LEASE AGREEMENT

 

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                                                                   Exhibit 10.10

 

                          DP OPERATING PARTNERSHIP, LP

 

 

                            STANDARD INDUSTRIAL LEASE      For Landlord Use Only:

                                   (NET-NET-NET)                  Building #:   285

                                                                       L/A:   BPE

 

Lease Preparation Date:   December 23, 1998

 

Landlord: DP Operating Partnership, L.P., a Delaware limited partnership,

located at 1200 Financial Boulevard, P. O. Box 7098, Reno, Nevada 89510

 

Tenant: Brightpoint, Inc., a Delaware corporation, with its principal business

offices located at 6402 Corporate Drive, Indianapolis, Indiana 46278.

 

Trade Name (dba):   Brightpoint, Inc.

 

1. LEASE TERMS

 

         1.01 Premises: The Premises referred to in this Lease contain

approximately 159,500 square feet as shown on Exhibit "A" attached, together

with the non-exclusive right to use the Common Areas as set forth in Section

4.02., subject to the terms and conditions of this Lease, any conditions and

restrictions, and Rules and Regulations of the Project (subject to the

provisions of Section 24.01 hereof) in effect from time to time. The address of

the Premises is: 5360 Capital Court, Reno, Nevada.

 

         1.02 Project: The Project in which the Premises are located consist of

approximately fourteen and 77/100ths (14.77) acres of land and the building in

which the Premises are located including approximately 159,500 square feet

located on such land, as shown in Exhibit "A."

 

         1.03 Tenant's Notice Address: Tenant's Notice Address is the address of

the Leased Premises as defined in Section 1.01 unless otherwise specified here:

6402 Corporate Drive, Indianapolis, IN 46278.

 

         1.04 Landlord's Notice Address: P. O. Box 7098, Reno, Nevada 89510

 

         1.05 Tenant's Permitted Use: Storage, warehousing, assembly, light

manufacturing, service and distribution of wireless communication equipment and

related products in compliance with all applicable laws, Rules and Regulations

of the Project (subject to the provisions of Section 24.01 hereof) and this

Lease.

 

         1.06 Lease Term: The Lease Term is for Five (5) years and commences

upon the later of (i) the issuance of a Temporary Certificate of Occupancy for

the Premises allowing for Tenant's

 

 

 

 

 

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functional occupancy thereof (ii) substantial completion of Landlord's Work (as

defined in Section 1.12 below) in substantial accordance with the provisions of

Exhibits "B" and "B-1" attached hereto without material interference due to

uncompleted portions of Landlord's Work or defective items (the "Lease

Commencement Date") and expires five (5) years thereafter. The Lease

Commencement Date and ending and rental adjustment dates shall be established by

Landlord and Tenant's execution of a Commencement Date Certificate, as provided

in Section 3.01 below, in the form attached hereto as Exhibit "E". Tenant shall

also have two (2) options to extend the Lease Term for additional five (5) year

periods each (the "Extension Terms," as defined in Section 41.01 below). For

purposes of the Lease the terms "Lease Term," "term of the Lease," and "term,"

shall mean and include the initial five (5) year period of this Lease, together

with the Extension Terms, to the extent exercised by Tenant pursuant to Article

41. below, and the term, "Initial Lease Term," shall mean the initial five (5)

year period of this Lease.

 

         1.07 Base Monthly Rent: Base Monthly Rent for the Initial Lease Term

shall be paid in accordance with the following schedule:

 

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

         Period                          Base Monthly Rent Amount

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

         Month 1 - 12/31/99              $44,820

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

         1/1/00 through Month 36         $49,445 plus the amortization amount as

                                        hereinafter provided

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

         Months 37-60                    $52,906

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

 

         Base Monthly Rent for the period commencing on January 1, 2000 and

ending at the end of the thirty-sixth (36th) month of the Lease Term, subject to

Tenant's prepayment right as hereinafter provided, shall include the difference

between (i) the cumulative amount of Base Monthly Rent which would have been

payable for the portion of the Initial Lease Term prior to January 1, 2000 at

the rate of Forty-nine Thousand, Four Hundred Forty-five Dollars ($49,445) per

month, and (ii) the cumulative amount of Base Monthly Rent payable under this

Lease at the rate of Forty-four Thousand, Eight Hundred Twenty Dollars ($44,820)

per month for the portion of the Initial Lease Term prior to January 1, 2000,

which amount shall be amortized at the rate of ten percent (10%) per annum

ratably on a monthly basis over such period. For example, and for such purposes

only, in the event the Lease Commencement Date was August 1, 1999, subject to

Tenant's prepayment right as hereinafter provided, the amount of Base Monthly

Rent for the period commencing on January 1, 2000 and ending at the end of the

thirty-sixth (36th) month of the Lease Term would be Eight Hundred Forty-two and

53/100ths Dollars ($842.53) ([$49,445 x 5 months] - [$44,820 x 5 months] @ 10%

per year for 31 months). Tenant shall have the right to prepay the unpaid

portion of the amortized amount determined above at any time after January 1,

2000, and in the event Tenant prepays such entire amount on or before January

31, 2000, no interest shall be required to be paid with such prepayment.

Landlord shall give Tenant notice of the amount of additional Base Monthly Rent

payable pursuant to this Section 1.07; provided, however, that the failure of

Landlord to provide such notice shall not be construed as a waiver of the

payment of such amount. In the event this

 

 

 

 

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Lease terminates prior to the end of the thirty-sixth (36th) month of the

Initial Lease Term for any reason other than a default by Landlord hereunder,

then Tenant agrees to pay to Landlord the unamortized portion of such amount

within ten (10) days after such termination.

 

         Base Monthly Rent during the Extension Terms, as applicable, shall be

determined as provided in Section 41.02 below.

 

         1.08 Security Deposit: [WAIVED])

 

         1.09 Proportionate Share: Tenant's Proportionate Share is One Hundred

percent (100%) based upon the total square footage of the building within which

the Premises are located in the Project and the square footage of the Premises.

 

         1.10 [INTENTIONALLY DELETED]

 

         1.11 Tenant is entitled to vehicle parking spaces as provided in and

subject to the provisions of Section 8. of the Lease.

 

         1.12 Tenant Improvements: Tenant Improvements to be performed in the

Premises, if any, will be performed in accordance with the terms and provisions

entitled "Landlord's Work" contained in Exhibits "A-1" and "B-1" attached.

Within fifteen (15) days of the Lease Commencement Date, representatives of

Landlord and Tenant agree to conduct a "walk through" inspection of the Premises

and reasonably agree on any remaining punchlist items to be completed after the

Lease Commencement Date. Any such remaining punchlist items shall be completed

by Landlord within a commercially reasonable period of time after the Lease

Commencement Date. Landlord represents and warrants that Landlord shall perform

Landlord's Work in a good and workmanlike fashion, in substantial conformance

with the provisions of Exhibits "B" and "B-1" attached, in compliance with all

applicable laws and regulations, and using new materials, and reasonably free of

construction defects. Upon receipt from Tenant of notice of any portion of

Landlord's Work which does not conform to the foregoing representation and

warranty within the two (2) year period commencing on the Lease Commencement

Date, Landlord agrees to promptly correct same. Tenant understands and agrees

that Tenant must provide written notice to Landlord within the two (2) year

period specified above and that the representation and warranty shall expire on

the second (2nd) anniversary of the Lease Commencement Date. Except as expressly

set forth hereinabove in this Section 1.12, nothing contained in this Lease,

including any Exhibits hereto, shall be interpreted or is intended in any way as

a representation or warranty by Landlord as to the quantity, quality, or fitness

of the Premises or Landlord's Work, including, without limitation, a fitness for

any particular purpose, each of which is expressly disclaimed by Landlord

hereunder. Thereafter during the Lease Term, except as set forth in this Section

1.12 above, Landlord will be under no obligation to alter, change, decorate or

improve the Premises.

 

2. DEMISE AND POSSESSION

 

 

 

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         2.01 Landlord leases to Tenant and Tenant leases from Landlord the

Premises described in 1.01. By entering the Premises, subject to the provisions

of Section 1.12 above, Tenant acknowledges that it has examined the Premises and

accepts the Premises in their condition delivered on the Lease Commencement

Date. Landlord expressly reserves its right to lease any other space available

in the Project to whom ever it wishes; provided, however, that Landlord shall

not lease any portion of the Project to any Person or entity which conducts junk

yard or smelting operations. Tenant hereby acknowledges that it did not rely on

any other tenant remaining a tenant in the Project as a consideration for

entering into this Lease.

 

         2.02 If for any reason Landlord cannot deliver possession of the

Premises with a Temporary Certificate of Occupancy on or before September 1,

1999, Landlord shall not be subject to any liability nor shall the validity of

this Lease be affected. However, Tenant, unless it is the cause of the delay,

has the right to cancel this Lease by written notification if possession of the

Premises is not delivered within one hundred five (105) days of the scheduled

Lease Commencement Date set forth in this Section 2.02 above. Landlord may

terminate this Lease by giving written notice to Tenant if possession of the

Premises is not delivered within one hundred five (105) days of the scheduled

Lease Commencement Date set forth in this Section 2.02 above.

 

3. BASE MONTHLY RENT

 

         3.01 Base Monthly Rent: On the first day of every calendar month of the

Lease Term commencing on the Lease Commencement Date, Tenant will pay, without

deduction or offset, prior notice or demand, Base Monthly Rent and Additional

Rent at the place designated by Landlord. In the event that the Lease Term

commences or ends on a day other than the first day of a calendar month, a

prorated amount of Base Monthly Rent and Additional Rent shall be due on the

first day of the first month following the Lease Commencement Date or the final

month of the Lease Term, as applicable, and shall be calculated using the actual

number of days in the particular a month. In the event this Lease is to commence

upon a date not ascertained on execution, both parties agree to complete and

execute a Commencement Date Certificate in the form of Exhibit "E" within ten

(10) days of the Lease Commencement Date, if applicable.

 

         3.02 [INTENTIONALLY DELETED]

 

         3.03 Any installment of rent or any other charge payable which is not

paid within ten (10) days after it becomes due will be considered past due and

Tenant will pay to Landlord as Additional Rent a late charge equal to the

product of twelve percent (12%) per annum of such installment for each month or

fractional month transpiring from the date due until paid. A twenty-five dollar

($25.00) handling charge will be paid by Tenant to Landlord for each returned

check and, thereafter, Tenant will pay all future payments of rent or other

charges due by money order or cashier's check. If Tenant shall be served with

three (3) or more demands during the term of the Lease for the payment of past

due rent, any payments tendered thereafter to cure any default by Tenant shall

be made only by cashier's check.

 

 

 

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         3.04 The amount of the Base Monthly Rent includes projected

construction of Tenant's improvements as indicated on Exhibits "A-1 and "B-1"

attached. In the event that Tenant requests Landlord to construct additional

improvements, such costs or expenses upon itemized notice by Landlord, shall be

paid by Tenant to Landlord.

 

4.   COMMON AREAS

 

         4.01 Definitions: "Common Areas": "Common Area" is defined as all areas

and facilities outside the Premises and within the exterior boundary line of the

Project that are provided and designated by Landlord for the non-exclusive use

of Landlord, Tenant and other lessees of the Project and their respective

employees, agents, customers and invitees. Common Areas include, but are not

limited to: all parking areas, loading and unloading areas, trash areas,

roadways, sidewalks, walkways, parkways, driveways, corridors, landscaped areas

and any restrooms used in common by lessees.

 

         4.02 Tenant, its employees, agents, customers and invitees have the

non-exclusive right (in common with other Tenants, Landlord, and any other

person granted use by Landlord) to use of the Common Areas. Tenant agrees to

abide by and conform to, and to cause its employees, agents, customers and

invitees to abide by and conform to all reasonable rules and regulations

established by Landlord subject to provisions of paragraph 24.

 

         4.03 Landlord has the right, in its sole discretion, from time to time,

to: 1) make changes to the Common Areas, including without limitation, changes

in the location, size, shape and number of driveways, entrances, parking spaces,

parking areas, ingress, egress, direction of driveways, entrances, corridors

parking areas and walkways; 2) close temporarily any of the Common Areas for

maintenance purposes so long as reasonable access to the Premises remains

available; 3) add additional buildings and improvements to the Common Areas; 4)

use the Common Areas while engaged in making additional improvements, repairs or

alterations to the Project or any portion thereof; do and perform any other acts

or make any other changes in, to or with respect to the Common Areas and Project

as Landlord may, in the exercise of sound business judgement, deem to be

appropriate; provided, however, that none of the foregoing shall materially and

unreasonably interfere with the conduct of Tenant's business from the Premises,

except in the case of emergency or as required by governmental authority.

 

5. ADDITIONAL RENT

 

         5.01 All charges payable by Tenant other than Base Monthly Rent are

called "Additional Rent". Unless this lease provides otherwise, Additional Rent

is to be paid with the next monthly installment of Base Monthly Rent and is

subject to the provisions of 3.03. The term "rent" whenever used in this Lease

means Base Monthly Rent and Additional Rent.

 

         5.02 Operating Costs

 

 

 

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         A. "Operating Costs" are all costs and expenses of ownership,

operation, maintenance, management, repair and insurance incurred by Landlord

for the Project including, but not limited to the following: all supplies,

materials, labor and equipment, used in or related to the operation and

maintenance of the Common Areas; all utilities, including but not limited to:

water, electricity, gas, heating, lighting, sewer, waste disposal related to the

maintenance or operation of the Common Areas; all air-conditioning and

ventilating costs related to the maintenance or operation of the Project; all

Landlord's costs in managing, maintaining, repairing, operating and insuring the

Project, including, for example, clerical, supervisory, and janitorial staff;

all maintenance, management and service agreements, including but not limited

to, janitorial, security, trash removal related to the maintenance or operation

of the Project; all legal and accounting costs and fees for licenses and permits

related to the ownership and operation of the Project; all insurance premiums

and costs of fire, casualty, and liability coverage, rent abatement and

earthquake insurance and any other type of insurance related to the Entire

Project, including any deductible for a loss attributable to the Premises; all

operation, maintenance and repair costs to the Common Areas, including but not

limited to, sidewalks, walkways, parkways, parking areas, loading and unloading

areas, trash areas, roadways, driveways, corridors, and landscaped area,

including for example, costs of resurfacing and restriping parking areas; all

maintenance and repair costs of building exteriors (including painting, asphalt

repair and replacement and roof maintenance, repair and replacement), restrooms

used in common by Tenants and signs and directories of the Project; amortization

(based upon the estimated useful life of such improvements and/or capital

expenditures) (along with reasonable financing charges) of capital improvements

made to the Common Areas which may be required by any government authority or

which will improve the operating efficiency of the Project; a reasonable reserve

for repairs and replacement; a five percent (5%) fee for Landlord's supervision

of the Common Areas (five percent (5%) of the total above mentioned costs and

expenses incurred in a calendar year). Operating Costs will not include

depreciation of the Project. Notwithstanding the foregoing, Tenant shall pay an

amount equal to two and 7/10ths cents (2.7(cent)) per square foot of the

Premises per month, which amount shall be increased by five percent (5%) for

each twelve (12) month period during the Lease Term (including any Extension

Terms) after the initial twelve (12) month period of the Lease, as Tenant's

Prorata Share of all Operating Costs other than (i) costs which may be required

to comply with all applicable laws, codes, rules, and regulations of

governmental and administrative authorities, and (ii) insurance and deductible

costs (collectively, the "Excluded Items"). Tenant shall be responsible for

Tenant's Prorata Share of the actual cost of the Excluded Items. During the

Lease Term, Tenant may, on one (1) occasion, notify Landlord in writing that

Tenant elects to pay Tenant's Prorata Share of actual Operating Costs and Tenant

shall thereafter be responsible for Tenant's Prorata Share of actual Operating

Costs during the remaining portion of the Lease Term (including any Extension

Term).

 

         B. Subject to the provisions of Paragraph 5.02A. above, Tenant shall

pay to Landlord Tenant's Proportionate Share of the Operating Costs as indicated

in 1.09. If there is a change in the square footage of either the Project or the

Premises during the term of this Lease the Proportionate Share of the Tenant

shall be adjusted accordingly. Such payment shall be paid by Tenant with and in

addition to the monthly payment of Base Monthly Rent. In the event Tenant elects

to pay Tenant's Prorata Share of actual Operating Costs as provided in Paragraph

5.02A. above, Tenant shall, if Landlord so elects, pay to Landlord on a monthly

basis, in advance, the amount which Landlord

 

 

 

 

 

 

 

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reasonably estimates to be Tenant's Proportionate Share of the Operating Costs.

In the event of such election by Landlord, Landlord shall periodically determine

Tenant's share of the actual Operating Costs, and in the event that the amount

which Tenant has paid to Landlord on account of the estimated Operating Costs is

less than his share of such actual Operating Costs, Tenant shall pay such

difference to Landlord on the next rent payment date. In the event that Tenant

elects to pay Tenant's Prorata Share of actual Operating Costs as provided in

Paragraph 5.02A. above, in the event that Tenant has paid to Landlord more than

his share of such actual Operating Costs, the amount of such difference shall be

credited against Tenant's payments of Operating Costs, the amount of such

difference shall be credited against Tenant's payments of Operating Costs next

due or if such period is at the end of the Lease term the amount of any

overpayment shall be promptly refunded to Tenant. In the event Tenant elects to

pay Tenant's Prorata Share of actual Operating Costs as provided in Paragraph

5.02A. above, no later than May 1 of each year during the Lease Term, Landlord

shall provide Tenant with an itemized statement which provides a detailed

accounting of all Operating Costs for the prior year.

 

         C. Failure by Landlord to provide Tenant with a statement by April 1st

of each year shall not constitute a waiver by Landlord of its right to collect

Tenant's share of Operating Costs or estimates for a particular calendar year,

Landlord's right to charge Tenant for such expenses in subsequent years is not

waived.

 

         5.03 Taxes

 

         A. "Real Project Taxes" are: (i) any fee, license fee, license tax,

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

or tax imposed by any taxing authority against the Project; (ii) any tax or fee

on Landlord's right to receive, or the receipt of, rent or income from the

Project or against Landlord's business of leasing the Project, (iii) any tax or

charge for fire protection, streets, sidewalks, road maintenance, refuse or

other services provided to the Project by any governmental agency; (iv) any tax

imposed upon this transaction, or based upon a re-assessment of the Project due

to a change in ownership or transfer of all of part or Landlord's interest in

the Project; (v) any charge or fee replacing, substituting for, or in addition

to any tax previously included within the definition of real property tax; and

(vi) the Landlord's cost of any tax protest relating to any of the above. Real

Project Taxes do not, however, include Landlord's federal or state income,

franchise, inheritance or estate taxes.

 

         B. Tenant shall pay to Landlord Tenant's Proportionate Share of the

Real Project Taxes as indicated in 1.09. Such payment shall be paid by Tenant

annually upon being invoiced for such taxes in addition to the monthly payment

of Base Monthly Rent. Tenant shall, if Landlord so elects and Tenant agrees, pay

to Landlord on a monthly basis, in advance, the amount which Landlord reasonably

estimates to be Tenant's Proportionate Share of the Real Project Taxes. In the

event of such election by Landlord, Landlord shall periodically determine

Tenant's share of the actual Real Project Taxes, and in the event that the

amount which Tenant has paid to Landlord on account of the Real Project Taxes is

less than his share of such actual Real Project Taxes, Tenant shall pay such

difference to Landlord on the next rent payment date. In the event that Tenant

has paid to Landlord more than his share of such actual Real Project Taxes, the

amount of such difference shall be

 

 

 

 

 

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credited against Tenant's payment of Real Project Taxes next due. If the Lease

term is expired then Landlord shall promptly refund any overpayment to Tenant.

If Tenant does not agree to the advance monthly payments specified above, Tenant

shall pay to Landlord on a quarterly basis, not later than thirty (30) days in

advance of each required quarterly installment, Tenant's Proportionate Share of

the Real Project Taxes. Landlord agrees that Tenant shall have the right, at

Tenant's sole cost and expense and upon written notice to Landlord, to contest

the legality or validity of any of the taxes which are to be paid by Tenant

pursuant to the foregoing provisions. In the event of any such contest, failure

on the part of Tenant to pay any such tax, prior to the delinquency date thereof

shall not constitute a default hereunder if Tenant posts a bond, in a reasonable

amount required by Landlord, but not to exceed one hundred fifty percent (150%)

of the disputed assessment. Tenant, upon the final determination of such

contest, shall immediately pay and discharge any judgment rendered against it,

together with all costs and charges incidental thereto. Landlord further agrees

at the request of Tenant, to execute, or join in the execution of any instrument

or documents necessary in connection with any such contest, but at no expense to

Landlord. Upon request of Tenant, Landlord shall provide Tenant with copies of

all invoices or statements which comprise the Real Project Taxes.

 

         C. Personal Property Taxes: Tenant will pay all taxes charged against

trade fixtures, furnishing, equipment or any other personal property belonging

to Tenant. Tenant will have personal property taxes billed separately from the

Project. If any of Tenant's personal property is taxed with the Project, Tenant

will pay Landlord the taxes for the personal property upon demand by Landlord.

 

         5.04 Based on Tenant's Proportionate Share defined in 1.09, Tenant

agrees to pay as Additional Rent to Landlord its share of any utility

surcharges, occupancy taxes, or any other costs resulting from the statutes or

regulations, or interpretations thereof, enacted by any governmental authority

in connection with the use or occupancy of the Project or the parking facilities

serving the Project, or any part thereof. Landlord represents and warrants that,

as of the Lease Commencement Date, Landlord has no "knowledge" (as hereinafter

defined) that any of the items specified in this Section 5.4 would be imposed on

Tenant under this Lease. For purposes of this Section 5.04, the term "knowledge"

shall have the meaning set forth in Section 7.07 below.

 

         5.05 Landlord by completing this paragraph may elect to have Tenant pay

a monthly estimate of the Additional Rent due from Tenant of 5.5(cent) per

square foot, i.e, $8.772.50. Landlord shall make adjustments to this estimate

based upon actual costs, projected future costs, and Tenant's payment option as

set forth in Paragraph 5.02A above. Landlord shall periodically determine the

balance between actual Additional Rent and Additional Rent paid by Tenant and

make adjustments in accordance with 5.02 and 5.03 above.

 

6.   [INTENTIONALLY DELETED]

 

7. USE OF PREMISES:   QUIET CONDUCT

 

         7.01 The Premises may be used and occupied only for Tenant's Permitted

Use as shown in 1.05 and for no other purpose, without obtaining Landlord's

prior written consent, which consent

 

 

 

 

 

 

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shall not be unreasonably withheld or delayed. Tenant will comply with all laws,

ordinances, orders and regulations affecting the Premises. Landlord represents

that (i) the Premises are currently zoned ___________________, and (ii) to the

best of Landlord's knowledge, there are currently no covenants, restrictions, or

agreements affecting the Project which would prevent Tenant from utilizing the

Premises for Tenant's permitted use specified in Section 1.05 above. Tenant will

not perform any act or carry on any practices that may injure the Project or the

Premises or be a nuisance or menace, or disturb the quiet enjoyment of other

lessees in the Project including but not limited to equipment which causes

vibration, use or storage of chemicals, or heat or noise which is not properly

insulated. Tenant will not cause, maintain or permit any outside storage on or

about the Premises. In addition, Tenant will not allow any condition or thing to

remain on or about the Premises which diminishes the appearance or aesthetic

qualities of the Premises and/or the Project or the surrounding property. The

keeping of a dog or other animal on or about the Premises is expressly

prohibited. So long as Tenant is not in default under the term of this Lease,

Tenant shall have quiet enjoyment of the Premises during the entire Lease Term.

 

         7.02 As used in this section, the term "Hazardous Waste" means:

 

         A. Those substances defined as "hazardous substances", "hazardous

materials", "toxic substances", "regulated substances", or "solid waste" in the

Toxic Substance Control Act, 15 U.S.C.ss. 2601 et. seq., as now existing or

hereafter amended ("TSCA"), the Comprehensive Environmental Response,

Compensation, and Liability Act of 1980, 42 U.S.C.ss.9601 et. seq., as now

existing or hereafter amended ("CERCLA"), the Resource, Conservation and

Recovery Act of 1976, 42 U.S.C. Section 6901 et. seq., as now existing or

hereafter amended ("RCRA"), the Federal Hazardous Substances Act, 15

U.S.C.ss.1261 et. seq., as now existing or hereafter amended ("FHSA"), the

Occupational Safety and Health Act of 1970, 29 U.S.C.ss. 651 et. seq., as now

existing or hereafter amended ("OSHA"), the Hazardous Materials Transportation

Act, 49 U.S.C.ss. 1801 et. seq., as now existing or hereafter amended ("HMTA"),

and the rules and regulations now in effect or promulgated hereafter pursuant to

each law referenced above;

 

         B. Those substances defined as "hazardous waste", "hazardous material",

or "regulated substances" in Nev. Rev. Stat. ch 459, 1989 Nev. Stat. ch. 598 and

1989 Nev. Stat. ch 363, or in the regulations now existing or hereafter

promulgated pursuant thereto or in the Uniform Fire Code, 1988 edition;

 

         C. Those substances listed in the United States Department of

Transportation table (49 CFR ss. 172.101 and amendments thereto) or by the

Environmental Protection Agency (or any successor agency) as hazardous

substances (40 CFR Part 302 and amendments thereto); and

 

         D. Such other substances, mixtures, materials and waste which are

regulated under applicable local, state or federal law, or which are classified

as hazardous or toxic under federal, state or local laws or regulations (all

laws, rules and regulations referenced in paragraphs (a), (b), (c) and (d) are

collectively referred to as "Environmental Laws").

 

 

 

 

 

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         7.03 Tenant's Covenants. Tenant does not intend to and Tenant will not,

nor will Tenant allow any other person (including partnerships, corporations and

joint ventures), during the term of this Lease to manufacture, process, store,

distribute, use, discharge or dispose of any Hazardous Waste in, under or on the

Project, the Common Areas, or any property adjacent thereto. Notwithstanding the

foregoing, Tenant shall be entitled to process, store, distribute, and dispose

of Hazardous Waste that arises in the normal course of Tenant's business

relating to its permitted uses under the Lease, provided that all such

activities are done in full compliance with all Environmental Laws and all other

governmental and administrative laws, rules, regulations, and requirements.

 

          A. Tenant shall notify Landlord promptly in the event of any spill or

release of Hazardous Waste into, on, or onto the Project regardless of the

source of spill or release, whenever Tenant knows or suspects that such a

release occurred.

 

         B. Tenant will not be involved in operations at or near the Project

which could lead to the imposition on the Tenant or the Landlord of liability or

the creation of a lien on the Project, under the Environmental Laws.

 

         C. Tenant shall, upon twenty-four (24) hour prior notice by Landlord,

permit Landlord or Landlord's agent access to the Project to conduct an

environmental site assessment with respect to the Project.

 

         7.04. Indemnity. Tenant for itself and its successors and assigns

undertakes to protect, indemnify, save and defend Landlord, its agents,

employees, directors, officers, shareholders, affiliates, consultants,

independent contractors, successors and assigns (collectively the "Indemnitees")

harmless from any and all liability, loss, damage and expense, including

reasonable attorneys' fees, claims, suits and judgments that Landlord or any

other Indemnitee, whether as Landlord or otherwise, may suffer as a result of,

or with respect to:

 

         A. The violation by Tenant or Tenant's agents, employees, invitees,

licensees or contractors of any Environmental Law after the earlier of (i) the

date of the granting of possession or occupancy of the Premises to Tenant, or

(ii) the Lease Commencement Date, including the assertion of any lien thereunder

and any suit brought or judgment rendered regardless of whether the action was

commenced by a citizen (as authorized under the Environmental Laws) or by a

government agency;

 

         B. To the extent caused, directly or indirectly by Tenant or Tenant's

agents, employees, invitees, licensees or contractors, any spill or release of

or the presence of any Hazardous Waste affecting the Project whether or not the

same originates or emanates from the Project or any contiguous real estate,

including any loss of value of the Project as a result of a spill or release of

or the presence of any Hazardous Waste;

 

         C. To the extent caused, directly or indirectly by Tenant or Tenant's

agents, employees, invitees, licensees or contractors, any other matter

affecting the Project within the jurisdiction of the United States Environmental

Protection Agency, the Nevada State Environmental Commission, the Nevada

Department of

 

 

 

 

 

                                      -10-

<PAGE>

 

Conservation and Natural Resources, or the Nevada Department of Commerce,

including costs of investigations, remedial action, or other response costs

whether such costs are incurred by the United States Government, the State of

Nevada, or any Indemnitee;

 

         D. To the extent caused, directly or indirectly by Tenant or Tenant's

agents, employees, invitees, licensees or contractors, liability for clean-up

costs, fines, damages or penalties incurred pursuant to the provisions of any

applicable Environmental Law; and

 

         E. To the extent caused, directly or indirectly by Tenant or Tenant's

agents, employees, invitees, licensees or contractors, liability for personal

injury or property 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 of an abnormally dangerous activity,

and response costs.

 

         7.05 Remedial Acts. In the event of any spill or release of or the

presence of any Hazardous Waste affecting the Project, caused by Tenant, its

employees, agents, invitees, licensees, or contractors, whether or not the same

originates or emanates from the Project or any contiguous real estate, and/or if

Tenant shall fail to comply with any of the requirements of any Environmental

Law, Landlord may, without notice to Tenant, at its election, but without

obligation so to do, gives such notices and/or cause such work to be performed

at the Project and/or take any and all other actions as Landlord shall deem

necessary or advisable in order to remedy said spill or release of Hazardous

Waste or cure said failure of compliance and any amounts paid as a result

thereof, together with interest at the rate equal to the product of the variable

Prime Rate "Prime", plus four percent (4%)) per annum as charged by Bank of

America, Nevada; times the amount of such installment amount due, or twelve

percent (12%) () per annum of such installment or the sum of twenty-five dollars

($25.00), whichever is greater, for each month or fractional month transpiring

from the date due until paid.

 

         7.06 Settlement. Landlord upon giving Tenant ten (10) days prior

notice, shall have the right in good faith to pay, settle or compromise, or

litigate any claim, demand, loss, liability, cost, charge, suit, order, judgment

or adjudication under the belief that it is liable therefor, whether liable or

not, without the consent or approval of Tenant unless Tenant within said ten

(10) day period shall protest in writing and simultaneously with such protest

deposit with Landlord collateral satisfactory to Landlord sufficient to pay and

satisfy any penalty and/or interest which may accrue as a result of such protest

and any judgment or judgments as may result, together with attorney's fees and

expenses, including, but not limited to, environmental consultants.

 

         7.07 Landlord Compliance With Environmental Laws. Landlord hereby

represents and warrants to Tenant that as of the date of execution of this Lease

and the Lease Commencement Date, (i) to Landlord's "knowledge" (as such term is

hereinafter defined), the Project is in compliance with all Environmental Laws

and Landlord has received no notice of any existing federal, state, county or

municipal environmental, pollution, health, safety, fire, or building code

violations from governmental authorities having jurisdiction with respect

thereto, (ii) to Landlord's knowledge, there is no reportable amount of

Hazardous Waste on, in, or under the Project, (iii) Landlord has not been named

as a party in any proceeding or lawsuit for violation of Environmental Laws with

respect to the Project, and (iv) to Landlord's knowledge, the Project is not

currently subject to investigation for

 

 

 

 

 

 

                                      -11-

<PAGE>

 

alleged violations of Environmental Laws. The term "knowledge" as used in this

Section 7.07 shall mean the actual knowledge of employees of Dermody Properties,

a Nevada corporation, without inquiry or investigation and without the inclusion

of imputed, implied, or constructive knowledge, except with respect to reports

or investigations commissioned on behalf of such company or Landlord. Landlord

agrees to defend, indemnify, and hold harmless Tenant, its officers, directors,

employees and agents and any assigns, subtenants, or successors to Tenant's

interest in the Premises from and against any and all losses, claims, damages,

penalties, and liability including reasonable out-of-pocket litigation costs and

reasonable attorneys' fees and expenses, which Tenant may suffer as a result of,

or with respect to, a breach by Landlord of Landlord's representations and

warranties specified in this Section 7.07 above.

 

         7.08 Survival. The representations, warranties, covenants, and

obligations of the parties contained in this Article 7. shall survive the

expiration or earlier termination of this Lease.

 

8. PARKING

 

         8.01 Tenant and Tenant's customers, suppliers, employees, and invitees

have the non-exclusive right to park in common with other lessees in the parking

facilities as designated by Landlord. Tenant agrees not to overburden the

parking facilities and agrees to cooperate with Landlord and other lessees in

the use of the parking facilities. Landlord reserves the right to, on an

equitable basis, assign specific spaces with or without charge to Tenant as

Additional Rent, make changes in the parking layout from time to time, and to

establish reasonable time limits on parking. So long as Tenant is the sole

tenant within the Project, and subject to the following provisions, Tenant shall

have the exclusive use of the vehicle parking spaces within the exterior

boundaries of the Project delineated on Exhibit A, and Landlord covenants and

agrees not to make material changes or alterations to such parking areas

specified herein except as required by law, rule, regulation or governmental or

administrative authority, or in connection with the further development of the

Project. Tenant agrees that Landlord is under no obligation to enforce Tenant's

exclusive rights set forth above.

 

9.   UTILITIES

 

         9.01 Tenant will be responsible for and shall pay for all water, gas,

heat, light, power, sewer, electricity, or other services metered, chargeable to

or provided to the Premises from and after the earlier of the Lease Commencement

Date or Tenant's right of occupancy of the Premises separate from and in

addition to the costs outlined in Section 5.02 dealing with the utility costs

for Common Area Maintenance. Landlord reserves the right to install separate

meters for any such utility.

 

         9.02 Landlord will not be liable or deemed in default to Tenant nor

will there be any abatement of rent for any interruption or reduction of

utilities or services not caused by any act of Landlord or any act reasonably

beyond Landlord's control. Tenant agrees to comply with energy conservation

programs implemented by Landlord by reason of enacted laws or ordinances.

 

 

 

 

 

                                      -12-

<PAGE>

 

         9.03 Tenant will contract and pay for all telephone and such other

services for the Premises subject to the provisions of 10.03.

 

10. ALTERATIONS, MECHANIC'S LIENS

 

         10.01 Tenant will not make any alterations to the Premises without

Landlord's prior written consent which consent shall not be unreasonably

withheld in accordance with the provisions of this Section 10. Landlord's

consent shall be contingent upon Tenant providing Landlord with the following

items or information, all subject to Landlord's approval: (i) Tenant's

contractor, (ii) certificates of insurance by Tenant's contractor for commercial

general liability insurance with limits not less than $2,000,000 General

Aggregate, $1,000,000 Products/Complete Operations Aggregate, $1,000,000

Personal & Advertising Injury, $1,000,000 Each Occurrence, $50,000 Fire Damage,

$5,000 Medical Expense, $1,000,000 Auto Liability (Combined Single Limit,

including Hired/Non-Owned Auto Liability), Workers Compensation, including

Employer's Liability, as required by state statute endorsed to show Landlord as

an additional insured and for worker's compensation as required and (iii)

detailed plans and specifications for such work. Tenant agrees that it will have

its contractor execute a waiver of mechanic's lien and that Tenant will remove

any mechanic's lien placed against the Project or provide a bond or other

collateral in an amount and on such terms as are acceptable to Landlord in

Landlord's reasonable discretion (it being agreed that Landlord may require

removal of and Tenant shall immediately remove any such liens if so required by

Landlord's lenders, partners, affiliates, or otherwise to finance, refinance,

sell or transfer the Project) within twenty (20)) days of receipt of notice of

lien. In addition, before alterations may begin, valid building permits or other

permits or licenses required must be furnished to Landlord, and, once the

alterations begin, Tenant will diligently and continuously pursue their

completion. At Landlord's option, any alterations may become part of the realty

and belong to Landlord. If requested by Landlord, Tenant will pay, prior to the

commencement of the construction, an amount determined by Landlord necessary to

cover the costs of demolishing such alterations and/or the cost of returning the

Premises to its condition prior to such alterations. As a further condition to

giving such consent, Landlord may require Tenant to provide Landlord, at

Tenant's sole cost and expense, a payment and performance bond in form

acceptable to Landlord, in a principal amount not less than one and one-half

times the estimated costs of such alterations, to ensure Landlord against any

liability for mechanic's and materialmen's liens and to ensure completion of

work. Tenant, at Landlord's option, shall at Tenant's expense remove all

alterations and repair all damage to the Premises. Notwithstanding the

foregoing, Tenant may, without Landlord's prior consent, make nonstructural

changes, alterations, and additions to the interior of the Premises (i) which

increase the value of the Premises, or (ii) in an amount not to exceed Five

Thousand Dollars ($5,000) in any one instance. Such additions may include,

without limitation, installation of computer cabling, painting, and

telecommunications system. Tenant agrees not to install any equipment on or

otherwise modify, repair or alter the roof of the Premises without the

Landlord's prior written consent, which consent shall not be unreasonably

withheld or delayed.

 

         10.02 Notwithstanding anything in 10.01, Tenant may, without the

written consent of Landlord, install trade fixtures, equipment, and machinery in

conformance with the ordinances of

 

 

 

 

 

 

                                      -13-

<PAGE>

 

the applicable city and county, and they may be removed upon termination of its

Lease provided the Premises are not damaged by their removal.

 

         10.03 Any private telephone systems and/or other related

telecommunications equipment and lines must be installed within Tenant's

Premises and, upon termination of this Lease removed and the Premises restored

to the same condition as before such installation, normal wear and tear

excepted.

 

         10.04 Tenant will pay all costs for alterations and will keep the

Premises, the Project and the underlying property free from any liens arising

out of work performed for, materials furnished to or obligation incurred by

Tenant, or provide a bond or other collateral in an amount and on such terms as

are acceptable to Landlord in Landlord's reasonable discretion (it being agreed

that Landlord may require removal of and Tenant shall immediately remove any

such liens if so required by Landlord's lenders, partners, affiliates, or

otherwise to finance, refinance, sell, or transfer the Project).

 

         10.05 Landlord will have the right to construct or permit construction

of tenant improvements in or about the Project for existing and new Tenants and

to alter any public areas in and around the Project. Notwithstanding anything

which may be contained in this Lease, Tenant understands this right of Landlord

and agrees that such construction will not be deemed to constitute a breach of

this Lease by Landlord and Tenant waives any such claim which it might have

arising from such construction. To the extent reasonably possible, Landlord

agrees to conduct or permit such construction so that such construction shall

not materially and unreasonably interfere with Tenant's ability to conduct its

business on the Premises.

 

11.   FIRE INSURANCE: HAZARDS AND LIABILITY INSURANCE

 

         11.01 Except as expressly provided as Tenant's Permitted Use, or as

otherwise consented to by Landlord in writing, Tenant shall not do or permit

anything to be done within or about the Premises which Tenant knows or

reasonably believes will increase the existing rate of insurance on the Project

and shall, at its sole cost and expense, comply with any requirements,

pertaining to the Premises, of any insurance organization insuring the Project

and Project-related apparatus. Upon notice of such increase, Tenant agrees to

pay to Landlord, as Additional Rent, any increases in premiums on policies

resulting from Tenant's Permitted Use or other use consented to by Landlord

which increases Landlord's premiums or requires extended coverage by Landlord to

insure the Premises. Landlord agrees, to the extent reasonably possible, to

provide Tenant with a reasonable opportunity to cure such condition.

 

         11.02 Tenant, at all times during the term of this Lease and at

Tenant's sole expense, will maintain a policy of standard fire and extended

coverage insurance with "all risk" coverage on all Tenant's improvements and

alterations in or about the Premises and on all personal property and equipment

to the extent of at least ninety percent (90%) of their full replacement value.

The proceeds from this policy will be used by Tenant for the replacement of

personal property and equipment and the restoration of Tenant's improvements

and/or alterations. This policy will contain an express waiver, in favor of

Landlord, of any right of subrogation by the insurer.

 

 

 

 

 

                                       -14-

<PAGE>

 

         11.03 Tenant, at all times during the term on this Lease and at

Tenant's sole expense, will maintain a policy of commercial general liability

coverage with limits of not less than $2,000,000 combined single limit for

bodily injury and property damage insuring against all liability of Tenant and

its authorized representatives arising out of or in connection with Tenant's use

or occupancy of the Premises.

 

         11.04 All insurance will name Landlord and/or Landlord's designated

partners and affiliates as an additional named insured and will include an

express waiver of subrogation by the insurer in favor of Landlord and Tenant and

will release Landlord from any claims for damage to any person, to the Premises,

and to the Project, and to Tenant's personal property, equipment, improvements

and alterations in or on the Premises of the Project, caused by or resulting

from risks which are to be insured against by Tenant under this Lease. All

insurance required to be provided by Tenant under this Lease will (a) be issued

by an insurance company authorized to do business in the state in which the

Premises are located and which has and maintains a rating of A/X in the Best's

Insurance Reports or the equivalent, (b) be primary and noncontributing with any

insurance carried by Landlord, and (c) contain an endorsement requiring at least

thirty (30) days prior written notice of cancellation to Landlord before

cancellation or change in coverage, scope or limit of any policy. Tenant will

deliver a certificate of insurance or a copy of the policy to Landlord within

thirty (30) days of execution of this Lease and will provide evidence of renewed

insurance coverage at each anniversary, and prior to the expiration of any

current policies; however, in no event will Tenant be allowed to occupy the

Premises before providing adequate and acceptable proof of insurance as stated

above. Tenant's failure to provide evidence of this coverage to Landlord may, in

Landlord's sole discretion, constitute a default under this Lease.

 

         11.05 Landlord shall, subject to reimbursement as provided herein,

maintain on the building included in the Project fire with extended coverage

insurance or any other insurance coverage as deemed reasonably necessary by

Landlord throughout the Lease Term. Such insurance policy shall be issued by an

insurance company authorized to do business in the State of Nevada and which has

and maintains a rating of A/IX in the Best's Insurance Reports or equivalent,

and in an amount not less than ninety-five percent (95%) of the full replacement

value of the building included in the Project.

 

         11.06 Tenant and Landlord each waive any and all rights against the

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

other, for the loss of or damage to such waiving party or its property or

property of others under its control, where such loss or damage is insured

against or would have been insured against under an insurance policy required to

be in force under this Lease at the time of such loss or damage. Tenant and

Landlord shall upon obtaining the policies of insurance required hereunder, give

notice to the insurance carriers that the foregoing mutual waiver of subrogation

is contained in this Lease.

 

12. INDEMNIFICATION AND WAIVER OF CLAIMS

 

         12.01 Except to the extent caused by the gross negligence or

intentional misconduct of Landlord, Tenant waives all claims against Landlord

for damage to any property in or about the

 

 

 

 

                                       -15-

<PAGE>

 

Premises and for injury to any persons, including death resulting therefrom,

regardless of cause or time of occurrence. Tenant will defend, indemnify and

hold Landlord harmless from and against any and all claims, actions,

proceedings, expenses, damages and liabilities, including attorney's fees,

arising out of, connected with, or resulting from any use of the Premises by

Tenant, its employees, agents, visitors or licensees, including, without

limitation, any failure of Tenant to comply fully with all of the terms and

conditions of this Lease except for any damage or injury which is the direct

result of intentional misconduct by Landlord, its employees, agents, visitors or

licensees. Landlord will defend, indemnify, and hold Tenant, its employees,

agents, visitors, or licensees harmless from and against any and all claims,

actions, proceedings, expenses, damages, and liabilities, including reasonable

attorney's fees, caused by the gross negligence or intentional misconduct of

Landlord.

 

13.   REPAIRS

 

         13.01 Tenant shall, at its sole expense, keep and maintain the Premises

and every part thereof (excepting common use equipment, which Landlord agrees to

repair or replace pursuant to Section 5.02 unless damages are due to the neglect

or intentional acts of Tenant or its agents, employees, visitors, or licensees),

including interior windows, skylights, doors, plate glass, any store fronts and

the interior of the Premises, in good and sanitary order, condition and repair,

normal wear and tear excepted. Tenant will, also, at its sole cost keep and

maintain all utilities, fixtures, plumbing and mechanical equipment used by

Tenant in good order and repair normal wear and tear excepted and furnish all

expendables (light bulbs, paper goods, soaps, etc.) used in the Premises. The

standard for comparison and need of repair will be the condition of the Premises

at the time of commencement of this Lease considering normal wear and tear and

all repairs will be made by a licensed and bonded contractor approved by

Landlord which shall not be unreasonably withheld or delayed.

 

         13.02 Tenant will not make repairs to the Premises at the cost of

Landlord whether by deductions of rent or otherwise, or vacate the Premises or

terminate the Lease if repairs are not made. If during the Term, any alteration,

addition or change to the Premises is required by legal authorities, Tenant, at

its sole expense, shall promptly make the same. Landlord reserves the right to

make any such repairs not made or maintained in good condition by Tenant normal

wear and tear excepted and Tenant shall reimburse Landlord for all such costs

upon demand.

 

         13.03 If repairs deemed necessary by Landlord or any government

authority are not made by Tenant within the prescribed time frame as requested

in writing, Tenant shall be in default of this Lease.

 

         13.04 Tenant shall, at its own expense, within thirty days of lease

commencement, contract with a vendor acceptable to Landlord for the maintenance

service of the HVAC which will be furnished to the Landlord upon request. If

Tenant fails to obtain and maintain such a maintenance service contract Landlord

shall have the right to obtain such a maintenance service contract at the

expense of Tenant.

 

 

 

                                       -16-

<PAGE>

 

 

         13.05 Landlord Repairs and Maintenance. During the Lease Term, Landlord

shall maintain, repair, and replace as necessary (i) the exterior walls and the

interior and exterior structures (consisting of foundations and bearing walls)

of the Project, (ii) the Common Area of the Project, and (iii) the roof

structure of the Project, except that Landlord shall not be responsible for any

repairs, maintenance, or replacements provided herein (I) caused by Tenant's

misuse of the Premises or Tenant's or Tenant's agents', employees', invitees',

licensees', or contractors' negligence, or intentional misconduct, or by reason

of failure of Tenant to perform