and Tenant are unable to agree upon an appraiser within such seven
days, the parties will within five days thereafter each appoint an appraiser
meeting the criteria set forth above, which appraisers will, within seven days
of their appointment, mutually select a third appraiser meeting the criteria
set forth above to select the Market Rental Rate in the manner set forth below.
Within seven days of the appointment (either by agreement or selection) of the
deciding appraiser, Landlord and Tenant will submit to that appraiser their
respective determinations of the Market Rental Rate and any related
information. Within twenty (20) days thereafter, the appraiser will review each
party’s submittal (and such other information as the appraiser deems necessary)
and will select one party’s submittal as representing the most reasonable
approximation of the Market Rental Rate for the Premises. The rate so selected
will be used for the applicable Renewal Term as the Base Rent rate. Subject to
the previous sentence, if the appraiser timely receives one party’s submittal,
but not both, the appraiser must designate the submitted rent rate as the
Market Rental Rate for the applicable Renewal Term. Landlord and Tenant will
each pay, directly to the appraiser selecting the Market Rental Rate, one-half
of all fees, costs and expenses of such appraiser. Landlord and Tenant will
each separately pay all costs, fees and expenses of their respective additional
appraiser (if any) appointed to determine the deciding appraiser.


 


(c)           In addition to paying Base Rent
determined pursuant to this Section 2.4, Tenant will continue to pay Additional
Rent and all other sums required under this Lease during all Renewal Terms.


 


(d)           If this Lease or Tenant’s right to
possession of the Premises shall expire or terminate for any reason whatsoever
before Tenant exercises all Renewal Options, then immediately upon such
expiration or termination, all Renewal Options shall simultaneously terminate
and become null and void. In addition, Tenant may not exercise a Renewal Option
if it is subletting or has assigned all or any portion of the Premises other
than to a Tenant Affiliate (as defined below) at the time Tenant seeks to
exercise such Renewal Option. The Renewal Options are personal to Tenant and
its Tenant Affiliates, and under no circumstances shall a subtenant or an
assignee other than a Tenant Affiliate have the right to exercise any Renewal
Option. Until such time as Tenant properly exercises a Renewal Option, all
references to the “Term” of this Lease will mean the Initial Term only. If
Tenant properly exercises its right to renew this Lease for a Renewal Term,
then all references to the “Term” of this Lease will include such Renewal Term.


 


6

















 


3.             RENT;
SECURITY DEPOSIT.


 


3.1           Base
Rent. Tenant shall pay to Landlord annual rent (“Base Rent”)
in the amount set forth in the Basic Lease Information, without prior notice or
demand, in monthly installments equal to one-twelfth (1/12) of the Base Rent,
on or before the first day of each and every calendar month during the Term,
except that Base Rent for the first full calendar month in which Base Rent is
payable shall be paid upon Tenant’s execution of this Lease and Base Rent for
any partial month at the beginning of the Term shall be paid on the
Commencement Date. Base Rent for any partial month at the beginning or end of
the Term shall be prorated based on the actual number of days in the month.


 


3.2           Additional Rent: Operating Costs and Taxes.


 


(a)           Definitions.


 


1)   “Operating Costs” means all Taxes
(as defined below) and other costs of managing, operating, maintaining and
repairing the Property in good condition and repair, including, without
limitation, all costs, expenditures, fees and charges set forth below. Operating
Costs include:


 


(A)          operation, maintenance and repair of the Property
(including maintenance, repair and replacement of glass, the roof covering or
membrane, the parking lot and driveways (including re-painting, re-striping,
seal-coating, cleaning, sweeping, resurfacing, patching and repairing parking
areas and other paved surfaces), sidewalks, exterior light fixtures, common
signage, other common areas and elements, regular painting of the exterior of
the Building and lawn care and landscaping). The terms “repair” or “repairs”
shall include reasonable replacements or renewals when necessary.


 


(B)           utilities and services (including, without limitation,
electricity, water, sewer, gas (if used at the Project), telecommunications
facilities and equipment, recycling programs and trash removal), and associated
supplies and materials.


 


(C)           wages, benefits and other compensation (including
employment taxes and fringe benefits) for persons who perform duties in
connection with the operation, management, maintenance and repair of the
Property up to, and including, level of Building Manager (or equivalent), such
compensation to be appropriately allocated for persons who also perform duties
unrelated to the Property.


 


(D)          property (including coverage for earthquake and flood if
carried by Landlord), liability, rental income and other insurance relating to
the Property, and expenditures for deductible amounts paid under such
insurance.


 


7

















 


(E)           licenses, permits and inspections.


 


(F)           complying with the requirements of any law, statute,
ordinance or governmental rule or regulation or any orders pursuant thereto
(collectively “Laws”), but only to the extent
such Laws are enacted and enforceable from and after the date of this Lease.


 


(G)           amortization of capital improvements required to comply
with Laws, or which are intended to reduce Operating Costs or improve the
utility, efficiency or capacity of any of the Building Systems, with interest
on the unamortized balance at the rate paid by Landlord on funds borrowed to
finance such capital improvements (or, if Landlord finances such improvements
out of Landlord’s funds without borrowing, the rate that Landlord would have
paid to borrow such funds, as reasonably determined by Landlord), over such
useful life as Landlord shall reasonably determine, but in no event greater
than ten percent (10%) per annum.


 


(H)          an office in the Project for the management of the
Property, including expenses of furnishing and equipping such office and the
rental value of any space occupied for such purposes.


 


(I)            commercially reasonable property management fees not to
exceed three percent (3%) of Landlord’s gross rental revenue received for that
fiscal year for the Property.


 


(J)            fees and costs for accounting, legal and other
professional services incurred in connection with the operation of the Property
and the calculation of Operating Costs.


 


(K)          a reasonable allowance for depreciation on machinery and
equipment used to maintain the Property and on other personal property owned by
Landlord in the Property (including window coverings and carpeting in common
areas).


 


(L)           fees and costs incurred in contesting the validity or
applicability of any Laws that may affect the Property to the extent that
contesting the Law results in a savings to Tenant. “Savings” under this section
would mean, by example, if any Operating Expense is reduced (or if a proposed
increase is avoided or reduced) because a Law was contested, Landlord may
include in its computation of Operating Expenses the costs of any fees and
costs incurred in connection with such contest up to the amount of any
Operating Expense reduction obtained in connection with the contest or any
Operating Expense increase avoided or reduced in connection with the contest,
as the case may be.


 


8

















 


(M)         the Building’s or Property’s share of any shared or common
area maintenance fees and expenses, property association fees, dues and
assessments, and all payments under any recorded documents (excluding mortgages
and deeds of trust) affecting the Property (including costs and expenses of
operating, managing, owning and maintaining the common areas of the Project and
any fitness center or conference center in the Project).


 


(N)          janitorial services, window washing, cleaning, rubbish
removal and other services provided to the Property.


 


(O)          security and access control equipment and services.


 


(P)           subject to the remaining provisions of this Section
3.2(a)(1), any other cost, expenditure, fee or charge, whether or not
hereinbefore described, which in accordance with generally accepted property
management practices would be considered an expense of managing, operating,
maintaining and repairing the Property.


 


Operating Costs shall not include:


 


(i)      capital improvements (except as otherwise provided above).


 


(ii)     costs of special services rendered to individual tenants
(including Tenant) for which a special charge is made.


 


(iii)    interest and principal payments on loans or indebtedness secured
by the Building.


 


(iv)    costs of interior improvements for Tenant or other tenants of the
Building.


 


(v)     costs of services or other benefits of a type which are not
available to Tenant but which are available to other tenants or occupants, and
costs for which Landlord is reimbursed by other tenants of the Building other
than through payment of tenants’ shares of Operating Costs.


 


(vi)    leasing commissions, attorneys’ fees and other expenses incurred
in connection with leasing space in the Building or enforcing such leases.


 


(vii)   depreciation or amortization, other than as specifically
enumerated in the definition of Operating Costs above.


 


9

















 


(viii)  costs, fines or penalties incurred due to
Landlord’s violation of any Law.


 


(ix)    commercially unreasonable contributions to employee pension
plans.


 


(x)     Any other exclusions from Operating Costs specifically described
on Exhibit F attached hereto and incorporated herein.


 


2)   “Taxes” means all real property
taxes and general, special or district assessments or other governmental impositions,
of whatever kind, nature or origin, imposed on or by reason of the ownership or
use of the Property; any state, county or municipal governmental property lease
excise tax or the equivalent thereof; service payments in lieu of taxes and
taxes and assessments of every kind and nature whatsoever levied or assessed in
addition to, in lieu of or in substitution for existing or additional real or
personal property taxes on the Property or the personal property described
above; and the reasonable cost of contesting by appropriate proceedings the
amount or validity of any taxes, assessments or charges described above. Taxes
shall include all Taxes either payable in, or attributable to, each calendar
year or portion thereof during the Term.


 


3)   “Tenant’s Share” means the Rentable
Area of the Premises divided by the Rentable Area of the Building. If the
Rentable Area of the Premises is increased by Tenant’s leasing of additional
space hereafter, Tenant’s Share shall be increased accordingly.


 


(b)     Additional Rent.


 


1)   Tenant shall pay Landlord as “Additional Rent”
for each calendar year during the Term Tenant’s Share of the amount by which
Operating Costs for such year exceed the Operating Costs Expense Stop, which
amount shall be prorated for the last year of the Term if such year is less
than a full calendar year. Both Landlord and Tenant acknowledge that basing the
Operating Costs Expense Stop on expenses for 2006, the intent is to base such
Expense Stop on the actual Operating Expenses that Tenant would have incurred
had the Building been fully occupied the entire year. Therefore, Tenant will
not incur any costs associated with Tenant’s Share of Operating Costs until
January 2007. In addition, in determining the Operating Costs Expense Stop, the
actual Operating Costs incurred in 2006 that vary with occupancy shall be
adjusted to an amount reasonably determined by Landlord to be the Operating
Costs that would have been incurred and paid had such occupancy been at least
ninety-five percent (95%) during all of 2006.


 


2)   Prior to the beginning of the Term and each calendar year
thereafter, Landlord shall notify Tenant of Landlord’s estimate of Operating
Costs and 


 


10

















 


Tenant’s Additional Rent for the remaining
and following calendar year, as applicable. Commencing on the first day of the
Term and continuing on the first day of every month thereafter, Tenant shall
pay to Landlord one-twelfth (1/12th) of the estimated Additional Rent. If
Landlord thereafter estimates that Operating Costs for any year will vary from
Landlord’s prior estimate, Landlord may, by notice to Tenant, revise the
estimate for such year (and Additional Rent shall thereafter be payable based
on the revised estimate).


 


3)   As soon as reasonably practicable after the end of each calendar
year during the Term, Landlord shall furnish Tenant a reconciliation statement
with respect to such year, showing Operating Costs and Additional Rent for the
year, and the total payments made by Tenant with respect thereto. Unless Tenant
raises any objections to Landlord’s statement within thirty (30) days after
receipt of the same, such statement shall presumptively be deemed correct and
Tenant shall have no right thereafter to dispute such statement or any item
therein or the computation of Additional Rent based thereon, subject only to
Tenant’s right of audit. If Tenant does object to such statement, then Landlord
shall provide Tenant with reasonable verification of the figures shown on the
statement and the parties shall negotiate in good faith to resolve any disputes.
Any objection of Tenant to Landlord’s statement and resolution of any dispute
shall not postpone the time for payment of any amounts due Tenant or Landlord
based on Landlord’s statement, nor shall any failure of Landlord to deliver
Landlord’s statement in a timely manner relieve Tenant of Tenant’s obligation
to pay any amounts due Landlord based on Landlord’s statement.


 


4)   If Tenant’s Additional Rent as finally determined for any calendar
year exceeds the total payments made by Tenant on account thereof, Tenant shall
pay Landlord the deficiency within fifteen (15) business days of Tenant’s
receipt of Landlord’s statement. If the total payments made by Tenant on
account thereof exceed Tenant’s Additional Rent as finally determined for such
year, Tenant’s excess payment shall be credited toward the rent next due from
Tenant under this Lease. For any partial calendar year at the beginning or end
of the Term, Additional Rent shall be prorated on the basis of a 365-day year
by computing Tenant’s Share of Operating Costs for the entire year and then
prorating such amount for the number of days during such year included in the
Term. Notwithstanding the termination of this Lease, Landlord shall pay to
Tenant or Tenant shall pay to Landlord, as the case may be, within fifteen (15)
business days after Tenant’s receipt of Landlord’s final statement for the
calendar year in which this Lease terminates, the difference between Tenant’s
Additional Rent for that year, as finally determined by Landlord, and the total
amount previously paid by Tenant on account thereof.


 


5)   Tenant shall have the right at any time during Landlord’s normal
business hours and upon reasonable prior notice to Landlord, which shall not be
given later than the first anniversary of Tenant’s receipt of Landlord’s
reconciliation statement for the preceding year, to audit Landlord’s books and
records with respect 


 


11

















 


to such reconciliation statement, at Tenant’s
sole expense. Should the audit disclose an overcharge to Tenant or an
underpayment to Landlord, the party owing an amount to the other party shall
reimburse the other party within fifteen (15) business days after the results
of the audit are known to Landlord and Tenant. Additionally, if the audit
report shows that Tenant was overcharged by five percent (5%) or more, Landlord
shall reimburse Tenant for its reasonable out of pocket costs of conducting the
audit, not to exceed $3,000.00 per audit.


 


3.3           Payment of Rent. All amounts
payable or reimbursable by Tenant under this Lease, including late charges and
interest, shall constitute “Rent” and shall
be payable and recoverable as Rent in the manner provided in this Lease. All
sums payable to Landlord on demand under the terms of this Lease shall be
payable within ten (10) days after notice from Landlord of the amounts due. Except
as specifically provided for in this Lease to the contrary, all Rent shall be
paid without offset, recoupment or deduction in lawful money of the United
States of America to Landlord at Landlord’s Address for Payment of Rent as set
forth in the Basic Lease Information, or to such other person or at such other
place as Landlord may from time to time designate.


 


3.4           Intentionally Deleted.


 


4.             RENTAL
TAXES. Tenant shall pay to Landlord with each installment of Rent the amount of
any gross receipts, transaction privilege, sales, excise or similar tax,
exclusive of any income tax, payable by Landlord on account of this Lease or
Tenant’s payment of such items to, or on behalf of, Landlord.


 


5.             USE
AND COMPLIANCE WITH LAWS.


 


5.1           Use.
The Premises shall be used and occupied solely for general business office
purposes for Tenant’s mortgage and information technology departments and for no
other use or purpose. Tenant shall comply with all present and future Laws
relating to Tenant’s use or occupancy of the Premises (and make any repairs,
alterations or improvements as required to comply with all such Laws), and
shall observe the Building Rules (as defined in Section 27 - Rules and Regulations). Tenant shall not do, bring, keep or
sell anything in or about the Premises that is prohibited by, or that will
cause a cancellation of or an increase in the existing premium for, any
insurance policy covering the Property or any part thereof. Tenant shall not
permit the Premises to be occupied or used in any manner that will constitute
waste or a nuisance, or disturb the quiet enjoyment of or otherwise annoy other
tenants in the Building. Except as may be provided in the Construction Rider,
Tenant shall not, without the prior consent of Landlord, (i) bring into the
Building or the Premises anything that may cause substantial noise, odor or
vibration, overload the floors in the Premises or the Building or any of the
heating, ventilating and air-conditioning (“HVAC”),
mechanical, elevator, plumbing, electrical, fire protection, life safety,
security or other systems in the Building (“Building
Systems”), or jeopardize the structural integrity of the Building or
any part thereof; (ii) connect to the utility systems of the Building any
apparatus, machinery or other equipment other than typical office equipment; or
(iii) connect to any electrical circuit in the 


 


12

















 


Premises any equipment or other load with
aggregate electrical power requirements in excess of 80% of the rated capacity
of the circuit.


 


5.2           Hazardous
Materials.


 


(a)           Definitions.


 


1)   “Hazardous Materials” shall mean
any substance:  (A) that now or in
the future is regulated or governed by, requires investigation or remediation
under, or is defined as a hazardous waste, hazardous substance, pollutant or
contaminant under, any governmental statute, code, ordinance, regulation, rule
or order, and any amendment thereto, including the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. §9601 et  seq.,
and the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et  seq.,
or (B) that is toxic, explosive, corrosive, flammable, radioactive,
carcinogenic, dangerous or otherwise hazardous, including gasoline, diesel
fuel, petroleum hydrocarbons, polychlorinated biphenyls (PCBs), asbestos, radon
and urea formaldehyde foam insulation.


 


2)   “Environmental Requirements” shall
mean all present and future Laws, orders, permits, licenses, approvals,
authorizations and other requirements of any kind applicable to Hazardous
Materials.


 


3)   “Handled by Tenant“ and “Handling by Tenant” shall mean and refer to any
installation, handling, generation, storage, use, disposal, discharge, release,
abatement, removal, transportation, or any other activity of any type by Tenant
or its agents, employees, contractors, licensees, assignees, sublessees,
transferees or representatives (collectively, “Representatives”)
or its guests, customers, invitees, or visitors (collectively, “Visitors“), at or about the Premises in connection with or
involving Hazardous Materials.


 


4)   “Environmental Losses” shall mean
all costs and expenses of any kind, damages (including foreseeable and
unforeseeable consequential damages), fines and penalties incurred in
connection with any violation of or compliance with Environmental Requirements,
and all losses of any kind attributable to the diminution of value, loss of use
or adverse effects on marketability or use of any portion of the Premises or
the Property.


 


(b)           Tenant’s Covenants. No Hazardous Materials shall be
Handled by Tenant at or about the Premises or Property without Landlord’s prior
written consent, which consent may be granted, denied, or conditioned upon
compliance with Landlord’s requirements, all in Landlord’s absolute discretion.
Notwithstanding the foregoing, normal quantities and use of those Hazardous
Materials customarily used in the conduct of general office activities, such as
copier fluids and cleaning supplies (“Permitted Hazardous
Materials”), may be used and 


 


13

















 


stored at the Premises without Landlord’s
prior written consent, provided that Tenant’s activities at or about the
Premises and Property and the Handling by Tenant of all Hazardous Materials
shall comply at all times with all Environmental Requirements. At the
expiration or termination of the Lease, Tenant shall promptly remove from the
Premises and Property all Hazardous Materials Handled by Tenant at the Premises
or the Property. Tenant shall keep Landlord fully and promptly informed of all
Handling by Tenant of Hazardous Materials other than Permitted Hazardous
Materials. Tenant shall be responsible and liable for the compliance with all
of the provisions of this Section by all of Tenant’s Representatives and
Visitors, and all of Tenant’s obligations under this Section (including its
indemnification obligations under paragraph (e) below) shall survive the
expiration or termination of this Lease.


 


(c)           Compliance. Tenant shall at Tenant’s expense
promptly take all actions required by any governmental agency or entity in
connection with or as a result of the Handling by Tenant of Hazardous Materials
at or about the Premises or the Property, including inspection and testing,
performing all cleanup, removal and remediation work required with respect to
those Hazardous Materials, complying with all closure requirements and
post-closure monitoring, and filing all required reports or plans. All of the
foregoing work and all Handling by Tenant of all Hazardous Materials shall be
performed in a good, safe and workmanlike manner by consultants qualified and
licensed to undertake such work and in a manner that will not interfere with
any other tenant’s quiet enjoyment of the Property or Landlord’s use,
operation, leasing and sale of the Property. Tenant shall deliver to Landlord
prior to delivery to any governmental agency, or promptly after receipt from
any such agency, copies of all permits, manifests, closure or remedial action
plans, notices, and all other documents relating to the Handling by Tenant of
Hazardous Materials at or about the Premises or the Property. If any lien
attaches to the Premises or the Property in connection with or as a result of
the Handling by Tenant of Hazardous Materials, and if Tenant does not cause the
same to be released, by payment, bonding or otherwise, within ten (10) days
after the attachment thereof, Landlord shall have the right but not the
obligation to cause the same to be released and any sums expended by Landlord
(plus Landlord’s administrative costs) in connection therewith shall be payable
by Tenant on demand.


 


(d)           Landlord’s
Rights. Landlord shall have the right, but not the obligation, to enter the
Premises at any reasonable time (i) to confirm Tenant’s compliance with
the provisions of this Section 5.2, and (ii) to perform Tenant’s
obligations under this Section if Tenant has failed to do so after reasonable
notice to Tenant. Landlord shall also have the right to engage qualified
Hazardous Materials consultants to inspect the Premises and review the Handling
by Tenant of Hazardous Materials, including review of all permits, reports,
plans, and other documents regarding same. Tenant shall pay to Landlord on
demand the costs of Landlord’s consultants’ fees and all costs incurred by
Landlord in performing Tenant’s obligations under this Section. Landlord shall
use reasonable efforts to minimize any interference with 


 


14

















 


Tenant’s business caused by
Landlord’s entry into the Premises, but Landlord shall not be responsible for
any interference caused thereby.


 


(e)           Tenant’s
Indemnification. Tenant agrees to indemnify, defend, protect and hold
harmless Landlord and its partners
or members and its or their partners, members, directors, officers,
shareholders, employees and agents from all Environmental Losses and all other
claims, actions, losses, damages, liabilities, costs and expenses of every
kind, including reasonable attorneys’, experts’ and consultants’ fees and
costs, incurred at any time and arising from or in connection with the Handling
by Tenant of Hazardous Materials at or about the Property or Tenant’s failure
to comply in full with all Environmental Requirements with respect to the
Premises.


 


(f)            Landlord’s Representations. Landlord
represents to Tenant that the Base Building does not contain any Hazardous
Materials other than insubstantial amounts, if any, in quantities not having
any materially adverse effect on Tenant’s health and safety, and that Landlord
has not released any Hazardous Materials onto the Property in violation of
Environmental Requirements. Landlord is making no further representations to
Tenant with respect to Hazardous Materials.


 


5.3           Americans With
Disabilities Act. The
parties agree that the liabilities and obligations of Landlord and Tenant under
that certain federal statute commonly known as the Americans With Disabilities
Act, as well as the regulations and accessibility guidelines promulgated
thereunder, as each of the foregoing is supplemented or amended from time to
time (collectively, the “ADA”), shall be
apportioned as follows:


 


(a)           Except as otherwise provided in (c)
below, if the structural elements of the Premises or any other portion of the
Base Building (as defined in the Construction Rider) are not in compliance with
the public accommodations provisions of the ADA on the Commencement Date,
including lavatory facilities, such nonconformity shall be promptly made to
comply by Landlord.


 


(b)           Except as otherwise provided in (c)
below, from and after the commencement date of the Lease, Tenant covenants and
agrees to conduct its operations within the Premises in compliance with the ADA.
If any of the Premises fails to comply with the ADA, such nonconformity shall
be promptly made to comply by Tenant. In the event that Tenant elects to
undertake any alterations to, for or within the Premises, including initial
build-out work, Tenant agrees to cause such alterations to be performed and
constructed in compliance with the ADA.


 


15

















 


(c)           Notwithstanding the foregoing, Tenant shall cause all
parts of the Premises, the Building or the Project designed by Tenant or its
own architects, space planners and designers (“Tenant
Design”) to comply with the ADA, and Landlord shall have no
responsibility therefor or liability for any noncompliance resulting from
Tenant Design.


 


6.             TENANT
IMPROVEMENTS AND ALTERATIONS.


 


6.1           Landlord
and Tenant shall perform their respective obligations with respect to design
and construction of any improvements to be constructed and installed in the
Premises as provided in the Construction Rider
attached hereto as Exhibit C. Except for (i) any improvements to be constructed
by Tenant as provided in the Construction Rider and (ii) non-structural
alterations not affecting the Building Systems and costing less than $50,000.00
in the aggregate (for which no Landlord consent shall be required), Tenant
shall not make any alterations, improvements or changes to the Premises,
including installation of any security system or telephone or data
communication wiring (“Alterations“),
without Landlord’s prior written consent, not to be unreasonably withheld,
conditioned or delayed; provided, however, that it shall in all events be
reasonable for Landlord to withhold such consent if the proposed Alterations
affect the structure of the Building and/or any of the Building Systems. Any
such Alterations shall be completed by Tenant at Tenant’s sole cost and
expense:  (i) with due diligence, in a
good and workmanlike manner, using new materials; (ii) in compliance with plans
and specifications approved by Landlord; (iii) in compliance with the
construction rules and regulations promulgated by Landlord from time to time;
(iv) in accordance with all applicable Laws (including all work, whether
structural or non-structural, inside or outside the Premises, required to
comply fully with all applicable Laws and necessitated by Tenant’s work); and
(v) subject to all conditions which Landlord may in Landlord’s reasonable
discretion impose. Such conditions may include requirements for Tenant to:  (i) provide payment or performance bonds or
additional insurance (from Tenant or Tenant’s contractors, subcontractors or
design professionals); (ii) use contractors or subcontractors designated by
Landlord (provided that such contractors or sub-contractors priced
competitively with others chosen by Tenant); and (iii) remove all or part of
the Alterations prior to or upon expiration or termination of the Term, as
designated by Landlord prior to the commencement of such Alterations. If any
work outside the Premises, or any work on or adjustment to any of the Building
Systems, is required in connection with or as a result of Tenant’s work, such
work shall be performed at Tenant’s expense by contractors designated by
Landlord (provided that such contractors or sub-contractors are priced
competitively with market rates). Landlord’s right to review and approve (or
withhold approval of) Tenant’s plans, drawings, specifications, contractor(s)
and other aspects of construction work proposed by Tenant is intended solely to
protect Landlord, the Property and Landlord’s interests. No approval or consent
by Landlord shall be deemed or construed to be a representation or warranty by
Landlord as to the adequacy, sufficiency, fitness or suitability of the
proposed Alterations or compliance thereof with applicable Laws or other
requirements. Except as otherwise provided in Landlord’s consent, all
Alterations shall upon installation become part of the realty and be the
property of Landlord.


 


6.2           Before
making any Alterations, Tenant shall submit to Landlord for Landlord’s prior
approval reasonably detailed final plans and specifications prepared by a
licensed 


 


16

















 


architect or engineer, a copy of the
construction contract, including the name of the contractor and all
subcontractors proposed by Tenant to make the Alterations, and a copy of the
contractor’s license. Tenant shall reimburse Landlord upon demand for any
reasonable expenses incurred by Landlord in connection with any Alterations
made by Tenant, including reasonable fees charged by Landlord’s contractors or
consultants to review plans and specifications prepared by Tenant and to update
the existing as-built plans and specifications of the Building to reflect the
Alterations. Tenant shall obtain all applicable permits, authorizations and
governmental approvals and deliver copies of the same to Landlord before
commencement of any Alterations.


 


6.3           Tenant
shall keep the Premises and the Property free and clear of all mechanics’,
materialmen’s, contractors’ or other liens arising out of any work performed,
materials furnished or obligations incurred by Tenant. If any such lien
attaches to the Premises or the Property, and Tenant does not cause the same to
be released by payment, bonding or otherwise within ten (10) days after notice
of the attachment thereof, Landlord shall have the right but not the obligation
to cause the same to be released, and any sums expended by Landlord (plus
Landlord’s administrative costs) in connection therewith shall be payable by
Tenant on demand with interest thereon from the date of expenditure by Landlord
at the Interest Rate (as defined in Section 16.2 - Interest).
Tenant shall give Landlord at least ten (10) business days’ notice prior to the
commencement of any Alterations and cooperate with Landlord in posting and
maintaining notices of non-responsibility in connection therewith.


 


6.4           Subject
to the provisions of Section 5 - Use and Compliance with
Laws and the foregoing provisions of this Section, Tenant may
install and maintain furnishings, equipment, movable partitions, business
equipment and other trade fixtures (“Trade Fixtures”)
in the Premises, provided that the Trade Fixtures do not become an integral
part of the Premises or the Building, without first obtaining approval from
Landlord. Tenant shall promptly repair any damage to the Premises or the
Building caused by any installation or removal of such Trade Fixtures.


 


7.             MAINTENANCE
AND REPAIRS.


 


7.1           By
taking possession of the Premises, Tenant agrees that the Premises are then in
a good and tenantable condition. During the Term, Tenant at Tenant’s expense
but under the direction of Landlord, shall repair and maintain the Premises,
including the interior walls, floor coverings, ceiling (ceiling tiles and
grid), Tenant Improvements, Alterations, fire extinguishers, outlets and
fixtures, and any appliances (including dishwashers, hot water heaters and
garbage disposers) in the Premises, in a first class condition, and keep the
Premises in a clean, safe and orderly condition.


 


7.2           Landlord
shall maintain or cause to be maintained in reasonably good order, condition
and repair, the structural portions of the roof, foundations, floor slab and
exterior walls of the Building, the Building Systems, and the public and common
areas of the Property; provided, however, that Tenant shall pay the cost of
repairs for any damage occasioned by Tenant’s use of the Premises or the
Property or any act or omission of Tenant or Tenant’s Representatives or
Visitors, to the extent (if any) not covered by Landlord’s property insurance. Landlord
shall be under no 


 


17

















 


obligation to inspect the Premises. Tenant
shall promptly report in writing to Landlord any defective condition known to
Tenant which Landlord is required to repair.


 


7.3           Landlord hereby reserves the right, at any time and from time to time,
without liability to Tenant, and without constituting an eviction, constructive
or otherwise, or entitling Tenant to any abatement of rent or to terminate this
Lease or otherwise releasing Tenant from any of Tenant’s obligations except as
may be specifically provided for under this Lease:


 


(a)           To make alterations, additions, repairs, improvements to
or in, or to decrease the size of area of, all or any part of the Building, the
fixtures and equipment therein, and the Building Systems, so long as such
alterations, additions, repairs and improvements do not alter the size of the
Premises or materially interfere with Tenant’s use and enjoyment of the
Premises, excepting only temporary inconvenience or interference reasonably
necessary and unavoidable as a result of the necessity of such alterations,
additions, repairs or improvements;


 


(b)           To change the Building’s name, provided that the name
shall not be the name of a competitor of Tenant or a Tenant Affiliate;


 


(c)           To install and maintain any and all signs on the exterior
and interior of the Building, subject to the provisions of this Lease;


 


(d)           To reduce, increase, enclose or otherwise change at any
time and from time to time the size, number, location, lay-out and nature of
the common areas and other tenancies and premises in the Property, and to
create additional rentable areas through use or enclosure of common areas; and


 


If any governmental authority promulgates or
revises any Law or imposes mandatory or voluntary controls or guidelines on
Landlord or the Property relating to the use or conservation of energy or
utilities or the reduction of automobile or other emissions or reduction or
management of traffic or parking on the Property (collectively “Controls”), to comply with such Controls, whether mandatory
or voluntary, or make any alterations to the Property related thereto.


 


8.             TENANT’S PERSONAL PROPERTY TAXES. Tenant shall pay
prior to delinquency all taxes levied by any governmental authority on Tenant’s
personal property including, but not limited to, unsecured personal property
taxes.


 


9.             UTILITIES AND SERVICES.


 


9.1           Description of
Services. Landlord shall
furnish to the Premises:  reasonable
amounts of heat, ventilation and air-conditioning during the Business Hours
specified in the Basic Lease Information (“Business Hours”)
on weekdays and Saturday except public holidays (“Business
Days”); reasonable amounts of electricity; janitorial services five
days a week (except public holidays); and hot and cold water from standard
outlets for lavatory, restroom and drinking purposes. Landlord shall also
provide the Building with normal fluorescent lamp replacement, 


 


18

















 


window washing, elevator service, and common
area toilet room
supplies. Any additional utilities or services that Landlord may agree to
provide (including lamp or tube replacement for other than Building Standard
lighting fixtures) shall be at Tenant’s sole expense.   Landlord will provide the following
utility connections:  1600 AMPS at 277/480, 3 phase, 4 wire, 50,000 A.I.C.
NEMA 1, which will be provided to the second (2nd) floor of the
Building via the Project’s SES
and distributed to such second (2nd) floor at Distribution Panel #2,
which is located on such second (2nd) floor. Notwithstanding the
foregoing, all step-down transformers shall be provided by Tenant, at Tenant’s
sole cost and expense, in order to distribute the available power per the
Tenant Improvements as defined in the Construction Rider.


 


9.2           Payment
for Additional Utilities and Services.


 


(a)           Upon request by Tenant in accordance with the procedures
established by Landlord from time to time for furnishing HVAC service at times
other than Business Hours on Business Days, Landlord shall furnish such service
to Tenant and Tenant shall pay for such services on an hourly basis at the then
prevailing rate established for the Building by Landlord (which rate is $8.00
per hour per zone as of the date of this Lease), which usage by Tenant shall be
reasonably estimated by Landlord.


 


(b)           If the temperature otherwise maintained in any portion of
the Premises by the HVAC systems of the Building is affected as a result of (i)
any lights, machines or equipment used by Tenant in the Premises, or (ii) the
occupancy of the Premises by more than one person per 150 square feet of
rentable area, then Landlord shall have the right to install any machinery or
equipment reasonably necessary to restore the temperature, including
modifications to the standard air-conditioning equipment. The cost of any such
equipment and modifications, including the cost of installation and any
additional cost of operation and maintenance of the same, shall be paid by
Tenant to Landlord upon demand.


 


(c)           If Tenant’s usage of electricity, water or any other
utility service exceeds the use of such utility Landlord determines to be
typical, normal and customary for the Building, Landlord may determine the
amount of such excess use by any reasonable means (including the installation
at Landlord’s request but at Tenant’s expense of a separate meter or other
measuring device) and charge Tenant for the cost of such excess usage. In
addition, Landlord may impose a reasonable charge for the use of any additional
or unusual janitorial services required by Tenant because of any unusual Tenant
Improvements or Alterations, the carelessness of Tenant or the nature of Tenant’s
business (including hours of operation).


 


9.3           Interruption of
Services. Subject to
Section 9.4 below, in the event of an interruption in or failure or inability
to provide any services or utilities to the Premises or Building for any reason
(a “Service Failure”), such Service Failure
shall not, regardless of its duration, impose upon Landlord any liability
whatsoever, constitute an eviction of Tenant, constructive or otherwise,
entitle Tenant to an abatement of rent or to terminate this Lease or otherwise
release 


 


19

















 


Tenant from any of Tenant’s obligations under
this Lease. Tenant waives the protection of any statute or
rule of law that gives or purports to give Tenant any right to terminate this
Lease or surrender possession of the Premises upon a Service Failure.


 


9.4           Abatement. Notwithstanding the foregoing, if there is a Service Failure which is
(a) specific to the Building and/or Property (as opposed to an interruption or
curtailment in essential services which extends beyond the Building or
Property), (b) causes the Premises to be untenantable, (c) is caused solely by
Landlord, and (d) lasts for more than five (5) consecutive Business Days after
Landlord has notice of such Service Failure or otherwise prevents Tenant
from  reasonably being able to access the
Premises for more than five (5) consecutive Business Days after notice to
Landlord, then Tenant will be entitled to an abatement of Basic Rent as
provided in this Section 9.4. If Tenant properly delivers such an abatement
notice to Landlord, and the untenantability caused by the interruption is not
remedied within such five (5) Business Day period, then, subject to the
following sentence, Tenant shall thereafter be entitled to an abatement of
Basic Rent and Additional Rent (in proportion to the portion of the Premises
rendered untenantable by Service Failure) until such service is restored. Notwithstanding
the foregoing, if Basic Rent and Additional Rent are abated pursuant to the
preceding sentence for a period of ninety (90) consecutive days, then, unless
otherwise mutually agreed to in writing between Landlord and Tenant, Tenant
shall elect, in writing delivered to Landlord within ten (10) Business Days
following the expiration of such 90-day period, to either terminate this Lease
as of the date of such notice or commence paying full Basic Rent and Additional
Rent from and after the date of such notice as otherwise provided under this
Lease. In the event Tenant fails to provide such written notice within the
aforementioned 10-Business Day period, then in that event Tenant will be deemed
to have elected not to terminate this Lease and, unless otherwise mutually
agreed to in writing between Landlord and Tenant, will immediately return to
paying full Basic Rent and Additional Rent as otherwise provided under this
Lease.


 


10.           EXCULPATION
AND INDEMNIFICATION.


 


10.1         Landlord’s
Indemnification of Tenant. Landlord shall indemnify, protect, defend and
hold Tenant harmless from and against any claims, actions, liabilities,
damages, costs or expenses, including reasonable attorneys’ fees and costs
incurred in defending against the same (“Claims”),
asserted by any third party against Tenant which arise out of (i) any bodily
injury, death or property damage occurring to such third parties at the Project
(other than within the Premises) to the extent caused by the willful misconduct
or negligent acts of Landlord or its authorized representatives and are not
caused in whole or in part by Tenant and (ii) Landlord’s uncured breach of any
representation, warranty or obligation under this Lease.


 


10.2         Tenant’s
Indemnification of Landlord. Tenant shall indemnify, protect, defend and
hold Landlord and Landlord’s authorized representatives harmless from and
against Claims arising from (a) the acts or omissions of Tenant or Tenant’s
Representatives or Visitors in or about the Property, or (b) any construction
or other work undertaken by Tenant on the Premises (including any design
defects), or (c) any breach or default or occurrence of Tenant Delay under this
Lease by Tenant, or (d) any loss, injury or damage, howsoever and by whomsoever
caused, to any person or property, occurring in or about the Premises during
the Term, excepting only Claims 


 


20

















 


described in this clause (d) to the extent
they are caused by the willful misconduct or negligent acts of Landlord or its
authorized representatives.


 


10.3         Damage
to Tenant and Tenant’s Property. Landlord shall not be liable to Tenant for
any loss, injury or other damage to Tenant or to Tenant’s property in or about
the Premises or the Property from any cause (including defects in the Property
or in any equipment in the Property; fire, explosion or other casualty;
bursting, rupture, leakage or overflow of any plumbing or other pipes or lines,
sprinklers, tanks, drains, drinking fountains or washstands in, above, or about
the Premises or the Property; or acts of other tenants in the Property) unless
caused by the gross negligence or willful misconduct of Landlord or its
employees or agents. Notwithstanding any other provision of this Lease to the
contrary, in no event shall Landlord be liable to Tenant for any punitive or
consequential damages or damages for loss of business by Tenant.


 


10.4         Survival.
The obligations of the parties under this Section 10 shall survive the
expiration or termination of this Lease.


 


11.           INSURANCE.


 


11.1         Tenant’s Insurance.


 


(a)           Liability Insurance. Tenant shall maintain in full
force throughout the Term commercial general liability insurance providing
coverage on an occurrence form basis with limits of not less than Two Million
Dollars ($2,000,000.00) each occurrence for bodily injury and property damage
combined, Two Million Dollars ($2,000,000.00) annual general aggregate, and Two
Million Dollars ($2,000,000.00) products and completed operations annual
aggregate. Tenant’s liability insurance policy or policies shall:  (i) include premises and operations liability
coverage, products and completed operations liability coverage, broad form
property damage coverage, including completed operations, blanket contractual
liability coverage, including, to the maximum extent possible, coverage for the
indemnification obligations of Tenant under this Lease, and personal and
advertising injury coverage; (ii) provide that the insurance company has the
duty to defend all insureds under the policy; (iii) provide that defense costs
are paid in addition to and do not deplete any of the policy limits;  and (iv) cover liabilities arising out of or
incurred in connection with Tenant’s use or occupancy of the Premises or the
Property. Each policy of liability insurance required by this Section
shall:  (i) contain a cross liability
endorsement or separation of insureds clause; (ii) provide that any waiver of
subrogation rights or release prior to a loss does not void coverage; (iii)
provide that it is primary to and not contributing with, any policy of
insurance carried by Landlord covering the same loss; (iv) provide that any
failure to comply with the reporting provisions shall not affect coverage
provided to Landlord or its partners, property managers or Mortgagees (as
defined below); and (v) name Landlord and its partners, the Property Manager
identified in the Basic Lease Information (the “Property
Manager”), and such other parties in interest as Landlord may from
time 


 


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to time designate to Tenant in writing, as
additional insureds. Such additional insureds shall be provided at least the
same extent of coverage as is provided to Tenant under such policies. All
endorsements effecting such additional insured status shall be at least as
broad as additional insured endorsement form number CG 20 11 11 85 promulgated by the Insurance Services Office.


 


(b)           Property Insurance. Tenant shall at all times
maintain in effect with respect to any Alterations and Tenant’s Trade Fixtures
and personal property, commercial property insurance providing coverage, on an “all
risk” or “special form” basis, in an amount equal to at least 90% of the full
replacement cost of the covered property. Tenant may carry such insurance under
a blanket policy, provided that such policy provides coverage equivalent to a
separate policy. During the Term, the proceeds from any such policies of
insurance shall be used for the repair or replacement of the Alterations, Trade
Fixtures and personal property so insured. Landlord shall be provided coverage
under such insurance to the extent of its insurable interest and, if requested
by Landlord, both Landlord and Tenant shall sign all documents reasonably
necessary or proper in connection with the settlement of any claim or loss
under such insurance. Landlord will have no obligation to carry insurance on
any Alterations or on Tenant’s Trade Fixtures or personal property.


 


(c)           Requirements For All Policies. Each policy of
insurance required under this Section 11.1 shall:  (i) be in a form, and written by an insurer,
reasonably acceptable to Landlord, (ii) be maintained at Tenant’s sole cost and
expense, and (iii) require at least thirty (30) days’ written notice to
Landlord prior to any cancellation, nonrenewal or modification of insurance
coverage. Insurance companies issuing such policies shall have rating
classifications of “A” or better and financial size category ratings of “VII”
or better according to the latest edition of the A.M. Best Key Rating Guide. All
insurance companies issuing such policies shall be admitted carriers licensed
to do business in the state where the Property is located. To the extent Tenant
does not self-insure as permitted under subsection (f) below, any deductible amount
under such insurance shall not exceed $5,000. Tenant shall provide to Landlord,
upon request, evidence that the insurance required to be carried by Tenant
pursuant to this Section, including any endorsement effecting the additional
insured status, is in full force and effect and that premiums therefor have
been paid.


 


(d)           Updating Coverage. Tenant shall increase the
amounts of insurance as required by any Mortgagee and, not more frequently than
once every three (3) years, as recommended by Landlord’s insurance broker, if,
in the opinion of either of them, the amount of insurance then required under
this Lease is not adequate. Any limits set forth in this Lease on the amount or
type of coverage required by Tenant’s insurance shall not limit the liability
of Tenant under this Lease.


 


(e)           Certificates of Insurance. Prior to occupancy of
the Premises by Tenant, and not less than thirty (30) days prior to expiration
of any policy thereafter,


 


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Tenant shall furnish to Landlord a
certificate of insurance reflecting that the insurance required by this Section
is in force, accompanied by an endorsement showing the required additional
insureds satisfactory to Landlord in substance and form. Notwithstanding the
requirements of this paragraph, Tenant shall at Landlord’s request provide to
Landlord a certified copy of each insurance policy required to be in force at
any time pursuant to the requirements of this Lease or its Exhibits.


 


(f)            Self-Insurance.
Subject to the provisions of this subsection (f), Tenant may self-insure under
a commercially reasonable self-insurance program with respect to the insurance
coverages set forth in subsection (b) above. Tenant must demonstrate to
Landlord’s satisfaction at the beginning of each calendar year of such self
insurance that Tenant maintains a tangible net financial worth of at least
$100,000,000. Tenant will, to the fullest extent allowable under the applicable
laws, indemnify, protect, defend (with counsel reasonably acceptable to
Landlord) and hold harmless Landlord from and against any and all claims that
would have been covered by the insurance replaced by the self-insurance. Such
self-insurance will not affect any waivers, releases or limitations of liability
of Landlord set forth in this Lease. If Tenant elects to self-insure, Tenant
will deliver written notice to Landlord (a) detailing the coverages being self
insured; (b) setting forth the amount, limits, and scope of the self insurance
for each such coverage (which will not be less than those required herein); (c)
demonstrating such tangible net worth; and (d) describing Tenant’s
self-insurance program (including, without limitations, its funding, claim
defense policies, coverage provisions, and other relevant matters). Upon
Landlord’s request, Tenant will provide a certificate reasonably satisfactory
to any mortgagee or assignee of Landlord setting forth the self-insured
coverages and naming (as applicable) such party as an additional insured and/or
loss payee, as its interests may appear.


 


11.2         Landlord’s Insurance. During the
Term, to the extent such coverages are available at a commercially reasonable
cost, Landlord shall maintain in effect insurance on the Building with
responsible insurers, on an “all risk” or “special form” basis, insuring the
Building and the Tenant Improvements in an amount equal to at least 90% of the
replacement cost thereof, excluding land, foundations, footings and underground
installations. Landlord may, but shall not be obligated to, carry insurance
against additional perils and/or in greater amounts.


 


11.3         Mutual Waiver of Right of Recovery and Waiver of Subrogation. Landlord and Tenant each hereby waive any right of recovery against
each other and the partners, managers, members, shareholders, officers,
directors and authorized representatives of each other for any loss or damage
that is covered by any policy of property insurance maintained by either party
(or required by this Lease to be maintained) with respect to the Premises or
the Property or any operation therein, regardless of cause, including
negligence (active or passive) of the party benefiting from the waiver. If any
such policy of insurance relating to this Lease or to the Premises or the
Property does not permit the foregoing waiver, or if the coverage under any
such policy would be invalidated as a result of such waiver, the party
maintaining such policy shall obtain from


 


23





















 


the
insurer under such policy a waiver of all right of recovery by way of
subrogation against either party in connection with any claim, loss or damage
covered by such policy.


 


12.           DAMAGE OR DESTRUCTION.


 


12.1         Landlord’s Duty to Repair.


 


(a)           If all or a substantial part of the Premises are rendered untenantable
or inaccessible by damage to all or any part of the Property from fire or other
casualty then, unless either party is entitled to and elects to terminate this
Lease pursuant to Sections 12.2 - Landlord’s Right to
Terminate and 12.3 - Tenant’s Right to
Terminate, Landlord shall, at its expense, use reasonable efforts to
repair and restore the Premises and/or the Property, as the case may be, to
substantially their former condition to the extent permitted by then applicable
Laws; provided, however, that in no event shall Landlord have any obligation
for repair or restoration beyond the extent of insurance proceeds received by
Landlord for such repair or restoration, or for any of Tenant’s personal
property, Trade Fixtures or Alterations.


 


(b)           If Landlord is required or elects to repair damage to the Premises
and/or the Property, this Lease shall continue in effect, but Tenant’s Base
Rent and Additional Rent shall be abated with regard to any portion of the
Premises that Tenant is prevented from using by reason of such damage or its
repair from the date of the casualty until substantial completion of Landlord’s
repair of the affected portion of the Premises as required under this Lease. In
no event shall Landlord be liable to Tenant by reason of any injury to or
interference with Tenant’s business or property arising from fire or other
casualty or by reason of any repairs to any part of the Property necessitated
by such casualty.


 


12.2         Landlord’s Right to Terminate. Landlord may elect to terminate this Lease following damage by fire
or other casualty under the following circumstances:


 


(a)           If, in the reasonable judgment of Landlord, the Premises and the
Property cannot be substantially repaired and restored under applicable Laws
within one hundred eighty (180) days from the date of the casualty;


 


(b)           If, in the reasonable judgment of Landlord, adequate proceeds are not,
for any reason, made available to Landlord from Landlord’s insurance policies
(and/or from Landlord’s funds made available for such purpose, at Landlord’s
sole option) to make the required repairs;


 


(c)           If the Building is damaged or destroyed to the extent that, in the
reasonable judgment of Landlord, the cost to repair and restore the Building
would exceed twenty-five percent (25%) of the full replacement cost of the
Building, whether or not the Premises are at all damaged or destroyed; or


 


24





















 


(d)           If the fire or other casualty occurs during the last year of the Term.


 


If any of the circumstances described in subparagraphs (a), (b), (c) or
(d) of this Section 12.2 occur or arise, Landlord shall give Tenant notice
within thirty (30) days after the date of the casualty, specifying whether
Landlord elects to terminate this Lease as provided above and, if not, Landlord’s
estimate of the time required to complete Landlord’s repair obligations under
this Lease.


 


12.3         Tenant’s Right to Terminate. If all or a substantial part of the Premises are rendered
untenantable or inaccessible by damage to all or any part of the Property from
fire or other casualty, and Landlord does not elect to terminate as provided
above, then Tenant may elect to terminate this Lease if (a) Landlord’s estimate
of the time required to complete Landlord’s repair obligations under this Lease
is greater than one hundred eighty (180) days, or (b) Tenant receives a
certified, written statement from a contractor stating that repairs cannot be
executed in one hundred eighty (180) days, in which event Tenant may elect to
terminate this Lease by giving Landlord notice of such election to terminate
within thirty (30) days after Landlord’s notice to Tenant pursuant to Section
12.2 - Landlord’s Right to Terminate or within
thirty (30) days of receiving the contractor’s statement under this Section
12.3 – Tenant’s Right to Terminate.


 


12.4         Waiver of Statutory Rights. Tenant waives any statutory right to terminate this Lease or abate
Rent because of any damage or destruction to the Premises due to fire or other
casualty.


 


13.           CONDEMNATION.


 


13.1         Definitions.


 


(a)           “Award” shall mean all compensation,
sums, or anything of value awarded, paid or received on a total or partial
Condemnation.


 


(b)           “Condemnation” shall mean (i) a
permanent taking (or a temporary taking for a period extending beyond the end
of the Term) pursuant to the exercise of the power of condemnation or eminent
domain by any public or quasi-public authority, private corporation or
individual having such power (“Condemnor”),
whether by legal proceedings or otherwise, or (ii) a voluntary sale or transfer
by Landlord to any such authority, either under threat of condemnation or while
legal proceedings for condemnation are pending.


 


(c)           “Date of Condemnation” shall mean the
earlier of the date that title to the property taken is vested in the Condemnor
or the date the Condemnor has the right to possession of the property being
condemned.


 


13.2         Effect on Lease.


 


(a)           If the Premises are totally taken by Condemnation, this Lease shall
terminate as of the Date of Condemnation. If a portion but not all of the
Premises is


 


25





















 


taken by Condemnation, this Lease shall
remain in effect; provided, however, that if the portion of the Premises
remaining after the Condemnation will be unsuitable for Tenant’s continued use,
then, upon notice to Landlord within thirty (30) days after Landlord notifies
Tenant of the Condemnation, Tenant may terminate this Lease effective as of the
Date of Condemnation.


 


(b)           If twenty-five percent (25%) or more of the Project or of the parcel(s)
of land on which the Building is situated or of the floor area in the Building
is taken by Condemnation, or if as a result of any Condemnation the Building is
no longer reasonably suitable for use as an office building, whether or not any
portion of the Premises is taken, Landlord may elect to terminate this Lease,
effective as of the Date of Condemnation, by notice to Tenant within thirty
(30) days after the Date of Condemnation.


 


(c)           If all or a portion of the Premises is temporarily taken by a Condemnor
for a period not extending beyond the end of the Term, this Lease shall remain
in full force and effect.


 


13.3         Restoration. If this Lease
is not terminated as provided in Section 13.2 - Effect on
Lease, Landlord, at its expense, shall diligently proceed to repair
and restore the Premises to substantially its former condition (to the extent
permitted by then applicable Laws) and/or repair and restore the Building to an
architecturally complete office building; provided, however, that Landlord’s
obligations to so repair and restore shall be limited to the amount of any
Award received by Landlord and not required to be paid to any Mortgagee. In no
event shall Landlord have any obligation to repair or replace any improvements
in the Premises beyond the amount of any Award received by Landlord for such
repair or to repair or replace any of Tenant’s personal property, Trade
Fixtures, or Alterations.


 


13.4         Abatement and Reduction of Rent. If any portion of the Premises is taken in a Condemnation or is
rendered permanently untenantable by repairs necessitated by the Condemnation,
and this Lease is not terminated, the Base Rent and Additional Rent payable
under this Lease shall be proportionally reduced as of the Date of Condemnation
based upon the percentage of rentable square feet in the Premises so taken or
rendered permanently untenantable. In addition, if this Lease remains in effect
following a Condemnation and Landlord proceeds to repair and restore the
Premises, the Base Rent and Additional Rent payable under this Lease shall be
abated during the period of such repair or restoration to the extent such
repairs prevent Tenant’s use of the Premises.


 


13.5         Awards. Any Award made
shall be paid to Landlord, and Tenant hereby assigns to Landlord, and waives
all interest in or claim to, any such Award, including any claim for the value
of the unexpired Term; provided, however, that Tenant shall be entitled to
receive, or to prosecute a separate claim for, an Award for a temporary taking
of the Premises or a portion thereof by a Condemnor where this Lease is not
terminated (to the extent such Award relates to the unexpired Term), or an
Award or portion thereof separately designated for relocation expenses or


 


26





















 


the
interruption of or damage to Tenant’s business or as compensation for Tenant’s
personal property, Trade Fixtures or Alterations.


 


14.           ASSIGNMENT AND SUBLETTING.


 


14.1         Landlord’s Consent Required. Tenant shall not assign this Lease or any interest therein, or sublet
or license or permit the use or occupancy of the Premises or any part thereof
by or for the benefit of anyone other than Tenant or a Tenant Affiliate, or in
any other manner transfer all or any part of Tenant’s interest under this Lease
(each and all a “Transfer”), without the prior
written consent of Landlord, which consent (subject to the other provisions of
this Section 14) shall not be unreasonably conditioned, withheld or delayed. The
term “Tenant Affiliate” shall mean an entity
controlling, controlled by, or under common control with Tenant, or a successor
to Tenant by reason of merger or consolidation. If Tenant is a business entity,
any direct or indirect transfer of twenty five percent (25%) or more of the
ownership interest of the entity (whether in a single transaction or in the
aggregate through more than one transaction) shall be deemed a Transfer. Notwithstanding
any provision in this Lease to the contrary, Tenant shall not mortgage, pledge,
hypothecate or otherwise encumber this Lease or all or any part of Tenant’s
interest under this Lease.


 


14.2         Reasonable Consent.


 


(a)           Prior to any proposed Transfer, Tenant shall submit in writing to
Landlord (i) the name and legal composition of the proposed assignee,
subtenant, user or other transferee (each a “Proposed
Transferee”); (ii) the nature of the business proposed to be
carried on in the Premises; (iii) such reasonable financial and other
information concerning the Proposed Transferee as Landlord may request; and
(iv) a copy of the proposed assignment, sublease or other agreement
governing the proposed Transfer. Within fifteen (15) Business Days after
Landlord receives all such information, it shall notify Tenant whether it
approves or disapproves such Transfer or if it elects to proceed under
Section 14.6 - Landlord’s Right to Space.


 


(b)           Tenant acknowledges and agrees that, among other circumstances for
which Landlord could reasonably withhold consent to a proposed Transfer, it
shall be reasonable for Landlord to withhold consent where (i) the
Proposed Transferee does not intend itself to occupy the entire portion of the
Premises that is the subject of such Transfer, (ii) Landlord disapproves
of the Proposed Transferee’s business operating ability or history, reputation
or creditworthiness or the character of the business to be conducted by the
Proposed Transferee at the Premises, (iii) the proposed Transfer would
violate any “exclusive” rights of any tenants in the Project or any use
restrictions governing the Project, (iv) Landlord or Landlord’s agent has
shown space in the Building to the Proposed Transferee, or responded to any
inquiries from the Proposed Transferee or the Proposed Transferee’s agent
concerning availability of space in the Building, at any time within the
preceding nine months and space remains available within the Building which is
substantially as large as the portion of the Premises contemplated to be
occupied by the Proposed


 


27





















 


Transferee, or (v) Landlord otherwise
determines that the proposed Transfer would have the effect of decreasing the
value of the Building or increasing the expenses associated with operating,
maintaining and repairing the Property. In no event may Tenant publicly offer
or advertise all or any portion of the Premises for assignment or sublease at a
rental less than that then sought by Landlord for a direct lease (non-sublease)
of comparable space in the Project.


 


14.3         Excess Consideration. If Landlord
consents to a Transfer, Tenant shall pay to Landlord as additional rent, within
ten (10) days after receipt by Tenant, any consideration paid by any transferee
(the “Transferee”) for the Transfer,
including, in the case of a sublease, fifty percent (50%)
of the excess of the rent and other consideration payable by the
subtenant (net of Tenant’s reasonable, documented
out-of-pocket leasing costs and commissions incurred in connection with the
sublease) over the amount of Base Rent and Additional
Rent payable hereunder applicable to the subleased space.


 


14.4         No Release Of Tenant. No Transfer
(nor any consent by Landlord to any Transfer), including, without limitation, a
Transfer to a Tenant Affiliate, shall relieve Tenant of any obligation to be
performed by Tenant under this Lease, whether occurring before or after such
Transfer. Each Transferee shall be jointly and severally liable with Tenant
(and Tenant shall be jointly and severally liable with each Transferee) for the
payment of Rent (or, in the case of a sublease, rent in the amount set forth in
the sublease) and for the performance of all other terms and provisions of this
Lease. The consent by Landlord to any Transfer shall not relieve Tenant or any
such Transferee from the obligation to obtain Landlord’s express prior written consent
to any subsequent Transfer by Tenant or any Transferee. The acceptance of rent
by Landlord from any other person (whether or not such person is an occupant of
the Premises) shall not be deemed to be a waiver by Landlord of any provision
of this Lease or a consent to any Transfer.


 


14.5         Effectiveness of Transfer. Prior to the date on which any permitted Transfer (whether or not
requiring Landlord’s consent) becomes effective, Tenant shall deliver to
Landlord a counterpart of the fully executed Transfer document and Landlord’s
standard form of Consent to Assignment or Consent to Sublease executed by
Tenant and the Transferee in which each of Tenant and the Transferee confirms
its obligations pursuant to this Lease. Failure or refusal of a Transferee to
execute any such instrument shall not release or discharge the Transferee from
liability as provided herein. The voluntary, involuntary or other surrender of
this Lease by Tenant, or a mutual cancellation by Landlord and Tenant, shall
not work a merger, and any such surrender or cancellation shall, at the option
of Landlord, either terminate all or any existing subleases or operate as an
assignment to Landlord of any or all of such subleases.


 


14.6         Intentionally Deleted.


 


14.7         Assignment of Sublease Rents. Subject to Section 14.3, Tenant hereby absolutely and irrevocably
assigns to Landlord any and all rights to receive rent and other consideration
from any sublease and agrees that Landlord, as assignee or as attorney-in-fact
for Tenant for purposes hereof, or a receiver for Tenant appointed on Landlord’s
application may (but shall not be obligated to) collect such rents and other
consideration and apply the same toward


 


28





















 


Tenant’s
obligations to Landlord under this Lease; provided, however, that Landlord
grants to Tenant at all times prior to occurrence of any breach or default by
Tenant a revocable license to collect such rents (which license shall
automatically and without notice be and be deemed to have been revoked and
terminated immediately upon any Event of Default).


 


14.8         Costs. Tenant will
pay to Landlord, as additional rent, all costs and expenses Landlord actually
incurs in connection with any proposed Transfer, including, without limitation,
reasonable attorneys’ fees and costs, regardless whether Landlord consents to
the Transfer.


 


15.           DEFAULT AND REMEDIES.


 


15.1         Events of Default by Tenant. The occurrence of any of the following shall constitute an “Event of Default” by Tenant:


 


(a)           Tenant fails to make any payment of Rent when due, or any amount
required to replenish the Security Deposit, if payment in full is not received
by Landlord within five (5) days after written notice to Tenant that it is due;
provided, however, that such failure will not constitute
an Event of Default hereunder on the first late payment in any calendar year
during the Term so long as that payment is made within five (5) days of Tenant’s
receipt of a follow-up notice of nonpayment from Landlord.


 


(b)           Intentionally Deleted.


 


(c)           Tenant fails timely to deliver any subordination document, estoppel
certificate or financial statement requested by Landlord within the applicable
time period specified in Sections 20 - Encumbrances -
and 21 - Estoppel Certificates and Financial Statements -
below.


 


(d)           Tenant violates the restrictions on Transfer set forth in
Section 14 - Assignment and Subletting.


 


(e)           Tenant ceases doing business as a going concern; makes an assignment
for the benefit of creditors; is adjudicated an insolvent, files a petition (or
files an answer admitting the material allegations of a petition) seeking
relief under any state or federal bankruptcy or other statute, law or
regulation affecting creditors’ rights; all or substantially all of Tenant’s
assets are subject to judicial seizure or attachment and are not released
within 30 days, or Tenant consents to or acquiesces in the appointment of a
trustee, receiver or liquidator for Tenant or for all or any substantial part
of Tenant’s assets; or there is a material adverse change in Tenant’s financial
condition.


 


(f)            Tenant fails, within thirty (30) days after the commencement of any
proceedings against Tenant seeking relief under any state or federal bankruptcy
or


 


29





















 


other statute, law or regulation affecting
creditors’ rights, to have such proceedings dismissed, or Tenant fails, within
thirty (30) days after an appointment, without Tenant’s consent or
acquiescence, of any trustee, receiver or liquidator for Tenant or for all or
any substantial part of Tenant’s assets, to have such appointment vacated.


 


(g)           Tenant fails to perform or comply with any provision of this Lease
other than those described in (a) through (f) above, and does not fully cure
such failure within fifteen (15) days after notice to Tenant.


 


15.2         Landlord’s Remedies. Upon the
occurrence of an Event of Default, Landlord shall have the following rights and
remedies, which rights and remedies shall be cumulative and not exclusive, and
which shall be in addition to all other rights and remedies now or hereafter
allowed by law or in equity, and which may be exercised without further notice
or demand:


 


(a)           Landlord may cure the Event of Default at Tenant’s expense. If Landlord
pays any sum or incurs any expense in curing the Event of Default, Tenant shall
reimburse Landlord upon demand for the amount of such payment or expense with
interest at the Interest Rate from the date the sum is paid or the expense is
incurred until Landlord is reimbursed by Tenant.


 


(b)           Landlord may terminate Tenant’s right to possess the Premises by any
lawful means.


 


(c)           Landlord may, by giving written notice to Tenant, terminate this Lease.


 


(d)           Upon a termination of Tenant’s right to possess the Premises or a
termination of this Lease, (i) Tenant shall immediately surrender possession of
the Premises to Landlord and shall remove all of its property therefrom, (ii)
Landlord may re-enter the Premises in the manner provided by law, (iii)
Landlord may relet all or any portion of the Premises to one or more third
parties on such terms as Landlord determines in its sole and unfettered
discretion, and (iv) Landlord may, at its election, remove all or any portion
of Tenant’s property from the Premises and place the same
in storage at the sole expense and risk of Tenant.


 


(e)           If
Landlord exercises any of the remedies stated above, Landlord shall be entitled
to recover from Tenant, and Tenant shall pay to Landlord, as current damages
for the applicable Event of Default, all damages incurred by Landlord by reason
of the Event of Default, which shall include, without limitation, (i) an amount
equal to the Rent payable under this Lease by Tenant for the remainder of the
Term (assuming this Lease had not been terminated), less (ii) the net proceeds
of any reletting of the Premises by Landlord after deducting all of Landlord’s
expenses in connection with such reletting, which shall include, without
limitation, repossession costs, repairs, redecorating, refurbishments and
improvements to the Premises, brokerage commissions, attorneys’ fees, and legal
expenses (such


 


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expenses in connection
with such reletting only to be deducted from net proceeds of such reletting if
this Lease is terminated as a result of an Event of Default prior to the final
eighteen (18) months of the Term). Tenant shall pay such current damages to
Landlord, in the amount set forth in the preceding sentence (hereinafter called
the “Deficiency”), in monthly installments
on the days on which Base Rent would have been payable under this Lease if this
Lease were still in effect.


 


(f)            If
Landlord exercises any of the remedies stated above, and regardless of whether
Landlord has collected any Deficiency, Landlord shall be entitled to recover
from Tenant, and Tenant shall pay to Landlord, on demand, as final damages for
the applicable Event of Default, the sum of (i) the then present worth of (A)
the aggregate of the Rent payable under this Lease by Tenant for the remainder
of the Term (assuming this Lease had not been terminated), less (B) the amount
of such loss Tenant proves could have been reasonably avoided, plus (ii)
repossession costs, Landlord’s expenses in connection with any attempts it may
have made to relet the Premises (which shall include, without limitation,
repairs, redecorating, refurbishments and improvements to the Premises and  brokerage commissions if this Lease is
terminated as a result of an Event of Default prior to the final eighteen (18)
months of the Term), attorneys’ fees, legal expenses, and all other damages
incurred by Landlord as a result of such Event of Default. For purposes of
determining such present worth, Landlord will use a discount equal to the Federal Reserve rate of the Federal Reserve Bank in San Francisco in
effect at the time of the award plus one percent (1%).


 


(g)           Landlord may exercise its statutory lien rights and remove Tenant’s
property from the Premises, which may be stored by Landlord in a public
warehouse or elsewhere at the sole cost and for the account of Tenant and sold
pursuant to law. If Landlord does not elect to store any or all of Tenant’s
property left in the Premises, Landlord may consider such property to be
abandoned by Tenant, and Landlord may thereupon dispose of such property in any
manner deemed appropriate by Landlord. Any proceeds realized by Landlord on the
disposal of any such property shall be applied first to offset all expenses of
storage and sale, then credited against Tenant’s outstanding obligations to
Landlord under this Lease, and any balance remaining after satisfaction of all
obligations of Tenant under this Lease shall be delivered to Tenant.


 


(h)           No action of Landlord shall be construed as an election to terminate
this Lease or to accept a surrender of the Premises unless written notice of
such intention is given by Landlord to Tenant. Tenant shall pay all attorneys’
fees, costs and expenses incurred by Landlord in enforcing Tenant’s obligations
under this Lease.


 


(i)            Acceptance of payment of Rent or partial payment of Rent or other
partial performance, with or without Landlord’s knowledge of an Event of
Default by Tenant, or failure of Landlord to take action on account of an Event
of Default


 


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by Tenant or to enforce its rights under this
Lease, shall not be deemed a waiver by Landlord of any Event of Default by
Tenant.


 


15.3         Landlord’s Default.


 


(a)           Landlord shall not be in default of this Lease unless and until Tenant
has given Landlord written notice of a breach of this Lease by Landlord and
Landlord shall have failed to cure such breach within thirty (30) days after
Landlord’s receipt of Tenant’s notice; provided, however, that if such breach
cannot reasonably be cured within such 30-day period, Landlord will have such
additional time as may be reasonably necessary to cure the breach.


 


(b)           Upon a default by Landlord under this Lease, Tenant may pursue its
rights and remedies under this Lease and Arizona law, excepting only the right
of offset, deduction or termination of this Lease, unless such remedy is
expressly conferred by this Lease.


 


16.           LATE CHARGE AND INTEREST.


 


16.1         Late Charge. If any payment
of Rent is not received by Landlord ten (10) days after due, Tenant shall pay
to Landlord, as a late charge, a sum equal to four percent (4%) of the
payment(s) of Rent overdue. A late charge shall not be imposed more than once
on any particular installment not paid when due, but imposition of a late
charge on any payment not made when due does not eliminate or supersede late
charges imposed on other (prior) payments not made when due or preclude
imposition of a late charge on other installments or payments not made when due.
Notwithstanding the foregoing, Tenant will not be assessed
the late charge described above on the first late Rent payment in any calendar
year during the Term so long as that payment is made within five (5) days of
Tenant’s receipt of notice of nonpayment from Landlord.


 


16.2         Interest. In addition to
the late charges referred to above, which are intended to defray Landlord’s
costs resulting from late payments, any payment from Tenant to Landlord not
paid ten (10) days after due shall bear interest from the date due until paid
to Landlord by Tenant at the rate of eighteen percent (18%) per annum or the
legal rate of interest in Arizona, whichever is less (the “Interest
Rate”). Acceptance of any late charge and/or interest shall not
constitute a waiver of Tenant’s default with respect to the overdue sum or
prevent Landlord from exercising any of its other rights and remedies under
this Lease.


 


17.           WAIVER. No provisions of this Lease shall be deemed
waived unless such waiver is in writing. The waiver of any breach of any
provision of this Lease shall not be deemed a waiver of such provision or of
any subsequent breach of the same or any other provision of this Lease. No
delay or omission in the exercise of any right or remedy upon any default shall
impair such right or remedy or be construed as a waiver. Landlord’s acceptance
of any payments of Rent due under this Lease shall not be deemed a waiver by
Landlord of any default by Tenant under this Lease (including Tenant’s
recurrent failure to timely pay Rent), and no endorsement or statement on any
check or payment or in any letter or document accompanying any check or payment
shall be


 


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deemed an accord and satisfaction. Landlord’s consent to or
approval of any act by Tenant requiring Landlord’s consent or approval shall
not be deemed to waive or render unnecessary Landlord’s consent to or approval
of any subsequent act by Tenant.


 


18.           ENTRY, INSPECTION AND CLOSURE. Upon reasonable oral
or written notice to Tenant (and without notice in emergencies), Landlord and
its authorized representatives may enter the Premises at all reasonable times
to: (a) determine whether the Premises are in good condition,
(b) determine whether Tenant is complying with its obligations under this
Lease, (c) perform any maintenance or repair of the Premises or the
Building that Landlord has the right or obligation to perform, (d) install
or repair improvements for other tenants where access to the Premises is
required for such installation or repair, (e) serve, post or keep posted
any notices required or allowed under the provisions of this Lease,
(f) show the Premises to prospective brokers, agents, buyers, transferees,
Mortgagees, or, in the case of prospective tenants, no earlier than one (1)
year prior to the Expiration Date, or (g) do any other act or thing
necessary for the safety or preservation of the Premises or the Building. When
reasonably necessary Landlord may temporarily close entrances, doors,
corridors, elevators or other facilities in the Building without liability to
Tenant by reason of such closure. Landlord shall conduct its activities under
this Section in a manner that will minimize inconvenience to Tenant without
incurring additional expense to Landlord. In no event shall Tenant be entitled
to an abatement of Rent on account of any entry by Landlord, and Landlord shall
not be liable in any manner for any inconvenience, loss of business or other
damage to Tenant or other persons arising out of Landlord’s entry on the
Premises in accordance with this Section. Subject to the remaining provisions
of this paragraph, no action by Landlord pursuant to this paragraph shall
constitute an eviction of Tenant, constructive or otherwise, entitle Tenant to
an abatement of Rent or to terminate this Lease or otherwise release Tenant
from any of Tenant’s obligations under this Lease. Notwithstanding the
foregoing, if any such entry or closure under this Section causes the Premises
to be reasonably untenantable and lasts for more than five (5) consecutive
Business Days after Landlord is notified of such untenantability or otherwise
prevents Tenant from being able to access the Premises for more than five (5)
consecutive Business Days after notice to Landlord, Tenant will be entitled to
an abatement of Basic Rent. If Tenant properly delivers such an abatement
notice to Landlord, and the untenantability caused by the entry or closure is
not remedied within such five (5) Business Day period, then, subject to the
following sentence, Tenant shall thereafter be entitled to an abatement of
Basic Rent and Additional Rent (in proportion to the portion of the Premises
rendered untenantable by the entry or closure) until the Premises are again
rendered tenantable. Notwithstanding the foregoing, if Basic Rent and
Additional Rent are abated pursuant to the preceding sentence for a period of
ninety (90) consecutive days, then, unless otherwise mutually agreed to in
writing between Landlord and Tenant, Tenant shall elect, in writing delivered
to Landlord within ten (10) Business Days following the expiration of such
90-day period, to either terminate this Lease as of the date of such notice or
commence paying full Basic Rent and Additional Rent from and after the date of
such notice as otherwise provided under this Lease. In the event Tenant fails
to provide such written notice within the aforementioned 10-Business Day
period, then in that event Tenant will be deemed to have elected not to
terminate this Lease and, unless otherwise mutually agreed to in writing
between Landlord and Tenant, will immediately return to paying full Basic Rent
and Additional Rent as otherwise provided under this Lease.


 


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19.           SURRENDER AND HOLDING OVER.


 


19.1         Surrender. Upon the
expiration or termination of this Lease, Tenant shall surrender the Premises
and all Tenant Improvements and Alterations to Landlord broom-clean and in
their original condition, except for reasonable wear and tear, damage from
casualty or condemnation and any changes resulting from approved Alterations;
provided, however, that prior to the expiration or termination of this Lease,
Tenant shall remove all telephone and other cabling installed in the Building
by Tenant and remove from the Premises all Tenant’s personal property and any
Trade Fixtures and all Alterations that Landlord has elected to require Tenant
to remove as provided in Section 6.1 - Tenant Improvements and
Alterations, and repair any damage caused by such removal. If such
removal is not completed before the expiration or termination of the Term,
Landlord shall have the right (but no obligation) to remove the same, and
Tenant shall pay Landlord on demand for all costs of removal and storage
thereof and for the rental value of the Premises for the period from the end of
the Term through the end of the time reasonably required for such removal. Landlord
shall also have the right to retain or dispose of all or any portion of such
property if Tenant does not pay all such costs and retrieve the property within
ten (10) days after notice from Landlord (in which event title to all such
property described in Landlord’s notice shall be transferred to and vest in
Landlord). Tenant waives all Claims against Landlord for any damage or loss to
Tenant resulting from Landlord’s removal, storage, retention, or disposition of
any such property. Upon expiration or termination of this Lease or of Tenant’s
possession, whichever is earliest, Tenant shall surrender all keys to the
Premises or any other part of the Building and shall deliver to Landlord all
keys for or make known to Landlord the combination of locks on all safes,
cabinets and vaults that may be located in the Premises. Tenant’s obligations
under this Section shall survive the expiration or termination of this Lease.


 


19.2         Holding Over. If Tenant
(directly or through any Transferee or other successor-in-interest of Tenant)
remains in possession of the Premises after the expiration or termination of
this Lease, Tenant’s continued possession shall be at the sufferance of
Landlord and Tenant shall be deemed to be occupying the Premises without claim
of right. In such event, Tenant shall continue to comply with or perform all
the terms and obligations of Tenant under this Lease, except that the Base Rent
during Tenant’s holding over shall be at one hundred fifty percent (150%) of
the then-current Base Rent (on a daily basis) payable immediately prior to the
expiration or termination of this Lease. In the event of any holdover without
Landlord’s prior written consent, Tenant shall indemnify, defend and hold
Landlord harmless from and against all Claims arising or resulting directly or
indirectly from Tenant’s failure to timely surrender the Premises, including,
without limitation, (i) any rent payable by or any loss, cost, or damages
claimed by any tenant or prospective tenant of the Premises, and (ii) Landlord’s
damages as a result of such tenant or prospective tenant rescinding its lease
or refusing to enter into the prospective lease of the Premises by reason of
Tenant’s failure to timely surrender the Premises.


 


20.           ENCUMBRANCES.


 


20.1         Subordination. This Lease is
expressly made subject and subordinate to any mortgage, deed of trust, ground
lease, development agreement, underlying lease or other encumbrance affecting
any part of the Property or any interest of Landlord therein which is now


 


34





















 


existing
or hereafter executed or recorded (“Encumbrance”);
provided, however, that this Lease shall survive the termination of the
Encumbrance by lapse of time, foreclosure or otherwise so long as Tenant is not
in default under this Lease. Tenant shall execute and deliver to Landlord,
within ten (10) business days after written request therefor by Landlord at any
time during this Lease, any additional documents evidencing the foregoing
self-effectuating subordination of this Lease and nondisturbance protection,
which documents may contain such other terms as may be requested by the
Mortgagee. Tenant will also execute and deliver to
Landlord, promptly following Tenant’s execution of this Lease and delivery
thereof to Landlord, a subordination, non-disturbance and attornment agreement
in the form of Exhibit E attached hereto (“SNDA
Agreement”). Landlord will use its commercially reasonable efforts
to cause the Mortgagee to execute the SNDA Agreement. Upon receipt from the
Mortgagee of the executed SNDA Agreement, Landlord shall promptly provide
Tenant with a fully executed copy of the SNDA Agreement. If the interest
of Landlord in the Property is transferred pursuant to or in lieu of
proceedings for enforcement of any Encumbrance, Tenant shall immediately and
automatically attorn to the new owner, and this Lease shall continue in full
force and effect as a direct lease between the transferee and Tenant on the
terms and conditions set forth in this Lease. Tenant
waives the protection of any statute or rule of law that gives or purports to
give Tenant any right to terminate this Lease or surrender possession of the
Premises upon the transfer of Landlord’s interest.


 


20.2         Mortgagee Protection. Tenant agrees
to give any holder of any Encumbrance covering any part of the Property (“Mortgagee”), by registered mail, a copy of any notice of
default served upon Landlord, provided that prior to such notice Tenant has
been notified in writing (by way of notice of assignment of rents and leases or
otherwise) of the address of such Mortgagee. If Landlord shall have failed to
cure such default within thirty (30) days from the effective date of such
notice of default, then the Mortgagee shall have an additional thirty (30) days
within which to cure such default or if such default cannot be cured within
that time, then such additional time as may be necessary to cure such default
(including the time necessary to foreclose or otherwise terminate its
Encumbrance, if necessary to effect such cure), and Tenant shall not pursue any
remedy against Landlord so long as such cure is being diligently pursued.


 


21.           ESTOPPEL CERTIFICATES. Within ten (10) business days
after written request therefor, Tenant shall execute and deliver to Landlord,
in a form provided by or satisfactory to Landlord, a certificate stating that
this Lease is in full force and effect, describing any amendments or
modifications hereto, acknowledging that this Lease is subordinate or prior, as
the case may be, to any Encumbrance and stating any other information Landlord
may reasonably request, including the Term, the monthly Base Rent, the date to
which Rent has been paid, the amount of any security deposit or prepaid rent,
whether either party hereto is in default under the terms of the Lease, and
whether Landlord has completed its construction obligations hereunder (if any).
Tenant irrevocably constitutes, appoints and authorizes Landlord as Tenant’s
special attorney-in-fact for such purpose to complete, execute and deliver such
certificate if Tenant fails timely to execute and deliver such certificate as
provided above. Any person or entity purchasing, acquiring an interest in or
extending financing with respect to the Property shall be entitled to rely upon
any such certificate. If Tenant fails to deliver such certificate within ten
(10) business days after Landlord’s second written request therefor, Tenant
shall be liable to Landlord for any damages incurred by Landlord including any
profits or other benefits from any financing or attempted financing of the
Property or any interest


 


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therein which are lost or made unavailable as a result,
directly or indirectly, of Tenant’s failure or refusal to timely execute or
deliver such estoppel certificate.


 


22.           NOTICES. Any notice, demand, request, consent or
approval that either party desires or is required to give to the other party
under this Lease shall not be effective unless it is in writing and served
personally, delivered by messenger or courier service, or sent by U.S.
certified mail, return receipt requested, postage prepaid, addressed to the
other party at the party’s address for notices set forth in the Basic Lease
Information. Any notice required pursuant to any Laws may be incorporated into,
given concurrently with or given separately from any notice required under this
Lease. Notices shall be deemed to have been given and be effective on the
earlier of (a)  receipt (or refusal of delivery or receipt); or (b) one
(1) day after acceptance by the independent service for delivery, if sent by
independent messenger or courier service, or 
three (3) days after mailing if sent by mail in accordance with this
Section. Either party may change its address for notices hereunder, effective
fifteen (15) days after notice to the other party complying with this Section. If
Tenant sublets the Premises, notices from Landlord shall be effective on the
subtenant when given to Tenant pursuant to this Section.


 


23.           ATTORNEYS’ FEES. In the event of any dispute between
Landlord and Tenant in any way related to this Lease, and whether involving
contract and/or tort claims, the non-prevailing party shall pay to the
prevailing party all reasonable attorneys’ fees and costs and expenses of any
type, without restriction by statute, court
rule or otherwise, incurred by the prevailing party in connection with any
action or proceeding (including any appeal and the enforcement of any judgment
or award), whether or not the dispute is litigated or prosecuted to final
judgment (collectively, “Fees”). The “prevailing
party” shall be determined based upon an assessment of which party’s major
arguments or positions taken in the action or proceeding could fairly be said
to have prevailed (whether by compromise, settlement, abandonment by the other
party of its claim or defense, final decision, after any appeals, or otherwise)
over the other party’s major arguments or positions on major disputed issues. Any
Fees incurred in enforcing a judgment shall be recoverable separately from any
other amount included in the judgment and shall survive and not be merged in
the judgment. The Fees shall be deemed an “actual pecuniary loss” within the
meaning of Bankruptcy Code Section 365(b)(1)(B) and, notwithstanding the
foregoing, all Fees incurred by either party in any bankruptcy case filed by or
against the other party, from and after the order for relief until this Lease
is rejected or assumed in such bankruptcy case, will be “obligations of the
debtor” as that phrase is used in Bankruptcy Code Section 365(d)(3).


 


24.           QUIET POSSESSION. Subject to Tenant’s full and
timely performance of all of Tenant’s obligations under this Lease and subject
to the terms of this Lease, including Section 20 - Encumbrances,
Tenant shall have the right to occupy the Premises throughout the Term as
against any persons or entities lawfully claiming by, through or under
Landlord.


 


25.           SECURITY MEASURES. Landlord may, but shall be under
no obligation to, implement security measures for the Property, such as the
registration or search of all persons entering or leaving the Building,
requiring identification for access to the Building, evacuation of the Building
for cause, suspected cause, or for drill purposes, the issuance of magnetic
pass cards or keys for Building or elevator access, and other actions that
Landlord deems necessary or appropriate


 


36





















 


to prevent any threat of property loss or damage, bodily
injury or business interruption; provided, however, that such measures shall be
implemented in a way as not to inconvenience tenants of the Building
unreasonably. If Landlord
uses an access card system, Landlord may require Tenant to pay Landlord a
deposit for each after-hours Building access card issued to Tenant. Tenant
shall be responsible for any loss, theft or breakage of any such cards, which
must be returned by Tenant to Landlord upon expiration or earlier termination
of the Lease. Landlord may retain the deposit for any card not so returned. Landlord shall at all times have the right to change, alter or reduce
any such security services or measures. Tenant shall cooperate and comply with,
and cause Tenant’s Representatives and Visitors to cooperate and comply with,
such security measures. Landlord and its agents and employees shall have no
liability to Tenant or its Representatives or Visitors for the implementation
or exercise of, or the failure to implement or exercise, any such security
measures or for any resulting disturbance of Tenant’s use or enjoyment of the
Premises.


 


26.           FORCE MAJEURE. “Force Majeure”
shall mean Landlord’s inability to obtain equipment or building materials
despite the timely and diligent effort by Landlord or its contractors to obtain
such equipment and materials, acts of God, fire, earthquake, flood, rainfall or
other weather-caused delays which interfere with construction, vandalism, acts
or delays of public agencies or governmental bodies, or the authority under the
covenants, conditions and restrictions, any moratorium on the issuance of
governmental approvals or utility service connections or other similar
government actions, strikes, union labor disputes or other union work
stoppages, freight embargoes or inability to obtain basic materials, supplies
or fuels, uncommon or unusual delays in the issuance of governmental permits or
approvals, or other events beyond the reasonable control of Landlord or its
contractors.


 


27.           RULES AND REGULATIONS. Tenant shall be bound by and
shall comply with the rules and regulations attached to and made a part of this
Lease as Exhibit D, as well as any reasonable rules and regulations
hereafter adopted by Landlord for all tenants of the Building, upon notice to
Tenant thereof (collectively, the “Building Rules”).
Landlord shall not be responsible to Tenant or to any other person for any
violation of, or failure to observe, the Building Rules by any other tenant or
person.


 


28.           LANDLORD’S LIABILITY. The term “Landlord,” as used
in this Lease, shall mean only the owner or owners of the Building at the time
in question. In the event of any conveyance of title to the Building, then from
and after the date of such conveyance, the transferor Landlord shall be
relieved of all liability with respect to Landlord’s obligations to be
performed under this Lease after the date of such conveyance. Notwithstanding
any other term or provision of this Lease, the liability of Landlord for its
obligations under this Lease is limited solely to Landlord’s interest in the
Building as the same may from time to time be encumbered, and no personal
liability shall at any time be asserted or enforceable against any other assets
of Landlord or against Landlord’s partners or members or its or their
respective partners, shareholders, members, directors, officers or managers on
account of any of Landlord’s obligations or actions under this Lease.


 


 


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29.           CONSENTS AND APPROVALS.


 


29.1         Determination in Good Faith. Wherever the consent, approval, judgment or determination of Landlord
is required or permitted under this Lease, Landlord may, in its sole and
unfettered discretion, exercise its good faith business judgment in granting or
withholding such consent or approval or in making such judgment or
determination without reference to any extrinsic standard of reasonableness,
unless the specific provision contained in this Lease providing for such
consent, approval, judgment or determination specifies that Landlord’s consent
or approval is not to be unreasonably withheld, or that such judgment or
determination is to be reasonable, or otherwise specifies the standards under
which Landlord may withhold its consent. If it is determined that Landlord
failed to give its consent where it was required to do so under this Lease,
Tenant shall be entitled to injunctive relief, or other relief as may be
provided for under this Lease, but shall not to be entitled to monetary damages
or to terminate this Lease for such failure.


 


29.2         No Liability Imposed on Landlord. The review and/or approval by Landlord of any item or matter to be
reviewed or approved by Landlord under the terms of this Lease or any Exhibits
or Addenda hereto shall not impose upon Landlord any liability for the accuracy
or sufficiency of any such item or matter or the quality or suitability of such
item for its intended use. Any such review or approval is for the sole purpose
of protecting Landlord’s interest in the Property, and no third parties,
including Tenant or the Representatives and Visitors of Tenant or any person or
entity claiming by, through or under Tenant, shall have any rights as a
consequence thereof.


 


30.           WAIVER OF RIGHT TO JURY TRIAL.  Landlord and Tenant waive
their respective rights to trial by jury of any contract or tort claim,
counterclaim, cross-complaint, or cause of action in any action, proceeding, or
hearing brought by either party against the other on any matter arising out of
or in any way connected with this Lease, the relationship of Landlord and
Tenant, or Tenant’s use or occupancy of the Premises, including any claim of injury
or damage or the enforcement of any remedy under any current or future law,
statute, regulation, code, or ordinance.


 


31.           BROKERS.  With the
exception of the Landlord’s Broker and the Tenant’s Broker designated in the
Basic Lease Information, Landlord and Tenant each represents and warrants to
the other that it has not had any dealings with any other realtors, brokers,
finders or agents in connection with this Lease and each releases and agrees to
indemnify the other from and against any claim or claims, including, without
limitation, costs, expenses and reasonable attorney’s fees incurred by the
other in connection with such claim or claims, based on the failure or alleged
failure to pay any realtors, brokers, finders or agents (other than Landlord’s Broker
and the Tenant’s Broker) and from any cost, expense or liability for any
compensation, commission or charges claimed by any realtors, brokers, finders
or agents (other than Landlord’s Broker and the Tenant’s Broker) claiming by,
through or on behalf of it with respect to this Lease or the negotiation of
this Lease. Landlord will pay the Landlord’s Broker and the Tenant’s Broker in
accordance with a separate agreement between Landlord and the applicable
broker.


 


32.           INTENTIONALLY DELETED.


 


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33.           PARKING. Tenant is entitled to use the number of Covered Reserved Parking
Spaces specified in the Basic Lease Information. Landlord will either designate
such spaces as reserved spaces or will mark Tenant’s name thereon, and Landlord
will not grant any other tenant the right to use such spaces; provided,
however, that Landlord will have no obligation to prevent unauthorized persons
from using such Covered Reserved Parking Spaces. During the Initial Term,
Tenant will pay to Landlord, concurrently with each payment of Base Rent, a fee
of $35.00 per month for each Covered Reserved Parking Space. Upon the
expiration of the Initial Term, the fee for the
Covered Reserved Parking Spaces will be adjusted from time to time by Landlord
to an amount equal to Landlord’s then-standard fee for covered reserved parking
spaces at the Property, provided that such fee will not increase at a rate of more than three
percent (3%) per year, compounded annually, over the $35.00 per month
per Covered Reserved Parking Space fee initially charged hereunder
and provided further that such cap is cumulative. Tenant is also
entitled to use, on a non-exclusive basis, those parking spaces within the
Property that are made available by Landlord for the common use of the tenants
of the Property (“Unreserved Parking Spaces”).
Landlord will designate the initial locations of the Covered Reserved Parking
Spaces and the Unreserved Parking Spaces, and Landlord
reserves the right to designate and redesignate such locations and to grant
other parties the exclusive right to use parking spaces at the Property. The use of Covered Reserved Parking Spaces and Unreserved Parking
Spaces by Tenant and its Representatives and Visitors shall be equal to five
(5) spaces for each 1,000 rentable square feet of space in
the Premises. Tenant agrees not to use, nor permit the use by its employees,
Representatives, or Visitors of, the driveways or parking lot for overnight or
other storage, or for the maintenance, repair or cleaning of automobiles or
other vehicles. Tenant shall not place or store goods, materials, supplies,
equipment, or other property of Tenant in the driveways or parking lot or
anywhere else in the Property or in the Building, excepting the Premises.
Landlord is not responsible for any theft, loss or damage with respect to
vehicles at the Property or the contents thereof.


 


34.           ENTIRE AGREEMENT. This Lease, including the Exhibits
and any Addenda attached hereto, and the documents referred to herein, if any,
constitute the entire agreement between Landlord and Tenant with respect to the
leasing of space by Tenant in the Building, and supersede all prior or
contemporaneous agreements, understandings, proposals and other representations
by or between Landlord and Tenant, whether written or oral, all of which are
merged herein. Neither Landlord nor Landlord’s agents have made any
representations or warranties with respect to the Premises, the Building, the
Project or this Lease except as expressly set forth herein, and no rights,
easements or licenses shall be acquired by Tenant by implication or otherwise
unless expressly set forth herein. The submission of this Lease for examination
does not constitute an option for the Premises and this Lease shall become
effective as a binding agreement only upon execution and delivery thereof by
Landlord to Tenant.


 


35.           MISCELLANEOUS. This Lease may not be amended or
modified except by a writing signed by Landlord and Tenant. Subject to Section
14 - Assignment and Subletting and Section 28
- Landlord’s Liability, this Lease shall
be binding on and shall inure to the benefit of the parties and their
respective successors, assigns and legal representatives. The determination
that any provisions hereof may be void, invalid, illegal or unenforceable shall
not impair any other provisions hereof and all such other provisions of this
Lease shall remain in full force and effect.


 


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The unenforceability, invalidity or illegality of any provision
of this Lease under particular circumstances shall not render unenforceable,
invalid or illegal other provisions of this Lease, or the same provisions under
other circumstances. This Lease shall be construed and interpreted in
accordance with the laws (excluding conflict of laws principles) of the State
of Arizona. The provisions of this Lease shall be construed in accordance with
the fair meaning of the language used and shall not be strictly construed
against either party, even if such party drafted the provision in question. When
required by the context of this Lease, the singular includes the plural. Wherever
the term “including” is used in this Lease, it shall be interpreted as meaning “including,
but not limited to” the matter or matters thereafter enumerated. The captions
contained in this Lease are for purposes of convenience only and are not to be
used to interpret or construe this Lease. If more than one person or entity is
identified as Tenant hereunder, the obligations of each and all of them under
this Lease shall be joint and several. Time is of the essence with respect to
this Lease, except as to the conditions relating to the delivery of possession
of the Premises to Tenant. Neither Landlord nor Tenant shall record this Lease.


 


36.           AUTHORITY. If Tenant is a corporation, partnership,
limited liability company or other form of business entity, each of the persons
executing this Lease on behalf of Tenant warrants and represents that Tenant is
a duly organized and validly existing entity, that Tenant has full right and
authority to enter into this Lease and that the persons signing on behalf of
Tenant are authorized to do so and have the power to bind Tenant to this Lease.
Tenant shall provide Landlord upon request with evidence reasonably satisfactory
to Landlord confirming the foregoing representations.


 


37.           SIGNAGE. Provided
Tenant, at its cost, receives all necessary governmental and quasi-governmental
approvals therefor as well as Landlord’s and the Kierland Master Association’s
prior written consent in connection therewith, Landlord shall allow Tenant to
erect Tenant’s sign in two (2) locations on the exterior of the Building as
depicted on Exhibit G attached hereto and incorporated herein, which sign shall
be Tenant’s name, “subordinate” to Landlord’s building designation sign, if any.
Tenant shall pay all annual and other permit fees therefor, shall pay all costs
of installation and maintenance thereof, shall keep the same in good condition,
order and repair at its sole cost and expense, shall remove the same prior to
termination of this Lease, and shall repair and restore any damage to the
Building caused by such installation and/or removal. Any such sign, and the
display of Tenant’s name thereon, shall be subject to the terms of any restrictive
covenants and/or sign criteria applicable thereto and all applicable laws,
ordinances and regulations. Landlord hereby approves Tenant’s signage depicted
on Exhibit G-1 attached hereto and incorporated herein.


 


38.           RIGHT OF
FIRST OFFER. So long as no Event of
Default then exists under this Lease, Tenant will have the first right (“First Right”) to be offered by Landlord the opportunity to
lease all remaining space (other than the Premises) within the Building (the “First Right Space”). The First Right is subject to the terms
and conditions set forth in this Section 38, and is further subject to any
prior rights to such space granted to any other tenants in the Building. If at
any time after the Commencement Date while this First Right is in effect Landlord
intends to lease all or any part of the First Right Space, then Landlord will
first notify Tenant that such First Right Space is available for lease (the “Available Space”). Tenant must notify Landlord in writing
within five (5) days of receiving Landlord’s notice whether Tenant desires to
lease the Available Space from


 


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Landlord. If Tenant notifies
Landlord that Tenant does not desire to lease the Available Space, or if Tenant
does not respond in writing to Landlord’s notice within such five (5) day
period, then Landlord may freely lease the Available Space without restriction.
If Tenant notifies Landlord in writing within such five (5) day period that
Tenant desires to lease the Available Space, the parties will thereafter
negotiate for Tenant’s lease of the Available Space from Landlord. If Landlord
and Tenant fail to mutually agree upon the terms of Tenant’s lease of the
Available Space and to execute a written amendment to this Lease within ten (10)
days after Tenant delivers Tenant’s offer notice to Landlord, then Landlord’s
obligations under this Section 38 shall automatically terminate and be of no
further force or effect at the end of such ten (10) day period. The purpose of
this Section 38 is to provide notice to Tenant so that Tenant may be in a
position to offer to lease such space on a competitive basis with others, and,
notwithstanding anything to the contrary contained in this Section 38, nothing
in this Section 38 shall be deemed to be an option or right of first refusal.


 


39.           LEASE
CONTINGENCY. Tenant acknowledges that, as of the date of this Lease, Landlord
is presently leasing portions of the Premises to two (2) tenants (the “Existing Tenants”) pursuant to two (2) separate leases (the “Existing Leases”). All obligations of Landlord hereunder are
contingent upon Landlord’s receipt of written terminations of both of the
Existing Leases executed by the Existing Tenants (the “Termination
Agreements”), wherein the Existing Tenants each agree to vacate
their respective premises within the Building on or before March 31, 2006. In
the event that Landlord has not received both of the fully executed Termination
Agreements on or before March 1, 2006 (the “Contingency
Date”), then in that event Landlord or Tenant may terminate this
Lease by delivery of written notice to the other party within fifteen (15) days
thereafter, in which event this Lease will terminate and neither party will
have any further rights or obligations hereunder.


 


40.           LENDER
APPROVAL CONTINGENCY. Tenant acknowledges that Landlord’s existing Mortgagee
must consent to this Lease as a condition to its effectiveness. Promptly
following the full execution of this Lease, Landlord will submit a signed copy
of this Lease to such Mortgagee for approval of the same. Upon receipt of such
approval, Landlord will notify Tenant of the same. In the event that such
Mortgagee fails to consent to this Lease and Landlord fails to notify Tenant of
such consent on or before the Contingency Date, then in that event this Lease
shall terminate automatically, and without further action of the parties,
unless Landlord and Tenant mutually agree in writing to extend the Contingency
Date. If this Lease terminates in accordance with this Section 40, then neither
party will have any further rights or obligations hereunder from and after such
termination.


 


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


 


	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  PCCP HC KIERLAND, LLC, a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  PCCP HC Kierland Owner, LLC, a Delaware limited liability company

  
	
   

  	
   

  	
  Its Sole Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  PCCP LB Hibernia LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
  Its Managing Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  PCCP Equities II, LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  	
  Its Co-Managing Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Aaron A. Giovara

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  THE RYLAND GROUP, INC.,

  
	
   

  	
  a Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel Schreiner

  	
   

  
	
   

  	
  Name:

  	
  Daniel Schreiner

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
										



 


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