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1. Resolution 4862 - Stream International & TeleTechCity of Kalispell Charles A. Harball Office of City Attorney City Attorney 312 First Avenue East P.O. Box 1997 Kalispell, MT 59903-1997 MEMORANDUM TO: Mayor Pamela B. Kennedy and Kalispell City Council Tel 406.758.7708 Fax 406.758.7771 charball@kalispell.com FROM: Charles Harball, City Attorney Chris Kukulski, City Manager SUBJECT: Resolution for the Approval of Documents of Agreement Between Stream/Selectron, TeleTech Holdings and the City of Kalispell MEETING DATE: Tuesday, February 23, 2004 Special Council Meeting BACKGROUND: On December 22, 2003 Council considered and passed upon the proposals of Stream International and TeleTech, Holdings, Inc. regarding the terms of the buyout of the Stream Use Agreement and Lease of the City owned property at the Gateway West Mall location as well as an agreement with TeleTech regarding a new Use Agreement and Lease at that location. From that point, further discussions and negotiations with these parties brought about the documents that accompany this memorandum. These documents are consistent with the terms of the Memorandums of Understanding that were approved by Council on December 22nd, except on the following points. 1. The City will no longer be providing TeleTech with an allowance [the 4% loan] that was originally anticipated. TeleTech will finance its needs at the site from its own private sources. 2. The term of the lease now recognizes the following conditions: a. The total term of the lease is ten years. b. TeleTech has the absolute option to terminate the lease at the end of five years. c. In the event that TeleTech is unable to satisfy its workforce requirements from the local labor pool, it may terminate the lease at the end of 3 years. Stream/Selectron — TeleTech Memorandum February 19, 2004 Page - 2 By passing the resolution, Council is approving the attached documents, in their substantive form to be used in the City's agreement with Stream/Selectron and TeleTech. RECOMMENDATION: That Council approve the documents drafted by its retained legal counsel of Dorsey and Whitney to be used in its agreement with Stream/Selectron and TeleTech. FISCAL EFFECTS: Based upon the payout being made to the City from Selectron and the guaranteed three year cash flow from TeleTech, the City will meet its obligations and will own the Gateway West asset free and clear at the end of the term. Further, the City and greater community will benefit from additional citizens on a payroll for a period of at least three years rather than merely expending funds to maintain an empty facility. Respectfully submitted, -oz Cha s ar all, City Attorney Chris Kukulski, City Manager Office of City Attorney City of Kalispell RESOLUTION NO.4862 RESOLUTION RELATING TO LOAN BUYOUT AND LEASE TERMINATION FOR THE STREAM INTERNATIONAL SERVICE CORP. PROJECT; APPROVING LOAN BUYOUT AND LEASE TERMINATION AGREEMENT BETWEEN THE CITY, FLATHEAD ECONOMIC DEVELOPMENT AUTHORITY AND SOLECTRON CORPORATION; APPROVING THE OPTION TO PURCHASE BETWEEN THE CITY, FLATHEAD ECONOMIC DEVELOPMENT AUTHORITY, AND CAPITAL GROUP, LLC; APPROVING THE JOBS AND USE AGREEMENT BETWEEN THE CITY AND TELETECH HOLDINGS, INC. AND TELETECH SERVICES CORPORATION; AND APPROVING FORM OF THE LEASE AGREEMENT; AND APPROVING AND AUTHORIZING THE EXECUTION AND DELIVERY OF DOCUMENTS RELATED THERETO. BE IT RESOLVED by the City Council (the "Council") of the City of Kalispell, Montana (the "City"), as follows: WHEREAS, Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, as amended (the "Act"), authorizes the City to issue and sell its taxable tax increment industrial infrastructure revenue bonds for the purpose of financing all or a portion of the costs of the acquisition, construction and installation of urban renewal projects and related financing costs; and WHEREAS, the City has, pursuant to the Act, established its West Side Urban Renewal District (as hereinafter defined, the "District") and has provided for the segregation of the tax increment derived therefrom as permitted by the Act; and WHEREAS, pursuant to Flathead County Commissioners' Resolution No. 1346, Flathead County (the "County") created the Flathead County Economic Development Authority as a port authority (the "Authority") on July 22, 1999; and WHEREAS, the County has appointed the Commissioners of the Authority and has pursuant to Resolution No. 1346 delegated certain powers, duties and responsibilities to the Authority; and WHEREAS, pursuant to the Act, the City has financed the acquisition of a 63,101 square foot space in the Gateway West Mall in the City including a commercial office facility of approximately 60,645 square feet (the "Property") through the sale of its West Side District Taxable Tax Increment Urban Renewal Revenue Bonds, Series 2000 (the "Series 2000 Bond") in the aggregate principal amount of $2,500,000, to evidence a loan from the Board of Investments of the State of Montana (the "Board of Investments"); and WHEREAS, pursuant to the Act, the City and the Authority accepted the proposal from Stream International Services Corp. ("Stream") for the lease, development and use of the Property as a call center (the "Project") and entered into a Lease Agreement pursuant to a Location, Development and Use Agreement dated as of February 8, 2000 (the "Location and Use Agreement"); and WHEREAS, pursuant to the Location and Use Agreement, Stream entered into a 10 year lease of the Property pursuant to a Lease Agreement dated as of February 8, 2000, with the City and the Authority (the "Lease"); and WHEREAS, pursuant to an Interlocal Agreement, dated as of February 7, 2000, the City, the Authority and the County have set forth their responsibilities and obligations with respect to the acquisition, ownership, management and financing of the Property and other obligations with respect to the Project; and WHEREAS, Stream notified the City and the Authority of its intention to close its operation at the Property and request to terminate the Lease; and WHEREAS, the City and the Authority have received a proposal to lease the Property from TeleTech Holdings, Inc. ("TeleTech"); and WHEREAS, at a public meeting held December 22, 2003, the City Council considered Stream's notice and request and TeleTech's proposal, approved the proposed Memorandum of Understanding, and authorized the City Manager, City Attorney and Community Development Director, along with the Executive Director of the Authority, to enter into negotiations with Stream and TeleTech to finalize the Memorandum of Understanding and to execute the documents on the City's behalf, and WHEREAS, the City, the Authority and Stream entered into a Memorandum of Understanding, dated as of December 31, 2003, setting forth the conditions for the termination of the Lease (the "Stream Memorandum of Understanding"); and WHEREAS, the City and TeleTech entered into a Memorandum of Understanding, dated January 20, 2004 (the "TeleTech Memorandum of Understanding"), pursuant to which TeleTech will enter into a Lease for the Property and operate a call center thereon (the "TeleTech Project"); and WHEREAS, the City and Authority have conducted negotiations with Stream and TeleTech as well as other parties to arrive at final terms and conditions that are satisfactory to the Company, the City and the Authority. Section 1. Draft Forms of Documents. Draft forms of the following documents have been prepared and submitted to this Council, and are hereby directed to be filed with the City Clerk: (a) Assignment and Consent to Assignment of Lease; (b) Loan Buyout and Lease Termination Agreement, between and among the City, Authority and TeleTech; (c) Jobs and Use Agreement, between the City and TeleTech, with the following Exhibits: Exhibit A —Form of Shopping Center Lease Agreement Exhibit B—Form of Option to Purchase Real Property (the Lease) Exhibit C—the Parking Plan Exhibit D—Form of the Company's Job Audit Certificate Exhibit E—Form of Certificate of Termination. 2 Section 2. Authorization and Approval of the Jobs and Use Agreement: Assignment and Consent to Assignment of Lease; and Loan Buyout and Lease Termination Agreement. The forms of the Jobs and Use Agreement; Lease Agreement; Assignment and Consent to Assignment of Lease; and Loan Buyout and Lease Termination Agreement referred to in Section 1 are hereby approved. The Mayor and the City Manager are authorized and directed to execute and deliver each of the aforementioned documents as may be required in substantially the form of the exhibits. The Mayor, City Manager, Finance Director and City Attorney, or any two of them, are also authorized to execute such other instruments as may be required to give effect to the transactions contemplated herein, in the Jobs and Use Agreement, Lease Agreement and in the Loan Buyout and Lease Termination Agreement. Section 3. Parking. The Council hereby approves of the acquisition of land to provide additional parking spaces for the TeleTech Project as required in the Jobs and Use Agreement in accordance with the Option to Purchase and the City Manager and Finance Director are hereby authorized to proceed with the acquisition of the Additional Land described in the Option to Purchase upon execution of the Jobs and Use Agreement and the Lease. The City agrees to pay for one-half of the costs of the acquisition of the Additional Land and the development of the additional parking required for the TeleTech Project and the Authority has agreed to pay for the other half of the costs. The City and the Authority will each own one-half of the Additional Land. The Mayor, City Manager, Finance Director and City Attorney, or any two of them, are also authorized to execute the Option to Purchase and such other documents or instruments as may be required to evidence the acquisition of the Additional Land and development of parking thereon. Section 4. Modifications, Absence of Officers. The approval hereby given to the various documents referred to above includes an approval of such modifications thereto, deletions therefrom and additions thereto as may be necessary and appropriate and approved by the Mayor, City Manager, Finance Director and the City Attorney. The execution of any instrument by the appropriate officer or officers of the City herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. In the absence or disability of the Mayor or City Manager, any of the documents authorized by this resolution to be executed, may be executed by the acting Mayor and in the absence or disability of the Finance Director by such officer of the City who, in the opinion of the City Attorney, may execute such documents. Section 5. Effective Date. This resolution shall become effective immediately upon its passage and approval. PASSED AND APPROVED by the City Council of the City of Kalispell, Montana, this 23rd day of February, 2004. ATTEST: Theresa White City Clerk Pamela B. Kennedy Mayor 3 LOAN BUYOUT AND LEASE TERMINATION AGREEMENT THIS AGREEMENT is made this 23rd day of February, 2004, by and between the City of Kalispell, a municipal corporation and political subdivision of the State of Montana ("City") and the Flathead Economic Development Authority, a body politic organized and existing under the laws of the State ("Authority") (collectively, "Landlord"), and Solectron Corporation, a Delaware corporation ("Tenant"). BACKGROUND: 1. Tenant and City entered into a Location, Development and Use Agreement dated as of February 8, 2000 (the "Development and Use Agreement") which obligated the Tenant to create and maintain a call center on certain premises located at Gateway West Mall, 1203 Highway 2, Kalispell, Montana, as more fully described in the 2000 Lease (the "Premises"), to snake certain Improvements to the Premises and to employ a certain number of full time employees over a specified period of time at specified hourly rates (the "Project"). The Development and Use Agreement imposed specific financial obligations on the Tenant, including the following: A. To repay the City-UDAG Improvements Advance in the principal amount of $1,000,000 amortized over a I0-year term at a rate of 11.5% (the "Improvement Rent"); B. To repay the City -American Capital Advance for Improvements in the sum of $1,500,000 amortized over a 10-year term at a rate of 12.41% per annum (the "Additional Improvement Rent"), the payments of which have been assigned to ACG-Kalispell Investors, LLC; C. To make Deficiency Tax Payments as defined in the Development and Use Agreement; and D. To lease the Premises from the Landlord for a minimum term of 10 years subject to the terms and conditions set forth in the form lease agreement attached as Exhibit D to the Development and Use Agreement. 2. Tenant entered into a Lease Agreement with the Landlord for the Premises dated March 8, 2000 (the "2000 Lease"). 3. Tenant desires to terminate the 2000 Lease prior to the Expiration Date set forth therein, and to be released of its obligations under the Development and Use Agreement and other documents executed and delivered therewith (the "Contractual Obligations"). 4. Landlord has agreed to an early termination of the 2000 Lease and a release of all Contractual Obligations, subject to satisfaction of and in accordance with the terms and conditions contained herein. NOW, THEREFORE, the parties hereto, in consideration of the mutual promises and covenants contained herein, and intending to be legally bound hereby, agree that the 2000 Lease is and shall be terminated and the Contractual Obligations satisfied, effective as of .February 23, 2004 ("Termination Date") provided as follows: 1. Upon Tenant's execution and delivery of this Agreement to Landlord, Tenant shall pay to Landlord the following amounts: A. Base Rent. The sum of $1,360,711.84 for Base Rent which represents the net present value of the rental stream of $275,000.00 rent per year to be paid on the remainder of 6.5 years of the lease agreement discounted at four (4.0%) percent (=$1,560,401.39) LESS a credit for the prepaid rent for the remainder of the lease term (($307,214.70 x 6.5 years)/10 years = $199,689.55). B. Improvement Rent. The sum of $767,394.28 which represents the outstanding principal amount of the Improvement Rent loan with interest thereon through February 23, 2004. 2. Upon Tenant's execution and delivery of this Agreement to Landlord, Tenant shall pay to ACG-Kalispell Investors, LLC, Additional Improvement Rent in the amount of $1,137,746.81. 3. Tenant shall comply with all the terms and conditions of the 2000 Lease through the Termination Date; thereafter neither party shall have any further rights or obligations under the 2000 Lease or the .Development and Use Agreement other than any obligations of Tenant which by their terms survive the expiration or earlier termination of the 2000 Lease. Notwithstanding anything contained herein to the contrary, after the Termination Date, Tenant shall be obligated to pay to Landlord any .Property Tax Obligation and any other amounts which were due during the Term in accordance with Section 5.7 of the Development and Use Agreement. 4. Tenant acknowledges that it will only remove its furnishings, equipment and trade fixtures from the Premises in accordance with Article XV of the 2000 Lease and it will leave at the Premises after the Termination Date, the Improvements, City financed Improvements, Personal Property and Equipment which were installed in the Premises by Tenant under Sections 5.2 and 5.3 of the Development and Use Agreement. 5. This Agreement is contingent upon Landlord and TeleTech Holdings, Inc. entering into a new lease for the Premises. [rest of page intentionally left blank] 2 IN WITNESS WHEREOF, Landlord and Tenant have caused this Agreement to be duly executed as of the day and year first above written. CITY OF KALISPELL By: Pamela Kennedy, Mayor Chris Kukulski, City Manager FLATHEAD ECONOMIC DEVELOPMENT AUTHORITY In President of the Board SOLECTRON CORPORATION By: Name: Title: (Signature page to Loan Buyout and Lease Termination Agreement, by and between the City of Kalispell, Montana, Flathead Economic Development Authority and Solectron Corporation, dated as of February 23, 2004.) ACKNOWLEDGEMENT AND RECEIPT Of THE CITY OF KALISPELL, MONTANA 1, the undersigned, being the duly qualified and acting City Finance Director of the City of Kalispell, Montana (the "City"), hereby certify and acknowledge that on the date of this instrument I received from Stream International Services Corp. ("Stream"), which has assigned all of its interests and obligations to Selectron Corporation ("Selectron") as of December 15, 2003, the following: 1. Base Rent. The sum of $1,360,711.84 for Base Rent which represents the net present value of the rental stream of S275,000.00 rent per year to be paid on the remainder of 6.5 years of the lease agreement discounted at four (4.0%) percent (=$1,560,401.39) LESS a credit for the prepaid rent for the remainder of the lease term (($307,214.70 x 6.5 years)/1.0 years = $199,689.55). Improvement Rent. The sum of [$767,394.281 which represents the outstanding principal amount of the Improvement Rent loan with interest thereon through February 23, 2004. WITNESS my hand officially as such City Finance Director and the seal of the City as of this 23rd day of February, 2003. (SEAL) CITY OF KALISPELL, MONTANA Finance Director ACKNOWLEDGEMENT AND RECEIPT OF AMERICAN CAPITAL GROUP 1, the undersigned of ACG-Kalispell Investors, LLC, a California limited liability company ("American Capital") hereby acknowledge receipt of the sum of $1,137,746.81 from Stream International Services Corp. ("Streanf ), which has assigned all of its interests and obligations to Selectron Corporation ("Selectron") as of .December 15, 2003, which represents payment in full of the amounts owed by Stream for repayment of an Additional improvement Loan of $1,500,000 under the terms of a Rental Agreement dated as of March 8, 2000, between the City of Kalispell, Montana (the "City") and Stream (the "Rental Agreement"), which payments were assigned to American Capital pursuant to an Assignment Agreement of the same date. American Capital hereby releases Stream, Selectron and the City of any and alI other obligations owed to it under the Rental Agreement and the Assignment. Dated as of this 23rd day of February, 2004. AMERICAN CAPITAL GROUP By Its JOBS AND USE AGREEMENT between. CITY OF KALISPELL, MONTANA and TELETECH HOLDINGS, INC. and TELETECH SERVICES CORPORATION Dated as of February 23, 2004 TABLE OF CONTENTS Page Section 1. Definitions; Rules of Interpretation; Exhibits ................................................ 2 1.1. Definitions................................................................................................... 2 12. Rules of Interpretation................................................................................ 6 1.2. Controlling .Document................................................................................ 6 1.4. Exhibits...................................................................................................... 6 Section 2. Representations ................. ........ ___ ...... ........... ....... ............ ....... ................... 6 2.1. City Representations................................................................................... 6 2.2. Company Representations ......................... Section 3. City Undertakings .......................................................................................... 8 3.1. Lease of Property.,..... . ................. __ ......... ___ ........................................... 8 3.2. CDBG Grant............................................................................................... 8 3.3. Parking .................................................... Section 4. Company's Undertakings with Respect to Project ........................................ 8 4.1. Lease of Property........................................................................................ 8 4.2. Permits; Environmental Laws.................................................................... 8 4.3. Corporate Existence Assumption .................... ...... 9 4.4. Property Tax Obligation; Deficiency Tax Payment ................................... 9 Section 5. Job Provisions — Reduction of Rent............................................................... 10 5.1. Inducement........................................................................ 5.2. Evidence of Job Creation; Job Audit... .............................................. I ... .... 11 5.3. Insufficient Work Force.............................................................................. I I Section 6. General Provisions ........... ............... .......... ................. ..... I...................... I.—... 11 6.1. Agreement to Pay Attorney's Fees and Expenses ...................................... 11 6.2. No Additional Waiver Implied by One Waiver .............. 6.3. Conflicts of Interest; City's Representatives Not Individually Liable.............................................................................. 11 6.4. Rights Cumulative...................................................................................... 12 6.5. Term of Agreement; Ternimation............................................................... 12 Section 7. Administrative Provisions.......................................................... I ........ ........... 12 7.1. Notices .............. ..... .......... .......I ......... I ....... I .... I., ............ .. .... 7.2. Delegation of Authority.............................................................................. 13 7.3. Non-Compete.............................................................................................. 13 7.4. Binding Effect............................................................................................. 13 T5. Severability................................................................................. 7.6. Amendments, Changes and Modifications... ..................... ... 13 1 7.7. Further Assurances and Corrective Instruments ......................................... 7.8. Execution Counterparts............................................................................. 7.9. Applicable Law........................................................................................... 7.10. Captions--. .......... ........................... ......... ............................................ Signatures l xhibit A— Form of Shopping Center Lease Exhibit 13— Form of Option to Purchase Exhibit C— the Parking Plan Exhibit D—Form of the Company's Job Audit Certificate Exhibit E—Form of Section 5.3 Certificate 11 13 13 13 13 JOBS AND USE AGREEMENT THIS JOBS AND USE AGREEMENT, dated as of February 23, 2004, between the CITY OF KALISPELL, MONTANA, a municipal corporation and political subdivision of the State of Montana (as hereinafter defined, the "City"), TELE TECH HOLDINGS, INC., a for profit corporation duly organized and existing under the laws of the State of Delaware (as hereinafter defined, the "Company"), and TELETECH SERVICES CORPORATION, a for profit corporation duly organized and existing under the laws of the State of Colorado (as hereinafter defined, "TSC"). WITNESSETH: WHEREAS, pursuant to Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, as amended (the "Act"), the City established its West Side Urban Renewal District (the "District") and has provided for the segregation of the tax increment derived therefrom as permitted by the Act; and WHEREAS, pursuant to the Act, the City has financed the acquisition of a 63,101 square foot space in the Gateway West Mall in the City including a commercial office facility of approximately 60,645 square feet (the "Property") through the sale of its West Side District Taxable Tax Increment Urban Renewal Revenue Bonds, ,Series 2000 (the "Series 2000 Bond") in the aggregate principal amount of $2,500,000, to evidence a loan from the Board of Investments of the State of Montana (the "Board of Investments"); and WHEREAS, pursuant to Flathead County Commissioners' Resolution No. 1346, Flathead County (the "County") created the Flathead County Economic Development Authority as a port authority (the "Authority") on July 22, 1999; and WHEREAS, pursuant to the Act, the City and the Authority accepted the proposal from Stream International Services Corp. ("Stream") for the lease, development and use of the Property as a call center and entered into a Lease Agreement pursuant to a Location, Development and Use Agreement dated as of February 8, 2000 (the "Location and Use Agreement"); and WIIPIZEAS, pursuant to the Location and Use Agreement, Stream entered into a 10 year lease of the Property pursuant to a Lease Agreement dated as of February 8, 2000, with the City and the Authority (the "Stream Lease"); and WHEREAS, Stream notified the City and the Authority of its intention to close its operation at the Property and to terminate the Stream Lease; and WHEREAS, as of December 15, 2003, Stream has assigned all of its interests and obligations under the Location and Use Agreement and the Stream Lease to Solectron Corporation ("Solectron"); and WHEREAS, the City, the Authority and Solectron have entered into a Memorandum of Understanding, dated as of December 31, 2003, setting forth the conditions for the termination of the Stream Lease (the "Solectron Memorandum of Understanding"); and WHEREAS, the City, the Authority, and Solectron have entered into a Loan Buyout and Lease Termination Agreement, dated as of February 23, 2004 (the "Termination Agreement"), consistent with the Solectron Memorandum of Understanding, whereby Solectron will satisfy its obligations to the City and the Authority and the City will release Stream and Solectron from their respective obligations under the Stream Lease and terminate the Stream Lease; and WHEREAS, the City and the Company have entered into a Memorandum of Understanding, dated January 20, 2004 (the "TeleTech Memorandum of Understanding"), pursuant to which the Company or a wholly owned subsidiary of the Company will establish a call center at the Property (the "Project") upon and subject to the terms and conditions set forth therein; and WHEREAS, the Company has determined that TSC, a wholly owned subsidiary of the Company, will enter into the Lease; and WHEREAS, pursuant to an Interlocal Agreement; dated as of February 7, 2000, the City, the Authority and the County have set forth their responsibilities and obligations with respect to the acquisition, ownership, management and financing of the Property; and WHEREAS, the City and Authority have conducted negotiations with the Company as well as other parties to arrive at final terms and conditions of the Project that are satisfactory to the Company, the City and the Authority. NOW THEREFORE, the City, pursuant to the Act, the Authority, the Company and TSC, each in consideration of the representations, covenants and agreements of the other, as set forth herein, mutually represent, covenant and agree as follows: Section 1. Definitions-, Rules of Interpretation; Exhibits. 1.1. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context clearly requires otherwise, the following terms have the meanings assigned to them: "Act" means Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, including any amendment thereof. "Agreement" means this Jobs and Use Agreement, including any amendment hereof or supplement hereto entered into in accordance with the provisions hereof. "American Capital" means ACG-Kalispell Investors, LLC, a California limited liability company or successor thereto. "Approved Minimum Hourly Wage" means $8.00 per hour. "Authority" means the Flathead County Economic Development Authority or any successor to its functions under the Interlocal Agreement. 2 "Benefits" means the standard benefits package offered by the TeleTech Companies in the U.S. to their Full Time Employees, as it may be modified from time to time. "Board of Investments" means the Board of Investments of the State of Montana or any successor to its functions under the Bond Resolution. "Board Loan" means the loan made by the Board of Investments to the City in the principal amount of $2,500,000. "Bond" means the City's West Side District Taxable Tax Increment Urban Renewal Revenue Bonds, Series 2000, issued to evidence the Board .Loan. "Bond Resolution" means Resolution No. 4536, adopted by the City Council on February 7, 2000, authorizing the issuance of the Bond and setting forth the terms and conditions related thereto, as such may be amended or supplemented from time to time in accordance with its terms. "Business Day" means any day other than a Saturday, Sunday or other day on which the Registrar for such series of Bond is not open for business. "City" means the City of Kalispell, .Montana, or any successors to its functions hereunder. "City Representative" means the City Manager or any other person authorized to act on behalf of the City under or with respect to this Agreement, as evidenced by a certificate conferring such authority executed by the City Manager and provided to the Company. "Company" means TeleTech Holdings, Inc., a Delaware corporation, or its permitted successors and assigns hereunder. "Company Certificate" means the certificate filed by the Company from time to time, with. the City certifying the number of jobs created with respect to the Project in substantially the form as shown on Exhibit D hereto. "Council" means the City Council or any successor governing body of the City, however denominated by statute or charter. "CSR" means a customer service representative. "Declaration of Restrictions and Establishment of Easements Affecting Land" means the Declaration of Restrictions and Establishment of Easements Affecting Land between ACG-Kalispell Investors, LLC, the City and the Authority, of record in the office of the County Clerk and Recorder of Flathead County as Document No. 2000 068 1600. "Deficiency Tax Payment" means the payment by TSC to the City of an amount equal to the greater of TSC's actual Property Tax Obligation as defined herein or S 140,000. "District" means the West Side Urban Renewal District created by Ordinance No. 1259 (the "Ordinance"), adopted on March 17, 1997, which Ordinance approved the West Side Urban Renewal Plan for the District containing a tax increment financing provision all as set forth in the Ordinance. "Environmental Laws or Regulations" means and includes the Federal Comprehensive Environmental Response and Liability Act ("CERCLA" or the "Federal Superfund Act") as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. §§ 9601 et seq.; the Federal Resource Conservation and Recovery Act of 1876 ("RCRA"), 42 U.S.C. §§ 6901 et seq.; the Clean Water Act, 33 U.S.C. § 1321 et seq.; and the Clean Air Act, 42 U.S.C. §§ 7401 et seq., all as the same may be from time to time amended, and any other federal, state, county, municipal, local or other statute, code, law, ordinance, regulation, requirement or rule which may relate to or deal with human health or the environment including without limitation all regulations promulgated by a regulatory body pursuant to any such statute, code, law or ordinance. "Existing FF&E" means the furniture, fixtures and equipment located within the Property as of the date hereof and leased to TSC pursuant to the Lease. "Fiscal Year" means January 1 through December 31 of each year. "Force Majeure" means, without limitation, the following: acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders or restraints of any kind of the government of the United States of America of the State or any of its departments, agencies or officials, or any civil or military authority; insurrections; riots; landslides; earthquakes; fires; storms; droughts; floods; explosions; or any other cause or event not reasonably within the control of the TeleTech Companies and not resulting from their negligence. "Full Time CSR" means a Full Time Employee working at the Project as a CSR. "Full Time Employee" or "(FTE)" means with respect to a 12-month period, an employee working not less than 2080 hours. With respect to any period less than 12-months, a Full Time Employee shall mean an employee working not less than the applicable pro rasa portion of 2080 hours a year, e.g., not less than 1040 hours during a 6-month period; not less than 520 hours during a 3-month period. "Improvements" means the work, materials, fixtures and improvements, if any, installed by the TeleTech Companies on the Property after the date hereof. "Job Audit" means the audit performed by the City or its agent, as provided in Section 5.2. "Lease" means the Shopping Center .Lease entered into by the City, the Authority and TSC in respect of the Property, substantially in the form of Exhibit A. "Lease Execution Date" means February 23, 2004. Lease Year" shall mean each twelve month period commencing the first day of the Lease. "Option to Purchase" shall mean the agreement between the City and American Capital pursuant to which the City has the option to purchase the property needed to satisfy TSC's parking requirements under the Lease, as more specifically described in Section 3.3 of this Agreement and on Exhibit B. "Personal Property and Equipment" means the items of personal property and equipment to be installed and located in the Property by the TeleTech Companies after the date hereof. "Plan" means the West Side Urban Renewal Plan approved by Ordinance No. 1259, adopted by the City Council on March 17, 1.997, and amended by Ordinance No. 1347, adopted by the City Council on February 7, 2000. "Pledged Revenues" means the following sources of funds that will be pledged to the repayment of the Bond: the Port Authority Levy and the Tax Increment, including the Deficiency Tax Payment. "Port Authority Levy" means an annual appropriation by Flathead County, Montana, of $125,000 of its authorized millage for "Port Authority" purposes, plus a pledge to levy and appropriate an additional $31,000 in the event the other Pledged Revenues are inadequate to pay the principal of and 'interest on the Bond when due. "Property" means the approximate 63,101 square foot of real property including a commercial office facility of approximately 60,645 square feet acquired by the City from the proceeds of the Board Loan to be leased to TSC pursuant to the Lease. "State" means the State of Montana. "Taxes" means all taxes levied on an ad valorem basis by a Taxing Body against taxable real and personal property located within the District and shall include all payments in lieu of taxes received by the City with respect to property within the District. "Tax Increment" means the amount received by the City pursuant to the Act and the Plan from the extension of levies of Taxes against the incremental taxable value, as defined in the Act, of all taxable property within the District and shall include any payments in lieu of Taxes attributable to the incremental taxable value and all payments received by the City designated as replacement revenues for lost tax increment. "Taxing Body" means the City, the County, the school districts, the State and any other political subdivision or governmental unit which may hereafter levy Taxes against taxable rental or personal property within. the District. "TeleTech Companies" means individually or collectively, as the context may require, the Company and its direct and indirect affiliates and subsidiaries. "TSC" means TeleTech Services Corporation, a Colorado corporation which is a wholly owned subsidiary of the Company, and its permitted successors and assigns under this Agreement and as Tenant under the Lease. "Wages" means any money due an employee from the employer or employers, whether to be paid by the Dour, day, week, semimonthly, monthly, or yearly, and includes bonus, piecework, and all tips and gratuities that are covered by section 3402(k) and service charges that are covered by section 3401 of the Internal Revenue Code of 1954, as amended and applicable on January 1, 1953, received by employees for services rendered by them to patrons of premises or businesses licensed to provide food, beverage, or lodging. 1.2. Rules of .Interpretation. (1) This Agreement shall be interpreted in accordance with and governed by the laws of the State without giving effect to the conflicts -of -laws principles thereof (2) The words "herein," "hereof' and words of similar import, without reference to any particular section or subdivision., refer to this Agreement as a whole rather than to any particular section or subdivision Hereof (3) References herein to any particular section or subdivision hereof are to the section or subdivision of this instrument as originally executed. (4) Any terms not defined herein but defined in the Bond Resolution shall have the same meanings herein unless the context hereof requires otherwise. (5) "Or" is not exclusive but is intended to contemplate or encompass one, more or all of the alternatives conjoined. 1.3. Controlling Document. To the extent there is a conflict or inconsistency between this Agreement and the TeleTech Memorandum of Understanding, this Agreement shall control. 1.4. Exhibits. The following Exhibits are attached to and by reference made a part of this Agreement: Exhibit A: a form of the Lease; Exhibit B: a form of the Option to Purchase; Exhibit C: the Parking Plan; Exhibit D: a form of the Company's Job Audit Certificate; and Exhibit E: Section 5.3 Certification Section 2. Representations. 0 2.1. City Representations. The City hereby represents as follows: (a) The City is authorized by law to enter into this Agreement, the Lease and the Option and to carry out its obligations hereunder and thereunder. (b) The City has negotiated and agreed upon the conditions for the termination of the Stream Lease. Upon execution of the Lease Termination Agreement, which will occur simultaneously with the execution of this Agreement, neither Stream nor Solectron has any further right, title or interest in or to the Property or the Existing FF&E. (c) The City Council has, after a public hearing duly called and held, duly authorized the execution and delivery of this Agreement, the Lease, the Option and the Termination Agreement. (d) All acts, conditions and things required by the Constitution and laws of the State and ordinances and resolutions of the City to be done, to exist, to happen and to be performed in order to make each of this Agreement, the Lease and the Option a valid and binding special, Iimited obligation of the City in accordance with its terms have been done, do exist, have happened and have been performed as so required. (e) The City is not aware of any facts the existence of which would cause the City to be .in violation in any material respect of any Environmental Laws or Regulations applicable to the Project. The City has not received from any local, state or federal official any notice or communication indicating that the activities of the City may be or will be in violation of any Environmental Laws or Regulations applicable to the Project. (g) The asbestos remediation contemplated by the Stream Lease and the Location and Use Agreement has been completed in accordance with all Environmental Laws or Regulations. 2,2. CoMpany Representations, The Company hereby represents as fellows: (a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware.. (b) The Company has the power to enter into this Agreement and by all necessary corporate action has duly authorized the execution and delivery of this Agreement. (c) The Company has reviewed the provisions of the Declaration of Restrictions and Establishment of Easements Affecting Land (the "Declaration of Restrictions") and approves the terms and conditions thereof. (d) The Company has received and reviewed the Phase I Environmental Assessment related to the Property and is satisfied therewith. (e) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terns and conditions of this Agreement is prohibited or limited by, conflicts with or results in a breach of the terms, conditions or provisions of the certificate of incorporation or bylaws of the Company or any evidence of indebtedness, agreement or instrument of whatever nature to which the Company is now a party or by which it is bound, or constitutes a default under any of the foregoing. (f) There is no action, suit, investigation, or proceeding now pending or, to the knowledge of the Company, threatened against or affecting the Company or its business, operations, properties, or condition (financial or otherwise) before or by any governmental department, commission, board, authority, or agency, or any court, arbitrator, mediator or grand jury, which could, individually or in the aggregate, materially and adversely affect the business, operations, properties, or condition. (financial or otherwise) of the Company. (g) TSC is a wholly owned subsidiary of the Company. 2.3 TSC Representations. TSC hereby represents as follows: (a) TSC is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Colorado and is duly qualified to do business in the State of Montana. (b) TSC has the power to enter into this Agreement and the Lease and by all necessary corporate action has duly authorized the execution and delivery of this Agreement and the Lease. (c) Neither the execution and delivery of this Agreement or the Lease, the consummation of the transactions contemplated hereby or thereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement or the Lease is prohibited or limited by, conflicts with or results in a breach of the terms, conditions or provisions of the certificate of incorporation or bylaws of TSC or any evidence of indebtedness, agreement or instrument of whatever nature to which TSC is now a party or by which it is bound, or constitutes a default under any of the foregoing. (d) There is no action, suit, investigation, or proceeding; now pending or, to the knowledge of TSC, threatened against or affecting TSC or its business, operations, properties, or condition (financial or otherwise) before or by any governmental department, commission, board, authority, or agency, or any court, arbitrator, mediator or grand jury, which could, individually or in the aggregate, materially and adversely affect the business, operations, properties, or condition (financial or otherwise) of TSC. (e) TSC has reviewed the Declaration of Restrictions, visited and inspected the Property and has determined that the Property and the use thereof as may be limited by the Declaration of Restrictions is suitable for its uses and will take it as is, subject to the specific obligations of the parties with respect thereto as described in this Agreement and the Lease. (f) TSC has reviewed the provisions of the Lease and has approved the terms and conditions thereof. (g) TSC acknowledges that the Series 2000 Bond is a special, limited obligation of the City payable from the funds described therein, including the Port Authority Levy and the Tax Increment, which includes the Deficiency Tax Payment, as defined herein. Section 3. City Undertakings. 3.1. Lease of Property. Immediately upon execution of the Lease Termination Agreement, the City will enter into the Leasein the form attached hereto as Exhibit_ A (which is incorporated by reference and made a part hereof). 3.2. CDBG Funds. (a) The City has agreed to apply for a grant from the Community Development Block Grant Program (the "CDBG Program") administered by the Department of Commerce in the amount of approximately $370,000 for workforce training (the "CDBG Grant"). The City agrees to submit the application on the earliest possible date consistent with City Council procedural requirements and CDBG Program rules. CDBG funds can be used for eligible capital improvements if the TeleTech Companies elect NOT to use CDBG funds for workforce training, provided that the TeleTech Companies agree to provide the City with documentation required to establish compliance with CDBG regulations. 3.3. Parking. The City agrees to provide to TSC a total of 500 parking spaces, inclusive of those currently available. Upon execution of the Lease, 250 spaces as shown on Exhibit C will be available to TSC. The City has entered into the Option to Purchase which will enable the City to provide TSC with the parking spaces shown on the Parking Plan attached hereto as Exhibit C (which is incorporated by reference and made a part hereof). The Parking Plan depicts the location and number of existing parking spaces and additional parking spaces and is acceptable to TSC. Upon 60 days notice from TSC, the City will proceed with all deliberate speed to provide the additional parking spaces pursuant to the Parking Plan, as necessary. Section 4. TeleTech Companies' Undertakings with Respect to Pr(Aect. 4.1. Lease of Property. TSC will enter into the Lease. 4.2. Permits, Environmental Laws. TSC will obtain, in a timely manner, all required permits, licenses and approvals, and will meet, in a timely manner and in all material respects, all requirements of all local, state and federal laws and regulations which must be obtained or met in connection with the acquisition and construction of the Improvements. TSC will comply in all material respects with all Environmental Laws or Regulations applicable to the construction, acquisition, and operation of the Project, will obtain any and all necessary environmental reviews, licenses or clearances under, and will comply in all material respects with, the National Environmental Policy Act of 1969. 4.3. Assignment. The Company and TSC each agree that they will not assign their respective obligations hereunder or under the Lease to another corporation or entity except under the same criteria, conditions and terms as apply under the Lease to an assignment of the Lease. 4.4. Property Tax Obligation, Deficiency Tax Payment. TSC understands and acknowledges that even though the Property is owned by the City, it is subject to a "beneficial use" tax as provided in Section 5-24-2304, M.C.A. Under the terms of the Lease, TSC has agreed to pay as due all real and personal property taxes including beneficial use taxes assessed against the Property, the Existing FF&E and its Personal Property and Equipment installed and located therein (the "Property Tax Obligation"), in addition to any special assessments that might be apportioned to the property and made an obligation under the Lease. TSC further acknowledges that the City's ability to acquire the Property and meet its obligation to pay principal of and interest on the Bond was dependent on the creation by the Project of additional taxes and additional Tax Increment Revenue within the District. Based on the current taxable value of the Property, the dollar amount of the Existing FF&E and the estimated costs of the Personal Property and Equipment, the City estimates that the Project will generate property taxes payable by TSC based on current tax rates and mill levies in an amount not less than $140,000 a year. TSC understands that this is an estimate and not a representation that TSC's Property Tax Obligation will not or can not exceed such amount. TSC hereby covenants and agrees to pay its actual Property Tax Obligation for the term of possession, prorated as provided in the Lease with respect to Real Property Taxes (as defined in the Lease) and that to the extent and in the event that TSC's annual Property Tax Obligation for any tax year is less than $140,000, whether by virtue of reduction in taxable valuation of Real and Personal Property, removal of Personal Property and Equipment from the Property, reduction of mill levies assessed against TSC's property, or TSC defaults under the Lease and has no annual Property Tax Obligation, TSC will pay directly to the City an annual amount equal to the greater of (i) TSC's actual Property Tax Obligation; or (ii) the difference between $140,000 and TSC's actual Property Tax Obligation (the "Deficiency Tax Payment"), provided that for the last year of the term of the Lease: (a) TSC's actual Property Tax Obligation shall be equal to TSC's actual Property Tax Obligation for the immediately preceding year, (b) TSC's actual Property Tax Obligation pursuant to clause (a) and the $140,000 figure shall each be multiplied by a fraction, the numerator of which is the number of days between January 1 and the date the Lease terminates and the denominator of which is 365, and (c) the resulting payment shall be paid on the date the Lease terminates. The payment for the last year of the term shall be adjusted upon receipt of the tax notice for the final year. Under Montana law, the Department of Revenue uses the value of real and personal property established as of January 1 each year to determine the amount of taxes to be billed for the ensuing Fiscal Year. TSC will receive its notice of its Real Property tax obligation for a Fiscal Year on or about November I and it will receive its notice of Personal Property tax obligation for a Fiscal Year on or about July 1. The City Finance Officer shall verify the amount ofTSC's Property Tax Obligation based on the actual Real and Personal Property taxes billed during the calendar year based on values established January 1. If a Deficiency Tax Payment is owed, the City shall submit an invoice to TSC no later than December 31. The Deficiency Tax Payment shall be due and payable in one installment on February 15 of each year through the term of this Agreement, commencing 10 ]February 15, 2004']. The amount of Deficiency Tax Payment due, but not paid, shall bear interest and penalties at the same rate applicable to unpaid property taxes as specified in Section 15-16-102, M.C.A. Upon receipt of amounts due, if any, the City shall deposit the Deficiency Tax Payment in the Debt Service Fund created for the Bond and the Deficiency Tax Payment shall be used solely to pay the principal of and interest on the Bond as due. Section 5. Job Provisions — Reduction of Rent. 5.1. Inducement. The Company acknowledges that as an inducement for the City to accept the Company's proposal and enter into this Agreement and the Lease, the TeleTech Companies have represented that they intend to establish the Project and create 425 new jobs at the Property in accordance with the ramp schedule more particularly described herein. As an inducement to the Company and TSC to enter into this Agreement and the Lease and to establish the Project and create the new jobs at the Property, the City has agreed that TSC will receive a credit against the Base Rent to be paid under the Lease as follows: (1) During the first Lease Year, TSC shall receive a credit equal to 100% of Base Rent for such period so long as the minimum hourly wage for a Full Time CSR working at the Property is not less than the Approved Minimum Hourly Wageand Benefits are offered to such pull Time CSRs whether so elected or not, valued at not less than 20% of the Approved Minimum Hourly Wage and the TeleTech Companies employ either (1), at least 1.25 individuals, 80% of whom are FTEs, at the Property at the expiration of the first Lease Year or (ii) an average of 125 individuals, 80% of whom are FTEs, at the Property during the first Lease Year; (2) During the second Lease Year, TSC shall receive a credit equal to 100% of Base Rent for such period so long as the minimum hourly wage for a Full Time CSR working at the Property is not less than the Approved Minimum Hourly Wage, and Benefits are offered to such Full Time CSRs, whether so elected or not, valued at not less than 20% of the Approved Minimum Hourly Wage and the TeleTech Companies employ either (i) at least 250 individuals, 80% of whom are FTEs, at the Property at the expiration of such second Lease Year or (ii) an average of 250 individuals, 80% of whom are FTEs, at the Property during such second Lease Year; (c) Commencing on the First day of the third Lease Year and continuing for each consecutive Lease Year thereafter, TSC shall receive a credit equal to 100% of Base Rent for each Lease Year so long as the minimum hourly wage for a Full Time CSR working at the Property is not less than the Approved Minimum Hourly Wage andBenefits are offered to such Full Time CSRs, whether so elected or not, valued at not less than 20% of the Approved Minimum Hourly Wage and the TeleTech Companies employ either (1) at least 425 individuals, 80% of whom are FTEs, at the Property at the expiration of such Lease Year or (ii) an average of 425 individuals, 80% of whom are FTEs, at the Property during such Lease Year. If the TeleTech ' Given that the Lease will not commence until February '04, this seems incorrect although 1 acknowledge it is the date in the MQU. 11 Companies do not meet the employment requirements of the immediately preceding sentence but they employ (x) more than 200 FTEs but less than 340 FTEs at the expiration of a Lease Year or (y) an average of more than 200 FTEs but less than 340 FTEs during such Lease Year, TSC shall continue to receive a credit against Base Rent but such credit shall be reduced on a pro rata basis based upon the higher of (x) or (y) above. If at the end of any Lease Year, occurring after the third Lease Year, the TeleTech Companies employ less than 200 FTEs or have employed less than an average of 200 FTEs during such Lease Year, TSC shall not be entitled to any credit against Base Rent for such Lease Year and the full amount of Base Rent accrued under the Lease for such Lease Year shall be payable by TSC in cash; as and when provided in the Lease. 5.2. Evidence of Job Creation: Job Audit. A job audit (the "Job Audit") will be performed by the City or its agent 30 days after the end of each Lease Year. The Company will provide to the City no later than 20 days prior to the Job Audit a completed and certified Job Audit Certificate in substantially the form attached hereto as Exhibit D (which is incorporated by reference and made a part hereof). The Company agrees to provide to the City such other documents and evidence that it may reasonably require to ascertain the accuracy and veracity of the information provided in the report. The Company will provide to the City reasonable access to its records and facilities for the purpose of conducting on -site audits for compliance with this section. 5.3. Insufficient Work Force. The Company and TSC shall have the option to terminate this Agreement and the Lease at any time after the end of the third Lease Year in the event that the TeleTech Companies are unable to hire and retain sufficient, qualified CSRs to meet their needs at the .Property, notwithstanding the sustained recruiting efforts of the TeleTech Companies, using the recruiting resources generally used by the TeleTech Companies elsewhere in the United States. The Company and TSC shall exercise their option to terminate this Agreement and the Lease pursuant to this Paragraph by providing at least six (6) months prior written notice to the City, including a written certification of an officer of the Company in the form of Exhibit E attached hereto. Section 6. General Provisions. 6.1. Agreement to Pay Attorneys' Fees and Expenses. In the event any party to this Agreement should default under any of the provisions hereof and a nondefaulting party should employ attorneys or incur other expenses for the collection of moneys or the enforcement or performance or observance of any obligation or agreement on the part of a defaulting party herein contained, the defaulting party agrees that it will on demand therefor pay to the nondefaulting parties the reasonable fee of such attorneys and such other expenses reasonably so incurred by the nondefaulting parties, whether with or without suit, on appeal, or in any bankruptcy or other insolvency proceeding. 6.2. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Agreement should be breached by any party and thereafter waived by the other 12 parties, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. 6.3. Conflicts of Interest; City's Representatives Not Individually Liable. No member, officer or employee of the City shall have any personal interest, direct or indirect, in this Agreement, the Project or the Improvements, nor shall any such member, officer or employee participate in any decision relating to this Agreement which affects his or her personal interests or the interests of any corporation, partnership, or association in which he or she is, directly or indirectly, interested. No member, officer or employee of the City shall be personally liable to the Company or TSC in the event of any default under or breach of this Agreement by the City, or for any amount which may become due to the Company or TSC for any obligation issued under or arising from the terms of this Agreement, except for any fraudulent misrepresentation made by any such member, officer or employee in violation of the first sentence of this Section 6.3. 6.4, Rights Cumulative. The rights and remedies of the parties to this Agreement, whether provided by law or by this Agreement, shall be cumulative, and the exercise by any party of any one or more of such remedies shall not preclude the exercise by such party, at the same or different times, of any other remedy for the same default or breach or of any of its remedies for any other default or breach of the party. No waiver made by either such party with respect to the performance or the manner or time thereof, of any obligation under this Agreement, shall be considered a waiver with respect to the particular obligation of the other party or a condition to its own obligation beyond those expressly waived in writing and to the extent thereof, or a waiver in any respect in regard to any other rights of the party making the waiver of any obligations of the other party. Delay by a party hereto instituting or prosecuting any cause of action or claim hereunder shall not be deemed a waiver of any rights hereunder. 6.5. Term of Agreement, Termination. This Agreement shall remain in effect until the expiration or early termination of the terra of the Lease, or such later date upon which all other obligations of the Company and TSC under this Agreement and the Lease which survive the termination of the Lease have been satisfied. Section 7. Administrative Provisions. 7.1. Notices. All notices, certificates or other communications required to be given to the City, the Company and TSC hereunder shall be sufficiently given and shall be deemed given when delivered or deposited in the United States mail in certified form with postage fully prepaid or by reputable overnight delivery service providing proof of delivery and addressed as follows: If to the City: City of Kalispell 312 1 st Avenue East Kalispell, Montana 59903 Attn: City Manager If to the Authority: Flathead County Port Authority c/o Jobs Now 215 E. Idaho 13 Kalispell, MT 59901 Attn: Executive Director If to the Company or TSC: c/o TeleTech 9197 South Peoria Street Englewood, Colorado 80112 Attn. President With a copy to: TeleTech Holdings, Inc. 9197 South Peoria Street Englewood, CO 80112 Attention: General Counsel Any party hereto, by notice given hereunder, may designate different addresses to which subsequent notices, certificates or other communications should be sent. 72. Delegation of Authority. The Company and TSC each acknowledge that the City may appoint an agent for purposes of implementing and monitoring compliance with this Agreement. The City intends to initially appoint the Authority as its agent. In the event of such appointment or the appointment of any replacement or successor agent, the City will notify the Company and TSC and provide the name and address of any such agent. 7.3. Non -Compete. The City and any related entity shall not lease/sublease space or lease/sell land to any third party that would operate a call center within the City of Kalispell (whether inbound or outbound) or that is competitive to the TeleTech Companies in the business of outsourced customer services or that is reasonably considered a competitor of the TeleTech Companies without the Company's prior written approval. 7.4. Binding affect. This Agreement shall inure to the benefit of and shall be binding upon the City, the Company and TSC and their respective successors and assigns. 7.5. Severability. If any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 7.6. A.mendments. Chan es and Modifications. This Agreement may be amended or any of its terms modified only by written amendment authorized and executed by the City, the Company and TSC. 7.7. Further Assurances and Corrective Instruments. The City, the Company and TSC agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Project or the Improvements or for carrying out the expressed intention of this Agreement. 7.8. Execution Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 14 7.9. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State without giving effect to the conflicts -of -laws principles thereof. 7.10. Captions. The captions or headings in this Agreement are for convenience only and in no way define, limit or describe the scope of intent of any provisions or Sections of this Agreement. 1.5 IN WITNESS WHEREOF, the parties hereto bave caused this Agreement to be executed as of the 23rd day of February, 2004. (SEAL) CITY OF KALISPELL, MONTANA By Attest: Mayor City Manager Clerk of Council (Signature page to Jobs and Use Agreement, dated as of February 23, 2004) 16 TELE TECH HOLDINGS, INC. By Its: TELETECH SERVICES CORPORATION By: Its: (Signature page to Jobs and Use Agreement; dated as of February 23, 2004) 17 APPROVED BY FLATHEAD COUNTY ECONOMIC DEVELOPMENT AUTHORITY By: Its Chairman Bv: Its Executive Director (Flathead County Economic Development Authority Approval page to Jobs and Use Agreement, dated as of February 23, 2004) is EXHIBIT A FORM OF SHOPPING CENTER LEASE EXHIBIT B FORM OF OPTION TO PURCHASE EXHIBIT C PARKING PLAN EXHIBIT D JOB AUDIT CERTIFICATE Tele Tech Holdings, Inc. (the "Company") by and through its , hereby certifies with respect to the Jobs and Use Agreement by and among the Company, TeleTeeh Services Corporation and the City of Kalispell, Montana (the "City"), dated as of 20_ (the "Agreement"), as follows: 1) This Certificate is being provided pursuant to Section 5.1 of the Agreement. 2) Capitalized terms used in this Certificate and the attached Schedule shall have the meanings as defined in the Agreement. 3) As of the date hereof, the TeleTeeh Companies have hired the number of persons as Full Time CSRs at the rate of pay shown on the attached Schedule. 4) All full Time CSRs have been offered the Benefits Package. 5) The Benefits Package consists of the following items and coverages for the Lease Year and is valued at per .hoer: Dated this day of , 20 TELETECH HOLDINGS, INC. By. Its D- I SCHEDULE Personnel and Wage Data: Lease Year: From to [Audit Date] Total number of CSRS at Kalispell site as of Audit Date: Total number of CSRS at Kalispell site as of 30 days prior to Audit Date: Total number of Full Time CSRS at Kalispell site paid approved Minimum Hourly Wage and offered Benefits Package as of Audit Date: Total number of CSRS receiving Benefits Packager Total number of Full Time CSRS at Kalispell site paid approved Minimum Hourly Wage and provided Benefits Package as of 30 days prior to Audit Date: Number of Full Time CSRS, if any, paid in excess of approved Minimum Hourly Wage: Number of Part Time CSRS, if any, paid less than approved Minimum Hourly Wage: (Minimum Dourly Rate paid to Part Time CSR: $_ ) D-2 F.XT mrr F. CERTIFICATE OF TERMINATION Pursuant to Section 5.3 of the Jobs and Use Agreement by and among TeleTech Holdings Inc. (the "Company"), TeleTech Services Corporation and the City of Kalispell, Montana (the "City"), dated as of February 23, 2004 (the "Agreement"), the Company hereby certifies as follows: 1) Capitalized terms used in this Certificate and herein shall have the meanings as defined in the Agreement. 2) As of the date hereof, the TeleTech Companies has Full Time Employees at the Property. The Company needs an additional Full Time Employees to meet its needs at the Property. 3) The attrition rate at the Company for the previous twelve months has been , and for the preceding six months has been 4) The Company is not able to hire and retain sufficient qualified CSRs to meet their needs at the Property, after substantial recruiting activities for a period of , which have included the following: 5) Pursuant to the Agreement, the Company hereby provides notice of its intention to terminate the Lease on 20 , which date is not less than six months from the date hereof. Dated this day of , 2004. TELETECH HOLDINGS, INC. By. Its E-1 EXHIBIT B OPTION TO PURCHASE REAL PROPERTY In consideration of Five Thousand Dollars ($5,000.00) paid to American Capital Group, LLC, a California Limited Liability Company (the "SELLER"), receipt of which consideration and the legal sufficiency thereof is hereby acknowledged, SELLER hereby gives and grants to the City of Kalispell, Montana and the Flathead Economic Development Authority (collectively, the "BUYER"), its heirs and assigns, the exclusive option to purchase the real property of SELLER situated in Flathead County, State of Montana, and more particularly described as follows: [TO BE REVISED: A tract of land in the NE 1/4 of the SE 1/4 of Section 12, Township 28 North, Range 22 W, PMM, Flathead County, Montana described as follows: Beginning at the point of intersection of the west boundary line of Glenwood Drive and the south boundary line of Two Mile Drive, thence westerly on and along the south boundary line of Two Mile Drive a distance of 340 feet to the NE corner of the tract of land described in Reception No. 9629012420, Records of Flathead County, Montana, thence southerly on and along the east boundary line of said tract of land a distance of 80 feet to the SE corner of said tract of land, thence westerly on and along the south boundary line of said tract of land a distance of 70 feet, thence southerly and parallel with the west boundary line of Glenwood Drive a distance of 240 feet, thence westerly and parallel with the south boundary line of Two Mile Drive a distance of 170 feet, thence southerly and parallel with the west boundary line of Glenwood Drive a distance of 80 feet, thence easterly and parallel with the south boundary line of Two Mile Drive a distance of 210 feet, thence northerly and parallel with the west boundary line of Glenwood .Drive a distance of 170 feet, thence easterly and parallel with the south boundary line of Two Mile Drive a distance of 370 feet to a point on the west boundary line of Glenwood Drive, thence northerly on and along the west boundary line of Glenwood Drive a distance of 230 feet to the point of beginning, containing approximately 2.5 acres of land (the "Property").] PRICE AND TERMS OF PAYMENT: The purchase price of the Property shall be $4.00 per square foot. SELLER represents that the Property consists of a 108,900 square feet, 2.5 acres (subject to confirmation), to which the option payment of FIVE THOUSAND DOLLARS ($5,000.00) shall be applied, leaving a balance to be paid [upon exercise of the option (at closing)] by BUYER of FOUR HUNDRED THIRTY THOUSAND SIX HUNDRED DOLLARS ($430,600). PERIOD OF OPTION AND EXERCISE. The duration of this option is 60 days, unless otherwise extended by the SELLER [from the date hereof] or [date of execution and delivery of the Lease between the City and Te.leTech Holdings, Inc., a Delaware Corporation, and TeleTech Services Corporation, a Colorado Corporation (the "Lease")]. To exercise this option, BUYER shall give notice thereof to SELLER at his address as stated at any time within 60 days from the date of this instrument. Upon BUYER'S failure to exercise the option, all consideration given by BUYER for the option shall be forfeited and shall be the property of SELLER. CLOSING: The date of closing on the Property must occur within 30 days of the exercise of the option. TITLE: Title to be conveyed as herein provided shall be merchantable title, free and clear of all liens, encumbrances, restrictions and easements, except zoning restrictions, building regulations, patent restrictions, reservations of record, and protective covenants and agreements. If the Title defects can not be cured in a manner acceptable to Buyer the option price shall be returned to the Buyer. CONVEYANCE: SELLER shall convey to BUYER by Warranty DEED merchantable title to the property subject only to the limitations hereinabove set forth. EXPENSES: BUYER shall be responsible for all costs associated with the exercise of the option, and the sale of the Property including but not limited to: costs of survey, filing of plat, preparation and recording of the Warranty .Deed, and title insurance, if any at BUYER's discretion. POSSESSION: BUYER shall have possession of the Property upon full payment of the purchase price. CLOSING AND TAX PRORATION: All taxes and easements for the current year shall be prorated between the parties as of the date of closing and settlement made therefor at the time of payment of the purchase price. Any of the foregoing which fall due before the exercise of the option shall, however, be in fact paid by the SELLER. NOTICES: Any notice hereunder shall be given in writing to the party for whom it is intended in person or by certified or registered mail, return receipt requested, directed to the 2 party at the address appearing in the first paragraph of this instrument, or such future address as may be designated in writing. Mailed notice shall be deemed given at the time of mailing, ASSIGNMENT AND SUCCESSION: This option shall bind and inure to the benefit of the heirs, personal representatives, successors and assigns of the respective parties. All rights of BUYER may be assigned without restriction, but notice of each assignment shall be given in writing to SELLER. Executed this 23rd day of February, 2004. SELLER BUYER BUYER STATE OF MONTANA : ss. County of On this day of , in the year 2004, before the undersigned Notary Public for the State of Montana, personally appeared , the of the City of Kalispell, Montana and , the of the Flathead Economic Development Authority, known to me to be the persons whose names are subscribed to the within instrument, and acknowledged to me that they executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year hereinabove first written. Notary Public, State of Montana {SEAL} Residing in My commission expires: 20- 3 STATE OF CALIFORNIA ) ss. County of On this — day of , in the year 2004, before the undersigned Notary Public for the State of California, personally appeared , the of American Capital Group, LLC, known to xne to be the person whose name is subscribed to the within instrument, and acknowledged to me that he executed the same. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the day and year hereinabove first written. {SEAL} 4 Notary Public, State of California Residing in My commission expires: , 20 SHOPPING CENTER LEASE BY AND BETWEEN THE CITY OF KALISPELL A BODY POLITIC AND THE FLATHEAD ECONOMIC DEVELOPMENT AUTHORITY A BODY POLITIC AS LANDLORD, I 11 TELETECH HOLDINGS INC. A DELAWARE CORPORATION, AND TELETECH SERVICES CORPORATION A COLORADO CORPORATION AS TENANT SHOPPING CENTER LEASE Table of Contents ARTICLE I -- BASK LEASE PROVISIONS ...................... 1.1 Date of Lease......................................................................................... ......1 .................. 1.2 Tenant's Trade Name .... .............................................................................. ............... ...I 1.3 Shopping Center.................................................................................I...........................1 1.4 Premises ........................................................................................................................1 1.5 Floor Area of the Premises ............................................ ....1 1.6 Term...............................................................................................................................1 L7 Intentionally Deleted......................................................................................................1 1.8 R.ent................................................................................................................................1 1.9 Intentionally Deleted......................................................................................................1. 1.10 Use of Premises ...... .................... ...................... ................. ....................... ................ ......I 1.11 Intentionally Deleted......................................................................................................1 1.12 Intentionally Deleted ........ ......... .................. ................................................................... I 1.13(a) Estimated Initial Pro Rata Share of Common Area Expenses ........... ........................... I 1.1.4 Address For Notices to Tenant ................................. ........... ...... .................................... I 1.15 Address For Notices to Landlord...................................................................................2 1.1.6 Interest Rate.._. ... ____ .............................. _ .... .......................................................... 2 1.17 Estimated Commencement Date....................................................................................2 ARTICLE 11 -- LEASED PREMISES.............................................................................................2 2.1 Premises; Floor Area; Shopping Center ........................................................................2 22 Reservations... .............................. .................................................. .............................. 2 2.3 Conditions of Record.....................................................................................................2 ARTICLEIll -- TERM....................................................................................................................3 3.1 Term; Commencement Date.........................................................................................3 3.2 Memorandum of Commencement Date .........................................................................3 ARTICLEIV -- RENT....................................................................................................................3 4.1 Rent................................................................................................................................3 4.2 Intentionally Deleted......................................................................................................3 4.3 Common Area Expenses................................................................................................4 4ALate Payment - Rent.... .......... ................... __ ........................................................... 5 4.5 Intentionally Deleted......................................................................................................5 ARTICLE V -- CONSTRUCTION OF LEASED PREMISES.......................................................6 11 5.1 Landlord's And Tenant's Obligations...........................................................................6 5.2 Leasehold Improvements...............................................................................................6 5.3 Intentionally Deleted......................................................................................................6 ARTICLE VI -- RECORDS AND BOOKS OF ACCOUNT..........................................................7 6.1 Annual Balance Sheet....................................................................................................7 ARTICLEVII -- SIGNAGE....................................................................................... ...............7 7.1 Tenant's Signing............................................................................................................7 ARTICLE VIII -- TAXES ........................ I ........................... I--.............. ....7 8.1 Real Property Taxes.......................................................................................................7 8.2 Personal Property Taxes................................................................................................8 ARTICLE IX — INTENTIONALLY DELETED .......................... ...8 ARTICLE X -- CONDUCT OF BUSINESS BY TENANT...........................................................8 10.1 Use of Premises..............................................................................................................8 10.2 Auctions.........................................................................................................................9 10.3 Compliance With Laws..................................................................................................9 ARTICLE XI -- MAINTENANCE AND REPAIRS.....................................................................9 11.1 Landlord's Maintenance Obligations .............. ............................................................ —9 11.2 Landlord's Right of Entry............................................................................................10 11.3 Tenant's Maintenance Obligations..............................................................................10 11.4 Plate Glass., ................ - ........................... ........... ............... ................................... —.. I I ARTICLE XI1 -- COMMON AREA.............................................................................................11 12.1 Common Area ............. ............................... .................................................................. I 1 ARTICLE XIII -- UTILITIES ..................... ---- .......................................................................... I I ARTICLE XIV -- ALTERATIONS, SIGNS AND FIXTURES...................................................12 14.1 Installation....................................................................................................................12 14.2 Removal by Tenant ......................................................................................................12 14.3 Liens.............................................................................................................................12 14.4 Signs, Awnings and Canopies......................................................................................13 ARTICLE XV -- SURRENDER OF PREMISES.........................................................................13 ARTICLE XVI -- INSURANCE AND INDEMNITY..................................................................13 11 16.1 Tenant Insurance..........................................................................................................13 162 Indemnification of Landlord........................................................................................14 16.3 Indemni%cation of Tenant............................................................................................15 16AWaiver of Subrogation.................................................................................................15 16.5 Waiver of Loss and Damage........................................................................................15 16.6 Notice by Tenant..........................................................................................................16 16.7 Restrictions on Uses.....................................................................................................16 ARTICLE XVII -- OFFSET STATEMENT, ATTORNMENT, SUBORDINATION, MORTGAGEE PROTECTION CLAUSE....................................................................................16 17.1 Offset Statement...........................................................................................................16 17.2 Attomment and Nondisturbance..................................................................................16 17.3 Subordination...............................................................................................................16 17.4 Mortgagee Protection Clause.......................................................................................17 ARTICLE XVIII -- ASSIGNMENT AND SUBLETTING..................................................... --17 18.1 Assignment and Subletting..........................................................................................17 18.2 Tenant's Request..........................................................................................................19 18.3 Other Prohibited Transfers...........................................................................................19 18.4 Sale of Premises......................................................................................I....................19 18.5 Permitted Transfers......................................................................................................19 ARTICLE XIX -- ASSIGNMENT OF RENTS............................................................................19 ARTICLE XX -- DESTRUCTION..............................................................................................20 20.1 Total or Partial Destruction of Premises......................................................................20 20.2 Proceeds........................................................................................... ..20 20.3 Waiver of Termination .................................................................................................21 ARTICLE XXI -- EMINENT DOMAIN..... ........... — .......... .... --- ...... .... — ................................ 21 21.1 Total Condemnation of Premises.................................................................................21 21.2 Total Condemnation of Parking Area..........................................................................21 21.3 Partial Condemnation of Premises...............................................................................21 21.4 Partial Condemnation of .Parking Area... .............................. ...................... ............... 21 21.5 Allocation of Award....................................................................................................22 ARTICLE XXII -- DEFAULT ......................................................................................................22 22.1 Notice and Remedies...................................................................................................22 22.2 Default by Landlord.....................................................................................................23 22.3 Limitation. on Tenant's Recourse.................................................................................24 22.4 Insolvency............................................................................................ ...24 22.5 Intentionally Deleted....................................................................................................24 iii ARTICLE XXIII -- HOLDING OVER, SUCCESSORS .......................... ..........25 23.1 Holding Over............................................................................................. ...25 23.2 Successors............................................................. ...25 ARTICLE XXIV -- QUIET ENJOYMENT ..................................................................................25 24.1 Landlord's Covenant....................................................................................................25 ARTICLE XXV -- LANDLORD WAIVER.................................................................................25 ARTICLE XXVI -- MISCELLANEOUS- ...................................... ............................................. 25 26.1 Index.................................................................................... ................25 26.2 Waiver..........................................................................................................................26 26.3 Accord and Satisfaction...............................................................................................26 26.4 Entire Agreement.........................................................................................................26 26.5 No Partnership.............................................................................................................26 26.6 Force Majeure........................ ...................................................................................... 26 26.7 Notices.........................................................................................................................27 26.8 Captions and Section Numbers....................................................................................27 26.9 Tenant Defined, Use of Pronoun.................................................................................27 26.10 Partial Invalidity...........................................................................................................27 26.11 No Option.....................................................................................................................27 26.12 Recording....................................................................................................................27 26.13 Legal Expenses............................................................................................................27 26.14 Rights Cumulative.......................................................................................................28 26.15 Authority............................................................................................................ .28 26.16 Time of the Essence.....................................................................................................28 26.17 Lease Addenda and Exhibits........................................................................................28 26.18 Parking........................................................................... ......28 26.19 Amenities.....................................................................................................................28 26.20 Brokerage Consulting Fees..........................................................................................28 26.21 Contingency.................................................................................................................29 Iv SHOPPING CENTER LEASE THIS LEASE is made and entered as of the "Date of Lease" (as described in Section 1.1 below), by end between THE CITY OF KALISPELL, A BODY POLITIC, AND THE FLATHEAD COUNTY ECONOMIC DEVELOPMENT AUTHORITY, A BODY POLITIC ('landlord"), and TELETECH HOLDINGS, INC., A DELAWARE CORPORATION, and TELETECH SERVICES CORPORATION, A COLORADO CORPORATION (Tenant"). ARTICLE I -- BASK LEASE PROVISIONS L l Date of Lease. February 23, 2004. L2 Tenant's Trade Name. TeleTech 1.3 Shopping Center. Gateway West Mall, located in the City of Kalispell, County of Flathead, State of Montana. 1 A Premises. Per Exhibit "A." 1.5 Floor Area of the Premises. Approximately 60,645 square feet, RSF. There is no usable square foot/common area factor included with this lease. Floor Area of the Shopping Center: Approximately 164,667 square feet RSF. L6 Term. Ten Years (120 months), 1.7 Intentionally Deleted. 1.8 Rent. $275,328.30 per year, payable at the end of each Lease year of the initial Tenn (the "Rent") subject to rent credits as set forth in Section 4.1 hereof.. L9 Intentionally Deleted. 1.10 Use of Premises. Call Center, Recruiting and Training, and General Office. 1,11 Intentionally Deleted. 1.12 Intentionally Deleted. 1,13 (a) Estimated Initial Pro Rata Share of Common Area Expenses. $ (b) Estimated Initial Monthly Impound. $ 1.14 Address For Notices to Tenant. TeleTech Holdings, Inc., 9197 South Peoria Street, Englewood, CO 80112, Attention: General Counsel; Telephone Number (303) 397-8188. TeleTech Services Corporation, c/o TeleTech Holdings, Inc., 9197 South .Peoria Street, Englewood, CO 80112, Attention: President; Telephone Number (303) 397-8188. 1.15 Address For Notices to Landlord. City of Kalispell, Montana, 312 -- I" Avenue East, Kalispell, Montana 59903, Attention: City Manager; Telephone Number (406) 758-7703. Flathead County Economic Development Authority, c/o Jobs Now, inc., 213 East Idaho, Kalispell, Montana 59901 Attention: Executive Director; Telephone Number (406) 257- 7711. .lobs Now, Inc., 213 East Idaho, Kalispell, Montana 59901 Attention: Executive .Director; Telephone Number (406) 257-771 L 1.16 .Interest Rate. Shall mean the greater of ten percent (10%) per annum or the maximum rate permitted under Montana Code Annotated §31.-1-107(l), or any amendments thereto in effect on the twenty-fifth (25th) day of the calendar month immediately prior to the event giving rise to the Interest Rate imposition; provided, however, the Interest Rate will in no event exceed the maximum interest rate permitted to be charged by applicable law. 1.17 Estimated Commencement .Date. February 23, 2004, ARTICLE II -- LEASED PREMISES 2.1 Premises; Floor Area; Shopping Center. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, those certain .Premises described in Section 1.4 which are located in the Shopping Center described in Section 1.3 hereof. The Shopping Center is owned by ACG-Kalispell Investors, LLC ("Developer"). The Premises consist of a space having Floor Area of approximately that square footage stated in Section 1.5. The measurement standard for determining rentable and usable square footage shall be the last BOMA standards relating to multi -tenant buildings (Building Owners and Managers Association (`SOMA") International Ansl Z 65.1 Method cc 1996). "Floor Area" means all areas designated by Landlord for the exclusive use of Tenant or other occupants of Shopping Center measured from the outside of the exterior walls and the center of the interior demising walls. The boundaries and location of the Premises are generally depicted on the site plan of the Shopping Center attached hereto as Exhibit "A" (the "Site Plan") and shall be deemed to include the entryway to the Premises. Tenant acknowledges and agrees that the Site Plan depicts a proposed general layout of the Shopping Center and shall not be deemed a representation by Landlord that the Shopping Center is constructed as indicated thereon, or that any tenants or occupants designated by name or type of business do or will conduct business in the Shopping Center, or that the Shopping Center will not be expanded, reduced or otherwise modified. 2.2 Reservations. Provided Landlord does not unreasonably interfere with Tenant's use of and access to the Premises, Landlord reserves the right at any time with reasonable notice to Tenant to go on or in the Premises for the purpose of effecting certain items of repair and maintenance as provided in this Lease. Easements for light and air are not included with the Premises. 2.3 Conditions of Record. Landlord's title is subject to: (a) the effect of any covenants, conditions, restrictions, easements, reciprocal easement and operating agreements, development agreements, mortgages or deeds of trust, ground leases, rights of way, and other matters or documents of record now or hereafter recorded against Landlord's title, (b) the effects of all zoning laws of the city, county and state where the Shopping Center 2 is situated, and (c) genera[ and special taxes and assessments. Tenant agrees that (i) as to its leasehold estate, it and all persons in possession or holding under it, will conform to and will not violate said matters of record, and (ii) this Lease is and shall be subject and subordinate to said matters of record and any amendments or modifications thereto. Landlord represents that there are no zoning or matters of record that will prohibit use of Premises described in Section 1.10 and that said use will not violate any such matters of record. ARTICLE III -- TERM 3.1 Term; Commencement Date. The term of this lease (the "Tenn") shall commence on the date this Lease is fully executed by Landlord and Tenant and Landlord has delivered the Premises to Tenant (the Commencement Date). The Commencement Date will be approximately February 23, 2004. If Landlord if unable to deliver the Premises to Tenant by March 8, 2004, Tenant may, at its option, tenninate this Lease upon five (5) business days' notice to Landlord. The Term shall continue from the Commencement Date for the number of months specified in Section 1.6 and shall include any extension period pursuant to this Lease unless sooner terminated in accordance with the provisions of this Lease. The number of months of the Term shall be computed from the first day of the month following the Commencement Date. 3.2 Memorandum of Commencement Date. Within five (5) business days following the Commencement Date, Tenant and Landlord shall execute a written memorandum ("Commencement Memorandum") stating the actual Commencement Date and the expiration date of the Term as determined pursuant to Section 3.1. ARTICLE IV -- RENT 4.1 Rent. Tenant shall pay to Landlord during the initial Term, Rent in the amount stated in Section 1.8, annually at the end of each Lease year of the initial Term, and, during any extension of the Lease, Tenant shall pay Rent in advance on the first day of each month, with all Rent to be paid without prior demand, deduction, counterclaim, or offset. Notwithstanding the foregoing, Tenant shall receive credits against Rent and Rent shall be reduced by such credits as follows: (a) During the first 12 months of the Tenn, Tenant shall receive a credit equal to 100% of Rent for such period so long as the full time agent hourly wage is no less than $8.00 per hour with a benefit package made available to all full time employees, whether so elected or not, valued at an additional 20% of hourly wage and Tenant employs either (1), at least 1.25 individuals, 80% of whom are FTEs (FTE defined as a "full-time employee"), at the Premises at the expiration of such I2-month period or (ii) an average of 125 individuals, 80% of whom are FTEs, at the Premises during such 12-month period; (b) During the second 12 months of the Term, Tenant shall receive a credit equal to 100% of Rent for such period so long as the full time agent hourly wage is no less than S8.00 per hour with a benefit package made available to all full time employees, whether so elected or not, valued at an additional 20% of hourly wage and Tenant employs either (i) at least 250 individuals, 80% of whom are FTEs, at the Premises at the expiration of such second 12-month period or (ii) an average of 250 individuals, 80% of whom are FTEs, at the Premises during such second 12-month period; (c) Commencing on the first day of the 24th month of the Term and continuing for each consecutive 12-month period thereafter (each such period being referred to as a "Lease Year"), Tenant shall receive a credit equal to 100% of Rent for each Lease Year so long as the full time agent hourly wage is no less than $8.00 per hour and receives a benefit package made available to all full time employees, whether so elected or not, valued at an additional 20% of hourly wage and Tenant employs either (i) at least 425 individuals, 80% of whom are FTEs, at the Premises at the expiration of such Lease Year or (ii) an average of 425 individuals, 80% of whom are FTEs, at the Premises during such Lease Year. 1.f Tenant does not meet the employment requirements of the immediately preceding sentence but Tenant employs (x) more than 200 FTEs but less than 340 FTEs at the expiration of a Lease Year or (y) an average of more than 200 FTEs but less than 340 FTEs during such Lease Year, Tenant shall continue to receive a credit against Rent but such credit shall be reduced on a pro rasa basis based upon the higher of (x) or (y) above. if at the end of any Lease Year, occurring after the third year, Tenant employs less than 200 FTEs or has employed less than an average of 200 FTEs during such Lease Year, Tenant shall not be entitled to any credit against Rent and the full amount of Rent accrued under the Lease shall be payable by Tenant in cash. 4.2 Intentionally Deleted. 4.3 Common Area Expenses. Tenant will pay its proportionate share of Common Area Expenses provided by Landlord commencing on the Commencement Date annual payments together with Rent. Common Area Expenses ("Common Area Expenses") shall include providing snow plowing and removal, sanding of the parking lot, parking lot maintenance, landscaping of all parking lots, and trash removal at Landlord's expense (provided that Tenant does not contract directly for such services, which Tenant shall have the right to contract for such services itself). Tenant shall be responsible for contracting and providing customary building services including maintenance of mechanical, electrical and sprinkler systems for the Premises and interior cleaning at Tenant's expense. Only those Common Area Expenses that apply directly to the Tenant and the Premises will be charged. Exclusions from Common Area Expenses include (i) legal fees, brokerage commissions, advertising costs, or other related expenses incurred by Landlord in connection with the leasing of space to individual tenants in the Shopping Center; (ii) repairs, alterations, additions, improvements or replacements made to rectify or correct any defect in the original design, materials or workmanship of the Shopping Center or common areas (but not including repairs, alterations, additions, improvements or replacements made as a result of ordinary wear and tear); (iii) damage and repairs attributable to fire or other casualty; (iv) damage and repairs necessitated by the negligence or willful misconduct of Landlord, Landlord's employees, contractors or 4 agents; (v) executive salaries or salaries of service personnel to the extent that such personnel perform services not solely in connection with the management, operation, repair or maintenance of the Shopping Center; (vi) Landlord's general overhead expenses not related to the Shopping Center; (vii) legal fees, accountants' fees and other expenses incurred in connection with disputes with Landlord's other occupants of the Shopping Center or associated with the enforcement of the terms of any leases with tenants or the defense of Landlord's title to or interest in the Shopping Center or any part thereof; (viii) costs (including permit, license and inspection fees) incurred in renovating or otherwise improving, decorating or painting or altering space for tenants or other occupants or of vacant space (excluding common areas) in the Shopping Center; (ix) costs incurred due to a violation by Landlord or any other tenant of the Shopping Center of the terms and conditions of a Lease; (x) cost of any service provided to Tenant or other occupants of the Shopping Center for which Landlord is reimbursed and costs incurred by Landlord as a result of, or for the benefit of, any individual tenant or occupant of the Shopping Center, regardless of whether Landlord is entitled to reimbursement; (xi) any other expense which, under generally accepted accounting principles applicable to real estate operations, would not be considered a reasonable maintenance and operating expense; and (xii) cost and expenses which would be capitalized under generally accepted accounting principles; (xiii) costs incurred for a hazardous waste clean-up unless caused by Tenant; and (xiv) costs incurred by the Landlord in reconfiguring or renovating the Shopping Center or making improvements of a capital nature thereto, including, without limitation, any improvements intended to increase the square footage within the Shopping Center. Landlord shall not collect in excess of (100%) of Common Area Expenses and shall not recover any item of cost more than once. Tenant shall have the right to audit any twelve (12) months of previous Common Area Expenses in the event of dispute. For purposes of the foregoing provisions regarding "Common Area Expenses", the term "Landlord" shall be deemed to include both the Landlord and the Developer. 4.4 Late Payment - Rent. 1f Tenant fails to pay the Rent, or any installment thereof as defined herein or any other additional rent under this Lease within five (5) business days after the same has become due, both Tenant and Landlord agree that Landlord will incur additional expenses including, but not limited to, extra collection efforts and handling costs. Both parties agree that should Tenant so fail to pay its Rent, or additional rent, Landlord is entitled to compensation for the detriment caused by the failure, but that it is extremely difficult and impractical to ascertain the extent of the detriment. The parties therefore agree that should Tenant fail to pay any Rent, or additional rent, due hereunder within five (5) business days after the same becomes due, :Landlord shall be entitled to recover from Tenant as a late charge $1 000.00 plus any reasonable attorneys' fees incurred by Landlord by reason of Tenant's failure to pay such amount when due. Such past due amounts shall also bear interest at the Interest Rate set forth in Section 1.16 from the date until paid. Tenant further agrees to pay Landlord any reasonable costs incurred by Landlord in the collection of such past due Rent, or additional rent, including, but not limited to, reasonable fees of an attorney and/or collection agency. Nothing herein contained shall limit any other remedy of Landlord under this Lease. Landlord shall also have the right to require Tenant to pay any past due sums by cashier's check or money order. 5 4.5 intentionally Deleted. ARTICLE V -- CONSTRUCTION OF LEASED PREMISES 5.1 Landlord's And Tenant's Obligations. Landlord shall deliver possession of the Premises to Tenant on the Commencement Date in its existing, as -is, condition with all faults and without any representations or warranties from Landlord. Tenant hereby agrees to accept possession of the Premises from Landlord on the Commencement Date in as -is condition. 5.2 Leasehold Improvements. Tenant may construct tenant improvements (the "Tenant's Work") in and to the Premises provided that Tenant complies with the Lease and the following conditions: (a) the Tenant's Work shall be constructed at Tenant's sole cost and expense, subject to reimbursement from the Tenant Improvement Allowance as provided in Section 5.4 below; (b) Landlord shall have approved in writing detailed plans and specifications for the Tenant Work (the "Plans"); (c) Landlord shall have approved Tenant's general contractor and subcontractors; (d) at least ten (10) days prior to commencement of construction, Tenant shall deliver to Landlord a certificate of insurance for each of Tenant's contractors evidencing adequate insurance coverage naming Landlord and Landlord's agent as additional insureds; (e) in addition to the right of Landlord and its agent to inspect the .Premises set forth in the Lease, Landlord and its agents shall have the right to conduct a walk- through inspection of the Tenant's Work as completed by Tenant; and (f) all construction shall be done in a good and workmanlike manner and shall comply at the time of completion with all laws and requirements. Tenant shall deliver to Landlord copies of all certificates of occupancy, permits and licenses required to be issued by any authority in connection with Tenant's construction. Tenant shall assign, on a nonexclusive basis, all warranties from Tenant's contractor(s) and suppliers with respect to the Tenant's Work and shall deliver copies of such warranties to Landlord. Prior to commencement of Tenant's Work, Tenant shall deliver to Landlord certificates of insurance evidencing the existence of Insurance as required by Section 16.1 and Article 8 of the "Declarations of Restrictions and Establishment of Easements Affecting Land" filed as Document Record No. 20006816000 in the [Office of the Clerk and Recorder, Flathead County, Montana (the "Declarations"). Upon completion of Tenant's Work, Tenant shall deliver to Landlord: (a) a copy of a recorded notice of completion if such recordation is required by law; (b) appropriate lien releases relative to any improvements made by Tenant and/or Tenant's contractor at the Premises; and (c) a certificate of occupancy or equivalent occupancy permit for the Premises issued by the appropriate local governmental authority if required by law. After completion of Tenant's Work, unless otherwise agreed to in writing by Landlord, any work performed on the Premises in connection with the heating, ventilation, air conditioning equipment (collectively, "HVAC"), any roof penetrations, or automatic sprinklers, and the contractor performing the work, shall be approved by Landlord prior to commencement of such work. Landlord reserves the right to have Landlord's contractor inspect Tenant's Work and other improvements at Tenant's expense and correct any defects at Tenant's expense. Until such time as any substandard work has been repaired by Landlord's contractor, Tenant will be responsible for any necessary and reasonable repairs and/or service calls. 5.3 Intentionally Deleted. ARTICLE VI -- RECORDS AND BOOKS OF ACCOUNT 6.1 Annual Balance Sheet. Tenant shall provide Landlord, whenever reasonably requested by Landlord for sale or re -finance purposes and provided said information is held confidential, a current annual balance sheet for Tenant's business at the Premises, either certified by an officer or partner of Tenant to be true and correct or accompanied by a report of an independent certified public accountant. ARTICLE V11-- SIGNAGE T 1 Tenant's Signage. Tenant will have the right to install exclusive signage on the exterior of the Premises and on a monument or pylon sign in a location determined by Landlord. Tenant acknowledges that such signage will be at its expense and will be subject to appropriate permits and approvals by regulatory authorities having jurisdiction and Landlord's reasonable review and approval. Landlord shall give Tenant top priority in signage on the pylon sign until such time as another tenant has leased more square footage than Tenant. ARTICLE VI.II -- TAXES 8.1 Real Property Taxes. (a) The term "Real Property Taxes" shall mean any form of general or special tax or assessment, license, charge, fee, levy or other imposition (other than Landlord's net income, estate, succession, inheritance or franchise taxes and rent taxes) now or hereafter imposed by any authority having the direct or indirect power to tax, including, without limitation, the state or federal government, any city, county, agency, improvement district or other district or any other political subdivision thereof, and whether or not now customary or within the contemplation of the parties. Tenant agrees to pay all Real Property Taxes levied against the Premises, on time as they become due, subject to the provisions of the Use Agreement. (b) All Real Property Taxes for the tax year in which the Term commences and for the tax year in which this Lease tenninates shall be apportioned and adjusted so that Tenant shall not be responsible for taxes and assessments for the periods of 7 time occurring prior to the commencement or subsequent to the expiration of the Tern. Tenant shall pay the pro -rasa share of Real Property Taxes for the final year of the Lease, or any extension thereof, upon termination of the Lease, prorated on the basis of the previous year's Real Property Taxes such payment to be adjusted upon receipt of the tax notice for the final year. (c) Without limiting the generality of the definition of Real Property Taxes described above, if at any time during the Tenn under the laws of the United States, or the state, county, municipality, or any political subdivision thereof in which the Shopping Center is located, a tax or excise on gross rent or any other tax however described is levied or assessed by any such political body against Landlord on account of gross rent payable to Landlord hereunder, or any tax is levied or assessed upon Landlord based upon Tenant's use or occupancy or operation of its business within the Premises, such tax or excise shall be considered "Real Property Taxes" for purposes of this Section S.1, and shall be payable in full by Tenant. 8.2 Personal Property Taxes. Tenant shall pay prior to delinquency all federal, municipal, county or state taxes, charges, assessments and fees assessed during the Term against any leasehold interest or personal property of any kind, owned by or placed in, upon or about the Premises by Tenant, whether or not title thereto is vested in Tenant, subject to the provisions of the Use Agreement. ARTICLE IX ---- INTENTIONALLY DELETED ARTICLE X -- CONDUCT OF BUSINESS BY TENANT 10.1 Use of Premises. Tenant shall use the Premises solely for the use specified in Section I A0.. Tenant shall not use, or pen -nit the Premises or any part thereof to be used, for any other use. Without limiting the generality of the preceding paragraph. Tenant agrees as follows: (a) Tenant shall at no time allow gaming machines (slots or otherwise) and/or arcade amusement machines (pinball, video, etc.) to be used, operated or kept within the Premises. Tenant shall not commit or suffer to be committed any waste upon the Premises or any nuisance or other act or thing which may disturb the quiet enjoyment of any other tenants or their customers in the Shopping Center. (b) No use shall be made or permitted to be made of the Premises, nor acts done, which will increase the existing rate of insurance upon the Premises, or cause a cancellation of any insurance policy covering the Premises or any part thereof. Tenant shall not sell or permit to be kept, used, stored or sold in or about Premises any article which may be prohibited by standard form fire insurance policies. Tenant shall, at its sole cost, comply with any and all requirements pertaining to the use of the Premises of any insurance organization or company necessary for the maintenance of the fire and public liability insurance described in this Lease covering the Premises and its appurtenances. If Tenant's use of the Premises results in a rate increase for the Shopping Center, Tenant shall pay within ten (10) days of billing frorn Landlord, as additional rent, a sung equal to the additional premium caused by such rate increase. (c) Tenant shall use its best efforts to complete, or cause to be completed, all deliveries, loading, unloading and services to the Premises prior to 10:00 a.m. each day. Tenant shall ensure that no delivery trucks or other vehicles servicing the Premises park in front of the Premises between the hours of 10:00 a.m. and 9:00 p.m. Landlord reserves the right to further regulate the activities of Tenant with regards to deliveries and servicing of the Premises. Notwithstanding anything contained herein to the contrary, Tenant may accept deliveries at the East entrance to the Premises, as depleted on the attached Site Plan, beyond the hours stipulated in this Section. 1.0.2 Auctions. No auction, "fire", sidewalk, close-out or bankruptcy sales may be conducted in or upon the Premises without Landlord's prior written consent. 10.3 Compliance With Laws. Tenant shall not use the Premises, or permit anything to be done in or about the Premises, which will in any way conflict with any law, statute, ordinance or governmental rule or regulation now in force or which may hereafter be enacted or promulgated. Tenant shall, at its sole cost and expense, promptly comply with all laws, statutes, ordinances and governmental rules, regulations or requirements now in force or which may hereafter be in force and with the requirements of any board of fire underwriters or other similar bodies now or hereafter constituted relating to or affecting the condition, use, occupancy, alteration or improvement of the Premises, including, without limitation, the provisions of the Americans with Disabilities Act of 1990 as it pertains to Tenant's use, occupancy, improvement and alteration of the Premises. The judgment of any court of competent jurisdiction or the admission of Tenant in any action against Tenant, whether Landlord be a party thereto or not, that Tenant has violated any law, statute, ordinance or governmental rule, regulation or requirement, shall be conclusive of that fact as between the Landlord and Tenant. ARTICLE X1 -- MAINTENANCE AND REPAIRS 11.1 Landlord's Maintenance Obligations. Landlord on behalf of Tenant shall maintain in good condition and repair the foundation, footings, concrete slab, concrete pier, structural steel, roof deck and membrane, exterior walls, facade, underground utilities and drainage based on Landlord's and Tenant's and engineer's conclusions of replacement and remedy to such capital items (except that Tenant shall maintain, repair or replace the roof membranes); provided, however, if any repairs or replacements are necessitated by the negligence, gross negligence, or willful acts of Tenant or anyone acting under Tenant or by reason of Tenant's failure to observe or perform any provisions contained in this Lease or caused by alterations, additions or improvements made by Tenant or anyone acting under Tenant, the cost of such repairs and replacements shall be solely borne by Tenant, to the extent not covered by insurance. Notwithstanding anything to the contrary 0 contained in this Lease, Landlord shall not be liable for failure to make repairs required to be made by Landlord under the provisions of this Lease unless Tenant has previously notified Landlord in writing of the need for such repairs and Landlord has failed to commence and complete the repairs within a reasonable period of time following; receipt of Tenant's written notification. Tenant waives any right of offset against any Rent, additional rent due hereunder and agrees not to assert as an affirmative defense in any judicial proceeding or arbitration brought by Landlord against Tenant on claims made under this Lease including, without limitation, the provisions of Section 70-261 of the Montana Code Annotated, or any superseding statute, and of any other law permitting Tenant to make repairs at Landlord's expense. The definition of maintenance and replacement of capital components shall be based on Generally Accepted Accounting Principles (GAAP) and shall be detailed in the lease. If replacement of the parking lot is required during the Term, it shall be Landlord's responsibility. 11.2 Landlord's Right of Entry. Landlord, its agents, contractors, employees and assigns may enter the Premises at all reasonable times upon reasonable prior notice under the circumstances (a) to examine the Premises; (b) to perform any obligation of, or exercise any right or remedy of, Landlord tinder this Lease; (c) to make repairs, alterations, improvements or additions to the Premises as Landlord reasonably deems necessary; (d) to perform work necessary to comply with laws, ordinances, rules or regulations of any public authority or of any insurance underwriter; (e) to show prospective tenants the Premises during the last six (6) months of the Term; and (f) to perfonn work that Landlord reasonably deems necessary to prevent waste or deterioration in connection with the Premises should Tenant fail to commence to make, and diligently pursue to completion, its required repairs as provided herein. In exercising such entry rights, Landlord agrees to use commercially reasonably efforts under the circumstances to minimize interference with Tenant's use of the Premises. 11.3 Tenant's Maintenance Obligations. Landlord shall warranty the existing mechanical systems, HVAC systems, plumbing systems, electrical systems and sprinkler puanp and warranty replacement for the Term. Tenant shall pay for repair of mechanical, electrical and HVAC systems and for replacement of systems installed by Tenant and exclusively servicing the Premises. Any repairs or replacements to the sprinkler heads, lines and pump are the Landlord's responsibility. Tenant, at its sole cost and expense, shall keep the Premises and all parts thereof (excluding Landlord's obligations in Section 11.1, above), including, without limitation, utility meters, pipes and conduits, all fixtures, furniture and equipment including heating, ventilation and air conditioning equipment, the exterior of the Premises, Tenant's signs, locks and closing devices, security devices, windows, window sashes, casements or frames, all doors and door frames, floor coverings, including carpeting, the and other flooring, all wall coverings, shelving, restrooms and other lavatory facilities, in first class order, condition and repair, reasonable wear and tear excepted, and shall make all replacements necessary to keep the Premises in such condition. All replacements shall be of a quality equal to or exceeding that of the original. Should Tenant fail to make, or initiate and diligently pursue, these repairs and replacements or otherwise maintain the Premises for a period of thirty (30) days after written demand by Landlord, or should Tenant commence, but fail to complete, any repairs or replacements within a reasonable time after written demand by Landlord, 10 Landlord may make such repairs or replacements without liability to Tenant for any loss or damage that may occur to Tenant's stock or business other than those resulting from Landlord's negligence or willful misconduct, and Tenant shall pay to Landlord the reasonable costs incurred by Landlord in making such repairs or replacements together with interest thereon at the Interest Rate from the date of commencement of the work until repaid. Tenant shall, at its expense, repair promptly any damage to the Building or the Shopping Center caused by Tenant or its agents or employees or caused by the installation or removal of Tenant's personal property. Tenant shall contract with a service company licensed and experienced in servicing HVAC equipment and approved by Landlord for the quarterly maintenance of the HVAC equipment serving the Premises and shall provide Landlord with a copy of the service contract within thirty (30) days following its execution, or Landlord, at its option, may contract with a service company of its own choosing, or provide such service itself, for the maintenance of the HVAC equipment, and bill Tenant for the reasonable cost of same. The sum so billed to Tenant shall become immediately due to Landlord as additional rent within ten (10) days after billing. Tenant shall, at its own expense, comply with all requirements, including the installation and periodic :maintenance of fire extinguishers or automatic dry chemical extinguishing system, of the insurance underwriters and other governmental authority having jurisdiction thereover as necessary for maintenance of reasonable fire and extended coverage insurance for the .Premises. 11.4 Plate Glass. Tenant shall replace, at its expense, any and all plate and other glass in and about the Premises which is damaged or broken from any cause whatsoever except due to the negligence or willful misconduct of Landlord, its agents or employees. ARTICLE XII -- COMMON AREA 12.1 Common Area. Tenant agrees that all obligations and responsibilities of Landlord, financial or otherwise, set forth in the Declarations, shall be assumed by Tenant. Landlord agrees that Tenant may exercise all of the rights and easements of the Landlord set forth in the Declarations and the Supplementary Agreement, including the right under Section 5.3(1) to audit the Maintenance .Director's records relating to Common Area Expenses, provided that if the exercise of any such right or easement shall have an effect lasting beyond the Term, then Tenant may exercise such right or easement only with the prior written consent of the Landlord, such consent not to be unreasonably withheld, delayed or conditioned. ARTICLE XIII -- UTILITIES Tenant shall be solely responsible for and shall promptly pay all charges for heat, water, gas, electricity, telephone and any other utility used, consumed or provided in, or furnished, or attributable to the Premises at the rates charged by the supplying utility companies. Should Landlord elect to supply any or all of such utilities, Tenant agrees to purchase and pay for the same as additional rent as apportioned by Landlord. The rate to be charged by Landlord to Tenant shall not exceed the rate charged Landlord by any supplying utility plus any reasonable expenses incurred by Landlord in connection with billing and supplying such utility service to Tenant. Unless due to the negligence of Landlord, its agents, contractors, or employees, in no II event shall Landlord be liable for any interruption or failure in the supply of any such utilities to the Premises, nor shall Rent, or additional rent, be abated as a result of any such interruption. Tenant agrees to reimburse Landlord within ten (10) days of billing for fixture charges and/or water tariffs, if applicable, which are charged by local utility companies. Landlord will notify Tenant of any such charges as soon as they become known. Any such charges will increase or decrease with current charges being charged Landlord by the local utility company, and will be due as additional rent. Tenant will have the right to utilize existing and/or add additional emergency generator(s) on a concrete pad outside of the Shopping Center. Any generators purchased or added by Tenant may be removed at the tennination of the Lease by the Tenant but Tenant shall not be required to remove such generators. ARTICLE XIV -- ALTERATIONS, SIGNS AND FIXTURES 14.1 Installation. Without Landlord's prior written consent, not to be unreasonably withheld, delayed or conditioned, Tenant shall not make or cause to be made any alterations, additions or improvements to the Premises (except for (a) non-structural, interior alterations not exceeding $25,000.00 in cost in any calendar year, and (b) Tenant's Work or install or cause to be installed any trade fixtures, floor covering, interior lighting, plumbing fixtures, or make any changes to the exterior of the Premises, except that work on the exterior permitted in Section 14.4. Tenant shall present Landlord with plans and specifications for such work concurrently with the request for approval. Notwithstanding anything to the contrary contained herein, no alterations, additions or improvements to any electrical system or outlet exceeding $10,000.00 for the Premises shall be made or allowed to be made by Tenant without first obtaining the written consent of Landlord. 14.2 Removal by Tenant. All alterations, decorations, fixtures, additions and improvements made by the Tenant, or made by Landlord on Tenant's behalf by agreement under this Lease, whether temporary or permanent in character, and whether or not affixed to the Premises (except furnishings, trade fixtures and equipment installed by Tenant) shall remain the property of Landlord and shall not be removed from the Premises without Landlord's prior written consent. Notwithstanding the foregoing provisions of this Section 14.2, upon the expiration or earlier termination of this Lease, Landlord may require Tenant to remove all the alterations, decorations, fixtures, additions, and improvements, and to restore the Premises as provided in Article XV hereof If, following Landlord's request to do so, upon the expiration of this Lease, Tenant fails to remove such alterations, decorations, additions and improvements and restore the Premises, Tenant shall promptly reimburse Landlord for the cost of removal and restoration. 14.3 Liens. Tenant shall keep the Premises free of any kinds of liens arising out of work performed for or materials furnished to Tenant, and shall promptly pay all contractors and materialmen used by Tenant to improve the Premises so as to minimize the possibility of a lien attaching thereto. if required by Landlord, Tenant shall also provide security for the lien free completion of such work in the form of a bond or other security reasonably satisfactory to Landlord. Should any lien be made or filed, Tenant shall bond against or discharge the same within twenty (20) days after written request by Landlord. Tenant shall indemnify, defend, protect and hold Landlord free and harmless from and against 12 any and all liability, damage, claims, demands, suits, actions or expense (including attorneys' fees) arising out of any work done or materials furnished with respect to the Premises by Tenant, its employees, representatives, successors, contractors, subcontractors, materialen and assigns. 1.4.4 Signs, Awnings and Canopies. Tenant may place any exterior signs, shades, awnings or canopies on the exterior of the Premises so long as any such work is completed in accordance with the applicable laws, rules or regulations adopted by any governmental body. ARTICLE XV -- SURRENDER OF PREMISES At the expiration or earlier termination of this Lease, Tenant shall surrender the Premises in a first class, clean condition in accordance with the requirements of Section 14.2 herein, reasonable wear and tear and damage by unavoidable casualty excepted, and shall surrender all keys for the Premises to Landlord at the place then fixed for the payment or rent and shall inform Landlord of all combinations on locks, safes and vaults, if any, in the Premises. Tenant shall remove all of its furnishings, equipment and trade fixtures, and any alterations or improvements if required by Landlord as provided in Section 14.2 hereof. before surrendering the Premises to Landlord and shall repair any damage to the Premises caused thereby. Tenant shall provide Landlord with a written statement, obtained at Tenant's sole expense from a reputable company licensed and experienced in HVAC repair and maintenance and approved by Landlord, certifying that the HVAC equipment serving the Premises was inspected and serviced, if necessary, within the last thirty (30) days of the Term and is in good working order, subject to reasonable wear and tear. ARTICLE XVI -- INSURANCE AND INDEMNITY 16.1 Tenant Insurance. During the Term, Tenant shall perform the obligations and responsibilities of Landlord set forth in Article 8 of the Declarations and shall maintain at its own expense in full force and effect the following insurance policies: (a) The insurance policies required to be purchased and maintained by Landlord under Article 8 of the Declarations; (b) Insurance covering all trade fixtures, merchandise, personal property and plate glass in or upon the Premises in amounts no less than one hundred percent (100%) of the replacement value thereof, providing protection against any peril included within the classification of "Fire and Extended Coverage" including sprinkler damage, if any, vandalism and malicious mischief; (c) Boiler and machinery insurance on the air conditioning equipment, evaporative coolers, boilers, and other pressure vessels and systems whether fired or unfired, located in the Premises, and if such objects and the damage that may be caused by there or result from them are not covered by Tenant's extended coverage insurance, then such boiler .insurance shall be in an amount satisfactory to Landlord and equal 100% of the replacement value of such equipment; IN (d) Business interruption insurance in such amount as will reimburse Tenant for direct or indirect loss of earnings attributable to the perils insured against under Subparagraphs (b) and (c) above for a period of twelve (12) months; (e) Workers' compensation insurance as required by law; and (f) Errors and Omissions Insurance. Each of the insurance policies required hereinabove shall name Landlord, and any person, firms, or corporations designated by Landlord, as an owner, loss payee and as additional insureds, except for the policies set forth in subparagraphs (b), (d), (e) and (f) which may name the Tenant as the owner. Such persons or entities shall not, by reason of their inclusion under any such policy, incur liability for payment of any premium. Tenant's insurance policies shall contain a clause that .Insurer will not cancel or change coverage without first giving Landlord at least thirty (30) days prior written notice. All insurance required hereunder shall be issued by an insurance company or companies approved by Landlord, licensed to do business in Montana and having a financial rating of Class A-X or better as rated in the most current available "Best's Key Rating Guide". A copy of the policy or certificate of insurance (and of all endorsements thereto) shall be delivered to Landlord prior to Tenant's occupancy of the Premises, and thereafter at least ten (10) days prior to the expiration of any existing policy. All public liability, property damage and other casualty policies shall be written as primary policies, not contributing with and not in excess of coverage which Landlord may carry. No policy required to be maintained by Tenant under this Section shall have a deductible in excess of $1,000 without Landlord's prior written consent. If Tenant fails to maintain any insurance required under this Section, Landlord may itself maintain such insurance and charge the cost thereof to Tenant as additional rent. Such amount shall be due and owing within ten (I0) days following written request therefor, and shall bear interest at the Interest Rate until paid. Landlord makes no representation or warranty to Tenant that the amount of insurance to be carried by Tenant under the terms of this Lease is adequate to fully protect Tenant's interests and Tenant assumes full responsibility to confirm the adequacy of its insurance coverage. To the extent that there are inconsistent requirements regarding insurance between Article 8 of the Declarations, and Article XVI of this Lease, provisions of the "Declarations of Restrictions and Establishment of Easements Affecting Land" will control. 16.2 Indemnification of Landlord. Tenant will, during the Term, indemnify, protect, defend and save Landlord harmless from and against any and all claims, demands, actions, damages, losses, liabilities, costs and expenses (including reasonable attorneys' fees and costs of investigation with respect to any claim, demand or action in connection with loss of life, bodily injury, personal injury and/or damage to property arising from or connected with the conduct or management of the business conducted by Tenant on the Premises, or the occupancy or use by Tenant, the Premises or any part thereof, or from any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed pursuant to this Lease, or from violations of or noncompliance with any governmental requirements or insurance requirements, or from any acts or omissions of Tenant or any person on the Premises by license or invitation of Tenant or occupying the Premises or any part thereof under Tenant, whether such injury occurs in, on or about the Premises or the Common Area, in 14 case Landlord shall be made a party to any litigation commenced by or against Tenant, Tenant shall, notwithstanding any allegations of negligence or willful misconduct on the part of Landlord, its agents or employees, defend Landlord and protect and hold Landlord harmless and pay all costs, expenses and reasonable attorneys' fees incurred or paid by Landlord in connection with such litigation; provided, however, Tenant shall not be liable for any such injury or damage to the extent and in the proportion such injury or damage is ultimately determined to be attributable to the negligence or misconduct of Landlord, its agents or employees, unless such injury or damage would be covered by insurance required to be carried by Tenant under this Lease. Landlord may, at its option, require Tenant to assume Landlord's defense in any action covered by this section through counsel satisfactory to Landlord. 16.3 Indemnification of Tenant. Landlord will, during the Term, indemnify, protect, defend and save Tenant harmless from and against any and all claims, demands, actions, damages, losses, liabilities, costs and expenses (including reasonable attorneys' fees and costs of investigation with respect to any claim, demand or action) in connection with loss of life, bodily injury, personal injury and/or damage to property arising from or connected with the conduct or management of Landlord's business conducted by Landlord on the Premises, or from any acts or omissions of Landlord or any person on the Premises by license or invitation of Landlord or occupying the Premises or any part thereof under Landlord (other than the Tenant). 16.4 Waiver of Subrogation. Provided that their respective policies of insurance are not invalidated thereby, each party hereby waives (a) its rights of recovery against the other party, its successors, assigns, directors, agents and representatives in connection with any loss or damage caused to the insured's property, and (b) on behalf of its carriers, any right of subrogation it may have against the other relative to such loss or damage. Each parry shall notify its carrier of the waiver contained herein and shall obtain, if required by their respective insurers, any special endorsements required by such insurers to evidence compliance with the foregoing waiver. 16.5 Waiver of Loss and Damage. Except to the extent such matter would not be covered by the insurance required to be maintained by Tenant under this Lease and such matter is attributable to the negligence or willful misconduct of Landlord, Landlord shall not be liable to Tenant, Tenant's employees, agents or invitees for: (1) any damage to property of Tenant, or of others, located in, on or about the Premises, (ii) the loss of or damage to property of Tenant or of others by theft or otherwise, (ii.i) any injury or damage to persons or property resulting fire, explosion, falling plaster, steam, gas, electricity, water, rain or leaks from any part of the Premises or from The pipes, appliance of plumbing works or from the roof, street or subsurface or from any other places or by dampness or by any other cause of whatsoever nature, or (iv) any such damage caused by other tenants or persons in the Premises, occupants of adjacent property of the Shopping Center, or the public, or caused by operations in construction of any private, public or quasi -public work. 15 16.6 Notice by Tenant. Tenant shall give reasonable notice to Landlord in case of fire or accidents in the Premises or in the Building or of any damage or defects in the Premises, the Building or any fixtures or equipment therein. 16.7 Restrictions on Uses. Tenant shall not use, or permit the Premises, or any part thereof, to be used for any purpose or purposes which will increase the existing rate of insurance upon the Premises or the Shopping Center (once said rate is established), or cause a cancellation of any insurance policy covering the Shopping Center or any part thereof, nor shall Tenant sell or permit to be kept, used or sold in or about the Premises any article which may be prohibited by a standard form of fire insurance policies. Tenant shall, at its sole cost, comply with any and all requirements, pertaining to the use of the Premises, of any insurance organization or company necessary for the maintenance of reasonable fire and public liability insurance covering the Premises and appurtenances. In the event Tenant's use of the Premises results in a rate increase for the building of which the Premises are a part, Tenant shall pay annually on the anniversary date of this Lease, as additional rent, a sum equal to that of the additional premium occasioned by said rate increase. ARTICLE XV.II -- OFFSET STATEMENT, ATTORNMENT, SUBORDINATION, MORTGAGEE PROTECTION CLAUSE 17.1 Offset Statement. Within fifteen 15 days after Landlord's written request, in connection with any sale, assignment, hypothecation or other transfer of Landlord's interest in this Lease, the Premises, the Building or the Shopping Center, Tenant agrees to deliver a certificate or tenant estoppel letter to any proposed mortgagee, purchaser, or other transferee, or to Landlord, certifying to the extent true that this Lease is in full force and effect, that to Tenant's knowledge, except for diminimus materials commonly used in offices, Tenant has not maintained during the period of Tenant's tenancy any toxic materials or hazardous waste in, on or about the Premises, that no more than one month's rent has been paid in advance, that a true and correct copy of the Lease and all amendments thereto are attached to the certificate or tenant estoppel letter, and that there are no defenses or offsets thereto, or stating those claimed by Tenant, and such other items as may be reasonably requested, Failure by Tenant to execute said statement shall be considered a material default by Tenant under this Lease. 17.2 Attornment and Nondisturbance. 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, deed of trust or other encumbrance made by Landlord covering the Premises, Tenant shall attorn to the purchaser or mortgagee upon any such foreclosure sale or transfer in lieu of foreclosure sale and recognize such purchaser or mortgagee as the Landlord under this Lease, provided that any such purchaser or mortgagee shall recognize this Lease as remaining in full force and effect so long as Tenant is not in default hereunder. 17.3 Subordination. Subject to the nondisturbance and attornment provisions of Section 17.2 above; Tenant agrees that this Lease, at Landlord's option, shall be subject and subordinate to the lien of any mortgages or trust deeds or the lien resulting from any other method of financing or refinancing, now or hereafter in force against the land and 16 buildings of which the Premises are a part or upon any buildings hereafter placed upon the land of which the Premises are a part; and to all advances made or hereafter to be made upon the security thereof. This section shall be self. -operative and no further instrument of subordination shall be required unless requested by Landlord. Tenant covenants and agrees that it will execute such additional subordination agreements from time to time within twenty (20) days following written request therefor by Landlord. However, if Landlord so elects, this Lease shall be deemed senior in priority to any mortgage, deed of trust or other encumbrance upon or including the Premises, regardless of date of recording and Tenant will execute a statement in writing to such effect at Landlord's request. Tenant's failure to timely execute and return any required agreement under this Section shall be considered a material default by Tenant under this Lease. Landlord shall obtain a non -disturbance agreement reasonably satisfactory to Tenant from any ground lessor and/or the holder of any lien upon the Premises to which this Lease is subordinate. 17.4 Mortgagee Protection Clause. Tenant agrees to give any mortgagees and/or trust deed holders, by registered mail, a copy of any notice of default served by Tenant upon Landlord, provided that prior to such notice Tenant has been notified in writing (by way of notice of assignment of lease, or otherwise) of the addresses of such mortgagees and/or trust deed holders. Tenant further agrees that if Landlord shall have failed to cure such default within the time provided for in this Lease, then the mortgagees and/or trust deed holders shall have an additional thirty (30) days within which to cure such default, or if such default cannot be cured within that time, then such additional time as may be necessary, provided such mortgagees and/or trust deed holders commence such cure within thirty (30) days and diligently pursue the remedies necessary to cure such default (excluding, however, commencement of foreclosure proceedings, even if necessary to effect such cure), in which event this Lease shall not be terminated while such remedies are being so diligently pursued. Tenant shall not unreasonably withhold its consent to changes or amendments to this Lease requested by the holder of any mortgage or deed of trust covering Landlord's interest in the Premises so long as such changes do not alter the economic terms of this Lease or otherwise diminish the rights or increase the obligations of Tenant hereunder. ARTICLE XVLII -- ASSIGNMENT AND SUBLETTING 1$.1 Assignment and Subletting. (a) Tenant will not assign this Lease in whole or in part, nor sublet all or any part of the Premises, without the prior written consent of Landlord, which consent Landlord shall not unreasonably withhold. Without in any way limiting Landlord's right to reasonably refuse to give consent, Landlord may withhold condition or delay its consent to any requested assignment or subletting if in Landlord's reasonable business judgment: (i) The financial strength of the proposed assignee or subtenant, both in terms of net worth and in terms of reasonably anticipated cash flow over the Lease Term, is materially less than Tenant's financial strength at the time this Lease is signed or is insufficient, based on generally accepted 17 accounting principles, to capitalize the business to be conducted in the Premises; (ii) The business of the proposed assignee or subtenant is substantially similar to the business of another tenant currently leasing a portion of the Shopping Center, conflicts with the permitted uses set forth in this Lease, or would violate the exclusive use rights of another tenant of the Shopping Center (or a prospective tenant of the Shopping Center with which Landlord is then negotiating); (iii) The proposed assignee or subtenant is currently a tenant of the Shopping Center and other space within the Shopping Center is vacant and would adequately serve the space requirements of such assignee or subtenant. (b) Any proposed assignee or subtenant which Landlord does not disapprove shall be deemed a "Permitted Business." The consent by Landlord to any assignment or subletting shall not constitute a waiver of the necessity for obtaining Landlord's consent to any subsequent assignment or subletting. If this Lease is assigned by Tenant, or if the Premises or any part thereof is sublet or occupied by any person or entity other than Tenant, Landlord may collect rent front the assignee, subtenant or occupant, and apply the net amount collected to the Rent, or additional rent, herein reserved, but no such assignment, subletting, occupancy or collection shall be deemed a waiver on the part of Landlord, or the acceptance of the assignee, subtenant or occupant as tenant, or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant herein contained unless expressly made in writing by Landlord. Irrespective of any assignment or sublease, Tenant shall remain fully liable under this Lease and shall not be released from performing any of the terms, covenants and conditions of this Lease. Any assignment or sublease made by Tenant without Landlord's written consent shall be voidable at Landlord's election. If Tenant assigns this Lease or sublets the Premises or any portion thereof as permitted herein or as consented to by Landlord, any Rent or additional rent paid to Tenant by such assignee or subtenant which exceeds the Rent, or additional rent, payable by Tenant to Landlord as set forth in this Lease and Tenant's reasonable subleasing costs including, but not limited to, Tenant Improvements, free rent, commissions, legal fees (which total rent shall be reasonably prorated on a square footage basis in the event that less than all of the Premises is assigned or sublet) 50% shall be paid by Tenant to Landlord as additional rent. (c) If Tenant is a corporation, or is an unincorporated association or partnership, the transfer, assignment or hypothecation of any stock or interest in such corporation, association or partnership in the aggregate in excess of forty-nine percent (49%) shall be decmed an assignment within the meaning and provisions of this Section IS. 1. (d) Tenant shall pay Landlord a non-refundable processing fee of $500.00 for each requested assignment or sublease to cover Landlord's costs. This fee shall is accompany any request for assignment or sublease. In addition, Tenant shall pay all costs reasonably incurred by Landlord in connection with reviewing a request to consent to an assignment or sublease, including Landlord's reasonable attorneys' and accountants' fees. 18.2 Tenant's Request. If Tenant desires to make an assignment or sublease. Tenant shall submit a written request therefor to Landlord which shall state (a) the name of the proposed assignee or subtenant, (b) the nature of the assignee's or subtenant's business to be carried on in the Premises, and (c) the terms and conditions of the proposed assignment or sublease. Tenant shall provide such financial information regarding the proposed assignee or sublessee as Landlord may reasonably request. Any assignment or sublease, if approved by Landlord, shall be pursuant to a written document approved by Landlord, and Landlord shall receive an original or copy of such fully executed document. 18.3 Other Prohibited Transfers. Tenant shall not grant any concession or right of use or occupancy to all or any part of the Premises (other than an assignment or sublease which shall be governed by Section 18.1), without Landlord's prior written consent which may be withheld in Landlord's sole, absolute and arbitrary discretion. Any such concession, right or security interest made by Tenant without Landlord's written consent shall be null and void. I£ Tenant shall select or appoint some person or entity other than Tenant to manage and control the business conducted in the Premises, and the result thereof shall be substantially similar to the result of a sublease or assignment, then such selection or appointment shall be deemed an assignment within the meaning and provisions of this Article. 18.4 Sale of Premises. In the event Landlord shall sell, convey, transfer or exchange the Premises, Tenant agrees to recognize and attorn to the purchaser, or transferee, as the Landlord hereunder and Landlord shall be and is hereby relieved and released from any liability under any and all of its covenants and obligations under the Lease arising out of any act, occurrence or event which occurs after such sale, conveyance, transfer or exchange. 18.5 Permitted Transfers. Notwithstanding anything to the contrary, Landlord's consent shall not be required for subletting or assignment to related entities. Tenant shall have the right to assign or sublease any portion of the space to any party resulting from a corporate transfer, merger or consolidation or the sale of any significant portion of Tenant's stock or assets or to any subsidiary or affiliate of Tenant without the written consent of Landlord ("Permitted Transfers"). Despite any Permitted Transfers, Tenant shall remain fully liable under this Lease and shall not be released from performing the terms, covenants and conditions of this Lease. ARTICLE XIX -- ASSIGNMENT OF RENTS With reference to any assignment by Landlord of Landlord's interest in this Lease, or the rents payable hereunder, conditional in nature or otherwise, which assignment is made to the 19 beneficiary of a deed of trust or ground lessor on or of property which includes the Premises, Tenant agrees as follows: (a) That the execution thereof by Landlord, and the acceptance thereof by the beneficiary of such deed of trust, or the ground lessor, shall never be treated as an assumption by such beneficiary or ground lessor of any of the obligations of Landlord hereunder, unless such beneficiary or ground lessor shall, by notice sent to Tenant, specifically elect otherwise; and (b) That, except as aforesaid, such beneficiary or ground lessor shall be treated as having assumed Landlord's obligations hereunder only upon foreclosure of such deed of trust and/or the taking of possession of the Premises, or, in the case of a ground lessor, the assumption of Landlord's position hereunder by such ground lessor. ARTICLE XX -- DESTRUCTION 20.1 Total or Partial Destruction of Premises, If the Premises shall be damaged by fire, the elements or other casualty insured against as required by this Lease but are not thereby rendered untenantable in whole or in part, Landlord shall, at its own expense, cause such damage to be repaired as soon as reasonably practical, and any Rent, or additional rent, or other charges payable hereunder shall not be abated. If by reason of any damage or casualty, the Premises shall be rendered untenantable only in part, the damage shall be repaired as described above, and the Rent shall be abated proportionately based on the portion of the Premises rendered untenantable. If the Premises shall be rendered wholly untenantable by reason of such occurrence, the damage shall be repaired as described above, and the Rent and all additional rent (excluding common area expenses) shall be abated during the period of restoration in the event the Premises are totally destroyed by casualty, if the Tenant requests, Landlord agrees to reconstruct the Premises to the extent insurance proceeds are available for the reconstruction, except that in the event the Premises are totally destroyed as a result of casualty during the last 24 months of the Term, or as the same may be extended, Landlord may elect to terminate this Lease; provided, however, if Landlord does so elect and the Lease is terminated, Landlord agrees Tenant shall have no further obligation under the Use Agreement to make the deficiency tax payments required therein; and provided further that if the Tenant has a right under Addendum 2 hereof to extend the term of this Lease at the time that Landlord elects to terminate this Lease as a result of casualty, and Tenant gives notice to the Landlord of its election to extend within thirty (30) days of receipt of notice of Landlord's election to terminate, Landlord shall reconstruct the Premises to the extent insurance proceeds are available for the reconstruction and this Lease shall continue for the extension period. 20.2 Proceeds. All proceeds from the insurance required to be kept under Section 16.1 shall be delivered to and constitute the property of Landlord and the proceeds of all property insurance covering Tenant's leasehold improvements which would constitute the property of Landlord upon. termination of the Lease shall also be paid to Landlord. Unless Landlord elects to terminate this Lease in accordance with Section 20.1 above, Landlord shall apply its insurance proceeds toward reconstruction of the Premises. Tenant shall be entitled to retain the proceeds of its insurance carried pursuant to 20 Section 16.1 covering its trade fixtures, merchandise, signs and other personal property which it would be entitled to remove upon the expiration of the Lease. 20.3 Waiver of Termination. Tenant and Landlord hereby waive any statutory rights which they may have to terminate the Lease in the event of the partial or total destruction of the Premises, Building or Shopping Center, it being agreed that the provisions of this Article XX shall control in the event of any damage or destruction. ARTICLE XXI -- EMINENT DOMAIN 21.1 Total Condemnation of Premises. If the whole of the Premises shall be acquired for any public or quasi -public use or purpose or taken by eminent domain, then the Tenn shall cease and terminate as of the date possession of title is given to such condemning authority in such proceeding and all rentals shall be paid up to that date, and Tenant shall have no further obligation under the Use Agreement, to make the deficiency tax payments required therein. 21.2 Total Condemnation of Parking Area. If the entire portion of the Common Area used for parking in the Shopping Center (".Parking Area") shall be acquired for any public or quasi -public use or purpose or taken by eminent dornain, the Term shall cease and tenninate as of the date possession or title is given to such condemning authority in such proceeding unless Landlord shall provide other parking facilities substantially equal to the previously existing ratio between the Parking Area and the Premises within ninety (90) days from the date of such taking. In the event that Landlord shall provide such other parking facilities, this Lease shall continue in full force and effect without abatement of Rent, or additional rent, or other charges, except for abatement during such 90 day period. 21.3 Partial Condemnation of Premises. If any part of the Premises shall be acquired or taken by eminent domain for any public or quasi -public use or purpose, and in the event that such partial taking or condemnation shall render the Premises unsuitable for the operation of Tenant's business, this Lease shall cease and terminate as of the date possession or title is given to such condemning authority in such proceeding. In the event of a partial taking or condemnation which is not extensive enough to render the Premises unsuitable for the operation of Tenant's business, Landlord shall promptly restore the Premises to a condition comparable to its condition at the time of such condemnation less the portion lost in the taking, and this Lease shall continue in full force and effect and the Rent, or additional rent, shall be equitably reduced based on the percentage of Floor Area of the Premises lost in the taking. 21.4 Partial Condemnation of Parking Area. If any part of the Parking Area shall be acquired or condemned by eminent domain for any public or quasi -public use or purpose end if, as the result of such partial taking, the ratio of square feet of Parking Area to square feet of the sales Floor Area of the entire Shopping Center is reduced to a ratio below 4 per 1,000 square feet of Floor Space in the Shopping Center, this Lease shall cease and terminate with 90 day notice to Tenant from the date possession or title is given to such condemning authority in such proceeding, unless Landlord shall provide 21 reasonable evidence of its ability to increase the parking ratio to a ratio equal to or in excess of per 1,000 square feet of Floor Space in the Shopping Center or Landlord can provide substitute parking either in or outside the Shopping Center, in which event this Lease shall be unaffected and remain in full force and effect as between the parties. 21.5 Allocation of Award. Except as provided below, in. the event of any condemnation or taking as herein provided, whether whole or partial, Tenant shall not be entitled to any part of the award, as damages or otherwise, for such condemnation and Landlord is to receive the full amount of such award. Tenant expressly waives any right or claim to any part thereof, including the right or claim for the value of the unexpired portion of the Term or diminution in value of Tenant's leasehold interest, or for the value of any option to extend the Term or renew this Lease. Tenant shall, however, have the right, provided such award shall not diminish Landlord's award, to claim and recover from the condemning authority, but not from Landlord, such compensation as may be separately awarded or recoverable by Tenant in Tenant's own right on account of any and all damage to Tenant's business by reason of the condemnation and for or on account of any costs or loss which Tenant might incur in removing Tenant's merchandise, furniture, fixtures and equipment from the Premises. Tenant hereby waives any rights it might otherwise have pursuant to Montana law to terminate this Lease as a result of any condemnation action or proceeding in lieu thereof. ARTICLE XXII -- DEFAULT 22.1 Notice and Remedies. In the event of Tenant's failure to pay Rent, or additional rent, or to perform any of Tenant's other obligations under this Lease, or any part thereof, when due or called for hereunder, Tenant shall have a period of four (4) business days after service of written notice by Landlord specifying the nature of Tenant's default within which to cure such defaults, provided that if the nature of a non -monetary default is such that it cannot be fully cured within said four (4) business day period, Tenant shall have such additional time as may be, reasonably necessary to cure such default so long as Tenant commences such cure promptly after service of Landlord's notice and proceeds diligently at all times to complete such cure. Tenant agrees that a notice served in accordance with the provisions of this Section 22.1 shall be in lieu of, and not in addition to, any notice required under applicable law or if Tenant fails to comply with the foregoing provisions, Tenant shall be deemed to be in material breach of this Lease and Landlord with or without further notice or demand may either: (a) Terminate Tenant's right to possession of the Premises because of such breach, and upon termination, recover from Tenant as damages (i) the worth at the time of award of any unpaid Rent, or additional rent, which had been earned at the time of termination, plus (ii) the worth at the time of award of the amount by which the unpaid Rent, or additional rent, which would have been due and payable after termination until the time of award exceeds the amount of such rent loss that Tenant proves could have been reasonably avoided, plus (iii) the worth at the tune of award of the amount by which the unpaid Rent, or additional rent, for the balance of the Term after the time of award exceeds the amount of such rent loss that Tenant proves could be reasonably avoided, plus (iv) any other arnounts 22 necessary to compensate Landlord for all of the detriment proximately caused by Tenant's failure to perform Tenant's obligations under this Lease, or which in the ordinary course of things would be likely to result therefrom, including, without limitation, any reasonable costs or expenses incurred by Landlord insofar as they are reasonably necessary to bring the Premises to a market -oriented condition and for market -oriented expenses, (A) .in retaking possession of the Premises, (B) in maintaining, repairing, preserving, restoring, replacing, cleaning, altering or rehabilitating the Premises or any portion thereof, including such acts for reletting to a new tenant or tenants, (C) for leasing commissions, or (D) for any other costs necessary or appropriate to relet the Premises, plus (v) at Landlord's election, such other reasonable amounts and remedies .in addition to or in lieu of the foregoing as may be permitted from time to time by the laws of the State of Montana. The "worth at the time of award" of the amounts referred to in subsections 22.1(a) (i) and (ii) above shall be computed by allowing interest at the Interest Rate. The "worth at the tune of award" of the amount referred to in subsection 22.1(a)(iii) shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the tune of award plus 1%. Tenant hereby waives redemption or relief from forfeiture under current Montana law, or under any other present or future law, in the event Tenant is evicted or Landlord takes possession of the Premises by reason of any default of Tenant hereunder. No act by Landlord other than giving written notice thereof to Tenant shall terminate this Lease. Any act of maintenance or efforts to relet the Premises or the appointment of a receiver on Landlord's initiative to protect Landlord's interest under this Lease shall not constitute a termination of Te.nant's right to possession; or (b) Not terminate Tenant's right to possession because of such breach, but continue this Lease in full force and effect and in that event (1) Landlord may enforce all rights and remedies under this Lease and under the provisions of Montana law, including the right to recover the Rent, or additional rent, and all other charges due hereunder as such rent and other charges become due hereunder, and (2) Tenant .may assign its interest in this Lease with Landlord's prior written consent, which shall not be unreasonably withheld, delayed or conditioned, as provided in Section herein; or (c) With or without terminating this lease, re-enter the Premises and remove all persons and property from the Premises. Such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant. No re-entry or taking possession of the Premises by Landlord pursuant to this paragraph shall be construed as an election to terminate this Lease unless a written notice of such intention is given to Tenant. Landlord shall use commercially reasonable efforts to mitigate Tenant's damages. 22.2 Default by Landlord. Landlord shall be deemed to be in default under this Lease only if Landlord fails to perform any of the covenants or conditions required on its part to be performed pursuant to this Lease, and such failure continues for a period of thirty (30) 23 days after receipt of written notice specifying the nature and extent of such default in detail; provided, however, that if such default is of a nature that it cannot reasonably be cured within such thirty (30) day period, Landlord shall have such additional time as may be required to effect such cure provided Landlord commences the cure within such thirty (30) day period and thereafter diligently prosecutes such cure to competition. In no event shall Tenant have the right to terminate this Lease as a result of Landlord's default and Tenant's remedies shall be limited to damages and/or an injunction. 22.3 Limitation on Tenant's Recourse. Tenant's sole recourse under this Lease against Landlord is to the interest of Landlord in and to the Premises and any portion of the Shopping Center owned by Landlord. Tenant shall have no right to satisfy any judgment which it .may have against Landlord from any other assets of Landlord or from any other assets of any partner, venturer or shareholder of Landlord or any beneficiary of any trust of which any person from tine to time holding Landlord's interest is trustee. The provisions of this Section are not intended to limit Tenant's right to seek injunctive relief or specific performance, or Tenant's right to claim the proceeds of insurance (if any) specifically maintained by Landlord for Tenant's benefit. The foregoing limitations shall also apply to any successor to Landlord's interest in the Premises. In no event shall Landlord ever be liable to Tenant for any indirect or consequential damages by reason of Landlord's breach or default of the terms of this Lease. 22.4 Insolvency. The occurrence of any of the following shall constitute a material, incurable breach which shall entitle Landlord to the remedies provided in Section 22.1 (the cure periods provided below shall be in lieu of, and not in addition to, any cure periods provided in Section 22.1): (a) This Lease or the Premises or any part of the .Premises are taken upon execution or by other process of law directed against Tenant, or are taken upon or subjected to any attachment by any creditor of Tenant or claimant against Tenant, and such attachment is not discharged within thirty (30) days after its levy; (b) Tenant files a petition in bankruptcy or insolvency or for reorganization or arrangement under the bankruptcy laws of the United States or under any insolvency act of any state, or is dissolved, or makes an assignment for the benefit of creditors; (c) Involuntary proceedings under any such bankruptcy laws or insolvency act or for the dissolution of, Tenant are instituted against Tenant, or a receiver or trustee is appointed for all or substantially all of Tenant's property, and such proceedings are not dismissed or such receivership or trusteeship is not vacated within sixty (60) days after such institution or appointment; or (d) The City of Kalispell shall terminate this Lease in accordance with the Use Agreement. 22.5 Intentionally Deleted. 24 ARTICLE XXIII -- HOLDING OVER, SUCCESSORS 23.1 Holding Over. Any holding over after the expiration of the Term, with the consent of the Landlord, express or implied, shall, in the absence of a written agreement providing otherwise, be construed to be a tenancy from month to month at a Rent equal to 150% of the Rent in effect upon the expiration of the Terre and shall otherwise be on the terms and conditions of this Lease. 23.2 Successors. All rights and liabilities herein given to, or imposed upon, the respective parties hereto shall extend to and bind the several respective heirs, executors, administrators, successors, and assigns of said parties; and if there shall be more than one party comprising Tenant, they shall all be bound jointly and severally by the terms, covenants and agreements herein. No rights, however, shall inure to the benefit of any assignee of Tenant unless the assignment of such assignee has been approved by Landlord in writing as provided in Section I S.I hereof. ARTICLE XXIV -- QUIET ENJOYMENT 24.1 Landlord's Covenant. Upon timely payment by Tenant of the Rent and additional rent herein provided, and upon the observance and performance of all of the covenants, terms and conditions on Tenant's part to be observed and performed hereunder, Tenant shall peaceably and quietly hold and enjoy the Premises for the Tenn without unreasonable hindrance or interruption by Landlord or any other person or persons lawfully or equitably claiming by, through or under the Landlord, subject, nevertheless, to the terms and conditions of this Lease. ARTICLE XXV -- LANDLORD WAIVER Within thirty (30) days after written request from Tenant, Landlord agrees to waive in writing (the "Landlord Waiver") for the benefit of a bonafide third -party lender ("lender") any lien or security interest on Tenant's property now or hereafter placed in the Premises and not paid for by Landlord, such as trade fixtures, machinery, equipment, furnishings and other articles of personalty (collectively, the "personalty"). The Landlord Waiver shall be in form and substance satisfactory to Landlord and shall in all events require the lender to (a) indemnify Landlord for all losses caused by the lender's (and its employees', agents' and contractors') activities on or about the Premises, (b) refrain from conducting any public auction of the personalty from the Premises, (c) immediately repair all damage caused by its removal of the personalty from the Premises, and (d) give Landlord reasonable prior written notice prior to removing the personalty from the Premises. ARTICLE XXVI -- MISCELLANEOUS 26.1 Index. Wherever in this Lease there is a reference to the Index, such reference shall refer to the following: (a) The "Index" as used in this Lease shall be deemed to mean the United States Department of Labor, Bureau of Labor Statistics Consumer Price Index -Los Angeles -Anaheim -Riverside -All Urban Consumers -All Items -Base 1982- 25 1984=100. If at anytime the Index does not exist in the format recited herein, Landlord shall substitute any official Index published by the Bureau of Labor Statistics or successor thereto or similar governmental agency, as may then be in existence and shall, in Landlord's opinion, be most nearly equivalent thereto. (b) The sum to be increased in accordance with the provisions of the Index shall be increased using the following formula: Such sum shall be increased by a percentage equal to the percentage increase, if any, in the index published for comparison month over the Index published for the base month; provided, however, in no event shall said sum be less than that which was due immediately preceding the date of adjustment. 26.2 Waiver. The waiver by either party of any breach of any term, covenant or condition of this Lease shall be deemed to be a waiver of any other term, covenant or condition of this Lease or of any subsequent breach of any term, covenant or condition. The subsequent acceptance of Rent, additional 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 amount so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such amounts. No covenant, term or condition of this Lease shall be deemed to have been waived by either party, unless such waiver is in writing by the waiving party. 26.3 Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than the Rent and additional rent herein stipulated shall be deemed to be other than a partial payment of the amount herein stipulated, nor shall any endorsement or statement on any check or any letter accompanying any cheek 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 amount or pursue any other remedy provided in this Lease. 26.4 Entire Agreement. This Lease, the Exhibits and Addenda attached hereto and forming a part hereof, the Declarations and the Use Agreement and all other documents executed in connection with the Development, set forth all the representations, covenants, promises, agreements, conditions and understandings between Landlord and Tenant concerning the Premises, and there are no representations, covenants, promises, agreements, conditions or understandings, either 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 signed by both parties. 26.5 No Partnership. 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 by reason of this Lease. 26.6 Farce Majeure. In the event that either party hereto shall be delayed or hindered in or prevented from the performance of any act required hereunder by reason of acts of God, strikes, lock -outs, labor troubles, inability to procure materials, failure of power, 26 governmental moratorium, riots, insurrection, war or other reason of a like nature not the fault of the party delaying in performing work or doing acts required under the terms of this Lease (but excluding delays due to financial inability) (herein collectively, "Force Majeure Delays"), then performance of such act shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay. The provisions of this Section 26.6 shall not apply to nor operate to excuse Tenant from the payment of Rent, additional rent, or for other payments strictly in accordance with the tern -is of this Lease. 26.7 Notices. All notices hereunder must be served personally by nationally recognized overnight delivery service to Tenant at the address specified in Section 1.14 and to Landlord at the address specified in Section 1.15, or at such other address as Landlord or Tenant may designate by written notice pursuant to this Section. 26.8 Captious and Section Numbers. The captions, section numbers and article numbers in this Lease are inserted only as a platter of convenience and in no way define, limit, construe, or describe the scope or intent of such sections or articles of this Lease nor in any way affect this Lease. 26.9 Tenant Defined, Use of Pronoun. The word "Tenant" means jointly and severally each and every person or party mentioned as a tenant herein; and if there shall be more than one Tenant or more than one parry comprising Tenant, any notice required or permitted by the terms of this Lease may be given by or to any one thereof, and shall have the same force and effect as if given by or to all thereof. The use of the neuter singular pronoun to refer to Landlord or Tenant shall be deemed a proper reference even though Landlord or Tenant may be an individual or entity or a group of two or more individuals or entities. The necessary grammatical changes required to make the provisions of this Lease apply in the plural sense where there is more than one Landlord or Tenant and to either corporations, associations, partnerships, or individuals, males or females, shall in all instances be assumed as though in each case fully expressed. 26.10 Partial Invalidity. 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 enforceable to the fullest extent permitted by law. 26.11 No Option. The submission of this Lease for examination does not constitute a reservation of or option for the Premises and this Lease becomes effective as a Lease only upon execution and delivery thereof by Landlord to Tenant. 26.12 Recording. At either parry's request, Landlord and Tenant shall execute, have acknowledged, and record a memorandum of this Lease at the requesting parry's expense. 26.13 Legal Expenses. If either Landlord or Tenant should bring suit against the other with respect to this Lease, then all reasonable costs and expenses, including without limitation, 27 actual professional fees and costs such as appraisers', accountants' and attorneys' fees and costs, incurred by the party which prevails in such action, whether by final judgment or out of court settlement, shall be paid by the other party, which obligation on the part of the other party shall be deemed to have accrued on the date of the commencement of such action and shall be enforceable whether or not the action is prosecuted to judgment. As used herein, attorneys' fees and costs shall include, without limitation, attorneys' fees, costs and expenses incurred in connection with any (i) post -judgment motions; (ii) contempt proceedings; (Ili) garnishment, levy, and debtor and third party examination; (iv) discovery-, and (v) bankruptcy litigation. 26.14 Rights Cumulative. The rights and remedies of Landlord specified in this Lease shall be cumulative and in addition to any other rights and remedies provided by law. 26.15 Authority, If Tenant is a corporation or partnership, each individual executing this Lease on behalf of such entity represents or warrants that he or she is duly authorized to execute and deliver this Lease on behalf of such entity and that such entity shall be bound by all the terms and provisions hereof. 26.16 Time of the Essence. Time is of the essence of each and every provision of this Lease except for delivery of possession of the Premises as set forth herein. 26.17 Lease Addenda and Exhibits. This Lease contains the following Addenda and Exhibits which are attached hereto and incorporated herein by this reference: (a) Addenda: Addendum No. 1 Use Restrictions; Addendum No. 2 Extension of Term; Addendum No. 3 Rider to Lease; (b) Exhibits: Exhibit "A" - Site Plan; Exhibit "B" - Construction Agreement; 26.18 Parking. Tenant shall be provided with parking areas for the Premises consisting of a total of 500 spaces. Landlord shall provide a parking plan to the Tenant, which includes those spaces currently available in the American Capital lot and which shall demonstrate the location and number of parking spaces that are currently available and that will, within 60 days of notice, be made available to the Tenant as the parking needs of the Tenant increase. Landlord shall pay the cost of any development and maintenance of new parking areas required. Landlord shall be responsible for plowing and sanding under the Declarations of Restrictions Agreement with the Developer. 26.19 Amenities. Tenant shall be allowed to construct or expand a cafeteria in the Premises, at Tenant's election and cost. Tenant shall be allowed to construct or expand a patio/smoking area located outside the Shopping Center in a location to be mutually agreed upon between Landlord and Tenant. 26.20 Brokerage Consulting Fees. Landlord shall recognize CRESA, Tenant's real estate advisor, as the broker for this transaction as per a separate agreement. Each party shall indemnify, defend and hold harmless the other party as to any other brokerage claims from any other broker. 28 26.21 Contingency. This Lease is contingent upon termination of the existing lease for the Premises on or prior to February 23, 2004. IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date first written above. LANDLORD: THE CITY OF KALISPELL, A BODY POLITIC, By: am Pamela B. Kennedy, Mayor Chris Kukulski, City Manager THE .FLATHEAD COUNTY ECONOMIC DEVELOPMENT AUTHORITY, A BODY POLITIC Lo , Board Chair TENANT: TELETECH HOLDINGS, INC., A DELAWARE CORPORATION C Its: TELETECH SERVICES CORPORATION A COLORADO CORPORATION By: Its: 29 ADDENDUM NO.1 TO SHOPPING CENTER LEASE (Use Restrictions) This Addendum is attached to that certain Shopping Center Lease dated February 23, 2004, (the "Lease"), between THE CITY OF KALISPELL, A BODY POLITIC, AND THE FLATHEAD COUNTY ECONOMIC DEVELOPMENT AUTHORITY, A BODY POLITIC, as Landlord, and TELETECH HOLDINGS, INC., A DELAWARE CORPORATION, and TELETECH SERVICES CORPORATION, A COLORADO CORPORATION, as Tenant, with respect to premises (the "Premises") in the Gateway West .Mall in the City of Kalispell, Flathead County, Montana, more particularly described in the Lease. The following; additional new terms or modifications to existing terms are hereby made a part of the Lease as though fully set forth therein: l . Hazardous Materials. Tenant hereby snakes the following covenants regarding hazardous materials: (a) Tenant shall at all times and in all respects comply with all federal, state and local laws, ordinances and regulations, including, but not limited to, the Federal Water Pollution Control Act (33 U.S.C. § 1.251, et seq.), Resource Conservation & Recovery Act (42 U.S.C. § 6901 et seq.), Safe Drinking Water Act (42 U.S.C. § 300 et seq.), Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601. et seq.), Montana Code (§ ), and other comparable state, county, municipal, local or other statute, law, regulation or ordinance ("Hazardous Materials Laws"), relating to industrial hygiene, environmental protection or the use, analysis, generation, manufacture, storage, disposal or transportation of any oil, flammable explosives, asbestos, urea formaldehyde, radioactive materials or waste, or other hazardous, toxic, contaminated or polluting materials, substances or waste, including, without limitation, any "hazardous substances" "hazardous wastes", "hazardous materials" or "toxic substances" under any such laws, ordinances or regulations (collectively, "Hazardous Materials"). (b) Tenant shall, at its own expense, procure, maintain in effect and comply with all conditions of any and all permits, licenses, and other governmental and regulatory approvals required for Tenant's use of the Premises, including, without limitation, discharge of (appropriately treated) materials or wastes into or through any sanitary sewer serving the Premises. Except as discharged into the sanitary sewer in strict accordance and conformity with all applicable Hazardous Materials Laws, Tenant shall cause any and all Hazardous Materials removed from the Premises to be removed and transported solely by duly licensed haulers to duly licensed facilities for final disposal of such materials and wastes. Tenant shall in all respects handle, treat, deal with and manage any and all Hazardous Materials in, on, under or about the Premises in total conformity with all applicable Hazardous Material Laws and prudent industry practice regarding management of such Hazardous Materials. Upon expiration or earlier termination of the Lease Tenn, Tenant shall cause all Hazardous Materials to be removed from the Premises and transported for use, storage or disposal in accordance with and compliance with all applicable Hazardous Materials Laws. Tenant shall not take any remedial A-1-1 action in response to the presence of any Hazardous Materials in or about the Premises or any building, nor enter into any settlement agreement, consent decree or other comprise in respect to any claims relating to any Hazardous Materials in any way connected with the Premises or any building, without first notifying Landlord of Tenant's intention to do so and affording Landlord ample opportunity to appear, intervene or otherwise appropriately assert and protect Landlord's interest with respect thereto. (c) Tenant shall immediately notify Landlord in writing of. (i) any enforcement, cleanup, removal or other governmental or regulatory action instituted, completed or threatened pursuant to any Hazardous Materials Laws; (ii) any claim made or threatened by any person against Tenant, the Premises or any building relating to damage, contribution, cost recovery compensation, loss or injury resulting from or claimed to result from any Hazardous Materials; and (iii) any reports made to any environmental agency arising out of or in connection with any Hazardous Materials in or removed from the .Premises or any building, including any complaints, notices, warnings or asserted violations in connection therewith. Tenant shall also supply to Landlord as promptly as possible, and in any event within five (5) business days after Tenant first receives or sends the same, with copies of all claims, reports, complaints, notices, warnings or asserted violations, relating in any way to the Premises, any building or Tenant's use thereof. Tenant shall promptly deliver to Landlord copies of hazardous waste manifests reflecting the legal and proper disposal of all Hazardous Materials removed from the Premises. (d) Tenant shall indemnify, defend (by counsel reasonably acceptable to Landlord), protect, and hold Landlord and each of Landlord's partners, employees, agents, attorneys, successors and assigns, free and harmless from and against tiny and all claims, liabilities, penalties, forfeitures, losses or expenses (including attorneys' fees), or death of or injury to any person or damage to any property whatsoever, arising from or caused in whole or in part, directly or indirectly by (1) the presence in, on, under or about the Premises or any building, of any Hazardous Materials caused by or knowingly permitted by Tenant or for which Tenant may be legally liable; (ii) Tenant's use, analysis, storage, trans Lion, generation of Hazardous Materials to, in, on, under, about or from the Premises or any building; or (iii) Tenant's failure to comply with any Hazardous Materials Laws. Tenant's obligations hereunder shall include, without limitation, and whether foreseeable or unforeseeable, all costs of any required or necessary repair, cleanup or detoxification or decontamination of the Premises or any building, or the preparation and implementation of any closure, remedial action or other required plans in connection therewith, and shall survive the expiration or earlier termination of the Lease term. For purposes of the release and indemnity provisions hereof, any acts or omissions of Tenant, or by employees, agents, assignees, contractors or subcontractors of Tenant or others acting for or on behalf of Tenant (whether or not they are negligent, intentional, willful or unlawful) shall be strictly attributable to Tenant. (e) If at any time it reasonably appears to Landlord that Tenant is not maintaining sufficient insurance or other means of financial capacity to enable Tenant to fulfill its obligations to Landlord hereunder, whether or not then accrued, liquidated, conditional or contingent, Tenant shall procure and thereafter maintain in full force and effect such insurance or other form of financial assurance, with or from companies or persons and in forms reasonably acceptable Landlord, as Landlord may from time to time reasonably request. A-1-2 2. Sewer Damages. Tenant agrees not to discharge any acid or other harmful or dangerous chemicals into the sewer system., the sinks, drains and toilets, if any. of the Premises or inside the main system leading from the Premises to the main sewer line. Should Tenant discharge any acid or harmful chemicals into any such systems. Tenant shall be fully responsible for the cost and repair of such damage. Landlord reserves the right to select an expert of its choosing to inspect any damage at Tenant's cost. A-1-3 ADDENDUM NO.2 TO SHOPPING CENTER LEASE (Extension of Term and Early Termination) This Addendum is attached to that certain Shopping Center Lease dated February 23, 2004 (the "Lease"), between THE CITY OF KALISPELL, A BODY POLITIC, AND THE FLATHEAD COUNTY ECONOMIC DEVELOPMENT AUTHORITY, A BODY POLITIC, as Landlord, and TELETECH HOLDINGS INC., A DELAWARE CORPORATION, and TELETECH SERVICES CORPORATION, A COLORADO CORPORATION, as Tenant, with respect to premises (the "Premises") in the Gateway West Mall in the City of Kalispell, .l"lathead County, Montana, more particularly described in the Lease. The following additional new terms or modifications to existing tenns are hereby made a part of the Lease as though fully set forth therein: 1. Extension of Term. Provided that Tenant is not in default under the Lease beyond expiration of any applicable cure periods and provided Tenant has not assigned or sublet the Premises in whole or in part, Tenant shall have the right to extend the term of the Lease for three (3) additional three (3) year periods) (each. an "extension term") under the same terms and conditions as the original Lease (except for Rent as provided below). It is understood that this option is unique to TELETECH HOLDINGS, INC., A DELAWARE CORPORATION, and TELETECH SERVICES CORPORATION, A COLOR -ADO CORPORATION, and upon any assignment or subletting, with or without Landlord's consent, this option shall be rendered null and void. 2. Notice. In order to exercise such option to extend the Tenn of the Lease, Tenant shall give to Landlord written notice of its election to do so no fewer than one hundred eighty (I80) days and no more than three hundred sixty (360) days (except as provided in Section 5.3 of this Lease) prior to expiration of the original Tenn or extension term, as applicable, and if Tenant shall fail to give such notice within said tune limit, Landlord will give Tenant thirty (30) days' written notice to elect to exercise its option at which time all rights and privileges as granted to Tenant to extend the Tenn of the Lease shall thereupon be null and void. 3. Rent, If Tenant shall exercise an option to extend the Term set forth herein, then the parties shall attempt to agree upon the Rent for the extension term in writing. If the parties are unable to agree on the Rent within sixty (60) days following Landlord's receipt of Tenant's written election to extend the Term, then the option to extend will be null and void. Should Tenant be subject to a late charge for two (2) consecutive months during any extension teen, Rent for the following twelve (12) months shall automatically be adjusted to be quarterly rental, payable in advance, commencing upon the first day of the month following, such consecutive late month and continuing for the next twelve (I2) months on a quarterly basis in advance. 4. Early Termination. Tenant shall have the option to tenninate the Lease at any time after the end of three years in the event that the TeleTech Companies are unable to hire and retain sufficient, qualified CSRs to meet their needs at the Property, notwithstanding the sustained recruiting efforts of the TeleTech Companies, using the recruiting resources generally used by the TeleTech Companies elsewhere in the United States. The Company and TSC shall exercise their option to terminate the Jobs and Use Agreement between Landlord and Tenant, dated A-2-1 February 23, 2004 (the "Use Agreement") and the Lease pursuant to this Paragraph by providing at least six (6) inontbs prior written notice to the City, including a written certification of an officer of the Company in the form attached as Exhibit E to the Use Agreement. A-2-2 ADDENDUM NO.3 TO SHOPPING CENTER LEASE (Rider to Lease) RIDER TO LEASE DATED , 2004 BETWEEN THE CITY OF KALISPELL, A BODY POLITIC, AND THE FLATHEAD COUNTY ECONOMIC DEVELOPMENT AUTI-IORITY, A BODY POLITLC ("LANDLORD") AND TELETECH HOLDINGS, INC., A DEWARE CORPORATION AND TELETECI-I SERVICES CORPORATION, A COLOR -ADO CORPORATION ("TENANT") A. PROHIBITED USE. Tenants and/or Tenant's assignees hereby covenant that during the entire term of this Lease or any extension thereof, they will respect and abide by any other exclusive agreements Landlord has granted. Tenant shall be prohibited from operating an adult book store, gyre, dance hall, billiard or pool hall, massage parlor, theater, bowing alley, skating rink, warehouse (except the existing Sears Warehouse), car wash, or for the renting, leasing or sale of or displaying for the purpose of renting, leasing or sale of any motor vehicle or trailer, or for industrial purposes. Nothing in this paragraph shall adversely affect or invalidate any existing lease or occupancy of any tenant of the Shopping Center. 2. Tenant shall be prohibited from operating a Supermarket (which shall be defined as any store or department containing at least five thousand (5,000) square feet of floor area, including aisle space and storage, primarily devoted to the retail sale of food for off premises consumption), a. bakery, a doughnut shop, a delicatessen, nor for the sale of fresh or frozen meat, poultry or produce for off premises consumption. Such restriction on the use of the Premises shall terminate if the Albertson's premises is not used as a Supermarket for a continuous period of six (6) months for any reason other than: (i) strikes, walkouts, or other labor difficulties, war, riot, insurrection, act of God, fire or other casualty, the requirements of any governmental act, law or regulation, or any temporary closure beyond the reasonable control of Tenant; or (ii) temporary closure due to restoration, reconstruction, expansion or remodeling of any building on the Albertson's premises. Tenant shall be prohibited from operating a Drugstore (which shall be defined as retail operation of a similar type to that operated by American Stores, Inc. (Osco) or their affiliates), nor for the sale or offer for sale of any ethical pharmaceutical A-3-1 products requiring the services of a registered pharmacist. Such restriction shall terminate if the Premises are not used as a Drugstore for a continuous period of six (6) months for any reason other than: (i) strikes, walkouts, or other labor difficulties, war, riot, insurrection, act of God, fire or other casualty, the requirements of any governmental act, law or regulation, or any temporary closure beyond the reasonable control of Tenant; or (ii) temporary closure due to restoration, reconstruction, expansion or remodeling of any building on the Albertson's Premises. 4. Tenant shall be prohibited from the retail sale of Brio Toys, Educational Insights, Aristo Play, Battat, Ravesberger, Hinistedt Dolls, European Artist Dolls, Susan Waukeen Dolls, and Steiff Toys. Tenant shall be prohibited from the sale of greeting cards as their primary business, primary defined to be more than twelve (12) linear feet of greeting cards for sale. 6. Tenant is prohibited from operating a fitness center, health club, and/or aerobic studio in the Shopping Center. 7. Tenant is prohibited from operating a nail salon as its primary business, primary is defined to be 50% or greater of gross sales. This paragraph Rider "A", Prohibited Use, shall only act to restrict Tenant's rights that Tenant may otherwise have under the terms of this Lease. It is not the intent of the parties hereto to have this paragraph Rider "A" interpreted in a manner which would broaden or grant any greater rights to Tenant than is otherwise set forth in the Lease. B. The following additional new terms or modifications to existing terms are hereby made a part of the pease as though fully set forth therein: To the extent of any conflict between the terms of this Addendum and the terms of the Lease, the terms of this Addendum shall prevail and control. A-3-2 Legal Description of City Parcel A parcel located in the Southeast 114 of Section 12, Township 28 North Range 22 West. Principal Meridian, Montana, Flathead County, Montana niore particularly described as follows: COMMENCING at the intersection of the Westerly right-of-way line of Glenwood Drive with the Northerly right-of-way line of U.S. Highway No. 2; thence along said Westerly right-of-way line N00°4742" E 223.31 feet to the Point of Beginning; thence N89°16'37"W 166.51 feet; thence NOO°56'30"E 148.77 feet; thence N89°03'30"W 38.87 feet; thence N00°48'46"E 199.10 feet; thence N89°5452"W 124.44 feet; thence S00°4525"W 33.25 feet; thence S89° 14'35"E 80.50 feet to the said Westerly right-of-way of Glenwood Drive; thence along said right-of-way SOO°47'42"W 316.10 feet to the Point of beginning; CONTAINING 1.45 acres of land as shown hereon. TOGETHER WITH a no-build/no- encroachment easement as shown on the plat. SUBJECT TO ALL existing easements and right-of-ways.