SUBLEASE AGREEMENT
FUNDAMENTAL PROVISIONS:
Effective
Date: October 1, 1999.
Landlord: SONIC INNOVATIONS, INC., a Delaware corporation
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Tenant: Executive Credit Services, L.C., a Utah Limited Liability company
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Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Premises: Approximately 5,695 square feet located in the ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ building (the "Building") comprising Suite
120. A diagram of the Premises is attached to this Sublease as
Exhibit A.
Term: Thirty Six months, commencing on the Effective Date and
terminating on September 30, 2002, as the Term may be reduced in
accordance with the provisions of tl1e Sublease permitting early
termination. Term also includes any holdover term.
Monthly
Rental
Amount: $(see below)_______ per month.
Suite 120
Lease Year Monthly Base Rent Rate
October 1, 1999 - September 30, 2000 $9,017.08 $19/RSF
October 1, 2000 - September 30, 2001 $9,904.89 $20/RSF +3%($22RSF)
October 1, 2001 - September 30, 2002 $11,067.28 $22/RSF +6%($22RSF)
Security: $20,084.36.
Permitted Use: General Office
Parking: Twenty-Five parking stalls including five reserved covered stalls
(numbers 7-11)
Master
Lease: Lease Agreement, dated April 28, 1999 between Landlord and Master
Landlord.
Master
Landlord: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, L.C., and its successors and assigns,
as the "Landlord" under the Master Lease.
Landlord
Improvements: The improvements described on Exhibit B to this Sublease.
Option A: That portion of the premises leased to Landlord pursuant to the
Master Lease that is identified on Exhibit A as the Option A
Space.
Option B
Space: That portion of the premises leased to Landlord pursuant to the
Master Lease that is identified on Exhibit A as the Option B
Space.
FOR VALUABLE CONSIDERATION, it is agreed as follows:
ARTICLE 1
SUBLEASE OF PREMISES
1.1 Sublease of Premises to Tenant. Landlord hereby subleases
the Premises to -tenant, and Tenant hereby subleases the Premises from
Landlord on the terms and conditions set for1h in this Sublease,
including the Fundamental Provisions set for1h above.
1.2 Acceptance of Premises: Possession.
(1} Inspection and Acceptance. Prior to entering into
this Sublease, Tenant has made a full and complete
inspection of the Premises. Subject only to completion
of the Landlord Improvements, Tenant agrees that Tenant
is subleasing the Premises, and Tenant accepts the
Premises, "AS IS, WHERE IS", including any and all
defects, patent, latent or otherwise, with no
representation or warranty whatsoever by Landlord as to
the fitness, suitability, habitability, or usability of
the Premises, as to compliance of the Premises with any
laws, regulations, or ordinances, or as to the presence
or absence of any Hazardous Materials (defined below}
on, about or adjacent to the Premises. In addition, the
Premises are subleased subject to current taxes and
assessments, reservations in patents and all
rights-of-way, easements, covenants, conditions,
restrictions, obligations, liens, encumbrances, and
liabilities of record as of the date of this Sublease,
and to all zoning and building code requirements and
other governmental laws, rules, and regulations.
(2) Possession. Possession of the Premises will be
delivered to Tenant on the Effective Date.
(3) Landlord Improvements. Landlord agrees
to complete the Landlord to the Premises, at
Landlord's expense and prior to October 15, 1999.
1.3 Sublease Subiect to Master Lease. The rights and interest of
Tenant under this Sublease are subject and subordinate to the Master
Lease, to all renewals, replacements and extensions of the Master Lease,
and to any mor1gage or trust deed that Landlord or Master Landlord may
now or in the future place upon the Premises, to any and all advances to
be made under any mor1gage or trust deed and to the interest on any
mor1gage or trust deed. It is expressly understood and agreed that
Landlord does not assume and shall not have any of the obligations or
liabilities of Master Landlord under the Master Lease and that Landlord
is not making the representations or warranties, if any, made by Master
Landlord in the Master Lease. With respect to work, services, repairs
and restoration or the performance of other obligations required of
Master Landlord under the Master Lease, Landlord's sole obligation with
respect to such obligations shall be to request the same from Master
Landlord upon written request from Tenant and to use reasonable effor1s
to obtain the same from Master Landlord. Landlord shall not be liable in
damages, nor shall rent ▇▇▇▇▇ under this Sublease, for or on account of
any failure by Master Landlord to perform the obligations and duties
imposed on it under the Master Lease. Nothing contained in this Sublease
shall be construed to create privity of estate or contract between
Tenant and Master Landlord. If there is a conflict between the terms and
conditions of, and the rights granted to Tenant pursuant to, this
Sublease and the terms and (;onditions of, and the rights granted to
Landlord pursuant to, the Master Lease, the Master Lease shall control.
1.4 Assumption of Duties under Master Lease. As between Landlord
and Tenant, Tenant hereby assumes and agrees to be bound by all of the
covenants, obligations, and agreements set for1h in the Master Lease
(other than the obligation to pay rent under the Master Lease} and by
any terms and limitations Imposed upon Landlord as the tenant
thereunder, as such covenants, obligations, agreements, terms, and
limitations relate to the Premises. Tenant shall indemnify, defend (with
counsel acceptable to Landlord), and hold
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Landlord and its Related Parties (as hereafter defined) harmless for,
from and against any and all claims, demands, liabilities, obligations,
damages, penalties, causes of action, costs and expenses, including
attorneys' fees and expenses, imposed upon, incurred by or asserted
against Landlord or any of Landlord's Related Parties which arise out of
any violations under the Master Lease occurring as a result of the acts
or omissions of Tenant or any of Tenant's Related Parties or any
violations by Tenant or any of Tenant's Related Parties of this Sublease
or which may arise out of or are in any manner connected with Tenant's
or any of Tenant's Related Parties' use and occupancy of the Premises
pursuant to this Sublease, a breach by Tenant of this Sublease or a
breach by Tenant of the provisions of the Master Lease. Notwithstanding
any contrary term or provision contained in this Sublease or in the
Master Lease, it is expressly agreed that (a) the terms of this Sublease
do not grant Tenant any rights of first refusal, any options to
purchase, or any extensions or renewal rights with respect to the Master
Lease; and (b) Tenant shall not use or occupy the Premises in a manner
contrary to or inconsistent with any of the provisions of the Master
Lease. Tenant agrees that Landlord may deliver to Master Landlord any
and all submissions, notices, or other information received by Landlord
from Tenant under this Sublease. As used in this Sublease, "Related
Parties" means the officers, directors, shareholders, employees, agents,
successors, assigns, contractors, and invitees of a particular person or
entity.
1.5 No Release of Landlord. Nothing in this Sublease shall be
deemed to release Landlord from any of its obligations to Master
Landlord pursuant to the Master Lease.
1.6 Receipt of Master Lease. Tenant acknowledges that Tenant has
received and read a copy of the Master Lease, including the Building
Rules and Regulations as described in the Master Lease.
1.7 Access to Premises. Landlord and its agents and Master
Landlord and its agents, at all reasonable times, shall have free and
full access to the Premises for the purpose of examining or inspecting
the condition thereof, for the purpose of determining if Tenant is
performing the covenants and agreements of this Sublease, for the
purpose of performing its obligations under this Sublease, for the
purpose of posting such reasonable notices as Landlord may desire to
protect the rights of Landlord, and, during the last three months of the
Term, to show the Premises to prospective new tenants.
1.8 Quiet Enjoyment. Conditioned upon Tenant paying the rent in
this Sublease and and fulfilling all the covenants, agreements,
conditions, and provisions in this Sublease to be kept, or performed by
Tenant, Tenant may at all times during the Term hereby granted,
peaceably, quietly, and exclusively have, hold, and enjoy the Premises,
subject to the terms and conditions of this Sublease.
1.9 Right of First Refusal.
(1) Grant: Terms and Conditions. Landlord hereby grants
to Tenant the right during Term to sublease the Option A
Space and the Option B Space on the terms and conditions
of Section 1.9. Prior to offering to sublease either the
Option A Space or the Option B Space (such space being
referred to as "Option Space") to any other person or
entity, after such person or entity gives a bona fide
offer at a rate not less than $22/ sq ft., else
Executive Credit Services will be given the right to
match the lower rate and the rates for Options A&B will
be amended. Landlord shall first offer to sublease the
Option Space to Tenant by delivering to Tenant a "Notice
Offer" with respect to the Option Space. Upon receipt of
a Notice Offer, Tenant shall have the right to add the
Option Space to the Premises leased pursuant to this
Lease by giving an "Acceptance Notice" to Landlord
within five (5) days of receipt of the Notice Offer. If
Tenant does not give an Acceptance Notice within such
time period, then Tenant shall have no further right
with respect to the Option Space, and Landlord may lease
the Option Space to a third party, free of any interest
of Tenant. If Tenant gives an Acceptance Notice, then
the Option Space shall be deemed to have been added to
and incorporated into the Premises as of the date the
Acceptance Notice is given to Landlord on all of the
terms and conditions of this Sublease, including the
Term, except that the Monthly Rental Amount shall be
increased by the appropriate amounts as set forth in
Exhibit C and except that "Tenant's Share" for purposes
of computing "Additional Rent" under Section 3.2 shall
be increased by adding
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to the Tenant's Share identified in Section 3.2,6.03%
with respect to the Option A Space and 7.95% with
respect to the Option B Space.
(2) Termination. Any other provision of this Sublease to
the contrary notwithstanding, Landlord may terminate the
rights pursuant to Section 1.9(8) with respect to the
Option A Space by written notice to Tenant given at any
time after May 31,2000 and with respect to the Option B
Space .by written notice to Tenant given at any time
after August 31, 2000, any such termination to be
effective upon receipt of the termination notice by
Tenant.
ARTICLE 2
TERM
1.10 Term of Sublease. The Term of this Sublease shall be as
stated in the Provisions, subject to the terms and conditions set forth
in this Sublease, which may permit or provide for an earlier
termination. Under no circumstances shall Master Landlord be required to
recognize the rights of Tenant to occupy any part of the Premises
following the termination of the Master Lease, and the Term shall
immediately and automatically terminate upon a termination of the Master
Lease for any reason, regardless of any other provision in this
Sublease.
1.11 Earlv Termination Provisions.
(1) By Landlord.
(a) Landlord sends or delivers to Tenant a written
notice signed by a duly authorized officer of
the company, exercising this right to terminate,
and Tenant receives the notice no earlier than
18 months after the Lease Effective Date and no
later than 19 months after the Lease Effective
Date.
(b) Landlord will reimburse Tenant for reasonable
building data cabling costs, reasonable
stationary reprinting costs, and office moving
expenses. The total of these costs covered by
Landlord shall not exceed $18,000 for Suite 120.
(c) Landlord will not take possession of the
Premises before 24 months and five calendar
days. Except as set forth in this section as
otherwise expressly provided in this Sublease or
the Master Lease, Landlord shall have no right
to terminate the Sublease before the Expiration
Date.
(2) By Tenant.
(a) Tenant sends or delivers to Landlord a written
notice signed duly authorized officer of the
company, exercising this right terminate, and
the Landlord receives the notice no earlier than
months after the Lease Effective Date and no
later than 19 after the Lease Effective Date.
(b) Tenant vacates the Premises no earlier than 24
months after Lease Commencement Date and no
later than 24 months and calendar days after the
Lease Commencement Date
(c) When it vacates the Premises, Tenant is not in
default of any provisions of the sublease or
Master lease provisions, the payment of rent.
Except as set forth in this Section or as
otherwise expressly provided in this Sublease or
Master
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Tenant shall have no right to terminate the
Sublease before the Expiration Date. (d) Tenant
will pay for unamortized leasing commission
costs which would amount to $3759 for Suite 120.
1.12 Surrender of Premises. Upon the termination of this
Sublease for any cause whatsoever , Tenant shall immediately surrender
to Landlord peaceable possession of the Premises, and all buildings,
improvements and fixtures then located thereon (reasonable wear and tear
and casualty loss insured under the casualty insurance described in
Section 7.2(b) excepted), subject, however, to the rights of removal as
provided in Section 2.4. All keys shall be returned to the Landlord upon
surrender. Failure of Tenant to return all keys shall obligate Tenant to
pay all necessary costs in changing the locks pertaining to the
Premises.
1.13 Removal of Personal Property and Tenant's Fixtures. Tenant
may, if not in default under any of the terms of this Sublease and on or
before the date of termination, remove from the Premises any and all
personal property of Tenant, including, but not limited to, furniture,
equipment, and fixtures belonging to Tenant; provided, however, Tenant
shall repair any damage to any improvements on the Premises caused by
such removal. .
1.14 Holding Over. If the Premises are not surrendered at the
end of the Term, Tenant indemnify Landlord and Landlord's Related
Parties for, from and against any loss or liability resulting from delay
by Tenant in so surrendering the Premises, including without limitation,
any claims made by any succeeding tenant based on such delay. If Tenant
or any of Tenant's Related Parties should remain in possession of the
Premises after the expiration of the Term without executing a new lease,
then such holding over shall be construed as a tenancy from month to
month, subject to all the covenants, terms, provisions and obligations
of this Sublease except that the Monthly Rental Amount during any
holdover tenancy shall be equal to 150% of the Monthly Rental Amount
stated in the Fundamental Provisions. Nothing contained herein shall be
construed as Landlord's permission for Tenant to hold over or as
limiting Landlord's remedies against a holdover lessee.
ARTICLE 3
RENT
1.15 Rent. Tenant shall pay to Landlord as rent during the
Term, the Monthly Rental Amount stated in the Fundamental Provisions.
The Monthly Rental Amount is payable monthly in advance on the first day
of each calendar month during the Term without any deduction or offset,
except that rent for the month in which the Term commences shall be paid
on or before the date the Term commences. For partial months at the
commencement or termination of this Sublease, the Monthly Rental Amount
shall be prorated, based on a 30-day month, for actual days elapsed.
1.16 Additional Rent. Tenant agrees to pay. Additional Rent" as
provided in and pursuant to the Master Lease with respect to the
Premises, it being agreed that, for purposes of computing such
Additional Rent payable by Tenant, Tenant shall be deemed to have a
"Tenant's Share" of 4.35%.
1.17 No Abatement. No abatement, diminution or reduction of the
rent or other charges payable by Tenant under this Sublease shall be
claimed by or allowed to Tenant for any reason, except as expressly
provided in this Sublease.
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ARTICLE 4
SECURITY DEPOSIT
4.1 Security Deposit. Upon the execution of this Sublease,
Tenant shall deposit the Security Deposit with Landlord, as security for
the full performance by Tenant of its obligations under this Sublease.
If Tenant defaults under any provision hereof, Landlord shall be
entitled, at its option, to apply or retain all or any part of the
Security Deposit for the payment of any rent or other sum in default,
any other amount which Landlord may spend or become obligated to spend
because of Tenant's default, or to compensate Landlord for any other
loss or damage which Landlord may suffer because of Tenant's default. If
any portion of the Security Deposit is so used or applied, Tenant shall,
within five (5) days after written demand therefore, deposit cash with
Landlord in an amount sufficient to restore the Security Deposit to its
original amount. In no event shall the Security Deposit be deemed or
treated as a prepayment of any rental or other amounts payable by Tenant
under this Sublease, including without limitation, the last monthly
installment of rent. Landlord shall not be required to keep the Security
Deposit separate from its general funds, and Tenant shall not be
entitled to interest on the Security Deposit. If Tenant shall fully and
faithfully perform every provision of this Sublease to be performed by
it, upon Tenant's vacation of the Premises and within thirty (30) days
after the expiration of the Sublease, Landlord shall return the Security
Deposit, or any remaining balance thereof, together with its written
explanation of the application of the funds, to Tenant. In the event of
termination of Landlord's interest in this Sublease, Landlord shall
transfer the deposit to Landlord's successor in interest, giving notice
to Tenant, and Tenant waives any claim to approve the transfer. Tenant
agrees that, upon a transfer of the Security Deposit, Landlord shall
have no further liability to return or account for it; provided,
however, that Landlord may retain the Security Deposit until such time
as any amount due from Tenant in accordance with this Sublease has been
determined and paid in full. Landlord's rights with respect to the
Security Deposit shall be in addition to and shall not preclude
concurrent, alternative or successive exercise of any other rights or
remedies available to Landlord.
ARTICLE 5
USE; CONSTRUCTION; MAINTENANCE AND REPAIR
1.18 Permitted Use. Tenant shall use the Premises only for the
Permitted Use designated in Fundamental Provisions.
1.19 No Waste: Compliance with Law. Tenant agrees not to commit
or permit any waste of the Premises. Tenant agrees to comply with all
laws, ordinances, regulations, building permits, governmental
stipulations and conditions, covenants, conditions and restrictions,
public or private, affecting the Premises and not to suffer or permit
any act to be done in or about the Premises in violation thereof.
1.20 Improvements. Tenant shall not remove, demolish or impair
the structural character of existing improvement to the Premises without
Landlord's prior written consent, which consent may be or withheld in
Landlord's sole and absolute discretion. Tenant may, at its sole cost
and expense, improve, construct, remodel, reconstruct or alter
improvements within the Premises so long as such work does not impair
the structural soundness of the building in which the Premises are
located, alter the exterior appearance of the building of which the
Premises are a part, or materially or adversely affect the value of the
Premises or the mechanical, electrical, HVAC, or plumbing systems
serving the Premises and other portions of the property of which the
Premises are a part. However, all such work shall be done in compliance
with and pursuant to plans, drawings and specifications first approved
in writing by Landlord, which approval may be given or withheld in
Landlord's sole and absolute discretion. Any material modifications to
any such plans, drawings and specifications shall also require the prior
written approval of Landlord, which approval may be given or withheld in
Landlord's sole and absolute discretion. Tenant covenants that any such
work shall conform to all applicable building codes, zoning and other
governmental regulations and restrictions and shall be constructed
diligently, in a good and workmanlike manner, using only new, high
quality materials, and in full compliance with all governmental laws,
rules and regulations then relating thereto. Tenant agrees to indemnify
and hold Landlord and Landlord's Related Parties harmless for, from and
against any and all claims
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for damages on the part of the owners, tenants, or occupants of adjacent
lands, buildings, or space arising from the uses of the Premises by or
activities of Tenant or any of Tenant's Related Parties pursuant to this
Section, and Tenant agrees to take all necessary, prudent and proper
measures to protect the land, improvements, and space of such adjacent
owners, tenants and occupants from injury of any nature arising from any
such use or activity.
1.21 Construction Work. All construction work on the Premises
shall be done in accordance with the provisions of this Article 5 and
under a written contract with a building contractor licensed under the
laws of the State of Utah and approved by Landlord. Landlord shall also
have the right to approve all subcontractors performing any construction
work on the Premises.
1.22 Mechanics' Liens. The parties agree, and notice is hereby
given, that Tenant is not the agent of Landlord for the construction,
alteration or repair of any improvements on the Premises, the same being
done at the sole direction and expense of Tenant. All contractors,
material men, mechanics, and laborers are hereby charged with notice
that they must look only to Tenant for the payment of any charge for
work done or material furnished on the Premises during the Term. Tenant
shall have no right, authority or power to bind Landlord or any interest
of Landlord for the payment of any claim for labor or material, or for
any charge or expense, incurred by Tenant as to improvements,
alterations or repairs on or to the Premises, and Tenant shall post
notices on the Premises during all construction work of any nature
whatsoever that Landlord is not responsible for any material and labor
used on the Premises. Tenant shall hold harmless and indemnify Landlord,
Landlord's Related Parties, Master Landlord, and Master Landlord's
Related Parties for, from and against any costs, expenses and
liabilities from any mechanics', laborers' or material men's liens which
may be filed against the Premises during the Term.
1.23 Maintenance and Repair Obligations. During the Term,
Tenant, at Tenant's sole cost and expense, shall keep the structures and
buildings constructed on the Premises and any other improvements
(including without limitation, landscaping, wiring, plumbing, plate
glass, doors, windows, parking lot, interior walls, floors and floor
coverings, fences, HV AC, lights, cranes, pest control, interior and
exterior painting) located from time to time thereon in an attractive,
good, clean, and safe condition and state of repair (reasonable wear and
tear, and casualty loss insured under the casualty insurance described
in Section 7.2(b) excepted), and will hold Landlord free and harmless of
and from any and all expense and liability therefore. Notwithstanding
the foregoing, Landlord agrees to repair, replace, and maintain the
roof, foundation, and exterior walls of the Premises.
1.24 Environmental Indemnity Tenant shall be solely responsible
for, and shall indemnify and hold harmless Landlord, Landlord's Related
Parties, Master Landlord, and Master Landlord's Related Parties for,
from and against any loss, damage, cost, expense or liability directly
or indirectly arising out of or attributable to the use, generation,
storage, release, threatened release, discharge, or disposal by Tenant
or any of Tenant's Related Parties of Hazardous Materials (as defined in
the Master Lease) on, under or about the Premises arising subsequent to
the date on which this Sublease was executed, including without
limitation: (a) all consequential and incidental damages; (b) the costs
of any required or necessary repairs, cleanup or detoxification of the
Premises, and the preparation and implementation of any closure,
remedial or other required plans; and (c) all reasonable costs and
expenses in connection with clauses (a) and (b), including but not
limited to attorneys' fees.
ARTICLE 6
LIENS AND ENCUMBRANCES
1.25 Encumbering the Premises. During the Term of this Sublease,
Tenant shall not cause permit any lien, claim, charge or encumbrance of
any nature or description whatsoever to attach to encumber the Premises
or any part thereof.
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1.26 Subordination.
(1) Subordination. This Sublease, at Landlord's option,
shall be subordinate to any mortgage, deed of trust, or any
other hypothecation or security now or hereafter placed upon the
Premises and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. If any mortgagee or trustee
shall elect to have this Sublease prior to the lien of its
mortgage or deed of trust, and shall give written notice thereof
to Tenant, this Sublease shall be deemed prior to such mortgage
or deed of trust, whether this Sublease is dated prior or
subsequent to the date of said mortgage or deed of trust or the
date of recording thereof.
(2) Execution of Certain Documents. Tenant agrees to
execute any documents required to effectuate an attornment or a
subordination or to make this Sublease prior to the lien of any
mortgage or deed of trust, as the case may be. Tenant's failure
to execute such documents within ten (10) days after written
demand shall constitute a material default by Tenant under this
Sublease, or, at Landlord's option, Landlord shall execute such
documents on behalf of Tenant as Tenant's attorney-in-fact.
Tenant does hereby make, constitute and irrevocably appoint
Landlord as Tenant's attorney-in-fact and in Tenant's name,
place and stead, to execute such documents in accordance with
this Section 6.2(b).
ARTICLE 7
GENERAL INDEMNITY; INSURANCE
1.27 General Indemnity Provisions. Tenant covenants and agrees
to indemnify and Landlord, Landlord's Related Parties, Master Landlord,
and Master Landlord IS Related Parties entirely harmless for, from and
against each and every claim, demand, liability, loss, cost, damage and
expense, including, without limitation, attorneys' fees and court costs,
arising out of any accident or other occurrence causing injury to or
death of persons or damage to property by reason of construction or
maintenance of any improvements on the Premises, of any additions,
alterations or renovations thereto, or due to the condition of the
Premises, or the use or neglect thereof by Tenant or any of Tenant's
Related Parties, or any other person, or otherwise occurring upon the
Premises. Tenant further agrees to indemnify and save Landlord,
Landlord's Related Parties, Master Landlord, and Master Landlord's
Related Parties and their respective interests in the Premises entirely
harmless for, from and against all claims, demands, liabilities, damages
and penalties arising out of any failure of Tenant to comply with any of
Tenant's obligations under this Sublease, including without limitation
attorneys' fees and court costs. These indemnity provisions, as well as
all other indemnity provisions in this Sublease, shall survive the
expiration of this Sublease or the earlier termination thereof.
(1) 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 of indemnity agreements set forth in this
Sublease and in Section 18 of the Master Lease;
(2) 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;
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(3) Workers' compensation insurance satisfying Tenant's
obligations under the workers' compensation laws of the State of
Utah; and
(4) Such other policy or policies of insurance as either
Landlord or Master Landlord may reasonably require or as Master
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 the section, Waiver of
Subrogation. Such liability insurance shall name Landlord, Master
Landlord and any other person specified from time to time by Landlord or
Master 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, Properly-Casualty. All
liability policies maintained by Tenant shall contain a provision that
Tenant, 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, Master Landlord and their Related
Parties and employees as a result of the acts or omissions of Tenant.
Tenant shall furnish to Landlord, which will be forwarded to the Master
Landlord, 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 be written as primary policies, not contributing with and
not in excess of the coverage of the coverage which Tenant, Landlord, or
Master 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 to recover against each other, against any other
tenant or occupant of the Building, and against the officers, directors,
shareholders, partners, joint ventures, 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.
1.29 Waiver of Subrogation. Landlord and Tenant each hereby
release and relieve the other, waive their right of recovery against the
other for direct or consequential loss or damage arising out of or
incident to the perils covered by property insurance carried by such
party, whether due to the negligence of Landlord or Tenant or their
agents, employees, contractors and/or invitees. If necessary all
property insurance policies required under this Lease shall be endorsed
to so provide.
ARTICLE 8
TAXES AND ASSESSMENTS
1.30 Sales Taxes. Tenant shall pay to Landlord, at the same time
as any other rental is made to or for Landlord, an amount equal to the
amount of all gross proceeds taxes, transaction privilege taxes, sales
taxes, or like taxes now or hereafter levied or assessed by the United
States, the State of Utah, or any municipal corporation or political
subdivision upon such rental, or the payment or receipt thereof, or
which Landlord will be caused to pay as a result of the receipt thereof,
except that Tenant shall not be obligated to pay to Landlord any amount
on account of any income tax of Landlord.
1.31 Ad Valorem Taxes. In addition to the monthly rent and all
other sums payable hereto, Tenant shall pay during the entire Term, as
additional rental hereunder, all ad valorem taxes, assessments, and
charges and other governmental levies and charges, general and special,
ordinary and extraordinary, unforeseen as well as foreseen, of any kind,
which are assessed or imposed upon the fixtures, equipment, and other
property of Tenant located on the Premises (the "Personal Property
Taxes"). Tenant shall pay the Personal Property Taxes when due and prior
to any delinquency.
1.32 Other Taxes. Tenant shall pay any and all other
governmental taxes, license assessments, or charges imposed on the
business conducted by Tenant on or from the Premises.
9
ARTICLE 9
ASSIGNMENT AND SUBLETTING
1.33 Assignments. Tenant shall not have the right to assign all
or part of this Sublease without Landlord's prior written consent, which
consent shall be at Landlord's sole and absolute discretion, and any
attempted assignment shall be null and void, shall constitute an
immediate default under this Sublease (without any cure period), and
shall, at Landlord's election, result in the immediate termination of
this Sublease.
1.34 Subleases. Tenant shall not have the right to further
sublet all or any portion or portions of the Premises without first
having obtained Landlord's written consent, which consent shall be at
Landlord's sole and absolute discretion. Any such sublease shall not
release Tenant from its obligation to perform all covenants herein
contained.
ARTICLE 10
SALE OF LEASEHOLD BY LANDLORD
1.35 Sale by Landlord. Landlord may sell, transfer, assign or
otherwise dispose of its interest in the Premises or this Sublease, or
any part thereof or interest therein, without the consent of Tenant.
Upon any such sale, transfer, assignment or disposal of all of its
interest in the Premises or this Sublease, Landlord shall be
automatically relieved of all obligations hereunder. This Sublease shall
not be affected by any such sale, transfer, assignment or disposal of
Landlord's interest, and Tenant agrees to attorn to Landlord's purchaser
or assignee.
ARTICLE 11
DEFAULTS AND REMEDIES
1.36 Default. Upon the non-payment of the whole or any portion
of the rentals hereby or any other sum or sums of money due to Landlord
under the provisions hereof, or upon the non-performance by Tenant of
any other covenant or condition herein set forth on the part of said
Tenant to be kept and performed, Tenant shall be in default hereunder;
provided, however, except as otherwise provided in this Sublease,
Landlord shall not be entitled to exercise its remedies for default
unless, in the case of a default involving the failure to pay rent or
any other sum of money under this Sublease, such default continues for
more than five (5) days following the due date, and in the case of any
other default, Landlord shall have given Tenant written notice of the
default and Tenant shall have failed to cure such default on or before
twenty (20) days after Tenant receives such notice. Tenant shall also be
in default under this Sublease and Landlord shall be entitled to
exercise its remedies under this Sublease for default:
(1) Bankruptcy. If Tenant shall file a petition in
bankruptcy or for reorganization or for an arrangement pursuant
to any federal or state bankruptcy law or any similar federal or
state law, or shall be adjudicated a bankrupt or shall make an
assignment for the benefit of creditors or shall admit in
writing its inability to pay its debts generally as they become
due, or if a petition or answer proposing the adjudication of
Tenant as a bankrupt or its reorganization pursuant to any
federal or state bankruptcy law or any similar federal or state
law shall be filed in any court and Tenant shall consent to or
acquiesce in the filing thereof or such petition or answer shall
not be discharged or denied within 60 days after the occurrence
of any of the foregoing;
(2) Other Insolvency Events. If a receiver, trustee or
liquidator of Tenant or of all substantially all of the assets
of Tenant or of the Premises or Tenant's leasehold interest
therein be appointed in any proceeding brought by Tenant, or if
any such receiver, trustee or liquidator
10
be appointed in any proceeding brought against Tenant and shall
not be discharged within 60 days after the occurrence thereof,
of if Tenant shall consent to or acquiesce in such appointment;
(3) Abandonment. If Tenant shall abandon the Premises,
with Tenant's absence from the Premises for a period for seven
(7) consecutive days to be conclusive evidence that the Premises
have been abandoned; or
(4) Master Lease. Any breach of the Master Lease that
occurs as a result of any act or omission of Tenant under this
Lease.
1.37 Remedies. Upon the occurrence of a default and the
expiration of any applicable grace period, it shall be lawful for
Landlord, at its option, to re-enter upon the Premises and to again
repossess and enjoy the same and all the improvements thereon free of
any claims or interest of Tenant whatsoever. with or without terminating
this Sublease, at Landlord's sole election. In addition, upon such
default, Landlord shall be entitled to avail itself of whatever remedies
it may have at law or in equity for the collection of any unpaid rentals
hereunder, past and future, or for any damages that it may have
sustained by reason of the breach by Tenant of the terms and conditions
hereof. No termination of this Sublease by forfeiture nor taking or
recovering possession of the Premises shall deprive Landlord of any
other action, right, or remedy against Tenant.
1.38 Interest on Past Due Amounts. Any sum of money due to
Landlord and not paid within five (5) days after such sum shall become
due shall bear interest from the due date until paid at the rate of
eighteen percent (18%) per annum.
1.39 Late Fees. Landlord may assess a late fee of five percent
(5%) of the amount due for any payment due to Landlord and not paid
within five (5) days of the date due, to compensate Landlord for the
extra expense of handling late payments.
1.40 Landlord's Right to Take Certain Actions. If Tenant fails
to comply with any of the terms of this Sublease, Landlord, in its sole
judgment, but without any obligation to do so, may do any or all things
required of Tenant by any of the provisions of this Sublease and incur
and pay expenses in connection therewith. Any amounts expended by
Landlord pursuant to this Section shall be immediately due and payable
by Tenant to Landlord and shall bear interest at the rate of eighteen
percent (18%) per annum until paid. Any action by Landlord hereunder
shall not constitute a waiver of any default by Tenant and shall be in
addition to any other right or remedy available to Landlord pursuant to
this Sublease or at law or in equity.
1.41 Waiver of Breach. No waiver by Landlord or Tenant of the
breach of any provision of this Sublease shall be construed as a waiver
of any preceding or succeeding breach of the same or any other provision
of this Sublease, nor shall the acceptance of rent by Landlord during
any period of time in which Tenant is in default in any respect other
than payment of rent be deemed to be a waiver of such default.
ARTICLE 12
GENERAL PROVISIONS
1.42 Notices. Notices shall be in writing and shall be given by
personal delivery. by deposit in the United States mail, certified mail.
return receipt requested, postage prepaid, or by express delivery
service, freight prepaid. Notices shall be delivered or addressed to
Landlord and Tenant at the addresses set forth on the first page of this
Sublease or at such other address or number as a party may designate in
writing. The date notice is deemed to have been given, received and
become effective shall be the date on which the notice is delivered, if
notice is given by personal delivery, or the date of actual receipt, if
the notice is sent through the United States mail or by express delivery
service or by facsimile transmission.
1.43 Attorneys' Fees. If any action is brought by any party to
this Sublease in respect of its rights under this Sublease, the
prevailing party shall be entitled to reasonable attorneys' fees and
court costs as
11
determined by the court. In the event that any person who shall not be a
party to this Sublease shall an action against Tenant in which Landlord
shall be involuntarily and without cause joined as a party, Tenant shall
reimburse Landlord for all attorneys' fees incurred by Landlord in
connection therewith.
1.44 Estoppel Certificates.
(1) Tenant to Provide Estoppel Certificate. Tenant
shall at any time upon ten (10) days' prior written notice from
Landlord execute, acknowledge and deliver to Landlord a
statement in writing (i) certifying that this Sublease is
unmodified and in full force and effect (or, if modified,
stating the nature of such modifications and certifying that
this Sublease, as so modified, is in full force and effect) and
the date to which the rent and other charges are paid in
advance, if any; (ii) acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of Landlord
hereunder, or specifying such defaults if any are claimed; (iii)
acknowledging that Tenant has unconditionally accepted the
Premises, is in possession thereof, and no defense to
enforcement of the Sublease exists; (iv) agreeing to provide any
Landlord or Master Landlord mortgagee with the opportunity to
cure defaults by the Landlord; and (v) agreeing not to amend,
cancel or assign the Sublease without the prior written content
of any Landlord or Master Landlord mortgagee. Any such statement
may be conclusively relied upon by any prospective purchaser or
encumbrances of the Premises.
(2) Tenant's Failure to Provide Certificate. At
Landlord's option, Tenant's failure to deliver such statement
within such time shall be a material breach of this Sublease and
shall be conclusive upon Tenant (i) that this Sublease is in
full force and effect, without modification, except as may be
represented by Landlord; (ii) that there are no uncured defaults
in Landlord's performance; (iii) that not more than one month's
rent has been paid in advance; (iv) that Tenant is in possession
of the Premises; (v) that no defenses exist to the enforcement
of the Sublease; and (vi) that Tenant agrees to be bound by
provisions (iv) and (v) in Section 12.3(8) above.
1.45 Severabilitv. The invalidity of any provision of this
Sublease, as determined bya court ol competent jurisdiction, shall in no
way affect the validity of any other provision hereof.
1.46 Recording. Neither this Sublease nor any memorandum of this
Sublease shall be or filed without Landlord's prior written consent,
which may be given or withheld by Landlord in its sole absolute
discretion.
1.47 Cumulative Remedies. No remedy or election hereunder shall
be deemed exclusive but shall, wherever possible, be cumulative with all
other remedies hereunder or at law or in equity.
1.48 Construction. The titles which are used following the
number of each Section are so used only for convenience in locating
various provisions of this Sublease and shall not be deemed to affect
the interpretation or construction of such provisions. The parties
acknowledge that each party and its counsel have reviewed and revised
this Sublease. This Sublease shall not be construed for or against
Landlord or Tenant. References in this Sublease to "Articles" and
"Sections" refers to the Articles and Sections of this Sublease, unless
otherwise noted.
1.49 Successors. Subject to the restrictions contained in
Article 9, this Sublease and all of provisions hereof shall be binding
upon and inure to the benefit of the successors and assigns of Landlord
and T en ant.
1.50 Governing Law. The terms, conditions, covenants, and
agreements herein contained shall be governed, construed, and controlled
according to the laws of the State of Utah, without giving effect to its
conflict of laws provisions.
1.51 Broker's Commission. Landlord agrees to pay the appropriate
finder's fee to the tenant's agent.
12
1.52 Time is of the Essence. Time is of the essence of this
Sublease and in the performance of all of the covenants and conditions
hereof.
1.53 Signage. The Landlord will provide the building standard
directory slat and suite sign.
1.54 Entire Agreement. This Sublease sets forth all the
promises, inducements, agreements, conditions, and understandings
between Landlord and Tenant-relative to the Premises, and there are no
promises, agreements, conditions, or understandings, either oral or
written, express or implied, between them other than are set forth
herein. No subsequent alteration, amendment, change, or addition to this
Sublease shall be binding upon Landlord or Tenant unless in writing and
signed by each of them. Parole evidence shall never be admissible in any
court, tribunal, arbitration or governmental agency to modify, amend or
vary the terms of this Sublease.
LANDLORD:
SONIC INNOVATIONS, INC.,
a Delaware corporation
BY:/S/_________________
Its CEO
TENANT:
Executive Credit Services, L.C.,
A Utah limited liability company
BY:/S/_________________
Its Managin Member
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
the foregoing Sublease. Agreement was acknowledged before me this 30th day
of September 1999 by Andy Reguskus as the President and CEO of SONIC
INNOVATIONS, INC., a Delaware corporation, on behalf of the corporation.
My Commission Expires: /S/
06-30-2001 NOTARY PUBLIC
Residing at ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
13
STATE OF UT)
: ss.
COUNTY OF Salt Lake}
the foregoing Sublease. Agreement was acknowledged before me this 29th day
of September 1999 by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ the MNG Member of Executive Credit
Services, L.C. a Utah Limited Liability Company, on behalf of the Company.
My Commission Expires: /S/
07-06-2002 NOTARY PUBLIC
Residing Midvale, Utah
14
CONSENT OF MASTER LANDLORD
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇. hereby consents to the foregoing Sublease
Agreement.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇.
By: /S/
Its
Date 09/28/99
15
EXHIBIT A
DIAGRAM OF THE PREMISES
EXHIBIT B
DESCRIPTION OF LANDLORD IMPROVEMENTS
Tenant was given attached schedule of values with a construction cost
estimate on 9122. Landlord agrees to pay for tenant improvement costs not to
exceed $12,500. These costs do not include the butt glass wall and door,
tenant's security system, tenant's phone or data cabling system, or new hallway
birch door and 36" sidelite. The attached diagram with clouded areas shows the
scope of work for the tenant improvement changes.
EXHIBIT C
RENTAL RATES FOR OPTION A SPACE AND OPTION B SPACE
Option A These will be the monthly rates for the time periods Option A
is exercised. Between:
October l, 1999 - September 30, 2000 $4016.83 $22/RSF
October l, 2000 - September 30, 2001 $4137.34 $22/RSF +3%($22RSF)
October 1, 2001 - September 30, 2002 $4257.84 $22/RSF +6%($22RSF)
Option B These will be the monthly rates for the time periods Option B
is exercised. Between:
October 1, 1999 - September 30, 2000 $4596.17 $22/RSF
October 1, 2000 - September 30, 2001 $4734.05 $22/RSF +3%($22RSF)
October l, 2001 - September 30,2002 $4871.94 $22/RSF +6%($22RSF)
