EXHIBIT 10.12
April 28, 1999
LEASE AGREEMENT BETWEEN
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, L.C., as
Landlord
and
SONIC INNOVATIONS, INC.,
a Delaware corporation, as
Tenant
DATED April 28, 1999
TABLE OF CONTENTS
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Page
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PART I
SUMMARY OF BASIC LEASE INFORMATION..................................................................... 1
A. PREMISES (Lease Provisions, Paragraph 2)........................................... 1
B. LEASE TERM (Lease Provisions, Paragraph 3)......................................... 1
C. BASE RENT (Lease Provisions, Paragraph 5) ......................................... 1
D. ADDITIONAL RENT (Lease Provisions, Paragraph 5.3).................................. 2
E. LETTER OF CREDIT / SECURITY DEPOSIT (Lease Provisions, Paragraph 5.8).............. 2
F. PARKING CHARGE (Lease Provisions, Paragraph 5.5)................................... 2
G. ADDRESSES FOR NOTICES (Lease Provisions, Paragraph 27.7)........................... 2
H. TENANT IMPROVEMENT ALLOWANCE AND SPACE PLAN (Work Letter Agreement)................ 2
PART II
LEASE PROVISIONS........................................................................................ 3
1. DEFINITIONS........................................................................ 3
2. PREMISES........................................................................... 3
3. TERM............................................................................... 3
3.1 Tenant's Right to Terminate Lease......................................... 3
4. USE................................................................................ 3
5. RENT............................................................................... 4
5.1 Base Rent................................................................. 4
5.2 No Other Adjustment of Base Rent.......................................... 4
5.3 Additional Rent........................................................... 4
5.4 Operating Expenses........................................................ 5
5.5 Parking Charge............................................................ 8
5.6 Payment of Rent........................................................... 9
5.7 Delinquent Payments and Handling Charge................................... 9
5.8 Letter of Credit / Security Deposit....................................... 9
5.9 Holding Over.............................................................. 11
6. CONSTRUCTION OF IMPROVEMENTS....................................................... 11
6.1 General................................................................... 11
6.2 Access by Tenant Prior to Commencement of Term............................ 11
6.3 Commencement Date; Adjustments to Commencement Date....................... 11
6.4 Removal of Certain Tenant Improvements and Restoration of the Premises
to Its Original Condition................................................................... 12
7. SERVICES TO BE FURNISHED BY LANDLORD............................................... 12
7.1 General................................................................... 12
7.2 Keys and/or Access Cards.................................................. 13
7.3 Tenant Identity, Signs and Other Matters.................................. 13
7.4 Charges................................................................... 14
7.5 Operating Hours........................................................... 14
8. REPAIR AND MAINTENANCE............................................................. 14
8.1 By Landlord............................................................... 14
8.2 By Tenant................................................................. 14
9. TAXES ON TENANT'S PROPERTY......................................................... 15
10. TRANSFER BY TENANT................................................................. 15
10.1 General................................................................... 15
10.2 Conditions................................................................ 15
10.3 Liens..................................................................... 16
10.4 Assignments in Bankruptcy................................................. 16
11. ALTERATIONS........................................................................ 16
12. PROHIBITED USES.................................................................... 17
12.1 General................................................................... 17
12.2 Hazardous Materials....................................................... 17
12.3 Overstandard Tenant Use................................................... 18
13. ACCESS BY LANDLORD................................................................. 18
14. CONDEMNATION....................................................................... 18
15. CASUALTY........................................................................... 19
15.1 General................................................................... 19
15.2 Intentionally Left Blank.................................................. 19
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16. SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT...................................... 19
16.1 General................................................................... 19
16.2 Attornment................................................................ 20
17. INSURANCE.......................................................................... 20
17.1 General................................................................... 20
17.2 Waiver of Subrogation..................................................... 21
17.3 Landlord's Insurance...................................................... 21
18. INDEMNITY.......................................................................... 21
19. THIRD PARTIES; ACTS OF FORCE MAJEURE; EXCULPATION.................................. 21
20. INTENTIONALLY LEFT BLANK........................................................... 22
21. CONTROL OF COMMON AREAS............................................................ 22
22. INTENTIONALLY LEFT BLANK........................................................... 22
23. QUIET ENJOYMENT.................................................................... 22
24. DEFAULT BY TENANT.................................................................. 22
24.1 Events of Default......................................................... 22
24.2 Remedies of Landlord...................................................... 23
24.3 Payment by Tenant......................................................... 23
24.4 Reletting................................................................. 24
24.5 Landlord's Right to Pay or Perform........................................ 24
24.6 No Waiver; No Implied Surrender........................................... 24
25. DEFAULTS BY LANDLORD............................................................... 24
26. RIGHT OF REENTRY................................................................... 24
27. MISCELLANEOUS...................................................................... 25
27.1 Independent Obligations; No Offset........................................ 25
27.2 Time of Essence........................................................... 25
27.3 Applicable Law............................................................ 25
27.4 Assignment by Landlord.................................................... 25
27.5 Estoppel Certificates; Financial Statements............................... 25
27.6 Signs, Building Name and Building Address................................. 26
27.7 Notices................................................................... 26
27.8 Entire Agreement, Amendment and Binding Effect............................ 26
27.9 Severability.............................................................. 26
27.10 Number and Gender, Captions and References................................ 26
27.11 Attorneys' Fees........................................................... 26
27.12 Brokers................................................................... 27
27.13 Interest on Tenant's Obligations.......................................... 27
27.14 Authority................................................................. 27
27.15 Recording................................................................. 27
27.16 Exhibits.................................................................. 27
27.17 Multiple Counterparts..................................................... 27
27.18 Survival of Indemnities................................................... 27
27.19 Miscellaneous............................................................. 27
27.20 Smoking Shelter........................................................... 27
27.21 Security Guard............................................................ 28
28. GENERATOR.......................................................................... 28
28.1 Grant of License.......................................................... 28
28.2 Relocation of System...................................................... 28
28.3 Tenant Responsibilities................................................... 28
28.4 Compliance with Laws...................................................... 28
28.5 Tenant Representations and Warranties..................................... 28
29. SATELLITE SPACE.................................................................... 29
29.1 Satellite Space........................................................... 29
29.2 Restrictions.............................................................. 29
29.3 Expenses.................................................................. 30
29.4 Use of Satellite Dish..................................................... 30
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EXHIBITS
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Exhibit A: Glossary of Defined Terms
Exhibit B: Description of Premises
Exhibit B-1: Smoking Shelter Location
Exhibit C: Building Rules and Regulations
Exhibit D: Work Letter Agreement
Exhibit D1: Pricing Agreement Letter
Exhibit D2: Building Standard Tenant Improvements
Exhibit E: Legal Description of Land
Exhibit F: Lease Extension Addendum
Exhibit G: Acknowledgment of Lease Commencement Date
Exhibit H: Estoppel Certificate, Subordination, Non-Disturbance and
Attornment Agreement
Monument Sign Addendum
Building Sign Addendum
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LEASE AGREEMENT
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THIS LEASE AGREEMENT (the "Agreement") is entered into as of the ______ day
of April, 1999, between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, L.C. as Landlord, and SONIC
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INNOVATIONS, INC., a Delaware corporation, as Tenant.
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PART I
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SUMMARY OF BASIC LEASE INFORMATION
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Each reference in this Summary of Basic Lease Information to the Lease
Provisions contained in PART II shall be construed to incorporate all the terms
provided in said Lease Provisions, and reference in the Lease Provisions to the
Summary contained in this PART I shall be construed to incorporate the
provisions of this Summary. In the event of any conflict between the provisions
of this Summary and the provisions in the balance of the Lease, the latter shall
control. The basic terms of this Lease are as follows:
A. PREMISES (Lease Provisions, Paragraph 2):
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1. Premises Location: Suites 100, 500 and 660, consisting of
approximately 18,892 square feet of Rentable Area (16,428 usable square feet),
located on the first floor of the Building; approximately 22,157 square feet of
Rentable Area (20,611 usable square feet) located on the fifth floor of the
Building; and approximately 14,218 square feet of Rentable Area (12,363 usable
square feet) located on the sixth floor of the Building; with a total of
approximately 55,267 square feet of Rentable Area (49,402 usable square feet)
(as outlined on the floor plans attached to this Lease as Exhibit B), the street
address of which is ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as constructed on the Land which
is further described on Exhibit E hereto. Tenant reserves the right to confirm
the measurement of the premises prior to the Lease Commencement Date.
2. Number of Approximate Square Feet of Rentable Area in the Building
measured consistently throughout the Building: Approximately One Hundred Thirty
Thousand Seven Hundred Eighty (130,780) square feet.
B. LEASE TERM (Lease Provisions, Paragraph 3):
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1. Duration: Five (5) years, Two (2) months.
2. Lease Commencement Date (Lease Provisions, Paragraph 6.3): The
earliest to occur of the following events: (a) the date of Substantial
Completion (as defined in the Work Letter Agreement) of the Landlord's Work on
the Phase One Space, or (b) the date on which Landlord would have substantially
completed the Landlord's Work on the Phase One Space and tendered possession of
the Phase One Space to Tenant but for certain delays attributable to Tenant as
provided in Paragraph 6.3, or (c) the date on which Tenant takes possession of
the Premises or any portion thereof (including the Phase One Space). Subject to
the Lease being executed and delivered by Tenant to Landlord on or before April
28, 1999, the Lease Commencement Date is scheduled to be July 1, 1999.
Following the Commencement Date, the Phase II Move-In Date is defined and set
forth in Section 6.3(b) below.
3. Lease Expiration Date (Lease Provisions, Paragraph 3): The Lease
Expiration Date shall be August 31, 2004, unless further extended or earlier
terminated as provided in this Lease.
C. BASE RENT (Lease Provisions, Paragraph 5):
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Lease Year Monthly Base Rent Annual Base Rent
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July 1, 1999 - to, but not including, the $ 72,994.17 N/A
Phase II Move-In Date
From, and including, the Phase II $101,322.83 $1,215.874.00
Move-In Date - August 31, 2000
September 1, 2000 - August 31, 2001 $104,316.46 $1,251,797.55
September 1, 2001 - August 31, 2002 $107,310.09 $1,287,721.10
September 1, 2002 - August 31, 2003 $110,303.72 $1,323,644.65
September 1, 2003 - August 31, 2004 $113,297.35 $1,359,568.20
D. ADDITIONAL RENT (Lease Provisions, Paragraph 5.3):
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1. Base Year (Lease Provisions, Paragraph 5.3.1): The Fiscal Year
commencing January 1 through December 31,1999 (with Operating Expenses for 1999
being annualized); provided, however, that real property taxes levied on the
Building and Parking Facility included in the Operating Expenses applicable to
the Base Year shall be determined as provided in paragraph 5.3.2(a) hereof.
2. Tenant's Share (Lease Provisions, Paragraph 5.3.1): Tenant's Share for
Tenant's payment of Operating Expenses means Forty-two and 26/100 percent
(42.26%).
E. LETTER OF CREDIT / SECURITY DEPOSIT (Lease Provisions, Paragraph 5.8):
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Means a Five Hundred Sixty Thousand and 00/100 Dollars ($560,000.00),
Letter of Credit, subject to reduction and replacement by a cash Security
Deposit, as provided in Paragraph 5.8.
F. PARKING CHARGE (Lease Provisions, Paragraph 5.5):
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Tenant shall throughout the Term, lease from Landlord up to a total of Two
Hundred Forty-Seven (247) automobile parking spaces, of which total Tenant may
elect to lease up to twenty (20) assigned and covered automobile parking spaces
at an initial cost of Zero Dollars ($0.00) per month per space for the initial
Lease Term. The remainder of the automobile parking spaces leased by Tenant
which Tenant does not elect to have assigned and covered shall be unassigned
parking spaces at a cost of Zero Dollars ($0.00) per month per space for the
initial Term of the Lease. The above notwithstanding, Landlord shall, with 3-day
advance notice from Tenant, make arrangements to accommodate Tenant's
requirement for 30 additional stalls (in the covered parking area, if possible)
once every 45-60 days for Tenant's board meetings.
G. ADDRESSES FOR NOTICES (Lease Provisions, Paragraph 27.7):
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1. Tenant's Address:
(a) Before Lease Commencement Date:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(b) After Lease Commencement Date:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
2. Landlord's Address:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.
c/o ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
3. Address of Landlord's Lender or Mortgagee:
U. S. Bank National Association
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
H. TENANT IMPROVEMENT ALLOWANCE AND SPACE PLAN (Work Letter Agreement):
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1. Space Plan Delivery Date: The initial Space Plan of Tenant's Premises
was delivered to Landlord on or before March 18, 1999.
2. Tenant Improvement Allowance: A Tenant Improvement Allowance shall be
in the amount of ONE MILLION THREE HUNDRED FORTY-FOUR THOUSAND SIX HUNDRED
THIRTY-FOUR AND 35/100 DOLLARS ($1,344,634.35) for the design, modification and
construction of the Tenant Improvements.
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PART II
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LEASE PROVISIONS
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1. DEFINITIONS. The definitions of certain of the capitalized terms used
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in this Lease are set forth in the Glossary of Defined Terms attached as Exhibit
A.
2. PREMISES. Subject to the provisions of this Lease, Landlord hereby
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leases to Tenant, and Tenant hereby leases from Landlord, the premises described
in the Summary of Basic Lease Information, Section "A", as outlined on the floor
plan attached hereto as Exhibit B (the "Premises"). In connection with such
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demise and subject to paragraph 21 herein, Landlord hereby grants to Tenant the
nonexclusive right to use during the Term, all Common Areas designed for the use
of all tenants in the Building, in common with all tenants in the Building and
their invitees, for the purposes for which the Common Areas are designed and in
accordance with all Legal Requirements. Landlord, however, has the sole
discretion, subject to the requirements of Paragraph 21 hereof, to determine the
manner in which the Common Areas are maintained and operated, and the use of the
Common Areas shall be subject to the Building Rules and Regulations. Tenant
acknowledges that Landlord has made no representation or warranty regarding the
Building or Premises except as specifically stated in this Lease. By occupying
the Premises, Tenant accepts the Premises as being suitable for Tenant's
intended use of the Premises. Landlord represents that, to the best of its
knowledge, upon occupancy, the Building will be in compliance with the Americans
with Disabilities Act of 1990. Landlord further represents that, to the best of
its knowledge, the Building is in compliance with all Legal Requirements.
Landlord further represents and warrants that, to the best of its knowledge, the
Complex and this Lease are in full compliance with all requirements under any
Landlord's Mortgage as well as under all other documents, instruments, or
agreements relating to the Complex or to which the Complex may be bound or
encumbered.
3. TERM. The provisions of this Lease shall be effective only as of the
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date this Lease is executed by both Landlord and Tenant. The duration of the
term of this Lease shall be for the period stated in the Summary of Basic Lease
Information, Section "B," commencing on the Commencement Date set forth in
paragraph 6.3 below, and expiring at 5:00 p.m. on the day stated in Section "B"
of the Summary of Basic Lease Information, unless earlier terminated as provided
herein (the "Term"). Tenant shall have the right to extend the Term of the
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Lease as provided in the Lease Extension Addendum attached as Exhibit F.
3.1 Tenant's Right to Terminate Lease. Tenant shall have the right
---------------------------------
to terminate this Lease if, and only if, Tenant fulfills all of the
following conditions:
(a) Tenant sends or delivers to Landlord a written notice signed by
Tenant exercising this right to terminate, and Landlord receives the notice
no earlier than 30 months after the Lease Commencement Date and no later
than 31 months after the Lease Commencement Date.
(b) No earlier than 42 months after the Lease Commencement Date and
no later than 42 months and five calendar days after the Lease Commencement
Date, (i) Tenant pays to Landlord, and Landlord receives from Tenant, the
sum of $200,000, in the form of a cashier's check and (ii) Tenant vacates
at least one-half of the Premises.
(c) Tenant vacates the remainder of the Premises no earlier than 48
months after the Lease Commencement Date and no later than 48 months and
five calendar days after the Lease Commencement Date.
(d) When it vacates the Premises, Tenant is not in default of any
provision of this Lease, including the payment of Rent.
Upon the occurrence of the Commencement Date, the parties will execute
and deliver a certificate in the form of Exhibit G attached hereto stating
and acknowledging the specific dates described in the Section 3.1 above.
Time is of the essence in the fulfillment of the foregoing conditions. If
Tenant fails to fulfill any of the foregoing conditions, Tenant's right to
terminate shall automatically and irrevocably cease. Except as set forth
in this Section or as otherwise expressly provided in this Lease, Tenant
shall have no right to terminate the Lease before the Lease Expiration
Date.
4. USE. Tenant shall occupy and use the Premises solely for lawful,
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general business office purposes, for light manufacturing and assembling, and
for purposes incidental to such uses, all in strict compliance with the Building
Rules and Regulations from time to time in effect. Tenant shall, and Tenant
agrees to cause its agents, servants, employees, invitees and licensees to
observe and comply fully and faithfully with the Building Rules and Regulations
attached hereto as Exhibit C, and incorporated herein by this reference, or such
reasonable modifications, rules and regulations which may be hereafter adopted
by Landlord for the care, protection, cleanliness and operation of the Premises
and Complex. Any modifications to the Building Rules and
3
Regulations will only be effective against Tenant to the extent they do not
materially adversely affect Tenant's use of the Premises, to the extent that
they are applied to all tenants in the Building in a non-discriminatory manner,
and to the extent that Tenant is given reasonable advance notice thereof. Tenant
shall also comply with all Legal Requirements and other restrictions on use of
the Premises as provided in this Lease, including, without limitation, paragraph
12 hereof. The Landlord represents that the Premises are properly zoned for the
permitted uses set forth herein.
5. RENT.
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5.1 Base Rent. In consideration of Landlord's leasing the Premises
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to Tenant, Tenant shall pay to Landlord the base rent ("Base Rent") at the
time(s) and in the manner stated in paragraph 5.6 below, as stated in
Section "C" of the Summary of Basic Lease Information.
5.2 No Other Adjustment of Base Rent. The stipulation of Rentable
--------------------------------
Area set forth in paragraph 2 above and in the Summary of Basic Lease
Information, shall be conclusive and binding on the parties.
Notwithstanding the foregoing, the Base Rent set forth in paragraph 5.1
above and in the Summary of Basic Lease Information is a negotiated amount
and there shall be no adjustment to the Base Rent or Additional Rent
without the prior written consent of Landlord and Tenant. Tenant shall
have no right to withhold, deduct or offset any amount of the monthly Base
Rent, Additional Rent or any other sum due hereunder even if the actual
rentable square footage or Rentable Area of the Premises is less than set
forth in paragraph 2 hereof. The measurement of space shall be consistent
throughout the Building.
5.3 Additional Rent. In addition to paying the Base Rent specified
---------------
in paragraph 5.1 above, Tenant shall pay as additional rent the Tenant's
Share (as defined in subparagraph 5.3.1(b) below) of the Operating Expenses
(as defined in subparagraph 5.4 below) for each Fiscal Year, or portion
thereof, that are in excess of the amount of Operating Expenses applicable
to the Base Year (as defined in subparagraph 5.3.1(a) below). Said
additional rent, together with other amounts of any kind (other than Base
Rent) payable by Tenant to Landlord under the terms of this Lease, shall be
collectively referred to in this Lease as "Additional Rent." Operating
Expenses which are normally and reasonably allocable to more than one
Fiscal Year shall be prorated and allocated over such period(s). All
amounts due under this paragraph 5.3 as Additional Rent are payable for the
same periods and in the same manner, time and place as the Base Rent as
provided in paragraph 5.6 below. Without limitation on any other
obligation of Tenant that may survive the expiration of the Lease Term,
Tenant's obligations to pay the Additional Rent provided for in this
paragraph 5.3 shall survive the expiration of the Lease Term.
5.3.1 Additional Rent Definitions. The following definitions apply
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to this paragraph 5:
(a) Base Year. "Base Year" means the Fiscal Year commencing
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January 1 through December 31 of the year stated in Section "D" of the
Summary of Basic Lease Information.
(b) Tenant's Share. "Tenant's Share" for Tenant's payment of
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Operating Expenses means the percentage stated in Section "D" of the
Summary of Basic Lease Information.
5.3.2 Calculation and Payment of Additional Rent. Tenant's Share of
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Operating Expenses for any Fiscal Year, or portion thereof, shall be
calculated and paid as follows:
(a) Calculation of Excess. If Tenant's Share of Operating
---------------------
Expenses for any Fiscal Year, commencing with the Fiscal Year
immediately following the Base Year, exceeds Tenant's Share of the
amount of Operating Expenses applicable to the Base Year (with
Operating Expenses for the Base Year 1999 being annualized), Tenant
shall pay as Additional Rent to Landlord an amount equal to that
excess (the "Excess") in the manner stated in subparagraphs 5.3.2(b)
and (c) below. Notwithstanding the foregoing, the Landlord
acknowledges that the Building and Parking Facility may not be fully
assessed for property taxes levied during the Base Year because of
incomplete construction. Therefore, for purposes of calculating the
Additional Rent, the Landlord will make an adjustment to the property
taxes applicable to the Base Year at the time the Building and Parking
Facility are fully assessed.
(b) Statement of Estimated Operating Expenses and Payment by
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Tenant. On or before the last day of the Fiscal Year in which the
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Lease Commencement Date occurs and for each Fiscal Year thereafter,
Landlord shall endeavor to deliver to Tenant an estimate statement
(the "Estimate Statement") of Additional Rent to be due by Tenant for
the forthcoming Fiscal Year. The Estimate Statement will be based on
good faith estimates, reasonably determined,
4
and will set forth in reasonable detail the calculation of estimated
expenses and Additional Rent. Thereafter, unless Landlord delivers to
Tenant a revision of the Estimate Statement, Tenant shall pay to
Landlord monthly, coincident with Tenant's payment of Base Rent, an
amount equal to the estimated Additional Rent set forth on the
Estimate Statement for such Fiscal Year divided by twelve (12) months.
On no more than two occasions during any Fiscal Year, Landlord may
estimate and re-estimate the Additional Rent to be due by Tenant for
that Fiscal Year and deliver a copy of the revised Estimate Statement
to Tenant. Thereafter, the monthly installments of Additional Rent
payable by Tenant shall be appropriately adjusted in accordance with
the revised Estimate Statement so that, by the end of any Fiscal Year,
Tenant shall have paid all of the Additional Rent as estimated by
Landlord on the revised Estimate Statement. Landlord's failure to
furnish the Estimate Statement for any Fiscal Year in a timely manner
shall not preclude Landlord from enforcing its rights to collect any
Additional Rent.
(c) Statement of Actual Operating Expenses and Payment by
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Tenant. Landlord shall provide to Tenant a budget of anticipated
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Operating Expenses for the current year by March 31 each year.
Landlord shall endeavor to give to Tenant as soon as available
following the end of each Fiscal Year, but in no event later than June
30, a statement (the "Statement of Actual Operating Expenses") stating
the Operating Expenses incurred or accrued for that preceding Fiscal
Year and indicating the amount, if any, of any Excess due to Landlord
or overpayment by Tenant. Landlord's Statement of Actual Operating
Expenses will show in reasonable detail the amount and computation of
Operating Expenses for the applicable Fiscal Year, a statement as to
any Operating Expense which is not final and the amount of Tenant's
obligations hereunder and application of Tenant's estimated payments.
Except for Operating Expense items identified by Landlord as not being
final or adjustments to Operating Expense items not reasonably
foreseeable by Landlord, no adjustment will be made by Landlord to the
Statement of Actual Operating Expenses for any Fiscal Year subsequent
to June 30 following the end of the Fiscal Year to which the Statement
of Actual Operating Expenses relates. On receipt of the Statement of
Actual Operating Expenses for each Fiscal Year for which an Excess
exists, Tenant shall pay, with its next installment of Base Rent due,
the full amount of the Excess, less the estimated amounts (if any)
paid during the Fiscal Year pursuant to an Estimate Statement (as
defined in subparagraph 5.3.2(b) above). In the event there is an
overpayment of Additional Rent set forth on a Statement of Actual
Operating Expenses for any Fiscal Year, the amount of overpayment
shall be credited against payments of Additional Rent as they become
due. If it is determined that there is an overpayment of Additional
Rent by Tenant for the Fiscal year in which the Lease Term expires,
such overpayment shall be promptly refunded to Tenant within 60 days
following expiration of the Term. Landlord's failure to furnish the
Statement of Actual Operating Expenses for any Fiscal Year in a timely
manner shall not prejudice Landlord from enforcing its rights
hereunder. Even if the Lease Term is expired and Tenant has vacated
the Premises, if an Excess exists when final determination is made of
Tenant's Share of the Operating Expenses for the Fiscal Year in which
the Lease terminates, Tenant shall immediately pay to Landlord the
amount calculated under this subparagraph (c) within 15 days of
receipt of the Statement of Actual Operating Expenses for such Fiscal
Year. Provisions of this subparagraph (c) shall survive the expiration
or earlier termination of the Lease Term.
5.4 Operating Expenses shall mean all costs and expenses which
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Landlord pays or accrues by virtue of the management, maintenance, service
or operation of the Land and all improvements thereon, including, without
limitation, the Building and Parking Facility, during a particular Fiscal
Year or portion thereof as determined by Landlord or its accountant in
accordance with generally accepted accounting principles (which shall be
consistently applied), subject to the exclusions contained in Section
5.4.2(a) below. The parties acknowledge and intend that the Lease of the
Premises to the Tenant be a full-service Lease. The present Estimate
Statement of Operating Expenses for the 1999 Fiscal Year has been delivered
to Tenant. The Operating Expenses shall be net and for that purpose shall
be deemed reduced by the amount of any insurance reimbursement, other
reimbursement, recoupment, payment, discount, credit, reduction, allowance,
or the like received or receivable by Landlord in connection with such
Operating Expenses.
5.4.1 Examples. "Operating Expenses" shall include, but shall not be
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limited to, the following to the extent they relate to the Complex or are
chargeable to the Complex in connection with the operation and maintenance
of the Cottonwood Corporate Center generally:
(a) all Impositions;
(b) all insurance premiums charged for policies obtained by
Landlord for the Land, Building and Parking Facility, which may
include without limitation, at Landlord's election, (i)
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fire and extended coverage insurance, including earthquake, windstorm,
hail, explosion, riot, strike, civil commotion, aircraft, vehicle and
smoke insurance, (ii) public liability and property damage insurance,
(iii) elevator insurance, (iv) workers' compensation insurance for the
employees covered by clause (h), (v) boiler, machinery, sprinkler,
water damage, and legal liability insurance, (vi) rental loss
insurance, and (vii) such other insurance as Landlord may elect to
obtain;
(c) all deductible amounts incurred in any Fiscal Year relating
to an insurable loss;
(d) all maintenance, repair, replacement, restoration and
painting costs, including, without limitation, the cost of operating,
managing, maintaining and repairing the following systems: utility,
mechanical, sanitary, drainage, escalator and elevator;
(e) environmental compliance costs up to $2,500 per year, and
all janitorial, snow removal, custodial, cleaning, washing,
landscaping, landscape maintenance, access systems, trash removal, and
pest control costs;
(f) all security costs;
(g) all electrical, energy monitoring, water, water treatment,
gas, sewer, telephone and other utility and utility-related charges;
(h) all wages, salaries, employee benefits, payroll taxes,
Social Security and insurance and other, similar salary charges
payable to all employees of Landlord or its affiliates, up to and
including the regional manager for performing services rendered in
connection with the repair, maintenance and operation of the Complex
(or an equitable pro rata portion of such expenses, if such employees
are engaged in the management, maintenance or operations of other
buildings) in connection with the Complex;
(i) all costs of leasing or purchasing supplies, tools,
equipment and materials in connection with the normal operation and
maintenance of the Complex;
(j) all fees and assessments of the Cottonwood Corporate Center
park applicable to the Complex;
(k) the cost of licenses, certificates, permits and inspections;
(l) the cost of contesting the validity or applicability of any
governmental enactments that may affect the Operating Expenses;
(m) the cost of Parking Facility maintenance and repair,
including, without limitation, resurfacing, repainting, restriping and
cleaning;
(n) all fees and other charges paid under all maintenance and
service agreements, including but not limited to window cleaning,
elevator and HVAC maintenance;
(o) All reasonable and customary fees, charges, management fees
(or amounts in lieu of such fees) up to a maximum of three percent
(3%) of gross rentals at the Complex, consulting fees, legal fees (but
excluding legal fees associated with dealings with individual tenants)
and accounting fees of all persons engaged by Landlord, together with
all other associated costs or other charges reasonably incurred by
Landlord in connection with the management office and the operation,
management, maintenance and repair of the Complex;
(p) all costs of monitoring services, including, without
limitation, any monitoring or control devices used by Landlord in
regulating the Parking Facility;
(q) amortization of the cost of acquiring, financing and
installing capital items which are intended to reduce (or avoid
increases in) operating expenses. Such costs shall be amortized over
the reasonable life of the items in accordance with generally accepted
accounting principles, but not beyond the reasonable life of the
Building; and
(r) such other expenses and costs reasonably necessary to be
incurred for the purpose of operating and maintaining the Complex in a
condition substantially similar to its condition as on the
Commencement Date of this Lease, reasonable wear and tear excepted;
and
6
(s) any such reasonable expenses and reasonable costs
resulting from a substitution of work, labor, material or services in
lieu of any of the above itemizations, or for any such additional
work, labor services or material resulting from compliance with any
governmental laws, rules, regulations or orders applicable to the
Complex or any parts thereof which shall, at the time of any such
substitution and/or addition, be considered operating expenses in
accordance with generally accepted accounting principles as applied to
real estate.
5.4.2 Adjustments. Operating Expenses shall be adjusted as follows:
-----------
(a) Exclusions. "Operating Expenses" shall not include (i)
----------
expenditures classified as capital expenditures for federal income tax
purposes except as set forth in clause 5.4.1(q), (ii) costs for which
Landlord is entitled to specific reimbursement by Tenant, by any other
tenant of the Building or by any other third party, (iii) allowances
specified in the Work Letter for expenses incurred by Landlord for
improvements to the Premises, (iv) leasing commissions and all noncash
expenses (including amortization and depreciation), except for the
amortized costs specified in clause 5.4.1(q), (v) land or ground rent,
if applicable, and (vi) the excess cost of any work or service
performed for or facilities furnished to any tenant of the Building to
a substantially greater extent or in a manner materially more
favorable to such tenant than that performed for or furnished to
Tenant hereunder; (vii) sums which constitute insured repairs or other
work necessitated by fire or other casualty; (viii) sums incurred for
the alteration or renovation of vacant or vacated space in the
Building; (ix) expenditures paid to a related corporation, entity or
persons which are in excess of the amount which would be paid in the
absence of such relationship; (x) expenditures resulting from the
relocation or moving of tenants in the Building to another location
within the Building; (xi) any income, franchise or corporate tax, any
leasehold taxes on other tenants' personal property, sales, capital
levy, capital stock, excess profits, transfer, revenue, or any other
tax, assessment or charge upon or measured by rent payable to
Landlord; (xii) overhead and administrative costs of Landlord not
directly incurred in the operation and maintenance of the Complex;
provided, however, that expenses which benefit the Complex and which
are allocated on part to the Complex (such as the cost of blanket
insurance, and expenses of a regional manager) are not excludable
under this paragraph 5.4.2(a); (xiii) interest, amortization or other
costs, including legal fees, associated with any loan or refinancing;
(xiv) expenses incurred for any necessary replacement of any item to
the extent that it is paid under warranty; (xv) the cost of any item
or service which Tenant separately reimburses Landlord or pays to
third parties; (xvi) the cost of correcting defects in the
construction of the Tenant Improvements; provided however, that
repairs resulting from ordinary wear and tear shall not be deemed to
be defects; (xvii) all expenses directly resulting from the negligence
or willful misconduct of the Landlord, its agents, servants or other
employees; (xviii) all costs associated with ensuring that the Complex
operating and management systems and computer controlled facility
components have been designed or upgraded to accurately process
data/time data from, into and between the twentieth (20/th/) and
twenty-first (21/st/) centuries and the years 1999, 200, and all leap
years; (xix) any item specified in this Lease to be at Landlord's
expense, unless also specifically stated to be reimbursable as a
component of Operating Expenses; (xx) advertising and promotional
expenses; (xxi) all bad debt loss, rent loss, or reserve for bad debt
or rent loss; (xxii) rentals, if any, incurred in leasing items to the
extent that the leasing of such items is commercially unreasonable and
the cost of the purchase of that item would not be included as a
permitted capital expenditure hereunder; (xxiii) the cost of
correcting any applicable building or fire code violation(s) (other
than violations resulting from acts of Tenant; and (xxiv) any item
excluded from Operating Expenses pursuant to paragraph 5.4.1.
Operating Expenses shall not exceed the reasonable, customary and
ordinary cost for such items.
(b) Gross-Up Adjustments. If the occupancy of the Building
--------------------
during any part of any Fiscal Year (including the Base Year) is less
than ninety-five percent (95%), Landlord shall make an appropriate
adjustment of the Operating Expenses that vary according to occupancy
for that Fiscal Year, as reasonably determined by Landlord using sound
accounting and management principles, to determine the amount of
Operating Expenses that would have been incurred had the Building been
ninety-five percent (95%) occupied. This amount shall be considered
to have been the amount of Operating Expenses for that Fiscal Year.
5.4.3 Landlord's Books and Records. If Tenant disputes the amount of
----------------------------
the Additional Rent due hereunder, Tenant may designate, within one hundred
twenty (120) days after receipt of the Statement of Actual Operating
Expenses, an independent certified public accountant or qualified third-
party management company to inspect Landlord's records. Tenant is not
entitled to request that
7
inspection, however, if Tenant is then in default under this Lease. The
accountant must be a member of a nationally recognized accounting firm and
must not charge a fee based on the amount of Additional Rent that the
accountant is able to save Tenant by the inspection. Any inspection must be
conducted in Landlord's offices at a reasonable time or times. If, after
such an inspection, Tenant still disputes the Additional Rent, Landlord and
Tenant shall each designate an independent certified public accountant,
which shall in turn jointly select a third independent certified public
accountant (the "Third CPA"). A certification of the proper amount shall be
made, at Tenant's sole expense, by the Third CPA. That certification shall
be final and conclusive. If as a result of such audit and certification, it
is determined that Tenant was overcharged by more than five percent (5%)
during any period covered by such audit and certification, then Landlord
will pay the costs and expenses of such audit. Any deficiency or
overpayment disclosed by such audit shall be promptly paid or refunded, as
the case may be.
5.5 Parking Charge. Tenant shall throughout the Term, lease from
--------------
Landlord the number of unassigned and assigned automobile parking spaces,
at such prices per month, as stated in Section "F" of the Summary of Basic
Lease Information. Such monthly parking charges shall be considered
Additional Rent and shall be due and payable without notice or demand, on
or before the first day of each calendar month. Landlord shall have the
right from time to time during the Extension Renewal Term (if applicable),
to increase the monthly parking charges for assigned parking spaces to the
then prevailing market rate. From time to time during the Extension
Renewal Term, the Landlord shall also have the right to increase the
monthly parking charges for unassigned parking spaces to the prevailing
market rate. Landlord shall also have the right to establish such
reasonable rules and regulations as may be deemed desirable, at Landlord's
reasonable discretion, for the proper and efficient operation and
maintenance of said Parking Facility; provided, however, that such rules
and regulations will only be effective against Tenant to the extent they do
not materially adversely affect this Lease, to the extent that they are
applied to all tenants in the Building in a non-discriminatory manner, and
to the extent that Tenant is given reasonable advance notice thereof. Such
rules and regulations may include, without limitation, (i) subject to the
provisions of this paragraph, the establishment of charges for parking
therein, and (ii) the use of parking gates, cards, permits and other
control devices to regulate the use of the parking areas. The rights of
Tenant and its employees, customers, service suppliers and invitees to use
the Parking Facility shall, to the extent such rules and regulations are
not inconsistent with the other terms of this Lease, at all times be
subject to (a) Landlord's right to establish reasonable rules and
regulations applicable to such use and to exclude any person therefrom who
is not authorized to use the same or who violates such rules and
regulations; (b) the rights of Landlord and other tenants in the Building
to use the same in common with Tenant; (c) other than with respect to
Tenant's assigned parking spaces, the availability of parking spaces in
said Parking Facility; and (d) Landlord's right to change the configuration
of the parking areas and any unassigned parking spaces as shall be
determined at Landlord's reasonable discretion. Tenant agrees to limit its
use of the Parking Facility to the number and type of parking spaces
specified in this paragraph above. Notwithstanding the foregoing, nothing
contained herein shall be deemed to impose liability upon Landlord for
personal injury or theft, for damage to any motor vehicle, or for loss of
property from within any motor vehicle, which is suffered by Tenant or any
of its employees, customers, service suppliers or other invitees in
connection with their use of the Parking Facility. Tenant understands and
agrees that, while the Parking Facility will be open to Tenant on a 24-hour
basis, other than spaces that are assigned for Tenant and other tenants,
all parking spaces in the parking area may be leased to members of the
general public between the hours of 6:30 p.m. through 7:00 a.m. Monday
through Saturday morning, after 1:30 p.m. on Saturday, and all day on
Sunday.
5.6 Payment of Rent. Except as otherwise expressly provided in this
---------------
Lease, all Base Rent and Additional Rent shall be due in advance monthly
installments on the first day of each calendar month during the Term. Rent
shall be paid to Landlord at its address recited in Section 27.7, or to
such other person or at such other address in the United States as Landlord
may from time to time designate in writing. Rent shall be paid without
notice, demand, abatement, deduction or offset in legal tender of the
United States of America. The Base Rent for the first full calendar month
of the Lease Term shall be paid on the Commencement Date of the Lease. In
addition, if the Term commences or ends on other than the first or the last
day of a calendar month, the Base Rent for the partial month shall be
prorated on the basis of the number of days during the applicable month.
If the Lease Term commences or ends on other than the first or the last day
of a Fiscal Year, the Additional Rent for the partial Fiscal Year
calculated as provided in paragraph 5.3 above shall be prorated on the
basis of the number of days during the applicable Fiscal Year. All
payments received by Landlord from Tenant shall be applied to the oldest
payment obligation owed by Tenant to Landlord. No designation by Tenant,
either in a separate or on a check or money order, shall modify this clause
or have any force or effect. The Rent to be paid by Tenant or any
Transferee hereunder shall not be based, in whole or in part, on the income
or profits derived from the lease, use or occupancy of the Premises. In
the event Landlord's Mortgagee succeeds to the Landlord's interests under
this Lease and determines that all or any portion of the Rent payable
hereunder is or may be deemed to be unrelated business income within the
meaning of the United States
8
Internal Revenue Code or regulations issued thereunder, Landlord's
Mortgagee may elect unilaterally to amend the calculation of Rent such that
none of the Rent payable under this Lease will constitute unrelated
business income; provided, however, that any such amendment shall not
increase Tenant's payment obligations or other liabilities, or reduce the
obligations of Landlord, under this Lease.
5.7 Delinquent Payments and Handling Charge. All Rent and other
---------------------------------------
payments required of Tenant hereunder shall bear interest from the date due
until the date paid at the rate of interest specified in Section 27.13.
Any amount payable by Landlord to Tenant shall bear interest from the date
due until paid at the rate of interest specified in Section 27.13. In
addition, Tenant shall pay to Landlord a late charge of two and one-half
percent (2.5%) of the delinquent payment if (a) any Base Rent, Additional
Rent or other payments required of Tenant hereunder are not received by
Landlord within 5 days of when due; or (b) any Base Rent, Additional rent
or other payments required of Tenant hereunder are not received by Landlord
when due on more than three (3) occasions in any Lease Year to reimburse
Landlord for its costs and inconvenience incurred as a consequence of
Tenant's delinquency (other than interest, attorneys' fees and costs). The
parties agree that this late charge represents a reasonable estimate of the
expenses that Landlord will incur because of any late payment (other than
interest, attorneys' fees and costs). Landlord's acceptance of any late
charge shall not constitute a waiver of Tenant's default with respect to
the overdue amount or prevent Landlord from exercising any of the rights
and remedies available to Landlord under this Lease. Tenant shall pay the
late charge as Additional Rent with the next installment of Additional
Rent. In no event, however, shall the charges permitted under this Section
5.7 or elsewhere in this Lease, to the extent the same are considered to be
interest under applicable law, exceed the maximum rate of interest
allowable under applicable law. If any two noncash payments made by Tenant
are not paid by the bank or other institution on which they are drawn,
Landlord shall have the right, exercised by notice to Tenant, to require
that Tenant make all future payments by certified funds or cashier's check.
5.8 Letter of Credit / Security Deposit. In addition to the
-----------------------------------
foregoing, on or before the execution date of this Lease, Tenant shall
provide Landlord an irrevocable letter of credit in the aggregate amount of
$560,000 ("Letter of Credit") in a form and from a financial institution
(the "Issuing Bank") satisfactory to Landlord, in its sole discretion,
unconditionally payable to Landlord upon presentation as security for the
faithful performance by Tenant under this Lease.
The Letter of Credit shall be reduced to $420,000 upon receipt of the
following financial information that has been certified by the Chief
Financial Officer of Sonic Innovations:
Cash Balance: $1,000,000 minimum
Current Ratio: 1.1 to 1 minimum
Stockholders' Equity: $3,000,000 minimum
Net Income Before Taxes: $1,500,000 for the trailing three months
("Current Ratio", for purposes of this Section 5.8,
shall mean current assets divided by current
liabilities)
The required amount of the Letter of Credit shall be further reduced
to $280,000 upon receipt of the following financial information that has
been certified by the Chief Financial Officer of Sonic Innovations:
Cash Balance: $2,000,000 minimum
Current Ratio: 1.2 to 1 minimum
Stockholders' Equity: $5,000,000 minimum
Net Income Before Taxes: $3,000,000 for the trailing three months
The Letter of Credit requirement shall be replaced with a cash
Security Deposit equal to one months rent upon receipt of the cash deposit
and the following financial information that has been certified by the
Chief Financial Officer of Sonic Innovations:
Cash Balance: $3,000,000 minimum
Current Ratio: 1.25 to 1 minimum
Stockholders' Equity: $6,000,000 minimum
Net Income Before Taxes: $12,000,000 for the trailing twelve
months
OR
Evidence of an initial public offering that raised a minimum of
$20,000,000 in new stockholder's equity.
9
At a minimum and without limiting the provisions of this Section 5.8
above, the Letter of Credit shall be valid for successive one year periods,
automatically renewed on each anniversary date of the Letter of Credit
during the Term of this Lease unless, thirty(30) days prior to any
expiration date, Tenant and the Issuing Bank provide Landlord with written
notice, in the manner provided in Section 27.7 of this Agreement, that the
Letter of Credit will not be renewed for any reason. Notwithstanding the
foregoing, in the event that (i) Landlord determines, in its sole
discretion, that either (a) Tenant has failed to timely make any payment or
perform any obligation under this Lease, or (b) there has occurred, or with
the passage time there would be, a default by Tenant under the Lease
Agreement; or (ii) the Landlord has not received satisfactory evidence that
the Letter of Credit has been renewed at least thirty (30) days prior to
any annual or other expiration date during the Term of this Lease, Landlord
may, prior to, concurrently with, in addition to or subsequent to
exercising any other right or remedy, draw upon the Letter of Credit for
the payment of any obligation due under this Lease, or to compensate
Landlord for any other expense, loss or damage which Landlord may incur by
reason of Tenant's failure to fully perform its obligations hereunder. The
Letter of Credit is not a limitation on Landlord's damages or other rights
under this Lease, and shall not be applied by Tenant to the Rent for the
last (or any) month of the Term. If this Lease is terminated due to any
default of Tenant or if Landlord determines to draw upon the Letter of
Credit as provided herein, the Landlord shall be authorized and entitled to
draw and apply the proceeds of the Letter of Credit as partial or whole
compensation, as the case may be, for the costs and expenses incurred by
Landlord in connection with this Lease, and such action shall be in
addition to any other damages or remedy to which Landlord is otherwise
entitled. Without in any way limiting the foregoing, Landlord may draw on
the Letter of Credit up to and including any expiration date, whether or
not notice has been provided to Landlord that the Letter of Credit will not
be renewed.
5.9 Holding Over. Any holding over by Tenant in the possession of
------------
the Premises, or any portion thereof, after the expiration of the Term,
with or without the consent of Landlord, shall require Tenant to pay one
hundred fifty percent (150%) of the Base Rent and Additional Rent herein
specified for the last month of the Term (prorated on a monthly basis),
unless Landlord shall specify a lesser amount for Rent in its sole
discretion. If Tenant holds over with Landlord's consent, such occupancy
shall be deemed a month-to-month tenancy and such tenancy shall otherwise
be on the terms and conditions herein specified in this Lease as far as
applicable. Notwithstanding the foregoing provisions or the acceptance by
Landlord of any payment by Tenant, any holding over without Landlord's
consent shall constitute a default by Tenant and shall entitle Landlord to
pursue all remedies provided in this Lease, or otherwise, and Tenant shall
be liable for any and all direct or consequential damages or losses of
Landlord resulting from Tenant's holding over without Landlord's consent.
6. CONSTRUCTION OF IMPROVEMENTS.
----------------------------
6.1 General. Subject to events of Force Majeure, Landlord and Tenant
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agree that Landlord shall construct, install, furnish, perform and supply
the Tenant Improvements in accordance with the parties' respective payment
and other obligations as specified in the Work Letter Agreement ("Work
Letter Agreement") attached hereto as Exhibit D and incorporated herein by
this reference. The Tenant Improvements shall meet or exceed the Building
Standard Tenant Improvements as specified in the Work Letter Agreement
6.2 Access by Tenant Prior to Commencement of Term. Provided that
----------------------------------------------
Tenant obtains and delivers to Landlord the certificates or policies of
insurance called for in Section 17.1, Landlord, in its sole discretion, may
permit Tenant and its employees, agents, contractors and suppliers to enter
the Phase One Space before the Lease Commencement Date or to enter the
Phase Two Space before the Phase Two Move-In Date (and such entry alone
shall not constitute Tenant's taking possession of the Phase One or Phase
Two Space for the purpose of Section 6.3(c) below), to perform certain work
on such Phase One or Phase Two Space on behalf of Tenant not contrary to
the provisions of the Work
10
Letter Agreement. Tenant and each other person or firm who or which enters the
Premises before the Commencement Date shall conduct itself so as to not
interfere with Landlord or other occupants of the Building. Landlord may
withdraw any permission granted under this Section 6.2 upon twenty-four (24)
hours' notice to Tenant if Landlord, in its reasonable discretion, determines
that any such interference has been or may be caused. Any prior entry shall be
under all of the terms of this Lease (other than the obligation to pay Base Rent
and Additional Rent) and at Tenant's sole risk. Tenant hereby releases and
agrees to indemnify Landlord and Landlord's contractors, agents, employees and
representatives from and against any and all personal injury, death or property
damage (including damage to any personal property which Tenant may bring into,
or any work which Tenant may perform in, the Premises) which may occur in or
about the Complex in connection with or as the result of said entry by Tenant or
its employees, agents, contractors and suppliers unless caused by or resulting
from the gross negligence or wilful misconduct of Landlord, its contractors,
agents, employees, suppliers, or representatives or from a breach of this Lease
by Landlord. Landlord and Tenant acknowledge that coordination and cooperation
between Landlord and Tenant and their respective architects, engineers,
contractors and consultants will be required in order to complete the Landlord's
Work and the installation of Tenant's furniture, fixtures, and equipment.
Landlord and Tenant agree to use good faith efforts to coordinate and cooperate
to accomplish the completion of the Landlord's Work and the installation of
Tenant's furniture, fixtures and equipment and otherwise ready the Premises for
occupancy by Tenant on schedule.
6.3 Commencement Date; Adjustments to Commencement Date.
---------------------------------------------------
(a) For purposes of this Lease, the "Commencement Date" shall mean
-----------------
the earliest to occur of the following events (the "Lease Commencement
Events"): (a) the date of Substantial Completion of the Landlord's Work on
the Phase One Space, or (b) the date on which Landlord would have
substantially completed the Landlord's Work on the Phase One Space and
tendered possession of the Phase One Space to Tenant but for Net Tenant
Delay, as provided in the Work Letter Agreement, or (c) the date on which
Tenant takes possession of the Premises or any portion thereof, including
the Phase One Space. Subject to events of Force Majeure and the provisions
of this paragraph 6.3, the Lease Commencement Date is scheduled to be as
stated in Section "B" of the Summary of Basic Lease Information. Upon the
occurrence of the Commencement Date, the parties will execute and deliver a
certificate in the form of Exhibit G attached hereto stating and
acknowledging the Commencement Date.
(b) For purposes of this Lease, the "Phase II Move-In Date" shall
mean the earliest to occur of the following events (the "Phase II Move-In
Date Events"): (a) the date of Substantial Completion of the Landlord's
Work on the Phase Two Space, or (b) the date on which the Landlord would
have substantially completed the Landlord's Work on the Phase Two Space and
tendered possession of that space to Tenant but for Net Tenant Delay, as
provided in the Work Letter Agreement, or (c) the date on which Tenant
takes possession of the Phase Two Space. Subject to events of Force Majeure
and the provisions of this paragraph 6.3, the Phase II Move-In Date is
scheduled to be September 1, 1999.
(c) If by the scheduled Commencement Date or, as applicable, the
Phase II Move-In Date there is not Substantial Completion of the applicable
Tenant Improvements for any reason, and such failure to substantially
complete renders the Phase One Space or Phase Two Space, as applicable,
untenantable for their intended purpose, all as reasonably determined by
Landlord, or Landlord is unable to tender possession of the applicable
space to Tenant, then the Landlord may elect (in addition to all other
remedies available to Landlord) to postpone the Commencement Date or the
Phase II Move-In Date, as applicable, until the earliest to occur of the
Lease Commencement Events or the Phase II Move-In Events, as applicable.
Such postponement shall extend the scheduled expiration of the Term for a
number of days equal to the postponement. Whether or not Landlord makes
such an election and notwithstanding any provision in this Lease or any
exhibit to the contrary, the potential postponement of the payment of Base
Rent and Additional Rent shall be Tenant's sole and exclusive remedy for
Landlord's delay in completing the Landlord's Work, the Tenant Improvements
or tendering possession of the Premises to Tenant. The Landlord shall not
be subject to any liability, including, without limitation, lost profits or
incidental or consequential damages for any delay or inability to deliver
possession of the Premises to the Tenant. Such a delay or failure shall not
affect the validity of this Lease or the obligations of the Tenant
hereunder, other than the postponement of the Lease Term.
6.4 Removal of Certain Tenant Improvements and Restoration of the
-------------------------------------------------------------
Premises to Its Original Condition. Within 30 days after the termination of this
----------------------------------
Lease, Tenant shall remove such portions of the Tenant Improvements as the Work
Letter
11
Agreement specifies must be removed upon Lease termination, shall repair all
damage caused by such removal, and shall restore to its original condition,
reasonable wear and tear and insured casualty loss excepted, (A) the portions of
the Premises affected by the removal and (B) such other portions of the Premises
as the Work Letter Agreement specifies. All such removal, repair, and
restoration shall be at Tenant's expense and shall be in accordance with the
Work Letter Agreement.
7. SERVICES TO BE FURNISHED BY LANDLORD.
------------------------------------
7.1 General. Subject to applicable Legal Requirements, governmental
-------
standards for energy conservation, and Tenant's performance of its obligations
hereunder, Landlord shall use all reasonable efforts to furnish the following
services:
(a) Subject to the charges provided in Section 7.4 below, HVAC to
the Premises during Building Operating Hours, at such temperatures and in
such amounts as are reasonably suitable and standard [thus excluding air
conditioning or heating for electronic data processing or other specialized
equipment or specialized (nonstandard) Tenant requirements];
(b) hot and cold water at those points of supply common to all floors
for lavatory and drinking purposes only;
(c) janitorial service five (5) days per week; however Tenant shall
provide any specialized janitorial service needed in the following areas:
production/assembly, shell lab and shipping/receiving;
(d) periodic window washing in and about the Building and the
Premises, anticipated to be accomplished approximately every 3 or 4
months for outside windows and every 2 or 3 months for inside windows;
(e) elevator service, if necessary, to provide access to and egress
from the Premises twenty-four hours per day, seven days per week;
(f) electric current twenty-four hours per day, seven days per week
for normal office machines and other machines of low electrical consumption
of not less than six (6) ▇▇▇▇▇ per square foot of Rentable Area of the
Premises available for Tenant's use; and
(g) replacement of fluorescent lamps in Building Standard light
fixtures installed by Landlord and of incandescent bulbs or fluorescent
lamps in all public rest rooms, stairwells and other Common Areas in the
Building.
If any of the services described above or elsewhere in this Lease are
interrupted, Landlord shall use reasonable diligence to promptly restore the
same; provided, however, if as a result of any interruption of services the
Premises will be uninhabitable or unusable by Tenant for five (5) consecutive
business days, then Base Rent and Additional Rent shall be abated to the extent
to which such condition interferes with Tenant's use of the Premises commencing
on the first day of such condition and continuing until such condition is
corrected. However, unless resulting from Landlord's gross negligence or wilful
misconduct, neither the interruption nor cessation of such services, nor the
failure of Landlord to restore same, shall render Landlord liable for damages to
person or property, or be construed as an eviction of Tenant, or work an
abatement of Rent or relieve Tenant from fulfilling any of its other obligations
hereunder. Other than in the case of a casualty, if such services are
interrupted for more than sixty (60) consecutive days, Tenant may terminate this
Lease upon written notice to Landlord.
If not previously installed, Landlord may cause an electric and/or water
meter(s) to be installed in the Premises of the Tenant in order to measure the
amount of electricity and/or water consumed for any such use, and the cost of
such meter(s) shall be paid promptly by Tenant.
Certain security measures (both by electronic equipment and personnel)
may be provided by Landlord in connection with the Building. However, Tenant
hereby acknowledges that any such security is intended to be solely for the
benefit of the Landlord and protecting its property, and while certain
incidental benefits may accrue to the Tenant therefrom, any such security is not
for the purpose of protecting either the property of Tenant or the safety of its
employees, agents or invitees. By providing any such security, Landlord assumes
no obligation to Tenant and shall have no liability arising therefrom.
12
7.2 Keys and/or Access Cards. Landlord shall furnish Tenant, at Landlord's
------------------------
expense, with up to Two Hundred Fifty (250) keys and access cards, and at
Tenant's expense with such additional keys and access cards as Tenant may
request, to unlock or allow access to the Building and each corridor door
entering the Premises. Tenant shall not install, or permit to be installed, any
additional lock on any corridor door into or in the Premises or make, or permit
to be made, any duplicates of keys or access cards to the Premises without
Landlord's prior consent. Landlord shall be entitled at all times to possession
of a duplicate of all keys and access cards to all doors to or inside of the
Premises. Tenant shall designate in writing any rooms within the Premises to
which Tenant will not allow Landlord access and Landlord shall only have access
to such rooms (except in emergency situations) with the advance permission of
Tenant. All keys and access cards referred to in this Section 7.2 shall remain
the property of the Landlord. Upon the expiration or termination of the Term,
Tenant shall surrender all such keys and access cards to Landlord and shall
deliver to Landlord the combination to all locks on all safes, cabinets and
vaults which will remain in the Premises. Landlord shall be entitled to install,
operate and maintain a card reader and after-hours access card system, security
systems and other control devices in or about the Premises and the Complex which
regulate entry into the Building (or portions thereof) and monitor, by closed
circuit television or otherwise, all persons leaving or entering the Complex,
the Building and the Premises.
7.3 Tenant Identity, Signs and Other Matters. Landlord shall disburse a
----------------------------------------
portion of the Tenant Improvement Allowance, as defined in the Work Letter
Agreement attached as Exhibit D, to provide and install, in Building Standard
graphics, letters or numerals identifying Tenant's name and suite number
adjacent to Tenant's entry door at one location per floor of the Building
occupied by Tenant. Tenant's name, as set forth on the first page of this Lease,
or as otherwise provided by Tenant in writing upon execution of this Lease,
shall also be placed in the Building Directory located on the main level of the
Building. Any subsequent modification to the listing of Tenant's name in the
Building Directory shall be at Tenant's cost. Without Landlord's prior written
consent, no other signs, numerals, letters, graphics, symbols or marks
identifying Tenant shall be placed on the exterior, or in the interior if they
are visible from the exterior, of the Premises.
Tenant shall not place or suffer to be placed on any exterior door, wall or
window of the Premises, on any part of the inside of the Premises which is
visible from outside of the Premises, or elsewhere on the Complex, any sign,
decoration, notice, logo, picture, lettering, attachment, advertising matter or
other thing of any kind, without first obtaining Landlord's prior written
approval, which Landlord may, in its discretion, grant or withhold. Landlord
may, at Tenant's cost, and without notice or liability to Tenant, enter the
Premises and remove any item erected in violation of this Section. Landlord, as
part of Building Rules and Regulations, may establish rules and regulations
governing the size, type and design of all such items and Tenant shall abide by
such rules and regulations subject to the provisions of this Lease applicable to
Building Rules and Regulations.
7.4 Charges. Tenant shall pay to Landlord monthly as billed, as Additional
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Rent, such charges as may be separately metered or as Landlord may compute for
(a) any utility services utilized by Tenant for computers, data processing
equipment or other electrical equipment in excess of that agreed to be furnished
by Landlord pursuant to Section 7.1, (b) lighting installed in the Premises in
excess of Building Standard lighting, (c) HVAC and other services in excess of
that stated in Section 7.1(a) or provided at times other than Building Operating
Hours, and (d) janitorial services required with respect to Above Standard
Tenant Improvements within the Premises. If Tenant wishes to use HVAC or
electrical services to the Premises during hours other than Building Operating
Hours, Landlord shall supply such HVAC, electrical and utility services at an
hourly cost to Tenant of $17.50 per Service Area (defined below), as adjusted
from time to time by Landlord consistent with prevailing market charges for such
use. A "Service Area", as used in this Lease, shall be defined as the separate
portions of the Premises as outlined on Exhibit B hereto (Two Service Areas on
Floor 1, Three Service Areas on Floor 5, and Two Service Areas on Floor 6).
Tenant will not be required to pay the hourly cost for services set forth above
for any Service Area unless said services are separately utilized by Tenant in
the Service Area. Landlord may utilize a lighting and utility occupancy sensor
in order to automatically determine and control use of HVAC, electrical and
other utility services. Landlord may elect to estimate the charges to be paid by
Tenant under this Section 7.4 and ▇▇▇▇ such charges to Tenant monthly in
advance, in which event Tenant shall promptly pay the estimated charges. When
the actual charges are determined by Landlord, an appropriate cash adjustment
shall be made between Landlord and Tenant to account for any underpayment or
overpayment by Tenant.
7.5 Operating Hours. Subject to Building Rules and Regulations and such
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security standards as Landlord may from time to time adopt, the Building shall
be open to the public during the Building Operating Hours and the Premises shall
be open to Tenant during hours other than Building Operating Hours.
13
8. REPAIR AND MAINTENANCE.
----------------------
8.1 By Landlord. Landlord shall provide the services to the Premises
-----------
set forth in paragraph 7.1 above and shall maintain the Complex (excepting
the Premises, but not Building systems therein (which Building systems
Landlord shall maintain), and portions of the Building leased by persons
not affiliated with Landlord) at all times in accordance with the standards
of similar office buildings and developments in the Salt Lake suburban
area, making such repairs and replacements as may be required to maintain
the Building in such condition. This Section 8.1 shall not apply to damage
resulting from a Taking (as to which Section 14 shall apply), or damage
resulting from a casualty (as to which Section 15.1 shall apply), or to
damage for which Tenant is otherwise responsible under this Lease. Tenant
hereby waives and releases any right it may have to make repairs to the
Premises or Building at Landlord's expense under any law, statute,
ordinance, rules and regulations now or hereafter in effect in any
jurisdiction in which the Building is located.
8.2 By Tenant. Tenant, at Tenant's sole cost, shall maintain the
---------
nonstructural components of the Premises and every part of the Premises
(including, without limitation, all floor, wall and ceiling coverings,
doors and locks, furnishings, trade fixtures, signage, leasehold
improvements, equipment and other personal property from time to time
situated in or on the Premises but excluding Building systems therein) in
good order, condition and repair, and in a clean, safe, operable,
attractive and sanitary condition. Tenant will not commit or allow to
remain any waste or damage to any portion of the Premises. Tenant shall
repair or replace, subject to Landlord's direction and supervision, any
damage to the Complex caused by Tenant or Tenant's agents, contractors or
invitees. If Tenant fails to make such repairs or replacements, Landlord
may, upon at least 5 days advance notice to Tenant, make the same at
Tenant's cost. Such cost shall be payable to Landlord by Tenant on demand
as Additional Rent. All contractors, workmen, artisans and other persons
which or whom Tenant proposes to retain to perform work in the Premises (or
the Complex, pursuant to the second sentence of this Section 8.2) pursuant
to this Section 8.2 or Section 11 shall be approved by Landlord, in
Landlord's reasonable discretion, prior to the commencement of any such
work.
9. TAXES ON TENANT'S PROPERTY. Tenant shall be liable for and shall pay,
--------------------------
before they become delinquent, all taxes and assessments levied against any
personal property placed by Tenant in the Premises (even if same becomes a
fixture by operation of law or the property of Landlord by operation of this
Lease), including any additional Impositions which may be assessed, levied,
charged or imposed against Landlord or the Building by reason of non-Building
Standard Items in the Premises. Tenant may withhold payments of any taxes and
assessments described in this Section 9 so long as Tenant contests its
obligation to pay in accordance with applicable law and the nonpayment thereof
does not pose a threat of loss or seizure of the Building or any interest of
Landlord therein.
10. TRANSFER BY TENANT.
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10.1 General. Except as specifically provided in this Section 10.1
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below, Tenant shall not directly or indirectly, voluntarily or by operation
of law, sell, assign, encumber, pledge or otherwise Transfer or hypothecate
all or any part of the Premises or Tenant's leasehold estate hereunder, or
permit the Premises to be occupied by anyone other than Tenant or sublet
the Premises or any portion thereof without Landlord's prior written
consent in Landlord's discretion (such consent not to be unreasonably
withheld, conditioned or delayed), being obtained in each instance, subject
to the terms and conditions contained in this paragraph. Notwithstanding
the foregoing, but without waiving any other requirement for a Transfer as
contained in this Section 10, Tenant shall have the right, without the
prior consent of Landlord, to assign the Lease or sublet the whole or any
part of the Premises to a corporation or entity (a "Related Entity") which:
(i) is Tenant's parent organization, or (ii) is a wholly-owned subsidiary
of Tenant or Tenant's parent organization, or (iii) is an organization of
which Tenant or Tenant's parent owns in excess of fifty percent (50%) of
the outstanding capital stock or has in excess of fifty percent (50%)
ownership or control interest, or (iv) is the result of a consolidation,
merger or reorganization with Tenant and/or Tenant's parent organization,
or (v) is the Transferee of substantially all of Tenant's assets. Except
as provided above, any attempted Transfer without Landlord's consent shall
be void. If Tenant desires to effect a Transfer, it shall deliver to
Landlord written notice thereof in advance of the date on which Tenant
proposes to make the Transfer, together with all of the terms of the
proposed Transfer and the identity of the proposed Transferee. Upon
request by Landlord, such notice shall contain financial information
concerning the proposed Transferee and other reasonable information
regarding the transaction which Landlord may specify. Landlord shall have
fifteen (15) days following receipt of the notice and information within
which to notify Tenant in writing whether Landlord elects (a) to refuse to
consent to the Transfer and to continue this Lease in full force, or (b) to
consent to the proposed Transfer. If Landlord fails to notify Tenant of
its election within said fifteen (15) day period,
14
Landlord shall be deemed to have elected option (a). The consent by
Landlord to a particular Transfer shall not be deemed a consent to any
other Transfer. If a Transfer occurs without the prior written consent of
Landlord as provided herein, Landlord may nevertheless collect rent from
the Transferee and apply the net amount collected to the Rent payable
hereunder, but such collection and application shall not constitute a
waiver of the provisions hereof or a release of Tenant from the further
performance of its obligations hereunder.
10.2 Conditions. The following conditions shall automatically apply
----------
to each Transfer, without the necessity of same being stated or referred to
in Landlord's written consent:
(a) Tenant shall execute, have acknowledged and deliver to
Landlord, and cause the Transferee to execute, have acknowledged and
deliver to Landlord, an instrument in form and substance acceptable to
Landlord in which (i) the Transferee adopts this Lease and agrees to
perform, jointly and severally with Tenant, all of the obligations of
Tenant hereunder, as to the space Transferred to it, including,
without limitation, the prohibition against rent based on the income
or profits derived from the Premises (any purported lease to the
contrary being null and void), (ii) Tenant subordinates to Landlord's
statutory lien and security interest any liens, security interests or
other rights which Tenant may claim with respect to any property of
the Transferee, (iii) Tenant agrees with Landlord that, if the rent or
other consideration due by the Transferee exceeds the Rent for the
transferred space, then Tenant shall pay Landlord as Additional Rent
hereunder 75% of such excess Rent and other consideration, net of
reasonable leasing commissions and tenant improvement costs directly
required in connection with such Transfer actually paid by Tenant,
immediately upon Tenant's receipt thereof, (iv) if the transferred
space is less than the entire portion of the premises on a particular
floor and unless direct access to the transferred space from a public
corridor is already available, Tenant and the Transferee agree to
provide to Landlord, at their expense, direct access from a public
corridor in the Building to the transferred space, (v) the Transferee
agrees to use and occupy the Transferred space solely for the purpose
specified in Section 4 and otherwise in strict accordance with this
Lease, and (vi) Tenant acknowledges that, notwithstanding the
Transfer, Tenant remains directly and primarily liable for the
performance of all the obligations of Tenant hereunder (including,
without limitation, the obligation to pay all Rent), and Landlord
shall be permitted to enforce this Lease against Tenant or the
Transferee, or all of them, without prior demand upon or proceeding in
any way against any other persons; and
(b) Tenant shall deliver to Landlord a counterpart of all
instruments relative to the Transfer executed by all parties to such
transaction (except Landlord).
(c) If Tenant requests Landlord to consent to a proposed
Transfer, Tenant shall pay to Landlord, whether or not consent is
given, Landlord's reasonable costs, including, without limitation,
reasonable attorneys' fees, incurred in connection with such request.
10.3 Liens. Without in any way limiting the generality of the
-----
foregoing, Tenant shall not grant, place or suffer, or permit to be
granted, placed or suffered, against the Complex or any portion thereof,
any lien, security interest, pledge, conditional sale contract, claim,
charge or encumbrance (whether constitutional, statutory, contractual or
otherwise) and, if any of the aforesaid does arise or is asserted, Tenant
will, promptly upon demand by Landlord and at Tenant's expense, cause the
same to be released.
10.4 Assignments in Bankruptcy. If this Lease is assigned to any
-------------------------
person or entity pursuant to the provisions of the Bankruptcy Code, 11
U.S.C. (S) 101 et seq. (the "Bankruptcy Code"), any and all monies or other
-- ---
consideration payable or otherwise to be delivered in connection with such
assignment shall be paid or delivered to Landlord, shall be and remain the
exclusive property of Landlord and shall not constitute property of Tenant
or of the Estate of Tenant within the meaning of the Bankruptcy Code.
11. ALTERATIONS. Tenant shall not make (or permit to be made) any change,
-----------
addition or improvement to the Premises (including, without limitation, the
attachment of any fixture or equipment) unless such change, addition or
improvement (a) equals or exceeds the Building Standard and utilizes only new
and first-grade materials, (b) is in conformity with all Legal Requirements, and
is made after obtaining any required permits and licenses, (c) is made with the
prior written consent of Landlord not to be unreasonably withheld, conditioned
or delayed, (d) is made pursuant to plans and specifications approved in writing
in advance by Landlord, (e) is made after Tenant has provided to Landlord such
reasonable indemnification and/or bonds requested by Landlord, including,
without limitation, a performance and completion bond in such form and amount as
may be satisfactory to Landlord to protect against claims and liens for labor
performed and materials furnished, and to insure the completion of any change,
addition or improvement, (f) is carried out by persons
15
approved in writing by Landlord who, if required by Landlord, deliver to
Landlord before commencement of their work proof of such insurance coverage as
Landlord may require, with Landlord named as an additional insured, and (g) is
done only at such time and in such manner as Landlord may reasonably specify.
Notwithstanding the foregoing, changes, additions, and improvements which cost
less than $10,000 and do not alter the exterior or any structural elements of
the Complex shall not be subject to the requirements of subsections (c), (d),
(e), or (f) above; provided, however, that any such alterations shall not be
made without Landlord's prior written consent to the Contractor selected to do
the work. All such alterations, improvements and additions (including all
articles attached to the floor, wall or ceiling of the Premises) shall become
the property of Landlord and shall, at Landlord's election, be (i) surrendered
with the Premises as part thereof at the termination or expiration of the Term,
without any payment, reimbursement or compensation therefor, or (ii) removed by
Tenant, at Tenant's expense, with all damage caused by such removal repaired by
Tenant. Tenant may remove Tenant's trade fixtures, office supplies, movable
office furniture and equipment not attached to the Building, provided such
removal is made prior to the expiration of the Term, no uncured Event of Default
has occurred and Tenant promptly repairs all damage caused by such removal.
Tenant shall indemnify, defend and hold harmless Landlord from and against all
liens, claims, damages, losses, liabilities and expenses, including attorneys'
fees, which may arise out of, or be connected in any way with, any such change,
addition or improvement. Within twenty (20) days following the imposition of any
lien resulting from any such change, addition or improvement, Tenant shall cause
such lien to be released of record by payment of money or posting of a proper
bond.
12. PROHIBITED USES.
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12.1 General. Tenant will not (a) use, occupy or permit the use or
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occupancy of the Complex or Premises for any purpose or in any manner which
is or may be, directly or indirectly, violative of any Legal Requirement,
or contrary to Building Rules and Regulations, or dangerous to life or
property, or a public or private nuisance, or disrupt, obstruct or
unreasonably annoy the owners or any other tenant of the Building or
adjacent buildings, (b) keep or permit to be kept any substance in, or
conduct or permit to be conducted any operation from, the Premises which
might emit offensive odors or conditions into other portions of the
Building, or make undue noise or create undue vibrations, (c) commit or
permit to remain any waste to the Complex or Premises, (d) install or
permit to remain any improvements to the Complex or Premises, window
coverings or other items (other than window coverings which have first been
approved by Landlord) which are visible from the outside of the Premises,
or exceed the structural loads of floors or walls of the Building, or
adversely affect the mechanical, plumbing or electrical systems of the
Building, or affect the structural integrity of the Building in any way,
(e) permit the occupancy of the Premises at any time during the Lease Term
to exceed one person (including visitors) per two hundred (200) square feet
Rentable Area of space in the Premises, or (f) commit or permit to be
committed any action or circumstance in or about the Complex or Building
which, directly or indirectly, would or might justify any insurance carrier
in cancelling or increasing the premium on the fire and extended coverage
insurance policy maintained by Landlord on the Complex or Building or
contents, and if any increase results from any act of Tenant, then Tenant
shall pay such increase promptly upon demand therefor by Landlord.
12.2 Hazardous Materials.
-------------------
(a) Without limiting the foregoing, Tenant shall not cause or
permit any Hazardous Material (defined below) to be brought upon, kept
or used in or about the Premises or Complex by Tenant, its agents,
employees, contractors or invitees, without the prior written consent
of Landlord. Notwithstanding the foregoing, Tenant may use and store
types and quantities of materials and substances which may be or
contain Hazardous Materials, provided that the same are of the type
and in the quantities customarily found or used in offices for use of
similar businesses, including packaging materials, commercial cleaning
fluids and photocopier fluids. If Tenant breaches the obligations
stated in the preceding sentence, or if the presence of Hazardous
Materials on the Premises or Complex caused or permitted by Tenant
results in contamination of the Premises or Complex, or if
contamination of the Premises or Complex by Hazardous Material
otherwise occurs for which Tenant is legally liable to Landlord for
damage resulting therefrom, then Tenant shall indemnify, defend and
hold Landlord harmless from any and all claims, judgments, damages,
penalties, fines, costs, liabilities or losses (including, without
limitation, diminution in value of the Premises or Complex, damages
for the loss or restriction on use of rentable or usable space or any
amenity of the Premises or Complex, damages arising from any adverse
impact on marketing of space in the Building, and sums paid in
settlement of claims, attorneys' fees, consultant fees and expert
fees) which arise during or after the Lease Term as a result of such
contamination. This indemnification of Landlord includes, without
limitation, the obligation to reimburse Landlord for costs incurred in
connection with any cleanup, remedial, removal or restoration work
required by any federal, state or local governmental agency or
political subdivision. Without limiting the foregoing, if
16
the presence of any Hazardous Material in, on or about the Premises or
Complex caused by or permitted by Tenant results in any contamination
of the Premises or Complex, Tenant shall promptly take all actions at
its sole expense as are necessary to return the Premises or Complex to
the condition existing prior to the introduction of any Hazardous
Material; provided, however, that Landlord's approval of such action
shall first be obtained. "Hazardous Material" shall mean, in the
broadest sense, any petroleum-based products, pesticides, paints,
insolvents, polychlorinated, biphenyl, lead, cyanide, DDT, acids,
ammonium compounds and other chemical products and any substance or
material defined or designated as a hazardous or toxic, or other
similar term, by any federal, state or local environmental statute,
regulation or ordinance affecting the Premises or Complex presently in
effect or that may be promulgated in the future, as such statutes,
regulations and ordinances may be amended from time to time. In
addition, Tenant shall execute affidavits, representations and the
like from time to time at Landlord's request concerning Tenant's best
knowledge and belief regarding the presence of hazardous substances or
materials on the Premises. In all events, Tenant shall indemnify
Landlord in the manner elsewhere provided in this Lease from any
release of hazardous materials on the Premises to the extent caused
by, or resulting from the acts of, Tenant or Tenant's employees,
directors, partners, shareholders, contractors, agents, invitees or
representatives occurring while Tenant is in possession, or elsewhere
if caused by Tenant or persons acting under Tenant.
(b) Landlord represents and warrants that, to the best of its
knowledge: (i) no part of the Premises or the Complex has ever been
used as a sanitary landfill, waste dump site or for the treatment,
storage or disposal of Hazardous Materials; and (ii) Landlord has not
received any notice of any action or proceeding relating to any
Hazardous Material or Release thereof on, under or at the Complex.
(c) The within covenants shall survive the expiration or
earlier termination of the lease term.
12.3 Overstandard Tenant Use. Tenant shall not, without Landlord's
-----------------------
prior written consent, use heat-generating machines, other than standard
equipment or lighting, or machines other than normal fractional horsepower
office or light manufacturing machines, in the Premises that may affect the
temperature otherwise maintained by the air conditioning system or increase
the water normally furnished to the Premises by Landlord.
13. ACCESS BY LANDLORD. Upon reasonable prior notice (except in case of
------------------
emergency or to perform janitorial services), Landlord, its employees,
contractors, agents and representatives, shall have the right (and Landlord, for
itself and such persons and firms, hereby reserves the right) to enter the
Premises at all hours (a) to inspect, clean, maintain, repair, replace or alter
the Premises or the Building (as otherwise permitted by this Lease), (b) to show
the Premises to prospective purchasers (or, during the last twelve (12) months
of the Term, to prospective tenants), (c) to determine whether Tenant is
performing its obligations hereunder and, if it is not, upon 5 days prior
written notice to Tenant, to perform same at Landlord's option and Tenant's
expense, or (d) for any other reasonable purpose. In an emergency, Landlord (and
such persons and firms) may use any means to open any door into or in the
Premises without any liability therefor. Landlord shall use reasonable efforts
to minimize interference with Tenant's use of the Premises. Entry into the
Premises by Landlord or any other person or firm named in the first sentence of
this Section 13 for any purpose permitted herein shall not constitute a trespass
or an eviction (constructive or otherwise), or entitle Tenant to any abatement
or reduction of Rent, or constitute grounds for any claim (and Tenant hereby
waives any claim) for damages for any injury to or interference with Tenant's
business, for loss of occupancy or quiet enjoyment, or for consequential
damages.
14. CONDEMNATION. If all of the Complex is Taken, or if so much of the
------------
Complex is Taken that, in Landlord's opinion, the remainder cannot be restored
to an economically viable, quality office building, or if the awards payable to
Landlord as a result of any Taking are, in Landlord's opinion, inadequate to
restore the remainder to an economically viable, quality office building,
Landlord may, at its election, exercisable by the giving of written notice to
Tenant within sixty (60) days after the date of the Taking, terminate this Lease
as of the date of the Taking or the date Tenant is deprived of possession of the
Premises (whichever is later). Tenant may, at its election, exercisable by
giving sixty (60) days' written notice to Landlord, terminate this Lease in the
event a substantial (greater than 50%) portion of the Premises is taken
rendering the Premises inadequate for its continued use and occupancy by Tenant.
If this Lease is not terminated as a result of a Taking, Landlord shall restore
the Premises remaining after the Taking to the condition prior to the Taking.
During the period of restoration, Base Rent shall be abated to the extent the
Premises are rendered untenantable and, after the period of restoration, Base
Rent and Tenant's Share shall be reduced in the proportion that the area of the
Premises Taken or otherwise rendered untenantable bears to the area of the
Premises just prior to the Taking. If any portion of Base Rent is abated under
this Section 14, either Tenant or Landlord may elect to extend the expiration
date of the Term for the period of the abatement. All awards, proceeds,
compensation or other payments from
17
or with respect to any Taking of the Complex or any portion thereof shall belong
to Landlord, and Tenant hereby assigns to Landlord all of its right, title,
interest and claim to same. Whether or not this Lease is terminated as a
consequence of a Taking, all damages or compensation awarded for a partial or
total Taking, including any award for severance damage, shall be the sole and
exclusive property of Landlord. Tenant may assert a claim for and recover from
the condemning authority, but not from Landlord, such compensation as may be
awarded on account of Tenant's moving and relocation expenses, and depreciation
to and loss of Tenant's moveable personal property, trade fixtures, and
diminution in the value of or deprivation of the leasehold estate under this
Lease. Tenant shall have no claim against Landlord for the occurrence of any
Taking, or for the termination of this Lease or a reduction in the Premises as a
result of any Taking.
15. CASUALTY.
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15.1 General. Tenant shall give prompt written notice to Landlord of
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any casualty to the Complex of which Tenant is aware and any casualty to
the Premises. If (a) the Complex or the Premises are totally destroyed, or
(b) if the Complex or the Premises are partially destroyed but in
Landlord's opinion they cannot be restored to an economically viable,
quality office building, or (c) if the insurance proceeds payable to
Landlord as a result of any casualty are, in Landlord's opinion, inadequate
to restore the portion remaining to an economically viable, quality office
building, or (d) if the damage or destruction occurs within twelve (12)
months of the expiration of the Term, or (e) Landlord's Mortgagee requires
insurance proceeds be applied to pay or reduce indebtedness rather than
repair the Premises, Landlord may, at its election exercisable by the
giving of written notice to Tenant within forty-five (45) days after the
casualty, terminate this Lease as of the date of the casualty or the date
Tenant is deprived of possession of the Premises (whichever is later). If
this Lease is not terminated by Landlord as a result of a casualty,
Landlord shall (subject to Section 15.2) restore the Premises to the
condition prior to the casualty. If restoration of the Premises to a
Building Standard Condition is not completed, or estimated by Landlord or
its agents to be completed, within a period of one hundred sixty (160)
days, Tenant may elect to terminate this Lease by providing written notice
to Landlord within thirty (30) days after expiration of the one hundred
sixty (160) day period, or, as applicable, within thirty (30) days after
receipt by Tenant of a written estimate from Landlord of a time in excess
of one hundred sixty (160) days to complete the restoration. If Tenant
does not elect to terminate within this 30-day period, Tenant shall be
deemed to have waived the option to terminate. During the period of
restoration, Base Rent and Additional Rent shall be abated to the extent
the Premises are rendered untenantable and, after the period of
restoration, Base Rent and Tenant's Share shall be reduced in the
proportion that the area of the Premises remaining tenantable after the
casualty bears to the area of the Premises just prior to the casualty.
Except for abatement of Base Rent, if any, Tenant shall have no claim
against Landlord for any loss suffered by reason of any such damage,
destruction, repair or restoration, nor may Tenant terminate this Lease as
the result of any statutory provision in effect on or after the date of
this Lease pertaining to the damage and destruction of the Premises or the
Building. Landlord shall not be required to repair any damage or to make
any restoration or replacement of any furnishings, trade fixtures,
leasehold improvements, equipment, merchandise and other personal property
installed in the Premises by Tenant or at the direct or indirect expense of
Tenant.
15.2 Intentionally Left Blank.
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16. SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT.
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16.1 General. This Lease, Tenant's leasehold estate created hereby,
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and all of Tenant's rights, titles and interests hereunder and in and to
the Premises are hereby made subject and subordinate to any Mortgage
presently existing or hereafter placed upon all or any portion of the
Complex, and to any and all renewals, extensions, modifications,
consolidations and replacements of any Mortgage and all advances made or
hereafter to be made on the security of any Mortgage. Notwithstanding the
foregoing, Landlord and Landlord's Mortgagee may, at any time upon the
giving of written notice to Tenant and without any compensation or
consideration being payable to Tenant, make this Lease, and the aforesaid
leasehold estate and rights, titles and interests, superior to any
Mortgage. In order to confirm the subordination (or, at the election of
Landlord or Landlord's Mortgagee, the superiority of this Lease), upon the
written request by Landlord or by Landlord's Mortgagee to Tenant, and
within ten (10) days of the date of such request, and without any
compensation or consideration being payable to Tenant, Tenant shall
execute, have acknowledged and deliver a recordable instrument
substantially in the form of Exhibit H hereto. Without limiting the
foregoing, upon request by Landlord's Mortgagee, the Landlord and Tenant
shall execute such documents as Landlord's Mortgagee deems necessary to
effect an amendment of this Lease; provided, however, any such amendment
may not materially adversely affect any of Tenant's rights, privileges, and
remedies provided for in this Lease, the amounts payable by Tenant under
this Lease, Tenant's use, occupancy and quiet enjoyment of the Premises as
18
set forth herein. Tenant's failure to execute and deliver such
instrument(s) as required in this Section 16 shall constitute a default
under this Lease.
16.2 Attornment. Upon the written request of any person or party
----------
succeeding to the interest of Landlord under this Lease, Tenant shall
automatically become the tenant of and attorn to such successor in interest
without any change in any of the terms of this Lease. No successor in
interest shall be (a) bound by any payment of Rent for more than one month
in advance, except payments of security for the performance by Tenant of
Tenant's obligations under this Lease, or (b) subject to any offset,
defense or damages arising out of a default or any obligations of any
preceding Landlord. Neither Landlord's Mortgagee nor its successor in
interest shall be bound by any amendment of this Lease entered into after
Tenant has been given written notice of the name and address of Landlord's
Mortgagee and without the written consent of Landlord's Mortgagee or such
successor in interest, not to be unreasonably withheld or delayed. Any
transferee or successor-in-interest shall not be liable for any acts,
omissions or defaults of Landlord that occurred before the sale or
conveyance, or the return of any security deposit except for deposits
actually paid to the successor or transferee. Tenant agrees to give
written notice of any default by Landlord to the holder of any Mortgage.
Tenant further agrees that, before it exercises any rights or remedies
under the Lease, other than Rent abatement as expressly provided herein,
the holder of any Mortgage or other successor-in-interest shall have the
right, but not the obligation, to cure the default within the same time, if
any, given to Landlord to cure the default, plus an additional thirty (30)
days. The subordination, attornment and mortgagee protection clauses of
this Section 16 shall be self-operative and no further instruments of
subordination, attornment or mortgagee protection need be required by any
Landlord's Mortgagee or successor in interest thereto. Nevertheless, upon
the written request therefor and without any compensation or consideration
being payable to Tenant, Tenant agrees to execute, have acknowledged and
deliver such instruments substantially in the form of Exhibit H hereto to
confirm the same.
17. INSURANCE.
---------
17.1 General. Tenant shall obtain and maintain throughout the Term
-------
the following policies of insurance:
(a) commercial general liability insurance with a combined
single limit for bodily injury and property damage of not less than
One Million Dollars ($1,000,000) per occurrence, including, without
limitation, contractual liability coverage for the performance by
Tenant of the indemnity agreements set forth in Section 18;
(b) hazard insurance with special causes of loss, including
theft coverage, insuring against fire, extended coverage risks,
vandalism and malicious mischief, and including boiler and sprinkler
leakage coverage, in an amount equal to the full replacement cost
(without deduction for depreciation) of all furnishings, trade
fixtures, leasehold improvements, equipment, merchandise and other
personal property from time to time situated in or on the Premises;
(c) workers' compensation insurance satisfying Tenant's
obligations under the workers' compensation laws of the State of Utah;
and
(d) such other policy or policies of insurance as Landlord may
reasonably require or as Landlord is then generally requiring from
other tenants in the Building.
Such minimum limits shall in no event limit the liability of Tenant under
this Lease except as otherwise provided in Section 17.2. Such liability
insurance shall name Landlord, and any other person specified from time to
time by Landlord, as an additional insured; such property insurance shall
name Landlord as a loss payee as Landlord's interests may appear; and both
such liability and property insurance shall be with companies acceptable to
Landlord, having a rating of not less than A:XII in the most recent issue
of Best's Key Rating Guide, Property-Casualty. All liability policies
------------------------------------------
maintained by Tenant shall contain a provision that Landlord and any other
additional insured, although named as an insured, shall nevertheless be
entitled to recover under such policies for any loss sustained by Landlord
and Landlord's agents and employees as a result of the acts or omissions of
Tenant. Tenant shall furnish Landlord with certificates of coverage. No
such policy shall be cancelable or subject to reduction of coverage or
other modification except after thirty (30) days' prior written notice to
Landlord by the insurer. All such policies shall be written as primary
policies, not contributing with and not in excess of the coverage which
Landlord may carry, and shall only be subject to such deductibles as may be
approved in writing in advance by Landlord. Tenant shall, at least ten
(10) days prior to the expiration of such policies, furnish Landlord with
renewals of, or binders for, such policies. Landlord and Tenant waive all
rights
19
to recover against each other, against any other tenant or occupant of the
Complex, and against the officers, directors, shareholders, partners, joint
venturers, employees, agents, customers, invitees or business visitors of
each other, or of any other tenant or occupant of the Building, for any
loss or damage arising from any cause covered by any insurance carried by
the waiving party, to the extent that such loss or damage is actually
covered. Tenant shall cause all other occupants of the Premises claiming
by, through or under Tenant to execute and deliver to Landlord a waiver of
claims similar to the waiver contained in this Section and to obtain such
waiver of subrogation rights endorsements. Any Landlord's Mortgagee may, at
Landlord's option, be afforded coverage under any policy required to be
secured by Tenant under this Lease by use of a mortgagee's endorsement to
the policy concerned.
17.2 Waiver of Subrogation. Landlord and Tenant hereby waive all
---------------------
claims, rights of recovery and causes of action that either party or any
party claiming by, through or under such party may now or hereafter have by
subrogation or otherwise against the other party or against any of the
other party's officers, directors, shareholders, partners or employees for
any loss or damage that may occur to the Complex, the Premises, Tenant's
improvements or any of the contents of any of the foregoing by reason of
fire or other casualty, or by reason of any other cause except gross
negligence or willful misconduct (thus including simple negligence of the
parties hereto or their officers, directors, shareholders, partners or
employees), that could have been insured against under the terms of (a) in
the case of Landlord, the fire and extended coverage insurance policies
required to be obtained and maintained by Landlord under Section 17.3, and
(b) in the case of Tenant, the fire and extended coverage insurance
policies required to be obtained and maintained under Section 17.1;
provided, however, that the waiver set forth in this Section 17.2 shall not
apply to any deductibles of more than $ on insurance policies carried
by Landlord. Landlord and Tenant shall cause an endorsement to be issued
to their respective insurance policies recognizing this waiver of
subrogation.
17.3 Landlord's Insurance. Landlord shall obtain and maintain
--------------------
throughout the Term the following policies of insurance:
(a) All-risk property damage insurance on the Complex, all
improvements thereto, and personal property owned by Landlord in the
amount of the full replacement values thereof, as the values may exist
from time to time; and
(b) General liability insurance covering Landlord's operations
and the Complex with combined single limits of not less than
$1,000,000 per occurrence for bodily injury and property damage;
(c) Worker's compensation for all of Landlord's employees; and
(d) All policies shall be issued by reasonable insurance
companies authorized to do business in the state in which the Premises
are located.
18. INDEMNITY. Subject to paragraph 17.2 and 17.1, and except to the
---------
extent caused by the gross negligence, willful misconduct or breach of this
Lease by Landlord, its employees, representatives or contractors, Tenant agrees
to indemnify, defend and hold Landlord and its officers, directors, partners and
employees entirely harmless from and against all liabilities, losses, demands,
actions, expenses or claims, including reasonable attorneys' fees and court
costs, and including consequential damages, for injury to or death of any person
or for damages to any property or for violation of law arising out of or in any
manner connected with (i) the use, occupancy or enjoyment of the Premises and
Complex by Tenant or Tenant's agents, employees or contractors, or the clients
and other invitees of Tenant, (ii) any work, activity or other thing allowed or
suffered by Tenant or Tenant's agents, employees or contractors to be done in or
about the Premises or Complex, other than Landlord's Work, (iii) any breach or
default in the performance of any obligation of Tenant under this Lease, and
(iv) any negligent or otherwise tortious act or failure to act by Tenant or
Tenant's agents, employees or contractors on or about the Premises or Complex.
19. THIRD PARTIES; ACTS OF FORCE MAJEURE; EXCULPATION. Except to the
-------------------------------------------------
extent caused by the gross negligence or willful misconduct of Landlord, its
employees, representatives or contractors, Landlord shall have no liability to
Tenant, or to Tenant's officers, directors, shareholders, partners, employees,
agents, contractors or invitees, for bodily injury, death, property damage,
business interruption, loss of profits, loss of trade secrets or other direct or
consequential damages occasioned by (a) the acts or omissions of any other
tenant or such other tenant's officers, directors, shareholders, partners,
employees, agents, contractors or other invitees within the Complex, (b) Force
Majeure, (c) vandalism, theft, burglary and other criminal acts (other than
those committed by Landlord and its employees), (d) water leakage, or (e) the
repair, replacement, maintenance, damage, destruction or relocation of the
Premises. Except to the extent an injury, loss, damage or destruction was
proximately caused by Landlord's gross negligence, fraud, willful act or
violation of law, Tenant waives all claims
20
against Landlord arising out of injury to or death of any person or loss of,
injury or damage to, or destruction of any property of Tenant.
20. INTENTIONALLY LEFT BLANK.
------------------------
21. CONTROL OF COMMON AREAS. Subject to the terms of the Lease, Landlord
-----------------------
shall have the exclusive control over the Common Areas. Landlord may, from time
to time, create different Common Areas, close or otherwise modify the Common
Areas, and reasonably modify the Building Rules and Regulations with respect
thereto; provided, however, that the use by Tenant of the Building and Premises
for the purposes intended shall not be materially adversely impacted.
22. INTENTIONALLY LEFT BLANK.
------------------------
23. QUIET ENJOYMENT. Provided Tenant has performed all its obligations
---------------
under this Lease, Tenant shall and may peaceably and quietly have, hold, occupy,
use and enjoy the Premises during the Term subject to the provisions of this
Lease. Landlord shall warrant and forever defend Tenant's right to occupancy of
the Premises against the claims of any and all persons whosoever lawfully
claiming the same or any part thereof, by, through or under Landlord, but not
otherwise, subject to the provisions of this Lease.
24. DEFAULT BY TENANT.
-----------------
24.1 Events of Default. Each of the following occurrences shall
-----------------
constitute an Event of Default (herein so called):
(a) the failure of Tenant to pay Base Rent, Additional Rent or
any other amount due under this Lease as and when due hereunder and
the continuance of such failure for a period of five (5) days after
written notice from Landlord to Tenant specifying the failure;
provided, however, after Landlord has given Tenant written notice
pursuant to this clause 24.1(a) on two separate occasions in any
calendar year, Landlord shall not be required to give Tenant any
further notice under this clause 24.1(a) in such calendar year;
provided, however, that the obligation of Tenant to pay a late charge
or interest pursuant to this Lease shall commence as of the due date
of the Rent or other monetary obligation and not on the expiration of
any grace period;
(b) the failure of Tenant to perform, comply with or observe
any other agreement, obligation or undertaking of Tenant, or any other
term, condition or provision in this Lease, and the continuance of
such failure for a period of thirty (30) days after written notice
from Landlord to Tenant specifying the failure, or, if reasonably
required, such longer period (not to exceed 120 days) so long as
Tenant timely and diligently commences and continues to completion the
required cure;
(c) the involuntary transfer by Tenant of Tenant's interest in
this Lease or other than specifically permitted pursuant to Section 10
hereof, the voluntary attempt to or actual transfer of its interest in
this Lease, without Landlord's prior written consent;
(d) the failure of Tenant to discharge any lien placed as a
result of Tenant's action or inaction upon the Premises or Building as
set forth hereunder;
(e) the occurrence of a Net Tenant Delay, as defined in the
Work Letter Agreement, of thirty (30) calendar days or more;
(f) the filing of a petition by or against Tenant (the term
"Tenant" also meaning, for the purpose of this clause 24.1(d), any
guarantor of the named Tenant's obligations hereunder) (i) in any
bankruptcy or other insolvency proceeding, (ii) seeking any relief
under the Bankruptcy Code or any similar debtor relief law, (iii) for
the appointment of a liquidator or receiver for all or substantially
all of Tenant's property or for Tenant's interest in this Lease, or
(iv) to reorganize or modify Tenant's capital structure provided,
however, that if such action is involuntary, then it shall not be an
Event of Default unless Tenant acquiesces in such action or such
action is not discharged within 60 calendar days of the filing
thereof; and
(g) the admission by Tenant in writing that it cannot meet its
obligations as they become due or the making by Tenant of an
assignment for the benefit of its creditors.
21
24.2 Remedies of Landlord. Upon any Event of Default, Landlord may,
--------------------
at Landlord's option in its sole discretion, and in addition to all other
rights, remedies and recourses afforded Landlord hereunder or by law or
equity, do any one or more of the following:
(a) terminate this Lease by the giving of written notice to
Tenant; reenter the Premises, with or without process of law; eject
all parties in possession thereof; repossess and enjoy the Premises
and all Tenant Improvements; and recover from Tenant all of the
following: (i) all Rent and other amounts accrued hereunder to the
date of termination, (ii) all amounts due under Section 24.3, and
(iii) liquidated damages in an amount equal to (A) the total Rent that
Tenant would have been required to pay for the remainder of the Term
discounted to present value at the prime lending rate (or equivalent
rate, however denominated) in effect on the date of termination at the
largest national bank in the state where the Complex is located, minus
(B) the then-present fair rental value of the Premises for such
period, similarly discounted, plus any other amount necessary to
compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this Lease or which
would be likely to result therefrom, including, without limitation,
reasonable attorneys' fees, brokers' commissions or finder's fees;
(b) terminate Tenant's right to possession of the Premises
without terminating this Lease by the giving of written notice to
Tenant, in which event Tenant shall pay to Landlord (i) all Rent and
other amounts accrued hereunder to the date of termination of
possession, (ii) all amounts due from time to time under Section 24.3,
and (iii) all Rent and other sums required hereunder to be paid by
Tenant during the remainder of the Term, diminished by any net sums
thereafter received by Landlord through reletting the Premises during
said period. Reentry by Landlord in the Premises will not affect the
obligations of Tenant hereunder for the unexpired Term. Landlord may
bring action against Tenant to collect amounts due by Tenant on one or
more occasions, without the necessity of Landlord's waiting until
expiration of the Term. If Landlord elects to proceed under this
Section 24.2(b), it may at any time elect to terminate this Lease
pursuant to Section 24.2(a);
(c) with reasonable prior notice to Tenant, alter any and all
locks and other security devices at the Premises without being
obligated to deliver new keys to the Premises, unless Tenant has cured
all Events of Default before Landlord has terminated this Lease under
Section 24.2(a) or has entered into a lease to relet all or a portion
of the Premises;
(d) if an Event of Default specified in Section 24.1(c) occurs,
Landlord may remove and store any property that remains on the
Premises and, if Tenant does not claim such property within thirty
(30) days after Landlord has delivered to Tenant notice of such
storage, Landlord may appropriate, sell, destroy or otherwise dispose
of the property in question without notice to Tenant or any other
person, and without any obligation to account for such property;
and/or
(e) no taking possession of the Premises by Landlord shall be
construed as Landlord's acceptance of a surrender of the Premises by
Tenant or an election of Landlord to terminate this Lease unless
written notice of such intention is given to Tenant. Notwithstanding
any leasing or subletting without termination of the Lease, Landlord
may at any time thereafter elect to terminate the Lease for Tenant's
previous breach.
24.3 Payment by Tenant. Upon any Event of Default, Tenant shall also
-----------------
pay to Landlord all costs and expenses incurred by Landlord, including
court costs and reasonable attorneys' fees, in (a) retaking or otherwise
obtaining possession of the Premises, (b) removing and storing Tenant's or
any other occupant's property, (c) constructing the Tenant Improvements or
otherwise incurred in connection with the Tenant Improvement Allowance
Items as defined in the Work Letter Agreement; provided, however, that the
amount recoverable by Landlord shall be limited to the unamortized portion
of such costs determined on a straight-line basis, (d) repairing,
restoring, altering, remodeling or otherwise putting the Premises into
condition acceptable to a new tenant or tenants, (e) reletting all or any
part of the Premises, (f) paying or performing the underlying obligation
which Tenant failed to pay or perform, and (g) enforcing any of Landlord's
rights, remedies or recourses arising as a consequence of the Event of
Default.
24.4 Reletting. Upon termination of this Lease or upon termination
---------
of Tenant's right to possession of the Premises, Landlord shall use
reasonable efforts to relet the Premises on such terms and conditions as
Landlord in its reasonable discretion may determine (including a term
different than the Term, rental concessions, and alterations to and
improvements of the Premises); however, Landlord shall
22
not be obligated to relet the Premises before leasing other portions of the
Building. Landlord shall not be liable for, nor shall Tenant's obligations
hereunder be diminished because of, Landlord's failure to relet the
Premises or collect rent due with respect to such reletting. If Landlord
relets the Premises, rent Landlord receives from such reletting shall be
applied to the payment of: first, any indebtedness from Tenant to Landlord
other than Rent (if any); second, all costs, including for maintenance and
alterations, incurred by Landlord in reletting; and third, Rent due and
unpaid. In no event shall Tenant be entitled to the excess of any rent
obtained by reletting over the Rent herein reserved.
24.5 Landlord's Right to Pay or Perform. Upon an Event of Default,
----------------------------------
Landlord may, but without obligation to do so and without thereby waiving
or curing such Event of Default, pay or perform the underlying obligation
for the account of Tenant, and enter the Premises and expend the Security
Deposit and any other sums for such purpose.
24.6 No Waiver; No Implied Surrender. Provisions of this Lease may
-------------------------------
only be waived by the party entitled to the benefit of the provision
evidencing the waiver in writing. Thus, neither the acceptance of Rent by
Landlord following an Event of Default (whether known to Landlord or not),
nor any other custom or practice followed in connection with this Lease,
shall constitute a waiver by Landlord of such Event of Default or any other
Event of Default. Further, the failure by Landlord to complain of any
action or inaction by Tenant, or to assert that any action or inaction by
Tenant constitutes (or would constitute, with the giving of notice and the
passage of time) an Event of Default, regardless of how long such failure
continues, shall not extinguish, waive or in any way diminish the rights,
remedies and recourses of Landlord with respect to such action or inaction.
No waiver by Landlord of any provision of this Lease or of any breach by
Tenant of any obligation of Tenant hereunder shall be deemed to be a waiver
of any other provision hereof, or of any subsequent breach by Tenant of the
same or any other provision hereof. Landlord's consent to any act by
Tenant requiring Landlord's consent shall not be deemed to render
unnecessary the obtaining of Landlord's consent to any subsequent act of
Tenant. No act or omission by Landlord (other than Landlord's execution of
a document acknowledging such surrender) or Landlord's agents, including
the delivery of the keys to the Premises, shall constitute an acceptance of
a surrender of the Premises.
25. DEFAULTS BY LANDLORD. Landlord shall not be in default under this
--------------------
Lease, and Tenant shall not be entitled to exercise any right, remedy or
recourse against Landlord or otherwise as a consequence of any alleged default
by Landlord under this Lease, unless Landlord fails to perform any of its
obligations hereunder and said failure continues for a period of thirty (30)
days after Tenant gives Landlord and (provided that Tenant shall have been given
the name and address of Landlord's Mortgagee) Landlord's Mortgagee written
notice thereof specifying, with reasonable particularity, the nature of
Landlord's failure. If, however, the failure cannot reasonably be cured within
the thirty (30) day period, Landlord shall not be in default hereunder if
Landlord or Landlord's Mortgagee commences to cure the failure within the thirty
(30) days and thereafter pursues the curing of same diligently to completion.
If Tenant recovers a money judgment against Landlord for Landlord's default of
its obligations hereunder or otherwise, the judgment shall be limited to
Tenant's actual direct, but not consequential, damages therefor and shall be
satisfied only out of the interest of Landlord in the Complex as the same may
then be encumbered, and Landlord shall not otherwise be liable for any
deficiency. In no event shall Tenant have the right to levy execution against
any property of Landlord other than its interest in the Complex. The foregoing
shall not limit any right that Tenant might have to obtain specific performance
of Landlord's obligations hereunder.
26. RIGHT OF REENTRY. Upon the expiration or termination of the Term for
----------------
whatever cause, or upon the exercise by Landlord of its right to reenter the
Premises without terminating this Lease, Tenant shall immediately, quietly and
peaceably surrender to Landlord possession of the Premises in "broom clean" and
good order, condition and repair, except only for ordinary wear and tear,
condemnation, damage by casualty not covered by Section 15.2 and repairs to be
made by Landlord pursuant to Section 15.1. If Tenant is in default under this
Lease, Landlord shall have a lien on such personal property, trade fixtures and
other property as set forth in Section 38-3-1, et seq., of the Utah Code ▇▇▇.
-- ---
(or any replacement provision). Landlord may require Tenant to remove any
personal property, trade fixtures, other property, alterations, additions and
improvements made to the Premises by Tenant without Landlord's prior written
consent, and to restore the Premises to their condition on the date of this
Lease. All personal property, trade fixtures and other property of Tenant not
removed from the Premises on the abandonment of the Premises or on the
expiration of the Term or sooner termination of this Lease for any cause shall
conclusively be deemed to have been abandoned and may be appropriated, sold,
stored, destroyed or otherwise disposed of by Landlord without notice to, and
without any obligation to account to, Tenant or any other person. Tenant shall
pay to Landlord all expenses incurred in connection with the disposition of such
property in excess of any amount received by Landlord from such disposition.
Tenant shall not be released from Tenant's obligations under this Lease in
connection with surrender of the Premises until Landlord has inspected the
Premises and delivered to Tenant a written release. While Tenant remains in
possession of the Premises after such expiration, termination or exercise by
Landlord of its
23
reentry right, Tenant shall be deemed to be occupying the Premises as a tenant-
at-sufferance, subject to all of the obligations of Tenant under this Lease,
except that the daily Rent shall be one hundred fifty percent (150%) of the per-
day Rent in effect immediately before such expiration, termination or exercise
by Landlord. No such holding over shall extend the Term. If Tenant fails to
surrender possession of the Premises in the condition herein required, Landlord
may, at Tenant's expense, restore the Premises to such condition.
27. MISCELLANEOUS.
-------------
27.1 Independent Obligations; No Offset. The obligations of Tenant
----------------------------------
to pay Rent and to perform the other undertakings of Tenant hereunder
constitute independent unconditional obligations to be performed at the
times specified hereunder, regardless of any breach or default by Landlord
hereunder. Tenant shall have no right, and Tenant hereby waives and
relinquishes all rights which Tenant might otherwise have, to claim any
nature of lien against the Complex or to withhold, deduct from or offset
against any Rent or other sums to be paid to Landlord by Tenant.
27.2 Time of Essence. Time is of the essence with respect to each
---------------
date or time specified in this Lease by which an event is to occur;
provided, however, that if either Landlord or Tenant is delayed or
hindered in or prevented from the performance of any act required under
this Lease by reason of inability to procure materials, failure of power,
acts of God, riots, insurrection, war or other reason of a like nature
(other than labor disputes) not the fault of the party delayed in
performing work or doing acts required under the terms of this Lease or
other Force Majeure events, then performance of such act will be excused
for the period of delay and the time for the performance of any such act
will be extended for a period equivalent to the period of such delay. The
provisions of this Section 27.2 will not operate to excuse Tenant from the
prompt payment of Base Rent, Additional Rent or any other payments required
by the terms of this Lease.
27.3 Applicable Law. This Lease shall be governed by, and construed
--------------
in accordance with, the laws of the State of Utah. All monetary and other
obligations of Landlord and Tenant are performable in the county where the
Complex is located.
27.4 Assignment by Landlord. Landlord shall have the right to assign
----------------------
without notice or consent, in whole or in part, any or all of its rights,
titles or interests in and to the Complex or this Lease and, upon any such
assignment, Landlord shall be relieved of all unaccrued liabilities and
obligations hereunder to the extent of the interest so assigned arising
after the date of such transfer.
27.5 Estoppel Certificates; Financial Statements. From time to time
-------------------------------------------
at the request of Landlord or Landlord's Mortgagee, Tenant will within
seven (7) calendar days, and without compensation or consideration execute,
have acknowledged and deliver a certificate substantially in the form of
Exhibit H hereto, setting forth the following: (a) a ratification of this
Lease; (b) the Commencement Date, expiration date and other Lease
information; (c) that this Lease is in full force and effect and has not
been assigned, modified, supplemented or amended (except by such writing as
shall be stated); (d) that all conditions under this Lease to be performed
by Landlord have been satisfied or, in the alternative, those claimed by
Tenant to be unsatisfied; (e) that no defenses or offsets exist against the
enforcement of this Lease by Landlord or, in the alternative, those claimed
by Tenant to exist; (f) whether within the knowledge of Tenant there are
any existing breaches or defaults by Landlord hereunder and, if so, stating
the defaults with reasonable particularity; (g) the amount of advance Rent,
if any (or none if such is the case), paid by Tenant; (h) the date to which
Rent has been paid; (i) the amount of the Security Deposit; and (j) such
other information as Landlord or Landlord's Mortgagee may reasonably
request. Landlord's Mortgagee and purchasers shall be entitled to rely on
any estoppel certificate executed by Tenant. Tenant shall, within twenty
(20) calendar days after Landlord's request, furnish to Landlord current
financial statements for Tenant, prepared in accordance with generally
accepted accounting principles consistently applied and certified by Tenant
to be true and correct.
27.6 Signs, Building Name and Building Address. Landlord may, from
-----------------------------------------
time to time at its discretion, place any and all signs anywhere in the
Complex. Notwithstanding the foregoing, Landlord shall not voluntarily
change the street address of the Complex without Tenant's prior consent.
Tenant shall not, without Landlord's prior written consent, use the name of
the Building for any purpose other than as the address of the business to
be conducted by Tenant from the Premises.
27.7 Notices. All notices and other communications given pursuant to
-------
this Lease shall be in writing and shall either be sent by overnight
courier or mailed by first class United States mail, postage prepaid,
registered or certified with return receipt requested, and addressed as set
forth in Section "G" of the Basic Lease Information, or delivered in person
to the intended addressee. Notice sent by overnight courier shall become
effective one (1) business day after being sent. Notice mailed in the
24
aforesaid manner shall become effective five (5) business days after
deposit. Notice given in any other manner, and any notice given to
Landlord, shall be effective only upon receipt by the intended addressee.
Each party shall have the continuing right to change its address for notice
hereunder by the giving of fifteen (15) days' prior written notice to the
other party in accordance with this Section 27.7.
27.8 Entire Agreement, Amendment and Binding Effect. This Lease
----------------------------------------------
constitutes the entire agreement between Landlord and Tenant relating to
the subject matter hereof, and all prior agreements relative hereto which
are not contained herein are terminated. This Lease may be amended only by
a written document duly executed by Landlord and Tenant (and, if a Mortgage
is then in effect, by the Landlord's Mortgagee entitled to the benefits
thereof), and any alleged amendment which is not so documented shall not be
effective as to either party. The provisions of this Lease shall be
binding upon and inure to the benefit of the parties hereto and their
heirs, executors, administrators, successors and assigns; provided,
however, that this Section 27.8 shall not negate, diminish or alter the
restrictions on Transfers applicable to Tenant set forth elsewhere in this
Lease.
27.9 Severability. This Lease is intended to be performed in
------------
accordance with and only to the extent permitted by all Legal Requirements.
If any provision of this Lease or the application thereof to any person or
circumstance shall, for any reason and to any extent, be invalid or
unenforceable, but the extent of the invalidity or unenforceability does
not destroy the basis of the bargain between the parties as contained
herein, the remainder of this Lease and the application of such provision
to other persons or circumstances shall not be affected thereby, but rather
shall be enforced to the greatest extent permitted by law.
27.10 Number and Gender, Captions and References. As the context of
------------------------------------------
this Lease may require, pronouns shall include natural persons and legal
entities of every kind and character, the singular number shall include the
plural, and the neuter shall include the masculine and the feminine gender.
Section headings in this Lease are for convenience of reference only and
are not intended, to any extent and for any purpose, to limit or define any
section hereof. Whenever the terms "hereof," "hereby," "herein,"
"hereunder" or words of similar import are used in this Lease, they shall
be construed as referring to this Lease in its entirety rather than to a
particular section or provision, unless the context specifically indicates
to the contrary. Any reference to a particular "Section" shall be
construed as referring to the indicated section of this Lease.
27.11 Attorneys' Fees. In the event either party commences a legal
---------------
proceeding to enforce any of the terms of this Lease, the prevailing party
in such action shall have the right to recover reasonable attorneys' fees
and costs from the other party, to be fixed by the court in the same
action. "Legal proceedings" includes appeals from a lower court judgment
as well as proceedings in the Federal Bankruptcy Court ("Bankruptcy
Court"), whether or not they are adversary proceedings or contested
matters. The "prevailing party" (i) as used in the context of proceedings
in the Bankruptcy Court means the prevailing party in an adversary
proceeding or contested matter, or any other actions taken by the non-
bankrupt party which are reasonably necessary to protect its rights under
this Lease, and (ii) as used in the context of proceedings in any court
other than the Bankruptcy Court means the party that prevails in obtaining
a remedy or relief which most nearly reflects the remedy or relief which
the party sought.
27.12 Brokers. Tenant and Landlord hereby warrant and represent unto
-------
the other that it has not incurred or authorized any brokerage commission,
finder's fees or similar payments in connection with this Lease, other than
that which is due pursuant to a separate written agreement between the
Landlord and Landlord's agents and subagents. Each party shall defend,
indemnify and hold the other harmless from and against any claim for
brokerage commission, finder's fees or similar payment arising by virtue of
authorization of such party, or any Affiliate of such party, in connection
with this Lease. Landlord shall be responsible for the payment of ▇▇▇▇
▇▇▇▇.
27.13 Interest on Tenant's Obligations. Any amount due from Tenant
--------------------------------
to Landlord which is not paid when due shall bear interest at the lesser of
ten percent (10%) per annum or the maximum rate allowed by law from the
date such payment is due until paid, but the payment of such interest shall
not excuse or cure the default in payment.
27.14 Authority. Each person executing this Lease on behalf of
---------
Tenant personally warrants and represents that (a) Tenant is a duly
organized and existing legal entity, in good standing in the State of Utah,
(b) Tenant has full right and authority to execute, deliver and perform
this Lease, (c) this Lease is binding upon and enforceable against Tenant
in accordance with its terms, (d) the person executing and delivering this
Lease on behalf of Tenant was duly authorized to do so, and (d) upon
request of Landlord, such person will deliver to Landlord satisfactory
evidence of his or her authority to execute this Lease on behalf of Tenant.
Each person executing this Lease on behalf of Landlord personally
25
warrants and represents that (a) Landlord is a duly organized and existing
legal entity, in good standing in the State of Utah, (b) Landlord has full
right and authority to execute, deliver and perform this Lease, (c) this
Lease is binding upon and enforceable against Landlord in accordance with
its terms, (d) the person executing and delivering this Lease on behalf of
Landlord was duly authorized to do so, and (d) upon request of Tenant, such
person will deliver to Tenant satisfactory evidence of his or her authority
to execute this Lease on behalf of Landlord.
27.15 Recording. Neither this Lease (including any Exhibit hereto)
---------
nor any memorandum hereof shall be recorded without the prior written
consent of Landlord (such consent not to be unreasonably withheld).
27.16 Exhibits. All Exhibits and written addenda hereto are
--------
incorporated herein for any and all purposes.
27.17 Multiple Counterparts. This Lease may be executed in two or
---------------------
more counterparts, each of which shall be an original, but all of which
shall constitute but one instrument.
27.18 Survival of Indemnities. The indemnity obligations of Tenant
-----------------------
and (if any) of Landlord contained in this Lease shall survive the
expiration or earlier termination of this Lease to and until the last to
occur of (a) the last day permitted by law for the bringing of any claim or
action with respect to which indemnification may be claimed, or (b) the
date on which any claim or action for which indemnification may be claimed
under such provision is fully and finally resolved and any compromise
thereof or judgment or award thereon is paid in full. Payment shall not be
a condition precedent to recovery upon any indemnification provision
contained herein.
27.19 Miscellaneous. Any guaranty delivered in connection with this
-------------
Lease is an integral part of this Lease and constitutes consideration given
to Landlord to enter into this Lease. No amendment to this Lease shall be
binding on Landlord or Tenant unless reduced to writing and signed by both
parties. Each provision to be performed by Tenant shall be construed to be
both a covenant and a condition. Venue on any action arising out of this
Lease shall be proper only in the District Court of Salt Lake County, State
of Utah. Landlord and Tenant waive trial by jury in any action, proceeding
or counterclaim brought by either of them against the other on all matters
arising out of this Lease or the use and occupancy of the Premises. The
submission of this Lease to Tenant is not an offer to lease the Premises or
an agreement by Landlord to reserve the Premises for Tenant. Landlord
shall not be bound to Tenant until Tenant has duly executed and delivered
duplicate original copies of this Lease to Landlord and Landlord has duly
executed and delivered one of those duplicate original copies to Tenant.
27.20 Smoking Shelter. Landlord shall provide a smoking shelter at
---------------
the location shown on Exhibit B-1 attached hereto. Landlord shall have the
right to relocate the smoking shelter without Tenant's consent.
27.21 Security Guard. Tenant shall have the right, with Landlord's
--------------
approval, to provide at its sole cost and expense a security guard in the
main corridor on the first floor of the Building.
28. GENERATOR
---------
28.1 Grant of License. Landlord hereby grants to Tenant a license
----------------
(the "License") during the Term of the Lease Agreement to own, operate and
maintain an alternate power source (the "Generator") for the Premises in
the event of a power outage in the Building or to the Premises, all at
Tenant's sole cost and expense. Landlord shall provide Tenant an area
within or about the Building for location of the Generator.
(a) Landlord shall not be liable for damage to the Generator or
theft, misappropriation or loss thereof.
(b) Landlord hereby reserves the right to grant, renew or
extend similar licenses to other parties.
(c) In the event any third party or another licensee shall
interfere with the enjoyment by Tenant of the rights hereunder, then
Tenant shall have the right to take appropriate action against such
interfering party, but not against Landlord, or to terminate this
26
License upon one hundred twenty (120) days' written notice to
Landlord. Landlord shall not be liable in any manner to Tenant for
any expenses or damages which Tenant may suffer as a result of such
interference and premature termination of this License.
28.2 Relocation of System. Landlord reserves the right to require
--------------------
Tenant to relocate the Generator to other areas within or about the
Building during the Term at Landlord's reasonable discretion. In such
event, Landlord shall reimburse Tenant for its reasonable expenses incurred
in connection with any such relocation. Should Landlord request the
relocation of the Generator, Landlord agrees to allow Tenant reasonable
time for such relocation.
28.3 Tenant Responsibilities. Tenant shall be responsible for any
-----------------------
and all cost, damage or expense arising from the installation, operation,
maintenance or repair of the Generator by Tenant or Tenant's agents,
employees, subcontractors, or representatives and any and all cost, damage
or expense to the Premises or the Building or the property of Landlord or
other licensees or tenants of the Building arising from such installation,
operation, maintenance, or repair thereof. Tenant shall indemnify and hold
Landlord harmless from and against any and all claims, costs, damages,
expenses, liens, claims of liens or expenses (including, without
limitation, reasonable attorneys' fees) arising out of, or in connection
with, Tenant's installation, operation, maintenance or repair of the
Generator, except for any loss, cost, damage or expense arising from the
gross negligence or willful misconduct of Landlord, its agents or
employees. This indemnity is in addition to and not in substitution of any
other indemnity in the Lease Agreement.
28.4 Compliance with Laws. Tenant shall comply with all local, state
--------------------
and federal laws and regulations governing such installation, operation,
maintenance and repair, including the sole and exclusive responsibility for
obtaining all applicable federal, state, or local construction and building
permits required in connection with the installation of the Generator. In
addition, Tenant shall provide Landlord with copies of such permits prior
to the installation of the Generator. Landlord shall render Tenant all
reasonable assistance and cooperation in Tenant's endeavors to obtain such
permits. Tenant shall also have the sole and exclusive responsibility for
complying with all applicable tests required by federal, state and local
laws and ordinances.
28.5 Tenant Representations and Warranties. Tenant represents and
-------------------------------------
warrants to Landlord that:
(a) all obligations rendered by Tenant or by a representative
of Tenant under this Section 28 shall meet or exceed industry
standards in force at the time and to also be in conformance and
compliance with applicable federal, state and local laws,
administrative and regulatory requirements and any other authorities
having jurisdiction over the subject matter herein and shall be
responsible for applying for, obtaining and maintaining all
registrations and certifications which may be required by such
authorities.
(b) the Generator, and the installation, operation, maintenance
and repair of the Generator will in no way damage the Building, or
interfere with the use of the Building by Landlord, other tenants,
invitees or otherwise. If such damage shall occur, Landlord shall
give Tenant written notice thereof and Tenant shall take immediate
action to correct the same. Landlord reserves the right to disconnect
power to the Generator in the event Tenant fails to correct after
proper notification and cure period.
(c) Tenant shall take all reasonable measures necessary to
insure that the Generator does not interfere with or disturb the
operation of any other equipment, system or business of Landlord or of
any other tenant or occupant of the Building.
29. SATELLITE SPACE.
---------------
29.1 Satellite Space. Subject to the provisions of the Lease
---------------
Agreement, and as part of the Premises leased to Tenant hereunder, Landlord
does hereby grant Tenant the right to the following space ("Space"):
(a) Space on the roof of the Building to place Tenant's
satellite dish, as reasonably and specifically described and
designated by Landlord (the "Satellite Space"); and
27
(b) At the location and in the manner designated by Landlord,
space for cabling attendant to Tenant's satellite dish from its
location on the roof of the Building to its Premises on the first,
fifth and sixth floors of the Building.
29.2 Restrictions. Tenant's rights as contained in this Section 29
------------
shall be subject to the following requirements:
(a) the use and occupancy of the Satellite Space by Tenant
shall be subject to all of the terms and provisions of the Lease
Agreement;
(b) The occupancy by Tenant of the entire Premises during the
Lease Term;
(c) Compliance with all applicable governmental laws, statutes,
regulations, rules, codes and ordinances;
(d) Compliance with the provisions of the Lease Agreement in
connection with the satellite dish and Satellite Space;
(e) All expenses in connection with the construction,
installation and maintenance of the satellite dish and attendant
cabling shall be paid by Tenant;
(f) The design, size, location and materials of the satellite
dish and Satellite Space shall be reasonably approved in writing by
Landlord;
(g) Payment by Tenant to Landlord, from time to time upon
request from Landlord, of all expenses incurred by Landlord that are
directly attributable to the satellite dish;
(h) Tenant's rights under this Section 29 may not be assigned
or transferred to any assignee, subtenant or other Transferee, other
than a Related Entity, of the Lease Agreement without Landlord's prior
written consent; and
(i) Upon termination or expiration of the Term of the Lease
Agreement, Landlord shall have the right to permanently remove
Tenant's satellite dish and attendant cabling at Tenant's expense.
29.3 Expenses. Tenant shall bear all expenses relating to the costs
--------
associated with the repair or removal of the satellite dish and restoration
of the Satellite Space to the condition in which those portions of the
Building existed before installation of Tenant's satellite dish, reasonable
wear and tear and insured casualty loss excepted. Tenant's payment and
other obligations under this paragraph shall survive any expiration or
earlier termination of the Lease Term.
29.4 Use of Satellite Dish. Tenant will not use the satellite dish
---------------------
or the Satellite Space for any purpose or in any manner which violates the
provisions of the Lease Agreement, or might make undue noise or create
undue vibrations, or exceed the structural loads of the Building. It will
be the responsibility of the Tenant to resolve all interference problems
with other tenants of the Building, and Landlord shall have no
responsibility or liability in connection therewith, regardless of cause.
Tenant shall not operate the satellite dish in any manner which will
conflict or interfere with the activities of, or cause electrical or other
interference to, the Landlord or any other tenant of the Building.
Notwithstanding any other provision in the Lease Agreement to the contrary,
Landlord shall not be liable or responsible to correct any interference
problem created by any tenant, customer, invitee, or third party to the
transmission or other use of the satellite dish by Tenant.
EXECUTED as of the date and year above first written.
28
TENANT ACKNOWLEDGES THAT LANDLORD HAS MADE NO WARRANTIES TO TENANT, EITHER
EXPRESS OR IMPLIED, AND LANDLORD AND TENANT EXPRESSLY DISCLAIM ANY IMPLIED
WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT'S INTENDED COMMERCIAL
PURPOSE.
TENANT: SONIC INNOVATIONS, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Title: VP of Finance & CFO
---------------------------------------------
Date: 4/28/99
---------------------------------------------
LANDLORD: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, L.C., a Utah limited
liability company, by its Manager,
COTTONWOOD PARTNERS MANAGEMENT, LTD., a Utah limited
partnership, by CotNet Management, Inc. its general
partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, President
29
EXHIBIT A
GLOSSARY OF DEFINED TERMS
-------------------------
a. "Addendum" shall mean all the addenda, exhibits and attachments, if any,
--------
attached to the Lease or to any exhibit to the Lease. All addenda are by
definition incorporated into the Lease Agreement. Unless otherwise
specifically provided, terms and phrases in any Addendum shall have the
meaning of such terms and phrases as provided in the Lease Agreement and
this Glossary of Defined Terms.
b. "Affiliate" shall mean a person or party who or which controls, is
---------
controlled by or is under common control with, another person or party.
c. "Building" shall mean that certain office building and garage structure
--------
constructed on the Land, the street address of which is ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇. The term "Building" shall include, without
limitation, all fixtures and appurtenances in and to the aforesaid
structure, including specifically but without limitation all above-grade
walkways and all electrical, mechanical, plumbing, security, elevator,
boiler, HVAC, telephone, water, gas, storm sewer, sanitary sewer and all
other utility systems and connections, all life support systems,
sprinklers, smoke detection and other fire protection systems, and all
equipment, machinery, shafts, flues, piping, wiring, ducts, duct work,
panels, instrumentation and other appurtenances relating thereto.
d "Building Operating Hours" shall mean 7:30 a.m. to 6:00 p.m. Monday through
------------------------
Friday, and Saturday 8:00 a.m. to 1:00 p.m., exclusive of Sundays and
Holidays.
e. "Building Rules and Regulations" shall mean the rules and regulations
------------------------------
governing the Complex promulgated by Landlord from time to time. The
current Building Rules and Regulations maintained by Landlord are attached
as Exhibit C hereto.
---------
f. "Building Standard", when applied to an item, shall mean such item as has
-----------------
been designated by Landlord (orally or in writing) as generally applicable
throughout the leased portions of the Building, as more fully set forth on
Exhibit D2 hereto.
g. "Commencement Date" shall mean the date of the commencement of the Term as
-----------------
determined pursuant to Section 6.3.
h. "Common Areas" shall mean all areas and facilities within the Complex which
------------
have been constructed and are being maintained by Landlord for the common,
general, nonexclusive use of all tenants in the Building, as revised from
time to time in Landlord's discretion (subject to paragraph 21 of the
Lease), and shall include rest rooms, lobbies, corridors, service areas,
elevators, stairs and stairwells, the Parking Facility, driveways, loading
areas, ramps, walkways and landscaped areas.
i. "Complex" shall mean the Land and all improvements thereon, including the
-------
Building and the Parking Facility.
j. "Fiscal Year" shall mean each fiscal year (or portion thereof) as
-----------
designated by Landlord, in which any portion of the Lease Term falls,
through and including the Fiscal Year in which the Lease Term expires. The
Fiscal Year currently commences on January 1. Landlord may change the
Fiscal Year at any time or times; provided, however, that Landlord may not
change the Fiscal Year so as to materially adversely impact Tenant's
expense reimbursement obligation.
k. "Force Majeure" shall mean the occurrence of any event which hinders,
-------------
prevents or delays the performance a party of any of its obligations
hereunder and which is beyond the reasonable control of such party.
l. "Holidays" shall mean (a) New Year's Day, Memorial Day, Independence Day,
--------
Labor Day, Thanksgiving Day and Christmas Day, and (b) other days which are
commonly observed as Holidays by the majority of tenants (by square
footage) of the Building. If the Holiday occurs on a Saturday or Sunday,
the Friday preceding or the Monday following may, at Landlord's discretion,
be observed as a Holiday.
m.. "HVAC" shall mean the heating, ventilation and air conditioning systems in
----
the Building.
A-1
n. "Impositions" shall mean (a) all real estate, personal property, rental,
-----------
water, sewer, transit, use, occupancy and other taxes, assessments,
charges, excises and levies (including any interest, costs or penalties
with respect thereto), general and special, ordinary and extraordinary,
foreseen and unforeseen, of any kind and nature whatsoever which are
assessed, levied, charged or imposed upon or with respect to the Complex,
or any portion thereof, or the sidewalks, streets or alleyways adjacent
thereto, or the ownership, use, occupancy or enjoyment thereof , and (b)
all charges for any easement, license, permit or agreement maintained for
the benefit of the Complex. "Impositions" shall not include income taxes,
estate and inheritance taxes, excess profit taxes, franchise taxes, taxes
imposed on or measured by the income of Landlord from the operation of the
Complex, and taxes imposed on account of the transfer of ownership of the
Complex or the Land. If any or all of the Impositions shall be
discontinued and, in substitution therefor, taxes, assessments, charges,
excises or impositions shall be assessed, levied, charged or imposed wholly
or partially on the Rents received or payable hereunder (a "Substitute
----------
Imposition"), then the Substitute Imposition shall be deemed to be included
----------
within the term "Impositions."
o. "Land" shall mean the real property on which the Building is constructed
----
and which is further described in Exhibit E hereto.
---------
p. "Landlord's Consent or Landlord's Approval" as used in this Agreement,
-----------------------------------------
shall mean the prior written consent or written approval of Landlord to the
particular item or request. Unless otherwise provided in this Lease, the
Landlord's consent or approval shall be determined in Landlord's reasonable
discretion.
q. "Landlord's Mortgagee" shall mean the mortgagee of any mortgage, the
--------------------
beneficiary of any deed of trust, the pledgee of any pledge, the secured
party of any security interest, the assignee of any assignment and the
transferee of any other instrument of transfer (including the ground lessor
of any ground lease on the Land) now or hereafter in existence on all or
any portion of the Complex, and their successors, assigns and purchasers.
"Mortgage" shall mean any such mortgage, deed of trust, pledge, security
--------
agreement, assignment or transfer instrument, including all renewals,
extensions and rearrangements thereof and of all debts secured thereby.
r. "Landlord's Work" shall mean all improvements, components, assemblies,
---------------
installations, finish, labor, materials and services that Landlord is
required to furnish, install, perform, provide or apply to the Premises as
specified in the Work Letter Agreement.
s. "Legal Requirements" shall mean any and all (a) judicial decisions, orders,
------------------
injunctions, writs, statutes, rulings, rules, regulations, promulgations,
directives, permits, certificates or ordinances of any governmental
authority in any way applicable to Tenant or the Complex, including but not
limited to the Building Rules and Regulations, zoning, environmental and
utility conservation matters, and (b) insurance requirements.
t. "Parking Facility" shall mean (a) any parking garage and any other parking
----------------
lot or facility adjacent to or in the Complex servicing the Building, and
(b) any parking area, open or covered, leased by Landlord to service the
Building.
u. "Permitted Use" means only the uses described in Paragraph 4 of this Lease,
-------------
and no other purpose, in strict compliance with the Building Rules and
Regulations from time to time in effect and all other Legal Requirements.
v. "Premises" shall mean the area leased by Tenant pursuant to this Lease as
--------
outlined on the floor plan drawing attached as Exhibit B hereto and all
---------
other space added to the Premises pursuant to the terms of this Lease. The
Premises includes the space between the interior surface of the walls and
the top surface of the floor slab of the outlined area and the finished
surface of the ceiling immediately above.
w. "Rent" shall mean Base Rent, Additional Rent, the parking charge called for
----
in Section 5.4 and all other amounts provided for under this Lease to be
paid by Tenant, whether as Additional Rent or otherwise. "Base Rent" shall
---------
mean the base rent specified in Section 5.1. "Additional Rent" shall mean
---------------
the additional rent specified in Section 5.3.
x. "Rentable Area" shall mean the Rentable Area of the Premises and the
-------------
Rentable Area of the Building as stated in Section "A" of the Summary of
Basic Lease Information.
y. "Security Deposit" shall be defined as stated in Section 5.8 of the of the
----------------
Lease.
A-2
z. "Substantial Completion" of the Premises shall occur at such time as the
----------------------
Premises are "Ready for Occupancy" as defined in the Work Letter Agreement.
aa. "Taking" or "Taken" shall mean the actual or constructive condemnation, or
------ -----
the actual or constructive acquisition by or under threat of condemnation,
eminent domain or similar proceeding, by or at the direction of any
governmental authority or agency.
bb. "Tenant's Share" shall mean the percentage of Operating Expenses to be paid
--------------
by Tenant in accordance with the provisions of Section 5.3.1(b) of the
Lease. Landlord and Tenant stipulate that "Tenant's Share" shall mean the
percentage stated in Section "D" of the Summary of Basic Lease Information.
cc. "Transfer" shall mean (a) an assignment (direct or indirect, absolute or
--------
conditional, by operation of law or otherwise) by Tenant of all or any
portion of Tenant's interest in this Lease or the leasehold estate created
hereby, (b) a sublease of all or any portion of the Premises, or (c) the
grant or conveyance by Tenant of any concession or license within the
Premises. If Tenant is a corporation, then any transfer of this Lease by
merger, consolidation or dissolution, or by any change in ownership or
power to vote a majority (excluding a public offering of securities) of the
voting stock (being the shares of stock regularly entitled to vote for the
election of directors) in Tenant outstanding at the time of execution of
this Lease shall constitute a Transfer. If Tenant is a partnership having
one or more corporations as general partners, the preceding sentence shall
apply to each corporation as if the corporation alone had been the Tenant
hereunder. If Tenant is a general or limited partnership, joint venture or
other form of association, the Transfer of a majority of the ownership
interests therein shall constitute a Transfer. "Transferee" shall mean the
----------
assignee, sublessee, pledgee, concessionaire, licensee or other transferee
of all or any portion of Tenant's interest in this Lease, the leasehold
estate created hereby or the Premises.
dd. "Work Letter Agreement" shall mean the agreement, if any, attached as
---------------------
Exhibit D hereto between Landlord and Tenant for the construction of
---------
improvements in the Premises.
ee. "Phase One Space" shall mean the portion of Premises on floors 5, 6 and
---------------
3,440 square feet of Rentable Area (2,991 usable square feet) of the first
floor.
ff. "Phase Two Space" shall mean the portion of the Premises on the remainder
---------------
of the first floor (15,452 square feet of Rentable Area; 13,437 usable
square feet) not included in the Phase One Space.
A-3
EXHIBIT B
PREMISES
--------
Attach floor plan of the Premises.
[Diagram]
B-1
EXHIBIT B-1
SMOKING SHELTER LOCATION
------------------------
[Diagram]
B-2
EXHIBIT C
RULES AND REGULATIONS
---------------------
Tenant shall comply with the following Rules and Regulations.
Landlord shall not be responsible to Tenant for the nonperformance of any of
these Rules and Regulations by Tenant, any other tenant, or any visitor,
licensee, agent, or other person or entity.
1. Security; Admission to Building. Landlord may from time to time adopt
-------------------------------
appropriate systems and procedures for the security or safety of the Building,
any persons occupying, using or entering the Building, or any equipment,
finishings or contents of the Building, and each tenant shall comply with such
systems and procedures. Landlord shall in no case be liable for damages for any
error with regard to the admission to or exclusion from the Building of any
person. In the event of an invasion, mob, riot, public excitement or other
commotion, Landlord reserves the right to prevent access to the Building during
the continuance of the same by closing of the doors of the Building or any other
reasonable method, for the safety of the tenants and protection of the Building
and property in the Building.
2. Conduct and Exclusion or Expulsion. Tenant's employees, visitors, and
----------------------------------
licensees shall not loiter in or interfere with the use of the Parking Facility
or the Complex's driveway or parking areas, nor consume alcohol in the Common
Areas of the Complex or the Parking Facility. The sidewalks, halls, passages,
exits, entrances, elevators, escalators, and stairways of the Building will not
be obstructed by any tenants or used by any of them for any purpose other than
for ingress to and egress from their respective premises. The halls, passages,
exits, entrances, elevators, escalators, and stairways are not for the general
public, and Landlord may control and prevent access to them by all persons whose
presence, in the reasonable judgment of Landlord, would be prejudicial to the
safety, character, reputation and interests of the Building and its tenants. In
determining whether access will be denied, Landlord may consider attire worn by
a person and its appropriateness for an office building, whether shoes are being
worn, use of profanity, either verbally or on clothing, actions of a person
(including without limitation spitting, verbal abusiveness, and the like), and
such other matters as Landlord may reasonably consider appropriate.
3. Signs, Notices and Decorations. No sign, placard, picture,
------------------------------
decoration, name, advertisement or notice (collectively "Material") visible from
the exterior of any tenant's premises shall be inscribed, painted, affixed or
otherwise displayed by any tenant on any part of the Building without the prior
written consent of Landlord. All approved signs or lettering will be printed,
painted, affixed or inscribed at the expense of the tenant desiring such by a
person approved by Landlord. Material visible from outside the Building will
not be permitted. Landlord may remove such Material without any liability, and
may charge the expense incurred by such removal to the tenant in question.
4. Curtains and Decorations. No awnings, curtains, draperies, blinds,
------------------------
shutters, shades, screens, or other coverings, hangings or decorations will be
attached to, hung or placed in, or used in connection with any window of the
Building or a tenant's premises without Landlord's prior written consent.
5. Non-obstruction of Light. The sashes, sash doors, skylights, windows,
------------------------
heating, ventilating, and air conditioning vents and doors that reflect or admit
light and air into the halls, passageways, tenant premises, or other public
places in the Building shall not be covered or obstructed by any tenant, nor
will any bottles, parcels or other articles or decorations be placed on any
window ▇▇▇▇▇.
6. Showcases. No showcases or other articles will be put in front of or
---------
affixed to any part of the exterior of the Building, nor placed in the public
halls, corridors or vestibules without the prior written consent of Landlord.
7. Cooking; Use of Premises for Improper Purposes. No tenant will permit
----------------------------------------------
its premises to be used for lodging or sleeping. No cooking will be done or
permitted by any tenant on its premises, except in areas of the premises which
are specially constructed for cooking as specifically provided in working
drawings approved by Landlord, so long as such use is in accordance with all
applicable federal, state, and city laws, codes, ordinances, rules and
regulations. Notwithstanding the foregoing, microwave ovens and other
Underwriters' Laboratory (UL)-approved equipment may be used in the premises for
heating food and brewing coffee, tea, and similar beverages for employees and
visitors. The premises shall not be used for any improper, reasonably
objectionable, or immoral purpose.
8. Janitorial Service. No tenant will employ any person or persons other
------------------
than the cleaning service of Landlord for the purpose of cleaning the premises,
unless otherwise agreed by Landlord in writing. If any tenant's actions result
in any increased expense for any required cleaning, Landlord may assess such
tenant for
C-1
such expenses. Janitorial service will not be furnished on nights to offices
which are occupied after business hours on those nights unless, by prior written
agreement of Landlord, service is extended to a later hour for specifically
designated offices.
9. Use of Restrooms. The toilets, urinals, wash bowls and other plumbing
----------------
fixtures will not be used for any purposes other than those for which they were
constructed, and no sweepings, rubbish, rags or other foreign substances will be
thrown in them. All damages resulting from any misuse of the fixtures will be
borne by the tenant who, or whose servants, employees, agents, visitors or
licensees, have caused the damage.
10. Defacement of Premises or Building. No tenant will deface any part of
----------------------------------
such tenant's premises or the Building. Without the prior written consent of
Landlord, no tenant will lay linoleum or other similar floor covering so that it
comes in direct contact with the floor of such tenant's premises. If linoleum
or other similar floor covering is to be used, an interlining of builder's
deadening felt will be first affixed to the floor by a paste or other material
soluble in water. The use of cement or other similar adhesive material is
expressly prohibited. Except as permitted by Landlord by prior written consent,
Tenant shall not ▇▇▇▇ on, paint signs on, cut, drill into, drive nails or screws
into, or in any way deface the walls, ceilings, partitions or floors of the
premises or of the Building, and any defacement, damage or injury directly or
indirectly caused by Tenant shall be paid for by Tenant. Pictures or diplomas
shall be hung on tacks or small nails; Tenant shall not use adhesive hooks for
such purposes.
11. Locks; Keys. No tenant will alter, change, replace or rekey any lock
-----------
or install a new lock or a knocker on any door of such tenant's premises.
Landlord, its agent or employee will retain a master key to all door locks on
the premises, subject to the provisions of 7.2 of the Lease. Any new door locks
required by a tenant or any change in keying of existing locks will be installed
or changed by Landlord following such tenant's written request to Landlord and
will be at such tenant's expense. All new locks and rekeyed locks will remain
operable by Landlord's master key. Landlord will furnish to each tenant, free
of charge keys to each door lock on its premises, and Building access cards as
stated in Section 7.2 of each tenant's lease. Landlord will have the right to
collect a reasonable charge for additional keys and cards requested by any
tenant. Each tenant, upon termination of its tenancy, will deliver to Landlord
all keys and access cards for the premises and Building which have been
furnished to such tenant. Tenant shall keep the doors of the premises closed
and securely locked when Tenant is not at the premises.
12. Furniture, Freight and Equipment. No furniture, freight, packages,
--------------------------------
merchandise, or equipment of any kind may be brought into the Building or
carried up or down in the elevators, except between those hours and in that
specific elevator designated by Landlord or otherwise upon consent of the
Landlord, without prior notice to and consent of Landlord. Landlord may at any
time restrict the elevators and areas of the Building into which deliveries or
messengers may enter. The elevator designated for freight by Landlord will be
available for use by all tenants in the Building during the hours and pursuant
to such procedures as Landlord reasonably may determine from time to time. The
persons employed to move Tenant's equipment, material, furniture or other
property in or out of the Building must be reasonably acceptable to Landlord;
unless otherwise approved by Landlord, such persons must be a locally recognized
professional mover whose primary business is the performing of relocation
services, and must be bonded and fully insured. Unless waived by Landlord in
writing, a certificate or other verification of such insurance must be received
and approved by Landlord prior to the start of any moving operations. Insurance
must be sufficient, in Landlord's sole opinion, to cover all personal liability,
theft or damage to the Building, including without limitation floor coverings,
doors, walls, elevators, stairs, foliage and landscaping. All moving operations
will be conducted at such times and in such a manner as Landlord may direct, and
all moving will take place during nonbusiness hours unless Landlord otherwise
agrees in writing. The moving tenant shall be responsible for the provision of
Building security during all moving operations, and shall be liable for all
losses and damages sustained by any party as a result of the failure to supply
adequate security. Landlord may prescribe the weight, size and position of all
equipment, materials, furniture or other property brought into the Building.
Heavy objects will, if considered necessary by Landlord, stand on wood strips of
such thickness as is necessary to distribute the weight properly. Landlord will
not be responsible for loss of or damage to any such property from any cause,
and all damage done to the Building by moving or maintaining such property will
be repaired at the expense of the moving tenant. Landlord may inspect all such
property to be brought into the Building and to exclude from the Building all
such property which violates any of these rules and regulations or the lease of
which these rules and regulations are a part. Supplies, goods, materials,
packages, furniture and all other items of every kind delivered to or taken from
the Premises will be delivered or removed through the entrance and route
designated by Landlord.
13. Inflammable or Combustible Fluids or Materials; Noninterference of
------------------------------------------------------------------
Others. No tenant will use or keep in the Premises or the Building any
------
kerosene, gasoline, inflammable, combustible or explosive fluid or material, or
chemical substance other than limited quantities of them reasonably necessary
for the operation or maintenance of office equipment or limited quantities of
cleaning fluids and solvents required in the normal operation of the Premises.
Without Landlord's prior written approval, no tenant will use any method of
heating
C-2
or air conditioning other than that supplied by Landlord. Tenant shall not waste
electricity, water, or air conditioning and shall cooperate fully with Landlord
to insure the most effective operation of the Building's heating and air
conditioning system. No tenant will keep any firearms within the Premises. No
tenant will use or keep, or permit to be used or kept, any foul or noxious gas
or substance in the Premises, or permit or suffer the Premises to be occupied or
used in any manner offensive or objectionable to Landlord or other occupants of
the Building by reason of noise, odors or vibrations, nor interfere in any way
with other tenants or those having business in the Building.
14. Address of Building. Landlord shall not voluntarily change the street
-------------------
address of the Building without the prior consent of Tenant.
15. Use of Building Name or Likeness. Landlord will have the right to
--------------------------------
prohibit any advertising by Tenant mentioning the Building which, in Landlord's
reasonable opinion, tends to impair the reputation of the Building or its
desirability as a Building for offices and, upon written notice from Landlord,
Tenant will discontinue such advertising.
16. Animals, Birds and Vehicles. Tenant will not bring any animals or
---------------------------
birds into the Premises or Building, and will not permit bicycles or other
vehicles inside or on the sidewalks outside the Building, except in areas
designated from time to time by Landlord for such purposes.
17. Off-Hour Access. All persons entering or leaving the Building at any
---------------
time other than the Building's business hours shall comply with such off-hour
regulations as Landlord may establish and modify from time to time. Landlord
may limit or restrict access to the Building during such periods and shall not
be liable for any error with regard to the admission or exclusion of any person.
18. Disposal of Trash. Each tenant will store all its trash and garbage
-----------------
within its premises. No material will be placed in the trash boxes or
receptacles if such material is of such nature that it may not be disposed of in
the ordinary and customary manner of removing and disposing of trash and garbage
without being in violation of any law or ordinance governing such disposal. All
garbage and refuse disposal will be made only through entryways and elevators
provided for such purposes and at such times as Landlord may designate. No
furniture, appliances, equipment or flammable products of any type may be
disposed of in the Building trash receptacles.
19. Disturbance of Tenants. Canvassing, peddling, soliciting and
----------------------
distribution of handbills or any other written materials in the Building or
Parking Facility are prohibited, and each tenant will cooperate to prevent same.
20. Doors to Public Corridors. Each tenant shall keep the doors of the
-------------------------
Premises closed and locked, and shall shut off all water faucets, water
apparatus, and utilities before tenant or tenant's employees leave the Premises,
so as to prevent waste or damage, and for any default or carelessness in this
regard Tenant shall be liable for all injuries sustained by other tenants or
occupants of the Building or Landlord. On multiple-tenancy floors, all tenants
will keep the doors to the Building corridors closed at all times except for
ingress and egress.
21. Concessions. Tenant shall not grant any concessions, licenses or
-----------
permission for the sale or taking of orders for food or services or merchandise
in the Premises, install or permit the installation or use of any machine or
equipment for dispensing food or beverage in the Building, nor permit the
preparation, serving, distribution or delivery of food or beverages in the
Premises, without the prior written approval of Landlord and only in compliance
with arrangements prescribed by Landlord; provided, however, Tenant shall be
allowed reasonable equipment for dispensing coffee/beverage services, candy and
a microwave oven. Only persons approved by Landlord shall be permitted to
serve, distribute or deliver food and beverage within the Building or to use the
public areas of the Building for that purpose.
22. Telecommunication and Other Wires. Tenant may not introduce
---------------------------------
Telecommunication wires or other wires into the Premises without first obtaining
Landlord's approval of the method and location of such introduction.
23. Rules Changes; Waivers. Subject to Section 4 of the Lease, Landlord
----------------------
reserves the right at any time to reasonably change or rescind any one or more
of these Rules and Regulations or to make any additional reasonable Rules and
Regulations that, in Landlord's judgment, may be necessary or helpful for the
management, safety or cleanliness of the Premises or Building; the preservation
of good order; or the convenience of occupants and tenants of the Building
generally. Landlord may waive any one or more of these Rules and Regulations
for the benefit of any particular tenant. No waiver by Landlord shall be
construed as a waiver of those Rules and Regulations in favor of any other
tenant, and no waiver shall prevent Landlord from enforcing those Rules and
C-3
Regulations against a tenant or any other tenant in the future. Tenant
shall be considered to have read these Rules and Regulations and to have agreed
to abide by them as a condition of Tenant's occupancy of the Premises.
C-4
EXHIBIT D
WORK LETTER AGREEMENT
---------------------
This Work Letter Agreement is attached to and made a part of the Lease.
All terms used in this Work Letter Agreement which have been defined in the
Lease have the same meaning as set forth in the Lease. This Work Letter
Agreement shall set forth the terms and conditions relating to the construction
of Tenant Improvements in the Premises.
I. Landlord and Tenant Construction Obligations
--------------------------------------------
A. Space Plan Preparation. Tenant shall assist and fully cooperate with
----------------------
the space planner/architect (the "Space Planner") designated by Landlord to
prepare a detailed space plan ("Space Plan") containing all information listed
in Section II of this Work Letter Agreement for all tenant improvements ("Tenant
Improvements") proposed by Tenant in the Premises. The Space Plan shall be
delivered to Landlord on or before the date specified in the Summary of Basic
Lease Information, Section "H." If the Space Plan is not delivered by the date
listed above, then each calendar day of delay in delivery shall constitute one
day of "Tenant Delay" hereunder.
B. Space Plan Approval and Tenant Improvement Allowance. Landlord will
----------------------------------------------------
review the Space Plan upon receipt from Tenant and shall thereafter meet with
Tenant and advise Tenant as to the matters set forth in this Section IB below.
In connection with construction of the Tenant Improvements, Tenant shall be
entitled to a one-time tenant improvement allowance (the "Tenant Improvement
Allowance") in the amount specified in the Summary of Basic Lease Information,
Section "H" for the costs relating to the design, modification and construction
of the Tenant Improvements as provided herein. The Tenant Improvement Allowance
shall be disbursed by Landlord (pursuant to Landlord's disbursement process) for
the following items, each of which shall be applied against and reduce the
Tenant Improvement Allowance: (i) the cost of materials, labor and other costs
related to the construction of the Tenant Improvements, (ii) the cost of
preparation and one modification of the Space Plan at a fee of seventeen cents
($.17) per usable square foot of the Premises, together with additional charges
for any additional modifications, (iii) the cost of the preparation of
construction plans or Working Drawings at a fee of fifty-two cents ($.52) per
usable square foot of the Premises, together with additional charges for any
additional modifications, (iv) a construction management and administration fee
of fifty cents ($.50) per usable square foot of the Premises, and (v) payment of
architectural and engineering fees associated with the Space Plan and Working
Drawings not otherwise included within the items specified above (collectively
the "Tenant Improvement Allowance Items"). In no event shall Landlord be
obligated to make disbursements for Tenant Improvements pursuant to this Work
Letter Agreement in excess of the Tenant Improvement Allowance, plus sums paid
by Tenant in accordance with the Pricing Agreement Letter (defined below).
If the Landlord determines that the Space Plan does not conform to the
requirements of Section II below, or Tenant determines that the estimated costs
of Tenant Improvements which are in excess of the Tenant Improvement Allowance
are not within the scope of its budget, the Space Plan will be returned to
Tenant for review by Tenant with the Space Planner and for corrections or
revisions. The cost of any correction or revision to the Space Plan shall be
included within the Tenant Improvement Allowance and borne by Tenant. Tenant
will deliver a corrected Space Plan within the scope of its budget to Landlord
no later than ten (10) calendar days after the initial proposed Space Plan has
been returned to Tenant. Each calendar day after the day the initial proposed
Space Plan is returned to Tenant until a revised and corrected Space Plan is
redelivered to Landlord shall constitute one day of Tenant Delay. This process
will be repeated, as required, until mutual approval of Tenant's Space Plan and
estimated Tenant Improvement costs. Upon approval of the final Space Plan and
estimated Tenant Improvement costs, Tenant will notify Landlord in writing of
such approval and that the preparation of working drawings may commence.
C. Preparation of Working Drawings. Upon final approval of the Space
-------------------------------
Plan and estimated Tenant Improvement costs, Landlord shall direct the Space
Planner to prepare working drawings ("Working Drawings") based on the approved
Space Plan. When prepared, the Working Drawings consistent with the Space Plan
shall be delivered by the Space Planner to the Tenant for approval. If the
Tenant fails to deliver the Working Drawings, together with its written approval
thereof, to the Landlord within ten (10) calendar days after delivery of the
Working Drawings by the Space Planner to Tenant, then each day of delay in
delivery of the approved Working Drawings shall constitute one day of Tenant
Delay.
D. Pricing Agreement Letter. Upon receipt of Working Drawings approved
------------------------
by Tenant, Landlord shall price the cost of the Tenant Improvements in
accordance with the Working Drawings, and furnish Tenant a Pricing Agreement
Letter in the form of Exhibit D1 hereto ("Pricing Agreement Letter") within
fourteen (14) calendar days from the receipt of approved Working Drawings. The
Pricing Agreement Letter shall provide for
D-1
the Tenant Improvement Allowance to be paid by the Landlord and all Tenant
Improvement costs in excess of the Tenant Improvement Allowance to be paid by
the Tenant. If a Pricing Agreement Letter is not delivered to Tenant on or
before such date, then each day of delay in delivery shall constitute one day of
"Landlord Delay" hereunder; provided, however, that if a Pricing Agreement
Letter cannot be delivered within fourteen (14) calendar days due to the
complexity or amount of Above Standard Tenant Improvements, Landlord shall so
notify Tenant, and any delay associated therewith shall not constitute a
Landlord Delay.
E. Tenant Approval of Pricing Agreement Letter. Tenant shall promptly
-------------------------------------------
review the Pricing Agreement Letter and shall approve, execute and return same
to Landlord within ten (10) calendar days after delivery thereof to Tenant. If
the Tenant fails to execute and deliver the Pricing Agreement Letter within said
ten (10) calendar day period, then each day of delay in delivery shall
constitute one day of Tenant Delay. The Pricing Agreement Letter shall require
that Tenant pay fifty percent (50%) of all Tenant Improvement costs in excess of
the Tenant Improvement Allowance presented in the Pricing Agreement Letter upon
execution of the Pricing Agreement Letter. Landlord reserves the right to ▇▇▇▇
Tenant up to ninety-five percent (95%) of the Tenant Improvement costs in excess
of the Tenant Improvement Allowance during the construction period in proportion
to the amount of work completed or materials purchased, with the final five
percent (5%) due upon acceptance of the completed Premises and in any event no
later than one (1) day before occupancy by Tenant.
F. Installation of Tenant Improvements. Upon approval and execution of
-----------------------------------
the Pricing Agreement Letter by Tenant, Landlord or Landlord's designee shall
install the Tenant Improvements in the Premises in accordance with the Lease
Agreement, this Work Letter Agreement, the executed Pricing Agreement Letter and
the Working Drawings. Landlord shall meet with Tenant and advise Tenant which
Tenant Improvements in the Working Drawings are in excess of Building Standard
Tenant Improvements as set forth in Exhibit D2 attached hereto and incorporated
herein by this reference. Any Tenant Improvements which are determined by
Landlord to be in excess of the Building Standard Tenant Improvements shall be
referred to as "Above Standard Tenant Improvements." The excess of time
required to complete the Above Standard Tenant Improvements over the time which
would have been required to complete the Premises for occupancy had only
Building Standard Tenant Improvements been used shall constitute Tenant Delay.
Landlord's Work will be performed in a good workmanlike manner and will be
adequate to deliver possession of the Premises Substantially Completed as
provided in this Work Letter Agreement. Landlord will retain a general
contractor for the construction of Landlord's Work, and the general contractor
will supervise, construct and complete all Landlord's Work in accordance with
the Working Drawings. The general contractor may be paid a general contractor's
fee, not to exceed sixteen percent (16%) of the costs of labor and material for
Landlord's Work, as set forth in the Pricing Agreement Letter, and such fee will
be applied against the Tenant Improvement Allowance. Other than the fee
described in Paragraph I.B(iv), Landlord will not receive any fees or profit or
reimbursement for overhead or general conditions in connection with Landlord's
Work. Landlord will supervise, bid and secure all permits and licenses
necessary to complete Landlord's Work, and Landlord will assume responsibility
for ensuring that all Landlord's Work and other construction work in the
Premises undertaken by or on behalf of Landlord is in compliance with all Legal
Requirements. Changes in Landlord's Work will be authorized only by mutual
written agreement between the parties setting forth any additional cost and
expense and additional time required to complete the Premises as a result
thereof.
G. Payment by Tenant for All Costs in Excess of Tenant Improvement
---------------------------------------------------------------
Allowance. Tenant shall pay all costs incurred in connection with the Tenant
---------
Improvements in excess of the Tenant Improvement Allowance, including, without
limitation, the costs of labor and materials. To the extent that the actual
cost of any element of Landlord's Work is less than the amount budgeted therefor
in the Pricing Agreement Letter, the cost savings shall inure to the benefit of
Tenant.
H. Change Orders. In the event that Tenant desires to change the Tenant
-------------
Improvements as provided in the approved Working Drawings, Tenant shall deliver
notice of the same to Landlord, setting forth in detail the changes Tenant
desires to make. Landlord may disapprove of said Tenant Changes in the event
that Landlord, in its sole discretion, determines that the changes would
constitute design problems for the Premises or Building. In the event that
Landlord approves of the proposed Tenant Changes, Landlord shall provide Tenant
with an amendment to the Pricing Agreement Letter setting forth the costs and
the period of Tenant Delay necessitated by the Tenant Changes. Thereafter, the
Tenant shall, within five (5) calendar days of receipt of Landlord's approval,
deliver written notice to Landlord stating whether or not Tenant elects to cause
Landlord to make such Tenant Changes. Tenant shall bear the full costs for any
and all such changes in the Tenant Improvements and any delays associated with
such changes shall constitute Tenant Delay. The costs for any and all change
orders shall be determined by the same pricing structure as the Tenant
Improvements as set forth in the Pricing Agreement Letter.
I. Net Tenant Delay. Net Tenant Delay shall mean the total number of
----------------
days of Tenant Delay minus the total number of days of Landlord Delay. If the
Premises are not ready for occupancy on or before the scheduled date specified
in paragraph 6 of this Lease, and there exists Net Tenant Delay, then,
notwithstanding
anything to the contrary set forth in the Lease or this Work Letter Agreement,
and regardless of the actual date of the Substantial Completion of the Premises,
the Lease Commencement Date shall be deemed to be the date the Lease
Commencement Date would have occurred without the Net Tenant Delay and Tenant
shall timely pay to Landlord Base Rent and all other charges provided for in the
Lease commencing as of the Lease Commencement Date determined as if the Net
Tenant Delay had not occurred. In addition, a Net Tenant Delay of thirty (30)
calendar days or more shall constitute a default and breach by Tenant of the
Lease.
J. Warranties and Guaranties. Landlord hereby assigns to Tenant all
-------------------------
warranties and guaranties by the Space Planner relating to the Working Drawings
and by the contractor who constructs the Tenant Improvements relating to the
Tenant Improvements and, in consideration therefor, Tenant hereby waives,
releases and agrees to indemnify Landlord from all loss, damages, delays and
claims relating to, or arising out of (i) the design, code compliance, quality,
omissions or errors and other like matters contained in the Working Drawings,
and (ii) the construction of the Tenant Improvements, including, without
limitation, lost profits and all incidental or consequential damages.
II. Tenant Space Plan Must Contain, as a Minimum, the Following Information:
-----------------------------------------------------------------------
A. Floor plan showing:
1. Partitions: indicate location and type of all
partitions.
2. Doors: indicate location, swing and type of all doors.
Also indicate hardware.
3. Standard Electrical Items: indicate the location of all
building standard electrical items listed herein (wall-
mounted 110 volt duplex outlets, single-pole light
switches and building standard light fixtures).
4. Standard Telephone Outlets: indicate the location of all
building standard telephone wall outlets, as listed
herein.
5. "Above Standard" Electrical Items: indicate the location
and type of all "above standard" electrical items,
including lighting.
6. Special Electrical Equipment and Requirements: indicate
the location and type of equipment that will have
special requirements and indicate the location and type
of special electrical equipment to be purchased.
7. Telephone and Data Equipment Location: indicate location
of telephone equipment room, if any.
8. Glass Items: indicate location, dimensions and type of
glass partitions, windows and doors. Include details if
not building standard.
9. Heavy Items: indicate location, dimensions, weight per
square foot and description of any heavy equipment or
filing system exceeding fifty (50) pounds per square
foot live load.
10. Special HVAC Requirements: Indicate location and
specific requirements for any special and/or
concentrated heating and/or air conditioning
requirements beyond that provided by the building HVAC
system and/or distribution network.
11. Floor Covering: indicate location, type and color of all
floor covering.
12. Wall Covering: indicate location, type and color of all
wall coverings.
13. Paint: indicate location, type and color of paint
finishes.
14. Millwork: indicate location, type and basic dimensions
of all cabinets, shelving and other millwork items.
15. Plumbing: indicate location and type of all plumbing
items.
16. Appliances: indicate location, type, dimensions and
special requirements of all appliances.
D-3
17. Critical Dimensions: indicate all critical dimensions
necessary for construction.
18. Fire Sprinkler Requirements: indicate location and type
of all fire sprinkling and/or special fire suppression
requirements.
19. Ceiling System and Finishes: indicate location, type and
color of all ceiling finishes and/or systems.
20. Security Requirements: indicate the location, type and
special requirements for any security system and/or
requirements.
21. Furniture System Requirements: indicate all interfacing
requirements with furniture systems (i.e., electrical,
telephone, data, anchoring, etc.).
III. Other Provisions.
----------------
A. Substantial Completion. For purposes of this Lease,
----------------------
"Substantial Completion" (and correlative terms) of the Premises shall occur at
such time as the Premises are "Ready for Occupancy". The Premises shall be
"Ready for Occupancy" at such time as all of the following conditions have been
satisfied:
1. Landlord will have completed the Landlord's Work
substantially in accordance with the Working Drawings;
2. The Premises will be sufficiently complete so that Tenant
can reasonably occupy and utilize them for the use for which they
are intended without interference to the conduct of Tenant's
business;
3. Landlord will have received any governmental approvals
which are necessary in order for Tenant to occupy the Premises including a
use and occupancy permit, if the same is required; and
4. The Architect's Certificate has been given.
The following procedure will be followed to obtain the Architect's
Certificate. As soon as Landlord determines that all of the conditions in
clauses (i), (ii), and (iii) (the "Occupancy Conditions") have been satisfied,
it will give Tenant notice of such determination. Tenant will then cause
Tenant's architect, within three (3) days thereafter, to inspect the Premises
and certify as to whether the Occupancy Conditions have been satisfied (the
"Architect's Certificate"). Unless Tenant's architect notifies Landlord within
such 3-day period that, in the reasonable judgment of such architect, that the
Occupancy Conditions have not been satisfied and the reasons therefor, the
Occupancy conditions will be deemed satisfied and the Architect's Certificate
deemed given. If Tenant's architect notifies Landlord that the Occupancy
conditions have not been satisfied in the reasonable judgment of such architect,
Landlord will make any required adjustments and Tenant's architect will again
determine whether the Occupancy Conditions are satisfied in accordance with the
foregoing procedure. As soon as it is determined by Tenant's architect that all
of the Occupancy Conditions have been completed and the Architect"s Certificate
is given or deemed given, Landlord and Tenant will jointly conduct an inspection
of the Premises. Landlord and Tenant will in good faith prepare any necessary
punchlist of items (the "First Punchlist") to be completed for the Premises
together with a completion date for each item. Landlord will proceed promptly to
remedy all of the items of the First Punchlist. Sixty (60) days after the
Commencement Date, Landlord and Tenant will jointly conduct a second inspection
of the Premises and will prepare a punchlist (the "Second Punchlist") of items
to be completed for the Premises together with a completion date for each item.
No items will be included on the list which are the result of damage caused by
Tenant or its agents, employees, servants or contractors. Landlord agrees to
promptly remedy any items on the Second Punchlist. If Landlord fails to complete
any item on the First Punchlist or Second Punchlist by its completion date,
Tenant may proceed to complete such item at Landlord's expense. Preparation of
punchlists and completion of any punchlist items are not a condition precedent
to Lease Term Commencement and will not delay the Commencement Date.
B. Time of the Essence. Unless otherwise indicated, all references
-------------------
herein to "number of days" shall mean and refer to calendar days. In all
instances where Tenant is required to approve or deliver an item, if no written
notice of approval is given or the item is not delivered within the stated time
period, at Landlord's sole option, at the end of such period the item shall
automatically be deemed approved or delivered by Tenant and the next succeeding
time period shall commence.
C. Tenant's Lease Default. Notwithstanding any provision to the
----------------------
contrary contained in the Lease or this Work Letter Agreement, if an event of
default has occurred as set forth in the Lease or in this Work Letter
D-4
Agreement at any time on or before the Substantial Completion of the Premises,
then, (i) in addition to all other rights and remedies granted to Landlord
pursuant to the Lease, Landlord shall have the right to cease the construction
of the Premises (in which case, Tenant shall be responsible for any delay in the
Substantial Completion of the Premises caused by such work stoppage), (ii) all
other obligations of Landlord under the terms of this Work Letter Agreement
shall be suspended until such time as such default is cured pursuant to the
terms of the Lease, and (iii) Landlord shall have the right to recover from
Tenant the costs incurred for the Tenant Improvement Allowance Items, and
otherwise in connection with the construction of the Tenant Improvements.
D. Construction of Certain Improvements. The construction of
------------------------------------
certain Tenant Improvement items specified below shall be completed in
accordance with the following provisions:
1. "Above Standard"
Electrical Items: Tenant shall advise Landlord of
locations and types of all
"above standard" electrical
items, including lighting.
2. Special Electrical
Equipment and
Requirements: Tenant shall advise Landlord of
locations and types of all
special electrical equipment.
3. Appliances: Tenant shall advise Landlord of
locations, types, dimensions
and special requirements of all
appliances.
4. Telephone and Data
Equipment Location: Tenant shall advise Landlord of
location, of telephone
equipment room, if any.
5. Heavy Items: Tenant shall advise Landlord of
location, dimensions, weight
per square foot and description
of heavy equipment or filing
systems exceeding 50 pounds/SF
live load.
6. Millwork: Tenant shall advise Landlord of
location, type and basic
dimensions of all cabinets,
shelving and other millwork
items. Standard Plastic
Laminate Specifications:
Countertops: Wilsonart #1573-
60. Cabinets: Pionite #AT301-S.
7. Plumbing: Tenant shall advise Landlord of
location and type of all
plumbing fixtures. Standard
Sink Specification: Kohler,
stainless #K-3287-H with
stainless faucet #K-15176.
8. Special HVAC: Tenant shall advise Landlord of
special HVAC requirements.
9. Critical Dimensions: Tenant shall advise Landlord of
all critical dimensions
necessary for construction.
10. Security Requirements: Tenant shall advise Landlord of
the location, type and any
special requirements.
11. Furniture Systems: Tenant shall advise Landlord of
all interfacing requirements
between furniture and systems
for electrical, telephones,
data, anchoring, etc.
E. Removal of Certain Tenant Improvements; Repair and Restoration
--------------------------------------------------------------
of the Affected Premises. Pursuant to Section 6.4 of the Lease Agreement, Tenant
------------------------
shall:
1. Replace with Building Standard windows the two mechanical
vents that vent to the outside, one of which is located in
the manufacturing lab and the other of which is located in
the shell lab.
D-5
2. Remove auditory labs one and two and pour a concrete floor
where the labs were located.
D-6
EXHIBIT D1
PRICING AGREEMENT LETTER
------------------------
This Pricing Agreement Letter dated ___________, 19___, is entered into
by and between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇. ("Landlord") and SONIC
INNOVATIONS, INC., a Delaware corporation ("Tenant").
R E C I T A L S :
- - - - - - - -
A. Pursuant to that certain Lease Agreement between Landlord and
Tenant, and the Work Letter Agreement which is an Exhibit thereto (collectively
the "Lease Agreement"), Tenant has leased from Landlord commercial office space
in the building ("Building") constructed on certain real property owned by
Landlord, as more particularly described in the Lease Agreement.
B. Landlord and Tenant have agreed to construct certain Tenant
Improvements in the Building as set forth in the Lease Agreement, and more
particularly in the Work Letter Agreement and this Pricing Agreement Letter
which are exhibits thereto.
C. Landlord and Tenant now agree as to the pricing and payment of the
construction of the Tenant Improvements as set forth in this Pricing Agreement
Letter and the Itemization of Tenant Improvement Costs (hereinafter defined)
attached hereto as Exhibit "A."
NOW, THEREFORE, for and in consideration of the parties' covenants
and agreements contained herein and in the Lease Agreement, Landlord and Tenant
covenant and agree as follows:
1. Landlord and Tenant have approved the Working Drawings for the
Tenant Improvements, dated , 19__, signed copies of
--------------------------------------
which have been delivered to Landlord and Tenant. Landlord agrees to construct
the Tenant Improvements in accordance with the approved Working Drawings;
provided, however, the costs of Tenant Improvements shall be paid as provided
herein.
2. If the actual cost of the Tenant Improvements exceeds the Tenant
Improvement Allowance (as defined in the Work Letter Agreement between the
parties), Tenant shall pay Landlord all amounts in excess of the Tenant
Improvement Allowance. The Tenant and Landlord acknowledge and agree that the
Tenant Improvement Allowance shall be disbursed for the Tenant Improvement
Allowance Items as set forth in the Work Letter Agreement. Any other provision
of the Lease, the Work Letter Agreement, or this Pricing Agreement Letter to the
contrary notwithstanding, the Tenant Improvement Allowance is to be considered
as a "pool", even though it is designated for certain categories as stated in
Paragraph 1.B. of the Work Letter Agreement, and may be transferred from one
allowance category to another, i.e., an unused portion of the Space Plan
allowance could be used for materials and labor for construction of the Tenant
Improvements. Further, any unused portion of the Tenant Improvement Allowance
may be taken in cash (with 30 days prior written notice to Landlord), on the
Phase II Move-In Date, or in free rent, commencing on the Phase II Move-In Date,
at Tenant's option.
3. Attached to this Pricing Agreement Letter is an itemization of
Tenant Improvement costs ("Itemization of Tenant Improvement Costs") which sets
forth the cost of all Tenant Improvement Allowance Items and other costs to be
incurred in connection with the initial design and construction of the Tenant
Improvements in accordance with the Working Drawings. Concurrent with the
execution of this Pricing Agreement Letter, Tenant shall provide its written
consent and approval to the Itemization of Tenant Improvement Costs and deliver
the same to the Landlord. Upon receipt of the Itemization of Tenant Improvement
Costs and this Pricing Agreement Letter, executed by Tenant, Landlord shall be
released by Tenant to commence the construction of the Tenant Improvements in
accordance with the Working Drawings, this Pricing Agreement Letter and the
Itemization of Tenant Improvement Costs attached hereto.
4. Concurrently with the approval and execution by Tenant of this
Pricing Agreement Letter and the Itemization of Tenant Improvement Costs, Tenant
shall pay fifty percent (50%) of all Tenant Improvement costs in excess of the
Tenant Improvement Allowance as presented on the Itemization of Tenant
Improvement Costs. Landlord reserves the right to ▇▇▇▇ Tenant up to ninety-five
percent (95%) of the costs in excess of the Tenant Improvement Allowance during
the construction period in proportion to the amount of work completed or
materials purchased, with the final five percent (5%) due upon acceptance of the
completed Premises and in any event no later than one (1) day before occupancy
by Tenant. In the event that any revisions, changes or substitutions shall be
made to the Working Drawings or the Tenant Improvements after execution by
D1-1
Tenant of this Pricing Agreement Letter and the Itemization of Tenant
Improvement Costs, any additional costs which arise in connection with such
revisions, changes or substitutions, or any other additional costs, shall be
paid by Tenant to Landlord immediately upon Landlord's request.
DATED effective as of the date first above written.
LANDLORD:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, L.C., a Utah
limited liability company, by its Manager,
COTTONWOOD PARTNERS MANAGEMENT, LTD., a Utah
limited partnership, by CotNet Management,
Inc. its general partner
By:__________________________________________
▇▇▇▇ ▇. ▇▇▇▇, President
TENANT:
SONIC INNOVATIONS, INC., a Delaware corporation
By:__________________________________________
Title: ___________________________________
D1-2
EXHIBIT "A"
TO PRICING AGREEMENT LETTER
ITEMIZATION OF TENANT IMPROVEMENT COSTS
---------------------------------------
D1-3
EXHIBIT D2
BUILDING STANDARD TENANT IMPROVEMENTS
-------------------------------------
1. The "Building Standard Tenant Improvements" (herein so called) are the
following:
A. Flooring: Grade and quality of carpeting to be selected by
Landlord, with color to be selected by Tenant from
those offered by Landlord.
Standard Specification: ▇▇▇▇ Troubador 36, ▇▇▇▇
Shoal Creek II 36, or ▇▇▇▇ Resolution 29.
Standard Specification for VCT flooring: ▇▇▇▇▇▇▇▇▇
Premium Excelon, Style: Canvas
B. Base: Carpet base to match carpeting selected by Tenant.
Grade and quality of rubber base, when applicable,
to be selected by Landlord.
Standard Specification: Johnsonite, 4" rubber
base.
C. Partitions: Demising Walls: 3-5/8" metal studs on 24" centers,
blanket sound insulation, 5/8" gypsum board on one
side. Studs and one layer of gypsum board extend
to bottom of steel deck on floor above.
Interior Walls: 3-5/8" metal studs on 24" centers,
5/8" gypsum board on each side. Walls to be
ceiling height and braced as per code
requirements.
All walls to be finished with tape, texture and
paint.
Standard Paint Specification: ▇▇▇▇-▇▇▇▇▇▇▇ 2800
Series, Eggshell finish or ▇▇▇▇-▇▇▇▇▇▇▇ 2300
Series, Semi-Gloss.
D. Doors/Side Lights: 3'-0" x 8'-0" solid core interior doors, 3'-0" x
8'-10" exterior solid core flush wood doors with
select white birch rotary cut veneer. Stain to be
selected from finish standards. Door frames are
hollow metal. Glass manufactured as per code
requirements, with hollow metal frames. Standard
hardware is Schlage, 626 series in brushed chrome.
E. Ceiling: ▇▇▇▇▇▇▇▇▇ RH90 Fireguard Tegular Lay-In, 24" x 24"
for use with 15/16" exposed tee grid.
F. Electrical Outlets: Standard 110v duplex wall outlets.
G. Light Switches: Single pole switches.
H. Lighting Occupancy
Sensor: Automatic lighting control device-Uneco conserver
series.
I. Light Fixtures: 2' x 4', (3) lamp, 18-cell parabolic, recessed
ceiling fixture. Grade and quality of fixture
selected by Landlord.
J. Fire Sprinkler
Requirements: Design build per Landlord, except special
requirements, of which the Tenant shall advise the
Landlord.
K. Window Coverings: Mechoshade vertical roller shades.
D2-1
EXHIBIT E
LEGAL DESCRIPTION OF LAND
-------------------------
BEGINNING at a point North 0 08'51" East along the Section line 908.560 feet,
and North 89 04'36" East 409.306 feet; from the West Quarter Corner of Section
23, Township 2 South, Range 1 East, Salt Lake Base and Meridian: Thence North 89
04'36" East 293.456 feet; thence South 0 03'29" West 169.090 feet; thence South
89 49'14" East 16.454 feet to a point on a 565.000 foot radius Curve to the left
the center of which bears North 0 10'47" East; thence Northeasterly along said
Curve to the left through a central angle of 4 38'05" a distance of 45.704;
thence South 4 27'18" East 269.999 feet to a point on a 835.000 foot radius
Curve to the right the center of which bears North 4 27'18" West; thence South
along said Curve to the right through a central angle of 4 38'05" a distance of
67.544; thence North 89 49'13" West 310.216 feet; thence North 0 10'47" East
433.439 feet to the point of BEGINNING. Contains 147,859 square feet or 3.3944
acres.
E-1
EXHIBIT F
LEASE EXTENSION ADDENDUM
------------------------
THIS LEASE EXTENSION ADDENDUM ("Addendum") is entered into as of
April 28, 1999, between Landlord and Tenant (as those terms are defined
in that certain Lease Agreement between Landlord and Tenant, dated April 28,
1999 (the "Lease"). Subject to the provisions of the Lease, Landlord hereby
grants to Tenant the option ("Extension Option") to extend the term of the Lease
for ONE successive extension term of FIVE years in accordance with the
provisions set forth in this Addendum (an "Extension Renewal Term"). If the Term
of the Lease is so extended, such extension shall be on the same terms and
conditions as are applicable during the initial Term as set forth in the Lease,
except that the Base Rent during the Extension Renewal Term shall be at the
"Prevailing Rental Rate" which shall mean the rental rate determined for the
most comparable office space located in the Cottonwood Corporate Center Project
as of the date of the Extension Notice (defined below) and taking into account
all relevant factors including, without limitation, any applicable tenant
improvement allowance, Base Year and expense then in effect, but in no event
less than the Rent under the Lease as of the date of the Extension Notice.
1. Exercise. If Tenant desires to exercise an Extension Option, it
--------
shall send notice thereof (an "Extension Notice") to Landlord no more than three
hundred (300) nor less than two hundred seventy (270) calendar days prior to the
expiration of the Term or Extension Renewal Term of the Lease then in effect.
Landlord and Tenant shall endeavor in good faith to determine the Prevailing
Rental Rate within thirty (30) calendar days after Landlord's receipt of
Tenant's Extension Notice. If they cannot agree within thirty (30) calendar
days, each shall appoint an appraiser who shall arrive at an estimate of the
Prevailing Rental Rate within thirty (30) calendar days. If such estimates are
within five percent (5%) of each other, the average of the two shall be the new
Base Rent for the Extension Renewal Term. If the estimates are more than five
percent (5%) apart, each appraiser shall select a third appraiser within five
(5) calendar days or, if they fail to do so, Landlord shall select a third
appraiser. The third appraiser shall prepare an estimate of the Prevailing
Rental Rate as provided above within thirty (30) calendar days and the two
closest of the three estimates shall be averaged to determine the new Base Rent
for the new Extension Renewal Term. No later than one hundred twenty (120)
calendar days prior to the expiration of the Lease Term then in effect, Landlord
and Tenant shall execute an amendment to the Lease (an "Extension Amendment")
stating the new Base Rent and expiration date of the Lease Term. If such an
Extension Amendment is not fully executed by the parties for any reason as
provided above other than Landlord's breach, the Term shall not be extended and
all Extension Option(s) hereunder shall terminate. Notwithstanding the
foregoing, Tenant shall not be entitled to extend this Lease if an uncured Event
of Default has occurred under any term or provision contained in the Lease
Agreement or a condition exists which with the passage of time or the giving of
notice, or both, would constitute an Event of Default pursuant to the Lease
Agreement as of the date of exercise of this Extension Option. The rights
contained in this Addendum shall be personal to the originally named Tenant and
may be exercised only by the originally named Tenant and any Related Entity (and
not any other assignee, sublessee or other Transferee of Tenant's interest in
this Lease) and only if the originally named Tenant or Related Entity occupies
the entire Premises as of the date it exercises the Extension Option in
accordance with the terms of this Addendum. If Tenant properly exercises the
Extension Option and is not in default under this Lease at the end of the
initial Term of the Lease, the Lease Term, as it applies to the entire Premises
then leased by Tenant, shall be extended for the Extension Renewal Term.
2. Other Provisions. If Tenant fails to deliver a timely Extension
----------------
Notice, Tenant shall be considered to have elected not to exercise the Extension
Option. Any termination of the Lease during the initial or applicable Lease Term
or Extension Renewal Term shall terminate all renewal or lease extension rights
hereunder. The extension rights of Tenant hereunder shall not be severable from
the Lease, nor may such rights be assigned or otherwise conveyed in connection
with any permitted assignment of the Lease other than to a Related Entity.
During any Extension Renewal Term all leasehold improvements within the Premises
shall be provided in their then-existing condition (on an "as-is" basis) at the
time the Extension Renewal Term commences.
F-1
DATED this 28 day of April, 1999.
LANDLORD:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, L.C., a Utah limited
liability company, by its Manager,
COTTONWOOD PARTNERS MANAGEMENT, LTD., a Utah
limited partnership, by CotNet Management, Inc.
its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, President
TENANT:
SONIC INNOVATIONS, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Title: VP of Finance & CFO
------------------------------------
F-2
EXHIBIT G
ACKNOWLEDGMENT OF LEASE COMMENCEMENT DATE
-----------------------------------------
STATEMENT OF CONFIRMATION AND
-----------------------------
ACKNOWLEDGMENT OF LEASE COMMENCEMENT DATE
-----------------------------------------
In accordance with that certain Lease Agreement between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, L.C., as Landlord and the undersigned, as Tenant (the "Lease"), the
Tenant hereby confirms the following:
1. Construction of the Tenant Improvements for the Phase One Space is
Substantially Complete, and the Lease Term shall commence as of
_________________, for a term of _________ years, _________ months, and
_________ days, ending on ________________.
2. In accordance with the Lease, Base Rent shall begin to accrue on
____________, in the amount of _____________________________ DOLLARS
($__________).
3. The dates applicable to Section 3.1 of the Lease for Tenant's right to
terminate the Lease shall be as follows:
(a) Dates for Landlord receipt of Tenant's exercise notice (Section
3.1(a)):
Between __________________ and ______________________.
(b) Dates for payment of $200,000 to Landlord and vacation by Tenant
of at least one-half of Premises (Section 3.1(b)):
Between __________________ and ______________________.
(c) Dates for vacation by Tenant of the remainder of the Premises
(Section 3.1(c)):
Between __________________ and ______________________.
LANDLORD:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, L.C., a Utah limited
liability company, by its Manager,
COTTONWOOD PARTNERS MANAGEMENT, LTD., a Utah limited
partnership, by CotNet Management, Inc. its general
partner
By:_____________________________________________
▇▇▇▇ ▇. ▇▇▇▇, President
TENANT:
SONIC INNOVATIONS, INC., a Delaware corporation
By:_______________________________________________
Title:_________________________________________
G-1
EXHIBIT H
---------
WHEN RECORDED, RETURN TO:
------------------------
U.S. Bank National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: Commercial Real Estate Division
ESTOPPEL CERTIFICATE,
---------------------
SUBORDINATION, NON-DISTURBANCE
------------------------------
AND ATTORNMENT AGREEMENT
------------------------
THIS AGREEMENT, made and entered into as of the ______ day of
_____________, 199___, by and between U.S. BANK NATIONAL ASSOCIATION, with its
principal office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ("Bank"),
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, L.C., a Utah general limited liability company, with
its principal office at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇ ("Lessor"), and SONIC INNOVATIONS, INC., a Delaware corporation, with
its principal office at ____________________________________________ ("Lessee").
R E C I T A L S:
- - - - - - - -
A. Lessee has by a written lease dated ___________, 19____, and any
future amendments and extensions approved by Bank (the "Lease") leased from
Lessor commercial office space in the improvements constructed on certain real
property owned by Lessor located in Salt Lake County, Utah, as more particularly
described in Exhibit "A" attached to and incorporated in this Agreement by
reference (the "Premises").
▇. ▇▇▇▇▇▇ has executed in favor of Bank a Deed of Trust which encumbers
the Premises as security for a loan from Bank to Lessor (the "Deed of Trust").
C. Lessee, Lessor and Bank have agreed to the following with respect to
their mutual rights and obligations pursuant to the Lease and the Deed of Trust.
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid
by each party to the other and the mutual covenants and agreements herein
contained and for other good and valuable consideration, the receipt of which is
hereby acknowledged, Bank, Lessor and Lessee covenant and agree as follows:
1. Lessee represents to and covenants with the Bank that:
(a) Lessee is the tenant under the Lease and the same has not
been modified, changed, altered, or amended in any respect and is the only
lease agreement between Lessee and Lessor relating to the Premises, and the
Lease represents the entire understanding between Lessee and Lessor with
respect to the Premises.
(b) Lessee is not in default under any provision of the Lease,
nor is there any fact or condition which, with notice or lapse of time,
would constitute a default.
(c) The Lease is in full force and effect, and, except as
otherwise provided in the Lease, Lessee is not entitled to any lien,
credit, offset, or reduction in rent.
(d) Lessee's initial monthly installment of rent under the Lease
is to be a minimum of $__________.
(e) Except for a security deposit of $__________ and prepaid
rent in the amount of $_________, Lessee has no other claim against Lessor
for any deposit or prepaid rent.
(f) Except as otherwise permitted under the Lease, Lessee has
not transferred, hypothecated or assigned Lessee's interest under the
Lease. Except for assignments or sublettings which do not require Lessor's
consent under the Lease, Lessee shall not authorize or consent to any
assignment
H-1
or subletting of the Premises without the prior written consent of the
Bank, which consent shall not be unreasonably withheld.
(g) There are no actions or proceedings, whether voluntary or
otherwise, pending or threatened against Lessee under any bankruptcy or
insolvency laws or under any other laws providing relief to debtors.
(h) To the best of Lessee's knowledge, Lessor is not in default
in any respect of its obligations under the Lease, nor is there now any
fact or condition which, with notice or lapse of time, would constitute a
default.
(i) Other than the possessory rights arising under the Lease,
Lessee has no option to purchase the Premises or otherwise acquire title to
or an interest in the Premises.
(j) Other than the assignment to the Bank described herein,
Lessee has no knowledge of any other assignment, hypothecation, mortgage or
pledge of Lessor's interest in the Lease or the rents payable thereunder,
except as may be disclosed by other recorded instruments.
2. Lessee's interest in the Lease and all rights of Lessee
thereunder, including any purchase option, shall be and are hereby declared
subject and subordinate to the lien and encumbrance of the Deed of Trust. The
term "Deed of Trust" as used in this Agreement shall also include any amendment,
supplement, modification, renewal, refinance or replacement thereof.
3. In the event of any foreclosure of the Deed of Trust or any
conveyance in lieu of foreclosure, provided that the Lessee shall not then be in
default beyond any grace period under the Lease and that the Lease shall then be
in full force and effect, the Lease shall not be terminated nor shall Lessee be
joined in foreclosure proceedings, nor shall Lessee's possession be disturbed,
and the Lease shall continue in full force and effect as a direct lease between
Lessee and Bank.
4. After the receipt by Lessee of notice from Bank of any
foreclosure of the Deed of Trust or any conveyance of the Premises in lieu of
foreclosure, Lessee will thereafter attorn to and recognize Bank or any
purchaser from Bank at any foreclosure sale or otherwise as Lessee's substitute
lessor on the terms and conditions set forth in the Lease.
5. Lessee shall not prepay any of the rents under the Lease more
than one month in advance (except as provided otherwise in the Lease) without
the prior written consent of Bank.
6. In no event shall Bank be liable for any act or omission of the
Lessor, nor shall Bank be subject to any offsets or deficiencies which Lessee
may be entitled to assert against the Lessor as a result of any act or omission
of Lessor occurring prior to Bank's obtaining possession of the Premises.
7. The Lease may not be terminated (except as permitted in the Lease
and except for Landlord's default) without the prior written consent of Bank. No
amendment of the Lease will be binding on Bank unless consented to by Bank which
consent shall not be unreasonably withheld.
8. If the Lease is cancelled or terminated for any reason, if any
purchase option contained in the Lease is exercised, or if the Lessee is
required to pay to Lessor any payment in excess of one calendar month in
advance, including, but not limited to lease termination or purchase option
payments, refund of any type, prepayments of rents, litigation settlements or
settlements of past-due rents (all of which shall be referred to herein
collectively as "Extraordinary Rental Payments"), Lessor and Lessee will notify
Bank and Lessor consents to Lessee remitting and Lessee agrees to remit any
Extraordinary Rental Payments to Bank directly and immediately.
9. This Agreement and its terms shall be binding upon and inure to
the benefit of Bank, Lessor, Lessee and their respective successors and assigns,
including, without limitation, any purchaser at any foreclosure sale.
10. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, and such counterparts when taken together,
shall constitute but one agreement.
H-2
DATED effective as of the date first above written.
BANK:
U.S. BANK NATIONAL ASSOCIATION
By:___________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
LESSOR:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, L.C., a Utah limited
liability company, by its Manager,
COTTONWOOD PARTNERS MANAGEMENT, LTD., a Utah
limited partnership, by CotNet Management, Inc.
its general partner
By:______________________________________
▇▇▇▇ ▇. ▇▇▇▇, President
LESSEE:
SONIC INNOVATIONS, INC., a Delaware corporation
By:___________________________________________
Title:_____________________________________
▇-▇
▇▇▇▇▇ ▇▇ ▇▇▇▇ )
: ss.
COUNTY OF SALT LAKE )
The foregoing instrument was acknowledged before me this _____ day of
_____________, 199__, by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, who is a Vice President of U.S. BANK
NATIONAL ASSOCIATION.
_________________________________________
NOTARY PUBLIC
Residing at Salt Lake County, Utah
My Commission Expires:
______________________
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
The foregoing instrument was acknowledged before me this ______ day of
______________, 199__, by ▇▇▇▇ ▇. ▇▇▇▇, the President of COTNET MANAGEMENT,
INC., General Partner of COTTONWOOD PARTNERS MANAGEMENT, LTD., Manager of ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, L.C., a Utah limited liability company.
_________________________________________
NOTARY PUBLIC
Residing at Salt Lake County, Utah
My Commission Expires:
______________________
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
The foregoing instrument was acknowledged before me this _____ day of
_____________, 19___, by _______________________________, who is a
_____________________________________ of ______________________________________,
a _______________ corporation.
_________________________________________
NOTARY PUBLIC
Residing at Salt Lake County, Utah
My Commission Expires:
______________________
H-4
EXHIBIT "A"
The following described real property is located in Salt Lake County, Utah:
PARCEL 1 ("COTTONWOOD CORPORATE CENTER PARCEL 9"):
BEGINNING at a point North 0 08'51" East along the Section line 908.560
feet, and North 89 04'36" East 409.306 feet; from the West Quarter Corner
of Section 23, Township 2 South, Range 1 East, Salt Lake Base and Meridian:
Thence North 89 04'36" East 293.456 feet; thence South 0 03'29" West
169.090 feet; thence South 89 49'14" East 16.454 feet to a point on a
565.000 foot radius Curve to the left the center of which bears North 0
10'47" East; thence Northeasterly along said Curve to the left through a
central angle of 4 38'05" a distance of 45.704; thence South 4 27'18" East
269.999 feet to a point on a 835.000 foot radius Curve to the right the
center of which bears North 4 27'18" West; thence South along said Curve to
the right through a central angle of 4 38'05" a distance of 67.544; thence
North 89 49'13" West 310.216 feet; thence North 0 10'47" East 433.439 feet
to the point of BEGINNING. Contains 147,859 square feet or 3.3944 acres.
PARCEL 2 ("COMMON ROADWAY"):
A perpetual, nonexclusive right-of-way and easement for vehicular and
pedestrian ingress and egress, appurtenant to PARCEL 1, as established by a
Declaration of Easements, Covenants and Restrictions recorded January 17,
1996, as Entry No. 6259074, in Book 7311, at page 821 of the official
records of the Salt Lake County Recorder, as amended by a First Amendment
to Declaration of Easements, Covenants and Restrictions, recorded July 3,
1996, as Entry No. 6398547, in Book 7437, at page 265 of the official
records of the Salt Lake County Recorder, over the following described
property:
BEGINNING at a point which is North 0 08'51" East along the Section line
447.50 feet and South 89 49'13" East 50.00 feet from the West Quarter
Corner of Section 23, Township 2 South, Range 1 East, Salt Lake Base and
Meridian, and running thence North 0 08'51" East 71.00 feet; thence South
89 49'13" East 669.22 feet; thence North 0 10'47" East 12.00 feet to a
point of a 787.50 foot radius curve to the left, the chord of which bears
North 72 37'45" East; thence Easterly along the arc of said curve and
through a central angle of 35 06'03" a distance of 482.44 feet to a point
of tangency; thence North 55 04'44" East 161.13 feet to a point of a 257.50
foot radius curve to the right, the chord of which bears South 81 12'57"
East; thence Easterly along the arc of said curve and through a central
angle of 87 24'39" a distance of 392.84 feet to a point of tangency; thence
South 37 30'37" East 388.28 feet to a point of a 282.50 foot radius curve
to the left, the chord of which bears South 57 30'40" East; thence
Southeasterly along the arc of said curve and through a central angle of 40
00'07" a distance of 197.23 feet to a point of tangency; thence South 77
30'44" East 203.08 feet; thence South 35 38'28" East 52.78 feet to the West
right-of-way line of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇; thence South 12 27'22" West along
said West line 71.77 feet; thence North 77 30'44" West 147.86 feet to a
point of a 693.16 foot radius curve to the right, the chord of which bears
North 71 09'19" West; thence Northwesterly along the arc of curve and
through a central angle of 13 28'28" a distance of 163.01 feet to a point
of a compound curve to the right, the radius point of which is North 22
43'23" East 377.50 feet; thence Northwesterly along the arc of said curve
and through a central angle of 29 46' a distance of 196.12 feet to a point
of tangency; thence North 37 30'37" West 388.28 feet to a point of a 162.50
foot radius curve to the left, the chord of which bears North 81 12'57"
West; thence Westerly along the arc of said curve and through a central
angle of 87 24'39" a distance of 247.91 feet to a point of tangency; thence
South 55 04'44" West 161.13 feet to a point of a 882.50 foot radius curve
to the right, the chord of which bears South 72 37'45" West; thence
Westerly along the arc of said curve and through a central angle of 35
06'03" a distance of 540.64 feet to a point of tangency; thence North 89
49'13" West 441.91 feet; thence North 0 10'47" East 12.00 feet; thence
North 89 49'13" West 227.27 feet to the point of BEGINNING.
H-5
MONUMENT SIGN ADDENDUM
----------------------
THIS ADDENDUM ("Addendum"), dated as of even date with, and as an
addendum to, that certain Lease Agreement between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇.▇. ("Landlord") and SONIC INNOVATIONS, INC., a Delaware corporation
("Tenant"), dated as of the 28 day of April, 1999 ("Lease Agreement").
R E C I T A L S :
- - - - - - - -
A. Pursuant to the Lease Agreement, Tenant has leased from Landlord
certain commercial office space in the building ("Building") constructed on real
property owned by Landlord located in Salt Lake County, Utah, as more
particularly described in the Lease Agreement.
B. Landlord and Tenant have agreed as set forth in this Addendum to the
nonexclusive right of Tenant to have its name displayed on a monument sign to be
located by Landlord in front of the Building in accordance with the drawing
attached hereto as Exhibit "A" and incorporated herein (the "Monument Sign").
NOW, THEREFORE, for and in consideration of the parties' covenants and
agreements contained herein and in the Lease Agreement, Landlord and Tenant
covenant and agree as follows:
1. Tenant shall have the nonexclusive right to have its name
displayed on the Monument Sign in accordance with Exhibit "A" hereto to be
located in front of the Building. Tenant's right to have its name on the
Monument Sign shall be subject to the following requirements and conditions:
(a) Obtaining all required governmental permits, licenses,
authorizations and approvals for the Monument Sign;
(b) The occupancy by Tenant of no less than 10,000 square feet
of Rentable Area in the Building during the Lease Term;
(c) Tenant shall bear the cost of acquisition and/or preparation
of the panel containing Tenant's name for placement on the Monument Sign;
(d) Compliance with all applicable governmental laws, statutes,
regulations, rules, codes and ordinances;
(e) Compliance with the provisions of the Lease Agreement;
(f) The design, size, location, materials and colors of the
Monument Sign shall be determined by Landlord in Landlord's reasonable
discretion;
(g) Landlord shall have the right to relocate, redesign and/or
reconstruct the Monument Sign from time to time in its sole discretion; and
(h) Tenant's signage rights under this Addendum may not be
assigned to any assignee of this Lease other than a Related Entity or any
subtenant of Tenant without Landlord's prior written consent, exercised in
its sole discretion.
2. The Lease Agreement, as modified hereby, shall remain in full
force and effect, enforceable in accordance with its terms.
3. Upon termination or expiration of the Term of the Lease
Agreement, or upon expiration of Tenant's sign rights under this Addendum,
Landlord shall have the right to permanently remove Tenant's name from the
Monument Sign.
DATED effective as of even date with the Lease Agreement.
LANDLORD:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, L.C., a Utah limited
liability company, by its Manager,
COTTONWOOD PARTNERS MANAGEMENT, LTD., a Utah
limited partnership, by CotNet Management, Inc.
its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, President
TENANT:
SONIC INNOVATIONS, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Title: VP of Finance & CFO
---------------------------------
EXHIBIT "A"
MONUMENT SIGN
-------------
[Diagram]
BUILDING SIGN ADDENDUM
----------------------
THIS BUILDING SIGN ADDENDUM ("Addendum"), dated as of even date with,
and as an addendum to, that certain Lease Agreement between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇.▇. ("Landlord") and SONIC INNOVATIONS, INC., a Delaware corporation
("Tenant"), dated as of the 28 day of April, 1999 ("Lease Agreement").
R E C I T A L S :
- - - - - - - -
C. Pursuant to the Lease Agreement, Tenant has leased from Landlord
certain commercial office space in the building ("Building") constructed on real
property owned by Landlord located in Salt Lake County, Utah, as more
particularly described in the Lease Agreement.
D. Landlord and Tenant have agreed as set forth in this Addendum to the
nonexclusive right of Tenant to have its name displayed on the top fascia of the
Building in accordance with the blue line drawing attached hereto as Exhibit "A"
and incorporated herein by this reference (the "Building Sign").
NOW, THEREFORE, for and in consideration of the parties' covenants and
agreements contained herein and in the Lease Agreement, Landlord and Tenant
covenant and agree as follows:
1. Tenant shall have the nonexclusive right to have its name
displayed on the Building Sign in accordance with Exhibit "A" hereto and as
provided herein, subject to each of the following requirements and conditions:
(a) Obtaining all required governmental permits, licenses,
authorizations and approvals for the Building Sign;
(b) The occupancy by Tenant of no less than 30,000 square feet
of Rentable Area in the Building during the Lease Term;
(c) Compliance with all applicable governmental laws, statutes,
regulations, rules, codes and ordinances;
(d) Compliance with the provisions of the Lease Agreement;
(e) All expenses in connection with the construction,
installation, repair and maintenance of the Building Sign, and Tenant's
name thereon, shall be paid by Tenant;
(f) The design, size, location, materials, colors and lighting
of the Building Sign shall be approved in writing by Landlord, in
Landlord's reasonable discretion; and
(g) Tenant's signage rights under this Addendum may not be
assigned to any assignee of this Lease other than a Related Entity or any
subtenant of Tenant without Landlord's prior written consent, exercised in
its sole discretion.
2. The Lease Agreement as modified hereby shall remain in full force
and effect, enforceable in accordance with its terms.
3. Upon termination or expiration of the Term of the Lease
Agreement, or upon expiration of Tenant's sign rights under this Addendum,
Landlord shall have the right to permanently remove Tenant's Building Sign from
the Building. Tenant shall bear all reasonable expenses relating to the costs
associated with the removal of Tenant's Building Sign, repair of any damage
caused by such removal, and restoration of the site of Tenant's sign on the
Building to the condition in which those portions of the Building existed before
the installation of Tenant's sign. Tenant's obligations under this paragraph, as
well as other provisions of this Addendum, shall survive the expiration or
earlier termination of the Lease Term.
4. Tenant shall at all times during the Lease Term maintain Tenant's
sign in working order and first-class condition.
DATED effective as of even date with the Lease Agreement.
LANDLORD:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, L.C., a Utah limited
liability company, by its Manager,
COTTONWOOD PARTNERS MANAGEMENT, LTD., a Utah
limited partnership, by CotNet Management, Inc.
its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, President
TENANT:
SONIC INNOVATIONS, INC., a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------
Title: VP of Finance & CFO
-------------------------------
EXHIBIT "A"
BUILDING SIGN
-------------
[Diagram]