exv10w4



 





EXHIBIT
10.4




AMENDED AND RESTATED LEASE




     THIS AMENDED AND RESTATED LEASE (the “Lease”) is made and entered into by and between
Papago Paragon Partners, L.L.C., an Arizona limited liability company (“Landlord”) and
Syntax-Brillian Corporation, a Delaware corporation, formerly Brillian Corporation (“Tenant”), as
of January 1, 2007 (the “Effective Date”).



RECITALS:




     A. Landlord and Tenant each had a leasehold relationship with Three-Five Systems, Inc., a
Delaware corporation (“3/5”), with respect to the real property and improvements located at 1600
Desert Drive, Tempe, Arizona (the “Project”). Landlord was the Lessor and 3/5 was the Lessee under
the Lease Agreement dated December 30, 2004 (the “Master Lease”). Tenant was the Sublessee and 3/5
was the Sublessor under the Second Amended and Restated Real Property Sublease Agreement dated
December 22, 2004 (the “Sublease”).



     B. 3/5 filed bankruptcy and rejected the Master Lease. Simultaneous with the rejection of the
Master Lease, the Sublease was converted to a direct lease between Landlord and Tenant without any
interruption in or termination of the Sublease or any of Tenant’s rights under the Sublease.



     C. Landlord and Tenant now wish to reaffirm and continue the rights and obligations of
the Tenant under the Sublease and the Master Lease, as direct obligations of Tenant to Landlord,
and rights of Tenant with respect to use and enjoyment of the Premises (defined below) and
applicable other portions of the Project.



     D. Therefore, by the signatures of the parties below, Landlord and Tenant that the Sublease,
as amended and restated herein, has not terminated and continues in full force and effect from the
original date of the Sublease and that the Sublease (as amended and restated herein) shall
constitute the entire agreement between Landlord and Tenant as it pertains to the Premises and the
Project, and that that Tenant shall be entitled to use and enjoy while it is not in default (after
the giving of any required notice of default and the expiration of any cure periods) of the
obligations recited in the Sublease.



BASIC LEASE PROVISIONS




1. Description of Premises and Building:




     A. Premises: Suites 100, 150 (only from July 1, 2007 through the Expiration Date) and 200
shown on Exhibit A in the Building. The Premises includes the right to use in common with
others the lobby, plaza and sidewalk areas, access ways and parking areas, and other areas
designated by Landlord from time to time for public use in common with Landlord, other tenants or
occupants of the Building and their visitors, invitees, employees, agents and contractors (the
“Common Areas”). The Common Areas will be subject to the exclusive management and control of
Landlord.



     B. Usable Area of the Premises: From the Effective Date through June 30, 2007, approximately
fifty-one thousand, one hundred seventy-eight (51,178) square feet. From July 1, 2007 through the
Expiration date, approximately fifty-two thousand, five hundred twenty (52,520) square feet.



     C. Rentable Area of the Premises: From the Effective Date through June 30, 2007,
approximately fifty-eight thousand one hundred twenty-five (58,125) square feet. From July 1, 2007
through the Expiration date, approximately fifty-nine thousand, four hundred sixty-seven (59,467)
square feet.



     D. Building: The building located at 1600 N. Desert Drive, Tempe, Arizona with all common
areas and appurtenant parking facilities all as shown on Exhibit B.



 









 





     2. Term (Article 2): The Term of the Lease shall be extended to expire on December 31, 2010
(the “Expiration Date”).



3. Base Rent (Article 3):




	 	 	 	 	 
	Period	 	Monthly Base Rent*
	January 1 through June 30, 2007
	 	$	66,105.08	 
	July 1 through December 31, 2007
	 	$	67,631.32	 
	January 1 through December 31, 2008
	 	$	69,660.14	 
	January 1 through December 31, 2009
	 	$	71,749.91	 
	January 1 through December 31, 2010
	 	$	73,902.61	 








 




			
	*	 	Monthly Base Rent is subject to applicable rental tax




4. Additional Rent (Article 4): Tenant’s Percentage Share: A percentage calculated to three
decimal points of which the Rentable Area of the Premises is the numerator and the Rentable Area of
the office space in the Building is the denominator, or approximately: (a) 63% from January 1
through June 30, 2007, and (b) 64.5% from July 1, 2007 through the Expiration Date (Article I and
Section 4.2)



5. Security Deposit: Waived (Article 5)



6. Brokers (Article 28): None



7. Permitted Use: General office and, to the extent allowable under all applicable zoning
ordinances and in compliance with the Declarations of Covenants, Conditions and Restrictions for
Papago Park Center, light manufacturing uses associated with the manufacturing of HDTV’s and
digital entertainment products (Section 6.1)



8. Addresses for Notices (Article 27):




	 	 	 	 	 	 	 
	 
	 	To:	 	Tenant	 	 
	 
	 	 	 	Syntax-Brillian Corporation	 	with a copy at the same time to:
	 
	 	 	 	1600 N. Desert Drive	 	Greenberg Traurig, LLP
	 
	 	 	 	Tempe, AZ 85281	 	2375 E. Camelback Road, Suite 700
	 
	 	 	 	Attention: Wayne Pratt	 	Phoenix, AZ 85016
	 
	 	 	 	Fax: (602) 389-8869	 	Attention: Karl A. Freeburg, Esq.
	 
	 	 	 	 	 	Fax: (602) 445-8100
	 
	 	 	 	 	 	 
	 
	 	To:	 	Landlord	 	with a copy at the same time to:
	 
	 	 	 	Papago Paragon Partners, L.L.C.	 	Bonnett, Fairbourn, Friedman & Balint
	 
	 	 	 	7202 E. Carefree Drive, Suite 200	 	2901 N. Central Avenue, Suite 1000
	 
	 	 	 	Carefree, AZ 85377	 	Phoenix, AZ 85012
	 
	 	 	 	Attention: Douglas A. Dragoo	 	Attention: Michael Beethe, Esq.
	 
	 	 	 	Fax: (480) 488-4780	 	Fax: (602) 274-1199






	 	 	 
	9. Guarantor:
	 	None.
	 
	 	 
	10. Exhibits:
	 	Exhibit A – Premises
	 
	 	Exhibit B – Site Plan
	 
	 	Exhibit C – Intentionally Deleted
	 
	 	Exhibit D – Permitted Alterations






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	 	Exhibit E – Rules and Regulations
	 
	 	Exhibit F – Estoppel Certificate
	 
	 	Schedule 1 – Clean Room Equipment
	 
	 	Schedule 2 – Hazardous Materials







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STANDARD LEASE PROVISIONS




ARTICLE 1 — PREMISES




     Landlord leases the Premises to Tenant, and Tenant leases the Premises from Landlord
for the Term according to this Lease. Except as set forth in this Lease, Landlord has not made any
representation or warranty with respect to the condition of the Premises or the Building or their
suitability or fitness for the conduct of the Permitted Use, and Tenant acknowledges that it has
had a full opportunity to make its own determination in this regard.



ARTICLE 2 — TERM




     The Term of the Lease shall expire on the Expiration Date, unless otherwise terminated
sooner as set forth herein.



ARTICLE 3 — RENT; LATE CHARGES




     3.1 Base Rent; Rent. Tenant agrees to pay Base Rent for the Premises in
consecutive, monthly installments, in advance, on the first day of each calendar month. Landlord
acknowledges receipt of rent for the months of January, 2007 ($61,591.00 Base Rent; $8,547.00
CAMs), February, 2007 ($61,591.00 Base Rent; $8,547.00 CAMs), March, 2007 ($61,591.00 Base Rent;
$8,547.00 CAMs), March, 2007 ($61,591.00 Base Rent; $8,547.00 CAMs), April, 2007 ($61,591.00 Base
Rent; $8,547.00 CAMs), May, 2007 ($61,591.00 Base Rent; $8,547.00 CAMs) and June, 2007 ($61,591.00
Base Rent; $8,547.00 CAMs). Landlord and Tenant agree that Tenant is obligated to pay an
additional $4,514.08 Base Rent per month, for the months of January through June of 2007 (and any
additional months which were underpaid), which shall be paid at the execution of this Lease. All
amounts (other than Base Rent) payable by Tenant to Landlord are called “Additional Rent.” Base
Rent and Additional Rent are sometimes called “Rent.” Rent will be payable to Landlord when due
without any prior notice or demand in lawful money of the United States and without any abatement,
offset or deduction whatsoever, and at Landlord’s Address or to such other person or to such other
place as Landlord may from time to time designate in writing to Tenant.



     3.2 Triple Net Lease. It is the purpose and intent of Landlord and Tenant that this
Lease be a so-called “triple net lease.” As such, Landlord and Tenant intend and agree that (a)
the Rent shall be absolutely net to Landlord, so that this Lease shall yield, net to Landlord the
Base Rent and all sums of Additional Rent specified in this Lease, (b) come hell or high water, all
costs, operating expenses, taxes premiums, fees, interest, charges, expenses, reimbursements and
obligations of every kind and nature whatsoever relating to the Premises, excepting only certain
net income taxes of Landlord and any other items specifically excepted herein which may arise or
become due during or out of the Lease Term, shall be paid or discharged by Tenant, (c) come hell or
high water, each and every obligation that may arise or be related to the Premises shall be
performed by Tenant at its sole cost and expense, and (d) that Landlord shall be indemnified and
held harmless by Tenant for, from and against such costs, operating expenses, taxes, premiums,
fees, interest, charges, expenses, reimbursements and obligations, Tenant expressly covenanting to
pay and perform all of the foregoing.



     3.3 Late Charge; Interest. The late payment of Rent will cause Landlord to incur
administrative costs and other damages, the exact amount of which would be impracticable or
extremely difficult to ascertain. Landlord and Tenant agree that if Landlord does not receive any
such payment on or before the date five (5) days after the date the payment is due, Tenant will pay
to Landlord, as Additional Rent, (a) a late charge (“Late Charge”) equal to five percent (5%) of
the overdue amount to cover additional administrative costs, and (b) interest on all delinquent
amounts at eighteen percent (18%) per annum (the “Interest Rate”) from the date due until the date
paid. No payment by Tenant or receipt by Landlord of a lesser amount than the correct Rent will be
anything other than a payment on account, nor will any endorsement or statement on any check or any
letter accompanying any payment be an accord and satisfaction. Landlord may accept such a partial



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payment without prejudice to Landlord’s right to pursue any other remedy in this Lease.



ARTICLE 4 — OPERATING EXPENSES




     4.1 Payment Operating Expenses.



          (a) In addition to Base Rent, Tenant will pay Tenant’s Percentage Share of Operating Expenses
for the Building allocable to each calendar year (or part of one) (each an “Expense Year”).
Operating Expenses are currently estimated at: (1) $363,281.25 per Expense Year ($30,273.44 per
month), from January 1 through June 30, 2007, and (2) $371,668.80 per Expense Year ($30,972.40 per
month), from July 1, 2007 through December 31, 2007; however such amount is subject to adjustment
as set forth herein.




          (b) “Operating Expenses” means all reasonable costs, fees, amounts, disbursements and expenses
of every kind and nature paid or incurred by or on behalf of Landlord with respect to any Expense
Year in connection with the operation, ownership, maintenance, insurance, restoration, management,
replacement or repair of the Building in a first class manner, including, without limitation, any
amounts paid or incurred with respect to:





          (i) all expenses paid or incurred by Landlord for electricity, gas, water, sewer,
refuse collection, telephone charges (not separately metered or chargeable to tenants) and
similar utility services;




          (ii) all real estate taxes, public and governmental charges and assessments, including
all general, extraordinary or special assessments or assessments against any of Landlord’s
personal property now or hereafter located in the Building, all costs and fees incurred by
Landlord in contesting or negotiating with public authorities (Landlord having the sole
authority to conduct such a contest or enter into such negotiations) as to any of them and
all sewer and other taxes and charges, but will not include taxes on Tenant’s machinery,
equipment, inventory, or other personal property or assets of Tenant;




          (iii) the costs of janitorial and cleaning services and supplies, including window
washing;




          (iv) costs of services of independent contractors, including management fees;




          (v) costs incurred in management of the Building (including employment taxes and fringe
benefits of all persons performing duties in connection with the maintenance and operation
of the Building, reasonably apportioned, as necessary);




          (vi) the cost (amortized over such reasonable period as Landlord shall determine
together with interest at the then current “Prime Rate” as published in the Wall Street
Journal plus two percent (2%) of any capital improvements made to the Building by Landlord
or the replacement cost of any building equipment needed to operate the Building at the same
quality levels as prior to the replacement;




          (vii) the cost of acquiring, maintaining, repairing and replacing personal property
utilized in maintaining, operating and repairing the Building;




          (viii) repairing, paving, repaving, lighting, cleaning, painting, striping;




          (ix) insuring the Building (including, but not limited to, fire and extended coverage
insurance), insurance against liability for personal injury, death and property damage and
workmen’s



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compensation insurance, business interruption insurance and rent loss insurance;




          (x) cost and expense of installing, maintaining and repairing burglar or fire alarm
systems in the Building, including any police protection, security and security patrol, fire
protection, or traffic regulating;




          (xi) inspecting, repairing and maintaining machinery and equipment used in the
operation of the Building;




          (xii) depreciation of machinery and equipment;




          (xiii) cost and expense of maintaining, repairing and replacing storm and sanitary
drainage systems and irrigation systems including any debris removal;




          (xiv) cost and expense of maintaining, repairing and replacing the exterior of the
Building, other improvements in the Building, and the parking facilities, including, but not
limited to, foundations, structural portions, floors, roofs, walls, elevators, stairs, and
signs;




          (xv) cost and expense of landscaping and shrubbery maintenance and replacement;




          (xvi) expense of utilities, administrative overhead costs, including, but not limited
to, reasonable management fees, legal, accounting, inspection and consultation fees
applicable to the Common Areas of the Building;




          (xvii) costs and expenses of amounts due under, and performing obligations under,
instruments now or hereafter of record and affecting the Premises, the Building, or any of
them, or any part of them; and




          (xviii) any costs incurred by Landlord for any capital improvements or structural
repairs to the Building to effect labor savings or otherwise reduce Operating Expenses or
required by any change in the laws, ordinances, rules, regulations or orders of any
governmental or quasi-governmental authority having jurisdiction over the Building, which
costs shall be amortized over the least of ten (10) years, or the useful life of the
applicable capital improvement or structural repair, or the period in which the savings or
reduction is effected.



          (c) Operating Expenses do not include: (i) expenses relating to leasing space in the Building
(including tenant improvements, leasing and brokerage commissions and advertising expenses); (ii)
legal fees and disbursements incurred for collection of tenant accounts or negotiation of leases,
or relating to disputes between Landlord and other tenants and occupants of the Building; (iii)
capital items unless specifically permitted by this Section; (iv) amounts received by Landlord on
account of proceeds of insurance to the extent the proceeds are reimbursement for expenses which
were previously included in Operating Expenses; (v) except as provided in this Section,
depreciation or payments of principal and interest on any Security Documents (as that term is
defined in Section 19.1); (vi) payments of ground rent pursuant to any Security Document covering
the Building; (vii) subject to Section 4.1(b), the costs of: gas, steam or other fuel; operation of
elevators and security systems; heating, cooling, air conditioning and ventilating; chilled water,
hot and cold domestic water, sewer and other utilities or any other service work or facility, or
level or amount, provided to any other tenant or occupant in the Building which either (A) is not
required to be supplied or furnished by Landlord to Tenant under this Lease or (B) is supplied or
furnished to Tenant pursuant to the terms of this Lease with separate or additional charge; and
(ix) any cost expressly excluded from Operating Expenses in an express provision.




          (d) If at any time during the Lease Term less than one hundred percent (100%) of the then
current office space in the Building is occupied, at Landlord’s option those components of
Operating Expenses

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which vary with occupancy (“Variable Expenses”) shall be removed from general Operating
Expenses and allocated to the portion of the office space in the Building which is actually
occupied and generating such components of Operating Expenses. This special allocation shall be
made on a pro rata basis over the occupied office space in the Building, based on both the
comparative Rentable Areas of the Building which are occupied and the portion of the Expense Year
during which the portions of the Building were occupied. Examples of Variable Expenses include,
without limitation, janitorial services, electricity for overhead lighting and HVAC costs.
Operating Expenses which do not vary with occupancy, such as public liability insurance and lobby
maintenance will continue to be allocated on a pro rata basis according to Tenant’s Percentage
Share of those Operating Expenses.




          (e) All decisions regarding Operating Expenses will be made in accordance with the good faith
determination of Landlord applying sound accounting and property management principles consistently
applied. Landlord will have the right to allocate equitably some or all of Operating Expenses among
particular classes or groups of tenants in the Building (for example, retail tenants) to reflect
Landlord’s good faith determination that measurably different amounts or types of services, work or
benefits associated with Operating Expenses are being provided to or conferred upon such classes or
groups. From time to time Landlord will have the right to expand or contract the amount, scope,
level or types of services, work, items or benefits, the cost of which is included within Operating
Expenses, so long as Landlord’s treatment of them for purposes of the calculation of Operating
Expenses is generally consistent. All discounts, reimbursements, rebates, refunds, or credits
(collectively, “Reimbursements”) attributable to Landlord’s out-of-pocket costs included in
Operating Expenses received by Landlord in a particular year will be deducted from Operating
Expenses in the year they are received.




          (f) Notwithstanding anything to the contrary in this Section 4.1, Landlord agrees to provide
meters or other monitoring devices for the measurement of utilities supplied to the Building and
Tenant agrees to pay Landlord for Tenant’s Proportionate Share of the total cost incurred by
Landlord for installing said monitoring devises (the “Installation Cost”) which shall be made as a
part of Tenant’s Operating Expenses until paid in full.




     4.2 Payment Procedure; Estimates. Not later than sixty (60) days prior to the
beginning of each Expense Year, Landlord will give Tenant written notice of its estimate of any
increased amounts payable under Section 4.1 for that Expense Year. On or before the first day of
each month during such Expense Year, Tenant will pay to Landlord one-twelfth (1/12th) of
the estimated amounts. Landlord will deliver to Tenant within one hundred fifty (150) days after
the close of each Expense Year, a statement of that Expense Year’s Operating Expenses, and Tenant’s
Percentage Share of Operating Expenses payable for that Expense Year pursuant to Section 4.1, as
determined by Landlord (the “Landlord’s Statement”). Landlord’s Statement will be binding upon
Landlord and Tenant, except as provided in Section 4.3. If Tenant’s Percentage Share of Operating
Expenses for any Expense Year is more than the estimated payments made by Tenant, Tenant will pay
the deficiency to Landlord when the next installment of Base Rent is due, or, if the Term has
ended, upon receipt of Landlord’s Statement. If Tenant’s Percentage Share of Operating Expenses
for any Expense Year is less than the estimated payments made by Tenant, the excess payments will
be credited against Rent next payable by Tenant or, if the Term has expired, will be paid to
Tenant. No delay in providing any Landlord’s Statement described in this Section will act as a
waiver of Landlord’s right to receive payment from Tenant of Tenant’s Percentage Share of Operating
Expenses. If this Lease ends on a day other than the end of a calendar year, Tenant’s Percentage
Share of Operating Expenses applicable to the year will be prorated on the basis that the number of
days from January 1 of the year to the end date bears to 365. The expiration or termination of
this Lease will not affect the obligations of Landlord and Tenant pursuant to this Section.



     4.3 Review of Landlord’s Statement. So long as no Event of Default then exists,
Tenant may review Landlord’s supporting books and records for any Operating Expenses, in accordance
with the following procedure:


(a) Within thirty (30) days after any Landlord’s Statement is delivered to Tenant, Tenant




7









 







may deliver a written notice (a “Dispute Notice”) to Landlord specifying the items described in the
Landlord’s Statement that are claimed to be incorrect, and Tenant will simultaneously pay to
Landlord all amounts due from Tenant to Landlord as specified in the Landlord’s Statement. Tenant
will not be entitled to withhold, deduct, or offset any monetary obligation of Tenant to Landlord
under this Lease pending the completion of and regardless of the results of any review of records
under this Section. The right of Tenant under this Section may only be exercised once for each
Expense Year. If Tenant does not deliver a Dispute Notice within the thirty (30) day period or
fails to meet any of the other conditions of exercise of such right, the right of Tenant to review
a particular Landlord’s Statement (and all of Tenant’s rights to make any claim relating to it)
under this Section will automatically be waived by Tenant.




          (b) Landlord maintains its records for the Building at Landlord’s manager’s corporate offices.
Tenant agrees that any review of records under this Section will be at the sole expense of Tenant
and will be conducted by independent certified public accountants which are not compensated on a
contingency fee or similar basis relating to the results of such audit. Tenant acknowledges and
agrees that any records of Landlord reviewed under this Section (and the information contained in
them) constitute confidential information of Landlord, which Tenant will not disclose, nor permit
to be disclosed by Tenant’s accountant, to anyone other than the Tenant’s accountants performing
the review and the principals of Tenant who receive the results of the review. The disclosure of
such information by Tenant or any of Tenant’s employees or contractors (including, without
limitation, Tenant’s accountant) to any other person, whether or not caused by the conduct of
Tenant, will be an Event of Default.




          (c) If Landlord disagrees that an error exists with respect to Landlord’s Statement, Landlord
will have the right to cause another review of that portion of Landlord’s Statement to be made by a
firm of independent certified public accountants selected by Landlord (“Landlord’s Accountant”).
In the event Landlord’s Accountant and Tenant’s accountant are unable to reconcile their reviews,
both accountants shall mutually agree upon a third accountant (the “Third Party Accountant”), whose
determination shall be conclusive. In the event that the results of Landlord’s Accountant’s review
of a particular Landlord’s Statement or the determination by the independent Third Party Accountant
indicates that total Operating Expenses for the period covered by the Landlord’s Statement in
question have been overstated by more than five percent (5%), then Landlord shall pay for the
reasonable cost of the Third Party Accountant, reimburse Tenant for the reasonable cost of Tenant’s
accountant and the amount of any overpayment by Tenant of estimated excess Operating Expenses, plus
interest at the Interest Rate from the time of the overpayment until the date of repayment, or
either of them, for the period in question shall be credited against Tenant’s obligations to pay
Additional Rent next coming due; in all other cases, Tenant shall be liable for Landlord’s
Accountant’s and any Third Party Accountant’s actual fees and expenses, and the amount of any
underpayment shall be paid by Tenant to Landlord with the next succeeding installment of estimated
Operating Expenses.




ARTICLE 5 — SECURITY FOR PERFORMANCE




     5.1 Security Deposit. The Security Deposit, if any, secures the faithful
performance of this Lease by Tenant. The Security Deposit is not an advance payment of Rent or a
measure or limit of Landlord’s damages upon an Event of Default. If an Event of Default occurs,
Landlord may, but will not be required to, use, apply or retain all or any part of the Security
Deposit (a) for the payment of any Rent, (b) for the payment of any other amount that Landlord may
spend or become obligated to spend by reason of such default by Tenant, and (c) for any other loss
or damages that Landlord may suffer by reason of such default by Tenant. If any portion of the
Security Deposit is so used or applied, Tenant will, upon demand by Landlord, deposit with Landlord
cash in an amount sufficient to restore the Security Deposit fully. At the end of this Lease, if
no Event of Default exists, Landlord will return to Tenant the remaining portion of the Security
Deposit within sixty (60) days after the date Landlord receives possession of the Premises in
accordance with the provisions of this Lease. The Security Deposit may be commingled with
Landlord’s other funds, and no interest will be paid on it. If Landlord transfers its interest in
the Premises, then Landlord may assign the Security Deposit to the transferee and thereafter
Landlord will have no further liability or obligation for the return of the Security



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Deposit Tenant waives the provisions of any Laws, whether now or in the future in effect, or
common law rule, to the contrary of this Article.



     5.2 Security Interest. Tenant hereby grants Landlord a security interest in and to
all right, title and interest of Tenant in and to the permanent fixtures that Tenant has affixed to
the clean room located from time to time in the Premises (the “Clean Room Fixtures”) and described
generally on Schedule 1 attached to this Lease. In furtherance of Tenant’s grant of the
security interest, Tenant hereby authorizes Landlord to file and record as necessary a financing
statement in accordance with the Uniform Commercial Code, as the same from time to time be in
effect in the State of Arizona, and such other financing statements, continuation statements and
other related filings as may be reasonably necessary to perfect its security interest in the Clean
Room Fixtures. Landlord agrees to waive its statutory lien, in favor of Tenant’s primary lending
institution(s) (“Tenant’s Lender”), on all assets of Tenant located on the Premises except the
Clean Room Fixtures.



ARTICLE 6 — USE OF PREMISES




     6.1 Tenant’s Permitted Use. Tenant will use the Premises for the Permitted Use
and no other purpose.



          (a) Kitchen. Tenant shall not use the existing kitchen located on the second floor.




          (b) Conference Room. Tenant shall have the right to use the conference room up to
sixty-three percent (63%) of the time, on a non-exclusive basis at no charge and shall schedule
such usage with Landlord on a first-come first-served basis.




     6.2 Access. Tenant shall have access to the Premises seven (7) days per week,
twenty-four (24) hours per day. Other occupants will also have similar access to the Building.



     6.3 Compliance With Laws and Other Requirements.



          (a) Tenant, at its cost, will obtain and maintain in full force and effect all governmental
licenses, approvals and permits required to allow Tenant to conduct the Permitted Use. Tenant will
timely take all action required to cause the Premises to comply in all respects with all laws,
ordinances, building codes, rules, regulations, orders and directives of any governmental authority
having jurisdiction and recorded documents (including, without limitation, any certificate of
occupancy) now or in the future applicable to the Premises (collectively, “Laws”), including,
without limitation, any Law requiring any form of improvement or alteration to the Premises.




          (b) Tenant will not use the Premises, or permit the Premises to be used, in any manner, or do
or suffer any act in or about the Premises which: (i) violates or conflicts with any applicable
Law; (ii) causes or is reasonably likely to cause damage to the Building, the Premises or the
Building systems, including, without limitation, the life safety, electrical, heating, ventilation
and air conditioning (“HVAC”), plumbing or sprinkler systems (collectively, the “Building
Systems”); (iii) violates a requirement or condition of any policy of insurance covering the
Building or the Premises, or increases the cost of such policy; (iv) constitutes or is reasonably
likely to constitute a nuisance; (v) interferes with, or is reasonably likely to interfere with,
the transmission or reception of microwave, television, radio, telephone, or other communication
signals by antennae or other facilities located in the Building; or (vi) violates any instrument
now or hereafter of record and affecting the Premises, the Building, or any part of them (provided,
however, that with respect to instruments that may hereafter affect the Building, such instrument
shall not increase Tenant’s obligations or interfere with or impair Tenant’s rights under this
Lease, and Tenant is given prior written notice of such instrument).




     6.4 Hazardous Materials. Except those Hazardous Materials already in existence on the
Premises



9









 







necessary for Tenant’s Use, a Schedule of which is attached as Schedule 2, no
Hazardous Materials will be Handled (defined below) upon, about, in, above or beneath the Premises
or any portion of the Building by or on behalf of Tenant, its subtenants or its assignees, or their
respective contractors, clients, officers, directors, employees, agents, or invitees (collectively,
a “Tenant Party”); however, quantities of those Hazardous Materials customarily used in the conduct
of general administrative and executive office activities such as copier fluids and cleaning
supplies, may be used and stored at the Premises without Landlord’s prior written consent, but only
in compliance with all applicable Environmental Laws (defined below), and with the highest
prevailing industry standards. Tenant will, at its sole cost and expense, promptly take all
actions (or at Landlord’s election, reimburse Landlord for taking all actions) required by any Law
that arises in connection with Tenant’s Handling of Hazardous Materials. Such actions will
include, but not be limited to, the investigation of the environmental condition of the Premises or
any portion of the Building, the preparation of any feasibility studies or reports and the
performance of any cleanup, remediation, removal or restoration work. Tenant will take all actions
(or, at Landlord’s election, reimburse Landlord for taking all actions) necessary to restore the
Premises or any portion of the Building to the condition existing prior to the introduction of
Tenant’s Hazardous Materials, despite any less stringent standards or remediation allowable under
applicable Environmental Laws; provided, however, that if it is impossible to restore the affected
portion of the Premises or the Building to its prior existing condition, Tenant shall take whatever
action is necessary to restore the affected area to a condition as close to its previously existing
condition as possible. “Environmental Laws” means all Laws regulating, relating to, or imposing
liability or standards of conduct concerning public health and safety or the environment.
“Hazardous Materials” means: (a) any material or substance: (i) that is defined or becomes defined
as a “hazardous substance,” “hazardous waste,” “infectious waste,” “chemical mixture or substance,”
or “air pollutant” under Environmental Laws; (ii) containing petroleum, crude oil or any fraction
of them; (iii) containing polychlorinated biphenyls (PCB’s); (iv) that constitutes asbestos or
asbestos-containing material; (v) that is radioactive; (vi) that is infectious; or (b) any other
material or substance displaying toxic, reactive, ignitable or corrosive characteristics, as all
such terms are used in their broadest sense. “Handle” means any installation, handling,
generation, storage, treatment, use, disposal, discharge, release, manufacture, refinement,
presence, migration, emission, abatement, removal, transportation, or any other activity of any
type in connection with or involving Hazardous Materials.



     6.5 Additional Taxes. In addition to the Base Rent and all other forms of Additional
Rent payable by Tenant hereunder, Tenant will reimburse Landlord upon demand as Additional Rent for
any and all taxes, impositions or similar fees or charges (other than Landlord’s income taxes and
any charges included by Landlord in Operating Expenses with respect to the Expense Year in
question) payable by or imposed or assessed upon Landlord or with respect to: (a) any fixtures,
equipment or other personal property located in or about the Premises; (b) any leasehold
improvements made in or to the Premises by or for Tenant (without regard to ownership of them) if
and to the extent the original cost, replacement cost or value thereof exceeds the cost of
Landlord’s then effective “Building Standard” tenant improvements, as determined in good faith by
Landlord; (c) the Rent payable, including, without limitation, any gross receipts tax, license fee
or excise tax levied by any governmental authority; (d) the possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy of any portion of the Premises; or
(e) this transaction or any document to which Tenant is a party creating or transferring an
interest or an estate in the Premises.



     6.6 Waiver of Liability and Indemnification. Other than Landlord’s gross negligence
or willful misconduct, Tenant waives all claims and causes of action against Landlord, its
partners, property managers, advisors, mortgagees and ground lessors and each of their respective
officers, managers, directors, employees, contractors, agents, successors and assigns
(collectively, “Landlord Parties”) for any damage to persons or property (including, without
limitation, loss of profits and intangible property) in any way relating to Tenant’s use and
occupancy of the Premises, or the condition of the Premises, Building, or land beneath all or any
part of any of them. Other than Landlord’s gross negligence or willful misconduct, Tenant will
indemnify, defend, protect and hold harmless Landlord and each of the Landlord Parties (except to
the extent the losses described below are caused by the gross negligence or willful misconduct of a
Landlord Party), from and against any and all claims, losses, damages, obligations, liabilities,
costs and expenses (including, but not limited to, reasonable



10









 







attorneys’ fees and legal costs) (collectively, “Claims, Damages and Costs”) that arise out of, is
occasioned by or is in any way attributable to (a) the use or occupancy of the Premises or any
portion of the Building by Tenant, or (b) the acts or omissions of Tenant or any Tenant Party, or
(c) any default of this Lease by Tenant. Tenant will indemnify, defend, protect and hold harmless
Landlord and each of the Landlord Parties (except to the extent the losses described below are
caused by the gross negligence or willful misconduct of a Landlord Party), from and against any and
all environmental damages that arise from the Handling of Tenant’s Hazardous Materials.
“Environmental Damages” means (X) all claims, judgments, damages, penalties, fines, costs,
liabilities, and losses; (Y) all sums paid for settlement of claims, reasonable attorneys’ fees,
consultants’ fees and experts’ fees; and (Z) all costs incurred by Landlord in connection with
investigation or remediation relating to the Handling of Tenant’s Hazardous Materials.



ARTICLE 7 — UTILITIES AND SERVICES




     7.1 Building Services. So long as no Event of Default exists, Landlord agrees
to furnish or cause to be furnished to the Premises as part of Operating Expenses:



          (a) Non-attended automatic elevator service.




          (b) Until the metering system is installed by Landlord, pursuant to Paragraph 4.1(f), HVAC to
the Premises, which in Landlord’s good faith judgment, is required for the comfortable use and
occupancy of the Premises from 6:00 a.m. to 6:00 p.m. Monday through Friday, and 9:00 a.m. to 2:00
p.m., Saturdays (collectively, the “Business Hours”), except for the date of observation of New
Year’s Day, President’s Day, Independence Day, Labor Day, Memorial Day, Thanksgiving Day, and
Christmas Day, and at Landlord’s discretion, other state and nationally recognized holidays
selected by Landlord (collectively, the “Holidays”); provided, however that if Tenant desires to
use HVAC during hours (“Non-Business Hours”) other than Business Hours (“After Hours HVAC”), Tenant
will provide Landlord with reasonable prior notice of Tenant’s desired After Hours HVAC use.
Tenant will pay Landlord’s charges prevailing from time to time (the “After Hours HVAC Rate”) for
supplying such After Hours HVAC within ten (10) days of receipt of a reasonably detailed bill.
When the metering system is installed, pursuant to Paragraph 4.1(f), then the use and expense of
HVAC systems on the Premises shall be in the sole discretion of Tenant, and at Tenant’s sole
expense. Tenant will be responsible for and will pay to Landlord any additional costs (including,
without limitation, the costs of installation of additional HVAC equipment) incurred by Landlord
because of the failure of the HVAC system to perform its function due to arrangement of
partitioning in the Premises, or the operation of the windows in the Premises, or changes or
alterations thereto or from any use by Tenant of heat-generating machinery or equipment other than
normal office equipment, including small photocopying machines and personal computers not linked to
a central mainframe at the Premises. Landlord makes no representation with respect to the adequacy
or fitness of the Building’s HVAC system to maintain temperatures as may be required for the
operation of any computer, data processing or other special equipment. Tenant will abide by such
rules and regulations as Landlord may promulgate from time to time about operation of the windows
in the Premises so as to enhance the comfort of all tenants in the Building and maximize the
efficiency of the HVAC equipment.




          (c) At all reasonable times, electric current as required for Building standard lighting and
fractional horsepower office machines and adequate electrical wiring and facilities for connection
to the lighting fixtures and incidental use equipment of Tenant. Without Landlord’s consent,
Tenant will not install, or permit the installation, in the Premises of any computers, word
processors, electronic data processing equipment or other type of equipment or machines which will
increase Tenant’s use of electric current in excess of that which Landlord is obligated to provide
pursuant to this Section. Tenant’s use of electric current will never exceed the capacity of the
feeders, risers or electrical installations of the Building.




          (d) City water for drinking and restroom purposes.




          (e) Janitorial and cleaning services for the Building only Monday through Friday evenings


11









 







for the Building only. Tenant will provide janitorial services for the Premises and shall
keep the same in good, clean and sanitary condition.




          (f) Building standard suite signage and listing in the Building directory. Landlord confirms
that Tenant’s existing signage is acceptable; provided, however, that Tenant shall ensure that its
signage conforms to all applicable laws and restrictions regulating signage.




     7.2 Interruption of Services. Landlord will not be liable for any failure to furnish,
stoppage of, change in or interruption in furnishing any of the services or utilities described in
Section 7.1 or any cause beyond Landlord’s reasonable control. In any such event, Tenant will not
be entitled to any damages nor will any failure or interruption abate or suspend Tenant’s
obligation to pay Rent or constitute a constructive or other eviction of Tenant. If any Law
controls the use or conservation of energy, water, gas, light or electricity, the reduction of
automobile or other emissions, or the provision of any other utility or service, Landlord may take
any reasonably appropriate action to comply with the Law. Security services provided by Landlord
at the Building are for the protection of Landlord’s property and under no circumstances will
Landlord be responsible for, and Tenant waives any rights with respect to, providing security or
other protection for Tenant or its employees, invitees in the Building.



ARTICLE 8 — MAINTENANCE AND REPAIRS




     8.1 Tenant’s Obligations. Tenant will, at its sole cost and expense, maintain
the Premises in good order and repair and in a safe, clean and neat condition. Tenant will make
all repairs to the Premises with replacements of any materials to be made by use of materials of
equal or better quality. Further, Tenant will be responsible for, and upon demand promptly
reimburse Landlord for, any damage to any portion of the Building or the Premises caused by (a) the
performance or existence of any alterations, additions or improvements made by Tenant or for Tenant
to the Premises; (b) the installation, use, operation or movement of Tenant’s property in or about
the Building or the Premises; or (c) any act or omission by Tenant or any person permitted in or
invited to the Premises or the Building by Tenant.



     8.2 Landlord’s Rights. Landlord and its contractors will have the right, at all
reasonable times, to enter upon the Premises to make any repairs to the Premises or the Building
reasonably required or deemed reasonably necessary by Landlord and to erect such equipment,
including scaffolding, as is reasonably necessary to effect such repairs. In the event of any
failure of Tenant to perform any of its obligations under this Article 8, or under Article 6,
Article 9, or Article 12, where such failure remains uncured for ten (10) days after delivery by
Landlord to Tenant of written notice of such failure (or in the case of an emergency, after such
oral or written notice, if any, as may be practical under the circumstances), Landlord may (but
will not be obligated to) elect to perform such obligation of Tenant at Tenant’s sole cost and
expense, and in the event of such performance by Landlord, Tenant will pay to Landlord within ten
(10) days of written demand one hundred ten percent (110%) of Landlord’s actual direct and indirect
costs (including interest, overhead, general conditions and administration) in performing
obligations of Tenant.



ARTICLE 9 — ALTERATIONS




     9.1 Landlord’s Consent; Conditions. Tenant will not make or permit to be made
any alterations, additions, or improvements in or to the Premises, except those set forth in
Exhibit D and such non-structural alterations or additions to the Premises which would not
impair in more than a de minimus way the structural integrity of the Premises (collectively,
“Alterations”) without first obtaining the prior written consent of Landlord, which consent shall
not be unreasonably withheld and will be requested in writing not less than fifteen (15) business
days prior to the scheduled and actual commencement of any Alterations. All Alterations (a) will
comply with all applicable Laws, (b) will be compatible (as determined in good faith by Landlord)
with the Building and its structure, mechanical, electrical, heating, ventilating, air-conditioning
and life safety systems; (c) will not interfere with the use and occupancy of any other portion of
the Building by any other tenant or their invitees; and (d) will not be visible from outside the
Premises. In addition, Landlord may



12









 







require: (A) Tenant’s submission to Landlord, for Landlord’s prior written approval, of all plans
and specifications relating to the Alterations; (B) Landlord’s prior written approval of the time
or times when the Alterations are to be performed; (C) Landlord’s prior written approval of the
contractors and subcontractors performing work in connection with the Alterations; (D) Tenant’s
receipt of all necessary permits and approvals from all governmental authorities having
jurisdiction over the Premises prior to the construction of the Alterations; (E) Tenant’s written
notice of whether the Alterations include the Handling of any Hazardous Materials; (F) Tenant’s
delivery to Landlord of such bonds and insurance as Landlord customarily requires; (G) Tenant’s
payment to Landlord within ten (10) days of written demand therefor of all costs and expenses
incurred by Landlord because of the Alterations, including, but not limited to, costs incurred in
reviewing the plans and specifications for, and the progress of, the Alterations and Landlord’s
supervision fee (which will be ten percent (10%) of the cost of the Alterations); (H) Tenant’s (and
Tenant’s contractor’s) compliance with such construction rules and regulations and building
standards as Landlord may promulgate from time to time; and (I) Tenant’s agreement to remove some
or all of the Alterations at the end of this Lease. All work will be performed by Tenant at
Tenant’s expense and will be prosecuted to completion in a diligent, first class manner and so as
not to interfere with any other tenants or occupants of the Building. Tenant will deliver to the
Building management office, within thirty (30) days following completion of the Alterations, a
reproducible copy of the “as built” drawings of the Alterations.



     9.2 Performance of Alterations Work. All work relating to the Alterations will be
performed in compliance with the plans and specifications approved by Landlord, all applicable
Laws, ordinances, rules, regulations and directives of all governmental authorities having
jurisdiction and the requirements of all carriers of insurance on the Premises and the Building.
Without Landlord’s prior written consent, which Landlord may withhold in its sole and absolute
discretion, Tenant will not use any portion of the Common Areas in connection with the making of
any Alterations, and Tenant will not modify or alter any improvements or components of the Building
outside of the Premises.



ARTICLE 10 — MECHANIC’S LIENS




     Tenant will pay when due all costs for work performed and materials supplied to the
Premises. Tenant will keep Landlord, the Premises and the Building free from all liens, stop
notices and violation notices relating to the Alterations or any other work performed for,
materials furnished to or obligations incurred by Tenant. Tenant will indemnify, defend and hold
harmless Landlord, the Premises and the Building of and from any and all loss, cost, damage,
liability and expense, including attorneys’ fees, arising out of or related to any liens or
notices. Tenant will give Landlord not less than seven (7) business days prior written notice
before commencing any Alterations in or about the Premises to permit Landlord to post appropriate
notices of non-responsibility. Tenant will also secure, prior to commencing any Alterations, at
Tenant’s expense, a completion and lien indemnity bond satisfactory to Landlord. During the
progress of the Alterations, Tenant will, upon Landlord’s request, furnish Landlord with sworn
contractor’s statements and lien waivers covering the Alterations. Tenant will satisfy or
otherwise discharge all liens, stop notices or other claims or encumbrances within twenty (20) days
after Landlord notifies Tenant in writing that any such lien, stop notice, claim or encumbrance has
been filed. If Tenant fails to pay and remove such lien, claim or encumbrance within the twenty
(20) day period, Landlord, at its election, may pay and satisfy it and the sums so paid by
Landlord, with interest from the date of payment at the Interest Rate, will be deemed to be
Additional Rent due and payable by Tenant without notice or demand.



ARTICLE 11 — SURRENDER




     At the end of this Lease, Tenant will surrender the Premises to Landlord in the same
condition as when received at the inception of this Lease, subject to ordinary wear and tear.
Except for Alterations that Tenant agreed to remove at the end of this Lease according to Article 9
and Alterations that Landlord requires Tenant to remove by written notice given before the
Expiration Date, all Alterations will become a part of the Premises and will become the property of
Landlord at the end of this Lease. In that event, Tenant will promptly remove prior to the end of
this Lease the Alterations designated by Landlord and will promptly



13









 







restore, patch and repair any resulting damage, all at Tenant’s expense. If Tenant fails to
perform its obligations under this Article, in addition to any other remedies, Landlord may use,
apply or retain all or any part of the Security Deposit with respect to the failure. All business
and trade fixtures, machinery and equipment, furniture, movable partitions and items of personal
property owned by Tenant or installed by Tenant at its expense in the Premises will be and remain
the property of Tenant upon the expiration of this Lease, provided Tenant is not in default
hereunder. Tenant will, at its sole expense, remove all such items and repair any damage to the
Premises or the Building caused by such removal. If Tenant fails to remove any such items or
repair such damage promptly before the end of this Lease, Tenant will be deemed to have abandoned
it; Landlord may store it at Tenant’s expense or appropriate it for itself, or sell or dispense of
it in its discretion, with no liability to Tenant.



ARTICLE 12 — INSURANCE; WAIVER; INDEMNIFICATION




     12.1 Property Insurance.



          (a) Tenant will maintain, at its sole expense, “special form” (and at Landlord’s option
earthquake, sprinkler leakage and flood) property insurance, in an amount not less than one hundred
percent (100%) of replacement cost covering (i) all leasehold and tenant improvements in and to the
Premises, (ii) all floor and wall coverings, and (iii) Tenant’s office furniture, business and
personal trade fixtures, equipment, furniture system and other personal property from time to time
situated in the Premises. The proceeds of the insurance will be used for the repair and
replacement of the property so insured, except that if not so applied or if this Lease is
terminated according to Article 13, the proceeds applicable to the leasehold improvements will be
paid to Landlord and the proceeds applicable to Tenant’s personal property will be paid to Tenant.




          (b) Tenant will maintain business interruption insurance for direct or indirect loss of
earnings attributable to all perils insured against in Section 12.2(a) for a period of not less
than twelve (12) months.




     12.2 Liability Insurance.



          (a) Tenant will maintain, at its sole expense for the protection of Landlord and Tenant,
commercial general liability insurance applying to the use and occupancy of the Premises and the
business operated by Tenant. The insurance will have a minimum combined single limit of liability
of at least $1,000,000 per occurrence and a general aggregate limit of at least $2,000,000. Tenant
will provide excess liability insurance on a following form basis, with overall limits of at least
$5,000,000. All policies will be written to apply to all bodily injury (including death), property
damage and personal injury losses, will include blanket contractual liability, broad form property
damage, independent contractor’s coverage, completed operations, products liability, cross
liability and severance of interest clauses, and will be endorsed to include Landlord and its
agents, property managers, beneficiaries, partners, employees, and any Holder of any Security
Document designated by Landlord as additional insureds.




          (b) Tenant will maintain, at its sole expense for the protection of Landlord and Tenant,
primary automobile liability insurance with limits of not less than $1,000,000 per occurrence
covering owned, hired and non-owned vehicles used by Tenant.




          (c) Prior to the sale, storage, use or giving away of alcoholic beverages on or from the
Premises by Tenant or another person, Tenant, at its own expense, will obtain a policy or policies
of insurance issued by a responsible insurance company and in a form acceptable to Landlord saving
harmless and protecting Landlord and the Premises against any and all damages, claims, liens,
judgments, expenses and costs, including actual attorneys’ fees, arising under any present or
future law, statute, or ordinance of the State of Arizona or other governmental authority having
jurisdiction of the Premises, by reason of any storage, sale, use or giving away of alcoholic
beverages on or from the Premises. The policy or policies of insurance will have a minimum
combined single limit of $3,000,000 per occurrence and will apply to bodily injury, fatal or

14









 








nonfatal; injury to means of support; and injury to property of any person. The policy or
policies of insurance will name the Landlord and its agents, beneficiaries, partners, employees and
any Holder of any Security Document designated by Landlord as additional insureds.




          (d) Tenant will maintain workers’ compensation insurance in accordance with the laws of the
State of Arizona, and employer’s liability insurance with a limit not less than $1,000,000 bodily
injury each accident; $1,000,000 bodily injury by disease each person; and $1,000,000 bodily injury
by disease policy limit.




     12.3 Policy Requirements. All insurance required to be maintained by Tenant will be
issued by insurance companies authorized to do insurance business in the State of Arizona and rated
not less than A:X in Best’s Insurance Guide. All such insurance policies will be written as
primary policies, not excess or contributing with or secondary to any other insurance as may be
available to Landlord or to the additional insureds. A certificate or evidence of insurance (or,
at Landlord’s option, copies of the applicable policies) evidencing the insurance required under
this Article will be delivered to Landlord prior to execution of this Lease Agreement. No policy
will be subject to cancellation or modification without thirty (30) days prior written notice to
Landlord and to any Holder of any Security Document designated by Landlord. Tenant will furnish
Landlord with a replacement certificate with respect to any insurance not less than thirty (30)
days prior to the expiration of the current policy. Tenant will have the right to provide the
insurance required by this Article 12 pursuant to blanket policies, but only if such blanket
policies expressly provide coverage to the Premises and the Landlord as required by this Lease
without regard to claims made under such policies with respect to other persons.



     12.4 Waiver of Subrogation. Landlord waives all rights of recovery against Tenant for
or arising out of damage to, or destruction of, the Premises or the Building from causes then
included under standard “special form” insurance policies or endorsements; however, the waiver of
subrogation will be limited exclusively to insurance proceeds actually received by Landlord for
such damage or destruction. Tenant waives any and all rights of recovery against Landlord for or
arising out of damage to or destruction of, any property of Tenant from causes then included under
standard “special form” insurance policies or endorsements. Tenant represents that its present
insurance policies now in force permit such waiver.



     12.5 Failure to Insure. If Tenant fails to maintain any insurance that Tenant is
required to maintain, Tenant will be liable to Landlord for any loss or cost resulting from such
failure to maintain. Landlord will have the right, in its sole discretion, to procure and maintain
insurance that Tenant is required to maintain and the cost will be deemed Additional Rent due and
payable by Tenant. Tenant will not self-insure against any risks required to be covered by
insurance provided by Tenant without Landlord’s prior written consent.



     12.6 Miscellaneous. Landlord makes no representation that the insurance coverage
specified to be carried by Tenant pursuant to this Article is adequate to protect Tenant against
Tenant’s undertaking under this Lease, and if Tenant believes that any insurance coverage is
insufficient, Tenant will provide, at its own expense, such additional insurance as Tenant deems
adequate. Tenant will not keep, use, sell or offer for sale in or upon the Premises any article
which may be prohibited by any insurance policy periodically in force covering the Premises or the
Building. If any of Landlord’s insurance policies are cancelled or cancellation is threatened or
the coverage reduced or threatened to be reduced in any way because of the use of the Premises by
Tenant or any assignee, subtenant, licensee or invitee of Tenant and, if Tenant fails to remedy the
condition giving rise to such cancellation, threatened cancellation, reduction of coverage, or
threatened reduction of coverage, within forty-eight (48) hours after notice, Landlord may, at its
option, either terminate this Lease or enter upon the Premises and attempt to remedy such
condition, and Tenant will promptly pay the cost to Landlord as Additional Rent. Landlord will not
be liable for any damage or injury caused to any property of Tenant or of others located on the
Premises resulting from such entry. If Landlord is unable, or elects not to remedy such condition,
then Landlord will have all of the remedies upon the occurrence of an Event of Default. Tenant
will not do or permit to be done any act or things upon or about the Premises or the Building,



15









 







that will (a) result in the assertion of any defense by the insurer to any claim, (b)
invalidate, or (c) be in conflict with, the insurance policies of Landlord or Tenant covering the
Building, the Premises or fixtures and property, or that would increase the rate of fire insurance
applicable to the Building; and Tenant will neither do nor permit to be done any act or thing upon
or about the Premises or the Building which might subject Landlord to any liability or
responsibility for injury to any person or persons or to property.



     12.7 Waiver of Landlord’s Liability.



          (a) Except for loss, injury or damage caused by Landlord’s gross negligence or willful
misconduct, Landlord will not be liable or in any way responsible to Tenant for any loss, injury or
damage suffered by Tenant or others caused by: (i) loss, theft, damage or destruction of any
property of Tenant (including without limitation computer storage devices, money, securities,
negotiable instruments, papers or other valuables) or others whether or not the property is
entrusted to the care or control of Landlord; or (ii) injury or damage to persons or property
resulting from the use of the Building (including without limitation any exercise facilities), or
from fire, smoke, dampness, explosion, falling plaster or ceiling tiles, broken glass, soil under
all or part of the Building, escaping steam, gas, fumes, vapors or odors, electricity, vermin,
computer or electronic equipment or systems malfunction or stoppage, freezing or excessive heat or
cold, flooding, water, rain, snow, ice or leaks or discharges from any part of the Building or from
any pipes, or from any component of the sprinkler system, or from any appliance or plumbing work in
the Building; or (iii) damage caused by other tenants, occupants or persons in the Premises or
other premises in the Building, or the public, or caused by operations in the construction of any
private or public work; or (iv) anything in relation to the HVAC system or any other equipment, any
utility services (including chilled water, water, natural gas, electricity and other utilities) or
elevator services provided by Landlord including, without limitation, the cessation or suspension
of any such utilities or services; or (v) any act or omission (including theft, malfeasance or
negligence) on the part of any agent, contractor, sub-contractor or person engaged to perform
janitorial or security services by Landlord; or (vi) any failure of Landlord to conduct cleaning,
repairs, replacements or maintenance; or (vii) any damage, injury or loss suffered to the Premises
or the contents by reason of Landlord entering the Premises to examine the Premises or the contents
or to carry on any work in the Premises; or (viii) any loss, damage or inconvenience suffered or
incurred by Tenant or caused to Tenant’s business or property as a direct or indirect result of any
act Landlord may take in remedying or attempting to remedy any Event of Default; or (ix) anything
whatsoever in relation to the non-observance or violation of any provision of: (A) the Rules and
Regulations; or (B) any other lease, sublease, license or other occupancy agreement respecting any
part of the Building by any other tenant, subtenant, licensee, occupant or other person.




          (b) Landlord will not be liable for any loss, injury or damage suffered by Tenant or others,
whether due to the negligence of the Landlord or otherwise, if Tenant has insured itself against or
is required by this Lease to insure itself against such losses, injury or damage.




          (c) Tenant’s waiver obligations in this Section 12.7 will survive this Lease.




     12.8 Indemnity. In addition to any other indemnity obligation in this lease, Tenant
will indemnify and hold harmless Landlord against any and all: (a) liability, loss, claims,
demands, damages or expenses (including, legal fees and costs), due to or arising out of injury of
any kind to any person (including injury resulting in death, personal discomfort, mental anguish,
shock, sickness, disease, invasion of privacy, wrongful entry, eviction or discrimination)
occurring at, in or about the Premises; and (b) costs, liabilities, claims, damages or expenses due
to or arising out of any work done by, or act of neglect or omission of Tenant or by any person for
whom Tenant is legally responsible in and about the Building. Tenant’s obligations and liabilities
in this Section 12.8 will survive the Lease.



ARTICLE 13 — DAMAGE OR DESTRUCTION




     13.1 Repair of the Premises. Tenant will promptly notify Landlord in writing
(a “Damage



16









 







Notice”) of any event, damage or condition to which this Article is or may be applicable.
Landlord will, within a reasonable time after the discovery by Landlord of any damage, subject to
reasonable delays for insurance adjustment or other matters beyond Landlord’s reasonable control,
and subject to all other terms of this Article, begin to repair the damage to the Building and the
Premises resulting from such damage and will proceed with reasonable diligence to restore the
Building and Premises to substantially the condition as existed immediately before such damage,
except for modifications required by applicable Laws or covenants, conditions and restrictions, and
modifications to the Building deemed desirable in good faith by Landlord. Landlord will not be
required to repair or replace any of the Alterations, furniture, equipment, fixtures, and other
improvements that may have been placed by, or at the request of, Tenant or other occupants in the
Building or the Premises. Landlord will have no liability for any inconvenience or annoyance to
Tenant or injury to Tenant’s business as a result of any damage, or Landlord’s Restoration (defined
in Section 13.2) activities hereunder, regardless of the cause therefor. Base Rent and Additional
Rent, payable under Article 3, will abate if and to the extent damage occurs to the Premises and as
a result all or any material portion of the Premises are rendered unfit for occupancy, and are not
occupied by Tenant, commencing on the date Tenant vacates the affected portion of the Premises and
continuing until the date the Restoration to be performed by Landlord with respect to the Premises
is substantially complete. The abatement will be limited to the proceeds of rental interruption
insurance proceeds with respect to the Premises and such damage collected by Landlord. Tenant will
assign to Landlord (or to any party designated by Landlord) all insurance proceeds payable to
Tenant under Tenant’s insurance required under this Lease with respect to the leasehold
improvements in the Premises. If the cost of Restoration or improvements in the Premises by
Landlord exceeds the amount of insurance proceeds received by Landlord from Tenant’s insurance
carrier, as assigned by Tenant, the cost of repairs to such improvements will be paid by Tenant to
Landlord prior to Landlord’s repair of the damage, or at Landlord’s election, at any later time
fol1owing Landlord’s discovery of any insufficiency of such insurance proceeds.



     13.2 Exceptions to Landlord’s Obligations. Landlord will have no obligation to repair
the Premises and will have the right to terminate this Lease if (a) any portion of the Premises or
any material portion of the Building is damaged and (b) Landlord estimates in good faith that the
repair and restoration of such damage under Section 13.1 (“Restoration”) cannot reasonably be
completed (without the payment of overtime) within one hundred eighty (180) days after Landlord’s
actual discovery of such damage, (ii) the Holder of any Security Document requires the application
of any insurance proceeds with respect to such damage to be applied to the outstanding balance of
the obligation secured by such Security Document, (iii) the cost of Restoration is not fully
covered by insurance proceeds available to Landlord and payments received by Landlord from tenants,
(iv) Tenant will be entitled to an abatement of Rent under this Article for any period in excess of
thirty-three percent (33%) of the remainder of the Term, or (v) such damage occurs (or Landlord
discovers the Damage) at any time within the last eighteen (18) months of the then applicable Term.
Its right of termination will be exercisable by delivery of written notice to Tenant until
forty-five (45) days following the later of (x) delivery of the Damage Notice or (y) Landlord’s
discovery or determination of any of the events described in clauses (i) through (v) of the
preceding sentence and will be effective upon delivery of such notice of termination (or if Tenant
has not vacated the Premises, upon the expiration of thirty (30) days).



ARTICLE 14 — CONDEMNATION




     If the whole or a material portion of the Premises or the Building is taken under the
power of eminent domain, or sold to prevent the taking (collectively, a “Taking”), this Lease will
automatically terminate as of the day before the date of such Taking. If a Taking of such portion
of the Building or the Premises, in the opinion of Landlord, substantially interferes with
Landlord’s operation, Landlord may terminate this Lease upon thirty (30) days’ written notice to
Tenant given at any time within sixty (60) days following the date of such Taking. The date of
Taking will be the earlier of the date of transfer of title resulting from such Taking or the date
of transfer of possession resulting from such Taking. If a portion of the Premises is taken and
this Lease is not terminated, Landlord will, with reasonable diligence, proceed to restore (to the
extent permitted by Law and covenants, conditions and restrictions then applicable to the Building)
the Premises (other than Tenant’s personal property and fixtures, and tenant improvements not
constituting building standard



17









 







installations) to a complete, functioning unit, to the extent of the condemnation award
received by Landlord. In such case, the Base Rent will be reduced proportionately based on the
portion of the Premises so taken. The entire award for any Taking will belong to Landlord, without
deduction for any estate or interest of Tenant, except that Tenant will be entitled to pursue
independently a separate award solely relating to the loss of, or damage to, Tenant’s personal
property and trade fixtures and Tenant’s relocation costs directly associated with the Taking.
Tenant will not assert any claim against Landlord or the condemning authority for, and hereby
assigns to Landlord, any compensation in connection with any such Taking.



ARTICLE 15 — RELOCATION




     Landlord will have the right, in its sole discretion, upon not less than sixty (60)
days prior written notice to Tenant, to relocate Tenant and to substitute for the Premises
described above other space in the Building containing at least as much rentable area and
comparable level of tenant finish as the Premises. If Tenant is already occupying the Premises,
then Landlord will also reimburse Tenant for Tenant’s reasonable moving and telephone relocation
expenses and for reasonable quantities of new stationery upon submission of receipts for such
expenditures.



ARTICLE 16 — ASSIGNMENT AND SUBLETTING




     16.1 Restriction. Without the prior written consent of Landlord, which may not
be unreasonably conditioned, withheld or delayed, Tenant will not, either involuntarily or
voluntarily or by operation of law or otherwise, assign, mortgage, pledge, hypothecate, encumber or
permit any lien to attach to, or transfer this Lease or any interest in it, or sublet the Premises
or any part of them, or permit the Premises to be occupied by anyone other than Tenant, Tenant’s
employees or Tenant’s Affiliates (defined below)(each a “Transfer” and any person or entity to whom
a Transfer is made or sought to be made, a “Transferee”). Any Transfer in violation of the
provisions of this Article will be void and, at Landlord’s option, will constitute an Event of
Default. “Transfer” includes (a) if Tenant is a partnership or limited liability company, the
withdrawal or change, voluntary, involuntary or by operation of law, of fifty percent (50%) or more
of the partners, members or managers, or transfer of twenty-five percent (25%) or more of
partnership or membership interests within a twelve (12) month period, or the dissolution of the
partnership or the limited liability company without immediate reconstitution, and (b) if Tenant is
a corporation whose stock is not publicly held and not traded through an exchange or over the
counter or any other form of entity, (i) the dissolution, merger, consolidation or other
reorganization of Tenant, the sale or other transfer of more than an aggregate of fifty percent
(50%) of the voting shares or other interests of or in Tenant (other than to immediate family
members by reason of gift or death), within a twelve (12) month period, or (ii) the sale, mortgage,
hypothecation or pledge of more than an aggregate of fifty percent (50%) of the value of the
unencumbered assets of Tenant within a twelve (12) month period. However, a Transfer to an entity
that assumes this Lease and (x) that owns or controls all or substantially all of Tenant’s
outstanding shares, or (y) all or substantially all of whose outstanding shares are owned by Tenant
or by an entity that owns or controls all or substantially all of Tenant’s outstanding shares, or
(z) that acquires all or substantially all of Tenant’s assets (each a “Tenant Affiliate”), will not
be subject to Sections 16.1, 16.2, 16.3, 16.4, 16.5, or 16.6; however, Tenant will promptly give
Landlord notice of the Transfer and a fully executed copy of the assumption agreement.



     16.2 Notice to Landlord. If Tenant desires to make a Transfer, Tenant will submit to
Landlord a written request (a “Transfer Notice”) for Landlord’s consent, at least five (5) business
days (but no more than one hundred eighty (180) days) prior to the effective date of the proposed
Transfer. The notice will include:



          (a) A statement containing (i) the name and address of the proposed Transferee; (ii) current
financial statements of the proposed Transferee certified by an officer, partner or owner, and any
other information and materials (including, without limitation, credit reports, business plans,
operating history, bank and character references) required by Landlord to assist Landlord in
reviewing the financial responsibility, character, and reputation of the proposed Transferee; (iii)
the nature of such Transferee’s business and

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proposed use of the Premises; (iv) the proposed effective date of the Transfer; (v) a description
of the portion of the Premises subject to the proposed Transfer; (vi) all of the principal terms of
the proposed Transfer (including a calculation of the Transfer Profits (as defined in this
Section)); and (vii) such other information or materials as Landlord may reasonably request. If
Landlord requests additional information or materials, the Transfer Notice will not be deemed to
have been received until Landlord receives them.




          (b) Four (4) originals of the proposed assignment or sublease or other Transfer on a form
approved by Landlord and four (4) originals of the Landlord’s consent to sublease or assignment and
assumption of lease and consent executed by Tenant and the proposed Transferee.




          (c) If Tenant modifies any of the terms and conditions relevant to a proposed Transfer
specified in the Transfer Notice, Tenant will re-submit the Transfer Notice to Landlord for its
consent.




     16.3 Landlord’s Recapture Rights. If Tenant intends to effect a Transfer, it may ask
Landlord either to waive or to exercise its rights in this Section 16.3 by a request containing as
much information required in Section 16.2(a) as Tenant has in its possession. If Landlord does not
exercise its rights under this Section 16.3 within five (5) business days after its receipt of
Tenant’s request, it will be deemed to have waived them and Tenant will be free for sixty (60) days
after Landlord’s receipt of the request to effect a Transfer on the terms outlined in its request.
Any such Transfer will be subject to all the other terms and conditions of this Article. If Tenant
does not effect the Transfer within that sixty (60) day period, it will make a request for any
subsequent proposed Transfer or be subject to other provisions of this Section 16.3. Unless
Landlord has waived its rights under this Section 16.3, by written notice to Tenant given at any
time within five (5) business days after Landlord’s receipt of all of the materials described in
Section 16.2, Landlord may elect to: (a) sublease the Premises or the portion proposed to be sublet
by Tenant upon the same terms as those offered to the proposed subtenant; (b) take an assignment of
this Lease upon the same terms as those offered to the proposed assignee; or (c) terminate this
Lease in its entirety or as to the portion of the Premises subject to the proposed Transfer, with a
proportionate adjustment in the Rent if this Lease is terminated as to less than all of the
Premises. If Landlord does not exercise any of the options described in this Section, then, during
the five (5) business day period, Landlord will either consent or deny its consent to the proposed
Transfer.



     16.4 Dispute Resolution. If Tenant or any proposed Transferee claims that Landlord
has unreasonably withheld or delayed its consent or otherwise acted in a manner not permitted under
this Article 16, then the sole remedy will be a declaratory judgment and an injunction for the
relief sought without any monetary damages or other monetary relief. Tenant and each proposed
Transferee waive to the maximum extent permitted by Law any and all other remedies, including,
without limitation, any right at law or equity to terminate this Lease with respect to any such
claim. Tenant will indemnify, defend, protect and hold harmless Landlord from any and all Claims,
Damages and Costs involving or asserted by any third party or parties (including, without
limitation, Tenant’s proposed Transferee and any broker representing Tenant or such Transferee)
claiming they were damaged by Landlord’s wrongful withholding or delaying of Landlord’s consent to
such proposed Transfer or other breach of this Article 16.



     16.5 Transfer Profits. If Landlord consents to any Transfer, upon Landlord’s demand,
Tenant will pay to Landlord fifty percent (50%) of all Rent, Additional Rent or other consideration
paid by or on behalf of such Transferee in connection with the Transfer in excess of Monthly Base
Rent and Additional Rent payable by Tenant under this Lease during the period of the Transfer
(“Transfer Profits”). Tenant will provide Landlord with a detailed statement setting forth the
calculation of any Transfer Profits that Tenant either has or will derive from such Transfer. In
addition, Landlord or its representative will have the right at all reasonable times to audit the
books and records of Tenant with respect to the calculation of the Transfer Profits. If the
inspection reveals that the amount was incorrect, then within ten (10) days of Tenant’s receipt of
the results of the audit, Tenant will pay Landlord the deficiency and the cost of Landlord’s audit.



     16.6 Landlord’s Costs. With respect to each proposed Transfer, whether or not
Landlord consents, Tenant will pay all of Landlord’s review and processing fees and costs, as well
as any reasonable professional,



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attorneys’, accountants’, engineers’ or other consultants’ fees incurred by Landlord relating
to such proposed Transfer within thirty (30) days after written request by Landlord.



     16.7 Continuing Liability of Tenant. Despite any Transfer, Tenant will remain as
fully and primarily liable for the payment of Rent and for the performance of all of its other
obligations as if the Transfer had not occurred. If an Event of Default occurs after a Transfer,
Landlord may proceed directly against Tenant without the necessity of exhausting its remedies
against such Transferee. Landlord may consent to subsequent Transfers of this Lease with
Transferees of Tenant, upon notice to Tenant, but without obtaining consent, and such consent will
not relieve Tenant of its liability under this Lease.



     16.8 Non-Waiver. The consent to any Transfer will not relieve Tenant, or any person
claiming through or by Tenant, of the obligation to obtain the consent to any further Transfer. If
a Transfer occurs, Landlord may collect Rent from the Transferee without waiving any rights
hereunder and collection of the Rent from a person other than Tenant will not be deemed a waiver of
any of Landlord’s rights, an acceptance of Transferee as Tenant, or a release of Tenant from the
performance of Tenant’s obligations.



ARTICLE 17 — DEFAULT AND REMEDIES




     17.1 Events of Default. “Events of Default” are:



          (a) Any failure by Tenant to pay any Rent in full within five (5) days’ written notice that it
is due. That notice will be in lieu of any notice required under any Law now or in the future is
in effect requiring that notice of default be given prior to commencement of an unlawful detainer
or other legal proceeding.




          (b) Any failure by Tenant to execute and deliver any statement or document described in
Article 19 and Article 23 requested by Landlord within the specified time periods, if the failure
continues for three (3) days after delivery of written notice that notice will be in lieu of, and
not in addition to, any notice required under any Law now or in the future in effect requiring that
notice of default be given prior to commencement of an unlawful detainer or other legal proceeding.




          (c) The failure by Tenant to observe or perform any other provision of this Lease, other than
those described in subsections (a), (b) and (c) of this Section, if such failure continues for
twenty (20) days (except if a different period of time is specified in this Lease, in which case
such different time period will apply) after written notice; however, if the nature of the default
is such that it cannot be cured within the twenty (20) day period, no default will exist if Tenant
commences the curing of the default within the twenty (20) day period and diligently prosecutes the
cure to completion. The twenty (20) day notice will be in lieu of, and not in addition to, any
notice required under any Law now or in the future in effect requiring that notice of default be
given prior to the commencement of an unlawful detainer or other legal proceeding.




          (d) The making or furnishing by Tenant of any materially false or misleading representation
prior to or during the Lease Term.




          (e) The assignment, subletting or other Transfer, or any attempted assignment, subletting or
other Transfer, of this Lease in violation of Article 16.




          (f) Any instance whereby Tenant or any general partner of Tenant will cease doing business as
a going concern, make an assignment for the benefit of creditors, generally not pay its debts as
they become due or admit in writing its inability to pay its debts as they become due, file a
petition commencing a voluntary case under any chapter of the Bankruptcy Code, be adjudicated an
insolvent, file a petition seeking for itself any reorganization, composition, readjustment,
liquidation, dissolution or similar arrangement under

20









 








the Bankruptcy Code or any other present or future similar statute, law, rule or regulation,
or file an answer admitting the material allegations of a petition filed against it in any such
proceeding, consent to the filing of such a petition or acquiesce in the appointment of a trustee,
receiver, custodian or other similar official for it or of all or any substantial part of its
assets or properties, or take any action looking to its dissolution or liquidation.




          (g) The commencement of a case, proceeding or other action against Tenant or any general
partner of Tenant seeking the entry of an order for relief against Tenant or any general partner
thereof as debtor; to adjudicate Tenant or any general partner thereof as a bankrupt or insolvent,
or seeking reorganization, arrangement, readjustment, liquidation, dissolution or similar relief
against Tenant or any general partner thereof under the Bankruptcy Code or any other present or
future similar statute, law, rule or regulation, which case, proceeding or other action either
results in such entry, adjudication or issuance or entry of any other order or judgment having a
similar effect, or remains undismissed for sixty (60) days, or within sixty (60) days after the
appointment (without Tenant’s or such general partner’s consent) of any trustee, receiver,
custodian or other similar official for it or such general partner, or of all or any substantial
part of its or such general partner’s assets and properties, such appointment will not be vacated.




          (h) The appointment of a receiver, trustee or custodian to take possession of all or any
substantial portion of the assets of Tenant, or the formation of any committee of Tenant’s
creditors, or any class of them, for the purpose of monitoring or investigating the financial
affairs of Tenant or enforcing such creditors’ rights.




          (i) The attempted repudiation or revocation of any guaranty or assumption of this Lease or the
participation by Guarantor in any event described in this Section.




     17.2 Landlord’s Right to Terminate Upon Tenant Default. If an Event of Default
occurs, Landlord will have the right to terminate this Lease and recover possession of the Premises
by written notice to Tenant. In that event, Landlord will be entitled to receive from Tenant
(subject to Landlord’s duty to mitigate its damages):



          (a) The worth at the time of award of any unpaid Rent which had been earned at the time of
such termination; plus




          (b) The worth at the time of award of the amount by which the unpaid Rent that would have been
earned after termination until the time of award exceeds the amount of such rental loss Tenant
proves could have been reasonably avoided; plus




          (c) The worth at the time of award of the amount by which the unpaid Rent for the balance of
the Term after the time of award exceeds the amount of such rental loss that Tenant proves could be
reasonably avoided; plus




          (d) Any other amount necessary to compensate Landlord for all the detriment proximately caused
by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom; and




          (e) At Landlord’s election, such other amounts in addition to or in lieu of the foregoing as
may be permitted from time to time by applicable law. “Worth at the time of award” will be
computed by allowing interest at the “prime rate” or “reference rate” announced from time to time
by Bank of America, N.T. & S.A. (or such reasonable comparable national banking institution as is
selected by Landlord if Bank of America, N.T. & S.A. ceases to publish a prime rate or reference
rate), plus one percent (1%).




     17.3 Landlord’s Right to Continue Lease Upon Tenant Default. If an Event of Default
or



21









 







abandonment of the Premises by Tenant occurs and if Landlord does not terminate this Lease,
Landlord may from time to time, without terminating this Lease, enforce all of its rights and
remedies under this Lease. Landlord may continue this Lease in effect after Tenant’s breach and
abandonment and recover Rent as it becomes due. The proceeds of any reletting will be applied
first to pay to Landlord all costs and expenses of reletting (including, without limitation, costs
and expenses of retaking the Premises, removing persons and property, securing new tenants,
including expenses for redecoration, alterations and other costs in connection with preparing the
Premises for the new tenant, and if Landlord maintains and operates the Premises, the costs to do
so) and receivers’ fees incurred in connection with the appointment of and performance by a
receiver to protect the Premises and Landlord’s interest under this Lease and any necessary or
reasonable alterations; second, to the payment of any indebtedness of Tenant to Landlord other than
Rent; third, to the payment of Rent due and unpaid hereunder; and the residue, if any, will be held
by Landlord and applied in payment of other or future obligations of Tenant to Landlord as the same
may become due and payable, and Tenant will not be entitled to receive any portion of such revenue.
No re-entry or taking of possession of the Premises by Landlord pursuant to this Section will be
an election to terminate this Lease unless a written notice of such election is given to Tenant or
unless the termination is decreed by a court of competent jurisdiction. Landlord may, at any time
after reletting, elect to terminate this Lease. If an Event of Default occurs when the Premises or
any portion thereof are sublet, Landlord may collect directly from the sublessee all rentals
becoming due to the Tenant and apply such rentals against other sums due to Landlord without
prejudice to any other remedies.



     17.4 Right of Landlord to Performance. If Tenant fails to pay any money required to
be paid by it other than Base Rent or fails to perform any other act to be performed by it, then
Landlord may cure the failure at the expense of Tenant (a) immediately and without notice in the
case (i) of emergency, (ii) where the failure unreasonably interferes with any other tenant in the
Building, or (iii) where the failure will result in the violation of Law or the cancellation of any
insurance policy maintained by Landlord, and (b) in any other case if such default continues for
ten (10) days from the receipt by Tenant of notice of the failure. Any sums paid by Landlord and
all incidental costs, together with interest thereon at the maximum rate permitted by law from the
date of payment, will be payable to Landlord as Additional Rent on demand, and Landlord will have
the same rights and remedies in the event of nonpayment as in the case of the failure by Tenant in
the payment of Rent.



     17.5 Subleases of Tenant. Whether or not Landlord elects to terminate this Lease,
Landlord may terminate any subleases, licenses, concessions, or other consensual arrangements for
possession entered into by Tenant and affecting the Premises, or it may succeed to Tenant’s
interest in such subleases, licenses, concessions or arrangements. If Landlord elects to succeed
to Tenant’s interest, Tenant will have no further right to or interest in the Rent or other
consideration receivable under them as of the date of notice by Landlord of its election.



     17.6 Non-Waiver. Landlord’s rights to indemnification for liabilities arising before
termination will survive this Lease. Landlord’s acceptance of a lesser sum than the Rent then due
will be on account of the earliest installment of Rent due. No endorsement or statement on any
check or any letter accompanying any check or payment as Rent is an accord and satisfaction, and
Landlord may accept payment without prejudice to its right to recover the balance of or pursue any
other remedy. The delivery of keys to any employee or agent of Landlord will not operate as a
surrender of the Premises.



     17.7 WAIVER OF TRIAL BY JURY. LANDLORD AND TENANT WAIVE THEIR RIGHTS TO TRIAL BY JURY
IN ANY ACTION ARISING OUT OF THIS LEASE.



     17.8 Cumulative Remedies. The remedies to this Lease are cumulative and are not
intended to be exclusive of any other remedies or means of redress in case of any breach or
threatened breach by Tenant. In addition to the other remedies, Landlord will be entitled to an
injunction of the breach or attempted or threatened specific performance of this Lease.



     17.9 Default by Landlord. Landlord’s failure to perform or observe any of its
obligations under



22









 







this Lease will constitute a default by Landlord under this Lease only if such failure will
continue for a period of thirty (30) days (or the additional time, if any, that is reasonably
necessary promptly and diligently to cure the failure) after Landlord receives written notice from
Tenant specifying in reasonable detail the nature and extent of the failure and the Lease provision
containing the obligation in question. Subject to the remaining provisions of this Lease,
following the occurrence of any such default, Tenant will have the right to pursue any remedy
available under Law for such default by Landlord (subject to the limitations set forth in Section
25.1); however, Tenant will not have any right to terminate this Lease on account of any such
default, or to setoff, abate or reduce Rent before entry of a non-appealable final judgment in
Tenant’s favor against Landlord. Tenant will have no claim against Landlord or defense to a claim
by Landlord unless Tenant gives Landlord written notice of the circumstances giving rise to the
claim or defense within one hundred eighty (180) days after the circumstances arise.



ARTICLE 18 — ATTORNEYS’ FEES




     If either Landlord or Tenant commences any action or other proceeding against the other
arising out of this Lease or the Premises, the prevailing party will be entitled to recover from
the other party, in addition to any other relief, its actual attorneys’ fees irrespective of
whether or not the action or other proceeding is prosecuted to judgment and irrespective of any
court schedule of reasonable attorneys’ fees. If Landlord or Tenant is made a party to any
litigation instituted by Tenant against a party other than Landlord (or Tenant), or by a third
party against Tenant (or Landlord), Tenant (or Landlord) will indemnify, hold harmless and defend
Landlord (or Tenant) from any and all loss, cost, liability, damage or expense incurred by Landlord
(or Tenant), including attorneys’ fees, in connection with the litigation.



ARTICLE 19 — SUBORDINATION AND ATTORNMENT




     19.1 Subordination. This Lease, and the rights of Tenant, are and will be
subordinate to the interests of (a) all present and future ground leases and master leases of all
or any part of the Building, (b) present and future mortgages and deeds of trust encumbering the
Building, reciprocal easement agreements, and covenants, conditions and restrictions now or
hereafter of record, (c) all past and future advances made under any such mortgages or deeds of
trust, and (d) all renewals, modifications, replacements and extensions of any such ground leases,
master leases, mortgages and deeds of trust (collectively, “Security Documents”) which now or in
the future constitute a lien upon the Building or the Premises. The subordination will be
effective without the necessity of the execution by Tenant of any additional document. Tenant will
within ten (10) days of demand therefor execute and deliver any instruments that may be required by
Landlord or the holder (“Holder”) of any Security Document in the form required by the Holder; the
failure to do so by Tenant will be an Event of Default. The instruments may contain provisions
that such lessor, mortgagee or beneficiary (hereafter, for the purposes of this Section 19, a
“Successor Landlord”) will (w) not be liable for any act or omission of Landlord or its
predecessors, if any, prior to the date of such Successor Landlord’s succession to Landlord’s
interest under this Lease, (x) not be subject to any offsets or defenses which Tenant might have
been able to assert against Landlord or its predecessors, if any, prior to the date of such
Successor Landlord’s succession to Landlord’s interest under this Lease, (y) not be liable for the
return of any rent, additional rent, or advance rent that Tenant might have paid for more than the
current month nor any Security Deposit under this Lease unless it has been deposited
with the Successor Landlord, and (z) be entitled to receive notice of any Landlord default under
this Lease plus a reasonable opportunity to cure such default prior to Tenant having any right or
ability to exercise any right to terminate this Lease as a result of such Landlord default.
Landlord is hereby irrevocably appointed and authorized as agent and attorney-in-fact of Tenant to
execute and deliver all such subordination instruments if Tenant fails to execute and deliver them
within ten (10) days after request from Landlord.



     19.2 Attornment and Non-Disturbance. If requested to do so, Tenant will attorn to and
recognize as Tenant’s landlord under this Lease any superior lessor, superior mortgagee or other
purchaser or person taking title to the Building by reason of the termination of any superior lease
or the foreclosure of any superior mortgage or deed of trust, and Tenant will, within five (5) days
of demand execute any instruments or other



23









 







documents which may be required by Landlord or the Holder of any such Security Document to
evidence the attornment described in this Section. A Holder will have the right to subordinate any
Security Documents to this Lease and in that case, in the event of the termination or transfer of
Landlord’s estate or interest in the Building by reason of any termination or foreclosure of the
Security Documents, Tenant will attorn to and become Tenant of the successor in interest to
Landlord at the option of the successor in interest; provided, however, that such successor in
interest shall not disturb Tenant and will continue the Lease in full force and effect.



     19.3 Mortgage and Ground Lessor Protection. Tenant agrees to give each Holder, by
registered or certified mail, a copy of any notice of default served upon Landlord by Tenant, if
Tenant has been notified in writing of the Holder’s address. Tenant further agrees that if
Landlord has failed to cure such default within thirty (30) days after notice to Landlord (or if
such default cannot be cured or corrected within that time, then such additional time as may be
necessary if Landlord is diligently pursuing the remedies or steps necessary to cure or correct
such default), then prior to Tenant pursuing any remedy for such default, the Holder will have an
additional thirty (30) days within which to cure or correct such default (or if such default cannot
be cured or corrected within that time, then such additional time as may be necessary if the Holder
has commenced within such thirty (30) days and is diligently pursuing the remedies or steps
necessary to cure or correct such default).



ARTICLE 20 — QUIET ENJOYMENT




     Tenant will have and peaceably enjoy the Premises free from and against all persons
holding an interest in the Building under and through Landlord, so long as Tenant complies with all
the terms of this Lease including, without limitation, the Rules and Regulations attached as
Exhibit E.



ARTICLE 21 — PARKING




     Tenant will have the right, free of charge, to use up to 160 total parking spaces in
the areas designated by Landlord for parking in the secured parking lot, on a first come, first
served basis in common with other occupants of the Building, their agents, employees, contractors
and invitees. Of Tenant’s 160 parking spaces, Tenant will also have the right to use up to (i) 53
covered, reserved parking spaces in the areas designated by Landlord for parking in the secured
parking lot free of charge, and (ii) 30 covered, reserved parking spaces in the areas designated by
Landlord for parking in the secured parking lot at a charge of twenty dollars ($20.00) per stall,
per month. Tenant may be allowed to rent additional covered, reserved parking spaces at a charge
of thirty-five dollars ($35.00) per stall, per month, provided Landlord has sufficient parking
available for other tenants. Landlord will have the right to change, add to or delete the design,
configuration, layout, size, ingress, egress, areas, method of operation, and other characteristics
of or relating to the parking areas at any time. Tenant will cause each of its employees and
occupants utilizing the parking areas to abide by all Rules and Regulations for the use of the
parking areas prescribed from time to time by Landlord; the initial Rules and Regulations are set
forth in Exhibit E. If any employee, contractor or other individual using the parking
areas violates this Article or the parking Rules and Regulations, Landlord may revoke the license
granted with respect to the particular violating party’s use of the parking areas, and pursuant to
its other remedies allowed by this Lease. Landlord may delegate its responsibilities to a parking
operator in which case such parking operator will have all the rights of control of Landlord. The
parking areas are solely for use by officers, directors, and employees of Tenant, permitted
sublessees of the Premises and assignees of this Lease, and may not be transferred without
Landlord’s prior approval.



ARTICLE 22 — RULES AND REGULATIONS




     Tenant will comply with the Rules and Regulations and any reasonable and
non-discriminatory amendments, modifications and additions to them as adopted and published by
written notice to tenants by Landlord for the safety, care, security, good order and cleanliness of
the Premises and the Building. Landlord will not be liable to Tenant for any violation of the
Rules and Regulations by any other tenant or occupant of
the Building.



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ARTICLE 23 — ESTOPPEL CERTIFICATES




     Tenant agrees to execute, acknowledge and deliver to Landlord from time to time a
statement in writing certifying that (a) this Lease is unmodified and in full force and effect (or
if there have been modifications, that this Lease is in full force and effect as modified and
stating the modifications), (b) the dates to which the Rent has been paid, if any, (c) whether or
not to the best knowledge of Tenant, Landlord is in default in the performance of this Lease and,
if so, specifying each default, and (d) such other matters as Landlord may reasonably request. The
form of Exhibit F is approved by Tenant; however, Landlord will have the right to use other
forms for such purpose. Tenant’s failure to execute and deliver such statement ten (10) days
after receipt of Landlord’s request for it, at the option of Landlord, constitute an Event of
Default and will be conclusive upon Tenant that the certificate prepared and delivered is correct.
Landlord is irrevocably appointed as attorney-in-fact of Tenant to execute and deliver a statement
if Tenant fails to execute and deliver such statement within ten (10) days after request for it.
Any statement delivered pursuant to this Article may be relied upon by any prospective purchaser of
the fee of the Building or any mortgagee, ground lessor or other like encumbrancer or any assignee
of any such encumbrance upon the Building.



ARTICLE 24 — ENTRY BY LANDLORD




     Upon reasonable prior written notice (except in the case of an emergency when no such
notice will be required), Landlord may enter the Premises at all reasonable times to: inspect them;
exhibit them to prospective purchasers, lenders or tenants; determine whether Tenant is complying
with all of its obligations; supply janitorial and other services to be provided by Landlord to
Tenant; post notices of non-responsibility in connections with Tenant’s Alterations; and make
repairs or improvements in or to the Building or the Premises. All such work will be done as
promptly as reasonably possible and so as to cause as little interference to Tenant as reasonably
possible. Tenant waives any claim for damages for any injury or inconvenience to, or interference
with, Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises or any other loss
occasioned by such entry. Landlord will at all times have and retain a key with which to unlock
all of the doors in, on or about the Premises (excluding Tenant’s vaults, safes and similar areas
designated by Tenant in writing in advance). Landlord will have the right to use any and all means
by which Landlord may deem proper to enter the Premises. Any entry to the Premises obtained by
Landlord will not be a forcible or unlawful entry into the Premises, or an eviction or a
termination of Tenant’s duties. If Landlord is required to obtain entry by means other than a key
provided by Tenant, the cost of such entry will be payable by Tenant as Additional Rent.



     Except in case of an emergency, notwithstanding anything in this section to the contrary,
Landlord agrees (i) that before entering the cleanroom, Landlord will obtain express permission
from Tenant and take all necessary sanitary precautions, including, but not limited to wearing
required protective suits; and (ii) to keep confidential any and all information of Tenant that
Landlord may gain access to upon entering Tenant’s office area.



ARTICLE 25 — LANDLORD’S LEASE UNDERTAKINGS;

TRANSFER OF LANDLORD’S INTEREST




     25.1 Landlord’s Lease Undertakings. The recourse of Tenant or its successors
or assigns against Landlord (and the liability of Landlord to Tenant, its successors and assigns)
with respect to (a) any actual or alleged breach by Landlord or (b) any matter relating to Tenant’s
occupancy of the Premises (collectively, “Landlord’s Lease Undertakings”) will be limited to solely
an amount equal to the lesser of (i) Landlord’s interest in the Building and (ii) the equity
Landlord would have in the Building if the Building were encumbered by independent secured
financing equal to eighty percent (80%) of the value of the Building. Tenant will have no recourse
against any other assets of Landlord or its officers, directors or shareholders. Except to the
extent of Landlord’s interest in the Building, no personal liability or personal responsibility of



25









 







any sort with respect to any of Landlord’s Lease Undertakings or any alleged breach thereof is
assumed by, or will at any time be asserted or enforceable against Landlord or any of its
directors, officers, shareholders, employees, agents, constituent partners, beneficiaries trustees
or representatives. Landlord will not be liable to Tenant for any lost profits, lost economic
opportunities or any form of consequential damage as the result of any actual or alleged breach by
Landlord of Landlord’s Lease Undertakings.



     25.2 Transfer of Landlord’s Interest. Landlord and each successor to Landlord will be
fully released from the performance of Landlord’s obligations arising after the date of the
transfer of Landlord’s interest in the Building to a third party. Landlord will not be liable for
any obligations arising after the date of the transfer of its interest in the Building.



ARTICLE 26 — HOLDOVER TENANCY




     If Tenant holds possession of the Premises after the end of the Term, Tenant will be a
tenant at sufferance upon all of the terms of this Lease, except Term and Base Rent. During the
holdover period, Tenant will pay Base Rent equal to one hundred fifty percent (150%) of the Base
Rent and Additional Rent payable during the last month of the Term. The Base Rent payable for the
holdover period will not be construed as a penalty or as liquidated damages. Tenant will
indemnify Landlord from and against any and all claims, demands, actions, proceedings, losses,
damages, liabilities, obligations, penalties, costs and expenses, including, without limitation,
all lost profits and other consequential damages, attorneys’ fees, consultants’ fees and court
costs incurred or suffered by or asserted against Landlord by reason of Tenant’s failure to
surrender the Premises at the end of this Lease.



ARTICLE 27 — NOTICES




     All notices that Landlord or Tenant may serve on the other may be served, as an
alternative to personal service, (i) by registered or certified mail, postage prepaid, (ii) by a
reputable overnight courier service, which provides evidence of delivery, addressed to Landlord’s
Address and identifying the provision of the Lease to which the notice relates, and to Tenant’s
address, or to the Tenant at the Premises whether or not Tenant occupies them, or addressed to such
other address or addresses as either Landlord or Tenant may from time to time designate to the
other in writing, or (iii) by facsimile addressed to Landlord’s or Tenant’s designee stated herein,
or such other person as either Landlord or Tenant may from time to time designate to the other in
writing. Any notice will be deemed to have been served at the time the same was received and each
alternative stated herein shall constitute “written” notice.



ARTICLE 28 — BROKERS




     Landlord will be responsible for the payment of any brokerage commissions to Landlord’s
Broker, if any. If Tenant has dealt with any other person or real estate broker in respect to
leasing, subleasing or renting space in the Building other than the Brokers and Landlord, or
Landlord’s Broker, does not have a separate written agreement with Tenant’s Broker regarding its
compensation on account of this Lease, Tenant will be solely responsible for the payment of any fee
due to it and Tenant will protect, indemnify, hold harmless and defend Landlord from any liability
to it.



ARTICLE 29 — RIGHTS RESERVED BY LANDLORD




     Landlord may from time to time, provided Landlord does not materially interfere with
Tenant’s use of the Premises: (a) change the name or street address of the Building; (b) install,
affix and maintain all signs on the exterior and interior of the Building; (c) designate and
approve prior to installation all types of signs, window shades, blinds, drapes, awnings or other
similar items, and all internal lighting that may be visible from the exterior of the Premises; (d)
change the arrangement of entrances, doors, corridors, elevators and stairs in the Building so long
as such change does not materially adversely affect access to the Premises; (e) grant any party the
exclusive right to conduct any business or render any service in the Building but not



26









 







prohibit Tenant from using the Premises for the purposes permitted under this Lease; (f) close
the Building after normal business hours, except that Tenant and its employees and invitees will be
entitled to admission at all times under such rules and regulations as Landlord prescribes for
security purposes; (g) install, operate and maintain security systems which monitor, by closed
circuit television or otherwise, all persons entering or leaving the Building; (h) install and
maintain pipes, ducts, conduits, wires and structural elements located in the Premises which serve
other parts or other tenants of the Building; (i) designate, relocate and limit the use of the
Common Areas; (j) do anything necessary to prevent a dedication of any rights in any person; and
(k) lease space in the Building and to create such other tenancies in the Building as Landlord, in
its sole business judgment, determines is in the best interests of the Building.



ARTICLE 30 — MISCELLANEOUS




     30.1 Entire Agreement. This Lease consists of the foregoing Basic Lease
Provisions, Articles 1 through 30, and Exhibits, all of which are incorporated by this reference.
If the provisions of the Basic Lease Provisions and the Articles conflict, the Articles will
control. This Lease contains all of the agreements and understandings relating to the leasing of
the Premises and the obligations of Landlord and Tenant in connection with such leasing. Landlord
has not made, and Tenant is not relying upon, any warranties, or representations, promises or
statements made by Landlord or any agent of Landlord, except as expressly set forth. This Lease
supersedes any and all prior agreements between Landlord and Tenant



     30.2 Amendments. This Lease will not be amended, changed, or modified in any way
unless in writing executed by Landlord and Tenant Landlord will not have waived or released any of
its rights unless in writing.



     30.3 Successors. This Lease will bind or inure to the benefit of Landlord and Tenant
and their respective successors and assigns; this provision will not permit any Transfer by Tenant
contrary to the provisions of Article 16.



     30.4 Force Majeure. Except for Tenant’s obligation to pay Rent, neither Landlord nor
Tenant will incur any liability to the other with respect to any of such Party’s obligations if the
failure is caused by any reason beyond the control of such Party, including, but not limited to,
strike, labor trouble, governmental rule, regulations, ordinance, statute or interpretation, or by
fire, earthquake, civil commotion, or failure or disruption of utility services. The amount of time
for Landlord to perform any of Landlord’s obligations will be extended by the amount of time
Landlord is delayed in performing such obligation by any force majeure.



     30.5 Survival of Obligations. Any obligations of Tenant accruing prior to the end of
this Lease will survive this Lease, and Tenant will promptly perform all such obligations whether
or not this Lease has ended.



     30.6 Light and Air. No diminution or shutting off of any light, air or view by any
structure now or hereafter erected will in any manner affect this Lease or the obligations of
Tenant, or increase any of the obligations of Landlord.



     30.7 Governing Law. This Lease will be governed by, and construed in accordance with,
the laws of the State of Arizona.



     30.8 Prohibition Against Recording. Tenant will not record this Lease nor any
memorandum, affidavit or other writing with respect to it without the prior written consent of
Landlord, which consent shall not be unreasonably withheld, conditioned or delayed.



     30.9 Severability. If any provision of this Lease is found to be unenforceable, the
remainder will not be affected. Any provision found to be invalid will be enforceable to the
extent permitted by law. If two interpretations may be given to any provision, one of which will
render the provision unenforceable, and one



27









 







of which will render the provision enforceable, the interpretation rendering the provision
enforceable will be adopted.



     30.10 Captions. All captions, headings, titles, numerical references and computer
highlighting are for convenience only and will have no effect on the interpretation of this Lease.



     30.11 Interpretation. Tenant acknowledges that it has read and reviewed this Lease
and that it has had the opportunity to confer with counsel in the negotiation of this Lease.
Accordingly, this Lease will be construed neither for nor against Landlord or Tenant, but will be
given a fair and reasonable interpretation in accordance with the meaning of its terms and the
intent of the parties.



     30.12 Independent Covenants. Each covenant, agreement, obligation or other provision
of this Lease to be performed by Tenant are separate and independent covenants of Tenant, and not
dependent on any other provision of this Lease.



     30.13 Number and Gender. All terms and words used in this Lease, regardless of the
number or gender in which they are used, will be deemed to include the appropriate number and
gender, as the context may require.



     30.14 Time is of the Essence. Time is of the essence of this Lease and the
performance of all obligations hereunder.



     30.15 Joint and Several Liability. If Tenant comprises more than one person or
entity, all such persons will be jointly and severally liable for payment of rents and the
performance of Tenant’s obligations.



     30.16 No Offer to Lease. The submission of this Lease to Tenant or its Broker or
other agent, does not constitute an offer to Tenant to lease the Premises. This Lease will have no
force and effect until (a) it is executed and delivered by Tenant to Landlord and (b) it is fully
reviewed and executed by Landlord. Execution and delivery by Tenant will constitute an irrevocable
offer for twenty (20) business days following the date of delivery.



     30.17 No Counterclaim; Choice of Laws. If Landlord commences any summary proceeding
for non-payment of Rent, Tenant will not interpose any counterclaim of whatever nature or
description in any such proceeding. In addition, Tenant submits to local jurisdiction in the
County of Maricopa, State of Arizona and agrees that any action by Tenant against Landlord will be
instituted in the State of Arizona and that Landlord will have personal jurisdiction over Tenant
for any action brought by Landlord against Tenant in the State of Arizona.



     30.18 Modification of Lease. If any current or prospective mortgagee or ground lessor
for the Building requires a modification of the Lease which will not cause an increased cost or
expense to Tenant or in any other way materially and adversely change the rights and obligations of
Tenant, then this Lease may be so modified and Tenant agrees to execute and deliver whatever
documents are required within ten (10) days following the request therefor.



     30.19 Lender’s Approval. This Lease is conditioned upon Landlord’s lender’s approval
of it.



     30.20 Authority. If Tenant signs as a corporation or a partnership, each of the
persons executing this Lease on behalf of Tenant warrants that Tenant is a duly authorized and
existing entity, that Tenant has and is qualified to do business in Arizona, that Tenant has full
right and authority to enter into this Lease, and that the signatory on behalf of Tenant are
authorized to do so. Upon Landlord’s request, Tenant will provide Landlord with evidence
reasonably satisfactory to Landlord confirming the warranty. Landlord warrants that Landlord is a
duly authorized and existing entity, qualified to do business in Arizona, and the signatory on
behalf of Landlord warrants that Landlord has full right and authority to enter into this Lease and
that the



28









 







person signing on behalf of Landlord is authorized to do so.



     30.21 No Partnership or Joint Venture. This Lease does not create the relationship of
principal and agent, or partnership, or joint venturer, or any other relationship between Landlord
and Tenant other than landlord and tenant.



     30.22 Confidentiality. Tenant agrees that (a) the terms and provisions of this Lease
are confidential and constitute proprietary information of Landlord and (b) it will not disclose,
and it will cause its partners, officers, directors, shareholders, employees, real estate agents,
lenders, accountants and attorneys to not disclose any term or provision of this Lease to any other
person without first obtaining the prior written consent of Landlord. Landlord agrees to keep the
terms and provisions of this Lease confidential except as disclosure may be necessary to allow
Landlord to enter into any future financing arrangements, sales of all or a portion of the property
containing the Premises, or for use in other leasing transactions.



     Landlord and Tenant executed this Lease as of the Effective Date.



	 	 	 	 	 
	 

	 	LANDLORD:	 	 
	 
	 	 	 	 
	 

	 	PAPAGO PARAGON PARTNERS, L.L.C., an Arizona
limited liability company	 	 
	 
	 	 	 	 
	 

	 	By: APEX PROPERTY SOLUTIONS, LLC, an Arizona
limited liability company	 	 
	 
	 	 	 	 
	 

	 	/s/ Douglas A. Dragoo
 

Douglas A. Dragoo, its Manager
	 	 
	 
	 	 	 	 
	 

	 	TENANT:	 	 
	 
	 	 	 	 
	 

	 	SYNTAX-BRILLIAN CORPORATION, a Delaware
corporation	 	 
	 
	 	 	 	 
	 

	 	/s/ Wayne Pratt	 	 
	 

	 	 	 	 
	 

	 	By: Wayne Pratt	 	 
	 

	 	Its: EVP — CFO	 	 







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