Document:

Exhibit
10.10

 

	
  LEASE OF

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  COMMERCIAL SPACE STANDARD

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Effective Date:

  	
   

  	
  County and State where property is located I
  Maricopa, Arizona

  
	
   

  	
   

  	
   

  
	
  LESSOR (Name, Address and Zip Code)

  	
   

  	
  LESSEE (Name, Address and Zip Code)

  
	
   

  	
   

  	
   

  
	
  NO Partners

  	
   

  	
  Sensory Science Corp.

  
	
  (an Arizona General Partnership)

  	
   

  	
  7835 E. McClain Drive

  
	
  7900 E. Greenway Road, Suite 201

  	
   

  	
  Scottsdale, AZ 85260

  

 

Scottsdale, AZ -85260

Attorney For Lessor

Attorney For Lessee

Subject Leased Premises (Address or Location of Building)

Description of Space (Square Feet and Location within building)

Suites 1 & 2 13,100 Sq. Pt.

Diagram of space is attached as an addendum

Subject Leased Premises (Legal Description of Building and Land in
which space is located)

7863 E. McClain Road, Scottsdale, AZ 85260

Improvements to be made by Lessor (Describe in detail the construction,
alteration, repairs or other improvements, if any, to be made by Lessor)

Plans and Specifications are attached as an addendum, Improvements
shall be completed by: Improvements to be made by Lessee (Describe in detail
the construction, alteration, repairs or other improvements, if any, to be made
by Lessee)

Plans and Specifications are attached as an addendum, Improvements
shall be completed by: Personal Property included with Lease (List all moveable
property or property which shall be moved in and attached as fixtures for
Lessee)

A detailed list is attached as an addendum

 

 

PART ONE SPECIFIC PROVISIONS FOR LEASE OF COMMERCIAL SPACE, STANDARD

1.1 Consideration. For valuable consideration Lesser leases to Lessee
space in the leased premises, with improvements and personal property described
above according to the terms hereinafter set forth, a copy of which Lessee
acknowledges receipt. 1.2 Term of Lease. This lease shall be in effect for a period
of 60 mo commencing at 12:00 noon on 11-1-99, and ending at 12:00 noon on
10-30-04.

1.3 Rent for Standard Lease. Rent shall be paid monthly on or before
the first day of each month beginning 11-1-99 Lessee shall pay the first
month’s rent in advance plus the last -0- months. The amount of rent shall be
calculated as follows: U Base monthly rent of $   See Attached Section 7.1

Plus an:  Increases in the base
rent calculated on; Increases in cost of fire insurance, $ Increases in real
estate taxes or other taxes charged the Lesser as a result of the ownership of
the building. Plus Sales or Transaction Tax charged by any governmental entity
on the rental transaction.

Common maintenance costs as follows:

 

See Attached Section 7.1

Plus

 

Security Deposit of $

Plus

Late Payment penalty of each rent payment when the payment is made more
than 10 days after it is due.

 

1.4 Base Rent. The base rent, as prescribed in paragraph 1.3 (rent for
standard tease), may be increased by percentage rent, cost of living increases,
increases in the cost of fire insurance paid by Lesser, increases in taxes on
the real property paid by the Lesser, taxes on the transaction of the rental,
and

 

 

common area maintenance charges, if any. The base rent for the term
shall be the monthly base rent multiplied by the number of months in the term
of this lease:

 

1.7 Fire and Casualty Insurance Escalation. If paragraph 1.3 (rent for
standard lease) provides for increases in rents based upon fire insurance
increases, then this paragraph shall be applicable.  Should the use or operations of Lessee result in increased fire
insurance premiums, then the amount of these premium increases directly
traceable to the Lessee shall be added to the base rent.

 

1.8Tax on Assessment Escalation

If paragraph 1.3 provides for increase in base rent because of tax
increases, then this provision becomes applicable. Since the base rent is
predicated upon the real property taxes and property taxes or assessments
against the building or real property, of which the leased premises are a part,
increase from what additional rent which portion is equal to the proportion
which the leased premises bear to the entire building. The additional rent rebuilding
from the increased tax or assessments shall be retroactive to the date the
increased taxes or assessments first took effect.

 

1.10 Sales and Transaction Tax. If paragraph 1.3 (rent for standard
lease) provides that Lessee shall pay the sales or transaction taxes, then this
paragraph is applicable. Lessee shall pay with each rent payment the amount of
any sales or transaction tax on the rental transaction. If any sales or similar
tax shall be levied or assessed by the United States of America, any state, county,
city, town, district, or agency or instrumentality thereof, upon or against
Lesser by reason of demand by Lesser, reimburse Lesser for the amount of any
such taxes or assessments paid by Lesser.

 

1.11 Security Deposit.  To
insure the Lessees prompt and full payment of the rent, and the faithful and
timely performance of all provisions of this ]case, and any extension or
renewal thereof, Lessee shall pay a security deposit as set forth in paragraph
1.3. If any default shall be made in the performance of any of the covenants on
the part of Lessee herein contained with respect to any item or items of the
leased premises, Lesser shall be entitled to that portion of the security
deposit as is required to cover the default. Upon the expiration or earlier
termination of this lease, or any extension or renewal thereof, provided Lessee
has paid all the rent herein called for and fully performed all of the other
provisions of this lease on its part to be performed, Lesser will release to
Lessee the security deposit.

 

1.12 Place of Paying Rent. Lessee shall pay rent to the address of
Lessor as designated on page one of this lease, or to any newer address of
which Lessor gives written notice to Lessee.

 

1.13 Utilities, Insurance and Other Expenses shall be allocated as
follows: Expense Description   Paid by
Lessor   Paid by Lessee

Comments or Qualifications

 

	
  PRORATED

  	
   

  	
   

  	
   

  	
   

  
	
  Water

  	
   

  	
   

  	
   

  	
  ý

  
	
  In-Suite Plumbing

  	
   

  	
   

  	
   

  	
  ý

  
	
  Electricity

  	
   

  	
   

  	
   

  	
  ý

  
	
  Fire and
  Casually Insurance of Building

  	
   

  	
  ý

  	
   

  	
  ý

  
	
  Fire and Casualtv Insurance of lessees Property

  	
   

  	
   

  	
   

  	
  ý

  
	
  Personal Liability Insurance

  	
   

  	
  \

  	
   

  	
  ý

  
	
  Theft Insurance

  	
   

  	
  ý

  	
   

  	
  ý

  
	
  Trash Removal”

  	
   

  	
   

  	
   

  	
  ý

  
	
  PRORATED

  	
   

  	
   

  	
   

  	
   

  

 

*LIMITED TO NORMAL OFFICE WASTE. THE DUMPSTER 1S NOT TO BE USED FOR
DISPOSAL OF COMMERCIAL OR INDUSTRIAL WASTE.

 

1.14 Maximum Legal Interest. I any monics are owed under the terms of
this lease, all o i c provision of the -lease notwithstanding, the parties
intend that the party owing sums to the other as the result of performances
under the lease, shall incur as a penalty the maximum legal rate of interest
that is in effect at (lie time of the accrual of the charge. Interest thus
imposed shall

 

 

be charged also on any costs, legal fees, or any other obligation
arising out of )[‘s lease. If the laws or the state which govern this lease
have no maximum legal interest limit, the rate shall be 12%.

 

1.15 Provisions of Fire and Casualty Insurance Policies For standard
Lease. Unless these obligations are changed by paragraph I.13, Lessor shall
continually keep in force, during the term of this lease and during arty
extension or renewal thereof, fire and extended coverage insurance in an amount
of no less that 80% of the full insurable value of the building in which the
leased premises are situated. Lessee-shall provide fire insurance protection an
Lessees stock in trade, furniture, fixtures and other property within the
leased premises, in an amount equal to the full insurable value thereof and
promises that any insurance coverage in this regard will contain a waiver of
the insurers right of subrogation against Lessor. 

Lessor and Lessee shall promptly deliver to one another die original or
originals; or a true and exact copy, of any and all such polity or policies of
insurance.

Lessee shall not carry any stock of goods or do or omit to do any act
in or about the leased premises which will in any way impair or invalidate the
obligation of any policy of insurance on or in reference to die ]cased premises
or the building in which the leased premises are situated. Lessee agrees to pay
upon demand, as additional rent, any increase in premiums for insurance that
may he charged during the term of this lease on the amount of insurance to be
carried by Lessor on ft leased premises or the building in which the ]cased
premises are situated, resulting from the business carried on in the leased
premises by Lessee, whether or not Lessor has consented to same.

 

1.16 Waiver of Subrogation on Casualty Insurance. Lessor hereby
releases Lessee, to the extent of its insurance coverage, from any and a11
liability for any loss or damage caused by fire or any of the extended coverage
casualties, notwithstanding such fire or other casualty shall be due to the
fault or negligence of Lessee or its agents, provided, however, this release
shall be in force and effect only with respect to loss or damage occurring
during such time as Lessors policies of fire and extended coverage insurance
shall contain a clause to the effect that this release shall not affect such
policies or the right of Lessor to recover thereunder. Lessor agrees that such
insurance policies will include such clause as long as the same is includable
without extra costs.

The parties shall use good faith efforts to have any and all fire,
extended coverage, or any and all material damage insurance which may be
carried endorsed with the following subrogation clause.  “This insurance shall not be invalid should
the insured waive in writing, prior to a loss, any and all right of the
coverage against any party for loss occurring to the property described
herein.”

Lessor and Lessee mutually agree that any right of subrogation afforded
the insurance carriers of their respective property . insurance policies
relative to real or personal property situated in or on the leased promises is
waived; and the parties undertake to give their respective insurance carriers
notice of this waiver.

 

1. 17 Liability Insurance. Lessee shall, at its own cost and expense,
during the term of this lease, procure and maintain in force policies of
liability insurance, with Lessor as an additional assured there under, insuring
Lessee to the amount of $500,000.00 against any loss or damage, or any claim
thereof, resulting from injury to or the death of any one person, and to the
amount of $500,000.00 against any loss or damage, or any claim thereof,
resulting from the injury to or the death of any number of persons from any one
accident, as the result of or by reason of the ownership by Lessor of the
leased premises, parking lot, and adjacent areas owned by Lessor, and the use
and occupancy thereof by Lessee; and to procure and maintain in full force and
effect, during the term herein specified, a policy or policies of insurance,
with Lessor as an additional assured there under, in an amount not less than
$500,000.00 insuring Lessor against any loss or damage or any claim thereof
resulting from the damage to or destruction of any property belonging to any
person or persons whomsoever, as a result or by reason of the ownership by
Lessor of the leased promises, parking lot or adjacent areas owned by Lessor,
and the use and occupancy thereof by Lessee.

Lessee shall promptly deliver to Lessor the original or originals, or a
true and exact copy, of any and all such policy or policies of insurance.

All policies shall contain a written obligation of the insurer to
notify Lessor in writing at least ten days prior to any cancellation thereof.

 

1.18 Non-Liability of Lessor. Lessor shall not be liable for any damage
occasioned by failure to keep the premises in repair, and shall not be liable
for any damage done or occasioned by or from plumbing, gas,

 

 

water, steam, or other pipes, tanks, washstand, water closet or waste
pipe, in, above, upon or about the building or promises, nor for damage
occasioned by water, snow, or ice being upon or coming through the roof,
skylight. trap-door, or otherwise, nor for any damage arising from the acts or neglects
of co-tenants or other occupants of the same building, or of any owners or
occupants of adjacent or contiguous property. 1.191ndemnification. Lessor shall
not be responsible or liable for any loss, theft, of damage to property or
injury to or death of Lessee or any person on or about the leased premises, and
Lessee agrees to indemnify and hold Lessor harmless there from unless it was
caused or resulted from the negligent or willful acts of Lessor. Lessee shall
hold Lessor harmless during the term of this ]cast, and during any extension or
renewal thereof, from and against any and all claims suits, actions, demands
and judgments arising out of an event or events occurring after the
commencement of the primary term thereof when the proximate cause of such
injury to person or damage to property was not the negligence of Lessor or the
negligence of an agent or employee of Lessor or of lessors successor. Lessee
agrees not to make any claim against Lessor, and it will hold Lessor harmless
there from, for any loss or damage to any personal property belonging to Lessee
or any of its guests, customers, or occupants, or for any injuries to Lessee or
any of its guests, customers, or occupants unless such loss or damage was
caused or resulted from the negligent or willful conduct of Lessor.

 

1.20 Renewal. Lessee shall have the right to renew for an additional 5
years term upon 60 days written notice to Lessor upon: p Same Terms Different
terms as follows:

Per attached Section 7.2

 

1.21 Purchase Option. Lessee shall have the right to purchase the
Subject Leased Premises upon the giving of days written notice for the total
purchase price of $       , all in
accordance with the Real Property Purchase Contract, Receipt and Escrow
Instructions which are attached.

 

1.22 Use by Lessee. The premises shall be used for a reasonable office,
warehousing, commercial or industrial use which use is specifically described
as:

General Lab and Office Use

 

1.23 Tax on Property of Lessor Paid by Lessor. Lessor shall pay before
delinquent all taxes and assessments levied and assessed upon or against the
loosed premises during the term of this ]case, subject to paragraph 1.8, if
applicable.

 

1.24 Tax on Property of Lessee. Lessee shall pay or cause to be paid,
before delinquency, throughout the primary term of this lease and any renewals
or extensions thereof, all taxes on any and all personal property owned by
Lessee and situated upon the leased promises. In the event Lessee fails to pay
the taxes levied upon or against its property as aforesaid when due and
payable, Lessor may pay the same on lessees behalf, and Lessee shall reimburse
Lessor for the same forthwith or Lessor may reimburse itself therefore out of
the rental payable hereunder by lessee or Lessor may reimburse itself from the
security deposit. Lessee shall save and hold Lessor harmless on account of any
of these taxes. Lessee shall pay Lessor the maximum legal interest rate per
annum or any monies that Lessor may advance on behalf of Lessee until there
monies are repaid.

 

1.25 Initial Construction and Repairs. Lessor shall cause the leased
promises to be completed or repaired in accordance with any plans,
specifications and agreements provided for on page one of this lease. Lessor
will not be obliged to construct or install at its expense any improvements or
facilities of any kind other than those called for on page one of this lease.
Lessor agrees to commence and complete the construction of the building or
improvements with reasonable diligence. 
Should no plans, specifications or agreements for repair or construction
be prescribed on page one of this lease, then Lessee has agreed to accept the
leased promises as they arc al the time this lease is executed. Any
construction or repairs will comply with applicable building codes.

 

1.26 Additional Space. Lessor agrees that, in the event Lessee desires
to lease additional space from Lessor during the term of the lease, and
provided Lessee shall not be in default under the provisions of the lease, and
provided that Lessor shall have space available, Lessor shall provide
additional space upon the following terms and conditions:

 

 

a. Space will be provided in the building to Lessee on a first right of
refusal basis.

b. The terms of the lease for the additional spice shall be negotiated
between Lessor and lessee at die time die space is provided.

c. Lessor deliver written notice in writing to Lessee the availability
of less than 30 days before the space is to be provided by Lessor, prior to
space being offered to the general market.

 

1.27 Reasonable Rules and Regulations.     In
the interest of uniformity, to conform to such reasonable and non­discriminatory
rules and regulations in the use of the leased promises as may be established
from time to time by Lessor for the general use of the premises and for the
convenience of all the Lessees of Lessor in the buildings, of which the leased
premises are an integral part, Lessee agrees to abide by all rules and
regulations of the building imposed by Lessor.

 

These regulations are imposed for the cleanliness, good appearance,
proper maintenance. good order and reasonable use of the premises and the
building, and as may be necessary for the proper enjoyment of the building by
all tenants and their clients, customers and employees.

The rules and regulations maybe changed from time to time on reasonable
notice to Lessee, Breach of building rules and regulations shall not be grounds
for termination of the lease unless Lessee continues to breach them after ten
days written  notice by Lessor, and then
only in the event such rules or regulations have been made for the above stated
purpose.

 

1.28. Common Areas and Parking. The term “Common Area” means the entire
area designed for common use or benefit within the outer property limits of the
building area, including, but not limited to, parking lots, landscaped and
vacant areas, passages for trucks and automobiles, areaways, roads, walks,
curbs, corridors, garden court and arcades, together with public facilities
such as washrooms, comfort rooms, lounges, drinking fountains, toilets, public
stairs, ramps, elevators, escalators, shelters, porches, bus stations and
loading docks, with facilities appurtenant to each, if any such areas now exist
or may later exist on the real property of Lessor, but excluding any area which
the Lessor may have designated as a restricted area.

Subject to reasonable rules and regulations to be promulgated by
Lessor, the public portions of the Common Area are hereby made available to
Lessee and its employees, agents, customers, and invitees for reasonable use in
common with other tenants, their employees, agents, customers, invitees and
Lessor for the purpose for which constructed.

Lessor hereby grants to Lessee and Lessee’s agents, employees and
invitees the right, during the term hereof, to use, in common with others
entitled to the use thereof, such truck way service corridors, service elevator
and loading docks subject to such reasonable regulations as Lessor shall make
from time to time.

Lessee further agrees to receive and deliver goods and merchandise and
to remove all garbage and refuse only by way of the truckway and loading docks
designated by Lessor for lessor use.

Lessor may from time to time temporarily close portions of the Common
Area, erect private boundary marks or lake further appropriate action to
prevent the acquisition of public rights and such action shall not be deemed an
eviction or disturbance of lessees use of the [eased premises.

Lessee shall have, and is hereby granted, such possession and control
over all portion of the entire Common Area, whether at the front or rear of die
leased premises, as will authorize Lessee to exclude therefrom all persons who
are not customers or patrons of the Lessees of the building area. who are or
may be creating a nuisance or disturbance thereon, and in particular as will
authorize Lessee to maintain an action in trespass against such persons who arc
not patrons or customers and who are or may be picketing thereon

Subject to reasonable rules and regulations of the Lessor, Lessee and
its employees agents, customers and invitees shall have the use of parking
areas specifically designated by Lessor for that purpose. Lessee agrees that
upon written notice from Lessor, it will, within five days, furnish to Lessor
the automobile license numbers assigned to Lessees vehicles and the vehicles of
all its officers, agents and employees.

Lessee agrees that it shall not at any time park or permit the parking
of its trucks or vehicles of others in truck passages or adjacent to loading
docks so as to interfere in any way with the use thereof.

Lessee, in common with Lessor and the patrons and customers of Lessee
and Lessor and of other lessees of Lessor in the building area, their patrons
and customers, shall have the right to use for parking

 

 

purposes the parking areas adjacent to the building or buildings
located on the real property hereinbefore described. Nothing herein contained
shall be construed in such manner as to imply that any portion of that parking
area is hereby leased unto that Lessee.

 

1.29 Repairs, Maintenance and Alterations by Lessor. Lessor shall be
responsible for structural repairs in general of the building, and Lessor shall
further be specifically responsible for keeping in good repair the foundations,
the outer walls, the roof, down spouts, and gutters and the plumbing, sewerage
and central refrigerated air conditioning or heating systems of the building,
except that Lessor shall not be responsible for the repair of any part of the
building in instances when such repair is necessitated by ordinary wear and
tear or by negligence of Lessee, its sublessee assignees, or by invitees,
clients, patrons, agents or employees of Lessee, its sublessee or assigns.

 

1.30. Maintenance of Heater, Cooler, Drinking Water and Locks. Lessee shall
at its own expense be responsible for the installation, care, maintenance and
replacement of all refrigerated air conditions, coolers, and heating equipment
and parts thereof serving the leased premises whether or not such equipment is
located on the leased premises and whether such equipment was installed-by
Lessee or by Lessor.

If the leased premises arc served by a central refrigerated air
conditioning or heating system, and only in such event, Lessor, at its own
expense, shall be responsible for the care, maintenance and replacement of all
equipment forming a part of that central system, regardless of the location of
such equipment. As used in this lease, “central refrigerated air conditioning
or heating system” shall mean a refrigerated air conditioning or heating system
designed to serve three or more separate leasehold premises. Lessee shall be
responsible for locks and maintenance of locks and doors, light bulbs, ballast
units and all window treatments.

 

PART TWO

 

GENERAL PROVISIONS FOR COMMERCIAL LEASES

 

2.1 Quiet Possession. Lessor agrees that Lessee, on paying the rentals
and on performing all terms of this lease, shall and may peaceably and quietly
have, hold and enjoy the leased promises during the term of this lease. Lessee
agrees that in the event of the inability of Lessor to deliver to Lessee
possession of the leased premises within 60 days of the commencement of the term
as above specified, Lessor shall not be liable for any damage caused thereby,
nor shall this lease be void or violable, but the term hereof shall be extended
for a period of time equal to the delay in such delivery but Lessee shall not
be liable for rent until such time as Lessor offers to deliver possession of
the leased premises to Lessee. By occupying the leased premises as a tenant, or
installing fixtures, facilities, or equipment or performing finishing work,
Lessee shall be deemed to have accepted the some and to have acknowledged that
the premises arc in the condition required by this lease. In he event of any
dispute, the certificate of lessor’s architect or contractor shall be
conclusive that the leased premises are in the condition required by this lease
and are ready for occupancy.

 

2.2 Use of Premises. Lessee has examined and knows the condition of the
leased premises, and has received the same in good order and repair, and
agrees:

a. To use these premises for reasonable office, warehousing, commercial
or industrial uses which do not materially damage the leased premises.

b. To surrender possession of these premises at the expiration of this
lease without further notice to quit, is as good condition as reasonable and
careful use will permit.

c. To keep the premises in good condition and repair at its own expense
and not to commit or permit any waste or nuisance.

d. Not to use the leased premises for living quarters or residence.

c. Not to make any unlawful, immoral or improper use of the leased
premises, or any use or occupancy thereof contrary to law or contrary to any
direction, rules, regulations, regulatory bodies, or officials having
jurisdiction thereof or which shall be injurious to any person or property.

 

 

2.3 Damages to Interior or Structure. Lessee shall pay (a) for any
expense, damage or repair occasioned by the stopping of waste pipes or overflow
from bathtubs, closets, washbasins, basins or sinks, and (b) for any damage to
window panes, window shades, curtain rods, wallpaper, furnishings, or any other
damage to the interior of the leased premises.

 

2.4 Repairs, Maintenance and Alterations by Lessee. The Lessee has
promised that the leased premises shall at all time be kept in good order.
condition and repair by Lessee, at its own expense and in accordance with all
laws, directions, rules and regulations of regulator), bodies or officials
having jurisdiction.

If Lessee refuses or neglects to commence repairs within 10 days after
receipt of written demand from Lessor, or adequately to complete such repairs
without liability to Lessor for any loss or damage that may accrue to Lessees
stock or business by reason thereof, and if Lessor shall make such repairs,
Lessee shall pay to Lessor, on demand, as additional rent, the costs thereof
with interest at the maximum legal rate from the date of commencement of those
repairs.

Lessee shall make no changes, improvements, alterations, or additions
to the leased premises unless such changes, improvements, alterations, or
additions: (a) are first approved in writing by Lessor; (b) are not in
violation of restrictions placed thereon by the investor financing the construction
of the building; and D will not materially alter the character of such premises
and will not substantially lessen the value thereof. Lessor may not
unreasonably withhold approval, and if there is a dispute as to reasonableness,
it shall be determined by arbitration.

If structural alterations become necessary because of the application
to the business carried on by Lessee of any law, ordinance, rule or regulation
of any regulatory body, or because of any act or default on the part of Lessee,
or because Lessee has overloaded any electrical or other facility, Lessee shall
make such structural alterations al its own cost and expense, after first
obtaining lessors written approval of plans and specifications and furnishing
such indemnization against lions, costs, damages and expenses as Lessor may
reasonably require.

Lessee may place partitions and fixtures (including light fixtures) and
make improvements and other alterations in the interior of the leased premises
at its own expense. These improvements or alterations installed or made by
Lessee, other than those of a structural nature, shall remain the property of
the Lessee provided, however, that prior to commencing any such work Lessee
shall first obtain the written consent of Lessor to the proposed work.

Lessor may require that such work be done by Lessor own employees or
under Lessors direction but al the expense of Lessee, and Lessor may, as a
condition to consenting to such work, require that Lessee give security that
the premises will be completed, free and clear of liens and in a manner
satisfactory to Lessor, and that the premises will be repaired by Lessee to
restored by Lessee to its former condition at the termination of the ]case at
Lessees sole cost and expense.

 

2.5. Mechanics’ and Other Liens Imposed by Lessee. Lessee shall keep
the leased premises and the improvements thereon at all times during the term
hereof free of mechanics’ and material men’s liens and other liens of like
nature, other than liens created and claimed by reason of any work done by or
at the instance of Lessor, and at a11 time shall fully protect and indemnify

Lessor against all such liens or claims and against all attorneys’ fees
and other costs and expenses growing out of or incurred by reason or on account
of any such liens or claims. Should Lessee fail to fully discharge any such
lien or claim, Lessor, at its option, may pay the same of any part thereof, and
Lessor shall be the sole judge of the validity of such lien or claim.

All amounts so paid by Lessor, together with interest thereon at the
maximum legal rate from the time of payment by Lessor until repayment by
Lessee, shall be paid by Lessee upon demand, and if not so paid, shall continue
to bear interest at the aforesaid rate, interest payable monthly, as additional
rent.

 

2.6. No Signs Without Approval of Lessor. Any and all signs placed by
or for Lessee on the exterior of the leased premises, or on the real property
on which the leased premises are located, shall be so placed and allowed to
remain in place only with the approval of Lessor in writing.

Nor shall Lessor, or its successor or tile owner of the leased
premises, be charged with the costs of installing, maintaining, changing, or
removing such sign or signs. Lessor hall have the right to approve tile design,
type, size. lettering and location of every sign to be erected in, upon or
about the leased premises.

 

 

Any signs placed upon or about such leased premises shall, upon the end
of the term of the lease or upon the earlier termination thereof, be removed by
Lessee, and Lessee shall repair any damage to the leased premises which shall
be occasioned thereto by reason of such removal.

 

2.7. No Exterior Paint Without Lessor Approval.  Lessee shall not decorate or paint the
exterior of the leased premises, or any part thereof, except in the manner, and
of a color, approved by Lessor.

 

2.8. Trash Control. Lessee shall provide and maintain sanitary and
ral-proof receptacles with covers at or about the leased premises in which to
place any and all refuse or trash, and to place this refuse and trash in
receptacles. Lessee shall make lessees own arrangements and pay for garbage and
trash pick-up service on or from the leased premises, and shall not permit the
same to accumulate and remain on the premises except during reasonable
intervals between pick-up service.

 

2.9. Sidewalk Maintenance. All time, Lessee shall keep the sidewalks in
front of the leased premises clean and in a sightly and sanitary condition, and
not exhibit or display any goods, wares or merchandise thereon.

 

2.10. Replacement of Class. Al Lessees own cost and expense, Lessee
shall replace all glass in, upon or about the leased premises that shall be
broken during tile term herein specified unless caused by Lessor, an agent or
employee of Lessor, or lessors successor.

 

2.11. Right of Re-Entry. Lessor shall have the right, by itself or
agent or with others, to enter the premises at reasonable hours to examine or
exhibit the premises, or to make such repairs and alterations as shall be
deemed necessary for the safety and preservation of the building, to inspect
and examine, to post such notices as Lessor may, deem necessary to protect
Lessor against

loss from liens of laborers, matcrialmcn or others, and for the purpose
of permitting or facilitating lessors performance of its obligations hereunder
or for any other reasonable purpose which does not materially diminish lessees
enjoyment or use of the leased premises.

Lessee expressly waives any claim for damages, including loss of
business, resulting from lessors entry, from the erecting of scaffolding or
other structures to facilitate repairs, or from lessors other reasonable
activities for the purpose of altering, improving, or repairing the leased
premises in conformity herewith.

Lessee agrees to permit Lessor, at any time within GO days prior to the
expiration of this lease, to place upon or in tile window of the leased
premises any usual or ordinary   or similar sign and to allow prospective
tenants, applicants or agents of Lessor to enter and examine the leased
premises during the last 60 days of the term hereof, and to permit Lessor or
lessors agents, at any time during the term hereof to conduct prospective
purchasers through the leased premises during reasonable business hours.

 

2.12 Assignment or Sub-Letting. No assignment, sublease or sale of this
lease or any interest therein may be made by Lessee without the written consent
of Lessor having first been obtained thereto, which consent Lessor shall grant
unless Lessor has a valid reason, which can be substantiated. If there is a
dispute as to whether Lessor has a valid reason for withholding consent, it
shall be determined by arbitration.

Any attempted assignment, sublease or sale of this lease or any
interest therein shall be null and void and have no effect unless such consent
shall have been obtained. Any assignment by operation of law shall be subject
to the same conditions and restrictions as an assignment by Lessee. If such
consent is given by Lessor, any and all sub-lessees shall be responsible tenants,
and Lessee shall not be relieved of any liability hereunder by Lessees
assignment, vacation or subletting thereof.

It is agreed that one of the conditions moving Lessor to make this
lease is the personal confidence reposed by it in Lessee, combined with the
belief that Lessee will be a tenant and occupant satisfactory la Lessor.

Nothing herein shall prevent the Lessor from assigning its interest
under this lease, provided, however, that any assignee shall be subject to the
same obligations and duties as the original Lessor.

 

2.13. Right of Lessor to Pay Obligations of Lessee to Others. If Lessee
shall fail or refuse to pay any sums due to be paid by it under the provisions
of this lease, or fail or refuse to maintain the leased

 

 

premises or any part thereof as herein provided, then, and in such
event, Lessor, after 10 days’ notice in writing by Lessor to Lessee, shall have
the right to pay any such stun or sums due to be paid by Lessee and to do and
perform any work necessary to the proper maintenance of (he leased premises;
and the amount of such sum or sums paid by Lessor for the account of Lessee and
the cost of any such work, together with interest thereon at the maximum legal
rate from the date of payment thereof by Lessor until the repayment thereof to
Lessor by Lessee, shall forthwith be paid by Lessee upon demand in writing.

The payment by Lessor of any such sum or sums or the performance by
lessor of any such work shall be prima facie evidence of the necessity
therefore.

 

2.14. Surrender and Return of Leased Premises.  On the last day of the term hereby created
or on the sooner termination thereof, Lessee shall peaceable surrender the
leased premises in good order, condition and repair, Broom clean - fire and
other unavoidable casualty, reasonable wear and tear only excepted. On or
before the last day of the term hereby created or on the sooner termination
thereof, Lessee shall, at its expense, remove its trade fixtures, signs and
carpeting from the leased premises and any property not removed shall be deemed
abandoned. All alterations, additions, improvements and fixtures (other than
lessees trade fixtures, signs and carpeting) which shall have been made or
installed by either Lessor or Lessee upon the leased premises and all hard
surface bonded or adhesively affixed flooring shall, without charge, remain
upon and be surrendered with the leased premises as a part thereof, Without
disturbance, molestation or injury.

[f the leased premises be not surrendered on the last day of the term
hereby created or on the sooner termination thereof, Lessee shall indemnify
Lessor against loss or liability resulting from delay by Lessee in so
surrendering the premises, including, without limitation, claims made by any
succeeding tenant founded on such delay. Lessee shall promptly surrender all
keys for the leased premises, at the lace then fixed for payment of rent and
shall inform Lessor of combinations on any locks and safes on the leased
premises.

 

2.15. Event of Default. Each of the following shall be deemed an Event
of Default: a. Default in the payment of rent or other payments hereunder

b. If Lessee shall default in the performance or observance of any
covenant or condition of this lease by the Lessee to be performed or observed,
or if Lessee shall fail to make reasonable efforts in the light of the
surrounding circumstances to keep substantially all the premises occupied and
open for business following the expiration of the period or 30 days giving
notice of such default or defaults or failure to Lessen by Lessor

c. Abandonment of the premises.

d. The filing or execution or occurrence or-.

(1) A petition in bankruptcy by or against Lessee.

(2) A petition or answer seeking a reorganization, arrangement,
composition, readjustment, liquidation, dissolution or other relief of the same
or different kind under any provision of the Bankruptcy Act.

(3) Adjudication of Lessee as a bankrupt or insolvent; or insolvency in
the bankruptcy equity sense. (4) An assignment for the benefit of creditors
whether by trust, mortgage, or otherwise.

(5) A petition or other proceeding by or against Lessee for, or the
appointment of, a trustee, receiver, guardian, conservator or liquidator of
Lessee with respect to all or substantially all its property.

(G) A petition or other proceeding by or against Lessee for its
dissolution or liquidation, or the taking of possession of the property of the
Lessee by any governmental authority in connection with dissolution or
liquidation.

(7) The taking by any person of the leasehold created hereby or any
part hereof upon execution, attachment, or other process of law or equity.

 

2.16. Fair Notice of Default. The parties are desirous of giving one
another fair notice of any default before sanctions arc imposed. In the event
of an act of default with respect to any provision of this lease, neither party
can institute legal action with respect to such default without first complying
with the following conditions:

a. Notice of such event of default must be in writing and mailed to the
other party by U.S. Certified Mail, return receipt requested;

 

 

b. Such written notice shall set forth the nature of the alleged
default in the performance of the terms of this lease and shall designate the
specific paragraph(s) therein which relate to the alleged act of default;

c. Such notice shall also contain a reasonably understandable
description of the action to be taken or performed by the other party in order
to cure the alleged default and the date by which the default must be remedied,
which date can be not less than ten business days from the date of mailing the
notice of default.

 

2..17 Termination. Upon occurrence of any Event of Default, and after
proper notice of default has been given, Lessor may, at its option, in addition
to any other remedy or right given hereunder or by law:

a. Give notice to Lessee that this lease shall terminate upon the date
specified in the notice, which date shall not be earlier than five days after
the giving of such notice; or,

b. Immediately after ten days notice of default, and without further
notice or demand, enter upon the leased premises or any part thereof, in the
name of the whole, and upon the date specified in such notice, or any other
notice pursuant to law, or upon such entry, this lease and the term thereof
shall terminate.

 

2.18. Repossession. Upon termination of this lease as hereinabove
provided, or pursuant to statute, or by summary proceedings or otherwise, the
Lessor may enter forthwith, without further demand or notice upon any part of
the premises, in the name of the whole, if he has not theretofore done so, and
resume possession either by summary proceedings, or by action at law or in
equity, or by force or otherwise, as Lessor may determine, without being liable
in trespass or for any damages. In no event shall such re-entry or resumption
of possession or reletting as hereafter provided be deemed to be acceptance or
surrender of this lease or a waiver of the rights or remedies of Lessor
hereunder

 

2.19. Court Action, Attorneys’ Fees and Casts. If, upon failure of
either party to comply with any of the covenants, conditions, rules or
regulations of and in this lease, suit or arbitration should be brought for
damages on account thereof, or to enforce the payment of rent herein
stipulated, or to recover possession of the premises, or to enforce any
provision hereof, the losing party agrees to pay to the prevailing party
reasonable costs and expenses incurred in prosecuting these suits or
arbitration, as determined by the court or arbitrator, including attorneys’ fees
and the value of time lost by the prevailing party or any of its employees in
preparing for or participating in any arbitration or litigation in connection
therewith. Interest shall accrue on that award at the maximum legal rate on all
monetary amounts awarded for principal, interest, attorneys fees, costs and all
other amounts, from the date of that award until paid.

 

2.20. Default by Lessor, In the event of any default by Lessor, Lessee,
before exercising any rights that it may have at law to cancel this lease, must
first send notice by registered or certified mail to Lessor, and shall have
offered Lessor thirty (30) days in which to correct and cure the default or
commence a good faith effort to cure such default.

 

2.21. Re-letting after Termination. Upon termination of this lease in
any manner above provided, Lessor shall use reasonable efforts to re-let the
premises.

Lessor shall be deemed to use reasonable efforts if it lease the whole
or any part of the premises, separately or with other premises, for any period
equal to or less than or extending beyond the remainder of the original term,
for any sum or to any lessee or for any use it deems reasonably satisfactory or
appropriate.

 

2.22. Damages. Upon termination of this lease in any manner above provided,
or by summary proceedings or otherwise, Lessee shall pay to Lessor forthwith
without demand or notice the sum of the following:

a. All rent, additional rent and other payments accrued to the date of
such termination and a proportionate part of the rent otherwise payable for the
month in which such termination occurs.

b. The costs of making all repairs, alterations and improvements
required to be made by Lessor hereunder and of performing all covenants of
Lessee relating to the condition of the premises during the term and upon
expiration or sooner termination of this lease, such costs to be deemed prima
facie to be

 

 

the costs estimated by a reputable architect or contractor selected by
Lessor or the amounts actually expended or incurred thereafter by Lessor.

c. The attorneys’ fees and other costs detailed in paragraph 2.19
(Court Action, Attorneys’ Fees and Costs).

d. An amount equal to “Liquidation damages” or “indemnity payments”
whichever is larger, determined and payable as set forth below:

(1) “Liquidation damages” means an amount equal to the excess of the
rent, addilional rent and other payments reserved in this lease for the portion
of the term remaining after termination of the lease (hereinafter referred to
as the “unexpired term”) over the then fair and reasonable rental value of the
premises for such period of the term.

(2) “Indemnity payments” means all the rent, additional rent and other
payments reserved under this lease which would have become due and owing there
under from time to time during the unexpired term, less, to the extent not
previously deducted or credited, the rent, additional rent and other payments
actually collected and allocable to the promises or to the portions thereof

re-lei by Lessor, and plus, to the extent not previously charged, the
costs and expenses, including but not limited to reasonable attorneys’ and
broker’s fees and expenses, paid or incurred by Lessor in connection with:

(a) Obtaining possession of the premises.

(b) Removal and storage of lessees or other occupants property. (c)
Care, maintenance and repair of the premises while vacant.

(d) Re-Ietting the whole or any part of the premises (which re-Ietting
may be for a period or periods of time less than the unexpired term hereof or
extending beyond the term hereof.)

(c) Repairing, altering, renovating, partitioning, enlarging,
remodeling or otherwise putting the premises, either separately or as part of
larger premises, into condition acceptable to, and reasonably necessary to
obtain new tenants.

Such costs and expenses shall be deemed prima facie to be the amounts
therefor invoiced to Lessor or actually expended or incurred therefore by
Lessor.

Lessee shall, without prior demand or notice, made indemnity payments
monthly on arrears with respect to such portion thereof as includes rent (as
distinguished from additional rent and other payments) and upon the respective
dates provided therefore in the lease with respect to additional rent and other
payments. Lessor may sue for all such indemnity payments as they accrue

without waiting until the date fixed in the lease as the expiration
date thereof. Any action or proceeding to recover liquidated damages shall not
be a waiver of lessors right to recover indemnity payments and vice versa, but
in any action or proceeding to recover indemnity payments to the extent that
they include rent (as distinguished from additional rent and other payments),
brought contemporaneously with or after an action or proceeding to recover
liquidated damages which has not been discontinued, there shall be deducted
from the claim for indemnity payments (to the extent not previously deducted or
credited) such portion of the liquidated damages as is in the same proportion
to such liquidated damages as the portion of the unexpired term from which
monthly indemnity payments have accrued bears to the unexpired term.

 

2.23. Operating Costs. All operating expenses of Lessee or whatever
nature, are the sole obligation of Lessee.

 

2.24. Landlord’s Lien. Upon the termination of this lease in any of the
manners herein provided, or upon default by Lessee under any of the provisions
hereof, Lessor may enter the leased premises and remove any and all personal
property of Lessee and may retain possession of such personal property until
all charges of any kind, including rent, storage or damages, shall be paid in
full.

 

2.25. Abandonment. If Lessee shall be in default in the payment of the
rental and shall vacate or abandon the premises or any part hereof (an absence
of Lessee therefrom for a period of five days after such default shall be
considered such an abandonment thereof), Lessor may, if it so elects, re-enter
the leased premises and remove the contents and take possession of the leased
premises and re-let the some or any part thereof, at such rental and upon such
terms and conditions as it may deem proper and apply the proceeds thereof, less
the expenses, including the usual agents commission so incurred, upon the
amount due from Lessor hereunder and Lessee shall be liable for any deficiency.

 

 

If Lessor shall take possession of the premises and relet the same,
such reletting shall not operate as a termination of this lease unless Lessor
so elects, such election to be evidenced by written notice to Lessee; nor shall
such action by Lessor operate as a waiver of any other rights or remedies of
Lessor hereunder.

 

2.26 Holdover. If Lessee shall holdover after the expiration of the
term hereof, with the consent of Lessor, express or implied, such tenancy shall
be from month to month only, and not a renewal hereof and Lessee agrees to pay
rent and all other charges as hereinabove provided, and also to comply with all
covenants of this lease for the time Lessee holds over. If lessee shall hold
over without the consent of Lessor, express or implied, then Lessee shall be
construed to be a tenant at sufferance at double the rent herein provided,
prorated by the day until possession is returned to Lessor. If Lessee shall
hold over with the consent of Lessor, Lessee shall be entitled to possession
until Lessor has given Lessee 30 days notice that such month to month tenancy
shall be terminated; otherwise, notice is only required as hereinafter provided
as notice of default.

 

2.27 Destruction of Leased Premises. If the leased premises shall, at
any time during the term herein specified, be damaged or destroyed by fire or
other unavoidable casualty to the extent that the leased premises shall be
unfit for occupancy and use by Lessee, and to the extent that the same cannot
be rebuilt or resorted by Lessor within 120 days thereafter, then and in such

event, either Lessor or Lessee may, at their respective option,
terminate this lease by notice in writing to the other of them given within ten
days after such damage or destruction provided, however, if the leased premises
can be rebuilt or restored within 120 days, Lessor shall, at its own cost and
expense and with due diligence, rebuild and restore the leased premises, and a
just and proportionate part only of the rentals hereby reserved shall be forced
to lease other premises, such amount paid for the other premises shall be
deducted from the amount owed to Lessor, provided that such deduction shall not
exceed the amount owed Lessor.

If Lessor shall rebuild or restore the leased premises, then and in
such event, the full amount of the insurance payable under policies of fire
insurance shall be paid to Lessor for use int he rebuilding and restoration of
the leased premises.

 

2.28. Removal of Trade Fixtures. Lessee shall have the right, upon the
expiration of the term of this lease, or at any time during such term if Lessee
shall not be in default, to remove from the leased premises all fixtures and
equipment placed thereon by Lessee, even though permanently affixed to the
leased premises, provided, however, that Lessee, in effecting removal, shall
restore the-leased premises to a good, safe, sound, orderly and sightly
condition.

 

2.29. Eminent Domain. If the leased premises or any part thereof shall
be taken by eminent domain, which taking shall render the remainder of the leased
premises unsuitable for occupancy and use by Lessee for the purpose intended by
Lesser, then and in such event, the full current amount payable to the date of
taking, or the prorated amount of that months rent to the date of taking, shall
be paid to Lessor, and this lease shall terminate as of the date of taking.

If only a part of the leased premises shall be taken by eminent domain,
and such taking shall not unduly interfere with the occupancy and use of the
leased promises for the purpose intended by Lessee, then and in such event. the
full amount payable for and upon such taking shall be paid to Lessor, and from
and after the date of such taking, only a just and proportionate part of the
rentals for the leased premises hereby reserved shall be paid by Lessee.

Lessee shall have the right to claim and recover from the condemning
authority, but not from Lessor, such compensation as may be separately awarded
or recoverable by Lessee in lessees own right on account of any and all damage
to Lessees leasehold interest, to lessees business by reason of the
condemnation, and for or on account of any cost or loss to which Lessee might
be put in removing Lessees merchandise, furniture, fixtures, leasehold
improvements and equipment.

 

2.30 Subordination. If Lessor shall desire at any time, and from time
to time to secure a loan or loans upon the security of the real properly and
the improvements thereon, including the leased premises, then and in such
event, Lessee hereby agrees to make and enter into a subordination agreement or
agreements with any responsible lending agency that Lessor shall designate,

 

 

wherein and whereby lessees rights, titles and interests in and to the
real property and the improvements are subordinated to the lien of any mortgage
or mortgages to be made, executed and delivered by Lessor as security for that
loan or loans; provided, however, that the subordination shall be upon the
following conditions:

a. The execution of the subordination agreement or agreements by Lessor
shall impose no personal liability whatsoever upon Lessee.

b. Any such mortgage -or mortgages shall provide that the mortgagee
shall agree to give to Lessee all notices required to be given to Lessor as
mortgagor under the terms and conditions of those mortgages, or any loan
agreement or agreements, or under the laws of the state where the leased
premises are situated.

c. The mortgage or mortgages shall further provide that in the event of
any default on the part of Lessor under the terms and conditions thereof or the
obligation secured, Lessee may, at its own election, cure such default, and any
amount expended by Lessee in so doing shall be paid by Lessor to Lessee, with
interest thereon at the maximum legal rate per annum from the time or times any
expenditure or expenditures for such purpose were made, upon demand by Lessee
therefor.

d. Lessor shall indemnify and hold harmless the Lessee of and from any
and all liability, cost or expense to which Lessee may be put by reason of the
failure of Lessor to keep and perform any of the covenants and agreements set
forth and contained in such mortgage or mortgages and the obligations thereby
secured.

 

2.31. Sale by Lessor. In the event of a sale or conveyance by Lessor of
all or part of the leased premises, the same shall operate to release Lessor
from any future liability upon any of the covenants or conditions, express or
implied, herein contained in favor of Lessee, and in such event Lessee agrees
to look solely to the responsibility of the successor in interest of Lessor in
and to this lease. This lease shall not be affected by any such sale, and
Lessee agrees to the purchaser or assignee.

 

2.32. Applicable Law. This lease shall be subject to and governed by
the laws of the state where the leased premises are situated, regardless of the
fact that one or more of the parties now is or may become a resident of a
different state.

 

2.33. Assignment of Personal Property Warranties. Lessor hereby assigns
to Lessee any and all rights it has under any manufacturers’ or dealers’
warranties covering the personal property and fixtures leased herein.

 

2.34. Prorations. If any probations are required to be made under the
terms of this lease, the prorations shall be made as of the first day of the
lease term.

 

PART THREE GENERAL LEASE PROVISIONS

 

3.1 Arbitration. At the option of either party, disputes may be settled
by arbitration. The manner of arbitration shall be as follows:

The parties adopt by reference the provisions of the “Uniform
Arbitration Act” and agree that, should any bona fide disputes arise out of
this agreement or out of the agreed performances of the parties pursuant
thereto, the parties may elect to arbitrate that dispute by the Lessor and
Lessee selecting and agreeing upon a disinterested attorney to serve as
arbitrator.

Should one of the parties or his attorney refuse or delay the selection
of an arbitrator for more than ten days after the mailing of written notice,
mailed to its last known address, stating a desire to arbitrate, then the party
desiring arbitration may petition the court or a court commissioner ex. parte
to have an arbitrator selected, and the costs and reasonable attorneys fees for
this shall be charged against the delinquent party in the arbitration award.

The parties shall share the costs of the arbitrator’s services, comply
with his arbitration procedures, and abide by his award within ten days after
receiving a copy of his decision.

If for some reason, the parties cannot agree on a disinterested
attorney, then the parties shall each select one attorney apiece, and these two
attorneys shall select a disinterested attorney.

The arbitrator shall assess the fees of the arbitrator against the
losing party based upon the prevailing hourly rates and out-of-pocket expenses.

 

 

After the award by the arbitrator, should the losing party take the
matter to court, then the arbitrator shall set an amount as reasonable
attorneys? fees and costs of the contemplated court proceedings for the losing
party to pay to the other party as a prerequisite to the filing of a court action
by the losing part.

Should it be necessary for either party to seek the assistance of a
court to enforce the arbitration award, then, in that event, the losing party
shall pay to the winning party an amount which is determined by the court for
the court costs, reasonable attorneys’ fees, and the time lost to the winning
party for his or his agents having to prepare for and appear in a court action.

 

3.2. Corporate Lessee. If Lessee is a corporation, then if, at any time
during the term of this lease, any part or all the corporate shares shall be
transferred by sale, assignment, bequest, inheritance, operation of law or
other disposition, so as to result in a change in the present control of the
corporation by the person or persons now owning a majority or the corporate
shares, Lessor may terminate this lease and the demised term at any time after
such change in control by giving lessee GO days prior written notice of such
termination.

 

3.3. Corporate Authority. If Lessee is a corporation, each person executing
this lease represents and warrants that he is duly authorized to execute and
deliver this lease on behalf of the corporation. Those persons further
represent that the terms of this lease are binding upon the corporation. The
corporation shall deliver to Lessor a certified copy of its Board of Directors
resolution ratifying or authorizing the execution of this lease within thirty
(30) days after its execution.

 

3.4. Nature of Relationship Between Parties. The sole relationship
between the parties created by this agreement is that of Lessor and Lessee.
Nothing contained in this lease shall be deemed, held, or construed as creating
a joint venture or partnership between the parties.

 

3.5. Notices. Copies of all notices and communications concerning this
lease shall be mailed to the parties at the addresses written on page one of
this lease, and any change or address shall be communicated to the other party
in writing. Any documents which may adversely affect the rib-his of any party
to this lease shall be dispatched by certified mail, return receipt requested.
For all documents mailed to persons in the continental United States, the time
period on all notices shall begin running on the day following the date that
the document is postmarked. For documents mailed to persons outside the
continental United States, the time period begins to run on the date that the
document is received by the other party.

 

3.6. Waiver and Consent. lessors consent to or waiver of any of the
terms or conditions of the lease on any one occasion shall not be deemed a
waiver or consent with regard to any such term or condition for any other
occasion or to any other act or conduct. The waiver by Lessor of any breach of
any term, covenant or condition herein contained shall not be deemed to be a
waiver of any subsequent breach of the same or any other term, covenant or
condition.

Whenever under this lease provision is made for Lessee to secure the
written consent or approval by Lessor, such consent or approval shall be in
writing and shall not be unreasonably withheld.

No covenant, term or condition of this lease shall be waived except by
written consent of the Lessor and the forbearance by Lessor in any regard
whatsoever shall not constitute a waiver or the covenant, term or condition to
be performed

 

3.7. Provisions of Lease. Each term and each provision of this lease to
be performed by Lessee shall be construed to be both a covenant and a
condition.

 

PART FOUR CONSTRUCTION AND INTERPRETATION

4.1. Entire Agreement. The terms of this document constitute the entire
agreement between the parties, and the parties represent that there are no
collateral agreements or side agreements not otherwise provided for within the
terms of this agreement

 

4.2. Interpretation.  Whenever
any word is used in this agreement is the masculine gender, it shall also be
construed as being used in the feminine and neuter genders, and singular usage
shall include the plural and vice versa, all as the context shall require.

 

 

4.3. Partial Invalidity.      If any
provision of the contract is held to be invalid or unenforceable all the
remaining provisions shall nevertheless continue in full force and effect.

4.4. Marginal Headings. The marginal and topical headings of the
paragraphs of this agreement tire for convenience only and are not to be
considered a part of this agreement or used in determining its content. or
context.

 

4.5. Modification. Any modification or amendment of this agreement
shall be in writing and shall be executed by all parties.

 

4.6. Succession of Benefits. The provisions of this agreement shall
inure to the benefit of and be binding upon the parties thereto, their heirs,
executors, administrators and permitted assignees

 

4.7. Time. Time is of the essence in this agreement for each and every
term, condition, covenant and provision.

 

PART FIVE EXECUTION. ACCEPTANCE AND ACKNOWLEDGMENT

5. I. Effective Date. This legal instrument has been executed by the
parties intending that it be effective on the effective date set forth on the
caption page. The panics recognize that they effectuated a meeting of the minds
among themselves on that effective date and intended that this instrument take
effect on that date even though because of the exigencies of the modem world,
the mechanics of drafting, the convenience of the panics, and the economy of
travel, it may have been necessary to actually sign and notarize the documents
at a later time.

 

5.2. Effective Place of Execution. The panics intend that the place of
execution be that county and state that is set forth in the caption of this
instrument. The effective place of execution is the place that the parties
intend this instrument to have been executed incorporating all laws, for
purposes of conflicts of laws, which apply to that effective place of execution.
The parties recognize that, due to the exigencies of the modem world, the
mechanics of drafting, the convenience of the parties, and the economy of
travel, this instrument may be executed by one or all the parties al some other
geographic place and possibly at multiple places. However, in spite of this,
they intend that it be deemed executed at the effective place of execution.

 

5.3. Interlineations and Initials. The parties recognize that because
of the exigencies of die modem world, the mechanics of drafting, the
convenience of the parties, and the economy of costs, they may have in their
own handwriting made minor changes in this instrument. These minor changes have
been initialed by all parties, if any changes have been made, fore and aft of
the change on all originals to prevent any extension or alteration of that
change by any of the parties or others. Unless otherwise indicated by the
placement of a date beside the change, these changes were intended by the
parties to have occurred as of the effective date of this instrument. Any
interlineated changes made by the parties after the effective date of this
instrument shall be initialed by all parties, dated, and have the date itself
initialed fore and aft by all parties to this instrument.

 

5.4. Execution. All parties named in the caption as parties shall sign
below and at least one of the parties shall initial all pages of all original
copies of this instrument. Furthermore. all documents such as schedules,
exhibits and like documents which are expressly incorporated herein shall be
initialed by all parties and either exchanged or attached to the originals
which are given

to any party named on the caption page of this instrument. It is the
intent of the parties that all pages be initialed on all originals that are
exchanged in order that no substituted pages or misunderstanding shall ever
become possible to create problems in satisfying the intended objectives of
this instrument.

 

5.5. Acknowledgment. The notary publics who have acknowledged the
signatures of the various parties as designated in the acknowledgments hereof
certify that this instrument was acknowledged by the signing party before the
notary on the date of the notarization. If the instrument was subscribed by any
of the panics in a representative capacity, then the notary ascertained that
the signing party signed for the principal named by that party and in the
capacity in which that party indicated he signed.

 

 

Additional numbered provisions are attached as an addendum

NO Partners          Sensory Science
Corp.

 

	
  /s/ Robert Newstead Partner

  	
   

  
	
  LESSOR

  
	
  STATE OF ARIZONA

  
	
  Acknowledgment COUNTY OF MARICOPA

  
	
   

  
	
  /s/ Doug McClain

  	
   

  
	
  Signature LESSEE

  
			

On this date, before me, a Notary Public, personally appeared known to
me or satisfactorily proven to be the person whose name is subscribed to this
instrument and acknowledged that he executed the same. If this person’s name is
subscribed in a representative capacity, it is for the principal named end in
the capacity indicated.

Date of Acknowledgment

Signature of Notary Public

My Commission Expires:

 

STATE OF ARIZONA

Acknowledgment COUNTY OF MARICOPA)

On this date, before me, a Notary Public, personally appeared known to
me or satisfactorily proven to be the person whose name is subscribed to this
instrument and acknowledged that he executed the same. If this person’s name is
subscribed in a representative capacity, it is for the principal named and in
the capacity indicated.

Date of Acknowledgment

Signature of Notary Public

My Commission Expires:

 

This instrument was recorded at the request of

STATE OF
ARIZONA          }            CERTIFICATE, OF

COUNTY OF MARICOPA}               RECORDATION

I certify that this instrument was recorded on the date, at the time.
in the docket, beginning with the page number, and with the fee number stamped
in the top apace of this instrument. If the instrument is of multiple pages.
the docket and page set forth represent the first page of that instrument and
that instrument extends through Docket   Page

The recording official is directed to return this instrument or e copy
thereof to the above person,

County Recorder    Deputy

 

PART SEVEN

Rental and CAM Rates (Initial Term)

 

	
  Section 7.1

  Rent

  	
   

  	
  CAM

  	
   

  	
  Total +
  Tax

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Year 1

  $9,956.00/Mo

  	
   

  	
  $

  	
  262.00

  	
  /Mo

  	
  $

  	
  10,218 00

  	
  /M

  
	
  Year 2 $10
  255.00/Mo

  	
   

  	
  $

  	
  270.00

  	
  /IMo

  	
  $

  	
  10,525.00

  	
   

  
	
  Year 3 $10,562.00/IMo

  	
   

  	
  $

  	
  278.00

  	
  /Mo

  	
  $

  	
  10,840.00

  	
   

  
	
  Year 4 $10,879.00/Mo

  	
   

  	
  $

  	
  286.00

  	
  /Mo

  	
  $

  	
  11,165.00

  	
   

  
	
  Year 5 $11,206.00/Mo

  	
   

  	
  $

  	
  295.00

  	
  /Mo

  	
  $

  	
  11,501.00

  	
   

  

 

 

Rental and CAM Rates (Optional 5 Year Lease Extension)

 

	
  Section 7.2

  	
   

  	
  Rent

  	
   

  	
  CAM

  	
   

  	
  Total f+
  Tax

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Year 6

  	
   

  	
  $

  	
  11,542.00

  	
  /Mo

  	
  $

  	
  304.00

  	
  IMo

  	
  $

  	
  11,846.00

  	
   

  
	
  Year 7

  	
   

  	
  $

  	
  11,888.00

  	
  /Mo

  	
  $

  	
  313.00

  	
  Mo

  	
  $

  	
  12,201.00

  	
   

  
	
  Year 8

  	
   

  	
  $

  	
  12,245.00

  	
  /IMa

  	
  $

  	
  322.00

  	
  /Mo

  	
  $

  	
  12,567.00

  	
   

  
	
  Year 9

  	
   

  	
  $

  	
  12,612.00

  	
  /Mo

  	
  $

  	
  332.00

  	
  /IMo

  	
  $

  	
  12,944.00

  	
   

  
	
  Year 10

  	
   

  	
  $

  	
  12,990.00

  	
  /Mo

  	
  $

  	
  342.00

  	
  /Mo

  	
  $

  	
  13,332.00

  	
   

  

 

Section 1.8 (Continued):

Notwithstanding any other provisions in Section 1.8, the increase in
property tax reflecting the improvements to the building made by the Lessee and
Lessor under the terms of this agreement will not be passed on to the Lessee.
Any normal tax increases before or after the reassessment of the building will
be passed on to the Lessee on a prorated basis.

 

 

 

When recorded return to: SNELL & WTLMER One Arizona Center Phoenix,
Arizona 850(}4 Attn: Sam Cowley, Esq.

FIRST AMENDME NT TO LEASE OF COMMERCIAL SPACE STANDARD

THIS FIRST AMENDMENT TO LEASE of Commercial SPACE STANDARD

(the “amendment” is executed as of this 10 day of by and between NO
Partners, an Arizona general partnership (“Lessor”) and Sensory Science Corporation,
a Delaware corporation (“Lessee”).

RECITALS

A.            Lessor and Lessee
previously entered into that certain Lease of Commercial Space, Standard dated
November l, 1999 (the “Lease”) with respect to the premises further described
in the Lease (the “Premises”).

B.            Lessor desires to
lease to Lessee and Lessee desires to lease from Lessor ten (10) additional
parking spaces as shown an. Exhibit A (the “Parking hereof

C.            Lessor and Lessee
now desire to amend the Lease in accordance with the terms

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:

l .             Page 1 of the
Lease is amended to provide that in addition to Suites 1 & 2 of 7863 East
McClain Road,, the Premises shall include the Parking Area depicted on Exhibit
A.

 

 

2.             Section 1.28 of the
Lease is amended to provide that in addition to the parking areas specifically
designated by Lessor for use by Lessee, Lessee shall be entitled to use the
Parking Area.

3.             The last sentence
of Section 1.28 of the Lease shall not apply to the Parking Area.

4.             Except as provided
in this Amendment, capitalized terms shall have the meaning set forth in the
Lease.

5.             Except as amended
hereby, the Lease shall remain in full force and effect.

6.             This Amendment may
be executed in any number of counterparties, each of which shall be an
original, but all of which shall constitute one instrument.

1N WITNESS whereof OF, this Amendment is executed as of the first day
and year written above.

LESSOR:

NO PARTNERS, ail Arizona general partnership

 

LESSEE:

SENSORY SCIENCE CORPORATION, a Delaware corporation

 

ACCEPTED AND APPROVED.,

CITY OF SCOTTSOALE, an Arizona municipality

By: Its;

 

STATE OF ARIZONA

) ss. County of Maricopa    )

foregoing instrument was acknowledged before me this 10th
day of April, 2000. of. NO Partners, an Arizona general partnership behalf of
the partner ship.

 

My Commission Expires

 

STATE OF ARIZONA

County of Maricopa

The foregoing instrument was acknowledged before me this 17th
day of April, 2000 by Down Lodrozny, the VP of Sensory Science Corporation, a
Delaware corporation, on behalf o the corporation.

 

	
  /s/ Betty Culton

  	
   

  
	
  Notary public

  
	
  My Commission Expires;Exhibit
10.11

 

INDUSTRIAL GROSS LEASE

 

BETWEEN 78 MCCLAIN,
L.L.C., AS LANDLORD, AND GO-VIDEO INC., AS TENANT

NOVEMBER 15, 1994

 

INDUSTRIAL GROSS LEASE
BETWEEN 78 MCCLAIN, L.L.C. AND GO-VIDEO, INC.

TABLE OF CONTENTS

 

	
  1.

  	
  BASII-C-LEASE INFORMATION

  	
   

  
	
   

  	
  1.1 Parties

  	
   

  
	
   

  	
  1.2- Premises

  	
   

  
	
   

  	
  1.3 Site Plan

  	
   

  
	
   

  	
  1.4 Lease Term

  	
   

  
	
   

  	
  1.5 Renewal
  Option Term

  	
   

  
	
   

  	
  1.6 Monthly
  Rent

  	
   

  
	
   

  	
  1.7 Base
  Operating Costs

  	
   

  
	
   

  	
  1.8 Use

  	
   

  
	
   

  	
  1.9
  Security Deposit

  	
   

  
	
   

  	
  1.10 Guarantors

  	
   

  
	
   

  	
  1.11 Broker

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  PREMISES

  	
   

  
	
   

  	
  2.1 Description

  	
   

  
	
   

  	
  2.2
  Revision of Site Plan

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  TERM

  	
   

  
	
   

  	
  3. 1 Term

  	
   

  
	
   

  	
  3.2 Holding
  Over

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  MONTHLY RENT

  	
   

  
	
   

  	
  4.1 Monthly
  Rent

  	
   

  
	
   

  	
  4.2 Time and Manner of
  Payment

  	
   

  
	
   

  	
  4.3 Payment

  	
   

  
	
   

  	
  4.4 ‘‘Lease Year’’ Defined

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  EXCESS
  OPERATING COSTS

  	
   

  
	
   

  	
  5.1
  Tenant’s obligation

  	
   

  
	
   

  	
  5.2
  ‘‘Operating Costs’’ Defined

  	
   

  
	
   

  	
  5.3
  Tenant’s Share of Excess Operating Costs

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  CONSTRUCTION OF PREMISES

  	
   

  
	
   

  	
  6.1 Obligations
  of Landlord and Tenant

  	
   

  
	
   

  	
  6.2 Condition of the
  Premises

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  COMMON AREAS

  	
   

  
	
   

  	
  7.1
  “Common Areas” Defined

  	
   

  
	
   

  	
  7.2
  Use of Common Areas

  	
   

  
	
   

  	
  7.3 Parking

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  USE OF
  PREMISES

  	
   

  
	
   

  	
  8.1
  Permitted Uses

  	
   

  
	
   

  	
  8.2 Insurance Requirements

  	
   

  
	
   

  	
  8.3 Prohibited operations

  	
   

  

 

 

	
   

  	
  8.4 Antenna

  	
   

  
	
   

  	
  8.5 Compliance with Laws

  	
   

  
	
   

  	
  8.6 Use of Walls

  	
   

  
	
   

  	
  8.7
  Indecent Materials

  	
   

  
	
   

  	
  8.8
  Hazardous Substances

  	
   

  
	
   

  	
  8.9
  Rules and Regulations

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  VAIVER
  AND INDEMNITY

  	
   

  
	
   

  	
  9.1
  Assumption and Waiver

  	
   

  
	
   

  	
  9.2 Notice
  of Claims

  	
   

  
	
   

  	
  9.3 Indemnity

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  INSURANCE

  	
   

  
	
   

  	
  10.1
  Required Insurance

  	
   

  
	
   

  	
  10.2
  Notice of Insurance

  	
   

  
	
   

  	
  10.3 Waiver of Subrogation:
  Release

  	
   

  
	
   

  	
  10.4
  Landlord’s Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  PERSONAL PROPERTY TAXES

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  MAINTENANCE

  	
   

  
	
   

  	
  12.1 Landlord’s Obligations

  	
   

  
	
   

  	
  12.2
  Tenant’s obligations

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  ALTERATIONS

  	
   

  
	
   

  	
  13.1
  Landlord’s Approval

  	
   

  
	
   

  	
  13.2 Alterations Become
  Part of Premises

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  LIENS

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  DAMAGE AND DESTRUCTION

  	
   

  
	
   

  	
  15.1
  Termination

  	
   

  
	
   

  	
  15.2 Repair

  	
   

  
	
   

  	
  15.3
  Abatement of Rent

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  EMINENT
  DOMAIN

  	
   

  
	
   

  	
  16.1
  Total Condemnation

  	
   

  
	
   

  	
  16.2 Partial Condemnation of
  the Premises

  	
   

  
	
   

  	
  16.3 Partial Condemnation of
  the Common Areas

  	
   

  
	
   

  	
  16.4
  Condemnation Award

  	
   

  
	
   

  	
  16.5
  Date of Condemnation

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  ASSIGNMENT AND SUBLETTING

  	
   

  
	
   

  	
  17.1 Restriction on
  Transfers

  	
   

  
	
   

  	
  17.2
  Requested Transfers

  	
   

  
	
   

  	
  17.3
  Tenant’s Liability

  	
   

  
	
   

  	
  17.4 Expenses

  	
   

  
	
   

  	
  17.5 Void
  Transfers

  	
   

  
	
   

  	
  17.6 No Merger

  	
   

  
	
   

  	
   

  	
   

  
	
  18.

  	
  SECURITY
  DEPOSIT

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  SIGNS

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  UTILITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  FIXTURES

  	
   

  

 

 

	
  22.

  	
  SURRENDER
  OF PREMISES

  	
   

  
	
   

  	
   

  	
   

  
	
  23.

  	
  ENTRY
  AND INSPECTION

  	
   

  
	
   

  	
   

  	
   

  
	
  24.

  	
  ESTOPPEL
  CERTIFICATE

  	
   

  
	
   

  	
   

  	
   

  
	
  25.

  	
  TITLE

  	
   

  
	
   

  	
  25.1 Subordination.

  	
   

  
	
   

  	
  25.2
  Quiet Enjoyment

  	
   

  
	
   

  	
   

  	
   

  
	
  26.

  	
  DEFAULT, REMEDIES

  	
   

  
	
   

  	
  26.1 Defaults

  	
   

  
	
   

  	
  26.2 Remedies

  	
   

  
	
   

  	
  26.3 Remedies Cumulative

  	
   

  
	
   

  	
  26.4 Landlord’s Right to Act

  	
   

  
	
   

  	
  26.5
  “Additional Rent” Defined

  	
   

  
	
   

  	
  26.6 Late
  Charges

  	
   

  
	
   

  	
  26.7
  Interest on Past-Due Obligations

  	
   

  
	
   

  	
  26.8 Attorneys’ Fees, Waiver of Jury
  Trial and Counterclaims

  	
   

  
	
   

  	
  26.9 Accord and
  Satisfaction

  	
   

  
	
   

  	
   

  	
   

  
	
  27.

  	
  BANKRUPTCY
  OF TENANT

  	
   

  
	
   

  	
   

  	
   

  
	
  28:

  	
  LANDLORD’S
  LIABILITY

  	
   

  
	
   

  	
  28.1 Default by
  Landlord

  	
   

  
	
   

  	
  28.2 Sale of
  Landlord’s Interest

  	
   

  
	
   

  	
  28.3
  Non-Recourse Liability

  	
   

  
	
   

  	
  28.4 Mortgage Exculpation

  	
   

  
	
   

  	
   

  	
   

  
	
  29.

  	
  FORCE MAJEURE

  	
   

  
	
   

  	
   

  	
   

  
	
  30.

  	
  BROKERS

  	
   

  
	
   

  	
   

  	
   

  
	
  31.

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  32.

  	
  FINANCIAL
  STATEMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  33.

  	
  GENERAL

  	
   

  
	
   

  	
  33.1 Arizona
  Law; Venue

  	
   

  
	
   

  	
  33.2 No
  Partnership

  	
   

  
	
   

  	
  33.3 Amendments

  	
   

  
	
   

  	
  33.4 No Waiver

  	
   

  
	
   

  	
  33.5 Exhibits

  	
   

  
	
   

  	
  33.6 Partial Invalidity

  	
   

  
	
   

  	
  33.7 Captions

  	
   

  
	
   

  	
  33.8 Time

  	
   

  
	
   

  	
  33.9
  Recordation

  	
   

  
	
   

  	
  33.10 No Third Party Rights

  	
   

  
	
   

  	
  33.11 Joint and Several Obligations

  	
   

  
	
   

  	
  33.12 Authority
  to Execute

  	
   

  
	
   

  	
  33.13 Binding on Successors and Assigns

  	
   

  
	
   

  	
  33.1-4-
  Impartial Interpretation

  	
   

  
	
   

  	
  33.15 Plurals

  	
   

  
	
   

  	
  33.1b
  Survival of Obligations

  	
   

  
	
   

  	
  33.17 Not Binding Until Signed

  	
   

  

 

 

	
  34.

  	
  RIGHT OF FIRST REFUSAL

  	
   

  

 

Legal Description Floor
Plan Site Plan

Work Letter Sign Criteria For Antenna And/Or Satellite Dish

 

INDEX OF DEFINED TERMS

	
  Term

  	
  Defined at:

  
	
  Additional Rent

  	
  Section 26.5

  
	
  Affiliate,

  	
  Section 34

  
	
  Broker

  	
  Section 1.11

  
	
  Buyer

  	
  Section 34

  
	
  Base Operating Costs
  Broker

  	
  Section 1.7

  
	
  Commencement Date

  	
  Section 3.1

  
	
  Common Areas

  	
  Section 7.1

  
	
  Condemnation

  	
  Section 16.1

  
	
  Controlling Percentage

  	
  Section 17.1(e)

  
	
  Default Interest

  	
  Section 26.7

  
	
  Environmental Laws

  	
  Section 8.8

  
	
  Excess Operating Costs

  	
  Section 5.1

  
	
  FIBA

  	
  Section 26.7

  
	
  Guarantors

  	
  Section 1.10 and
  26.1(e)

  
	
  Hazardous Substance

  	
  Section 8.8

  
	
  Insured Casualty

  	
  Section 15.1

  
	
  Landlord

  	
  Section 1.1

  
	
  Landlord’s Improvements

  	
  Section 6.1

  
	
  Lease Term

  	
  Section 3.1

  
	
  Lease Year

  	
  Section 1.4 and
  4.4

  
	
  Monthly Rent

  	
  Section 1.6

  
	
  Operating Costs
  Premises

  	
  Section 5.2

  
	
  Prime Rate

  	
  Section 1.2

  
	
  Renewal Option Term

  	
  Section 26.7

  
	
  Security Deposit

  	
  Section 1.5

  
	
  Security Instruments

  	
  Section 1.9 and
  Article 18

  
	
  Site Plan

  	
  Section 25.1(a)

  
	
  Tenant

  	
  Section 1.3

  
	
  Tenant Improvements

  	
  Section 7.3

  
	
  Tenant’s Permitted

  	
  Section 5.1

  
	
  Tenant’s Share Transfer

  	
  Section 17.1

  
	
  Use

  	
  Section 1.8

  

 

STANDARD FORM INDUSTRIAL
GROSS LEASE

 

BY THIS LEASE (“Lease”)
entered into as of this 15th day of November, 1994, Landlord and Tenant agree
as follows:

 

l.                                          BASIC
LEASE INFORMATION

THE FOLLOWING BASIC LEASE
INFORMATION IS A PART OF THIS LEASE, BUT DOES NOT CONSTITUTE THE ENTIRE LEASE.
TENANT ACKNOWLEDGES THAT IT HAS READ ALL OF THE PROVISIONS CONTAINED IN THE
ENTIRE LEASE AND ALL EXHIBITS WHICH ARE A PART THEREOF AND AGREES THAT THIS
LEASE, INCLUDING THE BASIC LEASE INFORMATION AND ALL EXHIBITS, REFLECTS THE
ENTIRE UNDERSTANDING AND REASONABLE EXPECTATIONS OF LANDLORD AND
TENANT-REGARDING THE PREMISES. TENANT ALSO ACKNOWLEDGES THAT IT HAS HAD THE
OPPORTUNITY TO REVIEW THIS LEASE PRIOR TO EXECUTION WITH LEGAL COUNSEL AND SUCH
OTHER ADVISORS AS TENANT DEEMS APPROPRIATE.

 

 

1.1 Parties:

Landlord: 78 McClain,
L.L.C., an Arizona limited liability company

Address: 7494 East Desert
Cove Scottsdale, Arizona 85260

Attention: Tom McClain,
Manager

Tenant: Go-Video, Inc.

Entity:   a
Delaware corporation

Address: 14455 North
Hayden Road Suite 219

Scottsdale, Arizona 85260

Contact: Douglas Klein,
Vice President of Finance and Treasurer

Phone: {602} 998-3400

 

1.2 Premises:

Street Address:             7807 East McClain
Drive Scottsdale, Arizona 85260

Legal Description: All
that certain real property located in Scottsdale, Maricopa County, Arizona, and
more particularly described in Exhibit “A” attached hereto.

Approximate

Square Footage: 32,766
square feet of Gross Leasable Area

 

1.3 Site Plan: The building, parking facilities and
other improvements as depicted on Exhibit “B” attached hereto (the “Site
Plan”).

 

1.4 Lease Term: Seven (7) years, commencing May
1, 1995, or such other date as is specified in Section 3.1. The Lease Term
shall also include the Renewal Option Term, if properly exercised by Tenant.

 

1.5 Renewal Option Term: One (1)
optional renewal term of three (3)–years, exercised as specified in
Section 3.1.

 

1.6 -Monthly Rent: For year ]., $22,936 per month;
for years 2 and 3, $23,591.52 per month; for years 4 and 5, $24,574 per month;
for years 6 and 7, $25,557; far years 8 through 10 (the Renewal Option Term)
$26,868 per month. In addition to the foregoing amounts, monthly rent shall
also include any and all rental, occupancy, use, sales and transactional
privilege tax imposed upon or payable by Landlord in connection with this
Lease, the rentals due hereunder, or the use or occupancy of the Premises.

 

1.7 Base Operating Costs: The Base
Operating Costs shall equal actual Operating Costs (as defined in
Section 5.2) incurred by Landlord during the first Lease Year.

 

1.8 Use: Consumer electronic products (including,
without limitation, video equipment) manufacturing and warehousing and related
office and administrative functions.

 

1.9 Security Deposit: $22,937.30,
plus tax. The Security Deposit shall be deposited and subject to increase in
accordance with Article 18.

 

1.10 Guarantors: None.

 

1.11 Broker:     Michael
Johnson

Gore Range Equities, Inc.

2910 East Camelback Road,
Suite 180 Phoenix, Arizona 85016

and

John Corritore                    . The
Corritore Company

6166 North Scottsdale
Road, Suite 650 Scottsdale, Arizona 85253

 

2.             PREMISES

 

2.1 Description. Landlord leases to Tenant and Tenant
leases from Landlord the Premises described in Section 1.2. Tenant’s
rights under this, Lease are subject to and restricted by the

 

 

provisions of any
covenants, conditions, restrictions and easements, and all amendments thereto,
recorded against the Premises.

 

2.2 Revision of Site Plan. The
depiction of the Site Plan on Exhibit “B” represents Landlord’s current plans
for the Premises. Such depiction may be subsequently modified (subject to
Tenant’s written approval of any material modification) and does not constitute
a representation, covenant or warranty of any kind by Landlord.

 

3.             TERM

 

3.
1 Term. The term of this Lease shall be for the
time period set forth in Section 1.4 or until this Lease is sooner
terminated (“Lease Term”). The Lease Term shall commence on the date the
Premises are ready for occupancy by Tenant (the “Commencement Date”). If Landlord
fails to obtain a building Mo4 permit from the City of Scottsdale for
construction of the Premises by January 15, 1995, Tenant may cancel by
giving Landlord notice of ‘ cancellation within seven (7) days following
Landlord’s notice to Tenant of Landlord’s failure- to meet such date. If Tenant
fails to give such notice, Tenant shall continue to be bound by the terms of
this Lease. If Landlord fails to commence construction of the Tenant
Improvements set forth in Exhibit “C” to this Lease (the “Tenant Improvements”)
by April 1, 1995, Tenant may cancel by giving Landlord notice of
cancellation within seven (7) days of such date and paying Landlord within five
(5) business days of such notice the documented cost of rebuilding the exterior
walls of the Building to conform with Landlord’s original drawings (i.e,
windows inserted in the west wall to match the north and east walls, five (5)
roll up doors inserted in the south wall, and a ten-foot panel window inserted
in the north wall to match the west wall of the Building). If Tenant fails to
give such notice, Tenant shall continue to be bound by the terms of this Lease.
If the Building is not ready for occupancy by Tenant on or before May 1, 1995,
Tenant shall receive ten (10) days free Monthly Rent in the month of June,
1995. If the Building is not ready for occupancy by Tenant on or before
June 1, 1995, Tenant shall receive an additional ten (10) days free
Monthly Rent in the month of July, 1995. No free rent penalty shall be assessed
against Landlord for any delay resulting from events described in
Article 29 of this Lease. Landlord shall provide thirty (30) days’ notice
to Tenant of the anticipated Commencement Date. If a delay in obtaining a
building permit, commencing construction of Tenant Improvements, or delivery of
possession is caused by Tenant’s failure to perform any obligation in
accordance with this Lease, the Lease Term shall commence on the date Landlord
would have delivered possession of the Premises to Tenant absent such delay.
For purposes of calculating the expiration of the Lease Term, if the
Commencement Date does not occur on the first day of a calendar month, the
expiration of the. Lease Term shall be calculated as though the Lease Term
began on the first day of the next succeeding calendar month. Irrespective of
when the Commencement Date occurs, all of the provisions of this Lease shall be
effective as of the date that Landlord permits Tenant to enter the Premises,
except that Tenant’s obligation to pay rent shall not commence until the
Commencement Date. Provided Tenant is not in default upon either the notice
date or the expiration of the initial Lease Term, Tenant may renew this Lease,
upon the terms hereof, for a Renewal Option Term of three {3} years by giving
Landlord notice of Tenant’s election to renew no less than 180 days prior to
expiration of the initial term Lease Term.

 

3.2 -Holding Over. If Tenant remains on the Premises
after the expiration of the Lease Term, Tenant shall become, at Landlord’s
election, a tenant on a month-to-month basis at a Monthly Rent equal to one
hundred fifty percent (1500) of the Monthly Rent payable for the last month of
the Lease Term. Such rent shall be payable in advance on the first day of such
holdover period and on the first day of each month thereafter. Such tenancy
shall be subject to all of the other provisions of this Lease.

 

4.                                       MONTHLY
RENT

4.1 Monthly Rent. At the times and in the manner set
forth herein, Tenant shall pay to Landlord as rent for the Premises during the
Lease Term, the Monthly Rent specified in Section 1.5 beginning on the
Commencement Date and continuing thereafter throughout the Lease Term.

 

4.2 Time and Manner of Payment. The
Monthly Rent shall be paid in advance on the first day of each calendar month
beginning with the Commencement Date. If the Commencement Date is other than
the

 

 

first day of a calendar
month, the Monthly Rent payment for such fractional month shall be a pro rata
amount {based upon a 30-day month} of the full Monthly Rent payment and shall
be paid on the Commencement Date (see Article 18 regarding application of
the Security Deposit to the first month’s rent).

 

4.3 Payment. All sums payable pursuant to this Lease
shall be paid when due, in lawful money of the United States of America,
without deduction, offset, prior notice or demand to Landlord at the address
set forth in Section 1.1, or at such other place or to such other person
as Landlord may from time to time designate.

 

4.4 “Lease Year” Defined. “Lease Year” is each twelve
(7.2) month period during the Lease Term. The first Lease Year shall begin at
12:01 A.M. on the Commencement Date and end at midnight on the day before the
first anniversary of the Commencement Date. (For example, if the Commencement
Date were May 1, 1995, the first Lease Year would begin at 12:Oi A.M. on May l,
1995, and end at midnight on April. 30, 1996.) Each succeeding Lease Year shall
commence on the anniversary of the Commencement Date and end on the anniversary
of the end of the First Lease Year.

 

5.                                       EXCESS
OPERATING COSTS

5.1 Tenant’s Obligation. For each
Lease Year, Tenant shall pay to Landlord, in the manner and at the intervals
provided below, the amount by which the Operating Costs exceed the Base
Operating Costs (“Excess Operating Costs”). Tenant’s obligation for Excess
Operating Costs is referred to as “Tenant’s Share.”

 

5.2 “Operating Costs” Defined.
“Operating Costs” shall mean the total-of all costs and expenses incurred in
connection with the ownership, operation, maintenance, replacement and repair
of the Premises, including, without limitation, all sums expended for:

(a)                                  Supplies,
materials, labor and equipment, used in or related to the operation and
maintenance of the Premises.

(b)                              Water,
electricity, gas, sewer, waste disposal and other utilities, security, heating,
air conditioning, ventilating, lighting, landscaping, painting, signage and
trash removal (not otherwise paid for directly by Tenant).

(c)                                  Maintenance,
management, janitorial and service agreements related to the Premises
(provided, however, that Tenant shall have the obligation to obtain and provide
janitorial services for the Premises).

(d) Legal and accounting
costs (excluding legal costs of negotiating, terminating or -extending this
Lease), incurred by Landlord in the operation of the Premises.

(e)                                  Insurance
premiums and costs, including but not limited to the premiums and costs of
fire, casualty and liability coverage, rental abatement, earthquake and flood
insurance related to the Premises.

(f) Maintenance, repair
and replacement costs relating to the Premises, including without limitation,
sidewalks, landscaping, service areas, driveways, parking areas (including
repairing, resurfacing, repaving and restriping), walkways, building exteriors
(including painting and repairing) roofs, signs and directories.

(g)                                 Clerical,
supervisory and janitorial staff, and a reasonable management fee to Landlord.

(h) Real estate taxes and
assessments, including all taxes, assessments (general and special) and other
impositions or charges which may be taxed, charged, levied, assessed or imposed
upon all or any portion of or in relation to the Premises or any portion
thereof, any leasehold estate in the Premises or measured by rent from the
Premises, including any increase caused by the transfer, sale or encumbrance of
the Premises or any portion thereof, and specifically including all assessments
and charges imposed against the Premises. Such taxes shall also include any
form of assessment, levy;—charge or tax (other than estate, inheritance, net
income or franchise taxes) imposed by any authority having a direct or indirect
power to tax or charge, including without limitation, any city, county, state,
federal or any improvement or other district, whether such tax is (i)
determined by the area of the Premises or the rent or other sums payable under
this Lease, (ii) upon or with respect to any legal or equitable interest of
Landlord in the Premises or any part thereof, (iii) upon this transaction or
any document to which Tenant is a party creating a transfer in any interest in
the Premises, (iv) in lieu of or as a direct substitute in whole or in part or
in addition to any real property taxes on the Premises, (v) based on any
parking spaces or parking facilities provided in the Premises, or (vi) in
consideration for services, such as police protection, fire

 

 

protection, street,
sidewalk and roadway maintenance, refuse removal of other services that may be
provided by any governmental or quasi-governmental agency from time-to-time.
Notwithstanding the foregoing, Operating Costs shall not include any penalty or
late charge for Landlord’s failure to pay taxes or assessments when due and
payable. If the Premises- are taxed as unimproved land for some or all of the
First Lease Year, then Base Operating Costs will be calculated using the taxes
and assessment on the Premises for the first tax year in which the Premises are
assessed with the improvements contemplated by this Lease.

Operating Costs shall not
include depreciation of the Building, loan payments, real estate commissions,
the initial cost of constructing the Building and other portions of Premises or
Tenant Improvement costs.

 

5.3 Tenant’s Share of Excess Operating Costs.
Landlord, at its option, shall have the right to estimate the amount of Excess
Operating Costs next due and to collect and impound such amount from Tenant on
a monthly, quarterly or such other basis as Landlord, in its discretion, may
determine. Landlord shall provide Tenant with a reconciliation of Tenant’s
impound account within 90 days after the end of each Lease Year, and if such
reconciliation reveals that Tenant’s impound account is insufficient to satisfy
Tenant’s Share of the Excess Operating Costs for such year, Tenant shall pay to
Landlord such deficiency within ten (10) days after Tenant’s receipt of the
reconciliation. Tenant, at Tenant’s cost and expense, may audit the Operating
Costs upon reasonable notice to Landlord. Landlord shall apply any excess in
Tenant’s impound account to Tenant’s rental obligations for the following month.
After the final reconciliation after the expiration of the Lease Term, Landlord
shall pay to Tenant any excess funds remaining in Tenant’s impound account. If
Landlord elects not to impound Tenant’s Share of Excess Operating Costs,
Tenant’s-Share of Excess Operating Costs shall be computed not more than once
each month and not less than once each year and shall be paid by Tenant within
ten (10) days after receipt of a bill therefor from Landlord. Tenant’s Share of
Excess Operating Costs relating to items (c), (f), and (g) of Section 5.2
above shall not increase more than five percent (50) per year.

 

6.                                       CONSTRUCTION
OF PREMISES

6.1 Obligations of Landlord and Tenant.
Landlord shall, at Landlord’s expense, prepare the Premises for Tenant’s
occupancy by performing that work described as “Landlord’s Improvements” on
attached Exhibit “C” (“Landlord’s Improvements”). Landlord shall notify Tenant
when Landlord substantially completes Landlord’s Improvements and, thereafter,
Tenant shall, at its expense, perform all work and supply all materials
necessary for Tenant’s use of the Premises that are not included within
Landlord’s Improvements.

 

6.2 Condition of the Premises.
Tenant shall have 30 days after the Commencement Date of this Lease to give
Landlord notice of any contended defects in the Premises or in Landlord’s
Improvements. Upon the expiration of such—30-day period, the Premises and
Landlord’s Improvements shall be deemed to be in satisfactory condition and in
compliance with this Lease, except as set forth to the contrary in Tenant’s
notice to Landlord. If Tenant fails to give such notice within such 30-day
period or to specify a defect therein, Tenant shall be deemed to have
irrevocably waived all rights with respect to such defects, but only with
respect to these defects which Tenant could have reasonable detected. Upon
receipt of any such notice Landlord shall repair any actual defects or
variances in the exercise of reasonable diligence to the extent such work is
Landlord’s obligation pursuant to this Lease. The existence of any defects or
variances shall not affect Tenant’s obligations set forth in Section 6.1.

 

6.3 ADA Standards.
Landlord represents and warrants that during the Lease Term the Building will
meet all handicap standards per the 1988 Uniform building Code and all
applicable requirements of the Americans. with Disabilities Act of 1990 (the
“ADA”). Landlord agrees, promptly and with due diligence, to make any
alterations and revisions necessary as a result of breach of the foregoing
warranty and representation, at Landlord’s sole cost, without charge to any
allowance provided to Tenant and without allocating such costs to Excess
Operating Costs, it being agreed that such costs are not includable as
Operating Costs.

 

 

7.                                       COMMON
AREAS

7.1 “Common Areas” Defined. “Common
Areas” are those areas and facilities within the Premises that are used for
landscaping and open-space areas, parking areas, service -roads, loading
facilities, sidewalks, driveways and similar uses.

 

7.2 Use of Common Areas. Tenant
shall have the exclusive right to use the Common Areas subject to the terms of
this Lease. The foregoing notwithstanding, Tenant shall have no claims against
Landlord arising out of the Condemnation or other taking by any public
authority of any or all of the Common Areas.

 

7.3 Parking. The Common Areas shall include a minimum
of eighty (80) parking spaces, including fifty (50) covered parking spaces. The
parking’ cover shall be of semi-cantilevered construction, and the covered
parking shall be located partially on 78th Street and partially at the rear of
the Building. Tenant and its subtenants, invitees, licensees, agents,
contractors, representatives, and employees (“Tenant’s Permittees”) shall park
only in the areas designated for parking. If Landlord determines that Tenant or
Tenant’s Permittees are not parking in the designated areas, Landlord shall
give Tenant 3 business days’ notice of such fact and, thereafter, Tenant shall,
within 3 business days of demand from Landlord, pay to Landlord the sum of
Fifteen Dollars ($15.00) per day for each vehicle parked by Tenant or Tenant’s
Permittees outside such designated areas; provided, however, that any demands
for payment must be given to Tenant within 7 days after the occurrences with
respect to which payment is demanded.

 

8.                                       USE
OF PREMISES

8.1 Permitted Uses. Tenant shall
occupy and use the Premises for the purposes specified in Section 1.7, and
for no other purposes whatsoever. No transfer pursuant to Article 17
shall affect the foregoing restriction. Tenant warrants that Tenant has
investigated and is satisfied that the use of the Premises as permitted by this
Lease and Tenant’s proposed manner of operation will comply with all applicable
laws, statutes, ordinances, codes, rules and regulations of governmental and/or
private entities having jurisdiction over the Premises, including without
limitation all zoning laws regulating the use and enjoyment of the Premises.
Tenant hereby waives any defense of its obligations hereunder based upon the
legal doctrines of frustration of purpose or impossibility or other defenses
based upon Tenant’s inability to use the Premises for the purposes for which
the Premises were leased.

 

8.2 Insurance Requirements. Tenant
shall not engage in or permit any activity that will cause the cancellation of
or increase the existing insurance premiums on or relating to the Premises.
Tenant shall not allow or permit to remain in or about the Premises any
article that may be prohibited by the broadest form of “All Risk” or “Special
Form” property damage insurance policies. Tenant shall comply with all
requirements pertaining to the use of the Premises -necessary for maintenance
of such insurance as Landlord may from time to time obtain for the Premises. If
Tenant breaches this Section, Landlord shall have the right to demand and
receive from Tenant an amount equal to the increase in the existing premium
rate.

 

8.3 Prohibited Operations. No use,
operation or conduct by Tenant or Tenant’s Permittees shall be conducted or
permitted within the Premises that is inconsistent with the operation of a
first-class industrial project, as reasonably determined by Landlord. Without
limiting the foregoing, Tenant shall not commit or permit any waste or any
unlawful, improper or offensive use of the Premises, or create or permit any
public or private nuisance.

 

8.4 Antenna. Tenant shall not erect any aerial or
antenna or any other item on the roof or exterior walls of the Premises, other
than signs as permitted by Article 19, except as expressly approved by
Landlord or as shown on Exhibit “E” attached hereto.

 

8.5 Compliance with Laws. Tenant, at its expense,
shall comply with all existing and future rules, regulations, ordinances,
orders, codes, laws and requirements of all municipal, county, state, federal
and other applicable governmental authorities, the Board of Fire Underwriters,
Landlord’s and Tenant’s insurance companies and other organizations that
establish insurance rates pertaining to the Premises or the use of the Common
Areas, including without limitation the installation of fire extinguishers,
alarm systems, sprinkler systems or automatic dry chemical extinguishing
systems. The judgment of any court of competent jurisdiction, or Tenant’s
admission in any action or proceeding against Tenant, whether or

 

 

not Landlord is a party
thereto, that Tenant has violated any such rule, regulation, ordinance, order,
code, law or requirement, shall be conclusive of that fact as between Landlord
and Tenant.

 

8.6 Use of Walls. Landlord reserves the use of the
exterior walls, the roof and the floor of the Premises and the right to install,
maintain, use, repair and replace pipes, conduits, wire and-other improvements
through the Premises in locations and in a manner that will not materially
interfere with Tenant’s use of the Premises.

 

8.7 Indecent Materials. Tenant or
Tenant’s Permittees shall not manufacture, produce, publish, sell, lease,
display or disseminate on the Premises any media, materials, or devices
(including, but not limited to newspapers, magazines, books, pamphlets,
paintings, photographs, tapes, films, cassettes, cable television programs,
movies, advertisements, and records) that Landlord, in its reasonable
discretion, deems to be unacceptable or inappropriate due to the indecent or
otherwise offensive nature and content of such media, materials, or devices.
Landlord specifically retains the right to enter and inspect the Premises
during normal business hours to assure itself that Tenant is not in violation
of this covenant. Tenant shall immediately cease the production of and remove
from the Premises, at Tenant’s cost, any such media, materials or devices upon
receipt of notice from Landlord requiring such ceasing and removal. If Tenant
fails to permanently cease the production of and remove such media, materials
or devices within 2 business days after receipt of such notice, notwithstanding
any grace periods afforded to Tenant elsewhere in this Lease, Tenant shall be
deemed in breach of this Lease and Landlord shall have the right to enter the
Premises to remove the media, material or devices and to immediately terminate
this Lease as of the date of the breach.

 

8.8 Hazardous Substances. Tenant
shall not manufacture, produce, use, store, release, dispose or handle in or
about the Premises or transfer to or from the Premises (or permit any other
party to do such acts) any Hazardous Substance except in compliance with all
applicable Environmental Laws. Tenant shall not construct or use any
improvements, fixtures or equipment or engage in any act on or about the
Premises that would require the procurement of any license or permit pursuant
to any Environmental Law. Tenant shall immediately notify Landlord of (i) the
existence of any Hazardous Substance on or about the Premises that may be in
violation of any Environmental Law (regardless of whether Tenant is responsible
for the existence of such Hazardous Substance), (ii) any proceeding or
investigation by any federal, state or local governmental authority regarding
the presence of any Hazardous Substance on the Premises or the migration
thereof to or from any other property, (iii) all claims made or threatened by
any third party against Tenant relating to any loss or injury resulting from
any Hazardous Substance, or (iv) Tenant’s notification of the National Response
Center of any release of a reportable quantity of a Hazardous Substance in or
about the Premises. “Environmental Laws” shall mean any federal, state or local
statute, ordinance, rule, regulation or guideline pertaining to health, industrial
hygiene, or the environment, including without limitation, the federal Comprehensive
Environmental Response, Compensation, and Liability Act,, as amended, and the
Arizona Environmental Quality Act. “Hazardous Substance” shall mean all
substances, materials and wastes that are-or become regulated or classified as
hazardous or toxic under any Environmental Law.

 

8.9 Rules and Regulations. Landlord
shall have the right from time to time to adopt, amend, delete or modify
reasonable rules and regulations for the use, safety, cleanliness or care of
the Premises. All rules and regulations and any modifications thereto shall be
effective immediately upon the delivery of notice to Tenant, along with a
complete copy of the rules and regulations. Tenant and Tenant’s Permittees
shall at all times faithfully observe and strictly comply with the rules and
regulations. Any failure 1:iy-Tenant or Tenant’s Permittees to comply with any
rules or regulations shall be deemed to be a default under this Lease.
Landlord-shall have no liability to Tenant for any violation of rules and
regulations by any other tenant or person.

 

9.                                       WAIVER
AND INDEMNITY

 

9.1 Assumption and Waiver. Tenant
assumes all risk of, and waives all claims against Landlord arising from,
damage, loss or theft of property or injury to persons in, upon, or about the
Premises from any cause. The foregoing waiver includes, without limitation, the
following risks against which Tenant should maintain adequate insurance to
protect Tenant’s inventory, equipment and other personal property: 

 

 

(i) any defect in or
failure of plumbing, heating or air conditioning equipment, electric wiring,
water pipes, stairs, railings or walks; (ii) the disrepair of any equipment;
(iii) the bursting, leaking or running of any tank, washstand, water closet,
drain or any pipe or tank in, upon or about the Premises; (iv) the backup of
any sewer pipe or down spout; (v) the escape of steam or hot water; (vi) water,
snow or ice; (vii) the falling of any fixture, plaster or stucco; (viii) broken
glass; (ix) any act or omission of occupants of adjoining property; and {x) any
unauthorized or criminal entry of third parties within the Premises or the
Building, regardless of any breakdown, malfunction or insufficiency of any
security measures provided. Notwithstanding anything contained herein to the
contrary, Tenant shall not be liable to the extent that damage or injury is
determined ultimately to be caused by the negligent or intentional tortuous
acts of Landlord, or of Landlord’s employees, agents, invitees, licensees, or
contractors (“Landlord’s Agents”) or by breach of this Lease by Landlord.

 

9.2 Notice of Claims. Tenant shall
give notice to Landlord as soon as possible (i) in case of fire or accidents in
the Premises or any breakdown or malfunction of any security measures, and (ii)
in the event any claim, action, proceeding or suit instituted or threatened
against Landlord.

 

9.3 Indemnity. Tenant shall indemnify Landlord and
Landlord’s property manager, if any, against all claims, costs, attorneys’
fees, damages, expenses, liabilities and losses arising out of or in connection
with any of the following:

(a) Tenant’s and Tenant’s
Permittees’ use of the Premises or the conduct of Tenant’s business thereon;

(b) Any activity, work or
occurrence performed, permitted or suffered by Tenant in, on or about the
Premises;

(c) Tenant’s failure to
perform fully and properly all of Tenant’s obligations under this Lease;

(d) The negligence or
intentional misconduct of Tenant or Tenant’s Permittees;

(e) Any loss or damage to
Tenant’s property or the property of others or death of or injury to Tenant or
Tenant’s Permittees, unless caused by Landlord’s negligence or intentional
misconduct;

(f) Tenant’s compliance
with or violation of any laws, statutes, codes, licensing requirements,
ordinances, orders and rules and regulations of any public authority applicable
to the Premises or any activity engaged thereon;

(g) Tenant’s failure to
surrender the Premises immediately upon the expiration or termination of the Lease
Term;

(h) Any claims for
brokerage commissions or finder’s fees resulting from Tenant executing this
Lease, excluding fees payable to the general leasing agent for the Project
designated by Landlord;     -

(i) The production or
presence of a Hazardous Substance in or about the Premises or any violation or
claim of violation of any Environmental Law relating to the Premises as a
result of the act or omission of Tenant or Tenant’s Permittees.

If any claim is made or
action is brought against Landlord as a result of any activities, or omissions
listed above, Tenant, upon notice from Landlord, shall diligently defend-the
same at Tenant’s expense through counsel satisfactory to Landlord.
Notwithstanding anything contained herein to the contrary, Tenant shall not be
liable to the extent that damage or injury is determined ultimately to be
caused by the negligent or intentional tortuous act of landlord, or of
Landlord’s employees, agents, invitees, licensees, or contractors (“Landlord’s
Agents”) or by breach of this Lease by Landlord.

 

10.                                 INSURANCE

10.1 Required Insurance. Tenant, at
its expense, shall procure and maintain the following insurance:

(a) Comprehensive general
liability insurance policies against claims for bodily injury, death or
property damage, occurring in, on or about the Premises or the Project, or
resulting from Tenant’s use, occupancy or maintenance thereof, which policies
shall name Landlord, Landlord’s property manager and -any other entities
designated by Landlord, as additional insureds. Such insurance shall be primary
with respect to Landlord and shall be in a total amount of at least Five
Million Dollars ($5,000,000.00) combined single limit (or in such higher
amounts as Landlord may reasonably designate from time to time). In the event
such amount is impaired or reduced for any reason, including but not limited
to, claims made by Tenant against such policies, Tenant shall immediately
purchase additional insurance so that the total amount of insurance required
hereunder shall be available in full at all times during the Lease Term. No
parties named as additional insureds shall incur any liability for the payment
of premiums for such policies. Such

 

 

policies shall be
endorsed to indicate that they will cover Tenant’s obligations under
Article 9 to the coverage limit of such policies (to the extent coverage
is available under standard form policies or under a contractual liability
endorsement) and shall provide that the insurance carrier shall have the duty
to defend and/or settle any legal proceeding filed against Landlord seeking
damages on account of bodily injury or property damage liability even if any of
the allegations of such legal proceedings are groundless, false or fraudulent;

 

(b) Insurance against
damage and destruction to Tenant’s personal property, inventory and all
fixtures, equipment, machinery, improvements, additions and alterations to the
Premises occurring as a result of acts or events typically covered by the
broadest form “All Risk” or “Special Form” property damage insurance policies
in the amount of full replacement value. In the event such items are damaged or
destroyed, Tenant shall diligently and fully repair and restore such items;

(c) Fire legal liability
insurance in an amount equal to the full replacement value of all improvements,
additions and alterations within the Premises that Tenant is not entitled to
remove from the Premises. Such insurance shall provide that all funds payable
as a result of damage to the Premises or the Building shall be payable to Landlord.
Such insurance policy shall also contain a severability of interest clause
pertaining to the coverage afforded by such policy;

 

(d) Such other insurance
and in such amounts as may from time to time be reasonably required by Landlord
against other insurable hazards. 

Landlord makes no
representations that the above listed insurance is adequate to protect Tenant
and Tenant may obtain such additional insurance=coverage as Tenant deems
appropriate.

 

10.2 Notice of Insurance. All
insurance provided for in this Article shall be effected under valid and
enforceable policies issued by insurance companies authorized to do business in
Arizona and approved by Landlord. The insurance policies shall be endorsed to
indicate that Tenant’s coverage shall not be invalid due to any act or omission
on Landlord’s part. Tenant shall cause the insurance companies issuing such
insurance to agree to notify Landlord in writing of any cancellation,
alteration or non-renewal of said insurance at least 60 days prior thereto. Tenant
shall deliver to Landlord at least 30 days prior to the date Tenant takes
possession of the Premises, and thereafter on each anniversary of the
Commencement Date, certificates evidencing the insurance coverage required
herein. If Tenant fails to deliver such certificates to Landlord at least five
(5) business days prior to the expiration or termination of any existing
insurance coverage or if Landlord receives notice that the existing insurance
coverage has been altered or reduced, Landlord, notwithstanding any grace
periods afforded Tenant in this Lease, shall be entitled to terminate this
Lease immediately upon notice to Tenant. All public liability and property
damage policies shall contain a provision that Landlord, although .named as an
additional insured, shall nonetheless be entitled to recovery under said
policies for any loss occasioned to Landlord, its servants, agents and
employees by reason of Tenant’s negligence. All insurance policies shall
provide “occurrence” coverage, rather than “claims-made” coverage.

 

10.3 Waiver of Subrogation:  Release. Notwithstanding any other
provisions in this Lease, Tenant and Landlord each waive all rights of recovery
against the other, and against the directors, shareholders, partners, officers,
employees, agents and representatives of the other, for loss of, or damage to,
the waiving party, its property or the property of others under its control to
the extent that, with respect to Landlord, Landlord receives insurance proceeds
from any insurance policy in force at the time of such loss or damage and, with
respect to Tenant, Tenant is required to maintain insurance pursuant to this
Lease. Each party shall, upon obtaining the insurance policies required
hereunder, give notice to the insurance carrier or carriers that the foregoing
waiver of subrogation is contained in this Lease and shall obtain, at their own
expense, an appropriate waiver of subrogation endorsement from the insurer. If
the Premises, the Building or the Project or Tenant’s personal property are damaged
or destroyed by fire or any other cause against which Tenant is required to
maintain insurance pursuant to this Lease, Landlord shall not be liable to
Tenant for any such damage or destruction. Tenant shall have no claim to or
interest in any portion of the proceeds of any insurance maintained by
Landlord.

 

10.4 Landlord’s Insurance. Landlord
shall maintain “All Risk” hazard insurance on the Building and other
improvements to the Premises in an amount equal to the full replacement value
of the Building and other

 

 

improvements.  Failure by Landlord to maintain such
insurance shall not relieve Tenant of any obligation under this Lease,
including without limitation, the obligation to pay rent.

 

11.                                 PERSONAL
PROPERTY TAXES

Tenant shall pay, prior
to delinquency, all taxes assessed against or levied upon fixtures, leasehold
improvements (including without limitation those improvements defined as
“Leasehold Improvements” in the Maricopa County version of DPST Form 520,
“Personal Property Statement”) and all personal property located in or upon the
Premises (“Taxed Personal Property”). Tenant shall cause the Taxed Personal
Property to be assessed and billed separately from the real property upon which
the Premises are located. Tenant shall deliver copies of the DPST Form 520
filed with the State of Arizona and Maricopa County within five (5) business
days after mailing or delivering the form to the State and County,
respectively. If any of Tenant’s Taxed Personal Property is assessed and taxed
with the Building or the Project, Tenant shall pay to Landlord its share of
such taxes, as determined by Landlord, within 10 days after delivery to Tenant
by Landlord of a statement setting forth the amount thereof.

 

12.                                 MAINTENANCE

12.1 Landlord’s Obligations.
Landlord shall promptly repair and maintain in good order and condition the
Common Areas and the roof, foundation, load-bearing walls, columns and beams,
and heating, ventilation, and air conditioning equipment (provided Landlord
shall only be obligated for replacement, not repair or maintenance, of HVAC
equipment) of the Building, and the outside Building plumbing, electrical and
other facilities serving the Premises, except for (i) maintenance or repairs
required because of any negligent or intentional act or omission of Tenant or
Tenant’s Permittees, including without limitation, damage to the interior or
exterior of the Building or the parking stalls and covers, or (ii) maintenance,
repairs, alterations or improvements required by a rule, regulation, ordinance,
order, code, law or requirement of any governmental authority or insurer as a
result of Tenant’s use or possession of the Premises. Except as provided
elsewhere in this Lease, Monthly Rent shall not abate and Landlord shall not be
liable by reason of any injury or interference with Tenant’s business arising
from the making of any repairs, alterations, or improvements in or to the
Premises; provided, however, Landlord shall perform such work in a manner so as
to not unreasonably interfere with the conduct of Tenant’s business. Tenant
shall not be entitled to undertake any such maintenance or repairs, whether at
the expense of Tenant or Landlord. Tenant shall pay to Landlord Tenant’s Share
of the costs incurred by Landlord in-performing such repair and maintenance
obligations in accordance with the provisions of Article 5 above; provided
that Tenant has no obligation to pay for repairs necessitated by faulty
construction performed by Landlord except for those repairs necessitated by
defects waived by Tenant pursuant to Section 6.2. 3f Landlord elects to
perform maintenance or repairs required due to the negligence or misconduct of
Tenant or Tenant’s Permittees, Tenant shall reimburse Landlord for all costs so
incurred by Landlord (including a reasonable charge for Landlord’s overhead)
within 10 days after delivery of demand by Landlord.

 

12.2 Tenant’s Obligations. Tenant
shall, unless specifically designated as Landlord’s obligations in
Section 12.1, at Tenant’s expense, promptly repair and maintain the
Premises in good order, condition and repair, including without limitation, all
plate glass, windows, window coverings or treatment, doors, floors, floor
coverings, utility systems, wiring, alarm systems, interior wall surfaces and
painting, heating, ventilating and air conditioning systems (except for
replacements of HVAC equipment, which shall be Landlord’s obligation),
switches, conduits, all appliances and equipment, all signage and all
maintenance, repairs, alterations or improvements required due to those matters
set forth in Sections 12.1(i) and 12.1(ii) above. Tenant shall change the
filters for the heating and air conditioning equipment during the first week of
each month and shall contract with a service company acceptable to Landlord for
the annual maintenance of heating and air conditioning equipment. Tenant shall
furnish Landlord with a copy of the service contract within 10 days after
taking possession of the Premises, and a copy of any subsequent contracts
within 10 days after execution. If Landlord determines that Tenant is not
changing the filters as required above, Landlord shall have the right to
require Tenant to contract with a service company to change such filters and to
perform all other maintenance on the heating and air conditioning equipment for
the remainder of the Lease Term. Tenant shall, at Tenant’s expense, contract
for janitorial services, trash and waste removal and disposal, security services
and protection and pest extermination with such persons and at such intervals
as Landlord shall approve in writing, such approval not to be unreasonably

 

 

delayed or withheld.
Tenant shall sweep and clean as needed and shall keep the sidewalk and area
immediately adjacent to the Building free of refuse. All refuse shall be
contained in trash containers at locations approved by Landlord.

 

13.                                 ALTERATIONS

13.1 Landlord’s Approval.  Tenant
shall not make any alteration, addition or improvement to the Premises,
including without limitation to the entrances and exits to the Premises, or to
any fixture, wiring, plumbing, heating and air conditioning or other equipment
therein without Landlord’s prior consent; provided, however, that Landlord’s
consent shall not be required for any alterations (i) of a purely cosmetic
nature, and (ii) which do not in any way alter or affect any structural
elements of the Building, or any wiring, plumbing, heating, air conditioning,
or other systems serving the Premises, and (iii) that are not visible outside
of the Premises, and (iv) that do not limit the uses to which the Premises may
be put or diminish the value of the Building and the rest of the Premises. If
Landlord’s consent is required hereunder, Landlord shall have the right to
impose any condition to such- consent as Landlord deems desirable (including,
without limitation, the posting of bonds or use of a contractor designated or
approved by Landlord). Tenant must acquire, prior to the commencement of
construction, all necessary building permits and must provide Landlord with
certificates of property (course of construction), workmen’s compensation and
liability insurance in form and amounts satisfactory to Landlord. Any
alteration, addition or improvement shall be completed in the exercise of due
diligence in a good and workmanlike manner, in accordance with plans,
specifications and drawings approved in writing by Landlord if Landlord’s
consent is required hereunder, and in compliance with this Lease and all
applicable laws, regulations and codes and all requirements of any insurer
providing coverage for the Premises. Tenant shall pay in a timely manner all
costs and fees incurred in connection therewith.

 

13.2 Alterations Become Part of
Premises. All alterations, additions or improvements to the Premises by Tenant
(except movable furniture, equipment and trade fixtures) shall become part of
the Premises and Landlord’s property immediately upon installation thereof
unless Landlord requires the removal thereof prior to the termination of this
Lease. Any alteration, addition or improvement that Tenant is required or permitted
to remove, together with any movable furniture, equipment and trade fixtures,
shall be removed at Tenant’s expense prior to the termination of this Lease and
Tenant shall promptly repair any damage to the Premises caused by such removal.                               If
Tenant fails to remove any alteration, addition or improvement that Tenant is
required to remove or fails to repair damage caused by such removal, Landlord
shall have the right to undertake such action for Tenant and to collect within
three (3) business days after demand from Tenant all costs (including a
reasonable charge for Landlord’s overhead) incurred in such removal or repair,
together with Default Interest from the dates of Landlord’s payments until paid
by Tenant.

 

14.                                 LIENS

Tenant shall keep the
Premises free and clear of all liens incurred by or resulting from acts of
Tenant. If any lien is filed, Tenant shall, within five (5) business days
thereafter, at its expense, cause the lien to be fully discharged by paying the
obligation-secured thereby or by obtaining and recording a surety bond in
accordance with A.R.S. §33-1004. Tenant is not authorized to act for or on
behalf of Landlord for the purpose of constructing any improvements to the
Premises, and neither Landlord nor Landlord’s interest in the Premises shall be
subject to any obligations incurred by Tenant. Landlord shall be entitled, but
not obligated, to post on the Premises during the course of any construction by
Tenant such notices of non-responsibility as Landlord deems appropriate. Tenant
shall, at least five (5) business days before the commencement of any work
which might result in a lien, provide notice thereof to Landlord so that
Landlord may post such notices. If any lien is filed or any action affecting
the title to the Premises is commenced the party receiving such information
shall immediately notify the other party.

 

15.                                 DAMAGE
AND DESTRUCTION

15.1 Termination.     If {i) the Premises or any portion thereof are
damaged or destroyed by any cause that is insured against by Landlord (an
“Insured Casualty”) to an extent of at least 50% of the replacement cost of the
Premises, (ii) the Premises or the Building are damaged or destroyed to an
extent of at least 5% of the replacement costs of such structures by any cause
which is not insured against by Landlord, (iii) the Premises or any portion
thereof are damaged or destroyed to an extent of at least 10% of the
replacement cost of the Premises by any cause whatsoever during the last three
(3) years of the Lease

 

 

Term, or (iv) the
Building is damaged or destroyed to an extent of at least 50% of its
replacement cost by any cause whatsoever (whether or not the Premises are
damaged or destroyed), either Landlord or Tenant shall be entitled to terminate
this Lease by notice to the other party given on or before 60 days after the,
occurrence of such casualty. The effective date of termination shall be 10 days
after receipt by the appropriate party of such notice. Tenant shall give prompt
notice to Landlord of any damage occurring on the Premises.

 

15.2 Repair. 
If this Lease is not terminated as provided above, Landlord shall, in
the exercise of reasonable diligence and at’-its own expense, repair the
Premises and the Building except as hereinafter provided. In such event, Tenant
waives the provisions of A.R.S. §33-343. If the damage or destruction is caused
by an Insured Casualty, Landlord shall not be obligated to commence such repair
until insurance proceeds therefor are made available to Landlord. Landlord
shall not be obligated to repair or restore the Premises or the Building to a
condition other than the condition of such improvement as existed on the
Commencement Date. Upon completion of such repair or restoration by Landlord,
Tenant shall diligently proceed to repair and restore the Premises to its
condition immediately prior to such damage or destruction, subject to the
provisions of Article 13.

 

15.3 Abatement of Rent.   During the period commencing with the date
of any damage or destruction that Landlord is required or elects to repair or
restore, and ending with the completion of such repairs or restoration, Monthly
Rent and Tenant’s other rental obligations shall be proportionately abated in
an amount equal to the proportion of which the portion of the Premises rendered
untenable bears to the total area of the Premises immediately prior to such
damage and destruction. Notwithstanding the foregoing, Monthly Rent shall not
abate if such damage or destruction was caused by the negligent or intentional
act or omission of Tenant, or Tenant’s Permittees. Except as expressly set
forth in this Lease, Tenant shall not be entitled to terminate this Lease or to
reduce or abate Monthly Rent or other sums payable hereunder in the event of
any damage or destruction from any cause whatsoever, including without limitation
as a result of claims for inconvenience or loss of business.

 

16.                                 EMINENT
DOMAIN

16.1 Total Condemnation.        If the entire Premises is
taken under the power of eminent domain or conveyed by Landlord under the
threat thereof (a “Condemnation”), this Lease Term shall terminate as of the
date of Condemnation. A11 Monthly Rent and other obligations shall be paid and
performed up to such date, and Tenant shall have no claim against Landlord for
the value of any unexpired term of this Lease.

 

16.2 Partial Condemnation of the
Premises. If a portion of the Premises is taken by a Condemnation and such
partial taking renders the Premises unsuitable for Tenant’s business, as
reasonably determined in good faith by Landlord and Tenant, this Lease shall
terminate as of the date of Condemnation and Tenant shall have no claim against
Landlord for the value of any unexpired term of this Lease. If the partial
taking by Condemnation does not render the Premises unsuitable for Tenant’s
business, Landlord shall, in the exercise of reasonable diligence, restore the

 

	
  LANDLORD’S NOTARY

  	
   

  
	
   

  	
   

  
	
  STATE OF ARIZONA

  	
  )

  
	
   

  	
  )

  
	
  County of Maricopa

  	
  )

  

 

The foregoing document
was acknowledged before me this I0th day of February 1995, by /s/ Thomas
W. Maclain, the Manager for 78 MacClain LLC, an LLC, on behalf of said LLC

IN WITNESS WHEREOF, I
hereunto set my hand and official seal.

 

Notary Public

 

 

My commission expires:

 

STATE OF ARIZONA

County of Maricopa

The
foregoing document was acknowledged before me this 23 day of December, 1994, by
Douglas Klein, the Vice President of Go Video, Inc, an Corporation on behalf of
said Corporation.

IN WITNESS WHEREOF, I
hereunto set my hand and official seal.

 

Notary Public: /s/ Muriel
Burney

 

My commission expires:
7/30/98

 

EXIIIBIT “A”

 

Legal Description of the
Premises

 

North Scottsdale Airpart,
Unit No. 2, Lots 13 and 14,

commonly known as 7807 East McClain Drive, Scottsdale, Arizona.

 

 

EXHIBIT “B” Site Plan

 

 

 

 

 

 

EXHIBIT “C” WORK LETTER

 

BUILDING SPECIFICATIONS
FOR

TOM McClain                   ,

Division #1 -SOFT COSTS,
GENERAL C!2NDMONS, ALLOWANCE ITEMS:

 

ARCHITECTURAL AND
ENGINEERING FOR ST RUCTURAL, MECHANICAL PLUMBING, ELECTRICAL, CIVIL DESIGN,
LANDSCAPE AND GRADING AND DRAINAGE PLANS

Design Review
ARCHITECTURAL AND FEES

TOPO

CONSTRUCTION STAKING

SLUEPRINTING

SOILS REPORT

CONCRETE AND COMPACTION
TESTING

BUILDING PERMIT, LOG IN
FEES

GRACING AND DRAINAGE
PERMIT AND REVIEW FEES

LANDSCAPING OFFSITE PERMIT
AND DRAWING

DRIVEWAY PERMIT AND PLAN
REVIEW

1’ WATER METER AND WATER
RESOURCE ACQUISITION FEE

SEWER DEPLOYMENT FEE FOR
A 1’ WATER METMR

TELEPHONE HOOIC;JP TO
ONFE CENTRAL LOCATION

WRITTEN FIVE YEAR
GUARANTEE OF TERMITE PRE-TREATMENT

WATER USE FEE SCOTTSDALE

BUILDERS RISK INSURANCE

PENALTY FOR PAVEMENT CUT
SITE TRAILER AND FACILITIES: PROGRESSIVE CLEAN-UP DURING CONSTRUCTION

FINAL DETAIL

TEMPORARY POWER AND WATER

TRASH DISPOSAL (JOB
DUMPSTER)

PROJECT SUPERVISION

SCHEDULING AND
COORDINATICN

TELEPHONE

ALLOWANCE ITEMS:

ELECTRIC HOOK-UP
TRANSFORMER FEES LMLITY COMPANY

CABINET AND COUNTER TOP

FLOOR COVERING-CARPET
ALLOWANCE $16.00/sq.yd

 (COLOR AND STYLE AS APPROVED BY OWNER)

 

DIVISION #4 MASONRY:

8 X 8 x 18 CMU EXTERIOR
WALLS. MIX OF CENTER SCORED, SCORED CMU PER SCOTTSDALE D.R. SUBMITTAL
REQUIREMENT, FUTURE HANGAR DOOR AREA 2’ x 6’ METAL STUD SYNTHETIC STUCCO

(1) REFUSE PAD WITH (3)
ENCLOSED 910E5, SCREEN WALLS 28’ EXTERIOR WALL HEIGHT

 

DIVISION #5 - METALS:

ROOF SUPPORT =LUMNS,
LINTELS AND MISC. STRUCTURAL STEEL (1) ROOF LADDER AND SCUTTLE

STEEL PIPE NOLLARDS AS
NECESSARY TO PROTECT MASONRY WALLS t8’ CLEAR HEIGHT IN WAREHOUSE TO BOTTOM
OFTRUSSES COVERED PARIONG FOR 50 CARS

 

DIVISION #6 - WOOD AND
PLASTICS:

TRUSS ROOF SYSTEM.. 1/2-
PLYWOOD, 2” X 4’ PERLINS, DOUBLE SLOPE ROOF SUPPORT PER SATELLITE DISH

 

 

DIVISION #7 - THERMAL AND
MOISTURE PROTECTION

PROVIDE A DOUBLE SLOPE
ROOF WITH CRICKETS, OVERFLOWS, SCUPPERS, CONDUCTOR HEADS AND OPEN FACE DOWN
SPOUTS

CAULK AND SEALANTS AT ALL
EXTERIOR JOINTS INCLUDING WINDOWS 5.8.5. MODIFIED G-4 25 M., 10 YEAR LIMITED
ROOF

R-30 CEILING A.C. AREAS

R-11 VINYL BACK
INSULATION IN WAREHOUSE WHITE

R-11 INSULATION EXTERIOR
WALLS A.C. AREA AND AROUND REST ROOMS AND PRIVATE OFFICES

 

DIVISION #8 - DOORS AND
WINDOWS:

12’ BY 14’ OVERHEAD
SECTIONAL MANUALLY OPERATED OVERHEAD DOORS AS INDICATED ON DRAWINGS (1)
EXTERIOR GLASS ENTRY STOREFRONT DOORS WITH OFFSET CLOSURE. WEATHER-STRIPPING,
THRESHOLD AND LOCKSET HARDWARE, BUTT-GLAZED SOLAR GRAY GLASS IN 13/4’ x 4’
OFFSET PAINT ALUMINUM FRAMES

DOORS TO RECEIVE SCHLAGE
OR EQUAL HARDWARE

1 314’ SOLID CORE 3’-0’ x
7-8’ OAK DOORS, PRE-FINISHED STEEL’KNOCK DOWN’ DOOR FRAMES (2) 3070 STEEL MAN
DOORS

DOOR EXITING A.C. AREAS
TO RECEIVE DOOR SEAL AND CLOSURE 4’ x 8’ SINGLE DOME SKYLIGHTS AS INDICATED ON
PLANS

 

DIVISION #9 - FINISHES:

EXTERIOR PAINT, 2 COATS
INCLUDING DOORS

INTERIOR PAINT, 2 COATS
INCLUDING WAREHOUSE WALLS STUCCO, SOFFITS

MARLITE OR CERAMIC TILE
(PER PLANS) ALL RESTROOM WALLS AS REQUIRED BY CITY CODE

5/8’ DRYWALL, KNOCK DOWN
FINISH, ON 3 5/8’ METAL FRAMING AT INTERIOR WALLS, 24” O.C. 8’ CEILING
INCLUDING PRODUCTION AREA

ALL OFFICE AND PRODUCTION
2’ x 2’ TEGULAR ACOUSTICAL 1’ILE IN SUSPENDED GRID

 

DIVISION #10 - SPECIAL
TIES:.

RESTROOM PARTITIONS

MIRRORS, SOAP DISPENSERS,
PAPER TOWEL DISPENSERS AND HANDICAPPED GRAB BARS AS REQUIRED BY CITY

 

DIVISIONS #11 -
EQUIPMENT, #12 - FURNISHINGS, #13 - SPECIAL CONSTRUCTION, AND #14 - CONVEYING
SYSTEMS

NOT INCLUDED IN THIS
PROPOSAL

 

DIVISION #15 -
MECHANICAL:

PLUMBING

1” WATER METER WITH 1 1/2”
COPPER SERVICE TO BUILDING AND TO FIXTURES A.B.S. SEWER SERVICE

ELECTRIC WATER HEATER

TANK TYPE WATER CLOSETS                  _ HANDICAPPED
WATER CLOSET, TANK TYPE

HOSE BI885 UTILITY SINK
SINKS WITH VANITY TOP AT TOILET ROOMS LUNCH SINK AT LUNCH AREA

CONDENSATE LINES FROM
A.C. UNITS TO CENTRAL DRAIN

(2) COFFEE BAR SINKS AT
WORK AREA AND CONFERENCE WIRELATED CABINETRY AND WORK AREA (AS DETAILEDQN
PLANS)

 

H V•A_C.•

EXHAUST TANS IN RESTROOMS

A.C. INCLUDING DUCT WORK
AT OFFICE, LABIENGINEERING AND TECH. AREA (1 TONl250 SO. FT) EVAP COOLERS IN
WAREHOUSE INCLUDING RELIEF VENTS (4 MIN. AIR CHANGES)

 

 

FIRE PROTECTION:

SPRINKLER SYSTEM TO BE T
WET ORDINARY GROUP # (2). SEMI-RECESSED HEADS IN CHROME ESCUTCHEONS IN ACOUSTIC
CEILING AREAS, BACK FLOW PREVENTOR AND TAP PER CITY REQUIREMENTS

 

DIVISION  #16 - ELECTRICAL:

WALL MOUNTED BATHROOM
LIGHT FIXTURES

ALL CONDUIT, J-BOXES,
SWITCHES, ETC., AS NECESSARY 120”r, 3 PHASE SERVICE ENTRANCE SECTION

200 AMP BREAKER PANELS

EMERGENCY LIGHTING AND
EXIT LIGHTING PER CITY AND FIRE CODE

8’ TWO LAMP OPEN STRIP
LIGHTING FIXTURES IN WAREHOUSE PROVIDING 20 F.C. TRENCHING AND CONDUIT FROM
TRANSFORMER TO SERVICE ENTRANCE SECTION WIRING OF ROOFTOP H.V.A.C. UNITS,
WATER HEATER, AND TOILET EXHAUST FANS (1) TRANSFORMER PAD

PHONE CONDUIT WITH PULL
STRING TO PROPERTY LINE PER U.S. WEST REQUIREMENTS TO ONE CENTRAL LOCATION

(1) 4 x 8’ x 3/4
TELEPHONE MOUNTING BOARD WITH 11S GROUND SWITCHING AS REQUIRED (3) WAY                                        ‘

SITE LIGHTING, 150 W HPS
WALL PACKS, PHOTO CELL SENSOR AND INCANDESCENT DOWN LIGHTS IN SOFFITS

2’ x 4 LAY-IN FIXTURES IN
OFFICE AND PRODUCTION, 30 F.C.

TELEPHONE LOCATIONS, 3.
BOX EMPTY CONDUIT FUTURE COMPUTER CABELING

(1) 110 VOLT OUTLET PER
OFFICE WALL OR EVERY 1Q’

RECESSED CAN FIXTURES AT
SELECTED LOCATIONS

 

 

EXHIBIT “D” SIGN CRITERIA

1.                                       Any
sign must meet all applicable standards of the City of Scottsdale and any other
governmental agency.

2.                                       Any
sign must comply with all recorded covenants, conditions, and restrictions
affecting the Premises.

3.                                       All
necessary governmental approvals and permits must be obtained and maintained
for any sign erected or maintained by Tenant on—the Premises.

4.                                       Any
sign must be reasonably compatible architecturally and aesthetically and in
terms of quality with the other improvements on the Premises.

 

 

EXHIBIT “E”

CRITERIA FOR ANTENNA
AND/OR SATELLITE DISH

1. Any antenna or dish
must meet all applicable standards of the City of Scottsdale, the Federal
Aviation Administration, the Federal Communications Commission and any other
governmental agency.

 

2. Any antenna or dish
must comply with all recorded covenants, conditions, and restrictions affecting
the Premises.

 

3. All necessary
governmental approvals and permits must be obtained and maintained.

 

4. Any dish shall have a
maximum height of no more than twelve feet (12’) above the adjacent ground
level.

 

5. Any dish shall be
enclosed with a screen wall matching the exterior finish of the principal
building on the Premises. Any gate shall be aesthetically harmonious with the
architectural character of the Premises.

 

6. Any antenna shall be
roof mounted at the rear of the building so as not to be visible from the front
of the building and adjacent streets.

 

7. No
antenna shall project more than three feet (3’) above the roof or any adjacent
parapet wall.

 

 

Premises to a condition
comparable to its condition prior to the Condemnation less the portion lost in
the Condemnation and this Lease shall continue in full force and effect.
Landlord shall not be obligated to commence such restoration until it receives
the entire Condemnation award nor shall it be obligated to incur expenses in
performing such restoration in excess of the Condemnation award, less all
costs, expenses and fees (including attorneys’ fees) incurred by Landlord in
collecting such award. In the event of such partial condemnation, the Monthly
Rent shall be reduced in proportion to the Grass Leasable Area of the Premises so
taken.

 

16.3 Partial Condemnation of the
Common Areas.  If 25% of the land area
of the Common Areas are taken by a Condemnation (or such lesser amount that
results in parking facilities inadequate to meet the local zoning
requirements), Landlord may elect to terminate this Lease by delivery of notice
to Tenant within 30 days after the date of Condemnation and Tenant shall have
no claim against Landlord for the value of any unexpired term of this Lease.
The foregoing shall in no way restrict Landlord from providing alternative
parking facilities to serve the Project, although Landlord shall have no
obligation to do so.

 

16.4 Condemnation Award.  In the event of a Condemnation, whether
whole or partial, Tenant waives any right to any part of the award, as damages
or otherwise, and Landlord shall receive the full amount of such award,
including any award for the leasehold estate. Notwithstanding the foregoing,
Tenant shall have the right to recover from the condemning authority, but not
from Landlord, such compensation as may be separately awarded to or recoverable
by Tenant on account of any damage to Tenant’s business by reason of the
Condemnation (except the loss of the leasehold estate) and for any cost or loss
to which Tenant might be put in removing Tenant’s personal property, leasehold
improvements and equipment.

 

16.5 Date of Condemnation. The date
of Condemnation shall mean the earlier of the date (i) possession-of the
Premises is delivered to the condemning authority, or (ii) title to the
Premises is vested in the condemning authority.

 

17.                                 ASSIGNMENT
AND SUBLETTING

17.1 Restriction on Transfers.  Tenant shall not, without Landlord’s prior
consent, do any of the following (each and all of which shall hereinafter be
individually and collectively referred to as a “Transfer”):

(a) Assign, hypothecate,
mortgage or otherwise encumber or convey Tenant’s interest in this Lease;

(b) Allow any transfer
thereof or any lien upon Tenant’s interest by operation of law;

(c) Sublet the Premises
or any part thereof;

(d) Permit the use or
occupancy of the Premises or any part thereof by anyone other than Tenant;

(e) If Tenant is a
corporation, permit a dissolution, merger, consolidation or other
reorganization of Tenant, or the sale or transfer of a Controlling Percentage
of Tenant’s capital stock or more than an aggregate of forty percent (40%) of
the value of Tenant’s assets. “Controlling Percentage” means the ownership of
and the right to vote stack possessing more than an aggregate of forty percent
(40%) of the total combined voting power of all classes of Tenant’s capital
stock issued, outstanding and entitled to vote for the election of directors;

(f) If Tenant is a
partnership, permit the withdrawal or change, voluntary, involuntary or by
operation of law, of any general partner or the dissolution of the partnership.

Notwithstanding the
provisions above, Tenant may assign or sublet the Premises, or any portion
thereof, without Landlord’s consent, to any corporation, partnership, limited
liability company or other legal entity which controls, is controlled by or is
under common control with Tenant, or to any such entity resulting from the
merger, reorganization, or consolidation of or with Tenant, or to any such
entity which acquires all the assets of Tenant as a going concern of the
business that is being conducted on the Premises; provided that before such
assignment shall be effective (i) said assignee shall assume in full the
obligations of Tenant under this Lease, and (ii) Landlord shall be given
written notice of such assignment and assumption..

 

17.2 Requested Transfers.  If
Tenant desires Landlord’s consent to a transfer of the Premises, Tenant shall
submit to Landlord:

 

 

(a) The proposed
sublease, assignment or other transfer agreement (executed by Tenant and the
other party), which shall not commence or take effect prior to 30 days after
receipt by Landlord of Tenant’s submission of all information required to be
submitted by Tenant to Landlord hereunder;

(b) A credit report on
the proposed transferee and $250 in cash to cover the legal review by Landlord
and Landlord’s processing expenses; and

(c) Any other information
or item Landlord may reasonably request, including without limitation,
sufficient information to enable Landlord to determine the acceptability of the
financial responsibility (as measured by such factors as audited net worth and
credit rating), experience and character of the proposed transferee.

Landlord, within 30 days
after receipt of all such information, by notice to Tenant shall either approve
or deny the transfer as Landlord teems advisable in its reasonable discretion.

 

17.3 Tenant’s Liability. Despite any
permitted transfer, Tenant’s liability under this Lease shall remain in full
force and effect for the remainder of the Lease Term. Prior to the transfer,
the transferee shall agree in writing to comply with and be bound by this Lease
to the extent of the space transferred, and Tenant shall deliver to Landlord
promptly after execution, an executed copy of each such transfer document and an
agreement of compliance by each such transferee.

 

17.4 Expenses. Tenant shall, promptly upon demand
from Landlord, pay Landlord’s expenses (exceeding $250), including without
limitation legal fees, incurred in connection with its consideration of the proposed
transfer, irrespective of whether Landlord grants its consent.

 

17.5 Void Transfers. Any arrangement
for a transfer which is not in compliance with the provisions of this
Article shall be void and shall constitute a default by Tenant under this
Lease.

 

17.6 No Merger. The voluntary or other surrender of
this Lease by Tenant, a mutual cancellation of -this Lease, or the termination
of this Lease by Landlord pursuant to any provision contained herein, shall not
work as a merger, but, at Landlord’s option, shall either terminate any or all
existing subleases hereunder, or operate as an assignment to Landlord of any
such subleases.

 

18                                    SECURITY
DEPOSIT

If Tenant Improvements
have been commenced on or prior to April 1, 1995, then on April 1,
1995 (or on such earlier date as Tenant Improvements are commenced), Tenant
shall deposit with Landlord that sum set forth in Section 1.8 as security
for the full and faithful performance of every provision of this Lease (the
“Security Deposit”). If Tenant Improvements have not commenced by April 1,
1995, but Tenant elects not to cancel this Lease, then Tenant shall deposit the
Security Deposit with Landlord upon the commencement of Tenant Improvements.
The Security Deposit shall be applied to the first rent coming due under this
Lease. If Tenant defaults under the terms of this Lease, beyond any applicable
cure period, Landlord may condition continuation of the Lease or Tenant’s
deposit of a new Security Deposit equal to one month’s Monthly Rent. If Tenant
defaults, at any time that Landlord holds a Security Deposit Landlord shall be
entitled, at its option, to apply or retain all or any part of the Security
Deposit for the payment of any rent or any other sum in default, any amount
that Landlord may be obligated to spend by reason of Tenant’s default, or to
compensate Landlord for any other expenses which it may suffer due to Tenant’s
default. The Security Deposit shall not be deemed liquidated damages. If
any portion of the Security Deposit is so used Tenant shall, within five (5)
days after demand therefor,- deposit sufficient cash with Landlord to restore
the Security Deposit to its full amount existing at such time. Landlord may
keep the Security Deposit with its general funds and Tenant shall not receive
interest on the Security Deposit. if Tenant fully complies with the terms of
this Lease, the Security Deposit shall be returned to Tenant or, at Landlord’s
option, to the last assignee of Tenant’s interest in this Lease, as soon as
Landlord determines the final amounts of Tenant’s obligations hereunder after
the expiration of the Lease or any period of holding over. If Landlord conveys
Landlord’s interest in the Premises, Landlord may transfer the Security Deposit
to any transferee and in that event, Tenant releases Landlord from all
liability for the return of the Security Deposit. Tenant shall not assign,
pledge, mortgage or otherwise hypothecate its interest in refund of the
Security Deposit.

 

 

19.                                 SIGNS

Tenant shall not erect or
place on or about the exterior of the Premises any signs, advertising
materials, awnings, canopies, exterior lighting or marquee, without
Landlord-’-s prior approval of the design, type, kind and location thereof
(which approval may be withheld in Landlord’s reasonable discretion). All signs
and other items described above shall be installed and displayed in strict
conformance with the requirements of all governmental agencies with authority
pertaining to the erection or placement thereof. Upon Landlord’s request,
Tenant shall immediately remove any sign or advertising material which violates
this Article. If Tenant fails to remove such material, Landlord shall have the
right to remove such materials at Tenant’s expense. Landlord shall have the
right to remove any sign on a temporary basis in order to perform Landlord’s
repair and maintenance obligations.

 

20.                                 UTILITIES

Tenant shall pay prior to
delinquency all charges for water, gas, heat, electricity, power, telephone
service and all other services or utilities used within, or about the Premises
by Tenant or Tenant’s Permittees. If any such utility is not separately
metered, Tenant shall reimburse Landlord within ten (10) days after written
demand for the cost thereof as reasonably determined by Landlord. Any security
deposit or connection charges required to furnish service to Tenant shall be
paid by Tenant. Landlord shall not be liable for loss or damage incurred in
connection with or incidental to the interruption or impairment of utility
service to the Premises by any cause whatsoever.

 

21.                                 FIXTURES

Tenant shall install and
maintain at Tenant’s expense fixtures required for Tenant’s business. All
fixtures not permanently affixed to the Premises shall remain Tenant’s property
and, provided Tenant is not in default hereunder, may be removed by Tenant from
time to time for the purpose of replacing such fixtures with items of like
character, quality and value and may be permanently removed not later than the
termination of the Lease. If such fixtures or other property are not removed
prior to the termination of the Lease, then such property shall, at Landlord’s
option and sole discretion, become Landlord’s property or be disposed of by
Landlord, as attorney-in-fact for and at the expense of Tenant. Tenant shall
promptly repair, at its expense, any damages occasioned by such removal
including, without limitation, holes or openings made in the walls, roof or
floor of the Premises. All other fixtures, equipment and other property
(including, without limitation, air conditioning units, heating equipment,
plumbing fixtures, hot water heaters, carpeting or other floor covering
cemented or otherwise affixed to the floor, and draperies) that are placed
upon, installed in or attached to the Premises by Tenant shall, at the
termination of this Lease for any reason, be the property of Landlord and
remain upon and—be surrendered with the Premises.

 

22.                                 SURRENDER
OF PREMISES

Tenant shall, upon the
termination of this Lease for any reason, quit and peaceably surrender the
Premises to Landlord in good order, condition and repair (reasonable wear and
tear excepted), free of refuse, in a broom-clean state and in accordance with
Article 21. Tenant shall provide Landlord with at least 30 days prior
notice of the date on which Tenant will surrender the Premises. Tenant shall
deliver all keys for the Premises to Landlord at the address at which Tenant
makes rent payments and shall inform Landlord in writing of the combinations of
all safes, locks and vaults, if any, in the Premises. Landlord’s acceptance of
surrender of the Premises by Tenant shall only arise from, and must: be
evidenced by, written acknowledgement of acceptance of surrender signed by
Landlord. No other act or conduct of Landlord, whether consisting of the
acceptance of the keys to the Premises, or otherwise, shall be deemed to be an acceptance
by Landlord of the surrender of the Premises by Tenant prior to the expiration
of the Lease Term.

 

23.                                 ENTRY
AND INSPECTION

Landlord and its agents
shall be entitled to enter the Premises at any time for the purpose of
conducting inspections, to make repairs, additions, or alterations thereto or
to the Building, to show the Premises to any prospective purchaser, tenant,
lender or insurer; to stabilize or support the structural portions of the
Premises, to post “For Rent” or “For Sale” signs (during the last twelve (12)
months of the Lease Term or Renewal Option Term) and to take necessary action
in the event of an emergency. Landlord shall provide 24 hours’ prior telephonic
notice of any entry not made during regular business hours, except in the event
of emergency. In connection with such entry, Landlord shall be entitled to
erect scaffolding and other

 

 

structures or equipment
as reasonably required by the work to be performed, provided that Landlord
shall not unreasonably interfere with Tenant’s business. No such entry shall
entitle Tenant to terminate this Lease, to reduce or abate Monthly Rent or
other amounts due hereunder or to any claims for damages. Landlord shall be
entitled to use any reasonable means to enter the Premises in the event of
emergency and shall not be liable for any damages resulting therefrom.

 

24.                                 ESTOPPEL
CERTIFICATE

Upon receipt of a request
from Landlord, Tenant shall, within five (5) business days after receipt of
such request, execute, acknowledge and deliver to Landlord a written statement
(i) certifying that this Lease is unmodified (or, if modified, stating the
nature of such modification) and in full force and effect and the dates to
which rent and other charges are paid in advance, (ii) acknowledging that there
are no uncured defaults by Landlord, or specifying any claimed defaults, and
(iii) certifying or acknowledging any other matters that Landlord may
reasonably request. Any such statements may be relied upon by any prospective purchaser
or encumbrancer of all or any portion of the Building or the Project. Tenant’s
failure to deliver such statement within such five (5) business day period
shall be conclusive against Tenant that (1) this Lease is in full force and
effect, without modification, except as represented by Landlord, (2) there are
no uncured defaults by Landlord, and (3) Monthly Rent has not been paid more
than one month in advance.

 

25.                                 TITLE

 

25.1 Subordination.

(a)                                  This
Lease shall be subject and subordinate at all times to any ground lease and the
lien of any mortgages, deeds of trust or other security instruments (“Security
Instruments”) in any amount presently existing or hereafter placed on or
against Landlord’s interest in this Lease, the Building or the Premises, and to
any and all previous or subsequent advances made there under, to the interest
on the obligations secured thereby, and all renewals, replacements arid
extensions, without the necessity of the execution and delivery of any further
instruments by Tenant. Tenant shall, at the written request and option of the
ground lessor, lien holder or the -purchaser of Landlord’s interest pursuant to
a foreclosure or other proceeding, attorn to such ground lessor, lien holder or
purchaser or enter into a lease for the balance of the Lease Term upon the same
terms contained in this Lease.

(b)                                 Notwithstanding
the foregoing, Tenant shall execute and deliver such further instruments
evidencing such subordination of this Lease if requested by Landlord within
five (5) business days after Tenant’s receipt of such request. If Tenant fails
or refuses to do so within such five (5) business day period, Tenant
irrevocably appoints Landlord, its successors and assigns, as Tenant’s
attorney-in-fact to execute and deliver all such instruments on Tenant’s
behalf; provided, however, that Tenant shall not be required to effectuate such
subordination, nor shall Landlord be authorized to effect such subordination on
Tenant’s behalf, unless the mortgagee or beneficiary named in the Security Instrument
shall concurrently agree in writing, for Tenant’s benefit, that so long as
Tenant is not in default under this Lease, that neither this Lease nor any of
Tenant’s rights shall be terminated or modified by any trustee’s sale or
proceeding to foreclose the Security Instrument.

(c)                                  Landlord
shall, at the written request of Tenant or Tenant’s lender, execute and deliver
to Tenant’s lender such instruments reasonably required by Tenant’s lender
wherein Landlord agrees to subordinate Landlord’s claims to Tenant’s inventory,
personal property and other assets to those of Tenant’s lender.

 

25.2 Quiet Enjoyment. Provided
Tenant is not in default hereunder, Landlord will do nothing to prevent Tenant
from peaceably and quietly enjoying and occupying the Premises. This covenant
shall not extend to, and Landlord shall not be liable for, any disturbance, act
or condition brought about by anyone not claiming by or through Landlord, or to
any action required or permitted to be taken by or on behalf of Landlord under
this Lease. This Lease conveys no interest to Tenant in light, air or view and
Landlord shall not be liable to Tenant for interference with or diminution of
the light, air or view, nor for any latent defect in the Premises.

 

 

26.                                 DEFAULT,
REMEDIES

 

26.1 Defaults. 
The occurrence of any one or more of the following events shall
constitute a material default and breach of this Lease by Tenant:

(a) Tenant’s abandoning
or vacating the Premises;

(b) Tenant’ s failure to
make any payment of rent or other sum due under this Lease, as and when due,
together with Default Interest thereon, where such failure continues for a
period of five (5) business days after notice of delinquency;

(c) Tenant’s failure to
observe any provision of this Lease or to perform any of Tenant’s obligations
under this Lease {except those described in Sections 26.1(a), (b) (d) and (e))
where such failure continues for a period of 30 days after notice from
Landlord;

(d) Any transfer of
Tenant’s interest in this Lease contrary to Article 17;

(e) To the extent not
prohibited by law, (i) the making by Tenant or any guarantor of this Lease
(“Guarantors”) of any general assignment or general arrangement for the benefit
of creditors; (ii) the filing by or against Tenant or any of the Guarantors of
a proceeding under state or federal insolvency and/or bankruptcy laws (unless,
in the case of a petition filed against Tenant or any of the Guarantors, the
same is dismissed within 30 days) ; (iii) the appointment of a trustee or
receiver to take possession of substantially all of Tenant’s assets at the
Premises or of Tenant’s interest in this Lease, where possession is not
restored to Tenant within 30 days; or (iv) the attachment, execution or other
judicial seizure of substantially all of Tenant’s assets at the Premises or of
Tenant’s interest in this Lease.

 

26.2 Remedies. 
In the event of any default or breach described in Section 26.1 or
any other material default by Tenant,

Landlord shall be
entitled to exercise the following rights and remedies at any time thereafter,
with or without notice or demand:

(a) To-terminate this
Lease effective immediately upon delivery of notice to Tenant and Tenant shall
immediately surrender possession of the Premises upon receipt of such notice.
Notwithstanding such termination, Tenant shall remain liable for damages in an
amount equal to all Monthly Rent and other sums that would have become payable
by Tenant during the balance of the Lease Term if this Lease had not been
terminated, less the net proceeds, if any, of any reletting of the Premises
subsequent to such termination, after deducting all of Landlord’s expenses
incurred in connection with suclr--- reletting, including without limitation
those expenses set forth in Section 26.2(b) below. Landlord shall have the
right to receive such damages from Tenant on the dates that such Monthly Rent
and other sums would have become payable under the Lease had the Lease not been
terminated. Alternatively, Landlord shall have the right to recover from Tenant
(i) the worth at the time of award (defined below) of the unpaid rent which had
accrued at the time of termination; (ii) the worth at the time of award of the
amount by which the unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rent loss that Tenant proves
could reasonably have been avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the Lease Term, had the
Lease not been terminated, after the time of award exceeds the amount of such
rent loss that Tenant proves could reasonably be avoided; and (iv) any other
amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform its obligations under this Lease or which
in the ordinary course of events would be likely to result from such failure.
The “worth at the time of award!!. of the amounts referred to in subsections
(i} and (ii) shall be computed by accruing Default Interest on the unpaid
amounts and with respect to subsection (iii) shall be computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award.

(b) To immediately
re-enter and remove all persons and property from the Premises, without
liability for damages sustained by reason of such re-entry and removal. Such
property may be stored in a public warehouse or elsewhere at Tenant’s expense.
If Landlord elects to re-enter or take possession pursuant to legal proceedings
or any notice provided by law, Landlord shall have the right to terminate this
Lease (as provided in subsection (a) above), or without terminating this
Lease, to relet the Premises or any part thereof for such term (which may be
for a term in excess of the Lease Term) and upon such conditions as Landlord,
in its sole discretion, may deem advisable (which may include concessions of
free rent, alterations or repairs and without obligation by the Landlord to
relet the Premises prior to any other property of Landlord. If Landlord elects
to relet the Premises, the rents received thereafter shall be applied first to
the payment of any indebtedness other than rent due hereunder from Tenant to
Landlord; second, to the payment of any costs of such reletting, including
without limitation, all repossession costs, brokerage commissions, legal
expenses, employees’ -expenses, alteration, remodeling and repair costs

 

 

and expenses of preparing
for such reletting; third, to the payment of rent due and unpaid hereunder; and
the residue, if any, shall be held by Landlord and applied to payment of future
rent as the same becomes due. If the rent to be received from such reletting
will be less than the total of all rental and other payments that Tenant would
have been obligated to make during the balance of the Lease Term, Tenant shall
immediately pay any such deficiency in full to Landlord. No such re-entry or
taking possession of the Premises by Landlord shall be construed as an election
to terminate this Lease unless a written notice of such intention is given to
Tenant or unless termination is decreed by a court. Notwithstanding any such
reletting without termination, Landlord may, at any time thereafter, elect to
terminate this Lease for such previous breach, upon delivery of notice to
Tenant.

(c) To judicially obtain
the appointment of a receiver and the receiver may take possession of Tenant’s
personal property used in the conduct of Tenant’s business. Such entry or
taking of possession shall not constitute an eviction of Tenant and Tenant
agrees to hold Landlord harmless from any claim by any person arising out of or
in any way connected with such entry or taking of possession. Neither the
application for or the appointment of a receiver, shall be construed as an
election by Landlord to terminate this Lease unless notice of such intention is
given to Tenant.

 

26.3 Remedies Cumulative. No remedy or option of
Landlord shall be considered exclusive of any other remedy, but the same shall
be cumulative and in addition to every other remedy or option given hereunder,
or now or hereafter existing at law, in equity or by statute, including,
without limitation an action to recover amounts due hereunder. Landlord may
exercise its rights and remedies at any time, in any order, to any extent, and
as often as Landlord deems advisable.

 

26.4 Landlord’s Right to Act. If Tenant fails to
perform any of its obligations, Landlord shall have the right, without any
passage of time or declaring Tenant in default, to perform such obligation on
Tenant’s behalf and to charge to Tenant all costs and expenses (including an
administration fee equal to 20% of such costs and expenses) incurred in
connection therewith, together with Default Interest thereon from the date
incurred. Tenant shall pay such amount within 3 days after presentment of a
statement to Tenant.

 

26.5 “Additional Rent” Defined. All
sums payable by Tenant hereunder=-in addition to Monthly Rent shall be deemed
to be additional rent, including without limitation, for purposes of
Section 5_02(b) (7) of the Bankruptcy Code, whether such sums are
designated as rent. Additionally, upon a default by Tenant hereunder, Tenant
shall pay to Landlord immediately upon demand as additional rent the value, as
reasonably determined by Landlord, of all concessions made to Tenant relating to
this tease or the Premises, including without limitation rental abatements and
tenant improvement allowances.

 

26.6 Late Charges. The late payment
by Tenant of any sums due hereunder will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which will be 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 encumbrance covering the Premises. Accordingly, if amounts payable
by Tenant are not received by Landlord on or before the due date of such
payment, Tenant shall immediately pay to Landlord a late charge equal to five
percent (5-°s) of such payment. The parties agree that such late charge
represents a fair and reasonable estimate of the costs Landlord will incur by
reason of Tenant’s late payment, and shall be in addition to the payment of.
Default Interest.

 

26.7 Interest an Past-Due
Obligations. Any amount owed Landlord that is not paid when due shall bear interest
from the date due until paid at a rate equal to the lesser of (i) 18% per
annum, or (ii) a variable rate per annum equal to 5 percentage points in excess
of the Prime Rate designated by First Interstate Bank of Arizona, N.A. (“FTBA”)
from time to time during the period such amount is owed to Landlord (“Default
Interest”). The term Prime Rate shall mean the prime commercial lending rate
announced by FIBA, as the same may be changed from time to time. If FIBA shall
at any time discontinue using a Prime Rate, Landlord shall, in its reasonable
judgment, substitute another means of determining the annual interest rate
charged by major commercial banks on 90-day unsecured commercial loans to their
most creditworthy borrowers, and such interest rate as so determined shall
thereafter be the Prime Rate. Payment of such interest shall not excuse or cure
any default by tenant.

 

26.8 Attorneys’ Fees. Waiver of Jury Trial and
Counterclaims. In any dispute between the parties, the prevailing party shall
be entitled to recover from the other party, immediately upon demand, all costs
and

 

 

attorneys’ fees, expert
witness fees, costs of tests and analyses, travel and accommodation expenses,
deposition and trial transcript copies, court costs and other similar costs and
fees incurred in enforcing its rights and remedies under this Lease, regardless
of whether legal proceedings are actually commenced. The parties waive trial by
jury in any action, proceeding or counterclaim brought by either of the parties
hereto against t-he other on any matters whatsoever arising out of or in any
way connected with this Lease, the relationship of Landlord and Tenant,
Tenant’s use or occupancy of the Premises and/or any claim of injury or damage.
If Landlord commences any proceedings for nonpayment of rent, Tenant shall not
interpose any counterclaim of whatever nature or description in any such
proceedings, other than compulsory counterclaims, it being the intent of this
Lease that Tenant’s obligation to pay rent is separate from any obligation of
Landlord under this Lease other than the covenant of quiet enjoyment as set
forth in Section 25. This shall not, however, be construed as a waiver of
Tenant’s right to assert such claims in any separate action or action brought
by Tenant.

 

26.9 Accord and Satisfaction.
Payment by Tenant or receipt by Landlord of a lesser amount than the rent or
other charges due hereunder shall be deemed to be on account of the earliest
due stipulated rent or other charges, and no endorsement or statement on any
check or any letter accompanying any check or payment shall be deemed an accord
and satisfaction, and Landlord shall accept such check or payment without
prejudice to Landlord’s right to recover the balance of such rent or other
charges or pursue any other remedy in this Lease.

 

27.                                 BANKRUPTCY
OF TENANT

If, pursuant to the
Bankruptcy Code, 11 U.S.C. Section 101 et seq., Tenant assumes this Lease
and proposes to assign the same to any party who shall have made a bona fide
offer to accept an assignment of this Lease on terms acceptable to Tenant, then
notice of such proposed assignment, setting forth (i} the name and address of
such party, (ii) the terms of the offer, and (iii) evidence assuring such
party’s future performance under the Lease shall be given to Landlord by Tenant
no later than 20 days after receipt by Tenant of such offer, but in any event
no later than 10 days prior to the date that Tenant applies to a court of
competent jurisdiction for authority and approval to enter into such assignment
and assumption. Landlord shall thereupon have the prior right, to be exercised
by notice to Tenant given at any time prior to the effective date of such
proposed assignment, to accept an assignment of this Lease upon the same terms
and conditions and for the same consideration, if any, as the bona fide offer
made by such party, less any brokerage commissions which may be payable by such
person for the assignment of this Lease.

 

28.                                 LANDLORD’S
LIABILITY

 

28.1 Default by Landlord. Landlord
shall not be considered in default or breach of this Lease for the
nonperformance of any obligation imposed herein unless such nonperformance
shall continue for a period of at least thirty (30) days after notice from
Tenant; provided, however, if the nature of the nonperformance is such that it
cannot=-be reasonably cured within thirty (30) days, Landlord shall not be
deemed to be in default if Landlord commences to cure such nonperformance
within such thirty (30) day period and thereafter pursues such cure to
completion in the exercise of reasonable diligence. If Landlord grants a
security interest in this Lease and notifies Tenant of the name and address of
said lien holder, notice shall not be effective unless Tenant simultaneously
upon giving notice of nonperformance to Landlord delivers a copy of the same to
each such lien holder by personal delivery or certified or registered United
States mail, postage prepaid. Each such lien holder shall be entitled to
perform such obligation within thirty (30) days after the expiration of any
period of time within which Landlord is entitled to perform such obligation
before Tenant shall have the right to take any action as a result of such
nonperformance.

 

28.2 Sale of Landlord’s Interest.
Upon any sale or conveyance of Landlord’s interest in this Lease, Landlord
shall be entirely relieved of a11 liability for Landlord’s obligations under
this Lease accruing thereafter, and the assignee or purchaser shall be deemed
without any further agreement between the parties or their successors in interest
to have assumed all of Landlord’s obligations accruing after such conveyance.
-.

 

 

28.3 Non-Recourse Liability. If
Landlord fails to perform any of its obligations under this Lease and, as a
consequence of such nonperformance, Tenant recovers a money judgment against
Landlord, such judgment shall be satisfied only out of Landlord’s interest in
the Premises. Landlord shall have no liability whatsoever for any deficiency,
and no other assets of Landlord shall be subject to levy, execution or other enforcement
procedures as a result of such judgment. None of Landlord’s obligations under
this Lease shall be subject to specific performance or injunctive remedies, and
Tenant waives all rights with respect to such remedies.

 

28.4 Mortgage Exculpation. Notwithstanding
anything contained herein to the contrary, Tenant waives and holds any
mortgagee or beneficiary named in any mortgage, deed of trust or other security
instrument harmless from any and all claims Tenant may have against Landlord,
including all claims arising against Landlord prior to the mortgagee or beneficiary
succeeding to Landlord’s interest hereunder.

 

29.                                 FORCE
MAJEURE

If either party is
delayed or prevented from the performance of any act by reason of acts of God,
strikes, lockouts, labor troubles, failure or refusal of governmental
authorities to timely issue permits or approvals or conduct reviews or
inspections, civil disorder, inability to procure materials, restrictive
governmental laws or regulations, or other causes beyond the control of the
party obligated (financial inability excepted), or,- in the case of Landlord’s
application for building permits, design review approval or other land use
approvals, any unreasonable delays by the City of Scottsdale planning and
zoning or building safety department, performance of such act shall be excused
for the period of delay and the period for the performance of any such act
shall be extended for a period equivalent to the period of such delay;
provided, however, nothing herein shall excuse Tenant from the prompt payment
of Monthly Rent or any other sum.

 

30.                                 BROKERS

Tenant represents and
warrants that, except as listed in Section 1.10, Tenant has not dealt with
any real estate broker(s) and there are no claims for brokerage commissions or
finder’s fees in connection with this Lease, other than from the Brokers.
Landlord agrees to pay Brokers a commission equal to five percent (5%) of the
Monthly Rent for the initial seven-year Lease Term, to be divided evenly
between the two Brokers (and, without liability to Landlord, by Brokers with
such other brokers or salesmen to which they may be obligated). The commission
shall be paid fifty percent (50%) upon Tenant’s, permanent occupying of the
Premises and fifty percent (50%) on the second anniversary of Tenant’s
permanent occupancy of the Premises, i.e., at the end of two continuous and
consecutive years of occupancy of the Premises by Tenant. If the Lease is
terminated prior to such second anniversary for any reason other than
Landlord’s default under this Lease, Landlord shall have no obligation for the
second half of the commission.

 

31.                                 NOTICES

No notice, consent,
approval or other communication given in connection herewith shall be validly
given, made, delivered or served unless in writing and delivered in person or
sent by registered or certified United States mail, postage prepaid, to
Landlord at the address set forth in Section 3.1 or to such other
addresses as Landlord may from time to time designate in writing and deliver to
Tenant in accordance with this Article, and to Tenant at the Premises (or prior
to Tenant’s occupancy of the Premises, at the address set forth in
Section 1.1). Notices, consents, approval or communications shall be
deemed given or received upon delivery, if delivered in person, or upon
twenty-four (24) hours after deposit in the mail, if delivered by mail. Unless
receipt of transmission is acknowledged in writing by the recipient, facsimile,
telex, electronic mail, or other telecommunication shall not constitute notice.

 

32.                                 FINANCIAL
STATEMENTS

Tenant shall from time to
time, within ten (10) days after Landlord’s request, provide Landlord with
Tenant’s most recent publicly available financial statements or annual
statements, certified to be accurate by a certified public accountant.

 

 

33.                                 GENERAL

33.1 Arizona Law; Venue.         This Lease shall be construed in accordance
with the laws of the State of Arizona. The parties agree that Maricopa County,
Arizona, shall be the venue for any litigation relating to this Lease.

 

33.2 No Partnership create any
relationship other than that of landlord and tenant.

 

33.3 Amendments. No alteration, amendment, change or
addition to this Lease shall be binding upon Landlord or Tenant unless reduced
to writing and signed by both parties.

 

33.4 No Waiver. No delay or omission of Landlord to
exercise any right or power shall impair any such right or power, or shall be
construed to be a waiver of any nonperformance by Tenant or an acquiescence
therein. No waiver of any nonperformance shall be effective unless it is in
writing. No written waiver by Landlord shall be deemed to be a waiver of any
other Lease provision, or of any subsequent breach by Tenant of the same or any
other provision. Landlord’s consent to or approval of any act by Tenant shall
not be deemed to render unnecessary the procurement of Landlord’s consent to or
approval of any subsequent act of Tenant, whether or not similar to the act so
consented to or approved.

 

33.5 Exhibits. Exhibits attached hereto shall by this
reference be deemed a part of this Lease as if set forth in full herein.

 

33.6 Partial Invalidity. If any provision of this
Lease is held by a court of competent jurisdiction to be invalid, void or
unenforceable, that provision may be modified to the minimum extent necessary and
the remainder of the provisions shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.

 

33.7 Captions. The various headings and numbers
herein and the grouping of the provisions of this Lease into separate articles
and sections are for the purpose of convenience only and shall not control or
affect the meaning or construction of any of the provisions.

 

33.8
Time. Time is of the essence. If any time period provided for
herein expires on a Saturday, Sunday or legal holiday, such time period shall
be extended to the next succeeding day that is not a Saturday, Sunday or legal
holiday.

 

33.9 Recordation. memorandum thereof
in Arizona._

Tenant shall not record
this Lease or any the public records of Maricopa County,

 

33.10 No Third Party Rights. Except
as expressly provided herein, no term of this Lease is intended to or shall be
for the benefit of any person not a party hereto, and no such other person
shall have any right or cause or action hereunder.

 

33.11 Joint and Several Obligations. If Tenant is
constituted of two or more persons, corporations or other entities, all
agreements, covenants, representations and warranties of Tenant herein are the
joint and several obligations of the entities constituting Tenant. If Tenant is
husband and wife, the obligations hereunder shall extend individually to the
sole and separate property of each as well as to their community property.
Notice given to any one of the entities constituting Tenant shall be deemed as
having been given to a11 such entities.

 

33.12 Authority to Execute. Any individual
executing this Lease on behalf of or as representative for a corporation or
other person, partnership or entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on behalf of such party, and
that this Lease is binding upon such party in accordance with its terms. If
Tenant is a corporation or a partnership, Tenant shall deliver to Landlord
within ten (10) days after the execution of this Lease a certified copy of a
resolution of the board of directors or of all partners, as the case may be,
authorizing or ratifying the actions of the individual (s) executing and
delivering this Lease.

 

 

33.13 Binding on Successors and Assigns. Each of
the provisions of this Lease shall bind, extend to, and inure to the benefit of
the respective heirs, legal representatives, and successors and assigns of both
Landlord and Tenant; provided, however, that this clause shall not permit any
transfer contrary to the provisions of Article 17.

 

33.14 Impartial Interpretation. This Lease is
the result of. negotiations between Landlord and Tenant and therefore the
language contained in this Lease shall be construed as a whole according to its
fair meaning and not strictly for or against either Landlord or Tenant.

 

33.15 Plurals. The words “Landlord” and
“Tenant,” as herein used, shall include the plural as well as the singular. The
neuter gender shall include the masculine and feminine genders.

 

33.16 Survival of Obligations. Tenant’s
obligations pursuant to Sections 8.8 and 9.3 and Articles 5, 21, 22, 26 and 30
of this Lease shall survive the expiration or other termination of the Lease
Term.

 

33.17 Not
Binding Until Signed. Submission of this instrument to Tenant
for examination shall not bind Landlord in any manner, until this instrument is
executed and delivered by both Landlord and Tenant.

 

34.                                 RIGHT
OF..FIRST REFUSAL

During the first
forty-eight (48) months of the Lease Term, provided Tenant is not then in
default beyond any applicable grace period, Tenant shall have the right of
first refusal an the sale by Landlord of some or all of the Premises to a third
party other than an Affiliate of Landlord. During such 48-month period, if
Landlord receives an offer to purchase some or all of the premises from a third
party other than an Affiliate of Landlord (“Buyer”), which Landlord wishes to
accept, Landlord shall first provide Tenant with written notice of the offer,
together with a copy of any related purchase contract, agreement of sale,
escrow instructions, or other written expression of the offer which shall set
forth all material terms of the proposed sale. Tenant shall have fifteen (15)
days after Landlord’s notice of the offer in which to elect to purchase the
Premises (or portion thereof covered by the offer) on the same terms as the
offer by giving Landlord written notice of such election. If Tenant fails to
timely elect to exercise its purchase option, then Landlord shall be free to
accept the offer and proceed with the sale to the third party. If the sale
fails to close, future offers made within the 48-month period shall be subject
to Tenant’s right of first refusal. If Tenant exercises its right of first
refusal, escrow shall open within ten (10) days of Tenant’s notice exercising
its option to purchase and shall close on the same terms arid conditions as the
offer. Irrespective of whether the third party offer may impose such
requirement upon Landlord, in any sale of all or part of the Premises by
Landlord to Tenant pursuant to this right of first refusal, Landlord shall have
no obligation to provide Tenant with any environmental audit or report nor with
any warranties and representations regarding environmental laws or issues. This
right of first refusal shall not apply to or have any effect on any sale,
transfer, or encumbrance of all or any part of the Premises by Landlord to an
Affiliate. For purposes of this paragraph, an “Affiliate” of Landlord shall
mean: any successor to Landlord by merger, consolidation, roll up, acquisition,
or dissolution; any or all of Landlord’s, or, if Landlord is an entity, then
its partners’; members’, shareholders’, or beneficiaries’, spouse, children,
grandchildren, brothers, sisters, parents, nieces, or nephews, or any
combination thereof, whether individually or as the partners, members,
shareholders or beneficiaries in or of an entity; or, any entity in which
Landlord or its partners, members, shareholders, or beneficiaries hold a
controlling interest. If, escrow fails to close for any reason other than
Landlord’s default, then, in addition to any other remedies available to
Lender, Tenant’s right of first refusal shall terminate as to all future
offers.

 

IN WITNESS WHEREOF, the
parties have duly executed this Lease as of the date first above written.

78 MCCLAIN, L.L.C.,

an Arizona limited
liability company

 

	
  /s/ Thomas McClain

  	
   

  
	
   

  
	
  GO-VIDEO, INC.,

  
	
  a Delaware corporation

  
	
  By:

  	
  /s/ David Klein

  	
   

  
	
  Its: Vice President

  
			

 

 

When recorded return to:

SNELL & WILMER

One Arizona Center

Phoenix, Arizona 85004

Attn: Sam Cowley, Esq.

 

FIRST AMENDMENT TO
INDUSTRIAL GROSS LEASE

 

THIS FTRST AMENDMENT TO
INDUSTRIAL GROSS LEASE (the “Amendment”) is executed as of this 18 day of 2000
by and between 78 McClain, L.L.C., an Arizona limited liability company {‘Landlord”)
and Sensory Science Corporation, a Delaware corporation, successor in interest
to Go Video Inc., a Delaware corporation (“Tenant”).

 

RECITALS

A.                                   Landlord
and Tenant previously entered into that certain Industrial Gross Least ,dated
November 15, 1994 (the “Lease”) with respect to the premises further
described in the Lease (the “Premises”).

 

B,                                     Landlord
desires to lease to Tenant and Tenant desires to lease from Landlord ten (10)
additional parking spaces as shown on Exhibit A (the “Parking Area”).

 

C.                                     Landlord
and Tenant now desire to amend the Lease in accordance with the terms

 

NOW, THEREFORE, for good
and valuable consideration, the receipt. and sufficiency of which is hereby
acknowledged, the parties agree as follows:

‘I.                                     Section 1_3
of the Lease is amended to provide that in addition to the facilities depicted
on the Site Plan, the Premises shall include the Parking Area depicted an
Exhibit A.

2.                                       The
first sentence of Section 7.3 of the Lease i; amended to provide that the
Common Area shall include ninety (90) parking spaces.

3.                                       Except
as provided in this Amendment, capitalized terms shall have the meaning set
forth in the Lease.

4.                                       Except
as amended hereby, the Lease shall remain in full force and effect.

5,                                       This
Amendment may be executed in any number of counterparts, each of which shall be
an original, but all of which shall constitute one instrument:

 

IN WITNESS WHEREOF, this
Amendment is executed as of the first day and year written above.

LANDLORD:

78 1ViCCLA1N, L.L.C., an
Arizona limited liability company

 

TENANT:

ACCEPTED AND APPROVED:

SENSORY SCIFNCL CORPORATION,

a Delaware corporation

 

 

Sate, OF Arizona

County of Maricopa

The foregoing instrument
was acknowledged before me this 18th day of April 2000, by Tom McClain, of
78 McClain, LLC., an Arizona limited liability company, on behalf of the limited
liability company.

 

My Commission Expires:

 

STATE OF ARIZONA

SS, County Of Maricopa

The foregoing instrument
was acknowledged before me this 18th day of April, 2000, Dewn Zad,
the VP of HR of Sensory Science corporation, a Delaware corporation, on behalf
of the corporation.

 

 

Scottsdale Northwest
Airpark Property Owners Association

 

15821 N. 79 St., Suite 1 •
Scottsdale, AZ 85260

Telephone 480.991.7117 •

FAX 480.991.6619

 

May 12, 2000

 

The undersigned have
reviewed the proposed abandonment for the taxiway, referenced in letter dated
April 27, 2000 referring to Lot 14 in North Scottsdale Airpark No. 2 aka
7835 West McClain Drive, (See Exhibit A & B attached) by Dawn M. Zadronzy,
and hereby approved of its release.

NORTH SCOTTSDALE AIRPARK
PROPERTY OWNER”S ASSOCIATION

 

	
  SCOTTSDALE AIRPORT

  
	
   

  
	
   

  
	
  /s/ Kevin Shirer

  	
   

  
	
  Airport
  Specialist/Noise Abatement Specialist

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