SUBLEASE AGREEMENT
Exhibit No. 10(A)
This Sublease Agreement (this “Sublease”) is entered into as of August 21, 2006, by and
between Progressive Casualty Insurance Company ("Sublandlord"), and Acme Operating Corporation
(“Subtenant”).
In consideration of the mutual covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Sublandlord and
Subtenant hereby agree as follows:
1. Definitions. For purposes of this Sublease, the following terms shall have the meanings
respectively indicated:
“Aircraft” shall mean the aircraft described in Exhibit “A”, attached hereto and made a part
hereof, as the same may be amended from time to time.
“Airport” shall mean the Cuyahoga County Airport, Richmond Heights, Ohio.
“County” shall mean the Board of County Commissioners of Cuyahoga County, Ohio.
“Hangar” shall mean the entire real property, airplane hangar and other improvements located
at 00000 Xxxxxx-Xxxxxx Xxxxxxx, Xxxxxxxx Xxxxxxx, Xxxx and being leased by Sublandlord from the
County, as more fully described in the Master Lease.
“Master Lease” shall mean the Lease, dated September 14, 2006, between the County and
Sublandlord, a copy of which is attached hereto as Exhibit “B” and made a part hereof.
“Prorata Share” shall mean fifty percent (50%).
“Subleased Premises” shall mean the following portions of the Hangar: (a) the office area,
consisting of approximately 1,000 square feet, as shown on the floor plan attached hereto as
Exhibit “C” and made a part hereof (the “Office Area”); and (b) the hangar and shop areas,
consisting of approximately 13,750 square feet, as shown on Exhibit “C” (collectively the “Hangar
Area”).
2. Sublease. Sublandlord hereby subleases to Subtenant the Subleased Premises. Subtenant
shall have the exclusive use of the Office Area, but shall be obligated to share the Hangar Area
with Sublandlord. The Office Area shall have a separate private exterior entrance.
3. Master Lease.
a. All of the terms, provisions, rights, conditions and obligations contained in the Master
Lease are hereby incorporated into this Sublease as an agreement between Sublandlord and Subtenant
as though Sublandlord were the landlord under the Master Lease and Subtenant were the tenant under
the Master Lease. Notwithstanding the foregoing, Subtenant recognizes that Sublandlord’s
performance of certain obligations required hereunder are conditioned upon due performance by the
County of its obligations under the Master Lease. In the event that the County fails or refuses to
perform any such obligation under the Master Lease, Sublandlord’s obligation under this Sublease
shall be limited to using commercially reasonable efforts (which shall not require Sublandlord to
pursue any litigation against the County) to obtain the required performance from the County, and
in no event shall Sublandlord be in breach of this Sublease for any failure or refusal of the
County to so perform its obligations under the Master Lease.
b. Sublandlord represents and warrants to Subtenant that the Master Lease is in full force and
effect, that neither Sublandlord nor, to the best of Sublandlord’s knowledge, the County
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is in default of their respective obligations under the Master Lease, and Sublandlord has
neither given nor received a notice of default pursuant to the Master Lease.
c. Except as otherwise specifically set forth herein, this Sublease is subject and subordinate
to the Master Lease, and shall terminate upon the expiration or earlier termination of the Master
Lease. Notwithstanding the foregoing, Sublandlord covenants: (i) not to voluntarily terminate the
Master Lease (provided that this provision shall not limit Sublandlord’s rights under applicable
law in the event of a material breach by the County under the Master Lease); (ii) not to modify the
Master Lease so as to adversely affect Subtenant’s rights hereunder without Subtenant’s prior
written consent; and (iii) not to permit the termination of the Master Lease as a result of any
breach or default by Sublandlord thereunder (provided that Sublandlord shall not be deemed to be in
violation of this clause if such breach or default results from any act or omission of Subtenant).
d. Whenever the consent of the County is required under the Master Lease for any matter
requested by Subtenant hereunder, Sublandlord agrees to use commercially reasonable efforts to
obtain, at Subtenant’s sole cost and expense, such consent on behalf of Subtenant.
4. Term. The term (“Term”) of this Sublease shall be five (5) years, beginning on October
1, 2006 (the “Sublease Commencement Date”) and ending on September 30, 2011. The options to renew
set forth in Article II of the Master Lease are not included in this Sublease and shall not inure
to the benefit of Subtenant. Rather, Subtenant’s renewal rights are governed by paragraph 21
below.
5. Rent. Beginning on the Sublease Commencement Date, Subtenant shall pay the following
charges (collectively “Rent”) to Sublandlord, without deduction or setoff of any kind, at the
address specified in paragraph 22 below (or such other address as Sublandlord shall designate in
writing):
a. Base Rent. Subtenant shall pay base rent (“Base Rent”) on or before the first day
of each calendar month according to the following schedule:
| Year | Annual Rent | Monthly Rent | ||
1 |
$43,234.00 | $3,602.83 | ||
2 |
$43,234.00 | $3,602.83 | ||
3 |
$43,234.00 | $3,602.83 | ||
4 |
$43,234.00 | $3,602.83 | ||
5 |
$43,234.00 | $3,602.83 |
If the Term does not commence on the first day of a calendar month or expire or terminate on the
last day of a calendar month, the Rent for such partial month shall be prorated accordingly.
b. Additional Rent — Operating Expenses. Beginning on the Sublease Commencement Date,
Subtenant shall pay to Sublandlord on a monthly basis, as additional rent, an amount equal to
one-twelfth (1/12) of Subtenant’s Prorata Share of Sublandlord’s good faith estimate of the cost of
operating, maintaining, repairing and replacing the Hangar, including the Subleased Premises, the
fuel farm and the surrounding parking areas (“Operating Expenses”), for each calendar year. For
purposes of this Sublease, Operating Expenses shall also include Real Estate Taxes (defined below)
and Insurance Costs (defined below). Sublandlord shall have the right, to be exercised no more
than once per calendar year, to adjust in good faith Sublandlord’s estimate of Operating Expenses
for such calendar year as of the first day of that calendar year and, in such event, Sublandlord
shall provide Subtenant with written notice of such revised good faith estimate in reasonable
detail. If Sublandlord does not provide Subtenant with written notice of such estimate prior to
the beginning of a calendar year, Subtenant, upon receipt of Sublandlord’s revised good faith
estimate, will remit an appropriate payment (or receive an appropriate credit) which is applicable
to any prior months.
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Within one hundred twenty (120) days after the end of each calendar year, Sublandlord shall provide
Subtenant with a written statement of Subtenant’s Prorata Share of the actual Operating Expenses
for the prior calendar year (“Operating Expense Statement”). Any difference between Subtenant’s
Prorata Share of the actual Operating Expenses and the monthly estimated payments made by Subtenant
under this provision shall be adjusted between Sublandlord and Subtenant by an appropriate payment
or credit being made within sixty (60) days after the receipt of Sublandlord’s Operating Expense
Statement. The adjustment requirements of this provision shall survive the expiration or other
termination of this Sublease. The amount of any adjustment which may be necessary subsequent to
the expiration or other termination of this Sublease shall be paid by the appropriate party within
sixty (60) days after delivery of Sublandlord’s Operating Expense Statement.
Sublandlord shall maintain and make available to Subtenant records in reasonable detail setting
forth the actual Operating Expenses incurred by Sublandlord and shall permit Subtenant to examine
and audit such records during Sublandlord’s regular business hours. Subtenant agrees that it shall
keep any and all information gained from such audit confidential and Subtenant may use such
information only in dealing directly with Sublandlord. Should Subtenant have a good faith dispute
as to the determination of actual Operating Expenses for any calendar year, and should such dispute
not be resolved between Sublandlord and Subtenant within sixty (60) days after Sublandlord receives
written notice thereof, then either party may submit the dispute for arbitration to a mutually
agreeable certified public accountant. The decision of such accountant shall be conclusive and
binding on the parties. The costs and expenses incurred with respect to such arbitration shall be
borne by the party against whom a decision is rendered, unless the arbitrator shall otherwise
decide.
Sublandlord shall timely pay all real estate taxes and/or assessments for which Sublandlord is
responsible under the Master Lease (“Real Estate Taxes”). Subtenant shall reimburse Sublandlord
for Subtenant’s Prorata Share of Real Estate Taxes on a monthly basis as a part of Operating
Expenses.
Subtenant shall also reimburse Sublandlord, on a monthly basis, for Subtenant’s Prorata Share of
the cost of the casualty insurance (“Insurance Costs”) that Sublandlord maintains on the Hangar.
6. Tenant Improvements. On or before the Sublease Commencement Date, Sublandlord shall
complete the alterations and improvements to the Hangar and fuel farm described in the plans,
specifications and other documents collectively attached hereto as Exhibit “D” and made a part
hereof (“Sublandlord’s Work”). Sublandlord agrees that: (a) Sublandlord shall prepare or cause to
be prepared all construction drawings, plans and/or specifications necessary to complete
Sublandlord’s Work; (ii) Sublandlord shall obtain all necessary permits, certificates or other
governmental approvals for Sublandlord’s Work; (iii) all work, materials and equipment incorporated
into Sublandlord’s Work will be of good quality, new and free of defects; (iv) Sublandlord’s Work
shall be performed and completed in compliance with all applicable laws, codes, rules and
regulations. Upon substantial completion of Sublandlord’s Work, Sublandlord and Subtenant shall
mutually inspect Sublandlord’s Work and agree on a punch list of cosmetic, finish or similar minor
items or mechanical adjustments that require completion. Sublandlord shall complete such punch
list items as promptly as practicable after such inspection. Subtenant shall reimburse Sublandlord
for Subtenant’s Prorata Share of all costs incurred by Sublandlord in completing Sublandlord’s
Work, including architectural, engineering and construction costs, within thirty (30) days after
receipt of Sublandlord’s invoice, which shall be accompanied by reasonable supporting
documentation.
7. Utilities and Services. Sublandlord shall provide the following utilities and services:
a. Electricity, gas, water and sewer service to the Subleased Premises;
b. Snow and ice removal from parking areas, sidewalks, and driveways in or about the Hangar;
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c. Janitorial service to the Subleased Premises sufficient to maintain the same in a clean and
sanitary condition;
d. Garbage removal a minimum of once per week;
e. Heating, ventilation and air conditioning in the Subleased Premises adequate to provide a
comfortable working environment.
The costs associated with the utilities and services to be provided by Sublandlord hereunder are
included as a part of Operating Expenses.
8. Insurance.
a. Sublandlord shall maintain the insurance policies and coverages required by Article XII,
Section II of the Master Lease.
b. Subtenant, at its sole expense, shall maintain commercial general liability insurance with
coverage limits of at least $1,000,000.00 for liability resulting from injury and/or death, and at
least $500,000.00 for liability resulting from damage to property, occurring in or on the Subleased
Premises. Such policy of insurance shall name Sublandlord as an additional insured as to claims
and liabilities arising out of Subtenant’s acts or omissions. Evidence of such insurance shall be
delivered to Sublandlord upon request. Subtenant shall also maintain workers compensation coverage
sufficient to satisfy the statutory requirements of the State of Ohio. All personal property of
Subtenant (including the Aircraft) kept at the Subleased Premises shall be at Subtenant’s sole
risk, and Subtenant shall maintain such insurance coverage on its personal property as Subtenant
deems advisable.
c. Notwithstanding anything to the contrary herein, Sublandlord and Subtenant hereby waive any
claim, right, and/or cause of action that either may have or acquire against the other, its
officers, directors, employees and agents, for damage to or destruction of its or others’ property,
whether real, personal, or mixed, of any kind or nature, including without limitation, each party’s
aircraft, arising from fire and/or other casualty, and shall secure such waivers of subrogation or
other endorsements as shall be necessary to ensure that any insurer of such property is bound by
such waiver.
9. Indemnification. Each party shall indemnify, defend and hold harmless the other party
(its affiliates, officers, directors, employees and agents) from and against any and all claims,
actions, losses, damages, liabilities, costs, expenses, and reasonable attorney fees in connection
with (i) loss of life, personal injury and/or damage to property (except as provided in paragraph
8(c) above) or other third party claims arising from or out of the negligent or intentional acts or
omissions or breach of contract of the indemnifying party, or (ii) the failure of Sublandlord to
comply with or perform any of its obligations under the Master Lease.
10. Alterations. Subtenant shall not make any alterations or improvements to the Subleased
Premises without first obtaining Sublandlord’s prior written consent and, if required, the County’s
prior written consent. Subtenant shall complete all approved alterations and improvements in a
workmanlike manner and in full compliance with all applicable laws, codes, rules and regulations.
All such alterations and improvements shall immediately become the property of the County and, upon
the expiration or termination of this Sublease, shall remain at the Subleased Premises, unless
otherwise agreed to in writing by the County. Subtenant shall not cause or permit any mechanic’s
liens or other liens to be filed against the Hangar in connection with any approved alterations and
improvements and shall indemnify, defend, and hold Sublandlord harmless against any loss therefrom.
If any liens are filed against the Hangar, Subtenant shall cause such lien to be released within
thirty (30) days after Subtenant receives notice of the filing thereof. If Subtenant fails to
cause any such lien to be so released, Sublandlord shall have the right to cause the same to be
released (by payment or otherwise). In that event, Subtenant shall
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reimburse Sublandlord for all costs incurred in obtaining the release of the lien, together with
interest thereon at the rate of ten percent (10%) per annum.
11. Use of Subleased Premises. Subtenant shall be the sole user of the Subleased Premises
and shall not use the Subleased Premises for any purpose other than to hangar the Aircraft and
perform activities related to the operation and maintenance of the Aircraft. Subtenant shall use
the Subleased Premises in compliance with the Master Lease and any laws, codes, rules and
regulations promulgated by the County, the Federal Aviation Authority and any other governmental
authority having jurisdiction over the Subleased Premises.
12. Maintenance and Repair. Sublandlord shall maintain and promptly make all necessary
repairs and replacements to the Hangar and Subleased Premises, any repairs necessitated by
Subtenant’s negligence or intentional misconduct excepted. The cost of all such maintenance,
repairs and replacements shall be included as part of Operating Expenses.
13. Taxes. Subtenant shall be responsible for all personal property taxes assessed against
the Aircraft or any other personal property of Subtenant or others located in or about the
Subleased Premises.
14. Fuel Farm. Subtenant may use the fuel farm at the Hangar for purposes of fueling the
Aircraft. Subtenant shall be entitled to purchase fuel for the Aircraft from Sublandlord at cost.
Subtenant shall also reimburse Sublandlord for all fuel flow fees paid by Sublandlord to the County
under Article 3, Section II of the Master Lease in connection with the fuel purchased by Subtenant.
If Sublandlord and Subtenant do not collectively consume enough fuel in any year to cause the fuel
flow fees paid to the County to exceed the minimum annual guaranteed flow fee specified in Article
III, Section II of the Master Lease, the parties agree that they each shall be responsible for
paying fifty percent (50%) of the fuel flow fee deficiency. Subtenant shall pay its share of such
deficiency within thirty (30) days after receipt of an invoice therefor from Sublandlord.
Subtenant shall maintain accurate records of all fuel consumed by Subtenant and shall permit
Sublandlord to inspect such records upon request. Subtenant shall reimburse Sublandlord by the
10th day of each month for all fuel consumed during the previous month and all fuel flow fees due
in connection therewith.
15. Casualty. In the event the Hangar and/or Subleased Premises are damaged or destroyed
by fire or other casualty, Sublandlord shall repair such damage in accordance with Article XII,
Section III of the Master Lease.
16. Eminent Domain. If any part of the Subleased Premises shall be taken by eminent
domain, or transferred by agreement in settlement of eminent domain proceedings, this Sublease
shall terminate as to the portion of the Subleased Premises taken or transferred, as of the date
title vests in the condemnor or transferee. If any portion of the Subleased Premises is taken or
transferred which adversely affects Subtenant’s reasonable use of the Subleased Premises, Subtenant
shall have the right to terminate this Sublease, effective as of the date title vests in the
condemnor or transferee. In the event of any taking, Subtenant shall have no claim against
Sublandlord, but this provision shall not preclude Subtenant from recovering damages against the
condemning authority or transferee to the extent permitted by applicable law.
17. Force Majeure. In the event that either party hereto shall be delayed from the
performance of any act required by it hereunder by reason of strikes, lockouts, inability to
procure labor or materials, riots, insurrections, wars or other reason of a similar nature beyond
the reasonable control of such party, then performance of such act shall be extended for a period
equivalent to the period of such delay. Delays due to lack of funds shall not be deemed delays
beyond the reasonable control of such party.
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18. Default; Remedies.
a. The occurrence of any of the following shall constitute an event of default hereunder (a
“Default”):
i. Subtenant fails to pay any Rent within ten (10) days after receipt of written notice of
nonpayment from Sublandlord, provided, however, that Sublandlord shall not be obligated to furnish
more than two (2) such notices of nonpayment in any twelve (12) month period;
ii. The voluntary or involuntary filing of a petition under any bankruptcy or insolvency laws
by or against Subtenant;
iii. Subtenant fails to perform any of its other obligations under this Sublease and said
failure shall continue for a period of thirty (30) days after receipt of written notice of default
from Sublandlord; or
iv. Any action by Subtenant which would result in a default by Sublandlord under the Master
Lease.
b. Upon the occurrence of any Default, Sublandlord shall be entitled to pursue any
contractual, legal or equitable remedy available to Sublandlord. All rights and remedies of
Sublandlord shall be cumulative and not exclusive. No waiver by Sublandlord of any term or
condition contained in this Sublease, or the breach thereof, shall constitute a waiver of such term
or condition or the breach thereof in the future.
19. Parking. Subtenant and its agents, employees, invitees and guests shall be entitled to
the nonexclusive use of all parking spaces at the Hangar.
20. Signage. Subtenant, at its sole expense, shall be entitled to install signage at the
entrance of the Hangar and/or Office area, subject to Sublandlord’s prior written approval, which
will not be unreasonably withheld. All signage shall comply with applicable laws, codes, rules and
regulations.
21. Renewal Options. Sublandlord hereby grants to Subtenant the right and option to extend
the Term of this Sublease for three (3) additional terms of five (5) years each (each a “Renewal
Term”). In the event Subtenant desires to exercise this option to renew, it shall so notify
Sublandlord at least one hundred eighty (180) days prior to the beginning of the Renewal Term, and
upon the giving of such notice, this Sublease shall automatically be extended for that Renewal
Term. The terms and conditions of this Sublease, as are then in effect, shall govern during each
Renewal Term, except for Subtenant’s Base Rent, which shall be as follows:
| First Renewal Term: | Year | Annual Rent | Monthly Rent | |||
| 1 | $47,452.00 | $3,954.33 | ||||
| 2 | $47,452.00 | $3,954.33 | ||||
| 3 | $47,452.00 | $3,954.33 | ||||
| 4 | $47,452.00 | $3,954.33 | ||||
| 5 | $47,452.00 | $3,954.33 |
During the second and third Renewal Terms, Subtenant’s Base Rent shall be an amount equal to the
amounts specified in the following schedules, plus fifty percent (50%) of the ground rent that
Sublandlord pays to the County under Article III, Section I.A. of the Master Lease:
| Second Renewal Term: | Year | Annual Rent | Monthly Rent | |||
| 1 | $47,190.00 | $3,932.50 | ||||
| 2 | $47,190.00 | $3,932.50 | ||||
| 3 | $47,190.00 | $3,932.50 | ||||
| 4 | $47,190.00 | $3,932.50 | ||||
| 5 | $47,190.00 | $3,932.50 |
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| Third Renewal Term: | Year | Annual Rent | Monthly Rent | |||
| 1 | $51,909.00 | $4,325.75 | ||||
| 2 | $51,909.00 | $4,325.75 | ||||
| 3 | $51,909.00 | $4,325.75 | ||||
| 4 | $51,909.00 | $4,325.75 | ||||
| 5 | $51,909.00 | $4,325.75 |
Subtenant’s renewal options are contingent upon Sublandlord exercising its option(s) to renew the
term of the Master Lease. If Sublandlord fails to exercise one or both of its options to renew the
Master Lease, Subtenant’s corresponding renewal option(s) hereunder shall be null and void.
22. Right of First Refusal. If Sublandlord fails to exercise its option(s) to renew the
Master Lease, or otherwise desires to terminate the Master Lease with the County, Subtenant shall
be given the right of first refusal, subject to consent of the County, to assume Sublandlord’s
rights and obligations under the Master Lease on a going-forward basis.
23. Commission. Sublandlord and Subtenant each represent and warrant that there were no
real estate brokers or agents involved in this transaction. Sublandlord and Subtenant each agree
to indemnify, defend and hold the other harmless from and against any and all claims by any broker
purporting to represent the indemnifying party.
24. Assignment and Subletting. Subtenant shall not assign, sublet or transfer, directly or
indirectly, this Sublease or any interest in the Subleased Premises without the prior written
consent of Sublandlord, which consent may be withheld in Sublandlord’s sole discretion.
25. Notices. Any notice required or permitted hereunder shall be in writing and shall be
personally delivered or sent by certified mail or overnight courier. Notices shall be effective
when received, refused or returned unclaimed. Notices shall be addressed to the parties as
follows:
If to Sublandlord at:
|
Progressive Casualty Insurance Company 0000 Xxxxxxxxxxx Xxxxx, Xxxxxxxx 0, XX-X00 Xxxxxxxx Xxxxxxx, Xxxx 00000 Attention: Director of Real Estate |
|
If to Subtenant:
|
Acme Operating Company 0000 Xxxxx xx Xxxx Xxxx. Xxxxx 000 Xxxxx Xxxxxx, Xxxxxxx 00000-0000 Attn: Xx. Xxxxx Xxxxxxxx |
26. Successors and Assigns. All the terms and conditions of this Sublease shall be binding
upon and inure to the benefit of the parties and their respective legal representatives,
successors, and assigns.
27. Surrender. Upon the expiration or termination of this Sublease, Subtenant shall
surrender the Subleased Premises in substantially the same condition as existed at the Sublease
Commencement Date, ordinary wear and tear excepted.
28. Counterparts. This Sublease may be executed in two (2) or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one and the same
instrument.
29. Modification. This Sublease shall not be modified in any respect except by a writing
signed by both parties.
30. Entire Agreement. This Sublease constitutes the entire understanding between the
parties. Any promise, term or condition not contained herein is not binding on the parties.
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NOW, THEREFORE, Sublandlord and Subtenant have executed this Sublease to be effective as of the day
and year first written above.
| SUBLANDLORD: Progressive Casualty Insurance Company |
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| By: | /s/ Xxx Xxxxxxx |
|||
| Its: Date: |
Director of Real Estate August 21, 2006 |
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| SUBTENANT: Acme Operating Corporation |
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| By: | /s/ Xxxxxxxx X. Xxxxx |
|||
| Its: Date: |
Vice President August 17, 2006 |
|||
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STATE OF OHIO
|
) | SS: | ||||
COUNTY OF CUYAHOGA
|
) |
Before me, a notary public in and for said County and State, personally appeared the above-named
Progressive Casualty Insurance Company, by Xxx Xxxxxxx, its Director of Real Estate.
Sworn to before me and subscribed in my presence at Cleveland, Ohio this 21st day of August, 2006.
/s/ Xxxxx X. Xxxxxxxx |
||
| SEAL |
STATE OF FLORIDA
|
) | SS: | ||||
COUNTY OF DADE
|
) |
Before me, a notary public in and for said County and State, personally appeared the above-named
Acme Operating Company, by Xxxxxxxx X. Xxxxx, its Vice President.
Sworn to before me and subscribed in my presence at this 17th day of
August, 2006.
/s/ Dania de la Xxxx |
||
| SEAL |
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CONSENT
The Board of County Commissioners of Cuyahoga County, Ohio hereby consent to the foregoing
Sublease Agreement.
| /s/ Xxxxx Xxxxxx |
||
| /s/ Xxxxxxx X. Xxxxx |
||
| /s/ Xxxxx Xxxxxx Xxxxx |
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EXHIBIT “A”
Aircraft
(Exhibit intentionally omitted)
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EXHIBIT “B”
Master Lease
(Exhibit intentionally omitted)
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EXHIBIT “C”
Floor Plan
(Exhibit intentionally omitted)
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EXHIBIT “D”
Plans and Specifications for Sublandlord’s Work
(Exhibit intentionally omitted)
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