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1. Resolution 4862 - Stream/Selectron & TeleTech AgreementsCity of Kalispell Charles A. Harball Office of City Attorney Tel 406,758.7708 City Attorney 312 First Avenue East Fax 406,758,7771 P.O. Box 1997 cbarball@,kalispell.com Kalispell, MT 59903-1997 MEMORANDUM TO: Mayor Pamela B. Kennedy and Kalispell City Council FROM: Charles Harball, City Attorney Chris Kukulski, City Manager SUBJECT: Resolution for the Approval of Documents of Agreement Between StreamlSelectron, TeleTech Holdings and the City of Kalispell MEETING DATE: Monday, March 1, 2004 Regular 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, ex� cept 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 terra 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 27, 2004 Page - 2 d. We have improved the job piece after three years that now requires that a complete abatement of rent will require an annual average of 425 employees rather than to allow a year-end snapshot of 425 employees as allowed during the ramp -up years. 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/Selection 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, Charles Harball, 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 A eement• Assignment and Consent to Assi nznent 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 1st day of :March, 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 make 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 10-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 March 1, 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 $785,769.69 which represents the outstanding principal amount of the Improvement Rent loan with interest thereon through March 1, 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 52 and 53 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 By: Chris Kukulski, City Manager FLATHEAD ECONOMIC DEVELOPMENT AUTHORITY By: 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 March 1, 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 ("$electron") 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 $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 ((5307,214.70 x 6.5 years)/10 years = $199,689.55). 2. Improvement Rent. The sum of $785,769.69 which represents the outstanding principal amount of the Improvement Rent loan with interest thereon through March 1, 2004. WITNESS my hand officially as such City Finance Director and the seal of the City as of this 1 st day of March, 2003. CITY OF KALISPELL, MONTANA (SEAL,) Finance Director SHOPPING CENTER LEASE BY AND BETWEEN THE CITY OF KALISPELL, A BODY POLITIC AND THE FLATHEAD ECONOMIC DEVELOPMENT AUTHORITY, A BODY POLITIC AS LANDLORD, AND TELETECH SERVICES CORPORATION, A COLORADO CORPORATION DOING BUSINESS IN MONTANA AS TELETECH SERVICES MONTANA AS TENANT SHOPPING CENTER LEASE Table of Contents Page ARTICLE I -- BASIC LEASE PROVISIONS & DEFINITIONS ...... ............................. ............... I ARTICLE IT -- LEASED PREMISES, PARKING AREAS & EXISTING FF&E ........................3 2.1 Premises........................................................................................... ......................... ...3 2.2 Reservations. .............................................................................................. ....3 2.3 Conditions of Record . ....................................... ....... ................ ................................... 3 2.4 Parking Areas............................................................................. ...........4 2.5 Lease of Existing FF&E. ............................. ................. ................... ................ ...4 ARTICLEIII -- TERM..................................................................................................... ........5 3.1 Term; Commencement Date........................................................................................5 3.2 Memorandum of Commencement Date. Section 3.1....................................................5 ARTICLEIV -- RENT.................................................................................................... 4.1 Base Rent. :........................................................................... .......5 4.2 Base Rent Credit......................................................................... ....7 4.3 Common Area Expenses................................................................................................7 4.4 Late Payment - Rent........................................................... ............ ........7 ARTICLE V -- CONSTRUCTION OF LEASED PREMISES.......................................................8 5.1 Landlord's And Tenant's Obligations...........................................................................8 5.2 Leasehold Improvements......................................................................... ......8 ARTICLE VI — INTENTIONALLLY DELETED............................................................................9 ARTICLEVII -- SIGNAGE............................................................................................................9 ARTICLEVIII -- TAXES................................................................................................... 8.1 Real Property Taxes. . . ........... ............ ........................... —.— .......................... 8.2 Personal Property Taxes............................................................................................I O ARTICLE IX — INTENTIONALLY DELETED..........................................................................10 ARTICLE X -- CONDUCT OF BUSINESS BY TENANT.........................................................10 z 10.1 Use of Premises................................................................................ ..........10 10.2 Restrictions on Tenant's Use.....................................................................................10 10.3 Restrictions on Landlord's Use..................................................................................11 10.4 Compliance With Laws......................................................... ..I I ARTICLE XI -- MAINTENANCE AND REPAIRS....................................................................12 11.1 Landlord's MaintenanceObligations; .................... 11.2 Building Systems.........................................................................................................12 11.3 Parking Lot. ................................................................................................................12 11.4 Landlord's Right of Entry..........................................................................................12 11.5 Tenant's Maintenance Obligations. ...........................................................................13 IL6 Service Contracts. ...........—.......................................................................................13 11.7 Plate Glass................................................................................... ...13 ARTICLE XII — INTENTIONALLY DELETED.........................................................................14 ARTICLE XIII ---- UTILITIES; GENERATOR..............................................................................14 ARTICLE XIV -- ALTERATIONS AND FIXTURES.................................................................14 14.1 Installation........................................................................................... ...14 14.2 Removal by Tenant....................................................................................................14 14.3 Liens...........................................................................................................................15 14.4 Awnings and Canopies....................................................... ....................................... 15 14.5 Amenities. .................... .......................... .......... ............... I ..................... ...15 ARTICLE XV w- SURRENDER OF PREMISES.........................................................................15 ARTICLE XVI -- INSURANCE AND INDEMNITY..................................................................16 16.1 Tenant Insurance . ...... ................................. ................................. ......................... I-".16 16.2 Indemnification of Landlord........................................................................................17 16.3 Indemnification of Tenant..........................................................................................17 16.4 Waiver of Subrogation...............................................................................................18 16.5 Waiver of Loss and Damage......................................................................................18 16.6 Notice by Tenant................................................................................... ..................... 18 ARTICLE XVII -- OFFSET STATEMENT, ATTORNIMENT, SUBORDINATION, MORTGAGEE PROTECTION CLAUSE....................................................................................18 17.1 Offset Statement . .......................................... ............................................................ -1.8 17.2 Attornent and Nondisturbance................................................................................19 17.3 Subordination. ......................................................................................... ..19 17A Mortgagee Protection Clause.....................................................................................19 ARTICLE XVIII -- ASSIGNMENT AND SUBLETTING,. ........................................................ 19 11 18.1 Assignment and Subletting..........................................................................................19 18.2 Tenant's Request............................................................................................ ....21 18.3 Other Prohibited Transfers.........................................................................................21 18.4 Sale of Premises.........................................................................................................21 18.5 Permitted Transfers....................................................................................................21 ARTICLE XIX --- ASSIGNMENT OF RENTS............................................................................21 ARTICLE XX -- DESTRUCTION...............................................................................................22 20.1 Total or Partial Destruction of Premises....................................................................22 20.2 Proceeds...................................................................................... .................22 20.3 Waiver of Termination...............................................................................................23 ARTICLE XXI -- EMINENT DOMAIN......................................................................................23 21.1 Total Condemnation of Premises...............................................................................23 21.2 Total Condemnation of Parking Area........................................................................23 21.3 Partial Condemnation of Premises.............................................................................23 21 A Partial Condemnation of Parking Area......................................................................23 21.5 Allocation of Award.......................................................................................•----......24 ARTICLEXXII -- DEFAULT......................................................................................................24 ARTICLE XXIII -- HOLDING OVER, SUCCESSORS..............................................................26 23.1 Holding Over............................................................................................. ..26 23.2 Successors.................................................................................... .26 ARTICLE XXIV -- QUIET ENJOYMENT..................................................................................26 ARTICLE XXV -- LANDLORD WAIVER.................................................................................27 ARTICLEXXVI -- MISCELLANEOUS......................................................................................27 26.1 Waiver.......................................................................................... ........................ ......27 26.2 Accord and Satisfaction.............................................................................................27 26.3 Entire Agreement................................................................................... 26.4 No Partnership . . ...... ...................... ................... I. ....... ...................... 26.5 Force Majeure..............................................................................................................28 26.6 Notices............................................................................................. .............................. .28 26.7 Captions and Section Numbers..................................................................................28 26.8 Tenant Defined, Use of Pronoun...............................................................................28 26.9 Partial Invalidity.......................................................................... ..........28 26.10 No Option............................................................................................... ................29 26.11 Recording. ...................................................................................... .--..29 26.12 Legal Expenses..........................................................................................................29 26.13 Rights Cumulative...................................................................................... ........29 iii 26.14 Authority . ....................................... 26.15 Time of the Essence . ...................... 26.16 Lease Addenda and Exhibits. :........ 26.17 Brokerage Consulting Fees. ........... 26.18 Contingency . .................................. ....................................................................29 ....................................... .......................29 ....................................................................29 ....................... .............................29 ....................................................................30 Iv SHOPPING CENTER LEASE THIS LEASE is made and entered as of the "Date of Lease" (as described in Section 1.1 below), by and between THE CITY OF KALISPELL, A BODY POLITIC, AND THE FLATHEAD COUNTY ECONOMIC DEVELOPMENT AUTHORITY, A BODY POLITIC ("Landlord"), and TELETECH SERVICES CORPORATION, A COLORADO CORPORATION doing business in Montana as TeleTech Services Montana ("Tenant"). ARTICLE I -- BASIC LEASE PROVISIONS & DEFINITIONS L l Date of Lease. March 1, 2004, 1.2 Shopping Center. Gateway West Mall, located in the City of Kalispell, County of Flathead, State of Montana, containing 164,667 rentable square feet. 1.3 Building. That portion of the Shopping Center which is owned by the Landlord. The Building is shown on the Site Plan. 1 A Premises. Those portions of the Building identified on the Site Plan, containing 60,645 rentable square feet. 1.5 Intentionally Deleted. 1.6 Initial Term. Ten Lease Years. L7 Term. The Initial Term, as the same may be extended or terminated pursuant to Addendum No. 2 to this Lease. 1.8 Base Rent. $275,000.00 per year during the Initial Term. If the Initial Term is extended pursuant to Addendum No. 2 to this Lease, Base Rent shall be determined in accordance with said Addendum No. 2. 1.9 Intentionally Deleted. 1.10 Use of Premises. Call Center, Recruiting and Training, and/or General Office. 1.11 Intentionally Deleted. 1.12 Intentionally Deleted. 1.13 Intentionally Deleted. 1.14 Address For Notices to Tenant. c/o TeleTech Holdings, Inc., 9197 South Peoria Street, Englewood, CO 80112, Attention: Vice President Real Estate & Facilities, with a copy to TeleTech Services Corporation, c/o TeleTech Holdings, Inc., 9197 South Peoria Street, Englewood, CO 80112, Attention: General Counsel. 1.15 Address For Notices to Landlord. City of Kalispell, Montana, 312 — lit 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. Jobs Now, Inc., 213 East Idaho, Kalispell, Montana 59901 Attention: Executive Director; Telephone Number (406) 257-7711. 1.16 Interest Rate. The greater of ten percent (10%) per annum or the maximum rate permitted under Montana Code Annotated §31-1-107(1), 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 When used in this Lease, the following terms shall have the respective meanings set forth in this Section 1.17: (a) "Additional Parking Area." means the area identified on Exhibit "B" attached hereto on which Landlord may construct and maintain additional parking for Tenant, its employees and invitees in accordance with Section 2.4 of this Lease. (b) "Approved Minimum Hourly Wage" means $8.00 per hour. (c) "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. "Common Area Expenses" shall have the meaning ascribed to such term in the Declaration. (d) "CSR" means a customer service representative. (e) "Declaration" means the Declaration of Restrictions and Establishment of Easements Affecting Land between Developer, Landlord and the Flathead County Economic Development Authority, of record in the office of the County Clerk and Recorder of Flathead County as Document No. 2000 068 1600, a copy of which is attached to this Lease as Exhibit "D" (f) "Developer" means ACG Kalispell Investors, LLC. (g) "Existing FF&E" means the furniture, fixtures and equipment located within the Premises as of the date hereof and described on the inventory to be prepared pursuant to Section 2.6. (h) "Floor Area" means rentable square footage, determined in accordance with current (at the time of calculation) standards for determining rentable square footage of multi -tenant properties, as established by the Building Owners and Managers Association, a/k/a `SOMA". 2 (1) "Full Time CSR" means a Full Time Employee working at the Premises as a CSR. (j) "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 rata 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. (k) "Jobs Agreement" means that certain Jobs and Use Agreement dated of even date herewith by and among Landlord, Tenant and TeleTeeh Holdings, Inc. (1) "Lease Year" means each 12 month period commencing on the Commencement Date; provided that if the Commencement Date is not the first day of a calendar .month, the first Lease Year shall include the partial month in which the Commencement Date occurs and the immediately succeeding 12 calendar months. (m) "Original Parking Area" means the parking areas identified on the Site Plan as being available for use by Tenant and its employees and invitees as of the date hereof. (n) "Rent" means Base Rent and all additional sums to be paid by Tenant to Landlord under this Lease, whether or not designated as "rent". (o) "Site Plan" means the plan attached to this Lease as Exhibit "A". (p) "TeleTech Companies" means individually or collectively, as the context may require, TeleTech Holdings, Inc. and its direct and indirect affiliates and subsidiaries, including without limitation, Tenant. ARTICLE II -- LEASED PREMISES, PARKING AREAS & EXISTING FF&E 2.1 Premises. 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 13 hereof. The boundaries and location of the Premises are generally depicted on the Site Plan and shall be deemed to include the entryway to the Premises. With the exception of the Building in which the Premises are situated, the Shopping Center is owned by the Developer. 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, all of which are described on Exhibit "C" attached to this Lease, (b) the effects of all zoning laws of the city, county and state where the Shopping Center is situated, and (c) general 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 the Premises for the uses described in Section 1.10, including without limitation those matters described in subsections (a)-(c) of this Section 2.3, and that said use will not violate any such matters of record. 2.4 Parking Areas. (a) During the Term, Landlord shall provide Tenant with access to no less than 500 designated, paved, outside parking spaces located in the Original Parking Area and the Additional Parking Area (collectively, "Tenant's Spaces"). Tenant's Spaces shall be paved, lit surfaced parking spaces. Tenant's Spaces shall include spaces designated by Landlord for handicap parking as required by applicable building and other codes. (b) Notwithstanding the provisions of Section 2.4(a) above, Tenant acknowledges that only 250 spaces exist in the Original Parking Area and that the remaining portion of Tenant's Spaces located in the Additional Parking Area do not exist as of the date hereof. Accordingly, Tenant shall provide Landlord with written notice ("Tenant's Parking Notice") at such time as it requires the additional Tenant's Spaces and within sixty (60) days following receipt of such written notice, Landlord shall construct and complete the Tenant's Spaces on the Additional Parking Area, subject to reasonable delays resulting from weather conditions and Force Majeure Delays (as defined in Section 26.5), provided that, notwithstanding the foregoing, Landlord will not be in default of its obligation to complete the additional Tenant's Spaces within 60 days following receipt of Tenant's Parking Notice so long as (a) Landlord is diligently pursuing completion of the additional Tenant's Spaces and (b) Developer agrees that Landlord may use a total of 500 parking spaces at the Shopping Center, commencing no later than the 61" day following the Landlord's receipt of Tenant's Parking Notice and continuing until the additional Tenant's Spaces are complete. (e) Landlord shall be responsible for ensuring that Tenant's Spaces are available for the use of Tenant and its employees and invitees. In the event Tenant experiences persistent problems with the availability of Tenant's Spaces for Tenant's use, Landlord and Tenant shall mutually agree upon an acceptable solution, to be implemented by Landlord, at Landlord's expense. 2.5 Lease of Existing FF&E. In addition to the Premises, and in consideration of the Rent otherwise payable hereunder, Landlord hereby leases to Tenant, and Tenant hereby leases 4 from Landlord, for the Term, the Existing FF&E. Landlord hereby represents and warrants to Tenant that as of the Commencement Date, Landlord will be the owner of the Existing FF&E, free and clear of all liens, security interests and other encumbrances. 2.6 Inventory of Existing FF&E. Within thirty (45) days following the Commencement Date, Landlord and Tenant will jointly prepare a detailed inventory of the Existing FF&E in form mutually satisfactory to the parties. Upon completion, Landlord and Tenant shall enter into an amendment to this Lease pursuant to which the inventory is incorporated. into, and made a part of, this Lease. Landlord and Tenant shall each pay their owns costs associated with preparing the required inventory. ARTICLE III -- TERM 3.1 Term; Commencement Date. The Initial Term 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 is anticipated to be approximately March 1, 2004. If Landlord is unable to deliver the Premises to Tenant by March 8, 2004, Tenant may, at its option, terminate this Lease upon five (5) business days' notice to Landlord. The Term shall continue from. the Commencement Date for the number of Lease Years 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. 3.2 Memorandum of Commencement Date. Within five (5) business days following the Commencement Date, Tenant and Landlord shall execute a written 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 Base Rent. During the Initial Term, Tenant shall pay to Landlord Base Rent in the amount stated in Section 1.8, annually at the end of each Lease Year. All Base Rent shall be paid without prior demand, deduction, counterclaim, or offset, except to the extent expressly allowed under this Lease. Notwithstanding the foregoing, Tenant shall receive credits against Base Rent and Base Rent shall be reduced by such credits as follows: (a) During the first Lease Year, Tenant 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 Premises 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 125 individuals, 80% of whom are FTEs, at the Premises at the expiration of the first Lease Year or (ii) an average of 125 individuals, 80% of whom are FTEs, at the Premises during the first Lease Year•, 5 (b) During the second Lease Year, Tenant 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 Premises 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 Premises at the expiration of such second Lease Year or (ii) an average of 250 individuals, 80% of whore. are FTEs, at the Premises during such second Lease Year; (c) During the third Lease Year, Tenant 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 Premises 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 (1) at least 425 individuals, 80% of whom are FTEs, at the Premises at the expiration of such third Lease Year or (ii) an average of 425 individuals, 80% of whom are FTEs, at the Premises during such third Lease Year. If the TeleTech 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 the third Lease Year or (y) an average of more than 200 FTEs but less than 340 FTEs during the third Lease Year, TSC shall 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). (d) Commencing on the first day of the fourth Lease Year and continuing for each consecutive Lease Year thereafter, Tenant 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 Premises 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 an average of 425 individuals, 80% of whom are FTEs, at the Premises during such Lease Year. If the TeleTech Companies do not meet the employment requirements of the immediately preceding sentence but they employ an average of more than 200 FTEs but less than 340 FTEs during such Lease Year, Tenant shall continue to receive a credit against Base Rent but such credit shall be reduced on a pro rata basis based upon the average number of FTEs employed. If at the end of any Lease Year, commencing with the fourth Lease Year, the TeleTech Companies have employed less than an average of 200 FTEs during such Lease Year, Tenant 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 Tenant in cash, as and when provided in this Section 4.1. 3 4.2 Base Rent Credit. Landlord will verify the credit to which Tenant is entitled pursuant to Section 4.1 in accordance with Section 5 of the .lobs Agreement. In the event of any inconsistency between the Jobs Agreement and this Lease as to the manner of calculation of such credit, the provisions of the Jobs Agreement shall control. 4.3 Common Area Expenses. (a) In addition to Base Rent, Tenant will pay Common Area Expenses, as more particularly described in this Section 4.3. (b) Reference is hereby made to Article 5 of the Declaration regarding Common Area Expenses. As between Landlord and Tenant, the parties agree that the following provisions shall apply: (i) Tenant shall be obligated to mare all payments of Common Area Expenses required to be made by Landlord under the Declaration, to the extent such payments relate to the Term of this Lease. (ii) Landlord hereby assigns to Tenant all of its rights and obligations under Article 5 of the Declaration for the Term. (iii) In accordance with Section 13.12 of the Declaration, Landlord shall notify Developer and the Maintenance Director under the Declaration that it has assigned to Tenant all of its rights and obligations under Article 5 of the Declaration for the Term of this Lease, including but not limited to the right to audit Common Area Expenses. In addition, Landlord shall notify Developer that all budgets and invoices for Common Area Expenses for the Term should be sent directly to Tenant and should be reconciled annually directly with the Tenant (for the period covered by the Term). (iv) So long as Tenant remains obligated under this Section 4.3, Landlord shall not modify or amend the provisions of the Declaration relating to Common Area Expenses. (c) The provisions of this Article 4.3 shall survive the expiration or early termination of this Lease and the amounts for which Tenant is liable hereunder shall be adjusted, as necessary, to reflect the actual Term of this Lease. 4.4 Late Payment - Rent. If Tenant fails to pay the Base Rent or any other Rent which has become due and payable under this Lease and such failure continues for a period of five (5) business days following written notice of such failure, 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 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 which has become due and payable hereunder within five (5) business days following written notice of such failure after the same becomes due and payable, Landlord shall be entitled to recover from 7 Tenant any reasonable attorneys' fees actually incurred by Landlord in collecting Tenant's past due amounts. Such past due amounts shall also bear interest at the .Interest Rate set forth in Section I.16 from the date originally due and payable until paid. Nothing herein contained shall limit any other remedy of Landlord under this Lease. ARTICLE V -- CONSTRUCTION OF LEASED PREMISES 5.1 Landlord's And Tenant's Obligations. Landlord shall deliver possession of the Premises and the Existing FF&E to Tenant on the Commencement Date in their existing, as -is, condition with all faults and without any representations or warranties from Landlord, except as expressly set forth in this Lease. Tenant hereby agrees to accept possession of the Premises and the Existing FF&E from Landlord on the Commencement Date in as -is condition. 5.2 Leasehold Improvements. Tenant may construct additional tenant improvements (the "Tenant's Work") in and to the Premises provided that Tenant complies with the following conditions: (a) the Tenant's Work shall be constructed at Tenant's sole cost and expense; (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, such approval not to be unreasonably withheld or delayed; (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; (c) in addition to the right of Landlord and its agent to inspect the Premises, 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 Declaration. 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 0 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. 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. Notwithstanding the foregoing, it is expressly understood and agreed that the tenant improvements existing within the Premises on the Commencement Date are not "Tenant's Work" and are not subject to the provisions of this Lease with respect to Tenant's Work. ARTICLE VI— INTENTIONALLY DELETED ARTICLE VII-- SIGNAGE T1 Tenant's Signage. Tenant will have the right to install exclusive signage on the exterior of the Premises and on the monument or pylon sign located in the entrance to the Shopping Center. 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 of the Shopping Center has leased more square footage than Tenant. ARTICLE VIII -- 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 Jobs Agreement. (b) All Real Property Taxes for the tax year in which the Term commences and for the tax year in which this Lease terminates shall be apportioned and adjusted so that Tenant shall not be responsible for taxes and assessments for the periods of time occurring prior to the commencement or subsequent to the expiration of the Term. 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 this 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. 9 (c) Without limiting the generality of the definition of Real Property Taxes described above, if at any time during the Term 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 8.1, 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 the Existing FF&E as well as 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 Jobs Agreement. ARTICLE IX — INTENTIONALLY DELETED ARTICLE X -- CONDUCT OF BUSINESS BY TENANT 10.1 Use of Premises. Tenant shall initially open for business and use the Premises solely for the use specified in Section 1.10. After initially opening for business subject to the use restrictions of Section 1.10, subject to the restrictions of Section 10.2 below, the Premises may be used for all other legally permitted uses. Tenant shall be entitled to operate at the Premises 24 hours per day, 7 days a week, 365 days a year. 10.2 Restrictions on Tenant's Use. Notwithstanding the provisions of Section 10.1, 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) 10 days of billing from Landlord, as additional rent, a sum 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 and unloading 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 the areas designated as the "Restricted Service Areas" on the Site Plan 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 to the Premises. Notwithstanding anything contained herein to the contrary, Tenant may accept deliveries at the Bast entrance to the Premises, as depicted on the Site Plan, beyond the hours stipulated in this Section. (d) No auction, "fire", sidewalk, close-out or bankruptcy sales may be conducted in or upon the Premises without Landlord's prior written consent. (e) Tenant shall be bound by the additional use restrictions contained in Addendum No. 3 to this Lease. 10.3 Restrictions on Landlord's Use. Landlord shall not lease or approve any assignment or sublease for the remaining space in the Building to any industrial or manufacturing users which may cause vibration, noise or odors, or which in any way may disrupt or negatively effect Tenant's operations. In addition, Landlord shall not lease or approve any assignment or sublease for the remaining space in the Building to any person or entity whose use would be competitive to the business of Tenant described in Section 1.10. To the extent Landlord has any right to approve any lease, assignment of lease or sublease with respect to any other portion of the Shopping Center (without implying, representing or warranting that Landlord has or will hereafter have such rights), Landlord agrees that the provisions of this Section 10.3 will apply equally to any such approval rights. 10.4 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. 11 ARTICLE XI -- MAINTENANCE AND REPAIRS 11.1 Landlord's Maintenance Obligations; Waiver of Offset. Landlord shall maintain in good condition and repair the foundation, footings, concrete slab, concrete pier, structural steel, roof deck and membrane, exterior walls, fagade, underground utilities and drainage of the Building based on Landlord's and Tenant's engineers' conclusions of replacement and remedy to such capital items; provided, however, if any repairs or replacements to the Building 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 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. Except as provided pursuant to Section 22.3 upon the occurrence of a Landlord default, Tenant waives any right of offset against any Rent for improvements made by Tenant, including any such rights otherwise provided by state law. 11.2 Building Systems. Landlord hereby represents and warrants to Tenant that the existing mechanical systems, HVAC systems, plumbing systems, electrical systems and sprinkler pump are currently in good working order and repair and will continue to be in good working order and repair for the remainder of the Term. Should any of the existing mechanical systems, HVAC systems, plumbing systems, electrical systems or sprinkler pump require replacement at any time during the Term, Landlord shall be solely responsible for such replacement and the cost thereof shall not be included in Common Area Expenses charged to Tenant. Without limiting the generality of the foregoing, Landlord shall be solely responsible for any required repairs or replacements to the sprinkler heads, lines and pumps serving the Building. 11.3 Parking Lot, Landlord shall be solely responsible for any required repair or replacement of the Original Parking Area and the Additional Parking Area, including all entrances and exits to such parking areas. The costs of such repair and replacement shall be included in Common Area Expense only to the extent described in the definition of Common Area Expense set forth in Section 1.17 of this Lease. 11.4 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 under this Lease; (c) to make repairs, alterations, improvements or additions to the Building as Landlord reasonably deems necessary, subject to the rights of Tenant under this Lease; (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 12 of the Term; and (f) to perform 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. 11.5 Tenant's Maintenance Obligations. Without limiting the obligations of Landlord under Sections 11.1-11.3, Tenant shall be responsible to maintain the interior of the Premises in good order and condition, reasonable wear and tear excepted and to maintain, repair and replace, to the extent Tenant deems necessary, any mechanical, electrical and HVAC systems installed by Tenant. Tenant shall be responsible for the day-to-day operation and maintenance of the Premises in accordance with all applicable governmental requirements and with standards from time to time prevailing for similar office space in the area in which the Premises are located, subject, however, to the limitations set forth in Article 11 with regard to Landlord's maintenance and repair obligations. In addition, Tenant shall be responsible to maintain the Existing FF&E in good order and condition, reasonable wear and tear excepted. Should Tenant fail to make, or initiate and diligently pursue, these repairs or otherwise maintain the Premises as required by this Lease for a period of thirty (30) days after written demand by Landlord, or should Tenant commence, but fail to complete, any repairs within a reasonable time after written demand by Landlord, Landlord may make such repairs without liability to Tenant for any loss or damage that may occur to Tenant's 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 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. 11.6 Service Contracts. 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. 11.7 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. 13 ARTICLE XII — INTENTIONALLY DELETED ARTICLE X11I— UTILITIES; GENERATOR 13.1 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 reasonably 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 and in no event shall exceed the rate which would be charged to Tenant directly by the applicable utility provider. Unless due to the negligence of Landlord, its agents, contractors, or employees, in no event shall Landlord be liable for any interruption or failure in the supply of any such utilities to the Premises, nor shall 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. 13.2 Generators. Tenant will have the right to utilize existing and/or add additional emergency generator(s) on a concrete pad on the exterior of the Shopping Center. Any generators purchased or added by Tenant may be removed at the termination of this Lease by the Tenant but Tenant shall not be required to remove such generators. ARTICLE X1V -- ALTERATIONS 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 to the Premises 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 non-structural, interior alterations not exceeding $25,000 in costs in any calendar year. Tenant shall present Landlord with plans and specifications for such work concurrently with the request for approval. Notwithstanding the foregoing, Tenant's Work shall be governed by the provisions of Section 5.2. 14.2 Removal by Tenant. All Existing FF&E and all alterations, decorations, fixtures, additions and improvements made by the Tenant, whether temporary or permanent in character, and whether or not affixed to the Premises (except furnishings, trade fixtures and equipment installed by Tenant, including without limitation any supplementary HVAC equipment, and any additional generator and related equipment installed by Tenant pursuant to this Lease) 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, 14 fixtures, additions, and improvements made by the Tenant (except for any generator, which shall be governed by Section 13.2), 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 made by the Tenant (other than any generator) and restore the Premises in accordance with Article XV, 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 provide security for the lien free completion of such work in the form of a band or other security reasonably satisfactory to the 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 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, materialmen and assigns. 14.4 Awnings and Canopies. Tenant may place any exterior 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. 14.5 Amenities. Notwithstanding the foregoing provisions of this Article 14, Tenant shall be entitled to construct or expand a cafeteria in the Premises, without the necessity of further Landlord consent. All costs and expenses incurred by Tenant in connection with any such expansion shall be borne solely by Tenant, including all permit and construction costs. Upon completion of any such construction or expansion, Tenant shall provide a copy of the plans and specifications therefore to Landlord. In addition, Tenant shall have the right to establish a smoking area outside of the Building in a location which is mutually acceptable to Landlord and Tenant. Tenant shall be entitled to fence or otherwise enclose the smoking area and shall be responsible for ensuring the smoking area is maintained in accordance with all applicable federal, state and municipal laws, rules and regulations. All fees, costs and expenses associated with establishing and maintaining the smoking area shall be borne by Tenant. ARTICLE XV -- SURRENDER OF PREMISES At the expiration or earlier termination of this Lease, Tenant shall surrender the Premises in substantially the same condition as exists on the Commencement Date and 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 made by Tenant if required by Landlord as 15 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 Declaration and shall maintain at its own expense in full force and effect the following insurance policies; provided that, notwithstanding the foregoing, Tenant shall not be obligated to comply with the obligations imposed by the last sentence of Section 8.3 of the Declaration: (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 them or result from them are not covered by Tenant's extended coverage insurance, them such boiler insurance shall be in an amount satisfactory to Landlord and equal 100% of the replacement value of such equipment; (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. All insurance required hereunder small be issued by are 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". 16 A 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 $1,000,000 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 (10) 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 Declaration and Article XVI of this Lease, the requirements of the Declaration will control; provided that Tenant shall not be obligated to comply with the obligations imposed by the last sentence of Section 8.3 of the Declaration. 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 occupancy or use by Tenant of 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 of the Shopping Center. In 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 mold 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 and Landlord shall be obligated to reimburse Tenant for the same proportionate share of the costs incurred by Tenant in reaching such result. l 6.3 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 17 loss of life, bodily injury, personal injury and/or damage to property arising from or connected with the ownership of the Building by Landlord or 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), whether such injury occurs in, on or about the Premises or the common area of the Shopping Center. 16A 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 party 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: (i) 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, (iii) any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or leaks from any part of the Premises or from the pipes, appliances or 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 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. 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. ARTICLE XVII -- 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 tc 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 any fuel maintained in connection with the use of a generator or generators permitted under this Lease and 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 18 than one month's rent has been paid in advance, that a true and correct copy of this 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 and the Jobs Agreement 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 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 consistent with the terms of this Lease 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 Iease, or otherwise) of the addresses of such mortgagees and/or trust deed holders. Tenant further agrees that any such mortgage and/or trust deed holder shall be entitled to exercise any cure rights of Landlord under this Lease during the period of time afforded Landlord for cure. ARTICLE XVIII -- ASSIGNMENT AND SUBLETTING 18.1 Assignment and Subletting. 19 (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 or delay. 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 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). (b) 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 from the assignee, subtenant or occupant, and apply the net amount collected to the .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 paid to Tenant by such assignee or subtenant which exceeds the 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 1`ifty one percent (51%) to any person or entity other than a TelcTech Company shall be deemed an assignment within the meaning and provisions of this Section 18.1. (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 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. In consideration of such payments, Landlord 20 agrees to respond to any request within thirty (30) days following Tenant's request. In the event Landlord fails to respond within such thirty (30) day period, Landlord shall be deemed to have agreed to Tenant's request. 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 and the right by the TeleTech Companies to occupy and use the Premises in accordance with the initial use restrictions of Section 10, which right to occupy and use the Premises shall not be deemed a violation of this Section 18.3), without Landlord's prior written consent, which may be withheld in Landlord's sole, absolute and arbitrary discretion. Any such concession, right or occupancy interest made by Tenant without Landlord's written consent shall be null and void. 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; provided that Tenant's agreement to recognize and attorn to a purchaser or transferee is conditioned upon such purchaser or transferee assuming the obligations of Landlord under this Lease and the Jobs Agreement. 18.5 Permitted Transfers. Notwithstanding anything to the contrary, Landlord's consent shall not be required for subletting or assignment to the TeleTech Companies. 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 TeleTech Company 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 beneficiary of a deed of trust or ground lessor on or of property which includes the Premises, Tenant agrees as follows: 21 (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 the Rent 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 shall be abated during the period of restoration; provided that, notwithstanding the foregoing, in the event the Premises are totally destroyed by casualty, Tenant shall have the right to terminate this Lease by written notice to Landlord provided within 90 days of the casualty and determination of the period of time necessary to repair the Premises and the Existing FF&E to their condition immediately prior to the casualty; and provided, further, that in the event the Premises are totally destroyed as a result of casualty during the last 24 months of the Term, Landlord may elect to terminate this Lease by written notice to the Tenant within 90 days of the casualty. If the Lease is terminated by either Landlord or Tenant pursuant to this Section 20.1, the .Yobs Agreement shall be simultaneously terminated and Tenant shall be relieved of all of its obligations thereunder, including the obligation 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. For purposes of this Section, repair of the Premises shall be deemed to include repair and/or replacement, as required, of the Existing FF&E with furniture, fixtures and equipment substantially similar in quality and quantity to those damaged. 20.2 Proceeds. All proceeds from the insurance required to be kept under Section 16.1, except business interruption insurance, 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 22 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 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 as well as its business interruption insurance. 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 Term 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 this Lease or the Jobs Agreement, including but not limited to the Tenant's obligation to make the deficiency tax payments required therein. 21.2 Total Condemnation of Parking Area. If the Original Parking Area and the Additional Parking Area or any portion of the entrances and exits to such parking areas shall be acquired for any public or quasi -public use or purpose or taken by eminent domain, the Term shall cease and terminate as of the date possession or title is given to such condemning authority in such proceeding unless Landlord shall immediately provide other parking facilities acceptable to Tenant in its sole discretion. 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 other charges. 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 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 Original Parking Area or the Additional Parking Area shall be acquired or condemned by eminent domain for any public or quasi -public use or purpose and if, as the result of such partial taking, the ratio of the number of parking spaces to square feet of the Floor Area of the Premises is reduced to a ratio below 8 per 1,000 square feet of Floor Area in the Premises, this Lease 23 shall, at the option of Tenant, cease and terminate on the date 90 days from the date possession or title is given to such condemning authority in such proceeding, unless Landlord shall provide alternative parking to replace the parking so taken within such 90 day period, which parking shall be acceptable to Tenant in its sole discretion., in which event this Lease shall be unaffected and remain in full force and effect as between the parties. 2 L5 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 shall, however, have the right 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 and property by reason of the condemnation, 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 and replace the Premises, and for or on account of the value of Tenant's leasehold interest. 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 XXH -- DEFAULT 22.1 Notice and Remedies. Tenant shall be in default under this Lease upon the occurrence of any of the following events or conditions: (a) In the event Tenant fails to pay any Rent as and when the same becomes due and payable and such failure continues for a period of five (5) business days following receipt of written notice from Landlord; or (b) In the event Tenant fails to perform any of its obligations under this Lease as and when required and such failure continues for a period of 30 days following receipt of written notice from Landlord or if such failure is not reasonably capable of being cured within such 30 day period, Tenant shall not be in 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. 22.2 In the event Tenant is in default under this Lease, 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 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 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 time of award of the amount by which the unpaid Rent, for the balance of the Term after the time of award 24 exceeds the amount of such Rent loss that Tenant proves could be reasonably avoided, plus (iv) 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 22.2(a) (i) and (ii) above shall be computed by allowing interest at the Interest Rate. The "worth at the time of award" of the amount referred to in subsection 22.2(a)(iii) shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time 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 Tenant'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 (i) Landlord may enforce all rights and remedies under this Lease and under the provisions of Montana law, including the right to recover the Rent, and all other charges due hereunder as such Rent and other charges become due hereunder, and (ii) Tenant may assign its interest in this Lease with Landlord's prior written consent, which shall not be unreasonably withheld, delayed or conditioned. 22.3 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) 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 the event Landlord's default continues beyond the cure period provided herein, Tenant: shall be entitled to exercise all rights and remedies available to Tenant under Montana law. Without limiting the foregoing, in the event Landlord defaults in any of its maintenance, repair or replacement obligations under this Lease following the expiration of all applicable cure periods, Tenant shall be entitled to exercise self-help remedies and either (a) recover from Landlord all amounts incurred by Tenant in exercising such 25 remedies, with interest thereon from the date expended until repaid at the Interest Rate, or (b) offset the amounts expended against the Rent owing hereunder. 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 22.2 (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 Jobs Agreement. 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 Base Rent equal to 150% of the Base Rent in effect upon the expiration of the Term 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 18.1 hereof or approval is not required in accordance with Section 18.5. ARTICLE XXIV -- QUIET ENJOYMENT 24.1 Landlord's Covenant. Upon timely payment by Tenant of the Rent herein provided, and upon the observance and performance of all of the covenants, terms and conditions 26 on Tenant's part to be observed and performed hereunder, Tenant shall peaceably and quietly hold and enjoy the Premises for the Term 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 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 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 suchh 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. 26.2 Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than the 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 check or payment as Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such amount or pursue any other remedy provided in this Lease. 26.3 Entire Agreement. This Lease, the Exhibits and Addenda attached hereto and forming a part hereof and the Jobs Agreement 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 27 addition to this Lease shall be binding upon Landlord or Tenant unless reduced to writing and signed by both parties. 26.4 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. 26.5 Force 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, 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 he extended for a period equivalent to the period of such delay. 26.6 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. 26.7 Captions and Section Numbers. The captions, section numbers and article numbers in this Lease are inserted only as a matter 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. 26.8 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 party 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. 26.9 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. 28 26.10 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. 26.11 Recording. At either party's request, Landlord and Tenant shall execute, have acknowledged, and record a memorandum of this Lease at the requesting party's expense. 26.12 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, 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; (iii) garnishment, levy, and debtor and third party examination; (iv) discovery; and (v) bankruptcy litigation. 26.13 Rights Cumulative. The rights and remedies of Landlord and Tenant specified in this Lease shall be cumulative and in addition to any other rights and remedies provided by law. 26.14 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. Each individual executing this Lease on behalf of the entities comprising Landlord 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. 26.15 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. 26.16 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 and Early Termination of Term; Addendum No. 3 Rider to Lease; (b) Exhibits: Exhibit "A" - Site Plan & Legal Description; Exhibit "B" — Additional Parking Area; Exhibit "C" -- Title Matters; Exhibit "D" — the Declaration 26.17 Brokerage Consulting Fees. Landlord shall recognize CB Wacholz and CRESA, Tenant's real estate advisors, as the brokers 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. 29 26.18 Contingency. This Lease is contingent upon termination of the existing lease for the Premises on or prior to March 1, 2004. In the event the existing lease for the Premises is not terminated by such date, this Lease and the Jobs Agreement shall be null and void and of no further force or effect unless otherwise agreed by Landlord and Tenant in writing. 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: Pamela B. Kennedy, Mayor Chris Kukulski, City Manager THE FLATHEAD COUNTY ECONOMIC DEVELOPMENT AUTHORITY, A BODY POLITIC M 1 ], Board Chair TENANT: TELETECH SERVICES CORPORATION A COLORADO CORPORATION DOING BUSINESS IN MONTANA AS TELETECH SERVICES MONTANA By: Dennis Lacey, Chief Financial Officer 30 ADDENDUM NO.1 TO SHOPPING CENTER LEASE (Use Restrictions) This Addendum is attached to that certain Shopping Center Lease dated March 1, 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 SERVICES CORPORATION, A COLORADO CORPORATION DOING BUSINESS IN MONTANA AS TELETECH SERVICES MONTANA, 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: 1. Hazardous Materials. Tenant hereby makes 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. § 1251, et seq.), Resource Conservation & Recovery Act (42 U.S.G. § 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.G. § 9601. et seq.), Montana Code Title 75, 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 Term, 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 action in response to the presence of any Hazardous Materials in or about the Premises or any A-1-1 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) Subject to the provisions of subsection (e) of this Addendum, 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, 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) Landlord covenants, warrants and represents that the Premises and the Building (including the lands thereunder) are free of any friable asbestos -containing materials and do not contain any Hazardous Materials of any kind (including PCBs, except for PCBs that are totally contained within light fixtures and exterior transformers). Landlord agrees to indemnify and hold Tenant harmless from any and all damages, losses, expenses (including reasonable attorneys fees), claims or actions related to or arising out of the presence of asbestos or Hazardous Materials at the Premises or the Building (including the lands thereunder), and in particular, to pay the full cost of any environmental clean-up which may be ordered under applicable A-1-2 legislation (excepting always any clean-up required with respect to materials introduced onto the Premises by the Tenant). Without limiting the foregoing, Landlord shall remain liable for all pre-existing environmental conditions at the Premises and the Building (including the lands thereunder), including all liability relating to the asbestos identified in those certain "Excerpts From An Environmental Assessment dated March, 2000, prepared for an EDA Grant for the Purchase and Remodeling of the Stream Facility in the Gateway West Mall, Kalispell, Montana" delivered to Tenant by Landlord, notwithstanding the indemnities of Tenant set forth in paragraph (d) of this Addendum and shall indemnify and hold Tenant harmless from any and all damages, losses, expenses (including attorneys fees), claims or actions related thereto in accordance with the indemnity set forth in this paragraph.. (f) 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 fortes reasonably acceptable Landlord, as Landlord may from time to time reasonably request. 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 March 1, 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 SERVICES CORPORATION, A COLORADO CORPORATION DOING BUSINESS IN MONTANA AS TELETECH SERVICES MONTANA, 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 folly 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 periods of three (3) year each (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 and TELETECH SERVICES CORPORATION, A COLORADO CORPORATION DOING BUSINESS IN MONTANA AS TELETECH SERVICES MONTANA, 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 Term of the Lease, Tenant shall give to Landlord written notice of its election to do so no fewer than one hundred eighty (180) days and no more than three hundred sixty (360) days prior to expiration of the Initial Term or extension term, as applicable, and if Tenant shall fail to give such notice within said time limit, Landlord will give Tenant thirty (30) days' written notice to elect to exercise its option at the expiration of which time all rights and privileges as granted to Tenant to extend the Term of the Lease shall thereupon be null and void. 3. Rent. (a) 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 and, failing agreement within sixty (60) days following Landlord's receipt of Tenant's written election to extend the Term, Rent will be as determined pursuant to subparagraph (b) below. Should Tenant be subject to a late charge for two (2) consecutive months during any extension term, 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 (12) months on a quarterly basis in advance. (b) If Tenant and Landlord are unable to agree upon the Rent for the extension term within sixty (60) days following Landlord's receipt of Tenant's written election to extend, then within five (5) business days after the expiration of such 60-day period, A-2-1 Tenant shall notify Landlord of the name of a proposed appraiser who is a member of the American Institute of Real Estate Appraisers, or a successor body hereinafter constituted exercising similar functions, who has experience in appraising leasehold property similar or comparable to the Premises and who has no substantial direct or indirect financial or other business interests in Tenant or Landlord. If Landlord does not approve the appraiser proposed by Tenant within five (5) business days after receipt of Tenant's proposal, each of Tenant and Landlord shall within five (5) business days thereafter select an appraiser having the same qualifications as are required of the initial proposed appraiser and the two appraisers so selected shall select a third similarly qualified appraiser. Tenant's selection may be the appraiser initially proposed by Tenant but not approved by Landlord so long as such appraiser has the requisite qualifications. Each of the appraisers selected pursuant to this subsection (b) shall be engaged to determine the fair market rental of the Premises for the extension term and shall be instructed that a fair market rental determination is required within thirty (30) days of its engagement. Following its determination of fair market rental, each appraiser shall deliver a written report of its appraisal to Landlord and Tenant. If there is only one appraiser, the fair market rental determination of such appraiser shall be conclusive and binding on all parties as the fair market rental of the Premises for the extension terns. If there are multiple appraisers and the appraisal reports reflect that the appraisers do not agree upon the fair market rental of the Premises, the fair market determinations of all such appraisers shall be totaled and the total divided by the number of appraisals, with the resultant average to be conclusive and binding on all parties as the fair market rental of the Premises for the extension term; provided, however, that if the fair market rental determination of any such appraiser deviates by more than ten percent (10%) from the median of all such determinations, the fair market rental shall be the average of the two (2) determinations closest in amount, and such average of the two (2) closest determinations shall be conclusive and binding upon all parties as to the fair market rental of the Premises for the extension term. The fees and expenses of all appraisers shall be paid 50% by Tenant and 50% by Landlord. 4. Early Termination. Tenant shall have the following options to terminate the Lease prior to the scheduled expiration of the Term: (a) At any time after the end of the fifth Lease Year, Tenant shall be entitled to terminate this Lease by providing Landlord with written notice at least six (6) months prior to exercising this termination option. As of the date set forth in Tenant's termination notice, which date shall be not less than six (f) months following the date of Tenant's notice, this Lease and the Jobs Agreement shall terminate and the provisions applicable upon expiration of the Terre shall apply. (b) At any time after the end of the third Lease Year, Tenant shall be entitled to terminate this Lease in accordance with the provisions of Section 5.3 of the Jobs A-2-2 Agreement, whereupon the provisions applicable upon the expiration of the Term shall apply. A-2-3 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 AUTHORITY, A BODY POLITIC ("LANDLORD") M TELETECH SERVICES CORPORATION, A COLORADO CORPORATION DOING BUSINESS IN MONTANA AS TELETECH SERVICES MONTANA ("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, to the extent not inconsistent with the rights granted to Tenant under this Lease. Tenant shall be prohibited from operating an adult book store, gym, 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 (b) 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) A-3-1 or their affiliates), nor for the sale or offer for sale of any ethical pharmaceutical 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, Himstedt Dolls, European Artist Dolls, Susan Waukeen Dolls, and Steiff Toys. 5. 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 Rider, 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 Lease 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 more particularly described as follows: COMMENCING at the intersection of the Westerly night -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 NOO°47'42"E 223.31 feet to the Point of Beginning; thence N89°l6'3TV 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°54'52"W 124.44 feet; thence SOO°45'25"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. EXHIBIT A X, M. cp: F-- 9 DO �i EXHIBIT A Tract 1: A portion of Gateway West Addition No. 34, according to the map or plat thereof on file and of record in the Office of the County Clerk and Recorder of Flathead County, Montana, described as follows: That portion of the E/2 of Section 12, Township 28 North, Range 22 West, M.p.M., flathead County, Montana, described as follows: Beginning at the intersection of the West line ofKfnshetla Avenue with the South line of Two mile Drive; thence along the West line of Kinshella Avenue South 0004742" West a distance of 1405.74 feet to its intersection with the Northwesterly right of way line of U.S. Highway No. 2, which point is an a 1970 foot radius curve concave Southeasterly staving a radial bearing of North. 21°47'I8" West; thence Southwesterly along the curve thru a central angle of 19013'17" a distance of 660.91 feet to a point; thence continuing along the right of way flue So nth 49°37'25" West a distance of 37.27 feet to the intersection with the West line of SEII4SE1/4 of Section 12; thence along the West line North 00°38'31" East a distance of 46390 feet to the Northwest corner of the SE114SEI/4; thence North 00°38'31" East along the West line of the NE1/4SE1/4 of Section 12, to a point 90 feet South of the Northwest corner thereof, which point is the Southwest corner of that certain tract of land acquired by Lena Cavalar in Order Terminating Joint Tenancy, recorded September 1,1966 in Book 482, page 644, under Recorder's Fee No. 6073; thence East along the South line of the Cavalar tract a distance of 252.53 feet, more or less,, to the Southeast corner thereof; thence North along the East line of the Cavalar tract a distance of So feet to the South lone of Two Mile Drive; thence South 89°59'18" East a distance of 340.63 feet, more or less, to the Point of Beginning. Tract 2: That portion of Gateway West Addition No. 34, a portion of which was formerly known. as Lewis & Clark, Second Addition, Lot 1, Block 1, City of Kalispell, Flathead County, Montana, described as follows: Beginning at the Northwest corner of Lot 1, Block I, Lewis & Clark Second Addition; thence North 89°43'00: East 150.00 feet; thence South 0°17'00" East 287.00 feet; thence South 89°43'00" West 153.92 feet; thence North 0°30'00" East 287.03 feet to the Point of Beginning. EXHIBIT B 2E I EXHIBIT C imerican Land ritle Association )wner's Poticy I Q-1792 j TICOR TITLE INSURANCE 27 5270 106 00001338 Policy of Title Insurance SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULES AND THE CONDITIONS AND STIPULA- TIONS, TICOR TITLE INSURANCE COM- PANY, a California corporation, herein called the Company, Insures, as of Date of Policy shown in Schedule A, against loss or damage, not exceeding the amount of insurance stated in Schedule A. sustained or incurred by the insured by reason of. 1. Title to the estate or interest described in Schedule A being vested other than as stated therein; mod by: .FIANCE TITLE AND ESCROW CORP. 1 SOUTH MAIN O. BOX 879 kUSPELL, MT 59903-0879 752-7606 2. Any defect in or lien or encumbrance on the title; 3. Unmarketability of the title. 4. Lack of a right of access to and from the land. The Company will also pay the casts, attorneys` fees and expenses incurred in defense of the title, as insured, but only to the extent provided in the Conditions and Stipulations. This policy shalt not be valid or binding Until countersigned beiow by an authorized signa- tory of the Company. T1COR TITLE INSURANC OMPANY By President • 0 M a . Attest "µ' Y' ^ weeretary ALTA OWNER'S POLICY (10,17-92) _ ..- z . .. _ . : - - -- - ,.,., OWNER POLICY SCHEDULE A Order Number Policy Number Date of Policy Amount of Premium Insurance Amount 20602340 27527010600001338 March 8, 2000 2,500,000.00 5,048.00 At 4.01PM 1. Narne of Insured: Ciry of Kalispell, and the Flathead County Economic Development Authority, a public body, corporate and politic 2. The estate or interest in the land which is covered by this policy is: Pee Simple Estate 3. Title to the estate or interest in the land is vested in, City of Kalispell, fan undivided .sixty three percent (63%) interest] and the Flathead County Economic Development Authority, a public body, corporate and politic, [an undivided thirty seven percent (37%) Interest] 4. The land referred to in this policy is described as follows: Lot 1 of the Amended Plat of the Mail portion of Gateway West Addition No. 34, according to the map or plat thereof orr file and of record In the Office of the County Clerk aad Recorder of Flathead County, Montana. END OF SCHEDULE A COOP �ZIL 3a11YI�I`� VDOL9SL901 XV4 6%:C? 001ti1C0 order No: 20602340 policy No.- 27527010600001338 OWNER POLICY SCHEDULED EXCEMOINS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of. General Exceptions: A. Rights or claims of parties in possession not shown by the public records. , B. Encroachments, overlaps, boundary line disputes, and any other matters which would be disclosed by an accurate survey or inspection of the premises including, but not limited to, insufficient or impaired access or matters contradictory to any survey plat shown by chc public records. C. Easements, or claims of casements not shown by the public records. U. Any lien, or right to a lien, for services, labor, or material heretofore or hereafter furnished, imposcd by law and not shown, by the public records. E. Utpatented mining claims; (b) reservations or exceptions in patcrits or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the public records. F. Taxes or special assessments which are not shown as existing liens by the public records of any taxing authority that levies taxes or assessments on real property or by the public records. Proceedings by a public agency which may result iar taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the public records. too _ _ iTx 33ntV11111tr. _- raot�sc n� xv.� ar=cr oo��t�eo S CHEDUL,E B Special Exceptions: 1. Takes, including any assessments collected therewith, for the year 2000 which arc a lien not yet payable. 2. Takes, Charges and Assessments not yct certified to the County for collection. 3_ An easeraer:t for the purpose shown below and rights incidental thereto as reserved in a document. Purpose: The right to mine for and extract ore and minerals. Recorded: June 3, 1941.. Book 241, Page 446 of Official Records, 4- Terms, provisions, covenants, conditions, definitions, options, obligations and restrictions, contained in a document. Recorded: February 6, 1976. Instrument No.:1188 Book 591, Page 868, of Offirhil Records. AND ANIJ3NDMENT Recorded: February 3, 1984 Instrumerzt No. 84-034-1641-0, of Official Records. Purpose: Reciprocal Easement Agreement 5. An easerstent for the purpose shown below and rights incidental thereto as set forth in document: Granted to; Northwestern Telephone Systems, inc., Purpose: public Utilities. Recorded: July 8, 1976. Instrument No. 7338 Book: 598 Page: 863 of Official Records. 6. An easement for the purpose shown below and rights incidental thereto as set forth i.tz document; Granted to: Pacific Power and Light Company. Purpose: Public Utilities. Recorded: January 17, 1.985_ Instrument No.. 85-017-1023-0, of Official Records AND Corrective Easement Recorded.` December 19, 1986 instrument No. 86-353-1444.1), of Official Records- 7. The rights of tenants of space in the mail and those claiming thereunder, including rights of scoured parties under financial statements, rights of vendors under conditions Was coatracts of personal propezty installed on the premise herein, and rights of tenants to remavc trade fixtures. soap xr a��rvt�t'1� �nt51scant W4 at:eT nn>�t�co 8. Terms, provisions, covenants, conditions, definitions, options, obligations and restrictions, contained in a docurent Recorded: September 3, 1997 Instrument No. 1997-246--093 $-0, of Official Records. purpose: Ordinance No. 1259 Approving the West Side Urban Renewal Plan for the City of Kalispell 9. Terms, provisions, covenants, conditions, definitions, options, obligations and restrictions, contained in a docurneDt purpose: Ordinance relating to the Modification of The Kalispell Montana Urban Renewal Playa (The Urban Renewal Plan) to approve certain projects as Urban Renewal Projects and to Amend Ordinance No. 1259 regarding the procedure for approving projects. Recorded, February 11, 2000. Instrument No._2040.042-1508-0, of Official Records. 10, Basements, reservations, notes andior dedications as shown on the official plat of Recorded Amended Plat of the Mall portion of Gawway West Addition No, 34. 11. Covenants, conditions and restrictions, but omitting any covenant or restriction based on race, color, religion, sex, handicap, familial status, or national origin unless and only to the extent that said covenant (a) is exempt under Chapter 42. Section 3607 of the United States Code or (b) relates to handicap but does -rot discriami ate against handicapped persons as set forth in The document. Recorded: March 8, 2000. instrument No.: 20(?Ci 68-1600-0 of ©fficial Reeords- 12, Terms, provisions, covenants, conditions, definitions, options, obligations and restrictions, contained itt a document - Purpose, Rcgolution No. 4543 Recorded: March 8, 2000. Instrument No.:2000-068-1531-0, of Official Records. 13. Encroachment of building in Set -Back and note as shown on map attached to Certificate of Plat recorded Note: Building'Eve Etzcroaches 0,33'. END OF SCHEDULE B 900 F.F. F.T. "itiTVF"f'T17 tAnLQcl.anti Tv4 ne:rT nn/tT/Pn Exclusions frorn Cov�fage The following matters am expressly excluded from the coverage of this 7ortcy and the Company will not pay loss or damage, casts. attorneys' fees cr expenses which arise by reason of: I. (al Any law, ordinance or governmental regulation (including but not ti€nfted to building and zoning laws. ordinances or regulations) restr€cting, regulating, pron1bit3Ag or relating to ii) the occupancy, use or enjoyment of the land: (H) the character, dimensions or location of any improvement now or hereafter erected on the land; (fi) a separation In ownershlp or a change in the dimensions or area of the land or any parcel of which the land is or was a part: or (iv) environmentat protection. or the effect of any violation of these taws. ordinances or governmental regulations, except to thig extent that a notice of the enforcement thereof or a notice of a defect, lien. or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at pate of policy. (b) Any governmental police power not excluded by (a) alcove, except to the extent that a notice of the exercise thereof or a netica of a defect, lien or encumbrance resulting from a violation or alsegad violation affecting ttte faros has been recorded in the pribfic records at Date of Palley, Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at pate of Policy, tout not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. Conditions and Stipulations i. OEFINITiON Of TERMS The following larms when used in this policy mean: (a) insured": the insured named in Schedule A, and, subject to any rights t defenses the Company y would have had against the named insured, those rho succeed to the interest of the named insurer by operation or law as Iistirtguishsd from purchase including. but not limited to, hairs, disuibutees, Iavisees, survivors, personal representatives, next of kin, or corporate or duciary successors. (b) "insured claimant": an insured claiming loss or damage. (c) -knowledge" or "known": actual knowledge, not constructive knows• age or notice which may be Imputed to an insured V reason of the puirtic tcords as defined in this policy or any other records which impan consuuc- ve notice of maners affecting the land. (d) "'land": the land described or referred to in Schedule A, Orin Schedule if not provided for in Schedule A, and improvements affixed thereto which y law constitute real property. The term "land" does not include any property 4yond the lines of the area described or reterrad to in the applicable icnedule, not any right. title, interest. estate or easement in anufting streets, Pads, avenues, alleys, lanes. ways or waterways, but nothing herein shall !codify or limit the extent to which a right of access to and from the land is vsured by this policy. (e) "mortgage' mortgage, deed of trust, trust dead, or other security 1strument. (1) "public records": records establisned under state stanates at date of ktticy tar the purpose or imparting constructive notca of matters relating to ear property to purchasers for value and without knowledge. With respect to ;ecdor€1(a)(iv) of the Exclusions From Coverage. "public records" shall also wAude environmental protection tufts filed in the records of the cterit of the Inited States district court for the district in which the land is located. tg) 'gnmarkatalsility of tine title": an alteged or apparent matter affecting ne title to the land, not excluded or excepted from coverage, which would :nvie a purchaser of the esmte ar interest described in Schedule A to be eteased from the obfigation to purchase by virtue of a contrsC.Wai cOnditten squiring the delivery of marketable title. CONTINUATION OF INSURANCE AFTER CONVEYANCE OF TITLE The coverage of this policy shall continue in forte as of Date of Policy in avor of an insured only so long a5 the Insured retains an estste or interest in ,a rand, or holds on tndebtedrim secured by a purchase money mortgage iivan by a purchaser from the insured, or only so long as the insured shall we Debility by reason of covenants of warranty made by the insured In any mrisfer or conveyance of the estate or interest. This policy shall not continue 1 AMM in favor of any purchaser from the insured of either f) an estate or .terez in the land, or (it) an indebtedness secured by a purchase money mortgage given to the Insured. 3. Defects. liens. encumbrances, adverse claims or other matters: (a) created, suffered, assumed or agreed to Icy the insured e(almanr (b) not known to the Company, not recorded in the public records at Date of Policy. but known to the Insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an Insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Poncy: or (s) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the estate or interest insured by this policy. 4. Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by this policy. by reason of the operation of federal bankruptcy, state inscivency, or similar craeliors' rights laws, that Is based on: (i) the transaction creating the estate or Interest insured by this policy being deemed a fraudulent conveyance of fraudulent transfer, or (i i 1 the transaction creating the estate or Interest insured by this policy bung deemed a preferential transfer except where the preferential transfer results from the failure: (a) to timely record the instrument of trarsfer or (b) of such recordation to impart notice to a purchaser for value or a judgment or lien creditor. 3. NOTICE OF CI..AFM TO 1:3E C.IYF.,N BY INSURED CLAIMANT The insured shall notity the Company promptly in wthing Ct) in case of any litigation as set forth in Section 4(a) belo it N) In case knowledge shall come to an insured hereunder of any claim of title or interest which is adverse to the title to the estate or interest, as insured, and which might cause Ions or dam- age for which the Company may be liable by virtue of this policy. or C) if title to the estate or interest. as insured, is re)ectad as unrnarketabie. It prompt notice shall not be given to the Company, then as to the insured all liability of the Company shalt terminate with regard to the matter or smatters for which prompt notice is required: provided. however; that failure to notify the Company shall in no case prejudice the rights of any insured under this policy unless the Company shall be prejudiced by the failure and then only to the extent of the prejudice. 4, DEFENSE AND PROSECUTION OF ACTIONS; DUTY OF INSURED CLAIMANT TO COOPERATE (a) Upon written request by the insured and subject to the options con- tained in Section G of these Conditions and Stipulations. the Company, at Its own cost and without unreasonable delay, shall provide for the defense of an insured in litigation in which any third party asserts a claim *averse to the title or interest as insured, but only as to those stated causes of action alleging a defect. fie n or encumbrance or other matter insured against by this policy. 71r4 Company shall have the right to select counsel of Its choice (subject to the right of the insured to object for reasonable cause) to represent the insured as to troose stated causes of action and shall not be liable for and will not pay the fees of any other counsel. The Company will not pay any lees, costs or expenses incurred by the Insured in the defense or those causes of action which atfege matters not insured against by this policy, (b) The Company shall have the right. at its own cost. to institute and prosecute arty action or proceeding or to do any other act which in its Opinion may be necessary or desirable to establish the title to the estate or Interest, as insured, or to prevent or reduce lass or damage to the insured. The Company may take any appropriate action under the terms of this policy. whether or not itshall be liable hereunder, and small not thereby concede liability or waive any provision of this policy, if this Company shalt exercise its rights under this paragraph. It shall do so diligently, (c) Whenever the Company shall have brought an action or interposed a defense as required or permitted by the provisions of this policy. the CorrrpanY may, pursue any litigatfan to final determinaVO4 by a court Or crmpetenl juris- diction and expressly reserves the rigrit, in its solo discretion. to appeal from any adverse judgment or order. (d) In all cases where tr is polity permits or requires the Company to prose- cute or provide for the defense of any action or proceeding, the insured shalt secure to the Company the right to so prosecute or provide defense in the aatfon or proceeding, and all appeals therein, and permit tha Company to use. at its option, the name of the insured for this purpose. Whenever too ull a-flI,L .J:7tI-nY 1rfjOL29100V TV4 n4:PT 00/ti1/C0 requested by the Company. the insured. at the Company's expense, shatti give the Company llrf reasonable aid 6) in any action or proceeding. securing evidence. amining w,rftnesses. pirzecuting or defending The action or pro- ceeding, or effecting settlement. and (i) in any other lawful act which In the op"611 of the Company may be necessary or desirable €o establish the title to rtntema as insured. If the Company is prejudiced t-y the failure of to furnish the regUilf0d sooperM(on. the Company'w ODl€gations to "Muted under the poEcy shall terminate, including any lialJility or oblige- d" to defend, prosecute. or continue any litigation, with regard to the matter or matters requiring such cooperation. 5. PROOF OF LOSS OR DAMAGE In addition to and utter the notices: required under Stenon 3 of these Condo- tions and Stipulations have been provided the Company, a proof of loss or damage signed and swam to by Ilse Insured claimant shall be furnished to the Company within 90 days after the insured claimant shall ascertain the facts giving rise to the foss or damage. The proof of loss or da mega shall describe the defect in. or lien or encumbrance on the title, or other matter insured against by ih€s policy which constitutes the basis of loss or carnage and shall state, to the extent posslble, the basis of calculating the amount of the foss or damage, if the Company is prejudiced by the failure of the insured claimant to Omvide the required proof of ions or damage, the Company's obligations to the jhwtad under the policy shall terminate, including any liability or obtiga. Lion to defend, pro"cule, orcordinue arty litigation. with regal)d la the,natter or ,natters requiring such proof of loss or damage. in addition, the insured claimant may reasonably be required to sut)mit to examination under oath by any authorized representative of the Company and shall produce for examination, inspection and copying, at such reason- able times and places as may be designated byanyauthodzed tepre4emative of the Company, aft records, books. ledgers, checks, carre$POndence and memoranda. whether bearing a date before or alter Cale of Policy, which reasonabfy pertain to the loss or damage. Further, if requested by any autho- rized represernative of the Company. the Insured claimant shah grant its permission, in uniting. for *try authorized representative of the Company to examine, inspect and copy all records, books, ledgers. checks, correspon- dence and memoranda in the custody arsvntrns of a third parry, which reused• ably porlain to the loss or damage. All Information designated as confidential toy the insured claimant provided to the Company pursuant to this Section ttftaii not be disclosed to others unless, in the reasonable judgment of the CcMarry, it is necessary in the administration of the claim. Failure of the 0€cfalmant to submit for examination under oath, produce other reason - Vested Information of gram permission to secure reasonably naves. ormation from third parties as required in this paragraph shall larmi- nals arty liability or the Company tinder this policy as to that _calm. 6. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS: y ERMINATION OF LIADiLrrY In case Cr a claim under this policy. the Company Shall hatfE rife fOtlowirrg additional Options. - (a) To Pay or Tender Payment of the Amount of Insurance. To pay or tender payment of the amount of Insurance under this policy together with anycosts, anorneys' fees and expenses incurred by the insured ctaiMattt, which were authorized by the Company. up to the time of pay€nem or tender of payment and which the Comparty is obligated to pay, Upon tote exercise byte Company of this option. all liability and o0ripations lathe insured under this policy, other than to make the payment required. snail terminate. including any liability or obligation to 001e110. prosecute, of ean- imue any litigation. and the policy shall be surrendered to the Company for cancellatlon. (b) To tray or otherwise Settle With Parties tither than the Insured or Yf'dh the Insured Claimant, (1) to pay or otherwise Wle with other parties for or In -he narne of an insured Claimant ally claim insured against under this policy, together with any casts, attorneys' fees and expenses incurred by Ih6 insured claimant which were authorized by the Company up to the time of payment and which the Company is obligated to pay: or (if) to pay or otherwise settle with the insured claimant the loss or atmage provided for under this policy. together with ariy costs, attorneys' fees and expenses incurred t7y the insured claimant whicn were authorized by the Company up to tine time of paaymeni and which ine Company is obligated to Pay Upon the exercise by the Company of either of the options provided for in paroplaphs tb)fil or tit). the Company's obligations to the inured under this policy for the claimed toss or damage. other than the payments required to be rnlilhkshall terminate, including any Inability or obligation to defend, prose- nlinue any litigation. 7. DETERMINATION, EXTENT OF LIABILITY AND COINSURANCE This policy Is a contract of indemnity against actual rrionetaty toss or darn. age sustained or incurred by the insured clamant who has suffered loss or damage by reason of matters insure(i against by this policy and only to the extent herein described. (a) The liability of the Company under this policy shalt not exceed the least of: (i) the Amount of Insurance stated In Schedule A; or, (F# the difference betwoen the value of the insured estate or interest as Insured and the value of the insured emate ar interest subject ro the defect. lien or encumbrance insured against by this pofrcy, (b) In the event the Amount of Insurance stated in Schedule A at the ,Date of Policy is less than Gil percent or the value of the insured estate or interest or the full consideration paid for the land, whichever is less, or if subsequent to the Date of policy an improvement is erected on the land which increases the value of the insured Estate or interest by at lea5I20 percent over trio Amount of Insurance Stated in Schedule A. then this Policy is subject to the foltowing: (I) where no subsequent improvement has been made, as to any partial loss. the Company shall only pay the foss pro rata in the proportion that the amount of insurance at Bate of Policy bears to the total value of the insurer] estate or interest at Date of,Policy: or (ti) where a subsequent improvement has been made, as to a3rry partial loss. the Company shatf only pay the toss pro rate. in the proportion that 120 percent of the Amount of insurance stated in Schedule A bears to the sum of the Amourn of insurance stated In Schedule A and the amount expended for Ina improvement. The provisions of this paragraph shall not apply to roses, attorneys' fees and expensesfor wNch the Company Is liable underthis policy, an6 shalt only apply to that portion of any loss which exceeds, in the aggregate, 10 percent of the Amount of Insurance stated in Schedule A, (c) The Como" will pay only those costs, attorneys' fees and.expenses incurred in accordance with Section a of these Conditions and St€pulations. g, APPORTIONMENT if the land d=rfbed in applicable Schedule consists of two or more parcels which are not us24 as a 6ingle site. and a Joss is establishod atfeC09 nne or more of the parcels but not all, the loss shall be computed and Settled on a pro rats basis as H the amount of insurance under this policy was dMded pro rota as to the value on Date of Polity of each separate parcel to the wrtoie, exclusive of any improvements made subsequent to Date of Policy, unless a liability of value has otherwise been agreed upon as to each parcel by the Company and the insured at the time of the issuance of this policy and shown try an express statement or by an endorsemmnt attached to this policy. 9. LIMITATION OF LIABILITY (a) It the Company establishes the tine, or removes the alleged defect, lien or encumbrance. or cures the lack of a right of access It or from the Land, or cures the claim of unmarketability of title, all as Insured, in a3 reasonably diligent manner by any method, including litigation and the completion of arty appeals therefrom. it shall have fully performed Its obligations with respect to that ,natter and shalt not be liable for any loss or damage caused thereby, (b) in the event of arry litigation. Including litigation by the Company or with the Company's consent. the Company shall nave no liability for foss or dam- age until there has been a final determination by a court of competent jurisdic- tion, and disposition of all appeals therefrom. adverse to the title as insured. (c) The Company shalt not be liable for loss or damage to arty Insured lot liability voluntarily assumed by tote insured In settling any claim or suit without the prior wr€tten consent of the Company. 1o. REDUCTION OF INSURANCE; REDUCTION OR TERMINATION OF LIABILITY AN payme11113 under this policy. except payments matte tot costs. attorneys' fees and expenses, %hail faduce the amount of the insurance oro tanto. 11, LIABILITY NONCiiMULATIVE It is expressly understood the the amount of insurance under this policy shall be reduced by any amount the Company may pay under any policy insuring a mortgage 1;o which exception is taken in Schedule 9 or to which the insured has agreed, assumed, or taken subject, or which is hereafter ex- ecuted by an Insured and which is a charge or lien on the estate or interest described or referred to in Schedule A. and the amount so paid shall be deemed a payment under Ibis policy to the Insured owner. 12. PAYMENT OF LOSS (a) No payment $hall be made without producing this policy for endorse- ment of the payment unless the policy has been lost or destroyed. in which case proof of loss or desiruction shall be famished to the Satisfaction of tie Company. RtlfiFi3i 7TT.TT %F)V:vT'f"ly xtirttaaranr Tar TO:elr nnirT/VA (b) Wn rt liability and the extent of toss or damage has been definitely fixed accordsnca with these Condit(OAS and SGpufadorgs, the toss or damage ttll be payabls within 30 dAY6 thereafter. f. SUBROGATION UPON PAYMENT OR SETTLEMENT (a) The Cotmpan)'s Right Of 5ubrOgatian, Whenever the Company shall have settled and paid a CWT,k under this 94, ate right of subrtgation Shall frost in the Company unaffWed by any act the insured clairwAnt. The Company small be subrogaiod to and be entitled to all rights and ,rrtedies wmtCh the Insured claimant would have sad against a.iy parson or Werty in respect to the cfafm nad this policy not been issued. ff tcqueslea by & Company. the insured claimant shall transfer to Ina Cornpany all tights Id remedies against any person or property necessary in order to perfact dS fight of subrogatton. The insured claimant shall permit the Company to $e, compromise of Settle in the name of the insured claimant and to use the ame of the insured claimant in any transaction or litigation involving these eras of rernedles, n a payment on account of a claim does not fully cover tM loss of the �5ured claimant, the C:ornpany shall qe subtogated to these rights and reme- irs in the proponion which the Company's payment beers to the whole mount of the iom if loss Should result from any act of the insured claimant, as scaled Above, )ttt act shall not void this polity, but the Company, in that avert, shall be wired to payorify that part of any fosses insured against by this policy which hall exceed the amount. if any. lost to the Company by reason zl the onpair• tent by the insured claimant of the Company's rtgrtt of subregatlon- (b) The Comparty's RiSr" Against Nonansuted Obligors. 'lisp Company's tight of subrogation against non-insured obligors shall An and shall include, vAthcut: limitation. the rights of the insured to indent• ides, guarantees. other porciez of tns,srance or bonds. notwithstanding any erm.s or conditions Conlaine4 in imose insirurtte nts which provid: for subroga- on rights by reason of this policy. IA. ARBITRATION unless prohibited by applicable tarn. either the Company or LN? insured may remand arbitration pursuant to ma Title tnsumnce Arbilratior. flutes of the tnterican Arbitration Assodation_ Arbitrable matters may include, but are not knitted to, any controversy or claim between the Oampany and the insured uis ng out of or relating 10 this policy. any service of the Company in connect ins, With its issuance crime breach of a policy provision or other abifgation. All --I arbitrable metiers when the Amount of Insurance is $1,000,000 or IeSs Shalt be arbitrated al the option of eithot Cho Company of ffte ln$w d. All Albitrable matters wheh the Amount of Insurance 13 In exCCSs of $1,000.000 shalt be arbitrated only when agreed to by both the Company and the insured. Arbitra. tion pursuant to this policy and under the Rules in effect on the date the demand for arbitration is made or, at the option of the Insured, the Ruies to affect at Date of Policy shall be bir4inig upon the parties. The award may include attorneys' fees only if the laws of the Matte am which the lams is located permit a court to Sward attarney$' fees to a prevelling party judgment upon Erse. award ren4$erad by the ArbAratar(s) may be entered ih any court leaving jurisdiction thereof. The taw of the sllus of the land shalt apply to art arbitration trnd8r ltie T,lla insurance Arbitration Rules. A copy of the Rules may he obtained from the Company gpon request. 16. UA01LtTY LIMITED TO THIS POLICY, POLICY ENTIRE CONTRACT (a) This policy together with ail endorsements, if any, attached thereto by (he Company Is the entire policy and contract between the insured and the Com- pany. In interpreting any provision of this policy. this policy shall betonstrued as a whole. (0) Any claim of loss or damage, whether or not based on negligence, and which arises out of the status of the Utle to ttis estate or iniarem covered hereby or by tiny aCtion asserting such claim, shall be restricted to this policy. (c) No amendment of of endorsement to this policy can be made except by a writing endorsed hereon or anached hereto signed by either the President, a Vice President, the Secretary, aft Assistant Secretary, or validating officer or authorized signatory of the Company. 16. SEYERABILIT"Y in the event any provision of the policy is held irwatid or unenforceable under applicable law, the policy Shall be deemed not to include that provision and all other provisions shall remain in lull lorce and effect. 17, NOTICES, WHERE SENT All notices required to be given the Company and any statement In writing required to be furnished the Company shall include the number of this policy and shaff be addressed to the Company at Tlcor Title Insurance Company, Claims Department, P.O. Box 2233, Cos Angeles, California 90051. G I� L ri 0 M -4 00 M 2 C a fiilf3FGi 1.1.TT 39i'T"IiV bA❑LAgtgnt TVA' ZQ:f`T OO/ST/C0 Cl EXHIBIT D RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: Hugh M. Boss, Esq. American Capital Group, LLC 115 S. LaCumbre Lane, Suite 302 Santa Barbara, CA 93105 DECLARATION OF RESTRICTIONS AND ESTABLISHMENT OF EASEMENTS AFFECTING LAND DECLARATION Off' RESTRICTIONS AND ESTARMSI4MENT OF EASEMENTS AFFECTING LANs? THIS DECLARATION OF RESTRICTIONS AND ESTABLISHMENT OF EASEMENTS AFFECTING LAND (the "Declaration") is made as of the day of March, 2000, by ACG - Kalispell Investors, LLC, a Montana limited liability company ("ACG") and the City of Kalispell, Montana, a municipal corporation, and the Flathead County Economic Development Authority, a body politic (collectively, the "City")(ACG and the City, collectively, the "Declarants"). RECITALS: A. Parcel Ownership. Declarants are the sole owners of that certain real property located in the City of Kalispell, County of Flathead, State of Montana commonly known as the Gateway West Mall (the "Shopping Center"), the legal description of which is attached hereto as Exhibit "A" and which is shown on the site plan attached hereto as Exhibit "B" hereof (the "Site Plan"), which .Site Plan reflects the Parcels owned by ACG (the `ACG Parcel") and the City (the "City Parcel"). B. By recording this Declaration against the Shopping Center, Declarants desire to (i) provide for non-exclusive easements over the Shopping Center for the purpose of parking, access by foot and automobile and for public utilities and site utilities as more particularly described herein. and (ii) fix protective provisions, covenants, and restrictions upon and subject to which the Shopping Center shall be improved, held, used, occupied, leased, sold or conveyed. C. Declarants desire that the Shopping Center and all improvements erected thereon shall be hereinafter held, conveyed, mortgaged, encumbered, leased, sub -leased, used, occupied, sold, assigned and improved, subject to the following declarations, limitations, covenants, conditions, restrictions and easements, all of which are for the purpose of enhancing and protecting the value and attractiveness of the Shopping Center and all improvements thereon, and every part thereof. All of the limitations, covenants, conditions, restrictions and easements shall constitute covenants which shall run with the land and shall be perpetually binding upon Declarants, all "Owners" (hereinafter defined), all future tenants ofthe Shopping Center, and each o fthe foregoing's respective successors -in -interest and assigns, and all parties having or acquiring any right, title or interest in or to any part of the Shopping Center. In consideration that the following encumbrances shall be binding upon Declarants and all Owners and shall attach to and run with the Parcels, and shall be for the benefit of and shall be limitations upon all future Owners of each of the Parcels and that all easements herein set forth shall be appurtenant to the dominant estates, and in consideration of the promises, covenants, conditions, restrictions, easements and encumbrances contained herein, Declarants do declare as follows: 2.2 D,1(H) ARTICLE 1 Unless otherwise defined herein, the following words when used in this Declaration shall have the following meanings: 1.1 Assessment. "Assessment" as used herein shall mean any Owner's monetary obligation to reimburse the Maintenance Director for such Owner's pro rata share of Common Area Expenses and management fees in accordance with this Declaration or satisfy such Owner's duties under Articles 5 and 6 of this Declaration. An Assessment shall include the principal amount due, plus any late charges, interest at the Interest Rate and costs (including reasonable attorneys' fees) expended to collect the same. 1.2 Assessment Lien. "Assessment Lien" as used herein shall mean the lien created by reason of the delinquency described in and upon recordation of the Notice of Assessment Lien. See also Section 5.7. 1.3 Buildinp Area. "Building Area" as used herein shall mean and refer to that portion of the Shopping Center upon which structures designed for permanent occupation or use (but exclusive of incidental structures which may from time to time be constructed in the Common Area) are built, as the same may change from time to time as permitted herein. 1.4 Common Area. "Common Area" as used herein shall mean and refer to all of the land areas of the Shopping Center other than areas upon which buildings exist which are landscaped, paved or improved with incidental structures for the common use of the Owners, their lessees and invitees. 1.5 Common Area Expenses. "Common Area Expenses" as used herein are defined in Section 5.3. 1.6 Common Utilities. "Common Utilities" as used herein shall mean the Utilities that serve the Common Area. 1.7 County. "County" as used herein skull mean the Flathead County, Montana. 1.8 Declarants. "Declarants" as used herein shall mean and refer to ACG and the City. 1.9 Floor Area. "Floor Area" as used herein shall mean the aggregate number of square feet of floor space, from time to time, of all floors in a building (including mezzanines, basements, and similar areas) appropriated for, or intended to be appropriated for, a specific Occupant's use, measured from the exterior faces or the exterior lines of the exterior walls (including basement walls) or, in those instances where a common wall exists, measured from the mid -paint of any such common wall(s) which an Occupant shares with another Occupant. "Floor Area" does not include Common Areas. Within thirty (30) days of a request, an Owner shall certify to the _2_ CnHMs'nTS t�' wpd xrzsrao requesting Owner the amount of Floor Area existing in any building on its Parcel. If any Owner causes an as -built survey to be prepared with respect to any portion of the Shopping Center, such Owner shall, upon written request, furnish a copy of the survey to the other Owners for informational purposes only. During any period of rebuilding, repairing, replacement or reconstruction of a building, the Floor Area of that building shall be deemed to be the same as existed immediately prior to that period. Upon completion of such rebuilding, repairing, replacement or reconstruction. the Owner upon whose parcel such building is located, shall cause a new determination of Floor Area for such building to be made in the manner described above, and such determination shall be sent to any Owner requesting the same. As of the date hereof, Declarants agree that the Floor Area on the AC(; Parcel is 104,022 square feet and the Floor Area on the City Parcel is 60,645 square feet. Section 12.1. 1.10 hazardous Material. "Hazardous Material" as used herein is defined in 1.11 Interest Rate. "Interest Rate" is defined in Section 5.7. 1.12 Maintenance Director. "Maintenance Director" is ACG, or such other Owner as may be designated by owners of sixty percent (60%) of the Floor Area. 1.13 Mangy. "Manage" as used herein shall mean to supervise, control, maintain, insure, clean, repair, operate, replace and restore the applicable portion of the Common Area and, with respect to the Maintenance Director, to collect the Common Area Expenses and management fees of the Common. Area as Assessments, all in accordance with this Declaration. "Manage" shall also mean "cause to be Managed." 1.14 Mortgage and Mortgq ee. "Mortgage and Mortgagee" as used herein are defined as follows: "Mortgage" is any mortgage, indenture of mortgage, deed of trust, "sale and leaseback" or "assignment and subleaseback" instrument encumbering or affecting the interest, whether fee or leasehold, of an Owner in a Parcel, by which the Owner retains possession of its Parcel, subject to the security interest therein of the Mortgagee. "Mortgagee" is a mortgagee, trustee; beneficiary, lessor or sublessor under a Mortgage. 1.15 Occupant. "Occupant" as used herein shall mean any Owner or other Person from time to time entitled to use and occupy exclusively any Floor Area in a building under an ownership right or any lease, sublease, license, concession or other similar agreement with the Owner thereof. 1.16 Intentionally Omitted. 1.17 Owner. "Owner" as used herein shall mean and refer to each. Person, including Declarants, who now or hereafter owns fee title to a Parcel. Owner shall not mean or refer to any such :Person who holds an interest in such Parcel. merely as security for the repayment of any obligation including, but not limited to, a beneficiary under the terns of a trust deed or mortgage. _3. 317M 1.18 Parcel. "Parcel" as used herein shall mean and refer to anyone of the Parcels on the Site Plan and any legal parcel of land into which the same may hereafter be subdivided, together with all improvements existing from time to time thereon., as said parcels within the Shopping Center are shown on the Site Plan or on any subsequent subdivision map covering the Shopping Center or any portion thereof recorded in the Official Records of the County. 1.19 Permittees. "Permittees" as used herein shall paean and refer to the Owners, their tenants and their respective heirs, successors, assigns, grantees, mortgagees, tenants, subtenants, licensees and concessionaires of any and all portions of the Building Area within the Shopping Center, as well as the officers, directors, agents, employees, customers, visitors, patrons, licensees and invitees of any such parties. 1.20 Person. "Person" as used herein shall include corporations, limited liability companies, partnerships, associates, other legal entities, individuals, trustees, heirs, executors, administrators, and other personal representatives. 1.21 Rules and Regulations. "Rules and Regulations" as used herein shall mean those reasonable rules and regulations the Maintenance Director may adopt from time to time to govern use and management of the Common Area. 1.22 Separate Utilities. "Separate Utilities" as used herein shall mean Utilities that serve only a building and other improvements located in a Building Area. 1.23 Shopping Center. "Shopping Center" is defined in the Recitals. 1.24 Site Plan. "Site Plan" as used herein shall mean and refer to the Site Plan attached hereto as Exhibit "B" showing the Shopping Center, the Parcels, the location of the Building Areas, the Common Area and other matters described herein L25 State. "State" as used herein shall mean the State of Montana. 1.26 Utilities. "Utilities" as used herein shall mean any lines, conduits and facilities for the supply, service or transmission of such things as water (fire protection and domestic), electricity, natural gas, storm water, sanitary sewer discharge, telephone, cable TV and communication data. ARTICLE 2 USE IN GENERAL 2.1 Lawful Commercial. Purpose. The Shopping Center may be used for any lawful commercial purpose not specifically prohibited herein. 2.2 Two Categories of Shopping. Center. For the purpose of this Declaration, the Shopping Center is divided into two (2) categories which relate to use, "Building ,Area" and "Common Area." -4- Cxi-1IAIA2251ccs5-wpd 2129100 ARTICLE 3 COMMON AREA 3.1 Common Use, Subject to the terms of this Declaration, the Common Area shall be used in common for the benefit of the Owners of the Shopping Center, their employees, guests, tenants, invitees and customers. The Common Area shall be used for roadways, walkways, ingress and egress, parking of motor vehicles, loading and unloading of commercial and other vehicles, for driveway purposes, for the comfort and convenience of tenants, customers, invitees and employees of all businesses and Occupants of the buildings within the Shopping Center. Use of the Common Area shall be subject to such reasonable rules and regulations and such reasonable requirements as may be imposed from time to time by the Maintenance Director. 3.2 Common Area. Configuration. Changes in the layout circulation pattern or configuration of the Common Area from that shown on the ,Site Plan may be made by the Owner of the Parcel upon which such Common Area is located with the consent of Owners owning eighty percent (80%) of the Floor Area in the Shopping Center, which consent shall not be unreasonably withheld. Owners may disapprove of any such changes which result in the reduction of parking spaces within the Shopping Center below four for each. 1,000 square feet of Floor Area. Notwithstanding the foregoing, the Owners acknowledge that changes consistent with the layouts as set forth on Exhibit "C" attached hereto shall be deemed approved by the Owners. In connection with any such changes, the changing Owner shall be responsible far relocating any existing Utilities. 3.3 Parking Standards: No Exclusive Rights. No Owner or Occupant shall have any exclusive right to use any portion of the parking areas within the Common Area. 3.4 Rights of Maintenance Director With Respect to Common Area Regulations, The Maintenance Director may adopt a system for the imposition of parking fees and charges if required by any statutes, rules or regulations promulgated or enacted by any appropriate governmental authority, including validations, and erect such gates, booths and structures as may be necessary to construct, implement and operate such. systems. The Maintenance Director shall have the right to hire security guards for the benefit of the entire Common Area in the Shopping Center (i) for security purposes, (ii) to ensure that the parking areas are utilized only by Pennittees, and. (iii) for any other purpose deemed reasonably appropriate by the Maintenance Director. 3.5 Employee Parking Areas. Except as provided herein, the employees of Occupants of the Shopping Center shall be required (to the extent parking spaces are available) to park in the parking areas as may be reasonably designated from time to time by the Maintenance Director. Without limiting the scope of the foregoing, the City shall cause employees of the tenant of City Parcel to park (to the extent parking spaces are available) in a portion of the Common Area delineated as "City Parcel Parking" on the Site Plan. Notwithstanding the foregoing, however, so long as such designated areas are in fact fully utilized, employees not able to park in such areas when such areas are full shall be entitled to park in other locations within the Common Area. The Maintenance Director may, upon reasonable notice to all Owners, implement such reasonable rules and regulations as may be required to enforce the foregoing requirements, including,, but not limited C %1114BlZ231cC,s5,wPd vz9/oa to, requiring employee parking stickers, exacting pines and towing of employee vehicles parked outside the designated areas. 3.6 Prohibited Uses in Common Areas. (a) Except for those portions of the Common Area designated by Maintenance Director as being available for loading or unloading, the Common Area shall not at any time be used for the parking of delivery trucks, or the loading or unloading thereof. (b) Subject to the provisions of Section 7.4 below, the Common Area shall not at any time be used as a construction staging area for the construction of improvements without the prior written consent of Maintenance Director. ARTICLE 4 CONSTRUCTION OBLIGATIONS 4.1 Paintin Building, Exteriors. Not more frequently than once every five (5) years, the Maintenance Director, in its reasonable discretion, may elect to require some or all of the Owners to repaint, or cause to be repainted, the exterior of their buildings located in the Shopping Center. The .Maintenance Director's decision to require only some of the Owners to repaint must be reasonable and justifiable under industry standards. The Maintenance Director shall establish a schedule and coordinate such painting to assure that it occurs without unreasonable inconvenience to the operation of the Shopping Center and Permittees, and further that all buildings in the Shopping Center are painted with the same general quality of paint as used with their initial construction and of such colors as are harmonious. The Maintenance Director may cause such painting to be contracted directly (on a competitive basis) and cause each Owner to be billed directly for its share of such cost. 4.2 Construction Indemnities, Each Owner covenants and agrees to indemnify, defend., and hold harmless the other Owners from and against all claims and all costs, losses, damages, expenses and liabilities (including reasonable attorneys' fees) incurred in connection with all claims, including any action or proceedings brought thereon, arising from or as a result of any construction liens, stop notices, or other claims regarding materials supplied or work performed, or the death of, or any accident, inj ury, loss or damage whatsoever caused to any natural person, or to the property ofany person, as shall occur in connection with any construction activities undertaken in connection with such .indemnifying Owner's Parcel, except for claims caused by the negligence, recklessness or willful misconduct of the indemnitee, its licensees, concessionaires, agents, servants or employees, or concessionaires. The indemnitee shall give the indeninitor notice of any suit or proceeding entitling the indemnitee to indemnification pursuant to this Section and the indemnitor shall defend the indemnitce in such suit or proceeding; with counsel approved by the indemnitee. 4.3 Cost of Construction. Except as otherwise set forth in this Declaration, each Owner shall be responsible for the cost and expense of all improvements constructed or to be constructed on its Parcel, subject to rights to reimbursement to the extent such costs and expenses -6- C'� �t[MBy225iecrx iwpi: a�zuoc constitute Common Area charges hereunder. ARTICLE S C011VIAI0N AREA OPERATION AND MAINTENANCE 5.1 Maintenance by Maintenance Director. The owners hereby delegate their duties to Manage the Common Area to the Maintenance Director, who shall perform such management duties on behalf of the Owners in accordance with this Declaration and make decisions in the granting or withholding of consent as set forth herein. In addition to all other rights, duties and powers set forth herein, the Maintenance Director shall have the power and duty to do the following: (a) Manage the Common Area; and (b) Levy, collect and enforce all Assessments. 5.2 Approval. Authority and Resignation ofMaintenance Director. Each Owner, by its acceptance of a deed, and each other Occupant, by its execution of a lease, recognizes and approves the Maintenance Director of the Common Area. The Maintenance Director shall have (and is hereby given) the full right and authority to Manage; such authority to also include the right to delegate any or all of the Maintenance Director's responsibilities hereunder to a property management company and the right to enact rules for the use and operation of the Common Area, including designating certain areas for employee parking. Notwithstanding the foregoing, the Maintenance Director shall have the right, in its sole and absolute discretion, to permit a tenant or Owner to take over some or all aspects of maintenance of the Common Area within its Parcel or to maintain, at such tenant's or Owner's sole cost and expense, any loading docks, drive -through lanes, trash enclosures or other areas exclusively used by such tenant or Owner, and the cost of such maintenance shall not be included in Common Area Expenses, 5.3 Authorization of Expenditures/Management Fee/Audit Rom, The Maintenance Director is hereby authorized to contract for and pay for, on behalf ofthe Owners, all of the reasonable costs and expenses associated with Maintenance Director's rights and duties hereunder, including, without limitation, the following (collectively, "Common Area Expenses"): (a) premiums on insurance for the Common Area and improvements located thereon, as more fully described in Section 8.4 below, .in the amounts and types determined by the Maintenance Director, and payment of any deductible amount in the event of a claim; (b) repairs of any damage to the Conurion Area to the extent such repair costs are not covered by insurance proceeds; (c) all general maintenance and repairs of the Common Area, whether required by the enactment or operation. of law, or otherwise, including, without limitation, painting, restriping, resurfacing, cleaning, sweeping, snow removal and janitorial services; - F- C:1FjV5C25,CM5.wpd 2129100 (d) maintenance, repair, lighting, landscaping and reasonable replacement of the Common Area ,and improvements thereon (including without limitation, costs relative to the installation, maintenance and refurbishment of drainage systems and catch/retention basins); (c) expenses for personnel to implement services pertaining to the Common Area, such expenses to be within industry norms for this work, including the cost of security guards, but excluding management or supervisorial personnel; expenses for such personnel shall be prorated in the event that such personnel perform services on :more than one property; (f) payroll, payroll taxes, health and workers' compensation insurance applicable to provide the aforementioned services rendered in connection with the Common Area; (g) any public utility or governmental charges, surcharges, and any other costs levied, assessed, or imposed pursuant to laws, statutes, regulations, codes and ordinances promulgated by any governmental or quasi -governmental authority in connection with the use of the Common Area; (h) Real property taxes and assessments on the Common Area. (i) Common Area Expenses shall exclude, however, (1) expenses resulting from the willful misconduct or negligence of the Maintenance Director or any Owner, (2) amounts otherwise directly paid by third parties, individual Owners, insurance proceeds, and the like, and (3) capital expenditures incurred in connection with the construction by any Owner of new Common Area and conversion of Common Area to Building Area. Notwithstanding anything to the contrary in this Declaration (including, without limitation, any other agreements an Owner may make with its tenants regarding the amount of the management fee payable by the tenant to such Owner), the Maintenance Director shall receive an administrative fee from each of the Owners equal to eight percent (8%) of such Owner's pro rata share of the total of Common Area Expenses. If a lease or other agreement pursuant to which a tenant occupies a portion of the Shopping Center provides for a management fee of less than eight percent (8%), then as between such tenant and the Owner of that portion of the Shopping Center to which such tenant's premises relate, the provisions of such lease or agreement shall control (as to such tenant's portion of the Shopping Center only), so long as such lease or other agreement is in effect, but as among the Owners inter se and the Maintenance Director, this Declaration shall prevail. The Maintenance Director shall provide any Owner, upon reasonable prior request, reasonable back- up for any item included in Common Area Expenses. In addition, the Owner or its designated representative, including its tenant (if so authorized by its Owner -landlord), may audit the Maintenance Director's records relating to Common Area Expenses and such Owner's share thereof, such audit to be performed at the Maintenance Director's principal place of business and at the Owner's cost (except as provided below). Such audit must be commenced within two (2) years following receipt from the Maintenance Director of the annual reconciliation of Common Area Expenses, and if not commenced within such period of time and thereafter diligently prosecuted to completion, such right to audit shall be forfeited as to that particular year. The audit must be 2f27�0�! performed by an accountant reasonably experienced in such matters. If any such audit correctly reveals an overcharge of an Owner with respect to its share of Common Area Expenses, such overcharge may, in addition to any other remedies available, be immediately offset against any amounts owing the Maintenance Director under this Declaration. In no event may an Owner withhold paying its share of Common Area Expenses pending an audit or any other dispute concerning Common Area Expenses. If the audit correctly reveals an overcharge of more than five percent (5%), the Maintenance Director shall pay the reasonable cost of such audit, and such payment shall not be included in Common Area Expenses. 5.4 Assessment of Common Area Expenses,, Budget. Each Owner shall reimburse the Maintenance Director as an Assessment for such Owner's pro rata share of Common Area Expenses and maintenance fee (as such pro rata share is determined in accordance with Section 5.5 below). Procedures for such Assessment are as follows: The Maintenance Director, prior to Tune 30, 2000, and annually thereafter, at least sixty (60) days prior to each anniversary of such date or prior to the end of the applicable calendar or fiscal year, as the Maintenance Director may designate, shall prepare and submit to the Owners a budget of the anticipated Common Area Expenses for the upcoming year. The Maintenance Director shall thereafter operate, maintain and repair the Common Area in accordance with the budget, subject to unforeseen increases and expenses. Thereafter, on the first day of each month each Owner shall pay or cause to be paid to the Maintenance Director one -twelfth (1 / 12th) of its pro rata share of the Common Area Expenses for its Parcel in accordance with the budget for such year. Pending the preparation of a new budget for the current year, the monthly amount which the Owners are required to pay pursuant to the previous budget shall apply. From time to time, but no less frequently than annually, the Maintenance Director shall send to each Owner a written statement itemizing the Common Area Expenses, including the management fee paid or payable to the Maintenance Director for the period designated in such statement. In the event an Owner shall have paid more than its pro rata share during such period, the Maintenance Director shall promptly refund the amount of such excess payment. Should an Owner have paid less than its pro rata share during such period, such Owner shall pay to the Maintenance Director the amount of such deficiency within thirty (30) days after receiving an invoice. 5.5 Payment of Pro Rata Share. The pro rata share of Managing the Common Area is to be borne and paid monthly in accordance with Section 5.4 above, by the Owner of any part of the Building Area, in the proportion which the Floor Area on such Owner's Parcel bears to the total Floor Area of all Building Area within the Shopping Center, provided that any Common Area Expenses that are capital in nature, according to generally accepted accounting principles, shall be paid by the Maintenance Director and such amount, together with interest at 10% per annurn, shall be amortized over the useful life of such assets. Each Owner shall pay such amortized amount in the proportion which the Floor Area on such Owner's Parcel bears to the total Floor Area of all Building Area within the ,Shopping Center, on a monthly basis as set forth above. 5.6 No Further Obligation Upon Sale. If any Owner sells all or part of the Shopping Center owned by it, then such Owner shall have no further obligation under this Declaration with respect to the part of such real property thus sold after the date of the conveyance, -9- 17.-�HM61225+cc S. pd =9100 other than obligations arising prior to the date of the conveyance for which such Owner shall remain obligated. However, the provisions of this Declaration shall be binding upon, and shall inure to the benefit of, all present and future Owners of all or any part of the Shopping Center. 5.7 Remedies for Non-Payments/Assessment Liens. In the event that any Owner fails or refuses at any time to pay its pro rata share of the Common Area Expenses or management fee when due, then, after written demand and failure to pay within ten (10) days after receipt of such demand, legal action may be instituted against the defaulting Owner for reimbursement, plus interest at five percentage points over the then current discount rate of interest as announced from time to time by the Federal Reserve Bank, San Francisco, California (the "Interest Rate") and in addition to any other remedies available to the Maintenance Director, the Maintenance Director may collect directly from such Owner's tenants, to the extent they are obligated to pay Common Area Expenses pursuant to the terms of their lease or otherwise. the Common Area Expenses (including, without limitation, the management fees) due from, the Owner. During the period of any delinquency hereunder, the "Interest Rate" defined as aforesaid shall be adjusted quarterly. In no event shall the rate of interest hereunder be greater than the highest rate then allowable by law. Any and all delinquent amounts together with said interest may be imposed as a lien and charge upon all ofthe Parcel or Parcels of such defaulting Owner ("Assessment Lien"). Such Assessment Lien may be imposed by serving written notice on such defaulting Owner which shall contain a representation of compliance of the provisions of this Article, an explanation as to the nature of the particular obligation, the work or service involved and the cost thereof, together with the description of the defaulting Owner's Parcel, and by duly recording a copy of said Notice of Assessment Lien in the Official Records of the County. No such liens shall exist until such notice is duly served and recorded as provided herein. Priority of such lien shall be determined as the date of filing same of record, provided, however, any such lien shall nevertheless be subject and subordinate to the lien of any first mortgage or deed of trust now or hereafter covering any portion of the Shopping Center. Such Assessment Lien shall continue until fully discharged, and may be foreclosed in accordance with applicable law. Such Assessment Lien shall secure not only the amount stated in the aforesaid notice, but also the reasonable casts and expenses in enforcing the same. 5.8 Different Payment Times in Lease. Notwithstanding anything contained herein to the contrary, in the event that the provisions of a particular lease between an Owner and its tenant with respect to the calculation, time and method of billing and payment of Common Area Expenses are different from the provisions of this Article, then (i) as between such Owner and its tenant, the lease provisions shall prevail, and (ii) as among the Owners inter se and the Maintenance Director, this Declaration shall prevail. 5.9 Default of Maintenance Director. The following shall constitute a default of the Maintenance Director: (a) The failure of the Maintenance Director to perform any of its material obligations hereunder for thirty (30) days after receipt of written notice from any Owner, where such performance could reasonably be completed within such thirty (30) day period of time; or -tQ- (' :k;htB1225kcrs5. wpd (b) If such performance would reasonably require more than thirty (30) days to complete, then either or both the Maintenance Director's failure to commence performance of such material obligation within such thirty (30) day period of time after receipt of written notice from any Owner, or its failure to diligently pursue the performance of such obligation to completion within such time as is reasonably necessary for completion of such obligation. If the Maintenance Director is in default as above provided, then any Owner may take such steps as such Owner reasonably deems necessary to cure such default, and the amount expended therefor, plus interest at the Interest Rate, shall be billed by the performing Owner to the other Owners on a pro rata basis and reimbursed by the billed Owners to such Owner within thirty (30) days after demand therefor. In the event any amounts are owing by the Maintenance Director as the result of any of the foregoing, each Owner shall have the same lien rights as are set forth in paragraph 5.7 hereof. In the event of such a default, the non -defaulting Owners may, upon the vote of Owners owning a maj ority ofthe Floor Area (exclusive of the Floor Area owned by the Maintenance Director), remove the Maintenance Director and elect from the non -defaulting Owners a replacement Maintenance Director. ARTICLE 6 REALTY TAXES AND ASSESSMENTS 6.1 Payment by Owner. As to any portion of the Shopping Center, it is intended and agreed that all real estate taxes and assessments which may be levied, assessed, or charged by any public authority against a Parcel or any part thereof, shall be paid prior to delinquency by the respective Owner of said Parcel except for real estate taxes and assessments on or reasonably attributable to the Common Area, which shall constitute Common Area Expenses as provided herein. 6.2 Ri2ht to Contest. Should the Maintenance Director deem any tax or assessment, or any part thereof {including the rate thereof, the assessed valuation of the Shopping Center in question, or any appropriate aspect thereofj, to be paid with respect to the Common Area to be excessive or illegal, the Maintenance Director shall have the right to contest the same in the name of the Owners after first requesting the Owner(s) to contest the tax or assessment and such Owners) having declined such request. Such contest may be prosecuted so long as the validity or amount is contested in good faith and the payment would affect or extinguish the right to prosecute such contest; provided, that if at anytime, the payment of the whole or a part of such contested amount shall become necessary to prevent foreclosure of the lien for such unpaid tax or assessment because of non-payment, then each Owner shall pay or cause to be paid, with respect to its Parcel, such tax or assessment to prevent such foreclosure. In any tax or assessment contest hereunder, all Owners shall cooperate to the extent reasonably necessary. In addition, any Owner shall have the right to require that the Maintenance Director (or the Owner of any Common Area) contest any tax or assessment; provided that such Owner shall execute an acceptable indemnity in favor of the Maintenance Director and such Owner, and shall pay any and all costs and expenses in connection therewith (subject to reimbursement from any award or other savings). -t i- c Hasa zzs�� s wPd vzarao 6.3 Copy of Tax Bill to Maintenance Director. Within thirty (30)days after receipt of written request from the Maintenance Director, each Owner shall submit to the Maintenance Director true and correct copies of the most recent tax bill issued by the taxing authorities for each Owner's Parcel(s). In the event an Owner fails to comply with such written request from the Maintenance Director within such thirty (30) day period, and after an additional ten (10) day written notice with which such. Owner fails to comply, such Owner shall pay to the Maintenance Director a sum equal to five percent (S%) of the applicable tax bill for each month or portion thereof that such Owner fails to submit the tax bills to Maintenance Director. At the request of any Owner, the Maintenance Director shall submit copies of any tax bills issued by the taking authorities for any Parcels within the Shopping Center. 6.4 Remedies for Non-Payment/Liens. In the event that any Owner fails or refuses at any time to pay its share of any real estate taxes or assessments when due, then, after written demand and failure to pay within ten (10) days after receipt of such demand, legal action may be instituted against the defaulting Owner for reimbursement, plus interest at the Interest Rate. During the period of any delinquency hereunder, the "Interest Rate" defined as aforesaid shall be adjusted quarterly. In no event shall the rate of interest hereunder be greater than the highest rate allowable by law. Any and all delinquent amounts together with said interest may be imposed as a lien and charge upon all of the Parcel or Parcels of such Owner. Such lien may be imposed by serving written notice on such defaulting Owner which shall contain a representation of compliance with the provisions of this Article, an explanation as to the nature of the particular default, together with a description of the defaulting Owner's Parcel, and by duly recording a copy of said notice in the Official Records of the County. No such liens shall exist until such notice is duly servedand recorded as provided herein. Priority of such lien shall be determined as the date of filing same of record; provided, however, any such lien shall nevertheless be subject and subordinate to the lien of any first mortgage or deed of trust now or hereafter covering any portion of the Shopping Center. Such lien shall continue until fully discharged, and may be foreclosed in accordance with applicable law. Such lien shall secure not only the amount stated in the aforesaid notice, but also the reasonable costs and expenses in enforcing the saute. ARTICLE 7 EASEMENTS 7.1 Ingress and Egress. Declarants hereby establish for the benefit of each Owner for its use and for the use of its Permittees, in common with others entitled to use the same, a non-exclusive perpetual easement for the passage and parking of vehicles over and across the parking and driveway areas of the Shopping Center, as the same may from time to time be constructed and maintained for such use, and for the passage and accommodation ofpedestrians over and across the parking, driveways, and sidewalk areas of the Shopping Center, as the same may from time to time be constructed and maintained for such use. Except in the event of emergency repairs, there shall be unimpeded access between the parking and driveway areas of the Shopping Center and the buildings in the Shopping Center. -12- (.'.iFIi�3B82.i1ccrs5.iv�d 7J2�1PI) 7.2 Non -Exclusive Nature. All ofthe foregoing easements shall be non-exclusive. The Owner of a Parcel shall be entitled to grant, modify, and terminate similar non-exclusive easements to others, whether or not they are Owners, Permittees, or otherwise have an interest in the ,Shopping Center. 7.3 Utilities. (a) Utilities. Declarants hereby establish for the benefit of each Owner (and public utility companies designated by an Owner) non-exclusive perpetual easements in, to, over, under, along, and across those portions of the Common Area (exclusive of any portion located within. a Building Area other than Utilities located with a Building Area as of the date hereof, which existing Utilities shall be governed by the provisions of this Section) located on the Shopping Center reasonably necessary for the installation, operation., flow, passage, use, maintenance, connection, repair, replacement, relocation and removal of Utilities serving the Stropping Center, including but not limited to, sanitary sewers, storm drains, water (fire and domestic), gas, electrical, telephone, and communication lines, vaults, meters, transformers, pipelines, hydrants, sprinkler controls and conduits. Whenever feasible, Utilities shall be located below the surface of the Common Area, or below the surface of any other above -ground improvements located thereon; provided, however, that in any event, (i) all Utilities which are located above the surface ofthe Common Area shall be placed so as not to interfere with, restrict, or impede other uses of Common Area provided for herein; and (ii) no Utility which must be located above the surface ofthe Common Area shall be installed upon any Parcel without prior written consent of the Owner of that Parcel, which consent shall not be unreasonably withheld. A grantee Owner shall be entitled to request from a grantor Owner the right to install a Utility across the Common Area of the grantor Owner's parcel. Prior to exercising the right granted herein, the grantee Owner shall first provide the grantor Owner with a written statement describing the need for such easement, shall identify the proposed location of the Utilities, and shall furnish a certificate of insurance showing that its contractor has obtained the minimum insurance coverage as required by this Declaration. Any Owner installing separate Utilities pursuant to the provisions of this subparagraph shall pay all costs and expenses with respect thereto (including all maintenance and repair costs and expenses in connection therewith) and shall cause all work in connection therewith (including general clean-up and proper surface and/or subsurface restoration) to be completed as quickly as possible (and in any event within a commercially reasonable time) and in a manner so as to minimize interference with the use of the Common Area, all of which activities shall be subject to the prior written approval of the grantor Owner and the Maintenance Director. if the Owners elect to install common Utilities, all repair, maintenance, replacement, and other work thereon shall be performed by the Maintenance Director as part of Common Area maintenance. T4 Easements for Construction Maintenance and Reconstruction. (a) Foundations and Footings. In order to accommodate any footings, foundations, columns, or walls which maybe constructed or reconstructed immediately adj acent to a common boundary Iine and which may over.Iap that common boundary line, Declarants, for themselves and each Owner, hereby establish non-exclusive easements in, to, over, under, and across -13- iH'.3B1225',ucrs5.wpd 2/?4r�7 that portion of each Parcel adjacent to its common boundary line in space not theretofore occupied by any then existing structure for the construction, maintenance and replacement of underground footings to a maximum lateral distance of two (2) feet and for the construction, replacement and maintenance of foundations, columns, or walls to a maximum lateral distance of six (6) inches. This easement shall: (i) continue in effect for the term of this Declaration and thereafter for so long as the building utilizing the easement area exists (including a reasonable period to permit reconstruction or replacement of such building if the same shall be destroyed, damaged, or demolished); (ii) include the reasonable right of access necessary to exercise and enjoy such grant upon terms and with the limitations described in this Declaration; and (iii) shall not unreasonably interfere with or impair grantor's use or development of its Parcel. (b) Subterranean Construction. Prior to utilizing any easement set forth in (a) above; the grantee Owner shall advise the grantor Owner and the Maintenance Director of its intention to use the same, and shall provide glans and specifications and proposed construction techniques for the improvements to be located within the easement area, and shall give the grantor Owner an opportunity to commence any construction activities which it contemplates undertaking to the end that each Owner involved shall be able to utilize subterranean construction techniques which will hermit the placement above ground of a building on each Parcel immediately adjacent to the common boundary line. If a common subterranean construction element is used, it is specifically understood that the grantor and the grantee shall each assume and pay its reasonable share of the cost and expense of the initial construction and, so long as both Owners are benefitting therefrom, subsequent maintenance thereof. In the event any building utilizing a common subterranean construction element is removed or altered, any common subterranean construction element relative thereto shall be left in place for the benefit of any building utilizing the same located on the adjoining Parcel. (c) Common Walls, Costs relative to the maintenance and repair of the structural elements of any common walls separating buildings on more than one Parcel shall be borne equally by the adjoining Parcel Owners, and all decisions regarding the removal, structural repairs and replacements of such common walls shall require the approval of both such Owners. ARTICLE 8 INSURANCE 8.1 Tones of Insurance. At all times during the term of this Declaration, each Owner shall, at its sole expense, continuously maintain or cause to be continuously maintained the following insurance: (a) Standard fire and standard extended coverage insurance on all buildings and other improvements located on its Parcel, other than Common Area improvements. Said insurance shall be in amounts at least sufficient to avoid the effects of co-insurance provisions of the policies. (b) Commercial general liability insurancewith coverage limits ofnot less -14- 2129100 than Two Million Dollars ($2,000,000.00) cornbined single limit bodily injury, personal injury, death and property damage liability per occurrence, insuring against liability of the insured with respect to the Building within the Owner's Parcel or arising out of the maintenance, use or occupancy of the Building within such Parcel, subject to increases in the amount as the Maintenance Director may reasonably require from time to time. All such liability insurance shall specifically insure the performance by each Owner of the indemnity agreement as to liability for injury to or death of persons and injury or damage to property in Section 8.3 below. Further, all liability insurance shall include, but not be limited to, bodily injury, blanket contractual, cross liability and severability of interest clauses, products/completed operations, broad form property damage, independent contractors, owned, non -owned and hired vehicles (which may be under separate policy) and, if alcoholic beverages are served, sold, consumed or obtained within any Building Area on such Parcel, liquor liability. (c) All policies of insurance provided for herein shall be issued by insurance companies with general policy holder's rating of not less than A and a fnatscial ratting of not less than Class X rated in the .most current available "Best's Key Rating Guide" and which are qualif ed to do business in the State, and shall otherwise be in such form and contain such terms as the Maintenance Director shall deem reasonably appropriate taking into account then -current industry standards. Executed copies of the policies of insurance or certificates thereof shall be delivered to the Maintenance Director and the other Owners upon request. Thereafter, executed copies of renewal policies or certificates thereof shall be delivered to the Maintenance Director within thirty (30) days prior to the expiration of the term of each policy. All policies of insurance delivered to the Maintenance Director must contain a provision that the company writing the policy will give to the Maintenance Director thirty (30) days notice in writing in advance of any cancellation or lapse of the effective date of any reductions in the amounts of insurance. (d) Notwithstanding the foregoing, the Maintenance .Director may, but shall not be obligated to, itself obtain some or all of such coverages on behalf of one or more Owners, at such Owners' cost and expense, if reasonable and prudent, such insurance may be obtained under blanket policies otherwise maintained by the Maintenance Director or its affiliates, subject to reasonable allocation of premiums. Unless the Owner's shall otherwise agree, all such premiums shall be allocated based upon the respective Floor Areas of the various Owners; provided, however, that premiums attributable to any casualty insurance shall be allocated based upon the fair market value of the respective improvements, and any proceeds from any insurance shall be allocated among the Owners reasonably based upon respective losses incurred by each. 8.2 Waiver of Subro a boss. Each Owner hereby waives any and every claim which arises, or may arise, in its favor and against any other Owner during the term of this Declaration for any and all loss of, or damage to, any of its property located within or upon, or constituting a part of, the Shopping Center, which loss or damage is covered by valid and collectible fire and extended coverage insurance policies, to the extent that such loss or damage is recoverable under said insurance policies. Said mutual waivers shall be in addition to, and not in limitation or derogation of, any other waiver or release regarding any loss of, or damage to, the said property of any Owner. Inasmuch as the said mutual waivers will preclude the assignment of any such claim _t5_ by way of subrogation (or otherwise) to an insurance company (or any other person, firm or corporation), each Owner shall give to each insurance company which has issued to it policies of fire and extended coverage insurance, written notice of the terms of said mutual waivers, and shall have said insurance policies properly endorsed, if necessary to prevent invalidation of said insurance coverages by reason of said waivers. 8.3 Indemnity. To the fullest extent permitted by law, each Owner ("Indemnitor") covenants with the other Owners ("Indemnitees") that the Indemnitees shall not be liable for any damage or liability of any kind or for any injury to or death of persons, or damage to property of Indemnitor or any other person, from any cause whatsoever, related to the use, occupancy or enjoyment of the Parcel by the Indemnitor or any person thereon or holding under the Indemnitor, including, but not limited to, damages resulting from any labor dispute, and the Indemnitor shall defend, indemnify and save the Indemnitecs harmless from all liability whatsoever on account of any real or alleged damage or injury and from liens, claims and demands related to the use of the Indemnitor's Parcel and its facilities, or repairs, alterations or improvements (including original improvements and fixtures) which the Indemnitor may make or cause to be made upon the Parcel; but the Indemnitor shall not be liable for damage or injury ultimately determined to be occasioned by the negligence of an Indemnitee or its designated agents, servants or employees. This obligation to indemnify shall include reasonable attorneys' fees and investigation costs and all otherreasonable costs, expenses and liabilities incurred by an Indemnitee or its counsel from the first notice that any claim is to be made or may be made. 8.4 Insurance Maintained by Maintenance Director. (a) At all times during the term hereof, the Maintenance Director shall continuously maintain or cause to be maintained standard fire and standard extended coverage insurance on the Common Area and improver mis thereon in an amount as may be determined from time to time by the Maintenance Director in the exercise of its reasonable business judgment and commercial general liability insurance, including contractual liability coverage, endorsed to cover bodily injury covering the Common .Area. (b) The premiums for said policies shall be apportioned among the Owners on a pro rata basis in accordance with Section 5.5. If the Maintenance Director hereafter determines that it would be more feasible to insure each Owner's Parcel(s) separately, then, it is agreed that the insurance coverage herein required by this Article will be placed in separate policies, each for the amounts indicated, from the same insurance company, to avoid a conflict of claims, and each Owner shall be named as an additional insured on the other Owner's policies. ARTICLE 9 DESTRUCTION AND REBUILDING 9.1 Restoration of Common Area. In the event of any damage or destruction to the Common Area, whether insured or uninsured, the Maintenance Director shall restore the Common Area with all due diligence to the extent feasible to a condition at least as good as that of the Common Area that existed immediately prior to such damage or destruction. Any uninsured C3[JkJ13V251=35'wo w`2gr04 portion of the cost to restore the Common Area shall be deemed a Common Area Expense and apportioned among the Owners as set forth in Section 5.5. 9.2 Restoration ofBuildins. If an Owner's building is damaged or destroyed, such Owner may, but shall not be obligated to, restore its building. If an Owner elects to so restore its building, such building shall be restored to a condition at least as good as that of the building that existed immediately prior to such damage or destruction and all such restoration and reconstruction shall be performed in accordance with the fallowing requirements, as the same are applicable thereto: (a) Plans and specifications therefor not previously approved for the original construction of the building shall be subject to the approval of the Maintenance Director, which approval shall not be unreasonably withheld. (b) The building being restored shall be at least of equal value per square foot, and at least as usable for its intended purpose, as such building was just prior to the happening of such casualty. 9.3 Obli ations if Owner Elects Not to Rebuild. In the event any Owner does not rebuild and restore its damaged building(s), or other irnprovernents under the provisions of this Article, such Owner shall promptly clear its Parcel of debris and hazardous conditions, pave or landscape same in a first-class condition such that it is harmoniously incorporated into the Shopping Center and thereafter shall maintain its Parcel in a clean, safe and sightly condition free of weeds, dust or other debris; provided, however, that in no event shall any Owner have the right to withdraw its Parcel or portion thereof from the Common Area, or from any easements created and provided for hereunder, at any time during the term of this Declaration. ARTICLE 10 NOTICES 10.1 Requirements. All notices, consents, requests, demands, approvals, waivers and other communications desired or required to be given hereunder (referred to collectively as "Notices") shall be in writing and signed by the party so giving the notice, and shall be effective when personally delivered or when deposited in the United States mail, as certified or registered mail, return receipt requested, first class postage and fees prepaid, or if given by same -day or overnight private courier, shall be effective as confirmed by the private courier service making delivery. All Notices shall be addressed as follows. If to ACG: ACG -- Kalispell Investors, LLC c/o American Capital Group LLC 115 S. LaCumbre Lane, Suite 302 Santa Barbara, California 93105 Attention: Hugh Boss -17- C:1ti?.?J1225kcrs S.wpA J29l40 If to the City: Jobs Now, Inc. 213 E. Idaho Kalispell, Montana 59901 Attention: Myrt Webb If to an Owner: At such address as an Owner provides to the other Owners in writing. 10.2 Change of Address. Anyone entitled to receive Notices hereunder may, from time to time, change his or its address for receiving Notices by giving written notice thereof in the manner outlined above. ARTICLE 11 EFFECT TERM AND TERMINATION 11.1 Run With the Land,'Term/Renewals, The covenants, conditions and restrictions contained in this Declaration shall be recorded and ran with the land and be binding upon each and all of the Owners (and upon all Persons claiming under them) for a period of sixty (60) years from the recording date hereof (unless terminated as provided in Section 11.2 below) and shall be deemed automatically extended in ten (10)-year increments thereafter unless (a) the Owners holding eighty percent (801/1o) of the Floor Area of the Shopping Center and (b) all Owners of more than 50,000 square feet of floor area agree in writing to terminate the Declaration on or before the expiration of such sixty (60)-year term or the expiration of any ten (10)-year extension period; provided, however, that the easements contained in Article 7 shall be perpetual. 11.2 Amendment and Termination. This Declaration may only be amended or terminated by the written agreement of (a) Owners holding eighty percent (80%) of the Floor Area of the Shopping Center and (b) all Owners of more than 50,000 square feet of floor area, duly acknowledged by each and recorded in the Office of the County Recorder of the County. ARTICLE 12 HAZARDOUS MATERIALS 12.1 Compliance withLaws. Each Owner (and to the extent that any tenant has caused Hazardous Materials (as defined below) to be stored, used or disposed of on any part of the Shopping Center, each such tenant), at its sole cost and expense, shall comply with all federal, state and local laws relating to the storage, use and disposal of hazardous, toxic or radioactive matter including, without limitation, asbestos, polychlorinated biphenyls, petroleum (or petroleum products), hydrocarbonic substances and constituents of any of the foregoing, any substance which, because of toxicity, corrosivity, reactivity, ignitability, carcinogenicity, magnification or concentration within biologic chains, presents a demonstrated threat to biologic processes when discharged into the environment, (collectively, ".Hazardous Materials"). In the event any Owner or tenant does store, use or dispose of any Hazardous Materials (other than those stored, used, or disposed of in normal quantities in a manner consistent with applicable law and customary practice in connection with properties similar to the Shopping Center), such Owner (or in the case of a tenant -t 8- c,RUB 25s c,�3. pd zrzsroa who has caused Hazardous Materials to be stored, used or disposed of on any part of the Shopping Center, such tenant) shall notify the Maintenance Director in writing at least ten (10) days prior to their first appearance on the Shopping Center. Each such Owner or tenant shall be solely responsible for and shall defend, indemnify and hold the Maintenance Director, the Maintenance Director's agents and employees, the other Owners and their agents and employees and the Shopping Center free and harmless from and against all claims, costs and liabilities, including attorneys' fees and casts, arising out of or connected with a violation of local, state or federal law with respect to such Hazardous Materials and the removal, clean-up and/or restoration work and materials necessary to return the Shopping Center, and any other property of whatever nature, to their condition existing prior to the appearance of the Hazardous Materials on the Shopping Center. A tenant's obligations under this Article shall survive the termination of its lease. An Owner's obligations under this Article shall survive the termination of this Declaration. 12.2 Notices and Reports. Each Owner shall notify the Maintenance Director and the other Owners and provide the Maintenance Director and the other Owners with copies of the following environmental entitlements or inquiries related to any part of the Shopping Center: Notices of violation, notices to comply, citations, inquiries, reports filed pursuant to self -reporting requirements, and reports filed pursuant to any governmental law or regulation relating to underground tanks. In the event of a release of any Hazardous Materials into the environment, each Owner shall furnish the Maintenance Director and the other Owners with copies of any and all reports in its possession relating to the release. Each Owner or tenant shall furnish to the Maintenance Director and the other Owners copies of any and all other environmental entitlements or inquiries relating to the Shopping Center including, but not Iimited to, all permit applications, permits and reports including, but not limited to, those reports and other matters which may be characterized as confidential, provided that the Maintenance Director and the other Owners may only use any such confidential reports and other matters to enforce its rights and responsibilities under this Declaration. ARTICLE 13 MISCELLANEOUS PROVISIONS 13.1 Binding Effect. The foregoing covenants, conditions and restrictions: (a) Shall apply to and bind each and all of the Owners and each and all of their respective heirs, successors, assigns, grantees, mortgages, tenants and subtenants to the extent specifically provided herein; (b) Are hereby unposed pursuant to a general plan for the improvement and use of the Shopping Center and are designed for the mutual benefit of the Owners and the tenants, subtenants and Occupants of any and all portions thereof; and (c) Shall obligate, inure to and pass with each and every portion of the Shopping Center and shall remain in full force and effect as provided herein. 13.2 Liens. Breach of any of the covenants or restrictions contained in this -19- CMIMB1225kcrs5.wpd V29YGO Declaration shall not defeat or render invalid the lien of any mortgage or deed of trust made in good faith, but all of the foregoing provisions, restrictions and covenants shall be binding and effective against any Owner of any portion of the Shopping Center, or any part thereof, whose title is acquired by foreclosure or trustee's sale or by deed in lieu of foreclosure or trustee's sale; provided, however, any such Owner whose title is acquired by foreclosure or trustee's sale shall take title free of any liens created or provided for hereunder, but any such Owner shall otherwise be subject to the provisions hereof, and shall be liable for any liens arising after the date such Owner acquires title. 13.3 Morta-ees. The term "mortgagee," wherever used herein, shall be construed to include beneficiaries and trustees under deeds of trust. Notwithstanding any other provisions in this Declaration for notices of default, the mortgagee of any party in default hereunder shall be entitled to notice of said default, in the same manner that other notices are required to be given under this Declaration, provided, however, that said mortgagee shall have, prior to the time of the default, notified all Owners of the mortgagee's mailing address. 13.4 Remedies. It shall be lawful for any Owners to prosecute any proceedings at law or in equity against any Owners violating, or attempting to violate, any of the covenants, conditions and restrictions herein., and either to prevent it, him or them from so doing or to recover damages from or on account of such violation. Such proceedings may include, but shall not be limited to, actions against the defaulting Owner for specific performance. 13.5 Partial Invalidity. Invalidation of any one of the covenants, conditions, restrictions or other provisions herein contained by judgment or court order shall in no way affect any of the other covenants, conditions, restrictions or provisions Hereof, and the saute shall remain in full force and effect. 13.5 Privity. This Declaration shall create privity of contract and estate with and among all grantees of all or any part of the Shopping Center and their respective heirs, executors, administrators, successors and assigns. 13.7 Attorneys` Fees. In the event that any action or proceeding is brought for the enforcement of this Declaration or as the result of any alleged breach, the prevailing party or parties shall be entitled to be paid court costs, including reasonable attorneys' fees, by the losing party or parties as well as all fees, costs and expenses incurred in connection with such action or proceeding, including, without limitation, any post judgment fees, costs or expenses incurred on any appeal or in collection of any judgment and any judgment or decree rendered shall include the same in the award. 13.8 Condemnation. In the event of any condemnation (by any duly constituted authority for a public or quasi -public use) of all or any part of the Shopping Center, the portion of the award attributable to the value of any land within the Common Area shall be payable only to the Owner(s) thereof, and no claim therefor shall be made by other Owners of any other portion of the Shopping Center; provided, however, that any or all other Owners of the Shopping Center may file collateral claims (including without limitation those relating to easements and similar rights) with the condemning authority over and above the value ofthe land taken, and provided further, however, _20- CnHNB'Q25=.5 wpd n9loQ that the Owner of any portion of the area so condemned shall promptly repair and restore the remaining portion of the area owned by such Owner as nearly as practical (to the extent of the condemnation award proceeds) to its condition immediately prior to the condemnation without contribution frorn any other Owner. If such Owner fails to do so, the Maintenance Director shall have the right to do so and charge back the cost thereof to the breaching Owner. The foregoing shall not alter or render ineffective the provisions of any lease between an Owner and tenant providing for the allocation of a condemnation award between them. 13.9 A.M.ditionalProperty, Subject to obtaining the consent Owners of suety percent (60%) of the Floor Area, the Owners may annex additional property to the Shopping Center by the recordation of a supplemental. declaration in the Official Records of the County. Upon such recordation, all provisions in this Declaration shad apply to such additional property as if it were originally covered by this Declaration. 13.10 Captions. The captions heading the various Articles of this Declaration are for convenience and identification only, and shall not be deemed to limit or define the contents of their respective sections. 13.11 First Class Condition. Each Owner shall beep, maintain, repair, manage and operate the buildings located on its respective Parcel(s), whether occupied or unoccupied, (i) in a first class manner, (ii) in a first class and clean order, operation, condition and repair in conformity with the highest standards of cleanliness and attractiveness for first class shopping centers in the County, and (iii) in such manner to establish, maintain and present, at all times, the appearance of a clean, well -managed, attractive, well coordinated and unified operation. 13.12 Third Partv Beneficiaries. No rights, privileges or immunities conferred upon Owners by this Declaration shall inure to the benefit of any tenant, customer, employee or invitee of the Shopping Center or any portion thereof or any other third party; nor shall any tenant, customer, employee or invitee of the Shopping Center or any other third party be deemed to be a third party beneficiary of any of the provisions contained herein. Notwithstanding the foregoing, however, any Owner may, by prior written notice to the Maintenance Director and the other Owners, assign to any tenant leasing more than 40,000 square feet of Floor Area any or all of such Owner's rights (but shall not be released from its obligations) hereunder during the duration of such tenancy. 13.13 Governing Law. This Declaration, and the rights and obligations provided for herein, shall be governed by and interpreted in accordance with the laws of the State. 13.14 Estoppel Certificates. Upon twenty (20) days` written notice, the Maintenance Director or any Owner shall have the right to request an estoppel certificate from each Owner of a parcel comprising the Shopping Center that (to the extent true) (i) the Declaration is in full force and effect, without modification (or, if there have been modifications, that the same is in full force and effect as modified, and stating the modifications); (ii) that the knowledge of the certifying party there are no uncured defaults in a party's performance under the Declaration; (iii) that no more than one (1) month's share of Common Area Expenses have been pre -paid by such Owner; and (iv) any other matters reasonably requested by the Maintenance Director or such Owner. (`.t}{MM_12ncm5.wpd Z 1-51W 13.15 Actions on Behalf of the Ctv. The Flathead County Economic Development Authority, acting alone, shall be authorized to snake and give any decisions, consents, approvals and agreements under this Declaration on behalf of the City. ARTICLE 14 SPECIAL PROVISIONS REGARDING INSIDE COMMON AREA The building which exists on the Shopping Center as of the date hereof contains certain inside common. area (the "Inside Common Area'), whicb Inside Common Area is located on the ACG Parcel within the portion of the building owned by ACG. Such Inside Compton Area shall be subject to the following provisions and agreements: 14.1 ACG may, but shall not be obligated to, erect at ACG's sole cost and expense a demising wall at such. location as ACG deems appropriate dividing the Inside Common Area so as to separate the portion of the :inside Common Area utilized for inside access to the City Floor Area (the "City Inside Common Area") from the balance of the Inside Common Area (the "ACG Inside Common Area"). In the event that ACG shall do so, then (a) the Maintenance Director shall maintain the City Inside Common Area and the City shall be solely responsible for any and all costs and expenses in connection with the maintenance and operation of the City Inside Common Area, and (b) ACG shall be solely responsible for (a) any and all costs and expenses in connection with the maintenance and operations of the ACG Inside Compton Area unless (b) such City Inside Common Area is accessed by rather Occupants, in which event the City shall be responsible for its pro rata share of such costs and expenses (calculated based upon the relative Floor Areas Inside Common Area). In all rather respects, the City Inside Common Area shall be maintained, operated and governed by the other provisions of this Declaration relating to Common Area generally; the ACG Inside Common Area shall not, however, be deemed Common Area for any purposes hereunder. 14.2 In the event that the Inside Common Area is not separately demised, either because ACG elects not to initially demise the Inside Common Area or because ACG elects (which it shall be entitled to do in its sole discretion) to remove any demising wall in the Inside Common Area, then under such circumstances any and all costs and expenses relative to the maintenance and operation of the Inside Common Area shall be deemed to be Common Area Expenses for all purposes under this Declaration, and such Inside Common Areas shall be maintained, operated, and governed by tine other provisions of this Declaration relating to Common Area generally. In such event, expenses relative to the Inside Common Area shall be allocated among the Owners of the existing building as modified from time to time in a manner consistent with the provisions of Section. 5.5 hereof: 14.3 Not)Nithst.anding the provisions of Section 3.2 or any other provision of this Declaration, ACG shall at all times have the right to make such changes to the Inside Common Area as it, in its sole discretion, may elect, provided that at all times the City shall have suitable access through the Inside Common Areas to the balance of the (outside) Common Area, IN WITNESS WEEREOF, this Declaration is executed as of the clay and year first above _22_ c:vi�utns��s w� 3(11U0 written. "ACG" ACG - Kalispell Investors, LLC, a Montana limited liability company By its manager: ACG - Kalispell Manager, LLC, a Montana limited liability company By its manager: American Capital Group, LLC, a California limited liability company RIP "City„ The City of Kalispell, Montana, a municipal corporation By: The Flathead County Economic Development Auftritu a hncly olitic -23- c^,��auas��5s.w�d ?f t i 1po STATE OF _ 1./rt,4I ) ) ss. COUNTY OF ) On # , before me, � , a Notary Public in and for said state, personally appeared ik k • S's , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official sea]. Ti, CORDERQ Comm. # 1159958 in ♦ NOTARY PUBLIC-CALIFORTA ,, Santa Barbara County MA �..•..my Lamm. Expiiss Ost.39�01-1 Notary Public in and for said State STATE OF ss. COUNTY OF On _� 4' , before me, C 6 i , a Notary Public in and for said state, personally appeared �i , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal.' &I Id Pu lic and for said State -24- 2/1 IM STATE OF �� ) ss. COUNTY OF ) On _ ajc .a , before me, , a Notary Public in and for said state, personally appeared.,, , Personalty known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. 25 r otary Puy ie in and for said State Tract 1: A. portion of Gateway West Addition No. 34, according to the reap or plat thereof on file and of record in the office of the County Clerk and Recorder of Flathead County, Montana, described as follows: That portion of the V2 of Section 12, Township 28 North, Range 22 West, NIX-M., Flathead County, Montana, described as follows: Beginning at the intersection of the West line of Kinshetla Avenue with the South line of Two mile Drive; thence along the West lime of Kinshella Avenue South 00°47'42" West a distance of 1405.74 feet to its intersection with the Northwesterly ,right of way lime of U.S. Highway No. 2, which point is on a 1970 foot radius curve concave Southeasterly having a radial bearing of North 21°07'18" West; thence Southwesterly along the curve thru a central angle of 19°13'17" a distance of 660.91 feet to a point; thence coutinuiog along the right of way line South 49°37'25" West a distance of 37.27 feet to the intersection with the West line of SE1/4SEIA of Section 12; thence along the West line North 00°38'31" East a distance of 463.90 feet to the Northwest corner of the SEII4SE114; thence North 00°38'31" East along the West [ine of the NE114SEI/4 of Section 12, to a point 90 feet South of the Northwest corner thereof, which point is the Southwest corner of that certain tract of land acquired by Lena Cavalar in Order Terminating Joint Tenancy, recorded September 1,1966 in Book 482, page 644, under Recorder's Fee No. 6073; thence East along the South line of the Cavalar tract a distance of 252.53 feet, more or less, to the Southeast corner thereof; thence North along the East line of the Cavalar tract a distance of 80 feet to the South line of Two Mile Drive; thence South 89°59'18" East a distance of 340.63 feet, more or less, to the Point of Beginning. Tract 2: That portion of Gateway West Addition No. 34, a portion of which was formerly known as Lewis & Clark, Second Addition , Lot 1, Block 1, City of Kalispell, Flathead County, Montana, described as follows: Beginning at the Northwest corner of Lot 1, Block I, Lewis & Clark. Second Addition; thence North 89°43'00: East 150.00 feet; thence South 0°17'00" East 287.00 feet; thence South 89°43'00" West 153.92 feet; thence North 0°30'00" East 287.03 feet to the Point of Beginning. roJ' i 56' 7 I �� Q. i :37 ------ ------ ,4W wl- EXISTING -V rn..�._....-�._.__._....._._...�.-...._.�...ivrolmr.eo�ly� CD .— ._..�.„_._.... _— �- _.....�..._._. _......... —AfILLE4 TWO MILE DRIVE ..._..� d MD p.: li MSKY SMEET I i� � � r cn IWO fiv" ORIVE L -- -----------IWO MILEORIVE---------- ------ Cz. — - — - — - . . . . . . — - — - — - 17' 1 TTLJT'177� cn co cn r— C'n C3 -Z g7- FF FT - - - - - - - - - - - - El HUS*(YSTREET OPTION #2 M 4-4 m rr CTJ co Ln Co CD TWO WILE DRIVE TWO MILEDRIVIE—. 10. 4, I z lit m - - - - - - - - - - - HUSKY,STREEr OPTION #3 0- ...... --------- ---- rWo Nlj�E DR- - IVE T, p ----------- HUSKY 5-MEET F��-7 — -- — - — - — - — - — --- PQ IP4 L X OPTION #3 OPTION #3 C� 21 —t7 F M K �n JOBS AND USE AGREEMENT between CITY OF KALISPELL, MONTANA and TELETECH: HOLDINGS, INC. and TELETECH SERVICES CORPORATION, doing business in Montana as TeleTech Services Montana Dated as of March 1, 2004 TABLE OF CONTENTS Section 1. Definitions; Rules of Interpretation; Exhibits .............. I.I. Definitions................................................................................................... 2 1.2. 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..... ................. ........................................... 3.1. Lease of Property........................................................................................ 8 3.2. CDBG Grant............................................................................................... 8 3.3. Parking...................................................................................... Section 4. Company's Undertakings with Respect to Project ........................................ 4.1. Lease of Property........................................................................................ 4.2. Permits; Environmental Laws ...................................................... 4.3. Corporate Existence Assumption............................................................... 4.4. Property Tax Obligation; Deficiency Tax Payment ................................... Section 5. Job Provisions — Reduction of Rent............................................................... 5.1. Inducement................................................................................................. 5.2. Evidence of Job Creation; Job Audit.......................................................... 5.3. Insufficient Work Force.............................................................................. Section 6. General Provisions ................................................... 6.1. Agreement to Pay Attorney's Pees and Expenses 6.2. No Additional Waiver Implied by One Waiver.... 6.3. Conflicts of Interest; City's Representatives Not Individually Liable.. .................... .................. 6.4. Rights Cumulative ................................................ 6.5, Term of Agreement; Termination ......................... 8 8 8 9 9 10 10 11 11 ...................................... I ...................................... 12 ...................................... 12 Section 7, Administrative Provisions ........................................... 7.1. Notices................................................................... 7.2. Delegation of Authority ........................................... 7.3. Non-Compete......................................................... 7.4. Binding Effect.......................................................... 7.5. Severability ......... .1.................... .......................... 1 ................................ 12 ............................... 12 .....................1.......... 13 ................................ 13 ................................ 13 ................................ 13 7.6. Amendments, Changes and Modifications................................................. 13 7.7. Further Assurances and Corrective Instruments ......................................... 13 7.8, Execution Counterparts.............................................................................. 13 7.9. Applicable Law........................................................................................... 13 7.10. Captions........................................................................................ 13 Signatures Exhibit 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 JOBS AND USE AGREEMENT THIS JOBS AND USE AGREEMENT, dated as of March 1, 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, doing business in Montana as TeleTech Services Montana (as hereinafter defined, "TSC"). W I T N E S S E T H.- 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 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 "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 March 1, 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, I. L 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. 0A "Authority" means the Flathead County Economic Development Authority or any successor to its functions under the Interlocal Agreement. "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. 3 "Deficiency Tax Payment" means the payment by TSC to the City of an amount equal to the greater ofTSC's actual Property Tax Obligation as defined herein or $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 rata 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. 4 "Lease Execution Date" means March 1, 2004. "Lease Year" shall mean each 12 month period commencing on the Commencement Date described in the Lease; provided that if such Commencement Date is not the first day of a calendar month, the first Lease Year shall include the partial month in which the Commencement Date occurs and the immediately succeeding 12 calendar months. "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, 1997, 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. "Part 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 Ievied 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 hour, 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 340I of the Internal Revenue Code of 1954, as amended and applicable on January 1, 1983, 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 farm of the Option to Purchase; Exhibit C: the Parking Plan; R Exhibit D: a form of the Company's Job Audit Certificate; and Exhibit E: Section 5.3 Certification Section 2. Representations. 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 Soectron 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, limited 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 follows: (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. 7 (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) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms 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. (e) 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. (f) 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 Lease in the form attached hereto as Exhibit A (which is incorporated by reference and made a part hereof). 3.2. CDBG Funds. Upon request of the Company, the City will apply for a grant from the Community Development Block Grant Program (the "CDBG Program") administered by the Department of Commerce for workforce training (the "CDBG Grant"). The City agrees to submit the application on the earliest possible date following the Company's request, 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. Within sixty (60) days following receipt of written notice from TSC that additional parking is required ("TSC's Parking Notice"), the City will construct and complete the additional spaces, subject to reasonable delays resulting from weather conditions and force majeure events, as more particularly described in the Lease; provided that, notwithstanding the foregoing, the City will not be in default of its obligation to complete the additional parking within 60 days following receipt of TSC's Parking Notice so long as (a) the City is diligently pursuing completion of the additional parking and (b) American Capital agrees that TSC may use 9 a total of 500 parking spaces at the Shopping Center, commencing no later than the 61" day following the City's receipt of TSC's Parking Notice and continuing until the additional parking is complete. Section 4. TeleTech Companies' Undertakings with Respect to Project. 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. Assi , ment. The Company and TSC each agree that they will not assign their respective obligations hereunder to another corporation or entity except under the same criteria, conditions and terms as apply under Sections 18.1, 18,.2 and 18.5 of the Lease with respect to an assignment of the Lease. 4.4. Pro ert Tax Obli ation• 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 15-24-2304, 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 (1) TSC's actual Property Tax Obligation; or (ii) the difference between 10 $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 1 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 of TSC's Property Tax Obligation based on the actual Real and Personal Property taxes billed during the calendar year based on values established January 1. 1f 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 February 15, 2005. 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.L 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 (as defined in the Lease) 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 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 125 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 11 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; (3) During the third 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 (1) at least 425 individuals, 80% of whom are FTEs, at the Property at the expiration of such third Lease Year or (ii) an average of 425 individuals, 80% of whom are FTEs, at the Property during such third Lease Year. If the TeleTech 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 the third Lease Year or (y) an average of more than 200 FTEs but less than 340 FTEs during the third Lease Year, TSC shall 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). (4) Commencing on the first day of the fourth 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 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 an average of 425 individuals, 80% of whom are FTEs, at the Property during such Lease Year. Commencing with the fourth Lease Year and continuing for each consecutive Lease Year thereafter, if the TeleTech Companies do not employ an average of 425 individuals at the Property during a Lease Year, 80% of whom are FTEs but they employ 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 average number of FTEs employed. If at the end of any Lease Year, commencing with the fourth Lease Year, the TeleTech Companies 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). 12 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. A reement to Pay Attorne s' Fees and Ex enses. 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 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,.Cit '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 13 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 term 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 snail 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 Kalispell, MT 59901 Attn. Executive Director If to the Company or TSC: c/o TeleTech 9197 South Peoria Street Englewood, Colorado 80112 Attn: Vice President Real Estate & Facilities 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. T2. 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 14 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. BindingEffect. ffect. 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 T6. Amendments,.Changes 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. T8. Executi.on.Counteil2arts. 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. 79. 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. 15 TNT WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the I st day of March, 2004. (SEAL) CITY OF KALISPELL, MONTANA Attest: Mayor City Manager Clerk of Council (Signature page to Jobs and Use Agreement, dated as of March 1, 2004) 16 TELE TECH HOLDINGS, INC. By Its: Dennis Lacey, Chief Financial Officer TELETECH SERVICES CORPORATION By: Dennis Lacey, Chief Financial Officer (Signature page to Jobs and Use Agreement, dated as of March 1, 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 March 1, 2004) 18 EXHIBIT A FORM OF SHOPPING CENTER LEASE EXHIBIT B OPTION TO PURCHASE REAL PROPERTY In consideration of Five Thousand Dollars ($5,000,00) paid to ACG — Kalispell Investors, LLC, a Montana 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: 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 southerly and parallel with the west boundary line of Glenwood Drive a distance of 150 feet, thence easterly and parallel with the south boundary line of Two Mile Drive a distance of 340 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 1.8 acres of land (the "Property"). PRICE AND TERMS OF PAYMENT: The purchase price of the Property shall be $4,00 per square foot. The Property consists of approximately 108,900 square feet, 2.5 acres (subject to confirmation by survey), to which the option payment of FIVE THOUSAND DOLLARS ($5,000.00) shall be applied, leaving a balance to be paid 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 from the dated date hereof, unless otherwise extended by the SELLER. To exercise this option, BUYER shall give notice thereof to SELLER at the address stated herein 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 60 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 Grant DEED merchantable title to the property subject only to the limitations hereinabove set forth. SELLER'S REPRESENTATIONS: BUYER acknowledges that it is purchasing the Property in its "as is", "where is" condition without representation or warranty from SELLER. BUYER'S COVENANT: BUYER hereby makes the covenant, for the benefit of the SELLER and its successors and assigns, that the Property purchased shall be used only for parking by the occupants of BUYER'S building at Gateway West. EXPENSES: BUYER shall be responsible for all costs associated with the exercise of the option, the creation of the legally distinct and conveyable parcel and the sale of the Property including but not limited to: costs of survey, filing of plat, preparation and recording of the Grant 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. RECORDING OF DOCUMENT: BUYER and SELLER covenant and agree that this Option to Purchase Real Property shall not be recorded, but shall be held as duplicate originals by each party. 2 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 party at the address appearing below, or such future address as may be designated in writing. Mailed notice shall be deemed given at the time of mailing. ADDRESSES: To SELLER: ACG — Kalispell Investors, LLC, Attn: Hugh M. Boss, 115 South LaCumbre Lane, Suite 302, Santa Barbara, California 93105. To BUYER: City of Kalispell, 312 — I" Avenue East, Kalispell, Montana 59903, and Flathead Economic Development Authority, c/o Jobs Now, 21.5 East Idaho, Kalispell, Montana 59901. 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 1st day of March, 2004_ SELLER BUYER 3 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. !SEAL! STATE OF CALIFORNIA ) County of Notary Public, State of Montana Residing in My commission expires: 20_ . ss. On this day of , in the year 2004, before the undersigned Notary Public for the State of California, personally appeared , the of ACG - Kalispell Investors, LLC, known to me 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. Notary Public, State of California {SEAL} Residing in My commission expires: , 20_ 91 EXHIBIT C e: 3 7 e t io n ...■w. «...� � ter/ i MOB io n ...■w. «...� � ter/ i MOB Mt�oM \\` EXHIBIT D JOB AUDIT CERTIFICATE Tele Tech Holdings, Inc. (the "Company") by and through its , hereby certifies with respect to the .lobs and Use Agreement by and among the Company, TeleTech Services Corporation and the City of Kalispell, Montana (the "City"), dated as of March 1, 2004 (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 1 (the "Schedule") shall have the meanings as defined in the Agreement. 3) For the Audit Period described in the Schedule, the minimum hourly wage for a Full Time CSR working at the Property was not less than the Approved Minimum Hourly Wage. 4) All Full Time CSRs have been offered Benefits. 5) The Benefits which are offered to Full Time Employees consist of all benefits required under applicable law and the following items and are collectively valued at not less than 20% of the Approved Minimum Hourly Wage: See Attached Schedule 2 Dated this day of , 20— TELETECH HOLDINGS, INC. By Its D-1 SCHEDULE 1 Personnel and Wage Data: Lease Year: From to ["Audit Date"] Total number of Full Time Employees at the Property paid not less than the Approved Minimum Hourly Wage and offered Benefits as of Audit Date: [Information to be provided during the first three Lease Years only] For the entire Lease Year ending on the Audit Date, the average number of employees at the Property: Of the total number of employees disclosed in the immediately preceding paragraph, the following number were Full Time Employees: or %. D-2 SCHEDULE 2 TeleTech will provide current Benefit information,gontaining details substantially similar to those contained in the following description of current Benefits offered to Full Time CSRs: 2004 Employee Benefits Summary Agents (Part -tune employees are eligible for benefits denoted by *) Benefit ELIGIBILITY EIVIPLOYEE"COST BENEFIT DETAILS The first of the month The employee portion of Coverage is available through our "Choice Plus" plans or an IVleiiiCal following 120 days of total plan cost is based on HMO in some locations, May elect a tier of employee only, employment. plan and tier chosen. employee plus children, employee plus spouse, or employee plus family. Employee contributions may be deducted on a pre-tax basis. The first of the month The employee portion of Choice between a DPO plan or a Pro -paid plan. May elect a following 120 days of total plan cost is based on ' tier of employee only, employee plus one, or employee plus DENTAL employment plan and tier chosen. two or more dependents. Employee contributions may be deducted on a pre-tax basis. (Pre -paid plan not available in al areas) The first of the month The employee portion of following 120 days is based Coverage is available through Vision Service Plan (YSP). Ma! isfoN of total plan cost on elect a tier of employee only, employee plus one, or employee employment. plan and tier chosen. plus two or more dependents. Employee contributions may be deducted on a pre-tax basis, BASIC L1FE AN' d AceiQEMCAL The first of the month The Company pays for the Eligible employees are covered by life and AD&D insurance DEATH AND, DISMEMBER.Re.NT . following 120 days of full cost of this coverage. both equal to annual salary. Minimum level of coverage for (ADA D) lksuRANCE employment. each insurance is $15,000 per employee; maximum is $11a,orfi. The first of the month Short -Term Disability Benefits will be paid at 60% of your average weekly earnings SHOR . r TERM" ❑ISASILITY following 120 days of insurance is available to you for the first 12 weeks of disability payable on the a=" day of employment. on a voluntary basis. illness or accident. TUITION REIMBGRS..MENT Upon completion of six The Company pays far the Up to $1,000 per calendar year for agents. months of employment. full cost of this coverage. ' The first of the month r Economical group term Life insurance is available to employee, spouse and child(ren). SUPPLEMENTAL:LIFE AND following 120 days of insurance rates based on Employee may be covered for life amounts from $20,000 to AI3&[3"INSURANCE FOF employment. insured's age, coverage $500,000. Spouse may be covered for life amounts from ( amount, and smoker/ non- $10,000 to $500,000. AD&D maximum is $250,000 for either. EMPLOYEE AND smoker status. Available in Proof of insurability may be required for employee and spouse DEPENDENT'S increments of $10,000. coverage. Children) may be covered by life insurance for $10,000. An employee is eligible to 1 % to 15% of salary to a i The 401(k) plan allows employee to reduce taxable income enter the 401(k) plan the first maximum of $13,000 E while saving for tomorrow. Company matching contributions PROFIT of the month foflowing the ; (indexed) per year. Highly ? wiff be determined on an annual basis dependent upon the 401(k)SHARING completion of 6 months of i compensated employees company meeting Board approved financial targets. PLAN' employment and attainment i may be limited to a lower of age 21. ! percentage due to annual discrimination testing, j QEPEN.DENT DARE The first of the month Based on amount of Contribute up to $5,000 annually on a pre-tax basis to be following 120 days of selected pre-tax deduction. reimbursed for qualifying dependent care expenses with non - REIMBURSEMENT PLAN employment. taxed dollars. Upon completion of 90 days The Company pays for the FT (PT) of employment. (No full cost of this benefit. Years 1-2: up to 40 (20) hours per year vacation is accrued during Years 3-4: up to 80 (40) hours per year VACATION:PAY* first 90 days of employment; I Years 5-9: up to 120 (60) hours per year on the 91' day, 9.24 hours Years 10}: up to 160 (80) hours per year (FT) or 4.62 hours (PT) are granted.) D-3 Upon completion of 90 The Company pays for the New Years Day Thanksgiving Day days of employment. full cost of this benefit. Memorial Day Day after Thanksgiving HOLDAY RAYS independence Day Christmas Day Labor Day One Personal Day Upon completion of 90 The Company pays for the FT: 1,846 hours per pay period, up to 48 hours per calendar days of employment full cast of this benefit. year. Maximum carry-over = 144 hours. PT: 0.923 hours per SACK L.A17E (accrual begins on the first pay period, up to 24 hours per calendar year. Maximum day of employment). carry over = 72 hours. ME EXHIBIT E 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 March 1, 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 have CSRs working at the Property. The TeleTech Companies need additional CSRs to meet their needs at the Property. 3) The TeleTech Companies have not been able 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 US. 4) Set forth on Annex I to this Certificate is a description of the recruiting efforts made by the TeleTech Companies during the past b months to meet the hiring needs of the TeleTech Companies. To the extent applicable, the Company will describe advertising, posting, open houses, etc. and indicate in reasonable detail the responses to received. By way of example, the Company would disclose that an ad was placed in ; that it ran for the period to _ and that the Company received responses, of which were qualified and hired.] 5) Pursuant to the Agreement, the Company hereby provides notice of its intention to terminate the Agreement and the Lease on , 20_, which date is not less than six months from the date hereof Dated this day of , 200 TELETECH HOLDINGS, INC. By Its E-1