PAPAGO PARK CENTER
GROUND SUBLEASE
BETWEEN
PAPAGO PARK CENTER, INC.
an Arizona corporation
AND
THREE-FIVE SYSTEMS, INC.
a Delaware Corporation
DATED April 1, 1994
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS...................................................... 1
Section 1.1. Definitions.......................................... 1
ARTICLE 2 DEMISE OF THE PREMISES; TERM..................................... 5
Section 2.1. Premises............................................. 5
Section 2.2. Term................................................. 5
Section 2.3. Commencement Date; Possession........................ 5
Section 2.4. Title Insurance...................................... 5
Section 2.5. Nondisturbance and Attornment Agreement.............. 6
ARTICLE 3 RENT............................................................. 6
Section 3.1. Rent................................................. 6
Section 3.2. Rent Absolutely Net.................................. 9
Section 3.3. Option to Purchase................................... 10
Section 3.4. Nonsubordination..................................... 12
ARTICLE 4 ADDITIONAL RENT.................................................. 13
Section 4.1. "Additional Rent" and "Impositions" Defined.......... 13
Section 4.2. Payments............................................. 14
Section 4.3. Contest.............................................. 14
Section 4.4. Assessment Reduction................................. 14
Section 4.5. Hold Harmless........................................ 14
ARTICLE 5 INSURANCE........................................................ 15
Section 5.1. Tenant Obligations to Insure......................... 15
Section 5.2. Policies and Companies............................... 16
Section 5.3. Policy Delivery, Payment Evidence.................... 16
Section 5.4. Blanket Insurance.................................... 16
Section 5.5. Expiration of Term................................... 16
Section 5.6. Risk of Loss......................................... 17
Section 5.7. Failure to Maintain Insurance........................ 17
Section 5.8. Availability of Insurance............................ 17
ARTICLE 6 SURRENDER........................................................ 17
Section 6.1. Surrender--Removable Property........................ 17
Section 6.2. Waste................................................ 18
Section 6.3. Title................................................ 18
TABLE OF CONTENTS
(Continued)
Page
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Section 6.4. Initial Environmental Site Assessment................ 18
Section 6.5. Interim Site Assessments............................. 18
Section 6.6. Final Phase I........................................ 19
Section 6.7. Tenant's Failure to Obtain the Final Phase I......... 19
Section 6.8. Survival of Provisions............................... 19
ARTICLE 7 LANDLORD'S PERFORMANCE FOR TENANT................................ 20
Section 7.1. Cures--Rights, Costs, and Damages.................... 20
ARTICLE 8 USE AND MAINTENANCE OF PREMISES.................................. 20
Section 8.1. Absence of Warranties................................ 20
Section 8.2. Permitted Uses....................................... 21
Section 8.3. Maintenance and Repairs.............................. 21
Section 8.4. Performance by Landlord.............................. 21
Section 8.5. Alterations.......................................... 21
ARTICLE 9 COMPLIANCE....................................................... 22
Section 9.1. Tenant Obligations................................... 22
Section 9.2. Certificate of Occupancy............................. 22
ARTICLE 10 CONSTRUCTION OF BUILDINGS AND LANDSCAPING....................... 22
Section 10.1. General Requirements................................ 22
Section 10.2. Approval of Final Plans............................. 23
Section 10.3. Government Approval................................. 23
Section 10.4. Construction Standards.............................. 23
Section 10.5. Ownership of Buildings and Improvements............. 23
Section 10.6. Requirement of Construction Contract................ 24
Section 10.7. Application of This Article......................... 25
ARTICLE 11 IMPAIRMENT OF LANDLORD'S TITLE.................................. 25
Section 11.1. No Liens............................................ 25
Section 11.2. Discharge........................................... 25
Section 11.3. No Implied Consent.................................. 26
ARTICLE 12 INSPECTION...................................................... 26
Section 12.1. Inspection and Entry................................ 26
ARTICLE 13 INDEMNIFICATION................................................. 27
ii
TABLE OF CONTENTS
(Continued)
Page
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Section 13.1. Indemnification of Landlord......................... 27
Section 13.2. Indemnification of Tenant........................... 29
ARTICLE 14 DAMAGE OR DESTRUCTION........................................... 30
Section 14.1. Tenant's Election to Restore, Rebuild or Raze....... 30
Section 14.2. Lease Obligations Continue.......................... 30
Section 14.3. Election to Terminate............................... 30
ARTICLE 15 CONDEMNATION.................................................... 31
Section 15.1. Total or Substantial Takings........................ 31
Section 15.2. Partial Taking...................................... 32
Section 15.3. Rights of Participation............................. 32
Section 15.4. Notice of Proceeding................................ 32
ARTICLE 16 SUBTENANT NON-DISTURBANCE....................................... 33
Section 16.1. Agreement for Non-Disturbance of Subtenants......... 33
ARTICLE 17 ASSIGNMENT, SUBLETTING, MORTGAGE................................ 34
Section 17.1. Prior Consent; Permitted Assignments............... 34
Section 17.2. Permitted Subleases................................ 35
Section 17.3. Rent From Assignee................................. 36
Section 17.4. Continuing Liability............................... 36
Section 17.5. Assignee Bound..................................... 37
Section 17.6. Consent Limited.................................... 37
Section 17.7. Permitted Mortgages--Definition.................... 37
Section 17.8. Permitted Mortgages--Further Provisions............ 38
Section 17.9. Notice to Permitted Mortgagees..................... 39
Section 17.10. Right to Cure...................................... 39
Section 17.11. Conditions of Cure................................. 40
Section 17.12. New Lease with Mortgagee........................... 40
Section 17.13. Priority of New Lease.............................. 41
Section 17.14. Assignment of Subleases............................ 41
Section 17.15. Grace Period....................................... 41
Section 17.16. Modifications...................................... 41
Section 17.17. Initial Assignment................................. 42
ARTICLE 18 DEFAULT BY TENANT............................................... 42
Section 18.1. Events of Default.................................. 42
iii
TABLE OF CONTENTS
(Continued)
Page
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Section 18.2. Notice and Termination.............................. 43
Section 18.3. No Implied Waivers.................................. 43
Section 18.4. Remedies Cumulative................................. 43
Section 18.5. Late Charge......................................... 43
ARTICLE 19 SAVING PROVISION................................................ 44
ARTICLE 20 NOTICES......................................................... 44
Section 20.1. Notices............................................. 44
Section 20.2. Notice to Permitted Mortgagees of Record Only....... 45
ARTICLE 21 QUIET ENJOYMENT................................................. 45
Section 21.1. Quiet Enjoyment..................................... 45
ARTICLE 22 ESTOPPEL........................................................ 45
Section 22.1. Estoppel Certificates............................... 45
ARTICLE 23 CONSENTS........................................................ 46
Section 23.1. Parties and Notice.................................. 46
Section 23.2. No Unreasonable Withholding or Delay................ 46
ARTICLE 24 ADJOINING EXCAVATION............................................ 46
Section 24.1. Entry and Repairs................................... 46
ARTICLE 25 LIMITATION ON RECOURSE.......................................... 47
ARTICLE 26 EASEMENTS, DEDICATIONS AND OTHER MATTERS........................ 47
ARTICLE 27 TRADE FIXTURES, MACHINERY AND EQUIPMENT......................... 48
ARTICLE 28 LEASEHOLD MORTGAGEE FURTHER ASSURANCES.......................... 48
ARTICLE 29 MISCELLANEOUS................................................... 49
Section 29.1. Choice of Law....................................... 49
Section 29.2. Memorandum.......................................... 49
Section 29.3. Entire Agreement.................................... 49
Section 29.4. Captions............................................ 49
Section 29.5. Execution and Delivery.............................. 50
iv
TABLE OF CONTENTS
(Continued)
Page
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Section 29.6. Singular and Plural, Gender......................... 50
Section 29.7. Multiple Parties.................................... 50
Section 29.8. Construction........................................ 50
Section 29.9. Declaration......................................... 50
Section 29.10.Nondisturbance - Improvement District.............. 50
ARTICLE 30 INUREMENT....................................................... 51
Section 30.1. Covenants Bind and Inure............................ 51
ARTICLE 31 ATTORNEYS' FEES................................................. 52
Section 31.1. Prevailing Party to Recover Attorneys' Fees......... 52
v
PAPAGO PARK CENTER
GROUND SUBLEASE
---------------
THIS SUBLEASE ("Lease"), dated effective as of the 1st day of April,
1994, by and between PAPAGO PARK CENTER, INC., an Arizona corporation
(hereinafter "Landlord"), and THREE-FIVE SYSTEMS, INC. a Delaware corporation
(hereinafter "Tenant").
WITNESSETH:
WHEREAS, Landlord is the ground lessee of certain real property located
in the City of Tempe, Arizona, known as the "Papago Park Center"; and
WHEREAS, Landlord plans to develop and maintain the Papago Park Center
as an integrated real estate development project for the benefit of Landlord;
and
WHEREAS, Tenant desires to lease from Landlord and Landlord is willing
to lease to Tenant a portion of the Papago Park Center on the terms and subject
to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of these premises and of the mutual
covenants and agreements hereinafter set forth, Landlord and Tenant have agreed
and hereby agree as follows:
ARTICLE 1
---------
DEFINITIONS
-----------
Section 1.1. Definitions. For the purposes of this Lease, the following
words shall have the meanings hereafter set forth:
"Additional Rent": As defined in Section 4.1.
"Adjustment Date": As defined in Section 3.1.B.
"Buildings": Any and all structures or improvements to be
constructed pursuant to Article 10, together with all future additions thereto
and alterations thereof, other than Landscaping.
"City": The City of Tempe, a municipal corporation.
"City Lease": That certain so-called "Improvements Lease" to
be executed between the City and Tenant pursuant to that certain "Agreement for
the Conveyance and Leaseback of Improvements", regarding the lease of the
Buildings and Landscaping from the City to Tenant.
"Commencement Date": As defined in Section 2.3.
"Declaration": Any instrument affecting the Papago Park Center
or any portion thereof which is now or may hereafter be duly recorded within the
records of Maricopa County, Arizona, together with all amendments thereto, and
which contains conditions, covenants, restrictions, liens, easements or similar
provisions running with the land, including without limitation any rules,
regulations, Papago Park Center Design Guidelines, Architectural and Development
Guidelines and procedures for obtaining approvals or for other purposes
contained therein or promulgated pursuant thereto; provided that any such
instrument (including amendments) hereafter recorded or adopted which contains
provisions having a non-uniform or materially adverse affect on the Premises,
shall not be effective against Tenant or any Person claiming by, through or
under Tenant and shall not be considered a "Declaration" hereunder without
Tenant's prior written consent, which shall not be unreasonably withheld or
delayed.
"Environmental Laws": Any one or all of the following: the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
ss. 9601 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6941
et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.; the Safe
Drinking Water Act, 42 U.S.C. ss. 300h et seq.; the Clean Water Act, 33 U.S.C.
ss. 1251 et seq.; the Clean Air Act, 42 A.R.S. ss. 49-921 et seq.; the Arizona
Environmental Quality Act, Laws 0000, Xx. 368; Laws 0000, Xx. 317; A.R.S. ss.
49-1001 et seq.; rules and regulations under any of the foregoing; and any other
applicable laws and regulations of the United States of America, the State of
Arizona or any political subdivision thereof now in effect or hereafter enacted
that deal with the regulation or protection of the environment, including the
ambient air, ground water, surface water or land use.
"Event of Default": As defined in Section 18.1.
"First Permitted Mortgage of Record": As defined in Section
17.8.A.
"Impositions": As defined in Section 4.1.
"Institutional Lender": As defined in Section 4.3.
"Insurance Requirements": All terms and provisions of each
insurance policy, whether procured by or covering Landlord, City, Tenant or any
Subtenant, covering or applicable to all or any part of the Premises and all
requirements of the issuers of any such
2
policies which are applicable to or affect all or any part of the Premises or
any use or condition thereof, at the time then relevant.
"Landlord": Papago Park Center, Inc., an Arizona corporation,
and its successors and assigns.
"Landscaping": All grading, drainage and site preparation or
improvements, landscaping, planting materials, hardscaping, outdoor decorative
or beautification features and watering systems and related improvements to be
installed on or in the Premises by Tenant pursuant to Article 10.
"Lease Term": As defined in Section 2.2.
"Legal Requirements": All statutes, codes, laws, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements of all federal,
state, county, municipal, and other governments, departments, commissions,
boards, courts, authorities, officials and officers of every nature and
description, all terms and conditions of the City Lease, and all covenants,
conditions, restrictions or other requirements duly and validly imposed by or
pursuant to any Declaration (subject to the limitations contained in the
definition of "Declaration") which may at any time be applicable to the
Landlord, the Tenant or any Subtenant or to the Premises or any part thereof,
including without limitation Environmental Laws.
"Lessor under the Master Ground Lease": Salt River Project
Agricultural Improvement and Power District, its successors and assigns, with
respect to the Lessor's interest under the Master Ground Lease.
"Master Ground Lease": That certain Papago Park Center Ground
Lease dated March 6, 1989, between Salt River Project Agricultural Improvement
and Power District, as Lessor, and Papago Center, Inc., as Lessee, and subject
to the provisions of Section 2.5 below, all amendments thereto and modifications
thereof, to which this Lease is and shall be subject and subordinate.
"Minimum Rent": As defined and described in Section 3.1.
"Mortgage": Any mortgage, deed of trust, security agreement,
contract to convey, pledge, assignment or other transfer for the purpose of
securing any debt or other obligation of or which creates any lien or
encumbrance upon all or any portion of the right, title or interest of Tenant
under this Lease, the leasehold estate hereby created or the Premises.
"Mortgagee": The holder, trustee or beneficiary of any
Mortgage.
3
"Papago Park Center": As defined in the Recitals.
"Papago Park Center Design Guidelines" or "Manual": Synonymous
with the Papago Park Center Architectural and Development Guidelines, being
detailed guidelines adopted and amended from time to time pursuant to the
Declaration (subject to the limitation on amendments and other adopted
instruments set forth in the definition of "Declaration" above) pertaining to
the location, design and construction of improvements within the Papago Park
Center.
"Permitted Assignee": As defined in Section 17.1.
"Permitted Assignment": As defined in Section 17.1.
"Permitted Mortgage": As defined in Section 17.7.
"Permitted Sublease": As defined in Section 17.2.
"Person": Any natural person, corporation, partnership, trust,
political subdivision, limited liability company or other person or entity
permitted by law to own real property in the State of Arizona.
"Premises": As defined in Section 2.1.
"Prohibited Use": Any of the following uses or occupancies:
any unlawful use or use in violation of any Legal Requirements; any business or
use that emits offensive odors, fumes, dust or vapors; any business or use that
is a public or private nuisance; any so-called "head shop"; massage parlor;
tatoo parlor; adult bookstore or store selling or exhibiting pornographic
materials; pornographic adult theater; adult lodging rented for periods of less
than twenty-four hours; and any display of nude or semi-nude male or female
dancers or entertainers or a so-called "strip-tease" establishment.
"Sublease": Any agreement, written or oral, by which Tenant
gives any Person the use or occupancy of or any benefit flowing from the
Premises or any portion thereof, including without limitation any permit,
license or concession.
"Subtenant": Any person having the use or occupancy of or any
benefit flowing from the Premises or any portion thereof pursuant to a Sublease.
"Tenant": The Tenant named herein and its successors and
assigns.
"Year": Unless otherwise specified, a 12-month period
commencing on the Commencement Date, unless the Commencement Date is other than
the first day of a
4
calendar month, in which event the first Lease Year (and each subsequent Lease
Year) shall commence on the first day of the calendar month following the
Commencement Date.
ARTICLE 2
---------
DEMISE OF THE PREMISES; TERM
----------------------------
Section 2.1. Premises. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord, upon and in consideration of the terms and subject
to the conditions contained herein, that certain parcel of real property located
in the City of Tempe, County of Maricopa, State of Arizona, more particularly
described in Exhibit "A" attached hereto and incorporated herein by this
reference, which real property together with the Buildings and Landscaping to be
constructed thereon (as hereinafter provided) is hereinafter referred to as the
"Premises"; subject, however, to the Master Ground Lease, all Legal Requirements
and all matters now of record, including but not limited to those matters which
are listed and disclosed in Exhibit "B" attached hereto and incorporated herein
by this reference, and any other matters hereafter placed of record pursuant to
the provisions of the Declaration and/or the provisions of Article 26 hereof. It
is acknowledged that the City will own the Buildings and Landscaping while the
City Lease is in effect, but Tenant shall remain responsible for the entire
Premises as set forth in this Lease.
Section 2.2. Term. The term of this Lease (the "Lease Term") shall be
approximately seventy-five (75) years commencing on the Commencement Date, and
expiring at 12:00 midnight on the last day of March, 2069, unless this Lease is
sooner terminated as hereinafter provided.
Section 2.3. Commencement Date; Possession. The initial Lease Term
shall commence upon full execution of this Lease (the "Commencement Date").
Notwithstanding such commencement, Tenant shall not have possession of the
Premises or be permitted to commence any construction until after the last to
occur of: (a) Landlord's receipt of Tenant's grading plans for Tenant's
contemplated construction, marked to show approval by the Architectural
Committee of the Papago Park Center Association, (b) Landlord's receipt of
evidence that the bond called for in Section 10.6 is in effect (unless such
requirement has been waived as hereinafter provided), and (c) Tenant's delivery
to Landlord of evidence of the insurance called for in subparts (A) and (C) of
Section 5.1 below.
Section 2.4. Title Insurance. Tenant shall be entitled to
order a leasehold title insurance policy insuring the leasehold interest of
Tenant or its assignee R & K (as defined in Section 6.4 below) for an amount
equal to $3.72 per net square foot of real property included within the
Premises. Landlord shall pay the one-time cost of a standard owner's leasehold
title insurance policy, and Tenant shall pay the additional premium for any
extended coverage, endorsements, lenders' policy, survey or any other title
insurance
5
requirements of Tenant or Tenant's title insurer. Landlord will use reasonable
efforts, at no expense to Landlord, to comply with any reasonable requirements
of the title insurer regarding the issuance of a title insurance policy to
Tenant. Tenant's ability to obtain extended coverage title insurance, lender's
title insurance or any particular title insurance endorsements, however, shall
not be a condition to the effectiveness of this Lease.
Section 2.5. Nondisturbance and Attornment Agreement. Prior to
the execution of this Lease, Landlord shall use reasonable efforts to cause the
Lessor under the Master Ground Lease to execute, have acknowledged and deliver
to Tenant, for its benefit and the benefit of any assignee pursuant to a
Permitted Assignment (as defined in Section 17.1.A below), a Nondisturbance and
Attornment Agreement substantially in the form attached to this Lease as Exhibit
"C", pursuant to which, among other things, the Lessor under the Master Ground
Lease shall (i) consent to and agree to be bound by the option to purchase set
forth in Section 3.3 below and the condemnation provisions set forth in Article
15 below, (ii) (intentionally omitted), (iii) certify that the Master Ground
Lease is free from default and that this Lease constitutes a Permitted Sublease
under the terms of the Master Ground Lease, (iv) agree that notwithstanding any
breach or default by Landlord under the Master Ground Lease, it will honor this
Lease and not disturb the rights of Tenant hereunder, provided that there is not
then in existence an Event of Default, and (v) agree that Tenant shall not be
bound by any amendment or modification made to the Master Ground Lease which
materially and adversely affects Tenant or the Premises if such amendment or
modification is made without the prior written consent of Tenant. If Landlord is
unable to obtain said Nondisturbance and Attornment Agreement, or if said
Nondisturbance and Attornment Agreement is delivered but deviates from the
requirements of Exhibit "C" in some material respect (as determined by Tenant),
Tenant may either (i) waive strict conformance with this Section 2.5 and execute
this Lease, whereupon the other provisions of the Lease shall have full force
and effect, or (ii) refuse to execute this Lease, whereupon this Lease shall
have no force or effect and neither Landlord nor Tenant shall have any liability
one to the other.
ARTICLE 3
---------
RENT
----
Section 3.1. Rent. Tenant shall pay rent throughout the Lease Term as
follows:
A. Minimum Rent and Adjustments. Tenant shall pay to
Landlord in such United States coin or currency as at
the time of payment shall be legal tender for the
payment of public and private debts at the addresses
specified or furnished pursuant to Section 20.1
during the Lease Term a minimum annual rental (which
as adjusted from time to time, as
6
hereinafter provided, is herein referred to as the
"Minimum Rent") as follows:
(1) During the first two (2) Years of the Lease Term,
a minimum rental of Twelve Dollars ($12.00) per annum, payable in equal monthly
installments in advance on or before the first (1st) day of each month;
(2) During Years three (3) through five (5) inclusive
of the Lease Term, a minimum rental of $79,868.16 per annum (based on $.32 per
net square foot), payable in equal monthly installments in advance on or before
the first (1st) day of each month;
(3) During Years six (6) through ten (10) inclusive
of the Lease Term, a minimum rental of $87,355.80 per annum (based on $.35 per
net square foot), payable in equal monthly installments in advance on or before
the first (1st) day of each month;
(4) During Years eleven (11) through fifteen (15)
inclusive of the Lease Term, a minimum rental of $99,835.20 per annum (based on
$.40 per net square foot), payable in equal monthly installments in advance on
or before the first (1st) day of each month;
(5) Minimum Rent shall be payable in advance without
notice in equal monthly installments on the first (1st) day of each and every
month, except that, if the Commencement Date is not the first day of a month,
the Minimum Rent for the month during which the Commencement Date occurs shall
be due and payable on the Commencement Date.
The foregoing rental amounts are based upon the assumption
that the real property described in Exhibit "A" contains a total of 249,588 net
square feet. In the event Tenant, at its own cost and expense, prior to the
Commencement Date commissions a survey by an Arizona licensed surveyor
reasonably acceptable to Landlord (the "Survey"), and such Survey establishes
that there are more or less than 249,588 net square feet contained within such
real property, the rental amounts set forth in subparagraphs (2) through (4)
above shall be adjusted to equal the actual net square footage contained in such
real property times the applicable per net square foot dollar amount set forth
in each subparagraph. For the purposes of this Section 3.1, net square footage
shall be calculated by excluding any portion of the Premises located within the
beds of any existing roads, streets, alleyways, access easements (excluding,
however, landscape easements and utility easements) or rights-of-way, whether or
not of record.
B. Minimum Rent Adjustments Commencing Year Sixteen
(16). After the fifteenth (15th) Year of the Lease
Term, the Minimum Rent shall
7
be subject to adjustment for the remaining Lease Term
in accordance with the formula set forth below.
In applying the formula, the following definitions shall
prevail:
(a) "Price Index" means the Metropolitan
Phoenix Consumer Price Index compiled quarterly by
the Center for Business Research of the College of
Business of Arizona State University or, if such
Price Index is discontinued, a reasonably equivalent
index selected by Landlord which includes the
Phoenix, Arizona, metropolitan area.
(b) "Average Price Index" means the average
of the Price Indices issued for the most recent four
(4) quarters prior to the date on which the Average
Price Index is to be determined for which Price
Indices have previously been announced.
(c) "Base Index" is the average of the Price
Indices for the four (4) quarters prior to the first
day of the calendar quarter of the 11th Year.
On the first day of the sixteenth (16th) Year of the Lease
Term and on the first day of each five (5) Year period thereafter (an
"Adjustment Date"), the Minimum Rent shall be adjusted to equal the Minimum Rent
for the eleventh (11th) Year of the Lease Term multiplied by a fraction, the
numerator of which is the Average Price Index applicable on the date of such
adjustment and the denominator of which is the Base Index; provided, however,
that in no event shall the Minimum Rent determined by such calculation be less
than the Minimum Rent for the immediately preceding Year. In no event shall any
five-year increase be greater than 20%; provided, however, in no event shall the
escalation of Minimum Rent on any Adjustment Date result in an adjusted annual
Minimum Rent which exceeds ten percent (10%) of the then fee simple value of the
Premises, exclusive of the value of the Buildings and Landscaping. Within three
(3) months prior to the applicable Adjustment Date, Landlord shall notify Tenant
of Landlord's calculation of the adjusted Minimum Rent. If Tenant believes such
calculation exceeds the ten percent (10%) of fee value limitation set forth
above, Tenant shall immediately notify Landlord and shall submit Tenant's
proposed fee simple value of the Premises (excluding the value of the Buildings
and Landscaping). If Landlord disagrees with such proposed value, Landlord shall
notify Tenant and the parties will engage in good faith negotiations to
determine the applicable fee simple value of the Premises exclusive of the
Buildings and Landscaping. If Landlord and Tenant are unable to agree upon such
value within thirty (30) days, Landlord and Tenant within ten (10) business days
thereafter shall appoint an arbitrator who is mutually acceptable to both
parties. Such arbitrator shall be a member of the American Institute of Real
Estate Appraisers (or any successor organization) with a then current senior
designation of MAI, who possesses no conflict of interest or relationship with
either party that would impair
8
impartiality, and at least ten (10) years experience in appraising commercial
properties in Maricopa County, Arizona. If the parties are unable to agree on
the appointment of such an arbitrator within such ten (10) day period, then upon
the request of either party, a qualified arbitrator meeting such qualifications
shall be appointed by the president of the Maricopa County Board of Realtors (or
any organization successor thereto), or, in such president's failure to act by
the presiding judge of the Superior Court of Maricopa County. Within five (5)
business days after appointment of the arbitrator, Landlord and Tenant shall
each submit to the arbitrator its respective proposed value. The arbitrator
shall determine the fee simple value of the Premises, exclusive of the Buildings
and Landscaping, by reviewing the two submitted values and selecting the one of
the two submitted values which most closely approximates the arbitrator's
independent opinion of the fee simple value of the Premises, exclusive of the
Buildings and Landscaping. The arbitrator shall not propose a third amount for
the value, nor propose a modification to the two amounts submitted by the
parties; instead, the arbitrator must choose one of the two values submitted by
the parties. In determining such value, the arbitrator may consult such
evidence, experts, consultants, or authorities as he or she deems necessary, or
such evidence, experts, consultants, or authorities as may be offered by either
Landlord or Tenant, provided such consultation takes place in the presence of
both Landlord and Tenant and each party has the right to cross-examine any
person so consulted. The arbitrator will use his or her best effort to render a
decision determining such value within twenty (20) days, but in no event later
than forty-five (45) days, after the receipt by the arbitrator of the proposals
submitted by Landlord and Tenant. The decision shall be rendered in writing
executed by the arbitrator and delivered to each of the parties and shall be
final. If for any reason the arbitrator fails, refuses, or is unable to act, a
successor shall be appointed in the same manner as provided herein. Until such
time as the fee simple value of the Premises is agreed upon by Landlord and
Tenant or otherwise determined by the arbitrator, Tenant shall continue to pay
the Minimum Rent at the rate calculated by Landlord. If the Minimum Rent
calculated and collected by Landlord is determined to exceed the ten percent
(10%) of fee value limitation set forth above, Landlord shall rebate the excess
to Tenant. The expense and fees of the arbitrator shall be borne equally by
Landlord and Tenant; however, all consultation costs, expert fees and expenses,
including attorneys' fees, incurred by each party shall be borne by the party
incurring the same.
Once the Minimum Rent is determined and adjusted effective as of the Adjustment
Date, the annual Minimum Rent so determined shall be the applicable annual
Minimum Rent for each Year thereafter until the next Adjustment Date occurs.
Section 3.2. Rent Absolutely Net. Landlord and Tenant hereby expressly
covenant and agree that all rent and other sums payable hereunder shall be
absolutely net to Landlord so that this Lease shall yield to Landlord the
Minimum Rent herein specified each Year during the Lease Term, free of any
charges, assessments, Impositions, or deductions of any kind charged, assessed
or imposed on or against Tenant or the Premises without abatement, diminution,
deduction or setoff by the Tenant, except as hereinafter specifically
9
provided. Except for Mortgages imposed by or on behalf of the Lessor under the
Master Ground Lease or Landlord for their own respective account(s), for which
such Lessor or Landlord, as applicable, shall be responsible, or except as
otherwise herein expressly set forth, Landlord shall not be required to pay any
such charge, assessment or Imposition concerning the Premises and all other
costs, expenses, and obligations of any kind relating to the ownership,
maintenance and operation of the Premises, including all construction,
alterations, repairs, reconstruction and replacements as hereinafter provided,
if any, and all liabilities which may arise or become due during the Term hereof
shall be paid by Tenant, and Landlord shall be indemnified and saved harmless by
Tenant from and against any or all such costs, expenses and obligations. In no
event shall Landlord be responsible for any personal property taxes of Tenant or
any Person claiming by, through or under Tenant, water or sewer rents, rates or
charges, charges for other private or public utilities, excises, levies, license
or permit fees, expenditures for improvements imposed or required by or as a
result of any Legal Requirements, or any other charges arising out of any use or
occupation of the Premises. In no event shall Tenant be responsible for the
ground rent amounts payable under the Master Ground Lease.
Section 3.3. Option to Purchase.
A. Tenant shall have an option (the "Option") to
purchase the real property which constitutes a part
of the Premises at the end of each of Years ten (10)
through fifteen (15) as follows:
Year Purchase Price
---- --------------
10 $1,622,322.00 ($6.50 per net square foot)
11 $1,634,801.40 ($6.55 per net square foot)
12 $1,647,280.80 ($6.60 per net square foot)
13 $1,659,760.20 ($6.65 per net square foot)
14 $1,672,239.60 ($6.70 per net square foot)
15 $1,684,719.00 ($6.75 per net square foot)
Each Purchase Price figure set forth above is based upon the assumption that the
real property which constitutes a part of the Premises contains 249,588 net
square feet. If the Survey establishes that there are more or less than 249,588
net square feet, the pertinent Purchase Price shall be adjusted to equal the
actual net square footage contained in such real property times the applicable
per net square foot dollar amount for the pertinent Year set forth above.
B. Tenant may exercise the Option at the end of each of Years
ten (10) through fifteen (15) by delivering written notice of such exercise
("the Purchase Notice") in accordance with the notice provisions of this Lease.
The Purchase Notice shall be delivered (i) no earlier than one hundred fifty
(150) days prior to the end (i.e., the last day of February) of the pertinent
Year, and (ii) no later than sixty (60) days prior to the end of
10
such pertinent Year, for the Year in which the Option is to be exercised. When
and if Tenant exercises the Option as provided herein, the purchase and sale
shall be conducted as follows:
(1) The Purchase Price shall be a net price (i.e.,
exclusive of the items in subparagraph [5] below) and shall be paid to Landlord
in immediately available funds at the closing.
(2) The closing shall be conducted by an Arizona
licensed escrow agent reasonably acceptable to Landlord and Tenant and located
in Phoenix, Arizona, and shall occur on or before December 31 of the Year in
which the Option is exercised.
(3) The real property shall be conveyed "AS IS"
without representation or warranty whatsoever, by special warranty deed subject
to (i) the deed restriction referred to in Section 8.2, (ii) all matters
affecting title as of the date of this Lease (excluding the Master Ground
Lease), (iii) all matters subsequently placed of record by Landlord pursuant to
the Declaration, and (iv) matters created by or with the consent of Tenant
(excluding, however, Mortgages imposed by or on behalf of Landlord or Lessor
under the Master Ground Lease for their own respective account(s), if any, and
also excluding the lien imposed by Tempe Improvement District No. 166, which
Mortgages and improvement lien shall be released or otherwise removed at the
closing). With respect to the lien of Tempe Improvement District No. 166, Lessor
under the Master Ground Lease and Landlord shall have the option, in lieu of
obtaining a release of said lien, to provide other continuing financial
assurances or arrangements insuring that Tenant, its successors and assigns, its
Permitted Mortgagees, future purchasers of the Premises and the Premises shall
not be held financially responsible for the lien imposed by Tempe Improvement
District No. 166 or, if reasonably commercially available at a reasonable cost,
Lessor under the Master Ground Lease or Landlord may obtain title insurance
endorsements insuring Tenant, its successor and assigns, its Permitted
Mortgagees and future purchasers of the Premises against loss as a result of the
existence of said lien. The Master Ground Lease shall be amended to delete said
real property therefrom at the closing.
(4) At closing, Lessor under the Master Ground Lease,
Landlord and Tenant, as appropriate, shall execute and deliver such other
reasonable and customary documents as may be required by the escrow agent or any
title insurer in order to consummate closing, including, without limitation,
escrow instructions, FIRPTA and property value affidavits.
(5) Costs of title insurance, escrow fees, recording
fees and other expenses of sale shall be paid by Tenant.
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(6) Upon closing, this Lease shall terminate. Neither
Landlord nor the Lessor under the Master Ground Lease shall have any continuing
indemnity obligations of any kind with respect to the real property for matters
occurring after closing.
(7) Until closing, Tenant shall remain liable for
Minimum Rent, Additional Rent and all other charges imposed upon Tenant under
this Lease.
C. The parties acknowledge that Tenant intends to avail itself
of the partial tax abatement provided in A.R.S. ss. 42-685(C) with respect to
the possessory interest tax on the Buildings and Landscaping. Landlord does not
guarantee that Tenant will obtain such partial tax abatement and Tenant's
ability to obtain such partial tax abatement shall not be a condition to this
Lease. However, if Tenant does not obtain such partial tax abatement or if
Tenant loses such partial tax abatement, during the first eight (8) years
following the initial issuance of a certificate of occupancy on any Building
(the "Relevant Eight years") because of the repeal or amendment of A.R.S. ss.
42-685(C), then Tenant shall be entitled to a one-time reduction in the Purchase
Price if the Option is exercised and closed in Year ten (10) of this Lease, in
accordance with the following provisions:
Under current law, the parties acknowledge that the
maximum period for which the partial tax abatement could be obtained covers the
entire Relevant Eight Years. For each year of the Relevant Eight Years that
Tenant does not have the benefit of the partial tax abatement because of the
repeal or amendment of A.R.S. ss. 42-685(C), the Purchase Price in Lease Year
ten (10) shall be reduced by a factor of $.125 per net square foot. Thus, for
example, if Tenant loses the partial tax abatement during the eighth year of the
Relevant Eight Years, the Purchase Price shall be reduced by $.125 per net
square foot; if the Tenant loses the partial tax abatement during the seventh
year of the Relevant Eight Years, the Purchase Price shall be reduced by $.25
per net square foot; if the Tenant loses the partial tax abatement during the
sixth year of the Relevant Eight Years, the Purchase Price shall be reduced by
$.375 per net square foot; if the Tenant loses the partial tax abatement during
the fifth year of the Relevant Eight Years, the Purchase Price shall be reduced
by $.50 per net square foot; if the Tenant loses the partial tax abatement
during the fourth year of the Relevant Eight Years, the Purchase Price shall be
reduced by $.625 per net square foot; if the Tenant loses the partial tax
abatement during the third year of the Relevant Eight Years, the Purchase Price
shall be reduced by $.75 per net square foot; if the Tenant loses the partial
tax abatement during the second year of the Relevant Eight Years, the Purchase
Price shall be reduced by $.875 per net square foot; and if the Tenant loses or
fails to obtain the partial tax abatement during the first year of the Relevant
Eight Years, the Purchase Price shall be reduced by $1.00 per net square foot.
For purpose of this Section 3.3.C, each year within the Relevant Eight Years
shall be measured from the anniversary date of the initial issuance of a
certificate of occupancy on any Building. Further, if Tenant is entitled to the
benefit of such partial tax abatement for the period of six (6) or more months
in any such year, Tenant shall be deemed to have obtained the partial tax
abatement benefit for the entire such year for purposes of calculating the
12
Purchase Price adjustment, and there shall be no proration of the Purchase Price
adjustment to account for any loss of the partial tax abatement for the
remaining part of such year. Nothing herein shall be construed to entitle Tenant
to any Purchase Price adjustment resulting from Tenant's failure to meet the
requirements in A.R.S. ss. 42-685(B), which requirements are a condition
precedent to obtaining the partial tax abatement under A.R.S. ss. 42-685(C), or
Tenant's failure to obtain such partial tax abatement for any reason other than
the repeal or amendment of A.R.S. ss. 42-685(C).
Section 3.4. Nonsubordination. Except with respect to the Option,
neither this Lease nor any of Landlord's right, title or interest hereunder
shall be subject or subordinate to any Mortgage or other liens or encumbrances
of any nature or description hereafter affecting Tenant's interest in this
Lease.
ARTICLE 4
---------
ADDITIONAL RENT
---------------
Section 4.1. "Additional Rent" and "Impositions" Defined. Following the
Commencement Date, Tenant shall pay as "Additional Rent" during the Lease Term,
without notice (except as specifically provided) and without abatement,
deduction or setoff (except as hereinafter provided in Section 4.3), before any
fine, penalty, interest, or cost may be added thereto, or become due or be
imposed by operation of law for the nonpayment thereof, all "Impositions" as
defined below:
"Impositions" mean all real property taxes or required
payments in lieu thereof and any taxes on rents or other payments hereunder
whether levied on Landlord or Tenant, general assessments (but not assessments
levied or imposed by Tempe Improvement District No. 166, which shall be the
responsibility of Landlord), fees, assessments or other charges pursuant to any
Declaration, and any other governmental or quasi-governmental charges, general
and special, ordinary and extraordinary, foreseen and unforeseen, of any kind
and nature whatsoever which at any time during the Term hereof may be assessed
and, if not paid, could become a lien on the Premises or any part thereof or
could become a charge against Landlord; provided, however, that:
A. If, by law, any Imposition may at the option of the
taxpayer be paid in installments (whether or not interest shall accrue on the
unpaid balance of such Imposition), Tenant may exercise the option to pay the
same (and any accrued interest on the unpaid balance of such Imposition) in
installments and in such event, shall pay such installments as they become due
during the Lease Term before any fine, penalty, further interest or cost may be
added thereto; and
13
B. Any Imposition (including Impositions which have been
converted into installment payments by Tenant, as referred to in Subpart A
above) relating to a fiscal period of the taxing authority, a part of which
period is included within the Lease Term and a part of which is included in the
period of time after the expiration of the Lease Term (whether or not such
Imposition shall be assessed, levied, confirmed, imposed upon or become a lien
upon the Premises, or shall become payable, during the Lease Term) shall be
adjusted between Landlord and Tenant as of the expiration of the Lease Term, so
that Tenant shall pay that portion of such Imposition attributable to the Lease
Term and Landlord shall pay the remainder thereof.
C. "Impositions" shall not include, and Tenant shall not be
liable or responsible for, any estate, inheritance, succession, transfer, gift,
franchise, income or excess profits tax levied or imposed upon Landlord, its
affiliates, or their respective successors and assigns.
Section 4.2. Payments. Tenant shall pay to Landlord, with and in
addition to the rental payments, all taxes imposed by any governmental unit on
the rentals received by Landlord pursuant to the terms of this Lease, if any.
Tenant shall pay all other Impositions directly to the taxing authority or other
Persons to whom such payment is due.
Section 4.3. Contest. Tenant, if it shall so desire, may contest the
validity or amount of any Imposition, in which event, Tenant may defer the
payment thereof during the pendency of such contest; provided, however, that
Tenant shall give Landlord prior notice of any such contest and, upon request by
Landlord at any time after the same shall have become due, Tenant shall deposit
with the Landlord an amount sufficient to pay such contested item together with
the interest and penalties thereon (as reasonably estimated by Landlord), which
amount shall be applied to the payment of such item when the amount thereof
shall be finally fixed and determined, or Tenant shall provide other security
reasonably acceptable to Landlord. Nothing herein contained, however, shall be
construed so as to allow such item to remain unpaid for a length of time that
permits the Premises or any part thereof to be sold for the nonpayment of the
same. If the amount so deposited shall exceed the amount of such payment, the
excess shall be paid to Tenant or, in case there shall be any deficiency, the
amount of such deficiency shall be promptly paid by Tenant to Landlord together
with all interest, penalties or other charges accruing thereon. At any time that
the Tenant hereunder is an Institutional Lender, the requirements for deposits
set forth in this Section shall be waived by Landlord. For purposes of this
Lease, an "Institutional Lender" shall means a bank, savings and loan
association, insurance company, trust company, pension fund, mutual fund,
retirement fund, eleemosynary, education or other financial institution.
Section 4.4. Assessment Reduction. Tenant may, if it shall so desire,
without expense to Landlord, endeavor at any time to obtain a reduction of the
assessed valuation upon the Premises for the purpose of reducing taxes thereon.
Tenant shall be authorized
14
to collect any tax refund payable as a result of any proceeding Tenant may
institute for that purpose, and any such tax refund shall be the property of
Tenant if and to the extent that such refund is based on a payment made by
Tenant.
Section 4.5. Hold Harmless. Landlord shall not be required to join in
any action or proceeding referred to in Section 4.3 or 4.4 unless required by
law or any rule or regulation in order to make such action or proceeding
effective, in which event any such action or proceeding shall be subject to
Landlord's prior written consent, which shall not be unreasonably withheld.
Landlord's reasonable costs and expenses in appearing or joining in any action
or proceeding referred to in Section 4.3 or 4.4 shall be reimbursed by Tenant;
and where practicable, Tenant shall be permitted to hire the attorney
representing Landlord's interests in any such action or proceeding. Tenant
hereby agrees to save Landlord harmless from all costs, expenses, claims, loss
or damage by reason of, in connection with, on account of, growing out of or
resulting from any such action or proceeding.
ARTICLE 5
---------
INSURANCE
---------
Section 5.1. Tenant Obligations to Insure. Tenant shall, at its own
cost and expense, keep and maintain or cause to be kept and maintained, for the
benefit of the Landlord, Tenant and, where applicable, City, the following
policies of insurance:
A. During Construction of the Buildings. Builders Risk
Completed Value Insurance during the course of the construction of the
Buildings.
B. After the Completion of the Buildings. Following completion
of any Buildings, Tenant shall at all times maintain or cause to be maintained
insurance on the Buildings against loss or damage by risks of fire, windstorm,
malicious mischief and other risks normally covered by a "special form" or
extended coverage policy in amounts sufficient to prevent Landlord or Tenant
from becoming a co-insurer under the terms of the applicable policies, but in
any event not less than the then full insurable value of the Buildings. The term
"full insurable value" shall mean actual replacement value without depreciation.
Such "full insurable value" shall be determined from time to time (but not less
frequently than once in any twenty-four (24) calendar months) by the insurer or,
at the option of the Tenant, by an appraiser, engineer, architect, or contractor
employed by Tenant. Tenant shall submit to Landlord a copy of each such
appraisal when received.
C. Liability. Tenant, throughout the Term of this Lease, shall
procure and maintain in effect, or cause to be procured and maintained in
effect, general commercial liability insurance against damage or loss because of
or on account of bodily injuries to or
15
the death of any person or the destruction of or damage to the property of any
person, occurring in, on, or about the Premises, or due in any way to the use,
occupancy, maintenance, or operation thereof or of any building or improvement
upon the Premises, or of the sidewalks adjoining the same. During the initial
construction of the Buildings and Landscaping, said policy or policies shall
provide insurance having limits of not less than Five Million Dollars
($5,000,000.00). Upon issuance of a certificate of occupancy upon any Buildings
within the Premises, said policy or policies shall provide insurance having
limits of not less than Five Million Dollars ($5,000,000.00) combined single
limit, or such higher limits as may be required under the City Lease. The
minimum policy limits set forth above shall be subject to increase as of every
fifth anniversary of the Commencement Date to an amount equal to the greater of:
(a) $5,000,000.00; or (b) the product of $5,000,000.00 multiplied by a fraction,
the numerator of which is the Consumer Price Index -- All Items -- All
Consumers--U.S. Cities Average--(1982-1984 = 100) published by the United States
Department of Labor, Bureau of Labor Statistics (the "CPI") for the month which
is three months prior to such fifth anniversary and the denominator of which is
the CPI for the month which is three months prior to the Commencement Date,
provided such increased amount is commercially available, and further provided
that in no event shall such insurance fall below the $5,000,000.00 limit once a
certificate of occupancy has been issued for any Building. In the event the CPI
is discontinued or substantially modified, Landlord shall substitute an
alternative price index, published by the United States Government or other
generally accepted source for such information, reconciled to December, 1993.
Tenant agrees that provisions of this paragraph as to maintenance of insurance
shall not be construed as limiting in any way the extent to which Tenant may be
held responsible for the payment of damages to persons or property resulting
from Tenant's activities, or the activities of its invitees and sublessees or
the activities of any other person or persons for which Lessee is otherwise
responsible.
Section 5.2. Policies and Companies. All insurance provided under
Sections 5.1(A), (B) and (C) shall be effected under standard form policies,
issued by stock or mutual company insurers of recognized responsibility
authorized to do business in the State of Arizona which are well rated by
national rating organizations and reasonably approved by Landlord and City. Any
such policy of insurance shall specifically provide that it is primary coverage
and name Landlord and Salt River Project Agricultural Improvement and Power
District as additional insureds. All policies of insurance shall provide that
they may not be modified or canceled without thirty (30) days prior written
notice to Landlord.
Section 5.3. Policy Delivery, Payment Evidence. Concurrently with the
execution and delivery of this Lease and not less than thirty (30) days prior to
the expiration dates of any policies of insurance furnished pursuant to this
Article 5, Tenant shall deliver to Landlord evidence of the payment of
applicable premiums together with a copy of the policy of insurance. Landlord's
failure to request copies or revision of insurance levels shall in no way
relieve Tenant of its obligation to maintain all insurance required in this
Article 5.
16
Section 5.4. Blanket Insurance. Nothing in this Article 5 shall prevent
Tenant from obtaining insurance of a kind and in the amount provided for under
this Article 5 under a blanket insurance policy or policies which cover other
properties owned or operated by Tenant or a Subtenant as well as the Premises;
provided, however, that any such policy of blanket insurance of the kind
provided for by Section 5.1 shall specify therein, or Tenant shall furnish
Landlord a written statement from the insurers under such policies specifying,
the amount of the total insurance allocated to the Premises, which amount shall
be not less than the amounts required herein. No blanket policy shall contain
any clause that would result in any insured thereunder being required or
permitted to carry insurance with respect to the property covered thereby in an
amount less than the full insurable value of such property in order to prevent
the insured therein named from becoming a co-insurer of any loss with the
insurer under such policy.
Section 5.5. Expiration of Term. If Landlord desires to assume existing
insurance coverage at the expiration of the Lease Term, all policies (except
blanket policies) shall be transferred to Landlord free of all right, title and
interest of Tenant and those claiming under Tenant, and Landlord shall pay to
Tenant an amount equal to the unearned premiums apportioned as of such
expiration date. If Landlord does not desire to assume existing policies of
insurance at the expiration of the term hereof, all existing policies shall be
canceled at no expense to Landlord, and Tenant shall be entitled to any refund
of premium.
Section 5.6. Risk of Loss. At no time during the Lease Term hereof, will
Landlord be required to carry any insurance covering or affecting the Premises.
Tenant assumes the risk of any loss or damage to or claims arising out of or
concerning the Premises throughout the Lease Term, except loss or damage
resulting from the negligence or willful misconduct of Landlord, its agents,
servants, contractors or employees.
Section 5.7. Failure to Maintain Insurance. If Tenant fails or refuses
to provide a copy of the required insurance policies, together with evidence of
payment of premiums therefor as required by Section 5.3 herein, or otherwise
fails or refuses to procure or maintain insurance as required by this Lease,
Landlord shall have the right, at Landlord's election, and after fifteen (15)
days written notice to Tenant and Tenant's failure to cure, in addition to any
other right or remedy, to procure and maintain such insurance. However, Tenant's
right to receive notice and an opportunity to cure is conditioned upon Landlord
timely receiving actual notice of Tenant's default with respect to insurance,
and in the event Landlord fails to receive at least thirty (30) days prior
actual notice of any expiration, cancellation, modification or failure to obtain
or maintain any of such insurance, Landlord shall not be required to give Tenant
any notice or opportunity to cure prior to Landlord's obtaining such insurance.
In any such event, the premiums paid by Landlord shall be due and payable by
Tenant to Landlord on the first day of the month following the date on which the
premiums were paid, together with interest as provided in Section 7.1. Landlord
17
shall give prompt notice of the payment of such premiums, stating the amounts
paid and the name(s) of the insured(s).
Section 5.8. Availability of Insurance. Notwithstanding anything to the
contrary contained herein, in the event that any of the insurance required above
is not commercially available at commercially reasonable rates to Tenant through
insurance brokers located in the Metropolitan Phoenix area, such that it is not
reasonably possible for Tenant to provide the exact type(s) or amounts of
coverage called for herein, then Landlord and Tenant shall negotiate and modify
this Lease as necessary to permit Tenant to obtain and maintain alternative
coverages that are commercially available at commercially reasonable rates so
long as such alternative coverages approximate as closely as reasonably possible
the types and amounts of insurance specified above.
ARTICLE 6
---------
SURRENDER
---------
Section 6.1. Surrender--Removable Property. Subject to the rights of
the City with respect to the Buildings under the City Lease, upon the expiration
of the Lease Term or on the sooner termination thereof, Tenant shall peaceably
and quietly leave, surrender and yield up to the Landlord all of the Premises
broom-clean and free of occupants and shall repair all material damage to the
Premises caused by or resulting from the removal of any removable property of
Tenant or of Subtenants. Any property of Tenant or any Subtenant which shall
remain in any Building after the expiration of the Lease Term or sooner
termination thereof shall be deemed to have been abandoned and may, subject to
Article 27 hereof and to the rights of the City under the City Lease, either be
retained by Landlord as its property or disposed of in such manner as Landlord
may see fit. If such property or any part thereof shall be sold by Landlord,
Landlord shall receive and retain the proceeds of such sale. Tenant shall be
liable to Landlord for any and all costs of removal and the repair of any and
all material damages caused thereby.
Section 6.2. Waste. Tenant shall not commit or suffer to be committed
any waste of the Premises.
Section 6.3. Title. Subject to the provisions of Section 10.5 hereof,
at the end of the Lease Term or any earlier termination thereof, title to the
Buildings and Landscaping shall, at the election of Landlord, automatically vest
in Landlord without the requirement of any deed, conveyance or xxxx of sale
thereon. However, if Landlord should require any such document in confirmation
thereof, Tenant shall execute, acknowledge and deliver the same.
18
Section 6.4. Initial Environmental Site Assessment. Prior to the date
of this Lease, Landlord shall procure a phase I environmental site assessment of
the Premises from Western Technologies, Inc. (the "Engineer"), the report of
which shall be certified to Landlord, Tenant, First Interstate Bank of Arizona,
NA ("FIB"), and R&K Development, LLC ("R&K") and shall be attached hereto as
Exhibit "D" and incorporated herein by this reference (the "Initial Phase I").
Landlord shall indemnify, defend, protect and hold Tenant, R&K, FIB and their
respective successors and assigns harmless for, from and against any and all
liability, obligation, claims, actions, costs and expenses (including reasonable
attorneys' fees and costs) arising out of or in connection with the existence of
any condition on, under or about the Premises existing prior to the date of this
Lease which violates any Environmental Laws, except to the extent arising out of
any condition on, under or about the Premises existing prior to the date of this
Lease which is caused by any act, omission or negligence of Tenant, Subtenants,
their employees, agents, licensees, guests or invitees. Further, if and to the
extent Landlord fails to so indemnify Tenant, R&K, FIB and their respective
successors and assigns, Tenant, R&K, FIB and their respective successors and
assigns shall be subrogated to Landlord's rights with respect to the indemnity
provided by the Lessor under the Master Ground Lease in Section 2.09.3 of the
Master Ground Lease.
Section 6.5. Interim Site Assessments. At any time Tenant desires to
assign its interest under this Lease in accordance with Section 17.1 hereof
(other than the Initial Assignment contemplated by Section 17.17 below), Tenant
shall commission a phase I environmental site assessment meeting the
requirements of the Final Phase I (defined below), which phase I environmental
site assessment shall be dated no earlier than six (6) months prior to the date
of such proposed assignment (an "Interim Site Assessment"). If the Interim Site
Assessment reveals the existence or potential existence of any adverse
environmental condition, Landlord shall not be required to accept such Interim
Site Assessment, and Landlord shall promptly cause a separate phase II
environmental report to be prepared, at Tenant's expense. If such separate
report indicates any condition on, under or about the Premises arising
subsequent to the date of this Lease which violates any Environmental Laws,
Tenant shall indemnify, defend, protect and hold Landlord and the Lessor under
the Master Ground Lease harmless for, from and against any and all liability,
obligation, claims, actions, costs and expenses (including, but not limited to,
costs of remediation and reasonable attorneys' fees and costs), except to the
extent arising out of any condition on, under or about the Premises which is
caused by any act, omission or negligence of Landlord, Lessor under the Master
Ground Lease, their respective employees, agents, licensees, guests or invitees.
Section 6.6. Final Phase I. Within three (3) months immediately
preceding the expiration of the Term or within two (2) months after any earlier
termination of the Lease, Tenant shall cause a phase I environmental site
assessment of the Premises to be conducted by the Engineer or another qualified
engineer licensed in the State of Arizona acceptable to Landlord, and cause a
final report to be issued and certified to Landlord in connection therewith
(collectively, the "Final Phase I"). The Final Phase I shall be conducted
pursuant
19
to a scope of work that is equal to or in excess of the scope of work pursuant
to which the Initial Phase I was conducted and shall include, without
limitation, a report on the Buildings and/or any other existing improvements.
Tenant shall indemnify, defend, protect and hold Landlord and the Lessor under
the Master Ground Lease harmless for, from and against any and all liability,
obligation, claims, actions, costs and expenses (including, but not limited to,
costs of remediation and reasonable attorneys' fees and costs) arising out of or
in connection with the existence of any condition on, under or about the
Premises arising subsequent to the date of this Lease which violates any
Environmental Laws, except to the extent caused by any act, omission or
negligence of Landlord, Lessor under the Master Ground Lease, their respective
employees, agents, licensees, guests or invitees. Tenant's indemnity shall
include but not be limited to, the full correction of the violation of law and
the restoration of the Premises, at Tenant's expense.
Section 6.7. Tenant's Failure to Obtain the Final Phase I. Should
Tenant fail to deliver to Landlord a Final Phase I showing the Premises to be
free of adverse environmental conditions, then Landlord may cause a separate
environmental report or reports to be prepared to like effect (including, if
necessary, any phase II or subsequent reports) and Tenant shall be liable to
Landlord for the actual cost of such separate report(s).
Section 6.8. Survival of Provisions. The provisions of this Article 6
shall survive the expiration or any termination of this Lease.
ARTICLE 7
---------
LANDLORD'S PERFORMANCE FOR TENANT
---------------------------------
Section 7.1. Cures--Rights, Costs, and Damages. If Tenant shall fail to
pay any Imposition or make any other payment required to be made under this
Lease or shall default in the performance of any other covenant, agreement,
term, provision, limitation or condition herein contained, Landlord, without
being under any obligation to do so and without thereby waiving such Event of
Default, may make such payment and/or remedy or correct such other default for
the account and at the expense of Tenant. Except as otherwise specifically set
forth herein, Landlord shall give Tenant thirty (30) days prior written notice
before taking any such action; provided, however, Landlord may take sooner
action as provided in Section 5.7 with respect to Tenant's failure to obtain or
maintain the required insurance hereunder, and may take immediate action without
notice to Tenant in the event of an emergency, or if the possibility of a lien
against the Premises is imminent. Bills for any reasonable expense incurred by
Landlord in connection therewith, and bills for all such reasonable expenses and
disbursements of every kind and nature whatsoever, including reasonable
attorneys' fees and reasonable out-of-pocket expenses, involved in collection or
20
endeavoring to collect the rent or additional rent or any part thereof or
enforcing or endeavoring to enforce any other right against Tenant under or in
connection with this Lease or pursuant to law, including without limitation any
such cost, expense and disbursements involved in instituting and prosecuting
summary proceedings, as well as bills for any property, material, labor or
services provided, furnished or rendered or caused to be furnished or rendered
by Landlord to Tenant with respect to the Premises and other equipment and
construction work done for the account of the Tenant pursuant to Sections 8.4
and/or 8.5 hereof, together with interest at the rate per annum equal to four
percent (4%) over the prime rate then published in the Wall Street Journal or a
reasonably equivalent rate selected by Landlord (eg., if the "prime rate" is 4%,
then the rate hereunder shall be 4% higher; in other words, 8%) from the
respective dates of the Landlord's making of each such payment or incurring of
each such cost or expense until paid in full hereunder may be sent by Landlord
to Tenant immediately or at any time at Landlord's option and shall be due and
payable in full to Landlord immediately upon demand.
ARTICLE 8
---------
USE AND MAINTENANCE OF PREMISES
-------------------------------
Section 8.1. Absence of Warranties. Tenant has leased the Premises
after a full and complete examination of the physical condition thereof as well
as the title thereto and knowledge of its presently permitted uses. Tenant
accepts the same in the condition or state in which they now exist without any
representation or warranty, express or implied in fact or by law, by Landlord
and without recourse to Landlord as to the title or access thereto, the nature,
condition or usability thereof (except as otherwise provided in Section 6.4
above) or the use or uses to which the Premises or any part thereof may be put.
Except as otherwise provided in Section 6.4 above, Landlord shall not be
required to furnish any services or facilities or to make any repairs or
alterations in or to the Premises throughout the Lease Term. Tenant hereby
assumes the full and sole responsibility for the condition, construction,
operation, repair, demolition, replacement, maintenance and management of the
Premises.
Section 8.2. Permitted Uses. Subject to the Declaration, applicable
Insurance Requirements and Legal Requirements, and the other requirements of
this Lease, the Premises may be used for any lawful purpose permitted by each of
the following: I-1 Zoning as defined by City of Tempe in the year that this
Lease is executed; and the Planned Area Development for Papago Park Center, and
for no other purpose without the prior written consent of Landlord. Landlord
shall not undertake or seek any zoning changes or any change to the Planned Area
Development with respect to the Premises that would materially and adversely
affect the Premises or Tenant's rights or obligations with respect thereto
without Tenant's consent. The Premises shall be used at all times solely in
compliance with all Legal Requirements. Under no circumstances shall the
Premises be used for any Prohibited Use. Further, should Tenant elect to
purchase the Premises, the
21
Tenant agrees to accept in the deed a restriction and covenant that runs with
the land that no Prohibited Use shall ever be permitted on the Premises.
Section 8.3. Maintenance and Repairs. Tenant shall take reasonable care
of the Premises consistent with the requirements of the Declaration and any
Legal Requirements. Tenant shall also keep the sidewalks and gutters in front of
the Premises free and clear from rubbish and shall not obstruct the same or
allow the same to be obstructed in any manner.
Section 8.4. Performance by Landlord. In the event Tenant fails to
maintain and repair the Premises in the condition required by Section 8.3
hereof, and subject to the terms of the City Lease with respect to the
Buildings, Landlord, without being under any obligation to do so and without
thereby waiving any default, may after thirty (30) days written notice to Tenant
and Tenant's failure to cure (or, in the event of an emergency or a threat to
safety, immediately and without notice to Tenant), perform or have performed any
and all such work as Landlord, in its reasonable discretion, deems necessary to
maintain or restore the Premises to the required condition. Any and all work
performed by or for Landlord pursuant to this Section 8.4 shall be deemed to
have been undertaken for and at the expense of Tenant. All reasonable costs
incurred by Landlord in undertaking such work shall be subject to the provisions
of Section 7.1 hereof.
Section 8.5. Alterations. Except as provided in Article 10 hereof,
Tenant shall not erect any structures, make any improvements or do any other
construction work on the Premises or alter, modify, or make additions,
improvements or repairs to or replacements of any structure now existing or
built at any time during the Lease Term or install any fixtures (other than
trade fixtures removable without injury to the Premises) which would (i) affect
the structural integrity of the Buildings, (ii) interfere with or affect utility
systems on the Premises (other than heating, ventilating, and air conditioning
systems installed by Tenant) or (iii) require filing of plans with, or other
approval by, any governmental authority having jurisdiction thereof, except in
accordance with the provisions of the Declaration.
ARTICLE 9
---------
COMPLIANCE
----------
Section 9.1. Tenant Obligations. Tenant shall assume and perform any
and all obligations of Landlord under any Declaration or other covenants,
easements and agreements now affecting the title to the Premises or hereafter
placed of record pursuant to the Declaration and/or Article 26 hereof, and shall
diligently comply with, at its own expense during the Lease Term, all Legal
Requirements and Insurance Requirements, the intention of the parties being that
Tenant during the Lease Term shall discharge and perform all obligations of
Landlord with regard to the Premises (other than obligations of Landlord
expressly agreed by Landlord herein to be performed by Landlord), as well as all
22
obligations of Tenant, pertaining to the Premises, and shall save Landlord
harmless therefrom, so that at all times the rent and other sums payable
hereunder shall be net to the Landlord without reduction on account of any such
matter.
Section 9.2. Certificate of Occupancy. Tenant shall obtain and keep in
full force and effect at all times any Building is occupied a certificate of
occupancy with respect to the Premises as may at any time be required by any
governmental agency having jurisdiction thereof. If at any time any of the
Buildings are unoccupied, Tenant may allow the certificate of occupancy for any
unoccupied Building to lapse; provided Tenant shall continue to maintain, keep
safe and insure the Premises during such time, and further provided that Tenant
shall obtain a new or renewed certificate of occupancy at the time such Building
is re-occupied.
ARTICLE 10
----------
CONSTRUCTION OF BUILDINGS AND LANDSCAPING
-----------------------------------------
Section 10.1. General Requirements. Landlord acknowledges Tenant
intends to construct Buildings on the real property which is subject to this
Lease, and convey title to such Buildings to the City upon completion of the
Buildings. Landlord further acknowledges that Tenant intends to lease back the
Buildings from the City under the City Lease. The Buildings and Landscaping
shall be constructed by Tenant in accordance with the requirements of the City
Lease and this Article 10. The initial Buildings and Landscaping shall be
completed by June 30, 1995, subject to Force Majeure delays. As used in this
Lease, the term "Force Majeure" shall mean war, fire, earthquake, flood,
unavailability of materials and court orders (provided the unavailability of
materials or court orders do not result from the conduct of the party claiming
the delay). Tenant shall notify Landlord in writing of any Force Majeure event
within fifteen (15) business days after it occurs. In the event of a Force
Majeure delay, the period for performance shall be extended for a period equal
to the Force Majeure delay; provided, such performance shall not be extended for
any Force Majeure period occurring more than fifteen (15) business days prior to
the date notice of such Force Majeure is given by Tenant to Landlord.
Section 10.2. Approval of Final Plans. Before commencing any
construction, Tenant will submit to Landlord and obtain Landlord's approval of
all final construction plans and specifications for construction of the
Buildings and Landscaping. In like manner, Tenant shall submit to Landlord and
obtain Landlord's approval of all amendments to said final construction plans
and specifications at least seven (7) days prior to giving effect thereto.
Within ninety (90) days following completion of the Buildings and Landscaping,
Tenant shall deliver to Landlord true and complete copies, in duplicate, of the
final "as built" plans and specifications. The right of Landlord to approve the
final plans and specifications and any amendment thereto is for the sole benefit
of Landlord and may be waived by Landlord in its sole and unfettered discretion.
Landlord's rights hereunder are for the sole benefit of
23
Landlord, and approval by Landlord shall not constitute an opinion or
representation by Landlord as to the sufficiency thereof or impose any present
or future liability or responsibility upon the Landlord.
Section 10.3. Government Approval. Prior to commencement of any
construction, Tenant will obtain the approval of the final construction plans
and specifications by the City and any and all federal, state, municipal, and
other governmental authorities, offices, and departments having jurisdiction in
the matter, and provide conformed copies of executed approvals to Landlord, and
will obtain all necessary building permits.
Section 10.4. Construction Standards. Tenant will construct the
Buildings and the Landscaping in a good, careful, proper and workmanlike manner,
in substantial accordance with the final construction plans and specifications,
and otherwise in strict accordance with the Architectural and Development
Guidelines and all Legal Requirements. Upon completion, Tenant shall provide to
Landlord a certificate of substantial completion in a form and executed by an
architect reasonably satisfactory to Landlord certifying that the Buildings and
the Landscaping have been substantially completed as above provided.
Section 10.5. Ownership of Buildings and Improvements. During the
existence of the City Lease, title to all Buildings and Landscaping constructed
or installed on the Premises by Tenant shall be in the City. In the event Tenant
exercises its option to purchase such Buildings and Landscaping from the City
pursuant to the option to purchase contained in the City Lease, title to such
Buildings and Landscaping shall thereafter be in the Tenant during the Lease
Term. In the event this Lease expires or is terminated for any reason prior to
the expiration or termination of the City Lease, Tenant's right to exercise the
option to purchase the Buildings and Landscaping under the City Lease shall
automatically be transferred to Landlord and Landlord shall be entitled to
exercise the same by payment of the option purchase price to the City as
provided in the City Lease, without further act or deed of Tenant and without
the payment of compensation to Tenant. Unless such Buildings and Landscaping are
then owned by the City, on the expiration or sooner lawful termination of this
Lease, all Buildings and Landscaping which constitute a part of the Premises,
exclusive of removable trade fixtures and personal property of Tenant and
Subtenants, shall, at the election of Landlord, without the payment of
compensation to Tenant or others, automatically and without further act or deed
become the property of Landlord free and clear of all claims and encumbrances.
Notwithstanding the foregoing, after the expiration or termination of this
Lease, Tenant shall upon request of Landlord execute such further documents or
instruments as may be necessary or appropriate to transfer to Landlord any and
all rights, interests and claims of Tenant to the Buildings and Landscaping.
Additionally, Tenant shall assign to Landlord, and Landlord shall be entitled to
the benefit of, any licenses, warranties or guarantees applicable to equipment,
systems, fixtures or personal property conveyed or otherwise transferred to or
for the benefit of Landlord under this Lease.
24
Section 10.6. Requirement of Construction Contract. All improvements
which Tenant is required or permitted to construct upon the Premises pursuant to
this Lease shall be constructed pursuant to written construction contracts,
copies of which, and of all amendments thereto, shall be provided to Landlord
prior to the commencement of construction. All such contracts shall contain a
provision to the effect that no lien for labor, materials or supplies may be
filed against the interests of the Landlord or the Lessor under the Master
Ground Lease, nor shall Landlord or the Lessor under the Master Ground Lease
have responsibility or liability therefor, and such contracts shall require the
parties thereto to inform subcontractors and material suppliers of such
non-responsibility and non-liability. The provisions of the immediately
preceding sentence shall not, however, be applicable with respect to the
construction of the Buildings and Landscaping so long as such Buildings and
Landscaping are constructed and/or installed, as the case may be, by Sun State
Builders. Unless waived by Landlord as provided below, prior to the commencement
of construction, Tenant shall, or shall cause the contractor to provide to
Tenant a performance bond, with endorsements naming Landlord and Salt River
Project Agricultural Improvement and Power District as additional obligees under
such bond, in the full amount of the cost of such work in form and substance and
issued by a bonding company satisfactory to Landlord sufficient to assure the
completion of such work. Tenant also shall cause a labor and material payment
bond conforming to the requirements of A.R.S. Section 33-1003 and a copy of the
contract to which it relates to be recorded in the office of the County Recorder
of Maricopa County, Arizona, prior to the performance of any labor or furnishing
of any materials, machinery, fixtures or tools contemplated by such contract and
shall take any and all other actions as may be necessary under A.R.S. Section
33-1003 in order to prevent mechanics' or materialmen's liens from attaching to
the Premises or any portion thereof. Tenant shall provide Landlord with true and
accurate copies of such bonds and endorsements. Notwithstanding the bond
requirements set forth above, in the event that the Master Ground Lease is
amended to permit alternatives to such bonds prior to commencement of
construction, Landlord may waive the bond requirements set forth above and
alternatively may require alternative forms of collateralization and/or
contractual security reasonably acceptable to Landlord. In connection with the
construction of the initial Buildings and Landscaping, Landlord shall accept, as
an alternative to such bonds, a security deposit in the amount of Fifty Thousand
and NO/100 Dollars ($50,0000.00) subject to and in accordance with the further
terms and provisions of this section. On or before the commencement of
construction of the initial Buildings and Landscaping, Tenant shall deliver to
Landlord a sum of Fifty Thousand and NO/100 Dollars ($50,000.00) as assurance of
Tenant's full and faithful performance of its construction and other obligations
under this Lease during the period from the commencement of such construction
through and including the date (the "Release Date") which is the later of (i)
one hundred twenty (120) days after Tenant opens for business within the
Premises, (ii) ninety (90) days after Tenant records (or causes to be recorded)
a notice of completion with respect to the construction of the initial Buildings
and Landscaping, or (iii) ninety (90) days after completion of construction of
the initial Buildings and Landscaping. If prior to the Release Date, Tenant
commits a Event of Default, Landlord may use, apply or retain all or part of the
security deposit for the payment of any
25
amount which Landlord may spend or become obligated to spend because of Tenant's
committing an Event of Default or to compensate Landlord for any other loss or
damage which Landlord may suffer as a result thereof. On the Release Date, as
long as there is not then in existence an Event of Default, Landlord shall
release the security deposit (less any amounts previously used, applied or
retained as permitted herein) to Tenant. Tenant shall not be entitled to any
interest earned on the security deposit.
Section 10.7. Application of this Article. Except with respect to the
provisions of this Article which are expressly limited to the construction of
the initial Buildings and Landscaping, the provisions of this Article 10 are
applicable to the construction of not only the initial Buildings and
Landscaping, but any future Buildings and/or Landscaping.
ARTICLE 11
----------
IMPAIRMENT OF LANDLORD'S TITLE
------------------------------
Section 11.1. No Liens. Tenant shall not create or suffer to be created
or to remain, and shall within thirty (30) days after notice of the filing
thereof pay in full and discharge or provide bonding sufficient to obtain the
release of any mechanic's, laborer's or materialman's lien which might be or
become a lien, encumbrance or charge upon the Premises or any part thereof or
the income therefrom, and Tenant will not suffer any other matter or thing
arising out of Tenant's use and occupancy of the Premises whereby the estate,
rights and interests of Landlord in the Premises or any part thereof might be
impaired.
Section 11.2. Discharge. If any mechanic's, laborer's or materialman's
lien shall at any time be filed against the Premises or any part thereof,
Tenant, within thirty (30) days after notice of the filing thereof, shall cause
such lien to be discharged of record by payment, deposit, bond, order of court
of competent jurisdiction or otherwise. Tenant shall immediately notify Landlord
in writing of any such lien which might attach or be claimed at any time and of
its action to either satisfy or obtain the release of the lien. If Tenant shall
fail to cause such lien to be released or discharged within the period
aforesaid, then, in addition to any other right or remedy, Landlord may, but
shall not be obligated to, discharge the same either by paying the amount
claimed to be due or by procuring the release of such lien by bonding or other
means, and any amount so paid by Landlord and reasonable costs and expenses
incurred by Landlord in connection therewith shall constitute additional rent
payable by Tenant to Landlord on demand.
Section 11.3. No Implied Consent. Nothing contained in this Lease shall
be deemed or construed in any way as constituting Landlord's expressed or
implied authorization, consent or request to any contractor, subcontractor,
laborer or materialman, architect or consultant for the construction or
demolition of any improvement, the performance of any
26
labor or services or the furnishing of any materials for any improvements,
alterations to or repair of the Premises or any part thereof.
ARTICLE 12
----------
INSPECTION
----------
Section 12.1. Inspection and Entry. Landlord shall have the right at
any time and from time to time during Tenant's or any Subtenant's normal
business hours to enter upon the Premises, or any part thereof, at any time
during the Lease Term for the purposes of inspecting any work under
construction, ascertaining the condition of the Premises and determining whether
Tenant is observing and performing all of its obligations under this Lease, or
of showing the Premises to any prospective Mortgagees (and during the last two
(2) years of the Lease Term, to any prospective purchaser or lessee), all with
or without cause and without hindrance or molestation from Tenant, provided that
Landlord shall give Tenant at least twenty-four (24) hours notice prior to any
inspection of any building interior and further provided Tenant may require
Landlord to be escorted throughout the Premises, but Landlord shall nonetheless
have full access. The notice and escort requirements provided for in this
paragraph shall not be required if and to the extent that Landlord has
reasonable cause to believe that an emergency exists requiring immediate
attention. Any inspection or entry by Landlord onto the Premises shall be
conducted, to the extent reasonably practicable, in a manner so as to minimize
disruption and/or interference with construction activities or the conduct of
business on the Premises
ARTICLE 13
----------
INDEMNIFICATION
---------------
Section 13.1. Indemnification of Landlord.
A. Tenant shall indemnify and save Landlord and all of its
directors, officers, employees, shareholders, agents or other persons liable by,
through or under Landlord harmless from and against any and all liabilities,
suits, obligations, fines, damages, penalties, claims, costs, charges and
expenses, including property damage, personal injury and wrongful death and
further including, without limitation, architects' and attorneys' fees and
disbursements, which may be imposed upon or incurred by or asserted against
Landlord or any such indemnified Person by reason of any of the following
occurring during the Lease Term or at any time when Tenant or any Subtenant is
in possession of the Premises or any portion thereof, unless caused by any
breach by Landlord of its obligations under this Lease or by the negligent
actions or willful misconduct of Landlord, its agents, servants, contractors or
employees:
27
(1) construction of the Buildings or Landscaping or
any other work or thing done in, on or about the Premises or any part thereof,
by Tenant or its agents or any contractor employed by it or any work performed
by or for Landlord pursuant to Article 7 hereof and any other work or
construction required under this Lease, including activities related to the bid
process therefor;
(2) any use, non-use, possession, occupation,
alteration, repair, condition, operation, maintenance or management of the
Premises or any improvements thereon at any time or any nuisance made or
suffered thereon or any failure by Tenant to keep the Premises or improvements
or any part thereof in a safe condition;
(3) any acts or omissions of the Tenant or any
Subtenant or any of its or their respective agents, contractors, servants,
employees or licensees;
(4) any fire, accident, injury (including death) or
damage to any person or property occurring in, on or about the Premises or
improvements or any part thereof;
(5) any lien or claim which may be alleged to have
arisen against or on the Premises or improvements or any part thereof or any of
the assets of, or funds appropriated to, Landlord or any liability which may be
asserted against Landlord with respect thereto to the extent arising, in each
such case, out of the acts or omissions of Tenant, its contractors, agents,
servants, guests, employees, licensees, invitees or Subtenants;
(6) any failure on the part of Tenant to keep,
observe, comply with and perform any of the terms, covenants, agreements,
provisions, conditions or limitations contained in any Subleases or other
contracts and agreements affecting the Premises or improvements or any part
thereof on Tenant's part to be kept, observed or performed; and
(7) any Imposition or tax, including any tax
attributable to the execution, delivery or recording of this Lease or payment of
Rent or other sums hereunder with respect to events occurring during the Term of
this Lease, except for any tax imposed on the net income of Landlord or excluded
from the definition of Impositions under Section 4.1.C above.
The provisions of this indemnity shall survive the expiration or
earlier termination of this Lease for any reason. However, the provisions of
this indemnity shall apply to Tenant only with respect to liabilities, suits,
obligations, fines, damages, penalties, claims, costs, charges and expenses,
arising out of or relating to events occurring prior to the occurrence of a
Permitted Assignment as defined in Section 17.1 and the receipt by Landlord of
the Permitted Assignee's covenant of assumption as provided in Section 17.5;
thereafter, the Permitted Assignee shall have the indemnity obligations for
events occurring from and after its assumption of Tenant's obligations
hereunder.
28
B. Tenant will hold all goods, materials, furniture, fixtures,
equipment, machinery and other property whatsoever on the Premises and
improvements at the sole risk of Tenant and save the Landlord harmless from any
loss or damage thereto by any cause whatsoever, except to the extent caused by
the grossly negligent actions or willful misconduct of Landlord, its agents,
servants, contractors or employees.
C. The obligations of Tenant under this Section shall not in
any way be affected by the absence in any case of covering insurance or by the
failure or refusal of any insurance carrier to perform any obligation on its
part to be performed under insurance policies affecting the Premises.
D. If any claim, action or proceeding is made or brought
against Landlord or its directors, officers, employees, shareholders, agents or
other Persons claiming by, through or under Landlord by reason of any event for
which Tenant is liable under this Article, then, upon demand by Landlord,
Tenant, at its sole cost and expense, shall resist or defend such claim, action
or proceeding in Landlord's name, if necessary, by such attorneys as Landlord
shall reasonably approve, which may be the attorneys for Tenant's insurance
carrier, if such claim, action or proceeding is covered by insurance. Landlord
agrees that Tenant shall have the right to contest the validity of any and all
claims and defend, settle and compromise any and all such claims of any kind or
character or by whomsoever claimed, in the name of Landlord, as Tenant may deem
necessary, provided that the expenses thereof shall be paid by Tenant, and
further provided that Landlord shall be fully indemnified.
Section 13.2. Indemnification of Tenant.
A. Landlord shall indemnify and save Tenant and all of its
directors, officers, employees, shareholders, agents or other persons liable by,
through or under Tenant harmless from and against any and all liabilities,
suits, obligations, fines, damages, penalties, claims, costs, charges and
expenses, including property damage, personal injury and wrongful death and
further including, without limitation, architects' and attorneys' fees and
disbursements, which may be imposed upon or incurred by or asserted against
Tenant or any such indemnified Person by reason of the negligence, recklessness
or willful misconduct of Landlord, its agents, servants, contractors, employees
or licensees or caused by any breach by Landlord of its obligations under this
Lease.
B. If any claim, action or proceeding is made or brought
against Tenant or its directors, officers, employees, shareholders, agents or
other Persons claiming by, through or under Tenant by reason of any event for
which Landlord is liable under this Article, then, upon demand by Tenant,
Landlord, at its sole cost and expense, shall resist or defend such claim,
action or proceeding in Tenant's name, if necessary, by such attorneys as Tenant
shall reasonably approve, which may be the attorneys for Landlord's insurance
29
carrier, if such claim, action or proceeding is covered by insurance. Tenant
agrees that Landlord shall have the right to contest the validity of any and all
claims and defend, settle and compromise any and all such claims of any kind or
character or by whomsoever claimed, in the name of Tenant, as Landlord may deem
necessary, provided that the expenses thereof shall be paid by Landlord, and
further provided that Tenant shall be fully indemnified.
ARTICLE 14
----------
DAMAGE OR DESTRUCTION
---------------------
Section 14.1. Tenant's Election to Restore, Rebuild or Raze. If at any
time during the Lease Term the Premises or any improvements thereon shall be
damaged or destroyed in whole or in part by fire or other occurrence of any kind
or nature, ordinary or extraordinary, foreseen or unforeseen, Tenant shall
restore, rebuild, raze or otherwise secure the Premises in a neat, safe and
sightly condition, in compliance with any Legal Requirements and the
requirements of any Declaration. All proceeds from the insurance procured by
Tenant pursuant to Article 5 that are released or paid on account of such damage
or destruction shall belong to Tenant. Any restoration or rebuilding undertaken
by Tenant shall comply with all requirements of Articles 10 and 11 pertaining to
the construction of the Buildings and Landscaping as if such provisions were set
forth in full herein.
Section 14.2. Lease Obligations Continue. In no event shall Tenant be
entitled to any abatement, allowance, reduction or suspension of rent because
part or all of the Premises shall be untenable due to the partial or total
destruction thereof. No such damage or destruction shall affect in any way the
obligation of Tenant to pay the Minimum Rent, Additional Rent and other charges
herein reserved or required to be paid or release Tenant of or from any
obligations imposed upon Tenant hereunder.
Section 14.3. Election to Terminate. Notwithstanding Sections 14.1 and
14.2 above, if the Buildings or any parts thereof are damaged or destroyed by
fire or other casualty at any time during the Lease Term:
A. Tenant's Elections. Tenant may elect to rebuild, restore,
raze or otherwise secure the Premises as set forth in Section 14.1 above and
keep this Lease in effect; or Tenant may elect to terminate this Lease after
such damage or destruction in accordance with the following: If Tenant elects to
terminate, it will give Landlord written notice of its intention to so terminate
within ninety (90) days after the occurrence of such damage or destruction.
Landlord shall, within thirty (30) additional days after receiving Tenant's
notice, inform Tenant in writing that Landlord either will (a) accept the
surrender of the Premises in its damaged condition, or (b) require Tenant to
completely raze and clear
30
the property within the next sixty (60) days. In the latter event, Tenant shall
completely raze and clear the property in a commercially reasonable manner
within said sixty-day (60) period. Upon either (i) Landlord's written election
to accept the surrender of the Premises in its damaged condition, or (ii) the
completion of the razing and clearing of the property, this Lease shall
terminate and all of Tenant's obligations hereunder shall cease with the
exception of any provisions hereto which expressly survive the termination of
this Lease.
B. Adjustment of Additional Rent. Upon Landlord's acceptance
of the surrender of the Premises in its damaged condition or the completion of
the razing and clearing of the property as provided in subparagraph A, this
Lease shall cease and terminate on the date of such completion with the same
force and effect as if such date were the date originally fixed for the
termination hereof. With respect to any items of Additional Rent which are
payable to Landlord in the event of such termination or which have accrued but
are not yet payable at the date of termination, but which are not then capable
of ascertainment, Tenant shall pay to Landlord an amount reasonably computed by
Landlord, who will hold such payment as trust funds until such Additional Rent
becomes determined. Upon determination of the Additional Rent due, if there is a
surplus in such trust account, Landlord will promptly refund the surplus to
Tenant. If there is a deficit in such account, Tenant will promptly pay the
amount of such deficit to Landlord. If as a result of any action or proceeding
to obtain a reduction of Impositions, Tenant shall be entitled to a refund, the
amount of such refund (less the cost and expense of collection including
reasonable attorneys' fees) when collected by Landlord shall be paid by Landlord
to Tenant, unless there remains at the time a deficit in the trust account or
unless Tenant shall be otherwise in default under the terms hereof. The
covenants and agreements with respect to the adjustment and payment of these
items of Additional Rent shall survive the termination hereof.
ARTICLE 15
----------
CONDEMNATION
------------
Section 15.1. Total or Substantial Takings. If at any time during the
term of this Lease, title to the whole or substantially all of the Premises
shall be taken in condemnation proceedings or by any right of eminent domain or
by agreement in lieu of such proceedings, or a substantial portion of the
Premises are so taken and the remainder of the Premises cannot feasibly be used
or converted for use by Tenant for the uses set forth in Section 8.2 hereof,
this Lease shall terminate on the date of such taking and the Minimum Rent and
Additional Rent provided for herein shall be apportioned and paid to the date of
such taking. In the event of the termination of this Lease as a result of any
such taking, each of Landlord and Tenant shall be entitled to make and pursue or
to settle, compromise and adjust and to receive any award or proceeds payable on
account of its own separate claim
31
for the value of the rights and interests so taken as if this Lease would have
remained in effect for the full Lease Term but for such taking.
Section 15.2. Partial Taking. In the event that title to or any
interest in the Premises shall be taken in condemnation proceedings or by right
of eminent domain or by agreement in lieu thereof, and such taking is not
subject to Section 15.1 hereof, the following provisions shall apply:
A. Awards. Each of Landlord and Tenant shall be entitled to
make and pursue or to settle, compromise and adjust its own separate claim for
the value of the rights and interests so taken as if this Lease would have
remained in effect as to the portion of the property so taken for the full Lease
Term but for such taking. Landlord shall be entitled to retain any amount
awarded for the taking of any right, title or interest of Landlord free of any
right or claim of Tenant or any Mortgage. Tenant shall be entitled to retain any
amount awarded for the taking of any right, title or interest of Tenant
hereunder, subject to the provisions of this Section and subject to the rights
of any Mortgagees.
B. Tenant's Elections. In the event of a partial taking,
Tenant shall have the same elections as provided in Section 14.1 in the case of
damage or destruction, In the event of a partial taking occurring during the
last five (5) years of the Lease Term, Tenant shall have the elections set forth
in Section 14.3.
C. Lease Obligations Continue. Unless this Lease is terminated
pursuant to the provisions of this Article 15, Tenant shall be entitled to a
reduction in the Minimum Rent based upon the percentage that the square footage
of land lost because of a partial taking bears to the total square footage of
land in the Premises prior to such partial taking; however, no such partial
taking shall otherwise affect in any way the obligation of Tenant to pay the
Additional Rent applicable to the remaining portion of the Premises or the other
charges herein reserved or required to be paid or release Tenant of or from any
other obligations imposed upon Tenant hereunder.
Section 15.3. Rights of Participation. Each of Landlord and Tenant
shall have the right, at its own expense, to appear in any condemnation
proceeding and participate in any and all hearings, trials and appeals therein.
Section 15.4. Notice of Proceeding. In the event that either Landlord
or Tenant shall receive notice of any proposed or pending condemnation
proceedings affecting the Premises or any part thereof, the party receiving such
notice shall promptly notify the other party of such notice and contents
thereof.
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ARTICLE 16
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SUBTENANT NON-DISTURBANCE
-------------------------
Section 16.1. Agreement for Non-Disturbance of Subtenants. Landlord
hereby covenants and agrees, for the benefit of any Subtenant, that, in the
event that this Lease shall for any reason terminate prior to the end of the
Lease Term, Landlord shall attorn to and shall recognize the rights of each
Subtenant under its Sublease as if the Landlord were the sublessor thereunder,
subject to the following terms and conditions: (a) such Sublease is a Permitted
Sublease; (b) such Subtenant has previously provided Landlord with its current
notice address; (c) at the time of the termination of this Lease, no default
exists (after the expiration of any applicable notice and cure periods) under
such Sublease which would then permit the landlord thereunder to terminate the
same or to exercise any default remedy provided for therein; and (d) Landlord
shall deliver to the Subtenant (at the notice address previously provided by
Subtenant to Landlord) within thirty (30) days following termination of this
Lease an instrument which the Subtenant shall execute within fifteen (15) days
after such delivery, confirming the agreement of such Subtenant to attorn to
Landlord and to pay all rent and other sums payable under such Sublease directly
to Landlord and to recognize Landlord as such Subtenant's landlord under its
Sublease, which instrument shall also provide that neither Landlord nor any of
its officers, employees, agents or other Persons responsible by, through or
under Landlord shall be:
A. Liable for any act or omission of any prior landlord
(including, without limitation, the then defaulting landlord), or
B. Subject to any offsets or defenses which the Subtenant may
have against any prior landlord (including, without limitation, the then
defaulting landlord), or
C. Bound by any payment of rent which the Subtenant might have
paid for more than the current month to any prior landlord (including, without
limitation, the then defaulting landlord), or
D. Bound by any covenant to undertake or complete any
construction of the Premises or any portion thereof demised by said Sublease, or
E. Bound by any obligation to make any payment to the
Subtenant, or
F. Bound by any modification of the Sublease made without the
written consent of Landlord.
Notwithstanding that Landlord shall not be liable for any act or
omission of any prior landlord, nor subject to any offsets or any defenses which
Subtenant may have against any prior landlord, and notwithstanding that Landlord
shall not have any obligation to construct
33
or complete any portion of the Premises, Subtenant shall have the right to set
off against the rent otherwise payable to Landlord under the Permitted Sublease
(subject to the limitation on setoff set forth below) the amounts necessary to
reimburse Subtenant for any amounts actually and reasonably expended and any
costs and expenses actually and reasonably incurred by Subtenant (but not for
lost profits or consequential damages incurred by Subtenant) as a result of any
breach or default under the Permitted Sublease by any landlord, including any
continuing default and including any failure of the Landlord or any prior
landlord to construct, complete, service, maintain or repair any improvements on
the Premises if and as provided in such Permitted Sublease; provided, however,
that the amount of rent to be paid to Landlord each month by the Subtenant
without setoff shall equal or exceed the monthly rent payable for that month
under this Lease.
ARTICLE 17
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ASSIGNMENT, SUBLETTING, MORTGAGE
--------------------------------
Section 17.1. Prior Consent; Permitted Assignments. Tenant may assign,
mortgage, pledge, encumber, sublease or transfer this Lease or any part thereof
or interest therein, with or without the prior written consent of Landlord in
each instance, provided no such action shall release Tenant of its continuing
obligations hereunder unless it meets the requirements of a "Permitted
Assignment" as hereinafter defined, and further provided that a Permitted
Assignment which is also the Initial Assignment shall not in any event act to
release the Tenant named in the first paragraph of this Lease of any of the
Tenant's obligations or liabilities under this Lease.
A. A "Permitted Assignment" shall be (i) the Initial
Assignment described in Section 17.17 below, and (ii) any other assignment of
Tenant's interest in this Lease which meets the following requirements:
(1) The assignment shall be an assignment of the
entire interest of Tenant for the remainder of the Term, and a partial
assignment shall not be permitted.
(2) Prior to such assignment the proposed assignee
shall submit to Landlord a financial statement together with reasonable
supporting documentation (but not including new appraisals) establishing that
such proposed assignee, either by itself or in combination with a guarantor
willing to guaranty such proposed assignee's obligations under this Lease, will
have at the time of the assignment a net worth (defined as the then current
market value of its assets less its liabilities) at least equal to the greater
of (i) $4,000,000 in 1993 dollars adjusted by the CPI index referred to in
Article 5 for inflation to the time of the proposed assignment, or (ii) the then
current fair market value of Premises (including the real property, Buildings
and Landscaping, if any) as if held in fee simple and in single ownership. The
fair market value of the Premises shall be established either through mutual
34
agreement between Landlord and Tenant, or, if they cannot agree upon a value, by
appraisal conducted by an MAI appraiser experienced in valuing similar
properties, with the expense of such appraisal being borne by Tenant.
(3) The proposed assignee's occupation and use of the
Premises will not violate Section 8.2 hereof.
(4) The proposed assignee's occupancy will not
require a variation in the terms of this Lease.
(5) Landlord is provided with an Interim Site
Assessment indicating no adverse environmental condition in, on, under or about
the Premises caused by Tenant or anyone claiming by, through or under Tenant.
B. Notwithstanding the foregoing requirements, so long as the
Premises or any portion thereof are owned by or under lease to Papago Park
Center, Inc., Salt River Project Agricultural Improvement and Power District, or
any affiliate or subsidiary thereof, Tenant may request Landlord's consent to an
assignment which does not meet all of the foregoing requirements, and any such
assignment with the consent of Landlord shall also be considered a "Permitted
Assignment." Further, in the event and at such time that none of Papago Park
Center, Inc., Salt River Project Agricultural Improvement and Power District, or
any affiliate or subsidiary thereof have any ownership interest (leasehold or
otherwise) in the Premises, Tenant shall have the right to assign its entire
interest under this Lease without meeting the requirements set forth above and
without obtaining the then Landlord's consent, and such assignment shall also be
considered a "Permitted Assignment."
C. An assignment which meets requirements of subpart A or B
above is herein called a "Permitted Assignment" and the assignee under a
Permitted Assignment is herein called a "Permitted Assignee". Upon the
occurrence of a Permitted Assignment and the Permitted Assignee's delivery to
Landlord of the assumption instrument referred to in Section 17.5 below, the
prior Tenant (except as otherwise provided in Section 17.17 below) shall be
released from liabilities and obligations under this Lease accruing thereafter,
and the Permitted Assignee shall be and become and remain liable for the payment
of all rents and other sums payable hereunder and for the due performance of all
the covenants, agreements, terms and provisions hereof on Tenant's part to be
performed throughout the remainder of the Lease Term, from and after the
Permitted Assignment. The provisions hereof shall be operative for and apply to
each subsequent Permitted Assignment.
Section 17.2. Permitted Subleases. Tenant may sublease portions of the
Premises with or without the prior consent of Landlord. However, the Subtenant
under any Sublease made without Landlord's consent shall not have the
protections of Article 16 and Landlord shall not be required to recognize or
attorn to such Subtenant, unless such Sublease meets the following requirements
for a "Permitted Sublease":
35
A. Such Sublease shall be subject and subordinate to this
Lease and the rights of Landlord hereunder and the rights of any Permitted
Mortgagee, as provided herein.
B. Such Sublease shall provide that, in the event the Lease is
terminated, the Subtenant will attorn to Landlord as provided in Article 16
hereof.
C. Such Sublease shall contain a provision to the effect that,
in the event this Lease is terminated and all of the Buildings within the
Premises are not operating at a total occupancy level of at least forty percent
(40%) or Landlord is not then receiving rents under all of the Subleases which
result in Landlord realizing the net amount of the Minimum Rent then due under
this Lease after considering all expenses of holding, operating and managing the
Buildings, then notwithstanding any agreement on the part of Landlord to
recognize such Sublease, Landlord shall have the right to terminate the Sublease
at any time after the first nine (9) years under the Sublease upon the giving of
one (1) year's prior notice and Landlord's making termination payment equal to
the annual Sublease rent then in effect upon such termination.
D. Such Sublease shall require the payment of minimum rent
thereunder which will represent throughout the term of such Sublease a
reasonable share of the Minimum Rent payable hereunder based on the Building
square footage leased by the subtenant relative to the square footage all of
Buildings within the Premises.
E. Such Sublease is otherwise entered into upon terms and
conditions which are reasonably satisfactory to Landlord. Tenant may satisfy
this condition E by obtaining Landlord's prior approval of a standard form of
Sublease and using such form without substantial deviation.
F. Notwithstanding anything to the contrary contained in this
Lease, provided it conforms with the form previously reviewed and approved by
Landlord, when executed the City Lease shall be approved as a Permitted
Sublease.
Section 17.3. Rent From Assignee. If this Lease is assigned, whether or
not in violation of the provisions hereof, Landlord may and hereby is empowered
to collect rent directly from the assignee. In such event, Landlord may apply
the net amount received by it to the rent and other sums payable hereunder. No
such collection shall be deemed a waiver of the covenant herein regarding
assignment or an acceptance of the assignee as a Tenant under this Lease or a
release of Tenant from the further performance of the covenants herein contained
on the part of Tenant.
Section 17.4. Continuing Liability. Except as provided herein in the
case of a Permitted Assignment, the making of any assignment in whole or in part
without Landlord's prior reasonable consent, shall not operate to relieve Tenant
from its obligations under this Lease and, notwithstanding any such assignment,
Tenant shall remain liable for the payment
36
of all rent and other sums payable hereunder and for the due performance of all
the covenants, agreements, terms and provisions of this Lease throughout the
Lease Term. However, in the event of a Permitted Assignment of all of Tenant's
rights and obligations under this Lease to a Permitted Assignee, upon such
Permitted Assignee's delivery to Landlord of the assumption instrument referred
to be in Section 17.5 below, Tenant thereafter shall only be liable for
obligations arising prior to such assignment, and the Permitted Assignee shall
be liable for all obligations arising from and after such assignment, provided
such Permitted Assignee has executed an instrument expressly assuming all such
obligations, as provided in Section 17.5 below.
Section 17.5. Assignee Bound. Subject to the provisions of Section
17.1.C above, every assignee, whether as assignee or as successor in interest of
any assignee of Tenant herein named, or as successor in interest of any
assignee, including any purchaser of the Lease under a foreclosure of any
Permitted Mortgage, shall be and become and remain liable for the payment of all
rent and other sums payable hereunder and for the due performance of all the
covenants, agreements, terms and provisions hereof on Tenant's part to be
performed throughout the Lease Term, and every provision of this Lease
applicable to Tenant shall apply to and bind every such assignee and purchaser
with the same force and effect as though such assignee or purchaser were the
Tenant named in this Lease. No transfer to such assignee or to such purchaser
shall be binding upon Landlord or act to release any assignor or prior Tenant
unless such assignee or purchaser shall deliver to the Landlord a recordable
instrument which contains a covenant of assumption by said assignee or purchaser
to such effect, but the failure or refusal of such assignee or purchaser to
deliver such instrument shall not release or discharge such assignee or
purchaser from its obligations and liability as above set forth.
Section 17.6. Consent Limited. Any consent by Landlord to any
assignment or Sublease shall apply only to the specific transaction approved.
Such consent shall not be construed as a waiver of the duty of Tenant or its
successors or assigns to obtain from the Landlord a consent to any other or
subsequent assignment or Sublease, if applicable, or as a modification or
limitation of the right of Landlord with respect to the foregoing covenant.
Section 17.7. Permitted Mortgages--Definition. Tenant from time to time
during the Term of this Lease may make one or more Permitted Mortgages. A
"Permitted Mortgage" shall mean a Mortgage in which the following conditions are
satisfied:
A. Such Permitted Mortgage shall encumber no interests in the
Premises other than Tenant's interest therein (including the Option) and any
Subleases;
B. Tenant or the holder of such Permitted Mortgage shall
promptly deliver to Landlord in the manner herein provided for the giving of
notices a true copy of the Permitted Mortgage and of any assignments thereof and
shall provide Landlord with the current notice address of the holder of such
Permitted Mortgage; and
37
C. The holder of such Permitted Mortgage shall expressly
accept and agree for itself and its successors and assigns, including any
purchaser at any foreclosure sale, to be bound by the provisions of Section 17.5
hereof, but only for the period of time that the holder of such Permitted
Mortgage is the Subtenant under the Sublease.
Section 17.8. Permitted Mortgages--Further Provisions. The following
provisions shall apply to any Permitted Mortgage:
A. For purposes of the notice requirements of this Article,
the term "Permitted Mortgagee" shall mean only the holder of an outstanding
Permitted Mortgage recorded in the office of the Maricopa County Recorder who
has provided Landlord with a current address for the delivery of notices (herein
sometimes called a "Permitted Mortgagee of Record"). Further, Landlord may rely
upon the certificate of any title insurance company authorized to do business in
the State of Arizona in order to determine which Permitted Mortgage is first and
prior to all others recorded in the office of said Maricopa County Recorder
(herein sometimes called the "First Permitted Mortgage of Record").
B. For the purpose of this Article, the making of a Permitted
Mortgage shall not be deemed to constitute an assignment or transfer of this
Lease, nor shall any holder of a Permitted Mortgage, as such, be deemed an
assignee or transferee of this Lease or of the leasehold estate hereby created
so as to require such holder of a Permitted Mortgage to assume the performance
of any of the terms, covenants or conditions on the part of Tenant to be
performed hereunder; but the purchaser at any sale of this Lease in any
proceedings for the foreclosure of any Permitted Mortgage, or the assignee or
transferee of this Lease under any instrument of assignment or transfer in lieu
of the foreclosure of any Permitted Mortgage (including any such holder of a
Permitted Mortgage, if it becomes such a purchaser or assignee), shall be deemed
to be an assignee or transferee within the meaning of this Section and shall be
deemed to have assumed the performance of all the terms, covenants, and
conditions on the part of Tenant to be performed hereunder, but only from and
after the date of such purchase and assignment. In no event shall a Permitted
Mortgagee (or any purchaser at a foreclosure sale) be liable or responsible for
or be deemed to have assumed liability or be obligated to indemnify Landlord for
any prior actions, omissions, defaults, breaches or other events caused by or
related to any prior tenant (including Tenant) and such Permitted Mortgagee (or
any purchaser at a foreclosure sale) shall only be responsible for acts,
omissions, defaults, breaches or events occurring from and after it becomes the
Tenant, but the prior Tenant(s) shall not be released from liability for prior
occurrences for which any such Tenant(s) may be liable under this Lease.
Notwithstanding the foregoing, upon the Permitted Mortgagee (or any purchaser at
a foreclosure sale) becoming the Tenant hereunder, such Permitted Mortgagee (or
purchaser at a foreclosure sale) shall be responsible to cure any defaults which
may then exist which are reasonably susceptible to cure, in accordance with the
provisions of Section 17.11 below.
38
C. Notwithstanding the provisions of Article 15 to the
contrary, any award or other proceeds of or from a taking in condemnation
proceedings or by any right of eminent domain or by agreement in lieu of such
proceedings, relating to the Buildings and Landscaping or any portion thereof,
shall first be utilized to pay off and discharge all Permitted Mortgages (with
such award or proceeds to first be utilized to pay off and discharge the First
Permitted Mortgage of Record and thereafter, in order of lien priority of the
Permitted Mortgages) before either Landlord or Tenant shall have rights or
claims thereto under Article 15 below or otherwise.
Section 17.9. Notice to Permitted Mortgagees. So long as any Permitted
Mortgage shall remain a lien on Tenant's leasehold estate hereunder, Landlord
agrees, simultaneously with the giving of any notice to Tenant (i) of default or
(ii) of termination hereof or (iii) of any matter on which a default may be
predicated or claimed or (iv) of any condition which if continued may lead to a
default or termination hereof or the exercise of any other remedies hereunder,
to give duplicate copies thereof or of any process in any action or proceeding
brought to terminate or to otherwise in any way affect this Lease, to each
Permitted Mortgagee of Record, and no such notice to Tenant or process shall be
effective against the holder of a Permitted Mortgage unless a copy of such
notice is given to such Permitted Mortgagee in the manner herein provided.
Concurrently with Tenant, the holder of a Permitted Mortgage will have the same
period, if any, after receipt of the aforesaid notice to remedy the default or
cause the same to be remedied plus twenty (20) additional days thereafter, and
Landlord agrees to accept performance by the holder of a Permitted Mortgage as
though the same had been done or performed by Tenant. Notwithstanding the
foregoing, if Landlord elects to obtain insurance pursuant to Section 5.7, the
additional grace period for Permitted Mortgagees set forth above shall be
reduced from twenty (20) days to ten (10) days.
Section 17.10. Right to Cure. Any provision hereof to the contrary
notwithstanding, Landlord will not terminate this Lease by reason of any default
without first giving to each Permitted Mortgagee a period of ninety (90) days
after the occurrence of such a default within which either (i) to obtain
possession of the Premises (including possession by a receiver) and thereafter
to cure such default, or (ii) to commence foreclosure proceedings in order to
acquire Tenant's interest under this Lease and thereafter prosecutes the same
with diligence and without unreasonable delay or substantial interruption. If
the holder of a Permitted Mortgage is prohibited from commencing or prosecuting
foreclosure or other appropriate proceedings in the nature thereof by any
process or injunction issued by any court or by reason of any action by any
court having jurisdiction of any bankruptcy or insolvency proceeding involving
Tenant, the ninety (90) day period set forth above for commencing or prosecuting
foreclosure or other proceedings shall be extended for the period of the
prohibition. Nothing herein shall preclude Landlord from exercising any other
rights or remedies under this Lease with respect to any default by Tenant during
any period of such forbearance. Upon a Permitted Mortgagee of Record acquiring
title or possession of the Premises, as provided above, such Permitted Mortgagee
of Record shall thereafter
39
proceed to cure any then existing defaults under this Lease, subject to and in
the manner set forth in Section 17.11 below.
Section 17.11. Conditions of Cure. The provisions of Section 17.10 are
subject to the conditions that, within forty-five (45) days after receipt of any
notice pursuant to Section 17.10, the holder of a Permitted Mortgage shall:
A. Notify Landlord of its election to proceed with due
diligence promptly to acquire possession of the Premises or to foreclose the
Permitted Mortgage or otherwise to extinguish Tenant's interest in this Lease;
and
B. Deliver to Landlord an instrument in writing duly executed
and acknowledged wherein such Mortgagee agrees that:
(1) During the period that such Mortgagee shall be in possession of
the Premises and so long as it remains in possession it will pay or cause to be
promptly paid to Landlord all Minimum Rent and Impositions that are then
currently due or that may, from time to time, become due hereunder; and
(2) If such Mortgagee shall obtain possession of the Premises, whether
voluntarily or pursuant to any foreclosure or other proceedings, such Mortgagee
shall, promptly following delivery of possession, perform all the covenants and
agreements herein contained on Tenant's part to be performed and also pay all
past due Minimum Rent and Impositions to the extent that Tenant shall have
failed to pay the same to the date of delivery of possession.
Section 17.12. New Lease with Mortgagee. In the event of the
termination of this Lease prior to its stated expiration date, Landlord agrees
that it will give the holder of the First Permitted Mortgage of Record notice of
such termination and will enter into a new lease of the Premises with such
Mortgagee or, at the request of such Mortgagee, with its assignee, designee or
nominee for the remainder of the Lease Term, effective as of the date of such
termination, upon all of the same covenants, agreements, terms, provisions and
limitations as are herein contained, if and only if (i) such Mortgagee makes
written request upon Landlord for such new lease within sixty (60) days after
the Landlord gives notice that this Lease has been terminated, and (ii) such
Mortgagee pays or causes to be paid to Landlord at the time of the execution and
delivery of such new lease any and all Minimum Rent and Impositions which would
at the time of the execution and delivery thereof be due under this Lease but
for such termination and pays or causes to be paid any and all expenses,
including reasonable attorneys' fees, court costs, and costs and disbursements
incurred by Landlord in connection with any such termination and in connection
with the execution and delivery of such new lease, less the net income from the
Premises collected by Landlord subsequent to the date of the termination of this
Lease and prior to the execution and delivery of such new lease. The provisions
of this Section shall survive the
40
termination of this Lease and shall continue in full force and effect thereafter
to the same extent as if this Section were a separate and independent contract
between Landlord and the holder of the First Permitted Mortgage of Record.
Section 17.13. Priority of New Lease. Notwithstanding anything to the
contrary express or implied in this Lease, any new lease made pursuant to the
preceding Section shall have the same priority as this Lease with respect to any
mortgage, deed of trust, or other lien, charge, or encumbrance on the fee of the
Premises, and any Sublease under this Lease shall be a Sublease under the new
lease (except to the extent the Mortgagee's foreclosure, if any, has eliminated
such Sublease and the Mortgagee does not require or permit attornment) and shall
not be deemed to have been terminated by the termination of this Lease.
Section 17.14. Assignment of Subleases. Tenant hereby assigns to
Landlord, effective upon the occurrence of any Event of Default hereunder, and
so long as such Default remains uncured, as collateral security for the
performance of all obligations of Tenant under this Lease, any Sublease created
by Tenant and each and every amendment, modification or extension thereof. In no
event shall such assignment impose upon Landlord any duty or obligation to
perform any of the obligations of Tenant as landlord under any such Sublease,
subject to Section 17.2. After default by Tenant, Landlord may collect the rents
and other payments from any and all Subtenants and apply the net amount
collected to the rent and other sums payable hereunder, and may enforce the
provisions of any such Sublease directly against the Subtenant thereunder in the
name of Landlord or of Tenant but for Landlord's sole benefit. No such
collection or enforcement by Landlord will be deemed to be a waiver of any
agreement, term, covenant or condition of this Lease by Landlord or the
acceptance by Landlord of any Subtenant. The assignment in this Section shall be
subordinate to any assignment of rents to a Permitted Mortgagee. Although the
provisions of the immediately preceding sentence are intended to be
self-operative, Landlord shall execute, have acknowledged and shall deliver such
instruments of subordination respecting said assignment of rents as any
Permitted Mortgagee may reasonably require. Once such default has been cured,
Tenant thereafter shall have the right to collect future rents and other
payments from any and all Subtenants and otherwise enforce the provisions of the
Sublease.
Section 17.15. Grace Period. Unless and until Landlord has received
notice from the holder of the First Permitted Mortgage of Record that such
holder elects not to demand a new lease as provided in Section 17.12 or until
the sixty (60) day period therefor has expired, Landlord shall not cancel or
agree to the termination or surrender of any existing Subleases or enter into
any new leases or subleases with respect to the Premises without the prior
written consent of the holder of the First Permitted Mortgage of Record.
Section 17.16. Modifications. Notwithstanding anything to the contrary
contained herein, so long as there is any Permitted Mortgage of Record, no
consensual act or
41
agreement between or on the part of Landlord or Tenant to cancel, terminate,
surrender, or modify this Lease or Tenant's right to possession shall be binding
upon or effective against a Permitted Mortgagee of Record without its prior
written consent.
Section 17.17. Initial Assignment. Tenant has informed Landlord that
concurrently with (or shortly following) the execution and delivery of this
Lease, Tenant intends to assign this Lease and its rights hereunder to R&K,
subject to and in accordance with the terms, covenants and provisions of an
Addendum to Escrow Instructions and Agreement to Purchase and Sell Improved Real
Property (the "Initial Assignment"). Throughout the term of the Initial
Assignment, the obligations of R&K shall be guaranteed by the Xxxxxxxxxxx Family
Trust dated September 21, 1979 pursuant to a Guarantee of Lease in a form
reasonably acceptable to Landlord. Notwithstanding anything to the contrary
contained in Section 17.4, Section 17.16, or any other contrary provision of
this Lease, the Initial Assignment shall not relieve the Tenant named in the
first paragraph of this Lease of its agreements, liabilities, covenants and
obligations hereunder during the period that R&K holds the Tenant's interest
hereunder; provided, however, R&K shall be released from any future obligation
or liability arising under this Lease following the acquisition of the Buildings
and Landscaping by Tenant and the re-assignment of this Lease by R&K back to the
Tenant named in the first paragraph of this Lease, it being understood that the
reassignment of this Lease by R&K back to the Tenant named in the first
paragraph of this Lease shall not operate to release R&K or any guarantor from
any obligation or liability incurred during the term of the Initial Assignment.
ARTICLE 18
----------
DEFAULT BY TENANT
-----------------
Section 18.1. Events of Default. The happening of any one of the
following events (herein called "Events of Default") shall be considered a
material breach and default by Tenant under this Lease.
A. Rent Payment. If default shall be made in the due and punctual
payment of any rent or sums required to be paid by Tenant hereunder within
twenty (20) days after notice thereof from Landlord to Tenant; or
B. Continuing Default. If default shall be made by Tenant in the
performance of or compliance with any of the covenants, agreements, terms,
limitations or conditions hereof other than those referred to in the foregoing
subsection A, and such default shall continue for a period of thirty (30) days
after written notice thereof from Landlord to Tenant (provided, however, that if
Tenant proceeds with due diligence during such thirty (30) day period to cure
such default and is unable by reason of the nature of the work involved to cure
the same within such period, but such default is reasonably susceptible of
42
being
cured by Tenant, such period shall be extended by the time reasonably necessary
to cure the same, as reasonably determined by Landlord).
Section 18.2. Notice and Termination. Upon the occurrence of one or
more of the Events of Default listed in Section 18.1, subject to the rights of
any Permitted Mortgagees, the terms and provisions of Sections 17.7 to 17.16,
inclusive, above, and the expiration of any cure, grace or other time period set
forth herein which are conditions precedent to Landlord's right of termination,
then Landlord at any time thereafter unless and until such Event of Default has
been cured may give written notice ("Second Notice") to Tenant specifying such
Event(s) of Default and stating that this Lease shall expire and terminate on
the date specified in such Second Notice, which shall be at least fifteen (15)
days after the giving of such Second Notice, and upon the date specified in such
Second Notice, subject to the provisions of Article 17, this Lease and all
rights of Tenant herein under shall terminate, cease and be null and void.
Section 18.3. No Implied Waivers. No failure by Landlord to insist upon
the strict performance of any covenant, agreement, term or condition hereof or
to exercise any right or remedy consequent upon a breach hereof, and no
acceptance of full or partial rent during the continuance of any such breach,
shall constitute a waiver of any such breach or of such covenant, agreement,
term or condition. No covenant, agreement, term or condition hereof to be
performed or complied with by Landlord or Tenant, and no breach thereof, shall
be waived, altered or modified, except by a written instrument executed by the
party to be charged therewith. No waiver of any breach shall affect or alter
this Lease, but each and every covenant, agreement, term, limitation and
condition hereof shall continue in full force and effect with respect to any
other then existing or subsequent breach hereof.
Section 18.4. Remedies Cumulative. In the event of any breach by Tenant
of any of the covenants, agreements, terms or conditions hereof, Landlord, in
addition to any and all other rights, shall be entitled to enjoin such breach
and shall have the right to invoke any right and remedy allowed at law or in
equity or by statute or otherwise for such breach as though re-entry, summary
proceedings, and other remedies were not provided for in this Lease. In the
event of Tenant's failure to pay rent or any other sums within five (5) days
after the date when due hereunder (without regard to any notice or grace periods
set forth in Section 18.1), then Tenant shall pay Landlord interest on any such
overdue payments and associated late charges at a per annum interest rate equal
to four percent (4%) over the prime rate then published in the Wall Street
Journal or a reasonably equivalent rate selected by Landlord (e.g., if the
"prime rate" is 4%, the rate hereunder shall be 4% higher; in other words 8%)
but in no event an amount greater than permitted by law, in addition to any
other right or remedy of Landlord resulting from any such breach or default by
Tenant.
Section 18.5. Late Charge. In the event that any payment required to be
made by Tenant to Landlord under the terms of this Lease is not received within
five (5) days after
43
the due date thereof (without regard to any notice or grace periods set forth in
Section 18.1), a late charge shall without notice become immediately due and
payable in an amount equal to two and one-half percent (2.5%) of the late
payment or $500.00, whichever is greater. The late charge shall be in addition
to the interest charges pursuant to Section 18.4.
ARTICLE 19
----------
SAVING PROVISION
----------------
If any term or provision hereof or the application thereof to any
person or circumstances shall, to any extent, be invalid or unenforceable, the
remainder of this Lease, or the application of such term or provision to persons
or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision hereof
shall be valid and be enforced to the fullest extent permitted by law.
ARTICLE 20
----------
NOTICES
-------
Section 20.1. Notices. Any notice, request, demand, statement, or
consent herein required or permitted to be given by either party to the other
hereunder shall be in writing signed by or on behalf of the party giving the
notice and addressed to the other at the address as set forth below:
Landlord Papago Park Center, Inc.
Xxxx Xxxxxx Xxx 00000
Xxxxxxx, XX 00000
Attn: Development Manager
Tenant Three-Five Systems, Inc.
Attn: Xx. Xxxxxx Xxxxxxxxxx
00000 Xxxxx 00xx Xxxxx
Xxxxxxx, XX 00000
with a copy to: Xxxxx X. Xxxxxx, Esq.
X'Xxxxxx Xxxxxxxx
Xxx Xxxx Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000
44
Each party may by notice in writing change its address for the purpose
of this Lease, which address shall thereafter be used in place of the former
address. Each notice, demand, request, or communication which shall be mailed to
any of the aforesaid shall be deemed sufficiently given, served, or sent for all
purposes hereunder two (2) business days after it shall be mailed by United
States registered or certified mail, postage prepaid, in any post office or
branch post office regularly maintained by the United States Government.
Section 20.2. Notice to Permitted Mortgagees of Record Only. When,
under the terms of this Lease, any notice is required or permitted to be given
to a Permitted Mortgagee, it is the intention of the parties that such notice
shall be required to be given only to Permitted Mortgagee(s) of Record who have
provided Landlord with a current notice address. This provision takes precedence
over any other provisions of this Lease that might impose a greater notice
requirement upon Landlord.
ARTICLE 21
----------
QUIET ENJOYMENT
---------------
Section 21.1. Quiet Enjoyment. Subject to all of the conditions, terms,
and provisions contained in this Lease, Landlord covenants that Tenant, upon
paying the rent and other sums when due hereunder and observing and keeping all
terms, covenants, agreements, limitations and conditions hereof on the part of
Tenant to be kept, shall have and may quietly enjoy the possession of the
Premises during the term hereof, without hindrance or molestation by Landlord,
and Landlord shall not affirmatively authorize any hindrance or molestation of
Tenant by others.
ARTICLE 22
----------
ESTOPPEL
--------
Section 22.1. Estoppel Certificates. Landlord may request of Tenant or
any Subtenant, and Tenant may request of Landlord, at any time and from time to
time a certificate addressed to Landlord or Tenant, as applicable, or any Person
designated by Landlord or Tenant, as applicable, as having any interest or
proposed interest in the Premises or any portion thereof evidencing whether:
A. The Lease is in full force and effect;
B. The Lease has not been modified or amended in any respect or
describing such modifications or amendments, if any;
45
C. There are no existing defaults under the Lease to the knowledge of
the party executing the certificate or specifying the nature of such defaults,
if any; and
D. Such other factual matters pertaining to the Lease and the Premises
as may be reasonably requested.
Any such requested certificate shall be delivered, without charge, to the
requesting party within fourteen (14) days after the request has been made in
writing.
ARTICLE 23
----------
CONSENTS
--------
Section 23.1. Parties and Notice. Whenever any consent, approval,
election or similar action is required under this Lease, the same shall not be
effective unless it is in writing and delivered to all parties in the manner
hereinabove provided for the giving of notices.
Section 23.2. No Unreasonable Withholding or Delay. Wherever in this
Lease the consent or approval of any party is required, such consent or approval
shall not be unreasonably withheld nor delayed, except where otherwise
specifically provided.
ARTICLE 24
----------
ADJOINING EXCAVATION
--------------------
Section 24.1. Entry and Repairs. Tenant shall allow any person,
municipality or agency authorized by law and desiring to excavate upon land or
streets adjacent to the Premises to enter the Premises and shore up any walls
during such excavation to the extent required. Tenant shall, at Tenant's own
expense, repair or cause to be repaired, any damage caused to any part of the
Premises because of any excavation, construction work or other work of a similar
nature which may be done on any property or street adjoining or adjacent to the
Premises, and Landlord hereby assigns to Tenant any and all rights to xxx for or
recover against any parties causing such damages, the amounts expended or
incurred by Tenant because of the provisions hereof requiring Tenant to repair
any damages sustained by such excavation work or other work.
46
ARTICLE 25
----------
LIMITATION ON RECOURSE
----------------------
In the event of a material breach and default by Tenant under this
Lease, after Landlord regains possession of the Premises, Tenant shall have no
personal liability for the payment of future Minimum Rent or Additional Rent or
other obligations accruing after Landlord regains possession of the Premises.
The foregoing limitation on Landlord's recourse shall not apply, however, and
Tenant shall have full, personal and continuing liability, for:
(1) Claims arising out of failure prior to Tenant's surrender of
the Premises to pay Impositions, taxes, assessments, labor or
material charges, or other charges that can create liens
against the Premises;
(2) Claims arising out of waste of the Premises or any portion
thereof occurring prior to Tenant's surrender of the Premises;
(3) Claims arising out of failure to comply with any Legal
Requirement or any requirement of the Declaration related to
the Premises occurring prior to Tenant's surrender of the
Premises;
(4) Claims arising out of any use, generation, storage or disposal
by Tenant or any Person responsible by, through or under
Tenant, of hazardous materials, hazardous substances, toxic
substances, or other regulated substances causing
environmental damage or liability;
(5) Claims arising out of or related to Tenant's indemnity
obligations under Article 13 hereof; and
(6) Claims arising out of Tenant's failure to comply with the
provisions of Section 14.3.
ARTICLE 26
----------
EASEMENTS, DEDICATIONS AND OTHER MATTERS
----------------------------------------
At the request of Tenant, when Tenant is not in default hereunder
(notice thereof having been given and any applicable cure period having expired,
where notice and/or grace is required hereunder), Landlord shall make reasonable
dedications to public use of roads, alleys or easements and convey any portion
so dedicated to the appropriate governmental authority, join in granting any
reasonable easements requested by Tenant for the Premises,
47
and execute and deliver (in recordable form where appropriate) all other
instruments and perform all other acts reasonably necessary or appropriate to
the development, construction, razing, redevelopment or reconstruction of the
Premises; however, Landlord shall not be required to cooperate in any rezoning.
Landlord's cooperation and consent to any of the foregoing shall be within
Landlord's reasonable discretion, to be given or withheld after Tenant's
submission of written requests and other information reasonably required by
Landlord. Landlord's cooperation, consent and actions under this Article shall
be at no cost to Landlord. Tenant shall save Landlord harmless from all costs,
expenses, claims, loss or damage by reason of, in connection with, on account
of, growing out of or resulting from any such cooperation, consent or action.
ARTICLE 27
----------
TRADE FIXTURES, MACHINERY AND EQUIPMENT
---------------------------------------
Landlord agrees that all trade fixtures, machinery, equipment,
furniture or other personal property of whatever kind and nature kept or
installed on the Premises by Tenant or Subtenants may be removed by Tenant or
Subtenants, or their agents and employees, in their discretion, at any time and
from time to time during the Term or upon expiration of this Lease. Tenant
agrees that in the event of material damage to the Premises due to such removal,
Tenant will repair or restore the same. Upon request of Tenant or any Subtenant,
Landlord shall execute and deliver any reasonable consent or waiver forms
submitted by any vendors, lessors, chattel mortgagees or holders or owners of
any trade fixtures, machinery, equipment, furniture or other personal property
of any kind and description kept or installed on the Premises by Tenant or any
Subtenant, setting forth the fact that Landlord waives, in favor of such vendor,
lessor, chattel mortgagee, holder or owner, any lien, claim, interest or other
right therein superior to that of such vendor, lessor, chattel mortgagee, owner
or holder. Landlord shall further acknowledge that the property covered by such
consent or waiver forms is personal property and is not to become a part of the
realty no matter how affixed thereto and that such property may be removed from
the Premises by the vendor, lessor, chattel mortgagee, owner or holder at any
time upon default by the Tenant or Subtenant, pursuant to the terms of such
chattel mortgage or other similar documents, provided that any damage to the
Premises due to such material removal will be repaired or restored by such
vendor, lessor, chattel mortgagee, owner or holder.
ARTICLE 28
----------
LEASEHOLD MORTGAGEE FURTHER ASSURANCES
--------------------------------------
Landlord and Tenant shall cooperate in including in this Lease by
suitable amendment from time to time any reasonable provision which may be
reasonably requested
48
by any proposed Permitted Mortgagee for the purposes of (i) implementing the
mortgagee-protection provisions contained in this Lease, (ii) allowing that
Permitted Mortgagee reasonable means to protect or preserve the lien of its
Permitted Mortgage upon the occurrence of a default under the terms of this
Lease, and (iii) confirming the elimination of the ability by Tenant to modify,
terminate or waive this Lease or any of its provisions without the prior written
approval of the Permitted Mortgagee. Landlord and Tenant each agree to execute
and deliver (and to acknowledge, if necessary, for recording purposes) any
agreement reasonably necessary to effect any such amendment; provided, however,
that any such amendment shall not in any way affect the term or rent under this
Lease nor otherwise in any material respect modify the provisions hereof or
adversely affect any rights of Landlord under this Lease. Landlord's cooperation
shall be limited to review and comment on any proposed amendments and eventual
approval by Landlord of any such amendments reasonably acceptable to Landlord.
Any reasonable costs and expenses incurred by Landlord in connection with its
cooperation under this Article 28 shall be reimbursed by Tenant.
ARTICLE 29
----------
MISCELLANEOUS
-------------
Section 29.1. Choice of Law. This Lease shall be construed and enforced
in accordance with the laws of the State of Arizona.
Section 29.2. Memorandum. Landlord and Tenant agree that at the request
of either, each will execute a short form memorandum of this Lease in a form
satisfactory for recording in the Office of the County Recorder, Maricopa
County, Arizona.
Section 29.3. Entire Agreement. This Lease together with the Exhibits
hereto contains the entire agreement between Landlord and Tenant and supersedes
all prior negotiations or agreements. Any agreement hereafter made between
Landlord and Tenant shall be ineffective to change, modify, waive, release,
discharge, terminate or effect an abandonment of this Lease, in whole or in
part, unless such agreement is in writing and signed by the party against whom
enforcement thereof is sought.
Section 29.4. Captions. The captions of Articles and Sections in this
Lease and its Table of Contents are inserted only as a convenience and for
reference and they in no way define, limit, or describe the scope of this Lease
or the intent of any provision thereof. References to Articles and Section
numbers are to those in this Lease unless otherwise noted.
49
Section 29.5. Execution and Delivery. This Lease shall bind Tenant upon
its execution thereof. Landlord shall be bound only after it executes and
delivers the Lease to Tenant.
Section 29.6. Singular and Plural, Gender. If two or more persons,
firms, corporations, or other entities constitute either the Landlord or the
Tenant, the word "Landlord" or the word "Tenant" shall be construed as if it
reads "Landlords" or "Tenants" and the pronouns "it", "he", and "him" appearing
herein shall be construed to be the singular or plural, masculine, feminine, or
neuter gender as the context in which it is used shall require.
Section 29.7. Multiple Parties. If at any time Landlord, Tenant, any
Permitted Mortgagee (Landlord, Tenant or any such Mortgagee being in this
Section referred to as a "party") is other than one individual, partnership,
firm, corporation, or other entity, the act of, or notice, demand, request, or
other communication from or to, or payment or refund from or to, or signature of
any one of the individuals, partnerships, firms, corporations, or other entities
then constituting such party with respect to such party's estate or interest in
the Premises or this Lease shall bind all of them as if all of them so had
acted, or so had given or received such notice, demand, request, or other
communication, or so had given or received such payment or refund, or so had
signed.
Section 29.8. Construction. This Lease has been fully negotiated by
both parties with the assistance of legal counsel and shall be construed
impartially in light of all pertinent facts and circumstances and not narrowly
against any party.
Section 29.9. Declaration. Landlord, as the Declarant under the
Declaration, acknowledges and agrees that Tenant shall be entitled to exercise
all voting rights applicable to the Premises under the Declaration and that
Tenant, by leasing the Premises pursuant to this Lease, shall be considered the
lessee of the Premises for all purposes under the Declaration, including any
period of time during which the Buildings are owned by the City of Tempe,
Arizona, pursuant to the City Lease.
Section 29.10. Nondisturbance - Improvement District. Prior to the
execution of this Lease, and as a condition precedent to the obligations of
Tenant hereunder, Landlord shall (i) use reasonable efforts to cause the Tempe
Improvement District No. 166 to execute, have acknowledged and delivered to
Tenant a Nondisturbance and Attornment Agreement in a form reasonably acceptable
to Tenant, pursuant to which the Tempe Improvement District No. 166 agrees that
notwithstanding any default by Landlord and/or the Lessor under the Master
Ground Lease under the terms and conditions of the agreements and documents
secured by a lien against the Premises, that so long as there is not in
existence an Event of Default hereunder, the Tempe Improvement District No. 166
will honor this Lease and not disturb Tenant's rights hereunder, or (ii) provide
other continuing financial assurances or arrangements insuring that Tenant, its
successors and assigns, its Permitted
50
Mortgagees, future purchasers of the Premises and the Premises shall not be held
financially responsible for the lien imposed by Tempe Improvement District No.
166 or, if reasonably commercially available at a reasonable cost, Lessor under
the Master Ground Lease or Landlord shall obtain title insurance endorsement(s)
insuring Tenant, its successors and assigns, its Permitted Mortgagees and future
purchasers of the Premises against loss as a result of the existence of said
lien. If Landlord is unable to deliver the financial assurances or arrangements
for such title insurance endorsement(s) or is unable to obtain said
Nondisturbance and Attornment Agreement, Tenant may either (i) waive strict
conformance with this Section 29.10 and execute this Lease, whereupon the other
provisions of the Lease shall have full force and effect, or (ii) refuse to
execute this Lease, whereupon this Lease shall have no force or effect and
neither Landlord nor Tenant shall have any liability one to the other.
ARTICLE 30
----------
INUREMENT
---------
Section 30.1. Covenants Bind and Inure. The covenants and agreements
herein contained shall bind and inure to the benefit of Landlord and Tenant and
their respective heirs, legal representatives, successors and assigns, except as
otherwise provided herein.
51
ARTICLE 31
----------
ATTORNEYS' FEES
---------------
Section 31.1. Prevailing Party to Recover Attorneys' Fees.
In the event of any suit, arbitration, or other adversarial proceeding between
the parties in any court or other forum of competent jurisdiction, the
prevailing party shall be entitled, in addition to any other remedy, to recover
its reasonable attorneys' fees and costs of such proceeding.
The parties have caused this instrument to be duly executed the day and
year first above written.
LANDLORD:
PAPAGO PARK CENTER, INC.,
An Arizona corporation
By /s/ Xxxx X. Xxxxxx
----------------------------
Its President
-------------------------
TENANT:
THREE-FIVE SYSTEMS, INC., a
Delaware corporation
By Xxxxx X. Xxxxxxxx
----------------------------
Its President
-------------------------
52
STATE OF ARIZONA )
)ss.
County of Maricopa )
On this, the 1st day of April, 1994, before me, the undersigned Notary
Public, personally appeared Xxxx X. Xxxxxx, who acknowledged himself to be the
President of PAPAGO PARK CENTER, INC., an Arizona corporation, whose name is
subscribed to the foregoing instrument, and acknowledged that he executed the
same for the purposes therein contained in such capacity.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Xxxxxx X. Xxxxx
-------------------------------
Notary Public
My Commission Expires: OFFICIAL SEAL
April 29, 1995 XXXXXXX X. XXXXX
---------------------- Notary Public - State of Arizona
MARICOPA COUNTY
STATE OF ARIZONA ) My Comm. Expires April 29, 1995
)ss.
County of Maricopa )
On this, the 1st day of April, 1994, before me, the undersigned Notary
Public, personally appeared Xxxxx X. Xxxxxxxx, who acknowledged himself to be
the President of THREE-FIVE SYSTEMS, INC., a Delaware corporation, whose name is
subscribed to the foregoing instrument, and acknowledged that he executed the
same for the purposes therein contained in such capacity.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Xxxxxx X. Xxxxxx
-------------------------------
Notary Public
My Commission Expires:
December 12, 1995
----------------------
53
