Document:

Exhibit 10.1

 

FIRST AMENDMENT TO THE SEPTEMBER 29, 2005
PENN-ARGOSY MERGER APPROVAL AGREEMENT

 

This First Amendment to the Penn-Argosy Merger
Approval Agreement (the “First Amendment”), with the respect to the Penn-Argosy
Merger Approval Agreement dated as of September 29, 2005 (“Merger Approval Agreement”) is entered into between the
Illinois Gaming Board (“Gaming Board”) and Penn National Gaming, Inc. (“Penn”),
effective as of the date of execution by all parties (the “Effective Date”). All
capitalized terms not defined in this First Amendment shall have the meaning
ascribed to such terms in the Merger Approval Agreement.

 

WHEREAS, the Effective Date of the Merger Approval
Agreement was September 29, 2005;

 

WHEREAS, the Merger Approval Agreement provided that
Penn must enter into a Definitive Sales Agreement to sell Empress and Alton by December 31,
2006, and that Penn dispose of Empress and Alton by the Execution Deadline;

 

WHEREAS, the Merger Approval Agreement also provided
that Penn may request that the Gaming Board, in its sole discretion,
review or reconsider the terms of the Merger Approval Agreement;

 

WHEREAS on March 6, 2006, Penn requested approval
from the Gaming Board to not sell the Alton and for an extension of time to
sell Empress;

 

WHEREAS, on March 6, 2006, the Gaming Board
adopted a Resolution approving Penn’s request not to sell Alton and for an
extension of time to sell Empress;

 

NOW THEREFORE, in consideration of Penn’s March 6,
2006 request and the Gaming Board’s March 6, 2006 Resolution, the receipt
and sufficiency of which is hereby acknowledged, Penn and the Gaming Board
agree that the Merger Approval Agreement shall be amended as follows:

 

1.             Penn shall enter into a Definitive Sales
Agreement to sell Empress by June 30, 2008.

 

2.             Penn will not sell the Alton as required by
the Merger Approval Agreement.

 

3.             Penn shall continue to operate its Illinois
casinos independently to prevent undue economic concentration.

 

4.             The Gaming Board may require Penn to
accelerate the sale of Empress within one year if the Gaming Board determines
that Penn’s ownership of three Illinois casinos, or two casinos in the Chicago
area, is causing undue economic concentration.

 

5.             Except as otherwise expressly provided
herein, all provisions of the Merger Approval Agreement shall remain in full
force and effect.

 

6.             On and after the effectiveness of this First
Amendment, each reference in the Merger Approval Agreement to the “Agreement,” “hereinafter,”
“herein” “hereunder,” “hereof” or words of like import shall mean and be a
reference to the Merger Approval Agreement, as amended by this First Amendment.

 

7.             This First Amendment, consisting of two
pages, may be signed in counterparts and delivered by facsimile, with each
executed counterpart in a facsimile standing as an original.

 

	
  ILLINOIS GAMING BOARD

  	
   

  	
  PENN NATIONAL GAMING, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
    /s/Mark
  Ostrowski

  	
   

  	
        /s/
  Kevin G. DeSanctis 

  	
   

  
	
  By:  Mark Ostrowski

  	
   

  	
  By:  Kevin G. DeSanctis

  	
   

  
	
  Its:  Administrator

  	
   

  	
  Its:  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
    4/25/06

  	
   

  	
  Dated:

  	
    4/24/06EXHIBIT
10.1

 

ASSIGNMENT AND
ASSUMPTION OF LEASE

 

This ASSIGNMENT AND ASSUMPTION OF LEASE (“Assignment”) is made as of
the 8th day of May, 2006 (“Effective Date”), by and between B.G. ASSOCIATES,
INC., an Arizona corporation (“Assignor”), and POORE BROTHERS, INC., a Delaware
corporation (“Assignee”).

 

RECITALS

 

1.             Assignor is the
tenant under The 5050 Building Lease Agreement entered into by and between 5050
North 40th St., L.L.C., an Arizona limited liability company, and
Assignor, as of November 22, 2000, attached as Exhibit A hereto, as
amended by the First Amendment to The 5050 Building Lease Agreement entered
into by and between REG Phoenix, LLC, as successor in interest to 5050 North 40th
St., L.L.C., and Assignor, as of November 5, 2005, attached as Exhibit B
hereto (collectively the “Lease”).

 

2.             Assignor desires to
assign its rights and obligations under the Lease to Assignee and Assignee
desires to assume Assignor’s rights and obligations under the Lease.

 

For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto hereby agree as follows:

 

AGREEMENT

 

1.             Assignment of
Lease. Assignor hereby assigns to Assignee all of Assignor’s rights and
obligations under the Lease arising as of and after the Effective Date.

 

2.             Assumption of
Obligations. Assignee hereby assumes from Assignor all of Assignor’s rights
and obligations under the Lease and agrees to fully and timely perform all of
Assignor’s obligations under the Lease arising as of and after the Effective
Date.

 

3.             Indemnity by
Assignor. Assignor agrees to indemnify, defend and hold harmless Assignee
from and against any and all claims, damages, liabilities, losses, costs and
expenses (including, without limitation, reasonable attorneys’ fees and expenses)
asserted against or suffered or incurred by Assignee as a result of or in
connection with any liabilities or obligations arising under or related to the
Lease and pertaining to periods prior to the Effective Date.

 

4.             Indemnity by
Assignee. Assignee agrees to indemnify, defend and hold harmless Assignor
from and against any and all claims, damages, liabilities, losses, costs and
expenses (including, without limitation, reasonable attorneys’ fees and
expenses) asserted against or suffered or incurred by Assignor as a result of
or in connection with any liabilities or obligations arising under or relating
to the Lease and pertaining to periods from and after the Effective Date.

 

5.             Joint
Representation. Assignor and Assignee hereby acknowledge that The Henderson
Law Firm has prepared this Assignment on behalf of both parties and that each
has had the opportunity to retain separate counsel to review this Assignment.
Assignor and Assignee hereby consent to the joint representation of both
parties by The Henderson Law Firm in connection with the preparation of this
Assignment.

 

6.             Successors and
Assigns. Subject to the provisions of the Lease, this Assignment shall be
binding upon and inure to the benefit of the successors and assigns of the
parties hereto.

 

 

7.             Attorneys’ Fees.
If there is any action or suit brought by a party hereto against another party
hereunder by reason of any alleged breach of any of the covenants, conditions,
agreements or provisions on the part of the other party arising out of this
Assignment, the prevailing party shall be entitled to recover from the other
party all costs and expenses of the action or suit, including reasonable
attorneys’ fees.

 

8.             Governing Law.
This Assignment shall be governed by, interpreted under, and construed and
enforced in accordance with, the laws of the State of Arizona.

 

9.             Counterparts.
This Assignment may be executed in multiple counterparts, each of which shall
be deemed an original, but all of which, together, shall constitute one and the
same instrument.

 

IN WITNESS WHEREOF, the parties hereto have executed this Assignment as
of the Effective Date.

 

	
   

  	
  “Assignor”

  	
  B.G.
  ASSOCIATES, INC.,

  
	
   

  	
  an
  Arizona corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  “Assignee”

  	
  POORE
  BROTHERS, INC.,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
								

 

 

CONSENT BY LANDLORD

 

REG
Phoenix, LLC, an Arizona limited liability company, without waiving any of its
rights as landlord under the Lease, hereby consents to this Assignment.

 

	
   

  	
  REG
  PHOENIX, L.L.C.,

  
	
   

  	
  an
  Arizona limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

EXHIBIT A

 

THE 5050 BUILDING LEASE AGREEMENT

 

THIS LEASE AGREEMENT, dated
this 22nd day of November, 2000 (this “Lease”), is entered into
between 5050 NORTH 40TH ST., L.L.C., an Arizona limited liability company (“Landlord”),
and B.G. ASSOCIATES, INC., an Arizona corporation (“Tenant”).

 

ARTICLE 1. PREMISES

 

Landlord hereby leases to
Tenant and Tenant hereby leases from Landlord, on the terms and conditions
herein set forth, the premises designated as Suite 300 and cross-hatched
on Exhibit A attached hereto and made a part hereof (the “Premises”),
consisting of approximately 5,602 square feet of rentable area measured
according to BOMA standards within that certain building known as The 5050
Building and situated at 5050 North 40th Street, Phoenix, Arizona (the “Building”),
The measurement of the rentable area of the Premises is made according to the
definition of such area employed by the Building Owners and Managers
Association.

 

ARTICLE 2. TERM

 

The Term of this Lease shall
be five (5) years commencing on the date that is not later than the 1st
day of February, 2001 (the “Commencement Date”) and ending on the 31st day of
January, 2006 (the “Termination Date”), Commencement of this Lease is
conditioned, and Tenant acknowledges that this Lease is conditioned, upon the
successful termination of the lease agreement of the Premises to Ceridian
Corporation, as successor to Matthews, Malone & Associates. If this
prior lease agreement is not terminated by December 1, 2000, this Lease
shall be void as if never made in the first instance. In the event the
termination and the tenant improvements for the Premises are completed prior to
February 1, 2001, in that event the Commencement Date shall be the date
upon which Landlord delivers keys to the Premises to Tenant along with a copy
of the Premises’ certificate of occupancy; provided, Landlord shall provide at
least one (1) business day notice of the intention to make such delivery.
Subject to the provisions of Article 26, notwithstanding anything herein
to the contrary, the rights of Tenant hereunder are wholly derivative of the
rights of Landlord under the Ground Lease (as defined below), including the
rights of occupancy of the Premises.

 

ARTICLE 3. RENT

 

Tenant shall pay to
Landlord, as fixed rent for the Premises during the Term of this Lease, the
total sum of Six Hundred Sixty Three Thousand Eight Hundred Thirty Seven
Dollars ($663,837) over the five (5) year term of this Lease, based upon
the rate of Twenty-Three Dollars and Fifty Cents ($23.50) per square foot within
the Premises for each of the first three years of the Term, yielding annual
rent of $131,647 plus applicable tax, in monthly installments, and Twenty-Four
Dollars ($24.00) per square foot within the Premises for the fourth and fifth
years of the Term, yielding annual rent for each of those years of $134,448,
plus applicable tax. Rent is due on or before the first day of each calendar
month, commencing on the commencement date; provided, however, the first month’s
rent shall be paid by Tenant upon execution of this Lease.

 

Rent due for a period of
less than a full month shall be prorated on the basis of a thirty (30) day
month. Rent shall be paid to Landlord, without deduction or offset, in lawful
money of the United States of America and shall be paid to Landlord at the
address designated herein or

 

 

at such other place as Landlord may, from time to time, designate.
Tenant shall also pay to Landlord with the payments of rent above required, as
additional rent, any privilege, excise, sales, gross proceeds, rent or other
tax now or hereafter levied, assessed or imposed, directly or indirectly, by
any governmental authority upon any rent or other payments required by this
Lease.

 

ARTICLE 4. SECURITY
DEPOSIT

 

Tenant shall deposit with
Landlord or its agent the sum of Twenty One Thousand Nine Hundred Forty-One and
no/100 Dollars ($21,941), as partial security for Tenant’s full and faithful
performance of each and every term, condition, covenant and provision of this
Lease. Thereafter, in the event Tenant defaults in the performance of any term,
condition, covenant or provision hereof, following the applicable Tenant cure
period’s lapse, Landlord may use, apply or retain the whole or any part of
such Security Deposit for the payment of any rent or other charge in default or
for the payment of any other sum which Landlord may incur or for which
Landlord may become obligated by reason of Tenant’s default, or to
compensate Landlord for any other loss or damage that Landlord may suffer
because of Tenant’s default. Under no circumstances shall the Security Deposit
be deemed to be the last month’s rent payable hereunder.

 

Any use, application or retention of the Security
Deposit by Landlord shall be in addition to, and not in substitution of or as
an alternative to, any other rights or remedies Landlord may have at law
or under this Lease, shall not prevent Landlord from pursuing its other rights
and remedies hereunder or at law or equity, and shall not prevent Landlord from
recovering damages in case of default(s) in excess of the amount of the
Security Deposit used, applied or retained. If any portion of the Security
Deposit is so used, applied or retained, then, not later than ten (10) days
after notice to Tenant; Tenant shall deposit a sufficient sum in cash with
Landlord to restore the Security Deposit to the full amount initially
deposited, and Tenant’s failure to do so shall be a material breach of this
Lease.

 

If Tenant, at the end of the Term hereof, including
extensions and holdover periods, if any, and after vacating the Premises shall
have fully and faithfully complied with all of the terms and provisions of this
Lease, the Security Deposit or any balance thereof not used, applied or
retained by Landlord hereunder within thirty (30) days of the date of Tenant’s
compliance, shall be returned to Tenant, or at Landlord’s option, to the last
assignee of Tenant’s interest hereunder. No interest or other payment shall be
made to Tenant on or for the use of the Security Deposit nor shall any trust
relationship be created by the deposit of the Security Deposit. Tenant agrees
that if Landlord shall sell or otherwise dispose of the Building, Landlord
shall be relieved of its obligation to return the Security Deposit provided
that Landlord’s transferee assumes in writing the obligations of Landlord with
respect to such Security Deposit. Landlord shall not be required to keep the
Security Deposit separate from its general funds. Notwithstanding the first
sentence of this paragraph, should Tenant timely exercise its option to renew,
Landlord shall reduce the balance of the Security Deposit to one (1) month’s
rent, and shall return the excess to Tenant within thirty (30) days of Tenant’s
commencement of the extension period.

 

ARTICLE 5. RENTAL
ADJUSTMENT 

 

For the purpose of this Article the terms
herein are defined as follows:

 

2

 

Expense Statement: An annual statement from Landlord setting
forth the actual Direct Expenses for the Building for the calendar year ending
on the prior December 31 and Tenant’s Proportionate Share thereof and
setting forth the estimated Direct Expenses that will be incurred by Landlord
for the Building during the current calendar year ending on the next following December 31
and Tenant’s Proportionate Share thereof.

 

Tenant’s Proportionate
Share: Additional
rent in an amount equal to Seven and eighty-two hundredths (7.82%) of the
amount of Direct Expenses that exceed the amount of Direct Expenses for the
Base Year, as defined herein. In determining Tenant’s Proportionate Share,
Landlord uses a load factor of 12.5%.

 

Direct Expenses: All direct costs of operation and
maintenance of the Building, parking areas and adjoining property, which shall
include, but shall not be limited to, the following costs: real property taxes
and assessments, personal property taxes levied on equipment, fixtures and
other property of Landlord located in the Building and used in connection with
the operation thereof, and any other taxes imposed by any federal, state,
county, municipal or other governmental entity, whether assessed against
Landlord and/or Tenant (except any tax payable by Tenant pursuant to Articles 3
and 46); water and sewer charges; insurance premiums for reasonable and
customary insurance, including, but not limited to, fire and other casualty
insurance and public liability insurance; utility expenses, including, without
limitation, expenses for gas, electricity and telephone; janitorial expenses;
expenses for landscaping and other services; reasonable and customary costs
incurred in the management of the Building, including, without limitation,
management fees, air conditioning maintenance and repair and elevator
maintenance and repair, the costs of supplies, materials, equipment and tools
used in the operation of the Building and adjoining areas, the wages and
salaries of employees used in the management, operation, and maintenance of the
Building; and taxes (other than net income taxes) or assessments of any type
whether or not now customary or within the contemplation of the parties hereto,
including expenditures for improvements normally designated as capital
improvements, which are imposed or required by or result from statutes or
regulations, or interpretations thereof implemented after the date hereof, and
promulgated by any federal, state, county, municipal or other governmental body
or agency of any type performing any governmental or other function (including,
but not limited to, the Environmental Protection Agency and the authority
administering the Occupational Safety and Health Act, or any successor agencies
performing the same or similar functions); provided, however, the cost of any
such capital improvements made necessary by the actions of any governmental
authority shall be amortized over the useful life to Landlord of such
improvement according to sound accounting practice and only the portion of such
amortization applicable to any calendar year or if applicable any partial
calendar year, shall be included as a Direct Expense for such calendar year or
partial calendar year.

 

Except as above provided, Direct Expenses shall not include any of the
following: (a) cost incurred in connection with construction or
refurbishing of the Building, except as provided In the preceding paragraph and
except that refurbishment of the common areas of the Building shall be included
in Direct Expenses as follows: (i) if such refurbishments are less than
$5,000 in a calendar year, such refurbishment expenses shall be entirely
included in Direct Expenses for such year, and (ii) if such refurbishment
expenses in a calendar year are $5,000 or more, the cost of any such
refurbishments shall be amortized over the useful life to Landlord of such
improvement (but in all events over no less than five years) according to sound
accounting practice and only the portion of such amortization applicable to any
calendar year shall be included as a Direct Expense for such calendar year; (b) cost
of leasehold/ construction improvements for Tenant or any other tenant
including changes, additions, repairs,

 

3

 

replacements,
alterations, painting, decorating or other costs to the Premises, the premises
of other tenants or in preparation for a tenant’s new or continued occupancy; (c) legal
fees, space planning fees, architectural fees, engineering fees, real estate
commissions, marketing, advertising or any expenses incurred in connection with
the development of or leasing of the Building; (d) any cost included in
operation expenses (including management fees) representing an amount paid to a
person, firm, corporation or other entity related to Landlord which is in
excess of the amount which would have been paid absent such relationship; (e) cost
of selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s
interest in the Building or the improvements located on the Building; (f) cost
associated with the operation of the business of the legal entity which
constitutes Landlord as the same is separate and apart from the cost and
operation of the Building, including legal entity formation, internal equity
account and legal matters; (g) costs of disputes between Landlord and any
third party; (h) the cost of any disputes between Landlord and any
employee or agent of Landlord; (i) cost of defending any lawsuits with
mortgagees or ground lessors; (j) any late fees, penalties, interest charges or
similar fees; (k) interest, principal payments and other costs of any
indebtedness and rental under any ground lease or other underlying lease; (l)
any debt losses, rent losses or reserves for bad debt; (m) the cost for any
repair resulting from casualty and condemnation of the Premises or Building
that is reimbursed by insurance proceeds; (n) income, excess profits or
franchise taxes or other such taxes imposed on income of Landlord from the
operation of the Building other than the taxes described in Sections 3 and 46
or the taxes described in the preceding paragraph; (o) wages, costs and
salaries associated with home office and off-site employees, except when they
provide professional services which would otherwise be provided by outside
professionals; (p) the cost of any items for which the Landlord is reimbursed
by insurance proceeds, condemnation awards, a tenant or otherwise except
through the participation of Tenant; (q) legal expenses arising out of the
construction, occupancy or maintenance of the Building or the enforcement of
the provisions of any agreements affecting the Building, including this Lease;
and (r) unrecovered expenses resulting from the gross negligence or willful
misconduct of the Landlord, its agents, servants or employees.

 

Base Year: Calendar Year 2001; if Tenant exercises its
option to renew, the Base Year for the extension period shall be calendar year
2006. In all events, if during any calendar year (including calendar year
2001), the Building is less than fully occupied, to determine Tenant’s
Proportionate Share, Direct Expenses fluctuating with Building occupancy shall
be “grossed up” to the amount, using commercially reasonable projections, that
normally would be expected if the Building were 95% occupied for that entire
year.

 

Landlord shall endeavor to give to Tenant on or
before April 1 of each calendar year throughout the Term of the Lease, an
Expense Statement as set forth herein, but Landlord’s failure to provide Tenant
with an Expense Statement by said dates shall not constitute a waiver by
Landlord of its right to require payment by Tenant of Tenant’s Proportionate
Share of estimated Direct Expenses or actual Direct Expenses.

 

Tenant’s Proportionate Share of estimated Direct
Expenses for the calendar year in which the Expense Statement is received shall
be divided by 12 and one such installment shall be paid concurrently with each
rental payment thereafter until receipt by Tenant of the next Expense
Statement. In addition, Tenant shall pay in full concurrently with the first
monthly rent payment due following receipt of the Expense Statement an amount
equal to the excess of the monthly installment required to be paid under the
most current Expense Statement over the monthly installment made under the
preceding Expense Statement (if any) multiplied by the number of months
elapsing from January through the month in which the Expense Statement is
received by Tenant.

 

4

 

If Tenant’s Proportionate
Share exceeds the payments made by Tenant for that calendar year, then
concurrently with the first monthly rent payment due following receipt by
Tenant of the Expense Statement, Tenant shall pay in full an amount equal to
such excess. If Tenant’s Proportionate Share as shown on the Expense Statement
is less than the payments made by Tenant for that calendar year, the amount of
such overpayment shall be credited against the next monthly rent payment(s)
falling due.

 

Even though the Term has
expired and the Tenant has vacated the Premises when the final determination is
made of Tenant’s Proportionate Share for the calendar year in which the Lease
expires, Tenant shall promptly following written demand pay the amount by which
Tenant’s Proportionate Share obligation for the portion of such year in which
Tenant was in occupancy exceeds the estimated payments made by Tenant for that
calendar year; conversely, any overpayment made shall be promptly rebated by
Landlord to Tenant. If Tenant elects at its sole expense to audit Landlord’s
books and records pertaining to Direct Expenses, such audit: (i) shall
cover a period not longer than the current and immediately preceding calendar
years; (ii) shall be performed at Landlord’s office for retaining such records;
and (iii) accountant’s reports and worksheets shall be provided at no
expense to Landlord for Landlord’s examination; provided, however, if Landlord’s
Expense Statement is off by more than five percent (5%), Landlord shall pay for
the cost of such audit.

 

Notwithstanding anything to
the contrary contained in this Article, Tenant’s rental payment shall in no
event be less than the rent specified in Article 3 hereof. Expense
Statements shall be prepared in accordance with generally recognized and
established accounting practices and each such annual determination and
statement, certified by Landlord, subject to Tenant’s foregoing audit rights,
shall be final and conclusive on both parties.

 

ARTICLE 6. COMPLETION
OF PREMISES

 

Landlord shall pay for
Tenant’s tenant improvements up to Ten Dollars ($10.00) per rentable square
foot in the Premises. The contract for those improvements shall be subject to
Tenant’s approval, which shall not unreasonably be withheld, delayed or
conditioned. If Tenant does not approve (or give written reasons for its
disapproval of) the contract within three (3) business days after Landlord
delivers it to Tenant, Tenant agrees that the Commencement Date shall be
delayed one (1) day for each day thereafter that Tenant delays its
approval of the contract. The parties acknowledge and agree that no costs for
tenant improvements shall be charged to Tenant unless both Landlord and Tenant
approve in writing any such charge, which approvals shall not be unreasonably
withheld or delayed.

 

Any additional interior improvements, additions or
alterations required by Tenant and approved by Landlord shall be furnished and
installed at Tenant’s sole cost and expense. Any such additional work which is
normally furnished and installed by the construction trades shall be furnished
and installed by Landlord’s general contractor or other contractor employed by
Landlord at such cost and on such terms as shall have been agreed to between
Landlord and Tenant.

 

In order for Landlord to prepare the necessary
construction plans required to accomplish the Completion of the Premises,
including the building standard tenant improvements hereinabove described, as
well as any additional construction work required by Tenant, Tenant shall,
within ten (10) days following the execution of this Lease, furnish to
Landlord in writing such full and complete information as will be required to
complete said construction plans. Said full and complete information shall include,
without limitation, the following details:

 

5

 

(a)           Exact location of telephone and electrical
outlets.

 

(b)           Interior wall finish specifications.

 

(c)           Detailed plans and specifications of all
non-standard construction work to be accomplished within the Premises by Landlord’s
general contractor or other contractor employed by Landlord.

 

All work to be performed on
the Premises which is not within the scope of work normally performed by the
construction trades, such as the furnishing and installing of furniture,
telephones, office equipment, etc., shall be furnished and installed by Tenant
at Tenant’s expense. Agents, contractors and employees obtained by Tenant to
accomplish such non-construction installations shall be subject to Landlord’s
approval and to the administrative supervision of Landlord’s general
contractor. Landlord shall allow access to the Premises during the construction
of the Premises during the last two weeks preceding commencement of the Lease
Term to Tenant’s agents, contractors and employees for the purpose of enabling
Tenant to prepare the Premises for Tenant’s use and occupancy. All such
non-construction work performed by Tenant’s agents, contractors or employees
shall be accomplished in such a manner as not to interfere unreasonably with or
delay the work of Landlord’s general contractor in the completion of the
Premises.

 

Tenant agrees that in the
event Tenant shall have failed by the time hereinabove specified to furnish
Landlord with the necessary information to complete the Premises or should
Tenant, its agents, contractors or employees otherwise cause delay in Landlord’s
preparation of the Premises, thereby delaying Tenant’s occupancy of the
Premises beyond the Commencement Date, then Landlord may at its option
require Tenant to commence payment of rental on the stated Commencement Date of
the Lease.

 

ARTICLE 7. POSSESSION

 

If Landlord, for any reason whatsoever, except for
that reason noted in the final paragraph of Article 6, cannot deliver
possession of the Premises to Tenant on the Commencement Date, this Lease shall
not be void or voidable (except as hereinafter provided) nor shall Tenant have
a claim for any loss or damage resulting therefrom, but as Tenant’s sole
remedy, all rent due hereunder shall be abated during the period between the
Commencement Date and the time when Landlord delivers possession, and the first
day of the Term of this Lease and the final day of the Term of this Lease shall
both be extended by a period equal to the period of such delay. If Landlord
shall not have delivered possession of the Premises by May 1, 2001, Tenant
shall have the option to cancel this Lease on or before June 1, 2001, by
giving ten (10) days’ written notice to Landlord, in which event (a) this
Lease shall be null and void and of no further force or effect and except as
stated in (b), neither Landlord nor Tenant shall have further liability or
obligation to the other hereunder, and (b) Landlord shall pay Tenant’s
rent at its present location (as of the date hereof) for the month of May,
2001, as Tenant’s liquidated damages, so long as the reason for the delay
beyond May 1, 2001, is not due to a breach by Tenant of Article 6
above. For purposes of this Article 7, “possession of the Premises” shall
be deemed to occur when the tenant improvements contemplated by Article 6
are completed and a copy of a certificate of occupancy therefor has been
delivered to Tenant.

 

6

 

ARTICLE 8. USE OF
PREMISES

 

The Premises are to be used
for general office use and for no other purpose or purposes (the “Permitted Use”)
without the prior written consent of Landlord in Landlord’s sole discretion.

 

Tenant shall not do or
permit anything to be done in or about the Premises which will in any way
increase the risk of fire to the Premises beyond that inherent or reasonably
necessary to the Permitted Use, nor keep or bring anything therein which will
in any way increase the existing rate of or affect any policy of fire, extended
coverage or any other insurance covering the Building or any of its contents,
or cause a cancellation of any of the same. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way obstruct or
interfere with the rights of other tenants or occupants of the Building or
injure or annoy them, or use or allow the Premises to be used for any improper,
immoral, unlawful or objectionable purpose, or maintain or permit any nuisance
in, on or about the Premises or permit anything to be done which may injure
or damage the Premises. Tenant shall not damage, deface or commit or suffer to
be committed any waste in or upon the Premises.

 

As used in this Lease, the
term “Hazardous Material” means any flammable items, explosives, radioactive
materials, hazardous or toxic substances, material or waste or related
materials, any dangerous or poisonous substances, chemicals, drugs or
materials, and including any substances defined as or Included in the
definition of “hazardous substances”, “hazardous wastes”, “infectious wastes”, “hazardous
materials”, “toxic substances”, “dangerous substances”, “poisonous substances”
or “controlled substances” now or subsequently regulated, controlled or
prohibited under any federal, state or local laws, statutes, ordinances, orders
or regulations (collectively “Hazardous Materials Laws”) including, without
limitation, oil, petroleum-based products, paints, poisons, harmful drugs,
solvents, lead, cyanide, DDT, printing inks, acids, pesticides, ammonia
compounds and other chemical products, asbestos, PCBs and similar compounds,
and including any different products and materials which are subsequently found
to have adverse effects on the environment or the health and safety of persons.
Tenant shall not cause or permit any Hazardous Material to be generated,
produced, brought upon, used, stored, treated, discharged, released, spilled or
disposed of on, in, under or about the Premises by Tenant, its affiliates,
agents, employees, contractors, sublessees, assignees, except only for such
Hazardous Material as is necessary to and commonly used in Tenant’s business
and the industry with which Tenant’s business is associated, as Tenant is
licensed and legally authorized to handle and as is permitted under and subject
to the terms and conditions of this Lease including without limitation the
permitted use of the Premises set forth in this Lease. Any Hazardous Material
necessary to Tenant’s business as permitted by and subject to the permitted use
set forth above in this Lease shall in each and every instance be utilized,
handled, transported, stored, used, held and disposed of in a safe, harmless,
nontoxic and proper manner and further in a manner which compiles with all
Hazardous Materials Laws whether now or hereafter existing.

 

Tenant shall and does hereby indemnify, defend and
hold Landlord harmless from and against any and all actions (including, without
limitation, remedial or enforcement actions of any kind, administrative or
judicial proceedings, and orders or judgments arising out of or resulting
therefrom), costs, claims, damages (including, without limitation, punitive
damages), expenses (including without limitation, attorneys’, consultants’ and
experts’ fees, court costs and amounts paid in settlement of any claims or
actions), fines, forfeitures or other civil, administrative or criminal
penalties, injunctive or other relief (whether or not based upon personal
injury, property damage, or contamination of, or adverse effects upon, the
environment, water tables or natural resources), liabilities or losses arising
from a breach of any of the provisions, terms or

 

7

 

agreements of this Article by Tenant, its affiliates, agents,
employees, contractors, sublessees or assignees.

 

In the event that Hazardous
Materials are discovered upon, in, or under the Premises as a result of the
actions of Tenant or its assignees, sublessees or Premises occupants after the
Commencement Date or arising from Tenant’s fixturizing the Premises prior
thereto, and any governmental agency or entity having Jurisdiction over the
Building requires the removal or disposal of such Hazardous Materials, or any
remediation of any discharge of or contamination by any such Hazardous
Materials, Tenant shall be solely responsible for removing those Hazardous
Materials or remediating any unlawful discharge or contamination of or from any
Hazardous Materials arising out of or related to the use or occupancy of the
Premises or Building by Tenant or its affiliates, agents, employees,
contractors, sublessees or assignees. Notwithstanding the foregoing, Tenant
shall not take any remedial action in or about the Premises or the Building
without first notifying Landlord of Tenant’s intention to do so and affording
Landlord the opportunity to protect Landlord’s interest with respect thereto.
Tenant Immediately shall notify Landlord in writing of any of the following of
which Tenant has knowledge: (j) any spill, release, discharge, disposal or
contamination of or by any Hazardous Material in, on or under the Premises, the
Building or any portion thereof; (ii) any enforcement, cleanup, removal or
other governmental or regulatory action instituted, contemplated, or threatened
(if Tenant has notice thereof) pursuant to any Hazardous Materials Laws; (iii) any
claim made or threatened by any person against Tenant, the Premises, or the
Building relating to damage, contribution, cost recovery, compensation, loss or
injury resulting from or claimed to result from any Hazardous Materials; and (iv) any
reports made to any governmental agency or entity arising out of or in
connection with any Hazardous Materials in, on, under or about or removed from
the Premises or the Building, including any complaints, notices, warnings, reports
or asserted violations in connection therewith. Tenant also shall supply to
Landlord as promptly as possible, and in any event within five (5) business
days after Tenant first receives or sends the same, copies of all claims,
reports, complaints, notices, warnings or asserted violations relating in any
way to the Premises, the Building or the Permitted Use. Without limiting the
foregoing indemnity, Tenant shall be responsible to pay for, or reimburse
Landlord for, the cost of any investigations, studies, cleanup or corrective
action initiated or undertaken on account of any action or inaction of Tenant
in violation of any Hazardous Materials Laws at or affecting the Premises
and/or Building. Further, Landlord reserves the right to enter into and upon the
Premises from time to time with or without notice for purposes of inspecting,
reviewing, analyzing or checking the Premises and in the event that Landlord
shall determine the same to be necessary or desirable, Landlord may from
time to time commission and cause to be made or conducted such studies,
reports, tests, samples, inspections, monitoring, remediation, removals and/or
disposals of or relating to Hazardous Materials or actual, threatened or
potential contamination by or from Hazardous Materials as Landlord shall deem
reasonably necessary, the cost of which shall be paid by Tenant if Tenant is
otherwise liable therefor hereunder.

 

ARTICLE 9. COMPLIANCE WITH LAW

 

Tenant shall at its sole cost and expense promptly
comply with all laws, statutes, ordinances and governmental rules, regulations
or requirements now in force governing the Premises and Tenant’s parking stalls
or which may hereafter be in force and with the requirements of any board
of fire underwriters or other similar body relating to or affecting the
condition, use or occupancy of the Premises, excluding structural changes not
related to or affected by Tenant’s improvements or acts, but including the
Americans With Disabilities Act and all state and local statutes and
regulations of similar import.

 

8

 

ARTICLE 10. RULES AND
REGULATIONS

 

Landlord has established
Building Rules and Regulations which are attached to this Lease as Exhibit B.
Landlord may from time to time make such modifications, additions and
deletions in the Building Rules and Regulations as in the sole judgment of
Landlord are necessary or convenient for the management and operation of the
Building, so long as such modifications, additions and deletions (i) are
consistent with current comparable office building operation conventions, (ii) do
not increase Tenant’s obligations or conflict with express provisions of this
Lease, or (iii) are not enforced in a discriminatory manner. Landlord
shall notify Tenant from time to time of modifications, additions, or deletions
in the Building Rules and Regulations, and any such modification,
addition, or deletion shall be effective after Landlord gives five (5) days’
written notice thereof to Tenant; provided, however, if an emergency arises which
in the sole judgment of Landlord makes it impracticable to give five (5) days’
written notice, such modification, addition, or deletion shall become effective
immediately upon implementation by Landlord, with the written notice to be
subsequently given. Tenant agrees to faithfully observe and comply with the
Building Rules and Regulations and all modifications, additions or
deletions thereto and the breach of any Building Rule and Regulation by
Tenants shall constitute a material breach of this Lease. Landlord shall not be
responsible to Tenant for the nonperformance by any other tenant or occupant of
the Building of any such Building Rules and Regulations, but the Building Rules and
Regulations from time to time in effect shall be uniformly applicable to all
tenants and occupants similarly situated.

 

ARTICLE 11. ALTERATIONS

 

Tenant shall not make or permit to be made any
alterations, additions, improvements, or installations at the Premises or any part thereof
without the prior written consent of Landlord, which consent shall not
unreasonably be withheld so long as such activities are not structural and do
not impact the Building’s utility systems. Any alterations, additions,
improvements, or installations to or of the Premises, except movable furniture
and trade fixtures, shall at once become a part of the realty and belong
to Landlord. In the event Landlord consents to alterations, additions, improvements,
or installations, pursuant to this Article, the same shall be made by Tenant at
Tenant’s sole cost and expense and selection by Tenant of any person or entity
to construct or install the same shall be subject to the prior written consent
of Landlord, which consent may be conditioned upon (1) Tenant,
providing Landlord, at Tenant’s sole cost and expense, a lien and completion
bond in an amount equal to one and one-half times the estimated cost of all of
such alterations, additions, improvements or installations and (2) acquisition
by Tenant of all permits needed to authorize such alterations, additions,
improvements or installations from the appropriate governmental agencies,
furnishing a copy thereof to Landlord at least ten (10) days prior to the
commencement of such work and complying with all of the conditions of such
permits in a prompt manner. It shall be a material breach hereof for Tenant to
make any alterations, additions, improvements or installations without the
prior consent of Landlord, and in addition to any other remedies Landlord may have,
Landlord may require that Tenant remove any or all of the same within
thirty (30) days of receipt by Tenant of a notice demanding such removal. Upon
the expiration or sooner termination of the Term hereof and upon demand by
Landlord, Tenant, at Tenant’s sole cost and expense, shall forthwith and with
all due diligence remove any such alterations, additions, improvements, or
installations designated by Landlord to be removed and repair any damage to the
Premises caused by such removal.

 

9

 

ARTICLE 12. REPAIRS

 

Tenant and its agents shall
have been given full opportunity to inspect and examine the Premises and, by
entry hereunder, Tenant accepts the Premises in its present “as is” condition
and without any warranty as to the condition of the Premises or the Building.
Tenant shall, at Tenant’s sole cost and expense, keep the Premises and every part thereof
in good condition and repair, ordinary wear and tear and damage thereto by
fire, earthquake, act of God or the elements excepted. If Tenant does not
commence such repairs after Landlord’s written demand for same and the passage
of five (5) business days, except in an emergency affecting other tenants
of the Building (in which event Tenant shall immediately commence repairs),
Landlord may make such repairs and Tenant shall pay the costs thereof and
any accrued interest thereon upon demand. Tenant hereby waives all rights to
make repairs at the expense of Landlord as provided by any law, statute or
ordinance now or hereafter in effect.

 

Landlord shall, at Landlord’s
expense, keep the structural portion, roof and parking lot of the Building in
good order, condition and repair; provided, however, that in the event any
damage to the structural portion of the Building is caused by the acts or
omissions of Tenant, its agents, contractors or employees, Landlord shall, at
Tenant’s sole cost and expense, complete the repairs necessary to place the
Building in good order, condition and repair and Tenant shall pay the costs
thereof upon demand.

 

Upon the expiration or
sooner termination of the Term hereof, Tenant shall surrender the Premises to
Landlord in the same condition as when received, ordinary wear and tear and
damage thereto by fire, earthquake, act of God or the elements excepted.

 

ARTICLE 13. ABANDONMENT

 

Tenant shall not vacate or
abandon the Premises at any time prior to the expiration or earlier termination
of the Term hereof. In the event Tenant shall abandon, vacate or surrender the
Premises, or be dispossessed by process of law, or otherwise, any personal
property belonging to Tenant and left on the Premises shall be deemed to have
been abandoned. The absence of Tenant for a period of thirty (30) consecutive
days during the Term of this Lease shall automatically be deemed an abandonment
of the Premises, and such period of absence shall be the exclusive test for a
determination that Tenant has vacated or abandoned the Premises.

 

ARTICLE 14. LIENS

 

Tenant shall keep the
Premises and the Building free from any vendor’s, mechanic’s, materialmen’s or
like liens arising out of any work performed, materials furnished or
obligations incurred by Tenant. Landlord shall have the right at all times to
post notices of non-responsibility on the Premises and record verified copies
thereof in connection with all work of any kind upon the Premises.

 

ARTICLE 15.
ASSIGNMENT AND SUBLETTING

 

Neither Tenant nor anyone claiming by, through or
under Tenant shall assign, transfer, mortgage, pledge, hypothecate or encumber
this Lease, or any interest therein, nor sublet the Premises or any part thereof,
or any right or privilege appurtenant thereto, or permit any other person (the
agents and servants of Tenant excepted) to occupy or use the Premises or any part thereof
(a “Transfer”), without the prior written consent of Landlord. Notwithstanding
the

 

10

 

foregoing, it shall not be deemed a Transfer if
Tenant permits persons not employed by Tenant to occupy up to two (2) of
Tenant’s offices and Tenant’s conference room from time to time; therefore
Tenant shall be jointly and severally responsible with such occupants under
Articles 8 through 12, inclusive, for the activities of such occupants. A
consent to one Transfer shall not be deemed a consent to any subsequent
Transfer and no such Transfer shall relieve Tenant of any liability or
obligation hereunder. Any of the foregoing acts without Landlord’s consent
shall be void and shall constitute a default of Tenant under this Lease. Tenant
shall pay Landlord’s reasonable attorneys’ fees incurred in connection with any
Transfer or request for consent to Transfer. If Tenant requests an assignment
or sublease of the entire Premises, Landlord shall have the right, without
obligation, to terminate this Lease and to enter into a direct lease with the
proposed assignee or subtenant; upon the commencement date of the new tenancy,
Tenant’s obligations hereunder (and Guarantors’ obligations under the Lease
Guaranty) shall cease.

 

In no event shall this Lease
or any interest therein be assigned or assignable by operation of law without
the prior written consent of Landlord or by voluntary or involuntary bankruptcy
proceedings or otherwise and in no event shall this Lease or any rights or
privileges hereunder be an asset of Tenant under any bankruptcy, insolvency or reorganization
proceedings. If a sublease of a portion of the Premises results in a higher
per-square foot rent from the sublessee to Tenant that the then-current fixed
rent reserved herein for the same space, Tenant shall pay one-half of such
excess to Landlord.

 

In the event of default by
any assignee of Tenant or any successor of Tenant in the performance of any of
the terms hereof, Landlord may proceed directly against Tenant without the
necessity of exhausting or pursuing any remedies against said assignee or
successor. Landlord may consent to subsequent Transfers of this Lease or
amendments or modifications to this Lease with assignees or successors of
Tenant without prior or subsequent notice to Tenant, and without obtaining its
or their consent thereof, and such action shall not relieve Tenant of any
liability or obligation under this Lease.

 

ARTICLE 16.
INDEMNIFICATION OF PARTIES: INSURANCE

 

Tenant agrees to indemnify Landlord against, and
hold Landlord, the Premises and the Building free and harmless from, any and
all penalties, costs, expenses (including attorneys’ fees), claims, demands and
causes of action, including imputed negligence due to ownership of the
Building, arising out of or in connection with (a) any accident or other
occurrence in or on the facilities (including, without limiting the generality
of the term “facilities,” stairways, passageways or hallways) the use of which
Tenant may have in conjunction with other tenants of the Building, when
such injury or damage shall be caused in part or in whole by the act or
omission of Tenant, its agents, contractors, servants, employees, licensees,
permittees and clients, (b) the condition of, or any defect in, the
Premises or any part thereof or any improvements thereof, to the extent
caused by Tenant or its agents, contractors, servants, employees, licensees,
permittees, clients, assignees, sublessees and Premises occupants, (c) the
condition of, or any defect in, Tenant’s fixtures or equipment or any part thereof,
(d) the use or occupancy of the Premises by Tenant or any tenant of
Tenant, or (e) any breach or default in the performance of any obligation
on Tenant’s part to be performed under the terms of this Lease.

 

If any action or proceeding
be brought against Landlord for any of the foregoing reasons, Tenant, upon
notice from Landlord shall defend the same at Tenant’s expense by counsel
satisfactory to Landlord.

 

11

 

Tenant shall at its own
costs and expense procure and maintain during the entire Term and any
extensions thereof, workmen’s compensation insurance as required by statute as
well as comprehensive public liability insurance covering the Premises and
their surrounding areas and naming Landlord as an additional insured in such
amounts as Landlord may from time to time reasonably require. The initial
liability coverage under Tenant’s comprehensive public liability insurance
shall not be less than One Million Dollars ($1,000,000) for any one person
injured or killed, Two Million Dollars ($2,000,000) for injury or death to
persons in any one incident and Five Hundred Thousand Dollars ($500,000) for
damage to property in any one incident (“Initial Coverage”). Said comprehensive
public liability insurance shall also contain cross liability endorsements and
insure performance by Tenant of the indemnity provisions provided above. The
limits of said insurance shall not, however, limit the liability of Tenant
under the first paragraph of this Article. The originals of all policies shall
remain in possession of Tenant; provided, however, that Landlord shall have the
right to receive from Tenant, upon written demand, a duplicate policy or
policies of any or all policies. All policies of insurance shall provide that
such insurance will not be canceled or subject to reduction of coverage or
other modification except after thirty (30) days written notice to Landlord.
Tenant shall furnish policy renewals to Landlord not less than ten (10) days
prior to the expiration of any policy required hereunder. Landlord shall keep
the Building insured with comprehensive public liability and property insurance
in such amounts and with such deductibles as from time to time are typical for
office buildings like the Building, and at the Commencement Date Landlord’s
public liability coverage shall be at a minimum in the amounts of the Initial
Coverage. All insurance policies procured shall be issued by a responsible
company or companies authorized to do business in the State of Arizona and
reasonably satisfactory to Landlord.

 

ARTICLE 17.
DENIAL OF SUBROGATION RIGHTS

 

Neither Landlord nor Tenant
shall be liable to the other for any business interruption or any loss or
damage to property or injury to or death of persons occurring on the Premises,
or in any manner growing out of or connected with the Tenant’s use and
occupation of the Premises, or the condition thereof whether or not caused by
the negligence or other fault of the Landlord or the Tenant, or of their
respective agents, employees, subtenants, licensees, or assignees. This release
shall apply only to the extent that such business interruption, loss or damage
to property, or injury to or death of persons is covered by insurance,
regardless of whether such insurance is payable to or protects the Landlord or
the Tenant or both. Nothing in this Article shall be construed to impose
any other or greater liability upon either Landlord or Tenant than would have
existed in the absence of this Article. This release shall be in effect only so
long as the applicable insurance policies contain a clause to the effect that
this release shall not affect the right of the insured to recover under such
policies.

ARTICLE 18. SERVICES

 

Landlord agrees to furnish
to the Premises during reasonable hours of generally recognized business days,
which hours and days shall be determined by Landlord and subject to the
Building Rules and Regulations, water and electricity suitable for the use
of the Premises and five-day janitorial service. Tenant may have its own
janitorial service but Tenant agrees to pay for the total cost of such service.
Landlord shall maintain the common stairs, corridors, entries, and toilet rooms
in the Building in a safe, neat and clean condition. Landlord shall not be
liable for, and Tenant shall not be entitled to, any abatement or reduction of
rent by reason of Landlord’s failure to furnish any of the foregoing when such
failure is caused by accidents, breakage, repairs, strikes, labor disturbances
of any character, governmental order, material shortages, energy or fuel shortages,
or by any other cause, similar or dissimilar, beyond the

 

12

 

reasonable control of Landlord, so long as Landlord acts with
reasonable diligence to correct the failure to furnish such service after receiving
written notice of the absence of such service. Landlord shall not be liable
under any circumstances for loss of or injury to property occurring through or
in connection with or incidental to Landlord or Landlord’s agents’, contractors’
or employees’ failure to furnish any of the foregoing services, except in the
instance of Landlord’s willful misconduct. Wherever heat generating machines or
equipment are used in the Premises which materially affect the temperature
otherwise maintained by the air conditioning systems, Landlord reserves the
right to install supplementary air conditioning units in the Premises or
Building and the cost thereof, including the cost of installation and the cost
of operation and maintenance thereof, shall be paid by Tenant to Landlord as
additional rent upon demand by Landlord. For Tenant’s use of Building’s air
conditioning system after 6:00 p.m. on weekdays, after Noon on Saturdays
and any time on Sundays and national holidays, Tenant shall pay all costs, not
to exceed Ten Dollars ($10) per hour per zone within the Premises.

 

Tenant will not, without the
prior written consent of Landlord, use any apparatus or device in the Premises,
including, without limitation, machines using current in excess of 110 volts, e.g.,
electronic data processing machines, mainframe computers or mini-computers,
which will in any way increase the amount of electricity or water usually
furnished or supplied for use in the Premises as general office space; nor
shall Tenant connect with electric current, except through existing electrical
outlets in the Premises, any apparatus, water pipe or other device for the
purposes of using electric current or water. If Tenant shall require water or
electric current in excess of that usually furnished or supplied for use of the
Premises as general office space and shall have obtained the consent of
Landlord for such excess use, Landlord may cause a water meter or electric
current meter to be installed in the Premises to measure the amount of such
excess water or electric current consumed. The cost of any such meters and of
installation, maintenance and repair thereof shall be paid by Tenant and Tenant
agrees to pay to Landlord as additional rent promptly upon demand therefor the
cost of all such water and electric current consumed as shown by said meters,
at the rates charged for such services by the local public utility furnishing
the same, plus any additional bookkeeping expense in connection therewith.

 

ARTICLE 19. ENTITY TENANT

 

If Tenant is a corporation, Tenant shall, at the
time of execution of this Lease, deliver to Landlord a certified resolution of
its board of directors authorizing the execution of this Lease on behalf of the
Tenant. If at any time during the Term of this Lease any part or all of
the corporate shares of Tenant shall be transferred by sale, assignment,
bequest, inheritance, operation of law or other disposition, or new shares
shall be issued, so as to result in a change in the present effective voting
control of Tenant by the person or persons having such control as of the date
of this Lease, Tenant shall promptly notify Landlord, in writing of such
change, and Landlord may terminate this Lease at any time within ninety
(90) days after receipt of such notice by giving Tenant not less than thirty
(30) days prior written notice of such termination. The preceding sentence
shall not apply in the instance of Tenant’s ESOP or of Tenant’s succession
plan, for so long as James O’Connor retains management control of Tenant while
he is alive, affiliated with Tenant and able-bodied.

 

If Tenant is a partnership or limited liability
company, Tenant shall, at the time of execution of this Lease, deliver to
Landlord a copy of the partnership or operating agreement and any amendments
thereto establishing the partnership or limited liability company, designating
all of the partners or members therein evidencing the authority of the
partnership or limited liability company to enter into this Lease, designating
the person or persons authorized

 

13

 

to execute this Lease on behalf of the partnership
or limited liability company, and indicating the persons having effective
operating control of the partnership or limited liability company. If at any
time during the Term of this Lease more than twenty-five percent (25%) of the
general partnership or membership interests in Tenant are transferred by sale,
assignment, bequest, inheritance, operation of law or other disposition, or if
new partners or members shall be admitted so as to result in a change in the
effective operating control of Tenant by the person or persons having such
control as of the date of this Lease, Tenant shall promptly notify Landlord in
writing of such change, and Landlord may terminate this Lease within
ninety (90) days after receipt of such notice by giving Tenant not less than
thirty (30) days prior written notice of such termination.

 

ARTICLE 20. HOLDING OVER

 

Tenant shall not hold over
after the termination or expiration of this Lease without Landlord’s written
consent. If Tenant holds possession of the Premises after the Term of this
Lease with Landlord’s consent, Tenant shall become a tenant from month to month
upon the terms herein specified except at a rental rate to be determined by
Landlord. In no event shall such rental rate be less than one hundred fifty
percent (150%) of the rental rate in effect immediately prior to the expiration
of the Term of this Lease. The rent shall be payable in advance on or before
the first day of each month. Tenant shall continue in possession until such
tenancy shall be terminated by either Landlord or Tenant giving written notice
of termination to the other party at least thirty (30) days prior to the
effective date of termination.

 

ARTICLE 21. ENTRY BY
LANDLORD

 

Landlord shall have the
right to enter the Premises at any time to inspect the same or to cure any
default (including a breach of the Building Rules and Regulations), to
supply any service to be provided by Landlord hereunder, to submit the Premises
to prospective purchasers, tenants or mortgagees, to post notices of
non-responsibility, and to alter, improve or repair the Premises and any
portion of the Building without abatement of rent, and may for the
purposes of repair and alteration erect scaffolding and other necessary
structures where reasonably required by the character of the work to be
performed, providing that the business of Tenant shall not be interfered with
unreasonably. Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant’s business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned by Landlord’s
entry for any of the aforesaid purposes, so long as Landlord’s interference
with Tenant’s business is not unreasonable.

 

For each of the aforesaid purposes, Landlord shall
at all times have and retain a key with which to unlock all of the doors upon
the Premises, excluding Tenant’s vaults, and Landlord shall have the right to
use any and all means to open said doors in an emergency in order to obtain
entry to the Premises and any such entry to the Premises obtained by Landlord
shall not under any circumstances constitute forcible or unlawful entry into or
a detainer of the Premises or an eviction of Tenant from the Premises or any
portion thereof. Landlord shall not be liable for the consequences of admitting
by passkey or refusing to admit to the Premises Tenant or any agent or employee
of Tenant.

 

ARTICLE 22. DEFAULT

 

Notwithstanding anything to the contrary herein,
Tenant shall not be deemed to be in default or breach under this Lease except
in the case of the occurrence of any of the following

 

14

 

events of default by Tenant: (a) the failure of Tenant to pay rent
(including additional rent) or any part thereof or any other sums payable
pursuant to this Lease as and when due hereunder; (b) the failure of
Tenant to observe or perform any of the covenants or agreements contained
in this Lease to be observed or performed by Tenant, other than those described
in Article 22(a) hereof, where such failure shall continue for thirty
(30) days after written notice of such failure from Landlord, provided, if the
nature of the default requires more than thirty (30) calendar days to cure,
Tenant has commenced the cure within such period and diligently pursues the
cure thereafter, Tenant shall have a longer period, not to exceed a total of
ninety (90) calendar days, to complete the cure; (c)(i) the making by
Tenant of any general assignment, or general arrangement for the benefit of
creditors; (ii) the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Tenant, the same is dismissed within ninety (90) days); (iii) the appointment
of a trustee or receiver to take possession of substantially all of Tenant’s
assets or of Tenant’s interest in this Lease where possession is not restored
to Tenant within sixty (60) days; or (iv) the attachment, execution or
judicial seizure of substantially all of Tenant’s assets or of Tenant’s
interest in this Lease, where such seizure is not discharged within thirty (30)
days; (d) the default by Tenant under any other lease agreement between
Landlord and Tenant; (e) the passage or other devolution of Tenant’s
interest in this Lease to any person or entity except that named as Tenant
herein, by law or otherwise, without the prior written consent of Landlord; (f)
the vacating or abandoning the Premises by Tenant for more than thirty (30)
days; or (g) the discovery by Landlord that any financial statement given
to Landlord by Tenant, any assignee of Tenant, any subtenant of Tenant, or any
successor in interest of Tenant, or any of them, was materially false.
Notwithstanding Article 22(a) above, on the first instance in any
twelve (12) consecutive month period of the event described in Article 22(a) above,
Tenant shall not be in default if Tenant pays its rent on or before the second
(2nd) business day following the receipt of written notice of late payment from
Landlord.

 

ARTICLE 23.
REMEDIES

 

In the event of any such material default or breach
by Tenant that is not fully cured within the applicable cure periods set forth
in this Lease, Landlord may at any time thereafter, with or without notice
or demand and without limiting Landlord in the exercise of any right or remedy
which Landlord may have by reason of such default or breach:

 

(a)             Terminate Tenant’s right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord. In
such event Landlord shall be entitled to recover from Tenant all damage incurred
by Landlord by reason of Tenant’s breach or default including, but not limited
to the cost of recovering possession of the Premises; expenses of reletting,
including the cost of necessary renovation and alteration of the Premises,
reasonable attorneys’ fees and any real estate commissions actually paid; the amount
by which the total of the unpaid rent and other sums due hereunder for the balance
of the term hereof exceeds the total amount of the greater of (i) any payments
of like character to be received by Landlord from any subsequent tenant or
tenants or (ii) the fair market rental value of the Premises during the
same period; and that portion applicable to the unexpired term of this Lease of
any commission paid by Landlord to a real estate broker or agent as a result of
this Lease;

 

(b)             Maintain Tenant’s right to possession in
which event this Lease and all obligations of Tenant hereunder shall continue
in effect, except that the Landlord, at its

 

15

 

option, may give notice to Tenant that all of
the rent to become due during the Term hereof (reduced to present value by
applying a discount factor of five percent (5%), compounded annually), less the
greater of (i) any sums obtained by reletting the Premises or (ii) the
fair market rental value of the Premises during the same period, is due and
payable immediately, in which event Tenant shall pay the sum within ten (10) days
of receipt of such notice;

 

(c)            Re-enter the Premises without terminating
this Lease and relet the Premises or any part thereof for such term or
terms and at such rental or rentals and upon such other terms and conditions as
Landlord in its sole discretion may deem advisable with the right to make
alterations and repairs to said Premises. Rentals received by Landlord from
such reletting shall be applied as follows: first, to the payment of the cost
of such reletting as more specifically set forth in subsection (1) above;
second, to the payment of the cost of any alterations and repairs to the
Premises; third, to the payment of any indebtedness, other than rent, due
hereunder; and the residue, if any, shall be held by Landlord and applied in
payment of future rent as the same may become due and payable hereunder,
Should such rentals received from such reletting during any month be less than
that agreed to be paid during that month by Tenant hereunder, then Tenant shall
pay such deficiency to Landlord. Such deficiency shall be calculated and paid
monthly. Tenant shall also pay to Landlord, as soon as ascertained, the costs
and expenses incurred by Landlord in such reletting or in making such alterations
and repairs. No such re-entry or taking possession of the Premises by Landlord
shall be construed as an election on its part to terminate this Lease
unless a written notice of such intention be given to Tenant or unless the
termination thereof be decreed by a court of competent jurisdiction.
Notwithstanding any such reletting without termination, Landlord may at
any time thereafter elect to terminate this Lease for such previous breach, and

 

(d)           Pursue any other remedy now or hereafter
available to Landlord under the laws or judicial decisions of the State of
Arizona.

 

Tenant hereby acknowledges that late payment by
Tenant to Landlord of rent or other sums due hereunder will cause Landlord to
incur costs not contemplated by this Lease, the exact amounts of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed
on Landlord by the terms of any mortgage or deed of trust covering the Building
or any part thereof. Accordingly, if any such payment due from Tenant
shall not be received by Landlord within five (5) business days after
notice is provided to Tenant that it is due, Tenant shall pay to Landlord a
late charge equal to five percent (5%) of such overdue amount plus any
attorneys’ fees incurred by Landlord by reason of Tenant’s failure to pay such
rent and/or other charges when due hereunder. The parties hereby agree that
such late charge represents a fair and reasonable estimate of the costs
Landlord will incur by reason of late payment by Tenant. Acceptance of such
late charge by Landlord shall in no event constitute a waiver of Tenant’s
default with respect to such overdue amount, nor prevent Landlord from
exercising any of the other rights and remedies granted hereunder.

 

ARTICLE 24.
DAMAGE OR DESTRUCTION

 

Except as otherwise provided in this Lease, in the
event the Premises or the Building are damaged by fire or other casualty
covered by Landlord’s insurance, such damage shall be repaired by and at the
expense of Landlord and this Lease shall remain in full force and effect

 

16

 

except that Tenant shall be entitled to a proportionate reduction of
rent while such repairs are being made, such proportionate reduction to be
based upon the extent to which the making of such repairs shall materially
interfere with Tenant’s business.

 

In the event such repairs
cannot, in the reasonable opinion of Landlord, be substantially completed
within sixty (60) days after the occurrence of such damage (without the payment
of overtime or other premiums), Landlord may, at its option, exercisable by
giving written notice to Tenant within thirty (30) days after the occurrence of
such damage, make such repairs within a reasonable time and shall proceed to
make such repairs with reasonable dispatch. In such event, this Lease shall
continue in full force and effect and the rent payable by Tenant hereunder
shall be determined as provided in the first paragraph of this Article. In the
event Landlord does not elect to repair the damage, as provided above, either
Landlord or Tenant, by written notice given to the other within ten (10) additional
days, may terminate this Lease effective as of the date of the occurrence
of such damage. In the event Landlord terminates this Lease, pursuant to this
Article, all proceeds of Landlord’s insurance shall belong to and become the sole
property of Landlord. In the event such repairs are not completed within one
hundred eighty (180) days after the occurrence of such damage, then either
party may terminate this Lease.

 

In the event of (a) damage
to or destruction of five percent (5%) of the Premises insurable replacement
value or of twenty-five percent (25%) or more of the then insurable replacement
value of the Building, as applicable, from any cause not covered by insurance,
or (b) a declaration of any governmental authority that the Premises or
the Building are unsafe or unfit for occupancy and would require repairs
exceeding twenty-five percent (25%) or more of the then insurable replacement
value of the Building, Landlord shall have the right to terminate this Lease by
written notice to Tenant given within thirty (30) days after the date of such
damage, destruction or declaration. Upon the giving of any such notice, this
Lease shall terminate. In the event of damage to or destruction of all or any
portion of the Premises or the Building to an extent less than five percent
(5%) of the then insurable replacement value of the Premises or the Building,
as applicable, from any cause not covered by insurance, or in the event
Landlord does not elect to terminate this Lease in accordance with this
paragraph, the Lease shall remain in full force and effect except that rent
shall be proportionately reduced as provided above and the Premises shall be
repaired and rebuilt with reasonable dispatch.

 

Notwithstanding anything to
the contrary contained herein, in the event the Premises or the Building shall
be damaged by fire or other casualty due to the grossly negligent or willful
acts of Tenant or its agents, officers, employees, contractors, servants or
occupants and the Lease is not terminated as hereinabove provided, then,
without prejudice to any other rights and remedies of the Landlord, there shall
be no abatement of rent.

 

With respect to any damage which Landlord is
obligated to repair or elects to repair, Tenant waives the provisions of Arizona
Revised Statutes Section 33-343 (which Section deals with Tenant’s
right to termination in the event of damage to or destruction of the Premises).

 

Landlord shall not under any
circumstances be required to make any repairs to or replacements of any paneling,
decoration, office fixtures, railings, ceilings or floor coverings, partitions
or any other property installed in the Premises by Tenant.

 

17

 

ARTICLE 25. EMINENT
DOMAIN

 

If at any time during the
Term of this Lease the entire Premises or any part thereof shall be taken
as a result of the exercise of the power of eminent domain or sold under threat
of the exercise of such power (a “taking”), this Lease shall terminate as to
the part so taken as of the date the condemning authority takes possession
or title, whichever occurs first.

 

If all or any substantial
portion of the Premises, or any portion of the Building other than the
Premises, shall be taken, Landlord may terminate this Lease, at its
option, by giving Tenant written notice of such termination within thirty (30)
days of such taking. If all or a portion of the Premises in excess of twenty
percent (20%) of the floor area thereof shall be taken with the result that
Tenant’s use of the Premises is substantially impaired, Tenant may terminate
this Lease at its option by giving Landlord written notice of such termination
within thirty (30) days of such taking. If neither party terminates this Lease
pursuant to this Article, this Lease shall remain in full force and effect
except that the rent payable by Tenant hereunder shall be reduced in the same
proportion as the floor area taken in the Premises bears to the total floor
area in the Premises.

 

Landlord shall be entitled
to and Tenant hereby assigns to Landlord the entire amount of any award or
payment made in connection with a taking; provided, however, that Tenant shall
be entitled to any payment or award attributable to the taking of removable
personal property or trade fixtures belonging to Tenant.

 

ARTICLE 26.
SUBORDINATION: ATTORNMENT

 

This Lease, at Landlord’s
option, shall be subordinate to any ground lease, mortgage, deed of trust, or
any other hypothecation for security now or hereafter placed upon the Building
or any part thereof and to any and all advances made on the security
thereof and to all renewals, modifications, consolidation replacements and
extensions thereof, including that certain Ground Lease dated June 4, 1980
relating to the land on which the Building is located, as amended by that
certain First Amendment to Ground Lease dated December 17, 1980, that
certain Second Amendment to Ground Lease dated August 14, 1989 and that
certain Third Amendment to Ground Lease executed in 1995 but undated (as
amended, the “Ground Lease”). If any mortgagee, trustee or ground lessor shall
elect to have this Lease prior to the lien of its mortgage, deed of trust or
ground lease, and shall give written notice thereof to Tenant, this Lease shall
be deemed prior to such mortgage, deed of trust, or ground lease regardless of
whether this Lease is dated prior or subsequent to the date of said mortgage,
deed of trust or ground lease or the date of recording thereof. Tenant agrees
to execute any documents required to effectuate such subordination or to make
this Lease prior to the lien of any mortgage, deed of trust or ground lease, as
the case may be, so long as such document(s) contain commercially
reasonable assurances that the other party shall not disturb Tenant’s tenancy
and by failing to do so within ten (10) days after written demand therefor
shall automatically make, constitute and irrevocably appoint Landlord as Tenant’s
attorney-in-fact and in Tenant’s name, place and stead to do so.

 

Tenant agrees that in the event any proceedings are
brought for the foreclosure of, or in the event of exercise of the power of
sale under any mortgage or deed of trust affecting the Premises whether or not
the Lease is terminated by such foreclosure or sale, Tenant will, upon request
by the purchaser, attorn to the purchaser under any such foreclosure or sale
and recognize such purchaser as Landlord under this Lease, so long as such
purchaser grants to Tenant non-disturbance assurances.

 

18

 

For the first ten years of Tenant’s occupancy of the
Premises under this Lease, Landlord will not allow the Ground Lease to be
terminated unless Landlord has obtained for Tenant from the then ground lessor
under the Ground Lease a non-disturbance agreement reasonably acceptable to
Tenant and such ground lessor. If Landlord fails to obtain such a
non-disturbance agreement for Tenant’s benefit from the ground lessor under the
Ground Lease and Landlord terminates the Ground Lease, then notwithstanding the
provisions of Article 29 or any other provision limiting Landlord’s liability
to Tenant hereunder, Landlord shall be personally liable to Tenant to the
extent of any loss or damage incurred by Tenant as a result thereof. The parties
acknowledge that this paragraph shall have no force or effect after the first
ten years of this Lease.

 

ARTICLE 27.
NOTICES

 

All notices, demands,
consents and statements which may or are required to be given by either
party to the other hereunder shall be in writing. All notices and demands by
Landlord to Tenant shall be personally delivered or sent by United States
certified mail, postage prepaid and addressed to Tenant at the address set
forth herein. All notices and demands by Tenant to Landlord shall be personally
delivered or sent by United States certified mail, postage prepaid, addressed
to Landlord at the address set forth herein. Either party may change its
address by notice given to the other in the manner set forth in this paragraph.
Notices, demands, and statements shall be deemed given and received when
personally delivered or two (2) days after they are mailed as above
provided.

 

ARTICLE 28. LANDLORD’S
RIGHT TO CURE DEFAULTS

 

All covenants and agreements
to be performed by Tenant under any of the terms of this Lease shall be at its
sole cost and expense and, except as otherwise specifically provided herein,
without any abatement of rent. If Tenant shall fall to pay any sum of money
owing to a party other than Landlord required to be paid by it hereunder or
shall fail to perform any other act on its part to be performed
hereunder, after the lapse of any cure period set forth herein (except there
shall be no cure period with regard to Hazardous Substance cleanup and
remediation caused by Tenant or its assignees, sublessees or Premises
occupants, it being understood that any release caused by Tenant or its
assignees, sublessees or Premises occupants must be addressed on the same
business day as it is identified, failing which Landlord may intervene),
Landlord may, but shall not be obligated to and without waiving any rights of
Landlord or releasing Tenant from any obligations of Tenant hereunder, make
such payment or perform such other act, to be made or performed by Tenant
hereunder. Tenant covenants to reimburse Landlord for such sums and Landlord
shall have (in addition to any other right or remedy of Landlord) the same
rights and remedies in the event of the nonpayment thereof by Tenant as in the
case of default by Tenant in the payment of any sums due Landlord hereunder.
All sums so paid or expenses incurred by Landlord and all necessary incidental
costs together with interest thereon at the rate of fifteen percent (15%) per
annum from the date of such payment by Landlord until paid shall be considered
as rent owing hereunder and shall be payable to Landlord on demand or, at the
option of Landlord, may be added to any rent then due or thereafter
becoming due under this Lease.

 

ARTICLE 29. DELAYS.
DEFAULT BY LANDLORD

 

Landlord shall not be responsible
for any delay or failure in the observance or performance of any term or
condition of this Lease to be observed or performed by Landlord to the extent
that such delays result from action or order of governmental authorities: civil

 

19

 

commotions; strikes, fires, acts of God or the public enemy; act or
default of any Tenant in the Building; inability to procure labor, material,
fuel, electricity, or other forms of energy; or any other cause beyond the reasonable
control of Landlord, whether or not similar to the matters herein specifically
enumerated. Any delay shall extend by like time any period of performance by
Landlord and shall not be deemed a breach of or failure to perform this
Lease or any provisions hereof.

 

In the event of any default
under this Lease by Landlord, Tenant, before exercising any rights that it may have
at law to cancel this Lease, shall have given notice of such default to
Landlord and shall have offered Landlord a reasonable opportunity to correct
and cure the default. Tenant also agrees to give the holders of any mortgages
or deeds of trust (“mortgagees”) by registered mail, a copy of any notice of
default served upon the Landlord, provided that prior to such notice Tenant has
been notified in writing (by way of Notice of Assignment of Rents and Leases,
or otherwise) of the addresses of such mortgagees. Tenant further agrees that
if Landlord shall have failed to cure or commence to cure such default within
the aforesaid time limit, then the mortgagees shall have an additional thirty
(30) days within which to cure such default or if such default cannot be cured
within that time, then such additional time as may be necessary if within
thirty (30) days any mortgagee has commenced and is diligently pursuing the
remedies necessary to cure such default (including, but not limited to,
commencement of foreclosure proceedings if necessary to effect such cure) in
which event this Lease shall not be terminated while such remedies are being so
diligently pursued.

 

Except as otherwise
expressly set forth in this Lease, Tenant agrees and understands that Tenant
shall look solely to the estate and property of Landlord in the Premises and
Building including, but not limited to, all rents, profits and proceeds
therefrom, for the enforcement of a Judgment (or other judicial decree)
requiring the payment of money by Landlord to Tenant by reason of default,
breach or event of default of Landlord in performance of its obligations under
this Lease, it being intended that there will be absolutely no personal
liability on the part of any other assets of Landlord or its investors or
of Landlord’s members or managers.

 

ARTICLE 30. TRANSFER OF
LANLORD’S INTEREST;

 

In the event Landlord
transfers its reversionary interest in the Premises or the Building (other than
a transfer for security purposes only), Landlord shall be relieved of all
obligations accruing hereunder after the effective date of such transfer,
including, but not limited to, the return of the Security Deposit or other
funds held by Landlord, provided that such obligations have been expressly
assumed in writing by the transferee.

 

Tenant agrees at any time
and from time to time upon ten (10) days prior request by the Landlord, to
execute, acknowledge and deliver to the Landlord a statement in writing
certifying that this Lease Is unmodified and in full force and effect (or if
there have been modifications, that the same is in full force and effect as
modified and stating the modifications), and the dates to which the rent and
any other charges have been paid in advance, if any, and acknowledging that
there are not, to Tenant’s knowledge, any uncured defaults on the part of
Landlord hereunder, or specifying such defaults if any are claimed. Any such
statement delivered pursuant to this paragraph may be conclusively relied
upon by any prospective purchaser, mortgagee or assignee of any mortgage of the
Premises or the Building.

 

If Tenant fails to deliver such statement within such time, any
prospective purchaser or encumbrance holder may conclusively assume: (i) that
this Lease is in full force and effect, without modification except as may be
represented by Landlord, (ii) that there are no uncured

 

20

 

defaults in Landlord’s performance, and (iii) that
not more than one month’s rent and no other charges have been paid in advance,
and such failure shall constitute a material default by Tenant under this Lease.

 

If Landlord desires to
finance, refinance or sell the Building or any part thereof, Tenant hereby
agrees to deliver to any prospective lender or purchaser designated by Landlord
such financial statements of Tenant as may be reasonably required by such
prospective lender or purchaser. Such statements shall include the past three
years’ financial statements of Tenant. All such financial statements shall be
received in confidence and shall be used only for the purposes herein set
forth.

 

ARTICLE 31. SUCCESSORS
AND ASSIGNS

 

Subject to all limitations
on assignment and subletting set forth herein, all of the terms and provisions
of this Lease shall inure to the benefit of and be binding upon the successors
and assigns of each of the parties hereto.

 

ARTICLE 32. ATTORNEYS’
FEES

 

Should either party be
required to commence legal proceedings relating to this Lease, the prevailing
party shall be entitled to receive reimbursement for its reasonable attorneys’
fees and costs of suit.

 

ARTICLE 33. OPTION TO
RENEW

 

Provided that no Event of Default exists at the time
of exercise, Tenant shall have the right to extend the Lease Term for a single
period of five (5) years, beginning upon the expiration of the initial
Lease Term. If Tenant desires so to extend the Lease Term, Tenant shall give
written notice of its intention at least two hundred seventy (270) calendar
days in advance of the Termination Date to Landlord. The foregoing right shall
exist so long as (i) no Event of Default exists at the time of exercise, (ii) Tenant
timely and properly gives notice to Landlord of its Intention to extend the
Lease Term, and (iii) Tenant will use the Premises for the uses specified
in Article 8 hereof. Such extension of the Lease Term will be on the same
terms, covenants and conditions as in this Lease, other than rent. Rent will be
the fair market fixed rent rate of the Premises, as reasonably determined by
Landlord in relation to comparable (in quality, location and size) space
located in the proximity of Camelback Road between 32nd and 40th Streets,
taking into account length of the term, tenant improvement allowances,
commissions to be paid, operating expense stops, etc. Landlord’s determination
of such fair market monthly fixed rent rate will be delivered to Tenant not
later than thirty (30) days after Landlord receives Tenant’s exercise notice. If
Tenant disputes Landlord’s determination of the fair market fixed rent rate of
the Premises for the extension of the Lease Term, Tenant will deliver notice of
such dispute. The parties will then attempt in good faith to agree upon such fair
market fixed rent rate. If Landlord and Tenant fail to agree within fifteen
(15) days thereafter, they will within seven (7) days thereafter mutually
appoint an appraiser to determine the fair market fixed rent rate. The
appraiser must have at least five (5) years of full-time commercial
appraisal experience, be a member of the American Institute of Real Estate
Appraisers and not have worked for either Landlord or Tenant in the past five (5) years.
If Landlord and Tenant are unable to agree upon an appraiser within such seven (7) day
period, the parties will within five (5) days thereafter apply to the
president of the local Board of Realtors for the selection of an appraiser, who
has not acted in any capacity of either party within the prior two (2) years.
Within seven (7) days of the appointment (either by agreement or neutral
selection) of the

 

21

 

appraiser, Landlord and Tenant will submit to the appraiser their
respective determinations of the fair market fixed rent rate and any related
information. Within twenty (20) days thereafter, the appraiser will review each
party’s submittal (and such other information as the appraiser deems necessary)
and will determine the fair market fixed rent rate to be used for the extension
of the Lease term as the rent rate, provided, however, in no event shall the
annual fixed rent be less than the fixed rent for the last year of the Initial
term hereof. Tenant will pay upon demand to Landlord one-half (1/2) of the cost
of the appraisal and Landlord will then pay the appraiser in full.

 

ARTICLE 34. DISPOSITION
OF TENANTS PROPERTY

 

Any and all of Tenant’s
property which may be removed from the Premises by Landlord pursuant to
the provisions of this Lease or of law, shall be handled, removed and stored by
Landlord at the sole risk, cost and expense of Tenant. Tenant shall pay to
Landlord, within five. (5) days of written demand by Landlord given to
Tenant, any and all charges for storage of such property incurred by Landlord.
Any such property of Tenant not removed from the Premises or retaken from
storage by Tenant within fifteen (15) days after Tenant’s right to possession
of the Premises has terminated shall be conclusively considered to have been
abandoned by Tenant and shall become the property of Landlord with Landlord in
its sole discretion having the right to sell or otherwise dispose of such
property without further liability to Tenant therefor.

 

ARTICLE 35. COMMISSIONS

 

Tenant represents and warrants that it has not entered
into any contracts with any brokers or finders, or obligated itself to pay any
real estate commissions or finders’ fees on account of the execution of this
Lease or the transaction contemplated hereby except for Lee &
Associates (Michael Garlick). Landlord represents and warrants that it has not
entered into any contracts with any brokers or finders, or obligated itself to
pay any real estate commissions or finders’ fees on account of the execution of
this Lease or the transaction contemplated hereby, except for Lee &
Associates (R. Craig Coppola), to whom Landlord shall pay a commission under a
separate agreement that provides for payment to Tenant’s broker identified in
this Article. Based on such representations and warranties, each party hereby agrees
to indemnify, defend and hold the other party harmless from and against all
claims, damages, expenses, liabilities, liens or judgments (including costs,
expenses and attorneys’ fees in defending the same) which arise on account of
any claim made against the indemnifying party that real estate commissions or
finders’ fees are payable and have not been discharged in their entirety.

 

ARTICLE 36. SURRENDER
OF PREMISES

 

The voluntary or other
surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not
work a merger, and shall, at the option of Landlord, terminate all or any
existing subtenancies, or may, at the option of Landlord, operate as an
assignment to it of any or all such subtenancies.

ARTICLE 37. WAIVER

 

No waiver of any term, covenant,
condition, or obligation of this Lease, or any breach thereof, shall be
effective unless granted in writing. The waiver by Landlord of any term,
covenant, condition or obligation herein contained or any breach thereof shall
not be deemed to be a waiver of any other term, covenant, condition or
obligation herein contained. The subsequent acceptance of rent hereunder by
Landlord shall not constitute a waiver of any

 

22

 

preceding breach by Tenant, regardless of Landlord’s knowledge of such
preceding breach at the time of acceptance of such rent.

 

ARTICLE 38. GOVERNING
LAW

 

This Lease shall be governed
by and construed in accordance with Arizona law, and the invalidity or
unenforceability of any provision of this Lease shall not affect or impair the
validity of any other provision hereof.

 

ARTICLE 39. DEFINITIONS
AND MARGINAL HEADINGS

 

The term “Tenant” as used
herein shall include the plural as well as the singular and shall include the
masculine, feminine and neuter. If there is more than one Tenant, the
obligations of Tenant hereunder shall be joint and several. Article headings
in this Lease are for convenience only and shall not define or limit the scope
or intent of any provision hereof.

 

ARTICLE 40. TIME OF
ESSENCE

 

Time is of the essence of this Lease and each and
every provision hereof.

 

ARTICLE 41. PARKING

 

Tenant hereby also rents up
to nine (9) reserved parking spaces in the garage parking area adjoining
the Building. From and after the Commencement Date, the rent for such reserved
spaces during the initial term shall be Fifty Dollars ($50) per month per
reserved stall. Covered unreserved parking shall at all times during the
initial Term shall be available for rent by Tenant at the rate of Twenty-Five
Dollars ($25) per month per unreserved stall up to fifteen (15) stalls.
Landlord shall have the right to designate where such parking spaces shall be
located, but shall not, except for reserved spaces, be required to mark
specific spaces. Landlord shall have the further right to double deck any
surface parking areas from time to time during the Term of this Lease. If
additional garage parking is requested by Tenant during the Term of this Lease,
Landlord shall make such space available to Tenant, on the terms, conditions
and rates then applicable to the other garage parking spaces, if in Landlord’s
sole discretion adequate garage parking is available to the other tenants in
the Building. If Tenant does not use all nine (9) reserved stalls by December 31,
2001, then Tenant nonetheless shall pay rent on at least six (6) reserved
stalls beginning January 1, 2002, Tenant shall not have the right to
assign or sublet its interest in any of parking stalls without the prior
written consent of Landlord. All parking spaces rented by Tenant shall be
considered part of the Premises for the purposes of Tenant’s obligations
and Landlord’s rights under Articles 8, 9, 10, 14, 16 and 17 hereof, and the
rental owing for such spaces shall be considered additional rent under the
Lease. The parking areas referred to herein, except for reserved spaces, shall
be used on a non-exclusive basis with occupants of the Building.

 

Tenant also acknowledges that there are parking
spaces in an uncovered parking area adjoining the Building. Visitors of the
Building may park in such spaces without charge; provided, however, if at
any time after the conclusion of the initial term, validated parking becomes,
in the opinion of Landlord, common practice among similar offices in the
vicinity of the Building, Tenant shall participate in such validated parking on
the same basis as other Tenants in the Building and Landlord shall charge a
competitive parking charge for such spaces.

 

23

 

Tenant’s use of all parking
areas shall be subject to any rules and regulations relating thereto
included from time to time in the Building Rules and Regulations,
including regulations governing the designation of specific parking spaces for
use by Tenant and its guests and invitees, the hours during which such parking
spaces may be used, the size of such parking spaces, and the traffic flow
in the parking areas. Landlord shall not be responsible for any vandalism or
other damages from any cause occurring to automobiles or their contents while
located in such parking spaces or while moving in the parking area. Landlord
agrees to maintain a ratio of at least 3.5 stalls per 1,000 square feet of
rentable area in the Building at all times during the term hereof.

 

ARTICLE 42. COVENANTS
AND CONDITIONS

 

Each provision of this Lease
to be performed by Tenant shall be deemed both a covenant and a condition.

 

ARTICLE 43. RECORDING

 

Tenant shall not record this
Lease without Landlord’s prior written consent, and such recording shall, at
the option of Landlord, constitute a non-curable default by Tenant. Tenant
shall, upon request of the Landlord, execute, acknowledge and deliver to
Landlord a “short form” memorandum of this Lease for recording purposes.

 

ARTICLE 44. INTEREST
ON PAST DUE OBLIGATIONS

 

Any amount due Landlord not
paid when due shall bear interest at the rate of fifteen percent (15%) per
annum from the date due or, if said rate is not a lawful one, the highest rate
permitted by law. Payment of such interest shall not excuse or cure any default
by Tenant under this Lease; provided, however, that interest shall not be
payable on late charges assessed against Tenant.

 

ARTICLE 45. SEVERABILlTY

 

The invalidity of any provision of this Lease as
determined by a court of competent jurisdiction shall in no way affect the
validity of any other provision hereof.

 

ARTICLE 46. PERSONAL
PROPERTY TAXES

 

Tenant shall pay when due
all taxes assessed against and levied upon tenant alterations and any property
of Tenant contained in, on or about the Premises or any part thereof. When
possible, Tenant shall cause all such taxes to be levied and assessed
separately from taxes upon the Premises.

 

ARTICLE 47. EXPANSION
RIGHT

 

During the initial term of this Lease or renewal
period, as a space is vacated by its then tenant, if Landlord shall desire to
lease the adjoining unleased space in the Building (the “Expansion Space”),
Landlord, if Tenant is not then in default hereunder beyond any applicable cure
period, and subject to any existing rights of expansion or of first refusal
possessed by any person, shall promptly transmit to Tenant in writing the basic
terms and conditions of its intended Expansion Space leasing offer. Tenant
shall have five (5) business days after receipt of Landlord’s notice to indicate
to Landlord in writing Tenant’s agreement to lease the

 

24

 

Expansion Space on the basic terms and conditions stated in Landlord’s
notice, and if Tenant so agrees, Landlord shall lease the Expansion Space to
Tenant on the basic terms and conditions stated in the notice. The non-monetary
terms of the Expansion Space lease shall mirror the terms hereof (except with
regard to renewal options), but the termination date with respect to the
Expansion Space shall be coextensive with the Termination Date hereof in any
event.

 

If Tenant does not indicate
its agreement with said five (5) business days, Tenant’s right of first
opportunity on the Expansion Space described in Landlord’s notice shall expire
and forever be of no further force and effect; provided, however, in the event
Landlord intends to accept an offer to lease the Expansion Space at a rental
rate which is less than 95% of the rental rate offered to Tenant pursuant to
this Article 47, Landlord shall first offer such space to Tenant at the
lower price pursuant to this Article prior to accepting any such offer.

 

ARTICLE 48. SIGNS AND
COMMUNICATIONS FACILITIES 

 

A.            Signs.

 

Tenant shall be entitled to “building standard”
signage for the suite entry door and Building tenant directory, but Tenant
may not have any other signage of any kind except as follows;

 

1.             In the event Landlord decides to permit
additional Building exterior wall signs for tenants, Tenant shall be permitted
to have a sign with dimensions in proportion to its square footage relative to
the square footage of other Building tenants which, as of the Commencement
Date, do not have exterior wall signs, so long as Tenant’s wall sign is
approved in all respects by the City of Phoenix. Tenant shall pay all costs of
the application for a Phoenix wall sign permit, all costs of sign design and
installation, and all damage-repair costs associated with installation and
removal of the wall sign at the termination of this Lease. If Landlord decides
to permit additional Building wall signs but Phoenix will not permit multiple
additional tenants to have wall signs on the Building, Tenant’s priority for
wall sign Installation shall be below that of (a) existing tenants having
wall signs and (b) any other tenant that does not then have a wall sign,
leases a larger premises than the Premises and wants a wall sign. Nothing in
this Article shall constitute a promise or agreement by Landlord that
Tenant ever shall have a wall sign on the Building exterior.

 

2.             In the event Landlord decides (and Phoenix
approves Landlord’s request) to ‘install a monument sign on the exterior of the
Building, Tenant shall be permitted to have a sign panel with dimensions in
proportion to its square footage relative to the square footage of other
Building tenants that desire to have a panel on such monument sign. Tenant
shall pay all costs of any monument sign permit, all costs of fabricating and
installing the panel, and all damage-repair costs associated with installing
(unless Landlord performs the installation) and removing the panel at the
termination of this Lease. In the event responses to Landlord’s invitation for
panel erection on a monument sign exceed the available number of bins for
panels, Tenant’s priority for installing its panel shall be below that of all
affirmatively-responding tenants of the Building having larger premises than
Tenant’s other than tenants that have wall signage at such time, it being
agreed that Tenant’s priority for monument signage shall be greater than any
other tenants of the Building then having wall signage. Nothing in this Article shall
constitute a

 

25

 

promise or agreement by Landlord that Tenant ever shall have a monument
sign panel installed.

 

B.            Communications; Equipment.

 

Landlord and Tenant acknowledge that, as a condition to the
effectiveness of this Lease, on or before the Commencement Date Tenant requires
a satellite dish to be mounted on the roof of the Building and cabling from
such satellite dish to Tenant’s Premises to make its contemplated system
operational. If Tenant desires to install a satellite dish or any other
equipment related to fixed wireless, local telephony, broadband infrastructure
and similarly, purposed communications services (collectively, the “apparati”)
on the roof of the Building, the following requirements shall be observed;

 

(a)            The apparati and all cabling, wiring, risers and
similarly-purposed installations appurtenant to the apparati, whether located
on the roof or elsewhere in the Building (collectively, the “Wiring”) shall in
all respects concerning dimensions and aesthetics (including screening) comply
with the City of Phoenix Zoning Ordinance.

 

(b)            Tenant shall have access to the Building roof
only through the licensed and bonded contractor(s) it hires to install the
apparati and Wiring. Such contractor shall coordinate all installation with the
Building manager.

 

(c)            The location of the apparati and Wiring shall
be approved in advance by Landlord. The location of the apparati on the
Building roof is subject to change in the sole discretion of Landlord; provided,
however, any relocation of the apparati at Landlord’s request shall not
adversely affect the transmission and reception of communications signals for
Tenant’s purposes. Landlord shall pay the cost of any re-location of the
apparati (and for any extension or replacement of Wiring needed) that Landlord
requires after initial placement on the roof, and Landlord shall pay for any damage
done to the roof, the Building or the apparati caused by such Landlord-required
re-location. In all events, the apparati and Wiring used by Tenant will not be
interfered with by Landlord during American financial market business hours on
business days.

 

(d)            Tenant shall be responsible for all damage to
the roof or Building caused by the installation or removal by Tenant of the
apparati and Wiring, subject only to the terms of subparagraph (c) above
pertaining to re-location obligations.

 

(e)            On or before thirty (30) days prior to the
scheduled expiration of this Lease, or within ten (10) days after any
other termination of this lease, Landlord may elect by written notice to
Tenant to:

 

(i) Retain any or all Wiring;

 

(ii) Remove any or all
such Wiring and, to the extent affected only by such removal, restore the
Premises and risers to their condition existing prior to the installation of
the Wiring (“Wire Restoration Work”), and Landlord shall perform such Wire
Restoration Work at Tenant’s sole cost and expense within fifteen (15) business
days of the Termination Date; or

 

26

 

(iii) Require Tenant to
perform the Wire Restoration Work at Tenant’s sole cost and expense,
within fifteen (15) business days of the Termination Date, as same may be
extended or truncated.

 

(f)            The provisions of this Article 48B shall
survive the expiration or sooner termination of the Lease.

 

(g)           In the event Landlord timely elects to retain
the Wiring (pursuant to subparagraph (e)(i) hereof), Tenant covenants that:

 

(i) Tenant shall be the
sole owner of such Wiring, that Tenant shall have the right to surrender such
Wiring, and that such Wiring shall be free of all liens and encumbrances; and

 

(ii) Tenant shall not
thereafter take any action which adversely affects the Wiring.

 

(h)           Notwithstanding anything to the contrary in Article 4,
Landlord may retain Tenant’s Security Deposit after expiration or sooner
termination of the Lease until the earliest of the following:

 

(i) Landlord elects to
retain the Wiring pursuant to subparagraph (e)(i), if applicable;

 

(ii) Landlord elects to
perform the Wire Restoration Work pursuant to subparagraph (e)(ii), the
Wire Restoration Work is complete, and Tenant has fully reimbursed Landlord for
all costs related thereto; or

 

(iii) Landlord elects
to require the Tenant to perform the Wire Restoration Work pursuant to
subparagraph (e)(iii), the Wire Restoration Work is complete, and Tenant has
paid for all costs related thereto.

 

In
the event Tenant fails or refuses to pay all costs of the Wire Restoration Work
within ten (10) days of Tenant’s receipt of Landlord’s notice (accompanied
by Landlord’s contractor’s invoices) requesting Tenant’s reimbursement for or
direct payment of such costs, Landlord may apply all or any portion of Tenant’s
Security Deposit toward the payment of such unpaid costs relative to the Wire
Restoration Work. The application of such Security Deposit by Landlord pursuant
to this Article 48B does not constitute a limitation on or waiver of
Landlord’s right to seek further remedies under law or equity if the Security
Deposit is Insufficient to pay the Landlord in full for the Wire Restoration
Work. Notwithstanding anything to the contrary herein, any portion of Tenant’s
Security Deposit not applied pursuant to this Article 48B on or before one
month after the Termination Date shall be immediately paid by Landlord to
Tenant.

 

ARTICLE 49. ENTIRE
AGREEMENT

 

This Lease, the Building Rules and Regulations,
and any addendum attached hereto and executed by the parties, constitute the
entire agreement of the parties and supersede all prior agreements or
understandings between the parties with respect to the subject matter hereof.
No prior agreement or understanding shall be effective. This Lease may not
be modified or amended except by written agreement of the parties.

 

27

 

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

 

	
  LANDLORD:

  	
  TENANT:

  
	
   

  	
   

  
	
  5050
  NORTH 40TH ST., L.L.C., an 

  Arizona limited liability company

  	
  B.G.
  ASSOCIATES, INC., an Arizona corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  [ILLEGIBLE]

  	
   

  	
  By 

  	
  /s/ James H. O’Connor

  	
   

  
	
   

  	
  Its

  	
  MANAGING
  MEMBER

  	
   

  	
   

  	
  James H. O’Connor,
  President/CEO

  
	
   

  	
   

  
	
   

  	
  Address
  of Tenant prior to the Commencement 

  Date:

  
	
   

  	
   

  
	
   

  	
  P.O. Box
  36155 

  Phoenix, Arizona 85067-6155

  
	
   

  	
   

  
	
   

  	
  Address
  of Tenant after the Commencement 

  Date:

  
	
   

  	
   

  
	
   

  	
  5050
  North 40th Street, Suite 300 

  Phoenix, Arizona 85018

  
	
   

  	
   

  
							

 

28

 

EXHIBIT “B” 

 

BUILDING RULES AND REGULATIONS

 

1.             No sign, placard, picture, picture,
advertisement, name or notice shall be inscribed, displayed, printed or affixed
on or to any part of the outside or inside of the Building, other than on
the inside of the Premises, subject to the second succeeding sentence, or the
surrounding area without the written consent of the Landlord being first
obtained. If such consent is given by Landlord, Landlord may regulate the
manner of display of the sign, placard, picture, advertisement, name or notice.
Landlord shall have the right to remove any sign, placard, picture,
advertisement, name or notice which has, not been approved by Landlord or is
being displayed in a non-approved manner without notice to and at the expense
of the Tenant. All approved signs or lettering on doors shall be printed,
painted, affixed or inscribed at the expense of Tenant by a person approved by Landlord.

 

Tenant shall not place anything or allow anything to be placed near the
glass of any window, door, partition or wall which may appear unsightly
from outside of the Premises; provided, however, that Landlord is to furnish
and install building standard window blinds at all exterior windows. Landlord
shall have the right to control all internal lighting that may be visible
from the Building’s exterior.

 

2.             The bulletin board or directory of the
Building will be provided exclusively for the display of the name and location
of tenants only, and Landlord reserves the right to exclude any other names
therefrom.

 

3.             The sidewalks, halls, passages, exits,
entrances, elevators and stairways shall not be obstructed by any of the
tenants or used by them for any purpose other than for ingress to and egress
from their respective premises. The halls, passages, exits, entrances, elevators,
stairways, balconies and roof are not for the use of the general public and Landlord
shall in all cases retain the right to control thereof and prevent access
thereto by all persons whose presence in the judgment of Landlord shall be
prejudicial to the safety, character, reputation and interests of the Building
or its tenants; provided, however, that nothing herein contained shall be
construed to prevent access by persons with whom Tenant normally deals in the
ordinary course of Tenant’s business unless such persons are engaged in illegal
activities. No tenant and no employees or invitees of any tenant shall go upon
the roof of the Building.

 

4.             Tenant shall not alter any lock or install
any new additional locks or any bolts on any door of the Premises without the
written consent of Landlord.

 

5.             The toilet rooms, urinals, wash bowls and
other apparatus shall not be used for any purpose other than that for which
they were constructed and no foreign substance of any kind whatsoever shall be
thrown therein. The expense of any breakage, stoppage or damage resulting
from a violation of this rule shall be borne by the tenant who, or whose employees
or invitees, shall have caused it.

 

6.             Tenant shall not overload the floor of the
Premises, shall not mark on or drive nails, screw or drill into the partitions,
woodwork or plaster (except as may be incidental to the

 

1

 

hanging of wall decorations), and shall not in any
way deface the Premises or any part thereof.

 

7              No furniture, freight or equipment of any
kind shall be brought into the Building without the consent of Landlord and all
moving of the same into or out of the Building shall be done at such time and
in such manner as Landlord may designate. Landlord shall have the right to
prescribe the weight, size and position of all safes and other heavy equipment
brought into the Building and also the times and manner of moving the same in
and out of the Building. Safes or other heavy objects shall, if considered
necessary by Landlord, stand on wood strips of such thickness as shall be
necessary to properly distribute the weight. Landlord will not be responsible
for loss of or damage to any such safe or property from any cause and all
damage done to the Building by moving or maintaining any such safe or other
property shall be repaired at the expense of Tenant. There shall not be used in
any Premises, or in the public halls of the Building, either by any tenant or
others, any hand trucks except those equipped with rubber tires and side guards.

 

8              Tenant shall not employ any person or persons
other than the janitor of Landlord for the purpose of cleaning the Premises
unless otherwise agreed to by Landlord. Except with the written consent of
Landlord, no person or persons other than those approved by Landlord shall be
permitted to enter the Building for the purpose of cleaning the same. Tenant
shall not cause any unnecessary labor by reason of Tenant’s carelessness or
indifference in the preservation of good order and cleanliness. Landlord shall
in no way be responsible to any Tenant for any loss of property on the
Premises, however occurring, or for any damage done to the effects of any
Tenant, by or as a result of the acts of the janitor, any other employee or
contractor of Landlord, or any other person. Janitor service shall include
ordinary dusting and cleaning by the janitor assigned to such work and shall
not include cleaning of carpets or rugs, except normal vacuuming, or moving of
furniture and other special services.

 

9.             Tenant shall not use, keep or permit to be
used or kept any noxious gas or substance in the Premises, or permit or suffer
the Premises to be occupied or used in a manner offensive or objectionable to
the Landlord or other occupants of the Building by reason of noise, odors
and/or vibrations, or interfere in anyway with other tenants or those having business
in the Building. No animals or birds shall be brought in or kept in or about
the Premises or the Building. No tenant shall make or permit to be made any
disturbing noises or disturb or interfere with occupants of this or neighboring
buildings or premises, or with those having business with such occupants, by
the use of any musical instrument, radio, phonograph, unusual noise, or in any
other way. No tenant shall throw anything out of doors or down the passageways.
No cooking shall be done or permitted by Tenant in the Premises.

 

10.           The Premises shall not be used for
manufacturing or for the storage of merchandise except as such storage may be
incidental to the uses of the Premises for general office purposes. No tenant
shall occupy or permit any portion of his Premises to be occupied for the
manufacture or sale of liquor, narcotics, or tobacco in any form, or as a
medical office, or as a barber
shop or manicure shop except with prior written consent of Landlord. No tenant
shall advertise for laborers giving an address at the Premises. The Premises
shall not be used for lodging or sleeping or for illegal purposes.

 

2

 

11.           Tenant shall not use or keep in the Premises
or the Building any kerosene, gasoline or inflammable or combustible fluid or
material or use any method of heating or air conditioning other than that
supplied by Landlord.

 

12.           Landlord will direct electricians as to where
and how telephone and telegraph wires are to be introduced. No boring or
cutting for or stringing of wires will be allowed without the consent of
Landlord. The location of telephones, call boxes and other office equipment affixed
to the Premises shall be subject to the approval of Landlord.

 

13.           All keys to the Building, offices, rooms and
toilet rooms shall be obtained from Landlord’s office and Tenant shall not from
any other source duplicate or obtain, keys or have keys made. Tenant, upon
termination of the tenancy, shall deliver to Landlord the keys to the Building,
offices, rooms, and toilet rooms which shall have been furnished and shall pay Landlord
the cost of replacing any lost key or of changing the lock or locks opened by such
lost key if Landlord deems it necessary to make such a change.

 

14.           No tenant shall lay linoleum, tile, carpet or
other similar floor coverings so that the same shall be affixed to the floor of
the Premises in any manner except as approved by the Landlord. The expense of
repairing any damage resulting from a violation of this rule or removal of
any floor covering shall be borne by the tenant by whom, or by whose contractors,
employees or Invitees, the floor covering shall have been laid.

 

15.           During all hours on Saturdays Sundays, legal
holidays and on weekdays between the hours of 6:00 p.m. and 7:00 a.m.
the following day, access to the Building or to the halls, corridors, or
stairways in the Building or to the Premises may be refused unless the person
seeking access is known to any person or employee of the building in charge and
has a pass or is property identified. Landlord shall in no case be liable for
damages for any error with regard to the admission to or exclusion from the
Building of any person. In case of invasion, mob, riot, public excitement, or
other commotion, Landlord reserves the right to prevent access to the Building
during the continuance of the same, by closing the doors or otherwise, for the
safety of the tenants and protection of the Building and property located
therein. Landlord reserves the right to close and keep locked all entrance and
exit doors of the Building during all hours on Saturdays, Sundays, legal
holidays and on weekdays between the hours of 6.00 p.m. and 7:00 a.m.
the following day, and during such further hours as Landlord may deem
advisable for the adequate protection of the Building and the property of its
tenants. Anything to the foregoing notwithstanding, Landlord shall have no duty
to provide security protection for the Building at any time or to monitor
access thereto.

 

16.           Tenant shall see that the doors of the
Premises are closed and securely locked before leaving the Building and that
all water faucets, water apparatus and electricity are entirely shut off before
Tenant or Tenant’s employees leave the Building. Tenant shall be responsible
for any damage to the Building or other tenants caused by a failure to comply
with this rule.

 

17.           Landlord reserves the right to exclude or
expel from the Building any person who, in the judgment of Landlord, is
intoxicated or under the influence of liquor or drugs, or who shall in any
manner do any act in violation of any of the rules and regulations of the Building.

 

3

 

18.           Any requests of Tenant will be considered
only upon application at the office of Landlord. Employees of Landlord shall
not be requested to perform any work or do anything outside of their
regular duties unless under special instructions from Landlord.

 

19.           No vending machine shall be installed,
maintained or operated upon the Premises without the written consent of the
Landlord.

 

20.           Landlord shall have the right, exercisable
without notice and without liability to Tenant, to change the name and the
street address of the Building of which the Premises are a part.

 

21.           Tenant agrees that it shall comply with all
fire regulations that may be issued from time to time by Landlord and
Tenant also shall provide Landlord with the name of a designated responsible
employee to represent Tenant in all matters pertaining to fire regulations.

 

22.           Landlord reserves the right by written notice
to Tenant to rescind, alter or waive any rule or regulation at any time
prescribed for the Building when, in Landlord’s judgment, it is necessary, desirable
or proper for the best interest of the Building or its tenants, in accordance
with the Lease.

 

23.           Tenant shall not disturb, solicit, or canvas
any occupant of the Building and shall cooperate to prevent same.

 

24.           Without the written consent of Landlord,
Tenant shall not use the name of the Building in connection with or in
promotion or advertising the business of Tenant except as Tenant’s address.

 

25.           Tenant shall be entitled to use the number of
parking spaces provided in the lease during working hours, the exact location
of which shall be designated by Landlord. Tenant shall not park in driveways or
loading areas nor reserved parking spaces of other tenants. Landlord or its
agents shall have the right to cause to be removed any car of Tenant, its
employees or agents that may be parked In unauthorized areas, and Tenant agrees
to save and hold harmless Landlord, its agents and employees from any and all claims,
losses, damages and demands asserted or arising in respect to or in connection with
the removal of any such vehicle and for all expenses incurred by Landlord in connection
with such removal. Tenant will from time to time, upon request of Landlord, supply
Landlord with a list of license plate numbers of vehicles owned or operated by
its employees and agents.

 

4

 

 

EXHIBIT “A”

 

 

NOV 05 2005

 

FIRST
AMENDMENT TO THE 

THE 5050 BUILDING LEASE AGREEMENT

 

THIS FIRST AMENDMENT TO LEASE AGREEMENT is dated this __ day of
October, 2005 (this “Amendment”), is entered into between REG PHOENIX, L.L.C.,
an Arizona limited liability company (“Landlord”), and B.G. ASSOCIATES, INC.,
an Arizona corporation (“Tenant”).

 

RECITALS:

 

Landlord’s predecessor in interest, 5050 NORTH 40TH STREET, L.L.C.,
leased to Tenant and Tenant leased from Landlord’s predecessor, on the terms
and conditions set forth in that certain 5050 Building Lease dated as of November 22,
2000 (the “Lease”), the premises designated as Suite 300 (the “Premises”),
consisting of approximately 5,602 square feet of rentable area within that
certain building known as The 5050 Building, situated at 5050 North 40th
Street, Phoenix, Arizona (the “Building”). The Lease has a scheduled expiration
date of January 31, 2006, and Landlord and Tenant desire to extend the
term of the Lease for an additional five (5) years beyond such date, to lapse
on January 31, 2011.

 

NOW THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto hereby agree as follows:

 

AGREEMENT:

 

1.             Extended Term. The Term of the Lease is extended so that
the Termination Date, as defined in the Lease, subject to earlier termination
as provided in the Lease, shall be January 31, 2011.

 

2,             Rent. The annual fixed rent for the Premises during the period of February 1,
2006, through the extended Termination Date shall be as follows:

 

Year
1: $22.50 per rentable square foot, full service* or $126,045 per year 

Year
2: $23.00 per rentable square foot, full service* or $128,846
per year 

Year
3: $23.50 per rentable square foot, full service* or $131,647 per year 

Year
4: $24.00 per rentable square foot, full service* or $134,448 per year 

Year
5: $24.50 per rentable square foot, full service* or $137,249 per year, and

 

*Each
year of fixed rent shall bear transaction privilege tax at the then-prevailing
rate, payable

by Tenant with each monthly installment of fixed rent.

 

	
  3.
  Base Year.

  	
   

  	
  The
  Base Year for the extension Term shall be calendar year 2006. If during any
  calendar year the Building is less than fully occupied, to determine Tenant’s
  Proportionate Share, Direct Expenses fluctuating with Building occupancy
  shall be “grossed up” to the amount, using commercially reasonable
  projections, that normally would be expected if the Building were ninety five
  percent (95%) occupied for that entire calendar year; the load factor of
  12.5% shall remain in place

  

 

 

	
  4.
  Security Deposit.

  	
   

  	
  Anything
  to the contrary notwithstanding in the Lease, the Security Deposit (no less
  than $21,941.00) shall be returned to Tenant upon the execution of this
  amendment, so long as Tenant is not then in default under the Lease.

  
	
   

  	
   

  	
   

  
	
  5.
  Improvement Allowance.

  	
   

  	
  Landlord
  shall pay for Tenant’s Interior Improvements upon the presentation of a
  contractor’s invoices with reasonable supporting documentation in the amount
  not to exceed Eight Dollars ($8.00) per rentable square foot in the Premises
  for the extension Term; and any unexpended excess of the allowance over the
  actual costs of improvements shall be credited to the annual fixed rent In
  the month and/or months immediately following. Tenant shall submit all
  Invoices for reimbursement within six (6) months of the date of the
  commencement of the extension Term. Tenant shall be entitled to use the
  Improvement Allowance for technology related items including audio/visual
  equipment, cabling and wiring.

  
	
   

  	
   

  	
   

  
	
  6.
  Parking Charges.

  	
   

  	
  Tenant’s
  rent for covered reserved parking spaces during the extension Term shall be
  Thirty-Five Dollars ($35) per month per reserved stall. Covered unreserved
  parking shall at all times during the extension Term shall be available for
  rent by Tenant at the rate of Twenty Dollars ($20) per month per unreserved
  stall, up to fifteen (15) stalls.

  
	
   

  	
   

  	
   

  
	
  7.
  Commissions.

  	
   

  	
  Lee &
  Associates Arizona (Michael Garlick), Tenant’s broker, shall be paid a three
  percent (3%) fee and Landlord’s broker, Lee & Associates Arizona
  (Craig Coppola), shall be paid a one and one-half percent (1.5%) fee, based
  on total lease consideration to be paid during the extension Term, but not
  for any option that may later be exercised by Tenant, unless and until
  Tenant remains in occupancy of the Premises after that option period
  commences in February of 2011.

  
	
   

  	
   

  	
   

  
	
  8.
  Affirmation.

  	
   

  	
  Except
  as otherwise set forth in this Amendment, the Lease is ratified, confirmed
  and approved in all respects.

  

 

IN WITNESS WHEREOF, Landlord and Tenant have
executed this Amendment as of the date first above written.

 

	
  LANDLORD:

  	
  TENANT:

  
	
   

  	
   

  
	
  REG
  PHOENIX, L.L.C., an 

  Arizona limited liability company as 

  Successor to 5050 NORTH
  40TH STREET,

  L.L.C.

  	
  B.G.
  ASSOCIATES, INC., an Arizona 

  corporation

  
	
   

  	
   

  
	
  By

  	
  /s/ Robert Gray

  	
   

  	
  By

  	
  /s/ James H. O’Connor

  
	
   

  	
  Robert Gray, Manager

  	
   

  	
   

  	
  James H. O’Connor,
  President/CEO

  
	
   

  	
   

  

 

2

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