EXHIBIT 10.1
ASSIGNMENT AND ASSUMPTION OF
LEASE
This ASSIGNMENT AND ASSUMPTION OF
LEASE (“Assignment”) is made as of the 8th day of May,
2006 (“Effective Date”), by and between B.G.
ASSOCIATES, INC., an Arizona corporation (“Assignor”),
and POORE BROTHERS, INC., a Delaware corporation
(“Assignee”).
RECITALS
1.
Assignor is the tenant under The 5050 Building Lease Agreement
entered into by and between 5050 North 40 th St.,
L.L.C., an Arizona limited liability company, and Assignor, as of
November 22, 2000, attached as Exhibit A hereto, as amended
by the First Amendment to The 5050 Building Lease Agreement entered
into by and between REG Phoenix, LLC, as successor in interest to
5050 North 40 th St., L.L.C., and Assignor, as of
November 5, 2005, attached as Exhibit B hereto (collectively
the “Lease”).
2.
Assignor desires to assign its rights and obligations under the
Lease to Assignee and Assignee desires to assume Assignor’s
rights and obligations under the Lease.
For good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the
parties hereto hereby agree as follows:
AGREEMENT
1.
Assignment of Lease . Assignor hereby assigns to Assignee
all of Assignor’s rights and obligations under the Lease
arising as of and after the Effective Date.
2.
Assumption of Obligation s. Assignee hereby assumes from
Assignor all of Assignor’s rights and obligations under the
Lease and agrees to fully and timely perform all of
Assignor’s obligations under the Lease arising as of and
after the Effective Date.
3.
Indemnity by Assignor . Assignor agrees to indemnify, defend
and hold harmless Assignee from and against any and all claims,
damages, liabilities, losses, costs and expenses (including,
without limitation, reasonable attorneys’ fees and expenses)
asserted against or suffered or incurred by Assignee as a result of
or in connection with any liabilities or obligations arising under
or related to the Lease and pertaining to periods prior to the
Effective Date.
4.
Indemnity by Assignee . Assignee agrees to indemnify, defend
and hold harmless Assignor from and against any and all claims,
damages, liabilities, losses, costs and expenses (including,
without limitation, reasonable attorneys’ fees and expenses)
asserted against or suffered or incurred by Assignor as a result of
or in connection with any liabilities or obligations arising under
or relating to the Lease and pertaining to periods from and after
the Effective Date.
5.
Joint Representation . Assignor and Assignee hereby
acknowledge that The Henderson Law Firm has prepared this
Assignment on behalf of both parties and that each has had the
opportunity to retain separate counsel to review this Assignment.
Assignor and Assignee hereby consent to the joint representation of
both parties by The Henderson Law Firm in connection with the
preparation of this Assignment.
6.
Successors and Assigns . Subject to the provisions of the
Lease, this Assignment shall be binding upon and inure to the
benefit of the successors and assigns of the parties
hereto.
7.
Attorneys’ Fees . If there is any action or suit
brought by a party hereto against another party hereunder by reason
of any alleged breach of any of the covenants, conditions,
agreements or provisions on the part of the other party arising out
of this Assignment, the prevailing party shall be entitled to
recover from the other party all costs and expenses of the action
or suit, including reasonable attorneys’ fees.
8.
Governing Law . This Assignment shall be governed by,
interpreted under, and construed and enforced in accordance with,
the laws of the State of Arizona.
9.
Counterparts . This Assignment may be executed in multiple
counterparts, each of which shall be deemed an original, but all of
which, together, shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties
hereto have executed this Assignment as of the Effective
Date.
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“Assignor”
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B.G. ASSOCIATES, INC.,
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an Arizona corporation
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By:
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Name:
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Title:
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“Assignee”
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POORE BROTHERS, INC.,
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a Delaware corporation
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By:
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Name:
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Title:
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CONSENT BY
LANDLORD
REG Phoenix, LLC, an Arizona limited
liability company, without waiving any of its rights as landlord
under the Lease, hereby consents to this Assignment.
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REG PHOENIX, L.L.C.,
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an Arizona limited liability company
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By:
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Name:
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Title:
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EXHIBIT A
THE 5050 BUILDING LEASE
AGREEMENT
THIS LEASE AGREEMENT, dated this 22
nd day of November, 2000 (this “Lease”), is
entered into between 5050 NORTH 40TH ST., L.L.C., an Arizona
limited liability company (“Landlord”), and B.G.
ASSOCIATES, INC., an Arizona corporation
(“Tenant”).
ARTICLE 1.
PREMISES
Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord, on the terms and conditions
herein set forth, the premises designated as Suite 300 and
cross-hatched on Exhibit A attached hereto and made a
part hereof (the “Premises”), consisting of
approximately 5,602 square feet of rentable area measured according
to BOMA standards within that certain building known as The 5050
Building and situated at 5050 North 40th Street, Phoenix, Arizona
(the “Building”), The measurement of the rentable area
of the Premises is made according to the definition of such area
employed by the Building Owners and Managers
Association.
ARTICLE 2.
TERM
The Term of this Lease shall be five
(5) years commencing on the date that is not later than the
1st day of February, 2001 (the “Commencement Date”) and
ending on the 31st day of January, 2006 (the “Termination
Date”), Commencement of this Lease is conditioned, and Tenant
acknowledges that this Lease is conditioned, upon the successful
termination of the lease agreement of the Premises to Ceridian
Corporation, as successor to Matthews, Malone &
Associates. If this prior lease agreement is not terminated by
December 1, 2000, this Lease shall be void as if never made in
the first instance. In the event the termination and the tenant
improvements for the Premises are completed prior to
February 1, 2001, in that event the Commencement Date shall be
the date upon which Landlord delivers keys to the Premises to
Tenant along with a copy of the Premises’ certificate of
occupancy; provided, Landlord shall provide at least one
(1) business day notice of the intention to make such
delivery. Subject to the provisions of Article 26,
notwithstanding anything herein to the contrary, the rights of
Tenant hereunder are wholly derivative of the rights of Landlord
under the Ground Lease (as defined below), including the rights of
occupancy of the Premises.
ARTICLE 3.
RENT
Tenant shall pay to Landlord, as
fixed rent for the Premises during the Term of this Lease, the
total sum of Six Hundred Sixty Three Thousand Eight Hundred Thirty
Seven Dollars ($663,837) over the five (5) year term of this
Lease, based upon the rate of Twenty-Three Dollars and Fifty Cents
($23.50) per square foot within the Premises for each of the first
three years of the Term, yielding annual rent of $131,647 plus
applicable tax, in monthly installments, and Twenty-Four Dollars
($24.00) per square foot within the Premises for the fourth and
fifth years of the Term, yielding annual rent for each of those
years of $134,448, plus applicable tax. Rent is due on or before
the first day of each calendar month, commencing on the
commencement date; provided, however, the first month’s rent
shall be paid by Tenant upon execution of this Lease.
Rent due for a period of less than a
full month shall be prorated on the basis of a thirty (30) day
month. Rent shall be paid to Landlord, without deduction or offset,
in lawful money of the United States of America and shall be paid
to Landlord at the address designated herein or
at such other place as Landlord may,
from time to time, designate. Tenant shall also pay to Landlord
with the payments of rent above required, as additional rent, any
privilege, excise, sales, gross proceeds, rent or other tax now or
hereafter levied, assessed or imposed, directly or indirectly, by
any governmental authority upon any rent or other payments required
by this Lease.
ARTICLE 4. SECURITY
DEPOSIT
Tenant shall deposit with Landlord
or its agent the sum of Twenty One Thousand Nine Hundred Forty-One
and no/100 Dollars ($21,941), as partial security for
Tenant’s full and faithful performance of each and every
term, condition, covenant and provision of this Lease. Thereafter,
in the event Tenant defaults in the performance of any term,
condition, covenant or provision hereof, following the applicable
Tenant cure period’s lapse, Landlord may use, apply or
retain the whole or any part of such Security Deposit for the
payment of any rent or other charge in default or for the payment
of any other sum which Landlord may incur or for which
Landlord may become obligated by reason of Tenant’s
default, or to compensate Landlord for any other loss or damage
that Landlord may suffer because of Tenant’s default.
Under no circumstances shall the Security Deposit be deemed to be
the last month’s rent payable hereunder.
Any use, application or retention of
the Security Deposit by Landlord shall be in addition to, and not
in substitution of or as an alternative to, any other rights or
remedies Landlord may have at law or under this Lease, shall
not prevent Landlord from pursuing its other rights and remedies
hereunder or at law or equity, and shall not prevent Landlord from
recovering damages in case of default(s) in excess of the amount of
the Security Deposit used, applied or retained. If any portion of
the Security Deposit is so used, applied or retained, then, not
later than ten (10) days after notice to Tenant; Tenant shall
deposit a sufficient sum in cash with Landlord to restore the
Security Deposit to the full amount initially deposited, and
Tenant’s failure to do so shall be a material breach of this
Lease.
If Tenant, at the end of the Term
hereof, including extensions and holdover periods, if any, and
after vacating the Premises shall have fully and faithfully
complied with all of the terms and provisions of this Lease, the
Security Deposit or any balance thereof not used, applied or
retained by Landlord hereunder within thirty (30) days of the date
of Tenant’s compliance, shall be returned to Tenant, or at
Landlord’s option, to the last assignee of Tenant’s
interest hereunder. No interest or other payment shall be made to
Tenant on or for the use of the Security Deposit nor shall any
trust relationship be created by the deposit of the Security
Deposit. Tenant agrees that if Landlord shall sell or otherwise
dispose of the Building, Landlord shall be relieved of its
obligation to return the Security Deposit provided that
Landlord’s transferee assumes in writing the obligations of
Landlord with respect to such Security Deposit. Landlord shall not
be required to keep the Security Deposit separate from its general
funds. Notwithstanding the first sentence of this paragraph, should
Tenant timely exercise its option to renew, Landlord shall reduce
the balance of the Security Deposit to one (1) month’s
rent, and shall return the excess to Tenant within thirty (30) days
of Tenant’s commencement of the extension period.
ARTICLE 5. RENTAL
ADJUSTMENT
For the purpose of this
Article the terms herein are defined as follows:
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Expense Statement:
An annual statement from Landlord
setting forth the actual Direct Expenses for the Building for the
calendar year ending on the prior December 31 and
Tenant’s Proportionate Share thereof and setting forth the
estimated Direct Expenses that will be incurred by Landlord for the
Building during the current calendar year ending on the next
following December 31 and Tenant’s Proportionate Share
thereof.
Tenant’s Proportionate
Share: Additional rent in
an amount equal to Seven and eighty-two hundredths (7.82%) of the
amount of Direct Expenses that exceed the amount of Direct Expenses
for the Base Year, as defined herein. In determining Tenant’s
Proportionate Share, Landlord uses a load factor of
12.5%.
Direct Expenses:
All direct costs of operation and
maintenance of the Building, parking areas and adjoining property,
which shall include, but shall not be limited to, the following
costs: real property taxes and assessments, personal property taxes
levied on equipment, fixtures and other property of Landlord
located in the Building and used in connection with the operation
thereof, and any other taxes imposed by any federal, state, county,
municipal or other governmental entity, whether assessed against
Landlord and/or Tenant (except any tax payable by Tenant pursuant
to Articles 3 and 46); water and sewer charges; insurance premiums
for reasonable and customary insurance, including, but not limited
to, fire and other casualty insurance and public liability
insurance; utility expenses, including, without limitation,
expenses for gas, electricity and telephone; janitorial expenses;
expenses for landscaping and other services; reasonable and
customary costs incurred in the management of the Building,
including, without limitation, management fees, air conditioning
maintenance and repair and elevator maintenance and repair, the
costs of supplies, materials, equipment and tools used in the
operation of the Building and adjoining areas, the wages and
salaries of employees used in the management, operation, and
maintenance of the Building; and taxes (other than net income
taxes) or assessments of any type whether or not now customary or
within the contemplation of the parties hereto, including
expenditures for improvements normally designated as capital
improvements, which are imposed or required by or result from
statutes or regulations, or interpretations thereof implemented
after the date hereof, and promulgated by any federal, state,
county, municipal or other governmental body or agency of any type
performing any governmental or other function (including, but not
limited to, the Environmental Protection Agency and the authority
administering the Occupational Safety and Health Act, or any
successor agencies performing the same or similar functions);
provided, however, the cost of any such capital improvements made
necessary by the actions of any governmental authority shall be
amortized over the useful life to Landlord of such improvement
according to sound accounting practice and only the portion of such
amortization applicable to any calendar year or if applicable any
partial calendar year, shall be included as a Direct Expense for
such calendar year or partial calendar year.
Except as above provided, Direct
Expenses shall not include any of the following: (a) cost
incurred in connection with construction or refurbishing of the
Building, except as provided In the preceding paragraph and except
that refurbishment of the common areas of the Building shall be
included in Direct Expenses as follows: (i) if such
refurbishments are less than $5,000 in a calendar year, such
refurbishment expenses shall be entirely included in Direct
Expenses for such year, and (ii) if such refurbishment
expenses in a calendar year are $5,000 or more, the cost of any
such refurbishments shall be amortized over the useful life to
Landlord of such improvement (but in all events over no less than
five years) according to sound accounting practice and only the
portion of such amortization applicable to any calendar year shall
be included as a Direct Expense for such calendar year;
(b) cost of leasehold/ construction improvements for Tenant or
any other tenant including changes, additions, repairs,
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replacements, alterations, painting,
decorating or other costs to the Premises, the premises of other
tenants or in preparation for a tenant’s new or continued
occupancy; (c) legal fees, space planning fees, architectural
fees, engineering fees, real estate commissions, marketing,
advertising or any expenses incurred in connection with the
development of or leasing of the Building; (d) any cost
included in operation expenses (including management fees)
representing an amount paid to a person, firm, corporation or other
entity related to Landlord which is in excess of the amount which
would have been paid absent such relationship; (e) cost of
selling, syndicating, financing, mortgaging or hypothecating any of
Landlord’s interest in the Building or the improvements
located on the Building; (f) cost associated with the
operation of the business of the legal entity which constitutes
Landlord as the same is separate and apart from the cost and
operation of the Building, including legal entity formation,
internal equity account and legal matters; (g) costs of
disputes between Landlord and any third party; (h) the cost of
any disputes between Landlord and any employee or agent of
Landlord; (i) cost of defending any lawsuits with mortgagees
or ground lessors; (j) any late fees, penalties, interest charges
or similar fees; (k) interest, principal payments and other costs
of any indebtedness and rental under any ground lease or other
underlying lease; (l) any debt losses, rent losses or reserves for
bad debt; (m) the cost for any repair resulting from casualty and
condemnation of the Premises or Building that is reimbursed by
insurance proceeds; (n) income, excess profits or franchise taxes
or other such taxes imposed on income of Landlord from the
operation of the Building other than the taxes described in
Sections 3 and 46 or the taxes described in the preceding
paragraph; (o) wages, costs and salaries associated with home
office and off-site employees, except when they provide
professional services which would otherwise be provided by outside
professionals; (p) the cost of any items for which the Landlord is
reimbursed by insurance proceeds, condemnation awards, a tenant or
otherwise except through the participation of Tenant; (q) legal
expenses arising out of the construction, occupancy or maintenance
of the Building or the enforcement of the provisions of any
agreements affecting the Building, including this Lease; and (r)
unrecovered expenses resulting from the gross negligence or willful
misconduct of the Landlord, its agents, servants or
employees.
Base Year : Calendar Year 2001; if Tenant exercises its
option to renew, the Base Year for the extension period shall be
calendar year 2006. In all events, if during any calendar year
(including calendar year 2001), the Building is less than fully
occupied, to determine Tenant’s Proportionate Share, Direct
Expenses fluctuating with Building occupancy shall be
“grossed up” to the amount, using commercially
reasonable projections, that normally would be expected if the
Building were 95% occupied for that entire year.
Landlord shall endeavor to give to
Tenant on or before April 1 of each calendar year throughout
the Term of the Lease, an Expense Statement as set forth herein,
but Landlord’s failure to provide Tenant with an Expense
Statement by said dates shall not constitute a waiver by Landlord
of its right to require payment by Tenant of Tenant’s
Proportionate Share of estimated Direct Expenses or actual Direct
Expenses.
Tenant’s Proportionate Share
of estimated Direct Expenses for the calendar year in which the
Expense Statement is received shall be divided by 12 and one such
installment shall be paid concurrently with each rental payment
thereafter until receipt by Tenant of the next Expense Statement.
In addition, Tenant shall pay in full concurrently with the first
monthly rent payment due following receipt of the Expense Statement
an amount equal to the excess of the monthly installment required
to be paid under the most current Expense Statement over the
monthly installment made under the preceding Expense Statement (if
any) multiplied by the number of months elapsing from
January through the month in which the Expense Statement is
received by Tenant.
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If Tenant’s Proportionate
Share exceeds the payments made by Tenant for that calendar year,
then concurrently with the first monthly rent payment due following
receipt by Tenant of the Expense Statement, Tenant shall pay in
full an amount equal to such excess. If Tenant’s
Proportionate Share as shown on the Expense Statement is less than
the payments made by Tenant for that calendar year, the amount of
such overpayment shall be credited against the next monthly rent
payment(s) falling due.
Even though the Term has expired and
the Tenant has vacated the Premises when the final determination is
made of Tenant’s Proportionate Share for the calendar year in
which the Lease expires, Tenant shall promptly following written
demand pay the amount by which Tenant’s Proportionate Share
obligation for the portion of such year in which Tenant was in
occupancy exceeds the estimated payments made by Tenant for that
calendar year; conversely, any overpayment made shall be promptly
rebated by Landlord to Tenant. If Tenant elects at its sole expense
to audit Landlord’s books and records pertaining to Direct
Expenses, such audit: (i) shall cover a period not longer than
the current and immediately preceding calendar years; (ii) shall be
performed at Landlord’s office for retaining such records;
and (iii) accountant’s reports and worksheets shall be
provided at no expense to Landlord for Landlord’s
examination; provided, however, if Landlord’s Expense
Statement is off by more than five percent (5%), Landlord shall pay
for the cost of such audit.
Notwithstanding anything to the
contrary contained in this Article, Tenant’s rental payment
shall in no event be less than the rent specified in Article 3
hereof. Expense Statements shall be prepared in accordance with
generally recognized and established accounting practices and each
such annual determination and statement, certified by Landlord,
subject to Tenant’s foregoing audit rights, shall be final
and conclusive on both parties.
ARTICLE 6. COMPLETION OF
PREMISES
Landlord shall pay for
Tenant’s tenant improvements up to Ten Dollars ($10.00) per
rentable square foot in the Premises. The contract for those
improvements shall be subject to Tenant’s approval, which
shall not unreasonably be withheld, delayed or conditioned. If
Tenant does not approve (or give written reasons for its
disapproval of) the contract within three (3) business days
after Landlord delivers it to Tenant, Tenant agrees that the
Commencement Date shall be delayed one (1) day for each day
thereafter that Tenant delays its approval of the contract. The
parties acknowledge and agree that no costs for tenant improvements
shall be charged to Tenant unless both Landlord and Tenant approve
in writing any such charge, which approvals shall not be
unreasonably withheld or delayed.
Any additional interior
improvements, additions or alterations required by Tenant and
approved by Landlord shall be furnished and installed at
Tenant’s sole cost and expense. Any such additional work
which is normally furnished and installed by the construction
trades shall be furnished and installed by Landlord’s general
contractor or other contractor employed by Landlord at such cost
and on such terms as shall have been agreed to between Landlord and
Tenant.
In order for Landlord to prepare the
necessary construction plans required to accomplish the Completion
of the Premises, including the building standard tenant
improvements hereinabove described, as well as any additional
construction work required by Tenant, Tenant shall, within ten
(10) days following the execution of this Lease, furnish to
Landlord in writing such full and complete information as will be
required to complete said construction plans. Said full and
complete information shall include, without limitation, the
following details:
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(a)
Exact location of telephone and
electrical outlets.
(b)
Interior wall finish
specifications.
(c)
Detailed plans and specifications of
all non-standard construction work to be accomplished within the
Premises by Landlord’s general contractor or other contractor
employed by Landlord.
All work to be performed on the
Premises which is not within the scope of work normally performed
by the construction trades, such as the furnishing and installing
of furniture, telephones, office equipment, etc., shall be
furnished and installed by Tenant at Tenant’s expense.
Agents, contractors and employees obtained by Tenant to accomplish
such non-construction installations shall be subject to
Landlord’s approval and to the administrative supervision of
Landlord’s general contractor. Landlord shall allow access to
the Premises during the construction of the Premises during the
last two weeks preceding commencement of the Lease Term to
Tenant’s agents, contractors and employees for the purpose of
enabling Tenant to prepare the Premises for Tenant’s use and
occupancy. All such non-construction work performed by
Tenant’s agents, contractors or employees shall be
accomplished in such a manner as not to interfere unreasonably with
or delay the work of Landlord’s general contractor in the
completion of the Premises.
Tenant agrees that in the event
Tenant shall have failed by the time hereinabove specified to
furnish Landlord with the necessary information to complete the
Premises or should Tenant, its agents, contractors or employees
otherwise cause delay in Landlord’s preparation of the
Premises, thereby delaying Tenant’s occupancy of the Premises
beyond the Commencement Date, then Landlord may at its option
require Tenant to commence payment of rental on the stated
Commencement Date of the Lease.
ARTICLE 7.
POSSESSION
If Landlord, for any reason
whatsoever, except for that reason noted in the final paragraph of
Article 6, cannot deliver possession of the Premises to Tenant
on the Commencement Date, this Lease shall not be void or voidable
(except as hereinafter provided) nor shall Tenant have a claim for
any loss or damage resulting therefrom, but as Tenant’s sole
remedy, all rent due hereunder shall be abated during the period
between the Commencement Date and the time when Landlord delivers
possession, and the first day of the Term of this Lease and the
final day of the Term of this Lease shall both be extended by a
period equal to the period of such delay. If Landlord shall not
have delivered possession of the Premises by May 1, 2001,
Tenant shall have the option to cancel this Lease on or before
June 1, 2001, by giving ten (10) days’ written
notice to Landlord, in which event (a) this Lease shall be
null and void and of no further force or effect and except as
stated in (b), neither Landlord nor Tenant shall have further
liability or obligation to the other hereunder, and
(b) Landlord shall pay Tenant’s rent at its present
location (as of the date hereof) for the month of May, 2001, as
Tenant’s liquidated damages, so long as the reason for the
delay beyond May 1, 2001, is not due to a breach by Tenant of
Article 6 above. For purposes of this Article 7,
“possession of the Premises” shall be deemed to occur
when the tenant improvements contemplated by Article 6 are
completed and a copy of a certificate of occupancy therefor has
been delivered to Tenant.
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ARTICLE 8. USE OF
PREMISES
The Premises are to be used for
general office use and for no other purpose or purposes (the
“Permitted Use”) without the prior written consent of
Landlord in Landlord’s sole discretion.
Tenant shall not do or permit
anything to be done in or about the Premises which will in any way
increase the risk of fire to the Premises beyond that inherent or
reasonably necessary to the Permitted Use, nor keep or bring
anything therein which will in any way increase the existing rate
of or affect any policy of fire, extended coverage or any other
insurance covering the Building or any of its contents, or cause a
cancellation of any of the same. Tenant shall not do or permit
anything to be done in or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants
of the Building or injure or annoy them, or use or allow the
Premises to be used for any improper, immoral, unlawful or
objectionable purpose, or maintain or permit any nuisance in, on or
about the Premises or permit anything to be done which
may injure or damage the Premises. Tenant shall not damage,
deface or commit or suffer to be committed any waste in or upon the
Premises.
As used in this Lease, the term
“Hazardous Material” means any flammable items,
explosives, radioactive materials, hazardous or toxic substances,
material or waste or related materials, any dangerous or poisonous
substances, chemicals, drugs or materials, and including any
substances defined as or Included in the definition of
“hazardous substances”, “hazardous wastes”,
“infectious wastes”, “hazardous materials”,
“toxic substances”, “dangerous substances”,
“poisonous substances” or “controlled
substances” now or subsequently regulated, controlled or
prohibited under any federal, state or local laws, statutes,
ordinances, orders or regulations (collectively “Hazardous
Materials Laws”) including, without limitation, oil,
petroleum-based products, paints, poisons, harmful drugs, solvents,
lead, cyanide, DDT, printing inks, acids, pesticides, ammonia
compounds and other chemical products, asbestos, PCBs and similar
compounds, and including any different products and materials which
are subsequently found to have adverse effects on the environment
or the health and safety of persons. Tenant shall not cause or
permit any Hazardous Material to be generated, produced, brought
upon, used, stored, treated, discharged, released, spilled or
disposed of on, in, under or about the Premises by Tenant, its
affiliates, agents, employees, contractors, sublessees, assignees,
except only for such Hazardous Material as is necessary to and
commonly used in Tenant’s business and the industry with
which Tenant’s business is associated, as Tenant is licensed
and legally authorized to handle and as is permitted under and
subject to the terms and conditions of this Lease including without
limitation the permitted use of the Premises set forth in this
Lease. Any Hazardous Material necessary to Tenant’s business
as permitted by and subject to the permitted use set forth above in
this Lease shall in each and every instance be utilized, handled,
transported, stored, used, held and disposed of in a safe,
harmless, nontoxic and proper manner and further in a manner which
compiles with all Hazardous Materials Laws whether now or hereafter
existing.
Tenant shall and does hereby
indemnify, defend and hold Landlord harmless from and against any
and all actions (including, without limitation, remedial or
enforcement actions of any kind, administrative or judicial
proceedings, and orders or judgments arising out of or resulting
therefrom), costs, claims, damages (including, without limitation,
punitive damages), expenses (including without limitation,
attorneys’, consultants’ and experts’ fees, court
costs and amounts paid in settlement of any claims or actions),
fines, forfeitures or other civil, administrative or criminal
penalties, injunctive or other relief (whether or not based upon
personal injury, property damage, or contamination of, or adverse
effects upon, the environment, water tables or natural resources),
liabilities or losses arising from a breach of any of the
provisions, terms or
7
agreements of this Article by
Tenant, its affiliates, agents, employees, contractors, sublessees
or assignees.
In the event that Hazardous
Materials are discovered upon, in, or under the Premises as a
result of the actions of Tenant or its assignees, sublessees or
Premises occupants after the Commencement Date or arising from
Tenant’s fixturizing the Premises prior thereto, and any
governmental agency or entity having Jurisdiction over the Building
requires the removal or disposal of such Hazardous Materials, or
any remediation of any discharge of or contamination by any such
Hazardous Materials, Tenant shall be solely responsible for
removing those Hazardous Materials or remediating any unlawful
discharge or contamination of or from any Hazardous Materials
arising out of or related to the use or occupancy of the Premises
or Building by Tenant or its affiliates, agents, employees,
contractors, sublessees or assignees. Notwithstanding the
foregoing, Tenant shall not take any remedial action in or about
the Premises or the Building without first notifying Landlord of
Tenant’s intention to do so and affording Landlord the
opportunity to protect Landlord’s interest with respect
thereto. Tenant Immediately shall notify Landlord in writing of any
of the following of which Tenant has knowledge: (j) any spill,
release, discharge, disposal or contamination of or by any
Hazardous Material in, on or under the Premises, the Building or
any portion thereof; (ii) any enforcement, cleanup, removal or
other governmental or regulatory action instituted, contemplated,
or threatened (if Tenant has notice thereof) pursuant to any
Hazardous Materials Laws; (iii) any claim made or threatened
by any person against Tenant, the Premises, or the Building
relating to damage, contribution, cost recovery, compensation, loss
or injury resulting from or claimed to result from any Hazardous
Materials; and (iv) any reports made to any governmental
agency or entity arising out of or in connection with any Hazardous
Materials in, on, under or about or removed from the Premises or
the Building, including any complaints, notices, warnings, reports
or asserted violations in connection therewith. Tenant also shall
supply to Landlord as promptly as possible, and in any event within
five (5) business days after Tenant first receives or sends
the same, copies of all claims, reports, complaints, notices,
warnings or asserted violations relating in any way to the
Premises, the Building or the Permitted Use. Without limiting the
foregoing indemnity, Tenant shall be responsible to pay for, or
reimburse Landlord for, the cost of any investigations, studies,
cleanup or corrective action initiated or undertaken on account of
any action or inaction of Tenant in violation of any Hazardous
Materials Laws at or affecting the Premises and/or Building.
Further, Landlord reserves the right to enter into and upon the
Premises from time to time with or without notice for purposes of
inspecting, reviewing, analyzing or checking the Premises and in
the event that Landlord shall determine the same to be necessary or
desirable, Landlord may from time to time commission and cause
to be made or conducted such studies, reports, tests, samples,
inspections, monitoring, remediation, removals and/or disposals of
or relating to Hazardous Materials or actual, threatened or
potential contamination by or from Hazardous Materials as Landlord
shall deem reasonably necessary, the cost of which shall be paid by
Tenant if Tenant is otherwise liable therefor hereunder.
ARTICLE 9. COMPLIANCE WITH
LAW
Tenant shall at its sole cost and
expense promptly comply with all laws, statutes, ordinances and
governmental rules, regulations or requirements now in force
governing the Premises and Tenant’s parking stalls or which
may hereafter be in force and with the requirements of any
board of fire underwriters or other similar body relating to or
affecting the condition, use or occupancy of the Premises,
excluding structural changes not related to or affected by
Tenant’s improvements or acts, but including the Americans
With Disabilities Act and all state and local statutes and
regulations of similar import.
8
ARTICLE 10. RULES AND
REGULATIONS
Landlord has established Building
Rules and Regulations which are attached to this Lease as
Exhibit B. Landlord may from time to time make
such modifications, additions and deletions in the Building
Rules and Regulations as in the sole judgment of Landlord are
necessary or convenient for the management and operation of the
Building, so long as such modifications, additions and deletions
(i) are consistent with current comparable office building
operation conventions, (ii) do not increase Tenant’s
obligations or conflict with express provisions of this Lease, or
(iii) are not enforced in a discriminatory manner. Landlord
shall notify Tenant from time to time of modifications, additions,
or deletions in the Building Rules and Regulations, and any
such modification, addition, or deletion shall be effective after
Landlord gives five (5) days’ written notice thereof to
Tenant; provided, however, if an emergency arises which in the sole
judgment of Landlord makes it impracticable to give five
(5) days’ written notice, such modification, addition,
or deletion shall become effective immediately upon implementation
by Landlord, with the written notice to be subsequently given.
Tenant agrees to faithfully observe and comply with the Building
Rules and Regulations and all modifications, additions or
deletions thereto and the breach of any Building Rule and
Regulation by Tenants shall constitute a material breach of this
Lease. Landlord shall not be responsible to Tenant for the
nonperformance by any other tenant or occupant of the Building of
any such Building Rules and Regulations, but the Building
Rules and Regulations from time to time in effect shall be
uniformly applicable to all tenants and occupants similarly
situated.
ARTICLE 11.
ALTERATIONS
Tenant shall not make or permit to
be made any alterations, additions, improvements, or installations
at the Premises or any part thereof without the prior written
consent of Landlord, which consent shall not unreasonably be
withheld so long as such activities are not structural and do not
impact the Building’s utility systems. Any alterations,
additions, improvements, or installations to or of the Premises,
except movable furniture and trade fixtures, shall at once become a
part of the realty and belong to Landlord. In the event
Landlord consents to alterations, additions, improvements, or
installations, pursuant to this Article, the same shall be made by
Tenant at Tenant’s sole cost and expense and selection by
Tenant of any person or entity to construct or install the same
shall be subject to the prior written consent of Landlord, which
consent may be conditioned upon (1) Tenant, providing
Landlord, at Tenant’s sole cost and expense, a lien and
completion bond in an amount equal to one and one-half times the
estimated cost of all of such alterations, additions, improvements
or installations and (2) acquisition by Tenant of all permits
needed to authorize such alterations, additions, improvements or
installations from the appropriate governmental agencies,
furnishing a copy thereof to Landlord at least ten (10) days
prior to the commencement of such work and complying with all of
the conditions of such permits in a prompt manner. It shall be a
material breach hereof for Tenant to make any alterations,
additions, improvements or installations without the prior consent
of Landlord, and in addition to any other remedies Landlord
may have, Landlord may require that Tenant remove any or
all of the same within thirty (30) days of receipt by Tenant of a
notice demanding such removal. Upon the expiration or sooner
termination of the Term hereof and upon demand by Landlord, Tenant,
at Tenant’s sole cost and expense, shall forthwith and with
all due diligence remove any such alterations, additions,
improvements, or installations designated by Landlord to be removed
and repair any damage to the Premises caused by such
removal.
9
ARTICLE 12.
REPAIRS
Tenant and its agents shall have
been given full opportunity to inspect and examine the Premises
and, by entry hereunder, Tenant accepts the Premises in its present
“as is” condition and without any warranty as to the
condition of the Premises or the Building. Tenant shall, at
Tenant’s sole cost and expense, keep the Premises and every
part thereof in good condition and repair, ordinary wear and
tear and damage thereto by fire, earthquake, act of God or the
elements excepted. If Tenant does not commence such repairs after
Landlord’s written demand for same and the passage of five
(5) business days, except in an emergency affecting other
tenants of the Building (in which event Tenant shall immediately
commence repairs), Landlord may make such repairs and Tenant
shall pay the costs thereof and any accrued interest thereon upon
demand. Tenant hereby waives all rights to make repairs at the
expense of Landlord as provided by any law, statute or ordinance
now or hereafter in effect.
Landlord shall, at Landlord’s
expense, keep the structural portion, roof and parking lot of the
Building in good order, condition and repair; provided, however,
that in the event any damage to the structural portion of the
Building is caused by the acts or omissions of Tenant, its agents,
contractors or employees, Landlord shall, at Tenant’s sole
cost and expense, complete the repairs necessary to place the
Building in good order, condition and repair and Tenant shall pay
the costs thereof upon demand.
Upon the expiration or sooner
termination of the Term hereof, Tenant shall surrender the Premises
to Landlord in the same condition as when received, ordinary wear
and tear and damage thereto by fire, earthquake, act of God or the
elements excepted.
ARTICLE 13.
ABANDONMENT
Tenant shall not vacate or abandon
the Premises at any time prior to the expiration or earlier
termination of the Term hereof. In the event Tenant shall abandon,
vacate or surrender the Premises, or be dispossessed by process of
law, or otherwise, any personal property belonging to Tenant and
left on the Premises shall be deemed to have been abandoned. The
absence of Tenant for a period of thirty (30) consecutive days
during the Term of this Lease shall automatically be deemed an
abandonment of the Premises, and such period of absence shall be
the exclusive test for a determination that Tenant has vacated or
abandoned the Premises.
ARTICLE 14.
LIENS
Tenant shall keep the Premises and
the Building free from any vendor’s, mechanic’s,
materialmen’s or like liens arising out of any work
performed, materials furnished or obligations incurred by Tenant.
Landlord shall have the right at all times to post notices of
non-responsibility on the Premises and record verified copies
thereof in connection with all work of any kind upon the
Premises.
ARTICLE 15. ASSIGNMENT AND
SUBLETTING
Neither Tenant nor anyone claiming
by, through or under Tenant shall assign, transfer, mortgage,
pledge, hypothecate or encumber this Lease, or any interest
therein, nor sublet the Premises or any part thereof, or any
right or privilege appurtenant thereto, or permit any other person
(the agents and servants of Tenant excepted) to occupy or use the
Premises or any part thereof (a “Transfer”),
without the prior written consent of Landlord. Notwithstanding
the
10
foregoing, it shall not be deemed a
Transfer if Tenant permits persons not employed by Tenant to occupy
up to two (2) of Tenant’s offices and Tenant’s
conference room from time to time; therefore Tenant shall be
jointly and severally responsible with such occupants under
Articles 8 through 12, inclusive, for the activities of such
occupants. A consent to one Transfer shall not be deemed a consent
to any subsequent Transfer and no such Transfer shall relieve
Tenant of any liability or obligation hereunder. Any of the
foregoing acts without Landlord’s consent shall be void and
shall constitute a default of Tenant under this Lease. Tenant shall
pay Landlord’s reasonable attorneys’ fees incurred in
connection with any Transfer or request for consent to Transfer. If
Tenant requests an assignment or sublease of the entire Premises,
Landlord shall have the right, without obligation, to terminate
this Lease and to enter into a direct lease with the proposed
assignee or subtenant; upon the commencement date of the new
tenancy, Tenant’s obligations hereunder (and
Guarantors’ obligations under the Lease Guaranty) shall
cease.
In no event shall this Lease or any
interest therein be assigned or assignable by operation of law
without the prior written consent of Landlord or by voluntary or
involuntary bankruptcy proceedings or otherwise and in no event
shall this Lease or any rights or privileges hereunder be an asset
of Tenant under any bankruptcy, insolvency or reorganization
proceedings. If a sublease of a portion of the Premises results in
a higher per-square foot rent from the sublessee to Tenant that the
then-current fixed rent reserved herein for the same space, Tenant
shall pay one-half of such excess to Landlord.
In the event of default by any
assignee of Tenant or any successor of Tenant in the performance of
any of the terms hereof, Landlord may proceed directly against
Tenant without the necessity of exhausting or pursuing any remedies
against said assignee or successor. Landlord may consent to
subsequent Transfers of this Lease or amendments or modifications
to this Lease with assignees or successors of Tenant without prior
or subsequent notice to Tenant, and without obtaining its or their
consent thereof, and such action shall not relieve Tenant of any
liability or obligation under this Lease.
ARTICLE 16. INDEMNIFICATION
OF PARTIES: INSURANCE
Tenant agrees to indemnify Landlord
against, and hold Landlord, the Premises and the Building free and
harmless from, any and all penalties, costs, expenses (including
attorneys’ fees), claims, demands and causes of action,
including imputed negligence due to ownership of the Building,
arising out of or in connection with (a) any accident or other
occurrence in or on the facilities (including, without limiting the
generality of the term “facilities,” stairways,
passageways or hallways) the use of which Tenant may have in
conjunction with other tenants of the Building, when such injury or
damage shall be caused in part or in whole by the act or
omission of Tenant, its agents, contractors, servants, employees,
licensees, permittees and clients, (b) the condition of, or
any defect in, the Premises or any part thereof or any
improvements thereof, to the extent caused by Tenant or its agents,
contractors, servants, employees, licensees, permittees, clients,
assignees, sublessees and Premises occupants, (c) the
condition of, or any defect in, Tenant’s fixtures or
equipment or any part thereof, (d) the use or occupancy
of the Premises by Tenant or any tenant of Tenant, or (e) any
breach or default in the performance of any obligation on
Tenant’s part to be performed under the terms of this
Lease.
If any action or proceeding be
brought against Landlord for any of the foregoing reasons, Tenant,
upon notice from Landlord shall defend the same at Tenant’s
expense by counsel satisfactory to Landlord.
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Tenant shall at its own costs and
expense procure and maintain during the entire Term and any
extensions thereof, workmen’s compensation insurance as
required by statute as well as comprehensive public liability
insurance covering the Premises and their surrounding areas and
naming Landlord as an additional insured in such amounts as
Landlord may from time to time reasonably require. The initial
liability coverage under Tenant’s comprehensive public
liability insurance shall not be less than One Million Dollars
($1,000,000) for any one person injured or killed, Two Million
Dollars ($2,000,000) for injury or death to persons in any one
incident and Five Hundred Thousand Dollars ($500,000) for damage to
property in any one incident (“Initial Coverage”). Said
comprehensive public liability insurance shall also contain cross
liability endorsements and insure performance by Tenant of the
indemnity provisions provided above. The limits of said insurance
shall not, however, limit the liability of Tenant under the first
paragraph of this Article. The originals of all policies shall
remain in possession of Tenant; provided, however, that Landlord
shall have the right to receive from Tenant, upon written demand, a
duplicate policy or policies of any or all policies. All policies
of insurance shall provide that such insurance will not be canceled
or subject to reduction of coverage or other modification except
after thirty (30) days written notice to Landlord. Tenant shall
furnish policy renewals to Landlord not less than ten
(10) days prior to the expiration of any policy required
hereunder. Landlord shall keep the Building insured with
comprehensive public liability and property insurance in such
amounts and with such deductibles as from time to time are typical
for office buildings like the Building, and at the Commencement
Date Landlord’s public liability coverage shall be at a
minimum in the amounts of the Initial Coverage. All insurance
policies procured shall be issued by a responsible company or
companies authorized to do business in the State of Arizona and
reasonably satisfactory to Landlord.
ARTICLE 17. DENIAL OF
SUBROGATION RIGHTS
Neither Landlord nor Tenant shall be
liable to the other for any business interruption or any loss or
damage to property or injury to
