Not applicable

EX-10.2 4 p66753exv10w2.txt EXHIBIT 10.2 Exhibit 10.2 LEASE BETWEEN PHOENIX INDUSTRIAL INVESTMENT PARTNERS, L.P. AN ARIZONA LIMITED PARTNERSHIP AS LANDLORD AND SPEEDFAM - IPEC, INC., AN ILLINOIS CORPORATION AS TENANT TABLE OF CONTENTS

TABLE OF CONTENTS

LEASE THIS LEASE is made and entered into as of the ______ day of ________________, 2002, ("LEASE EXECUTION DATE") by and between Phoenix Industrial Investment Partners, L.P., an Arizona limited partnership (hereinafter called "LANDLORD"), and SpeedFam - IPEC, Inc., an Illinois corporation (hereinafter called "TENANT"). RECITALS A. Concurrently herewith, Landlord purchased from Tenant that certain real property commonly known as 300 North 56th Street and 305 North 54th Street, Chandler, Arizona, more fully described on the attached Exhibit A ("PROPERTY "). B. As part of the aforementioned acquisition, Landlord desires to lease to Tenant, and Tenant desires to lease from Landlord, the Leased Premises (as defined hereinafter) upon the terms and conditions hereof. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: W I T N E S S E T H: In consideration of the mutual covenants hereinafter set forth, the parties hereto agree as follows: 1. DEFINITIONS. As used in this Lease the following terms shall have the following respective meanings: a. Additional Charges: as defined in Section 5. b. Affiliate, Subsidiary or Successor: as defined in Section 23. c. Alteration or Alterations: as defined in Section 11. d. Appraisal: as defined in Section 28. e. Base Rent: as defined in Section 4. f. Business Days: any day which is not a Saturday, Sunday or federal, state or local holiday. g. Capital Improvement: as defined in Section 9. h. Cost(s) and Expense(s): all costs, expenses and fees of every kind and nature, including without limitation reasonable attorneys' fees, court costs, experts' fees, consultants' fees and all other expenses arising from or connected with threatened or pending actions, suits, claims, demands or proceedings. i. Default: as defined in Section 24. j. Default Rate: the lesser of (i) four (4) points above the then prime rate of interest as announced from time to time by Bank One, Arizona, NA, a national banking association, or its successor; and (ii) the highest rate permitted by applicable law. Page 1 of 42 k. Fair Market Rental: as defined in Section 28. l. Hazardous Materials: as defined in Section 37. m. Impositions: Any of the following which at any time during or in respect of the Lease Term may be charged, assessed, levied, confirmed or imposed on or be a lien upon (y) the Leased Premises or any part thereof or any Rent or other payments paid to Landlord pursuant to this Lease or subleases of the Leased Premises, or any part thereof, by anyone claiming by, through or under Tenant; or (z) any occupancy, use or possession of or activity conducted on the Leased Premises or any part thereof: all taxes including, without limitation, (i) Real Property Taxes; (ii) sales, transaction privilege, license, excise, rent or similar taxes and whether imposed on, or measured by, the Rent, Additional Charges or other payments or consideration in any form for which Tenant is obligated by reason of the privilege of renting or of Tenant's occupancy hereunder, and (iii) all new taxes imposed, levied or charged in lieu of or in addition to existing taxes by virtue of present or future law or governmental authority in connection with the ownership, use, occupancy or possession of the Leased Premises as measured by the Rents, Additional Charges or other payments herein provided to be paid by Tenant, or otherwise, assessments (including without limitation, all assessments for public improvements or benefits, whether or not commenced or completed prior to the date hereof and whether or not to be completed within the term hereof, ground rents, contract payments, water, sewer, utility or similar rents, rates and charges, excises, levies, license fees, permit fees, inspection fees and other authorization fees, other charges and other governmental impositions in each case, whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every kind and character (including all interest and penalties thereon). Notwithstanding anything hereinabove to the contrary, Impositions shall not include, and Tenant shall never be obligated to pay, any corporate, estate, inheritance, succession, capital, levy or transfer tax of Landlord or any income, profit or revenue tax, franchise taxes or other similarly imposed taxes of Landlord determined on the basis of general income or revenues (except to the extent a part of the sales, privilege, rent and other taxes described by (ii) of this definition of Impositions) or any interest or penalties in respect thereof. n. Improvements: As defined in Section 2. o. Insurance Requirements: all terms of an insurance policy covering or applicable to the Leased Premises or any part thereof, all requirements of the issuer of any such policy, and all orders, rules, regulations and other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) applicable to or affecting all or any part of the Leased Premises or any use or condition thereof. p. Lease: this Lease, as at the time amended, modified or supplemented, together with all Exhibits now or hereafter attached hereto or referenced herein. q. Lease Term: as defined in Section 3. r. Lease Year: Except with regard to the first Lease Year, which first Lease Year shall include the first twelve (12) full calendar months and any partial month at the commencement of the Lease Term (if the Lease commences on a date other than the first of a month), each consecutive twelve (12) month period during the Lease Term, with the first Lease Year commencing simultaneously with the commencement of the Lease Term, Page 2 of 42 and with each subsequent Lease Year commencing immediately upon the expiration of the immediately preceding Lease Year. s. Leased Premises: as defined in Section 2. t. Legal Requirements: all laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements of all governments, officials and officers, foreseen or unforeseen, ordinary or extraordinary, which now or at any time hereafter may be applicable to all or any part of the Leased Premises or any use or condition thereof. u. Month or Monthly: each calendar month beginning or ending during the Lease Term. v. Option or Options: as defined in Section 27. w. Option Date: as defined in Section 27. x. Qualified Appraiser: as defined in Section 28. y. Real Property Taxes: all taxes, assessments, levies, and other charges of any kind or nature whatsoever, general and special, foreseen and unforeseen (including all installments of principal and interest required to pay any existing or future general or special assessments for public improvements, services or benefits, and any increases resulting from reassessments resulting from a change in ownership, new construction, or any other cause), now or hereafter imposed by any governmental or quasi-governmental authority or special district having the direct or indirect power to tax or levy assessments, which are levied or assessed against, or with respect to the value, occupancy or use of all or any portion of the Leased Premises (as now constructed or as may at any time hereafter be constructed, altered or otherwise changed) or Landlord's interest therein, the fixtures, equipment and other property of Landlord, real or personal, that are an integral part of and located on the Leased Premises, the gross receipts, income, or rentals from the Leased Premises, or the use of parking areas, public utilities, or energy within the Leased Premises, or Landlord's business of leasing the Leased Premises. If at any time during the Lease Term the method of taxation or assessment of the Leased Premises prevailing as of the Effective Date shall be altered so that in lieu of or in addition to any Real Property Taxes described above there shall be levied, assessed or imposed (whether by reason of a change in the method of taxation or assessment, creation of a new tax or charge, or any other cause) an alternate or additional tax or charge (i) on the value, use or occupancy of the Leased Premises or Landlord's interest therein, or (ii) on or measured by the gross receipts, income or rentals from the Leased Premises, on Landlord's business of leasing the Leased Premises, or computed in any manner with respect to the operation of the Leased Premises, then any such tax or charge, however designated, shall be included within the meaning of the term "REAL PROPERTY TAXES" for purposes of this Lease. "Real Property Taxes" shall also include any costs and expenses incurred by Landlord in connection with appealing and/or contesting any Real Property Taxes. z. Rent: shall mean, collectively, Base Rent, Additional Charges, Impositions, late charges and all other payments of money payable to Landlord under this Lease, whether or not such payments are specifically denominated as rent hereunder. aa. Restoration: as defined in Section 20(b). Page 3 of 42 bb. SNDA: as defined in Section 26. cc. Tenant's Equipment: all personal property, furniture, furnishings, business or trade fixtures and equipment now or hereafter in or about the Leased Premises or any part thereof, which are the property of Tenant or any permitted sublessee or assignee of Tenant, the Alteration or removal of which shall be in accordance with Section 10. Without limiting the generality of the foregoing, Tenant's Equipment shall include that property listed on the attached Exhibit B. dd. Third Appraiser: as defined in Section 28. ee. Unavoidable Delays: delays due to strikes, acts of God, labor disputes, fire, earthquakes, floods, explosion, out of the ordinary actions of the elements, invasion, war, insurrection, sabotage, inability to procure or general shortage of labor, equipment, facilities, materials, or supplies in the open market, failure of transportation, lockouts, actions of labor unions, laws or orders of governmental, civil, military or naval authorities, governmental restrictions, enemy action, riot, civil commotion, unavoidable casualty, or other causes (whether similar or dissimilar) beyond the control of the obligated party hereto, financial inability excepted. 2. LEASED PREMISES. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the Property together with all improvements, buildings, fixtures and structures ("IMPROVEMENTS") as now or hereafter existing, constructed or altered thereon and all appurtenances thereto (collectively, the "LEASED PREMISES"). Tenant acknowledges that Tenant is the prior owner of the Leased Premises, that this Lease is part of a sale-leaseback transaction and Tenant is intimately familiar with all aspects of the Leased Premises and that this Lease is on an "as is", "where is" and "with all faults" basis. 3. TERM. The term of this Lease ("LEASE TERM") shall commence on _________________________, 2002, and shall end on the last day of the one hundred eightieth (180th) full calendar month after commencement of the Lease Term, which expiration date is ____________________, 2017, subject to the Options to extend hereinafter set forth or earlier termination pursuant to the terms of this Lease. 4. RENT. Tenant shall pay to Landlord as base monthly rent ("BASE RENT") for the Leased Premises as follows: Lease Year 1 $250,000.00 per month Lease Year 2 $255,000.00 per month Lease Year 3 $260,100.00 per month Lease Year 4 $265,302.00 per month Lease Year 5 $270,608.04 per month Lease Year 6 $276,020.20 per month Lease Year 7 $281,540.60 per month Lease Year 8 $287,171.42 per month Lease Year 9 $292,914.85 per month Lease Year 10 $298,773.14 per month Lease Year 11 $304,748.61 per month Lease Year 12 $310,843.58 per month Lease Year 13 $317,060.45 per month Lease Year 14 $323,401.66 per month Lease Year 15 $329,869.69 per month

Page 4 of 42 Base Rent shall be payable in advance of the first day of each Month during the Lease Term; provided, however, if the Lease Term commences on a day other than the first day of a Month, Tenant shall pay to Landlord concurrently with the commencement of the Lease Term, the Base Rent for such partial Month on a pro-rated basis calculated using a thirty (30) day month. The Base Rent and all other sums payable to Landlord hereunder shall be paid by good check payable in currency of the United States of America as at the time shall be legal tender for the payment of public and private debts, at the Landlord's address specified for notices in Section 30, or at such other place as Landlord may designate in writing from time to time. Such payments shall be made without any abatement, deduction or offset whatsoever, and without any prior demand therefor. In the event that the Lease Term is terminated for any reason on a date other than the last day of a calendar month, on the first day of the last calendar month of the Lease Term Tenant shall pay to Landlord as Base Rent for the period from said first day of said last calendar month to and including the last day of the Lease Term that proportion of the monthly Base Rent hereunder which the number of days between said first day of said last calendar month and the last day of the term hereof bears to thirty (30). If a check of Tenant's is dishonored for insufficient funds, Landlord may require Tenant to make future payments due hereunder via electronic transfer or cashier's check. 5. ADDITIONAL CHARGES. Tenant also shall pay from time to time during the Lease Term as additional charges ("ADDITIONAL CHARGES"): a. all amounts and obligations other than Base Rent which Tenant herein assumes or agrees to pay, including without limitation all Impositions; and b. interest at the Default Rate on such of the foregoing amounts and obligations other than Base Rent as are payable to Landlord which are not paid on or before the fifth (5th) day after written notice by Landlord to Tenant that such amount is due, with such interest to accrue from each date that such amount was due until paid. 6. LATE CHARGES AND INTEREST. Tenant acknowledges that late payment by Tenant to Landlord of Rent under this Lease will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which is extremely difficult or impracticable to determine. Such costs include, but are not limited to, processing and accounting charges, late charges that may be imposed on Landlord by the terms of any mortgage or deed of trust secured by the Leased Premises. Therefore, if any installment of Base Rent or any payment of Additional Charges, Impositions or other rent due from Tenant is not received by Landlord in good funds by the applicable due date, Tenant shall pay to Landlord an additional sum equal to five percent (5%) of the amount overdue as a late charge. The parties acknowledge that this late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of late payment by Tenant. In no event shall this provision for a late charge be deemed to grant to Tenant a grace period or extension of time within which to pay any Rent or prevent Landlord from exercising any right or remedy available to Landlord upon Tenant's failure to pay any Rent due under this Lease in a timely fashion, including any right to terminate this Lease as set forth elsewhere herein. If any Base Rent remains delinquent for a period in excess of five (5) days then, in addition to such late charge, Tenant shall pay to Landlord interest on any Base Rent, Rent and/or Additional Charges that is not paid when due at the Default Rate following the date such amount became due until paid. 7. USE OF LEASED PREMISES. Tenant may use the Leased Premises for any lawful purpose permitted by applicable zoning, building and other Legal Requirements of municipal, state or Page 5 of 42 federal authorities now in force, or which hereafter may be in force with respect to the Leased Premises'. Tenant will not commit, omit or permit any act, condition or event which is contrary to any Legal Requirement or Insurance Requirement. Tenant shall not commit any waste in or about the Leased Premises, and Tenant shall keep the Leased Premises in a neat, clean, attractive and orderly condition, free of any nuisances. 8. TRIPLE NET LEASE. This Lease shall be deemed an absolute triple net lease and Tenant shall do all acts and make all payments connected with or arising out of any use or occupation of the Leased Premises, or any part thereof, whether now or hereafter existing, levied or imposed, and whether foreseen or unforeseen. Landlord shall not be obligated to perform any acts or be subject to any liabilities or to make any payments except as otherwise specifically and expressly provided in this Lease. 9. MAINTENANCE AND REPAIRS. a. Tenant at its sole Cost and Expense will keep in good, clean, first class and operable condition the Leased Premises and every part thereof, including, but not limited to, all plumbing, heating, roof, parking lot, ventilation, air conditioning and electrical systems and equipment in, on or serving the Leased Premises, windows, doors, floors, interior walls, the roof, exterior walls, ceiling and basement which are part of the Leased Premises, and will make or cause to be made all necessary or appropriate repairs, replacements or renewals thereof, whether interior or exterior, structural or non- structural, ordinary or extraordinary, foreseen or unforeseen, capital or ordinary. b. In addition to the foregoing, Tenant shall be required to make such repairs, maintenance and replacements at such reasonable intervals as the parties may agree, which intervals are initially designated on Exhibit D. Tenant will maintain a software package that schedules all preventative maintenance procedures with the settings consistent with those set forth on Exhibit D. Such repairs, maintenance and replacements shall be done in a good, workmanlike and first class manner. If Landlord so requires, Tenant shall obtain Landlord's consent, which shall not be unreasonably withheld, as to the selection of contractors prior to commencement of such work. Subject to Tenant's right to use internal personnel for repair, replacement and maintenance obligations, Tenant shall contract for regular maintenance and upkeep for landscaping, elevators, janitorial and the HVAC system, and shall provide Landlord with copies of such concurrently herewith and within five (5) business days after Landlord's request. If Landlord and/or a successor in interest to Tenant shall be bound by such contracts, such contracts shall include a clause that makes them terminable upon thirty (30) days written notice from Landlord. Unless Tenant has contracted for repair, replacement and maintenance obligations with a third- party, at all times during the Lease Term, Tenant shall maintain internal maintenance personnel adequate to maintain the Leased Premises in good, clean, first class and operable condition. If Tenant does not maintain such internal maintenance personnel, as Landlord shall reasonably determine, Tenant shall enter into such maintenance contracts on such terms and conditions as Landlord shall reasonably require. c. Tenant shall also cause the Leased Premises to be inspected by a licensed contractor on an annual basis, or at such other times as Landlord shall reasonably designate, and Tenant shall perform, subject to Unavoidable Delays, within forty five (45) days after the presentation of the contractor's findings, all repairs, maintenance and replacements designated by said contractor. If Landlord so requires, Tenant shall obtain Landlord's consent, which shall not be unreasonably withheld, as to the selection of said contractor. Page 6 of 42 Tenant shall also cause the roof, parking lot, plumbing and electrical systems to be inspected by a licensed roofing contractor, paving company, plumbing company or electrical company as applicable, on an annual basis, or at such other times as Landlord shall designate and Tenant shall perform, subject to Unavoidable Delays, within forty five (45) days after the presentation of the contractor's findings, all repairs, maintenance and replacements designated by said contractor. Tenant shall provide Landlord with a copy of any reports or findings pursuant to any inspection required hereunder within five (5) business days after Tenant's receipt thereof. d. If Tenant does not timely perform all of its maintenance, repair and replacement obligations as required by the terms of this Lease, Landlord may, but shall have no obligation to, perform such obligations at Tenant's sole Cost and Expense. In such event, Tenant shall reimburse Landlord for all Costs and Expenses associated therewith upon demand, with interest at the Default Rate from date of payment by Landlord. Such sums shall be considered Rent for all purposes hereunder. e. Tenant shall be required to maintain the Leased Premises in a first class condition through the Lease Term, at its sole Cost and Expense. Notwithstanding anything contained herein to the contrary, Tenant shall be solely responsible for all maintenance, repairs and replacements affecting the Leased Premises during the Lease Term and in no event shall Tenant be deemed an agent of Landlord for the purpose of conducting such maintenance, repairs, and replacements without the express written acknowledgement of agency by Landlord. 10. TENANT'S EQUIPMENT. All of Tenant's Equipment shall remain the property of Tenant, provided that: a. Tenant shall have the right at any time during the Lease Term while not in Default to remove from the Leased Premises all or any part of Tenant's Equipment in or on the Leased Premises without regard to the manner placed on or affixed to the Leased Premises, provided that Tenant at its expense immediately will repair or be obligated for all Costs and Expenses in connection with all damage to the Leased Premises caused by the removal of Tenant's Equipment therefrom. b. Any of Tenant's Equipment not removed by Tenant at its expense within thirty (30) days after the expiration or earlier termination of this Lease or the Lease Term shall be considered abandoned by Tenant and may be appropriated, sold, destroyed, or otherwise disposed of by Landlord without any further notice to Tenant, and without obligation to account therefor. Tenant at its expense will immediately repair or be obligated for all Costs and Expenses in connection with all damage to the Leased Premises caused by any removal of Tenant's Equipment therefrom. Landlord shall not be responsible for any loss of or damage to Tenant's Equipment, except to the extent caused by Landlord's gross negligence or willful acts. 11. ALTERATIONS AND ADDITIONS. Tenant shall have the right at any time during the Lease Term, at Tenant's sole Cost and Expense, while not in Default to make changes, alterations, additions or improvements (collectively, "ALTERATIONS", or singularly, an "ALTERATION") in or to the Leased Premises, subject to the following: a. Tenant shall not construct any Alterations or otherwise alter the Leased Premises without Landlord's prior written approval, which approval shall not be unreasonably withheld or Page 7 of 42 delayed, except that provided Tenant complies with each and every other term and condition applicable to Alterations, no approval by Landlord shall be required provided: i. The cost of the Alteration in question does not cost in excess of Fifty Thousand Dollars ($50,000.00); ii. The total cost of all Alterations for the Lease Year in which Tenant commences construction of the Alteration in question does not total more than One Hundred Thousand Dollars ($100,000.00); provided, however, that the cost of Alterations costing less than Fifty Thousand Dollars ($50,000.00) shall not apply to the total Alteration amount of One Hundred Thousand Dollars ($100,000.00) for the applicable Lease Year unless and until the total cost of all Alterations for such Lease Year costing less than Fifty Thousand Dollars ($50,000.00) each shall total at least One Hundred Thousand Dollars ($100,000.00), and then, all of such Alterations shall apply to the total Alteration amount for said Lease Year and the Tenant shall be required to obtain Landlord's consent for any and all subsequent Alterations during said Lease Year; iii. Such Alteration does not affect the structural integrity of the Leased Premises or any base-building system; and iv. Such Alteration does not adversely affect the future leaseability of the Leased Premises to a subsequent lessee. Except for any Alterations permitted under this Section 11(a) without Landlord's consent, Tenant shall not construct any Alteration until Landlord has approved in writing the plans and specifications therefor, and such Alteration shall be constructed substantially in compliance with such approved plans and specifications by a licensed contractor first approved by Landlord (who shall not unreasonably withhold, condition or delay its approval of any such contractor). All Alterations constructed by Tenant shall be constructed by a reputable licensed contractor in a good and workmanlike first class manner and using new materials of good quality, in accordance with all applicable laws and regulations. b. Tenant shall not commence construction of any Alterations until: i. All required governmental approvals and permits have been obtained; ii. All requirements regarding insurance imposed by this Lease have been satisfied; iii. Tenant has given Landlord at least ten (10) days' prior written notice of its intention to commence such construction, iv. For any Alteration requiring Landlord's consent hereunder, Tenant has obtained contingent liability and broad form builders' risk insurance in an amount equal to the cost of the Alteration if there are any perils relating to the proposed construction not covered by insurance required to be carried pursuant to Section 19. v. For any Alteration requiring Landlord's consent hereunder, Tenant has deposited into an escrow account an amount equal to not less than one hundred fifty Page 8 of 42 percent (150%) of the amount of the estimated hard and soft costs of the Alteration, securing Tenant's payment and performance of its obligations related to the applicable Alteration. c. All Alterations shall remain the property of Tenant during the Lease Term but shall not be altered or removed from the Leased Premises except in further accordance with this Section 11; provided, however, that any Alteration which involves Tenant's Equipment may be altered and removed in accordance with Section 10. At the expiration or sooner termination of the Lease Term, all Alterations shall be surrendered to Landlord as part of the realty and shall then become Landlord's property, and Landlord shall have no obligation to reimburse Tenant for all or any portion of the value or cost thereof; provided, however, Landlord expressly reserves the right to require Tenant to remove any Alterations prior to the expiration or sooner termination of the Lease Term by providing Tenant with written notice thereof within sixty (60) days prior to the expiration of the Lease Term or within thirty (30) days after the earlier termination of the Lease Term, as applicable. d. For any Alteration reasonably determined by Landlord to adversely affect the future leaseability of the Leased Premises, Tenant shall post a letter of credit, in form and content and with a bank reasonably acceptable to Landlord (or other security reasonably satisfactory to Landlord) in an amount equal to one hundred fifty percent (150%) of the estimated cost (as determined by a licensed contractor's bid good for reasonable period of time) to remove such Alteration and restore the Leased Premises to its state immediately prior to the commencement of construction of said Alteration. In addition to the foregoing, Tenant shall cause a licensed contractor reasonably acceptable to Landlord (if Landlord so desires to maintain acceptance of such contractor) to prepare a bid for the removal of said Alteration and restoration of the Leased Premises to its state immediately prior to the commencement of construction of said Alteration on each fifth anniversary of the completion of construction of said Alteration and shall increase the amount of the letter of credit or other security, as applicable, to the extent necessary to provide Landlord with one hundred fifty percent (150%) security for such removal and restoration. Such letter of credit or security may be drawn upon only upon Tenant's failure to act in accordance with Landlord's request under Section 31. The foregoing notwithstanding, Tenant shall not be required to comply with the requirements of this Section 11(d) if it obtains a minimum credit rating of at least BBB- (minimum investment grade rating). e. Every six (6) months Tenant shall notify Landlord in writing of the nature and cost of any and all Alterations performed by Tenant hereunder, and, to the extent Landlord has not already been provided with plans, specifications, approvals, permits, the final cost and such other information as Landlord shall reasonably determine related to said Alteration, Tenant shall provide Landlord with such information concurrently therewith. f. Tenant shall, at its sole Cost and Expense, make any Alteration of any sort to the Leased Premises when and if required by applicable current or future law, including, but not limited to, the Americans With Disabilities Act of 1990 and all applicable fire and safety codes. Tenant shall not be required to make such Alterations solely as a result of a change in the law as to such requirements, but only at such times as are required by the applicable law or code. Tenant may take advantage of any phase in or "grandfathering" provisions in such laws and codes. Any such Alterations shall be made by Tenant in accordance with and subject to the provisions of this Section 11. Page 9 of 42 g. In performing Alterations, Tenant shall not be deemed the agent of Landlord for any purpose without the express written acknowledgement of such agency by Landlord. h. The provisions and conditions of Sections 13 and 14 below shall apply to any work performed by Tenant under this Section 11. 12. IMPOSITIONS. Subject to Section 15 relating to permitted contests, Tenant during the Lease Term (i) will pay when due (or such earlier date as may be required by the installment payment provisions below in this Section 12) and prior to delinquency all Real Property Taxes levied or assessed against the Leased Premises; and (ii) will pay all other Impositions; both subsections (i) and (ii), before any interest, penalty, fine or cost may be added for non-payment, and will furnish to Landlord for inspection within thirty (30) days after such payment, receipts of the appropriate taxing authority or other proof satisfactory to Landlord evidencing payment of such other Impositions. Tenant will protect, indemnify and hold Landlord harmless from and against all liabilities, obligations, claims, damages, penalties, causes of action and Costs and Expenses imposed upon or incurred by or asserted against Landlord or the Leased Premises by reason of Tenant's failure to pay all Impositions as required herein. If Real Property Taxes or any other Impositions are payable in installments, Tenant may, at its election, make payment thereof in installments which are due and payable during the Lease Term; provided, however, Tenant shall pay Real Property Taxes in quarterly installments during each tax year; provided further, however, that Tenant shall not be required to make such quarterly payments of Real Property Taxes if it obtains a minimum credit rating of at least BBB- (minimum investment grade rating). To the extent Tenant is required to make quarterly payments of Real Property Taxes pursuant to the preceding sentence, Tenant shall make such payments directly to the relevant governmental authority if permitted by such authority; provided, however, that if the relevant taxing authority does not accept quarterly payments, Tenant shall make such payments into an interest bearing escrow account, with the escrow agent being directed to make such payments to the relevant taxing authority when directed by either Tenant or Landlord. Any Impositions relating to a fiscal period, part of which is within and part of which is subsequent to the Lease Term, whether or not such Impositions shall become due and payable or a lien upon the Leased Premises or any part thereof, or be assessed, levied, confirmed or imposed during the Lease Term, shall be adjusted and apportioned between Tenant and Landlord so that Tenant shall pay only that portion of such Impositions computed by multiplying the total amount of such Impositions relating to the fiscal period by a fraction, the numerator of which is the number of days constituting the remainder of the Lease Term and the denominator of which is the number of days constituting the entire fiscal period. The amount due from either party to the other based upon the adjustment and apportionment of such Impositions shall be paid at or promptly following expiration or termination of the Lease Term. 13. COMPLIANCE WITH REQUIREMENTS. Subject to Section 15 relating to permitted contests, Tenant during the Lease Term will: a. comply with all Legal Requirements and Insurance Requirements; and b. procure, maintain and comply with all permits, licenses, franchises and other authorizations required for the use of the Leased Premises or any part thereof then being made by Tenant, and for the proper erection, installation, operation and maintenance of the Improvements and Tenant's Equipment or any part thereof. Page 10 of 42 14. LIENS. If the Leased Premises, or any part thereof shall at any time become subject to any vendor's, mechanic's, laborer's or materialmen's lien based upon Tenant's Work, any Alteration or the furnishing of material, labor or professional services to Tenant or the Leased Premises and contracted for by or on behalf of Tenant or its contractors or subcontractors, Tenant shall cause the same, at Tenant's expense, to be discharged or bonded over (pursuant to applicable state law) within twenty (20) days after notice thereof, and Tenant shall defend, indemnify, protect and hold Landlord harmless from all liability, loss, Costs and Expenses arising from such lien, Alteration, material, labor and/or professional services. 15. PERMITTED CONTESTS. Tenant at its expense, after prior written notice to Landlord and while not in Default, may contest in its own name or in the name of Landlord, or both, by appropriate action taken in good faith and with due diligence, the amount or validity or application, in whole or in part, of any Impositions or any Legal Requirement, provided that: a. in the case of any Impositions or Legal Requirement, Tenant shall first make all contested payments, under protest if it desires, unless Tenant's action in some manner suspends the collection of such payments or unless Tenant is not required to make such payments; b. neither the Leased Premises nor any part thereof or interest therein could realistically under the then existing circumstances be deemed to be in danger of being sold, forfeited or lost by reason of the contest; c. in the case of any Impositions or Legal Requirement, Tenant shall have furnished such security, if any, as may be required by governmental authority and reasonably approved by Landlord; d. in the case of any Legal Requirement, Landlord could not realistically and under the then existing circumstances be in danger of any criminal or civil liability for failure to comply therewith; and e. in the case of any Imposition or Legal Requirement which remains unpaid at any time during such contest, Tenant shall have furnished to Landlord such security as Landlord shall reasonably require in an amount not less than one hundred twenty five percent (125%) of the amount claimed to be owed by a governmental authority. 16. NO CLAIMS AGAINST LANDLORD. Nothing contained in this Lease shall constitute any consent (except where consent is expressly required and given under this Lease) or request by Landlord, express or implied, for the performance of any labor or services or the furnishing of any materials or other property in respect of the Leased Premises or any part thereof, or as giving Tenant any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against Landlord, except as any such claim is expressly provided for by statute despite the provisions of this Section. Any labor, services or material furnished to the Leased Premises in connection with the fulfillment of Tenant's obligations hereunder shall be the sole responsibility of Tenant. 17. INDEMNIFICATION BY TENANT. Tenant will indemnify, defend, protect and hold Landlord harmless from and against all liabilities, obligations, claims, damages, penalties, causes of action, and proceedings, and all Costs and Expenses incurred in connection therewith, imposed upon or incurred by or asserted against Landlord or the Leased Premises by reason of the occurrence or existence of any matter or thing relating to this Lease or the Page 11 of 42 Leased Premises during the Lease Term, unless resulting from the negligence or willful acts of Landlord, including but not limited to: a. any accident, injury to or death of persons (including workers) or loss of or damage to property occurring on or about the Leased Premises or any part thereof; b. any condition or use of the Leased Premises or any part thereof; c. any failure on the part of Tenant to perform or comply with any of the terms of this Lease; d. performance of any labor or services or the furnishing of any materials or other property in respect of the Leased Premises or any part thereof; and e. all claims for loss or damage to the Leased Premises uncompensated by Tenant's insurance. 18. UTILITIES. In addition to the Rent and other payments herein provided, Tenant during the Lease Term shall pay prior to delinquency for all water, gas, light, power, telephone, sewage, refrigeration, air conditioning, heat and ventilating, janitorial, and all other materials and utilities used in connection with or supplied to the Leased Premises. To the extent not already installed, Tenant at its Cost and Expense shall have separate meters installed for power, gas, water and other utilities for which separate meters are available, and Tenant solely shall be obligated for all utility connect, disconnect and security deposit charges applicable to the Leased Premises. Landlord shall not be liable for, and Tenant shall not be entitled to any other relief, by reason of the unavailability or limited availability of the foregoing utilities and services. 19. INSURANCE. a. Risks To Be Insured. Tenant at its Cost and Expense during the Lease Term will maintain the following insurance for the Leased Premises with reputable insurers authorized to do business in Arizona and rated at least A-IV by A.M. Best Company: i. primary coverage insurance with respect to the Improvements against loss or damage by fire and other risks from time to time in so-called "all risk" form with a sprinkler leakage endorsement insuring the personal property, inventory, trade fixtures, and Alterations within the Leased Premises and the Leased Premises for the full replacement value thereof, as determined from time to time by the insurer, and in any event in an amount sufficient to prevent Landlord from becoming a co-insurer of any such loss or damage; ii. commercial general liability insurance, together with host liquor liability insurance, and together with excess liability insurance coverage, insuring against, liability for personal injury, bodily injury, death and damage to property occurring in or about, or resulting from an occurrence in or about, the Leased Premises with combined single limit coverage on a per occurrence basis of not less than a minimum amount of Five Million Dollars ($5,000,000.00) and an aggregate limit of not less than a minimum amount of Five Million Dollars ($5,000,000.00), which insurance shall contain (1) a "contractual liability" endorsement insuring Tenant's performance of Tenant's obligation to indemnify Landlord for losses Page 12 of 42 related to personal injury, bodily injury, death and damage to property, as contained in Section 17; and (2) a cross liability endorsement; iii. appropriate worker's compensation or other insurance against liability arising from claims of workmen in respect of and during the period of any work on or about the Leased Premises; and iv. pollution legal liability insurance, together with new conditions coverage, insuring against, liability for environmental contamination, releases, disposal or pollution to property occurring in, on, under or about, or resulting from an occurrence in or about, the Leased Premises with combined single limit coverage on a per occurrence basis of not less than a minimum amount of Five Million Dollars ($5,000,000.00), as such amount may be increased at the reasonable request of Landlord, with a deductible not to exceed One Hundred Thousand Dollars ($100,000.00). Notwithstanding anything contained herein to the contrary, such coverage shall be with either AIG or Zurich or such other similarly rated insurance companies. v. Such other insurance that from time to time is reasonably required by any lender of Landlord. b. Policy Provisions. i. All insurance maintained by Tenant pursuant to Section 19(a)(i) (Property Insurance), shall: 1. name Landlord, Tenant, and such other parties as Landlord shall reasonably designate as insureds, as their respective interests may appear, and, if reasonably commercially available, shall include an effective waiver by the issuer of all rights of subrogation against any insured or such insured's interest in the Leased Premises or any income derived therefrom as provided in Section 19(d); 2. provide that all insurance proceeds, if any, from losses shall be adjusted with Landlord and Tenant. ii. All insurance maintained by Tenant pursuant to Section 19(a)(ii) (Liability Insurance), shall name Landlord and such other parties as Landlord shall reasonably designate as additional insureds and, if reasonably commercially available, shall include an effective waiver by the issuer of all rights of subrogation against any additional insured or such additional insured's interest in the Leased Premises or any income derived therefrom as provided in Section 19(d). iii. All insurance maintained by Tenant pursuant to Section 19(a), shall: 1. not have a "deductible" in excess of One Hundred Thousand Dollars ($100,000.00), or such greater amount as is approved by Landlord; 2. if reasonably commercially available, pay any losses notwithstanding any act or failure to act or negligence of Landlord or Tenant or any other Page 13 of 42 person or entity relating to any act, omission or other event causing such losses; 3. provide that no cancellation, lapse, reduction in amount or material change in coverage thereof shall be effective until at least thirty (30) days (or ten (10) days in the case of non payment of premium) after receipt by Landlord and Tenant of written notice thereof; 4. be primary insurance which provides that the insurer shall be liable for the full amount of the loss up to and including the total amount of liability set forth in the declarations without the right of contribution from any other insurance coverage of Landlord; 5. be in a form reasonably satisfactory to Landlord; and 6. contain a "severability" clause. c. Delivery of Evidence of Insurance. i. After written request by Landlord and/or not less than thirty (30) days prior to the expiration date of any policy to be obtained by Tenant pursuant to this Section 19, Tenant will deliver to Landlord a certificate of insurance as to the issuance and effectiveness of such policy and the amount of coverage afforded thereby. Landlord may, at any time, and from time to time, inspect and/or copy any and all insurance policies required to be procured by Tenant pursuant to this Section 19. Notwithstanding the foregoing, with regard to the insurance required of Tenant pursuant to Section 19(a)(iv) above, Tenant shall provide Landlord with a copy of the entire policy within five (5) business days after the issuance thereof. ii. Tenant shall pay all premiums due for insurance required to be carried by Tenant hereunder (excepting worker's compensation insurance as specified in Section 19(a)(iii)), one year in advance. d. Waiver of Subrogation Rights. i. To the extent permitted by Landlord's insurer, if any, Landlord hereby releases and waives any and all rights of subrogation against Tenant, and against the officers, employees, agents and representatives of Tenant, which, in the absence of this Section 19(d)(i), would arise in favor of any insurance company insuring Landlord against loss by fire or casualty and loss of any other type resulting from damage to or destruction of the Improvements or any portion thereof, or in damage to or destruction of the property of Landlord or the property of others under Landlord's control on the Leased Premises, and to the extent permitted by Landlord's insurer, if any, Landlord hereby releases and waives its right of recovery against Tenant for loss or damage resulting from damage to or destruction of the Improvements or any part thereof, or in damage to or destruction of the property of Landlord on the Leased Premises caused by fire, or other hazards insured against by extended coverage or casualty insurance as provided in this Lease, to the extent that Landlord is compensated for such loss or damage by actual receipt of proceeds from insurance policies covering such loss or damage or portions thereof, it being expressly understood and agreed that Page 14 of 42 this release and waiver shall not constitute a release and waiver by Landlord of any right of recovery against Tenant for loss or damage, whether arising in connection with the same claim or separate claims, in excess of insurance proceeds actually received by Landlord. ii. To the extent permitted by Tenant's insurer, if any, Tenant hereby releases and waives any and all rights of subrogation against Landlord, and against the officers, employees, agents and representatives of Landlord, which, in the absence of this Section 19(d), would arise in favor of any insurance company insuring Tenant against loss by fire or casualty and loss of any other type resulting from damage to or destruction of the Improvements or any portion thereof, or in damage to or destruction of the Leased Premises of Tenant or the property of others under Tenant's control on the Leased Premises, and, to the extent permitted by Tenant's insurer, if any, Tenant hereby releases and waives its right of recovery against Landlord for loss or damage resulting from damage to or destruction of the Improvements or any part thereof, or in damage to or destruction of the Leased Premises of Tenant on the Leased Premises caused by fire, or other hazards insured against by extended coverage or casualty insurance as provided in this Lease, to the extent that Tenant is compensated for such loss or damage by actual receipt of proceeds from insurance policies covering such loss or damage or portions thereof, it being expressly understood and agreed that this release and waiver shall not constitute a release and waiver by Tenant of any right of recovery against Landlord for loss or damage, whether arising in connection with the same claim or separate claims, in excess of insurance proceeds actually received by Tenant. iii. The foregoing releases and waivers of subrogation rights and releases and waivers of the rights of the Landlord and of the Tenant respectively are expressly conditioned upon the Landlord and the Tenant each being able to obtain in present and future policies required under this Lease of fire, extended coverage, casualty and similar insurance, clauses or endorsements at a commercially reasonable cost which permit the insured to release and waive the insurance company's right of subrogation against third parties responsible for loss, and in the event either the Landlord or the Tenant at any time is unable to obtain policies containing such subrogation waiver clauses or endorsements at a commercially reasonable cost, then and in that event such party may give to the other party written notice thereof and from and after the giving of such notice the releases and waivers herein set forth and each and all of them shall be considered withdrawn and shall in no wise be effective as to loss or damage arising from risks covered by such policies. iv. Notwithstanding anything contained in Sections 19(d)(i)-(iii), the insurance required to be carried by Tenant hereunder shall be primary in nature and any insurance carried by Landlord, if any, shall be secondary in nature. Further, Landlord shall have no obligation whatsoever to carry insurance insuring the Leased Premises, Improvements, Alterations or personal property located within the Leased Premises. Page 15 of 42 20. DAMAGE TO OR DESTRUCTION OF LEASED PREMISES. a. Tenant To Give Notice. In case of any material damage to or destruction of the Leased Premises or any part thereof, Tenant will promptly (and in no event later than the tenth (10th) day after such occurrence) give written notice thereof to Landlord generally describing the nature, extent and cause of such damage or destruction. b. Restoration. In case of any damage to or destruction of the Improvements or any part thereof at any time during the Lease Term, subject to the terms of Section 20(e), Tenant shall, at its Cost and Expense, promptly commence and complete, subject to Unavoidable Delays, the restoration, replacement or rebuilding of the Improvements as nearly as possible to its value, condition and character immediately prior to such damage or destruction (such restoration, replacement and rebuilding, together with any temporary repairs and property protection pending completion of the work, being herein called "RESTORATION"). c. Application Of Insurance Proceeds. All insurance proceeds received by Landlord or Tenant on account of any damage to or destruction of the Improvements or any part thereof (less the Costs and Expenses incurred by the Landlord and Tenant in the collection thereof, including, without limitation, adjusters fees and expenses) shall be paid only for the Restoration, subject to Sections 20(d) and (e) below. d. Abatement. During any period when Tenant's use of the Leased Premises is prevented in whole or part by reason of total or partial damage to or destruction of the Improvements, or by reason of such restoration, the Rent shall be temporarily abated in proportion to the degree that Tenant's use of the Leased Premises is so prevented, but only to the extent of any business interruption or loss of income insurance proceeds actually received by Landlord from Tenant's insurance described in Section 19. e. Limited Termination. Except as set forth below, in case of any damage or destruction occurring during the Lease Term, whether or not insurance proceeds are available for the purpose of Restoration, this Lease shall remain in full force and effect without any abatement, suspension, deferment, diminution or reduction. If twenty percent (20%) or more of the then replacement value of the Improvements is damaged by fire or other casualty occurring during the final two (2) Lease Years of the then running initial or extended Lease Term and Landlord receives insurance proceeds sufficient to cover any Rent loss due to such termination, Tenant may terminate this Lease by written notice to Landlord within thirty (30) days after the date of the fire or other casualty, effective as of the date set forth in such termination notice, which shall in no event be earlier than the thirtieth (30th) day after the date of said termination notice, with Tenant to be responsible for the payment of all Rent and Additional Charges becoming due hereunder until the date of such termination; provided, that Tenant shall pay or assign its right to receive insurance proceeds from such damage or destruction over to Landlord, with Tenant to also pay Landlord contemporaneously with such termination the insurance deductible amount, if any, applicable to such damage or destruction. 21. EMINENT DOMAIN. a. Whole or Substantial Taking. If all or substantially all of the Leased Premises shall be lawfully taken by condemnation or other eminent domain proceedings pursuant to any law, general or special, this Lease shall terminate on the date of such taking. All Rent Page 16 of 42 and Additional Charges required to be paid by Tenant under this Lease shall be paid up to the date of such termination and upon such termination this Lease shall be of no further force and effect, except that any obligation or liability of either party, actual or contingent, under this Lease which has accrued on or prior to such termination date shall survive and any prepayment of Rent and Additional Charges shall be prorated between the parties. For purposes of this Section "substantially all of the Leased Premises" shall be deemed to mean such portion of the Leased Premises as, when so taken, would leave remaining a balance of the Leased Premises which, due either to the area so taken or the location of the part so taken in relation to the part not so taken, would not under economic conditions, applicable zoning laws, building regulations then existing or prevailing, reasonably accommodate Tenant's business as conducted at the date of such taking and after performance of all covenants, agreements, terms and provisions herein and by law provided to be performed and paid by Tenant. Tenant, in cooperation with Landlord, shall have the right to participate in any condemnation proceedings and be represented by legal counsel for the purpose of protecting its interests hereunder. b. Partial Taking. If only a portion of the Leased Premises shall be so taken and Section 21(a) does not apply, this Lease shall be unaffected by such taking, except that Rent payable by Tenant pursuant to the provisions of this Lease shall be equitably reduced by Landlord to a just and appropriate amount according to the nature and extent of the taking. c. Award. No award for any partial or total taking shall be apportioned, it being agreed and understood that Landlord shall be entitled to the entire award for any partial or entire taking. Tenant assigns to Landlord its interest in any award which may be made in such taking or condemnation, together with any and all rights of Tenant arising in or to the same or any part thereof. Nothing contained herein shall be deemed to give Landlord any interest in or require Tenant to assign to Landlord any separate award made to Tenant for the taking of Tenant's Equipment, for the interruption of Tenant's business or its moving costs, or for the loss of goodwill. Nothing herein contained shall prohibit Tenant from making a separate claim, to the extent permitted by law, for the value of Tenant's Equipment, moving expenses or relocation benefits. d. Temporary Taking. If the temporary use or occupancy of all or any part of the Leased Premises shall be lawfully taken for not more than one hundred eighty (180) days by condemnation or in any other manner for any public or quasi-public use or purpose during the Lease Term, Tenant shall be entitled to receive that portion of the award for such taking which represents compensation for the taking of Tenant's Equipment, moving expenses or relocation benefits, and that portion which represents reimbursement for the cost of Restoration pursuant to Section 21(e). This Lease shall be and remain unaffected by such taking and Tenant shall be responsible for all obligations hereunder not affected by such taking and shall continue to pay in full when due the Rent, Additional Charges and all other sums required to be paid by Tenant pursuant to the provisions of this Lease. If the period of temporary use or occupancy shall extend beyond the end of the Lease Term, that part of the award which represents compensation for the use or occupancy of the Leased Premises (or a part thereof) shall be divided between Landlord and Tenant so that Tenant shall receive so much thereof as represents the period to and including the end of the Lease Term, and Landlord shall receive so much as represents the period subsequent to the end of the Lease Term. Page 17 of 42 e. Restoration. In the event of any taking of the Leased Premises which does not result in a termination of this Lease, or in the event of a taking for a temporary use or occupancy of all or any part of the Leased Premises, Tenant at its expense shall proceed with reasonable diligence with the Restoration of the remaining parts of the Leased Premises to substantially the condition existing immediately prior to the date of taking to the extent that the same may be feasible to constitute a complete and tenantable Leased Premises. Landlord shall reimburse Tenant for the reasonable costs of the Restoration of the Leased Premises in an amount not to exceed the amount of the condemnation award specifically allocated to the restoration of the Leased Premises; provided, however, that Landlord shall use commercially reasonable efforts to seek recovery of the reasonable costs of such Restoration as part of the condemnation award and a specific allocation of such costs in the award. If the condemnation award does not specifically allocate any portion thereof for the restoration of the Leased Premises, the Landlord shall reimburse Tenant for the reasonable costs of the Restoration of the Leased Premises in an amount not to exceed the amount of the condemnation award in excess of the portion of the award allocable to the real property taken, as Landlord shall reasonably determine. 22. PERFORMANCE ON BEHALF OF TENANT. If Tenant shall fail to make any payment or perform any act required hereunder to be made or performed by Tenant, and provided Landlord has given Tenant ten (10) days written notice of its intent to do so and Tenant has failed during said period to make such payment or perform the act required to be performed by Tenant, subject to Unavoidable Delays, then Landlord may, but shall be under no obligation to, make such payment or perform such act with the same effect as if made or performed by Tenant. Notwithstanding the immediately preceding sentence, Landlord may proceed immediately in the event of an emergency without any notice to Tenant other than bona fide attempts to contact by telephone as soon as reasonably possible under the circumstances either of Tenants' two (2) representatives (whom Tenant may change from time to time by providing written notice thereof) whose names and telephone numbers Tenant has furnished in writing to Landlord prior to such emergency. Entry by Landlord upon the Leased Premises for such purpose shall not waive or release Tenant from any obligation or an Event of Default hereunder. Tenant shall reimburse Landlord for all reasonable sums so paid by Landlord and all reasonable Costs and Expenses incurred by Landlord in connection with Landlord's payment or performance under this Section with interest at the Default Rate from the date of such payment by Landlord, and no such payment or performance by Landlord pursuant hereto, shall be deemed to suspend or delay the payment of any amount of money or charge at the time the same becomes due or payable, nor limit any right of Landlord or relieve Tenant from any Default hereunder. 23. ASSIGNMENTS AND SUBLEASES. a. Tenant shall not do any of the following (collectively referred to herein as a "TRANSFER"), whether voluntarily, involuntarily or by operation of law, without the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed: i. sublet all or any part of the Leased Premises or allow it to be sublet, occupied or used by any person or entity other than Tenant; or ii. assign its interest in this Lease. In no event shall Tenant mortgage or encumber the Lease (or otherwise use the Lease as a security device) in any manner. Tenant shall reimburse Landlord for all reasonable costs Page 18 of 42 and attorneys' and consultants' fees incurred by Landlord in connection with the evaluation, processing and/or documentation of any requested Transfer whether or not Landlord's consent is granted. Any Transfer so approved by Landlord shall not be effective until Tenant has delivered to Landlord an executed counterpart of the document evidencing the Transfer which: (x) is in a form reasonably approved by Landlord; (y) contains the same terms and conditions as stated in Tenant's notice given to Landlord pursuant to Section 23(b); and (z) in the case of an assignment of the Lease, contains the agreement of the proposed transferee to assume all obligations of Tenant under this Lease arising after the effective date of such Transfer and to remain jointly and severally liable therefor with Tenant. Any Transfer without Landlord's consent, where such consent is required, shall, at Landlord's election in its sole and absolute discretion, constitute a Default by Tenant and shall be voidable at Landlord's option. Landlord's consent to any one Transfer shall not constitute a waiver of the provisions of this Section 23(a) as to any subsequent Transfer or a consent to any subsequent Transfer. No Transfer, even with the consent of Landlord, shall relieve Tenant of its personal and primary obligation to pay the Rent and Additional Charges and to perform all of the other obligations to be performed by Tenant hereunder. The acceptance of Rent by Landlord from any person shall not be deemed to be a waiver by Landlord of any provision of this Lease nor to be a consent to any Transfer. Subject to the following, any Transfer shall be upon then fair market value. Tenant shall provide Landlord with a certified appraisal performed by a Qualified Appraiser (as defined hereinafter) justifying the proposed rent and terms of the proposed Transfer ("TRANSFER APPRAISAL"). Tenant hereby agrees that it shall not be unreasonable for the Landlord to withhold its consent to a proposed Transfer if it is not on such terms and conditions at least as beneficial to the Landlord as set forth in the Transfer Appraisal; provided, however, that if Tenant is unable to consummate a sublease or assignment after two hundred seventy (270) days of marketing the property or negotiating the sublease at fair market value as determined by the Transfer Appraisal, Tenant enter into a Transfer upon such terms as reasonably become available from potential subtenants and/or assignees. b. At least thirty (30) days before a proposed Transfer is to become effective, Tenant shall give Landlord written notice of the proposed terms of such Transfer and request Landlord's approval, which notice shall include the following: i. the name and legal composition of the proposed transferee; ii. a current financial statement of the transferee, financial statements of the transferee covering the preceding three (3) years if the same exist, and (if available) an audited financial statement of the transferee for a period ending not more than one year prior to the proposed effective date of the Transfer, all of which statements are prepared in accordance with generally accepted accounting principles; iii. the nature of the proposed transferee's business to be carried out in the Leased Premises; iv. all consideration to be given on account of the Transfer; v. the proposed use of the proposed transferee; Page 19 of 42 vi. the nature of any proposed tenant improvements or Alterations; vii. a copy of the Transfer Appraisal; and viii. a current financial statement of Tenant (except that such financial statement shall not be required if Tenant is current in all filings required by the Securities and Exchange Commission). c. If Landlord consents to a Transfer proposed by Tenant, Tenant may enter into such Transfer, and if Tenant does so, the following shall apply: i. Tenant shall not be released of its liability for the performance of all of its obligations under this Lease. ii. If Tenant assigns its interest in this Lease, then Tenant shall pay to Landlord two- thirds (2/3) of all Transfer Consideration (as defined hereinafter) received by Tenant over and above the assignee's agreement to assume the obligations of Tenant under this Lease. iii. If Tenant sublets any part of the Leased Premises, then with respect to the space so subleased, Tenant shall pay to Landlord two-thirds (2/3) of the positive difference, if any, between all Transfer Consideration paid by the subtenant to Tenant, less Base Rent allocable to the space sublet. Landlord shall reasonably determine the Base Rent fairly allocable to the portion so subleased. Such amount shall be paid to Landlord on the same basis and at the same time, whether periodic or in lump sum, that such Transfer Consideration is paid to Tenant by its subtenant. iv. Tenant's obligations under this Section 23(c) shall survive any Transfer, and Tenant's failure to perform its obligations hereunder shall be an Event of Tenant's Default. Landlord shall have the right at reasonable intervals to inspect Tenant's books and records relating to the payments due hereunder. Upon request therefor, Tenant shall deliver to Landlord copies of all bills, invoices or other documents upon which its calculations are based. Landlord may condition its approval of any Transfer upon obtaining a certification from both Tenant and the proposed transferee of all Transfer Consideration and other amounts that are to be paid to Tenant in connection with such Transfer. v. As used in this Section 23(c), the term "TRANSFER CONSIDERATION" shall mean the positive difference, if any of: (i) any consideration of any kind received, or to be received, by Tenant as a result of the Transfer, if such sums are related to Tenant's interest in this Lease or in the Leased Premises; minus (ii) all Costs and Expenses reasonably related to the Transfer, including, without limitation, brokerage fees and commissions, legal fees, and Costs and Expenses of Alterations and tenant improvements related to the Transfer. The Costs and Expenses set forth in Section 23(c)(v)(ii) shall not exceed two (2) months base rent under the applicable sublease or assignment. vi. Tenant shall conditionally assign and transfer to Landlord its interests in the sublease and all rentals and income arising therefrom. Unless and until Tenant Defaults in performing any of its obligations under this Lease, Tenant may Page 20 of 42 receive, collect, and enjoy the rents accruing under the sublease. The condition to the assignment shall be that if Tenant Defaults in any performing any of its obligations under this Lease, Landlord may, at its option (which may be exercised in Landlord's sole and absolute discretion) by notice to Tenant and the sublessee, do either of the following: 1. in pursuit of Landlord's remedies hereunder, terminate the sublease in conjunction with a termination of this Lease; or 2. elect to receive and collect, directly from the sublessee, all rent and any other sums owing and to be owed under the sublease, as further set forth in Section 23(c)(vii) below. If the Landlord elects to receive and collect rent and other sums owing under the sublease, such shall not limit the Tenant's right to receive any Transfer Consideration it is entitled to pursuant to Section 23(c)(ii) or (iii), as applicable; provided, however, the Landlord may receive and collect such Transfer Consideration on behalf of Tenant and apply such to remedy any Default of Tenant and/or apply such to the Security Deposit. vii. Landlord will not, as a result of the sublease, or as a result of the collection of rents or any other sums from the sublessee under Section 23(c)(vi) above, be liable to the sublessee for any failure of Tenant, as sublessor, to perform any obligation of Tenant, as sublessor, under the sublease. Amongst such other provisions as the Landlord shall reasonably require, the sublease document and/or the consent to sublease document shall contain the following provisions: 1. Tenant shall irrevocably authorize and direct the sublessee, on receipt of any written notices from Landlord stating that a Default exists in the performance of any of Tenant's obligations under this Lease, to pay to Landlord the rents and any other sums due and to become due under the sublease. 2. Tenant shall agree that the sublessee has the right to rely on any such statement from Landlord, and that the sublessee will pay those rents and other sums to Landlord without any obligation or right to inquire as to whether a default exists and despite any notice or claim from Tenant to the contrary. 3. Tenant will not have any right or claim against the sublessee for those rents or other sums paid by the sublessee to Landlord. Landlord will credit Tenant with any rent actually received by Landlord under this assignment, but the acceptance of any payment on account of rent from the sublessee as the result of a default by Tenant will not: a. be an attornment by Landlord to the sublessee or by the sublessee to Landlord; b. be a waiver by Landlord of any provision of the Lease; or Page 21 of 42 c. release the Tenant from any liability under the terms, agreements or conditions of the Lease. No payment of rent by the sublessee directly to Landlord, regardless of the circumstance or reasons for that payment, will be deemed an attornment to Landlord by the sublessee in the absence of a specific written agreement signed by Landlord to that effect. 4. In the event the Lease is terminated prior to the expiration of the term of the sublease, Landlord shall have the right, at Landlord's option (which may be exercised in Landlord's sole and absolute discretion), pursuant to notice to the sublessee, to succeed to Tenant's interest as sublessor in the sublease and cause the sublessee to attorn to Landlord on the terms and conditions of the sublease. Within ten (10) days of Landlord's request, the sublessee shall execute and deliver to Landlord an attornment agreement in such form and with such content as Landlord may reasonably require. If Landlord exercises its option, Landlord will so assume the obligations of Tenant, as sublessor, under the sublease from the time of the exercise of the option, but Landlord will not be: a. liable for any rent paid by the sublessee to Tenant more than one month in advance, or for any security deposit paid by the sublessee to Tenant (unless actually received by Landlord); b. liable for any act or omission of the Tenant under the Lease or for any default of Tenant, as sublessor, under the sublease which occurred prior to Landlord's assumption; c. subject to any defenses or offsets that the sublessee may have against Tenant, as sublessor, which arose prior to Landlord's assumption; or d. bound by any changes or modifications made to the sublease without the prior written consent of Landlord. If Landlord does not elect to assume Tenant's interest as sublessor in the sublease, the sublease shall terminate concurrently with the termination of this Lease. 5. The sublease shall not be subject to amendment or modification without the prior written consent of Landlord, which consent shall not be unreasonably withheld. 6. The sublessee shall not be permitted to terminate the sublease without first providing written notice to the Landlord and providing Landlord with a reasonable period of time (of not less than thirty (30) days) to cure Tenant's default, as sublessor, under the Sublease. Such notice shall specify the nature of the default giving rise to the sublessee's right to terminate the Lease. Under no circumstances shall the Landlord be required to cure such default and may do so in its sole and absolute discretion. Page 22 of 42 d. The sale of all or substantially all of Tenant's assets (other than bulk sales in the ordinary course of business), any dissolution of Tenant, or, the transfer, assignment and/or hypothecation of any stock in Tenant, in the aggregate in excess of twenty-five percent (25%) during the Lease Term; excepting therefrom transfers in the aggregate in excess of twenty-five percent (25%) during the Lease Term, but not more than fifty percent (50%) during the Lease Term, where no change in the controlling interests of Tenant occurs as a result thereof, shall be deemed an assignment within the meaning and provisions of this Section 23. e. Notwithstanding anything contained herein to the contrary, Tenant may, without Landlord's consent or participation, transfer this Lease or sublease all or a portion of the Leased Premises to: i. any corporation or other legal entity which directly or indirectly controls or is controlled by or is under common control with Tenant ("AFFILIATE"); ii. any corporation or other legal entity not less than fifty percent (50%) of whose outstanding stock or beneficial interest shall, at the time, be owned directly or indirectly by Tenant ("SUBSIDIARY"); or iii. a corporation or other legal entity in which or with which Tenant is merged or consolidated, in accordance with applicable statutory provisions for merger or consolidation, if any, provided that by operation of law or by effective provisions contained in the instruments of merger or consolidation, the liabilities of the entities participating in such merger or consolidation are assumed by the corporation or other legal entity surviving such merger or created by such consolidation ("SUCCESSOR"). For purposes of this Section 23(e), "CONTROL" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such corporation or other legal entity, whether through the ownership of voting securities or by contract or otherwise. If Tenant assigns its interest in this Lease or subleases all or a portion the Leased Premises to an Affiliate, Subsidiary or Successor, Tenant shall, within ten (10) days after the effective date of such Transfer, provide Landlord with an assignment and assumption agreement or sublease, as applicable, in substance and form reasonably acceptable to Landlord. f. Notwithstanding anything contained in this Section 23 to the contrary, in the event that Tenant requests Landlord's consent to a Transfer, Landlord shall have the following rights: i. The right to terminate this Lease; or ii. In the case of a sublease of less than fifty percent (50%) of the Leased Premises, terminate this Lease as to that part of the Leased Premises requested to be sublet; or iii. In the case of a sublease of greater than fifty percent (50%) of the Leased Premises, terminate this Lease in full or as to that part of the Leased Premises requested to be so sublet, as Landlord shall determine in its sole and absolute discretion, either: Page 23 of 42 1. On the condition that the proposed transferee immediately enter into a direct lease of the Leased Premises with Landlord (or, in the case of a partial sublease, a lease for the portion requested to be so sublet) on the same terms and conditions contained in the requested sublease or such other terms and conditions as Landlord may reasonably designate; or 2. So that Landlord is thereafter free to lease the Leased Premises (or, in the case of a partial sublease, the portion requested to be so sublet) to whomever (including, without limitation, the proposed transferee) it pleases on whatever terms are acceptable to Landlord in its sole and absolute discretion. iv. In the event Landlord elects to so terminate this Lease as set forth above, then: 1. If such termination is conditioned upon the execution of a lease between Landlord and the proposed transferee, Tenant's obligations under this Lease shall not be terminated until such transferee executes a new lease with Landlord, enters into possession and commences the payment of rent; and 2. If Landlord elects simply to terminate this Lease (or, in the case of a partial sublease, terminate this Lease as to the portion requested to be so sublet), the Lease shall so terminate in its entirety (or as to the space requested to be so sublet) fifteen (15) days after Landlord has notified Tenant in writing of such election. 3. Upon such termination, Tenant shall be released from any further obligation under this Lease if it is terminated in its entirety (or shall be released from any further obligation under the Lease with respect to the space requested to be so sublet in the case of requested partial sublease), except that the foregoing release shall not apply to, and Tenant shall not be released from: a. Any obligations under this Lease accruing prior to such termination; b. Any obligations under Section 31 below relating to the surrender of the Leased Premises or such space requested to be so sublet, as applicable; and c. Any obligations which, by their terms, are to survive the expiration or sooner termination of this Lease. 4. In the case of a partial termination of the Lease, Landlord shall equitably adjust, as Landlord shall reasonably determine, the Base Rent and allocate costs and expenses related to common area maintenance and Impositions to the Tenant based upon the value of the Leased Premises not so terminated. Page 24 of 42 5. Upon Landlord's request, Tenant shall execute a separate termination agreement evidencing any termination of this Lease and/or amendment to this Lease evidencing the matters set forth herein. 24. EVENTS OF DEFAULT; TERMINATION. a. Events of Default. Any one or more of the following specified events shall be a "DEFAULT": i. if Tenant shall fail to pay any Base Rent when the same becomes due and payable, and if such failure continues for more than five (5) days after written notice of non-payment of Rent has been given by Landlord to Tenant. If so stated in the notice of default, the notice of default shall also constitute a demand for possession under the forcible entry and detainer statutes; or ii. if Tenant shall fail to pay, when the same becomes due and payable, any Additional Charges or other Rent and such failure shall continue for more than five (5) days after written notice of such non-payment has been given by Landlord to Tenant; or iii. if Tenant shall fail to perform or comply with any other obligation of Tenant under this Lease, and such failure shall continue for more than thirty (30) days after notice thereof has been given by Landlord to Tenant, and Tenant shall not, subject to Unavoidable Delays, within such thirty (30) day period commence with due diligence the curing of such default, or, having so commenced, shall thereafter fail or neglect, for reasons other than Unavoidable Delays, to diligently pursue or complete the curing of such default, such extended period not to exceed one hundred eighty (180) days after notice thereof from Landlord; or iv. if Tenant shall make a general assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts as they become due or shall file a petition in bankruptcy, or shall be adjudicated a bankrupt or insolvent, or shall file a petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation due to its bankrupt or insolvent financial status; v. if, as a result of any proceeding against Tenant, a decree or order of a court or agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to the Tenant or of or relating to all or substantially all of its property, or for the winding-up or liquidation of its affairs or for the supervision of the business or affairs of Tenant, shall have been entered, and such decree or order shall have remained in force undischarged or unstayed for a period of more than sixty (60) days; vi. Tenant shall have sublet the Leased Premises or assigned its interest in this Lease in violation of the provisions contained in Section 23; vii. Tenant shall have abandoned the Leased Premises or left the Leased Premises substantially vacant; Page 25 of 42 viii. Tenant shall have failed to deliver documents required of it pursuant to Sections 25(a) or (b) within the time periods specified therein; ix. Tenant shall have defaulted beyond applicable cure periods under any loan, security agreement, security instrument, promissory note, or other obligation whatsoever under which Tenant is required to perform in any manner whatsoever; or x. Chronic delinquency by Tenant in the payment of any Rent. For purposes of this Lease, "CHRONIC DELINQUENCY" shall mean failure by Tenant to pay within five (5) days of the due date any Rent for any two (2) months (consecutive or non- consecutive) during any Lease Year. This section shall in no way limit, nor be construed as a waiver of the rights and remedies of Landlord provided hereunder or by law in the event of even one (1) instance of delinquency in the payment of Rent by Tenant. In the event of chronic delinquency, at Landlord's option, Landlord shall have the right, in addition to all other rights under this Lease and at law, to require that Tenant pay all Rent on a quarterly basis, in advance, and make all Rent payments via electronic transfer of funds. ' b. Remedies. i. In the event of any default and breach by Tenant of any of its obligations under this Lease and notwithstanding the vacation or abandonment of the Leased Premises by Tenant, this Lease shall continue in effect so long as Landlord does not expressly terminate Tenant's right to possession in any of the manners specified in this paragraph and Landlord may, at Landlord's option and without limiting Landlord in the exercise of any other rights or remedies which it may have by reason of such default and breach, exercise all of its rights and remedies hereunder, including, without limitation: 1. The right to declare the Lease Term ended and to reenter the Leased Premises and take possession thereof and remove all persons therefrom, and Tenant shall have no further claim in or to the Leased Premises or under this Lease; or 2. The right without declaring this Lease ended to reenter the Leased Premises, take possession thereof, remove all persons therefrom and occupy or lease the whole or any part thereof for and on account of Tenant and upon such terms and conditions and for such rent as Landlord may deem proper and to collect such rent or any other rent that may hereafter become payable and apply the same as provided in Section 24(b)(ii); or 3. The right, even though Landlord may have relet the Leased Premises or brought an action to collect Rent and other charges without terminating this Lease, to thereafter elect to terminate this Lease and all of the rights of Tenant in or to the Leased Premises; or 4. The right, without terminating this Lease, to bring an action or actions to collect Rent and other charges hereunder which are from time to time past due and unpaid or to enforce any other provisions of this Lease Page 26 of 42 imposing obligations on Tenant, it being understood that the bringing of any such action or actions shall not terminate this Lease unless written notice of termination is given. ii. Should Landlord relet the Leased Premises under the provisions of Section 24(b)(i)(2), Landlord may execute any lease either in its own name or in the name of Tenant, but Tenant hereunder shall have no right or authority whatever to collect any rent from the new tenant. The proceeds of any such reletting shall first be applied to the payment of the costs and expenses of reletting the Leased Premises, including without limitation, reasonable brokerage commissions and alterations and repairs which Landlord, in its sole and absolute discretion, deems necessary and advisable and to the payment of reasonable attorneys' fees and costs incurred by Landlord in connection with Tenant's default, the retaking of the Leased Premises and such reletting and, second, to the payment of any indebtedness, other than Rent, due hereunder, including, without limitation, storage charges owing from Tenant to Landlord. When such costs and expenses of reletting have been paid, and if there is no such indebtedness or such indebtedness has been paid, Tenant shall be entitled to a credit for the net amount of rental received from such reletting each month during the unexpired balance of the Lease Term, and Tenant shall pay Landlord monthly on the first day of each month as specified herein such sums as may be required to make up the rentals provided for in this Lease. Nothing contained herein shall be construed as obligating Landlord to relet the whole or any part of the Leased Premises. iii. Should Landlord elect to terminate this Lease under the provisions of Section 24(b)(i)(1) or (3) above, Landlord shall be entitled to recover immediately from Tenant (in addition to any other amounts recoverable by Landlord as provided by law), the following amounts: 1. The worth at the time of award of the unpaid rent which had been earned at the time of termination; 2. The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; 3. The worth at the time of award of the amount by which the unpaid rent for the balance of the Term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided; and 4. Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under the Lease or which in the ordinary course of things would be likely to result therefrom. For purposes of computing "the worth at the time of the award" of the amount specified in Section 24(b)(iii)(3) above, such amount shall be discounted at the discount rate of the Federal Reserve Bank of San Francisco at the time of award. For purposes of computing "the worth at the time of the award" under Page 27 of 42 Section 24(b)(iii)(1) or (2) above, an interest rate of ten percent (10%) per annum shall be utilized. iv. If Landlord shall elect to reenter the Leased Premises as provided above, Landlord shall not be liable for damages by reason of any reentry. Tenant hereby waives all claims and demands against Landlord for damages or loss arising out of or in connection with any reentering and taking possession of the Leased Premises and waives all claims for damages or loss arising out of or in connection with any destruction of or damage to the Leased Premises, or for any loss of property belonging to Tenant or to any other person, firm or corporation which may be in or upon the Leased Premises at the time of such reentry. v. Landlord shall not be deemed to have terminated this Lease, Tenant's right to possession of the Leased Premises or the liability of Tenant to pay Rent thereafter to accrue or its liability for damages under any of the provisions hereof by any reentry hereunder or by any action in unlawful detainer or otherwise to obtain possession of the Leased Premises, unless Landlord shall notify Tenant in writing that Landlord has so elected to terminate this Lease. Tenant agrees that the service by Landlord of any notice pursuant to the unlawful detainer statutes or comparable statutes of the state or locality in which the Leased Premises are located and the surrender of possession pursuant to such notice shall not (unless Landlord elects to the contrary at the time of or at any time subsequent to the service of such notice and such election shall be evidenced by a written notice to Tenant) be deemed to be a termination of this Lease or of Tenant's obligations hereunder. No reentry or reletting under this paragraph shall be deemed to constitute a surrender or termination of this Lease, or of any of the rights, options, elections, powers and remedies reserved by Landlord hereunder, or a release of Tenant from any of its obligations hereunder, unless Landlord shall specifically notify Tenant, in writing, to that effect. No such reletting shall preclude Landlord from thereafter at any time terminating this Lease as herein provided. vi. All fixtures, furnishings, goods, equipment, chattels or other personal property of Tenant remaining on the Leased Premises at the time that Landlord takes possession thereof may at Landlord's election be stored at Tenant's expense or sold or otherwise disposed of by Landlord in any manner permitted by applicable law. vii. In the event of the exercise by Landlord of any one or more of its rights and remedies hereunder, Tenant hereby expressly waives any and all rights of redemption, if any, granted by or under any present or future laws. c. Cumulative Remedies. Each right, option, power, election and remedy of Landlord provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise shall be, cumulative and concurrent and shall be in addition to every other right, power or remedy provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by Landlord of any one or more of the rights, powers or remedies provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise shall not prejudice, preclude or impair the simultaneous or later exercise by Landlord of any or all such other rights, options, powers, elections or remedies Landlord may have upon a Page 28 of 42 breach and default under this Lease and shall not be deemed to be a waiver of Landlord's rights or remedies thereupon or to be a release of Tenant from Tenant's obligations thereon unless such waiver or release is expressed in writing and signed by Landlord. d. Recovery of Costs and Expenses. If any action, whether at law or equity, is instituted by either party for default by the other under this Lease, the prevailing party shall be awarded all Costs and Expenses incident thereto. e. Limitation of Landlord Liability. Any claim, demand or right of any kind by Tenant which is based upon or arises in connection with this Lease shall be barred unless Tenant commences an action thereon within twelve (12) months after the date that Tenant discovers or, in the exercise of reasonable diligence, should have discovered, the act, omission, event or default upon which the claim, demand or right in question arises, has occurred. In consideration of the benefits accruing hereunder, Tenant and all successors and assigns covenant and agree that, in the event of any actual or alleged breach or default hereunder by Landlord: i. the sole and exclusive remedy and source of recovery for any judgment or award shall be against Landlord's interest in the Leased Premises; ii. no limited partner, member, shareholder or other owner of Landlord (excepting general partners) (collectively, "LANDLORD OWNER") shall be sued or named as a party in any suit or action (except as may be necessary to secure jurisdiction of the partnership); iii. no service of process shall be made against any Landlord Owner (except as may be necessary to secure jurisdiction of Landlord); iv. no Landlord Owner shall be required to answer or otherwise plead to any service of process; v. no judgment will be taken against any Landlord Owner; vi. any judgment taken against any Landlord Owner may be vacated and set aside at any time without hearing; vii. no writ of execution will ever be levied against the assets of any Landlord Owner; viii. in no event shall Landlord be liable to Tenant for punitive, special, indirect or consequential damages; and ix. these covenants and agreements are enforceable both by Landlord and also by any Landlord Owner. Tenant agrees that each of the foregoing covenants and agreements shall be applicable to any covenant or agreement either expressly contained in this Lease or imposed by statute or at common law. Page 29 of 42 25. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS. a. Estoppel Certificate by Tenant. Tenant, any sublessee or assignee or all of any portion of Tenant's interest under this Lease, will execute, acknowledge and deliver to Landlord, within fifteen (15) days of Landlord's written request, a certificate certifying: i. this Lease is unmodified and in full force and effect (or, if there have been modifications, that the Lease is in full force and effect, as modified, and stating the modifications); ii. the dates, if any, to which Rent, Additional Charges and other sums payable hereunder have been paid; iii. no notice has been received by Tenant of any Default which has not been cured, except as otherwise specified in such certificate, or, if there is an uncured Default, specifying the nature of such; iv. Landlord is not in default hereunder and no event which, with the passing of time, giving of notice, or both, would constitute a default by Landlord hereunder; and v. certifying such other information about the status of the Lease and the Leased Premises as may be required by Landlord. A failure to deliver an estoppel certificate within fifteen (15) days after delivery of a request therefor shall be a conclusive admission that, as of the date of the request for such statement: (w) this Lease is unmodified except as may be represented by Landlord in said request and is in full force and effect, (x) there are no uncured defaults in Landlord's performance, (y) no rent has been paid more than thirty (30) days in advance; and (z) the information regarding the status of the Lease, as represented by Landlord in said request, is true and correct. Any such certificate may be relied upon by any permitted prospective transferee, deed of trust beneficiary or mortgagee of Landlord's interest under this Lease. b. Tenant's Financial Statements. At any time during the Lease Term, Tenant shall, upon ten (10) days' prior written notice from Landlord, provide Tenant's most recent financial statement and financial statements covering the twenty-four (24) month period prior to the date of such most recent financial statement to any lender of Landlord, any potential lender of Landlord or potential buyer of the Leased Premises. Such statements shall be prepared in accordance with generally accepted accounting principles and shall be certified by Tenant's chief financial officer as true and correct in all material respects or, if such is the normal practice of Tenant, shall be audited by an independent certified public accountant. Notwithstanding the foregoing, Tenant shall not be obligated to provide Landlord with financial information as set forth in this Section 25(b) for so long as Tenant is required to, and does, file such information with the Securities and Exchange Commission. c. Estoppel Certificate by Landlord. Landlord will execute, acknowledge and deliver to Tenant, within fifteen (15) days of Tenant's written request, a certificate certifying: i. that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect as modified, and stating the modifications); Page 30 of 42 ii. the dates, if any, to which Rent, Additional Charges and other sums payable hereunder have been paid; and iii. whether or not, to the knowledge of Landlord, there then exists any Default under this Lease (and if so, specifying the same). A failure to deliver an estoppel certificate within fifteen (15) days after delivery of a request therefor shall be a conclusive admission that, as of the date of the request for such statement: (w) this Lease is unmodified except as may be represented by Landlord in said request and is in full force and effect, (x) there are no uncured defaults in Tenant's performance, (y) no rent has been paid more than thirty (30) days in advance; and (z) the information regarding the status of the Lease, as represented by Tenant in said request, is true and correct. Any such certificate may be relied upon by any permitted prospective assignee, sublessee or other transferee of all or part of Tenant's interest under this Lease. 26. SUBORDINATION AND ATTORNMENT. This Lease, at Landlord's option, shall be subordinate to any mortgage or deed of trust which may be placed against the Leased Premises and to any and all advances made or to be made pursuant to any such mortgage or deed of trust, and to all renewals, replacements and extensions of any such mortgage or deed of trust; provided that each such subordination shall be on the condition that the mortgagee or deed of trust beneficiary and trustee shall execute and deliver to Tenant an agreement ("SNDA") to the effect that, so long as a Default caused by Tenant is not occurring hereunder, such mortgagee, beneficiary or trustee will recognize this Lease and not disturb or otherwise interfere with Tenant's leasehold and other rights under this Lease. The form and substance of such document shall be in form and content as may reasonably be required by Landlord's lender or potential lender, as the case may be. Tenant shall execute and deliver the SNDA within fifteen (15) days after written request by Landlord. 27. OPTIONS TO EXTEND. Subject to the provisions of Section 24(a)(ix) above and provided that no Default shall have occurred and be continuing at the time this Option is exercised, Landlord hereby grants to Tenant three (3) successive options (collectively, the "OPTIONS", and each an "OPTION") to extend the Lease Term of this Lease for three (3) successive periods of five (5) consecutive Lease Years each. Tenant may exercise each Option only by giving Landlord written notice thereof not less than twelve (12) months, no more than eighteen (18) months prior to the expiration of the then running initial or extended Lease Term, as the case may be. The covenants, terms and conditions between Landlord and Tenant during each such extended term shall be the same as contained in this Lease for the initial Lease Term, except that Tenant shall have no further right to extend the Lease Term, and the Base Rent payable during each such extended term for which Tenant exercises this Option shall be adjusted for the first Lease Year of the applicable Option to equal the greater of: a. one hundred and two percent (102%) of the Base Rent due for the preceding Lease Year; and b. Fair Market Rental of the Leased Premises as of the beginning of the extended term ("OPTION DATE") as hereinafter set forth: i. Between the three hundred sixty-fifth (365th) and one hundred eightieth (180th) day prior to the Option Date, Landlord and Tenant shall attempt to agree by a written and signed addendum to this Lease on the Fair Market Rental to be payable during such extended term. If Landlord and Tenant are unable to agree Page 31 of 42 on such Fair Market Rental or fail to execute the addendum by the one hundred eightieth (180th) day preceding the Option Date, then, within thirty (30) days thereafter Landlord and Tenant shall each select a Qualified Appraiser and use the appraisal mechanism set forth in Section 28 to determine the Fair Market Rental. ii. If for any reason the Fair Market Rental has not been determined as of the Option Date, Tenant shall continue to pay Base Rent to Landlord in an amount of Landlord's lowest proposal during the negotiations set forth in Section 27(b)(i) above, and, when the Fair Market Rental for the extended term is determined, Tenant within thirty (30) days following Landlord's notice thereof, shall pay to Landlord the amount of any increase for each month during which Tenant paid a lower monthly installment of Base Rent, or, if Tenant has over paid Base Rent, Tenant shall receive a credit for such amounts against Base Rent next coming due. c. Further, the Base Rent for each Lease Year during an Option after the first Lease Year during said Option shall be increased by two percent (2%) over the preceding Lease Year. d. The exercise of all preceding Option(s) is a condition precedent to the exercise of any subsequent Option(s). e. Any references in this Lease to the Lease Term shall mean the initial Lease Term as extended pursuant to this Section. 28. APPRAISAL. Any appraisal of the Fair Market Rental of the Leased Premises required or permitted hereunder shall be made by either Landlord or Tenant selecting and notifying the other party hereto of the name and address of an appraiser who is duly licensed in the state where the Leased Premises are located, who is a member of the American Institute of Real Estate Appraisers ("M.A.I.") and who is knowledgeable concerning the sale and rental values of properties similar to and located in the same State and County as the Leased Premises (a "QUALIFIED APPRAISER"). Within fifteen (15) days after being notified of the name and address of a Qualified Appraiser, such other party hereto shall select and notify Landlord or Tenant (as the case may be) of the name and address of a second Qualified Appraiser. Within ten (10) days after the expiration of the aforesaid fifteen (15) day period, the two Qualified Appraisers shall select and notify Landlord and Tenant of the name and address of a third Qualified Appraiser ("THIRD APPRAISER"). The first two Qualified Appraisers selected by Landlord and Tenant each shall make an independent and separate appraisal ("APPRAISAL") of the Fair Market Rental of the Leased Premises, and shall furnish copies of each such Appraisal to each other, to the Third Appraiser, and to Landlord and Tenant within thirty (30) days after the expiration of the aforesaid fifteen (15) day period. Within fifteen (15) days after the expiration of the aforesaid thirty (30) day period, the Third Appraiser will notify Landlord and Tenant of which Appraisal the Third Appraiser has selected as the closer to the Fair Market Rental of the Leased Premises. For the purposes hereof, the term "FAIR MARKET RENTAL" means the rental during the applicable term that a willing tenant would pay a willing landlord, neither of whom is compelled to rent. In no event shall the Fair Market Rental during the extended term under Section 27 be less than one hundred two percent (102%) of the Base Rent payable by Tenant for the Lease Year immediately prior to the Option Date for such extended term. If either Landlord or Tenant fails to appoint its Qualified Appraiser and send notice thereof to the other party as required herein, the one appointed Qualified Page 32 of 42 Appraiser promptly shall appoint a second Qualified Appraiser and the Third Appraiser shall be selected as set forth hereinabove. If Landlord and Tenant each shall appoint a Qualified Appraiser, but such two Qualified Appraisers are unable to agree within the required time upon the selection of a Third Appraiser, the Third Appraiser shall be selected by the mutual agreement of the Landlord and Tenant, if the Landlord and Tenant are unable to so agree within ten (10) days, the Third Appraiser shall be selected by the then presiding civil judge of the Superior Court of Arizona in and for Maricopa County. The determination of the Fair Market Rental in accordance with the foregoing procedures shall be final and binding upon Landlord and Tenant and enforceable by any court of competent jurisdiction. All appraisal fees and expenses of the Qualified Appraiser selected by Landlord shall be paid by Landlord, of the Qualified Appraiser selected by Tenant shall be paid by Tenant, and of the Third Appraiser shall be paid equally by Landlord and Tenant. Notwithstanding the foregoing, if the Fair Market Rental as determined by the Third Appraiser pursuant to the foregoing procedures is greater than the lowest proposal of Landlord during the negotiation period, the Tenant shall pay one hundred percent (100%) of the fees and expenses of both Qualified Appraisers and the Third Appraiser. However, if the Fair Market Rental as determined by the Third Appraiser pursuant to the foregoing procedures is lower than the highest proposal of Tenant during the negotiation period, the Landlord shall pay one hundred percent (100%) of the fees and expenses of both Qualified Appraisers and the Third Appraiser. If the Fair Market Rental as determined by the Third Appraiser pursuant to the foregoing procedures is between Landlord's lowest proposal during the negotiation period and Tenant's highest proposal during the negotiation period, each of the parties shall bear the fees and expenses of their respectively appointed Qualified Appraiser and shall split the fees and expenses of the Third Appraiser. 29. RIGHT OF ENTRY. Provided that Landlord has given Tenant at least twenty-four (24) hours prior notice (except in the event of an emergency in which case no advance notice is required), and subject to reasonable security precautions of Tenant, Landlord may, at all reasonable times and during usual business hours, enter upon the Leased Premises for the purpose of inspecting, repairing or preserving the same, or to show the Leased Premises to prospective purchasers, and in addition may, at any time within the last eighteen (18) months of the then running Lease Term show the Leased Premises to prospective tenants. Any entry into the Leased Premises obtained by Landlord in accordance with this Section 29 shall not be deemed to be a forcible or unlawful entry into, or a detainer of, the Leased Premises, or an eviction, actual or constructive, of Tenant from the Leased Premises. Tenant hereby waives any claims for damages for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Leased Premises, and any other loss occasioned thereby. 30. NOTICES. All notices and other communications to be given hereunder by Landlord or Tenant shall be in writing and shall be deemed to have been given upon (i) personal delivery when personally delivered; (ii) upon the earlier of receipt or the third Business Day following the date of deposit in the mail (at the addresses specified below, whether or not received by the person to whose attention notice is directed at such address) after having been mailed by first class registered or certified mail, return receipt requested, postage prepaid; (iii) the next business day when sent via nationally recognized overnight courier; or (iv) upon receipt of confirmation of successful transmission when sent by facsimile transmittal (with a copy sent via First Class mail) as follows: Page 33 of 42 Landlord: Tenant: Phoenix Industrial Investment Partners, L.P. SpeedFam - IPEC, Inc. 19800 Glen Una Drive 305 North 54th St. Saratoga, California 95070 Chandler, AZ 85226 Attn: Kenneth Levy Attn: J. Michael Dodson Facsimile: 408 ###-###-#### Facsimile: (480) 785-4116 With a copy to: With a copy to: Frank H. Maiorana, Esquire Robert C. Bates, Esq. Silicon Valley Law Group Snell & Wilmer, L.L.P. 152 North Third Street, Suite 900 One Arizona Center San Jose, California 95112 Phoenix, Arizona 85004-0001 Facsimile: (408) 286-1430 Facsimile: (602) 382-6070

The parties hereto may change the address for delivery by providing ten (10) days written notice to the other parties in the manner set forth herein. The copies of notices sent to Frank H. Maiorana and Robert C. Bates are informational and are not required in order for the notices given to Landlord and Tenant to be effective. 31. SURRENDER. Upon the expiration of the Lease Term, or upon the earlier termination of this Lease, Tenant shall vacate and surrender the Leased Premises to Landlord in first class condition and repair and in full compliance with the maintenance, repair and replacement provisions of this Lease. In any event, Tenant shall cause the following to be done prior to the expiration or the sooner termination of this Lease: a. all interior walls shall be painted or cleaned so that they appear freshly painted; b. all non-carpeted floor coverings shall be cleaned and waxed to the extent they are in first class condition; c. to the extent non-carpeted floor coverings are not in first class condition, said floor coverings shall be repaired or replaced, as necessary; d. all carpets not in first class condition shall be cleaned and shampooed to the extent necessary to place them in first class condition as reasonably determined by Landlord; e. to the extent cleaning and shampooing does not place the carpets in first class condition as reasonably determined by Landlord, such carpets shall be replaced, to the extent necessary, with neutral carpets of equal or better quality; f. all broken, marred, stained or nonconforming acoustical ceiling tiles shall be replaced; and g. all windows shall be washed. If Landlord so requests, Tenant shall, prior to the expiration or sooner termination of this Lease, remove any Alterations which Tenant is required to remove pursuant to Section 11 and repair all damage caused by such removal. Page 34 of 42 If the Leased Premises are not so surrendered upon the expiration or sooner termination of this Lease, Tenant shall be liable to Landlord for all costs incurred by Landlord in conforming the Leased Premises to the required condition, plus interest on all such costs at the Default Rate. Tenant shall indemnify Landlord against loss or liability to the extent resulting from delay by Tenant in so surrendering the Leased Premises, including, without limitation, any claims made by any succeeding tenant to the extent related to such delay. 32. NO BROKER. Landlord and Tenant each represents to the other that there are no broker's commissions in connection with this Lease and each party shall indemnify, defend, protect and hold the other harmless from and against any and all Costs and Expenses related to a claim of commission owing by and through the applicable party. 33. WAIVER. Any waiver by Landlord of any Default, breach or failure by Tenant shall not constitute a waiver of any other Default, breach or failure by Tenant hereunder. The subsequent acceptance of Base Rent, Rent or Additional Charges hereunder by Landlord shall not be deemed to be a waiver of any preceding Default or breach by Tenant of this Lease, other than a failure of Tenant to pay the particular Base Rent, Rent or Additional Charges so accepted. No covenant, term or condition of this Lease shall be deemed to have been waived by Landlord unless such waiver be in writing by Landlord. 34. NO PARTNERSHIP. The relationship of the parties hereto as solely that of landlord and tenant, and under no circumstances shall the parties hereto be considered as partners, joint venturers or lender and borrower. Tenant represents, warrants and acknowledges that the transaction by which the Landlord acquired title to the Leased Premises and the subsequent lease of the Leased Premises hereunder are separate and distinct transactions and the Tenant has no rights of first refusal or options to purchase the Leased Premises. 35. PARTIAL INVALIDITY. The invalidity or unenforceability of any covenant, term or condition of this Lease shall not affect any other covenant, term or condition of this Lease. 36. RECORDING. Neither Landlord nor Tenant shall record this Lease without the prior written consent of the other, which consent may be withheld in the other party's sole and absolute discretion. Either party, however, may record a memorandum hereof and, in the event of a request to execute such memorandum by one party, the other party shall execute and deliver to the requesting party within ten (10) days after the request therefor, such memorandum to be in a form reasonably acceptable to both parties. If either party requests a memorandum of this Lease be executed and recorded, concurrently with the execution and delivery of said memorandum, Tenant shall execute and deliver to Landlord a Quitclaim Deed in such form and content as Landlord shall require. Such Quitclaim Deed shall be held by Landlord unrecorded unless and until this Lease has expired or been terminated. Tenant hereby irrevocably authorizes and directs Landlord to record said Quitclaim Deed upon the expiration or earlier termination of this Lease; provided, however, Landlord shall provide Tenant with notice of Landlord's intent to record the Quitclaim Deed at least five (5) business days prior to such recording. 37. HAZARDOUS MATERIALS. Landlord and Tenant agree as follows with respect to the existence or use of Hazardous Materials in, on or about the Leased Premises: a. Except as otherwise permitted pursuant to Section 37(c) below, any handling, transportation, storage, treatment, disposal or use of Hazardous Materials by Tenant and Tenant's agents, employees, contractors, or invitees (collectively "AGENTS") after the Page 35 of 42 Effective Date in or about the Leased Premises is strictly prohibited. Tenant shall indemnify, defend upon demand with counsel reasonably acceptable to Landlord and hold harmless Landlord from and against any liabilities, losses, claims, damages, lost profits, consequential damages, interest, penalties, fines, monetary sanctions, attorneys' fees, experts' fees, court costs, remediation costs, investigation costs, and other expenses which result from or arise in any manner whatsoever out of the use, storage, treatment, transportation, release, or disposal of any Hazardous Materials on or about the Leased Premises caused or permitted by Tenant or Tenant's Agents. b. If the presence of Hazardous Materials in, on or about the Leased Premises caused or permitted by Tenant or Tenant's Agents results in contamination or deterioration of water or soil resulting in a level of contamination greater than the levels established as acceptable by any governmental agency having jurisdiction over such contamination, then Tenant shall promptly take any and all action necessary to investigate and remediate such contamination if required by Law or as a condition to the issuance or continuing effectiveness of any governmental approval which relates to the use of the Leased Premises or any part thereof. c. Landlord acknowledges that Tenant uses numerous chemicals classified as Hazardous Materials in the operation of its business and that Tenant shall be permitted to do so provided that Tenant does so in a manner consistent with the requirements of this Section 37(c) and provided that Tenant discloses the use of such materials to Landlord as required by Section 37(k). In addition, Tenant may use reasonable quantities of household chemicals such as adhesives, lubricants and cleaning fluids in order to conduct its business at the Leased Premises. Tenant agrees that during its use and occupancy of the Leased Premises it will: (1) not (A) permit Hazardous Materials to be present on or about the Leased Premises except in a manner and quantity necessary for the ordinary performance of Tenant's business or (B) release, discharge or dispose of any Hazardous Materials on, in, at, under, or emanating from, the Leased Premises; (2) comply with all Hazardous Materials Laws relating to the Leased Premises and the use of Hazardous Materials on or about the Leased Premises and not engage in or permit others to engage in any activity at the Leased Premises in violation of any Hazardous Materials Laws; and (3) immediately notify Landlord of (A) any inquiry, test, investigation or enforcement proceeding by any governmental agency or authority against Tenant, Landlord or the Leased Premises relating to any Hazardous Materials or under any Hazardous Materials Laws; (B) any contamination of the Leased Premises by Hazardous Materials which constitutes a violation of any Hazardous Materials Laws; or (C) the occurrence of any event or existence of any condition that would cause a breach of any of the covenants set forth in this Section 37. d. Upon reasonable notice to Tenant, Landlord may inspect the Leased Premises and surrounding areas for the purpose of determining whether there exists on or about the Leased Premises any Hazardous Material or other condition or activity that is in violation of the requirements of this Lease or of any Hazardous Materials Laws. Such inspections may include, but are not limited to, entering the Leased Premises or adjacent property with drill rigs or other machinery for the purpose of obtaining laboratory samples. Landlord shall not be limited in the number of such inspections during the Lease Term. In the event (i) such inspections reveal the presence of any such Hazardous Material or other condition or activity in violation of the requirements of this Lease or of any Hazardous Materials Laws, or (ii) Tenant or its Agents contribute or knowingly consent to the presence of any Hazardous Materials in, on, under, through or about the Leased Page 36 of 42 Premises or exacerbate the condition of or the conditions caused by any Hazardous Materials in, on, under, through or about the Leased Premises, Tenant shall reimburse Landlord for the cost of such inspections within ten (10) days of receipt of a written statement therefor. Tenant will supply to Landlord such historical and operational information regarding the Leased Premises and surrounding areas as may be reasonably requested to facilitate any such inspection and will make available for meetings appropriate personnel having knowledge of such matters. Tenant agrees to give Landlord at least sixty (60) days prior notice of its intention to vacate the Leased Premises so that Landlord will have an opportunity to perform such an inspection prior to such vacation. The right granted to Landlord herein to perform inspections shall not create a duty on Landlord's part to inspect the Leased Premises, or liability on the part of Landlord for Tenant's use, storage, manufacture, treatment or disposal of Hazardous Materials, it being understood that Tenant shall be solely responsible for all liability in connection with the use, storage, manufacture, treatment or disposal of Hazardous Materials by Tenant or Tenant's Agents. e. 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 government. The term "HAZARDOUS MATERIALS" includes, without limitation, petroleum products, asbestos, PCB's, and any material or substance which is (i) listed under, or defined as hazardous or extremely hazardous pursuant to The Arizona Environmental Quality Act of 1986, A.R.S. Section 49-101, et. seq., (ii) deemed as a "hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C. 6903) ("RCRA"), (iii) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq. (42 U.S.C. 9601) ("CERCLA") or any regulations promulgated under CERCLA; (iv) any substance now or hereafter regulated by the Toxic Substances Control Act, as amended ("TSCA") (15 U.S.C. Section 2601 et seq.) or any regulations promulgated under TSCA; (v) petroleum, petroleum by-products, gasoline, diesel fuel, or other petroleum hydrocarbons; (vi) asbestos and asbestos-containing material, in any form, whether friable or non-friable; (vii) polychlorinated biphenyls; (viii) lead and lead- containing materials; or (ix) any additional substance, material or waste. As used herein, the term "HAZARDOUS MATERIAL LAW(S)" shall mean any statute, law, ordinance, or regulation of any governmental body or agency (including the U.S. Environmental Protection Agency, the Arizona Department of Environmental Quality which regulates the use, storage, release or disposal of any Hazardous Materials. f. If Tenant's use of Hazardous Materials on or about the Leased Premises results in a release, discharge or disposal of Hazardous Materials on, in, at, under, or emanating from, the Leased Premises, Tenant agrees to investigate, clean up, remove or remediate such Hazardous Materials in full compliance with: (i) the requirements of (A) all Hazardous Materials Laws and (B) any governmental agency or authority responsible for the enforcement of any Hazardous Materials Laws; and (ii) any additional requirements of Landlord that are reasonably necessary to protect the value of the Leased Premises. g. Landlord shall have the right, but not the obligation, prior or subsequent to Tenant's Default, without in any way limiting Landlord's other rights and remedies under this Lease, to enter upon the Leased Premises, or to take such other actions as it deems reasonably necessary or advisable, to investigate, clean up, remove or remediate any Hazardous Materials or contamination by Hazardous Materials present on, in, at, under, Page 37 of 42 or emanating from, the Leased Premises in violation of Tenant's obligations under this Lease or under any Hazardous Materials Laws. Notwithstanding any other provision of this Lease, Landlord shall also have the right, at its election, in its own name or as Tenant's agent, to negotiate, defend, approve and appeal, at Tenant's expense, any action taken or order issued by any governmental agency or authority with regard to any such Hazardous Materials or contamination by Hazardous Materials. The reasonable Costs and Expenses paid or incurred by Landlord in the exercise of the rights set forth in this Section 37 shall be payable by Tenant upon demand. h. Notwithstanding any provision contained herein to the contrary, Tenant shall surrender the Leased Premises to Landlord upon the expiration or earlier termination of this Lease free of debris, waste or Hazardous Materials placed on, about or near the Leased Premises by Tenant or Tenant's Agents, and, with respect to any contamination or other conditions resulting from the actions or inaction of Tenant or Tenant's Agents, in a condition which complies with all Hazardous Materials Laws and any additional requirements of Landlord that are reasonably necessary to protect the value of the Leased Premises, including, without limitation, the obtaining of any closure permits or other governmental permits or approvals related to Tenant's use of Hazardous Materials in or about the Leased Premises. If it is determined by Landlord that the condition of all or any portion of the Leased Premises is not in compliance with the provisions of this Lease with respect to Hazardous Materials, including, without limitation, all Hazardous Materials Laws, at the expiration or earlier termination of this Lease, then at Landlord's sole option, Landlord may require Tenant to hold over possession of the Leased Premises until Tenant can surrender the Leased Premises to Landlord in the condition in which the Leased Premises existed on the Effective Date and in any case prior to the appearance of such Hazardous Materials, including, without limitation, the conduct or performance of any closures as required by any Hazardous Materials Laws. Any such holdover by Tenant will be with Landlord's consent, will not be terminable by Tenant in any event or circumstance and will otherwise be subject to the provisions of Section 38 of this Lease. i. Tenant agrees to indemnify and hold harmless Landlord from and against any and all claims, losses (including, without limitation, loss in value of the Leased Premises), liabilities and expenses (including attorneys' fees) sustained by Landlord attributable to (i) any Hazardous Materials placed on or about the Leased Premises by Tenant or Tenant's Agents, or (ii) Tenant's breach of any provision of this Section 37. j. The obligations of Tenant under this Section 37 shall survive the expiration or earlier termination of the Lease Term. The rights and obligations of Landlord and Tenant with respect to issues relating to Hazardous Materials are exclusively established by this Section 37. In the event of any inconsistency between any other part of this Lease and this Section 37, the terms of this Section 37 shall control. k. Prior to the execution of this Lease, Tenant has completed, executed and delivered to Landlord a Hazardous Materials Disclosure Certificate ("CERTIFICATE") in form and content attached hereto as Exhibit C. Tenant covenants, represents and warrants to Landlord that the information in the Certificate is true and correct and accurately describes the Hazardous Materials that will be manufactured, treated, used or stored on or about the Leased Premises by Tenant or Tenant's Agents. Tenant shall (a) on each six (6) month anniversary of the commencement date of this Lease; and (b) at such other times as Landlord reasonably requests, complete, execute and deliver to Landlord an updated Hazardous Materials Disclosure Certificate (each, an "UPDATED CERTIFICATE") describing Page 38 of 42 Tenant's then current and known proposed future uses of Hazardous Materials on or about the Leased Premises, which Updated Certificates shall be in the same format as that which is set forth in Exhibit C or in such updated format as Landlord may reasonably require from time to time. Landlord shall have the right to approve or disapprove such new or additional Hazardous Materials in its sole and absolute discretion; provided, however, that this requirement shall not apply to Hazardous Materials manufactured, treated, used or stored by Tenant in connection with Tenant's business, which Hazardous Materials may be used in accordance with this Section 37. Tenant shall make no use of Hazardous Materials on or about the Leased Premises except as described in the Certificate, an Updated Certificate or as otherwise approved by Landlord in writing in accordance with this Section 37; provided, however, that Landlord shall have no right to approve or disapprove of Hazardous Materials manufactured, treated, used or stored by Tenant in connection with Tenant's business, which Hazardous Materials may be used in accordance with this Section 37; provided further, however, that Tenant shall not be required to provide Landlord prior notice of a new or different chemical which is classified as a Hazardous Material which is used in connection with Tenant's business. The Certificate and each Updated Certificate shall be completed and signed by Tenant's environmental risk manager. 38. HOLDING OVER. No holding over by Tenant of the Leased Premises after the expiration of the Lease Term shall operate to extend the Lease Term or this Lease, and Tenant shall indemnify, defend and hold Landlord harmless from all Costs and Expenses and claims for damages by any other tenant to whom Landlord may have leased to Leased Premises effective upon the expiration of the Lease Term or termination of this Lease. Any such holding over shall be deemed a tenancy at sufferance, subject to all conditions, provisions and obligations of this Lease insofar as the same are applicable to a tenancy at sufferance, except that the Base Rent shall be an amount equal to one hundred ten percent (110%) of the greater of (i) Base Rent that was applicable at the expiration of the Lease; and (ii) the fair market rental value as reasonably determined by Landlord. 39. AUTHORITY. The person or persons executing this Lease on behalf of Landlord and Tenant each hereby represent and warrant to the other party (Landlord or Tenant, as the case may be) that authority for the same was duly given as evidenced by the certified copy of resolution(s) of their respective Boards of Directors. 40. PARKING. Tenant, its officers, directors, employees, agents, contractors, vendors, licensees and other authorized persons, shall be entitled to use throughout the Lease Term all vehicular parking spaces, free of charge on and about the Leased Premises. 41. QUIET TITLE. Provided that Tenant is not in Default under this Lease, Landlord covenants that, subject to the terms and conditions of this Lease, from and after the commencement of the Lease Term, Tenant shall not be disturbed or hindered in Tenant's enjoyment of the Leased Premises and that Landlord shall not interfere with Tenant's business activities involving the Leased Premises. 42. BENEFIT. The covenants, terms and conditions of this Lease shall inure to the benefit of and be binding upon the parties hereto and, subject to Section 23, their respective successors and assigns. 43. SIGNAGE. Tenant shall be permitted to place such signage on and about the Leased Premises as are permitted by applicable law; provided, however, prior to the expiration or Page 39 of 42 earlier termination of this Lease, Tenant shall remove such signage from the Leased Premises and restore the Leased Premises to its condition immediately preceding the installation of such signage. 44. TELECOMMUNICATIONS. Tenant's use of the Leased Premises shall not include using the Leased Premises to provide telecommunications services (including, without limitation, Internet connections) to third parties, it being intended that Tenant's telecommunications activities within the Leased Premises be strictly limited to such activities as are incidental to general office use. 45. APPROVALS AND CONSENTS. Unless a party's sole discretion is otherwise expressly provided for in a particular provision of this Lease, all approvals and consents required of either party hereunder shall not be unreasonably withheld or delayed, regardless of whether or not the provision in question expressly so states. 46. SECURITY DEPOSIT. Concurrently herewith, Tenant shall deposit with Landlord the sum of Six Hundred Fifty Thousand Dollars ($650,000.00), as security for the performance by Tenant of its obligations under this Lease, and not as prepayment of Rent (the "SECURITY DEPOSIT"). Landlord may from time to time apply such portion of the Security Deposit as is necessary for the following purposes: a. to remedy any default by Tenant in the payment of Rent; b. to repair damage to the Leased Premises caused by Tenant; c. to clean the Leased Premises upon the expiration or sooner termination of the Lease; and/or d. to remedy any other default of Tenant to the extent permitted by applicable law, including, without limitation, on account of damages owing to Landlord under Section 24(b), and, in this regard, Tenant hereby waives any restriction on the uses to which the Security Deposit may be put, if any. In the event the Security Deposit or any portion thereof is so used, Tenant agrees to pay to Landlord promptly upon demand an amount in cash sufficient to restore the Security Deposit to the full original amount. Landlord shall not be deemed a trustee of the Security Deposit, may use the Security Deposit in business, and shall not be required to segregate it from its general accounts. Tenant shall not be entitled to any interest on the Security Deposit. If Landlord transfers the Leased Premises during the Lease Term, Landlord shall pay the Security Deposit to any transferee of Landlord's interest, in which event the transferring Landlord will be released from all liability for the return of the Security Deposit. If Tenant performs every provision of this Lease to be performed by Tenant, the unused portion of the Security Deposit shall be returned to Tenant (or, at Tenant's direction, the last assignee of Tenant's interest under this Lease), to the extent not applied, within fifteen (15) days following the expiration or sooner termination of this Lease and the surrender of the Leased Premises by Tenant to Landlord in accordance with the terms of this Lease. If this Lease is terminated following Tenant's Default, the unpaid portion of the Security Deposit, if any, shall be returned to Tenant two (2) weeks after final determination of all damages due Landlord. If a Default by Tenant occurs hereunder, Landlord may require that Tenant deposit with it such additional amount (either in cash or in a letter of credit) as Landlord reasonably determines, to be added to and held as a portion of the Security Deposit. Page 40 of 42 47. MISCELLANEOUS. This Lease constitutes the entire agreement of the parties with respect to the subject matter hereof and may be amended, waived or discharged only by an instrument in writing signed by the party against which enforcement of such amendment, waiver or discharge is sought. This Lease shall be binding upon and inure to the benefit of and be enforceable by the respective successors and permitted assigns of the parties. The headings in this Lease are for purposes of reference only and shall not control, limit or define the meaning or construction of any provision hereof. Time is of the essence of this Lease. The parties acknowledge that each party and its counsel have reviewed and revised this Lease and that the rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or in any amendments or exhibits hereto. This Lease shall be construed in accordance with and governed by the laws of the State of Arizona. (SIGNATURES TO FOLLOW ON SUCCEEDING PAGE) Page 41 of 42 IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and year first above written. Phoenix Industrial Investment Partners, L.P. SpeedFam - IPEC, Inc., an Arizona limited partnership an Illinois corporation By: Glen Una Management Company, a California corporation Its: General Partner By: /s/ J. Michael Dodson ---------------------------- Name: J. Michael Dodson -------------------------- Title: Chief Financial Officer ------------------------- By: /s/ Kenneth Levy ---------------------------- Name: Kenneth Levy -------------------------- Title: President ------------------------- Page 42 of 42 EXHIBIT A LEGAL DESCRIPTION OF LEASED PREMISES LOT 1 OF SPEEDFAM INTERNATIONAL, INC., ACCORDING TO THE PLAT OF RECORD IN THE OFFICE OF THE COUNTY RECORDER OF MARICOPA COUNTY, ARIZONA, RECORDED IN BOOK 439 OF MAPS, PAGE 41. Exhibit A Page 1 of 1 EXHIBIT B TENANT'S EQUIPMENT The following property shall be included in the definition of Tenant's Equipment: BUILDING 305: CDA Air Compressor Equipment Air Scrubbers DI Water System/Equipment Waste Treatment Equipment Cleanroom HVAC Equipment Chemical Distribution/Storage Equipment Cleanroom Vacuum Equipment Cleanroom System (walls, partitions, air handlers, hepafilters, chiller, other) 50 Hertz Generators 7.5 Ton Overhead Cranes Trolley Mounted Cranes Surveillance Cameras and Security Equipment Cafeteria Equipment BUILDING 300: CDA Air Compressor Equipment Cleanroom Vacuum Equipment Air Scrubbers Cleanroom Humidity Control Equipment (Kathobar) Roof Boilers for Kathobar Units Electrical Backup Power Generator 330KV Electrical Transfer Switch 50 Hertz Generators DI Water System/Equipment Waste Treatment Equipment Chemical Distribution/Storage Equipment Cleanroom System (walls, partitions, air handlers, hepafilters, chiller, other) Surveillance Cameras and Security Equipment Acid Fume Safety Hood Cleanroom Safety Showers Exhibit B Page 1 of 1 EXHIBIT C HAZARDOUS MATERIALS DISCLOSURE CERTIFICATE Your cooperation in this matter is appreciated. Initially, the information provided by you in this Hazardous Materials Disclosure Certificate is necessary for Landlord to evaluate your proposed uses of the Leased Premises. On an annual basis and at such other times as set forth in Section 37 of the Lease, you are to provide an update to the information initially provided by you in this certificate. Any questions regarding this certificate should be directed to, and when completed, the certificate should be delivered to the Landlord as provided in the Lease. GENERAL INFORMATION: Describe the proposed operations to take place in, on, or about the Leased Premises, including, without limitation, principal products processed, manufactured or assembled, and services and activities to be provided or otherwise conducted. Existing tenants should describe any proposed changes to on-going operations. 1. USE, STORAGE AND DISPOSAL OF HAZARDOUS MATERIALS 1.1 Will any Hazardous Materials (as hereinafter defined) be used, generated, treated, stored or disposed of in, on or about the Leased Premises? Existing tenants should describe any Hazardous Materials which continue to be used, generated, treated, stored or disposed of in, on or about the Leased Premises. Wastes Yes [ ] No [ ] Chemical Products Yes [ ] No [ ] Other Yes [ ] No [ ] If Yes is marked, please explain: __________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ 1.2 If Yes is marked in Section 1.1, attach a list of any Hazardous Materials to be used, generated, treated, stored or disposed of in, on or about the Leased Premises, including the applicable hazard class and an estimate of the quantities of such Hazardous Materials to be present on or about the Leased Premises at any given time; estimated annual throughput; the proposed location(s) and method of storage (excluding nominal amounts of ordinary household cleaners and janitorial supplies which are not regulated by any Environmental Laws, as hereinafter defined); and the proposed location(s) and method(s) of treatment or disposal for each Hazardous Material, including the estimated frequency, and the proposed contractors or subcontractors. Existing tenants should attach a list setting forth the information requested above and such list should include actual data from on-going operations and the identification of any variations in such information from the prior year's certificate. Exhibit C Page 1 of 6 2. STORAGE TANKS AND SUMPS. Is any above or below ground storage or treatment of gasoline, diesel, petroleum, or other Hazardous Materials in tanks or sumps proposed in, on or about the Leased Premises? Existing tenants should describe any such actual or proposed activities. Yes [ ] No [ ] If yes, please explain: ____________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ 3. WASTE MANAGEMENT 3.1 Has your company been issued an EPA Hazardous Waste Generator I.D. Number? Existing tenants should describe any additional identification numbers issued since the previous certificate. Yes [ ] No [ ] 3.2 Has your company filed a biennial or quarterly reports as a hazardous waste generator? Existing tenants should describe any new reports filed. Yes [ ] No [ ] If yes, attach a copy of the most recent report filed. 4. WASTEWATER TREATMENT AND DISCHARGE 4.1 Will your company discharge wastewater or other wastes to: ____ storm drain? ____ sewer? ____ surface water? ____ no wastewater or other wastes discharged. Existing tenants should indicate any actual discharges. If so, describe the nature of any proposed or actual discharge(s). ________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ________________________________________________________ 4.2 Will any such wastewater or waste be treated before discharge? Yes [ ] No [ ] Exhibit C Page 2 of 6 If yes, describe the type of treatment proposed to be conducted. Existing tenants should describe the actual treatment conducted. ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ________________________________________________________ 5. AIR DISCHARGES 5.1 Do you plan for any air filtration systems or stacks to be used in your company's operations in, on or about the Leased Premises that will discharge into the air; and will such air emissions be monitored? Existing tenants should indicate whether or not there are any such air filtration systems or stacks in use in, on or about the Leased Premises which discharge into the air and whether such air emissions are being monitored. Yes [ ] No [ ] If yes, please describe: ___________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ________________________________________________________ 5.2 Do you propose to operate any of the following types of equipment, or any other equipment requiring an air emissions permit? Existing tenants should specify any such equipment being operated in, on or about the Leased Premises. ____ Spray booth(s) ____ Incinerator(s) ____ Dip tank(s) ____ Other (Please describe) ____ Drying oven(s) ____ No Equipment Requiring Air Permits If yes, please describe: ___________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ________________________________________________________ 5.3 Please describe (and submit copies of with this Hazardous Materials Disclosure Certificate) any reports you have filed in the past [thirty-six] months with any governmental or quasi-governmental agencies or authorities related to air discharges or clean air requirements and any such reports which have been issued during such period by any such agencies or authorities with respect to you or your business operations. 6. HAZARDOUS MATERIALS DISCLOSURES 6.1 Has your company prepared or will it be required to prepare a Hazardous Materials management plan ("MANAGEMENT PLAN") or Hazardous Materials Business Plan and Inventory ("BUSINESS PLAN") pursuant to Fire Department or other governmental or Exhibit C Page 3 of 6 regulatory agencies' requirements? Existing tenants should indicate whether or not a Management Plan is required and has been prepared. Yes [ ] No [ ] If yes, attach a copy of the Management Plan or Business Plan. Existing tenants should attach a copy of any required updates to the Management Plan or Business Plan. 6.2 Are any of the Hazardous Materials, and in particular chemicals, proposed to be used in your operations in, on or about the Leased Premises listed or regulated under Proposition 65? Existing tenants should indicate whether or not there are any new Hazardous Materials being so used which are listed or regulated under Proposition 65. Yes [ ] No [ ] If yes, please explain: ____________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ________________________________________________________ 7. ENFORCEMENT ACTIONS AND COMPLAINTS 7.1 With respect to Hazardous Materials or Environmental Laws, has your company ever been subject to any agency enforcement actions, administrative orders, or consent decrees or has your company received requests for information, notice or demand letters, or any other inquiries regarding its operations? Existing tenants should indicate whether or not any such actions, orders or decrees have been, or are in the process of being, undertaken or if any such requests have been received. Yes [ ] No [ ] If yes, describe the actions, orders or decrees and any continuing compliance obligations imposed as a result of these actions, orders or decrees and also describe any requests, notices or demands, and attach a copy of all such documents. Existing tenants should describe and attach a copy of any new actions, orders, decrees, requests, notices or demands not already delivered to Landlord pursuant to the provisions of Article 7 of the Lease Agreement. ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ________________________________________________________ 7.2 Have there ever been, or are there now pending, any lawsuits against your company regarding any environmental or health and safety concerns? Yes [ ] No [ ] Exhibit C Page 4 of 6 If yes, describe any such lawsuits and attach copies of the complaint(s), cross-complaint(s), pleadings and other documents related thereto as requested by Landlord. Existing tenants should describe and attach a copy of any new complaint(s), cross- complaint(s), pleadings and other related documents not already delivered to Landlord pursuant to the provisions of Article 7 of the Lease Agreement. ___________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ________________________________________________________ 7.3 Have there been any problems or complaints from adjacent tenants, owners or other neighbors at your company's current facility with regard to environmental or health and safety concerns? Existing tenants should indicate whether or not there have been any such problems or complaints from adjacent tenants, owners or other neighbors at, about or near the Leased Premises and the current status of any such problems or complaints. Yes [ ] No [ ] If yes, please describe. Existing tenants should describe any such problems or complaints not already disclosed to Landlord under the provisions of the signed Lease Agreement and the current status of any such problems or complaints. ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ ________________________________________________________ 8. PERMITS AND LICENSES. Attach copies of all permits and licenses issued to your company its proposed operations in, on or about the Leased Premises, including, without limitation, any Hazardous Materials permits, wastewater discharge permits, air emissions permits, and use permits or approvals. Existing tenants should attach copies of any new permits and licenses as well as any renewals of permits or licenses previously issued. 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 government. The term "HAZARDOUS MATERIALS" includes, without limitation, petroleum products, asbestos, PCB's, and any material or substance which is (i) listed under, or defined as hazardous or extremely hazardous pursuant to The Arizona Environmental Quality Act of 1986, A.R.S. Section 49-101, et. seq., (ii) deemed as a "hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C. 6903) ("RCRA"), (iii) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq. (42 U.S.C. 9601) ("CERCLA") or any regulations promulgated under CERCLA; (iv) any substance now or hereafter regulated by the Toxic Substances Control Act, as amended ("TSCA") (15 U.S.C. Section 2601 et seq.) or any regulations promulgated under TSCA; (v) petroleum, petroleum by-products, gasoline, diesel fuel, or other petroleum hydrocarbons; (vi) asbestos and asbestos-containing material, in any form, whether friable or non-friable; (vii) polychlorinated biphenyls; (viii) lead and lead-containing materials; or (ix) any additional substance, material or waste. As used herein, the term "HAZARDOUS MATERIAL LAW(S)" shall mean any statute, law, Exhibit C Page 5 of 6 ordinance, or regulation of any governmental body or agency (including the U.S. Environmental Protection Agency, the Arizona Department of Environmental Quality which regulates the use, storage, release or disposal of any Hazardous Materials. The undersigned hereby acknowledges and agrees that this Hazardous Materials Disclosure Certificate is being delivered to Landlord in connection with the evaluation of a Lease and, if such Lease is executed, will be attached thereto as an exhibit. The undersigned further acknowledges and agrees that if such Lease is executed, this Hazardous Materials Disclosure Certificate will be updated from time to time in accordance with Section 37 of the Lease. The undersigned further acknowledges and agrees that Landlord and its partners, lenders and representatives may, and will, rely upon the statements, representations, warranties, and certifications made herein and the truthfulness thereof in entering into the Lease and the continuance thereof throughout the term, and any renewals thereof, of the Lease. I, the undersigned, acting with full authority to bind the Tenant and on behalf of the Tenant, certify, represent and warrant that the information contained in this certificate is true and correct. SpeedFam-IPEC, Inc. an Illinois corporation By:______________________ Name:____________________ Its:_____________________ Date:____________________ Exhibit C Page 6 of 6 EXHIBIT D SOFTWARE MAINTENANCE SCHEDULE [SEE ATTACHED] Exhibit D Page 1 of 1