INDUSTRIAL REAL ESTATE LEASEbetween LAS VEGAS AIRPORT PROPERTIES LLC AS LANDLORD and TRANSACT TECHNOLOGIES INC. AS TENANT

 

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                                                                   Exhibit 10.13

 

                          INDUSTRIAL REAL ESTATE LEASE

 

                                     between

 

                        LAS VEGAS AIRPORT PROPERTIES LLC

                                    AS LANDLORD

 

                                       and

 

                           TRANSACT TECHNOLOGIES INC.

                                    AS TENANT

 

                          DATED AS OF DECEMBER 2, 2004

 

 

                                      Page 1

 

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                          INDUSTRIAL REAL ESTATE LEASE

 

                                TABLE OF CONTENTS

 

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                                                                          PAGE #

                                                                           ------

<S>                 <C>                                                     <C>

ARTICLE 1 BASIC TERMS..................................................       6

 

   SECTION 1.01     DEFINITIONS.........................................       6

   SECTION 1.02     BASE RENT...........................................      10

   SECTION 1.03     RIDERS..............................................      10

   SECTION 1.04     PARKING.............................................      11

 

ARTICLE 2 LEASE TERM AND COMMON BUILDING AREAS.........................      11

 

   SECTION 2.01     LEASE OF PROPERTY FOR LEASE TERM....................      11

   SECTION 2.02     DELIVERY OF POSSESSION..............................      11

   SECTION 2.03     HOLDING OVER........................................      12

   SECTION 2.04     COMMON BUILDING AREAS...............................      12

   SECTION 2.05     LANDLORD'S RIGHTS IN COMMON BUILDING AREAS..........      13

 

ARTICLE 3 BASE RENT....................................................      13

 

   SECTION 3.01     TIME AND MANNER OF PAYMENT..........................      13

   SECTION 3.02     BASE RENT INCREASES.................................      14

 

ARTICLE 4 OTHER CHARGES PAYABLE BY TENANT..............................      14

 

   SECTION 4.01     ADDITIONAL RENT.....................................      14

   SECTION 4.02     OPERATING COSTS.....................................      14

   SECTION 4.03     PERSONAL PROPERTY TAXES.............................      15

   SECTION 4.04     UTILITIES...........................................      16

   SECTION 4.05     INSURANCE...........................................      16

   SECTION 4.06     WAIVER OF SUBROGATION...............................      18

   SECTION 4.07     LATE CHARGES........................................      18

   SECTION 4.08     INTEREST ON PAST DUE OBLIGATIONS....................      18

   SECTION 4.09     RETURN OF CHECK.....................................       18

   SECTION 4.10     SECURITY DEPOSIT; INCREASES.........................      19

   SECTION 4.11     TERMINATION; ADVANCE PAYMENTS.......................      19

 

ARTICLE 5 USE OF PROPERTY..............................................      19

 

   SECTION 5.01     PERMITTED USES......................................      19

   SECTION 5.02     MANNER OF USE.......................................      19

   SECTION 5.03     HAZARDOUS SUBSTANCES................................      20

   SECTION 5.04     SIGNS AND AUCTIONS..................................      23

   SECTION 5.05     INDEMNITY...........................................      23

   SECTION 5.06     LANDLORD'S ACCESS...................................      24

   SECTION 5.07     INTENTIONALLY OMITTED...............................      24

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<S>                 <C>                                                       <C>

ARTICLE 6 CONDITION OF PROPERTY; MAINTENANCE,

REPAIRS AND ALTERATIONS................................................      24

 

   SECTION 6.01     EXISTING CONDITIONS.................................      24

   SECTION 6.02     EXEMPTION OF LANDLORD FROM LIABILITY................      24

   SECTION 6.03     LANDLORD'S OBLIGATIONS..............................      25

   SECTION 6.04     TENANT'S OBLIGATIONS................................      26

   SECTION 6.05     ALTERATIONS, ADDITIONS, AND IMPROVEMENTS............      27

   SECTION 6.06     CONDITION UPON TERMINATION..........................      28

 

ARTICLE 7 DAMAGE OR DESTRUCTION........................................      28

 

   SECTION 7.01     PROPERTY DAMAGE.....................................      28

   SECTION 7.02     REDUCTION OF RENT...................................      29

   SECTION 7.03     WAIVER..............................................      30

 

ARTICLE 8 CONDEMNATION.................................................      30

 

   SECTION 8.01     CONDEMNATION........................................      30

 

ARTICLE 9 ASSIGNMENT AND SUBLETTING....................................      30

 

   SECTION 9.01     LANDLORD'S CONSENT REQUIRED.........................      30

   SECTION 9.02     LANDLORD'S ELECTION.................................      31

   SECTION 9.03     NO RELEASE OF TENANT................................      32

   SECTION 9.04     NO MERGER...........................................      32

 

ARTICLE 10 DEFAULTS; REMEDIES..........................................      32

 

   SECTION 10.01    COVENANTS AND CONDITIONS............................      32

   SECTION 10.02    DEFAULTS............................................      32

   SECTION 10.03    REMEDIES............................................      33

   SECTION 10.04    CUMULATIVE REMEDIES.................................       35

 

ARTICLE 11 PROTECTION OF LENDERS.......................................      35

 

   SECTION 11.01    SUBORDINATION.......................................      35

   SECTION 11.02    ATTORNMENT..........................................      35

   SECTION 11.03    SIGNING OF DOCUMENTS................................      36

   SECTION 11.04    ESTOPPEL CERTIFICATES...............................      36

   SECTION 11.05    TENANT'S FINANCIAL CONDITION........................      36

 

ARTICLE 12 LEGAL COSTS.................................................      37

 

   SECTION 12.01    LEGAL PROCEEDINGS...................................      37

   SECTION 12.02    LANDLORD'S CONSENT..................................      37

 

ARTICLE 13 MISCELLANEOUS PROVISIONS....................................      37

 

   SECTION 13.01    NON-DISCRIMINATION..................................      37

   SECTION 13.02    LANDLORD'S LIABILITY................................      37

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<S>                 <C>                                                       <C>

   SECTION 13.03    SEVERABILITY........................................      38

   SECTION 13.04    INTERPRETATION......................................      38

   SECTION 13.05    INCORPORATION OF PRIOR AGREEMENTS; MODIFICATIONS....      38

   SECTION 13.06    NOTICES.............................................      38

   SECTION 13.07    WAIVERS.............................................      39

   SECTION 13.08    NO RECORDATION......................................      39

   SECTION 13.09    BINDING EFFECT; CHOICE OF LAW.......................      39

   SECTION 13.10    CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY..........      39

   SECTION 13.11    JOINT AND SEVERAL LIABILITY.........................      40

   SECTION 13.12    FORCE MAJEURE.......................................      40

   SECTION 13.13    EXECUTION OF LEASE..................................      40

   SECTION 13.14    BROKERS AND LEASING AGENTS..........................      40

   SECTION 13.15    RULES AND REGULATIONS...............................      40

   SECTION 13.16    INTENTIONALLY OMITTED...............................      41

   SECTION 13.17    WAIVER OF JURY TRIAL................................      41

   SECTION 13.18    REAL ESTATE BROKERAGE DISCLOSURES...................      41

   SECTION 13.19    MOLD ADDENDUM.......................................      41

   SECTION 13.20    LANDLORD REPRESENTATIONS............................      41

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                             LIST OF EXHIBITS/RIDERS

 

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Exhibit/Rider                                                          Lease Section

  Designation                         Description                           Reference

-------------                        -----------                        -------------

<S>              <C>                                                    <C>

     "A"         Depiction of Premises..............................       1.01(p)

 

    "A-1"        Depiction of Warehouse Space.......................       2.02(c)

 

     "B"         Legal Description of Site..........................       1.01(b)

 

     "C"         Rules and Regulations..............................       13.15

 

     "D"          Estoppel Certificate...............................       11.04

 

     "E"         Commencement Memorandum............................       1.01(c)

 

     "F"         Duties Owed by a Nevada Real Estate Licensee.......       13.18

 

     "G"         Confirmation Regarding Real Estate Relationship....       13.18

 

     "H"         Mold Addendum......................................       13.19

 

Rider No. 1   -   Work Letter........................................       1.03

 

Rider No. 2   -   Option to Renew Lease..............................       1.03

 

Rider No. 3   -   Intentionally Omitted..............................       1.03

 

Rider No. 4   -   Right of First Offer to Lease......................       1.03

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                          INDUSTRIAL REAL ESTATE LEASE

 

     THIS INDUSTRIAL REAL ESTATE LEASE (this "Lease") is made as of the 2nd day

of December, 2004, by and between LAS VEGAS AIRPORT PROPERTIES LLC, a Delaware

limited liability company ("Landlord") and TRANSACT TECHNOLOGIES INC., a

Delaware corporation ("Tenant").

 

                                    ARTICLE 1

                                   BASIC TERMS

 

     SECTION 1.01 DEFINITIONS.

 

     For purposes of this Lease, the following terms shall have the following

meanings:

 

          (a) Allowance: Sixty Eight Thousand Three Hundred Ten and 00/100

Dollars ($68,310.00).

 

          (b) Building: That certain parcel of real estate located within the

Hughes Airport Center as described on Exhibit "B" attached hereto and

incorporated herein by this reference and the building and other improvements

located thereon, all of which is commonly known as 6700 Paradise Road, Las

Vegas, Nevada, 89119.

 

          (c) Commencement Date: The earlier of the date (i) the Work (as

defined in Rider No. 1 attached hereto) is substantially completed in accordance

with Section 2.02(b) below, or (ii) January 1, 2005, except as delayed pursuant

to Section 2.02 of this Lease. At such time as the Commencement Date shall have

been established, Landlord and Tenant shall execute Exhibit E attached hereto

and incorporated herein by reference as a confirmation of said date.

 

          (d) Common Building Areas: All areas and facilities outside the

Premises and within the exterior property boundary line of the Building and

interior utility raceways within the Premises that are provided and designated

by the Landlord from time to time for the general non-exclusive use of Landlord,

Tenant and other tenants of the Building and their respective employees,

suppliers, shippers, customers, contractors and invitees, including, without

limitation, trash areas, roadways, sidewalks, walkways, landscaped areas,

irrigation systems, lighting facilities, fences, gates, elevators, roof, common

entrances, common areas within the Building, common pipes, conduits, wires and

appurtenant equipment serving the Premises, exterior signs, Tenant directories,

fire detection systems, sprinkler systems, security systems, and the parking

facilities for the Building. Landlord has the right to change the Common

Building Areas and to take other actions respecting these areas in accordance

with Section 2.05 below.

 

          (e) Declaration: (i) that certain Declaration of Restrictions and

Grant of Easements dated November 1, 1985 and filed for record with the County

Recorder of Clark County, Nevada ("County Recorder") as Document No. 2175093, as

supplemented and amended from time to time, and (ii) that certain Declaration of

Restrictions and Grant of Easements for Hughes Airport Center 6700 Paradise and

1111, 1151 and 1181 Grier Drive Association dated May 18, 2004 and filed for

record with the County Recorder in Book 20040603, Instrument No. 0002453, as

supplemented and amended from time to time. The Declaration is

 

 

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filed on the Building and a larger real estate development, of which the

Building is a part, known as Hughes Airport Center.

 

          (f) Initial Security Deposit: Ten Thousand Six Hundred Fifty Six and

36/100 Dollars ($10,656.36).

 

          (g) Laws: All applicable statutes, regulations, requirements,

ordinances and orders promulgated by any federal, state, local or regional

governmental authority whether prior to or following the Commencement Date of

this Lease.

 

          (h) Landlord's Addresses: Mailing Address: LAS VEGAS AIRPORT

PROPERTIES LLC, c/o Stoltz Management of Delaware, Inc., 250 Pilot Road, Suite

220, Las Vegas, Nevada 89119. Office Address: LAS VEGAS AIRPORT PROPERTIES LLC,

c/o Stoltz Management of Delaware, Inc., 725 Conshohocken State Road, Bala

Cynwyd, Pennsylvania 19004.

 

     With a copy to: Lehman Brothers Bank, FSB,

                     1000 West Street

                     Suite 200

                     Wilmington, DE 19801

                      Attention: General Counsel

 

          (i) Landlord's Broker: Stoltz Realty of Delaware, Inc.

 

          (j) Lease Interest Rate: The lesser of (i) two percentage points (2%)

over that fluctuating rate of interest announced from time to time by the Bank

of America National Trust and Savings Association as its prime or reference

commercial lending rate of interest (or in the event such bank is no longer

announcing such rate, by such other federally regulated banking institution of

comparable stature as Landlord shall determine), or (ii) the maximum interest

rate permitted by law.

 

          (k) Lease Term: Five (5) years beginning on the Commencement Date and

continuing until sixty (60) months after the first day of the first full month

following the Commencement Date, unless extended pursuant to Rider No. 2 -

Option to Renew Lease attached to this Lease and incorporated herein by this

reference.

 

          (l) Leased Premises Address: 6700 Paradise Road, Suite D, Las Vegas,

Nevada 89119.

 

           (m) Mortgagee: The mortgagee under a mortgage or beneficiary under a

deed of trust holding a lien encumbering the Building or any holder of a ground

leasehold interest in the Building or any part thereof. For purposes of this

Lease, Lehman Brothers Bank, FSB shall be referred to as the "First Mortgagee."

 

          (n) Operating Costs: All costs of any kind paid or incurred by

Landlord because of or in connection with the ownership, management,

maintenance, repair, replacement, restoration or operation of the Building

(including all Common Building Areas), including by way of illustration but not

limitation, all of the following: (i) all amounts charged to the Building

pursuant to the Declaration; (ii) Real Property

 

 

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Taxes; (iii) all costs, charges and surcharges for utilities, water, sewage,

janitorial, waste disposal and refuse removal and all other utilities and

services provided to the Building which are not separately metered or billed

directly to tenants of the Building; (iv) insurance costs for which Landlord is

responsible under this Lease or which Landlord or any Mortgagee deems necessary

or prudent; (v) any costs levied, assessed or imposed pursuant to any applicable

Laws; (vi) the cost (amortized over such period as Landlord reasonably

determines together with interest at the Lease Interest Rate on the unamortized

balance) of any capital improvements to the Building or equipment replacements

made by Landlord after the Commencement Date that are intended to reduce other

Operating Costs or are required by any Laws or are necessary in order to operate

the Building at the same quality level as prior to such replacement; (vii) costs

and expenses of operation, repair and maintenance of all structural and

mechanical portions and components of the Building including, without

limitation, plumbing, communication, heating, ventilating and air-conditioning

("HVAC"), elevator, and electrical and other common Building systems; (viii)

utilities surcharges or any other costs levied, assessed or imposed by, or at

the direction of, or resulting from statutes or regulations or interpretations

thereof, promulgated by any federal, state, regional, municipal or local

government authority in connection with the use or occupancy of the Building

(including, without limitation, energy conservation charges or surcharges); (ix)

all costs incurred in the management and operation of the Building including,

without limitation, gardening and landscaping, maintenance of all parking areas,

maintenance of signs, resurfacing and repaving, painting, lighting, cleaning,

and provision of Building security; (x) all personal property taxes levied on or

attributable to personal property used in connection with the Building; (xi)

depreciation on personal property owned by Landlord which is utilized in the

operation or maintenance of the Building; (xii) rental or lease payments paid by

Landlord for rented or leased personal property used in the operation or

maintenance of the Building; (xiii) management fees in an amount not to exceed

four percent (4%) of Landlord's gross revenues in respect of the Building,

wages, salaries and other labor costs incurred in the management and operation

of the Building; (xiv) fees for required licenses and permits; (xv) reasonable

legal, accounting and other professional fees which are directly related to the

reasonable administration of the Building; (xvi) reasonable and appropriate

reserves for repair and replacement; (xvii) wages, salaries and other labor

costs incurred in the management and operation of the Building; (xviii) any

other expenses which would reasonably or customarily be included in the cost of

managing, operating, maintaining and repairing buildings similar to the

Building. At Landlord's sole discretion, Landlord shall have the right to

amortize any of the costs of repair or maintenance of the Building over such

period as Landlord reasonably determines together with interest at the Lease

Interest Rate on the unamortized balance, in lieu of including the entire amount

of such costs in Operating Costs in the year such costs are incurred. If the

Building is not fully occupied during any portion of the Lease Term, (a)

Landlord shall make an appropriate adjustment to Operating Costs for such period

employing sound accounting and management principles, to determine the amount of

Operating Costs that would have been incurred had the Building been fully

occupied during such period and (b) such adjusted amount of Operating Costs

shall be the amount utilized for purposes of Section 4.02 below. Except as

otherwise provided in this Lease, Operating Costs shall not include all or any

portion of the following (1) Depreciation of the Building or equipment therein;

(2) Principal, interest, loan fees and penalties relating to land on which the

Building is located and all expenditures relating to any ground lease payment or

obligations; (3) Leasehold improvements including redecorating made for tenants

of the Building; (4) Refinancing costs; (5) Any expenses for repairs or

maintenance which are actually paid by warranties and service contracts; (6) The

cost of any item to the extent that such cost is reimbursed or reimbursable by

an insurance company, a condemnor, a tenant, or any other party; (7) The cost of

any repairs caused by Landlord's negligence, or the negligence of Landlord's

agents, employees or invitees; (8) Legal fees incurred in enforcing leases or in

leasing the Building; (9) Costs incurred by the Landlord in connection with its

lease negotiations with prospective tenants, and all other costs associated with

the Landlord's leases with third-

 

 

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party tenants, including all brokerage commissions and advertising expenses;

(10) Expenses incurred by the Landlord in connection with services or equipment

supplied to a third-party tenant for its specific use or to the extent its use

is disproportionate to the other tenants in the Building; (11) Remuneration paid

to third parties in connection with commercial enterprises operated by Landlord

other than the operation and management of the Hughes Airport Center, if any;

(12) The Landlord's everyday corporate overhead; (13) All costs incurred by the

Landlord in connection with any dispute relating to Landlord's title to and

ownership of the Building; (14) All utility costs for which a tenant directly

contracts with local utility companies; (15) Costs of complying with all

environmental laws and regulations in effect as of the date this Lease is

executed, except for costs resulting from Tenant's particular use of the

Premises; (16) Costs incurred by Landlord resulting from the violation of

environmental laws by other tenants in the Building; (17) All penalties and

costs incurred by Landlord due to Landlord's or any third-party tenant's

negligence; (18) Any costs representing an amount paid to an entity related to

Landlord which is in excess of the amount which would have been paid in the

absence of such relationship; or (19) costs incurred by Landlord with respect to

structural repairs and replacements of the Building.

 

          (o) Permitted Uses: General office, warehouse, repair center and other

compatible uses.

 

          (p) Premises: The office/warehouse space in the approximate location

within the Building as indicated on Exhibit "A" attached hereto and incorporated

herein by this reference.

 

          (q) Real Property Taxes: Any form of tax, assessment, license fee,

license tax, business license fee, commercial rental tax, levy, charge, penalty,

tax or similar imposition, imposed by any authority having the direct power to

tax (including any city, county, state or federal government, or any school,

agricultural, lighting, drainage, transportation, air pollution, environmental

or other improvement or special assessment district) as against any legal or

equitable interest of Landlord in the Building and/or the Premises, including,

but not limited to, the following:

 

               (i) any tax on a landlord's "right" to rent or "right" to other

     income from the Premises or against Landlord's business of leasing the

     Premises;

 

               (ii) any assessment, tax, fee, levy or charge in substitution,

     partially or totally, of any assessment, tax, fee, levy or charge

     previously included within the definition of Real Property Taxes (it is the

     intention of Tenant and Landlord that all such new and increased

     assessments, taxes, fees, levies and charges be included within the

     definition of "Real Property Taxes" for the purposes of this Lease);

 

               (iii) any assessment, tax, fee, levy or charge allocable to or

     measured by the area of the Premises or the rent payable hereunder,

     including, without limitation, any gross income tax or excise tax levied by

     the state, county, city or federal government, or any political subdivision

     thereof, with respect to the receipt of such rent, or upon or with respect

     to the possession, leasing, operating, management and maintenance,

     alteration, repair, use or occupancy of the Building, or any portion

     thereof;

 

               (iv) any assessment, tax, fee, levy or charge upon this

     transaction creating or transferring an interest or an estate in the

     Premises;

 

 

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               (v) any assessment, tax, fee, levy or charge based upon the

     number of people employed, working at, or using the Premises or the

     Building, or utilizing public or private transportation to commute to the

     Premises or the Building; and

 

               (vi) reasonable legal and other professional fees, costs and

     disbursements incurred in connection with proceedings to contest, determine

     or reduce Real Property Taxes.

 

     Real Property Taxes shall not include federal or state income, franchise,

inheritance, transfer, gift, gross receipts or estate taxes of Landlord or of

any of the parties which comprise Landlord.

 

          (r) Rentable Square Feet in the Building: Fifty three thousand one

hundred fifteen (53,115) rentable square feet. The Building is stipulated for

all purposes to contain said Rentable Square Feet in the Building.

 

          (s) Tenant's Address: 3960 Howard Hughes Parkway, Suite 500, Las

Vegas, Nevada 89109.

 

          (t) Tenant's Broker: None.

 

           (u) Tenant's Guarantor: None.

 

          (v) Tenant's Rentable Square Feet: approximately thirteen thousand six

hundred sixty-two (13,662) rentable square feet, subject to adjustment based

upon the Final Plans (as defined in Rider No. 1). The Premises are stipulated

for all purposes to contain said Tenant's Rentable Square Feet, as adjusted

based on the Final Plans.

 

          (w) Tenant's Share: Twenty-five and seventy-two hundredths percent

(25.72%), subject to adjustment based upon any change in Tenant's Rentable

Square Feet as shown on the Final Plans (as defined in Rider No 1).

 

     SECTION 1.02 BASE RENT.

 

     The "Base Rent" shall be seventy eight cents ($0.78) per month for each

square foot of Tenant's Rentable Square Feet, which is equal to Ten Thousand Six

Hundred Fifty Six and 36/100 Dollars ($10,656.36) per month as adjusted pursuant

to Section 3.02 below. The Base Rent shall be adjusted in accordance with

Tenant's Rentable Square Feet as shown on the Final Plans (as defined in Rider

No. 1).

 

     SECTION 1.03 RIDERS.

 

     The following Riders are attached to and made a part of this Lease: RIDER

NO. 1 - TENANT WORK LETTER; RIDER NO. 2 - OPTION TO RENEW LEASE; RIDER NO. 3 -

INTENTIONALLY OMITTED; RIDER NO. 4 - RIGHT OF FIRST OFFER TO LEASE.

 

 

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     SECTION 1.04 PARKING.

 

     Tenant shall be entitled to use up to thirty-five (35) unreserved uncovered

parking spaces on the parking area of the Building. Tenant hereby acknowledges

and agrees that the foregoing parking spaces are the total number of parking

spaces available for use by Tenant, Tenant's agents, employees, contractors,

invitees, successors or others using the Premises with Tenant's express or

implied permission.

 

                                     ARTICLE 2

                      LEASE TERM AND COMMON BUILDING AREAS

 

     SECTION 2.01 LEASE OF PROPERTY FOR LEASE TERM.

 

     Landlord hereby leases the Premises to Tenant and Tenant leases the

Premises from Landlord for the Lease Term. The Lease Term is for the period

stated in Section 1.01(k) above and shall begin and end on the dates specified

in Section 1.01(k) above. The "Commencement Date" shall be the date specified in

Section 1.01(c) above for the beginning of the Lease Term.

 

      SECTION 2.02 DELIVERY OF POSSESSION.

 

          (a) Landlord will be deemed to have delivered possession of the

Premises to Tenant on the Commencement Date, as it may be adjusted pursuant to

this Section 2.02 or Rider No. 1 of this Lease. Landlord will construct or

install in the Premises the Work (as that term is defined in Rider No. 1) to be

constructed or installed by Landlord according to Rider No. 1. Tenant

acknowledges that neither Landlord nor its agents or employees have made any

representations or warranties as to the suitability or fitness of the Premises

for the conduct of Tenant's business or for any other purpose, nor has Landlord

or its agents or employees agreed to undertake any alterations or construct any

tenant improvements to the Premises except as expressly provided in this Lease

and Rider No. 1. Subject to Rider No. 1 of this Lease, if Landlord fails to

deliver possession of the Premises to Tenant on or before the fixed date

component of the Commencement Date, then as Tenant's sole remedy for the delay

in Tenant's occupancy of the Premises, the fixed date component of the

Commencement Date shall be extended by the length in delay of delivery of the

Premises to Tenant. Notwithstanding the foregoing, in the event Landlord fails

to deliver possession of the Premises on or within sixty (60) days following the

fixed date component of the Commencement Date, Tenant shall thereafter have the

right, upon written notice to Landlord ("Tenant Termination Notice") to

terminate this Lease effective on the date thirty (30) days following receipt by

Landlord of the Tenant Termination Notice. Notwithstanding the foregoing,

Landlord may vitiate such termination if Landlord delivers the Premises to

Tenant within thirty (30) days following its receipt of the Tenant Termination

Notice.

 

          (b) Notwithstanding any provision to the contrary contained in Section

2.02(a), if the Premises are not substantially completed by the fixed date

specified in Section 1.01(c)(ii) due to Force Majeure Delays, then as Tenant's

sole remedy for the delay in Tenant's occupancy of the Premises, the fixed date

component of the definition of the Commencement Date shall be delayed for the

period of delay in substantial completion of the Premises resulting therefrom.

The Premises shall be deemed "substantially completed" when (i) Landlord has

provided reasonable access to the Premises to Tenant, (ii) Landlord has

completed the Work (as defined in Rider No. 1) other than details of

construction which do not unreasonably interfere with Tenant's use of the

Premises, and (iii) Landlord has obtained a permanent or temporary certificate

of occupancy for the Premises (or its equivalent). For purposes of this Section

2.02, "Force

 

 

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Majeure Delays" shall mean and refer to a period of delay or delays encountered

by Landlord affecting the Work because of fire, earthquake or other acts of God;

acts of the public enemy; riot; insurrection; public unrest; governmental

regulations of the sales of materials or supplies or the transportation thereof;

strikes or boycotts; shortages of material or labor or any cause beyond the

reasonable control of Landlord, excluding the issuance of governmental permits

or approvals affecting the Work.

 

          (c) Notwithstanding any provision to the contrary contained in Section

1.01(c) or this Section 2.02, in the event the Work (as defined in Rider No. 1)

is not substantially completed by January 1, 2005, and provided Tenant is not

otherwise in default of this Lease, Tenant shall have the right to occupy the

warehouse portion of the Premises as such area is depicted on Exhibit A-1

attached hereto and incorporated herein (the "Warehouse Space"), commencing on

January 1, 2005 and ending on the Commencement Date (the "Early Occupancy

Period"). Tenant's occupancy of the Warehouse Space during the Early Occupancy

Period shall not unreasonably interfere with Landlord's completion of the Work

and such occupancy shall be at Tenant's sole risk and subject to all of the

provisions of this Lease, including, without limitation, all insurance and

indemnity requirements; provided, however, during the Early Occupancy Period,

Tenant shall pay monthly Base Rent of seventy eight cents ($0.78) for each

square foot contained in the Warehouse Space only. During the Early Occupancy

Period, Tenant's Additional Rent obligations shall be equitably adjusted to

reflect the fact that Tenant's occupancy will be limited to the Warehouse Space.

Tenant shall promptly deliver to Landlord, on or before Tenant's early occupancy

of the Warehouse Space, original certificates evidencing the existence and

amounts of such insurance required to be carried by Tenant in Article 4 for the

Warehouse Space. Early occupancy of the Warehouse Space shall not advance the

expiration date of this Lease.

 

     SECTION 2.03 HOLDING OVER.

 

     Tenant shall vacate the Premises upon the expiration or earlier termination

of this Lease. Tenant shall reimburse Landlord for and indemnify and hold

Landlord harmless against all damages, claims, losses, penalties, charges, and

expenses (including reasonable attorney's fees) incurred by Landlord resulting

from any delay by Tenant in vacating the Premises. If Tenant does not vacate the

Premises upon the expiration or earlier termination of this Lease, Tenant's

occupancy of the Premises shall be a tenancy at sufferance, subject to all of

the terms of this Lease applicable to a tenancy at sufferance, except that the

Base Rent then in effect shall be equal to one hundred fifty percent (150%) of

the Base Rent in effect immediately prior to the expiration or earlier

termination of this Lease. Nothing contained in this Section 2.03 shall be

construed as consent by Landlord to any holding over of the Premises by Tenant,

and Landlord expressly reserves the right to require Tenant to surrender

possession of the Premises to Landlord upon the expiration or earlier

termination of this Lease.

 

     SECTION 2.04 COMMON BUILDING AREAS.

 

     Tenant shall have the nonexclusive right to the use in common with other

tenants in the Building, subject to the Rules and Regulations referred to in

Section 13.15 below, the Common Building Areas appurtenant to the Premises, as

they may change from time to time.

 

 

                                     Page 12

 

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     SECTION 2.05 LANDLORD'S RIGHTS IN COMMON BUILDING AREAS.

 

     Landlord hereby reserves the right from time to time to do the following

provided it is done without unreasonable interference with Tenant's use of the

Premises:

 

          (a) To install, use, maintain, repair and replace pipes, ducts,

conduits, wires and appurtenant meters and equipment for service to other parts

of the Building above the ceiling surfaces, below the floor surfaces, within the

walls and in the central core areas, and to relocate any pipes, ducts, conduits,

wires and appurtenant meters and equipment included in the Premises which are

located in the Premises or located elsewhere outside the Premises, and to expand

the Building. For any work to be performed in the Premises, Landlord shall

provide commercially reasonable prior notice to Tenant of the same;

 

          (b) To make changes to the Common Building Areas, including, without

limitation, changes in the location, size, shape and number of driveways,

parking spaces, entrances, loading and unloading areas, ingress, egress,

direction of traffic, landscaped areas, and walkways and the parking facilities

for the Building;

 

          (c) To close temporarily any of the Common Building Areas for

maintenance purposes or to prevent prescriptive easements so long as access to

the Premises remains available;

 

          (d) To designate other land outside the boundaries of the Building

and/or the Hughes Airport Center to be a part of the Common Building Areas;

 

          (e) To add additional buildings and improvements to the Common

Building Areas, including, without limitation, the construction of buildings,

parking structures or surface parking areas;

 

          (f) To use the Common Building Areas while engaged in making

additional improvements, repairs or alterations to the Building or to the Hughes

Airport Center, or any portion thereof provided, however, that such use of the

Common Building Areas shall be reasonable, including without limitation, the

duration and extent of such use; and

 

          (g) To do and perform such other acts and make such other changes in,

to or with respect to the Common Building Areas and the Building as Landlord

may, in the exercise of sound business judgment, deem to be appropriate.

 

                                     ARTICLE 3

                                    BASE RENT

 

     SECTION 3.01 TIME AND MANNER OF PAYMENT.

 

     Base Rent is due on or before the first (1st) day of each month without

offset, deduction or prior demand. The Base Rent shall be abated for the first

six (6) full months of the Lease Term. Upon execution of this Lease, Tenant

shall pay Landlord the Base Rent in the amount stated in Section 1.02 above for

the seventh (7th) full month of the Lease Term. The Base Rent for the first

month of the Lease Term shall be prorated on the basis of the actual number of

days in such month, if such month is a fractional month, and the Lease Term

shall nevertheless commence on the Commencement Date and continue until sixty

(60) months

 

 

                                      Page 13

 

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after the first day of the first full month following the Commencement Date. If

such month is a fractional month, the Base Rent for such fractional month shall

be due and payable on the Commencement Date. Thereafter, on the first day of the

eighth (8th) month of the Lease Term (or, if the first full month of the Lease

Term is the second month, then the ninth (9th) month of the Lease Term) and each

month thereafter, Tenant shall pay Landlord the Base Rent, in advance, without

offset, deduction or prior demand. The Base Rent shall be payable at such of

Landlord's Addresses as may be designated by Landlord in writing or at such

other place as Landlord may designate in writing. It is understood and agreed by

Tenant that Landlord's acceptance of any payment for sums due under this Lease

which payment represents less than all sums due and owing from Tenant to

Landlord shall, in addition to reserving any and all of Landlord's rights under

this Lease, be credited to Tenant's account in the order and manner deemed

appropriate solely at the discretion of Landlord.

 

     SECTION 3.02 BASE RENT INCREASES.

 

     The Base Rent shall be increased on the first day of the thirteenth (13th)

month of the Lease Term and on each annual anniversary thereof during the Lease

Term (the "Adjustment Month") by an amount equal to three percent (3%) of the

Base Rent in effect immediately prior to a respective Adjustment Month. Landlord

shall notify Tenant of each increase by delivering a written statement setting

forth the new amount of the Base Rent. Tenant shall pay the new Base Rent from

its effective date until the next periodic increase.

 

                                    ARTICLE 4

                         OTHER CHARGES PAYABLE BY TENANT

 

     SECTION 4.01 ADDITIONAL RENT.

 

     All charges payable by Tenant hereunder other than Base Rent are called

"Additional Rent." Unless this Lease provides otherwise, all Additional Rent

shall be paid with the next monthly installment of Base Rent and under the same

terms and conditions as the Base Rent. Notwithstanding that the Base Rent shall

be abated for the first six (6) full months of the Lease Term, there shall be no

abatement of Additional Rent whatsoever. The term "Rent" shall mean Base Rent

and Additional Rent. Tenant shall pay Landlord all Rent without offset,

deduction or prior demand.

 

     SECTION 4.02 OPERATING COSTS.

 

          (a) During the Lease Term, Tenant shall pay as Additional Rent

Tenant's Share of the Operating Costs. The inclusion of the improvements,

facilities and services described in the definition of Operating Costs set forth

in Section 1.01(n) above, shall not be deemed to impose an obligation upon

Landlord to make available said improvements or facilities or to provide any of

said services unless Landlord has agreed elsewhere in this Lease to provide the

specific improvement, facility or service.

 

          (b) Tenant shall pay Tenant's Share of Operating Costs, in advance, in

monthly installments with the Base Rent based on Landlord's good faith estimate

of the Operating Costs. Landlord may adjust such estimates from time to time as

Landlord determines, which adjustment will be effective as of the next payment

date for Base Rent after notice of such adjustment to Tenant. After the end of

each calendar year, Landlord shall deliver to Tenant a statement, in reasonable

detail, of the Operating Costs as finally determined by Landlord for the

preceding calendar year and Tenant's Share of such Operating Costs. Upon

 

 

                                      Page 14

 

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Tenant's receipt of such statement, there shall be an adjustment between

Landlord and Tenant, with payment to Landlord within thirty (30) days of

Tenant's receipt of such statement or credit given to Tenant, as the case may

be, to reflect the finally determined Operating Costs. Landlord's failure to

provide such statement(s) shall in no way excuse Tenant from its obligation to

pay Additional Rent and shall not constitute a waiver of Landlord's right to

bill and collect such Additional Rent from Tenant in accordance with the terms

of the Lease.

 

          (c) Landlord shall have the right, from time to time, to equitably

allocate some or all of the Operating Costs for the Building among different

portions or occupants of the Building (the "Cost Pools"), in Landlord's

discretion. Such Cost Pools may include, but shall not be limited to, the office

space tenants of the Building as a whole, and the industrial space tenants of

the Building as a whole. The Operating Costs within each such Cost Pool shall be

allocated and charged to the tenants within such Cost Pool in an equitable

manner.

 

          (d) In the event of any dispute as to the amount of Tenant's Share of

Operating Costs as set forth in the Operating Costs statement, Tenant shall have

the right, once, and only once, a year after no less than thirty (30) days prior

written notice and at reasonable times, to inspect and photocopy Landlord's

Operating Costs records for the previous calendar year only at Landlord's Office

Address specified in Section 1.01(h). If, after such inspection and photocopy,

Tenant continues to dispute the amount of Tenant's Share of Operating Costs as

set forth in the Operating Costs statement, Tenant shall be entitled to retain

an independent, certified public accountant to audit Landlord's Operating Costs

records for the previous calendar year only to determine the proper amount of

Tenant's Share of Operating Costs. Landlord shall be entitled to review the

results of such audit promptly after completion of same. If such audit proves

that Landlord has overcharged Tenant, then within fifteen (15) days after the

results of the audit are made available to Landlord, Landlord shall credit

Tenant the amount of such overcharge toward the payments of Base Rent and

Additional Rent next coming due under this Lease. If such audit proves that

Landlord has undercharged Tenant, then within fifteen (15) days after the

results of the audit are made available to Tenant, Tenant shall pay to Landlord

the amount of any such undercharge. Tenant agrees to pay the cost of such audit,

provided that Landlord shall reimburse Tenant the amount of such cost if the

audit proves that Landlord's determination of Tenant's Share of Operating Costs

(as set forth in the Operating Costs statement) was in error by more than six

percent (6%). Landlord shall be required to maintain records of all Operating

Costs for three (3) years following the issuance of the Operating Costs

statement for such Operating Costs. The payment by Tenant of any amounts

pursuant to this Section shall not preclude Tenant from questioning the

correctness of any Operating Costs statement.

 

     SECTION 4.03 PERSONAL PROPERTY TAXES.

 

          (a) Tenant shall pay all taxes charged against trade fixtures, utility

installations, furnishings, equipment or any other personal property belonging

to Tenant. Tenant shall use its best efforts to have its personal property taxed

separately from the Premises.

 

          (b) If any of Tenant's personal property is taxed with the Premises,

Tenant shall pay Landlord the taxes for the personal property within fifteen

(15) days after Tenant receives a written statement from Landlord for such

personal property taxes.

 

 

                                     Page 15

 

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      SECTION 4.04 UTILITIES.

 

          (a) The parties acknowledge that this Lease is intended to be a fully

net lease and that, except as expressly provided in this Lease, Tenant shall be

responsible for all non-capital repairs required to the Premises and for the

provision of all utilities at the Premises, including but not limited to water,

sewage, trash removal, waste disposal, janitorial, electricity, telephone,

security, and cleaning of the Premises, together with any taxes thereon. The

costs of installing or otherwise bringing any meters or utilities to the

Premises shall constitute a cost of Work pursuant to Rider No. 1, or if no Rider

No. 1 is attached to this Lease, then such costs shall be paid directly by

Tenant. Tenant shall contract with and pay, directly to the appropriate

supplier, the cost of all utilities and services supplied to the Premises. All

such contracts and suppliers will be subject to Landlord's prior, reasonable

approval. If any such utilities or services are not able to be separately

metered or separately billed to the Premises, Tenant shall pay to Landlord a

reasonable proportion to be determined by Landlord of all such charges jointly

metered or billed with other premises in the Building to Landlord, together with

a reasonable administrative fee not to exceed ten percent (10%) of such jointly

metered or billed charges, immediately upon receipt of Landlord's bill therefor.

Notwithstanding the foregoing, Landlord may elect from time to time and at any

time during the term of this Lease to contract directly with any supplier of

utilities or services to the Premises and to bill Tenant for such costs, which

bill may include a reasonable administrative fee to Landlord not to exceed ten

percent (10%) of such costs.

 

          (b) Landlord has advised Tenant that presently Nevada Power Company

(the "Electric Service Provider") is the utility company selected by Landlord to

provide electric service for the Building. Notwithstanding the foregoing, if

permitted by law, Landlord shall have the right at any time and from time to

time during the term of the Lease to either contract for service from a

different company or companies providing electric service (each such company

shall hereafter be referred to as "Alternate Service Provider") or to continue

to contract for service from the Electric Service Provider. Tenant shall

cooperate with Landlord, the Electric Service Provider, and any Alternate

Service Provider at all times and, as reasonably necessary, shall allow

Landlord, the Electric Service Provider, and any Alternate Service Provider

reasonable access to the electric feeder lines, risers, wiring and any other

machinery within the Premises.

 

     Should Landlord elect to supply the electricity used or consumed in the

Premises, Tenant agrees to purchase and pay for the same as Additional Rent at

the applicable rates filed by Landlord with the proper regulatory authority.

Landlord shall in no way be liable or responsible for any loss, damage, or

expense that Tenant may sustain or incur by reason of any change, failure,

interference, disruption, or defect in the supply or character of the electric

energy furnished to the Premises or if the quantity or character of the electric

energy supplied by the Electric Service Provider or any Alternative Service

Provider is no longer available or suitable for Tenant's requirements unless due

to the gross negligence or intentional acts of Landlord, its servants, agents or

employees. Notwithstanding any provision to the contrary contained herein, in

any event, no such change, failure, defect, unavailability, or unsuitability

shall constitute eviction, in whole or in part, or entitle Tenant to any

abatement or diminution of Rent, or relieve Tenant from any of its obligations

under this Lease.

 

     SECTION 4.05 INSURANCE.

 

          (a) Landlord shall maintain property insurance on the Building Shell

and appurtenant structures in an amount equal to one hundred percent (100%) of

the full value thereof. The cost of such insurance shall be included within the

definition of Operating Costs hereunder. Payments for losses

 

 

                                     Page 16

 

<PAGE>

 

thereunder shall be made solely to Landlord or the Mortgagees as their

respective interests shall appear. In addition, Tenant shall obtain and keep in

force at all times during the Lease Term, a policy or policies of insurance

covering loss or damage to all of the improvements, betterments, personal

property, utility installations, trade fixtures, furnishings, income and

business contents located within the Premises other than the Building Shell

(including all Work constructed in accordance with Rider No. 1) in the amount of

one hundred percent (100%) of the full replacement value thereof as reasonably

ascertained by the Tenant's insurance carrier against risks of direct physical

loss or damage, normally covered in an "all risk" policy (including the perils

of flood and surface waters), as such term is used in the insurance industry;

provided, however, that Tenant shall have no obligation to insure against

earthquake. As used in this Lease, the term "Building Shell" means the Building

completed with the following improvements: (a) roof, foundation and exterior

walls and interior load bearing walls (not including drywall); (b) unfinished

floors throughout the Premises, broom clean; (c) building standard power and

lighting power provided to the Building at a point to be determined by Landlord

in its sole discretion; (d) core walls to the extent called for in Landlord's

final plans and specifications for the construction of the Building; and (e)

mechanical, plumbing, life safety, and HVAC systems provided to the Building at

a point to be determined by Landlord in its sole discretion. The proceeds of

such insurance shall be used for the repair or replacement of the property so

insured. Upon termination of this Lease following a casualty as set forth

herein, if the Premises have also been damaged, and if Landlord terminates this

Lease, Tenant will promptly pay to Landlord all of its insurance proceeds, if

any, relating to any and all Work constructed pursuant to Rider No. 1 to this

Lease and any alterations made thereto (but not to Tenant's trade fixtures,

equipment, furniture or other personal property of Tenant) in the Premises.

 

          (b) Tenant shall, at Tenant's expense, maintain a policy of Commercial

General Liability insurance insuring Tenant and as additional insureds, Landlord

and any Mortgagees, against liability arising out of the ownership, use,

occupancy or maintenance of the Premises. Such insurance shall be on an

occurrence basis providing single-limit coverage in an amount not less than Two

Million Dollars ($2,000,000) per occurrence. The initial amount of such

insurance shall be subject to periodic increase upon reasonable demand by

Landlord based upon inflation, increased liability awards, recommendation of

professional insurance advisers, and other relevant factors. However, the limits

of such insurance shall not limit Tenant's liability nor relieve Tenant of any

obligation hereunder. Such policy shall contain the following provision: "Such

insurance as afforded by this policy for the benefit of Landlord shall be

primary as respects any claims, losses or liabilities arising out of the use of

the Premises by the Tenant or by Tenant's operation and any insurance carried by

the Landlord shall be excess and noncontributing." The policy shall insure

Tenant's performance of the indemnity provisions of Section 5.05.

 

          (c) Tenant shall, from time to time, at Tenant's sole expense, obtain

and maintain other types of insurance as Mortgagees of Landlord may reasonably

require in form, in amounts and for insurance risks against which a prudent

tenant would protect itself.

 

          (d) Insurance required to be maintained by Tenant hereunder shall be

in companies holding a "General Policyholders' Rating" of "A" or better and a

"financial rating" of 10 or better, as set forth in the most current issue of

"Best's Insurance Guide," or such comparable ratings as Landlord shall approve,

in its sole discretion. Tenant shall promptly deliver to Landlord, on or before

the Commencement Date, original certificates evidencing the existence and

amounts of such insurance required to be carried by Tenant in this Article 4. No

such policy shall be cancelable or subject to reduction of coverage except after

thirty (30) days prior written notice to Landlord. Tenant shall, within thirty

(30) days prior to the expiration,

 

 

                                     Page 17

 

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cancellation or reduction of such policies, furnish Landlord with renewals or

"binders" thereof. Tenant shall not do or permit to be done anything which shall

invalidate the insurance policies required under this Lease.

 

     SECTION 4.06 WAIVER OF SUBROGATION.

 

     Tenant and/or Landlord shall obtain from the issuers of the "all risk"

insurance policies referred to in this Article Four a mutual waiver of

subrogation provision in said policies and Tenant and Landlord each hereby

release and relieve the other, and waive any and all rights of recovery against

the other, or against the employees, officers, agents and representatives of the

other, for loss or damage arising out of or incident to the perils required to

be insured against under this Article 4 which perils occur in, on or about the

Premises, whether due to the negligence of Landlord or Tenant or their agents,

employees, contractors or invitees.

 

     SECTION 4.07 LATE CHARGES.

 

     Tenant acknowledges that Tenant's failure to pay Base Rent or Additional

Rent promptly may cause Landlord to incur unanticipated costs. The exact amount

of such costs are impractical or extremely difficult to ascertain. Such costs

may include, but are not limited to, processing and accounting charges and late

charges which may be imposed on Landlord by any ground lease, mortgage or trust

deed encumbering the Premises. Therefore, if Landlord does not receive any Rent

payment within ten (10) days after it becomes due, Tenant shall pay Landlord a

late charge equal to ten percent (10%) of the overdue amount. The parties agree

that such late charge represents a fair and reasonable estimate of the costs

Landlord will incur by reason of such late payment. In the event that a late

charge is payable hereunder, whether or not collected, for three (3) consecutive

installments of Rent, the Rent shall automatically become due and payable

quarterly in advance, rather than monthly, notwithstanding Section 3.01 above.

 

     SECTION 4.08 INTEREST ON PAST DUE OBLIGATIONS.

 

     Any amount owed by Tenant to Landlord which is not paid when due shall bear

interest at the rate of (i) fifteen percent (15%) per annum, or (ii) the Prime

Rate plus five (5) percentage points per annum, whichever is greater, from the

due date of such amount. However, interest shall not be payable on late charges

to be paid by Tenant under this Lease. The payment of interest on such amounts

shall not excuse or cure any default by Tenant under this Lease. If the interest

rate specified in this Lease is higher than the rate permitted by law, the

interest rate is hereby decreased to the maximum legal interest rate permitted

by law.

 

     SECTION 4.09 RETURN OF CHECK.

 

     If Base Rent or Additional Rent is paid by check and the check is returned

to Landlord for any reason whatsoever without payment, Tenant shall be assessed

a late charge and interest on past due amount pursuant to Sections 4.07 and 4.08

as well as a Twenty-Five Dollar ($25) fee. If payment is returned for

insufficient funds, Landlord has the right to demand that such payment be in the

form of a cashiers or certified check. If Tenant has two (2) or more

insufficient funds payments in a twelve (12) month period, Tenant shall, at

Landlord's option, make all subsequent payments in the form of a cashiers or

certified check.

 

 

                                      Page 18

 

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     SECTION 4.10 SECURITY DEPOSIT; INCREASES.

 

     Upon the execution of this Lease, Tenant shall deposit with Landlord a cash

security deposit (the "Security Deposit") in the amount of the Initial Security

Deposit set forth in Section 1.01(f) above. In no event may Tenant apply the

Security Deposit to pay any Rent due under this Lease. Landlord may apply all or

part of the Security Deposit to any unpaid Rent or other charges due from Tenant

or to cure any other defaults of Tenant. If Landlord uses any part of the

Security Deposit, Tenant shall restore the Security Deposit to its full amount

within ten (10) business days after Landlord's written request. Tenant's failure

to do so shall be a material default under this Lease. If Tenant is in default

under the Lease more than two (2) times in any twelve (12) month period,

irrespective of whether or not such default is cured, without limiting

Landlord's other rights and remedies provided for in the Lease or at law or in

equity, the Security Deposit shall automatically be increased by an amount equal

to the greater of: (i) three (3) times the Security Deposit (adjusted as

provided in this Section); or (ii) three (3) months of the then current Base

Rent, which shall be paid to Landlord forthwith on demand. The increase in the

Security Deposit shall be paid to Landlord forthwith on demand. Tenant's failure

to do so shall be a material default under this Lease. No interest shall be paid

on the Security Deposit. Landlord shall not be required to keep the Security

Deposit separate from its other accounts and no trust relationship is created

with respect to the Security Deposit. Each time the Base Rent is increased,

Tenant shall if requested by Landlord, on or before the date that the first

increased Base Rent payment is due, deposit additional funds with Landlord

sufficient to increase the Security Deposit to an amount which bears the same

relationship to the adjusted Base Rent as the Initial Security Deposit bore to

the initial Base Rent. Notwithstanding anything in the Lease to the contrary, no

purchaser of Landlord's interest in the Building or holder of any mortgage, deed

of trust, ground lease or other lien on the Building shall be liable for the

return of any Security Deposit unless and until such Security Deposit is

actually transferred by Landlord to such party.

 

     SECTION 4.11 TERMINATION; ADVANCE PAYMENTS.

 

     Upon expiration of this Lease or other termination of this Lease, and after

Tenant has vacated the Premises in the manner required by this Lease, an

equitable adjustment shall be made concerning advance rent and other advance

payments made by Tenant to Landlord, and Landlord shall, within sixty (60) days,

refund any unused portion of the Security Deposit to Tenant, or, at Landlord's

option, to Tenant's assignee or sublessee.

 

                                    ARTICLE 5

                                 USE OF PROPERTY

 

     SECTION 5.01 PERMITTED USES.

 

     Tenant may use the Premises only for the Permitted Uses set forth in

Section 1.01(o) above.

 

     SECTION 5.02 MANNER OF USE

 

     Tenant shall not cause or permit the Premises to be used in any way (i)

which constitutes (or would constitute) a violation of any Laws, occupancy

certificate, the requirements of any board of fire underwriters or similar body,

as any of the same now or in the future may exist, or (ii) which annoys or

interferes with the rights of tenants or users of the Building, or (iii) which

constitutes a nuisance or waste, or (iv) which is

 

 

                                      Page 19

 

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prohibited by the Declaration. Tenant, at its sole cost and expense, shall

comply with all Laws now in force or which may hereafter be in force regulating

the use, occupancy or alterations by Tenant of the Premises. Landlord makes no

representation or warranty as to the suitability of the Premises for Tenant's

intended use or whether such use complies with all such Laws.

 

     SECTION 5.03 HAZARDOUS SUBSTANCES.

 

          (A)   REPORTABLE USES REQUIRE CONSENT.

 

           The term "Hazardous Substance" as used in this Lease shall mean any

product, substance, chemical, material or waste whose presence, nature, quantity

and/or intensity of existence, use, manufacture, disposal, transportation,

spill, release or effect, either by itself or in combination with other

materials expected to be on the Premises, is either: (i) potentially injurious

to the public health, safety or welfare, the environment, or the Premises; (ii)

regulated or monitored by any governmental authority; or (iii) a basis for

potential liability of Landlord to any governmental agency or third party under

any applicable statute or common law theory. Hazardous Substance shall include,

but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any

products or by-products thereof. Tenant shall not engage in any activity in or

about the Premises which constitutes a Reportable Use (as hereinafter defined)

of Hazardous Substances without the express prior written consent of Landlord

and compliance in a timely manner (at Tenant's sole cost and expense) with all

Applicable Requirements (as defined in Section 5.03(d)). "Reportable Use" shall

mean (i) the installation or use of any above or below ground storage tank, (ii)

the generation, possession, storage, use, transportation, or disposal of a

Hazardous Substance that requires a permit from, or with respect to which a

report, notice, registration or business plan is required to be filed with, any

governmental authority, and (iii) the presence in, on or about the Premises of a

Hazardous Substance with respect to which any Applicable Requirements require

that a notice be given to persons entering or occupying the Premises or

neighboring properties. In addition, Landlord may (but without any obligation to

do so) condition its consent to any Reportable Use of any Hazardous Substance by

Tenant upon Tenant's giving Landlord such additional assurances as Landlord, in

its reasonable discretion, deems necessary to protect itself, the public, the

Premises and the environment against damage, contamination or injury and/or

liability therefor, including but not limited to the installation (and, at

Landlord's option, removal on or before Lease expiration or earlier termination)

of reasonably necessary protective modifications to the Premises (such as

concrete encasements) and/or the deposit of an additional Security Deposit.

 

          (B) DUTY TO INFORM LANDLORD.

 

     Tenant shall obtain Landlord's written consent, which consent shall be

granted or withheld in Landlord's sole discretion, to the manufacturing,

processing, distribution, using, producing, treating, storing (above or below

ground level), disposing of, or allowing to be present, of any other Hazardous

Substance in or about the Premises except for those previously approved in

writing by Landlord. In connection with each such consent requested by Tenant,

Tenant shall submit to Landlord a description, including the composition,

quantity and all other information requested by Landlord concerning the proposed

presence of any Hazardous Substance. Landlord's consent to the presence of any

Hazardous Substance may be deemed given only by inclusion of a description of

the composition and quantity of the proposed Hazardous Substance on Landlord's

written consent to the request. Landlord's consent to the presence of any

Hazardous Substance at any time during the Lease Term or renewal thereof shall

not waive the requirement of obtaining Landlord's consent to the subsequent

presence of any other, or increased quantities of, any Hazardous Substance in or

 

 

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about the Premises. If Tenant knows, or has reasonable cause to believe, that a

Hazardous Substance has come to be located in, on, under or about the Premises

or the Building, other than as previously consented to by Landlord, Tenant shall

immediately give Landlord written notice thereof, together with a copy of any

statement, report, notice, registration, application, permit, business plan,

license, claim, action, or proceeding given to, or received from, any

governmental authority or private party concerning the presence, spill, release,

discharge of, or exposure to, such Hazardous Substance including but not limited

to all such documents as may be involved in any Reportable Use involving the

Premises. Tenant shall not cause or permit any Hazardous Substance to be spilled

or released in, on, under or about the Premises (including, without limitation,

through the plumbing or sanitary sewer system).

 

     If any Hazardous Substance is present in or about the Premises, Landlord

shall have the right upon reasonable notice to Tenant to engage a consultant to

inspect the Premises and to review Tenant's use of Hazardous Substances and all

of Tenant's practices with respect to such Hazardous Substances. Tenant shall

cooperate in all respects with such inspections and reviews. All costs of such

consultants shall be reimbursed to Landlord within fifteen (15) days of written

demand by Landlord.

 

          (C) INDEMNIFICATION.

 

     Tenant shall indemnify, protect, defend and hold Landlord, its agents,

employees, lenders and ground lessor, if any, and the Premises, harmless from

and against any and all damages, liabilities, judgments, costs, claims, liens,

expenses, penalties, loss of permits and attorneys' and consultants' fees

arising out of or involving any Hazardous Substance brought onto the Premises by

or for Tenant or by anyone under Tenant's control. Tenant's obligations under

this Section 5.03 (c) shall include, but not be limited to, the effects of any

contamination or injury to person, property or the environment created or

suffered by Tenant, and the cost of investigation (including consultants' and

attorneys' fees and testing), removal, remediation, restoration and/or abatement

thereof, or of any contamination therein involved, and shall survive the

expiration or earlier termination of this Lease. No termination, cancellation or

release agreement entered into by Landlord and Tenant shall release Tenant from

its obligations under this Lease with respect to Hazardous Substances, unless

specifically so agreed by Landlord in writing at the time of such agreement.

Tenant's indemnity obligations provided in this Section 5.03(c) shall include,

without in any way limiting the foregoing:

 

      (i) All costs, expenses and attorneys' fees incurred or sustained by any

     party in making any investigation on account of any claim, demand, loss,

     liability, cost, charge, suit, order, judgment or adjudication, in

     prosecuting or defending any action brought in connection therewith, in

     obtaining or seeking to obtain a release therefrom and in enforcing any of

     the agreements herein contained;

 

     (ii) Liability for clean-up costs, fines, damages or penalties incurred

     pursuant to the provisions of any Applicable Requirements;

 

     (iii) Liability for costs and expenses of abatement, correction or

     clean-up, fines, damages, response costs or penalties which arise from the

     provisions of any Applicable Requirements; and

 

     (iv) Liability for personal injury or Premises damage arising under any

     statutory or common-law tort theory, including, without limitation, damages

     assessed for the maintenance of a public or private nuisance, or for the

     carrying on of an abnormally dangerous activity, and response costs.

 

 

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          (D) TENANT'S COMPLIANCE WITH REQUIREMENTS.

 

          Tenant shall, at Tenant's sole cost and expense, fully, diligently and

in a timely manner, comply with all "Applicable Requirements," which term is

used in this Lease to mean all laws, rules, regulations, ordinances, directives,

covenants, easements and restrictions of record, permits, the requirements of

any applicable fire insurance underwriter or rating bureau, and the

recommendations of Landlord's engineers and/or consultants, relating in any

manner to the Premises (including but not limited to matters pertaining to (i)

industrial hygiene, (ii) environmental conditions on, in, under or about the

Premises, including soil and groundwater conditions, and (iii) the use,

generation, manufacture, production, installation, maintenance, removal,

transportation, storage, spill, or release of any Hazardous Substance), now in

effect or which may hereafter come into effect. Tenant shall, within ten (10)

business days after receipt of Landlord's written request, provide Landlord with

copies of all documents and information, including but not limited to permits,

registrations, manifests, applications, reports and certificates, evidencing

Tenant's compliance with any Applicable Requirements specified by Landlord, and

shall within one (1) business day following receipt, notify Landlord in writing

(with copies of any documents involved) of any threatened or actual claim,

notice, citation, warning, complaint or report pertaining to or involving

failure by Tenant or the Premises to comply with any Applicable Requirements.

Upon written request by Landlord, and within twenty (20) business days of

receipt of such request, Tenant shall provide Landlord annually on each

anniversary date of the Commencement Date a written certification, certifying

that:

 

     (i) Tenant's business has been conducted in full compliance with the

     Applicable Requirements;

 

      (ii) All Hazardous Substances (if any) related to Tenant's business have

     been disclosed to Landlord or in said certificate;

 

     (iii) The method and frequency of off-site disposal of Hazardous Substances

     from the Premises, as described in the certificate, comply with the

     Applicable Requirements.

 

          (E) INSPECTION; COMPLIANCE WITH LAW.

 

          Landlord, Landlord's agents, employees, contractors and designated

representatives, and any Mortgagees, shall have the right to enter the Premises

at any time in the case of an emergency, and otherwise, with prior notice to

Tenant, at reasonable times, for the purpose of inspecting the condition of the

Premises and for verifying compliance by Tenant with this Lease and all

Applicable Requirements, and Landlord shall be entitled to employ experts and/or

consultants in connection therewith to advise Landlord with respect to Tenant's

activities, including but not limited to Tenant's installation, operation, use,

monitoring, maintenance, or removal of any Hazardous Substance on or from the

Premises. The costs and expenses of any such inspections shall be paid by the

party requesting same, unless a default of this Lease by Tenant or a violation

of Applicable Requirements or a contamination, caused or contributed to by

Tenant, is found to exist or to be imminent, or unless the inspection is

requested or ordered by a governmental authority as the result of any such

existing or imminent violation or contamination. In such case, Tenant shall upon

request reimburse Landlord or Landlord's Mortgagee, as the case may be, for the

costs and expenses of such inspections.

 

 

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     SECTION 5.04 SIGNS AND AUCTIONS.

 

     Tenant shall not place any signs on the Premises without Landlord's prior

written consent. At Tenant's sole cost, Tenant shall have the right to signage

on Tenant's suite entrance door and on the Building above Tenant's entrance door

subject to Landlord's prior written approval of such signage which may be

withheld in Landlord's sole discretion. Tenant shall not conduct or permit any

auctions or sheriff's sales at the Premises.

 

     SECTION 5.05 INDEMNITY.

 

     Tenant shall indemnify and hold harmless Landlord and all agents, servants

and employees of Landlord from and against all claims, losses, damages,

liabilities, expenses (including reasonable attorneys' fees), penalties and

charges (collectively, "Claims") arising from or in connection with (i) Tenant's

use of the Premises during the Lease Term, or (ii) the conduct of Tenant's

business, or (iii) any activity, work or things done, permitted or suffered by

Tenant in or about the Premises during the Lease Term. Tenant shall further

indemnify and hold harmless Landlord from and against any and all claims, loss,

damage, liability, expense (including reasonable attorneys' fees), penalty or

charge arising from any default in the performance of any obligation on Tenant's

part to be performed under the terms of this Lease, or arising from any

negligence of Tenant, or any of Tenant's agents, contractors, or employees, and

from and against all costs, attorneys' fees, expenses and liabilities incurred

in the defense of any such claim or any action or proceeding brought thereon. If

any action or proceeding be brought against Landlord by reason of any such

claim, Tenant, upon notice from Landlord, shall defend the same at Tenant's

expense by legal counsel reasonably satisfactory to Landlord. Tenant, as a

material part of its consideration to Landlord, hereby assumes all risk of

damage to property or injury to persons in or upon the Premises arising from any

cause and Tenant hereby waives all claims in respect thereof against Landlord.

Notwithstanding the foregoing, Tenant shall not be required to assume the risk

with respect to or defend, save harmless or indemnify Landlord from any Claims

resulting from the gross negligence or willful misconduct of Landlord or its

agents, contractors or employees, and Landlord hereby so defends, indemnifies

and holds Tenant harmless from any such Claims. In addition, because Landlord is

required to maintain insurance on the Building Shell and Tenant compensates

Landlord for such insurance as part of Operating Costs and because of the

existence of waivers of subrogation set forth in Section 4.06 of this Lease,

Landlord hereby indemnifies and holds Tenant harmless from any Claims to any

property or injury to persons outside of the Premises to the extent such Claim

is, or if Landlord has failed to properly maintain such insurance, should have

been, covered by such insurance, even if resulting from the negligent acts or

omissions of Tenant or those of its agents, contractors or employees.

Notwithstanding the foregoing, Landlord shall not be required to defend, save

harmless or indemnify Tenant from any liability for injury, loss, accident or

damage to any person or property resulting from Tenant's gross negligence or

willful misconduct, or those of Tenant's officers, agents, contractors or

employees. Similarly, since Tenant must carry insurance pursuant to Section

4.05(a) to cover its personal property and any tenant improvements within the

Premises, Tenant hereby indemnifies and holds Landlord harmless from any Claim

to any property within the Premises to the extent such Claim is, or if Tenant

has failed to properly maintain such insurance, should have been, covered by

such insurance, even if resulting from the negligent acts or omissions (but, not

the gross negligence or willful misconduct) of Landlord or those of its agents,

contractors or employees. The provisions of this Section 5.05 shall survive the

expiration or sooner termination of this Lease with respect to any Claims

occurring prior to such expiration or termination. The foregoing indemnity

requirements are not intended to nor shall they relieve any insurance carrier of

 

 

                                     Page 23

 

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its obligations under policies required to be carried pursuant to the provisions

of this Lease to the extent that such policies cover the results of negligent

acts or omissions of Landlord or Tenant or their officers, agents, contractors

or employees, or the failure of either party to perform any of its obligations

under this Lease.

 

     SECTION 5.06 LANDLORD'S ACCESS.

 

          Landlord or its agents, employees or contractors may enter the

Premises during regular business hours after twenty-four (24) hours prior

written notice to Tenant (except , in the case of emergency no such notice will

be required) to examine the Premises, to show the Premises to potential buyers,

investors, tenants or other parties, for the purpose of making tests,

inspections, repairs, alterations, improvements or additions as Landlord deems

desirable or for any other purpose Landlord deems necessary. The above shall not

obligate Landlord to make any repairs except as otherwise expressly provided in

this Lease. Landlord may place customary "For Sale" or "For Lease" signs on the

Premises. The exterior walls and roof of, the floor above, and the area beneath

the Premises are not demised under this Lease and Landlord reserves the right to

use the same. Landlord may install, maintain and use pipes, utility lines,

ducts, conducts, flues, lines, wires, drains, sprinkler main and valves, access

panels and structural elements serving the Premises or other parts of the Hughes

Airport Center within or through the Premises. Landlord shall use reasonable

efforts to locate new facilities and elements above the finished ceiling, within

walls, below the floor, in Tenant's storage area and in other locations that

will minimize to the extent practicable the disruption of Tenant's business.

Landlord may change, add to or subtract from the Common Areas or any building in

the Hughes Airport Center, construct other buildings and improvements, use

portions of the Common Areas for promotions, exhibits, shows, the placement of

carts and kiosks or such other uses as Landlord deems appropriate, and do such

other acts to the Common Building Areas as Landlord believes reasonably

necessary. In exercising the rights reserved in this Section, Landlord shall use

reasonable efforts to minimize disruption of Tenant's business.

 

     SECTION 5.07 INTENTIONALLY OMITTED.

 

                                    ARTICLE 6

           CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS

 

     SECTION 6.01 EXISTING CONDITIONS.

 

     Except as may be set forth in Rider No. 1, Tenant accepts the Premises in

its condition "AS IS" as of the date of execution of this Lease, subject to all

recorded matters and Laws. Tenant acknowledges that neither Landlord nor any

employee or agent of Landlord has made any representation as to the condition of

the Premises or the suitability of the Premises for Tenant's intended use.

 

     SECTION 6.02 EXEMPTION OF LANDLORD FROM LIABILITY.

 

     Landlord, its officers, managers, directors, shareholders, members, agents,

servants and employees shall not be liable for and Tenant shall indemnify and

hold Landlord and its officers, managers, directors, shareholders, members,

agents, servants and employees harmless from and against all claims, losses,

damages, expenses, penalties and charges arising from or in connection with any

damage or injury to the person, business (or any loss of income therefrom),

goods, wares, merchandise or other property of Tenant,

 

 

                                     Page 24

 

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Tenant's employees, invitees, customers, or any other person in or about the

Premises, or any other person claiming under Tenant whether such damage or

injury is caused by or results from: (a) fire, steam, electricity, water, gas or

rain; (b) the breakage, leakage, obstruction or other defects of pipes,

sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures

or any other cause; (c) the failure, delay or diminution in the quality or

quantity of any utilities or services supplied to the Premises or the Building,

(d) inconvenience or annoyance arising from the necessity of repairing any

portion of the Building or the Premises; (e) the interruption for any reason in

the use of the Premises; (f) the termination of this Lease by reason of the

destruction of the Premises; or (g) any conditions arising in or about the

Premises, or from other sources or places, nor shall any of the same be

construed as an eviction of Tenant, nor, unless otherwise permitted under this

Lease, work an abatement of Rent, nor relieve Tenant from any obligation under

this Lease. Without limiting the foregoing, Landlord, its officers, managers,

directors, shareholders, members, agents, servants and employees shall not be

liable for and Tenant shall indemnify and hold Landlord and its officers,

managers, directors, shareholders, members, agents, servants and employees

harmless from and against all claims, losses, damages, expenses, penalties and

charges arising from or in connection with the following: (i) any defect or

shortcoming in or failure of plumbing, heating or air conditioning or

ventilation systems, elevators, electric wiring or installation thereof, water

pipes, stairs, railings or walks; (ii) any equipment or appurtenances becoming

out of repair; (iii) the bursting, leaking or running of any tubing, radiant

panel, fire sprinkler system, electric fixture, valve, fitting, tank, washstand,

water closet, waste pipe, drain or other pipe or tank or any other water and/or

moisture related release and/or condition and all consequences and/or conditions

relating from same, upon or about the Premises or the Building; (iv) the backing

up of any sewer pipe or downspout; (v) the escape of steam, hot or cold water;

(vi) water, snow or ice being u