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OFFICE LEASE AGREEMENT

Office Lease Agreement

OFFICE LEASE AGREEMENT | Document Parties: KBS PHOENIX IV, LLC | KOLL BREN FUND V, LP | Koll Bren Realty Advisors, Inc | READY MIX, INC You are currently viewing:
This Office Lease Agreement involves

KBS PHOENIX IV, LLC | KOLL BREN FUND V, LP | Koll Bren Realty Advisors, Inc | READY MIX, INC

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Title: OFFICE LEASE AGREEMENT
Governing Law: Arizona    

OFFICE LEASE AGREEMENT, Parties: kbs phoenix iv  llc , koll bren fund v  lp , koll bren realty advisors  inc , ready mix  inc
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Exhibit 10.3

         OFFICE LEASE AGREEMENT

By and Between

KOLL BREN FUND V, L.P.

"LANDLORD"

And

READY MIX, INC.

"TENANT"


 


TABLE OF CONTENTS—OFFICE LEASE AGREEMENT

ARTICLE 1.   SUMMARY AND DEFINITION OF CERTAIN LEASE PROVISIONS AND EXHIBITS   2
ARTICLE 2.   PREMISES/RIGHT TO USE COMMON AREAS   3
ARTICLE 3.   TERM   4
ARTICLE 4.   MINIMUM MONTHLY RENT   4
ARTICLE 5.   ADDITIONAL RENT/BASE YEAR   4
ARTICLE 6.   PARKING   5
ARTICLE 7.   RENT TAX AND PERSONAL PROPERTY TAXES   6
ARTICLE 8.   PAYMENT OF RENT AND LATE CHARGES   6
ARTICLE 9.   SECURITY DEPOSIT   7
ARTICLE 10.   CONSTRUCTION OF THE PREMISES   7
ARTICLE 11.   ALTERATIONS   7
ARTICLE 12.   LIENS   9
ARTICLE 13.   USE OF PREMISES/RULES AND REGULATIONS   l0
ARTICLE 14.   RIGHTS RESERVED BY LANDLORD   10
ARTICLE 15.   QUIET ENJOYMENT   10
ARTICLE 16.   MAINTENANCE AND REPAIR   11
ARTICLE 17.   UTILITIES AND JANITORIAL SERVICES   11
ARTICLE 18.   ENTRY AND INSPECTION   11
ARTICLE 19.   ACCEPTANCE OF THE PREMISES/LIABILITY INSURANCE   12
ARTICLE 20.   CASUALTY INSURANCE   12
ARTICLE 21.   DAMAGE AND DESTRUCTION OF PREMISES   12
ARTICLE 22.   EMINENT DOMAIN   13
ARTICLE 23.   ASSIGNMENT AND SUBLETTING   13
ARTICLE 24.   SALE OF PREMISES BY LANDLORD   14
ARTICLE 25.   SUBORDINATION/ATTORNMENT/MODIFICATION/ASSIGNMENT   14
ARTICLE 26.   LANDLORD'S DEFAULT AND RIGHT TO CURE   15
ARTICLE 27.   ESTOPPEL CERTIFICATES   15
ARTICLE 28.   TENANT'S DEFAULT   15
ARTICLE 29.   LANDLORD'S REMEDIES   16
ARTICLE 30.   TENANT'S RECOURSE   17
ARTICLE 31.   HOLDING OVER   17
ARTICLE 32.   GENERAL PROVISIONS   17
ARTICLE 33.   NOTICES   18
ARTICLE 34.   BROKER'S COMMISSIONS   18
ARTICLE 35.   INDEMNIFICATION/WAIVER OF SUBROGATION   19
ARTICLE 36.   WAIVER OF TRIAL BY JURY   19
EXHIBIT A.   PREMISES SPACE PLAN   21
EXHIBIT B.   BUILDING STANDARD WORK LETTER   22
    1. DEFINITIONS    
    2. GENERAL PROCEDURES FOR PREPARING PLANS AND SPECIFICATIONS    
    3. LANDLORD'S OBLIGATIONS TO PAY FOR IMPROVEMENTS    
    4. CONSTRUCTION OF TENANT'S LEASEHOLD IMPROVEMENTS    
    5. COMPLETION OF TENANT LEASEHOLD IMPROVEMENTS    
EXHIBIT C.   RULES AND REGULATIONS   23
EXHIBIT D.   COMMENCEMENT DATE CONFIRMATION   26

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OFFICE LEASE AGREEMENT

         THIS OFFICE LEASE AGREEMENT, dated this 26 th day of May 2000 , is made and entered into by KBS PHOENIX IV, LLC, a Delaware limited liability company ("Landlord"), and READY MIX, INC., a Nevada corporation (the "Tenant"). In consideration of the mutual promises and representations set forth in this Lease, Landlord and Tenant agree as follows:

ARTICLE 1.    SUMMARY AND DEFINITION OF CERTAIN LEASE PROVISIONS AND EXHIBITS

        1.1   The following terms and provisions of this Lease, as modified by other terms and provisions hereof, are included in this Section 1.1 for summary and definitional purposes only. If there is any conflict or inconsistency between any term or provision in this Section 1.1 and any other term or provision of this Lease, the other term or provision of this Lease shall control:

    (a)   Landlord:   KBS Phoenix IV, LLC,
A Delaware limited liability company

 

 

(b)

 

Address of Landlord for Notices:

 

CB Richard Ellis, Inc.
2415 East Camelback Road
Phoenix, Arizona 85016
ATTN: Asset Services

 

 

(c)

 

Tenant:

 

Ready Mix, Inc.,
A Nevada corporation

 

 

(d)

 

Address of Tenant for Notices:

 

2601 E. Thomas
Suite 235
Phoenix, Arizona 85016
  •         With a copy to:

        (e)     Lease Term:      Three (3) years and Three (3) months, plus the remainder of any partial calendar month in which the Lease Term commences, beginning on the earlier of June 11, 2000, (the "Commencement Date") or the date of substantial completion of Tenant Improvements if the space is subject to new construction pursuant to Exhibit B , and expiring on August 31, 2003, (the "Termination Date"), Landlord and Tenant shall execute a Commencement Date Confirmation substantially in the form of Exhibit D hereto promptly following the Commencement Date.

        (f)     Building:     The office building known as 26 th Place, located at 2601 East Thomas, Phoenix, Arizona, (the "Building").

        (g)     Premises:     Suite 235 on the 2 nd floor of the Building, as shown on Exhibit A , consisting of approximately 2,260 Rentable Square Feet (the "space")

        (h)     Minimum Monthly Rent     Tenant's Minimum Monthly Rent shall be as follows:

Months: 1-3:   $1,506.67 per month plus applicable rental sales tax
Months: 4-15:   $3,015.22 per month plus applicable rental sales tax
Months: 16-27:   $3,203.55 per month plus applicable rental sales tax
Months: 28-39:   $3,393.77 per month plus applicable rental sales tax

        (i)     Tenant's Pro Rata Share:      7.06% (see Article 5 ).

        (j)     Base Year:     2000

        (k)     Security Deposit:     A Deposit of $3,393.77 shall be required shall be due upon execution of this Lease (see Article 9 ).

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        (1)     Business Hours:     7:00 a.m. to 6:00 p.m. Monday through Friday; 8:00 a.m. to 12:00 p.m. Saturday.

        (m)     Tenant Improvements:     Landlord shall provide Tenant with new Building Standard carpet (to be selected by Tenant), paint the suite, replace damaged mini blinds, replace damaged ceiling tiles, replace missing door on office, repair cabinets in the breakroom and install a 3'x4' glass window.

        (n)     Antenna:     Landlord will allow Tenant to place its antenna on the roof of the building. The Landlord shall have the right to approve the size and location of the antenna. Tenant at its sole cost shall be responsible for the installation and removal of the antenna including any costs associated with patching the roof.

        1.2   The following exhibits (the "Exhibits") and addenda are attached hereto and incorporated herein by this reference:

Exhibit A   Premises Space Plan
Exhibit B   Building Work Letter for Tenant Improvements
Exhibit C   Building Rules and Regulations
Exhibit D   Commencement Date Confirmation

        The Office Lease Agreement and the Exhibits are collectively referred to herein as the "Lease."

ARTICLE 2.    PREMISES/RIGHT TO USE COMMON AREAS

        2.1   Landlord leases to Tenant and Tenant leases from Landlord the Premises, for and subject to the terms and provisions set forth in this Lease. This Lease is subject to all liens, encumbrances, ground leases, casements, restrictions, covenants, and all other matters of record, the Rules and Regulations prescribed in Exhibit C and the Parking provisions set forth in Article 6 . Tenant and Tenant's agents, contractors, customers, directors, employees, invitees, officers, and patrons (collectively, the "Tenant's Permittees") have a non-exclusive privilege and license, during the Lease Term, to use the Common Areas in common with all other authorized users thereof.

        2.2   For purposes of this Lease, the following terms shall have the definitions set forth below:

  •         (a)   "Automobile Parking Areas" means all areas designated for automobile parking upon the Land. Automobile Parking Areas are Common Areas, but certain parking areas are restricted to use by certain occupants.

            (b)   "Common Areas" means those areas within the Building and upon the Land not leased to any tenant and which are intended by Landlord to be available for the use, benefit, and enjoyment of all occupants of the Building.

            (c)   "Interior Common Facilities" means lobbies, corridors, hallways, elevator foyers, restrooms, mail rooms, mechanical and electrical rooms, janitor closets, and other similar facilities used by tenants or which may be made available and/or accessible by Landlord for the benefit of tenants on a non-exclusive basis.

            (d)   "Land" means the parcel of land upon which the Building is situated;

            (e)   "Load Factor" means the quotient of the Rentable Square Footage of the Building divided by the aggregate Usable Square Footage of all premises and occupiable space in the Building.

            (f)    "Rentable Square Footage" means (1) with respect to the Building, the sum of the total area of all floors in the Building (including Interior Common Facilities but excluding stairs, elevator shafts, vertical shafts, parking areas and exterior balconies), computed by measuring to the

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  • exterior surface of permanent outside walls; and (2) with respect to the Premises, the Usable Square Footage of the Premises multiplied by the Load Factor.

            (g)   "Usable Square Footage" means the area of the Premises (or other space occupiable by tenants as the case may be) computed by measuring to the exterior surface of permanent outside walls, to the midpoint of corridor and demising walls and to the Tenant side of permanent interior walls and Interior Common Facilities walls (other than corridor walls).

ARTICLE 3.    TERM

        The term of this Lease shall be as set forth in Section 1.1(e).

ARTICLE 4.    MINIMUM MONTHLY RENT

        Tenant shall pay to Landlord, without deduction, setoff, prior notice, or demand, the Minimum Monthly Rent, payable in advance on the first day of each calendar month during the Lease Term. The equivalent of one month's Minimum Monthly Rent shall be due and payable by Tenant to Landlord concurrently upon Tenant's execution of this Lease and delivery of same to Landlord for counter execution. If the Lease Term commences on a date other than the first day of a calendar month, the Minimum Monthly Rent for that month shall be prorated on a per diem basis and the excess paid by Tenant upon execution of the Lease shall be credited to Tenant and applied toward the Minimum Monthly Rent due for the immediately following full calendar month.

ARTICLE 5.    ADDITIONAL RENT/BASE YEAR

        Tenant shall pay as additional rent each year the amount, if any, by which Tenant's Pro Rata Share of Operating Costs (hereinafter defined) during each Operating Year (hereinafter defined) of the Lease Term exceeds Tenant's Pro Rata Share of Operating Costs in the Base Year set forth in Section 1.1 (i) . Tenant's Pro Rata Share is the percentage set forth in Section 1.1 (i) . If the Lease Term begins or ends anytime other than the first or last day of an Operating Year, Operating Costs and Tenant's Pro Rata Share thereof shall be prorated. Prior to the end of each Operating Year, Landlord shall provide Tenant with a written statement of Landlord's estimate of Tenant's Pro Rata Share of Operating Costs for the next succeeding Operating Year (the "Estimated Share"). Landlord may, at any time, revise the Estimated Share and adjust the required monthly payment accordingly. After the end of each Operating Year, Landlord shall provide Tenant with a statement showing Tenant's Pro Rata Share of the actual Operating Costs for the preceding Operating Year (the "Actual Share"). If the Actual Share exceeds the Estimated Share paid by Tenant during that Operating Year, Tenant shall pay the excess at the time the next succeeding payment of Minimum Monthly Rent is payable (or within ten (10) days if the Lease Term has expired or been terminated). If the Actual Share is less than the Estimated Share paid by Tenant, Landlord shall apply such excess to payments next falling due under this Article (or refund the same to Tenant or credit amounts due from Tenant if the Lease Term has expired or been terminated). If the Project is not fully occupied during any portion of any Fiscal Year, Landlord may adjust (an " Equitable Adjustment ") Operating Costs to equal what would have been incurred by Landlord had the Project been fully occupied. This Equitable Adjustment shall apply only to Operating Costs which are variable and therefore increase as occupancy of the Project increases. Landlord may incorporate the Equitable Adjustment in its estimates of Operating Costs. If Landlord does not furnish any particular service whose cost would have constituted an Operating Cost to a tenant other than Tenant who has undertaken to perform such service itself, Operating Costs shall be increased by the amount which Landlord would have incurred if it had furnished the service to such tenant. For purposes of this Lease: (a) "Operating Costs" means and includes all costs of management, maintenance, and operation of the Building, including but not limited to the costs of cleaning, repairs, utilities, air conditioning, heating, plumbing, elevator, parking, landscaping, insurance, property taxes and special assessments levied against the Land, the Building or the Premises, and all other costs which

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can properly be considered operating expenses but excluding costs of property additions, alterations for tenants, leasing commissions, advertising, depreciation, interest, income taxes and administrative costs not specifically incurred in the management, maintenance and operation of the Project; and (b) "Operating Year" means a year beginning January 1 and ending December 31.

ARTICLE 6.    PARKING

        6.1   Provided that Tenant shall not default or be in default at any time under the terms and conditions of this Lease, and provided further that Tenant shall pay all parking license fees, plus tax and other charges relating thereto, and provided further that Tenant shall comply with and abide by any parking rules and regulations from time to time in effect, Tenant shall have a license to park up to, but not more than, Ten (10) passenger automobiles (but not oversized or abnormally heavy vehicles) in parking spaces located in the Automobile Parking Areas provided by Landlord from time to time for the Building, of which Ten(10) spaces (the "Total Spaces") (i)  Two (2) (the "Covered Spaces") shall be in reserved, covered Automobile Parking Areas provided and designed by Landlord from time to time, and (ii)  Eight (8) (the "Uncovered, Unreserved Surface Spaces") shall be uncovered, unreserved spaces used in common with all other tenants, visitors and occupants to or in the Building.

        The parking privileges or spaces made available to Tenant as provided above in this paragraph shall be charged to Tenant during the initial Lease Term beginning on the first day of month two (2) of the Lease Term at the rate of, and Tenant shall then pay to Landlord in cash and in advance for each such privilege or space, $25.00 per space per month, plus tax, for Two (2) Covered Spaces. The Uncovered, Unreserved Surface Spaces shall be available free of charge for the initial Lease Term. Tenant covenants and agrees not to park or permit to be parked by its agents, servants or employees more than Ten (10) vehicles at any time at or on the Land or any lots provided by Landlord for the Building and in the event Tenant causes or permits more vehicles than designated herein to be parked, after receiving written notice from the Landlord, the same shall constitute a default under this Lease. Each automobile shall, at Landlord's option to be exercised from time to time, bear a permanently affixed and visible identification sticker or tag to be provided from time to time by Landlord. Tenant shall not and shall not permit its employees, agents, servants, licensees, customers or invitees to park any vehicles in locations other than those specifically designated by Landlord as being for Tenant's use. This license is for self-service parking only and does not include additional rights or services. Landlord shall not have any obligation to monitor or enforce Tenant's parking licenses or privileges. Except for the gross negligence or willful misconduct of Landlord, neither Landlord nor its operators, agents, servants, licensees or employees shall be liable for: (i) loss or damage to any vehicle or other personal property parked or located upon or within such parking spaces or any Automobile Parking Areas whether pursuant to this license or otherwise and whether caused by fire, theft, explosion, strikes, riots or any other cause whatsoever; or (ii) injury to or death of any person in, about or around such parking spaces or any parking areas or any vehicles parking therein or in proximity thereto whether caused by fire, theft, assault, explosion, riot or any other cause whatsoever and Tenant hereby waives any claim for or in respect to the above. Tenant further agrees to indemnify, defend and hold harmless Landlord for, from and against all claims or liabilities arising out of loss or damages to property or injury to or death of persons, or both, relating to any of the foregoing unless directly caused by the gross negligence or willful misconduct of Landlord. Except pursuant to an assignment permitted under the Lease, Tenant shall not assign any of its rights hereunder and in the event an attempted assignment is made, it shall be void.

        6.2   In the event any tax, surcharge, imposition or regulatory fee is at any time imposed by any governmental authority upon or with respect to parking, parking spaces, the parking rights or license granted hereby, the parking fees to be paid hereunder, or the vehicles parking in the Automobile Parking Areas referred to herein, Tenant shall pay the same to Landlord as additional rent hereunder, payable with monthly installments of Monthly Rent or as otherwise required by Landlord.

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        6.3   Landlord or its agents shall have the right (but not the obligation), from time to time as a part of Expenses, to monitor all Automobile Parking Areas to assure that Tenant, its employees, agents and contractors are parking only in the areas designated by Landlord from time to time for Tenant's use. Landlord shall have the right to tow away, at the expense of the vehicle owner, any vehicles that do not park in spaces designated for Tenant's use or any vehicles of Tenant's invitees not parked in areas designated for Tenant's use or visitors parking. Landlord shall only invoice the Tenant and not individual employees for said parking. Landlord shall have the right to modify the overall site parking plan including the right to change the location of any spaces previously reserved for Tenant's use, whether covered or uncovered and/or whether surface or garage, provided they are within similar location to Tenant's premises. Landlord shall also have the right to pursue other rights and remedies available at law or in equity.

        6.4   Landlord or its agents shall have the right from time to time with thirty (30) days prior written notice to the Tenant to substitute other Covered Spaces within the Project for the Covered Spaces referenced hereinabove.

        6.5   Landlord or its agents reserves the right to cancel the above Covered Spaces and/or convert them to Uncovered, Unreserved Surface Spaces for nonpayment of rent in excess of one (1) month. Landlord will give five (5) days written notice prior to the exercise of such right.

        6.6   All rental or other charges set forth above shall be due and payable at the same times as the monthly installments of Base Rent are payable under the Lease and shall in general be subject to the terms and provisions as are applicable to rental installments under the Lease, including without limitation, payment of privilege, rental or other taxes on such rental charges.

ARTICLE 7.    RENT TAX AND PERSONAL PROPERTY TAXES

        Tenant shall pay to Landlord, in addition to, and simultaneously with, any other amounts payable to Landlord under this Lease, a sum equal to the aggregate of any municipal, county, state, or federal excise, sales, use, or transaction privilege taxes now or hereafter levied or imposed against, or on account of, any amounts payable under this Lease by Tenant or the receipt thereof by Landlord. Tenant shall pay, prior to delinquency, all taxes levied upon fixtures, furnishings, equipment and personal property placed on the Premises by Tenant.

ARTICLE 8.    PAYMENT OF RENT AND LATE CHARGES

        Tenant shall pay the rent and all other charges specified in this Lease to Landlord at the address set forth on Section 1. 1 (b) of this Lease, or to another person and at another address as Landlord from time to time designates in writing. Minimum Monthly Rent, additional rent, or other charges payable by Tenant to Landlord under the terms of this Lease (all of which shall be deemed "rent" for all intents and purposes under this Lease and under applicable law) not received within ten (10) days after the due date (the "Delinquency Date") thereof shall automatically (and without notice) incur a one time late charge of five percent (5%) of the delinquent amount. Further, any Minimum Monthly Rent, additional rent, or other charges payable by Tenant to Landlord and not paid prior to the Delinquency Date shall bear interest from the Delinquency Date at the "Delinquency Interest Rate" of fifteen percent (15%) per annum. Notwithstanding the above, if the Delinquency Interest Rate exceeds the maximum interest rate allowed by law, the Delinquency Rate shall be reduced to the highest rate allowed by law. In the event any party other than Tenant (a "third party") remits to Landlord all or any portion of the Minimum Monthly Rent, additional rent, or other charges due and payable by Tenant under this Lease, for or on behalf of Tenant, and/or if Landlord should accept the tender of any such payment from a third party, neither the remittance or acceptance of any such payment shall create, establish or constitute, or be deemed to create, establish or constitute, a tenancy of any such third party, or a landlord-tenant relationship, between Landlord and any third party, notwithstanding the

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existence of any statutory or common law rights of such third party to the contrary, whether such rights are currently or hereafter in effect, and Landlord may accept any and all such payments solely for the account of Tenant hereunder and without effecting a modification or amendment of this Lease or otherwise abrogating any of the terms, provisions or conditions hereof.

ARTICLE 9.    SECURITY DEPOSIT

        Tenant shall, upon execution of this Lease, deposit with Landlord security for the performance of all of its obligations in the amount set forth in Section 1.1(k). If Tenant defaults under this Lease, Landlord may use any part of the Security Deposit to make any defaulted payment, to pay for the cure of any defaulted obligation, or to compensate Landlord for any loss or damage resulting from any default. To the extent any portion of the deposit is used, Tenant shall within five (5) days after demand from Landlord restore the deposit to its full amount. Landlord may keep the Security Deposit in its general funds and shall not be required to pay interest to Tenant on the deposit amount. If Tenant shall perform all of its obligations under this Lease and return the Premises to Landlord at the end of the Term, Landlord shall return all of the remaining Security Deposit to Tenant within thirty (30) days after the end of the Term. The Security Deposit shall not serve as an advance payment of Rent or a measure of Landlord's damages for any default under this Lease.

        If Landlord transfers its interest in the Project or this Lease, Landlord may transfer the Security Deposit to its transferee. Upon such transfer, Landlord shall have no further obligation to return the Security Deposit to Tenant, and Tenant's right to the return of the Security Deposit shall apply solely against Landlord's transferee.

ARTICLE 10.    CONSTRUCTION OF THE PREMISES

        Landlord shall construct Tenant's Leasehold Improvements, in accordance with Exhibit B . Prior to the Commencement Date, any work performed by Tenant or any fixtures or personal property moved onto the Premises shall be Tenant's own risk and neither Landlord nor Landlord's agents or contractors shall be responsible to Tenant for damage or destruction to Tenant's property, including damage or destruction occasioned by Landlord's own negligence. Tenant's taking possession of any portion of the Premises shall be conclusive evidence that the Premises was in good order, repair and condition. If Landlord authorizes Tenant to take possession of any part of the Premises prior to the Commencement Date for purposes of doing business, all terms of this Lease shall apply to such pre-Term possession, including Base Rent at the rate set forth for the First Lease Year in the Schedule prorated for any partial month. Except as expressly provided herein and in Exhibit B , Landlord shall have no other or further obligation to construct Leasehold Improvements for or on behalf of Tenant in the Premises or elsewhere in the Building. Landlord makes no representation or warranty whatsoever regarding the suitability of the Tenant's Leasehold Improvements respecting Tenant's intended use and occupancy of the Premises.

ARTICLE 11.    ALTERATIONS

        11.1     Landlord's Consent and Conditions.     Tenant shall not make any improvements or alterations to the Premises (the " Work ") without in each instance submitting plans and specifications for the Work to Landlord and obtaining Landlord's prior written consent; nor shall Tenant change, alter or modify any existing locks, or install any new or additional locks, upon any doors or other entrances providing access to and from the Premises without in each instance obtaining Landlord's prior written consent and furnishing Landlord with new keys, combinations, codes, or other means of unlocking such doors or entrances so as to afford Landlord access to the Premises in accordance with Article 18 of this Lease. Tenant shall pay Landlord's standard charge for review of the plans and all other items submitted by Tenant. Landlord will be deemed to be acting reasonably in withholding its consent for

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any Work which (a) impacts the base structural components or systems of the Building, (b) impacts any other tenant's premises, or (c) is visible from outside the Premises.

        Tenant shall reimburse Landlord for actual costs incurred for review of the plans and all other items submitted by Tenant. Tenant shall pay for the cost of all Work. All Work shall become the property of Landlord upon its installation, except for Tenant's trade fixtures and for items which Landlord requires Tenant to remove at Tenant's cost at the termination of the Lease pursuant to Section 11.5.

        The following requirements shall apply to all Work:

        (a)   Prior to commencement, Tenant shall furnish to Landlord building permits, certificates of insurance satisfactory to Landlord, and, at Landlord's request, security for payment of all costs.

        (b)   Tenant shall perform all Work so as to maintain peace and harmony among other contractors serving the Building and shall avoid interference with other work to be performed or services to be rendered in the Building.

        (c)   The Work shall be performed in a good and workmanlike manner, meeting the standard for construction and quality of materials in the Building, and shall comply with all insurance requirements and all applicable governmental laws, ordinances and regulations (" Governmental Requirements ").

        (d)   Tenant shall perform all Work so as to minimize or prevent disruption to other tenants, and Tenant shall comply with all reasonable requests of Landlord in response to complaints from other tenants.

        (e)   Tenant shall perform all Work in compliance with Landlord's "Policies, Rules and Procedures for Construction Projects" in effect at the time the Work is performed.

        (f)    Tenant shall permit Landlord to supervise all Work. Landlord may charge a supervisory fee not to exceed five percent (5%) of labor, material, and all other costs of the Work, if Landlord's employees or contractors perform the Work.

        (g)   Upon completion, Tenant shall furnish Landlord with contractor's affidavits and full and final statutory waivers of liens, as-built plans and specifications, and receipted bills covering all labor and materials, and all other close-out documentation required in Landlord's "Policies, Rules and Procedures for Construction Projects".

        11.2     Damage to Systems.     If any part of the mechanical, electrical or other systems in the Premises shall be damaged, Tenant shall promptly notify Landlord, and Landlord shall repair such damage. Landlord may also at any reasonable time make any repairs or alterations which Landlord deems necessary for the safety or protection of the Building and the Land, or which Landlord is required to make by any court or pursuant to any Governmental Requirement. Tenant shall at its expense make all other repairs necessary to keep the Premises, and Tenant's fixtures and personal property, in good order, condition and repair; to the extent Tenant fails to do so, Landlord may make such repairs itself. The cost of any repairs made by Landlord on account of Tenant's default, or on account of the mis-use or neglect by Tenant or its invitees, contractors or agents anywhere in the Building or on the Land, shall become Additional Rent payable by Tenant on demand.

        11.3     No Liens.     Tenant has no authority to cause or permit any lien or encumbrance of any kind to affect Landlord's interest in the Land or the Building; any such lien or encumbrance shall attach to Tenant's interest only. If any mechanic's lien shall be filed or claim of lien made for work or materials furnished to Tenant, then Tenant shall at its expense within ten (10) days thereafter either discharge or contest the lien or claim. If Tenant contests the lien or claim, then Tenant shall (i) within such ten (10) day period, provide Landlord adequate security for the lien or claim, (ii) contest the lien or claim in good faith by appropriate proceedings that operate to stay its enforcement, and (iii) pay promptly

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any final adverse judgment entered in any such proceeding. If Tenant does not comply with these requirements, Landlord may discharge the lien or claim, and the amount paid, as well as attorney's fees and other expenses incurred by Landlord, shall become Additional Rent payable by Tenant on demand.

        11.4     Ownership of Improvements.     All Work as defined in this Article 11, partitions, hardware, equipment, machinery and all other improvements and all fixtures except trade fixtures, constructed in the Premises by either Landlord or Tenant, (i) shall become Landlord's property upon installation without compensation to Tenant, unless Landlord consents otherwise in writing, and (ii) shall at Landlord's option either (a) be surrendered to Landlord with the Premises at the termination of the Lease or of Tenant's right to possession, or (b) be removed in accordance with Section 11.5 below (unless Landlord at the time it gives its consent to the performance of such construction expressly waives in writing the right to require such removal).

        11.5     Removal at Termination.     Upon the termination of this Lease or Tenant's right of possession Tenant shall remove from the Premises, Building and Land its trade fixtures, furniture, moveable equipment and other personal property, any improvements which Landlord elects shall be removed by Tenant pursuant to Section 11.4, and any improvements to any portion of the Land other than the Premises. Tenant shall repair all damage caused by the installation or removal of any of the foregoing items. If Tenant does not timely remove such property, then Tenant shall be conclusively presumed to have, at Landlord's election (i) conveyed such property to Landlord without compensation or (ii) abandoned such property, and Landlord may dispose of or store any part thereof in any manner at Tenant's sole cost, without waiving Landlord's right to claim from Tenant all expenses arising out of Tenant's failure to remove the property, and without liability to Tenant or any other person. Landlord shall have no duty to be a bailee of any such personal property. If Landlord elects abandonment, Tenant shall pay to Landlord, upon demand, any expenses incurred for disposition.

ARTICLE 12.    LIENS

        Tenant shall keep the Premises, Building, and the Land free from any and all liens arising out of any work performed, material furnished, or other obligations incurred due to the actions of Tenant or Tenant's Permittees or the failure of Tenant to comply with any law. In the event any such lien does attach against the Premises, Building, or Land, and Tenant does not discharge the lien or post bond (which under law would prevent foreclosure or execution under the lien) within ten (10) days after demand by Landlord, such event shall be a default by Tenant under this Lease and, in addition to Landlord's other rights and remedies, Landlord may take any action necessary to discharge the lien.

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ARTICLE 13.    USE OF PREMISES/RULES AND REGULATIONS

        13.1   Without the prior approval of Landlord, Tenant shall not use the Premises for any use other than for general business office purposes and Tenant agrees that it will use the Premises in such manner as to not interfere with or infringe on the rights of other tenants in the Building and so particularly prescribed in Exhibit C . Tenant agrees to comply with all applicable laws, ordinances and regulations in connection with its use of the Premises, agrees to keep the Premises in a clean and sanitary condition, and agrees not to perform any act in the Building which would increase any insurance premiums related to the Building or would cause the cancellation of any insurance policies related to the Building.

        13.1   Tenant shall not use, generate, manufacture, store, or dispose of, in, under, or about the Premises, the Building, the Land, or the Project or transport to or from the Premises, the Building, the Land, or the Project, any Hazardous Materials. For purposes of this Lease, "Hazardous Materials" includes, but is not limited to: (i) flammable, explosive, or radioactive materials, hazardous wastes, toxic substances, or related materials; (ii) all substances defined as "hazardous substances," "hazardous materials," "toxic substances," or "hazardous chemical substances or mixtures" in the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, 42 U.S.C. § 9601, et seq., as amended by Superfund Amendments and Re-authorization Act of 1986; the Hazardous Materials Transportation Act, 49 U.S.C. §1901, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. §6901, et seq.; the Toxic Substances Control Act, 15 U.S.C. §2601, et seq.; (iii) those substances listed in the United States Department of Transportation Table (49 CFR 172.10 and amendments thereto) or by the Environmental Protection Agency (or any successor agent) as hazardous substances (40 CFR Part 302 and amendments thereto); (iv) any material, waste, or substance which is (A) petroleum, (B) asbestos, (C) polychlorinated biphenyl's, (D) designated as a "hazardous substance" pursuant to §311 of the Clean Water Act, 33 U.S.C. S 1251 et seq . (33 U.S.C. §1321) or listed pursuant to the Clean Water Act (33 U.S.C. § 1317); (E) flammable explosives; or (F) radioactive materials; and (v) all substances defined as "hazardous wastes" in Arizona Revised Statutes § 36-3501 (16).

ARTICLE 14.    RIGHTS RESERVED BY LANDLORD

        In addition to all other rights, Landlord has the following rights, exercisable without notice to Tenant and without effecting an eviction, constructive or actual, and without giving right to any claim for set off or abatement of rent: (a) to decorate and to make repairs, alterations, additions, changes, or improvements in and about the Building; (b) to approve the weight, size, and location of heavy objects in and about the Premises and the Building, and to require all such items to be moved into and out of the Building and Premises in such manner as Landlord shall direct in writing; (c) to prohibit the placing of vending machines in or about the Premises without the prior written consent of Landlord; (d) to take all such reasonable measures for the security of the Building and its occupants; and (e) to relocate the Premises to another location of substantially equivalent size and location in the Building provided such relocation does not increase the Minimum Monthly Rent or other costs payable by Tenant under this Lease. If Landlord elects to move Tenant, Landlord shall build out or renovate the new location with Leasehold Improvements at the new location substantially equal to Leasehold Improvements constructed or to be constructed in the original Premises pursuant to Exhibit B and Landlord will pay Tenant's reasonable costs of moving to the new location, including incidental costs such as reprinting stationery and new Signage, but Landlord will have no other liability to Tenant with respect to relocation.

ARTICLE 15.    QUIET ENJOYMENT

        Landlord agrees that, provided a default by Tenant has not occurred, Landlord will do nothing that will prevent Tenant from quietly enjoying and occupying the Premises during the Lease Term. Tenant

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agrees this Lease is subordinate to the Rules and Regulations set forth in Exhibit C , and the Parking prescribed in Article 6 .

ARTICLE 16.    MAINTENANCE AND REPAIR

        Landlord shall maintain the Premises and Building in good condition and repair, reasonable wear and tear excepted. Tenant waives all rights to make repairs at the expense of Landlord. If Landlord would be required to perform any maintenance or make any repairs because of: (a) modifications to the roof, walls, foundation, and floor of the Building from that set forth in Landlord's plans and specifications which are required by Tenant's design for improvements, alterations and additions; (b) installation of Tenant's improvements, fixtures, or equipment; (c) a negligent or wrongful act of Tenant or Tenant's Permittees; or, (d) Tenant's failure to perform any of Tenant's obligations under this Lease, Landlord may perform the maintenance or repairs and Tenant shall pay Landlord the cost thereof. Tenant agrees to: (a) Pay Landlord's cost of maintenance and repair, including additional janitorial costs of any Non-Building Standard Improvements and Non Building Standard materials and finishes and (b) Repair or replace all ceiling and wall finishes (including painting) and floor or window coverings which require repair or replacement during the Lease Term, at Tenant's sole cost. Notwithstanding anything in this Lease to the contrary, to the extent the terms and provisions of Article 21 conflict with, or are inconsistent with, the terms and provisions of this Article 16 , the terms and provisions of Article 21 shall control.

ARTICLE 17.    UTILITIES AND JANITORIAL SERVICES

        Landlord agrees to furnish to the Premises during normal business hours as defined in Article 1.1(1) (the "Business Hours"), and subject to the Rules and Regulations, electricity suitable for the intended use of the Premises, heat and air conditioning required in Landlord's judgment for normal use and occupation of the Premises, and janitorial services for the Premises and Common Areas. Landlord further agrees to furnish hot and cold water to those areas provided for general use of all tenants in the Building. Landlord will use diligent efforts to provide continuous elevator service for the Building. If Tenant shall require electric current, water, heating, cooling, or air which will result in excess consumption of such utilities or services, Tenant shall first obtain the written consent of Landlord to the use thereof. If, in Landlord's reasonable discretion, Tenant consumes any utilities or services in excess of the normal consumption of such utilities and services for general office use, Tenant agrees to pay Landlord for the cost of such excess consumption of utilities or services upon receipt of a statement of such costs from Landlord at the same time as payment of the Minimum Monthly Rent is made. Landlord may also cause separate meters to be installed, at Tenant's expense, to measure excess consumption or establish another basis for determining the amount of excess consumption of electrical current. Landlord shall not be liable for damages nor shall rent or other charges abate in the event of any failure or interruption of any utility or service supplied to the Premises or Building by a regulated utility or municipality, or any failure of a Building system supplying any such service to the Premises (provided Landlord uses diligent and commercially reasonable efforts to repair or restore the same) and no such failure or interruption shall entitle Tenant to terminate this Lease.

ARTICLE 18.    ENTRY AND INSPECTION

        Landlord shall at all times retain a master key (or other means of unlocking doors and entrances), to the Premises such that Landlord shall have access to and the right to enter into the Premises at reasonable times for the purpose of inspecting the Premises and to perform its obligations, or to make repairs, alterations, additions or improvements, as permitted by this Lease, and reserves the right, during the last six (6) months of the term of the Lease, to show the Premises at reasonable times to prospective tenants. Landlord shall be permitted to take any action under this Article without causing

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any abatement of rent or liability to Tenant for any loss of occupation or quiet enjoyment of the Premises, nor shall such action by Landlord be deemed an actual or constructive eviction.

ARTICLE 19.    ACCEPTANCE OF THE PREMISES/LIABILITY INSURANCE

        19.1 &nb


 
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