Loading...
HomeMy WebLinkAboutLease Agreement with Red Canyon Corporation for Building~E ~;F;~ TSIS LEASE made and entered into this day of 199 between the RED CANYON CORPORATION, an Idaho Corporation, hereinafter called "Landlord", and the CITY OF MBRIDIAN, a Municipal Corporation, hereinafter called "Tenant". wITNESSETB: Landlord hereby leases, demises and lets unto Tenant, and Tenant hereby leases, hires and takes from Landlord those certain premises, hereinafter called the demised premises, described as follows: DEMISED PREMISES That certain building or portion of a building being part of the building located at 2nd Street and Pine Avenue, Meridian, Idaho, delineated in red on the plat attached hereto, marked Exhibit "A", and hereinafter called "Tenant's Gross Leasable Area" which Gross Leasable Area is approximately 2,400 square feet, constructed or to be constructed thereon by Landlord in accordance with the scoge or work being Exhibit "B" attached hereto and by reference made a part hereof. This lease is made upon the following terms covenants and conditions to which the parties hereby agree to: SI:CTIOIt 1 TERM 1. The term of this lease shall be for a period of one (1) year, commencing on April 1, 1997, the date (the rent commencement date) and ending on March 31, 1998. oPTlox so xa~ z~assa Lessor hereby grants to Lessee an option to renew the above lease for one additional term of one (1) year provided that the Lessee is not in default under the terms of this lease, has not ever been in default in payment of the rent for more than fifteen (15) days, and grovided that Lessee exercises this option by delivering to Lessor a written notice of election to exercise the option sixty (60) days prior to the termination of the above lease. It is agreed that the rental rate for the renewed lease shall be the same rate as the rate for the last month of the initial lease, but it shall not be less than the amount of rent that Lessee is paying during the last year of this lease. sacziox a CONSTRUCTION 2. (a) Responsibility for complete construction of the premises is Landlords, with the respective obligations set forth in Exhibit "H", and defined therein as Landlord's Construction Obligation and any Description of Work to be Performed by Landlord at Tenant's Expense. It is the intention of the parties that Landlord shall have sole responsibility for planning and executing Landlord's construction obligation; (b) Landlord agrees to complete Landlord's construction obligation substantially in accordance with: (1) The plans and specifications (hereinafter called "Landlord's plans") for the buildings and common areas shown on 8xhibit A, excluding work to be performed by Landlord's tenants. (2) Such further working drawings and specifications consistent with and in further development of Landlord's plans as may from time to time be reasonably necessary (copies of which shall be furnished to Tenant whenever they affect work on the premises), except that Landlord may make minor changes in its work on the premises without approval by Tenant, provided that any change in the floor area of the premises shall be reflected in the minimum rent, tax, insurance and common area maintenance obligations of Tenant. (c) Landlord and Tenant shall collaborate in the preparation of complete plans and specifications (hereinafter called "Tenant's plans") for the completion of work to be performed by Landlord at Tenant's expense and Tenant's construction obligation. The obligations of the parties with respect to the preparation of Tenant's plans shall be as follows: (1) Upon execution of the lease, Landlord shall supply to Tenant the information necessary to permit Tenant to prepare Tenant's plans for the performance of the work listed in Exhibit B as work to be performed by Landlord at Tenant's expense and Tenant's construction obligation. (2) Tenant shall, after receipt of the information to be submitted pursuant to RED CANYON - CITY OF MERIDIAN LEASB AGREEMENT PAGE - 2 subparagraph 2.(c)(1) proceed promptly to prepare Tenant's plans for work to be performed by Landlord at Tenant's expense and Tenant's construction obligation. Said Tenant's plans shall be submitted to Landlord for written approval and such approval shall not be unreasonably withheld. Any objections by Landlord and the reason therefor shall be in writing and delivered to Tenant. Upon approval of Tenant's plans and delivery of the demised premises to Tenant, Tenant shall proceed diligently to commence construction of and to complete Tenant's construction obligation. Tenant agrees to proceed diligently with such installations and perform such work as is required of Tenant in a first- class workmanlike manner. (3) In the event that Tenant fails to supply Landlord plans required under subparagraph 2.(c){2) above, within thirty (30) calendar days, after delivery of necessary information by Landlord, then Landlord shall have the right to terminate this lease by written notice to Tenant. (d) Tenant may, from time to time, make alterations and additions to the interior of the premises in accordance with plans and specifications first approved by Landlord which approval Landlord need not give if unusual expense will be required to readapt the premises to normal use on lease termination, or if the cost of insurance or taxes on the premises or the cost of Landlord's services called for hereunder, will be increased unless Tenant first agrees to pay such expense or increased cost. All such changes shall be part of the premises except such fixtures and items as by writing at the time of approval the parties agree shall be removed by Tenant on termination of this lease. All alterations and additions at any time undertaken by Tenant, and Tenant's original installation of equipment and furnishings prior to commencement of the lease term, shall be performed by contractors approved by Landlord, in such manner as to maintain harmonious labor relations, and so as not to damage any part of the property, and work performed before Landlord's construction work is finished shall be coordinated therewith. Tenant in every case before starting work shall secure all licenses and permits RBD CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 3 necessary therefor; shall deliver to Landlord a statement of the names of all contractors and subcontractors and the estimated cost of all labor and material to be furnished by them; shall cause Tenant's contractors to carry workmen's compensation insurance covering all the employees of contractors and subcontractors and public liability insurance with liability limits of $200,000 - $1,000,000, and property damage insurance with limits of $100,000 - $300,000, both general and vehicular (all such insurance to be written in companies approved by Landlord and insuring Landlord and Tenant as well as the contractors), and deliver to Landlord certificates of all such insurance. Tenant shall, at all times, keep the premises free from and clear of mechanics' liens, and unless waived in writing by Landlord, shall provide a suitable Payment, Performance and Completion bond prior to the commencement of any construction work in the premises. (e) All construction required or permitted by this lease, whether by Tenant or by Landlord, shall be done in a good and workmanlike manner, and in compliance with all applicable laws and all lawful ordinances, regulations and orders of governmental authority and insurers of the premises. Either party may inspect the work of the other at reasonable times, and shall promptly give notice of observed defects. 88CTIOlf 3 RENTAL 3. Tenant agrees to pay minimum monthly rental in advance on the first day of each calendar month throughout the demised term, without deduction or offset of any kind, as follows: A. BASE RENT FOR THE FIRST YEAR OF THE TSRM, THE BASE RENT SHALL BE ONE THOUSAND EIGHT HUNDRED AND NO/100 DOLLARS ($1,800.00) PER MONTH. B. SECURITY DEPOSIT LESSEE SHALL PAY NO SECURITY DEPOSIT. C. THE FIRST MONTHS RENT SHALL BE PAID ON APRIL 1, 1997 AND RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 4 THE MONTHLY RENT SHALL ALWAYS BE DUE ON THE FIRST DAY OF EACH MONTH. Each installment of rent shall be increased by the sum of twenty ($20.00) for each day that payment of such installment of minimum rental to Landlord is later than the tenth day of the calendar month for which such rental is due. In the event the rent commencement date occurs other than on the first day of a calendar month, the first rental shall be prorated accordingly. Remittance shall be made to Landlord at such address as shall from time to time be designated by Landlord to Tenant in writing. SECTION 4 TAXES 4. Landlord shall pay the real estate taxes, assessments, levies and charges. 88CTIO1~ 5 US8 5. Tenant agrees to use and occupy the premises during the term hereof for the purpose of providing offices and associated space for City employees. Tenant shall not use, or permit said premises or any part thereof, to be used for any purpose or purposes other than the purpose or purposes for which the said premises are hereby leased; and no use shall be made or permitted to be made of the said premises, or acts done, which will increase the existing rate of insurance upon the building in which said premises may be located over the standard rate of insurance prevailing in the area in which the premises are located, or cause a cancellation of any insurance policy covering said building, or any part thereof, nor shall Tenant sell, or permit to be kept, used, or sold in or about said premises, any article which may be prohibited by the standard form of fire insurance policies as the same may provide from time to time. SECTIOIt 6 NUISANCE 6. Tenant shall not commit, or suffer to be committed, any waste upon the demised premises, or any public or private nuisance, or other act or thing which may disturb the quiet enjoyment of any other tenant in the building in which the demised premises may be located or any other tenant in the property of RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 5 which the demised premises may be a part. Tenant shall neither conduct nor permit to be conducted any sale by auction on the demised premises or any sale in the nature of a fire or distress sale or a going out of business sale. SECTION 7 ALTERATIONS 7., Tenant shall not make, or suffer to be made, any alterations in the premises, or any part thereof, without the prior written consent of Landlord as provided in Paragraph 2 (d) above. Any additions to or alterations of the premises shall become at once a part of the realty and belong to the Landlord, unless agreed otherwise. SECTION 8 ABANDONMENT 8. Tenant agrees not to vacate or abandon the premises at any time during the demised term. Should Tenant vacate or abandon said premises or be dispossessed by process of law or otherwise, such abandonment, vacation or dispossession shall be a breach of this lease and, in addition to any other rights which Landlord may have, Landlord may at once remove any personal property belonging to Tenant which remains on the demised premises and store the same, the coat of such removal and storage to be charged to the account of Tenant. SECTION 9 LANDLORD'S CONVEYANCE 9. If ,during the term of this lease Landlord, its successors or assigns, shall convey its interest in the demised premises, then from and after the effective date of the conveyance the Landlord so conveying shall be released and discharged from any and all obligations under this lease except those already accrued. SECTION 10 MAINTENANCE AND REPAIRS. All maintenance and repair to keep the exterior, foundation, and roof of the leased premises in good condition and RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 6 a pleasing appearance, shall be performed by and at the expense of the Lessor, unless such maintenance and repair must be performed due to the breach or negligence of Lessee. Lessee shall be responsible for all non-structural and non-major repairs and maintenance necessary to keep the interior of the leased premises in good conditions and a pleasing appearance for the above stated use. Structural and major repairs to the interior of the leased premises shall be performed as reasonably required, at the expense of, and by the Lessors. Repairs deemed to be "structural" or "major" shall include, but shall not be limited to, the following: Replacement of major hentinq, air conditioning, plumbing, or electrical systems, {excluded are those items of plumbing, electronics or electrical systems installed by the Lessee for its own use and benefit). By way of illustration, replacement of a defective section. of floor would be "structural", but replacement of carpeting or similar floor covering would be "non-structural". By way of further illustration, any item of maintenance or repair which would constitute a capital expenditure, rather than an item of expense, would be deemed "major" or "structural". Lessee shall be responsible for general regular maintenance of the leased premises and the related components. Lessor shall be responsible for maintaining sidewalks, parking areas, and lawn areas in a clean and orderly condition, and for keeping any lawns and shrubbery watered and trimmed. Lessee shall be responsible for replacement of all broken glass and all broken or burned out light fixtures and bulbs, and for the cleaning of the exterior windows of the demised premises. Lessors shall pay for the trash removal, water and sewer. Lessee shall at all times, at Lessee's expense, keep the interior of the leased premises in a neat, clean, and orderly condition. 8ECTION 11 LAWS AND REGULATIONS 11. Tenant at its own cost and expense shall comply promptly with all laws, rules, and orders of all Federal, State County and Municipal Governments, or departments, which may be applicable to the use of the leased premises, and shall likewise promptly comply with the requirements of the Board of Fire Underwriters or Landlord's insurance carrier concerning the use of the premises. SECTION 12 INDEMNIFICATION AND LIABILITY INSURANCE RED CANYON - CITY OF MBRIDIAN LEASE AGREEMENT PAGE - 7 12. Except for such loss or damage as may be caused by the negligent or willful act of Landlord, its agents, or employees, Landlord shall not be liable to Tenant, its officers, agents, employees, customers, invitees or third parties for loss of or damage to property, including goods, wares and merchandise, or for injury or death to persons, in on, or about the premises, and Tenant agrees to indemnify and save and hold Landlord harmless from and on account thereof howsoever arising or by whomever caused. During the term thereof, Tenant shall maintain in full force and effect with insurance companies of good reputation a comgrehensive liability insurance policy applicable to the premises and the activities of Tenant therein with a combines single limit for bodily injury and property damage of not less than $500,000. A certificate evidencing such coverage and providing that the insurance may not be cancelled without thirty (30) days prior written notice to Landlord shall be provided to Landlord. SECTION 13 SIGNS AND OTHER ADVERTISING 13. The Tenant shall not affix or maintain upon the glass panes and supports of the show windows, doors, and the exterior walls of the premises, or within 36 inches of any window, door, or exterior wall of the premises, any sign, advertising placards, name, insignia, trademark, descriptive material or any other such like item or items, except such as shall have first received written approval of the Landlord as to size, type, color, location, copy, nature and display qualities; EXCEPT, Tenant may place legal notices, and other documents of the City of Meridian on the windows and/or doors of the premises. Anything to the contrary in this Lease notwithstanding, the Tenant shall not affix any sign to the roof of the premises. No advertising medium shall be utilized by Tenant which can be heard or experienced outside the Tenant's premises, including without limiting the generality of the foregoing, flashing lights, search-lights, loudspeakers, phonographs, radios or television. Tenant shall not display paint or place or caused to be displayed, painted or places, any handbills, bumper stickers or other advertising devices on any vehicle parked in the parking area of the property, whether belonging to Tenant, or to Tenant's agent, or to any other person; nor shall Tenant distribute, or cause to be distributed, on the property any handbills or other advertising devices. Tenant shall erect signs only after specific approval of Landlord and in conformance with the decor of the center. Landlord's approval hereunder shall not be unreasonably withheld. RED CANYON - CITY OF MERIDIAN LEASB AGREEMENT PAGE - 8 SECTION 14 UTILITIES 14. (a) Tenant, from the time it first enters the premises for the purpose of setting fixtures, or from the commencement of the term of this lease, whichever date shall first occur, and throughout the term of this lease, shall pay for all public and other utilities and related services rendered or furnished to the premises, including, but not limited to, water, hot water, gas, electricity, telephone, heat, light, sewer charges, installation and connection charges or deposits therefor and refuse or garbage collection or disposal. Tenant shall not allow refuse garbage, or trash to accumulate inside or outside of the demised premises. In the event that one or more of such utilities or related services shall be supplied to the premises and to one or more other tenants within the property without being individually metered or measured to the premises, Tenant's proportionate share thereof shall be paid as additional rent and shall be determined by Landlord's engineering consultants based upon their estimate of Tenant's anticipated usage. Landlord shall provide and maintain the necessary mains, conduits, wires, and cables to bring water and electricity to the premises. (b) Payment for Tenant's proportionate share of any and all unmetered water, gas, electricity and other utilities used by Tenant shall. be made monthly and within ten (10) days of the presentation of bills to Tenant. Landlord may cut off and discontinue, without notice to Tenant, water, gas, electricity, or any other service whenever and during any period for with bills for the service, or any sum under this lease, are not properly paid by Tenant. (e) Landlord shall not be liable in damages, consequential or otherwise, arising out of any interruption whatsoever in utility services which are due to fire, accident, strike, acts of God, or other causes beyond the control of Landlord or any interruptions in such service which are necessary to the making of alterations, repairs, or improvements or authorized pursuant to subparagraph 14 (b) hereof . 88CTION 15 ENTRY BY LANDLORD 15. Landlord, or its agents, shall not be permitted to enter the demised premises. BUT, upon reasonable notice Tenant shall allow Landlord to enter the demised premises to inspect the same; to maintain the building in which the said premises are located; to make such repairs to the demised premises as Landlord RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 9 is obligated or may elect to make; to make repairs, alterations or additions to any other portion of the building in which the demised premises are located; to post notices on non-responsibility for alterations, additions ore repairs; to install, use and maintain pipes, ducts, conduits, wires and appurtenant meters and equipment for service to areas outside the premises; and to relocate any pipes, ducts, conduits, wires and appurtenant meters and equipment included in the premises whether located within or without the premises. Landlord shall have such right of entry and the right to fulfill the purpose thereof without any rebate of rent to Tenant for any loss of occupancy or quiet enjoyment of the demised premises thereby occasioned. 88CTION 16 DAMAGE AND DESTRUCTION 16. (a) In the event that the premises are totally destroyed or materially damaged or destroyed from cause not insured under Landlord's fire insurance policy with extended coverage endorsement, then Landlord shall have the right to terminate this lease by giving written notice of termination to Tenant within thirty (30) days after the date of such damage or destruction. If the lease is not so terminated, then Landlord shall diligently groceed to repair and restore the same. (b) In the event of material damage or partial destruction of the premises from a cause covered under Landlord's fire insurance with extended coverage endorsement, and adjustment of the loss with insurance carriers or in any event, within one hundred eighty (180) days after the date of such damage or destruction, then Landlord shall proceed to repair and restore the premises. If it appears that the premises may not be repaired or restored within said period, then either Landlord or Tenant shall have the right to terminate this lease by written notice to the other given within sixty (60) days after the date of such destruction, whether the premises are affected thereby or not. (c) In the event that the building's destroyed to the extent of not less than fifty percent (50$) of the replacement cost of said buildings, Landlord may elect to terminate this lease by written notice to Tenant given within sixty (60) days after the date of such destruction, whether the prem~.ses are affected thereby or not. (d) If in any such case the premises are rendered unfit for use and occupancy and the lease is not so terminated, a just proportion of the minimum rent according to RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 10 the nature and extent of the injury shall be abated until the premises, excluding any fixtures or items installed or paid for by Tenant shall have been put by Landlord in proper condition for use and occupation. (e) Except as expressly otherwise provided herein, damage to or destruction of the prem~.ses shall not serve to terminate the lease or result in rental abatement hereunder Tenant waives any right of offset it may have against the obligation to pay rental hereunder under any statute or rule of law arising out of Landlord's duties of repair and restoration under the provisions hereof. (f) Landlord's duties of repair and restoration under the provisions hereof shall extend only to those portions of the premises insured as part thereof under Landlord's fire insurance with extended coverage endorsement. (g) Landlord shall obtain and maintain in force a standard fire and extended risk insurance policy with Landlord as insured, insuring the premises for at least ninety percent (90~) of the insurable replacement value thereof. The proceeds of said policy shall be payable to Landlord and used for repair and reconstruction of the improvements, if Landlord is obligated hereunder to repair or reconstruct, and subject to any requirements as to the disposition of the proceeds that may be imposed by any firm or organization with is the beneficiary under a Deed of Trust placed against the building of which the premises will form a part. (hj Landlord shall not be liable for any damage to property of Tenant or of others located on the leased premises, nor for the loss of or damage to any property of Tenant or of others by theft, casualty or otherwise. Landlord shall not be liable to Tenant for any loss of income due to damage or destruction of Tenant's property ar the premises. Landlord shall not be liable for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow or leaks from any part of the leased premises or from the pipes, appliances or plumbing works or from the roof, street or sub- surface or from any other place or by dampness or by any other cause of whatsoever nature. Landlord shall not be liable for any such damage caused by other tenants or persons in the leased premises, occupants of adjacent property, of the property, or the public, or caused by operations in construction of any private, public or quasi-public work. Landlord shall not be liable for any latent defect in the leased premises or in the building for which they form a part except for a period of one (1) year from the date Tenant takes possession.. of the leased premises. All property of Tenant RED CANYON - CITY OF MERIDIAAi LEASE AGRBEMENT PAGE - 11 kept or stored on the leased premises shall be so kept or stored at the risk of Tenant only and Tenant shall hold Landlord harmless from any claims arising out of damage to the same, including subrogation claims by Tenant's insurance carrier. All insurance policies obtained by Tenant for the premises shall specifically waive any rights of subrogation against Landlord or Landlord's agents or employees. SECTION 17 ASSIGNMENT 18. (a) Tenant shall not assign this lease or any interest therein, nor lease or underlet the said premises, or any part thereof, or any right or privilege appurtenant thereto, nor permit the occupancy or use of any part thereof by and other person, without the written consent of Landlord first had and obtained, and a consent o one assignment, subletting, occupancy or use, shall not be construed as a consent to any subsequent assignment, subletting, occupancy or use. Any such assignment, subletting, occupancy or use, without the prior written consent of Landlord, shall at the options of Landlord terminate this lease and any such purported assignment, sublease occupancy or use shall be null and void. Any request of Tenant to permit the assignment or subletting of this lease shall be accompanied by Tenant's check in the amount of One Hundred Dollars and No/100 ($100.00) which shall be retained by Landlord in the event that such assignment or subletting is permitted, or returned to Tenant in the event such is denied. SECTION 1$ DBFAtJLT 19. Should the Tenant at any time be in default hereunder with respect to any rental payments or other charges to the Tenant hereunder, and should such default continue for a period of five (5) days after written notice from Landlord to Tenant; or should the Tenant be in default in the prompt and full performance of any other of its promises, covenants or agreements herein contained and should such default or breach of performance continue for more than a reasonable time (in no event to exceed thirty (30) days) after written notice thereof from the Landlord to the Tenant specifying the particulars of such default or breach of performance; or should the Tenant vacate or abandon the premises; or should Tenant or any agent of Tenant falsify any report required to be furnished to Landlord pursuant to the terms of this lease, or should Tenant or any guarantor of this lease become bankrupt or RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 12 insolvent, or file any debtor proceedings or take or have taken against Tenant or any guarantor of this lease in any court pursuant to any statute either of the United States or of any state a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Tenant's or any such guarantor's property, or if Tenant or any such guarantor makes an assignment for the benefit of creditors, or petitions for or enters into an arrangement or if Tenant shall suffer this lease to be taken under any writ of execution; then the Landlord may treat the occurrence of any one or more of the foregoing events as a breach of this lease, and in addition to any and all other rights or remedies of the Landlord hereunder and by the law provided, it shall be, at the option of the Landlord, without further notice or demand of any kind to Tenant or any other person: (a ) The right of the Landlord to declare the term hereof ended and to re-enter the premises and take possession thereof and remove all persons therefrom, and the Tenant shall have no further claim thereon or thereunder; or (b) The right of the Landlord without declaring this lease ended to re-enter the premises and occupy or lease the whole or any part thereof for and on account of the Tenant and upon such terms and conditions. and for such rent as the Landlord may deem proper and to collect said rent and any other rent that may thereafter become payable and apply the same toward the amount due or thereafter to become due from the Tenant and on account of such expense of such subletting and any other damages sustained by the Landlord; and should such rental be less than that herein agreed to be paid by the Tenant, the Tenant agrees to pay such deficiency to the Landlord in advance on the day of each month hereinbefore specified for payment of minimum annual rental and to pay to the Landlord forthwith upon any such reletting the costs and expenses the Landlord may incur by reason thereof; or (c) The right of the Landlord, even though it may have relet said premises, to thereafter elect to terminate this lease and all of the rights of the Tenant in or to the premises. Should the Landlord relet the premises under the provisions of subparagraph (b) above, it may execute any such lease either in its own name or in the name of the Tenant as it shall see fit, but the tenant therein named shall be under no obligation whatsoever to see to the application by Landlord of any rent collected by Landlord from such tenant, nor shall the Tenant hereunder have any right or authority whatever to collect any rent from such tenant. The Landlord shall not be deemed to have terminated this lease, or the liability of the Tenant to pay rent RED CANYON - CITY 0~' MERIDIAN LBASE AGREEMENT PAGE - 13 thereafter to accrue, or its liability for damages under any of the provisions hereof, by any such re-entry or by any action in unlawful detainer, or otherwise, to obtain possession of the premises, unless the Landlord shall have notified the Tenant in writing that it has so elected to terminate this lease, and the Tenant further covenants that the service by the Landlord of any notice pursuant to the unlawful detainer statutes of the State of Idaho and the surrender of possession pursuant to such notice shall not (unless the Landlord elects to the contrary at the time of or at any time subsequent to the service of such notices and such election be evidenced by a written notice to the Tenant) be deemed to be a termination of this lease. Nothing herein contained shall be construed as obligating the Landlord to relet the whole or any part of the premises. In the event of any entry or taking possession of the premises as aforesaid the Landlord shall have the right, but not the obligation, to remove therefrom all or any part of the personal property located therein and may place the same in storage at a public warehouse at the expense and risk of the owner or owners thereof. In the event of Tenant's default and Landlord's retaking of possession of the premises, whether this lease is terminated by Landlord or not, Tenant agrees to pay to Landlord as an additional item of damages the cost of repairs, alterations, redecorating, leasing commissions, attorney fees and Landlord's other expenses incurred in retaking the premises and in reletting the premises to a new tenant. Should the Landlord elect to terminate this lease under the provisions of subparagraphs (a) or (c) above, the Landlord shall thereupon, without waiting for the end of the term hereof, be entitled to recover from the Tenant as damages the difference, if any, between the then reasonable rental value of the premises for the period of the term reserved in the lease and the amount of rental and other charges payable by the Tenant for the balance of the term of this lease, together with the rent then unpaid, if any. For all purposes of this Paragraph 19, the rental agreed to be paid by the Tenant or the amount of rental payable by the Tenant shall be deemed to be the minimum annual rental and all other sums required to be paid by Tenant pursuant to the terms of this lease. All such sums, other than the minimum annual rental, shall be computed on the basis of the average monthly amount thereof accruing during the immediately preceding sixty (60) month period, except that if it becomes necessary to compute such rental before such a sixty (60) month period has occurred then on the basis of the average monthly amount thereof accruing during such shorter period. In the event of default, all of the Tenant's fixtures, furniture, equipment, improvements, additions, alterations, and RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 14 other personal property, shall remain in the subject premises and in that event, and continuing during the length of said default, Landlord shall have the right to take the exclusive possession of same and to sue same, rent or charge free, until all defaults are cured or, at its option, at any time during the term of this lease, to require Tenant to forthwith remove same. Notwithstanding any other provisions of this section, the Landlord agrees that if the default complained of, other than for the payment of monies, is of such a nature that the same cannot be rectified or cured within the thirty ( 30 ~ day period requiring such rectification or curing as specified in the written notice relating thereto, then such default shall be deemed to be rectified or cured if the Tenant within such period of thirty (30) days shall have commenced the rectification and curing thereof and shall continue thereafter with all due diligence to cause such rectification and curing and does so complete the same with the use of such diligence as aforesaid. The remedies given to the Landlord in this section shall be in addition and supplemental to all other rights or remedies which the Landlord may have under the laws then in force. SSCTIOI~ 19 VOLUNTARY SURRENDER 19. The voluntary or other surrender of this lease by Tenant, or a mutual cancellation thereof, shall not work a merger, but shall, at the option of Landlord, terminate all or any existing subleases or subtenancies, or operate as an assignment to it of any or all such subleases or subtenancies. s$cslox ao ATTORNEY'S FEES 20. If Landlord shall be made a party to any litigation commenced by or against Tenant, Tenant shall pay all costs, expenses and attorney's fees incurred by Landlord in connection with such litigation except in the event that such litigation shall determine that Landlord has committed a breach of this lease and shall adjudicate that Landlord is liable therefor. In the event of any action at law or in equity between Landlord and Tenant to enforce any of the provisions and/or rights hereunder, the unsuccessful party to such litigation covenants and agrees to pay to the successful party all costs and expenses, including reasonable attorney's fees incurred therein by such successful party, and if such successful party shall recover judgment in any RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 15 such action or proceeding, such costs, expenses and attorney's fees shall be included in and as part of such judgment. If Landlord employs an attorney to collect delinquent money from Tenant, attorney's fees to be paid by Tenant shall in no event be less that Tow Eundred Dollars ($200.00) per occurrence. SECTION 21 NOTICES 21. All notices to be given to Tenant may be given in writing personally or by depositing the same in the United States certified mail, postage prepaid, and addressed to Tenant at the said premises, whether or not Tenant has departed from, abandoned or vacated the premises. Notice by Tenant to Landlord shall be in writing and deposited in the United States certified mail, postage prepaid, addressed to Landlord at the address specified from time to time as contemplated by Paragraph 3. SECTION 22 WAIVSR 22. The waiver by Landlord or any breach of any term, covenant or condition herein contained shall not be deemed to be a waiver of any other term, covenant or condition or any subsequent breach of the same or any other term, covenant, or condition herein contained. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this lease, other than the failure of Tenant to pay the particular rental so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. SECTION 23 OFFSET STATEMENTS 23. Tenant shall at any time and from time to time upon not less than ten (10) days prior request by Landlord, execute, acknowledge and deliver to Landlord a statement in writing certifying the date of commencement of this lease, that this lease is unmodified and in full force and effect (or if there have been modifications that the same is in full force and effect as modified and stating the date of the modifications) and further stating the dates to. which the minimum rent and other charges have been paid, and setting forth such other matters as may reasonably be requested RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 16 by Landlord. 88CTION 2* FOLDING OVER 24. Any holding over after the expiration of the said term, with the con8ent of Landlord, shall be construed to be a tenancy from month to month, and shall be on the terms and conditions herein specified, so far as applicable. 88CTIOW 25 EXTRA EXPENDITURES 25. In the event that Landlord shall make any expenditure for which Tenant is responsible, then the amount thereof, together with interest at twelve (12$) per annum and costs, may, at Landlord's election, be added to and be deemed part of the installment of rent next falling due. PROVIDED, FOWEVER the cost of the floor covering which Lessor is initially paying for and installing but which Lessee is reimbursing Lessor for in monthly installments shall not be subject to the eighteen percent (18$) interest. SRCTIOIi 26 CONDEMNATION 26. (a) If during the lease term, the premises, or any substantial part, are damaged by action of public or other authority, or are taken by eminent domain or receive compensable damage by reason of anything lawfully done in pur$uance of public or other authority, this lease shall terminate at Landlord's election, which election may be made notwithstanding that Landlord's entire interest may not have been divested. In case of such damage or taking of part of the premises, if the remainder is insufficient for use for Tenant's purposes, or in case of such damage or taking of the time needed to do the construction work necessary to put the premises or such remainder in proper condition for use and occupation is reasonable estimated to exceed six (6) months, or Landlord does not commence within sixty ( 60 ) days after the damage or the surrender of the part taken and proceed with reasonable diligence to do such work, Tenant may terminate this lease, without penalty, by notice given to Landlord within thirty (30) days after the right to terminate arises. If in any such case the premises are rendered unfit for use RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 17 and occupation and the lease is not so terminated, a just proportion of the min~.mum rent according to the nature and extent of the injury shall be abated until the premises (or in case of a partial taking what may remain thereof), excluding any fixtures or items installed or paid for by Tenant shall have been put by Landlord in proper condition for use and occupation; and in case of a taking which permanently reduces the area of the premises, a just proportion of the minimum rent shall be abated for the remainder of the lease term. (b) Landlord reserves and excepts all rights to damages to the premises and the lease-hold hereby czeated, accruing by reason of exercise of eminent domain or by reason of anything lawfully done in pursuance of public or other authority. Tenant hereby grants to Landlord all Tenant's rights to such damages and covenants to deliver such further assignments thereof as Landlord may from time to tune request. (c) In the event of any taking of the premises or any part thereof for temporary use, (1) the lease, including Tenant's obligation to pay tent, shall be and remain unaffected thereby, and (2) Tenant shall be entitled to receive for itself such portion or portions of any award made for such use with respect to the period of the taking which is within the lease term, provided that if such taking shall remain in force at the expiration or earlier termination of this lease, Tenant shall then pay to Landlord a sum equal to the reasonable cost of performing Tenant's obligations with respect to surrender of the premises and upon such payment shall be excused from such obligations. sacs=o~ a7 SUBORDINATION 27. This lease is and shall always be subordinate to any mortgage or Deed of Trust which is now or shall at any time be placed upon the demised premises or any part thereof or the building of which the demised premises are a portion and Tenant agrees to execute and deliver any instrument, without cost, which may be deemed necessary to further effect the subordination of this lease to any such mortgage or Deed of Trust. In the event that Landlord shall default under the terms of this lease, Tenant shall give Landlord written notice specifically setting forth the alleged default. Tenant agrees to give any Mortgagee and/or Trust Deed Holder by registered mail, a copy of any Notice of Default served RBD CANYON - CITY OF MSRIDIAN LBASB AGR88MSNT PAGE - 18 upon the Landlord, provided that prior to such notice Tenant has been notified, in writing, (by way of Notice of Assignment of Rents and Leases, or otherwise) of the address of such Mortgagee and/or Trust Deed Holder. Tenant further agrees that Landlord shall have thirty (30) days within which to cure any alleged default and that is Landlord shall have failed to cure such default within the time provided for in this Lease, then Landlord or Mortgagee and/or Trust Deed Holder shall have an additional time as may be necessary to cure if Landlord or any Mortgagee and/or Trust Deed Holder has commenced and is diligently pursuing the remedies necessary to cure such default, (including in the case of any Mortgagee and/or Trust Deed Holder, commencement of foreclosure proceedings, if necessary to effect such cure) in which event this Lease shall not be terminated while such remedies are being so diligently pursued. SECTION 28 SIDEWALK OBSTRUCTIONS 28. Tenant shall not obstruct the sidewalks adjacent to the demised premises or any portion of the Common Areas by placing any item thereon, including without limitation newspaper racks, bicycle stands, weighing machines, amusement rides, and merchandise or merchandise fixtures of any kind, without first obtaining written permission from Landlord. 8$CTIOIT 29 EMPLOYEE PARKING 29. Automobiles of Tenant, its employees and agents shall not be parked within the property area except in areas designated as "employee parking." Landlord shall have the right to cause to be removed any car or Tenant, its employees or agents that may be parked in any area other than an employee parking area, without liability of any kind to Tenant, its agents or employees, and Tenant agrees to save and hold harmless Landlord, its agents and employees from any and all claims, losses, damages and demands asserted or arising in respect to or in connection with the removal of any such automobile as aforesaid. Tenant will from time to time upon request of Landlord supply Landlord with a list of license plat numbers of all automobiles owned by its employees and agents. In the event of a violation of this paragraph by Tenant, its employees, or agents, Landlord may give Tenant written notice of such violation, identifying therein the automobile causing such violation, and thereafter for each subsequent violation, upon written notice thereof from Landlord to Tenant, Tenant shall be assessed the sum of ten dollars ($10.00), which sum shall be added to the installment of minimum rental next following due. RED CANYON - CITY OF MERIDIAN LBASE AGREEMENT PAGE - 19 88CTIO1~ 30 SUCCESSORS 30. All the terms, covenants and conditions hereof shall be binding upon and inure to the benefit of the heirs, executors, adm~.nistrators, successors and assigns of the parties hereto, provided that nothing in this paragraph shall be deemed to permit any assignment, subletting, occupancy or use contrary to the provisions of paragraph 18. 88CTIOIt 31 COMMON AREAS 31. Areas within the outer property lines of the property as delineated on the plat attached hereto marked Exhibit "A", exclusive of areas therein specified for leasing to tenants shall be known as Common Areas, as shall all other areas from time to time designated by Landlord for use as part of the property. Landlord covenants and agrees at its sole cost and expense to improve said Common Areas by installing and constructing thereon Parking Lots, access roads, pedestrian walkways, sidewalks, exterior canopies, delivery and landscaped areas and lighting facilities to the extent to which Landlord shall determine to be necessary. Said Common Areas shall be available for the common sue of all Landlord's tenants in the property, their employees, customers and invitees. Notwithstanding anything elsewhere herein contained, Landlord reserves the right from time to time to make reasonable changes in, additions to and deletions from the Common Areas and the purposes to which the same may be devoted, and the use of Common Areas shall at all times be subject to such reasonable rules and regulations as may be promulgated by Landlord. S$CTION 32 COMMON ARBA MAINTENANCE 32. Landlord will maintain or cause to be maintained the Common Areas. SECTIOB 33 SUBROGATION WAIVER RED CANYON -CITY OF MERIDIAN LEASE AGREEMENT PAGE - 20 33. Any insurance carried by either party with respect the premises and property therein or occurrences thereon shall, if it can be so written without additional premium, or with an additional premium which the other party agrees to pay, include a clause or endorsement denying to the insurer rights of subrogation against the other party to the extent rights have been waived by the insured prior to occurrence of injury of loss. Each party, notwithstanding any provisions of this lease to the contrary, hereby waives any rights of recovery against the other for injury or loss due to hazards covered by insurance containing such clause or endorsement to the extent of the injury of loss covered. SECTION 34 SECURITY DEPOSIT 34. Tenant shall pay no security deposit 88CTION 35 INTEREST 35. Any sum accruing to Landlord under the terms and provisions of this lease which is not paid when due shall bear interest at the rate of twelve percent (12 $ ) per annum from the date when the same becomes due and payable by the terms and provisions hereof until paid, notwithstanding specific reference thereto elsewhere in this lease, sBCTION 36 RULES AND REGULATIONS 36. Tenant and Tenant's employees and invitees shall observe faithfully and comply with any reasonable rules and regulations governing the property as may from time to time be promulgated by the Landlord. 8$CTION 37 MISCBLLANEOUS 37. {a) The opening for business of any other tenants is not a condition of this lease. (b) The marginal captions in this lease are for convenience only and shall not in any way limit or be deemed RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 21 to construe or interpret the terms and provisions hereof. (c ) Time is of the essence of this lease and of all provisions hereof, except in respect to the delivery of possession of the demised premises. (d) The words "Landlord" and "Tenant", as used herein, shall include the plural as well as the singular. (fiords used in the neuter gender include the masculine and feminine. If there be more than on Landlord or Tenant the obligations hereunder imposed upon Landlord or Tenant shall be joint and several. (e) This lease shall be construed and enforced in accordance with the laws of the State of Idaho. (f) No payment by Tenant or receipt by Landlord of a lesser amount than the monthly rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such rent or pursue any other remedy in this lease provided. (g) This lease and any Exhibits or Riders, if any, set forth all the covenants, promises, agreements, conditions and understandings between Landlord and Tenant oral or written, between them other than are herein set forth. Except as herein otherwise provided, no subsequent alteration, amendment, change or addition to this, lease shall be binding upon Landlord or Tenant unless reduced to writing and signing by them. (h) Landlord does not, in any way or for any purpose, become a partner of Tenant in the conduct of its business, or otherwise, or joint venturer or a member of a joint enterprise with Tenant. The provisions of this lease relating to the percentage rent payable hereunder are included solely for the purpose of providing a method whereby the rent is to be measured and ascertained. (i) Tenant shall due its best efforts to complete, or cause to be completed, all deliveries, loading, unloading and services to the leased premises prior to 10:00 a.m. of each day. Tenant shall attempt to cause no delivery trucks or other vehicle servicing the premises to park or stand in front of, or at the rear of, the premises from 10:00 a.m. to 9:00 p.m. of each day. Landlord reserves the right to further regulate the activities of Tenant in regard to deliveries and RED CANYON - CITY OF MERIDIAN LEASB AGREEMENT PAGE - 22 servicing of leased premises, and Tenant agrees to abide by such further nondiscriminatory regulations of Landlord. (j ) Tenant shall replace at its expense any and all plate and other glass damaged or broken from any cause whatsoever in and about the leased premises. The Tenant shall be responsible for the maintenance of the plate glass on the premises but shall have the option either to insure the risk or to self-insure. (k) Tenant shall be responsible for any and all damage done to the premises as a result of any forced entry or attempted forced entry. (1) Tenant shall, in the event any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under any mortgage or similar encumbrance made by the Landlord covering the leased premises, attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Landlord under this lease. (m) If any term, covenant or condition of this lease or the application thereof to any person or circumstance shall, to any extent, be invalid yr unenforceable, the remainder of this lease, or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this lease shall be valid and be enforced to the fullest extent permitted by law. (n) The submission of this lease for examination does not constitute a reservation of or option for the leased premises and this lease becomes effective as a lease only upon execution and delivery thereof by Landlord and Tenant. (o) Tenant shall not record this lease without the written consent of Landlord, however, upon the request of either party hereto the other party shall join in the execution of a memorandum or so-called "short form" of this lease for the purposes of recordation. Said memorandum or short form of this lease shall describe the parties, the leased premises and the term of this lease and shall incorporate this lease by reference. (p) Tenant shall give immediate notice to Landlord in case of :fire or accidents in the leased premises or in the building or which the premises are a part. S$CTION 38 RED CANYON - CITY OF MERIDIAN LEASE AGRBEMENT PAGE - 23 CONTINGENCY 38. This lease is contingent upon obtaining approval from the City of Meridian, Idaho, for a conditional use permit to operate the premises in the fashion suggested in this lease agreement. IN WITNESS WHEREOF, the parties hereto have executed this lease or, as the case may be, have caused their officers thereunto duly authorized to execute this lease the day and year first above written. DATED This day of , 1997. LESSOR RED CANYON CORPORATION By Lloyd M. Gerber President LBSSEE CITY OF MERIDIAN By Robert d. Corrie Mayor Elizabeth M. Gerber Secretary STATE OF IDAHO ) ss. County of Ada ) William G. Berg, Jr. City Clerk On this day of , 1997, before me, RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 24 the undersigned, a Notary Public in and for said State, personally appeared Floyd ~t__ Gerb_e~ and ~li~abet M. ~~ h _ Gerber, known to me to be the President and Secretary of the RED CANYON CORPORATION, that executed this instrument and the persons who executed the said instrument on behalf of said corporation and acknowledged to me that such corporation executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the day and year in this certificate first above written. (S~) Notary Pu is or Idaho Residence: My Commission Expires STATE OF IDAHO, County of Ada, ss. On this day of , 1997, before me, the undersigned, a Notary Public n and for said State, personally appeared the Mayor, Robert D. Corrie, and the City Clerk, William G. Berg, Jr., respectively, of the CITY OF MERIDIAN, a municipality and political subdivision of the State of Idaho, known to me to be the entity that granted the authority to the said individuals to subscribe their names to the within and foregoing instrument in their capacity as Mayor and City Clerk, and acknowledged to me that they executed the same in the name of the CITY OF MERIDIAN. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year in this certificate first above written. (SEAL) Notary Publ c for Idaho Residence: My Commission Expires RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 25 ~CEtVE~ AUG 1 4 f99T q1'Y OF ~~IINAN LSASB AaR$~rr ~ THIS LEASE made and entered into this ~ © ~` day of t~'' _.,_,, 199„_ between the RED CANYON CORPORATION, an Idah Corporation, hereinafter called "Landlord", and the CITY OF MERIDIAN, a Municipal Corporation, hereinafter called "Tenant". WITNESSETH: Landlord hereby leases, demises and lets unto Tenant, and Tenant hereby leases, hires and takes from Landlord those certain premises, hereinafter called the demised premises, described as follows: DEMISED PREMISES That certain building or portion of a building being part of the building located at 2nd Street and Pine Avenue, Meridian, Idaho, delineated in red on the plat attached hereto, marked Exhibit "A", and hereinafter called "Tenant's Gross Leasable Area" which Gross Leasable Area is approximately 2,400 square feet, constructed or to be constructed thereon by Landlord in accordance with the scope or work being Exhibit "B" attached hereto and by reference made a part hereof. This lease is made ugon the following terms covenants and conditions to which the parties hereby agree to: SECTION 1 TERM 1. The term of this lease shall be for a period of one (1) year, commencing on April 1, 1997, the date (the rent commencement date) and ending on March 31, 1998. OPTION TO ~ LEASE Lessor hereby grants to Lessee an option to renew the above lease for one additional term of one (1) year provided. that the Lessee is not in default under the terms of this lease, has not ever been in default in payment of the rent for more than fifteen (15) days, and provided that Lessee exercises this option by delivering to Lessor a written notice of election to exercise the option sixty (60) days prior to the termination of the above lease. It is agreed that the rental rate for the renewed lease shall be the same rate as the rate for the last month of the initial lease, but it shall not be less than the amount of rent that Lessee is paying during the last year of this lease. 88CTION 2 CONSTRUCTION 2. (a) Responsibility for complete construction of the premises is Landlords, with the respective obligations set forth in Exhibit "B", and defined therein as Landlord's Construction Obligation and any Description of Work to be Performed by Landlord at Tenant's Expense. It is the intention of the parties that Landlord shall have sole responsibility for planning and executing Landlord's construction obligation; (b) Landlord agrees to complete Landlord's construction obligation substantially in accordance with: (1) The plans and specifications (hereinafter called "Landlord's plans"j for the buildings and common areas shown on Bxhibit A, excluding work to be performed by Landlord's tenants. (2) Such further working drawings and specifications consistent with and in further development of Landlord's plans as may from time to time be reasonably necessary (copies of which shall be furnished to Tenant whenever they affect work on the premises), except that Landlord may make minor changes in its work on the premises without approval by Tenant, provided that any change in the floor area of the premises shall be reflected in the minimum rent, tax, insurance and common area maintenance obligations of Tenant. (c) Landlord and Tenant shall collaborate in the preparation of complete plans and specifications (hereinafter called "Tenant's plans") for the completion of work to be performed by Landlord at Tenant's expense and Tenant's construction obligation. The obligations of the parties with respect to the preparation of Tenant's plans shall be as follows: (1) Upon execution of the lease, Landlord shall supply to Tenant the information necessary to permit Tenant to prepare Tenant's plans for the performance of the work listed in Exhibit B as work to be performed by Landlord at Tenant's expense and Tenant's construction obligation. (2) Tenant shall, after receipt of the RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 2 information to be submitted pursuant to subparagraph 2.(c)(1) proceed promptly to prepare Tenant's plans for work to be performed by Landlord at Tenant's expense and Tenant's construction obligation. Said Tenant's plans shall be submitted to Landlord for written approval and such approval shall not be unreasonably withheld. Any objections by Landlord and the reason therefor shall be in writing and delivered to Tenant. Upon approval of Tenant's plans and delivery of the demised premises to Tenant, Tenant shall proceed diligently to commence construction of and to complete Tenant's construction obligation. Tenant agrees to proceed diligently with such installations and perform such work as is required of Tenant in a first- class workmanlike manner. {3) In the event that Tenant fails to supply Landlord plans required under subparagraph 2.(c)(2) above, within thirty (30) calendar days, after delivery of necessary information by Landlord, then Landlord shall have the right to terminate this lease by written notice to Tenant. (d) Tenant may, from time to time, make alterations and additions to the interior of the premises in accordance with plans and specifications first approved by Landlord which approval Landlord need not give if unusual expense will be required to readapt the premises to normal use on lease termination, or if the cost of insurance or taxes on the premises or the cost of Landlord's services called for hereunder, will be increased unless Tenant first agrees to pay such expense or increased cost. All such changes shall be part of the premises except such fixtures and items as by writing at the time of approval the parties agree shall be removed by Tenant on termination of this lease. All alterations and additions at any time undertaken by Tenant, and Tenant's original installation of equipment and furnishings prior to commencement of the lease term, shall be performed by contractors approved by Landlord, in such manner as to maintain harmonious labor relations., and so as not to damage any part of the property, and work performed before Landlord's construction work is finished shall be coordinated therewith. Tenant in every case before RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 3 starting work shall secure all licenses and permits necessary therefor; shall deliver to Landlord a statement of the names of all contractors and subcontractors and the estimated cost of all labor and material to be furnished by them; shall cause Tenant's contractors to carry workmen's compensation insurance covering all the employees of contractors and subcontractors and .public liability insurance with liability limits of $200,000 - $1,000,000, and property damage insurance with limits of $100,000 - $300,000, both general and vehicular (all such insurance to be written in companies approved by Landlord and insuring Landlord and Tenant as well as the contractors), and deliver to Landlord certificates of all such insurance. Tenant shall, at all times, keep the premises free from and clear of mechanics' liens, and unless waived in writing by Landlord, shall provide a suitable Payment, Performance and Completion bond prior to the commencement of any construction work in the premises. (e) All construction required or petmitted by this lease, whether by Tenant or by Landlord, shall be done in a good and workmanlike manner, and in compliance with all applicable laws and all lawful ordinances, regulations and orders of governmental authority and insurers of the premises. Either party may inspect the work of the other at reasonable times, and shall promptly give notice of observed defects. SECTION 3 RENTAL 3. Tenant agrees to pay minimum monthly rental in advance on the first day of each calendar month throughout the demised term, without deduction or offset of any kind, as follows: A. BASE RENT FOR THB FIRST YEAR OF THE TERM, TH8 BASE RENT SHALL BE ONE THOUSAND EIGHT HUNDRED AND NO/100 DOLLARS ($1,800.00) PER MONTH. B. SECURITY DEPOSIT LESSEB SHALL PAY NO SECURITY DEPOSIT. RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGB - 4 C. THE FIRST MONTHS RENT SHALL BE PAID ON APRIL 1, 1997 AND THE MONTHLY RENT SHALL ALWAYS BE DUE ON THE FIRST DAY OF EACH MONTH. Each installment of rent shall be increased by the sum of twenty ($20.00) for each day that payment of such installment of minimum rental to Landlord is later than the tenth day of the calendar month for which such rental is due. In the event the rent commencement date occurs other than on the first day of a calendar month, the first rental shall be prorated accordingly. Remittance shall be made to Landlord at such address as shall from time to time be designated by Landlord to Tenant in writing. SECTION 4 TAXES 4. Landlord shall pay the real estate taxes, assessments, levies and charges. SECTION 5 USE 5. Tenant agrees to use and occupy the premises during the term hereof for the purpose of providing offices and associated space for City employees. Tenant shall not use, or permit said premises or any part thereof, to be used for any purpose or purposes other than the purpose or purposes for which the said premises are hereby leased; and no use shall be made or permitted to be made of the said premises, or acts done, which will increase the existing rate of insurance upon the building in which said premises may be located over the standard rate of insurance prevailing in the area in which the premises are located, or cause a cancellation of any insurance policy covering said building, or any part thereof, nor shall Tenant sell, or permit to be kept, used, or sold in or about said premises, any article which may be prohibited by the standard form of fire insurance policies as the same may provide from time to time. SECTION 6 NUISANCE 6. Tenant shall not commit, or suffer to be committed, any waste upon the demised premises, or any public or private nuisance, or other act or thing which may disturb the quiet enjoyment of any other tenant in the building in which the demised RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 5 premises may be located or any other tenant in the property of which the demised premises may be a part. Tenant shall neither conduct nor permit to be conducted any sale by auction on the demised premises or any sale in the nature of a fire or distress sale or a going out of business sale. SECTION 7 ALTERATIONS 7. Tenant shall not make, or suffer to be made, any alterations in the premises, or any part thereof, without the prior written consent of Landlord as grovided in Paragraph 2 (d) above. Any additions to or alterations of the premises shall become at once a part of the realty and belong to the Landlord, unless agreed otherwise. SECTION 8 ABANDONMENT 8. Tenant agrees not to vacate or abandon the premises at any time during the demised term. Should Tenant vacate or abandon said premises or be dispossessed by process of law or otherwise, such abandonment, vacation or dispossession shall be a breach of this Lease and, in addition to any other rights which Landlord may have, Landlord may at once remove any personal property belonging to Tenant which remains on the demised premises and store the same, the cost of such removal and storage to be charged to the account of Tenant. SECTION 9 LANDLORD'S CONVEYANCE 9. If during the term of this lease Landlord, its successors or assigns, shall convey its interest in the demised premises, then from and after the effective date of the conveyance the Landlord so conveying shall be released and discharged from any and all obligations under this lease except those already accrued. SECTION 10 MAINTENANCE AND REPAIRS. All maintenance and repair to keep the exterior, RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 6 foundation, and roof of the leased premises in good condition and a pleasing appearance, shall be performed by and at the expense of the Lessor, unless such maintenance and repair must be performed due to the breach or negligence of Lessee. Lessee shall be responsible for all non-structural and non-major repairs and maintenance necessary to keep the interior of the leased premises in good conditions and a pleasing appearance for the above stated use. Structural and major repairs to the interior of the leased premises shall be performed as reasonably required, at the expense of, and by the Lessors. Repairs deemed to be "structural" or "major" shall include, but shall not be limited to, the following: Replacement of major heating, air conditioning, plumbing, or electrical systems, (excluded are those items of plumbing, electronics or electrical systems installed by the Lessee for its own use and benefit). By way of illustration, replacement of a defective section of floor would be "structural", but replacement of carpeting or similar floor covering would be "non-structural". By way of further illustration, any item of maintenance or repair which would constitute a capital expenditure, rather than an item of expense, would be deemed "major" or "structural". Lessee shall be responsible for general regular maintenance of the leased premises and the related components. Lessor shall be responsible for maintaining sidewalks, parking areas, and lawn areas in a clean and orderly condition, and for keeping any lawns and shrubbery watered and trimmed. Lessee shall be responsible for replacement of all broken glass and all broken or burned out light fixtures and bulbs, and for the cleaning of the exterior windows of the demised premises. Lessors shall pay for the trash removal, water and sewer. Lessee shall at all times, at Lessee's expense, keep the interior of the leased premises in a neat, clean, and orderly condition. BBCTION 11 LAWS AND REGULATIONS 11. Tenant at its own cost and expense shall comply promptly with all laws, rules, and orders of all Federal, State County and Municipal Governments, or departments, which may be applicable to the use of the leased premises, and shall likewise promptly comply with the requirements of the Board of Fire Underwriters or Landlord's insurance carrier concerning the use of the premises. SECTION 12 INDEMNIFICATION AND LIABILITY INSURANCE RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 7 12. 8xcept for such loss or damage as may be caused by the negligent or willful act of Landlord, its agents, or employees, Landlord shall not be liable to Tenant, its officers, agents, or employees for loss of, or damage, to property, including goods, wares and merchandise, or for injury or death to persons, in on, or about the premises, and Tenant agrees to indemnify and save and hold Landlord harmless from and on account thereof for any negligence or action of the City or its officers, agents, or employees, howsoever arising or by those people just mentioned. During the term thereof, Tenant shall maintain in full force and effect with insurance companies of good reputation a comprehensive liability insurance policy applicable to the premises and the activities of Tenant therein with a combined single limit for bodily injury and property damage of not less than $500,000. A certificate evidencing such coverage and providing that the insurance may not be cancelled without thirty (30) days prior written notice to Landlord shall be provided to Landlord. SSCTIOI~ 13 SIGNS AND OTHER ADVERTISING 13. The Tenant shall not affix or maintain upon the glass panes and supports of the show windows, doors, and the exterior walls of the premises, or within 36 inches of any window, door, or exterior wall of the premises, any sign, advertising placards, name, insignia, trademark, descriptive material or any other such like item or items, except such as shall have first received written approval of the Landlord as to size, type, color, location, copy, nature and display qualities; EXCEPT, Tenant may place legal notices, and other documents of the City of Meridian on the windows and/or doors of the premises. Anything to the contrary in this Lease notwithstanding, the Tenant shall not affix any sign to the roof of the premises. No advertising medium shall be utilized by Tenant which can be heard or experienced outside the Tenant's premises, including without limiting the generality of the foregoing, flashing lights, search-lights, loudspeakers, phonographs, radios or television. Tenant shall not display paint or place or caused to be displayed, painted or places, any handbills, bumper stickers or other advertising devices on any vehicle parked in the parking area of the property, whether belonging to Tenant, or to Tenant's agent, or to any other person; nor shall Tenant distribute, or cause to be distributed, on the property any handbills or other advertising devices. Tenant shall erect signs only after specific approval of Landlord and in conformance with the decor of the center. Landlord's approval hereunder shall not be unreasonably withheld. RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 8 SECTION 14 UTILITIES 14. (a) Tenant, from the time it first enters the premises for the purpose of setting fixtures, or from the commencement of the term of this lease, whichever date shall first occur, and throughout the term of this lease, shall pay for all public and other utilities and related services rendered or furnished to the premises, including, but not limited to, water, hot water, gas, electricity, telephone, heat, light, sewer charges, installation and connection charges or deposits therefor and refuse or garbage collection or disposal. Tenant shall not allow refuse, garbage, or trash to accumulate inside or outside of the demised premises. In the event that one or more of such utilities or related services shall be supplied to the premises and to one or more other tenants within the property without being individually metered or measured to the premises, Tenant's proportionate share thereof shall be paid as additional rent and shall be determined by Landlord's engineering consultants based upon their estimate of Tenant's anticipated usage. Landlord shall provide and maintain the necessary mains, conduits, wires, and cables to bring water and electricity to the premises. (b) Payment for Tenant's proportionate share of any and all unmetered water, gas, electricity and other utilities used by Tenant shall be made monthly and within ten (10) days of the presentation of bills to Tenant. Landlord may cut off and discontinue, without notice to Tenant, water, gas, electricity, or any other service whenever and during any period for with bills for the service, or any sum under this lease, are not properly paid by Tenant. (c) Landlord shall not be liable in damages, consequential or otherwise, arising out of any interruption whatsoever in utility services which are due to fire, accident, strike, acts of God, or other causes beyond the control of Landlord or any interruptions in such service which are necessary to the making of alterations, repairs, or improvements or authorized pursuant to subparagraph 14 (b) hereof . SECTION 15 BNTRY BY LANDLORD 15. Landlord, or its agents, shall not be permitted to enter the demised premises. BUT, upon reasonable notice Tenant shall allow Landlord to enter the demised premises to inspect the same; to maintain the building in which the said premises are RED CANYON - CITY OF MERIDIAN LEASE AGRBBMBNT PAGB - 9 located; to make such repairs to the demised premises as Landlord is obligated or may elect to make; to make repairs, alterations or additions to any other portion of the building in which the demised premises are located; to post notices on non-responsibility for alterations, additions ore repairs; to install, use and maintain pipes, ducts, conduits, wires and appurtenant meters and equipment for service to areas outside the premises; and to relocate any pipes, ducts, conduits, wires and appurtenant meters and equipment included in the premises whether located within or without the premises. Landlord shall have such right of entry and the right to fulfill the purpose thereof without any rebate of rent to Tenant for any loss of occupancy or quiet enjoyment of the demised premises thereby occasioned. SUCTION 16 DAMAGE AND DESTRUCTION 16. (a) In the event that the premises are totally destroyed or materially damaged or destroyed from cause not insured under Landlord's fire insurance policy with extended coverage endorsement, then Landlord shall have the right to terminate this lease by giving written notice of termination to Tenant within thirty (30) days after the date of such damage or destruction. If the lease is not so terminated, then Landlord shall diligently proceed to repair and restore the same. (b) In the event of material damage or partial destruction of the premises from a cause covered under Landlord's fire insurance with extended coverage endorsement, and adjustment of the loss with insurance carriers or in any event, within one hundred eighty (180) days after the date of such damage or destruction, then Landlord shall proceed to repair and restore the premises. If it appears that the premises may not be repaired or restored within said period, then either Landlord or Tenant shall have the right to terminate this lease by written notice to the other given within sixty (60) days after the date of such destruction, whether the premises are affected thereby or not. (c) In the event that the building's destroyed to the extent of not less than fifty percent (50~) of the replacement cost of said buildings, Landlord may elect to terminate this lease by written notice to Tenant given within sixty (60) days after the date of such destruction, whether the premises are affected thereby or not. (d) If in any such case the premises are rendered unfit for use and occupancy and the lease is not so RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 10 terminated, a just proportion of the minimum rent according to the nature and extent of the injury shall be abated until the premises, excluding any fixtures or items installed or paid for by Tenant shall have been put by Landlord in proper condition for use and occupation. (e) Except as expressly otherwise provided herein, damage to or destruction of the premises shall not serve to terminate the lease or result in rental abatement hereunder, Tenant waives any right of offset it may have against the obligation to pay rental hereunder under any statute or rule of law arising out of Landlord's duties of repair and restoration under the provisions hereof. (f) Landlord's duties of repair and restoration under the provisions hereof shall extend only to those portions of the premises insured as part thereof under Landlord's fire insurance with extended coverage endorsement. (g) Landlord shall obtain and maintain in force a standard fire and extended risk insurance policy with Landlord as insured, insuring the premises for at least ninety percent (90~) of the insurable replacement value thereof. The proceeds of said policy shall be payable to Landlord and used for repair and reconstruction of the improvements, if Landlord is obligated hereunder to repair or reconstruct, and subject to any requirements as to the disposition of the proceeds that may be imposed by any firm or organization with is the beneficiary under a Deed of Trust placed against the building of which the premises will form a part. (h) Landlord shall not be liable for any damage to property of Tenant or of others located on the leased premises, nor for the loss of or damage to any property of Tenant or of others by theft, casualty or otherwise. Landlord shall not be liable to Tenant for any loss of income due to damage or destruction of Tenant's property or the premises. Landlord shall not be liable for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow or leaks from any part of the leased premises or from the pipes, appliances or plumbing works or from the roof, street or sub- surface or from any other place or by dampness or by any other cause of whatsoever nature. Landlord shall not be liable for any such damage caused by other tenants or persons in the leased premises, occupants of adjacent property, of the property, or the public, or caused by operations in construction of any private, public or quasi-public work. Landlord shall not be liable for any latent defect in the leased premises or in the building for which they form a part except. for a period of one (1) year from the date Tenant takes RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 11 possession of the leased premises. All property of Tenant kept or stored on the leased premises shall be so kept or stored at the risk of Tenant only and Tenant shall hold Landlord harmless from any claims arising out of damage to the same, including subrogation claims by Tenant's insurance carrier. All insurance policies obtained by Tenant for the premises shall specifically waive any rights of subrogation against Landlord or Landlord's agents or employees. SBCTION 17 ASSIGNMENT 18. (a) Tenant shall not assign this lease or any interest therein, nor lease or underlet the said premises, or any part thereof, or any right or privilege appurtenant thereto, nor permit the occupancy or use of any part thereof by and other person, without the written consent of Landlord first had and obtained, and a consent o one assignment, subletting, occupancy or use, shall not be construed as a consent to any subsequent assignment, subletting, occupancy or use. Any such assignment, subletting, occupancy or use, without the prior written consent of Landlord, shall at the options of Landlord terminate this lease and any such purported assignment, sublease occupancy or use shall be null and void. Any request of Tenant to permit the assignment or subletting of this lease shall be accompanied by Tenant's check in the amount of One Hundred Dollars and No/100 ($100.00) which shall be retained by Landlord in the event that such assignment or subletting is permitted, or returned to Tenant in the event such is denied. 88CTION 18 DEFAULT 19. Should the Tenant at any time be in default hereunder with respect to any rental payments or other charges to the Tenant hereunder, and should such default continue for a period of five (5) days after written notice from Landlord to Tenant; or should the Tenant be in default in the prompt and full performance of any other of its promises, covenants or agreements herein contained and should such default or breach of performance continue for more than a reasonable time (in no event to exceed thirty (30) days). after written notice thereof from the Landlord to the Tenant specifying the particulars of such default or breach of performance; or should the Tenant vacate or abandon the premises; or should Tenant or any agent of Tenant falsify any report required to be furnished to Landlord pursuant to the terms of this lease, or R$D CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 12 should Tenant or any guarantor of this lease become bankrupt or insolvent, or file any debtor proceedings or take or have taken against Tenant or any guarantor of this lease in any court pursuant to any statute either of the United States or of any state a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Tenant's or any such guarantor's property, or if Tenant or any such guarantor makes an assignment for the benefit of creditors, or petitions for or enters into an arrangement or if Tenant shall suffer this lease to be taken under any writ of execution; then the Landlord may treat the occurrence of any one or more of the foregoing events as a breach of this lease, and in addition to any and all other rights or remedies of the Landlord hereunder and by the law provided, it shall be, at the option of the Landlord, without further notice or demand of any kind to Tenant or any other person: (aj The right of the Landlord to declare the term hereof ended and to re-enter the premises and take possession thereof and remove all persons therefrom, and the Tenant shall have no further claim thereon or thereunder; or (bj The right of the Landlord without declaring this lease ended to re-enter the premises and occupy or lease the whole or any part thereof for and on account of the Tenant and upon such terms and conditions and for such rent as the Landlord may deem proper and to collect said rent and any other rent that may thereafter become payable and apply the same toward the amount due or thereafter to become due from the Tenant and on account of such expense of such subletting and any other damages sustained by the Landlord; and should such rental be less than that herein agreed to be paid by the Tenant, the Tenant agrees to pay such deficiency to the Landlord in advance on the day of each month hereinbefore specified far payment of minimum annual rental and to pay to the Landlord forthwith upon any such reletting the costs and expenses the Landlord may incur by reason thereof; or (cj The right of the Landlord, even though it may have relet said premises, to thereafter elect to terminate this lease and all of the rights of the Tenant in or to the premises. Should the Landlord relet the premises under the provisions of subparagraph (bj above, it may execute any such lease either in its own name or in the name of the Tenant as it shall see fit, but the tenant therein named shall be under no obligation whatsoever to see to the application by Landlord of any rent collected by Landlord from such tenant, nor shall the Tenant hereunder have any right or authority whatever to collect any rent from such tenant. The Landlord shall not be deemed to have RRD CANYON - CITY OF MERIDIAN LEASE AGRSEMSNT PAGE - 13 terminated this lease, or the liability of the Tenant to pay rent thereafter to accrue, or its liability for damages under any of the provisions hereof, by any such re-entry or by any action in unlawful detainer, or otherwise, to obtain possession of the premises, unless the Landlord shall have notified the Tenant in writing that it has so elected to terminate this lease, and the Tenant further covenants that the service by the Landlord of any notice pursuant to the unlawful detainer statutes of the State of Idaho and the surrender of possession pursuant to such notice shall not (unless the Landlord elects to the contrary at the time of or at any time subsequent to the service of such notices and such election be evidenced by a written notice to the Tenant) be deemed to be a termination of this lease. Nothing herein contained shall be construed as obligating-the Landlord to relet the whole or any part of the premises. In the event of any entry or taking possession of the premises as aforesaid the Landlord shall have the right, but not the obligation, to remove therefrom all or any part of the personal property located therein and may place the same in storage at a public warehouse at the expense and risk of the owner or owners thereof. In the event of Tenant's default .and Landlord's retaking of possession of the premises, whether this lease is terminated by Landlord or not, Tenant agrees to pay to Landlord as an additional item of damages the cost of repairs, alterations, redecorating, leasing commissions, attorney fees and Landlord's other expenses incurred in retaking the premises and in reletting the premises to a new tenant. Should the Landlord elect to terminate this lease under the provisions of subparagraphs (a) or (c) above, the Landlord shall thereupon, without waiting for the end of the term hereof, be entitled to recover from the Tenant as damages the difference, if any, between the then reasonable rental value of the premises for the period of the term reserved in the lease and the amount of rental and other charges payable by the Tenant for the balance of the term of this lease, together with the rent then unpaid, if any. For all purposes of this Paragraph 19, the rental agreed to be paid by the Tenant or the amount of rental payable by the Tenant shall be deemed to be the minimum annual rental and all other sums required to be paid by Tenant pursuant to the terms of this lease. All such sums, other than the minimum annual rental, shall be computed on the basis of the average monthly amount thereof accruing during the immediately preceding sixty (60) month period, except that if it becomes necessary to compute such rental before such a sixty (60) month period has occurred then on the basis of the average monthly amount thereof accruing during such shorter period. In the event of default, all of the Tenant's fixtures, RED CANYON - CITY OF MERIDIAN LBASE AGREEMENT PAGE - 14 furniture, equipment, improvements, additions, alterations, and other personal property, shall remain in the subject premises and in that event, and continuing during the length of said default, Landlord shall have the right to take the exclusive possession of same and to sue same, rent or charge free, until all defaults are cured or, at its option, at any time during the term of this lease, to require Tenant to forthwith remove same. Notwithstanding any other provisions of this section, the Landlord agrees that if the default complained of, other than for the payment of monies, is of such a nature that the same cannot be rectified or cured within the thirty (30) day period requiring such rectification or curing as specified in the written notice relating thereto, then such default shall be deemed to be rectified or cured if the Tenant within such period of thirty (30) days shall have commenced the rectification and curing thereof and shall continue thereafter with all due diligence to cause such rectification and curing and does so complete the same with the use of such diligence as aforesaid. The remedies given to the Landlord in this section shall be in addition and supplemental to all other rights or remedies which the Landlord may have under the laws then in force. SECTION 19 VOLUNTARY SURRBNDBR 19. The voluntary or other surrender of this lease by Tenant, or a mutual cancellation thereof, shall not work a merger, but shall, at the option of Landlord, terminate all or any existing subleases or subtenancies, or operate as an assignment to it of any or all such subleases or subtenancies. 88CTION 20 ATTORNEY'S F88S 20. If Landlord shall be made a party to any litigation commenced by or against Tenant, Tenant shall pay all costs, expenses and attorney's fees incurred by Landlord in connection with such litigation except in the event that such litigation shall determine that Landlord has committed a breach of this lease and shall adjudicate that Landlord is liable therefor. In the event of any action at law or in equity between Landlord and Tenant to enforce any of the provisions and/or rights hereunder, the unsuccessful party to such litigation covenants and agrees to pay to the successful party all costs and expenses, including reasonable attorney's fees incurred therein by such successful RBD CANYON - CITY OF MERIDIAN LBASB AGREEMENT PAGB - 15 party, and if such successful party shall recover judgment in any such action or proceeding, such costs, expenses and attorney's fees shall be included in and as part of such judgment. If Landlord employs an attorney to collect delinquent money from Tenant, attorney's fees to be paid by Tenant shall in no event be less that Tow Hundred Dollars ($200.00) per occurrence. SECTION 21 NOTICES 21. All notices to be given to Tenant may be given in writing personally or by depositing the same in the United States certified mail, postage prepaid, and addressed to Tenant at the said premises, whether or not Tenant has departed from, abandoned or vacated the premises. Notice by Tenant to Landlord shall be in writing and deposited in the United States certified mail, postage prepaid, addressed to Landlord at the address specified from time to time as contemplated by Paragraph 3. SUCTION 22 WAIVER 22. The waiver by Landlord or any breach of any term, covenant or condition herein contained shall not be deemed to be a waiver of any other term, covenant or condition or any subsequent breach of the same or any other terns, covenant, or condition herein contained. The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this lease, other than the failure of Tenant to pay the garticular rental so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. SECTION 23 OFFSBT STATEMENTS 23. Tenant shall at any time and from time to time upon not less than ten (10) days prior request by Landlord, execute, acknowledge and deliver to Landlord a statement in writing certifying the date of commencement of this lease, that this lease is unmodified and in full force and effect (or if there have been modifications that the same is in full force and effect as modified and stating the date of the modifications) and further stating the dates to which the minimum rent and other charges have been paid, RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 16 and setting forth such other matters as may reasonably be requested by Landlord. SSCTIOg 2+~ HOLDING OVER 24. Any holding over after the expiration of the said term, with the consent of Landlord, shall be construed to be a tenancy from month to month, and shall be on the terms and conditions herein specified, so far as applicable. 88CTION 25 EXTRA EXPENDITURES 25. In the event that Landlord shall make any expenditure for which Tenant is responsible, then the amount thereof, together with interest at twelve (12$) per annum and costs, may, at Landlord's election, be added to and be deemed part of the installment of rent next falling due. PROVIDED, HOWEVER the cost of the floor covering which Lessor is initially paying for and installing but which Lessee is reimbursing Lessor for in monthly installments shall not be subject to the eighteen percent (18$) interest. SSCTION 26 CONDEMNATION 26. (a) If during the lease term, the premises, or any substantial part, are damaged by action of public or other authority, or are taken by eminent domain or receive compensable damage by reason of anything lawfully done in pursuance of public or other authority, this lease shall terminate at Landlord's election, which election may be made notwithstanding that Landlord's entire interest may not have been divested. In case of such damage or taking of part of the premises, if the remainder is insufficient for use for Tenant's purposes, or in case of such damage or taking of the time needed to do the construction work necessary to put the premises or such remainder in proper condition for use and occupation is reasonable estimated to exceed six (6) months, or Landlord does not commence within sixty ( 60 ) days after the damage or the surrender of the part taken and proceed with reasonable diligence to do such work, Tenant may terminate this lease, without penalty, by notice given to Landlord within thirty {30) days after the right to terminate arises. RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 17 If in any such case the premises are rendered unfit for use and occupation and the lease is not so terminated, a just proportion of the minimum rent according to the nature and extent of the injury shall be abated until the premises (or in case of a partial taking what may remain thereof), excluding any fixtures or items installed or paid for by Tenant shall have been put by Landlord in proper condition for use and occupation; and in case of a taking which permanently reduces the area of the premises, a just proportion of the minimum rent shall be abated for the remainder of the lease term. (b) Landlord reserves and excepts all rights to damages to the premises and the lease-hold hereby created, accruing by reason of exercise of eminent domain or by reason of anything lawfully done in pursuance of public or other authority. Tenant hereby grants to Landlord all Tenant's rights to such damages and covenants to deliver such further assignments thereof as Landlord may from time to time request. (c) In the event of any taking of the premises or any part thereof for temporary use, (1) the lease, including Tenant's obligation to pay rent, shall be and remain unaffected thereby, and (2) Tenant shall be entitled to receive for itself such portion or portions of any award made for such use with respect to the period of the taking which is within the lease term, provided that if such taking shall remain in force at the expiration or earlier termination of this lease, Tenant shall then pay to Landlord a sum equal to the reasonable cost of performing Tenant's obligations with respect to surrender of the premises and upon such payment shall be excused from such obligations. sscTSa~r 27 SUBORDINATION 27. This lease is and shall always be subordinate to any mortgage or Deed of Trust which is now or shall at any time be placed upon the demised premises or any part thereof or the building of which the demised premises are a portion and Tenant agrees to execute and deliver any instrument, without cost, which may be deemed necessary to further effect the subordination of this lease to any such mortgage or Deed of Trust. In the event that Landlord shall default under the terms of this lease, Tenant shall give Landlord written notice specifically setting forth the alleged default. Tenant agrees to give any Mortgagee and/or Trust .Deed RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 18 Bolder by registered mail, a copy of any Notice of Default served upon the Landlord, provided that prior to such notice Tenant has been notified, in writing, {by way of Notice of Assignment of Rents and Leases, or otherwise) of the address of such Mortgagee and/or Trust Deed Holder. Tenant further agrees that Landlord shall have thirty (30) days within which to cure any alleged default and that is Landlord shall have failed to cure such default within the time provided for in this Lease, then Landlord or Mortgagee and/or Trust Deed Holder shall have an additional time as may be necessary to cure if Landlord or any Mortgagee and/or Trust Deed Holder has commenced and is diligently pursuing the remedies necessary to cure such default, (including in the case of any Mortgagee and/or Trust Deed Holder, commencement of foreclosure proceedings, if necessary to effect such cure) in which event this Lease shall not be terminated while such remedies are being so diligently pursued. SECTION 28 SIDEWALK OBSTRUCTIONS 28. Tenant shall not obstruct the sidewalks adjacent to the demised premises or any portion of the Common Areas by placing any item thereon, including without limitation newspaper racks, bicycle stands, weighing machines, amusement rides, and merchandise or merchandise fixtures of any kind, without first obtaining written permission from Landlord. sgcTSON 2s EMPLOYEE PARKING 29. Automobiles of Tenant, its employees and agents shall not be parked within the property area except in areas designated as "employee parking." Landlord shall have the right to cause to be removed any car or Tenant, its employees or agents that may be parked in any area other than an employee parking area, without liability of any kind to Tenant, its agents or employees, and Tenant agrees to save and hold harmless Landlord, its agents and employees from any and all claims, losses, damages and demands asserted or arising in respect to or in connection with the removal of any such automobile as aforesaid. Tenant will from time to time upon request of Landlord supply Landlord with a list of license plat numbers of all automobiles owned by its employees and agents. In the event of a violation of this paragraph by Tenant, its employees, or agents, Landlord may give Tenant written notice of such violation, identifying therein the automobile causing such violation, and thereafter for each subsequent violation, upon written notice thereof from Landlord to Tenant, Tenant shall be assessed the sum of ten dollars ($10.00j, which sum shall be added RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 19 to the installment of minimum rental next following due. SECTION 30 SUCCESSORS 30. All the terms, covenants and conditions hereof shall be binding upon and inure to the benefit of the heirs, executors, administrators, successors and assigns of the parties hereto, provided that nothing in this paragraph shall be deemed to permit any assignment, subletting, occupancy or use contrary to the provisions of paragraph 18. SECTIOI~i 31 COMMON AREAS 31. Areas within the outer property lines of the property as delineated on the plat attached hereto marked Exhibit "A", exclusive of areas therein specified for leasing to tenants shall be known as Common Areas, as shall all other areas from time to time designated by Landlord for use as part of the property. Landlord covenants and agrees at its sole cost and expense to improve said Common Areas by installing and constructing thereon Parking Lots, access roads, pedestrian walkways, sidewalks, exterior canopies, delivery and landscaped areas and lighting facilities to the extent to which Landlord shall determine to be necessary. Said Common Areas shall be available for the common sue of all Landlord's tenants in the property, their employees, customers and invitees. Notwithstanding anything elsewhere herein contained, Landlord reserves the right from time to time to make reasonable changes in, additions to and deletions from the Common Areas and the purposes to which the same may be devoted, and the use of Common Areas shall at all times be subject to such reasonable rules and regulations as may be promulgated by Landlord. SECTION 32 COMMON AREA MAINTENANCE 32. Landlord will maintain or cause to be maintained the Common Areas. RBD CANYON.- CITY OF MERIDIAN LEASE AGREEMENT PAGE - 20 SECTION 33 SUBROGATION WAIVER 33. Any insurance carried by either party with respect the premises and property therein or occurrences thereon shall, if it can be so written without additional premium, or with an additional premium which the other party agrees to pay, include a clause or endorsement denying to the insurer rights of subrogation against the other party to the extent rights have been waived by the insured prior to occurrence of injury of loss. Each party, notwithstanding any provisions of this lease to the contrary, hereby waives any rights of recovery against the other for injury or loss due to hazards covered by insurance containing such clause or endorsement to the extent of the injury of loss covered. SECTION 34 SECURITY DEPOSIT 34. Tenant shall pay no security deposit. SSCTIOI~ 35 INTEREST 35. Any sum accruing to Landlord under the terms and provisions. of this lease which is not paid when due shall bear interest at the rate of twelve percent (12$) per annum from the date when the same becomes due and payable by the terms and provisions hereof until paid, notwithstanding specific reference thereto elsewhere in this lease. SECTION 36 RULES AND REGULATIONS 36. Tenant and Tenant's employees and invitees shall observe faithfully and comply with any reasonable rules and regulations governing the property as may from time to time be promulgated by the Landlord. SSCTI01~ 37 MISCELLANEOUS 37. (a) The opening for business of any other tenants RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 21 is not a condition of this lease. (b) The marginal captions in this lease are for convenience only and shall not in any way limit or be deemed to construe or interpret the terms and provisions hereof. (c) Time is of the essence of this lease and of all provisions hereof, except in respect to the delivery of possession of the demised premises. (d) The words "Landlord" and "Tenant", as used herein, shall include the plural as well as the singular. Words used in the neuter gender include the masculine and feminine. If there be more than on Landlord or Tenant the obligations hereunder imposed upon Landlord or Tenant shall be joint and several. (e) This lease shall be construed and enforced in accordance with the laws of the State of Idaho. (f) No payment by Tenant or receipt by Landlord of a lesser amount than the monthly rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such rent or pursue any other remedy in this lease provided. (g) This lease and any Exhibits or Riders, if any, set forth all the covenants, promises, agreements, conditions and understandings between Landlord and Tenant oral or written, between them other than are herein set forth. Except as herein otherwise provided, no subsequent alteration, amendment, change or addition to this,. lease shall be binding upon Landlord or Tenant unless reduced to writing and signing by them. (h) Landlord does not, in any way or for any purpose, become a partner of Tenant in the conduct of its business, or otherwise, or joint venturer or a member of a joint enterprise with Tenant. The provisions of this lease relating to the percentage rent payable hereunder are included solely for the purpose of providing a method whereby the rent is to be measured and ascertained. (i) Tenant shall due its best efforts to complete, or cause to be completed, all deliveries, loading, unloading and services to the leased premises prior to 10:00 a.m. of each day. Tenant shall attempt to cause no delivery trucks RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 22 or other vehicle servicing the premises to park or stand in front of, or at the rear of, the premises from 10:00 a.m. to 9:00 p.m. of each day. Landlord reserves the right to further regulate the activities of Tenant in regard to deliveries and servicing of leased premises, and Tenant agrees to abide by such further nondiscriminatory regulations of Landlord. (j ) Tenant shall replace at its expense any and all plate and other glass damaged or broken from any cause whatsoever in and about the leased premises. The Tenant shall be responsible for the maintenance of the plate glass on the premises but shall have the option either to insure the risk or to self-insure. (k) Tenant shall be responsible for any and all damage done to the premises as a result of any forced entry or attempted forced entry. (1) Tenant shall, in the event any proceedings are brought for the foreclosure of, or in the event of exercise of the power of sale under any mortgage or similar encumbrance made by the Landlord covering the leased premises, attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Landlord under this lease. (m) If any term, covenant or condition of this lease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this lease, or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this lease shall be valid and be enforced to the fullest extent permitted by law. (n) The submission of this lease for examination does not constitute a reservation of or option for the leased premises and this lease becomes effective as a lease only upon execution and delivery thereof by Landlord and Tenant. (o) Tenant shall not record this lease without the w=itten consent of Landlord, however, upon the request of either party hereto the other party shall join in the execution of a memorandum or so-called "short form" of this lease for the purposes of recordation. Said memorandum or short form of this lease shall describe the parties, the leased premises and the term of this lease and shall incorporate this lease by reference. (p) Tenant shall give immediate notice to Landlord in case of fire or accidents in the leased premises or in the RBD CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 23 building or which the premises are a part. 8SCTION 38 CONTINGENCY 38. This lease is contingent upon obtaining agproval from the City of Meridian, Idaho, for a conditional use permit to operate the premises in the fashion suggested in this lease agreement. IN WITNESS WHEREOF, the parties hereto have executed this lease or, as the case may be, have caused their officers thereunto duly authorized to execute this lease the day and year first above written. DATED This ZD day of ~ uS t , 1997 . LESSOR LESSEE RED CANYON CORPORATION CITY OF MERIDIAN By L oyd Gerber ~ t d. Corrie President or Elizabeth M. Gerber Secretary William G. Berg, J . City Clerk ti~,~,~a~~R~~,~~~~~~~ ~ ~ ~/ ~. y ^~ w ~ ~~ R~ }~ .~/ ~ ~~~IF39tA7"> tfi133~~'ti~~ RED CANYON - CITY OF MERIDIAN LEASE AGREEMENT PAGE - 24 STATE OF IDAHO } ss. County of Ada ) On this ~ day of ffcr ~ , 1997, before me, the undersigned, a Notary Publ in and for said State, personally appeared Lloyd M. Gerber ,known to me to be the President sic- of the RED CANYON CORPORATION, that executed this instrument and the persons who executed the said instrument on behalf of said corporation and acknowledged to me that such corporation executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, the day and year in this certificate first above written. .~'~ E L ' ~~~'•. (SEAL } ; ~~ ~\ ~'~°'~~".qJ'•~: ®~oT A ~, ~'~'®J' -~ A ~~+ e71~~ f QF , STATE OF IDAHO, ss. County of Ada, r ~., ~~u,i~ Notar public f"or Idaho Resi nce: }~~y,~'C( ~ My ommission Expires ~ G~ On this o2G~` day of ~i u f` , 1997, before me, the undersigned, a Notary Public i and for said State, personally appeared the Mayor, Robert D. Corrie, and the City Clerk, William G. Berg, Jr. , respectively, of the CITY OF MERIDIAN, a municipality and political subdivision of the State of Idaho, known to me to be the entity that granted the authority to the said individuals to subscribe their names to the within and foregoing instrument in their capacity as Mayor and City Clerk, and acknowledged to me that they executed the same in the name of the CITY OF MERIDIAN. IN officia written {SEAL} WITNESS WHEREOF, I have hereunto set my hand and affixed my 1 seal the day and year in this certificate first above >P.~' ~OT~~ ~~~ `~~ b ~ a ' ~ RED CANYON - ~7~T7C'~F MERIDIAN LEASE AGREEMENT PAGE - 25