OFFICE LEASE
FOR
AIRPORT TECHNOLOGY CENTER
by and between
CARLYLE AIRPORT TECHNOLOGY TRUST,
a Maryland real estate investment trust,
as Landlord,
and
NEXTCARD, INC.,
a Delaware corporation,
as Tenant.
Dated March 7, 2000
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TABLE OF CONTENTS
PAGE
----
ARTICLE 1 PREMISES, BUILDING, PROJECT, AND COMMON AREAS...............................4
ARTICLE 2 LEASE TERM..................................................................5
ARTICLE 3 BASE RENT...................................................................5
ARTICLE 4 ADDITIONAL RENT.............................................................6
ARTICLE 5 USE OF PREMISES............................................................15
ARTICLE 6 SERVICES AND UTILITIES.....................................................17
ARTICLE 7 REPAIRS....................................................................19
ARTICLE 8 ADDITIONS AND ALTERATIONS..................................................20
ARTICLE 9 COVENANT AGAINST LIENS.....................................................23
ARTICLE 10 INSURANCE..................................................................23
ARTICLE 11 DAMAGE AND DESTRUCTION.....................................................26
ARTICLE 12 NONWAIVER..................................................................27
ARTICLE 13 CONDEMNATION...............................................................28
ARTICLE 14 ASSIGNMENT AND SUBLETTING..................................................29
ARTICLE 15 SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES.............33
ARTICLE 16 HOLDING OVER...............................................................33
ARTICLE 17 ESTOPPEL CERTIFICATES......................................................34
ARTICLE 18 SUBORDINATION..............................................................34
ARTICLE 19 DEFAULTS; REMEDIES.........................................................35
ARTICLE 20 COVENANT OF QUIET ENJOYMENT................................................39
ARTICLE 21 SECURITY DEPOSIT...........................................................39
ARTICLE 22 INTENTIONALLY DELETED......................................................39
ARTICLE 23 SIGNS......................................................................39
ARTICLE 24 COMPLIANCE WITH LAW........................................................41
ARTICLE 25 LATE CHARGES...............................................................42
ARTICLE 26 LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT.......................42
ARTICLE 27 ENTRY BY LANDLORD..........................................................43
ARTICLE 28 TENANT PARKING.............................................................43
ARTICLE 29 MISCELLANEOUS PROVISIONS...................................................44
ARTICLE 30 OPTIONS TO EXTEND..........................................................53
ARTICLE 31 LETTER OF CREDIT...........................................................55
(i)
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EXHIBITS
PAGE
A OUTLINE OF PREMISES
B TENANT WORK LETTER
C FORM OF NOTICE OF LEASE TERM DATES AND AREA CONFIRMATION
D RULES AND REGULATIONS
E FORM OF TENANT'S ESTOPPEL CERTIFICATE
F GUARANTY FEDERAL BANK STANDARD SNDA
G OUTLINE OF BUILDING/PROJECT
H MONUMENT SIGN/LOCATION OF TENANT POSITION
(ii)
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AIRPORT TECHNOLOGY CENTER
OFFICE LEASE
This Office Lease (the "LEASE"), dated as of the date set forth in
Section 1 of the Summary of Basic Lease Information (the "SUMMARY"), below, is
made by and between CARLYLE AIRPORT TECHNOLOGY TRUST, a Maryland real estate
investment trust ("LANDLORD"), and NextCard, Inc., a Delaware corporation
("TENANT").
SUMMARY OF BASIC LEASE INFORMATION
TERMS OF LEASE DESCRIPTION
1. Date: March 7, 2000
2. Premises (Article 1).
2.1 Building: Building A consisting of approximately
75,963 rentable square feet of space
located at Airport Technology Center,
4127 East Van Buren, Phoenix, Arizona
("BUILDING A") and Building B
consisting of approximately 120,549
rentable square feet of space located
at Airport Technology Center, 4129 East
Van Buren, Phoenix, Arizona ("BUILDING
B") (collectively, Building A and
Building B shall be referred to herein
as the Building or Buildings, as the
context may require)
2.2 Premises: Approximately 37,851 rentable square
feet of space located on the first
(1st) floor of Building B and
approximately 62,149 rentable square
feet of space located on the second
(2nd) floor of Building B and commonly
known as Suite 200, as further set
forth in EXHIBIT A to the Office Lease.
Figures are approximate only until
Tenant Work reaches the stage where
accurate measurements can be made (See
Section 4.2.9). Once determined, the
exact rentable square feet of the
Premises shall be memorialized in a
Notice of Lease Term Date, a form of
which is Exhibit C to the Lease.
3. Lease Term (Article 2).
3.1 Length of Term: Six (6) years, with two options to
extend for three years each as
described in Article 30 of this Lease.
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3.2 Commencement Date: The earlier to occur of (i) the date
upon which Tenant first commences to
conduct business in the Premises, and
(ii) the date that the Premises are
"Ready for Occupancy" as defined in
Section 5.1 of EXHIBIT B to this Lease
or, if earlier, the date that the
Premises would have been Ready for
Occupancy if no "Tenant Delay" or
"Tenant Delays," as defined, on a
net-critical-path basis, in Section 5.2
of EXHIBIT B to the Lease, had
occurred.
3.3 Expiration Date: If the Lease Commencement Date shall be
the first day of a calendar month, then
(subject to Tenant's extension options)
the day immediately preceding the sixth
(6th) anniversary of the Lease
Commencement Date; or, if the Lease
Commencement Date shall be other than
the first day of a calendar month, then
(subject to Tenant's extension options)
the last day of the month in which the
sixth (6th) anniversary of the Lease
Commencement Date occurs.
4. Base Rent (Article 3):
Months Stipulated Annual Rent Annual Rent/RSF
------ ---------------------- ---------------
[*]
Square Footage Charged
(approximate; to be adjusted
Months pursuant to Section 4.2.9) Annual Rent/RSF
------ ---------------------------- ---------------
[*]
5. Base Year (Article 4): [*] as to the second floor of the
Premises, and [*] as to the first
floor of the Premises.
6. Tenant's Share (Article 4): Approximately [ * ]% (subject to
confirmation in EXHIBIT C).
* Portions redacted pursuant to a request for confidential treatment
filed with the Securities and Exchange Commission.
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7. Permitted Use (Article 5): General office use and any other legal
use consistent with a first-class
office building, including without
limitation, call center, operations
center, general administrative office
uses, including any support systems
related thereto.
8. Security Deposit (Article 21): See Article 21 and Article 31.
9. Parking Space Ratio [*] unreserved parking spaces for
(Article 28): every [*] rentable square feet of
the Premises.
10. Address of Tenant NextCard, Inc.
(Section 29.18): 595 Market Street, Suite 1800
San Francisco, California 94105
Attention: Robert Linderman, Esq.
General Counsel and Secretary
(Prior to Lease Commencement Date)
and
NextCard, Inc.
Airport Technology Center
4129 East Van Buren, Suite 200
Phoenix, Arizona 85008-6911
Attention: Mr. Mark Attinger,
Vice President/Operations Site Manager
(After Lease Commencement Date)
11. Address of Landlord See Section 29.18 of the Lease.
(Section 29.18):
12. Broker(s) (Section 29.24): Walnut Creek office of CB Richard Ellis
on behalf of the Tenant.
Phoenix office of CB Richard Ellis on
behalf of the Landlord.
13. Tenant Improvement [*] per rentable square foot
Allowance (EXHIBIT B):
* Portions redacted pursuant to a request for confidential treatment
filed with the Securities and Exchange Commission.
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ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
1.1 PREMISES, BUILDING, PROJECT AND COMMON AREAS.
1.1.1 THE PREMISES. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord the premises set forth in Section 2.2 of the Summary
(the "Premises"). The outline of the Premises is set forth in EXHIBIT A attached
hereto and each floor or floors of the Premises has the estimated number of
rentable square feet as set forth in Section 2.2 of the Summary. The parties
hereto agree that the lease of the Premises is upon and subject to the terms,
covenants and conditions herein set forth, and Tenant covenants as a material
part of the consideration for this Lease to keep and perform each and all of
such terms, covenants and conditions by it to be kept and performed and that
this Lease is made upon the condition of such performance. The parties hereto
hereby acknowledge that the purpose of EXHIBIT A is to show the approximate
location of the Premises in the "Building," as that term is defined in Section
1.1.2, below, only, and such Exhibit is not meant to constitute an agreement,
representation or warranty as to the construction of the Premises, the precise
area thereof or the specific location of the "Common Areas," as that term is
defined in Section 1.1.3, below, or the elements thereof or of the accessways to
the Premises or the "Project," as that term is defined in Section 1.1.2, below.
Except as specifically set forth in Articles 7 and 8 and other provisions of
this Lease and in the Tenant Work Letter attached hereto as EXHIBIT B (the
"Tenant Work Letter"), Landlord shall not be obligated to provide or pay for any
improvement work or services related to the improvement of the Premises. Tenant
also acknowledges that neither Landlord nor any agent of Landlord has made any
representation or warranty regarding the condition of the Premises, the Building
or the Project or with respect to the suitability of any of the foregoing for
the conduct of Tenant's business, except as specifically set forth in this Lease
and the Tenant Work Letter. The taking of physical possession of the Premises by
Tenant for the purpose of commencement of business therein shall conclusively
establish that the Premises and the Building were at such time in good and
sanitary order, condition and repair, subject only to latent defect and any
"punch-list" items that do not substantially interfere with Tenant's use and
occupancy of the Premises.
1.1.2 THE BUILDING AND THE PROJECT. The Premises are a part of
the building set forth in Section 2.1 of the Summary (the "Building"). The
Building is part of an office project known as "AIRPORT TECHNOLOGY CENTER." The
term "Project," as used in this Lease, shall mean (i) the Building and the
Common Areas, and (ii) the land (which is improved with landscaping, parking
facilities and other improvements) upon which the Building and the Common Areas
are located.
1.1.3 COMMON AREAS. Tenant shall have the non-exclusive right to
use in common with other tenants in the Project, and subject to the Rules and
Regulations referred to in Article 5 of this Lease, those portions of the
Project which are provided, from time to time, for use in common by Landlord,
Tenant and any other tenants of the Project, including, without limitation, the
main lobby of the Building, common corridors and hallways, stairwells,
elevators, restrooms and other public or common areas (such areas, together with
such other portions of the Project designated by Landlord to be shared by
Landlord and certain tenants, are collectively
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referred to herein as the "Common Areas"). The term "Building Common Areas," as
used in this Lease, shall mean the portions of the Common Areas located within
the Building designated as such by Landlord. The manner in which the Common
Areas, including landscaping, are maintained and operated shall be at the
reasonable discretion of Landlord, provided that Landlord shall maintain and
operate the same in a manner consistent with that of other first-class, office
buildings located in the Gateway submarket of Phoenix, Arizona, which buildings
are comparable in size, age, specifications, construction and quality of
appearance, services and amenities to the Building (the "Comparable Buildings"),
and the use thereof shall be subject to such rules, regulations and restrictions
as Landlord may make from time to time. Landlord reserves the right to close
temporarily, make alterations or additions to, or change the location of
elements of the Project and the Common Areas, provided that such action does not
materially and unreasonably interfere with Tenant's use of the Premises.
1.1.4 ACCESS. Subject to those provisions of this Lease which
specify to the contrary, Tenant shall have full and unimpaired access to the
Premises, the Building, the Project (including the parking lot) and the Common
Areas (including the Building elevators).
ARTICLE 2
LEASE TERM
The terms and provisions of this Lease shall be effective as of the date
of this Lease. The term of this Lease (the "Lease Term") shall be as set forth
in Section 3.1 of the Summary, shall commence on the date set forth in Section
3.2 of the Summary (the "Lease Commencement Date"), and shall terminate on the
date set forth in Section 3.3 of the Summary (the "Lease Expiration Date")
unless this Lease is sooner terminated as hereinafter provided. At any time
during the Lease Term, either party may deliver to the other party a notice in
the form as set forth in EXHIBIT C, attached hereto, as a confirmation only of
the information set forth therein, which such party shall execute and return to
the other party within five (5) days of receipt thereof.
ARTICLE 3
BASE RENT
Tenant shall pay, without prior notice or demand, to Landlord or
Landlord's agent at the management office of the Project, or, at Landlord's
option, at such other place as Landlord may from time to time designate in
writing, by a check for currency which, at the time of payment, is legal tender
for private or public debts in the United States of America, base rent ("BASE
RENT") as set forth in Section 4 of the Summary, payable in equal monthly
installments as set forth in Section 4 of the Summary in advance on or before
the first day of each and every calendar month during the Lease Term. The Base
Rent for the first full month of the Lease Term which occurs after the
expiration of any free rent period shall be paid at the time of Tenant's
execution of this Lease. If any Rent payment date (including the Lease
Commencement Date) falls on a day of the month other than the first day of such
month or if any payment of Rent is for a period which is shorter than one month,
the Rent for any fractional month shall accrue on a daily basis for the period
from the date such payment is due to the end of such calendar month or to the
end of the Lease Term at a rate per day which is equal to 1/365 of the
applicable annual Rent. All other
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payments or adjustments required to be made under the terms of this Lease that
require proration on a time basis shall be prorated on the same basis.
ARTICLE 4
ADDITIONAL RENT
4.1 GENERAL TERMS. In addition to paying the Base Rent specified in
Article 3 of this Lease, Tenant shall pay "Tenant's Share" of the annual
"Building Direct Expenses," as those terms are defined in Sections 4.2.8 and
4.2.2 of this Lease, respectively, which are in excess of the Building Direct
Expenses for the calendar year [ * ] as to the second floor of the Premises, and
[ * ] as to the first floor of the Premises, calculated, as more specifically
set forth in the last paragraph of Section 4.2.7 below, utilizing a gross-up
method to include a fully-assessed, fully occupied building. Notwithstanding the
foregoing, there shall be no such payment of excess Building Direct Expenses for
the first eighteen (18) months of the Lease Term other than with respect to
requested use of services and utilities beyond the Standard Tenant Services
defined in Article 6 below. The provisions of this Section 4.1 are subject to
the limitations regarding the "Controllable Operating Expenses" set forth in
Section 4.6 below. Such payments by Tenant, together with any and all other
amounts payable by Tenant to Landlord pursuant to the terms of this Lease, are
hereinafter collectively referred to as the "Additional Rent", and the Base Rent
and the Additional Rent are herein collectively referred to as "Rent." All
amounts due under this Article 4 as Additional Rent shall be payable for the
same periods and in the same manner as the Base Rent. Without limitation on
other obligations of Tenant which survive the expiration of the Lease Term, the
obligations of Tenant to pay the Additional Rent provided for in this Article 4
shall survive the expiration of the Lease Term.
4.2 DEFINITIONS OF KEY TERMS RELATING TO ADDITIONAL RENT. As used in
this Article 4, the following terms shall have the meanings hereinafter set
forth:
4.2.1 "BASE YEAR" shall mean the calendar year [ * ] as to the
second floor of the Premises, and [ * ] as to the first floor of the Premises.
4.2.2 "BUILDING DIRECT EXPENSES" shall mean "Building Operating
Expenses" and "Building Tax Expenses", as those terms are defined in Sections
4.2.3 and 4.2.4, below, respectively.
4.2.3 "BUILDING OPERATING EXPENSES" shall mean the portion of
"Operating Expenses," as that term is defined in Section 4.2.7 below, allocated
to the tenants of the Building pursuant to the terms of Section 4.3 below.
4.2.4 "BUILDING TAX EXPENSES" shall mean that portion of "Tax
Expenses", as that term is defined in Section 4.2.8 below, allocated to the
tenants of the Building pursuant to the terms of Section 4.3 below.
4.2.5 "DIRECT EXPENSES" shall mean "Operating Expenses" and "Tax
Expenses."
4.2.6 "EXPENSE YEAR" shall mean each calendar year in which any
portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires,
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* Portions redacted pursuant to a request for confidential treatment filed
with the Securities and Exchange Commission.
<PAGE> 10
provided that Landlord, upon notice to Tenant, may change the Expense Year from
time to time to any other twelve (12) consecutive month period, and, in the
event of any such change, Tenant's Share of Building Direct Expenses shall be
equitably adjusted for any Expense Year involved in any such change.
4.2.7 "OPERATING EXPENSES" shall mean all expenses, costs and
amounts of every kind and nature which Landlord pays or accrues during any
Expense Year because of or in connection with the ownership, management,
maintenance, security, repair, replacement, restoration or operation of the
Project, or any portion thereof, calculated in accordance with the custom and
practice with institutional owners of Comparable Buildings in accordance with
this Section 4.2.7. Without limiting the generality of the foregoing, Operating
Expenses shall specifically include any and all of the following: (i) the cost
of supplying all utilities, the cost of operating, repairing, maintaining, and
renovating the utility, telephone, mechanical, sanitary, storm drainage, and
elevator systems, and the cost of maintenance and service contracts in
connection therewith; (ii) the cost of licenses, certificates, permits and
inspections and the cost of contesting any governmental enactments which may
affect Operating Expenses, and the costs incurred in connection with a
governmentally mandated transportation system management program or similar
program; (iii) the cost of all insurance carried by Landlord in connection with
the Project as reasonably determined by Landlord; (iv) the cost of landscaping,
relamping, and all supplies, tools, equipment and materials used in the
operation, repair and maintenance of the Project, or any portion thereof; (v)
the cost of parking area repair, restoration, and maintenance; (vi) fees and
other costs, including reasonable management fees, consulting fees, legal fees
and accounting fees, of all contractors and consultants in connection with the
management, operation, maintenance and repair of the Project; (vii) payments
under any equipment rental agreements and the fair rental value of any
management office space not to exceed 950 square feet; (viii) wages, salaries
and other compensation and benefits, including taxes levied thereon, of all
persons engaged in the operation, maintenance and security of the Project; (ix)
costs under any instrument pertaining to the sharing of costs by the Project;
(x) operation, repair, maintenance and replacement of all systems and equipment
and components thereof of the Project; (xi) the cost of janitorial, alarm,
security and other services, replacement of wall and floor coverings, ceiling
tiles and fixtures in common areas, maintenance and replacement of curbs and
walkways, repair to roofs and re-roofing; (xii) amortization (including interest
on the unamortized cost) over the useful life as Landlord shall reasonably
determine, of the cost of acquiring or the rental expense of personal property
used in the maintenance, operation and repair of the Project, or any portion
thereof; (xiii) the cost of capital improvements or other costs incurred in
connection with the Project (A) which are intended to, and do, effect economies
in the operation or maintenance of the Project, or any portion thereof, (B) that
are required to comply with present or anticipated conservation programs, (C)
which are replacements or modifications of nonstructural items located in the
Common Areas required to keep the Common Areas in good order or condition, or
(D) that are required under any governmental law or regulation; provided,
however, that any capital expenditure shall be amortized (including interest on
the amortized cost) over its useful life as Landlord shall reasonably determine;
and (xiv) costs, fees, charges or assessments imposed by, or resulting from any
mandate imposed on Landlord by, any federal, state or local government for fire
and police protection, trash removal, community services, or other services
which do not constitute "Tax Expenses" as that term is defined in Section 4.2.8
below and (xv) payments under any easement, license, operating agreement,
declaration, restrictive covenant, or instrument pertaining to the sharing of
costs by
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the Building. Notwithstanding the foregoing, for purposes of this Lease,
Operating Expenses shall not, however, include:
(a) costs, including marketing costs, legal fees, space planners' fees,
advertising and promotional expenses, and brokerage fees incurred in connection
with the original construction or development, or original or future leasing of
the Project, and costs, including permit, license and inspection costs, incurred
with respect to the installation of tenant improvements made for new tenants
initially occupying space in the Project after the Lease Commencement Date or
incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant space for tenants or other occupants of the Project
(excluding, however, such costs relating to any common areas of the Project or
parking facilities);
(b) except as set forth in items (xii), (xiii), and (xiv) above,
depreciation, interest and principal payments on mortgages and other debt costs,
if any, penalties and interest, costs of capital repairs and alterations, and
costs of capital improvements and equipment;
(c) costs for which the Landlord is reimbursed by any tenant or occupant
of the Project or by insurance by its carrier or any tenant's carrier or by
anyone else, and electric power costs for which any tenant directly contracts
with the local public service company;
(d) any bad debt loss, rent loss, or reserves for bad debts or rent
loss;
(e) costs associated with the operation of the business of the
partnership or entity which constitutes the Landlord, as the same are
distinguished from the costs of operation of the Project (which shall
specifically include, but not be limited to, accounting costs associated with
the operation of the Project). Costs associated with the operation of the
business of the partnership or entity which constitutes the Landlord including
costs of partnership accounting and legal matters, costs of defending any
lawsuits with any mortgagee (except as the actions of the Tenant may be in
issue), costs of selling, syndicating, financing, mortgaging or hypothecating
any of the Landlord's interest in the Project, and costs incurred in connection
with any disputes between Landlord and its employees, between Landlord and
Project management, or between Landlord and other tenants or occupants, and
Landlord's general corporate overhead and general and administrative expenses;
(f) the wages and benefits of any employee who does not devote
substantially all of his or her employed time to the Project unless such wages
and benefits are prorated to reflect time spent on operating and managing the
Project vis-a-vis time spent on matters unrelated to operating and managing the
Project; provided, that in no event shall Operating Expenses for purposes of
this Lease include wages and/or benefits attributable to personnel above the
level of Project manager;
(g) amount paid as ground rental for the Project by the Landlord;
(h) except for a Project management fee to the extent allowed pursuant
to item (m), below, overhead and profit increment paid to the Landlord or to
subsidiaries or affiliates of the Landlord for services in the Project to the
extent the same exceeds the costs of such services rendered by qualified,
first-class unaffiliated third parties on a competitive basis;
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(i) any compensation paid to clerks, attendants or other persons in
commercial concessions operated by the Landlord;
(j) rentals and other related expenses incurred in leasing air
conditioning systems, elevators or other equipment which if purchased the cost
of which would be excluded from Operating Expenses as a capital cost, except
equipment not affixed to the Project which is used in providing janitorial or
similar services and, further excepting from this exclusion such equipment
rented or leased to remedy or ameliorate an emergency condition in the Project;
(k) all items and services for which Tenant or any other tenant in the
Project reimburses Landlord or which Landlord provides selectively to one or
more tenants (other than Tenant) without reimbursement;
(l) costs, other than those incurred in ordinary maintenance and repair,
for sculpture, paintings, fountains or other objects of art;
(m) any costs expressly excluded from Operating Expenses elsewhere in
this Lease;
(n) rent for any office space occupied by Project management personnel
to the extent the size or rental rate of such office space exceeds the size or
fair market rental value of office space occupied by management personnel of the
Comparable Buildings in the vicinity of the Building, with adjustment where
appropriate for the size of the applicable project;
(o) costs arising from the gross negligence or willful misconduct of
Landlord or its agents, employees, vendors, contractors, or providers of
materials or services;
(p) costs incurred to comply with laws relating to the presence of
Hazardous Materials (as defined under applicable law) which, as to Hazardous
Materials located within the real property (exclusive of any improvements) of
the Project, is in existence during the Lease Term, and which, as to Hazardous
Materials located within any improvements on the Project, was in existence prior
to the Lease Commencement Date and was of such a nature that a federal, State or
municipal governmental authority, if it had then had knowledge of the presence
of such hazardous material, in the state, and under the conditions that it then
existed in the Building or on the Project, would have then required the removal
of such Hazardous Materials or other remedial or containment action with respect
thereto; and costs incurred to remove, remedy, contain, or treat hazardous
material, which Hazardous Materials is brought into the Building or onto the
Project after the date hereof by Landlord or any other tenant of the Project and
is of such a nature, at that time, that a federal, State or municipal
governmental authority, if it had then had knowledge of the presence of such
hazardous material, in the state, and under the conditions, that it then exists
in the Building or on the Project, would have then required the removal of such
Hazardous Materials or other remedial or containment action with respect
thereto;
(q) costs arising from Landlord's charitable or political contributions;
(r) any gifts provided to any entity whatsoever, including, but not
limited to, Tenant, other tenants, employees, vendors, contractors, prospective
tenants and agents;
(s) the cost of any magazine, newspaper, trade or other subscriptions;
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(t) costs incurred for the construction or replacement of the structural
components of the Building, including, without limitation, foundations, exterior
walls, roof, beams, columns, footings and structural slabs;
(u) rental under any ground or underlying lease;
(v) legal, accounting or other professional fees and expenses incurred
in connection with defense of Landlord's title to or interest in the Building or
Project or any part thereof;
(w) costs of any improvements, alterations or equipment, which would be
properly classified as capital expenditures according to generally accepted
accounting principles consistently applied (except as specifically permitted
under clauses (xii) or (xiii) in Section 4.2.7 above);
(x) penalties or other costs incurred due to a violation by Landlord, as
determined by written admission, stipulation, final judgment or arbitration
award, or any of the terms and conditions of the Lease or any other lease
relating the Building or Project except to the extent such costs reflect costs
that would have been incurred by Landlord absent such violation;
(y) payments to subsidiaries or affiliates of Landlord for management or
other services on or to the Building or Project for supplies or other materials
to the extent that the cost of such services, supplies or materials materially
exceed the amounts normally payable to unaffiliated third parties for similar
goods and services under similar circumstances (taking into account the market
factors in effect on the date any relevant contracts were negotiated) in
comparable buildings;
(z) all direct or indirect costs of refinancing, selling or exchanging
the Building or Project, including broker commissions, attorneys' fees and
closing costs; and
(aa) costs arising from latent defects in the Base, Shell or Core of the
Building or improvements installed by Landlord or repair thereof.
(bb) costs arising from the installation of canopy covers and other
specialized parking improvements requested by third-party tenants for their
specific spaces.
If Landlord is not furnishing any particular work or service (the cost
of which, if performed by Landlord, would be included in Operating Expenses) to
a tenant who has undertaken to perform such work or service in lieu of the
performance thereof by Landlord, Operating Expenses shall be deemed to be
increased by an amount equal to the additional Operating Expenses which would
reasonably have been incurred during such period by Landlord if it had at its
own expense furnished such work or service to such tenant. Landlord shall not
interpret the provisions of the preceding sentence in a manner which shall
increase Operating Expenses payable by Tenant under this Lease. If the Project
is not at least one hundred percent (100%) occupied during all or a portion of
any Expense Year, Landlord shall make an appropriate adjustment to the
components of Operating Expenses for such year to determine the amount of
Operating Expenses that would have been incurred had the Project been one
hundred percent (100%) occupied; and the amount so determined shall be deemed to
have been the amount of Operating Expenses for such year. Operating Expenses for
the Expense Year shall not
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include market-wide labor-rate increases due to extraordinary circumstances,
including, but not limited to, boycotts and strikes, and utility rate increases
due to extraordinary circumstances including, but not limited to, conservation
surcharges, boycotts, embargoes or other shortages, or amortized costs relating
to capital improvements. For any charge or cost which Tenant is obligated to pay
under this Lease, no such charge or cost item shall be included more than once
or allocated under more than one expense category. The aggregate sum of all cost
items allocable to tenants or occupants of the Building for any year upon which
an allocation is made shall not exceed the aggregate sum of such expense items
which are actually incurred by Landlord in the year in question. For the
purposes of this Article 4, "variable components" include only those component
expenses that are affected by variations in occupancy levels.
4.2.8 TAXES.
4.2.8.1 "TAX EXPENSES" shall mean all federal, state,
county, or local governmental or municipal taxes, fees, charges or other
impositions of every kind and nature, whether general, special, ordinary or
extraordinary, (including, without limitation, real estate taxes, general and
special assessments, transit taxes, personal property taxes imposed upon the
fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances,
furniture and other personal property used in connection with the Project, or
any portion thereof), which shall be paid or accrued during any Expense Year
(without regard to any different fiscal year used by such governmental or
municipal authority) because of or in connection with the ownership, leasing and
operation of the Project, or any portion thereof, exclusive of any tax which
Tenant is required to pay under Section 4.5.3 or for which Landlord receives a
waiver.
4.2.8.2 Tax Expenses shall include, without limitation:
(i) Any assessment, tax, fee, levy or charge in addition to, or in substitution,
partially or totally, of any assessment, tax, fee, levy or charge previously
included within the definition of real property tax; (ii) Any assessment, tax,
fee, levy or charge, upon this transaction or any document to which Tenant is a
party, creating or transferring an interest or an estate in the Premises; and
(iii) All of the real estate taxes and assessments imposed upon or with respect
to the Building and all of the real estate taxes and assessments imposed on the
land and improvements comprising the Project. Such Tax Expenses shall
specifically exclude (i) all excess profits taxes, franchise taxes, gift taxes,
capital stock taxes, inheritance and succession taxes, estate taxes, federal and
state income taxes, and other taxes applied or measured by Landlord's general or
net income (as opposed to rent, receipts, or income attributable to operations
at the Building), (ii) any item included in Operating Expenses, (iii) any tax
which Tenant is required to pay under Section 4.5.3; and (iv) any item for which
Landlord receives a waiver.
4.2.8.3 Any costs and expenses (including, without
limitation, reasonable attorneys' and consultants' fees) incurred in attempting
to protest, reduce or minimize Tax Expenses shall be included in Tax Expenses in
the Expense Year such expenses are incurred. If Tax Expenses for any period
during the Lease Term or any extension thereof are increased after payment
thereof for any reason, including, without limitation, error or reassessment by
applicable governmental or municipal authorities, Tenant shall pay Landlord upon
demand Tenant's Share of any such increased Tax Expenses included by Landlord as
Building Tax Expenses pursuant to the terms of this Lease. Notwithstanding
anything to the contrary contained in this Section 4.2.8 (except as set forth in
Section 4.2.8.1, above), there shall be
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excluded from Tax Expenses (i) all excess profits taxes, franchise taxes, gift
taxes, capital stock taxes, inheritance and succession taxes, estate taxes,
federal and state income taxes, and other taxes to the extent applicable to
Landlord's general or net income (as opposed to rents, receipts or income
attributable to operations at the Project), (ii) any items included as Operating
Expenses, and (iii) any items paid by Tenant under Section 4.5 of this Lease.
4.2.8.4 The amount of Tax Expenses for the Expense Year
attributable to the valuation of the Project, inclusive of tenant improvements,
shall be known as the "Base Taxes". If in any comparison year subsequent to the
Expense Year, the amount of Tax Expenses decreases below the amount of Base
Taxes, then for purposes of all subsequent comparison years, including the
comparison year in which such decrease in Tax Expenses occurred, the Base Taxes,
and therefore the Expense Year, shall be decreased by an amount equal to the
decrease in Tax Expenses.
4.2.8.5 For the purposes of this Lease, Tax Expenses shall
be calculated as if the tenant improvements in the Building were fully
constructed and the real property, the Building, and all tenant improvements in
the Building were fully assessed for real estate tax purposes. Landlord
specifically agrees that the gross-receipts component of Tax Expenses for the
Base Year and each subsequent year shall be calculated as if the Building were
one hundred percent (100%) occupied with rent paying tenants.
4.2.9 "TENANT'S SHARE" shall mean the percentage set forth in
Section 6 of the Summary. Tenant's Share was calculated based on the ratio of
the rentable square footage of the Premises to the total rentable square footage
of the Building. The rentable square feet in the Premises and Building is
measured pursuant to the Standard Method for Measuring Floor Area in Office
Buildings, ANSI Z65.1 - 1996 ("BOMA"), provided that the rentable square footage
of the Building shall include all of, and the rentable square footage of the
Premises therefore shall include a portion of, the square footage of the ground
floor common areas located within the Building and the common area and occupied
space of the portion of the Building or Project, dedicated to the service of the
Building. Not later than thirty (30) days following the Lease Commencement Date,
Landlord and Tenant shall remeasure the Premises to confirm the accuracy of the
measure of the rentable square footage. Any difference between the results
determined by such remeasurement shall be reflected on EXHIBIT C.
4.3 METHOD OF ALLOCATION OF DIRECT EXPENSES. Landlord and Tenant
acknowledge that the Building is a part of a multi-building project and that the
costs and expenses incurred in connection with the Project (i.e. the Direct
Expenses) should be shared between the tenants of the Building and the tenants
of the other buildings in the Project. Accordingly, as set forth in Section 4.2
above, Direct Expenses (which consists of Operating Expenses and Tax Expenses)
are determined annually for the Project as a whole, and a portion of the Direct
Expenses, which portion shall be determined by Landlord on an equitable basis,
shall be allocated to the tenants of the Building (as opposed to the tenants of
any other buildings in the Project) and such portion shall be the Building
Direct Expenses for purposes of this Lease. Such portion of Direct Expenses
allocated to the tenants of the Building shall include all Direct Expenses
attributable solely to the Building and an equitable portion of the Direct
Expenses attributable to the Project as a whole.
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4.4 CALCULATION AND PAYMENT OF ADDITIONAL RENT. If for any Expense Year
ending or commencing within the Lease Term, Tenant's Share of Building Direct
Expenses for such Expense Year exceeds Tenant's Share of Building Direct
Expenses applicable to the Base Year, then Tenant shall pay to Landlord, in the
manner set forth in Section 4.4.1, below, and as Additional Rent, an amount
equal to the excess (the "Excess").
4.4.1 STATEMENT OF ACTUAL BUILDING DIRECT EXPENSES AND PAYMENT BY
TENANT. Landlord shall endeavor to give to Tenant following the end of each
Expense Year, a statement (the "STATEMENT") which shall state the Building
Direct Expenses incurred or accrued for such preceding Expense Year, and which
shall indicate the amount of the Excess. Upon receipt of the Statement for each
Expense Year commencing or ending during the Lease Term, if an Excess is
present, Tenant shall pay, with its next installment of Base Rent due, the full
amount of the Excess for such Expense Year, less the amounts, if any, paid
during such Expense Year as "Estimated Excess," as that term is defined in
Section 4.4.2, below, and if Tenant paid more as Estimated Excess than the
actual Excess, Tenant shall receive a credit in the amount of Tenant's
overpayment against Rent next due under this Lease. The failure of Landlord to
timely furnish the Statement for any Expense Year shall not prejudice Landlord
or Tenant from enforcing its rights under this Article 4. Even though the Lease
Term has expired and Tenant has vacated the Premises, when the final
determination is made of Tenant's Share of Building Direct Expenses for the
Expense Year in which this Lease terminates, if an Excess is present, Tenant
shall immediately pay to Landlord such amount, and if Tenant paid more as
Estimated Excess than the actual Excess, Landlord shall, within thirty (30)
days, deliver a check payable to Tenant in the amount of the overpayment. The
provisions of this Section 4.4.1 shall survive the expiration or earlier
termination of the Lease Term.
4.4.2 STATEMENT OF ESTIMATED BUILDING DIRECT EXPENSES. In
addition, Landlord shall endeavor to give Tenant a yearly expense estimate
statement (the "ESTIMATE STATEMENT") which shall set forth Landlord's reasonable
estimate (the "ESTIMATE") of what the total amount of Building Direct Expenses
for the then-current Expense Year shall be and the estimated excess (the
"ESTIMATED EXCESS") as calculated by comparing the Building Direct Expenses for
such Expense Year, which shall be based upon the Estimate, to the amount of
Building Direct Expenses for the Base Year. The failure of Landlord to timely
furnish the Estimate Statement for any Expense Year shall not preclude Landlord
from enforcing its rights to collect any Estimated Excess under this Article 4,
nor shall Landlord be prohibited from revising any Estimate Statement or
Estimated Excess theretofore delivered to the extent necessary. Thereafter,
Tenant shall pay, with its next installment of Base Rent due, a fraction of the
Estimated Excess for the then-current Expense Year (reduced by any amounts paid
pursuant to the last sentence of this Section 4.4.2). Such fraction shall have
as its numerator the number of months which have elapsed in such current Expense
Year, including the month of such payment, and twelve (12) as its denominator.
Until a new Estimate Statement is furnished (which Landlord shall have the right
to deliver to Tenant at any time), Tenant shall pay monthly, with the monthly
Base Rent installments, an amount equal to one-twelfth (1/12) of the total
Estimated Excess set forth in the previous Estimate Statement delivered by
Landlord to Tenant.
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<PAGE> 17
4.5 TAXES AND OTHER CHARGES FOR WHICH TENANT IS DIRECTLY RESPONSIBLE.
4.5.1 Tenant shall be liable for and shall pay ten (10) days
before delinquency, taxes levied against Tenant's equipment, furniture, fixtures
and any other personal property located in or about the Premises. If any such
taxes on Tenant's equipment, furniture, fixtures and any other personal property
are levied against Landlord or Landlord's property or if the assessed value of
Landlord's property is increased by the inclusion therein of a value placed upon
such equipment, furniture, fixtures or any other personal property and if
Landlord pays the taxes based upon such increased assessment, which Landlord
shall have the right to do regardless of the validity thereof but only under
proper protest if requested by Tenant, Tenant shall upon demand repay to
Landlord the taxes so levied against Landlord or the proportion of such taxes
resulting from such increase in the assessment, as the case may be.
4.5.2 Tenant shall be treated, economically, as if the provisions
of this Section 4.5.2 were included in all leases within the Project. If the
tenant improvements in the Premises, whether installed and/or paid for by
Landlord or Tenant and whether or not affixed to the real property so as to
become a part thereof, are assessed for real property tax purposes at a
valuation higher than the valuation at which tenant improvements conforming to
Landlord's "building standard" in other space in the Building are assessed, then
the Tax Expenses levied against Landlord or the property by reason of such
excess assessed valuation shall be deemed to be taxes levied against personal
property of Tenant and shall be governed by the provisions of Section 4.5.1,
above.
4.5.3 Notwithstanding any contrary provision herein, and
notwithstanding the fact that this Lease is a "Base Year" Lease, Tenant shall
pay, together with and in addition to the Base Rent specified in this Lease,
prior to delinquency, a sum equal to the aggregate of any municipal, city,
county, state or federal excise, sales, use or transaction privilege taxes
legally levied or imposed, or hereafter legally levied or imposed, during the
term hereof or any extension or renewal hereof, against or on account of any or
all amounts payable hereunder by Tenant or the receipt thereof by Landlord
(except state, federal or any other income taxes imposed or levied against
Landlord), including by way of illustration and not limitation any (i) rent tax
or sales tax, service tax, transfer tax or value added tax, or any other
applicable tax on the rent or services herein or otherwise respecting this
Lease, (ii) taxes assessed upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair, use or occupancy by
Tenant of the Premises or any portion of the Project, including the Project
parking facility; or (iii) taxes assessed upon this transaction or any document
to which Tenant is a party creating or transferring an interest or an estate in
the Premises.
4.6 CONTROLLABLE COSTS. Notwithstanding anything to the contrary set
forth in this Article 4, for each Expense Year, Tenant's obligation to pay
"Controllable Costs" (as hereinafter defined) shall not increase, on an annual
and cumulative basis, by an amount greater than [*] per year
following the initial lease year. For purposes of this Section 4.6,
"Controllable Costs" shall mean all Operating Expenses and Tax Expenses except:
(i) property taxes and any and all assessments, including assessment districts,
and government mandated charges with respect to the Building or Project, or any
part thereof; (ii) insurance carried by Landlord with respect to the Project
and/or the operation thereof; and (iii) costs of utilities, including, without
limitation, air conditioning, heating, ventilating, plumbing, and electricity
* Portions redacted pursuant to a request for confidential treatment
filed with the Securities and Exchange Commission.
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costs, water and sewer charges, utility surcharges or assessments and refuse
removal. Such limitations shall be calculated on an annual basis and cumulative
basis only, such that Landlord may carry forward increases in Controllable
Operating Expenses in excess of one hundred five percent (105%) and pass them
through to Tenant in subsequent Expense Years so long as the requirements of the
preceding sentence are satisfied.
4.7 LANDLORD'S BOOKS AND RECORDS. Within forty-five (45) days after
receipt of a Statement by Tenant, if Tenant disputes the amount of Additional
Rent set forth in the Statement, a representative, designated by Tenant, may,
after reasonable notice to Landlord and at reasonable times, inspect Landlord's
records at Landlord's offices, provided that Tenant is not then in a state of
monetary default after the applicable cure period has lapsed under this Lease.
If Tenant disputes a line-item amount in the Statement, Tenant may request a
copy of the supporting documents relating to such line-item. If after such
inspection, Tenant still disputes the amount of the Additional Rent set forth in
the statement, Tenant shall have the right, within the ninety (90) days
thereafter, to cause an independent certified public accountant (which
consultant is a member of a regionally recognized accounting firm), as selected
by Tenant and reasonably approved by Landlord (the "Accountant"), to commence
and complete an audit of Landlord's books and records to determine the proper
amount of the Additional Rent payable by Tenant for the Expense Year which is
the subject of such statement, which audit shall be final and binding upon
Landlord and Tenant. If such audit reveals that Landlord has overcharged Tenant,
then Landlord shall credit against Tenant's rental obligations next falling due
the amount of such over-charge with interest at the Interest Rate. If the audit
reveals that the Tenant was under-charged, then within thirty (30) days after
the results of such audit are made available to Tenant, Tenant shall reimburse
to Landlord the amount of such under-charge with interest at the Interest Rate.
Tenant shall pay the costs of such audit unless the Accountant determines that
the amount of Additional Rent set forth in the Statement which was the subject
of such audit was in error to Tenant's disadvantage by more than [*] of the
Operating Expenses and Tax Expenses, in which case Landlord shall pay the cost
of such audit.
ARTICLE 5
USE OF PREMISES
5.1 PERMITTED USE. Tenant shall use the Premises solely for the
Permitted Use set forth in Section 7 of the Summary and Tenant shall not use or
permit the Premises or the Project to be used for any other purpose or purposes
whatsoever without the prior written consent of Landlord, which may be withheld
in Landlord's sole discretion.
5.2 PROHIBITED USES. Tenant further covenants and agrees that Tenant
shall not use, or suffer or permit any person or persons to use, the Premises or
any part thereof for any use or purpose contrary to the provisions of the "Rules
and Regulations" set forth in EXHIBIT D, attached hereto, or in violation of the
laws of the United States of America, the State of Arizona, or the ordinances,
regulations or requirements of the local municipal or county governing body or
other lawful authorities having jurisdiction over the Project, including,
without limitation, any such laws, ordinances, regulations or requirements
relating to hazardous materials or substances, as those terms are defined by
applicable laws now or hereafter in effect. Landlord shall not modify the Rules
and Regulations without Tenant's consent, which shall not be unreasonably
* Portions redacted pursuant to a request for confidential treatment
filed with the Securities and Exchange Commission.
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<PAGE> 19
withheld or delayed, and which consent shall be deemed to be granted by Tenant
so long as such change shall not require Tenant to pay Additional Rent and shall
not unreasonably interfere with Tenant's use of the Premises. Such amendment is
not binding on Tenant until the tenth (10th) business day after Tenant receives
written notice of the change, and no rule shall apply retroactively. The Rules
and Regulations do not take precedence over the specific terms and conditions of
the lease. 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 unlawful purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Premises. Tenant shall
comply with, and Tenant's rights and obligations under the Lease and Tenant's
use of the Premises shall be subject and subordinate to, all recorded easements,
covenants, conditions, and restrictions now or hereafter affecting the Project,
provided that any such easements, covenants, conditions, and restrictions
hereafter affecting the Project do not materially and unreasonably interfere
with Tenant's use of the Premises and do not result in any additional monetary
obligation on the part of Tenant other than minor administrative compliance
costs.
5.3 HAZARDOUS MATERIALS.
5.3.1 PROHIBITION ON USE. Tenant shall not use or allow another
person or entity to use any part of the Premises for the storage, use,
treatment, manufacture or sale of Hazardous Materials, except for such products
in the Premises which are incidental to the operation of its offices, such as
photocopy supplies, secretarial supplies and limited janitorial supplies, which
products contain chemicals which are categorized as Hazardous Materials.
Landlord agrees that the use of such products in the Premises in compliance with
all applicable laws and in the manner in which such products are designed to be
used shall not be a violation by Tenant of this Section 5.3.1.
5.3.2 INDEMNITY. Subject to the provisions of Section 10.1 below,
Landlord and Tenant each agree to indemnify, defend, protect and hold the other
harmless from and against any and all claims, actions, administrative
proceedings (including informal proceedings), judgments, damages, punitive
damages, penalties, fines, costs, liabilities, interest or losses, including
reasonable attorneys' fees and expenses, consultant fees, and expert fees,
together with all other costs and expenses of any kind or nature, that arise
during or after the Lease Term directly or indirectly from or in connection with
the presence, suspected presence, release or suspected release of any Hazardous
Materials in or into the air, soil, surface water or groundwater at, on, about,
under or within the Premises or Project or any portion thereof, caused by the
other party, its assignees or subtenants and/or their respective agents,
employees, contractors, licensees or invitees.
5.3.3 REMEDIAL WORK. In the event any investigation or monitoring
of site conditions or any clean-up, containment, restoration, removal or other
remedial work (collectively, the "Remedial Work") is required under any
applicable federal, state or local laws or by any judicial order, or by any
governmental entity as the result of operations or activities upon, or any use
or occupancy of any portion of the Premises by Tenant or Tenant Affiliates,
Tenant shall perform or cause to be performed the Remedial Work in compliance
with such laws or order. All Remedial Work shall be performed by one or more
contractors, selected by Tenant
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and approved in advance in writing by Landlord. All costs and expenses of such
Remedial Work shall be paid by Tenant, including, without limitation, the
charges of such contractor(s), the consulting engineers, and Landlord's
reasonable attorneys' fees and costs incurred in connection with monitoring or
review of such Remedial Work.
5.3.4 DEFINITION OF HAZARDOUS MATERIALS. As used herein, the term
"Hazardous Materials" means any hazardous or toxic substance, material or waste
which is or becomes regulated by any local governmental authority, the State of
Arizona or the United States, including, without limitation, any material or
substance which is (i) defined or listed as a "hazardous waste," "extremely
hazardous waste," "restricted hazardous waste," "hazardous substance" or
"hazardous material" under any applicable federal, state or local law or
administrative code promulgated thereunder, (ii) petroleum products, (iii)
asbestos, (iv) radioactive materials, or (v) polychlorinated biphenyls ("PCBs")
or substances or compounds containing PCBs.
ARTICLE 6
SERVICES AND UTILITIES
6.1 STANDARD TENANT SERVICES. Tenant shall be allowed to use the
Premises on a twenty-four (24) hour seven (7) day per week basis. Landlord shall
provide the following services on all days (unless otherwise stated below)
during the Lease Term.
6.1.1 Subject to limitations imposed by all governmental rules,
regulations and guidelines applicable thereto, and taking into account the fact
that the Premises have been improved with electronic monitoring systems which
program themselves rather than customary thermostats, Landlord shall provide
heating, ventilation and air conditioning ("HVAC") to the Premises in accordance
with that required for normal comfort, given the location of the Building in
Phoenix, Arizona, for normal office use and delivered to the Comparable
Buildings from 7:00 A.M. to 6:00 P.M. Monday through Friday, and on Saturdays
from 8:00 A.M. to 12:00 Noon (collectively, the "BUILDING HOURS"), except for
the date of observation of New Year's Day, Independence Day, Labor Day, Memorial
Day, Thanksgiving Day, Christmas Day, Martin Luther King, Jr. Day, President's
Day and, at Landlord's discretion, other locally or nationally recognized
holidays which are observed by other Comparable Buildings (collectively, the
"HOLIDAYS"). In the event that the Approved Working Drawings do not reflect HVAC
zoning controls or if Tenant desires to add or revise HVAC zoning controls
within the Premises during the Lease Term as an Alteration, Landlord hereby
approves the concept of HVAC zoning controls subject to its plan approval
requirements and other requirements relating to Alterations as set forth in
Article 8 of this Lease.
6.1.2 Landlord shall provide adequate electrical wiring and
electricity for lighting and power in the Premises, provided that (i) the
connected electrical load of the incidental use equipment does not exceed an
average of five (5) watts per rentable square foot of the Premises, and the
electricity so furnished for incidental use equipment will be at a nominal one
hundred twenty (120) volts and no electrical circuit for the supply of such
incidental use equipment will require a current capacity exceeding twenty (20)
amperes, and (ii) the connected electrical load of Tenant's lighting fixtures
does not exceed an average of one (1) watt per usable
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<PAGE> 21
square foot of the Premises, and the electricity so furnished for Tenant's
lighting will be at a nominal two hundred seventy-seven (277) volts, which
electrical usage shall be subject to applicable laws and regulations. Tenant
shall bear the cost of replacement of lamps, starters and ballasts for
non-Building standard lighting fixtures within the Premises. Landlord shall be
responsible, as an Operating Expense for the ordinary, typical and routine
replacement of lamps, starts and ballasts for Building standard lighting
fixtures within the Premises.
6.1.3 Landlord shall provide city water twenty-four (24) hours a
day, seven (7) days a week, from the regular Building outlets for drinking,
lavatory and toilet purposes in the Common Areas.
6.1.4 Landlord shall provide janitorial services to the Premises
and Common Areas serving the Premises, Monday through Friday, except Holidays.
Such janitorial services shall be provided in a manner consistent with that
provided comparable first-class office buildings in the vicinity of the Project.
Landlord shall provide window washing services in a manner consistent with other
comparable buildings in the vicinity of the Building, but in no event less than
two (2) times per year. Tenant shall have the right to contract for additional
janitorial service, at Tenant's sole cost and expense. Landlord shall provide
landscaping maintenance for the Project in a manner consistent with that
provided comparable first-class office buildings in the vicinity of the Project.
6.1.5 Landlord shall provide nonexclusive, non-attended automatic
passenger/freight elevator service, with all elevators in service (subject to
normal maintenance and repair) during the Building Hours, and shall have one
elevator available at all other times, including on the Holidays.
Tenant shall cooperate fully with Landlord at all times and abide by all
regulations, procedures and requirements that Landlord may reasonably prescribe
for the proper functioning and protection of the HVAC, electrical, mechanical
and plumbing systems.
6.2 OVERSTANDARD TENANT USE. Unless identified on plans approved by
Landlord prior to their installation, Tenant shall not, without Landlord's prior
written consent, use heat-generating machines, machines other than normal
fractional horsepower office machines, or equipment or lighting other than
Building standard lights in the Premises, which may affect the temperature
otherwise maintained by the air conditioning system or increase the water
normally furnished for the Premises by Landlord pursuant to the terms of Section
6.1 of this Lease. If Tenant uses water, electricity (including lighting), heat
or air conditioning in excess of that supplied by Landlord pursuant to Section
6.1 of this Lease, Tenant shall pay to Landlord, upon billing, the actual cost
of such excess consumption, the cost of the installation, operation, and
maintenance of equipment which is installed in order to supply such excess
consumption, and the cost of the increased wear and tear on existing equipment
caused by such excess consumption; and Landlord may install devices to
separately meter any increased use and in such event Tenant shall pay the
increased cost directly to Landlord, on demand, at the rates charged by the
public utility company furnishing the same, including the cost of such
additional metering devices. Tenant's use of electricity shall never exceed the
capacity of the feeders to the Project or the risers or wiring installation, and
subject to the terms of Section 29.32, below, Tenant shall not install or use or
permit the installation or use of any computer or electronic data processing
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<PAGE> 22
equipment (other than customary desktop personal computers and similar office
equipment) in the Premises (unless identified on plans approved by Landlord
prior to their installation), without the prior written consent of Landlord. If
Tenant desires to use heat, ventilation or air conditioning during hours other
than those for which Landlord is obligated to supply such utilities pursuant to
the terms of Section 6.1 of this Lease, Tenant shall give Landlord such prior
notice, if any, as Landlord shall from time to time establish as appropriate, of
Tenant's desired use in order to supply such utilities, and Landlord shall
supply such utilities to Tenant at such actual cost to Tenant (which shall be
treated as Additional Rent) as Landlord shall from time to time establish.
Tenant's data center (the "Data Center"), as well as all other portions of the
Premises so designated on the plans, shall be separately metered.
6.3 INTERRUPTION OF USE. Tenant agrees that Landlord shall not be liable
for damages, by abatement of Rent or otherwise, for failure to furnish or delay
in furnishing any service (including telephone and telecommunication services),
or for any diminution in the quality or quantity thereof, when such failure or
delay or diminution is occasioned, in whole or in part, by breakage, repairs,
replacements, or improvements, by any strike, lockout or other labor trouble, by
inability to secure electricity, gas, water, or other fuel at the Building or
Project after reasonable effort to do so, by any riot or other dangerous
condition, emergency, accident or casualty whatsoever, by act or default of
Tenant or other parties, or by any other cause beyond Landlord's reasonable
control; and such failures or delays or diminution shall never be deemed to
constitute an eviction or disturbance of Tenant's use and possession of the
Premises or relieve Tenant from paying Rent or performing any of its obligations
under this Lease; however, notwithstanding Section 29.16, and without limiting
Tenant's remedies hereunder or at law or equity, Landlord agrees that in the
event such interruption prevents Tenant from using some or all of the Premise
and such interruption continues for five (5) days after Landlord's receipt of
notice of same, then Tenant shall be entitled to one (1) day of abated Rent (or
prorated abated Rent if Tenant is using a portion of the Premises) for every one
(1) day which any of the utilities or services described in Section 6.1
generally are not provided to the Premises and the Premises are not occupied by
Tenant as a result thereof, such abatement to be in proportion to the ratio that
the amount of rentable square feet of the Premises which is unfit for occupancy
for the purposes permitted under this Lease bears to the total rentable square
feet of the Premises. If such interruption continues for a period of more than
ninety (90) consecutive days, then Tenant may, at any point after the expiration
of such ninety (90) day period, and so long as such interruption is then
continuing, terminate this Lease and Tenant's remaining obligations hereunder.
Furthermore, Landlord shall not be liable under any circumstances for a loss of,
or injury to, property or for injury to, or interference with, Tenant's
business, including, without limitation, loss of profits, however occurring,
through or in connection with or incidental to a failure to furnish any of the
services or utilities as set forth in this Article 6.
ARTICLE 7
REPAIRS
Tenant shall, at Tenant's own expense, keep the Premises, including all
improvements, fixtures and furnishings therein, and the non-structural floor or
floors of the Building in which the Premises are located, in good order, repair
and condition at all times during the Lease Term. In addition, Tenant shall, at
Tenant's own expense, but under the supervision and subject to the
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prior approval of Landlord, and within any reasonable period of time specified
by Landlord, promptly and adequately repair all damage to the Premises and
replace or repair all damaged, broken, or worn fixtures and appurtenances caused
by Tenant's use of the Premises except for damage caused by ordinary wear and
tear or beyond the reasonable control of Tenant; provided however, that, if
Tenant fails to make such repairs, Landlord may, but need not, make such repairs
and replacements, and Tenant shall pay Landlord the cost thereof, including a
percentage of the cost thereof (to be uniformly, nondiscriminatorily, and
reasonably established for the Building and/or the Project) sufficient to
reimburse Landlord for all overhead, general conditions, fees and other costs or
expenses arising from Landlord's control of such repairs and replacements
forthwith upon being billed for same. Notwithstanding the foregoing, Landlord
shall be responsible for compliance with the American Disabilities Act with
respect to the portions of the Building and Project located outside of the
perimeter of the Premises, and Tenant shall be responsible for compliance with
such Act during the term of the Lease to the extent of its applications to the
area located within the perimeter of the Premises, unless any noncompliance with
such Act within the Premises is a condition which existed due to the design and
construction of the "Base, Shell and Core" as defined in Section 1.1 of EXHIBIT
B to this Lease. Landlord shall also be responsible for repairs to the exterior
walls, foundation and roof of the Building, the structural portions of the
floors of the Building, the systems and equipment of the Building, and the
landscaping, walkways, driveways and parking areas of the Project, except to the
extent that such repairs are required due to the negligence or willful
misconduct of Tenant; provided, however, that if such repairs are due to the
negligence or willful misconduct of Tenant, Landlord shall nevertheless make
such repairs at Tenant's expense. Subject to the limitations of Article 27,
Landlord may, but shall not be required to, enter the Premises at all reasonable
times to make such repairs, alterations, improvements or additions to the
Premises or to the Project or to any equipment located in the Project as
Landlord shall reasonably deem necessary or as Landlord may be required to do by
governmental or quasi-governmental authority or court order or decree. TENANT
HEREBY WAIVES ANY AND ALL RIGHTS UNDER AND BENEFITS OF ARIZONA REVISED STATUTES
SECTION 33-343 OR UNDER ANY SIMILAR LAW, STATUTE, OR ORDINANCE NOW OR HEREAFTER
IN EFFECT.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 LANDLORD'S CONSENT TO ALTERATIONS. Tenant may not make any
improvements, alterations or additions to the Premises or any mechanical,
plumbing or HVAC facilities or systems pertaining to the Premises (collectively,
the "ALTERATIONS") without first procuring the prior written consent of Landlord
to such Alterations, which consent shall be requested by Tenant not less than
five (5) days prior to the commencement thereof, and which consent shall not be
unreasonably withheld or delayed by Landlord, provided it shall be deemed
reasonable for Landlord to withhold its consent to any Alteration which
adversely affects the structural portions or the systems or equipment of the
Building or is visible from the exterior of the Building. The construction of
the initial improvements to the Premises shall be governed by the terms of the
Tenant Work Letter and not the terms of this Article 8.
8.2 MANNER OF CONSTRUCTION. Landlord may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or about the
Premises, such requirements as
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Landlord in its discretion may deem desirable, including, but not limited to,
the requirement that Tenant utilize for such purposes only contractors,
subcontractors, materials, mechanics and materialmen approved by Landlord, the
requirement that upon Landlord's request, Tenant shall, at Tenant's expense,
remove such Alterations upon the expiration or any early termination of the
Lease Term. At the time of approval of any such alteration, Landlord shall
advise Tenant whether or not Landlord shall require Tenant to remove such
alteration at the end of the Lease Term. Tenant shall construct such Alterations
and perform such repairs in a good and workmanlike manner, in conformance with
any and all applicable federal, state, county or municipal laws, rules and
regulations and pursuant to a valid building permit, issued by the city in which
the Project is located, all in conformance with Landlord's construction rules
and regulations; provided, however, that prior to commencing to construct any
Alteration, Tenant shall meet with Landlord to discuss Landlord's design
parameters and code compliance issues. In the event Tenant performs any
Alterations in the Premises which require or give rise to governmentally
required changes to the "BASE BUILDING," as that term is defined below, then
Landlord shall, at Tenant's expense, make such changes to the Base Building. The
"Base Building" shall include the structural portions of the Building, and the
public restrooms, elevators, exit stairwells and the systems and equipment
located in the internal core of the Building on the floor or floors on which the
Premises are located. In performing the work of any such Alterations, Tenant
shall have the work performed in such manner so as not to obstruct access to the
Project or any portion thereof, by any other tenant of the Project, and so as
not to obstruct the business of Landlord or other tenants in the Project. In
addition to Tenant's obligations under Article 9 of this Lease, upon completion
of any Alterations, Tenant agrees to cause a Notice of Completion to be recorded
in the office of the Recorder of the County in which the Project is located in
accordance with ARIZONA REVISED STATUTES Section 33-993(E) or any successor
statute, and Tenant shall deliver to the Project construction manager a copy of
the "field-grade as-built" drawings of the Alterations as well as all permits,
approvals and other documents issued by any governmental agency in connection
with the Alterations.
8.3 PAYMENT FOR IMPROVEMENTS. If payment is made directly to
contractors, Tenant shall (i) comply with Landlord's requirements for final lien
releases and waivers in connection with Tenant's payment for work to
contractors, and (ii) sign Landlord's standard contractor's rules and
regulations which shall be typical and customary of the contractors rules and
regulations promulgated by institutional owners of the Comparable Buildings. If
Tenant orders any work directly from Landlord, Tenant shall enter into a
construction agreement with Landlord which shall define Landlord's construction
costs, overhead and fee. If Tenant does not order any work directly from
Landlord, Tenant shall reimburse Landlord for Landlord's reasonable, actual,
out-of-pocket costs and expenses actually incurred in connection with Landlord's
review of such work.
8.4 CONSTRUCTION INSURANCE. In addition to the requirements of Article
10 of this Lease, in the event that Tenant makes any Alterations, prior to the
commencement of such Alterations, Tenant shall provide Landlord with evidence
that Tenant carries "Builder's All Risk" insurance in an amount approved by
Landlord covering the construction of such Alterations, and such other insurance
as Landlord may reasonably require, it being understood and agreed that all of
such Alterations shall be insured by Tenant pursuant to Article 10 of this Lease
immediately upon completion thereof.
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8.5 LANDLORD'S PROPERTY.
8.5.1 REMOVAL OBLIGATIONS. All Alterations, improvements,
fixtures, equipment and/or appurtenances which may be installed or placed in or
about the Premises, from time to time, shall be at the sole cost of Tenant and
shall be and become the property of Landlord, except that Tenant may remove any
Alterations, improvements, fixtures and/or equipment which Landlord agreed that
Tenant could remove upon the surrender of the Premises, provided Tenant repairs
any damage to the Premises and Building caused by such removal and returns the
affected portion of the Premises to a building standard tenant improved
condition as determined by Landlord. The following is an itemized list of
Tenant's fixtures which Tenant shall be entitled to remove at the end of the
Lease Term to the extent such items have not been acquired utilizing the Tenant
Improvement Allowance.
Equipment: Furniture, Fixtures and Appliances:
---------- -----------------------------------
Hubs, routers, switches All workstation, office and conference room
Cable/ fiber termination interfaces furniture
file servers Data center racks
voice response units Data center raised floor
voice mail systems Data center cable trays (under the raised
cursor and predictive dialers floor)
phone switches and phones Data center ladder racks (overhead)
security system Wall clocks and whiteboards
security cameras Any related items not aforementioned
card swipes and hand recognition devices
controllers to card swipes
desktop and laptop PC's
printers, fax machines, copiers
Projectors and screens
Video conferencing equipment
Any additional office and/or data equipment
not aforementioned.
Power and HVAC:
Generator and belly fuel tank
Data Center cooling system and fans
power poles (integrated with workstations)
8.5.2 REMOVAL OBLIGATIONS. Furthermore, Landlord may, by written
notice to Tenant prior to the end of the Lease Term, or given following any
earlier termination of this Lease, require Tenant, at Tenant's expense, to
remove any Alterations or improvements and to repair any damage to the Premises
and Building caused by such removal and return the affected portion of the
Premises to a building standard tenant improved condition as determined by
Landlord. If Tenant fails to complete such removal and/or to repair any damage
caused by the removal of any Alterations or improvements in the Premises and
return the affected portion of
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the Premises to a building standard tenant improved condition as reasonably
determined by Landlord, Landlord may do so and may charge the cost thereof to
Tenant. Tenant hereby protects, defends, indemnifies and holds Landlord harmless
from any liability, cost, obligation, expense or claim of lien in any manner
relating to the installation, placement, removal or financing of any such
Alterations, improvements, fixtures and/or equipment in, on or about the
Premises, which obligations of Tenant shall survive the expiration or earlier
termination of this Lease.
ARTICLE 9
COVENANT AGAINST LIENS
Tenant shall keep the Project and Premises free from any liens or
encumbrances arising out of the work performed, materials furnished or
obligations incurred by or on behalf of Tenant, and shall protect, defend,
indemnify and hold Landlord harmless from and against any claims, liabilities,
judgments or costs (including, without limitation, reasonable attorneys' fees
and costs) arising out of same or in connection therewith. Tenant shall give
Landlord notice at least twenty (20) days prior to the commencement of any such
work on the Premises (or such additional time as may be necessary under
applicable laws) to afford Landlord the opportunity of posting and recording
appropriate notices of non-responsibility. Tenant shall remove any such lien or
encumbrance by bond or otherwise within ten (10) business days after notice by
Landlord, and if Tenant shall fail to do so, Landlord may pay the amount
necessary to remove such lien or encumbrance, without being responsible for
investigating the validity thereof, unless Tenant has commenced legal action to
contest, dispute, or defend the claims of the lienholder and the validity of the
liens and thereafter continues to prosecute this action to a successful judgment
releasing the lienholder's interest in the Premises or the Building. The amount
so paid shall be deemed Additional Rent under this Lease payable upon demand,
without limitation as to other remedies available to Landlord under this Lease.
Nothing contained in this Lease shall authorize Tenant to do any act which shall
subject Landlord's title to the Building or Premises to any liens or
encumbrances whether claimed by operation of law or express or implied contract.
Any claim to a lien or encumbrance upon the Building or Premises arising in
connection with any such work or respecting the Premises not performed by or at
the request of Landlord shall be null and void, or at Landlord's option shall
attach only against Tenant's interest in the Premises and shall in all respects
be subordinate to Landlord's title to the Project, Building and Premises.
ARTICLE 10
INSURANCE
10.1 INDEMNIFICATION AND WAIVER. Tenant hereby assumes all risk of
damage to property or injury to persons in, upon or about the Premises from any
cause whatsoever (including, but not limited to, any personal injuries resulting
from a slip and fall in, upon or about the Premises) and agrees that Landlord,
its partners, subpartners and their respective officers, agents, servants,
employees, and independent contractors (collectively, "LANDLORD PARTIES") shall
not be liable for, and are hereby released from any responsibility for, any
damage either to person or property or resulting from the loss of use thereof,
which damage is sustained by Tenant or by other persons claiming through Tenant.
Tenant shall indemnify, defend, protect,
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and hold harmless the Landlord Parties from any and all loss, cost, damage,
expense and liability (including without limitation court costs and reasonable
attorneys' fees) incurred in connection with or arising from any cause in, on or
about the Premises (including, but not limited to, a slip and fall), any acts,
omissions or negligence of Tenant or of any person claiming by, through or under
Tenant, or of the contractors, agents, servants, employees, invitees, guests or
licensees of Tenant or any such person, in, on or about the Project or any
breach of the terms of this Lease, either prior to, during, or after the
expiration of the Lease Term, provided that the terms of the foregoing indemnity
shall not apply to the negligence or willful misconduct of Landlord. Should
Landlord be named as a defendant in any suit brought against Tenant in
connection with or arising out of Tenant's occupancy of the Premises, Tenant
shall pay to Landlord its costs and expenses incurred in such suit, including
without limitation, its actual professional fees such as reasonable appraisers',
accountants' and attorneys' fees. The provisions of this Section 10.1 shall
survive the expiration or sooner termination of this Lease with respect to any
claims or liability arising in connection with any event occurring prior to such
expiration or termination. Notwithstanding anything to the contrary contained in
this Lease, nothing in this Lease shall impose any obligations on Tenant or
Landlord to be responsible or liable for, and each hereby releases the other
from all liability for, consequential damages other than those consequential
damages incurred by Landlord in connection with a holdover of the Premises by
Tenant after the expiration or earlier termination of this Lease or incurred by
Landlord in connection with any repair, physical construction or improvement
work performed by or on behalf of Tenant in the Project, but Tenant shall not be
responsible for any direct or consequential damages resulting from Landlord's or
contractor's acts in connection with the completion by Landlord of the tenant
improvements in the Premises pursuant to the Tenant Work Letter.
10.2 TENANT'S COMPLIANCE WITH LANDLORD'S FIRE AND CASUALTY INSURANCE.
Tenant shall comply with all non-monetary insurance company requirements
pertaining to the use of the Premises. If Tenant's conduct or use of the
Premises causes any increase in the premium for such insurance policies then
Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant's
expense, shall comply with all rules, orders, regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.
10.3 TENANT'S INSURANCE. Tenant shall maintain the following coverages
in the following amounts.
10.3.1 Commercial General Liability Insurance covering the
insured against claims of bodily injury, personal injury and property damage
(including loss of use thereof) arising out of Tenant's operations, and
contractual liabilities (covering the performance by Tenant of its indemnity
agreements) including a Broad Form endorsement covering the insuring provisions
of this Lease and the performance by Tenant of the indemnity agreements set
forth in Section 10.1 of this Lease, for limits of liability not less than:
Bodily Injury and Property $3,000,000 each occurrence
Damage Liability $3,000,000 annual aggregate
Personal Injury Liability $3,000,000 each occurrence
$3,000,000 annual aggregate
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0% Insured's participation
10.3.2 Physical Damage Insurance covering (i) all office
furniture, business and trade fixtures, office equipment, free-standing cabinet
work, movable partitions, merchandise and all other items of Tenant's property
on the Premises installed by, for, or at the expense of Tenant, (ii) the "Tenant
Improvements," as that term is defined in the Tenant Work Letter, and any other
improvements which exist in the Premises as of the Lease Commencement Date
(excluding the Base Building) (the "ORIGINAL IMPROVEMENTS"), and (iii) all other
improvements, alterations and additions to the Premises. Such insurance shall be
written on an "all risks" of physical loss or damage basis, for the full
replacement cost value (subject to reasonable deductible amounts) new without
deduction for depreciation of the covered items and in amounts that meet any
co-insurance clauses of the policies of insurance and shall include coverage for
damage or other loss caused by fire or other peril including, but not limited
to, vandalism and malicious mischief, theft, water damage of any type, including
sprinkler leakage, bursting or stoppage of pipes, and explosion, and providing
business interruption and loss-of-earnings coverage for a period of one year.
10.3.3 Worker's Compensation and Employer's Liability or other
similar insurance pursuant to all applicable state and local statutes and
regulations.
10.4 FORM OF POLICIES. The minimum limits of policies of insurance
required of Tenant under this Lease shall in no event limit the liability of
Tenant under this Lease. Such insurance shall (i) name Landlord, and any other
party the Landlord so specifies, as an additional insured, including Landlord's
managing agent, if any; (ii) specifically cover the liability assumed by Tenant
under this Lease, including, but not limited to, Tenant's obligations under
Section 10.1 of this Lease; (iii) be issued by an insurance company having a
rating of not less than A-X in Best's Insurance Guide or which is otherwise
acceptable to Landlord and licensed to do business in the State of Arizona; (iv)
be primary insurance as to all claims thereunder and provide that any insurance
carried by Landlord is excess and is non-contributing with any insurance
requirement of Tenant; (v) be in form and content reasonably acceptable to
Landlord; and (vi) provide that said insurance shall not be canceled or coverage
changed unless thirty (30) days' prior written notice shall have been given to
Landlord and any mortgagee of Landlord. Tenant shall deliver said policy or
policies or certificates thereof to Landlord on or before the Lease Commencement
Date and shall deliver a renewal policy or renewal certificate thereof to
Landlord at least thirty (30) days before the expiration dates thereof. In the
event Tenant shall fail to procure such insurance, or to deliver such policies
or certificate, Landlord may, at its option, procure such policies for the
account of Tenant, and the cost thereof shall be paid to Landlord within five
(5) days after delivery to Tenant of bills therefor.
10.5 SUBROGATION. Landlord and Tenant intend that their respective
property loss risks shall be borne by reasonable insurance carriers to the
extent above provided, and Landlord and Tenant hereby agree to look solely to,
and seek recovery only from, their respective insurance carriers in the event of
a property loss to the extent that such coverage is agreed to be provided
hereunder. The parties each hereby waive all rights and claims against each
other for such losses, and waive all rights of subrogation of their respective
insurers, provided such waiver of subrogation shall not affect the right to the
insured to recover thereunder. The parties agree that their respective insurance
policies are now, or shall be, endorsed such that the waiver of
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subrogation shall not affect the right of the insured to recover thereunder, so
long as no material additional premium is charged therefor.
10.6 ADDITIONAL INSURANCE OBLIGATIONS. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance required to be carried by Tenant pursuant to this
Article 10 and such other reasonable types of insurance coverage and in such
reasonable amounts covering the Premises and Tenant's operations therein, as may
be reasonably requested by Landlord.
10.7 MINIMUM REQUIREMENTS OF LANDLORD'S INSURANCE. Landlord shall
maintain insurance through individual or blanket policies insuring the Building
against fire and extended coverage (including, if Landlord elects, "all risk"
coverage, earthquake/volcanic action, flood and/or surface water insurance) for
the full replacement cost of the Building, with deductibles and the form and
endorsements of such coverage as reasonably selected by Landlord, together with
rental abatement insurance against loss of Rent in an amount equal to the amount
of Rent for a period of at least twelve (12) months commencing on the date of
loss. Landlord may also carry such other insurance as Landlord may reasonably
deem prudent or advisable, including, without limitation, liability insurance in
such amounts and on such terms as Landlord shall reasonably determine; provided,
however, that such insurance shall be in a form, amount and type of coverage as
carried by other prudent landlords of Comparable Buildings. Tenant shall pay to
Landlord, as a portion of the Operating Expenses, the costs of the insurance
coverages described herein, including, without limitation, Landlord's cost of
any self-insurance deductible or retention.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 REPAIR OF DAMAGE TO PREMISES BY LANDLORD. Tenant shall promptly
notify Landlord of any damage to the Premises resulting from fire or any other
casualty. If the Premises or any Common Areas serving or providing access to the
Premises shall be damaged by fire or other casualty, Landlord shall promptly and
diligently, subject to reasonable delays for insurance adjustment or other
matters beyond Landlord's reasonable control, and subject to all other terms of
this Article 11, restore the Base Building, the Premises (including Tenant Work)
and such Common Areas. Such restoration shall be to substantially the same
condition of the Base Building, the Premises (including Tenant Work) and the
Common Areas prior to the casualty, except for modifications required by zoning
and building codes and other laws or by the holder of a mortgage on the Building
or Project. Upon the occurrence of any damage to the Premises, upon notice (the
"LANDLORD REPAIR NOTICE") to Tenant from Landlord, Tenant shall assign to
Landlord (or to any party designated by Landlord) all insurance proceeds payable
to Tenant under Tenant's insurance required under Section 10.3 of this Lease,
and Landlord shall repair any injury or damage to the Tenant Improvements and
the Original Improvements installed in the Premises and shall return such Tenant
Improvements and Original Improvements to their original condition. Landlord
shall not be liable for any inconvenience or annoyance to Tenant or its
visitors, or injury to Tenant's business resulting in any way from such damage
or the repair thereof; provided however, that if such fire or other casualty
shall have damaged the Premises or Common Areas necessary to Tenant's occupancy,
and the Premises are not occupied
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by Tenant as a result thereof, then during the time and to the extent the
Premises are unfit for occupancy, the Rent shall be abated in proportion to the
ratio that the amount of rentable square feet of the Premises which is unfit for
occupancy for the purposes permitted under this Lease bears to the total
rentable square feet of the Premises.
11.2 LANDLORD'S OPTION TO REPAIR. Notwithstanding the terms of Section
11.1 of this Lease, Landlord may elect not to rebuild and/or restore the
Premises, Building and/or Project, and instead terminate this Lease, by
notifying Tenant in writing of such termination within sixty (60) days after the
date of discovery of the damage, such notice to include a termination date
giving Tenant sixty (60) days to vacate the Premises, but Landlord may so elect
only if the Building or Project shall be damaged by fire or other casualty or
cause, whether or not the Premises are affected, and one or more of the
following conditions is present: (i) in Landlord's reasonable judgment, repairs
cannot reasonably be completed within one hundred eighty (180) days after the
date of discovery of the damage (when such repairs are made without the payment
of overtime or other premiums); (ii) the holder of any mortgage on the Building
or Project or ground lessor with respect to the Building or Project shall
require that the insurance proceeds or any portion thereof be used to retire the
mortgage debt, or shall terminate the ground lease, as the case may be; or (iii)
the damage occurs during the last twelve (12) months of the Lease Term. In
addition to Landlord's rights to terminate as set forth above, Tenant shall have
the right to terminate this Lease under this Section 11.2 upon delivery of
thirty (30) days' written notice to Landlord and only if each of the following
conditions is satisfied: (a) the damage to the Project by fire or other casualty
was not caused by the gross negligence or intentional act of Tenant or its
partners or subpartners and their respective officers, agents, servants,
employees, and independent contractors; (b) Tenant is not then in default under
this Lease; (c) as a result of the damage, Tenant cannot reasonably conduct
business from the Premises; and, (d) as a result of the damage to the Project,
Tenant does not occupy or use the Premises at all.
11.3 WAIVER OF STATUTORY PROVISIONS. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building or the Project, and any statute or regulation of
the State of Arizona, including without limitation, Arizona Revised Statutes
Section 33-343, with respect to any rights or obligations concerning damage or
destruction in the absence of an express agreement between the parties, and any
other statute or regulation, now or hereafter in effect, shall have no
application to this Lease or any damage or destruction to all or any part of the
Premises, the Building or the Project.
ARTICLE 12
NONWAIVER
No provision of this Lease shall be deemed waived by either party hereto
unless expressly waived in a writing signed thereby. The waiver by either party
hereto of any breach of any term, covenant or condition herein contained shall
not be deemed to be a waiver of any subsequent breach of same or any other term,
covenant or condition herein contained. The subsequent acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular Rent so accepted, regardless of
Landlord's knowledge of
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such preceding breach at the time of acceptance of such Rent. No acceptance of a
lesser amount than the Rent herein stipulated shall be deemed a waiver of
Landlord's right to receive the full amount due, nor shall any endorsement or
statement on any check or payment or any letter accompanying such check or
payment be deemed an accord and satisfaction, and Landlord may accept such check
or payment without prejudice to Landlord's right to recover the full amount due.
No receipt of monies by Landlord from Tenant after the termination of this Lease
shall in any way alter the length of the Lease Term or of Tenant's right of
possession hereunder, or after the giving of any notice shall reinstate,
continue or extend the Lease Term or affect any notice given Tenant prior to the
receipt of such monies, it being agreed that after the service of notice or the
commencement of a suit, or after final judgment for possession of the Premises,
Landlord may receive and collect any Rent due, and the payment of said Rent
shall not waive or affect said notice, suit or judgment.
ARTICLE 13
CONDEMNATION
If the whole or any part of the Premises, Building or Project shall be
taken by power of eminent domain or condemned by any competent authority for any
public or quasi-public use or purpose, or if any adjacent property or street
shall be so taken or condemned, or reconfigured or vacated by such authority in
such manner as to require the use, reconstruction or remodeling of any part of
the Premises, Building or Project, or if Landlord shall grant a deed or other
instrument in lieu of such taking by eminent domain or condemnation, Landlord
shall have the option to terminate this Lease effective as of the date
possession is required to be surrendered to the authority. If such portion of
the rentable square feet of the Premises is taken such that, in Tenant's
reasonable business judgment, the Premises are no longer suitable for the
conduct of Tenant's business therein, and if the notice of such taking shall be
in effect for at least one hundred eighty (180) days, Tenant shall have the
option to terminate this Lease effective as of the date possession is required
to be surrendered to the authority. Tenant shall not because of such taking
assert any claim against Landlord or the authority for any compensation because
of such taking and Landlord shall be entitled to the entire award or payment in
connection therewith, except that Tenant shall have the right to file any
separate claim available to Tenant for any taking of Tenant's personal property
and fixtures belonging to Tenant and removable by Tenant upon expiration of the
Lease Term pursuant to the terms of this Lease, and for moving expenses, so long
as such claims do not diminish the award available to Landlord, its ground
lessor with respect to the Building or Project or its mortgagee, and such claim
is payable separately to Tenant. All Rent shall be apportioned as of the date of
such termination. If any part of the Premises shall be taken, and this Lease
shall not be so terminated, the Rent shall be proportionately abated.
Notwithstanding anything to the contrary contained in this Article 13, in the
event of a temporary taking of all or any portion of the Premises for a period
of one hundred and eighty (180) days or less, then this Lease shall not
terminate but the Base Rent and the Additional Rent shall be abated for the
period of such taking in proportion to the ratio that the amount of rentable
square feet of the Premises taken bears to the total rentable square feet of the
Premises. Landlord shall be entitled to receive the entire award made in
connection with any such temporary taking.
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ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 TRANSFERS. Tenant shall not, without the prior written consent of
Landlord, which shall not be unreasonably withheld or delayed, assign, mortgage,
pledge, hypothecate, encumber, or otherwise transfer, this Lease or any interest
hereunder, permit any assignment, or other transfer of this Lease or any
interest hereunder by operation of law, sublet the Premises or any part thereof
or otherwise permit the occupancy or use of the Premises or any part thereof by
any persons other than Tenant and its employees and contractors (all of the
foregoing are hereinafter sometimes referred to collectively as "TRANSFERS" and
any person to whom any Transfer is made or sought to be made is hereinafter
sometimes referred to as a "TRANSFEREE"). If Tenant desires Landlord's consent
to any Transfer, Tenant shall notify Landlord in writing, which notice (the
"TRANSFER NOTICE") shall include (i) the proposed effective date of the
Transfer, which shall not be less than thirty (30) days nor more than one
hundred eighty (180) days after the date of delivery of the Transfer Notice,
(ii) a description of the portion of the Premises to be transferred (the
"SUBJECT SPACE"), (iii) all of the terms of the proposed Transfer and the
consideration therefor, including calculation of the "Transfer Premium", as that
term is defined in Section 14.3 below, in connection with such Transfer, the
name and address of the proposed Transferee, and a copy of all existing executed
and/or proposed documentation pertaining to the proposed Transfer, including all
existing operative documents to be executed to evidence such Transfer or the
agreements incidental or related to such Transfer, (iv) current financial
statements of the proposed Transferee certified by an officer, partner or owner
thereof, business credit and personal references and history of the proposed
Transferee and any other information reasonably required by Landlord which will
enable Landlord to determine the financial responsibility, character, and
reputation of the proposed Transferee, nature of such Transferee's business and
proposed use of the Subject Space, and (v) an executed estoppel certificate from
Tenant in the form attached hereto as EXHIBIT E. Landlord shall respond to
Tenant within ten (10) business days. Any Transfer made without Landlord's prior
written consent shall, at Landlord's option, be null, void and of no effect, and
shall, at Landlord's option, constitute a default by Tenant under this Lease.
Whether or not Landlord consents to any proposed Transfer, Tenant shall pay
Landlord's reasonable review and processing fees, as well as any reasonable
actual third-party professional fees (including, without limitation, attorneys',
accountants', architects', engineers' and consultants' fees) incurred by
Landlord (which fees, in the case of a Transfer which does not require any
modification of this Lease to accommodate specific requirements of the proposed
Transferee, shall not exceed $1,500), within thirty (30) days after written
request by Landlord.
14.2 LANDLORD'S CONSENT. Landlord shall not unreasonably withhold or
delay its consent to any proposed Transfer of the Subject Space to the
Transferee on the terms specified in the Transfer Notice. Without limitation as
to other reasonable grounds for withholding consent, the parties hereby agree
that it shall be reasonable under this Lease and under any applicable law for
Landlord to withhold consent to any proposed Transfer where one or more of the
following apply:
14.2.1 The Transferee intends to use the Subject Space for
purposes which are not permitted under this Lease;
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14.2.2 The Transferee is either a governmental agency or
instrumentality thereof, and Landlord has not previously approved the occupancy
of any portion of the Project by a governmental entity or instrumentality
thereof;
14.2.3 The Transferee is not a party of reasonable financial
worth and/or financial stability in light of the responsibilities to be
undertaken in connection with the Transfer on the date consent is requested;
14.2.4 The proposed Transfer would cause a violation of another
lease for space in the Project, or would give an occupant of the Project a right
to cancel its lease; or
14.2.5 Either the proposed Transferee, or any person or entity
which directly or indirectly, controls, is controlled by, or is under common
control with, the proposed Transferee, (i) occupies space in the Project at the
time of the request for consent, or (ii) is negotiating with Landlord or has
negotiated with Landlord during the six (6) month period immediately preceding
the date Landlord receives the Transfer Notice, to lease space in the Project.
If Landlord consents to any Transfer pursuant to the terms of this
Section 14.2 (and does not exercise any recapture rights Landlord may have under
Section 14.4 of this Lease), Tenant may within six (6) months after Landlord's
consent, but not later than the expiration of said six-month period, enter into
such Transfer of the Premises or portion thereof, upon substantially the same
terms and conditions as are set forth in the Transfer Notice furnished by Tenant
to Landlord pursuant to Section 14.1 of this Lease, provided that if there are
any changes in the terms and conditions from those specified in the Transfer
Notice (i) such that Landlord would initially have been entitled to refuse its
consent to such Transfer under this Section 14.2, or (ii) which would cause the
proposed Transfer to be more favorable to the Transferee than the terms set
forth in Tenant's original Transfer Notice, Tenant shall again submit the
Transfer to Landlord for its approval and other action under this Article 14
(including Landlord's right of recapture, if any, under Section 14.4 of this
Lease).
14.3 TRANSFER PREMIUM. If Landlord consents to a Transfer, as a
condition thereto which the parties hereby agree is reasonable, Tenant shall pay
to Landlord [*] of any "Transfer Premium," as that term is defined in this
Section 14.3, received by Tenant from such Transferee. "TRANSFER PREMIUM" shall
mean all rent, additional rent or other consideration actually received by
Tenant in connection with the Transfer in excess of the Rent and Additional Rent
payable by Tenant under this Lease during the term of the Transfer on a per
rentable square foot basis if less than all of the Premises is transferred,
after deducting the reasonable expenses incurred by Tenant for (i) any changes,
alterations and improvements to the Premises in connection with the Transfer,
(ii) any free base rent reasonably provided to the Transferee in connection with
the Transfer, (iii) any brokerage commissions in connection with the Transfer,
(iv) legal fees, (v) moving costs, (vi) advertising costs; (vii) lease
takeover/assumption costs, (viii) key money, bonus money or other cash
consideration paid by Transferee to Tenant in connection with such Transfer,
(ix) any payment in excess of fair market value for services rendered by Tenant
to Transferee or for assets, fixtures, inventory, equipment, or furniture
transferred by Tenant to Transferee in connection with such Transfer, and (x)
any other costs necessary to induce the Transferee to enter into the Transfer
with Tenant (collectively, "TENANT'S SUBLEASING COSTS").
* Portions redacted pursuant to a request for confidential treatment
filed with the Securities and Exchange Commission.
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14.4 [INTENTIONALLY DELETED]
14.5 EFFECT OF TRANSFER. If Landlord consents to a Transfer, (i) the
terms and conditions of this Lease shall in no way be deemed to have been waived
or modified, (ii) such consent shall not be deemed consent to any further
Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to
Landlord, promptly after execution, an original executed copy of all
documentation pertaining to the Transfer in form reasonably acceptable to
Landlord, (iv) Tenant shall furnish upon Landlord's request a complete
statement, certified by an independent certified public accountant, or Tenant's
chief financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord's consent, shall relieve Tenant or any
guarantor of the Lease from any liability under this Lease, including, without
limitation, in connection with the Subject Space. Landlord or its authorized
representatives shall have the right at all reasonable times to audit the books,
records and papers of Tenant relating to any Transfer, and shall have the right
to make copies thereof. If the Transfer Premium respecting any Transfer shall be
found understated, Tenant shall, within thirty (30) days after demand, pay the
deficiency, and if understated by more than two percent (2%), Tenant shall pay
Landlord's costs of such audit.
14.6 NON-TRANSFERS. Notwithstanding anything to the contrary contained
in Article 14 of this Lease, an assignment or subletting by Tenant of all or a
portion of the Premises or this Lease to (i) a parent or subsidiary of Tenant,
or (ii) any person or entity which controls, is controlled by or under common
control with Tenant, or (iii) any entity which purchases all or substantially
all of the stock or assets of Tenant, or (iv) any entity into which Tenant is
merged or consolidated (all such persons or entities described in (i), (ii),
(iii) and (iv) being sometimes hereinafter referred to as "Affiliates"), shall
not require Landlord's consent and shall not be deemed a Transfer under Article
14 of this Lease, provided that (a) any such Affiliate was not formed as a
subterfuge to avoid the obligations of Article 14 of this Lease; (b) Tenant
gives Landlord at least ten (10) days' prior notice of any such assignment or
sublease to an Affiliate or as soon as reasonably possible as may be provided by
any applicable laws or regulations; (c) such Affiliate shall have, as of the
effective date of any such assignment or sublease, a tangible net worth,
computed in accordance with generally accepted accounting principles (but
excluding goodwill as an asset), which is sufficient to meet the obligations of
Tenant under this Lease and is equal to or greater than the net worth of Tenant
as of the date of the Transfer; (d) any such assignment or sublease shall be
subject and subordinate to all of the terms and provisions of this Lease, and
such Affiliate shall assume, in a written document reasonably satisfactory to
Landlord and delivered to Landlord upon or prior to the effective date of such
assignment or sublease, all the obligations of Tenant under this Lease with
respect to the portion of the Premises which is the subject of such assignment
or sublease (other than the amount of Base Rent payable by Tenant with respect
to a sublease); and (e) Tenant and any guarantor shall remain fully liable for
all obligations to be performed by Tenant under this Lease. Landlord hereby
acknowledges that Tenant has advised Landlord that Tenant will become affiliated
with NextBank, and, upon receipt of notice by Landlord of its formation, agrees
that NextBank shall be an Affiliate for purposes of this Section 14.6. In
addition, a sale or transfer of the capital stock of Tenant shall be permitted
without Landlord's consent, provided, that (A) such sale or transfer occurs in
connection with any bona fide financing or capitalization for the benefit of
Tenant or (B) Tenant initially becomes a publicly traded corporation; provided,
however, that
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(i) any such sale or transfer was not done as a subterfuge to avoid the
obligations of Articles 14 of this Lease; (ii) Tenant gives Landlord at least
ten (10) days prior notice of any such sale or transfer, described in (A) or (B)
above, or as soon as reasonably possible as may be provided by any applicable
laws or regulations; and (iii) if the resulting entity, as of the effective date
of any such sale or transfer does not have a tangible net worth, computed in
accordance with GAAP (but excluding goodwill as an asset) which is sufficient to
meet the obligations of Tenant under this Lease and is not equal to or greater
than the net worth of Tenant as of the date of the Transfer, then Landlord shall
have the right to request an additional amount to add to the Security Deposit
from such resulting entity in order to assure the performance of Tenant's
obligations under this Lease.
14.7 OCCURRENCE OF DEFAULT. Any Transfer hereunder shall be subordinate
and subject to the provisions of this Lease, and if this Lease shall be
terminated during the term of any Transfer, Landlord shall have the right to:
(i) treat such Transfer as canceled and repossess the Subject Space by any
lawful means, or (ii) require that such Transferee attorn to and recognize
Landlord as its landlord under any such Transfer. If Tenant shall be in default
under this Lease, Landlord is hereby irrevocably authorized, as Tenant's agent
and attorney-in-fact, to direct any Transferee to make all payments under or in
connection with the Transfer directly to Landlord (which Landlord shall apply
towards Tenant's obligations under this Lease) until such default is cured. Such
Transferee shall rely on any representation by Landlord that Tenant is in
default hereunder, without any need for confirmation thereof by Tenant. Upon any
assignment, the assignee shall assume in writing all obligations and covenants
of Tenant thereafter to be performed or observed under this Lease. No collection
or acceptance of rent by Landlord from any Transferee shall be deemed a waiver
of any provision of this Article 14 or the approval of any Transferee or a
release of Tenant from any obligation under this Lease, whether theretofore or
thereafter accruing. In no event shall Landlord's enforcement of any provision
of this Lease against any Transferee be deemed a waiver of Landlord's right to
enforce any term of this Lease against Tenant or any other person. If Tenant's
obligations hereunder have been guaranteed, Landlord's consent to any Transfer
shall not be effective unless the guarantor also consents to such Transfer.
14.8 RELEASE OF TENANT. If Landlord approves a Transfer which is an
assignment by Tenant to: (i) in the case of a publicly held company, an entity
with a market share equal to or greater than the "Market Cap" of Tenant (i.e.,
common outstanding shares multiplied by the price per share) as of the date of
execution of this Lease, or, if higher, the Market Cap of Tenant as of the date
of the request for approval of such Transfer (but in no event higher than
[ * ]); or, (ii) in the case of a non-publicly held company, to an entity with
a net worth, as reflected in such entity's most recent audited financial
statements, of [*], Landlord shall, upon the full execution and
delivery of Landlord's consent to such assignment, enter into a release
agreement whereby Tenant shall be relieved of all further liability or
obligation under this Lease.
* Portions redacted pursuant to a request for confidential treatment
filed with the Securities and Exchange Commission.
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ARTICLE 15
SURRENDER OF PREMISES; OWNERSHIP
AND REMOVAL OF TRADE FIXTURES
15.1 SURRENDER OF PREMISES. No act or thing done by either party or its
agent or employee during the Lease Term shall be deemed to constitute an
acceptance by Landlord of a surrender of the Premises unless such intent is
specifically acknowledged in writing by both parties. The delivery of keys to
the Premises to Landlord or any agent or employee of Landlord shall not
constitute a surrender of the Premises or effect a termination of this Lease,
whether or not the keys are thereafter retained by Landlord, and notwithstanding
such delivery Tenant shall be entitled to the return of such keys at any
reasonable time upon request until this Lease shall have been properly
terminated. The voluntary or other surrender of this Lease by Tenant, whether
accepted by Landlord or not, or a mutual termination hereof, shall not work a
merger, and at the option of Landlord shall operate as an assignment to Landlord
of all subleases or subtenancies affecting the Premises or terminate any or all
such sublessees or subtenancies.
15.2 REMOVAL OF TENANT PROPERTY BY TENANT. Within three (3) days
following the expiration of the Lease Term, or upon any earlier termination of
this Lease, Tenant shall, subject to the provisions of this Article 15, quit and
surrender possession of the Premises to Landlord in as good order and condition
as when Tenant took possession and as thereafter improved by Landlord and/or
Tenant, reasonable wear and tear and repairs which are specifically made the
responsibility of Landlord hereunder excepted. Within such three (3) day period,
Tenant shall, without expense to Landlord, remove or cause to be removed from
the Premises all debris and rubbish, and such items of furniture, equipment,
business and trade fixtures, free-standing cabinet work, movable partitions and
other articles of personal property owned by Tenant or installed or placed by
Tenant at its expense in the Premises, and such similar articles of any other
persons claiming under Tenant, as Landlord may, in its sole discretion, require
to be removed, and Tenant shall repair at its own expense all damage to the
Premises and Building resulting from such removal. Within said three (3) day
period Tenant shall not be obligated to pay Rent.
ARTICLE 16
HOLDING OVER
If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, with or without the express or implied consent of Landlord,
such tenancy shall be from month-to-month only, and shall not constitute a
renewal hereof or an extension for any further term, and in such case Rent shall
be payable at a monthly rate equal to the product of (i) the Rent applicable
during the last rental period of the Lease Term under this Lease, and (ii) a
percentage equal to (A) [*] for the first and second months of such holdover;
(B) [*] for the third month of such holdover; and (C) [*] for the fourth month
and any additional months of such holdover as liquidated damages. Such
month-to-month tenancy shall be subject to every other applicable term, covenant
and agreement contained herein. Nothing contained in this Article 16 shall be
construed as consent by Landlord to any holding over by Tenant, and Landlord
expressly reserves the right to require Tenant to surrender possession of the
Premises to Landlord as
* Portions redacted pursuant to a request for confidential treatment
filed with the Securities and Exchange Commission.
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provided in this Lease upon the expiration or other termination of this Lease.
The provisions of this Article 16 shall not be deemed to limit or constitute a
waiver of any other rights or remedies of Landlord provided herein or at law. If
Tenant fails to surrender the Premises upon the termination or expiration of
this Lease, in addition to any other liabilities to Landlord accruing therefrom,
Tenant shall protect, defend, indemnify and hold Landlord harmless from all
loss, costs (including reasonable attorneys' fees) and liability resulting from
such failure, including, without limiting the generality of the foregoing, any
claims made by any succeeding tenant founded upon such failure to surrender and
any lost profits to Landlord resulting therefrom.
ARTICLE 17
ESTOPPEL CERTIFICATES
Within ten (10) days following a request in writing by Landlord, which
request shall be given no more frequently than once in any consecutive twelve
(12) month period and which may only be given in the context of a proposed
financing to be secured by a lien on the Project or a proposed sale of the
Project, Tenant shall execute, acknowledge and deliver to Landlord an estoppel
certificate, which, as submitted by Landlord, shall be substantially in the form
of EXHIBIT E, attached hereto (or such other form as may be required by any
prospective mortgagee or purchaser of the Project, or any portion thereof),
indicating therein any exceptions thereto that may exist at that time, and shall
also contain any other information reasonably requested by Landlord or
Landlord's mortgagee or prospective mortgagee. Any such certificate may be
relied upon by any prospective mortgagee or purchaser of all or any portion of
the Project. Tenant shall execute and deliver whatever other instruments may be
reasonably required for such purposes. Within ten (10) days following a request
in writing by Tenant, Landlord shall execute and deliver to Tenant an estoppel
certificate similar in form and substance to EXHIBIT E, taking into account the
context of the fact that the Landlord is executing such certificate. At any time
during the Lease Term, Landlord may require Tenant to provide Landlord with a
current financial statement and financial statements of the two (2) years prior
to the current financial statement year, audited if such statements had been
prepared by a third-party auditor or, if internally prepared, certified by an
officer of Tenant. Failure of Tenant to timely execute, acknowledge and deliver
such estoppel certificate or other instruments shall constitute an acceptance of
the Premises and an acknowledgment by Tenant that statements included in the
estoppel certificate are true and correct, without exception.
ARTICLE 18