Sublease Agreement Between FRANKLIN DEVELOPMENT CORPORATION as Sublandlord and FRANKLIN COVEY PRODUCTS, LLC as Tenant
Exhibit
10.5
Between
FRANKLIN
DEVELOPMENT CORPORATION
as
Sublandlord
and
XXXXXXXX
XXXXX PRODUCTS, LLC
as
Tenant
Table of Contents
|
Page
|
|||
|
1
|
|||
|
1
|
|||
|
1
|
|||
|
1
|
|||
|
1
|
|||
|
2
|
|||
|
2
|
|||
|
2
|
|||
|
2
|
|||
|
3
|
|||
|
3
|
|||
|
3
|
|||
|
3
|
|||
|
3
|
|||
|
3
|
|||
|
3
|
|||
|
3
|
|||
|
4
|
|||
|
4
|
|||
|
4
|
|||
|
4
|
|||
|
4
|
|||
|
5
|
|||
|
6
|
|||
|
6
|
|||
|
7
|
|||
|
7
|
|||
|
7
|
|||
|
7
|
|||
|
7
|
|||
|
8
|
|||
|
8
|
|||
|
8
|
|||
|
9
|
|||
|
9
|
|||
|
9
|
|||
|
10
|
|||
|
10
|
|||
|
10
|
|||
|
10
|
|||
|
11
|
|||
|
11
|
|||
|
11
|
|||
|
12
|
|||
|
12
|
|||
|
13
|
|||
|
13
|
|||
|
13
|
|||
|
14
|
|||
|
15
|
|||
|
15
|
|||
|
15
|
|||
|
15
|
|||
|
16
|
|||
|
16
|
|||
|
16
|
|||
|
17
|
|||
|
18
|
|||
|
18
|
|||
|
18
|
|||
|
18
|
|||
|
18
|
|||
|
18
|
|||
|
18
|
|||
|
19
|
|||
|
20
|
|||
|
20
|
|||
|
21
|
|||
|
21
|
|||
|
|
|
|
|
|
21
|
|||
|
21
|
|||
|
22
|
|||
|
22
|
|||
|
22
|
|||
|
22
|
|||
|
23
|
|||
|
23
|
|||
|
23
|
|||
|
23
|
|||
|
24
|
|||
|
24
|
|||
|
24
|
|||
|
25
|
|||
|
25
|
|||
|
25
|
|||
|
26
|
|||
|
26
|
|||
|
26
|
|||
|
26
|
|||
|
27
|
|||
|
27
|
|||
|
27
|
|||
|
27
|
|||
|
27
|
|||
|
27
|
|||
|
27
|
|||
|
27
|
|||
|
27
|
|||
|
28
|
|||
|
28
|
|||
|
28
|
|||
|
28
|
|||
|
28
|
|||
|
28
|
|||
|
28
|
SCHEDULE OF
EXHIBITS
EXHIBIT
A OUTLINE OF
THE PREMISES
EXHIBIT
B RULES
AND REGULATIONS
EXHIBIT
C TENANT
IMPROVEMENT ALLOWANCE
EXHIBIT
D LEASE
EXTENSION ADDENDUM
EXHIBIT
E MASTER
LEASE
THIS
SUBLEASE AGREEMENT (the “Lease” or “Agreement”) is entered into as of
the 7th day of July, 2008, to be effective as of July 5, 2008, 11:59 P.M.,
Mountain Standard Time, by and between FRANKLIN DEVELOPMENT CORPORATION, a Utah
corporation (“Sublandlord”), and XXXXXXXX XXXXX PRODUCTS, a Utah limited
liability company (“Tenant”).
Sublandlord
is the tenant under that certain Lease Agreement by and between Sublandlord and
Franklin SaltLake, LLC, a Utah limited liability company (“Prime Landlord”)
dated June 12, 2005 (the “Master Lease”). Pursuant to the rights
granted to Sublandlord under the Master Lease, Sublandlord hereby leases to
Tenant and Tenant hereby rents from Sublandlord the Premises (as defined in
Section 1.2). This Lease has been executed and delivered pursuant to
the Master Asset Purchase Agreement dated May 22, 2008 among Xxxxxxxx Xxxxx
Canada, Ltd., a Canadian corporation, Xxxxxxxx Xxxxx de Mexico S. de
X.X. de C.V., a Mexican company, Xxxxxxxx Xxxxx Europe, Ltd., a UK registered
company, Xxxxxxxx Xxxxx Client Sales, Inc., a Utah corporation, Xxxxxxxx Xxxxx
Catalog Sales, Inc., a Utah corporation, Xxxxxxxx Xxxxx Product Sales, Inc., a
Utah corporation, and Xxxxxxxx Xxxxx Printing, Inc., a Utah corporation
(collectively, the “Selling Parties”), and Tenant, as amended (the “Purchase
Agreement”). Sublandlord is a related entity to the Selling Parties
and will receive a real and material benefit as a result of this
Sublease. Capitalized terms used but not defined herein have the
meanings ascribed to them in the Purchase Agreement. Intending to be
legally bound under this Lease and in consideration of the agreements herein
made, and other good and valuable consideration, Sublandlord and Tenant hereby
agree as follows:
ARTICLE I
BASIC LEASE PROVISIONS AND
DEFINITIONS
1.1 Building and the
Properties. The premises leased hereunder are comprised of
portions of the following buildings: Franklin, Washington, Jefferson, Xxxxxxx
Xxxxx and Xxxxx buildings located in the office park commonly known as 0000
Xxxxx Xxxxxx Xxxx Xxxxxxxxx, Xxxx Xxxx Xxxx, Xxxx (collectively, the
“Building”). As used herein, the term “Properties” shall mean and
refer to that certain real property upon which each of the buildings identified
in the foregoing sentence are located, and as further defined in the Master
Lease.
1.2 Premises. The
“Premises” are depicted on attached Exhibit A and
incorporated by reference and are deemed to consist of approximately 54,676
square feet of Net Rentable Area (defined in Section 2.4). The
parties acknowledge that the Net Rentable Area is broken down into the following
areas, which areas are further depicted in Exhibit A: (a) 53,701
rentable square feet (“Office Space”); (b) 975 rentable square feet (“Computer
Room”); and (c) 23,280 rentable square feet (“Shared Space”). As to
the Office Space and the Computer Room, Tenant shall have the exclusive right to
these areas. With respect to the Shared Space, Tenant and Sublandlord
shall have equal access and rights to such space and shall use such space in
common (but to the exclusion of any other persons). With respect to
the Shared Space, Tenant shall only be responsible for rent on 11,640 rentable
square feet (or 50%) thereof, as further specified herein. The
following areas shall not be included as Net Rentable Area; however, Tenant and
its employees shall have the right to use (i) the wellness center serving the
Premises, pursuant to the same arrangement (including but not limited to, fees,
membership qualifications, and limitations on use) to which Sublandlord is a
party; and (ii) any corridors, elevator lobbies, ground floor lobbies,
vestibules, service and freight areas, restrooms, elevator and mechanical rooms,
telephone and electrical closets, and other similar
facilities
provided for the benefit of all tenants of the Building, visitors to the
Building, or Sublandlord (such areas collectively defined as “Common
Areas”). Tenant and Tenant’s Agents rights in the Common Areas shall
be only to the same extent as those of Sublandlord under the Master
Lease.
1.3 Lease
Term. The “Lease Term” shall commence on the Closing Date (as
defined under the Purchase Agreement) (the “Commencement Date”), and shall end
at midnight on June 30, 2025 (the “Termination Date”), unless terminated earlier
in accordance with the terms of this Lease. The Lease Term may be
extended, at Tenant’s option, in accordance with the Lease Extension Addendum
attached as Exhibit
D.
1.4 Base
Rent. “Base Rent” is collectively the Office Space Base Rent,
the Computer Room Base Rent and the Shared Space Base Rent. Base Rent
is to be paid from the Commencement Date through the Termination Date, and is
payable on the first day of each month in advance in the amounts set forth below
and subject to adjustment as provided in Section 1.6. Base Rent for
any partial month shall be prorated based on the number of days in that
month.
|
|
1.4.1
|
“Office
Space Base Rent” is $9.00 per rentable square foot, $40,275.75 per month,
and $483,309 per year;
|
|
|
1.4.2
|
“Computer
Room Base Rent” is $12.00 per rentable square foot, $975.00 per month, and
$11,700.00 per year; and
|
|
|
1.4.3
|
“Shared
Space Base Rent” is $9.00 per rentable square foot for shared space in the
Adams, Jefferson, Washington and Xxxxxxx Xxxxx buildings, and $12.00 per
rentable square foot in the Franklin Building, $10,003.75 per month, and
$120,045.00 per year.
|
1.5 Tenant’s Share of Other
Charges and Property Taxes. (a) “Tenant’s Share” of
“Other Charges” (defined in Section 4.3) is 21.27% of such costs as further
specified in Section 4.3 below, and (b) “Tenant’s Share” of “Property
Taxes” (defined in Section 4.4) is 17.8% of such taxes. Tenant’s
Share is subject to adjustment due to re-measurement of the Net Rentable Area,
provided such re-measurement is performed in accordance with the ANSI/BOMA
Z65.1-1996 Standard, if any be performed, and documentation evidencing the same
is provided to Tenant.
1.6 Adjustment to Base
Rent. Commencing on July 1, 2010 and each July 1 thereafter,
Base Rent shall be increased by two percent (2%) of the Base Rent in effect
immediately prior to the date of increase. If Tenant exercises any of
the options to extend this Lease, Base Rent shall be increased by the same
percentages set forth in the Master Lease.
1.7 Permitted
Uses. The parties acknowledge and agree that Tenant is
acquiring this leasehold interest in accordance with the Purchase Agreement, and
that as such, Tenant’s predecessor-in-interest has been using the Premises to
effectuate the goals and purposes of Tenant’s business. Tenant may
use the Premises in any manner that is consistent with the historical use of the
Premises for a period of twenty-four months prior to the Commencement Date,
including without limitation, general office use, a photo lab, graphics art
production, and a call center (the “Permitted Use”). Tenant shall not
use the Premises for any purpose other than the Permitted Use. Except
as expressly allowed as a Permitted Use, Tenant’s use of the Premises shall be
subject to all terms and provisions of the Master Lease, including but not
limited to, the obligation to comply with any restrictive covenants applicable
to the Premises. Tenant’s and Sublandlord’s use of the
Premises
are subject to the “Rules and Regulations” set forth on attached Exhibit B, as
modified and enforced in accordance with Section 13.1.
1.8 Definition of Sublandlord’s
Agents and Tenant’s Agents. “Sublandlord’s Agents” includes
any asset manager, property manager, agent, managing agent, affiliate,
contractor, employee, director, officer, partner, or servant of Sublandlord, or
any corporate or other legal entity affiliated with Sublandlord or third party
operator and owner of the Building, and “Tenant’s Agents” includes any agent,
officer, employee, servant, partner, independent contractor, licensee, invitee,
or visitor of Tenant.
ARTICLE II
PREMISES
2.1 Lease of the Premises; Work
Letter. Sublandlord leases the Premises to Tenant, and Tenant
leases the Premises from Sublandlord complete with any improvements thereto,
together with the right-in-common to the use of any of the Common Areas (which
shall include the wellness center) within the Properties. Sublandlord
agrees to provide the tenant improvement allowance described in Exhibit C (the
“Tenant Improvement Allowance”), but has no obligation to construct any
improvements in the Premises.
2.2 Condition of the
Premises. Except as otherwise provided in this Lease, by
occupying the Premises, Tenant: (a) acknowledges that it has had
full opportunity to examine the Building, including the Premises, and accepts
the same in its as-is, where-is condition, without representation or warranty of
any kind, and (b) accepts the Premises and acknowledges that the Premises must
comply with all requirements imposed upon Sublandlord under the Master
Lease. This Lease does not grant any right to light or air over or
about the Premises or Building.
2.3 Signs. Without
the prior written consent of Sublandlord, Tenant shall not erect or install on
the exterior of the Building, on any window, or in any lobby, hallway or door
therein located, any sign or other type display. Notwithstanding the
foregoing, Sublandlord will provide and install identification letters or
numerals on doors of the Premises in the building standard fonts at Tenant’s
expense. Tenant may not use any other signage or lettering without
Sublandlord’s prior written consent. Sublandlord has provided a
location in the lobby of the Building a directory of tenant names and
locations. At Tenant’s cost, Sublandlord will provide and install
directory strips.
2.4 Net Rentable
Area. The term “Net Rentable Area” means the sum of the net
useable area, which is computed by measuring to the inside finish of the
Building’s exterior glass line, to the exterior side of partitions that separate
the Premises from the Building’s interior non-rentable areas not within the
Premises, and to the center of partitions that separate the Premises from
adjoining rentable areas. The parties stipulate that the Net Rentable
Area of the Premises is that stated in Section 1.2.
2.5 Relocation. [INTENTIONALLY
DELETED.]
ARTICLE III
COMMENCEMENT
DATE
3.1 Commencement
Date. Sublandlord shall make the Premises available for
occupancy on the Commencement Date.
3.2 Holding
Over. If Tenant remains in possession of the Premises after
the expiration or earlier termination of the Lease Term without the execution of
a new lease or an extension hereof, Tenant’s occupancy will be from
month-to-month at 110% of the Base Rent due for the last full calendar month
during the holdover period plus all other sums due under this Lease and subject
to all other provisions and obligations of this Lease that are applicable to a
month-to-month tenancy. The holdover period may be canceled by
Sublandlord upon seven (7) days notice to Tenant, and such holdover is a
material default hereunder.
ARTICLE IV
RENT
4.1 Payment. Tenant
shall pay Rent to Sublandlord in advance in legal tender of the United States of
America, without any notice, demand, set-off or deduction, at the following
address: Franklin Development Corporation, 0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000, Attn: Accounts Receivable, or
at such place or to such of Sublandlord’s Agents as Sublandlord from time to
time designates in writing. Any Rent payment due hereunder is
delinquent if not received by Sublandlord by the due
date. Sublandlord may accept any partial payment of Rent without
prejudice to any of Sublandlord’s rights or remedies. The term “Rent”
includes, without limitation, (a) Base Rent, (b) Tenant’s Share of
Other Charges, (c) Tenant’s Share of Property Taxes, and (d) other
charges and reimbursable costs payable by Tenant in accordance with this
Lease. Items (b), (c) and (d) above may sometimes herein be referred
to collectively as “Additional Rent.” Notwithstanding anything in
this Lease to the contrary, all amounts payable by Tenant to Sublandlord as
Rent, shall constitute rent for the purpose of Section 502(b)(7), as it may be
amended, of the Bankruptcy Code, 11 U.S.C. §§101 et seq. (the “Bankruptcy
Code”).
4.2 Base
Rent. Tenant shall pay (with or without receipt of a written
statement from Sublandlord) the Base Rent in advance, promptly upon the first
day of every month of the Lease Term. If the initial or final month
is less than a full calendar month, the Base Rent for such month will be reduced
proportionately. It is the intent of both parties that the Base Rent
herein shall be absolutely net to Sublandlord throughout the Lease Term, and
that all costs, expenses and obligations relating to the Building and/or the
Premises which may arise or become due during the Lease Term shall be paid by
Tenant as hereafter provided.
4.3 Tenant’s Share of Other
Charges. Except for calendar year 2008, Tenant shall pay
Tenant’s Share of Other Charges (as defined under the Master
Lease). For the avoidance of doubt, “Other Charges” shall include,
without limitation, all management office expenses; all applicable sales and use
taxes; expenses incurred for heat, cooling and other utilities; cost of
insurance; cost of janitorial and cleaning services, trash collection services,
pest control and security services; salaries, wages and other personnel costs of
engineers, superintendents, watchpersons, and all other employees of the
Building, including any sales tax imposed upon their service; charges under
maintenance and service contracts for elevators, chillers, boilers (if
applicable) and controls; window cleaning; building and grounds maintenance;
management fees; permits and licenses; all
maintenance
and repair expenses and supplies, including replacement of light bulbs and
ballasts in lighting fixtures; costs (including finance charges) of improvements
to the Building, equipment or capital items that are designed to increase
safety, improve energy efficiency, accurately process date and/or time data or
expand telecommunications service; amortization, depreciation and replacement
costs, interest and other expenses incurred with respect to equipment purchased
to replace existing equipment, systems or other capital expenditures purchased
to comply with the directives of a governing body; costs of complying with all
governmental regulations, including, without limitation, the disposal of
chlorofluorocarbons and compliance with Title III of the Americans with
Disabilities Act of 1990 (“ADA”), or any other similar laws of the State of Utah
(the “Utah Act”); costs of independent contractors; fees; owner’s association
assessments; and all other costs and expenses properly incurred in the operation
and maintenance of an office building, to the extent that any of the foregoing
are Sublandlord’s responsibility pursuant to the Master Lease. During
the calendar year 2008 (the “Initial Year”), Tenant’s Share of Other Charges
shall be deemed to be five dollars and two cents ($5.02) per rentable square
foot in the Premises (“Initial Basic Other Charges”), and such amount shall not
be subject to adjustment. Notwithstanding the Master Lease to the
contrary, for purposes of this Lease, “Other Charges” shall exclude the cost of
any alterations to any portion of the Building not leased by Tenant (except for
Common Areas); lease commissions; payment of principal and interest on mortgages
of Sublandlord; and costs of Sublandlord of any work or service performed for
any tenant at the cost of such tenant.
(a) Except
for the Initial Year, prior to the last day of each calendar year during the
Lease Term, Sublandlord will provide Tenant with a statement of estimated Other
Charges for the upcoming calendar year (based on Sublandlord’s reasonable
estimate of anticipated costs). Beginning January 1 of the upcoming
calendar year, Tenant shall pay in twelve (12) equal monthly installments, based
on Sublandlord’s estimate, Tenant’s Share of Other Charges. If
Sublandlord reasonably determines that the Other Charges are greater than the
estimate, then Sublandlord may deliver to Tenant on the first day of March,
June, September or December, the revised amount of Tenant’s Share of Other
Charges. Tenant shall pay to Sublandlord within twenty (20) days of
notification of the revised amount, the difference between the previous estimate
and the revised estimate for the expired portion of the current calendar
year. Monthly installments of Tenant’s Share of Other Charges will be
increased for the months following Tenant’s receipt of the revised estimate to
one-twelfth (1/12) of the revised estimate of Tenant’s Share of Other
Charges.
(b) Not more
than one hundred eighty (180) days following the last day of each calendar year,
Sublandlord will provide Tenant with a written comparison of the amount of the
estimated Tenant’s Share of Other Charges paid for the calendar year (or partial
calendar year) just ended to Tenant’s Share of Other Charges actually incurred
for such calendar year, along with back-up documentation supporting and
verifying the actual Other Charges, to the extent the same is in Sublandlord’s
possession or control. If Tenant inquires regarding back-up
documentation, Sublandlord shall reasonably cooperate with Tenant in obtaining
any further back-up documentation requested by Tenant. If the amount
of the estimated Tenant’s Share of Other Charges charged to Tenant for such
prior calendar year (or partial calendar year): (A) exceeds the amount Tenant
should have been charged, Sublandlord shall give Tenant a credit toward the next
Base Rent and Additional Rent (applicable to Other Charges) (or if in the last
year of the Lease Term, refund the excess) due, and such credit shall continue
until such time as it has been used in its entirety, (B) is less than the amount
Tenant should have been charged, Tenant shall pay Sublandlord, as Additional
Rent, the difference (provided, however, that such amount shall not exceed the
cap provided under subsection (c) below) within twenty (20) days following
Tenant’s receipt of such written comparison and back-up documentation, to the
extent the same is in Sublandlord’s possession or control. If Tenant
inquires regarding back-up documentation,
Sublandlord
shall reasonably cooperate with Tenant in obtaining any further back-up
documentation requested by Tenant. For purposes of determining the
adequacy of the back-up documentation submitted by Sublandlord, for any Other
Charges that are the result of a charge under the Master Lease, then the extent
of documentation received by Sublandlord from Prime Landlord shall be deemed
sufficient to satisfy such requirement. Any delay or failure of
Sublandlord in billing any Other Charge escalation is not a waiver of and does
not impair the continuing obligation of Tenant to pay such
escalation. Tenant is not entitled to a refund or credit if Other
Charges for any calendar year are less than the Initial Basic Other
Charges.
(c) Notwithstanding
anything to the contrary in this Section 4.3, (i) the percentage increase in
Tenant’s Share of Other Charges from one calendar year to the next shall be
limited to the lesser of the Other Charges incurred by Sublandlord or the
percentage increase in “CPI” (as defined below), during the same period, and
(ii) under no circumstances shall Tenant be required or obligated to pay for any
Other Charges that are not a pass-through expense being charged by Prime
Landlord under the Master Lease or a direct monetary obligation imposed against
Sublandlord pursuant to the Master Lease for which Tenant is responsible under
this Lease. Sublandlord and Tenant acknowledge and agree that it is
the intent of the parties and this Sublease that Tenant shall only be liable for
Tenant’s Share of actual costs incurred by Sublandlord in connection with the
Master Lease and that there shall be no xxxx-up or profit relative to Rent
charged under this Lease. For the purposes of calculating the cap in
Other Charges increase, the parties shall use the Consumer Price Index for All
Urban Consumers (CPI-U): U.S. city average, by expenditure category and
commodity and service group, 1982-84=100, All items (“CPI”).
4.4 Tenant’s
Share of Property Taxes. Tenant shall pay Tenant’s Share of
Property Taxes (as defined under the Master Lease). Notwithstanding
the foregoing, “Property Taxes” does not include any interest or penalties paid
by Sublandlord as a result of Sublandlord’s failure to pay Property Taxes when
due and payable, any net income, franchise or capital gains tax, inheritance tax
or estate tax imposed or constituting a lien upon Sublandlord or all or
any part of the Properties.
(a) Prior to
the last day of each calendar year during the Lease Term, Sublandlord will
provide Tenant with a statement of estimated Property Taxes for the upcoming
calendar year (based upon Sublandlord’s reasonable estimate of anticipated
Property Taxes). Beginning January 1 of the upcoming calendar year,
Tenant shall pay in twelve (12) equal monthly installments, based on
Sublandlord’s estimate, Tenant’s Share of Property Taxes. If, at any
time during the calendar year, Sublandlord determines in its reasonable
discretion that the Property Taxes are greater than the estimate, then
Sublandlord may deliver to Tenant the revised amount of Tenant’s Share of
Property Taxes. Tenant shall pay to Sublandlord within twenty (20)
days of notification of the revised amount, the difference between the previous
estimate and the revised estimate for the expired portion of the current
calendar year. Monthly installments of Tenant’s Share of Property
Taxes will be increased for the months following Tenant’s receipt of the revised
estimate to one-twelfth (1/12) of the revised estimate of Tenant’s Share of
Property Taxes.
(b) Not more
than one hundred eighty (180) days following the last day of each calendar year,
Sublandlord will provide Tenant with a written comparison of the amount of the
estimated Tenant’s Share of Property Taxes paid for the calendar year (or
partial calendar year) just ended to Tenant’s Share of Property Taxes actually
incurred for such calendar year. If the amount of the estimated
Tenant’s Share of Property Taxes charged to Tenant for such prior calendar year
(or partial calendar year): (A) exceeds the amount Tenant should have been
charged, Sublandlord will give Tenant a credit toward the next Base Rent and
Additional Rent (or if in the last year of the
Lease
Term, refund the excess within twenty (20) days following preparation of the
written comparison) due, whichever is sooner due, and such credit shall continue
until such time as it has been extinguished or used in its entirety, (B) is less
than the amount Tenant should have been charged, Tenant shall pay Sublandlord,
as Additional Rent, the difference within twenty (20) days following Tenant’s
receipt of such written comparison. Any delay or failure of
Sublandlord in billing any excess Property Taxes escalation is not a waiver of
and does not impair the continuing obligation of Tenant to pay such
escalation.
(c) Notwithstanding
any provision of this Section 4.4 to the contrary, under no circumstances shall
Tenant be required or obligated to pay all or any portion of Tenant’s Share of
Property Taxes that are not a pass-through being charged by Prime Landlord under
the Master Lease or a direct monetary obligation imposed against Sublandlord
pursuant to the Master Lease for which Tenant is responsible under this
Lease.
4.5 Other
Impositions. Together with related interest and penalties,
Tenant shall: (a) reimburse Sublandlord for any increase in ad
valorem taxes that Sublandlord becomes obligated to pay where such ad valorem
tax pertains directly to the Premises, (b) pay all license and permit fees
and all taxes levied or assessed by governmental authorities by virtue
of: (i) any leasehold improvements to the Premises made at
Tenant’s direction or which Sublandlord is required to make (either hereunder or
under the Master Lease) and during Tenant’s occupancy of the Premises (excluding
improvements identified in the Work Letter), (ii) Tenant conducting
business or operating the Premises, (iii) Tenant’s Agents or Tenant’s
employees or contractors, (iv) Tenant’s personal property, and
(v) Tenant’s assets or sales, and (c) pay the cost of any additional
electronic security badges requested by Tenant, as the same are required for
access to the Building. Notwithstanding the foregoing to the
contrary, Tenant shall not be responsible for the payment of any expenses or
costs where such expenses or costs arose as the result of Sublandlord’s failure
to pay a tax, fee, assessment or similar expense when due and payable, or any
net income, franchise or capital gains tax, inheritance tax or estate tax
imposed or constituting a lien upon Sublandlord or all or any part of the
Properties.
4.6 Tax
Protest. To the extent permitted by law: (a) Tenant hereby
waives any right it may have under Utah law to protest or appeal Property Taxes
or the value of the Building; and (b) Tenant hereby assigns to Sublandlord any
rights of Tenant to appeal or protest Property Taxes or the value of the
Building. Notwithstanding the foregoing, Sublandlord shall provide
Tenant with written notice of any application, filing or other written protest
Sublandlord makes or submits relating to Property Taxes prior to the filing or
submission of such notice and, upon a successful outcome of such protest,
Sublandlord will reimburse Tenant’s Share of such refund, less any reasonable
costs or expenses incurred in connection with such
protest. Sublandlord shall not suffer or permit any action in
protesting the Property Taxes to result in Tenant’s loss of its right to quiet
enjoyment of the Premises.
ARTICLE V
SUBLANDLORD’S
SERVICES
5.1 Electricity. So
long as Tenant is not in Default, Sublandlord will furnish or cause to be
furnished electricity for normal business usage. Tenant’s use of
electricity in the Premises may not at any time exceed the capacity of the
electrical conductors and equipment serving the Premises. In
addition, Tenant shall not, without the prior written consent of Sublandlord,
use any apparatus or device which causes a material increase in the amount of
electricity usually furnished
above and
beyond the Permitted Use. Without Sublandlord’s prior written
consent, Tenant may not: (i) connect electrical equipment that
consumes more than that permitted by the building standard specifications or
(ii) make any material alteration or addition to the electrical system of
the Premises. If Sublandlord grants consent, Tenant shall be
responsible for the cost of additional risers or other required
equipment. For any electricity used by Tenant that is not separately
metered and is in excess of the average monthly use for the twelve (12) month
period immediately prior to the Commencement Date (the “Baseline Period”),
Tenant shall be responsible for the cost of such excess usage where Tenant is
the sole cause of such excess usage and Sublandlord has reasonably determined
the cost of such excess usage based on a comparison relating to the Baseline
Period. If the electricity is separately metered, then in such event
Tenant shall be responsible for payment of any excess usage over and above the
average monthly use for the Baseline Period.
5.2 Air-Conditioning. So
long as Tenant is not in Default, Sublandlord will furnish or cause to be
furnished to the Premises Monday through Friday from 7:30 a.m. to 6:00 p.m.
(but, not on Saturdays, Sundays, or federal or state holidays) (“Business
Hours”) air-conditioning at reasonable temperatures to provide reasonably
comfortable occupancy of the Premises under Normal Business Conditions (defined
below) (excepting any areas that develop excessive heat from machines, lights,
sun, overcrowding or other sources). “Normal Business Conditions” for
maintaining reasonably comfortable temperatures are those conditions in
existence during the twelve (12) month period immediately prior to the
Commencement Date. Tenant shall be allowed to access the controls to
turn on the air-conditioning to the Premises outside of Business Hours to the
extent of Sublandlord’s access to such controls in accordance with the Master
Lease.
5.3 Heat. So
long as Tenant is not in Default, Sublandlord will furnish or cause to be
furnished to the Premises during Business Hours during times of the year that
heating is necessary to heat the Premises at reasonable temperatures to provide
reasonably comfortable occupancy of the Premises under Normal Business
Conditions. Tenant shall be allowed access to the controls to turn on
the heating to the Premises outside of Business Hours to the extent of
Sublandlord’s access to such controls in accordance with the Master
Lease.
5.4 Janitorial
Services. So long as Tenant is not in Default, Sublandlord
will furnish or cause to be furnished to the Premises janitorial services
adequate to keep the Premises, including the Common Areas, in a neat, clean and
orderly fashion at the same standard as during the twelve (12) month period
immediately prior to the Commencement Date. Tenant shall pay
Sublandlord for the actual cost incurred by Landlord for janitorial services to
the Premises (so long as such costs are not being charged in connection with the
Other Charges).
5.5 Water. So
long as Tenant is not in Default, Sublandlord will furnish or cause to be
furnished to the Common Areas and the Premises water for drinking, lavatory
(including warm water at reasonable temperatures) and toilet
purposes. Tenant will not install any equipment that uses water
without Sublandlord’s prior written consent. Tenant shall not use any
water above and beyond what would be reasonably expected considering the
Permitted Use of the Premises. Sublandlord reserves the right to
install a water meter for the Premises, and thereafter Tenant shall pay for
water based upon its usage. Tenant shall reimburse Sublandlord the
actual cost of installation of the water meter within twenty (20) days after
demand and receipt of back-up documentation.
5.6 No
Liability. Unless caused by the negligence of Sublandlord, no
interruption or malfunction of any utility or telephone service is a breach by
Sublandlord, an eviction or disturbance of Tenant, release Tenant from any
obligation, or grant Tenant any right to offset or
rent
abatement, and neither Sublandlord nor Sublandlord’s Agents shall be liable for
damages (consequential or otherwise) in such event.
5.7 Utility
Deregulation. Sublandlord has advised Tenant that presently
PacifiCorp, d/b/a Utah Power (“Electric Service Provider”) is the utility
company selected by Sublandlord to provide electric service for the
Building. Notwithstanding the foregoing, if permitted by law,
Sublandlord has the right at any time and from time to time during the Lease
Term to either contract for service from a different company or companies
providing electric service (each such company is hereinafter referred to as an
“Alternate Service Provider”) or continue to contract for service from the
Electric Service Provider.
(a) Tenant
will cooperate with Sublandlord, the Electric Service Provider, and any
Alternate Service Provider at all times, and, as reasonably necessary, shall
allow Sublandlord, Electric Service Provider and any Alternate Service Provider
reasonable access to the electric lines, feeders, risers, wiring, and any other
machinery within the Premises; provided, however, that such access shall not
unreasonably interfere with Tenant’s business operations or shall be conducted
in such a way as to minimize interference with Tenant’s business
operations.
(b) Sublandlord
is in no way liable or responsible for any loss, damage, or expense that Tenant
may sustain or incur by reason of any change, failure, interference, disruption,
or defect in the supply or character of the electric energy furnished to the
Premises, unless caused by Sublandlord’s gross negligence or willful misconduct,
or if the quantity or character of the electric energy supplied by the Electric
Service Provider or any Alternate Service Provider is no longer available or
suitable for Tenant’s requirements (collectively, an “Electrical Disruption”),
and no such Electrical Disruption will constitute an actual or constructive
eviction, in whole or in part, nor will it entitle Tenant to any abatement or
diminution of Rent, or relieve Tenant from any of its obligations under the
Lease unless such Electrical Disruption is caused by Sublandlord’s willful
misconduct or gross negligence.
5.8 Utility
Costs. Except as otherwise provided herein, all utility costs
provided for in this Section 5 shall be considered part of the Other Charges and
passed through to Tenant as part of Tenant’s Share.
ARTICLE VI
TENANT’S CARE OF
PREMISES
6.1 Waste. Neither
Tenant nor Tenant’s Agents will commit waste, and Tenant will keep the Premises
and the fixtures therein in good repair. Tenant shall be responsible
for maintenance and repair of appliances and shall pay for unstopping any drains
or water closets in the Premises. If: (a) Tenant fails to make
repairs to the Premises, or (b) any act or neglect of Tenant or Tenant’s
Agents results in damage to the Premises or the Building, Sublandlord may repair
such damage, and within ten (10) days of receipt of Sublandlord’s invoice,
Tenant shall reimburse Sublandlord for the actual cost
thereof. Neither Tenant nor Tenant’s Agents will deface or injure the
Building, and Tenant will pay the cost of repairing any damage or injury done to
the Building or any part thereof by Tenant or Tenant’s Agents. Tenant
will participate in any Sublandlord required recycling program; provided,
however, that Sublandlord shall credit Tenant’s Share of any receipts or income
from the recycling program against Tenant’s Share of Other Charges.
6.2 Alterations, Additions or
Improvements. Tenant may not make any alterations,
improvements, door lock changes or other modifications to the Premises or move
Tenant’s furnishings, equipment or other property into or out of the Premises or
Building without the prior written consent of Sublandlord, which consent shall
not be unreasonably withheld, conditioned or delayed. Any requests by
Tenant to alter the Premises shall be in writing and in sufficient detail to
allow Sublandlord to determine the extent of the alteration to be
made. Tenant shall give Sublandlord notice sufficient to allow
Sublandlord to file a Notice of Non-responsibility or to take any other similar
action in advance of the commencement of any alterations. All
alterations, additions or improvements (including, but not limited to carpets,
drapes and anything bolted, nailed or otherwise secured in a manner customarily
deemed to be permanent) are fixtures, not subject to attachment of a mechanic’s
or materialman’s lien, and will become the property of Sublandlord and remain in
the Premises at the end of the Lease Term, unless such alterations, additions or
improvements constitute Trade Fixtures. As used herein, “Trade
Fixtures” shall mean and refer to property placed on or annexed to rented real
estate by Tenant for the purpose of the conduct of Tenant’s business particular
to its Permitted Use. To the extent required by law, Tenant shall use
union labor to perform Tenant’s construction or repair work, and comply with any
collective bargaining or labor agreement to which Sublandlord is a
party. If Sublandlord shall be damaged as a result of any breach by
Tenant of this covenant, Tenant agrees to pay to Sublandlord the amount of such
damage. Except for Trade Fixtures, all alterations, additions or
improvements made in or upon the Premises, either by Sublandlord or Tenant in
order to comply with Title III of the Americans with Disabilities Act of 1990
(“ADA”), or any other similar laws of the State of Utah (the “Utah Act”) are
Sublandlord’s property on termination of this Lease and shall remain on the
Premises without compensation to Tenant. Sublandlord may require
Tenant to remove any Trade Fixtures upon the termination or expiration of this
Lease. If Sublandlord requires removal of a Trade Fixture in
accordance with the foregoing sentence, and Tenant fails to comply with such
request within twenty (20) days after written notice from Sublandlord,
Sublandlord may remove the Trade Fixture at Tenant’s cost, and Tenant shall pay
Sublandlord upon demand all costs incurred by Sublandlord in removing the Trade
Fixture.
Notwithstanding
anything to the contrary herein, with respect to the portion of the Premises
located in the Xxxxx building and used for retail purposes as of the
Commencement Date (the “Retail Portion”), upon the expiration or sooner
termination of this Lease, Tenant shall remove all of its equipment, fixtures,
and Trade Fixtures therefrom, together with any personal property of Tenant, and
shall repair all damage caused by such removal, all at Tenant’s sole cost and
expense. Such repairs shall include, but not be limited to, repairing
damage to walls and floors resulting from the removal of shelving, and
repainting the walls and resurfacing the floors. In addition to the
required removal and repairs, the Retail Portion shall otherwise be surrendered
in as good a condition as it currently exists, reasonable wear and tear
excepted.
Tenant’s
performance of its obligations to maintain, repair and remove the Tenant’s
furnishings, equipment or other property may be conducted only by contractors
and subcontractors approved in writing by Sublandlord, and Sublandlord shall not
unreasonably withhold its approval of such contractors and
subcontractors. The contractors and/or subcontractors shall carry
insurance in amounts and with companies as customarily required in connection
with the work to be performed by such contractors or
subcontractors. Such contractors and subcontractors must provide
Sublandlord with certificates of insurance prior to commencement of work, and
such certificates shall list Sublandlord and its asset manager, property
manager, managing agent and any other designee of Sublandlord as additional
insureds.
6.3 No
Overloading. Tenant will not overload the floors of the
Premises. Tenant shall not place a load upon the floor of the
Premises exceeding the load per square foot that such floor was designed to
carry, as determined by Sublandlord or its structural
engineer. Partitions shall be considered as part of the
load. Sublandlord may prescribe the weight and position of all safes,
files and heavy equipment that Tenant desires to place in the Premises, so as to
distribute their weight properly. Tenant’s business machines and
mechanical equipment shall be installed and maintained so as not to transmit
noise or vibration to the Building structure or to any other space in the
Building. Tenant shall be responsible for the cost of all structural
engineering required to determine structural load and all acoustical engineering
required to address any noise or vibration caused by
Tenant.
6.4 No
Liens. Sublandlord’s title is and always will be paramount to
the title of Tenant, and Tenant will not do any act which encumbers
Sublandlord’s title or subjects the Premises or the Building or any part of
either to any lien, unless Tenant is making an alteration, improvement or
modification as permitted in connection with Section 6.2. Tenant must
immediately remove any and all liens or encumbrances which are filed against the
Premises or the Building as a result of any act or omission of Tenant or
Tenant’s Agents. If Tenant fails to remove any such lien within
thirty (30) days of receipt of notice thereof, then Sublandlord may, but is not
obligated to, remove such lien, and Tenant shall pay all reasonable costs of
removal or bonding the lien, plus interest at the Default Rate, to Sublandlord
upon demand.
6.5 Property and Improvements at
Tenant’s Risk. All personal property, betterments and
improvements in the Premises, the Building, parking areas or related facilities,
whether owned, leased or installed by Sublandlord, Tenant or any other person,
are at Tenant’s sole risk, and neither Sublandlord nor Sublandlord’s Agents will
be liable for any damage thereto or loss thereof from any cause, including but
not limited to theft, misappropriation, casualty, overflowing or leaking of the
roof, the bursting or leaking of water, sewer or steam pipes, or from heating or
plumbing fixtures, unless caused by Sublandlord’s or Sublandlord’s Agent’s
negligence.
6.6 Flammables, Explosives or
Toxic Substances. Except for household cleaners in quantities
typically used in connection with office use, Tenant will not use or permit in
the Premises or the Building any flammable or explosive material, toxic
substances, environmentally hazardous materials (as defined below) or other
items hazardous to persons or property. Tenant will not use the
Premises in a manner that (a) invalidates or is in conflict with fire,
insurance, life safety or other policies covering the Building or the Premises,
or (b) increases the rate of fire or other insurance on the Building or the
Premises. If any insurance premium is higher than it otherwise would
be due to Tenant’s failure to comply with this section, Tenant shall reimburse
Sublandlord as Additional Rent, that part of Sublandlord’s insurance premiums
that are charged because of Tenant’s failure.
6.7 Hazardous Materials
Defined. “Hazardous Materials” means: (a) any
“hazardous waste” as defined by the Resource Conservation and Recovery Act of
1976 (42 U.S.C. § 6901 et seq.) (“RCRA”), as amended from time to time, and
regulations promulgated thereunder; (b) any “hazardous substance” being
“released” in “reportable quantity” as such terms are defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. § 9601 et seq.) (“CERCLA”), as amended from time to time, and regulations
promulgated thereunder; (c) asbestos; (d) polychlorinated biphenyls;
(e) urea formaldehyde insulation; (f) “hazardous chemicals” or “extremely
hazardous substances”, in quantities sufficient to require reporting,
registration, notification or special treatment or handling under the Emergency
Planning and Community Right-to-Know Act of 1986 (42 U.S.C. §§ 11001, et seq.)
(“EPCRA”), as amended from time to time and regulations promulgated thereunder;
(g) any “hazardous chemicals” in levels
that
would result in exposures greater than those allowed by permissible exposure
limits established pursuant to the Occupational Safety and Health Act of 1970
(29 U.S.C. § 651 et seq.) (“OSHA”), as amended from time to time and regulations
promulgated thereunder; (h) any substance which requires reporting,
registration, notification, removal, abatement or special treatment, storage,
handling or disposal under Section 6, 7 or 8 of the Toxic Substances Control Act
(15 U.S.C. §§ 2601 et seq.) (“TSCA”) as amended from time to time and
regulations promulgated thereunder; (i) any toxic or hazardous chemicals
described in the Occupational Safety and Health Standards (29 C.F.R.
1910.1000-1047) in levels which would result in exposures greater than those
allowed by the permissible exposure limits pursuant to such regulations;
(j) the contents of any storage tanks, whether above or below ground;
(k) medical wastes; (l) materials related to those described in
subparagraphs (a) through (k) hereof; and (m) anything defined as hazardous
or toxic under any now existing or hereinafter enacted statute.
6.8 Environmental Regulations
Defined. “Environmental Regulations” means any law, statute,
regulation, order or rule now or hereafter promulgated by any Governmental
Authority, whether local, state or federal, relating to air pollution, water
pollution, noise control or transporting, storing, handling, discharge, disposal
or recovery of on-site or off-site hazardous substances or materials, as same
may be amended from time to time, including without limitation, the following:
(a) the Clean Air Act (42 U.S.C. §§ 7401 et seq.); (b) Marine
Protection, Research and Sanctuaries Act (33 U.S.C. §§ 1401-1445); (c) the
Clean Water Act (33 U.S.C. §§ 1251 et seq.); (d) RCRA, as amended by the
Hazardous and Solid Waste Amendments of 1984 (42 U.S.C. § 6901 et seq.); (e)
CERCLA, as amended by the Superfund Amendments and Reauthorization Act of 1986
(42 U.S.C. §§ 9601 et seq.); (f) TSCA; (g) the Federal Insecticide,
Fungicide and Rodenticide Act, as amended (7 U.S.C. §§ 136 et seq.);
(h) the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.);
(i) OSHA; (j) the Hazardous Liquid Pipeline Safety Act (49 U.S.C. §§
2001 et seq.); (k) the Hazardous Materials Transportation Act (49 U.S.C. §§
1801 et seq.); (l) the Noise Control Act of 1972 (42 U.S.C. §§ 4901 et
seq.); (m) EPCRA; (n) National Environmental Policy Act (42 U.S.C. §§
4321-4347); and (o) Medical Waste Tracking Act of 1988 (42 U.S.C.
§6992).
6.9 Compliance; Environmental
Compliance. Tenant will observe and comply promptly with all
present and future legal requirements of governmental authorities and insurance
requirements relating to or affecting the Premises, any Tenant sign, or the use
and occupancy of the Premises or incident to Tenant’s occupancy of the Building
and its use thereof. Nothing contained in this Lease is intended to
prevent or prohibit compliance by either party with ADA or the Utah Act, nor is
any provision of this Lease intended to violate ADA, and any provision that does
so is hereby modified to allow compliance or deleted as
necessary. Tenant will not use or permit the Premises to be used in
violation of any Environmental Regulations. Tenant assumes sole and
full responsibility for, and will remedy at its cost, all such violations,
provided that Tenant must first obtain Sublandlord’s written approval of any
remedial actions, which approval Sublandlord may not unreasonably
withhold. Except for household cleaners in quantities typically used
in connection with office use, Tenant will not use, generate, release, store,
treat, dispose of, or otherwise deposit, in, on, under or about the Premises,
any Hazardous Materials, nor will Tenant permit or allow any third party to do
so, without Sublandlord’s prior written consent. Sublandlord’s
election to conduct inspections of the Premises is not approval of Tenant’s use
of the Premises or any activities conducted thereon, and is not an assumption by
Sublandlord of any responsibility regarding Tenant’s use of the Premises or
Hazardous Materials. Tenant’s compliance with the terms of this
Section 6.9 and with all Environmental Regulations is at Tenant’s sole
cost. Tenant will pay or reimburse Sublandlord for any costs or
expenses incurred by Sublandlord, including reasonable attorneys’, engineers’,
consultants’ and other experts’ fees and disbursements incurred or
payable
to
determine, review, approve, consent to or monitor the requirements for
compliance with Environmental Regulations, including, without limitation, above
and below ground testing. Sublandlord and Sublandlord’s Agents are
hereby authorized to enter upon the Premises for such
purposes. Tenant will supply Sublandlord with historical and
operational information regarding the Premises, including without limitation,
all reports required to be filed with governmental agencies, as may be
reasonably requested by Sublandlord to facilitate site assessment, and will make
available for meetings with Sublandlord or Sublandlord’s Agents, appropriate
personnel having knowledge of such matters. If Tenant fails to comply
with the provisions of this Section 6.9, or if Sublandlord receives notice or
information asserting the existence of any Hazardous Materials, Sublandlord has
the right, but not the obligation, without in any way limiting Sublandlord’s
other rights and remedies, to enter upon the Premises or to take such other
actions Sublandlord deems necessary or advisable to clean up, remove, resolve,
or minimize the impact of any Hazardous Materials on or affecting the
Premises. Tenant shall pay to Sublandlord on demand as Additional
Rent all reasonable costs and expenses paid or incurred by Sublandlord in the
exercise of any such rights. Tenant will notify Sublandlord in
writing, immediately upon the discovery, notice (from a governmental authority
or other entity) or reasonable grounds to suspect, by Tenant, Tenant’s Agents,
its successors or assigns the presence in the Premises or the Building of any
Hazardous Materials or conditions that result in a violation of or could
reasonably be expected to violate this Section 6.9, together with a full
description thereof. Breach of this Section 6.9 is a Default under
this Lease.
6.10 Termination and
Surrender. Upon termination of this Lease, Tenant
must: (a) surrender any keys, electronic ID cards, and other
access devices to Sublandlord at the place then fixed for the payment of rent,
(b) remove all Trade Fixtures from the Premises, unless Tenant elects to
leave a Trade Fixture(s) and Sublandlord consents to the non-removal of the
Trade Fixture, (c) surrender the Premises in “broom clean” condition,
(d) except for reasonable wear and tear resulting from normal use in light
of the Permitted Use, surrender the Premises and fixtures in the condition in
which Tenant received them, and (e) deliver the Premises to Sublandlord
free of any and all Hazardous Materials not delivered or brought to the Premises
by Tenant or Tenant’s Agents. Tenant shall surrender the Premises
free and clear of all mechanic’s or materialmen’s liens, and this obligation
shall survive the termination of the Lease.
6.11 Tenant’s Supplemental
Security Measures. Subject to the terms of Section 6.2 above
and this Section 6.11, Tenant shall be permitted to install its own supplemental
security measures at the Premises.
(a) Tenant
agrees that all of its supplemental security measures shall be subject to
Sublandlord’s prior written approval, which approval shall not be unreasonably
withheld. Sublandlord shall not grant approval to any supplemental
security measures that interfere or are incompatible with Sublandlord’s security
measures for the Building or consist of armed guards.
(b) If Tenant
elects to install any supplemental security measures at the Premises, Tenant
agrees to use reasonable efforts to coordinate its security functions with
Sublandlord and cooperate to develop procedures with Sublandlord to implement
Tenant’s supplemental security measures in an efficient and effective
manner.
(c) Tenant
will keep and maintain, in good working order, condition, and repair, its
supplemental security measures, and will make all repairs and replacements
thereto. Tenant agrees to pay all costs and expenses of its
supplemental security measures, including, but not limited to, installation,
maintenance, repair, and replacement costs.
(d) Tenant
agrees that in no event shall Sublandlord, or its agents and employees, have any
liability or responsibility for the effectiveness of any of Tenant’s
supplemental security measures.
ARTICLE VII
TRANSFER OF INTEREST,
PRIORITY OF LIEN
7.1 Assignment and
Sublease. Tenant may assign this Lease or sublet all or a
portion of the Premises without the prior written consent of Sublandlord in the
following instances: (i) the assignment or sublease is to an affiliate or
subsidiary of Tenant; (ii) the assignment or sublease occurs jointly and
concurrently with or to the same assignee or affiliate of the assignee under or
in connection with that certain Master License Agreement dated as of the
Commencement Date, to which Tenant and Sublandlord are parties (the “Master
License Agreement”), and such assignee or sublessee expressly agrees in writing
to assume all of the obligations of Tenant hereunder; or (iii) Tenant has
obtained the consent of Landlord to a sublease of all or a portion of the
Premises. Notwithstanding that Sublandlord’s consent is not required
for transfers pursuant to clauses (i)-(iii) above, each such assignment or
sublease shall only be made upon the obtaining of the prior written consent of
Landlord as required in connection with the Master Lease (and Sublandlord agrees
to cooperate to obtain such consents, if required, from
Landlord). Except as provided in the foregoing sentence, Tenant shall
not, and shall not have the right to, assign, sell, transfer, delegate or
otherwise dispose of, whether voluntarily or involuntarily, by operation of law
or otherwise, this Lease or any of its rights or obligations under this Lease
without the prior written consent of Sublandlord, which consent shall not be
unreasonably conditioned, withheld or delayed.
7.2 Right of First
Refusal. Unless such assignment or subletting is being made in
accordance with items (i), (ii) or (iii) above, if Tenant shall desire to assign
this Lease or to further sublet all or any portion of the Premises, Tenant shall
give Sublandlord notice thereof (the “Marketing Notice”), which shall be
accompanied by:
(a) If a
sublease of an entire floor or floors, a notice identifying such floor or floors
and if a sublease of less than an entire floor or floors, a description of the
portion of the Premises that Tenant proposes to sublet, together with a floor
plan thereof; and
(b) A notice
of all of the material and economic terms and conditions of the proposed
assignment or sublease (other than the identity of the proposed assignee or
subtenant if not yet known to Tenant), including:
(i) The
proposed commencement date;
(ii) The term
of the proposed sublease;
(iii) The fixed
rent;
(iv) All
regularly scheduled items of additional rent;
(v) The base
year for all escalations;
(vi) Any
rental concession;
(vii) The
amount of any tenant improvement allowance in connection with the
sublease;
(viii) Any work
to be performed by Tenant to prepare the Premises for occupancy by the proposed
subtenant or assignee;
(ix) Any
consideration to be paid for the acquisition of the Premises by reason of such
assignment or sublease, or for the acquisition of the leasehold improvements,
fixtures or Tenant’s furniture or equipment;
(x) Any
takeover obligation;
(xi) Any
options to be granted to the proposed subtenant;
(xii) The
nature and character of the business of the proposed assignee or subtenant and
its proposed use of the Premises; and
(xiii) Any
banking, financial, or other credit information with respect to the proposed
assignee or subtenant reasonably sufficient to determine the financial
responsibility of the proposed assignee or subtenant.
(c) Such
Marketing Notice shall be deemed an offer from Tenant to Sublandlord whereby
Sublandlord shall then have the option (the “Recapture Option”), which may be
exercised by notice (the “Recapture Notice”) given to Tenant within fifteen (15)
days after Sublandlord’s receipt of the Marketing Notice.
If
Sublandlord does not timely deliver the Recapture Notice to Tenant, Tenant shall
be free to sublease the Premises or assign this Lease to any third party,
subject to the restrictions set forth in Section 7.1 above.
7.3 Subordination. Tenant
agrees to be bound by the provisions of Section 21.1, 21.2 and 21.3
(“Subordination Provisions”) of the Master Lease; provided, however, that
Sublandlord agrees to afford to Tenant any of the rights provided to Sublandlord
in connection with the Subordination Provisions. The parties
acknowledge that in connection with the Purchase Agreement, certain consents,
estoppels and non-disturbance agreements are being sought from Landlord and
Landlord’s lender(s).
7.4 Sublandlord’s
Lien. In addition to any statutory lien and security interest,
in consideration of the mutual benefits arising under this Lease, Tenant hereby
grants to Sublandlord a lien and security interest (“Sublandlord’s Lien”) in all
of Tenant’s personal property and all Trade Fixtures now or hereafter placed in
the Premises (“Tenant’s Property”) to secure payment of Rent and other sums that
become due under this Lease. The provisions of this section
constitute a security agreement under the Uniform Commercial Code (the “Code”)
so that Sublandlord has and may enforce a security interest on Tenant’s
Property. Tenant authorizes Sublandlord to file a financing statement
describing the above collateral. In addition to any other remedies
provided by law or under this Lease, Sublandlord is entitled to all the rights
and remedies afforded a secured party under the Code with respect to Tenant’s
Property. Sublandlord’s Lien shall terminate upon (i) the termination
of this Lease, or (ii) the assignment or sublease of all or a portion of the
Premises, provided that any assignee or sublessee shall have first agreed to
subject its personal property located or to be located on the Premises to
Sublandlord’s Lien and the provisions of this Section 7.4. With
respect to any sublease of a portion of the Premises, Sublandlord’s Lien shall
only be
released
with respect to Tenant’s Property located in that portion of the Premises being
subleased. Sublandlord agrees to execute any documentation reasonably
requested by Tenant within five (5) business days thereof to evidence the
termination or partial termination of Sublandlord’s Lien in accordance with the
provisions of this Section 7.4. Tenant shall not be deemed to be in
violation of this Section 7.4 or Section 6.2 for any of Tenant’s Property that
is moved, sold or transferred from the Premises in the ordinary course of
business.
ARTICLE VIII
DAMAGE AND DESTRUCTION;
EMINENT DOMAIN
8.1 Damage and
Destruction. If the Building is totally destroyed by fire,
tornado or other casualty or if the Premises or the Building are so damaged that
rebuilding or repairs cannot be completed within ninety (90) days after the date
of such damage, Sublandlord may at their option terminate this Lease, and Rent
will xxxxx for the unexpired portion of the Lease Term effective as of the date
of such damage. If the Building or the Premises are damaged by fire,
tornado or other casualty covered by Sublandlord’s insurance, and rebuilding or
repairs can be completed within ninety (90) days after the date of such damage,
or if the damage is more serious and Sublandlord do not elect to terminate this
Lease, within sixty (60) days after the date of such damage, Sublandlord will
commence to rebuild or repair the Building and the Premises and will proceed
with reasonable diligence to restore the Building and Premises to substantially
the same condition that existed immediately prior to the casualty; provided,
however, Sublandlord will not rebuild, repair or replace Tenant’s furniture,
fixtures, equipment or the improvements where Sublandlord is not entitled to
receipt of insurance proceeds allocated for such furniture, fixtures, equipment
or improvements. Sublandlord will allow Tenant a fair diminution of
Base Rent during the time and to the extent that the Premises are unfit for
Tenant’s use in the ordinary conduct of Tenant’s business, which abatement will
continue only until the earlier of (a) thirty (30) days following the
completion of Sublandlord’s restoration of the Building and Premises as herein
provided and receipt of a certificate of occupancy for the Premises or
(b) the completion of Tenant’s repairs. Any insurance carried by
Sublandlord or Tenant against loss or damage to the Building or to the Premises
is for the sole benefit of the party carrying such insurance and under its sole
control, and Sublandlord’s obligation to rebuild or restore hereunder is limited
to the extent of recoverable insurance proceeds available
therefor. If any mortgagee under a deed of trust, security agreement
or mortgage on the Building requires the insurance proceeds to be used to retire
debt, Sublandlord will have no obligation to rebuild, and this Lease will
terminate upon notice to Tenant.
8.2 Eminent
Domain. If the whole Premises are taken or condemned, or
purchased in lieu thereof, by any government authority for any public or
quasi-public use or purpose, then, this Lease will terminate from the time when
the possession is required for such use or purpose. The Rent will be
prorated to the date when the possession is required. If any part of
the Premises, including the Common Areas, are taken, Sublandlord will notify
Tenant in writing, and Tenant will have the option to cancel this Lease, by
giving Sublandlord written notice within twenty (20) days after receipt of such
notice from Sublandlord. If Tenant exercises the option, then
cancellation will be effective and the Rent will be pro-rated to the date when
Tenant vacates the Premises. If Tenant is not entitled to cancel the
Lease or, if it is entitled to do so, but does not exercise its option, as of
the date when possession is required, the Rent will be reduced in the proportion
that the Net Rentable Area contained in the remaining Premises bears to the Net
Rentable Area contained in the
Premises
before the taking. Any award of proceeds resulting from a
condemnation or sale in lieu thereof of the whole or part of the Premises will
belong solely to Sublandlord and Tenant hereby waives any right to make any
claim therefor as the result of this Lease. Provided, however, that
Sublandlord is not entitled to any award for relocation expenses and the taking
Tenant’s Property specifically awarded to Tenant.
ARTICLE IX
LIABILITY; INDEMNIFICATION;
INSURANCE
9.1 Waiver of
Claims. To the extent permitted by law, Sublandlord will not
be liable for, and Tenant releases Sublandlord and Sublandlord’s Agents from and
waives all claims for, damage to person or property that Tenant or any occupant
of the Building or Premises sustains resulting from: (a) any
part of the Building or Premises or any equipment or appurtenances becoming out
of repair which is not required to be maintained by Sublandlord, (b) any
accident in or about the Building which is not the result of Sublandlord’s
negligence, or (c) directly or indirectly any act or neglect of Tenant,
Tenant’s Agents, any occupant of the Building or of any other person, including
Sublandlord and Sublandlord’s Agents. Subject to the foregoing
sentence and subject to Section 6.5, the liability of Sublandlord and
Sublandlord’s Agents for any injury, loss or damage to any person or property on
or about the Premises will be limited to those directly and solely caused by the
negligence, gross negligence or willful misconduct of Sublandlord or
Sublandlord’s Agents. To the extent permitted by law, Tenant will not
be liable for, and Sublandlord releases Tenant and Tenant’s Agents from and
waives all claims for, damage to person or property that Sublandlord or any
occupant of the Building or Premises sustains resulting
from: (a) any part of the Building or Premises or any equipment
or appurtenances becoming out of repair which is not required to be maintained
by Tenant, (b) any accident in or about the Building which is not the
result of Tenant’s negligence, or (c) directly or indirectly any act or
neglect of Sublandlord, Sublandlord’s Agents, any occupant of the Building or of
any other person, including Tenant and Tenant’s Agents. Subject to
the foregoing sentence and subject to Section 6.5, the liability of Tenant and
Tenant’s Agents for any injury, loss or damage to any person or property on or
about the Premises will be limited to those directly and solely caused by the
negligence, gross negligence or willful misconduct of Tenant or Tenant’s
Agents.
9.2 Indemnification.
(a) Tenant
indemnifies Sublandlord and Sublandlord’s Agents from any loss, cost or
expense: (i) due to injury to or destruction of life or property
directly or indirectly arising out of Tenant’s use and occupancy of the
Building, (ii) due to damage to or destruction of the Building structure,
or any part thereof, or of any abutting real property caused by or attributable
to the act, omission or negligence of Tenant or Tenant’s Agents, or (iii) caused
by or attributable to Tenant’s failure to perform its obligations under this
Lease. Tenant will employ counsel reasonably satisfactory to
Sublandlord, or at Sublandlord’s option, Sublandlord may retain its own counsel
at the expense of Tenant, to prosecute, negotiate and defend any such claim,
action or cause of action; provided, however, that Tenant shall only be required
to reimburse the foregoing expenses so long as they are
reasonable. Sublandlord has the right to compromise or settle any
such claim, action or cause of action without admitting liability; provided,
however, that Tenant’s consent shall first be obtained, such consent not to be
unreasonably withheld, conditioned, or delayed. Tenant shall pay any
indebtedness arising under the indemnity to Sublandlord together with interest
thereon at the Default Rate, from the date such indebtedness arises until
paid.
(b) Sublandlord
indemnifies Tenant and Tenant’s Agents from any loss, cost or expense from any
matter or thing arising from any breach or default in the performance of any
obligation on Sublandlord’s part or to be performed under the terms of this
Sublease or the Master Lease. Sublandlord will employ counsel
reasonably satisfactory to Tenant, or at Tenant’s option, Tenant may retain its
own counsel at the expense of Sublandlord, to prosecute, negotiate and defend
any such claim, action or cause of action; provided, however, that Sublandlord
shall only be required to reimburse the foregoing expenses so long as they are
reasonable. Tenant has the right to compromise or settle any such
claim, action or cause of action without admitting liability and without
Tenant’s consent; provided, however, that Tenant’s consent shall first be
obtained, such consent not to be unreasonably withheld, conditioned or
delayed. Sublandlord shall pay any indebtedness arising under the
indemnity to Sublandlord together with interest thereon at the Default Rate,
from the date such indebtedness arises until paid.
(c) The
foregoing indemnities of Sublandlord and Tenant shall survive termination of
this Lease.
9.3 Insurance
Requirements. Tenant will provide and maintain a Commercial
General Liability Policy of insurance (occurrence form) with respect to the
Premises with a minimum per occurrence coverage limit of One Million and No/100
Dollars ($1,000,000.00), with a minimum General Aggregate of Two Million and
No/100 Dollars ($2,000,000.00), including bodily injury, property damage,
personal and advertising injury, products and completed operations and
professional liability (when and where applicable), and with deductible or
self-insured retention, if any, not to exceed Five Thousand and No/100 Dollars
($5,000.00) per occurrence without Sublandlord’s approval. The policy
shall name Sublandlord as an additional insured. The coverage of such
policy will extend beyond the Premises to portions of the Common Area which
Tenant or Tenant’s Agents use from time to time for promotional or other
exclusive uses.
(a) If it
becomes customary for a significant number of tenants of office buildings of
similar size in the area in which the Building is located to be required to
provide liability insurance policies with limits higher than the foregoing
limits, within thirty (30) days after Sublandlord’s request therefor Tenant will
provide Sublandlord with an insurance policy whose limits are not less than the
then customary limits.
(b) Tenant
will carry “All Risk” or “Special Form” coverage (or other comparable coverage),
including vandalism and malicious mischief insurance covering the Improvements
and all other improvements (whether existing or installed by Tenant or
Sublandlord), stock in trade, fixtures, furniture, furnishings, removable floor
coverings, trade equipment, signs and all other decorations in the Premises for
one hundred percent (100%) of their full replacement cost.
(c) Tenant
will also carry adequate worker’s compensation insurance in no less than
statutorily required amounts, covering its employees in the Premises containing
a waiver of subrogation in favor of Sublandlord, Sublandlord’s Agents and any
designee of Sublandlord, and Tenant hereby indemnifies, agrees to hold harmless,
and at Sublandlord’s option defend, Sublandlord, Sublandlord’s Agents and any
designee of Sublandlord from and against all claims arising out of any loss
suffered by any of Tenant’s Agents at the Building which would have been or is
covered by an appropriate worker’s compensation insurance policy.
9.4 Sublandlord’s
Insurance. Sublandlord covenants to Tenant that on or before
the Commencement Date Sublandlord will name Tenant as an additional insured on
the commercial general liability policy maintained by Sublandlord pursuant to
Subsection 17 of the Master Lease,
provide
Tenant with reasonable evidence thereof, and shall at all time throughout the
Lease Term maintain such insurance and Tenant’s additional insured
status.
9.5 General Provisions with
Respect to Tenant’s Insurance. On or before Tenant or Tenant’s
Agents enter the Premises for any reason, and again before any insurance policy
expires, Tenant will deliver to Sublandlord an original certificate of
insurance. Any insurance required to be carried under this Lease may
be carried under a blanket policy covering the Premises and other locations of
Tenant.
(a) All
insurance policies required to be carried under this Lease by or on behalf of
Tenant will provide (and any certificate evidencing the existence of any
insurance policies, will certify) that unless Sublandlord is given ten (10) days
written notice: (i) the insurance will not be canceled, and
(ii) no material change may be made in the insurance policies.
(b) If Tenant
fails to comply with any of the Insurance Requirements stated in this Lease,
Sublandlord may obtain such insurance and keep the same in effect and Tenant
shall pay to Sublandlord the premium cost thereof upon demand.
(c) All
policies of insurance required to be carried by Tenant under this Lease shall
(i) be written by good and solvent insurance companies satisfactory to
Sublandlord with minimum ratings in Best’s Key Rating Guide published by A.M.
Best Company of A\XII, (ii) include Cross Liability coverage, and
(iii) be primary and non-contributing with any other insurance available
to, or carried by, Sublandlord or Sublandlord’s Agents.
9.6 Waiver of
Subrogation. Each party hereby waives every right or cause of
action for the events which occur or accrue during the Lease Term for any and
all loss of, or damage to, any of its property (whether or not such loss or
damage is caused by the fault or negligence of the other party or anyone for
whom said other party may be responsible), which loss or damage is covered by
valid and collectible fire, extended coverage, “All Risk” or similar policies
covering real property, personal property or business interruption insurance
policies, to the extent that such loss or damage is recovered under said
insurance policies. Said waivers are in addition to, and not in
limitation or derogation of, any other waiver or release contained in this Lease
with respect to any loss or damage to property of the parties
hereto. Each party will give its insurance carrier written notice of
the terms of such mutual waiver, and the insurance policies will be properly
endorsed, if necessary, to prevent the invalidation of coverage by reason of
said waiver.
9.7 Notice. Tenant
shall give immediate notice to Sublandlord in case of fire or any accident in
the Premises or in the Building and of any defects therein or in any fixtures or
equipment.
ARTICLE X
ACCESS TO THE
PREMISES
10.1 Access to the
Premises. Sublandlord and Sublandlord’s Agents shall have the
right to enter the Premises upon the same terms and conditions provided for in
connection with Section 17 of the Master Lease and as otherwise permitted under
the Master Lease.
ARTICLE XI
FAILURE TO PERFORM,
DEFAULTS, REMEDIES
11.1 Defaults. Each
of the following is a “Default” by Tenant under this Lease:
(i) Tenant
fails to pay any installment of Rent or other amount due more than five (5) days
after such Rent is due (provided however, that Tenant shall be entitled to at
least one written notice during a twelve month period if such Rent is not timely
paid).
(ii) Tenant
fails to comply with any provision of this Lease (including the Rules and
Regulations), other than the payment of Rent, and does not cure or commence to
cure such failure within twenty (20) days after written notice to
Tenant. If such default is reasonably expected to take more than
twenty (20) days to cure, Tenant must diligently proceed to cure the default
through completion. The notice of default will specify the provision
of this Lease that has been breached or allegedly breached.
(iii) The
filing or execution or occurrence of: a petition in bankruptcy or
other insolvency proceeding by or against Tenant or any guarantor of Tenant’s
obligations; an assignment for the benefit of creditors; a petition or other
proceeding by or against Tenant or any guarantor of Tenant’s obligations for the
appointment of a trustee, receiver or liquidator of Tenant or any guarantor of
Tenant’s obligations or any of Tenant’s or such guarantor’s property; or a
proceeding by any governmental authority for the dissolution or liquidation of
Tenant or any guarantor of Tenant’s obligations.
(iv) Tenant
abandons or vacates any substantial portion of the Premises.
(v) Tenant
petitions for or suffers its interest under this Lease to be taken under a writ
of execution.
(vi) Tenant
defaults under any other lease with Sublandlord, now existing or hereafter
entered into.
(b) If a
Default occurs, Tenant’s liability under all of the provisions of this Lease
will continue notwithstanding any expiration and surrender, and notwithstanding
any re-entry or repossession or dispossession under the terms of this
Lease. Further, Tenant shall pay any reasonable legal fees and costs
and expenses incurred by Sublandlord as a result of Tenant’s Default to
Sublandlord upon demand.
11.2 Remedies. If
a Default by Tenant occurs, Sublandlord may, at its option and without waiving
any other right or remedy available to it:
(a) Terminate
this Lease by providing written notice of such termination to Tenant, in which
case neither Sublandlord nor Tenant shall have any further rights or obligations
under this Lease as of the date of termination, except with respect to those
amounts Tenant was obligated to pay to Sublandlord prior to the date of such
termination; or terminate Tenant’s possessory rights, without terminating this
Lease, in which case Sublandlord shall have the rights described
below. If Sublandlord elects to terminate the Lease, Sublandlord
shall have the immediate right, after complying with all applicable legal
requirements or with Tenant’s consent in lieu thereof, to enter and take
possession of the Property, and remove all persons, furniture,
fixtures
and equipment from the Property, at Tenant’s sole expense, in order to recover
at once, full and exclusive possession of the Property. Regardless of
whether Sublandlord elects to terminate this Lease or terminate Tenant’s
possessory rights, Tenant shall pay to Sublandlord all costs and damages arising
out of Tenant’s Default, including, without limitation, costs of recovering
possession, costs of reletting, and attorneys’ fees.
(b) If
Sublandlord elects to terminate Tenant’s possessory rights without terminating
this Lease, Sublandlord shall have the right, after complying with all
applicable legal requirements or with Tenant’s consent in lieu thereof, to enter
and take possession of the Property and remove all persons, furniture, fixtures
and equipment from the Property, at Tenant’s sole expense, in order to recover
at once, full and exclusive possession of the Property. Should
Sublandlord elect to terminate Tenant’s possessory rights without terminating
this Lease, Sublandlord shall undertake to relet the Property or any part
thereof for such term or terms and at such rental or rentals and upon such other
terms and conditions as are reasonable under the circumstances, and Sublandlord
shall have the right to remodel or make alterations and repairs to the Premises
as part of the reletting process. Any rentals received by Sublandlord
from any such reletting shall be applied as follows: first, to the payment of
any remodeling of, or alterations and repairs to, the Property; second, to the
payment of any other costs associated with the reletting, including but not
limited to brokerage commissions; third, to the payment of the Base Rent,
Additional Rent, and other charges under this Lease; and the residue, if any,
shall be held by Sublandlord and applied in payment of future Base Rent,
Additional Rent, and other charges under this Lease. Should such
rentals received from such reletting by Sublandlord (after deducting all costs
of associated with the reletting of the Property) during any month be less than
the Base Rent, Additional Rent, and other charges under this Lease, including
but not limited to increases in operating expenses, then Tenant shall, upon
receipt of a statement from Sublandlord specifying the amount, pay the
difference to Sublandlord. Such difference shall be calculated and
paid monthly.
(c) Cure the
Default at the expense of Tenant, in which event Tenant shall reimburse
Sublandlord for any amount expended by Sublandlord in connection with the cure,
plus interest at the Default Rate (defined in Section 11.4).
Sublandlord
may remove and store in any warehouse, at Tenant’s cost, or, in Sublandlord’s
sole discretion, Sublandlord may deem abandoned by Tenant and dispose of
accordingly, any property belonging to Tenant, or otherwise found upon the
Premises at the time of re-entry, termination of this Lease or termination of
Tenant’s right to the Premises. Pursuit of any of the foregoing
remedies is not a forfeiture or waiver of any Rent due to Sublandlord hereunder
or of any damages accruing to Sublandlord by reason of the violation of any of
the provisions herein contained. Tenant shall pay all Rent and
Additional Rent to Sublandlord without any set-off or counterclaim.
The
foregoing rights and remedies are cumulative and in addition to any other rights
granted to Sublandlord by law, and the exercise of any of them is not an
election excluding the exercise by Sublandlord at any time of a different or
inconsistent remedy. The failure of Sublandlord at any time to
exercise any right or remedy is not a waiver of its right to exercise such right
or remedy at any other future time.
11.3 Breach by Tenant or
Sublandlord. In the event of any breach or threatened breach
by either party of any covenants, agreements, terms or conditions in this Lease,
the non-breaching party shall be entitled to enjoin such breach or threatened
breach and, in addition to the rights and remedies provided hereunder, will have
any other right or remedy allowed at law or equity, by
statute
or otherwise. The provisions of this article will be construed
consistent with Utah law, so that remedies of either party herein described are
available to the full extent but only to the extent that they are not invalid or
unenforceable under Utah law.
11.4 Sublandord’s Default;
Tenant’s Remedies. Sublandlord’s failure to perform any of its
covenants, agreements or obligations hereunder or under the Master Lease within
twenty (20) days after receipt of written notice thereof from Tenant shall be
deemed an event of default of Sublandlord. If such default is
reasonably expected to take more than twenty (20) days to cure, Sublandlord must
diligently proceed to cure the default through completion. If
Sublandlord does not cure or does not commence to cure such default, Tenant may
effect such a cure at Sublandlord’s expense. Any sums incurred by
Tenant in effecting such a cure shall be paid by Sublandlord within thirty (30)
days after receipt of demand therefor, together with documentation evidencing
such expense(s), to the reasonable satisfaction of Sublandlord. The
foregoing shall not limit any rights or remedies available to Tenant at law or
in equity.
11.5 Payments. Except
as elsewhere provided herein, including, without limitation, as provided in
Section 1.4 regarding the payment of Base Rent, all amounts Tenant owes to
Sublandlord are due and payable within five business (5) days from the date that
Tenant receives a statement therefor. If any payment of Base Rent or
any other sum due from Tenant to Sublandlord under this Lease is not received
within five business (5) days of when due, Tenant shall pay to Sublandlord on
demand a late charge of One Hundred and No/100 Dollars ($100.00) plus Ten and
No/100 Dollars ($10.00) for each day elapsing thereafter prior to Sublandlord’s
receipt of such payment, to cover Sublandlord’s cost for administration fees and
expenses incurred in conjunction with the collection of late
payments. All amounts (including Rent) not paid when due will bear
interest from the date originally due until the date fully paid at the lesser of
(i) the “prime rate” published in the Wall Street Journal
on the date as of which the interest in question commences to accrue plus two
percent (2%), or, if the name publication is not then in print, that financial
news publication (if any) with the largest U.S. circulation, or (ii) the
highest lawful rate (the “Default Rate”). If Tenant fails to timely
pay three (3) installments of Rent during any consecutive twelve-month period,
Sublandlord may terminate this Lease.
11.6 Mediation. The
parties shall attempt in good faith to resolve any dispute or claim arising out
of or relating to this Lease promptly by confidential mediation under the CPR
Mediation Procedure in effect on the Commencement Date, before resorting to
litigation. If such dispute or claim is not settled by the parties
through mediation within forty-five (45) days after the first meeting of the
parties with the mediator to discuss the matter, or if the parties agree to
terminate mediation sooner, then either party may initiate a litigation action
subject to all of the terms and conditions of this Lease.
ARTICLE XII
QUIET ENJOYMENT;
RESERVATIONS BY SUBLANDLORD;
NO CONSTRUCTIVE EVICTION;
REPRESENTATIONS AND WARRANTIES OF SUBLANDLORD
12.1 Quiet
Enjoyment. So long as Tenant is not in Default, Tenant will
have peaceful and quiet possession of the Premises against all parties claiming
adversely thereto by or under Sublandlord.
12.2 Reservations by
Sublandlord. In addition to other rights conferred by this
Lease or by law, Sublandlord reserves the right, to be exercised in
Sublandlord’s reasonable discretion, to: (a) change the name of
the Building; (b) change entrances and exits to the Building and to the
parking structure adjacent to the Building; (c) install and maintain a sign
or signs on the exterior or interior of the Building; (d) change the street
address of the Building; (e) designate all sources furnishing signs, sign
painting and lettering; (f) take all measures as may be necessary or
desirable for the safety and protection of the Premises or of the Building;
(g) have pass keys to the Premises; (h) repair, alter, add to,
improve, build additional stories on, or build adjacent to the Building;
(i) run necessary pipes, conduits and ducts through the Premises;
(j) carry on any work, repairs, alterations or improvements in, on or about
the Building or in the vicinity thereof and, during the continuance of any such
work, to temporarily close doors, entryways, public space and corridors in the
Building; (k) interrupt or temporarily suspend Building services and facilities;
(l) change the arrangement and location of entrances or passageways, doors
and doorways, corridors, elevators, stairs, toilets, or other public parts of
the Building; and (m) grant to anyone the exclusive right to conduct any
business or render any service in or to the Building, provided such exclusive
right shall not operate to exclude Tenant from the Permitted
Use. Tenant hereby waives any claim to damage or inconvenience caused
by such work. This paragraph is not to be construed to diminish the
obligations of Tenant provided herein, nor to create or increase any obligation
on the part of Sublandlord with respect to repairs or
improvements. Neither Sublandlord nor Sublandlord’s Agents will be
liable to Tenant or Tenant’s Agents for any inconvenience, interference or
annoyance resulting from work done in or upon the Premises or any portion of the
Building or adjacent grounds. Notwithstanding anything in this
Section 12.2 to the contrary, the exercise of any of the rights set forth in
this Section 12.2 by Sublandlord shall be conducted so as to minimize any
interference with Tenant’s business operations at the Premises, shall be subject
to compliance with Tenant’s reasonable instructions and security requirements,
and shall not materially alter or adversely affect the rights or obligations of
Tenant under this Lease.
12.3 Attornment. Any
sale, assignment, or transfer of Sublandlord’s interest under this Lease, or in
the Premises shall be subject to this Lease, and Tenant shall attorn to
Sublandlord’s successor and assigns and shall recognize such successor or
assigns as Sublandlord under this Lease, regardless of any rule of law to the
contrary or absence of contractual privity, and Sublandlord shall ensure that in
the event of such sale, assignment, or transfer, the party attorned to has been
given notice of the Lease and the terms hereof and that such party agrees to
abide by the terms of this Lease.
12.4 Surrender of the
Premises. No agreement to accept surrender of the Premises is
valid unless in writing signed by Sublandlord, and no employee of Sublandlord or
Sublandlord’s Agents has any power to accept such surrender prior to the
termination of the Lease. Tenant’s delivery of keys to any employee
of Sublandlord or Sublandlord’s Agents is not a termination of the Lease or a
surrender of the Premises.
12.5 Master
Lease. Sublandlord and Tenant acknowledge and agree that
Tenant shall, to the fullest extent possible, be entitled to the rights,
benefits and protections afforded to Sublandlord under the Master Lease to the
extent that such rights, benefits and protections relate to the occupancy or
possession of the Premises, notwithstanding the failure of Sublandlord and
Tenant to
enumerate
in this Lease all of such obligations, rights, benefits and protections and to
specifically allocate as between Sublandlord and Tenant such
obligations. Sublandlord covenants and agrees that it
shall:
(a) promptly
and completely fulfill all of its obligations to Prime Landlord under the Master
Lease;
(b) use
reasonable efforts to cause Prime Landlord, under the Master Lease, to perform
all of the obligations of Prime Landlord thereunder to the extent the
obligations apply to the Premises and Tenant’s use thereof and of the Common
Areas; and
(c) in the
event of any default or failure by Prime Landlord to perform its obligations as
contemplated by the immediately preceding subparagraph (b), Sublandlord shall,
upon notice from Tenant, make demand upon Prime Landlord to perform its
obligations under the Master Lease within ten days of notice from Tenant and/or
enter into negotiations with Prime Landlord regarding the event of default or
failure by Prime Landlord; provided, however, that Sublandlord shall have no
obligation to commence litigation against Prime Landlord.
12.6 Representation and
Warranties of Sublandlord. Sublandlord represents and warrants
to Tenant that, to its knowledge, (i) a true and correct copy of the Master
Lease is attached as Exhibit E, and that there are no other agreements, letter
agreements, side agreements, amendments, modifications, waivers, writings or
other matters amending, modifying, waiving, changing or otherwise affecting the
Lease or any term or provision thereof; (ii) the Master Lease is, as of the date
of this Lease, in full force and effect; (iii) any information provided
regarding actual or estimated Other Charges or that has been provided or
delivered to Tenant is true and accurate and does not fail to disclose any
material fact relating to the Other Charges; (iv) as of the date of this Lease,
there exists no Event of Default (as defined in the Master Lease); (v) except as
otherwise disclosed in writing to Tenant, Sublandlord has not received any
written notice from a governmental entity of a claim that the Building or the
Common Areas do not comply with all laws applicable thereto; (vi) Sublandlord is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with all requisite power and authority to
enter into and carry out its obligations under this Lease and such other
agreements and instruments to be executed and delivered by Sublandlord in
connection herewith; (vii) each officer who executes this Lease and such other
agreements and instruments has been duly authorized to so act by all requisite
action on its part; (viii) Sublandlord has caused no mortgages, trust deeds or
contracts for sale to encumber the leasehold interest in the Premises other than
those that have been disclosed in writing to Tenant; and (ix) no proceedings are
presently pending or, to the knowledge of Sublandlord, threatened, for the
taking by exercise of the power of eminent domain, or in any other manner for a
public or quasi-public purpose, of all or any part of the
Building. All of the representations and warranties made in this
subsection shall survive the execution of this Lease for the Term.
12.7 Representations and
Warranties of Tenant. Tenant represents and warrants to
Sublandlord that (i) it is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, with all requisite power
and authority to enter into and carry out its obligations under this Lease and
such other agreements and instruments to be executed and delivered by Tenant in
connection herewith; and (ii) each officer who executes this Lease and such
other agreements and instruments has been duly authorized to so act by all
requisite action on its part.
ARTICLE XIII
RULES AND
REGULATIONS
13.1 Rules and
Regulations. Tenant shall observe and abide by the Rules and
Regulations set forth on Exhibit
B. Sublandlord may revise the Rules and Regulations or adopt
new ones for the reputation, safety, care or cleanliness of the Building or
Premises, or the operations and maintenance thereof and the equipment therein,
or for the comfort of Tenant and the other tenants of the Building; provided,
however, that any revisions to the Rules and Regulations or the adoption of any
new Rules and Regulations shall not alter any of Tenant’s rights or increase its
obligations under this Lease. Notwithstanding any provision herein to
the contrary, Tenant shall not be bound by the Rules and Regulations unless
Sublandlord and any other tenants within the Properties are bound by the Rules
and Regulations (including that Tenant shall have the right to enforce such
Rules and Regulations against Sublandlord) and such Rules and Regulations are
not arbitrarily enforced.
ARTICLE XIV
COMMUNICATIONS
14.1 Communications. No
notice, request, consent, approval, waiver or other communication under this
Lease is effective unless the same is in writing and is hand delivered, sent via
nationally recognized overnight courier or mailed by registered or certified
mail, postage prepaid, or sent via facsimile (with electronic or telephonic
verification of receipt and copy by regular mail, certified mail or overnight
courier) addressed as follows:
(a) If
intended for Sublandlord, a communication is effective if mailed to the address
designated as Sublandlord’s Notice Address in Section 14.2 or to such other
address as Sublandlord designates by giving notice to Tenant (or sent via
facsimile to the facsimile number with verification as provided above), with a
copy to the address designated as Sublandlord’s Notice Copy Address in Section
14.2 (or sent via facsimile to the facsimile number with verification as
provided above), or to such other person or party as Sublandlord shall designate
by notice to Tenant.
(b) If
intended for Tenant, a communication is effective if mailed to the address
designated as Tenant’s Notice Address in Section 14.2 or to such other address
as Tenant designates by notice to Sublandlord (or sent via facsimile to the
facsimile number with verification as provided above) with a copy to the address
designated as Tenant’s Notice Copy Address in Section 14.2 (or sent via
facsimile to the facsimile number with verification as provided above), or to
such other person or party as Tenant designates by notice to
Sublandlord. Notice may be given to Tenant by Sublandlord or
Sublandlord’s attorney acting as Sublandlord’s authorized agent.
Any
notice given by certified mail is effective when the return receipt is signed or
refusal to accept the notice is noted thereon. Any notice given by
overnight courier or hand delivery is effective upon receipt or refusal to
accept. Any notice given by facsimile is effective upon electronic or
telephonic verification so long as a copy is also sent via regular mail,
certified mail or overnight courier.
14.2 Notice
Addresses.
(a) Sublandlord’s
Notice Address:
Franklin Development
Corporation
0000 Xxxx Xxxxxxx
Xxxxxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxxxxx X.
Xxxxx
facsimile: (000) 000-0000
(b) Tenant’s
Notice Address:
Xxxxxxxx Xxxxx Products,
LLC
0000 Xxxx Xxxxxxx
Xxxxxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxxx
Xxxx
facsimile: (000) 000-0000
telephone: (000)
000-000-0000
(c) Tenant’s
Notice Copy Address:
Xxxxx & Xxxxxx, LLP
00 Xxxx Xxxxx Xxxxxx, Xxxxx
0000
Beneficial Xxxxx
Xxxx Xxxx Xxxx, XX 00000
Attn: Xxxx Xxxxxx, Esq.
facsimile: (000)000-0000
telephone: (000)000-0000
ARTICLE XV
MISCELLANEOUS
PROVISIONS
15.1 Tenant Estoppel
Certificates. Tenant agrees, at any time and from time to
time, upon not less than five (5) days prior written notice by Sublandlord, to
execute, acknowledge and deliver to Sublandlord a written statement containing
the following information: (a) certification that this Lease is unmodified
and in full force and effect (or if there have been modifications, that the
Lease is in full force and effect as modified and stating the modifications),
(b) a statement regarding the dates to which Tenant has paid the rent and
other charges hereunder, (c) a statement as to whether to the best of
Tenant’s knowledge, Sublandlord is in Default in the performance of any
covenant, agreement or condition contained in this Lease, and, if so, a
specification of each such Default of which Tenant may have knowledge,
(d) a statement of the amount of monthly rent plus rent increases, if any,
(e) a statement of the amount of the security deposit, if any, (f) a
statement of the address to which notices to Tenant should be sent; and (g) any
other information reasonably requested by Sublandlord. Any such
statement delivered pursuant hereto may be relied upon by any owner of the
Building, any prospective purchaser of the Building, and any present or
prospective mortgagee, deed of trust holder or trustee for bond holders with
respect to the Building or of Sublandlord’s interest. If Tenant fails
to furnish an Estoppel Certificate within ten business days (10) days after
request therefor, such failure shall be deemed a default hereunder and,
moreover, it shall be conclusively presumed that: (a) this Lease is in full
force and effect without modification in accordance with the terms set forth in
the request; (b) that there are no breaches or defaults on the part of
Sublandlord; and (c) no more than one month’s rent has been paid in
advance.
15.2 Termination
Option. Tenant may, at its option, terminate this Lease with
respect to the Call Center Space. For the purposes of this Section
15.2, the “Call Center Space” consists of approximately 15,426 rentable square
feet on the first floor and 4,914 rentable square feet on the second floor of
the Xxxxxxx Xxxxx building. In order to exercise this option, Tenant
shall deliver written notice of its exercise at least six (6) months prior to
the desired termination date, which notice shall be accompanied by a termination
fee equal to six (6) months’ Base Rent at the rates that would be in effect for
the Call Center Space had the option not been exercised. Such
termination fee is in consideration for Tenant’s right to partially terminate
this Lease and is not an advance payment of Rent. Tenant shall
continue to pay Rent for the Call Center Space until the effective date of such
termination, which date shall be specified in the notice of
exercise. Upon the effective date of such termination, the Net
Rentable Area shall be deemed reduced by 20,340 square feet, Tenant’s Share
shall be deemed reduced accordingly, and Tenant shall have no further liability
or obligation with respect to the Call Center Space under this Lease or
otherwise. Tenant shall remove all fixtures and equipment from the
Call Center Space upon termination. The parties agree to execute an
amendment to this Lease to effectuate the intent of this Subsection 15.2 upon
Tenant’s notice of exercise.
15.3 Telecommunications. Subject
to applicable law, Sublandlord reserves to itself the exclusive right to
(a) place antennae and related facilities and other equipment for the
provision of telecommunications services (the “Telecommunications Equipment”) on
the rooftop or in other portions of the Building designated by Sublandlord for
such use, and (b) enter into license agreements or leases for the use of
such areas by commercial and other providers of telecommunications services (the
“Telecommunications Agreements”). As used in this Article XV,
“telecommunications services” shall mean the implementation, provision,
facilitation and maintenance of voice, data, video or other communication
services (or any combination of the foregoing) including, without limitation:
(a) the provision and resale of point-to-point telephone communications
(including dedicated long distance service), (b) video communications
service, (c) 800-number service, (d) telephone credit or debit card
service, (e) audio or video conferencing, paging, voice mail and message
centers, (f) data transmission service, (g) access to computer
“internet” or other networked computer-based communications, (h) satellite
or cable television, (i) wideband digital networks, (j) security
services, and (k) provision of telephone, video communication or other
telecommunication equipment to consumers of such services; whether now existing
or subsequently developed and however provided, including, without limitation,
wireless transmission and reception of communication
signals. Sublandlord shall be entitled to any and all fees or other
charges payable by any such provider of telecommunications services on account
of any Telecommunications Agreements.
15.4 Brokerage
Fees. Except as listed below, Tenant and Sublandlord represent
and warrant that neither has incurred any liability for commissions or similar
compensation to third parties in connection with this Lease, and each party
indemnifies the other against any liability arising from any claims for a breach
of the foregoing representation and warranty.
15.5 Attorney’s and
Professional’s Fees. Tenant and Sublandlord agree to reimburse
each other upon demand for reasonable attorney’s fees incurred related to a
Tenant or Sublandlord Default. In the event of litigation concerning
this Lease, the prevailing party is entitled to reimbursement of its costs
respecting such suit, or settlement thereof, including reasonable attorney’s
fees, expert fees, and fees of consultants, auditors, appraisers and other
similar professionals, such reimbursement to be paid by the unsuccessful
party.
15.6 Liability of Sublandlord and
Tenant. If Sublandlord, on the one hand, or Tenant, on the
other (in either case, the “Liable Party”), is held or found to be liable to
Tenant, on the one hand, or Sublandlord, on the other (the “Recipient Party”),
for any claim, liability, loss or expense (a “Loss”) relating to or arising from
a breach of any representation or warranty contained in this Lease, whether
based on an action or claim in contract, negligence, tort or otherwise, the
amount of damages recoverable for such Loss by the Recipient Party from the
Liable Party will not exceed $3,200,000 minus the sum of (A) the aggregate
amount of Losses arising under this Agreement and paid by the Liable Party to
the Recipient Party, and (B) the aggregate amount of any liabilities for damages
arising from a breach of any representation or warranty contained in any
Transaction Agreement paid by the Liable Party to the Recipient
Party. “Transaction Agreements” means the Purchase Agreement and the
Ancillary Agreements identified in the Purchase Agreement.
15.7 Tenant’s
Authority. Tenant agrees that if Tenant is a corporation
(including any form of professional association or corporation) or partnership
(general or limited): (i) the individual executing this Lease is duly
authorized to execute and deliver this Lease on behalf of Tenant in accordance
with Tenant’s organizational documents; (ii) this Lease is binding upon
Tenant; (iii) Tenant is duly organized and legally existing in the state of
its organization and is qualified to do business in the state in which the
Building is located; and (iv) upon Sublandlord’s request Tenant will
provide Sublandlord satisfactory evidence of such authority.
15.8 Parking. Tenant
shall have the non-exclusive right to use a proportionate share of the number of
parking spaces serving the Building equal to Tenant’s Share as set forth in
Section 1.5 above. Sublandlord may adopt reasonable rules and
regulations applicable to all parking areas from time to time, which Tenant
shall follow and cause its employees, guests, agents and invitees to follow.
15.9 Sublandlord
Approval. Sublandlord’s approval when required under the Lease
is non-technical and non-legal in nature, and Tenant remains responsible for all
technical and legal aspects of any item requiring Sublandlord’s
approval.
15.10 Unenforceability/Joint and
Several Liability. The invalidity or unenforceability of any
provision hereof will not affect or impair any other provision. If
Tenant consists of more than one person or entity, the obligations of each are
joint and several.
15.11 Headings,
Miscellaneous. The headings of the several articles,
paragraphs and sections contained herein are for convenience only and do not
define, limit or construe the contents of such articles, paragraphs and
sections. All negotiations, considerations, representations and
understandings between the parties are incorporated herein and are superseded
hereby. There are no terms, obligations, covenants, statements,
representations, warranties or conditions relating to the subject matters hereof
other than those specifically contained herein. This Lease may not be
amended or modified by any act or conduct of the parties or by oral agreements
unless reduced and agreed to in writing signed by both Sublandlord and
Tenant. No waiver of any of the terms of this Lease is binding upon
Sublandlord unless reduced to writing and signed by Sublandlord.
15.12 Force
Majeure. If Sublandlord or Tenant are prevented or delayed in
the performance of any of their covenants or obligations hereunder by
circumstances beyond their control (including, but not limited to governmental
regulations or prohibitions) such delay or nonperformance will not be a default
hereunder and will be deemed waived and accepted by the other
party.
15.13 Entire
Agreement. This Lease, the exhibits and any addendum attached
hereto (which are hereby incorporated into this Lease by this reference) set
forth the entire agreement between Sublandlord and Tenant, and there are no
other oral or written agreements between them. All prior oral or
written agreements are merged herein and superseded by this Lease.
15.14 Governing
Law. This Lease is governed by the laws of the State of
Utah.
15.15 Forum Selection; Jury Trial
Waiver. Tenant hereby knowingly, intentionally, and
irrevocably agrees that Sublandlord may bring any action or claim to enforce or
interpret the provisions of this Lease in the State and County where the
Property is located, and that Tenant irrevocably consents to personal
jurisdiction in such State for the purposes of any such action or
claim. Nothing in this Section 15.14 shall be deemed to preclude or
prevent Sublandlord from bringing any action or claim to enforce or interpret
the provisions of this Lease in any other appropriate place or
forum. Tenant further agrees that any action or claim brought by
Tenant to enforce or interpret the provisions of this Lease, or otherwise
arising out of or related to this Lease or to Tenant’s use and occupancy of the
Property, regardless of the theory of relief or recovery and regardless of
whether third parties are involved in the action, may only be brought in the
State and County where the Property is located, unless otherwise agreed in
writing by Sublandlord prior to the commencement of any such
action.
IN THE
INTEREST OF OBTAINING A SPEEDIER AND LESS COSTLY ADJUDICATION OF ANY DISPUTE,
SUBLANDLORD AND TENANT HEREBY KNOWINGLY, INTENTIONALLY, AND IRREVOCABLY WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION, PROCEEDING, CLAIM, OR
COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE OTHER ON ALL MATTERS ARISING
OUT OF OR RELATED TO THIS LEASE OR THE USE AND OCCUPANCY OF THE
PROPERTY.
15.16 Memorandum of
Lease. Tenant may not record this Lease without Sublandlord’s
prior written consent.
15.17 Not Binding
Lease. The submission of this Lease to Tenant is not an
offer. This instrument is not effective as a Lease or otherwise
unless and until executed by and distributed to both Sublandlord and
Tenant.
15.18 Successors and
Assigns. This Lease is binding upon and inure to the
respective parties herein, their heirs, executors, administrators, successors
and permitted assigns whomever.
15.19 Non-Waiver. Neither
Sublandlord’s failure to enforce or require strict performance of any provision
of this Lease, nor Sublandlord’s acceptance of Rent with knowledge of a breach
is a waiver of such breach or any future breach.
15.20 Counterparts. This
Lease may be executed in counterparts, each of which shall be deemed an
original, and all of which taken together shall constitute one and the same
Lease.
15.21 Time is of the
Essence. Time is of the essence in both Sublandlord’s and
Tenant’s performance of their obligations under this
Lease.
15.22 Survival of
Obligations. Any obligations of the parties specified to
survive the termination of this Lease shall so survive.
(Signature
page to follow)
IN
WITNESS WHEREOF, the parties hereto have caused this Lease to be executed by
their respective representatives thereunto duly authorized, as of the date first
above written.
|
SUBLANDLORD:
|
|
|
FRANKLIN
DEVELOPMENT CORPORATION,
a
Utah corporation
|
|
|
By:
|
/s/ Xxxxxx X. Xxxxxxx |
|
Its:
|
President |
|
TENANT:
|
|
|
XXXXXXXX
XXXXX PRODUCTS, LLC
a
Utah limited liability company
|
|
|
By:
|
/s/ Xxxxx Xxxx |
|
Name:
|
Xxxxx Xxxx |
|
Title:
|
Chief Executive Officer and President |
