Exhibit 10.17
SUBLEASE
This Sublease ("Sublease") is executed as of the 30th day of November,
1998 by and between Colorado Electronics Corporation, LLC, a Colorado limited
liability corporation ("Sublessor"), and Circuit Technology Corporation, a Utah
corporation ("Sublessee").
RECITALS:
A. Sublessor leases approximately 142,500 rentable square feet of space
(the "Leased Premises") in a building located at 0000-0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000, pursuant to that certain Net Lease dated
January 8, 1998 by and between Sun Borne XII, LLC, Caleb Development, LLC and
Woodmen Joint Ventures, LLP (collectively, "Master Landlord"), and ETA
Technologies Corporation ("ETA"), who has transferred its interest under such
Net Lease to Sublessor with the consent of the Master Landlord and without any
release of liability thereunder. Such Net Lease is hereinafter referred to as
the "Master Lease," a copy of which is attached hereto as Exhibit A.
B. Sublessee wishes to sublease from Sublessor that portion of
Sublessor's Premises identified on Exhibit B attached hereto, consisting of
approximately 71,500 rentable square feet of space (the "Subleased Premises"),
and Sublessor is willing to sublease the Subleased Premises to Sublessee,
subject to the terms and conditions set forth herein.
C. Any capitalized term used but not defined herein shall have the
meanings given to such terms in the Master Lease.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the sufficiency of which is hereby acknowledged,
Sublessor and Sublessee agree as follows:
1. Leasing of Property. Subject to the terms, conditions and covenants
set forth in this Sublease, Sublessor hereby leases to Sublessee, and Sublessee
hereby leases from Sublessor, the Subleased Premises, together with the right to
use approximately 123 parking spaces immediately adjacent to the east of the
Subleased Premises. Sublessee's occupancy of the Subleased Premises shall be
subject to Sublessor's right of reasonable ingress and egress through the
Subleased Premises to gain access to portions of the building not a part of the
Subleased Premises for ordinary business purposes.
2. Term. The "Term" of this Sublease shall be the remaining portion of
the Term of the Master Lease, commencing on the date this Sublease is signed by
the last party to sign as indicated beneath their respective signatures below
(the "Commencement Date"); provided, however, at any time after January 1, 2004,
Sublessee and Master Landlord shall each have the right upon twelve (12) months
prior notice to terminate this Sublease. If the Master Lease shall terminate or
if the right of possession of Sublessor and/or ETA to the Premises is terminated
without termination of the Master Lease for any reason whatsoever, this Sublease
shall not thereupon terminate, and this Sublease shall remain in effect.
3. Rent.
3.1 Base Rent. Sublessee shall pay to Sublessor, as "base rent"
(which is defined in the Master Lease as "Basic Rent") for the Subleased
Premises, an amount computed at a rate of $5.05 per rentable square foot per
calendar year subject to adjustment as provided below. During the Term of this
Sublease, such rate shall be increased by five percent (5%) on the first day of
each calendar year commencing January 1, 1999. Accordingly, during the Term of
this Sublease, monthly base rent shall be determined by multiplying (i) the
applicable rate per rentable square foot per year against (ii) the total number
of square feet of the Subleased Premises, and then dividing the result by 12.
Base rent, but not additional rent, shall be abated for the period from
the Commencement Date through November 30, 1998, and base rent shall be paid on
55,500 square feet of the Subleased Premises from December 1, 1998, through
January 31, 1999, inclusive, and thereafter, on the entire Subleased Premises;
providing, however, if Sublessee shall at any time be in default of this
Sublease, it shall immediately owe base rent on the entire Subleased Premises
commencing the Commencement Date.
All base rent shall be payable to Master Landlord in advance, on
December 1, 1998, and continuing thereafter during the Term. Sublessee shall pay
to Master Landlord upon execution of this Sublease the amount of $23,356.25 as
base rent for the month of December 1, 1998.
3.2 Additional Rent. In addition to base rent, Sublessee shall pay
to Master Landlord, as "additional rent," all additional items of expense that
Sublessor is required, pursuant to any provision of the Master Lease, to incur
on account of Sublessee's occupancy of the Subleased Premises including, without
limitation, those costs and expenses set forth in Section 3.4 of the Master
Lease. Sublessee's prorated share (50.1754% based on the number of rentable
square feet of the Subleased Premises divided by 142,500 rentable square feet)
of such costs and expenses shall be paid to Master Landlord in the same manner
as base rent, on the first day of each month during the Term of this Sublease
commencing December 1, 1998, without any abatement. Sublessee shall pay other
amounts of additional rent, if any, to Master Landlord within 10 days following
Sublessee's receipt of Sublessor's or Master Landlord's, whichever may be the
case, xxxx therefor. All remedies available to Sublessor pursuant to the terms
of this Sublease for non-payment of base rent shall be applicable to the
non-payment of additional rent. Whenever the word "rent: is used in this
Sublease it shall be deemed to include additional rent unless the context
specifically or clearly implies that only base rent is referenced.
3.3 Method of Payment. All rent shall be paid to Master Landlord
at the address for Master Landlord set forth in the Master Lease or at any other
place designated in writing by Master Landlord. All rent shall be paid hereunder
without notice, demand, deduction, abatement, setoff or counterclaim, in lawful
money of the United States of America.
4. Security Deposit. Sublessee shall deposit with Master Landlord upon
the execution of this Sublease the sum of $30,089.58 as a security deposit for
Sublessee's faithful performance of Sublessee's obligations hereunder. If
Sublessee fails to pay rent or other charges due hereunder, or otherwise
defaults with respect to any provision of this Sublease, Master Landlord may
use, apply or retain all or any portion of said deposit for the payment of any
rent or other charges in default or for the payment of any other sum to which
Sublessor may become obligated by reason of Sublessee's default, or to
compensate Master Landlord for any loss or damage which Master Landlord may
suffer thereby. If Master Landlord so uses or applies all or any portion of said
deposit, Sublessee shall within 10 days after written demand therefor deposit
cash with Master Landlord in an amount sufficient to restore said deposit to the
full amount hereinabove stated and Sublessee's failure to do so shall be a
breach of this Sublease, and Sublessor or Master Landlord may at its option
thereupon terminate this Sublease. Master Landlord shall not be required to keep
said deposit separate from its general accounts and Sublessee shall not be
entitled to interest on said deposit. Within 30 days after the expiration of
this Sublease, on condition Sublessee has vacated the Subleased Premises and has
fully and faithfully performed every provision of this Sublease to be performed
by it, the security deposit or any balance thereof shall be returned to
Sublessee.
5. Utilities. Charges for all utilities provided to the Subleased
Premises shall be paid for directly by Sublessee, provided that until such time
as electricity supplied to the building including the Subleased Premises is
separately metered, electricity charges shall be prorated between the parties on
an equitable basis based on usage and shall be paid by Sublessee to Master
Landlord as additional rent pursuant to Sections 3.2 and 3.3 hereof. The cost of
installing a separate electric meter for the Subleased Premises shall be paid
for by Sublessor. Sublessee shall proceed with due diligence after the
Commencement Date to install the separate meter.
6. Maintenance and Repairs. Sublessee shall maintain, repair, replace
and keep the Subleased Premises and all improvements therein in good, safe and
sanitary condition, order and repair and in accordance with all applicable laws,
and to pay all costs and expenses in connection therewith. All maintenance and
repairs by Sublessee will be done promptly, in a good workmanlike fashion, free
and clear of all liens and claims for liens and without diminishing the original
quality of the Subleased Premises.
7. Use of Premises. Sublessee shall use the Subleased Premises only for
the uses permitted by the Master Lease and for no other purpose.
8. Condition and Alteration of the Subleased Premises. Sublessee
acknowledges that it has inspected and is aware of the condition of the
Subleased Premises; that Sublessee, together with its architects, engineers and
contractors, have been allowed access to the Subleased Premises for the purpose
of inspecting same and evaluating the condition thereof; and that the obligation
to prepare the Subleased Premises for Sublessee's occupancy shall rest entirely
on the Sublessee. Sublessee hereby accepts the physical condition of the
Subleased Premises in their present state, AS-IS, subject to the making of
leasehold improvements thereto by Sublessee in accordance with and subject to
the terms and conditions of the Master Lease as incorporated herein by
reference; provided that, if required by the Master Landlord, Sublessee at the
expiration of the Term shall, at its expense, remove such leasehold improvements
and restore the Subleased Premises to their condition existing on the
Commencement Date, ordinary wear and tear excepted.
9. Effectiveness and Applicability of Master Lease. This Sublease is
subject and subordinate to the terms and conditions of the Master Lease.
Sublessee shall not commit or permit to be committed any act (including acts of
omission) which shall violate any term or condition of the Master Lease. All of
the terms and conditions contained in the Master Lease are hereby incorporated
herein by this reference as if fully set forth herein, with each reference
therein to Landlord and Tenant being deemed to be references, respectively, to
Sublessor and Sublessee herein; provided, however, (i) that the time periods for
the giving of any notice by so to Sublessee required or permitted hereunder
shall be three (3) business days less than is provided in the Master Lease for
the giving of notice by Master Landlord to Tenant thereunder, and the time
periods for the giving of any notice by Sublessee to Sublessor required or
permitted hereunder shall be three (3) business days more than is provided in
the Master Lease for the giving of notice by Tenant to Master Landlord
thereunder and (ii) Sublessee shall have no obligations under Sections: 7.5.2,
7.5.3, 7.27, 7.28 and 13.17 of the Master Lease and those sections are not
incorporated herein. If the Master Lease is terminated by Master Landlord or the
right of possession of Sublessor and/or ETA to the Premises is terminated under
the Master Lease, Sublessee shall be deemed to be the Tenant and Master Landlord
the Landlord under the Master Lease, each to have the respective rights and
obligations of those parties under the Master Lease as modified in the prior
sentence. In addition, Sublessee waives, with respect to this Sublessee, all
rights, statutes and benefits which Sublessor has waived pursuant to the Master
Sublease.
Notwithstanding the foregoing provisions to this Section 9, Sublessee
hereby agrees that Sublessor shall not be obligated by this Sublease to perform
any duties of the "Landlord" under the Master Lease as incorporated herein, and
the Sublessee shall look solely to the Master Landlord for the performance of
such duties. If Sublessee fails to comply with all terms and conditions of this
Sublease, Master Landlord may at its election, take all actions and be entitled
to all remedies of Sublessor as a result of Sublessee's noncompliance, directly
against Sublessee.
10. Sublessor's Obligations. Sublessor agrees to maintain the Master
Lease during the Term of this Sublease subject, however, to any earlier
termination of the Master Lease without the fault of Sublessor. Sublessor also
agrees to comply with or perform all of its obligations under the Master Lease,
except as between Sublessee and Sublessor only, for those obligations that
Sublessee has agreed to perform under this Sublease. Such obligations of
Sublessee shall not relieve Sublessor of those obligations as to Master Landlord
under the Master Lease.
11. Attorneys Fees. IF any action or other proceeding arising out of
this Sublease is commenced by either party to this Sublease concerning the
Subleased Premises, then as between Sublessor and Sublessee, the prevailing
party shall be entitled to receive from the other party, in addition to any
other relief that may be granted, the reasonable attorneys' fees, costs, and
expenses incurred in the action or other proceeding by the prevailing party.
12. Notices. Every notice, demand, request, consent, approval or other
communication (herein without distinction sometimes referred to as "notices")
which Sublessor or Sublessee is respectively required or desires to give or make
or communicate upon or to the other shall be in writing and shall be given or
made or communicated by personally delivering same or by mailing the same by
registered or certified mail, first class postage and fees prepaid,
return-receipt requested, to the other at the Leased Premises or Subleased
Premises, as the case may be, or to such other address or addresses as any party
hereto may designate from time to time and at any time by notice given as herein
provided. Al l notices so sent shall be deemed to have been delivered,
effective, made or communicated, as the case may be, at the time that the same
and the required copies, if any, shall have been personally delivered or
deposited, registered or certified, properly addressed, as aforesaid, postage
and fees prepaid, return-receipt requested, in the United States mail. Sublessor
and Sublessee shall promptly deliver to the other a copy of each and every
notice or correspondence it delivers or receives to or from the Master Landlord
and/or its representatives and agents regarding this Sublease and/or the
Subleased Premises.
13. Execution in Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.
14. Governing Law. This Sublease shall be governed by and construed in
accordance with the laws of the State of Colorado.
15. Brokers and Finders. Sublessee represents and warrants to Sublessor
that it has dealt with no broker or finder in connection with this Sublease
and/or the Subleased Premises. In the event that any claim for a brokerage fee
or finder's fee is made in connection with the transactions contemplated hereby,
the party through whom such claim is made shall indemnify and hold harmless the
other party with respect to such claim.
16. Representation. Sublessor and Sublessee each represents and
warrants to the other that such party has full right and lawful authority to
enter into this Sublease.
17. Condition Precedent. If the consent hereto of the Master Landlord
is required, the effectiveness of this Sublease is expressly subject to
obtaining such consent and Sublessor shall promptly undertake to secure such
consent. Sublessee's right to possession of the Subleased Premises is subject to
it first providing to Sublessor and Master Landlord proof of insurance with
respect to the Subleased Premises as required under the Master Lease.
18. Equipment Purchase. Sublessee hereby agrees to pay to Master
Landlord in escrow upon execution of this Sublease $100,000.00 ("Equipment
Deposit") to be applied towards Sublessor's arrears rent under the Master Lease
in return for Sublessor's fixtures and equipment in the Subleased Premises by a
previous agreement between Sublessor and Sublessee. The Equipment Deposit shall
be made payable by Sublessee to the trust account of Master Landlord's counsel,
Enoch & Enoch, P.C. ("Escrow Agent"). Escrow Agent shall disburse the Equipment
Deposit to Master Landlord at such time as Sublessee has received possession of
the Subleased Premises and a xxxx of sale and position of the fixtures and
equipment it intends to purchase from Sublessor and the liens of Union Bank, TRW
and Master Landlord against such fixtures and equipment have been released or
terminated (collectively, "Satisfaction of Contingencies"). Master Landlord and
Sublessee agree to give written notice to Escrow Agent of the Satisfaction of
Contingencies. Upon receipt of such written verification, Escrow Agent shall
disburse the Equipment Deposit to Master Landlord. In the event of a dispute
over the duties or obligations of Escrow Agent or the disbursement of the
Equipment Deposit, Escrow Agent may at its sole discretion interplead the
Equipment Deposit into the El Paso County, Colorado District Court and
thereafter, it shall be relieved of any further liabilities or obligations with
respect to the escrow or Equipment Deposit. Sublessor, Sublessee and Master
Landlord waive any actual or apparent conflict of interest by Escrow Agent
acting in such capacity and also as counsel for Master Landlord. Notwithstanding
the foregoing, the Equipment Deposit shall be disbursed by Escrow Agent to
Sublessee if this Sublease is terminated by Sublessee as provided under Section
19 below. This Sublease is not contingent upon the occurrence of the
Satisfaction of Contingencies.
19. Landlord's Lien Contingency. This Sublease and all obligations of
Sublessee hereunder are contingent upon Sublessee's receipt on or before
December 5, 1998 from Master Landlord's commercial lender a written agreement to
waive the lien rights under Section 11.6 of the Master Lease with respect to
Sublease. If the lender's written consent is not obtained on or before said
date, the contingency shall be deemed waived unless within five (5) days
thereafter, Sublessee gives written notification of its election to terminate
this Sublease. If Sublessee so elects to terminate this Sublease, all funds paid
to Escrow Agent and Master Landlord shall be promptly repaid to Sublessee.
Sublessee shall not be entitled to possession of the Subleased Premises until
this lien contingency has been satisfied or waived.
20. Personal Guaranties. The performance of all obligations of
Sublessee under this Sublease, is personally guaranteed by ALL SHAREHOLDERS OF
CTC pursuant to the guaranty below.
IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be
executed as of the date and year first written above.
COLORADO ELECTRONICS CORPORATION, LLC
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------------------
Its: General Manager
-----------------------------------------------
Date: January 6, 1998
----------------------
CIRCUIT TECHNOLOGY CORPORATION
By: /s/ Xxxxx Xxxxxxxx
------------------------------------------------
Name: Xxxxx Xxxxxxxx
----------------------------------------------
Its: President
-----------------------------------------------
Date: November 30, 1998
----------------------
AGREED AND APPROVED:
ETA TECHNOLOGIES CORPORATION
By:
--------------------------------------------------
Name:
------------------------------------------------
Its:
-------------------------------------------------
Date: , 1998
----------------------
