Build-to-suite Lease Agreement

BUILD TO SUIT LEASE
DATED APRIL 8,1998
between
TACC INVESTORS, LLC, LANDLORD
and
INTUIT INC., TENANT.


2
BUILD TO SUIT LEASE


1. PARTIES. This lease, dated, for reference purposes only, April 8, 1998, is made by and between TACC Investors, LLC, an Arizona limited liability company (herein called "Landlord"), and Intuit Inc., a Delaware corporation (herein called "Tenant").


2. PREMISES; ACCESS. Landlord hereby leases to Tenant and Tenant leases from Landlord for the term, at the rent, and upon all of the conditions set forth herein, the real property (consisting of approximately fifteen (15) acres of land) shown on EXHIBIT A, together with a facility consisting of two (2) buildings connected by a common entryway and lobby to be constructed on such real property pursuant to this Lease, containing approximately 135,000 square feet (the buildings and related improvements are sometimes called the "Improvements"), all of the foregoing being called the "Premises." The Improvements will be constructed in two (2) phases: Phase I will consist of a 65,000 square foot shell Base Building, related Tenant Improvements, a 5,000 square foot common entryway and lobby, no fewer than 650 paved parking spaces and related site work. Phase II will consist of a 65,000 square foot shell Base Building, related Tenant Improvements, an additional 450 paved parking spaces and related site work.


Upon completion of Phase I, the Premises will have access to and from Tucson Boulevard. It is anticipated that at some future date Tucson Airport Commerce Center may construct road improvements connecting the Premises to Country Club Road as part of future phases of development of Tucson Airport Commerce Center. Landlord is making no assurances to Tenant regarding such additional access to Country Club Road.


3. TERM; IMPROVEMENTS; COMMENCEMENT DATE.


3.1. TERM. The term (the "Term") of this Lease shall be for approximately ten (10) years commencing on the Commencement Date (as defined in paragraph 3.3) and ending on the earlier of (a) ten (10) years following the date Phase II is Ready for Occupancy (as defined in paragraph 3.3), or (b) July 31, 2009, unless this Lease is sooner terminated or extended, or the Premises are expanded, pursuant to any provision hereof.


3.2. IMPROVEMENTS.


(a) The Improvements are preliminarily described in EXHIBIT B (the "Outline Specifications"). Tenant has previously approved the Outline Specifications. The Outline Specifications describe certain elements of the Tenant Improvements and certain elements of the site and the shell Base Building for Phase I. The Improvements described in the Outline Specifications are to be designed and constructed with provision for special improvements and other features keyed to Tenant's particular business. The parties recognize there will continue to occur a rapid process of


-1- 3


refinement of the Improvements and the Outline Specifications to meet Tenant's particular needs, City of Tucson and regulatory requirements and any contingencies that arise in achieving final plans and specifications. Landlord and Tenant agree to act reasonably, diligently and in good faith to produce final plans and specifications for the Improvements (which term shall include all agreed changes). Tenant acknowledges that Tenant's timely and diligent cooperation with Landlord is essential to timely completion. Tenant agrees to provide Landlord and Landlord's agents with timely and thorough programs of Tenant's requirements, reviews, comments and approvals.


(b) In particular, set forth in EXHIBIT C is the critical path schedule which shall be adhered to by Landlord and Tenant in order to develop expeditiously final plans and specifications (the "Plans") for the Improvements and to achieve the delivery dates set forth in paragraph 3.4. Landlord and Tenant shall use all reasonable efforts to perform their respective obligations within the time periods set forth in EXHIBIT C. The critical path schedule will allow insubstantial and harmless deviations from the strict schedule but not substantial departures therefrom unless Landlord and Tenant agree so in a writing that commensurately extends the delivery dates under paragraph 3.4. Landlord and Tenant acknowledge that some of the approvals required in the critical path schedule have already been given. Eric Johnson will be Tenant's contact person for purpose of submittals and approvals.


(c) Any change in the Outline Specifications, the Improvements or the other plans and specifications envisioned under this paragraph 3.2 requested by Tenant shall (i) be reasonable, (ii) not involve major structural changes (unless Landlord agrees), (iii) require no additional land (unless Landlord agrees), (iv) result in no violation of any existing or future CC&R's or applicable laws and regulations, (v) have Landlord's written approval, which Landlord may not unreasonably withhold or delay, and (vi) require Tenant to pay any additional cost required to implement such change. The cost of any Tenant-requested change to the Tenant Improvements will be handled pursuant to subparagraph (f) below. The cost of any Tenant-requested change to the site or to the shell Base Buildings will be handled pursuant to subparagraph (h) below. Any CC&R's not in force as of the date of execution of this Lease shall be reasonably derivative from any draft of CC&R's delivered to Tenant before such execution date, and in no event will any future CC&R's impair the right of Tenant to use the Premises for the uses permitted under paragraph 8.1. No change in the Base Buildings will occur after the design process for the Tenant Improvements has commenced, without Landlord's written approval.


(d) "Tenant Improvements" will consist of all fixed Tenant improvement work shown on the Plans including but not limited to all interior walls, heating/ventilating/air conditioning systems, architecture and engineering fees, building permit fees and general contractor fees associated with the Tenant Improvements. Tenant will furnish an emergency generator from Tenant's existing facility and Tenant shall provide all fixtures, furnishings and equipment not expressly shown as Landlord-provided on the Plans, including, without limitation, the air conditioning for the telephone/computer room.


-2-


4


(e) Upon completion of the process described above, Landlord shall submit the Plans to the City of Tucson for approval. If the City of Tucson review process necessitates material changes in the Plans, Landlord will notify Tenant promptly and Tenant shall deliver to Landlord Tenant's written comments on such changes within five (5) days after Landlord has notified Tenant. Landlord and Tenant shall have the right to approve any such material changes in the Plans.


(f) Landlord shall provide Tenant with an allowance (the "Allowance") for Tenant Improvements not to exceed $28.00 per square foot in the Improvements as reasonably calculated by Landlord. At the very earliest practicable date Landlord will provide Tenant with written notice of the estimated if not final square footage of the Improvements so that Tenant has a reasonable cost guideline to work with. If the actual cost of the Tenant Improvements exceeds the Allowance, the excess will be amortized over the ten-year Term of this Lease at 9% interest and shall be added to monthly Rent. If the actual cost of the Tenant Improvements is less than the Allowance, Tenant will receive a credit against monthly Rent equal to 60% of the actual cost reduction.


Example:


If the Tenant Improvements are constructed at $30/sq. ft. over the
70,000 sq. ft. (approx.) comprising Phase II, the rental rate will
increase from $0.7475 to $0.7728, or an increase of $1,773.46 per month
($2 x 70,000 = 140,000, amortized over 10 years at 9%).


Example:


If the Tenant Improvements are constructed at $26/sq. ft. over the
70,000 sq. ft (approx.) comprising Phase I, the rent credit would be
$84,000 ($2 x 70,000 = 140,000 x 60% = 84,000), credited against the
rent due for the first two (2) months.


(g) After Landlord and Tenant have completed the foregoing process and reached agreement in writing, Landlord shall meet all conditions of zoning and obtain the necessary permits and commence and diligently proceed to complete at its sole cost and expense, through reputable contractors of Landlord's choice, the construction of the Improvements in a good and workmanlike manner substantially as described in the Plans, and provide all necessary transportation, labor, materials, tools, implements and appliances required to construct the Improvements. Notwithstanding the provisions of the Outline Specifications or the Plans, Landlord may make reasonable substitutions and other "value engineering" changes so long as the substitutions or changes result in Improvements capable of at least equal performance. Landlord shall promptly inform Tenant of any substitutions and changes. Tenant may protest any proposed substitution that is likely to lower the quality of the Improvements. Landlord and Tenant will collaborate promptly with each other to eliminate any dispute over substitutions. Landlord will be required to provide no improvements other than the


-3- 5


Improvements described in the Plans, subject only to those changes mutually approved by Landlord and Tenant in writing.


(h) Landlord and Tenant recognize that the process of designing and constructing the Improvements may result in additional cost to Landlord and require an adjustment of the Rent payable by Tenant inasmuch as the process will be devoted to Tenant's particular needs. The cost of any material change or addition to the site or the shell Base Building components of the Improvements described in the Outline Specifications, or any material change in the scope or quality thereof, including the additional costs to Landlord resulting from change orders to the general contract(s), together with the associated costs of the contractors' general conditions, shall result in an increase in the Rent. If such adjustment becomes necessary, Landlord will recalculate the Rent and promptly provide Tenant with new Rent figures for the Premises with such detail and other back-up information as may reasonably be requested by Tenant to fairly demonstrate the basis for such an adjustment, to which Tenant's approval shall not be unreasonably withheld. Landlord and Tenant will collaborate promptly with each other to eliminate any dispute over recalculation of the Rent. The adjustment sum will be amortized over the ten-year Term of this Lease at nine percent (9%) interest and shall be added to monthly Rent.


(i) Landlord is making no express or implied warranties to Tenant regarding the condition of the Premises or the Improvements excepting only those express warranties set forth in this Lease. Tenant acknowledges that Landlord will be utilizing the professional services of an architect and a general contractor and although Landlord is making no representations or warranties other than the express warranties set forth in this Lease, Landlord will provide Tenant with the benefits of any standard warranty that Landlord receives on building components, as well as the ten (10) year manufacturers' warranty/bond on the roof membrane (the cost of which Tenant shall pay to Landlord before taking possession of the Premises). Tenant acknowledges that some or all of these warranties require ongoing maintenance of building components for the warranties to remain valid, and Tenant agrees to discharge all maintenance required by the terms of any warranties and to enter into the appropriate service agreements at Tenant's sole expense. Notwithstanding the foregoing, Tenant shall also have the benefit of any express or written warranty provided by any architect, contractor, subcontractor or supplier (a "Provider") providing services, labor, materials, supplies and equipment for the Improvements, as well as any other warranty available to Tenant under applicable law, excepting only any implied warranty of habitability or fitness for any particular purpose, which implied warranty, if any, Tenant hereby disclaims as to Landlord but reserves as to all Providers.


Notwithstanding anything to the contrary in the preceding paragraph, Landlord expressly warrants to Tenant that the Improvements will be constructed in compliance with applicable laws and building codes, subject to the time requirements for assertion of claims set forth in other paragraphs of this Lease.


-4- 6


3.3. COMMENCEMENT DATE. The Term of this Lease shall commence on the earlier of (the "Commencement Date") (i) the date on which Tenant takes possession of the first sub-phase of Phase I of the Premises to conduct its business (for a purpose other than fixturization or fit-up), or (ii) the day on which a temporary certificate of occupancy (or equivalent approval of completion) has been issued for the first sub-phase of Phase I of the Premises by the appropriate governmental agency, whereupon such sub-phase shall be deemed "Ready for Occupancy." The Commencement Date shall not, under any circumstances, occur before September 1, 1998. Each of the sub-phases of Phase I and the entirety of Phase II shall be deemed Ready for Occupancy the day on which a temporary certificate of occupancy (or equivalent approval of completion) has been issued for such sub-phase or Phase II by the appropriate governmental agency. For a phase or sub-phase to be considered "Ready for Occupancy" any required parking spaces shall then be available for Tenant's use. Each certificate of occupancy may contain stipulations and conditions so long as it permits Tenant to take occupancy of a given sub-phase or phase of the Premises and use such sub-phase or phase of the Premises for all of the purposes contemplated by this Lease. Landlord and Tenant shall execute, as soon as determinable, a written statement specifying (a) the Commencement Date and/or (b) the termination date of this Lease, which, when executed, will become part of this Lease.


3.4. DELIVERY. Delivery of Phase I of the Premises Ready for Occupancy will occur in three (3) successive sub-phases consisting of the following Improvements, on the following dates:


First sub-phase: a 65,000 sq. ft. shell Base Building, 650
paved parking spaces, and approximately
37,000 sq. ft. of contiguous Tenant
Improvements, including an approximately
2,000 sq. ft. computer room and
approximately 500 telemarketing call
stations, or such fewer number of
stations as may be determined by Tenant's
needs (as to which Tenant will notify
Landlord on or before April 15, 1998), or
by area constraints: September 1, 1998


Second sub-phase: approximately 28,000 sq. ft. of Tenant
Improvements: September 30, 1998


Third sub-phase: 5,000 sq. ft. common entryway and lobby:
October 15, 1998


In addition, Landlord will make every reasonable effort to have the first sub-phase shell (including the computer room) ready for Tenant fit-up by August 1, 1998, provided that Landlord shall have no liability to Tenant if notwithstanding Landlord's reasonable efforts Landlord is unable to meet this schedule.


-5- 7


On or before April 30, 1998, Tenant shall notify Landlord in writing of the date by which Tenant desires Phase II of the Premises, consisting of a 65,000 sq. ft. shell Base Building, an additional 450 paved parking spaces and related Tenant Improvements, to be delivered to Tenant Ready for Occupancy, which shall occur no earlier than May 1, 1999, and no later than September 1, 1999 (the "Phase II Delivery Date").


In addition, Landlord will make every reasonable effort to have the Phase II shell Base Building and 450 paved parking spaces ready for Tenant fit-up seventy-five (75) days prior to the Phase II Delivery Date, provided that Landlord shall have no liability to Tenant if notwithstanding Landlord's reasonable efforts Landlord is unable to meet this schedule.


Notwithstanding any provision in this Lease to the contrary, each scheduled date of delivery and any other scheduled date of performance by Landlord under this paragraph 3.4 shall be extended one (1) day for each day of Tenant Delay and one (1) day for each day of delay caused by Force Majeure. "Tenant Delay" shall mean any delay in Landlord's commencement or completion of Improvements that occurs as a result of: (i) any request by Tenant either that Landlord perform any work in addition to that required under the Plans or that Landlord delay commencement or completion of the Improvements for any reason including, without limitation, time for contractor, subcontractor, supplier or materialman performance arising out of a change order or a material change in the Plans or the Improvements requested by Tenant, (ii) any material change by Tenant to the Plans after final approval thereof, (iii) any failure of Tenant to respond to any request for approval required hereunder within the time period specified for such response or, where no specific response time is specified, within a reasonable period of time after the request, (iv) any delay in Landlord's construction of the Improvements caused by Tenant's interference with Landlord's work or Tenant's activities in the Premises, or (v) any other act or omission of Tenant or an Event of Default by Tenant under this Lease that effectively delays commencement or completion of the Improvements. If loss of schedule time due to Tenant Delay reasonably can be avoided by Tenant's own action within twenty-four (24) hours after receipt of notice of the problem from Landlord, Tenant Delay in such instance will not be incurred until Landlord gives Tenant such notice, unless an emergency or other highly compelling circumstances obviate the necessity of notice. Force Majeure shall have the meaning ascribed to it in paragraph 42, except that for purposes of this paragraph, Force Majeure will not include Landlord's failure to meet applicable zoning conditions to the development and use of the Premises as contemplated by Landlord and Tenant. The parties acknowledge that Landlord has accrued, as of April 7, 1998, eight (8) days of Force Majeure credit due to weather-caused delays prior to that date, which Landlord may use, at Landlord's election, to extend the scheduled dates of delivery and performance under this paragraph 3.4 for Phase I.


If any sub-phase of Phase I is not Ready for Occupancy, or if Phase II is not Ready for Occupancy, by the respective date(s) set forth above for any reason other than (i) Tenant Delay or (ii) Force Majeure, Tenant's sole and exclusive


-6-


8


remedy shall be a credit against Rent next coming due under this Lease equal to the sum of (a) any bona fide "holdover" penalty that Tenant is required to pay, and demonstrates that it has paid, to its present landlord because of Tenant's inability to vacate its present premises, or some portion thereof, and take scheduled occupancy of the Improvements, and (b) any expenses or charges actually incurred by Tenant as a result of the delayed delivery of the Premises, excluding loss of profits and other special or consequential damages. The term "holdover" penalty is defined as the difference between (iii) Tenant's then base rent at its present facility and (iv) any additional rent imposed on Tenant under its present lease due to Tenant's failure to vacate its present premises on schedule.


Notwithstanding anything to the contrary in this Lease, other than Tenant Delay, Tenant shall have the right in its sole and absolute discretion, and for its sole and exclusive remedy, to terminate this Lease if the first sub-phase of Phase I of the Premises is not Ready for Occupancy by December 31, 1998.


3.5. EARLY ENTRY. Landlord shall permit Tenant to enter the Premises prior to the Commencement Date for the purpose of placing on the Premises furniture, fixtures, wire, cabling and equipment earlier approved by Landlord in writing and any improvements and alterations permitted under paragraph 9.5.


If Tenant does enter the Premises prior to the Commencement Date, Tenant shall procure and maintain insurance policies required pursuant to paragraph 10 and provide written indemnification to Landlord in form reasonably acceptable to Landlord prior to such entry. Landlord and Tenant shall carefully coordinate their respective efforts so as not to interfere with the objectives of paragraphs 3.2 and 3.4. Entry by Tenant shall be made so as to comply in all respects with paragraph 9.5 and the other provisions of this Lease, all applicable ordinances, regulations and requirements of the City of Tucson, any applicable CC&R's, and in such a manner so as not to interfere with Landlord or Landlord's contractors in the performance of the construction work contemplated hereby. Tenant shall not use the Premises for the storage of inventory or otherwise commence business without the express prior written consent of Landlord. Landlord shall not be responsible for repainting or cleaning the Improvements as a result of any damage or wear resulting from Tenant's early entry.


4. RENT; OTHER CHARGES.


4.1. MONTHLY RENT. Subject to the qualification in the following subparagraph, Tenant shall pay to Landlord rent ("Rent") for the Premises monthly payments, in advance, without deduction, off-set or demand, on the first (1st) day of each month of the Term hereof at the rates set forth below. Rent for any period during the Term hereof which is for less than one month shall be a pro rata portion of the monthly installment based upon a thirty (30) day month. Rent shall be payable in lawful money of the United States to Landlord at the address stated herein or to such other persons or at such other places as Landlord may designate by written notice to Tenant from time to time.


-7- 9
Rent for each phase or sub-phase of the Premises shall commence upon, but not before, the earlier of (a) Tenant's taking possession of such phase or sub-phase to conduct its business (for a purpose other than fixturization or fit-up), or (b) Landlord's delivery of such phase or sub-phase Ready for Occupancy. If Tenant elects, pursuant to paragraph 3.4, to defer taking possession of Phase II until a date subsequent to May 1, 1999, Tenant shall nevertheless pay rent thereon to Landlord as compensation for Landlord's holding the space, commencing on May 1, 1999, at a rate equal to twenty percent (20%) of the scheduled Rent for Phase II until Tenant starts to pay Rent for Phase II, which shall occur no later than September 1, 1999.


Monthly Rent payable by Tenant to Landlord for the initial ten (10) year Term of this Lease shall be calculated as follows:


Months 1 - 48: $0.7475/sq. ft. NNN
("Initial Rate")


Months 49 - 96: No less than the Initial Rate, subject
to increase effective at month 49 in
accordance with paragraph 4.2 ("First
Adjusted Rate")


Months 97 - end No less than the First Adjusted
of initial Term: Rate, subject to increase
effective at month 97 in accordance
with paragraph 4.3 ("Second Adjusted
Rate")


For purposes of calculating Rent payable by Tenant to Landlord during the entire Term of this Lease (including the Renewal Terms), Landlord and Tenant hereby agree that the Premises shall be deemed to contain 135,000 square feet, subject to increase by expansion under paragraph 47 below. Notwithstanding the foregoing, square footage (and the resultant Rent calculations) shall be based on the final Plans (measurements to extend to the outside of exterior walls) once completed.


4.2. FIRST ADJUSTED RATE. The Rent payable by Tenant to Landlord during months 49-96 of the Lease shall be no less than the Initial Rate increased (but not decreased) by a factor equal to the cumulative percentage increases in the U.S. Department of Labor, Bureau of Labor Statistics Consumer Price Index for All Urban Consumers (Tucson, Arizona, region) (All items; 1982-84 = 100) (the "Consumer Price Index") occurring between the Commencement Date and the forty-ninth (49th) month of this Lease, not to be less than one percent (1%) nor to exceed four percent (4%), per year.


4.3. SECOND ADJUSTED RATE. The Rent payable by Tenant to Landlord during months 97-120 of the Lease shall be no less than the First Adjusted Rate increased (but not decreased) by a factor equal to the cumulative percentage increases in


-8- 10 the Consumer Price Index occurring between the forty-ninth (49th) month of this Lease and the ninety-seventh (97th) month of this Lease, not to be less than one percent (1%) nor to exceed four percent (4%), per year.


4.4. RENTAL TAXES. Tenant further agrees to pay to Landlord with Rent, or at any other time during or after the Term of this Lease within thirty (30) days after Landlord's demand therefor, at Landlord's election, any excise, sales or transaction privilege tax imposed or levied by any government or governmental agency upon Landlord on account of this Lease, Rent paid hereunder by Tenant or any other payments made or obligations discharged or benefits conferred by Tenant hereunder, including without limitation, payments of Tenant's Proportionate Share of the expenses, if any, under paragraph 5, Real Property Tax under paragraph 6, and the costs of insurance under paragraph 10. Tax calculations will be subject to applicable changes in local and state tax ordinances.


4.5. PROPORTIONATE SHARE. Tenant's Proportionate Share of the expenses under paragraph 5, if any, Real Property Tax under paragraph 6, and the costs of insurance under paragraph 10, to be paid by Tenant to Landlord, as additional rent, shall be one hundred percent (100%).


5. COMMON CHARGES; LEGAL COMPLIANCE; ESTIMATED PAYMENTS. Tenant shall pay to Landlord as additional rent, which shall be due within thirty (30) days after demand, any fee, charge or other assessment against the Premises or any portion thereof that is levied or assessed pursuant to any property owners' association, CC&R's or similar authority, or any fee, charge or other assessment against the Premises or any portion thereof that represents a fair and equitable percentage of the cost of repair, maintenance, upkeep, and replacement (including periodic resurfacing) of any road, street, amenity or common area directly serving the Premises. Landlord will provide Tenant with prior notice of the amount and due dates of potential charges under this paragraph as soon as possible after the information is available to Landlord. Landlord will also make every reasonable effort to provide Tenant with prior notice of the work to be done, which shall be reasonable under the circumstances, but Landlord's good faith failure to give this notice does not relieve Tenant of its payment obligation for the reasonable fe ...