Sublease Agreement between Action Performance Companies, Inc. and Integrated Information Systems, Inc. for 1480 South Hohokam Drive, Tempe, AZ

Summary

This Sublease Agreement, effective October 4, 2002, is between Action Performance Companies, Inc. (Lessor) and Integrated Information Systems, Inc. (Lessee) for portions of the second floor at 1480 South Hohokam Drive, Tempe, Arizona. The agreement allows the Lessee to use the premises for general office purposes until February 28, 2003, on a month-to-month basis, with rent and a security deposit specified. The Lessee is responsible for a share of additional costs and must comply with the terms of the Prime Lease. The Prime Lessor's consent is required for this sublease.

EX-10.50 5 file004.txt 1480 SUBLEASE AGREEMENT Exhibit 10.50 SUBLEASE THIS SUBLEASE ("Sublease") is made and entered into as of the 4th day of October, 2002 (the "Commencement Date"), by and between Action Performance Companies, Inc., an Arizona corporation ("Lessor"), and Integrated Information Systems, Inc., a Delaware corporation ("Lessee"). This Sublease supersedes the sublease between Lessor and Lessee dated March 28, 2000 (the "Original Sublease"). 1. BASIC LEASE PROVISIONS. a. Building Property Address: 1480 South Hohokam Drive, Tempe, Arizona 85281. b. Lessee's Address (for notices): 1480 South Hohokam Drive, Tempe, Arizona 85281, Attn: Chief Financial Officer. c. Lessor's Address (for notices): 4707 East Baseline Road, Phoenix, Arizona 85042, Attn: Chief Financial Officer. d. Prime Lessor: H-B TEMPE, L.L.C. e. Prime Lessor's Address (for notices): 4636 East University Drive. Suite 265, Phoenix, Arizona 85034, Attn: Property Manager. f. Identification of Prime Lease and all Amendments thereto: Lease dated June 28, 1999 by and between H-B TEMPE, L.L.C., an Arizona limited liability company, as Lessor, and ACTION PERFORMANCE COMPANIES, INC., an Arizona corporation, as Lessee. g. Commencement Date: The date hereof. h. Expiration Date: 11:59 p.m. on February 28, 2003, unless earlier terminated under the terms hereof. i. Rent: $40,184.98. j. Payee of Rent: Lessor. k. Address for Payment of Rent: 4707 East Baseline Road, Phoenix, Arizona 85042. l. Description of Premises: Portions of the second floor of the building (the "Building") consisting of approximately 36,285 of the approximate 65,018 rentable square feet of the Building, all as depicted on the Floor Plan attached to this Sublease as EXHIBIT A. m. Lessee's Use: General office use and for any other purpose permitted under the Prime Lease. n. Security Deposit: $43,844.00. 2. PRIME LEASE. Lessor is the Lessee under a Prime Lease (the "Lease") with the Prime Lessor. Lessor represents and warrants that (a) in connection with the Original Sublease, Lessor delivered to Lessee a full and complete copy of the Prime Lease and all other agreements between Prime Lessor and Lessor relating to the leasing, use, and occupancy of the Premises, (b) the Prime Lease is, as of the date hereof, in full force and effect, and (c) as of the date hereof, there exist no material defaults under the Prime Lease. Lessor and Lessee acknowledge and agree that the consent of the Prime Lessor to this Sublease is required under the terms of Paragraph 16 of the Prime Lease. 3. SUBLEASE. a. Lessor hereby subleases to Lessee, and the Lessee accepts from the Lessor, the Premises. b. Lessee acknowledges and agrees that the Premises include certain common areas within the Building including, without limitation, lobbies, hallways, elevators, stairs and restroom facilities, and Lessee grants to Lessor the nonexclusive right to use, in common with Lessee, such common areas. c. Lessor and Lessee acknowledge and agree that the Premises constitute less than the entire premises leased by Lessor from the Prime Lessor pursuant to the Prime Lease (the "Prime Leased Premises"). 4. TERM. The term of this Sublease (the "Term") shall commence on the Commencement Date and shall continue on a month-to-month basis thereafter until terminated by either party; provided, however, that notwithstanding the month-to-month tenancy the first date upon which a termination notice may be given is January 1, 2003, that no notice shall attempt to terminate the tenancy on less than thirty days prior notice, and that the Term, even if no termination notice is ever given, shall terminate not later than February 28, 2003 [consistent with page 1 Expiration Date]. 5. POSSESSION. Lessor shall provide the Premises to Lessee and Lessee accepts the Premises in their current "as is" condition, Lessee acknowledging that Lessor makes no representations or warranties concerning the condition of the Premises including, without limitation, those relating to the structure of the Premises, systems and components thereof and/or the presence of patent or latent defects and that Lessor has no obligation to construct, remodel, improve, repair, decorate or paint the Premises or any improvement thereon or a part thereof. 6. LESSEE'S USE. The Premises shall be used and occupied only for the Lessee's Use set forth in Section 1(m). Lessee shall not use or occupy the Premises nor permit anything to be done in or on the Premises which will constitute a public or private nuisance and Lessee shall not use or occupy or permit the Premises to be used or occupied in any manner which will violate any laws or any of the terms, covenants and provisions of the Prime Lease, including the rules and regulations attached to the Prime Lease, if any. 2 7. RENT. a. Rent shall be paid in equal monthly installments in advance on the first day of each month of the Term. Rent shall be pro-rated for any partial months during the Term. Except as may be otherwise provided herein, Lessee's covenant to pay Rent shall be independent of every other covenant in this Sublease. b. If Rent is not paid when due, which failure is not cured within three (3) days after written notice thereof by Lessor to Lessee, such delinquent Rent shall thereafter bear interest at the rate of twelve percent (12%) per annum. In addition, if any installment of Rent is not paid when due, which failure continues for ten (10) days, a late charge equal to five percent (5%) of such overdue amount or Two Hundred Fifty and No/100 Dollars ($250.00), whichever is greater, shall be due and payable. Lessee acknowledges that such late charge represents a fair and reasonable estimate of the administrative costs Lessor will incur by reason of late payments by Lessee. The provisions of this Section providing for the assessment of interest and/or a late charge shall not be deemed to authorize or grant to Lessee an option for the late payment of Rent and shall not prevent Lessor from exercising the rights and remedies available to Lessor in the event of delinquent payments. 8. ADDITIONAL RENT. Lessor and Lessee acknowledge that Lessor is obligated to pay additional rent under the Prime Lease for taxes, operating expenses, insurance, common area maintenance charges and other expenses incurred in connection with the Property (hereinafter "Additional Rent"). Lessor and Lessee agree that the Rent does not include any Additional Rent under the Prime Lease attributable to the Premises during the Term and Lessee shall be responsible for their pro rata share of the Additional Rent for the Premises. 9. LESSEE'S OBLIGATIONS. Lessee shall be responsible for, and shall pay prior to delinquency the following: a. To the extent not provided by Prime Lessor, all utility consumption costs, including without limitation, telephone, trash removal, cable television and other charges incurred in connection with the Premises. b. All maintenance, repairs and replacements as to the Premises and Lessee's fixtures and equipment therein, to the extent Lessor is obligated to perform the same under the Prime Lease. 10. QUIET ENJOYMENT. Lessor represents and warrants that it has full power and authority to enter into this Sublease, subject to the consent of the Prime Lessor as described in Section 2 above. So long as Lessee is not in default in the performance of its covenants and agreements in this Sublease, Lessee's quiet and peaceable enjoyment of the Premises shall not be disturbed or interfered with by Lessor or by any person claiming by, through, or under Lessor, subject, however, to the provisions of this 3 Sublease. In addition, Lessee acknowledges that Lessor is not obligated to furnish to Lessee any services under this Sublease and that any services to be furnished to the Premises, shall be furnished by the Prime Lessor subject to and in accordance with the provisions of the Prime Lease. As such, Lessor shall have no liability to Lessee and Lessee hereby releases Lessor for, from and against any claims, demands, judgments, losses, liabilities, costs and expenses (including reasonable attorneys' fees) incurred or sustained by Lessee as a result of the failure by the Prime Lessor to furnish to the Premises the services described in the Prime Lease. In this regard, Lessor hereby assigns to Lessee all of its rights against the Prime Lessor under the Prime Lease with respect to the provision of services to the Premises and agrees that, if such assignment is not effective, Lessor will, at Lessee's sole cost and expense, use reasonable efforts to obtain from Prime Lessor such services to the Premises. 11. LESSEE'S INSURANCE. Lessee shall procure and maintain, at its own cost and expense, such insurance as is required to be carried by Lessor under the Prime Lease, naming Lessor, as well as Prime Lessor, as additional insureds. If the Prime Lease requires Lessor to insure leasehold improvements or alterations, then Lessee shall insure such leasehold improvements which are located in the Premises, as well as alterations in the Premises, made by Lessee. Lessee shall furnish to Lessor a certificate of Lessee's insurance required hereunder not later than the Commencement Date. No such policy shall be cancelable or subject to reduction of coverage or other modification without the prior written consent of Lessor. Lessee shall within thirty (30) days of the expiration of any such policies, furnish to Lessor renewals or "binders" thereof. If Lessee shall fail to procure and maintain any insurance required to be maintained by it pursuant to the terms of the Prime Lease, Lessor may, but shall not be required to, procure the same at Lessee's expense. 12. ASSIGNMENT OR SUBLETTING. Lessee shall not assign, convey or mortgage this Sublease or any interest under it. 13. RULES. Lessee agrees to comply with all rules and regulations that Prime Lessor has made or may hereafter from time to time make for the Building. Lessor shall not be liable in any way for damage caused by the non-observance by any other sublessee of similar covenants or of such rules and regulations. 14. REPAIRS AND COMPLIANCE. Lessee shall promptly pay for the repairs set forth in Section 9(B) and Lessee shall, at Lessee's own expenses, comply with all laws and ordinances, and all orders, rules and regulations of all governmental authorities and of all insurance bodies and their fire prevention engineers at any time in force, applicable to the Premises. Lessor and Lessee acknowledge and agree that Lessor shall not be obligated to make any maintenance, repairs or replacements to the Premises, and Lessee shall look solely to the Prime Lessor for the maintenance, repair and replacements that may be necessary to the Premises. For this purpose, Lessor hereby assigns to Lessee all of its rights against the Prime Lessor under the Prime Lease with respect to maintenance, repair and replacement of the Premises, and agrees that if such assignment is not effective, Lessor will, at Lessee's sole cost and expense, use reasonable efforts to obtain 4 from Prime Lessor performance of such maintenance, repair and/or replacement obligations. 15. FIRE OR CASUALTY OR EMINENT DOMAIN. In the event of a fire or other casualty affecting the Building or the Premises, or of a taking of all or a part of the Building or Premises, under the power of eminent domain, Lessor shall not exercise any right which may have the effect of terminating the Prime Lease without first obtaining the prior written consent of Lessee. In the event Lessor is entitled, under the Prime Lease, to rent abatement as a result of a fire or other casualty or as a result of a taking under the power of eminent domain, then Lessee shall be similarly entitled to rent abatement. If the Prime Lease imposes on Lessor the obligation to repair or restore leasehold improvements or alterations, Lessee shall be responsible for repair or restoration of leasehold improvements or alterations to the Premises and Lessee shall apply any insurance proceeds resulting from the loss to repair and restore such leasehold improvements and alterations. Lessor and Lessee acknowledge and agree that Lessor shall not be obligated to perform any repair or restoration to the Premises, following the occurrence of a casualty event or the exercise of the power of eminent domain. For such matters, Lessee shall look solely to the Prime Lessor and Lessor hereby assigns to Lessee all of its rights against the Prime Lessor under the Prime Lease with respect to the repair or restoration of the Premises, as a result of a casualty or the exercise of power of eminent domain, and agrees that, if such assignment is not effective, Lessor, at Lessee's sole cost and expense, will use reasonable efforts to cause Prime Lessor to repair or restore the Premises. 16. ALTERATIONS. Lessee shall not make any alterations in or additions to the Premises (without the prior written consent of Lessor and Prime Lessor, which consent Lessor shall not unreasonably withhold, condition or delay). Lessee shall be solely responsible for obtaining the consent of Prime Lessor, if such consent is required under the Prime Lease. If Alterations by Lessee are permitted or consented to as aforesaid, Lessee shall comply with all of the covenants of Lessor contained in the Prime Lease pertaining to the performance of such Alterations. In addition, Lessee shall indemnify, defend and hold harmless Lessor for, from and against liability, loss, cost, damage, liens and expense imposed on Lessor arising out of the performance of Alterations by Lessee, except to the extent same is caused by the negligent acts or omissions of Lessor. 17. SURRENDER. Upon the expiration of this Sublease, or upon the termination of the Sublease or of the Lessee's right to possession of the Premises, Lessee will at once surrender and deliver up the Premises, together with all improvements thereon, to Lessor in good condition and repair, reasonable wear and tear and, subject to Section 15 of this Sublease, casualty damage excepted; conditions existing because of Lessee's failure to perform maintenance, repairs or replacements as required of Lessee under this Sublease shall not be deemed "wear and tear." Said improvements shall include all plumbing, lighting, electrical, heating, cooling and ventilating fixtures and equipment and other articles of personal property used in the operation of the Premises (as distinguished from operations incident to the business of Lessee). Lessee shall surrender to Lessor all keys to the Premises, and make known to Lessor the combination of all combination locks which 5 Lessee is permitted to leave on the Premises. All Alterations in or upon the Premises made by Lessee shall become a part of and shall remain upon the Premises, upon such termination without compensation, allowance or credit to Lessee; provided, however, Lessee shall remove any Alterations made by Lessee, or portion thereof to the extent Lessor may be required to do so by Prime Lessor. If Prime Lessor requires removal of any Alteration made by Lessee, or a portion thereof, and Lessee does not make such removal in accordance with this Section, Lessor may remove the same (and repair any damage occasioned thereby), and dispose thereof, or at its election, deliver the same to any other place of business of Lessee, or warehouse the same. Lessee shall pay the reasonable costs of such removal, repair, delivery and warehousing within ten (10) days following receipt of Lessor's documented invoice therefor. 18. REMOVAL OF LESSEE'S PROPERTY. Upon the expiration of this Sublease, Lessee shall remove Lessee's articles of personal property incident to Lessee's business ("Fixtures"); provided, however, to the extent Lessor is required to do so under the Prime Lease, Lessee shall repair any injury or damage to the Premises, which may result from such removal. If Lessee does not remove Lessee's Trade Fixtures from the Premises, prior to the expiration or earlier termination of the Term, Lessor may, at its option, remove the same (and repair any damage occasioned thereby) and dispose thereof or deliver the same to any other place of business of Lessee, or warehouse the same, and Lessee shall pay the reasonable cost of such removal, repair, restoration, delivery or warehousing to Lessor within ten (10) days following receipt of Lessor's documented invoice therefor. Lessee shall pay, prior to delinquency, directly to the appropriate taxing authorities, any personal property taxes levied or assessed against Lessee's Trade Fixtures. 19. HOLDING OVER. Lessee shall have no right to occupy the Premises, or any portion thereof after the expiration of this Sublease or after termination of this Sublease or of Lessee's right to possession as a result of an Event of Default hereunder. In the event Lessee or any party claiming by, through or under Lessee holds over, Lessor may exercise any and all remedies available to it at law or in equity to recover possession of the Premises, and to recover damages. For each and every month or partial month that Lessee or any party claiming by, through or under Lessee remains in occupancy of all or any portion of the Premises, after the expiration of this Sublease or after termination of this Sublease or Lessee's right to possession, Lessee shall pay, as minimum damages and not as a penalty, an amount equal to the sum of monthly rental at a rate equal to double the rate of Rent, if any, payable by Lessee hereunder immediately prior to the expiration or other termination of this Sublease or of Lessee's right to possession. The acceptance by Lessor of any lesser sum shall be construed as payment on account and not in satisfaction of damages for such holding over. 20. ENCUMBERING TITLE. Lessee shall not do any act which shall in any way encumber the title of Prime Lessor in and to the Building or the Property, nor shall the interest or estate of Prime Lessor or Lessor be in any way subject to any claim by way of lien or encumbrance, whether by operation of law by virtue of any express or implied contract by Lessee, or by reason of any other act or omission of Lessee. Any claim to, or 6 lien upon, the Premises, the Building or the Property arising from any act or omission of Lessee shall accrue only against the sub-estate of Lessee and shall be subject and subordinate to the paramount title and rights of Prime Lessor in and to the Building and the Property and the interest of Lessor in the premises leased pursuant to the Prime Lease. Without limiting the generality of the foregoing, Lessee shall not permit the Premises, the Building or the Property to become subject to any mechanics', laborers' or materialmen's lien on account of labor or material furnished to Lessee or claimed to have been furnished to Lessee in connection with work of any character performed or claimed to have been performed on the Premises by, or at the direction or sufferance of, Lessee; provided, however, that if so permitted under the Prime Lease, Lessee shall have the right to contest in good faith and with reasonable diligence, the validity of any such lien or claimed lien if Lessee shall give to Prime Lessor and Lessor such security as may be deemed satisfactory to them to assure payment thereof and to prevent any sale, foreclosure, or forfeiture of the Premises, the Building or the Property by reason of nonpayment thereof; provided further, however, that on final determination of the lien or claim of lien, Lessee shall immediately pay any judgment rendered, with all property costs and charges, and shall have the lien released and any judgment satisfied. 21. INDEMNITY. a. INDEMNIFICATION. To the fullest extent permitted by law, each party hereto ("Party") will, at said Party's sole cost and expense, indemnify the other Party (a Party for all purposes of this Section 21 to be defined as set forth in Section 21(c) below) against all Claims arising from: (i) any Personal Injury, Bodily Injury or Property Damage whatsoever occurring in or at the Premises, the Building and/or the Property, except to the extent caused by the negligence and/or a breach of this Sublease by the other Party; (ii) any Bodily Injury to an employee of a Party arising out of and in the course of employment of the employee and occurring anywhere in the Property, except to the extent caused by the negligence and/or a breach of this Sublease by the other Party; (iii) the use or occupancy, or manner of use or occupancy, or conduct or management of the Premises, or of any business therein; (iv) subject to the waiver of subrogation provisions of this Sublease, any act, error, omission or negligence of any of the Parties in, on or about the Premises, the Building and/or the Property, except to the extent caused by the negligence and/or a breach of this Sublease by the other Party; (v) the conduct of a Party's business; (vi) any alterations, activities, work or things done, omitted, permitted or allowed by Parties in, at or about the Premises, the Building and the Property, including the violation of or failure to comply with, or the alleged violation of or alleged failure to comply with any applicable laws, statutes, ordinances, standards, rules, regulations, orders, or judgments in existence on the date of the Sublease or enacted, promulgated or issued after the date of this Sublease including hazardous materials laws; (vii) any breach or default by a Party in the full and prompt payment of any amount due under this Sublease, any breach, violation or nonperformance of any term, condition, covenant or other obligation of a Party under this Sublease, or any misrepresentation made by a Party, provided, however, that neither Party shall be liable for special or consequential damages; (viii) all damages sustained by a Party as a result of any holdover by the other Party in the Premises, provided, however, that neither Party shall be liable 7 for special or consequential damages; or (ix) any matter enumerated in Section 21(b) below. b. WAIVERS. To the fullest extent permitted by law, each Party waives all Claims against the other Party arising from the following: (i) any Personal Injury, Bodily Injury, or Property Damage occurring in or at the Premises, the Building and/or the Property; (ii) any loss of or damage to property of a Party located in the Premises, the Building and/or the Property by theft or otherwise; (iii) any Personal Injury, Bodily Injury, or Property Damage to any Party caused by other lessees of the Property, parties not occupying space in the Property, occupants of property adjacent to the Property, or the public or by the construction of any private, public, or quasi-public work occurring either in the Premises, the Building and/or the Property; (iv) any interruption or stoppage of any utility service or for any damage to persons or property resulting from such stoppage; (v) business interruption or loss of use of the Premises, the Building and/or the Property; (vi) any latent defect in construction of the Premises; (vii) damages or injuries or interference with a Party's business, loss of occupancy or quiet enjoyment and any other loss resulting from the exercise by the other Party of any right or the performance of any obligations under this Sublease; or (viii) any Bodily Injury to an employee of a Party arising out of and in the course of employment of the employee and occurring anywhere in the Premises, the Building or the Property. c. DEFINITIONS. For purposes of this Section 21: (i) the term "Party" or "Parties" means Lessor and/or Lessee, as applicable, and their respective officers, members, sublessees, shareholders, partners, venturers, parent, subsidiaries, trustees and ancillary trustees and the respective officers, directors, shareholders, members, parents, subsidiaries of any affiliated entities, personal representatives, executors, heirs, assigns, licensees, invitees. beneficiaries, agents, servants, employees and independent contractors of these persons or entities and all persons and entities claiming through any of these persons or entities; (ii) the term "Indemnify" means indemnify, defend (with counsel reasonably acceptable to the Indemnified Party) and hold free and harmless for, from and against; (iv) the term "Claims" means all liabilities, claims, damages (including consequential damages), losses, penalties, litigation, demands, causes of action (whether in tort or contract, in law or at equity or otherwise), suits, proceedings, judgments, disbursements, charges, assessments, and expenses (including reasonable attorneys' and experts' fees and expenses incurred in investigating, defending, or prosecuting any litigation, claim, or proceeding); (v) the term "Waives" means that the Lessee Parties waive and knowingly and voluntarily assume the risk of; and (vi) the terms " Bodily Injury" " Personal Injury" and " Property Damage" will have the same meanings as in the form of commercial general insurance policy issued by Insurance Services Office, Inc. most recently prior to the date of the injury or loss in question. d. SCOPE OF INDEMNITIES AND WAIVERS. Except as provided in the following sentence, the indemnities and waivers contained in Section 21 will apply regardless of the active or passive negligence or sole, joint, concurrent, or comparative negligence of any of the Parties, and regardless of whether liability without fault or strict liability is imposed or sought to be imposed on any of the Parties. The indemnities and 8 waivers contained in Section 21 will not apply to the extent of the percentage of liabilities that a final judgment of a court of competent jurisdiction establishes, under the comparative negligence principles of the State of Arizona, that a Claim against a Party was proximately caused by the willful misconduct or negligence of that Party; provided, however, that in such event the indemnity or waiver will remain valid for all other Parties. e. OBLIGATIONS INDEPENDENT OF INSURANCE. The indemnification provided in Section 21(a) may not be construed or interpreted as in any way restricting, limiting or modifying Lessee's insurance or other obligations under this Sublease, and the provisions of Section 21(a) are independent of Lessee's insurance and other obligations. Lessee's compliance with the insurance requirements and other obligations under this Sublease does not in any way restrict, limit or modify Lessee's indemnification obligations under this Sublease. f. SURVIVAL. The provisions of this Section 21 will survive the expiration or earlier termination of this Sublease until all Claims against any Parties involving any of the indemnified or waived matters are fully and finally barred by the applicable statutes of limitations. g. DUTY TO DEFEND. A Party's duty to defend the other Party is separate and independent of a Party's duty to Indemnify a Party. A Party's duty to defend includes Claims for which the other Party may be liable without fault or may be strictly liable. A Party's duty to defend applies regardless of whether issues of negligence, liability, fault, or default have been determined. A Party's duty to defend applies immediately, regardless of whether the Parties have paid any sums or incurred any detriment arising out of or relating, directly or indirectly, to any Claims. It is the express intention of Lessor and Lessee that a Party will be entitled to obtain summary adjudication regarding the other Party's duty to defend at any stage of any Claim within the scope of this Section 21. h. WAIVER OF SUBROGATION. In addition to the waiver of subrogation contained in Section 21(b), each Party hereby waives its rights and the subrogation rights of its insurer against the other Party and any other lessees of space in the Building or the Property, as well as their respective members, officers, employees, agents, authorized representatives and invitees, with respect to any claims including, but not limited to, claims for injury to any persons and/or damage to the Premises, and/or any fixtures, equipment, personal property, furniture, improvements and/or alterations in or to the Premises, which are caused by or result from (a) risks or damages required to be insured against under a policy of property insurance under this Sublease or under the Prime Lease, or (b) risks and damages which are in fact insured against by one or more property insurance policies maintained by either Party from time to time. It is the intent of the Parties that with respect to any loss from a named peril required to be covered under a policy of property insurance, each Party will look solely to its insurance companies for recovery. Each Party shall obtain from its insurers under each policy required by this 9 Sublease or under the Prime Lease a waiver of all rights of subrogation which such insurers of such Party might otherwise have against the other Party. 22. LESSOR'S RESERVED RIGHTS. Lessor reserves and shall at any and all reasonable times with reasonable notice have the right to enter the Premises, to inspect the same for the purposes of inspecting the performance by Lessee of the terms and conditions of this Sublease. In addition, Lessor expressly reserves for its benefit a reasonable right of access through, above and below the Premises, including the right to run cabling and wiring. Lessor reserves the right to enter the Premises, at reasonable times to post notices of non-responsibility, to alter, improve or repair the Premises. In exercising the rights reserved by Lessor, Lessor shall use commercially reasonable efforts to not unreasonably interfere with the conduct by Lessee of its business in the Premises, and the exercise by Lessor of its rights pursuant to this Section 22 shall not entitle Lessee to an abatement of Rent unless such exercise materially prevents Lessee from conducting its business operations in the Premises. Nothing in this Section 22 shall be construed as obligating Lessor to perform any repairs, alterations or maintenance to the Premises. 23. DEFAULTS. Lessee further agrees that the occurrence of any one or more of the following events shall be considered an Event of Default: a. Lessee shall be adjudged an involuntary bankrupt, or a decree or order approving, as properly filed, a petition or answer filed against Lessee asking reorganization of Lessee under the Federal bankruptcy laws as now or hereafter amended, or under the laws of any State, shall be entered, and any such decree of judgment or order shall not have been vacated or stayed or set aside within sixty (60) days from the date of the entry or granting thereof; or b. Lessee shall file, or admit the jurisdiction of the court and the material allegations contained in, any petition in bankruptcy, or any petition pursuant or purporting to be pursuant to the Federal bankruptcy laws now or hereafter amended, or Lessee shall institute any proceedings for relief of Lessee under any bankruptcy or insolvency laws or any laws relating to the relief of debtors, readjustment of indebtedness, reorganization, arrangements, composition or extension; or c. Lessee shall make any assignment for the benefit of creditors or shall apply for a consent to the appointment of a receiver for Lessee or any of the property of Lessee; or d. Lessee shall admit in writing its inability to pay its debts as they become due; or e. The Premises are levied on by any revenue officer or similar officer; or 10 f. A decree or order appointing a receiver of the property of Lessee shall be made and such decree or order shall not have been vacated, stayed or set aside within sixty (60) days from the date of entry or granting thereof; or g. Lessee shall abandon the Premises during the Term hereof; or h. Lessee shall default in any payment of Rent required to be made by Lessee hereunder when due as herein provided and such default shall continue for three (3) days after notice thereof in writing to Lessee; or i. Lessee shall default in securing insurance or in providing evidence of insurance as set forth in Section 11 of this Sublease or shall default with respect to lien claims as set forth in Section 20 of this Sublease and either such default shall continue for five (5) days after notice thereof in writing to Lessee; or j. Lessee shall, by its act or omission to act, cause a default under the Prime Lease and such default shall not be cured within the time, if any permitted for such cure under the Prime Lease; or k. Lessee shall default in any of the other covenants and agreements herein contained to be kept, observed and performed by Lessee, and such default shall continue for twenty (20) days after notice thereof in writing to Lessee, provided that if the nature of Lessee default is such that more than twenty (20) days are reasonably required for its cure, then Lessee shall not be deemed in default if Lessee commences such cure within said 20-day period and thereafter diligently prosecutes such cure to completion. 24. REMEDIES. Upon the occurrence of any one or more Events of Default, Lessor may exercise the rights and remedies available to Lessor at law, in equity, by statute or otherwise and Lessor may exercise any remedy against Lessee which Prime Lessor may exercise for default by Lessor under the Prime Lease. All of the remedies given to Lessor in this Sublease in the event Lessee commits an Event of Default shall be construed and held to be cumulative and no one of them shall be exclusive of the other. 25. SECURITY DEPOSIT. Lessor acknowledges and agrees that it holds the Security Deposit as specified in Section 1 as security for the prompt, full and faithful performance by Lessee of each and every provision of this Sublease and of all obligations of Lessee hereunder. If Lessee fails to perform any of its obligations hereunder, Lessor may use, apply, retain or hold any part of the Security Deposit for the payment of: (a) any Base Rent or other sums of money which Lessee may not have paid when due; (b) any sum expended by Lessor on Lessee's behalf in accordance with the provisions hereof; or (c) any sum which Lessor may expend or may be required to expend by reason of Lessee's default hereunder. The use, application or retention of the Security Deposit or any portion thereof, shall not prevent Lessor from exercising any other right or remedy provided by this Sublease or available to Lessor at law or in equity. If Lessee shall fully and faithfully comply with all of the provisions of this Sublease, the Security Deposit, or 11 any balance thereof, shall be returned to Lessee without interest within thirty (30) days of expiration of the Term. 26. NOTICES AND CONSENTS. All notices, demands, request, consents or approvals which may or are required to be given by either party to the other shall be in writing and shall be deemed given when received or refused if personally delivered, if sent by United States registered or certified mail, postage prepaid, return receipt requested or if sent by overnight commercial courier service (a) if to Lessee, addressed to Lessee at the address specified in Section 1(b) or at such other place as Lessee may from time to time designate by notice in writing to Lessor, or (b) if for Lessor, addressed to Lessor at the address specified in Section 1(c) or at such other place as Lessor may from time to time designate by notice in writing to Lessee. Each party agrees promptly to deliver a copy of each notice, demand, request, consent or approval from such party to Prime Lessor and promptly to deliver to the other party a copy of any notice, demand, request, consent or approval received from Prime Lessor. Such copies shall be delivered by overnight commercial courier. Notice by a party may be given by legal counsel to such party. 27. PROVISIONS REGARDING SUBLEASE. Except as specifically provided herein, this Sublease and all the rights of parties hereunder are subject and subordinate to the Prime Lease. Lessee and Lessor (provided Lessee is not then in default under this Sublease) each agree that it will not, by its act or omission to act, cause a default under the Prime Lease. Subject to the terms and conditions of this Sublease, Lessor shall be responsible for all Claims under the Prime Lease prior to the commencement date of the Original Sublease and thereafter for all Claims relating to those portions of the Building of which it is actually in possession for the time periods during which it was actually in possession of such portions of the Building. Lessee shall be responsible for all Claims arising from or relating to the Premises following the Commencement Date. In furtherance of the foregoing, the parties hereby confirm, each to the other, that it is not practical in this Sublease to enumerate all of the rights and obligations of the various parties under the Prime Lease and specifically to allocate those rights and obligations in this Sublease. Accordingly, in order to afford to Lessee the benefits of this Sublease and of those provisions of the Prime Lease which by their nature are intended to benefit the party in possession of the Premises, and in order to protect Lessor against a default by Lessee which might cause a default or event of default by Lessor under the Prime Lease: a. Lessee and Lessor shall pay, when and as due, all base rent, additional rent and other charges payable under the Prime Lease as otherwise set forth herein. b. Except as otherwise expressly provided herein, Lessee shall perform all affirmative covenants and shall refrain from performing any act which is prohibited by the negative covenants of the Prime Lease, where the obligation to perform or refrain from performing is by its nature imposed upon the party in possession of the Premises. If practicable, Lessee shall perform affirmative covenants which are also covenants of Lessor under the Prime Lease at least five (5) days prior to the date when 12 Lessor's performance is required under the Prime Lease. Lessor shall have the right to enter the Premises to cure any default by Lessee under this Sublease provided that Lessee is first given written notice and opportunity to cure in accordance with the provisions of this Sublease. c. Lessor shall not agree to an amendment to the Prime Lease which might have an adverse effect on Lessee's occupancy of the Premises, or its use of the Premises, for their intended purpose, unless Lessor shall first obtain Lessee's prior written approval thereof which approval may be withheld in Lessee's reasonable discretion. d. Lessor hereby grants to Lessee the right to receive all of the services and benefits with respect to the Premises, which are to be provided by Prime Lessor under the Prime Lease. Lessor shall have no duty to perform any obligations of the Prime Lessor which are, by their nature, the obligation of an owner or manager of real property. For example, Lessor shall not be required to provide the services or repairs which the Prime Lessor is required to provide under the Prime Lease. Lessor shall have no responsibility for or be liable to Lessee for any default, failure or delay on the part of Prime Lessor in the performance or observance by Prime Lessor of any of its obligations under the Prime Lease, nor shall such default by Prime Lessor affect this Sublease or waive or defer the performance of any of Lessee's obligations hereunder except to the extent that such default by Prime Lessor excuses performance by Lessor under the Prime Lease. Notwithstanding the foregoing, the parties contemplate that Prime Lessor shall, in fact, perform its obligations under the Prime Lease and in the event of any default or failure of such performance by Prime Lessor, Lessor agrees that it will, upon notice from Lessee, make demand upon Prime Lessor to perform its obligations under the Prime Lease and, provided that Lessee specifically agrees to pay all reasonable costs and expenses of Lessor and provides Lessor with security reasonably satisfactory to Lessor to pay such costs and expenses, Lessor will take appropriate legal action to enforce the Prime Lease. 28. ADDITIONAL SERVICES. Lessor shall cooperate with Lessee to cause Prime Lessor to provide services required by Lessee in addition to those otherwise required to be provided by Prime Lessor under the Prime Lease. Lessee shall pay Prime Lessor's charge for such services promptly after having been billed therefor by Prime Lessor or by Lessor. If at any time a charge for such additional services is attributable to the use of such services both by Lessor and by Lessee, the cost thereof shall be equitably divided by Lessor between Lessor and Lessee. 29. BROKERAGE. Each party warrants to the other that it has had no dealing with any broker or agent in connection with this Sublease and covenants to pay, hold harmless and indemnify the other party for, from and against any and all costs (including reasonable attorneys' fees), expense or liability for any compensation, commissions and charges claimed by any broker or agent with respect to this Sublease or the negotiation thereof on behalf of such party. 13 30. FORCE MAJEURE. With the exception of monetary defaults, neither Party shall be deemed in default with respect to any of the terms, covenants and conditions of this Sublease to be performed, if the failure to timely perform same is due in whole or in part to any strike, lockout, labor trouble (whether legal or illegal), civil disorder, failure of power, restrictive governmental laws and regulations, riots, insurrections, war, shortages, accidents, casualities, acts of God, acts caused directly by the other Party's agents, employees and invitees or any other cause beyond the reasonable control of the Party whose performance has been delayed. 31. SIGNAGE. Lessor grants Lessee the right to maintain its sign on the exterior of the Building subject to the Prime Lease, approval of Prime Lessor and Lessee's compliance with all applicable code requirements. To the extent the consent of Prime Lessor under the Prime Lease is necessary for Lessee to maintain or replace its signage, Lessor grants to Lessee the right to seek such approval. 32. PARKING. Lessor and Lessee acknowledge and agree that under the Prime Lease, Lessor is entitled to the use of one hundred thirty-seven (137) vehicle parking spaces on the Property. Lessor hereby grants Lessee the right to use all such spaces. 33. MISCELLANEOUS. a. ENTIRE AGREEMENT, AMENDMENTS. This Sublease and any Exhibits and Riders attached hereto and forming a part hereof, set forth all of the covenants, promises, agreements, conditions and understandings between Lessor and Lessee concerning the Premises, and there are no covenants, promises, agreements, representations, warranties, conditions or understandings either oral or written between them concerning the Premises other than as contained in this Sublease. Except as otherwise provided in this Sublease, no subsequent alteration, amendment, change or addition to this Sublease shall be binding unless it is in writing and signed by both Lessor and Lessee. b. TIME IS OF THE ESSENCE. Time is of the essence of each and every term, covenant and condition of this Sublease. c. BINDING EFFECT. The covenants and conditions of this Sublease shall, subject to the restrictions on assignment and subletting, apply to and bind the heirs, executors, administrators, personal representatives, successors and assigns of the parties hereto. d. RECORDATION. Neither this Sublease nor any memorandum hereof shall be recorded by Lessee. At the sole option of Lessor, Lessee and Lessor shall execute, and Lessor may record, a short form memorandum of this Sublease in form and substance satisfactory to Lessor. 14 e. GOVERNING LAW. This Sublease and all the terms and conditions thereof shall be governed by and construed in accordance with the laws of the State of Arizona. f. DEFINED TERMS AND PARAGRAPH HEADINGS. The words "Lessor" and "Lessee" as used in this Sublease shall include the plural as well as the singular. Words used in masculine gender include the feminine and neuter. The paragraph headings and titles to the paragraphs of this Sublease are not a part of this Sublease and shall have no effect upon the construction or interpretation of any part hereof g. REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee represents and warrants to Lessor as follows: 1. Lessee has been duly organized, is validly existing, and is in good standing under the laws of its state of incorporation and is qualified to transact business in Arizona. All necessary action on the part of Lessee has been taken to authorize the execution, delivery and performance of this Sublease and of the other documents, instruments and agreements, if any, provided for herein. The persons who have executed this Sublease on behalf of Lessee are duly authorized to do so; 2. This Sublease constitutes the legal, valid and binding obligation of Lessee, enforceable against Lessee in accordance with its terms, subject, however, to bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws relating to or affecting the rights of creditors generally, general principles of equity, whether enforceability is considered in a proceeding in equity or at law, and to the qualification that certain waivers, procedures, remedies and other provisions of this Sublease may be unenforceable under or limited by applicable law, however, none of the foregoing shall prevent the practical realization to Lessor of the benefits intended by this Sublease; 3. To its actual knowledge, there are no suits, actions, proceedings or investigations pending, or to the best of its knowledge, threatened against or involving Lessee before any court, arbitrator or administrative or governmental body which might reasonably result in any material adverse change in the contemplated business, condition or operations of Lessee; 4. To its actual knowledge, Lessee is not, and the execution, delivery and performance of this Sublease and the documents, instruments and agreements, if any, provided for herein will not result in any breach of or default under any other document, instrument or agreement to which Lessee is a party or by which Lessee is subject or bound; 5. Lessee has or will obtain before or within ninety (90) days following the Commencement Date all required licenses and permits, both governmental and private, relating to the Premises. 15 h. REPRESENTATIONS AND WARRANTIES OF LESSOR. Lessor represents and warrants to Lessee as follows: 1. Lessor has been duly organized, is validly existing, and is in good standing under the laws of its state of incorporation and is qualified to transact business in Arizona. All necessary action on the part of Lessor has been taken to authorize the execution, delivery and performance of this Sublease and of the other documents, instruments and agreements, if any, provided for herein. The persons who have executed this Sublease on behalf of Lessor are duly authorized to do so; 2. This Sublease constitutes the legal, valid and binding obligation of Lessor, enforceable against Lessor in accordance with its terms, subject, however, to bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws relating to or affecting the rights of creditors generally, general principles of equity, whether enforceability is considered in a proceeding in equity or at law, and to the qualification that certain waivers, procedures, remedies and other provisions of this Sublease may be unenforceable under or limited by applicable law, however, none of the foregoing shall prevent the practical realization to Lessee of the benefits intended by this Sublease; 3. To Lessor's actual knowledge, there are no suits, actions, proceedings or investigations pending, or to the best of its knowledge, threatened against or involving Lessor before any court, arbitrator or administrative or governmental body which might reasonably result in any material adverse change in the contemplated business, condition or operations of Lessor; 4. To Lessor's actual knowledge, and subject to Prime Lessor's approval, the execution, delivery and performance of this Sublease and the documents, instruments and agreements, if any, provided for herein, will not result in any breach of or default under the Prime Lease, any other document, instrument or agreement to which Lessor is a party or by which Lessor is subject or bound; 5. To Lessor's actual knowledge, neither Lessor, its contractors, licensees, invitees. employees or agents have disposed or released any hazardous materials on or under the Premises, Building or Property, except in compliance with the terms and conditions of the Prime Lease and applicable environmental laws. i. NO WAIVER. The failure of either party to insist in any one or more instances upon the strict performance of any one or more of the obligations of this Sublease, or to exercise any election herein contained, shall not be construed as a waiver or relinquishment for the future of the performance of such one or more obligations of this Sublease or the right to exercise such election, but the same shall continue and remain in full force and effect with respect to any subsequent breach, act or omission. j. SEVERABILITY. If any clause or provision of this Sublease is or becomes illegal or unenforceable because of any present or future law or regulation of 16 any governmental body or entity effective during the Sublease Term, the intention of the parties is that the remaining provisions of this Sublease shall not be affected thereby. k. EXHIBITS. If any provision contained in an Exhibit, Rider or Addenda to this Sublease is inconsistent with any other provision of this Sublease, the provision contained in this Sublease shall supersede the provisions contained in such Exhibit, Rider or Addenda, unless otherwise provided. l. FAIR MEANING. The language of this Sublease shall be construed to its normal and usual meaning and not strictly for or against either Lessor or Lessee. Lessor and Lessee acknowledge and agree that each party has reviewed and revised this Sublease and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply to the interpretation of this Sublease, or any Exhibits, Riders or amendments hereto. m. NO MERGER. The voluntary or other surrender of this Sublease by Lessee or a mutual cancellation of this Sublease shall not work as a merger and shall, at Lessor's option, either terminate any or all existing subleases or subtenancies, or operate as an assignment to Lessor of any or all of such subleases or subtenancies. 34. HAZARDOUS MATERIALS. Neither Lessor nor Lessee shall introduce, release, deposit or store within the Premises any hazardous substances or toxic materials. The provisions of this Section 34 shall not, however, extend to reasonable quantities of hazardous or toxic materials typically and customarily used in connection with first-class office operations, provided that such materials are used and stored in accordance with the codes and ordinances of governmental authorities having jurisdiction and in accordance with any storage requirements set forth on the containers for such materials or substances. 35. ESTOPPEL CERTIFICATE. Each of Lessee and Lessor shall, whenever requested by the other, without charge and within twenty (20) days after written request, execute, acknowledge and deliver to the other a statement in writing to such Party's actual knowledge and based upon the then current facts as known to such Party, certifying that: (a) this Sublease is unmodified and in full force and effect (or if modified, stating the nature of such modification and certifying that this Sublease, as so modified, is in full force and effect); (b) the dates to which Rent and other charges are paid; (c) that there are not to such parties knowledge, any uncured defaults on the part of the other under this Sublease or specifying such defaults if any are claims; and (d) such other information as may be reasonably requested and as may be factually accurate. 36. ATTORNEYS' FEES. In the event that it becomes necessary for either Lessor or Lessee to employ an attorney to enforce any of the terms or provisions of this Sublease, the prevailing party shall be entitled to all of its reasonable attorneys' fees and court costs (if any) in connection therewith, the amount to be fixed by the court without a jury. 17 IN WITNESS WHEREOF, the parties have executed this Sublease the day and year first above written. Lessor: Lessee: Action Performance Companies, Inc., Integrated Information Systems, Inc. an Arizona corporation a Delaware corporation By: /s/ R. David Martin By: /s/ William A. Mahan Name: R. David Martin Name: William A. Mahan Title: Chief Financial Officer Title: EVP & Chief Financial Officer 18