EXHIBIT 10.37
SUBLEASE AGREEMENT
This Sublease Agreement (this "Sublease"), made and entered into this
20th day of December, 2002, by and between Ultrak Operating, L.P., a Texas
limited partnership ("Ultrak"), and Pittway Corporation, a Delaware corporation
("Pittway") and wholly-owned subsidiary of Honeywell International Inc., a
Delaware corporation.
RECITALS
WHEREAS, Ultrak is the tenant pursuant to that certain Lease Agreement
dated December 17, 2001 (as amended, the "Prime Lease"), by and between
Briarwood Waters Ridge LP, as landlord ("Landlord"), and Ultrak, as tenant, for
those certain premises (the "Premises") comprised of the land and the building
(the "Building") located at 0000 Xxxxxx Xxxxx Xxxxx in Lewisville, Texas. A true
and correct copy of the Prime Lease is attached hereto as Exhibit A.
WHEREAS, Ultrak, Landlord and Pittway are parties to that certain
Consent to Sublease Agreement and First Amendment to Lease Agreement dated
December 20, 2002 amending the Prime Lease and granting Landlord's consent to
Ultrak and Pittway's entrance into this Sublease.
WHEREAS, Ultrak desires to sublease a portion of the Premises to
Pittway, and Pittway desires to sublease the same from Ultrak, upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises to be subleased, the
mutual covenants and agreements herein contained, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it
is hereby agreed by and between the parties hereto as follows:
AGREEMENT
1. Subleased Premises, Access and Building Percentage. Ultrak hereby
subleases unto Pittway, and Pittway hereby subleases from Ultrak, subject to the
terms and conditions set forth in this Sublease, those certain premises (the
"Subleased Premises") identified on attached Exhibit B. Pittway's "Building
Percentage" of the Building is the quotient of the number of square feet
comprising the Subleased Premises divided by the number of total square feet of
useable warehouse and office space minus the total square feet of the to be
agreed to common areas. Pittway will have access to, and egress from, the
Building and the Subleased Premises by way of the common lobby area identified
on attached Exhibit B. Pittway has the right to construct, at its sole cost and
expense and upon receipt of prior written consent from Ultrak, which consent
will not be unreasonably withheld, and provided Pittway provides Ultrak with
access codes or other means of access to the Sublease Premises: (i) its own
access to the Subleased Premises from the common lobby areas; (ii) at its
option, either install its own access control system or use Ultrak's existing
access control system at those points which Pittway deems reasonably necessary,
including, without limitation, points in the common lobby areas; (iii) a
demising wall on the second floor of the Building; and (iv) a fence in the
warehouse area
of the Building (the items described in i, ii, iii and iv are collectively the
"Initial Improvements").
2. Term and Extension Option. The initial term ("Initial Term") of this
Sublease commences on the date hereof (the "Commencement Date"), and expires on
the date that is the last day of the month in which the first anniversary of the
Commencement Date occurs, unless sooner terminated as provided in this Sublease.
2.1 Pittway has the option ("Extension Option") to extend the
Initial Term of this Sublease for one extension term ("Extension Term") expiring
on the scheduled expiration date of the term under the Prime Lease. The
Extension Term will be on all of the same terms and conditions set forth in this
Sublease; provided, however, (i) annual Rent, as defined below, will be
$655,848.00 payable in equal monthly installments of $54,654.00; and (ii) that
if the total dollar amount for either (i) utilities (which are not separately
metered and payable by Pittway) and/or (ii) real estate taxes payable for the
Building increase during the Extension Term by five percent or more, pro rata
based on the number of days in the Extension Term, of the amounts payable
therefor during the Initial Term, Rent payable under Section 3.1 will be
increased by Pittway's Building Percentage of such increase in excess of five
percent (5%) of the amounts payable therefor during the Initial Term. Ultrak
shall, upon receipt of Pittway's written request, substantiate such increases
with evidence reasonably acceptable to Pittway. Pittway will give written notice
to exercise the Extension Option at least three (3) months prior to the
expiration of the Initial Term.
2.2 The Initial Term and the Extension Term are collectively called
the "Term".
3. Rent, Utilities and Taxes.
3.1. Commencing on the Commencement Date and continuing thereafter
on the first day of each month during the Term, Pittway shall pay to Ultrak
annual rent ("Rent") of $276,248.00 in equal monthly installments of $23,020.67;
subject, however, to increase as permitted under Section 2.1 of this Sublease.
Except as specifically provided in this Sublease, this Rent is inclusive of all
amounts that Pittway is required to pay under this Sublease. Rent for partial
months will be prorated based upon the number of days within the subject month.
Pittway shall pay Rent to Ultrak as the same shall become due, without demand,
reduction or set off of any kind except as expressly permitted by this Sublease
or the Prime Lease.
3.2. Pittway shall pay all charges incurred for any telephone or
other telecommunications services (including but not limited to computer
Internet access fees) used by Pittway on the Subleased Premises; provided,
however, that Pittway is not required to pay for such charges under this Section
3.2 to the extent that it is required to pay for such charges under that certain
Transitional Services Agreement dated as of even date herewith by and between
Pittway and Ultrak. In addition, Pittway shall pay all taxes levied against its
personal property as provided in Section 7(d) of the Prime Lease.
4. Prime Lease. Except as excluded in Section 4.1 below, (a) Pittway
agrees to assume and perform, according to the terms of the Prime Lease, all of
the duties, covenants,
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agreements and obligations of Ultrak under the Prime Lease, as the same may be
applicable to the Subleased Premises as if Pittway were the tenant under the
Prime Lease and (b) as between Ultrak and Pittway, Ultrak shall have all of the
rights and remedies reserved by and granted to Landlord in the Prime Lease as if
Ultrak was the "Landlord" thereunder, including but not limited to the
provisions of Section 17 (Default) of the Prime Lease, which shall apply to
Pittway's obligations under the Prime Lease and this Sublease.
4.1. The following provisions of the Prime Lease are expressly
excluded from this Sublease:
o Section 1, Premises and Term;
o Section 3, Minimum Rent; Security Deposit;
o Section 4, Payments;
o Section 6, Utility Charges;
o Sections 7(a), (b), (c) and (e), Taxes;
o Section 8(d);
o Section 10, Repairs;
o Section 13, Damage by Fire or Other Casualty;
o Section 14, Condemnation;
o Section 15(c), (d) and (e), Liability and Indemnification;
o Section 16, Assignment and Subletting;
o Section 18, Inspection by Landlord;
o Section 21, Notice and Payment;
o Section 22, Net Lease;
o Section 26, Purchase Option;
o Section 27, Tenant's Information;
o Section 44, Landlord's Lien;
o Section 50, Intention of Parties; Contingent Security
Interest; and
o Any obligations under that certain letter dated December 17,
2001 (a copy of which is attached hereto as Exhibit C),
regarding the subleasing of the Premises.
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4.2. Subject to Ultrak's obligations under Section 10 of this
Sublease, Pittway agrees that it will take good care of the Subleased Premises
and will keep them in good condition and repair, will commit no waste or
nuisance, and will not do, suffer, or permit to be done any injury to the same.
To the extent applicable, at all times during the Term, Pittway shall cause the
Subleased Premises to comply with the terms of the Master Declaration of
Covenants, Restrictions, and Development Standards Applicable to Waters Ridge
dated June 1, 1984 (Vol. 1423, P. 000 Xxxx Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx, to
which the Premises (including the Subleased Premises) and the Building are
subject.
4.3. Pittway shall neither do nor permit anything to be done which
would cause the Prime Lease to be terminated or forfeited or any claims to
accrue to the benefit of Landlord by reason of any right of termination or
forfeiture reserved or vested in Landlord under the Prime Lease, or any right
for Landlord to claim damages under the Prime Lease. Pittway shall defend, hold
harmless and indemnify Ultrak from any loss, damage or expense, including
reasonable attorneys' fees, arising from the breach of the terms of the
preceding sentence.
4.4. It is hereby understood and agreed that Pittway's rights to
use, possess and enjoy the Subleased Premises are subject and subordinate to the
terms and conditions of the Prime Lease and the rights and remedies of Landlord
and Ultrak thereunder.
5. Title and Possession. Subject to receipt of the attached Landlord's
Consent to Sublease, Ultrak covenants and agrees that it has full right and
authority to enter into this Sublease for the full Term hereof, and that
Pittway, upon paying the Rent and other sums when and as provided herein, and
upon performing the duties, covenants, agreements and obligations hereof, and
upon keeping and obeying all of the restrictions, conditions and provisions
hereof, and subject to the terms of the Prime Lease and this Sublease, will
have, hold and enjoy quiet possession of the Subleased Premises for the Term
herein granted.
6. Sublease and Assignment. Pittway, on notice to Ultrak and Landlord
(but without Ultrak or Landlord's consent), may assign this Sublease or sublet
all or part of the Premises to any "Affiliates", provided such Affiliate assumes
all of the obligations of Pittway hereunder relating to the sublet portion of
the Subleased Premises and Pittway remains obligated for the payment of Rent and
the performance of all other obligations hereunder. An Affiliate is any company
controlling, controlled by or under common control with Pittway, as well as any
entity acquiring all or substantially all of Pittway's assets. A transfer of an
ownership interest in Pittway is not an assignment of this Sublease. Any other
assignment, transfer, mortgage, encumbrance or sublease by Pittway will require
Ultrak and Landlord's consent, which shall not be unreasonably withheld,
conditioned or delayed by either of them.
7. Damage, Casualty and Condemnation. In the event of damage or
destruction of fifty percent (50%) or more of the Subleased Premises or the
taking of all or at least fifty percent (50%) thereof under the power of eminent
domain, either party may terminate this Sublease upon ten (10) days prior
written notice to the other party; provided such notice is delivered within
twenty (20) days after the occurrence of such event.
8. Waiver of Claims; Subrogation. Notwithstanding any provision of this
Sublease to the contrary, Ultrak and Pittway each hereby waives any and all
rights of recovery, claim,
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action or cause of action, against the other and against Landlord, their agents
(including partners, both general and limited), officers, directors,
shareholders or employees, for any loss or damage that may occur to the
Subleased Premises, or any improvements thereto, or the Building, or any
improvements thereto, or any property of such party therein, by reason of fire,
the elements, or any other cause which are insured against under the terms of
standard fire and extended coverage insurance policies, regardless of cause or
origin, including negligence of the other party hereto, its agents, officers or
employees, and each covenants that its insurers will hold no right of
subrogation against such other party.
9. Alterations. The parties agree Pittway is taking the Subleased
Premises, "as is", "where is" and with all faults. Pittway shall not make any
alterations, additions or improvements to the Subleased Premises without the
prior written consent of Landlord and Ultrak, which consent Ultrak will not
withhold if Landlord has granted its consent. All alterations, additions and
improvements that are approved must be made at Pittway's sole cost and expense.
Upon the termination of the Term, all such alterations, additions and
improvements will be and remain part of the Subleased Premises and Pittway will
not be permitted to remove such alteration or improvement unless required to do
so by Ultrak and/or Landlord at the time that either Ultrak or Landlord grants
its consent for the installation or construction thereof. Ultrak hereby consents
to Pittway's installation of a phone system into the Subleased Premises and
agrees that Pittway may, but is not required, to remove such system upon the
expiration or earlier termination of this Sublease. Pittway shall not, and shall
not permit any party to, impose or cause to be filed, any mechanic's or
materialmen's liens encumbering the Premises, the Building or any part thereof.
Pittway covenants and agrees to indemnify Ultrak and Landlord against, and holds
Ultrak and Landlord harmless from, all liens, whether for labor or materials
arising as the result of alterations, additions, repairs, or improvements to the
Subleased Premises made by Pittway during the term of this Sublease. The parties
shall mutually agree upon the modifications required to adequately separate the
Subleased Premises from the remainder of the Premises. Pittway shall pay its
Building Percentage of the cost of such modifications, except with respect to
the modifications described in Section 1, which shall be at Pittway's sole costs
and expense.
10. Maintenance, Repair and Replacement. Ultrak shall maintain, repair
and, as necessary, replace all elements of the Building and the Subleased
Premises including, without limitation, the foundation, all structural elements,
the roof and roof membrane, common areas, parking areas and all Building
systems, including, without limitation, mechanical, electrical, plumbing, sewer,
fire-life-safety, and heating, ventilating and air conditioning systems. Other
than keeping the Subleased Premises clean and orderly, and replacing light bulbs
and other consumables on the Subleased Premises, Pittway is not required to
perform any maintenance, repairs or replacements unless the same are required
due to the acts or omissions or negligence of Pittway or its employees, agents
or invitees.
11. Notices. All notices and notifications under this Lease to be sent
from one party to the other must be in writing and sent by a nationally
recognized private carrier of overnight mail (e.g., Federal Express) or by
United States certified mail, return receipt requested and postage prepaid to
the other party as set forth below. Each such mailed notice or communication is
deemed to have been given to, or served upon, the party to which addressed on
the earlier of the date it is received if hand delivered, one business day after
the date the same is deposited with the courier, or three business days after
the same is deposited with the United States
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registered or certified mail, postage prepaid, properly addressed in the manner
above provided. Any party hereto may change its address for the service of
notice hereunder by serving written notice hereunder upon the other party
hereto, in the manner specified above, at least 10 days prior to the effective
date of such change.
Ultrak: Ultrak Operating, L.P.
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
ATTN: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Gardere Xxxxx Xxxxxx LLP
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
ATTN: Xxxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
Pittway: Honeywell International Inc.
0000 Xxxxxxx Xxxxx
Xxxxxx Xxxxxx, XX 00000-0000
ATTN: Xxxxxx X. Xxxxxxx, Vice
President & General Counsel
Facsimile: (000) 000-0000
with a copy to: Honeywell International Inc.
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
ATTN: Xxxx Xxxxxxxxxx,
General Counsel
Facsimile: (000) 000-0000
12. Surrender of Subleased Premises; Current Condition of Subleased
Premises. Upon the expiration or earlier termination of the Term of this
Sublease, Pittway will quit and surrender possession of the Subleased Premises
to Ultrak in as good order and condition as the same are now or hereafter may be
improved by Landlord, Ultrak or Pittway, reasonable wear and tear and casualty
loss excepted. To the extent Pittway's property remains in the Subleased
Premises after the expiration of the Term such property is deemed abandoned and
Ultrak has the right to remove and store the same at Pittway's cost, or to
assert control and ownership over, and use of, the same. PITTWAY ACKNOWLEDGES
THAT IT IS TAKING THE SUBLEASED PREMISES IN AN "AS IS" CONDITION. No promise of
Ultrak to alter, remodel or improve the Premises, the Subleased Premises, or any
portion thereof, and no representation respecting the condition of the Subleased
Premises or its compliance with Applicable Laws (as defined in the Prime Lease)
has been made by Ultrak or any employee, agent or representative of Ultrak to
Pittway.
13. Termination of Prime Lease. It is understood and agreed by and
between the parties hereto that the existence of this Sublease is dependent and
conditioned upon the continued existence of, and subject to, the Prime Lease,
and in the event of the termination of the
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Prime Lease for reasons other than a negotiated termination thereof by Landlord
and Ultrak, this Sublease automatically will be terminated; provided, however,
that this provision will not be deemed to release Ultrak from liability if the
Prime Lease is terminated by reason of a default by Ultrak as tenant under the
Prime Lease, which default did not result, in whole or in part, from a default
by Pittway hereunder. Pittway will have no recourse against Ultrak if the Prime
Lease is terminated by reason of a default by Pittway hereunder, or by any
reason other than a default by Ultrak under the Prime Lease. Notwithstanding the
foregoing, in the event the Prime Lease is terminated prior to the expiration of
the Term, Pittway shall use commercially reasonably efforts to mitigate any
damages caused by such event.
14. Waiver. A waiver by any party of any default, breach or failure
under this Sublease by the other party will not be construed as a waiver of any
subsequent or different default, breach or failure.
15. Successors and Assigns. All of the terms, covenants, provisions and
conditions of this Sublease are binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
16. Captions. The captions used on the sections of this Sublease are
for convenience only, are not a part of this Sublease, and are not to be
considered in the interpretation hereof.
17. Consent of Landlord. This Sublease is contingent upon approval by
Landlord manifested by Landlord's execution of the Consent to Sublease attached
hereto. Unless and until Landlord executes the Consent to Sublease, this
Sublease is of no force or effect, and the parties hereto have no liability or
obligation to each other.
18. Relationship of Parties. This Sublease does not and will not create
the relationship of principal and agent, or of partnership, or of joint venture,
or of any other association between Ultrak and Pittway, the sole relationship
between the parties hereto being strictly that of landlord and tenant.
19. Broker's Warranty. Each of Ultrak and Pittway warrants and
represents that it has not dealt with any real estate broker in connection with
this Sublease. The party who breaches this warranty will defend, hold harmless
and indemnify the other from any loss, damage or expense, including reasonable
attorneys' fees, arising from the breach.
20. Counterparts--Signatures This Sublease may be executed in multiple
counterparts each of which are deemed to be an original and all of which, taken
together, shall be one and the same instrument. Electronic or facsimile
signatures shall be deemed to be original signatures hereof.
21. Parking and Signage Rights. Pittway is entitled to use at least 100
parking stalls, on a non-exclusive basis and at no additional cost, in the
parking areas serving the Building. Pittway may install such Building and
Sublease Premises signage as Pittway deems necessary subject to the terms and
provisions of the Prime Lease and the consent of Ultrak, which consent Ultrak
will not unreasonably withhold if Landlord consents to such signage.
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22. Landlord's Right to Enter Subleased Premises. Ultrak and Landlord
may, upon reasonable prior notice and with an escort provided by Pittway, enter
the Subleased Premises for the purpose of inspecting and examining the same, and
for all other reasonable purposes; provided, however, that no such notice or
escort is required in the event of an emergency.
23. Access to Fitness Room, Cafeteria, and Roof. Pittway has the right,
at no additional cost or rent, to access and use the fitness room and cafeteria
located in the Building at those times when the fitness room and cafeteria are
normally open to employees of Ultrak; provided, however, that Pittway shall pay
for all costs previously approved by Pittway in writing and actually incurred by
Ultrak in connection with improvements made to the Building to accommodate such
access, including but not limited to installation and/or modification of
additional access control systems, walls and/or other barriers; provided,
further, however, that Pittway may, in lieu of agreeing to pay for such costs,
surrender its right to use the fitness room and/or the cafeteria. Pittway has
the right, at no additional cost or rent, to access and use the roof of the
Building for the limited purpose of demonstrating products it sells as part of
its business operations at the Subleased Premises. Ultrak will, to the extent
necessary, deliver keys to Pittway to access these areas. Pittway agrees to
comply with any reasonable requirements Ultrak may have with respect to
Pittway's access to the fitness room, cafeteria and roof, including but not
limited to requiring Pittway's employees to sign a waiver and indemnification as
a condition to access to the fitness room and requiring an Ultrak escort to
accompany any person(s) accessing the roof.
24. Mutual Indemnification. Pittway hereby agrees to indemnify and hold
Ultrak, its contractors, employees, officers, partners and shareholders harmless
from and against any and all costs, damages, claims, liabilities and expenses
(including reasonable attorneys' fees) suffered by or claimed against Ultrak,
resulting from Pittway's use and occupancy of the Subleased Premises, any
negligence of Pittway or its employees, contractors or invitees, or any failure
of Pittway to comply with the terms of this Sublease. Ultrak hereby agrees to
indemnify and hold Pittway, its contractors, employees, officers, partners and
shareholders harmless from and against any and all costs, damages, claims,
liabilities and expenses (including reasonable attorneys' fees) suffered by or
claimed against Pittway, resulting from any negligence of Ultrak, or its
employees, contractors or invitees in the Building, or any failure of Ultrak to
comply with the terms of this Sublease.
25. Compliance with Applicable Laws. Notwithstanding the provisions of
Sections 2 and 5 of the Sublease to the contrary, as between Ultrak and Pittway,
and except to the extent affected by Pittway's particular use of the Subleased
Premises, Ultrak shall be responsible for the compliance of the Subleased
Premises, the Building, the common areas and the land on which they are located
with Applicable Laws. Pittway shall be responsible for compliance with all
Applicable Laws which are applicable to Tenant's particular use and manner of
use of the Subleased Premises. If Pittway's particular use of the Subleased
Premises violates any Applicable Laws, Pittway shall bear all expense and
liability for compliance with such Applicable Laws. Neither party shall commit
any act or omit to take any action, the result of which would be the loss of the
Free Trade Zone status in the warehouse portion of the Building.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be executed
as of the day and year first above written.
ULTRAK OPERATING, L.P.,
a Texas limited partnership
By: Ultrak GP, Inc. a Texas corporation,
its General Partner
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Name: Xxxxx Xxxxxx
Its: Vice President, Chief Financial
Officer and Secretary
PITTWAY CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
Its: Assistant Secretary
Exhibit A
Prime Lease
Exhibit B
Subleased Premises
(See Attached)
Exhibit C
December 17, 2001 Letter
