Lessee’s Obligations: Lessee shall, at Lessee’s sole cost and expense, maintain the Rental Residence in a clean, neat and sanitary condition and shall keep the Rental Residence and every part of the Rental Residence in good condition and repair in compliance with any covenants or demands of the homeowners association.  Lessee waives all rights to make repairs at the expense of the Lessor as provided by law, statute, or ordinance now or subsequently in effect.  All of Lessee’s Improvements are the property of the Lessor.  Lessor has no obligation to construct, remodel, improve, repair; with the exception of mechanical residence systems such as plumbing, electrical, air conditioning or residence damage caused by the malfunction of these systems, decorate or paint the Rental Residence or any improvement on or part of the Rental Residence. Lessee shall pay for the cost of all repairs to the Rental Residence not required to be made by Lessor and shall be responsible for any decorating, remodeling, alteration and painting during the Lease Term. Lessee shall pay for any repairs to the Rental Residence made necessary by any negligence or carelessness of Lessee, its contractors, or invitees.  Lessee shall comply with any and all provisions of the homeowners’ or community association property maintenance requirements.  Lessee is responsible for any association fines or financial consequences associated with violations of the association covenants and/or restrictions.  Lessor will be held financially responsible for any homeowners’ or community association assessments.

Lessee Improvements:   Lessee agrees to Rental Residence in “AS-IS” condition.  Lessee shall provide Lessor with design plan, products, licensed contractor, and all information relative to all improvements for Lessor’s approval before improvements are made.  All Lessee improvements must conform to any applicable homeowners’ association or community association guidelines and approval/acceptance requirements.

Liability and Casualty Insurance

Liability Insurance: Lessee is encouraged to maintain a policy of personal liability insurance in the event a guest, contractor or trespasser sustains a personal or physical injury while on the property.

Casualty Insurance: Lessee shall, during the Lease Term, keep in full force and effect, a policy or policies of so called “All Risk” or “all Peril” insurance, including coverage for vandalism or malicious mischief, insuring the Lessee Improvements, with coverage in an amount equal to the replacement cost.

Insurance Requirements: Lessor will have no obligation to carry insurance on any alterations or on Lessee’s personal property. Each policy of insurance required under Article 8 shall : (i) be in a form, and written by an insurer, reasonably acceptable to Lessor, (ii) be maintained at Lessee’s sole cost and expense, and (iii) require at least thirty (30) days’ written notice to Lessor prior to any cancellation, non-initial or modification of insurance coverage.  All insurance companies issuing such policies shall be admitted carriers licensed to do business in the State of Arizona. Any deductible amount under such insurance shall not exceed $1,000. Lessee shall provide to Lessor, upon request, evidence that the insurance required to be carried by Lessee pursuant to this Section, including any endorsement affecting the additional insured status, is in full force and effect and that premiums therefore have been paid.  All insurance policies required pursuant to this Article 8 shall be written as primary policies, not contributing with or in excess of any coverage which Lessor may carry. Lessee shall procure and maintain all policies entirely at its own expense.  Lessee shall not do or permit to be done anything which shall invalidate the insurance policies maintained by Lessor or the insurance policies required pursuant to this Article 8 or the coverage under such policies.

Co-Insurance: If on account of the failure of Lessee to comply with the provisions of this Article 8, Lessor is deemed co-insurer by its insurance carrier, then any loss or damage which Lessor shall sustain by reason of such failure shall be borne by Lessee, and shall be paid by Lessee within ten (10) days after receipt of a bill for such loss or damage.

Adequacy of Insurance: Lessor makes no representation or warranty to Lessee that the amount of insurance to be carried by Lessee under the terms of this Lease is adequate to fully protect Lessee’s interests. If Lessee believes that the amount of any such insurance is insufficient, Lessee is encouraged to obtain, at its sole cost and expense, such additional insurance as Lessee may deem desirable or adequate. Lessee acknowledges that Lessor shall not, by the fact of approving, disapproving, waiving, accepting, or obtaining any insurance, incur any liability for or with respect to the amount of insurance carried, the form of legal sufficiency of such insurance, the solvency of any insurance companies or the payment or defense of any lawsuit in connection with such insurance coverage, and Lessee hereby expressly assumes full responsibility for and all liability, if any, with respect to, Lessee’s insurance coverage.

Updating Coverage: Lessee shall increase the amounts of insurance as becomes personally required.  Any limits set forth in this Lease on the amount or type of coverage required by Lessee’s insurance shall not limit the liability of Lessee under this Lease.

Certificates of Insurance: Lessee shall at Lessor’s request provide to Lessor a certified copy of each insurance policy required to be in force at any time pursuant to the requirements of this Lease or its Exhibits.

Lessor’s Insurance: During the Term, Lessor shall maintain in effect insurance on the Premises with responsible insurers, a policy of fire, extended coverage, vandalism, and malicious mischief insurance in such amount as Lessor deems appropriate in Lessor’s sole and absolute discretion, and in compliance with the Lessor’s mortgage/finance company(s) requirements.  Other insurance may include by way of illustration, but not of limitation, loss of rental income insurance.

Lessor’s Liability: The term “Lessor”, as used in this Lease, shall mean only the owner or owners of the Rental Residence at the time in question. Notwithstanding any other term or provision of this Lease, the liability of Lessor for any of its obligations under this Lease shall be limited solely to Lessor’s interest in the Rental Residence.  No personal liability shall at any time be asserted or enforceable against any other assets of Lessor or against Lessor in its individual capacity or against Lessor’s partners, members, directors, officers, managers, agents, or representatives on account of any of Lessor’s obligations or actions under this Lease.

9. Lessor’s Right to Perform Lessee Obligations

All covenants and agreements to be performed by Lessee under any of the terms of this Lease shall be performed by Lessee at Lessee’s sole cost and expense and without any abatement of Monthly Basic Rent or Additional Rent. If Lessee shall fail to pay any sum of money other than Monthly Basic Rent required to be paid by it under this Lease, or shall fail to perform any other act on its part to be performed under this Lease, and such failure shall continue for ten (10) business days after notice of such failure by Lessor (or such shorter period of time as may be reasonable in the event of an emergency) Lessor may (but shall not be obligated to do so) without waiving or releasing Lessee from any of Lessee’s obligations, make any such payment or perform any such act on behalf of Lessee. All sums paid by Lessor and all necessary incidental costs, together with interest at the greater of (a) eighteen percent (18%) per annum or (b) the rate of interest per annum publicly announced, quoted or published, from time to time, by Bank of America, at its Phoenix, Arizona office as its “reference rate” plus six (6) percentage points, from the date of such payment by Lessor until reimbursement in full by Lessee (the “Default Rate”), shall be payable to Lessor as Additional Rent; provided, however, in no event shall the Default Rate exceed the maximum rate (if any) permitted by applicable law.

10. Default and Remedies

Event of Default: If Lessee shall fail to pay any Additional Rent or any other sum required to be paid by Lessee under this Lease, and such failure shall continue for ten (10) days, or if Lessee shall fail to perform any of the other covenants or conditions which Lessee is required to observe and perform and such failure shall continue for fifteen (15) days (or such shorter period of time as may be specified by Lessor in the event of an emergency) after written notice of such failure by Lessor to Lessee, or if Lessee makes or has made any warranty, representation or statement to Lessor in connection with this Lease which is or was materially false or misleading when made or furnished, or if Lessee shall commit an Event of Default under any other agreement between Lessor and Lessee, or if the interest of Lessee in this Lease or any of Lessee’s personal property located on the Rental Residence shall be levied upon under execution or other legal process, or if any petition shall be filed by or against Lessee or any Guarantor to declare Lessee or any Guarantor as bankrupt or to delay, reduce or modify Lessee’s or any Guarantor’s debts or obligations, or if any petition shall be filed or other action taken to reorganize or modify Lessee’s or Guarantor’s capital structure, or if Lessee or any Guarantor shall be declared insolvent according to law, or if any assignment of Lessee’s or any Guarantor’s property shall be made for the benefit of creditors, or if a receiver or trustee is appointed for Lessee or any Guarantor or all or any of their respective property, or if Lessee or any Guarantor shall file a voluntary petition pursuant to the Bankruptcy Code or any successor to the Bankruptcy Code or if an involuntary petition be filed against Lessee or any Guarantor pursuant to the Bankruptcy Code or any successor to the Bankruptcy Code, then Lessee shall have committed a material breach and default under this Lease (an “Event of Default”).

Remedies: Upon the occurrence of an Event of Default under this Lease by Lessee, Lessor may, without prejudice to any other rights and remedies available to a Lessor at law, in equity or by statute, Lessor may exercise one or more of the following remedies, all of which shall be construed and held to be cumulative and non-exclusive: (a) Terminate this Lease and re-enter and take possession of the Rental Residence, in which event, Lessor is authorized to make such repairs, redecorating, refurbishments or improvements of the Rental Residence as may be necessary in the reasonable opinion of the Lessor acting in good faith for the purposes of reletting the Lease Premises and the costs and expenses incurred in respect of such repairs, redecorating and refurbishments and the expenses of such reletting (including brokerage commissions) shall be paid by Lessee to Lessor within ten (10) days after receipt of Lessor’s statement; or (b) Without terminating this Lease, re-enter and take possession of the Lease Premises; or (c) Without such re-entry, recover possession of the Rental Residence in the manner prescribed by any statute relating to summary process, and any and all notices to quit, or other formalities of any nature to which Lessee may be entitled, are hereby specifically waived to the extent permitted by law; or (d) Without terminating this Lease, Lessor may relet the Rental Residence as Lessor may see fit without thereby avoiding or terminating this Lease, and for the purposes of such reletting, Lessor is authorized to make such repairs, redecorating, refurbishments or improvements to the Rental Residence as may be necessary in the reasonable opinion of Lessor acting in good faith for the purpose of such reletting, and if a sufficient sum is not realized from such reletting (after payment of all costs and expenses of such repairs, redecorating and refurbishments and expenses of such reletting (including brokerage commissions) and the collection of rent accruing there from) including Additional Rent payable under this Lease, then Lessee shall pay such deficiency (5) days after receipt of Lessor’s statement.  Lessor shall not by re-entry or any other act, be deemed to have terminated this Lease, or the liability of Lessee for performance of the covenants under this Lease, unless Lessor notifies Lessee in writing that Lessor has so elected to terminate this Lease. After the occurrence of an Event of Default, the acceptance of Additional Rent, or the failure to re-enter by Lessor shall not be a waiver of Lessor’s right to subsequently terminate this Lease and exercise any other rights and remedies available to it, and Lessor may re-enter and take possession of the Rental Residence as if Additional Rent had been accepted after the occurrence of an Event of Default. Upon an Event of Default, Lessee shall also pay to Lessor all costs and expenses incurred by Lessor, including court costs and attorney’s fees, in retaking or otherwise obtaining possession of the Lease Premises, removing and storing all personal property on the Lease Premises and otherwise enforcing any of Lessor’s rights, remedies or recourses arising as a result of an Event of Default.

Remedy Upon Termination: Notwithstanding any other provision contained in this Lease, in the event Lessee or successors or assigns shall become insolvent, bankrupt, or make an assignment for the benefit of creditors, or if it or their interests hereunder shall be levied upon or sold under execution or other legal process, Lessor shall have the election to either continue or terminate the Lease, provided that in the event the lease is terminated, in addition to the balance due Lessor by Lessee at that time the lease is terminated, which balance shall include Additional Rent, Late Fees, and Finance Charges, the Lessor shall also be entitled to damages or indemnity or injury resulting from the rejection or abandonment of the unexpired term of the Lease and shall be paid the full Additional Rent together with any other monies due Lessor under the terms of this agreement.  Lessee shall be responsible to reimburse Lessor for all costs involved in advertising and preparing the premises for a new lease.

Lessor Default: In the event Lessor should neglect or fail to perform or observe any of the covenants, provisions or conditions contained in this Lease on its part to be performed or observed, and such failure continues for thirty (30) days after written notice of default (or if more than thirty (30) days shall be required because of  the nature of the default, if Lessor shall fail to commence the curing of such default within such thirty (30) day period and proceed diligently to completion), then Lessor shall be responsible to Lessee for any actual damages sustained by Lessee as a result of Lessor’s breach, but not special or consequential damages. Notwithstanding any other provisions in this Lease, any claim which Lessee may have against Lessor for failure to perform or observe any of the covenants, provisions or conditions contained in this Lease shall be deemed waived unless such claim is asserted by written notice of such claim to Lessor within ten (10) days of commencement of the alleged default or of occurrence of the cause of action and unless suit be brought upon such claim within six (6) months subsequent to the occurrence of such cause of action. Lessee shall have no right to terminate this Lease, except as expressly provided elsewhere in this lease.

Indemnification and Exculpation

Indemnification: Lessee shall indemnify, protect, defend and hold Lessor harmless for, from and against all claims, damages, losses, costs, liens, encumbrances, liabilities and expenses, including reasonable attorneys’, accountants’ and investigators’ fees and court costs (collectively, the “Claims”), however cause, arising in whole or in part from Lessee’s use of all or any part of the Rental Residence or from any activity, work or thing done, permitted or suffered by Lessee or by any invitee, servant, agent, or contractor of Lessee in the Rental Residence, and shall further indemnify, protect, defend and hold Lessor harmless for, from and against all Claims arising in whole or in part from any breach or default in the performance of any obligation on Lessee’s part to be performed under the terms of this Lease or arising in whole or in part from any act, neglect, fault or omission by Lessee or by any invitee, servant, agent, employee or sub Lessee of Lessee anywhere in the Rental Residence. In case any action or proceeding is brought against Lessor to which this indemnification shall be applicable, Lessee shall pay all Claims resulting there from and shall defend such action or proceeding, if Lessor shall so request, at Lessee’s sole cost and expense, by counsel reasonably satisfactory to Lessor. The obligations of Lessee under this Article shall survive the expiration or earlier termination of this Lease.

Exculpation: Lessee, as a material part of the consideration to Lessor, hereby assumes all risk of damage to property, injury, and death to persons and all claims of any other nature resulting from Lessee’s use of all or any part of the Rental Residence. Neither Lessor nor its agents or employees shall be liable for any damaged property of Lessee entrusted to any employee or agent of Lessor or for loss of or damage to any property of Lessee by theft or otherwise. Lessor shall not be liable for any injury or damage to persons or property resulting from any cause, including, but not limited to, fire, explosion, electricity, sewage, noise, water or rain which may leak from any part of the Rental Residence, or from the pipes, appliances or plumbing works in the Rental Residence, or from the roof of any structure on the Property, or from the streets or sub surfaces on or adjacent to the Property, or from any other place or resulting from dampness or any other causes whatsoever. Neither Lessor nor its employees or agents shall be liable for any defects in the Rental Residence, nor shall Lessor be liable for the negligence or misconduct, including, but not limited to, criminal acts, by maintenance or other personnel or contractors serving the Rental Residence or other third parties. All property of Lessee kept or stored on the Property shall be so kept or stored at the risk of Lessee only, and Lessee shall indemnify, defend and hold Lessor harmless for, from and against any Claims arising out of damage to the same, including subrogation claims by Lessee’s insurance carriers. None of the events or conditions set forth in this Article shall be deemed a constructive or actual eviction or result in a termination of this Lease, nor shall Lessee be entitled to any abatement or reduction of Monthly Basic Rent or Additional Rent by reason of such events or condition. Lessee shall give prompt notice to Lessor with respect to any defects, fires or accidents that Lessee observes in the Rental Residence.

Entry By Lessor

Lessor reserves and shall at any and all times have, upon twenty four (24) hours prior written notice (except in the event of an emergency), the right to enter the Rental Residence, to inspect the same. Lessor shall at all times have the right to use any and all means which Lessor may deem proper to open such doors in an emergency in order to obtain entry to the Rental Residence, and any entry to the Rental Residence obtained by Lessor by any means or otherwise shall not under any circumstances be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Rental Residence or an eviction of Lessee from all or any portion of the Rental Residence.

Assignment and Subletting

Assignment and Subletting Prohibited: Lessee shall not transfer or assign this Lease or any right or interest under this Lease, or sublet the Rental Residence or any part of the Rental Residence without first obtaining Lessor’s prior written consent, which consent Lessor shall not unreasonably withhold.

Lessee shall keep the Rental Residence free and clear of all mechanic’s and materialmen’s liens. If, because of any act or omission (or alleged act or omission) of Lessee, any mechanics’, materialmen’s or other liens, change or order for the payment of money shall be filed or recorded against the Rental Residence or the Property or against any other property of Lessor (irrespective and/or regardless of whether such lien, charge or order is valid or enforceable as such), Lessee shall, at its own expense, cause the same to be cancelled or discharged of record within thirty (30) days after Lessee shall have received written notice of the filing of such lien, or Lessee may, within such thirty (30) day period, furnish to Lessor, a bond pursuant to A.R.S. * 33-1004 (or any successor statute) and satisfactory to Lessor and Superior Mortgagees against the lien, charge or order, in which case Lessee shall have the right to contest, in good faith, the validity or amount of such lien.

Attorneys’ Fees

Lessee shall pay to Lessor all amounts for costs (including reasonable attorneys’ fees) incurred by Lessor in connection with any breach or default by Lessee under this Lease or incurred in order to enforce or interpret the terms or provisions of this Lease. Such amounts shall be payable within ten (10) business days after receipt by Lessee of Lessor’s statement. In addition, if any action shall be instituted by either of the parties hereto for the enforcement or interpretation of any of their respective rights or remedies in or under this Lease, the prevailing party shall be entitled to recover from the losing party all costs incurred by the prevailing party in such action and any appeal there from, including reasonable attorneys’ fees to be fixed by the court.

Notices

Any notice or communication given under the terms of this Lease shall be in writing and shall be delivered in person, sent by any public or private express mail delivery service or deposited with the United States Postal Service or a successor agency, certified or registered mail, return receipt requested, postage pre-paid, addressed as set forth in the Basic Provisions, or at such other address as either party may from time to time designate by notice under this Article.  The parties agree the address of the Rental Residence is where notices from Lessor to Lessee are to be sent, unless Lessee, in writing, designates an alternate address.