LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is made and entered as of December 26,
2000, by and between, JERRY HONEYWELL AND CAROL HONEYWELL, AS TRUSTEES OF THE
JERRY HONEYWELL AND CAROL HONEYWELL TRUST, as Landlord, and VIDEOLOCITY, INC.
(formerly named, Moviesonline, Inc.), a Nevada corporation, as Tenant.
FOR GOOD AND VALUABLE CONSIDERATION and the mutual observances of the terms and
covenants herein, the parties agree, as follows:
1. Premises. Landlord hereby leases to Tenant on a 24-hour, 7-day a week basis,
the two-story office building owned by Landlord, located at 1762-A, Prospector
Drive, Park City, Utah 84060, consisting of a first floor (the "First Floor")
and a second floor (the "Second Floor") (together, the "Premises").
2. Term. This Lease shall be in effect with respect to the First Floor for an
initial term, which shall commence on January 1, 2001, and end on December 31,
2001. This Lease shall be in effect with respect to the Second Floor for an
initial term, which shall commence on February 15, 2001, and end on December 31,
2001. In the event Tenant holds over after the expiration of this Lease, Tenant
shall become a tenant at will.
3. Option to Renew. Provided that Tenant has not been in default under this
Lease at any time, Tenant shall have the option to renew the term of this Lease
for an additional term, which shall commence on January 1, 2002, and end on
December 31, 2002. All of the terms and conditions of this Lease shall remain
the same during the renewal term, except that the rent during the renewal term
shall be subject to negotiation between Landlord and Tenant, but in no event
less than the rent provided during the initial term. Tenant shall exercise the
option to renew by providing Landlord with written notice thereof at least one
hundred twenty (120) days prior to the end of the initial term of this Lease.
Within ten (10) days after receipt of such written notice by Landlord, Tenant
and Landlord shall meet and negotiate in good faith to arrive at the rent for
the renewal term.
4. Rent. Tenant agrees to pay rent for the Premises, in advance, as follows:
(a) For the First Floor: (i) the sum of $2,000.00 upon the execution of
this Lease for the month of January, 2001 and (ii) thereafter, the sum of
$2,000.00 on the first day of each and every month during the term of this
Lease.
(b) For the Second Floor: (i) the sum of $1,000.00, on or before
February 1, 2001, for the period February 15, 2001, through February 28, 2001;
and (ii) thereafter the sum of $2,000.00 on the first day of each and every
month during the term of this Lease.
5. Late Payment Fee. If any monthly installment of rent is not paid within five
(5) days of the date it is due, a late payment fee equal to ten percent (10%) of
the amount of the late monthly installment shall be added and be due and payable
without notice to Tenant. If any two (2) monthly installments of rent are not
paid within five (5) days of the date they are due, or if any check from Tenant
to Landlord is returned to Landlord for insufficient funds, Landlord may require
that all future monthly rent payments be in the form of cashier's checks.
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6. Security Deposit. Concurrently with the execution of this Lease, Tenant shall
pay to Landlord a security deposit in the amount of $12,000.00. Throughout the
term of the Lease, Landlord shall be entitled to hold the security deposit,
without interest, in Landlord's general funds, and to use the security deposit
to pay any defaulted rent or other costs associated with the Premises that are
the obligations of Tenant and which have not been paid by Tenant. At any time
Landlord expends funds from the security deposit to pay any obligation of Tenant
under this Lease, Landlord will notify Tenant, and Tenant shall have five (5)
days in which to pay to Landlord the amount required in order to restore the
full amount of the security deposit. Failure to so restore the security deposit
will be a default under this Lease. Provided that Tenant has not been in default
under this Lease at any time, Landlord shall apply the security deposit to pay
the last two (2) months rent due during the initial term of this Lease;
provided, however, if Tenant has not been in default under this Lease at any
time and has exercised timely the option to renew, Landlord shall instead apply
the security deposit to pay the last two (2) months rent due during the renewal
term of this Lease. Any amount of the security deposit remaining at the
expiration of this Lease shall be returned to Tenant by Landlord within ten (10)
days, less charges for any damages to the Premises or other obligations to
Landlord for which Tenant is responsible.
7. Interest. Any obligation of Tenant to Landlord under this Lease, including
any advance made by Landlord for an obligation of Tenant under this Lease which
Tenant is required to pay but has not paid, which is in excess of the amount
available to Landlord from the security deposit, shall accrue interest at the
rate of eighteen percent (18%) per annum from the date such obligation arises
until fully paid to Landlord.
8. Utilities; Snow Removal. Landlord shall pay for all gas, electric power, and
water services consumed on the Premises by Tenant. Tenant will be responsible
for any damages resulting to the Premises as a result of Tenant's failure to
maintain adequate temperatures in the Premises to prevent freezing of pipes or
other damage to the Premises. Landlord shall be responsible for the removal of
snow from the entrance to the Premises. Tenant shall be responsible for its own
telephone services.
9. Trash Disposal; Janitorial. Landlord shall pay any charges for the pick-up
and disposal of trash from the Premises. Tenant shall pay and be responsible for
its own janitorial services and supplies for the Premises, which shall be
provided by a reputable, independent janitorial services company. The janitorial
services company employed by Tenant shall be subject to the reasonable approval
of Landlord. Janitorial services shall be performed no less than once each week
and shall include, at a minimum, removal of all trash, vacuuming of all carpets,
mopping of all tile floors, and the thorough cleaning of the rest rooms on the
Premises.
10. Insurance; Indemnification.
(a) Fire and casualty insurance for the full replacement value of the
building constituting a part of the Premises will be provided and paid for by
Landlord. This insurance will not cover any loss to Tenant's personal property,
inventory, or fixtures. Tenant shall insure its personal property at its sole
cost and expense.
(b) Tenant shall provide and maintain public liability insurance for
those claims arising from injuries within or about the Premises or directly
attributable to Tenant's negligence or actions related thereto. Tenant shall
carry commercial general liability insurance in the aggregate amount of not less
than $1,000,000.00, per occurrence and aggregate, with Landlord as an additional
named insured thereon.
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(c) Notwithstanding Tenant's obligation to purchase general liability
insurance, Tenant agrees to indemnify and hold Landlord harmless from any and
all claims, causes of action, loss, damage or expense, including attorney's
fees, for personal injury and property damage arising from or relating to the
use of the Premises and the adjacent parking lot and walkways by Tenant, its
officers, employees, agents, guests and invitees, except for Landlord's gross
negligence or wilful acts. Prior to taking possession of the Premises, Tenant
will provide to Landlord a Certificate of Liability Insurance showing that
insurance in compliance with this Paragraph 10 has been purchased by Tenant.
Such Certificate of Liability Insurance shall provide for no less than thirty
(30) days notice of cancellation to Landlord and shall be in form and substance
acceptable to Landlord.
11. Property Taxes. Landlord shall be solely responsible to pay any and all real
property taxes and assessments against the Premises. Tenant shall be solely
responsible to pay any and all personal property taxes assessed against Tenant's
personal property located at the Premises.
12. Condition of Premises. Tenant has inspected the Premises and accepts the
Premises it their present "as is" condition. Landlord shall have no obligation
to make any changes, alternations, or improvements to the Premises.
13. Use of Premises; Alterations and Improvements. Tenant has leased the
Premises for general office use and no other use of the Premises is permitted.
Any change in such use shall require the advance written consent of Landlord.
Unless otherwise agreed to in writing by Landlord, Tenant agrees that its use
and occupancy of the Premises will be limited, as follows:
(a) Tenant shall not conduct any business from the Premises that is
deemed extra-hazardous, or will result in an increase in fire insurance premiums
on the Premises, on inability to obtain fire insurance at standard rates. Tenant
shall not create unreasonable levels of noise, odor, or vibration that might
reasonably be expected to penetrate to adjoining properties and cause annoyance
to the owners or occupants of the same. Tenant shall not conduct any activity on
the Premises that is prohibited by law. Tenant shall commit no waste on the
Premises.
(b) Tenant shall not store, use, or dispose of Hazardous Materials or
Toxic Wastes on the Premises, (except in such limited quantities as are
reasonable and customary in the routine operation of Tenant's business and then
only in compliance with all applicable laws, rules and regulations of local,
state and federal governmental agencies). For the purposes of this Lease, the
term "Hazardous Materials" shall mean any product or substance that is regulated
under state or federal environmental laws, including, without limitation, the
Utah Hazardous Waste Act (26-14-2 UCA), the Hazardous Materials Transportation
Act, Clean Water Act (33 USC 1317), the Resources Conservation and Recovery Act
(42 USC 6901), the Comprehensive Environmental Response, Compensation, and
Liability Act (42 USC 9601), or any other state or federal statute or regulation
now in effect or later adopted. Any violation of these Acts is a violation of
this Lease.
(c) Tenant shall not make any structural alterations or material
changes to the Premises, including construction or removal of partition walls or
the penetration of exterior walls or roofs, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed.
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(d) Tenant shall make no exterior modifications to the building or
grounds constituting the Premises without the written consent of Landlord, which
consent shall not be unreasonably withheld or delayed.
(e) In the event that Tenant obtains Landlord's written consent to any
alterations or improvements to the Premises, Tenant shall not permit mechanics'
or materialmen's liens related to Tenant's construction of such improvements to
attach to the Premises. In the event a liens is filed against the Premises,
Landlord may give Tenant written notice to either remove such lien, or, in the
alternative, to post an amount equal to twice the amount of the lien claim in
escrow pending the resolution of the dispute with the lien claimant. If Tenant
fails to obtain a lien release or bond for the lien within five (5) days of
demand from Landlord, Tenant shall be in monetary default under this Lease, and
Landlord shall have all the remedies available under this Lease, including
termination of this Lease. Termination of this Lease will not, however, absolve
Tenant of the obligation to remove the lien or to indemnify Landlord against the
lien.
14. Parking. Tenant shall have the right to use of the surface parking lot
adjacent to the Premises in common with other neighboring property owners and
their guests and invitees, on a first come/first served basis, without
additional charge of any kind, so long as such parking does not violate any law
or create a nuisance.
15. Signs. No signs, banners, or advertising material shall be placed on the
exterior of the Premises without the written consent of Landlord, which consent
shall not be unreasonably withheld or delayed. Any signs, banners, or
advertising material shall be paid for by Tenant and shall conform to and comply
with any applicable sign ordinance or other laws, rules and regulations of Park
City Municipal Corporation. Any required sign permits shall be applied for and
paid for by Tenant.
16. Maintenance and Repairs. Tenant shall be solely responsible for the
maintenance of the interior of the Premises in a clean, attractive, sanitary and
well kept condition. Landlord shall be responsible to maintain, repair or
replace, as necessary, the plumbing system and fixtures, heating system and
furnace, electrical systems and wiring, and all mechanical systems so that the
same shall always be in good working order and repair and in compliance with
applicable building codes and safety requirements of all local, state and
federal governmental agencies. Landlord shall also maintain, repair and replace,
as necessary, the roof, walls, glazing and other structural components of the
building constituting the Premises, unless damage is caused by the acts or
negligence of Tenant or Tenant's employees, agents, guests or invitees, in which
case Tenant shall reimburse Landlord for the cost of all required repairs.
Landlord shall supply working light bulbs to all light fixtures in the Premises
upon commencement of this Lease; thereafter, Tenant shall be responsible for the
replacement of any light bulbs in such light fixtures.
17. Assignment and Subleasing. Tenant shall have no right to sub-let the
Premises or assign this Lease, whether in full or in part, without the prior
written consent of Landlord, which consent shall not be unreasonably withheld or
delayed, and any purported assignment or sublease of the Tenant without
Landlord's prior written consent shall be absolutely void and of no effect
whatsoever. The sale of Tenant's business, or a controlling interest in Tenant's
business, shall be deemed to be an assignment of the Lease, which requires
Landlord's prior written consent. In no event shall Landlord be required to
release Tenant in connection with any approved assignment of this Lease. In the
event Tenant assigns or sub-lets this Lease (including an unapproved transfer of
control of Tenant's business to a third party) in violation of this provision,
Landlord shall have the option of declaring this Lease in default and/or
terminating this Lease on fifteen (15) days' written notice to Tenant.
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18. Abatement of Rent or Termination Following Casualty Loss. In the event of a
fire or other casualty loss which makes the Premises uninhabitable for a period
of more than one hundred twenty (120) days, Landlord shall have the option of
terminating this Lease or abating the rent during the actual period of repairs
and extending the Lease term by a period equal to the period during which the
Premises are uninhabitable. If the nature of the damage is such that the
Premises cannot reasonably be restored fully to their condition prior to the
loss within one hundred twenty (120) days, Tenant may terminate this Lease by
written notice to Landlord. Landlord shall not be liable to Tenant for lost
profits, rent on temporary locations, or other costs or damages incurred by
Tenant as a result of the Premises becoming uninhabitable due to fire or other
casualty loss.
19. Landlord's Right to Inspect. Landlord shall have the right to inspect the
Premises at reasonable times to insure compliance with this Lease. Inspection
during Tenant's normal business hours is permitted with reasonable advance
notice to Tenant; provided, however, Landlord shall make every effort not to
inconvenience Tenant or to disrupt Tenant's business in connection with any such
inspections. In the event of an emergency, Landlord may enter the Premises
without notice Tenant in order to secure the Premises and make any emergency
repairs.
20. Remedies.
(a) In the event of a default by Tenant in the payment of rent under
this Lease, Landlord shall have all remedies available at law, including the
right to enter and re-take possession of the Premises, or to re-let the Premises
on Tenant's account and hold Tenant liable for the balance of the Lease term,
and/or to bring an action against Tenant for the amounts owed. Landlord shall
have the right, but not the obligation, to allow any approved sub-tenants to
remain in possession, and to re-take possession of all or only portions of the
Premises. Landlord shall give Tenant a written notice of any default in the
payment of rent, stating the nature of the default and the amount owed. Tenant
shall have five (5) days from the date of any such notice to pay all sums owing,
including any late payment fee, and if not cured within such five (5) days,
Landlord may exercise its legal and equitable remedies, including termination of
this Lease and eviction of Tenant. Landlord may also sue Tenant for any amounts
owed, with or without terminating this Lease.
(b) In the event of a default under this Lease other than the payment
of rent, or any other monetary sum, Landlord shall give Tenant twenty (20) days'
written notice of the default specifying the nature of the default, and if the
condition complained of is not cured within said twenty (20) days (or such
longer period as may be required when the condition giving rise to the default
is such that the default cannot be reasonably cured within 20 days, and Tenant
has within the 20-day notice period undertaken the work necessary to effect a
cure and is diligently prosecuting the same to completion), Landlord shall have
the right to exercise all available legal and equitable remedies against Tenant
to enforce the terms of this Lease, including the repossession of the Premises
and/or termination of this Lease. Notwithstanding any time periods contained in
this Lease, Tenant agrees to take such actions as are reasonable and necessary
in the case of an emergency to secure the Premises and prevent further damage to
the Premises until permanent repairs can be made.
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(c) The obligations of Tenant under this Lease shall survive the
termination of Tenant's possession until fully paid. In addition to amounts due
under this Lease, Tenant shall be liable for Landlord's reasonable attorney's
fees and costs incurred in the enforcement of this Lease and the collection of
amounts owed.
(d) Landlord shall have the right, but not the obligation, to sub-let
the Premises on Tenant's account for the remainder of the Lease term, and to
hold Tenant liable for the difference in rent, if any, even if Tenant's
possession has terminated because of Tenant's default under this Lease.
21. Condemnation. In the event that all of the Premises are taken by a
governmental entity for public purposes, this Lease shall terminate on the
effective date of such taking. In the event that only a portion of the Premises
is taken by a governmental entity for public purposes, there shall be no
reduction in rent unless the portion of the Premises taken materially interferes
with Tenant's use of the Premises, in which case Tenant shall either have the
right, at its option, to accept a reduction in rent offered by Landlord or to
terminate this Lease. Any condemnation award in connection with either a total
or partial taking of the Premises by a governmental entity for public purposes
shall be apportioned between Landlord and Tenant as the parties may agree at the
time in conjunction with the taking. Tenant shall have the right to appear on
its own behalf in any condemnation suit to defend the value of its leasehold
interest at Tenant's expense. If the parties are not able to agree on an
apportionment of any award (and apportionment is not made in the condemnation
proceeding), the apportionment will be submitted to binding arbitration under
the rules of the American Arbitration Association, with each party to bear its
own costs. If the taking has resulted in a loss of some of Tenant's space or
facilities, but Tenant remains in possession and operation, rent will be
adjusted proportionately for the loss of space or facilities.
22. Notices. Notices that may be required from time to time under this Lease
shall be in writing and shall be sent or delivered to the parties addressed, as
follows:
To Landlord: Jerry Honeywell and Carol Honeywell,
as Trustees of The Jerry Honeywell
and Carol Honeywell Trust
Post Office Box 917
Park City, Utah 84060
With a copy to:
Mr. Gary W. Nielsen
Attorney At Law
4970 North 400 West
Park City, Utah 84098
To Tenant: Videolocity, Inc.
1762-A Prospector Drive
Park City, Utah 84060
Attention: Mr. Jerry E. Romney, Jr.,
President
Notice shall be effective upon personal delivery, or three (3) days
after mailing by registered mail, return receipt requested. Notice may also be
given by delivery to Federal Express or another national overnight delivery
service, with notice so delivered being effective on the day of actual delivery
as shown on the records of such delivery service. Either party may change its
address or request that additional notices be sent to others by written notice
given in accordance with this Paragraph 22.
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23. Covenant of Quiet Enjoyment; Subordination. For so long as Tenant is
faithfully performing its obligations under this Lease, Landlord promises to
provide Tenant with quiet enjoyment of the Premises. Landlord shall pay all
mortgages or trust deed loans recorded against the Premises. Tenant agrees that
this Lease shall be subordinate to any mortgage or trust deed now recorded or
hereafter recorded against the Premises; provided, however, that any mortgage or
trust deed hereafter recorded against the Premises shall contain a
non-disturbance provision for Tenant's benefit as a condition to the
subordination of this Lease by Tenant.
24. Sale of Premises. This Lease shall be binding on the successors and assigns
of Landlord in the event of a sale or transfer of the title to the Premises or
any part thereof. No sale or transfer of title shall disturb Tenant's possession
or quiet enjoyment of the Premises.
25. Surrender of Premises. Upon the expiration or sooner termination of this
Lease, Tenant shall surrender the Premises to Landlord in substantially the same
condition as existed on the date of commencement of this Lease, normal wear and
tear excepted, and broom clean and free of all personal property and debris of
Tenant. Tenant may remove all of its trade fixtures and equipment. Landlord may
dispose of and discard any personal property or debris left on the Premises by
Tenant at the cost and expense of Tenant and may deduct the cost and expense
thereof from Tenant's security deposit.
26. Estoppel Certificate. Upon the written request of Landlord, Tenant shall
provide a written statement to Landlord to the effect that this Lease is in full
force and effect, and that Landlord is not in default on any obligations to
Tenant, or if there are claims of default or offset against Landlord, Tenant
shall describe those claims. Tenant's failure to provide such a written
statement to Landlord within ten (10) days' after written request therefor from
Landlord shall constitute a default under this Lease and entitle Landlord to
exercise all its remedies under this Lease.
27. Attorney's Fees. If either party is required to bring suit to enforce the
terms of this Lease, the prevailing party shall be entitled to recover its
reasonable costs of enforcement, including reasonable attorney's fees, from the
other party as additional damages and as a part of any judgment entered.
28. Commissions. The parties have negotiated this Lease themselves, without the
involvement of real estate brokers or agents. Each party shall indemnify the
other from any claims from third party real estate brokers or agents claiming a
right to a commission relating to this Lease.
29. Covenant of Cooperation. Landlord agrees to cooperate with Tenant by joining
in and executing any application for a building, sign, or similar permit which
may be required in order to make any alterations or improvements to the Premises
to which Landlord has consented in accordance with the terms of this Lease.
30. Miscellaneous. This Lease will be governed, interpreted and construed
according to the laws of the State of Utah. This Lease represents the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any and all prior or contemporaneous oral or written understandings
or agreements with respect to the subject matter hereof. This Lease may not be
modified or amended except in a writing signed by the parties. Landlord and
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Tenant agree to deal with one another fairly and in good faith in all matters
arising under this Lease. Each party signing this Lease represents and warrants
to the other that such party has obtained all consents and approvals and has all
requisite power and authority to execute and deliver this Lease and to perform
all its terms and conditions.
31. Counterparts; Facsimile Transmission. This Lease may be executed in
counterparts, and all such counterparts taken together shall constitute but a
single agreement. The facsimile transmission of a signed original counterpart of
this Lease or of an amendment thereto by one party to this Lease to the other
shall be deemed the same as delivery of a signed original.
IN WITNESS WHEREOF, the parties have executed this Lease as of the date first
above written.
Landlord:
___________________________________
JERRY HONEYWELL, AS TRUSTEE OF THE
JERRY HONEYWELL AND CAROL HONEYWELL
TRUST
___________________________________
CAROL HONEYWELL, AS TRUSTEE OF THE
JERRY HONEYWELL AND CAROL HONEYWELL
TRUST
Tenant: VIDEOLOCITY, INC. (formerly named,
Moviesonline, Inc.), a Nevada
corporation
By_________________________________
Jerry E. Romney, Jr., President
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EXHIBIT "A"
INVENTORY 1762 A PROSPECTOR AVE.
THE FOLLOWING FURNITURE IS SUPPLIED TO VIDEOLOCITY, INC. AS-IS AND AT NO CHARGE
FOR THEIR USE AS LONG AS THE LEASE BETWEEN THEM AND THE JERRY AND CAROL
HONEYWELL TRUST IS IN EFFECT.
2 EA. 5' X 3' DESK/COMPUTER MODULES
2 EA. CORNER COMPUTER TABLE MODULES
1 EA. 2' X 3' END TABLE MODULES
1 EA. MOVABLE COMPUTER STANDS
1 EA. 2' X 4' SIDE DESK
2 EA. 3' X 6' DESK AND COMPUTER RETURN TABLES
1 EA. 3' X 5' DESK W/CURVED END
1 EA. 3' X 5' OAK CONFERENCE TABLE
6 EA. OAK/BLUE UPHOLSTERY CONFERENCE TABLE CHAIRS
6 EA. NS5E6(AM25) BURGUNDY UPHOLSTERED DESK CHAIRS
1 EA. NS5E6(AM22) GRAY UPHOLSTERED DESK CHAIR
1 EA. SUPERIOR GRAY UPHOLSTERED DESK CHAIR
1 EA. 4-DRAWER VERTICAL LEGAL FILE CABINET
2 EA. ANDERSON/HICKEY 4-DRAWER VERTICAL FILE CABINET
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VIDEOLOCITY
................................
1762 A Prospector Drive
Park City, Utah 84060
Tel: 435-615-8338
Fax: 435-615-9979
August 31, 2001
Jerry Honeywell & Carol Honeywell, Trustees
of the Jerry Honeywell and Carol Honeywell Trust
P.O. Box 917
Park City, UT. 84060
Dear Mr. & Mrs. Honeywell,
Pursuant to paragraph 3 of that certain Lease Agreement dated as of December 26,
2000 by and between Videolocity, Inc. and the Jerry Honeywell and Carol
Honeywell Trust, Videolocity is exercising its option to extend the term of said
lease for the property situated at 1762 A Prospector Drive, Park City, Utah for
one year following the expiration of the term, for both the first and second
floors of said property. It is our understanding that the term of said Lease,
for both floors, expires December 31, 2001. Therefore, the term of said Lease
would be extended through December 31, 2002 with the same terms and conditions
as set forth in said Lease, including the following request to be incorporated
in the extension of the aforementioned Lease pursuant to this notice of
extension, with the following conditions, precedent.
Videolocity requires that certain fixtures on the second floor be modified.
Specifically, Videolocity requires that the reception desk and surrounding
shelving on the second floor be removed to open the space up for a
conference/reception area. Removing this fixture may necessitate the carpet be
replaced in the immediate area where the fixture was located and the adjacent
wall repainted where the shelving was attached. Please inform us as to if and
when this can be facilitated.
This notice is hereby given as of August 31, 2001.
Sincerely,
Jerry Romney, Jr.
President
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