EXHIBIT 10.51
LEASE AGREEMENT
---------------
THIS LEASE AGREEMENT (the "Lease") is executed on this the day of July,
1994, by and between BETTILYON MORTGAGE LOAN COMPANY, a corporation organized
under the laws of the State of UTAH (the "Landlord") and UNITED STATIONERS
----
SUPPLY CO., an Illinois corporation (the "Tenant");
SECTION 1
---------
PREMISES
Landlord hereby leases unto Tenant and Tenant hereby leases from
Landlord, subject to the terms of this Lease, (i) the property located at 890
West 2600 South, South Salt Lake City, Utah, consisting of a warehouse/office
premises containing approximately 17,140 square feet (the "890 Premises"), and
(ii) the property located at 888 West 2600 South, consisting of approximately
17,860 square feet (the "888 Premises"), all as more particularly described in
Exhibit "A" attached hereto and made a part hereof, together with all
improvements, easements, rights and appurtenances in connection therewith and
all improvements now or hereafter located thereon. The building thereon is
outlined in red on Exhibit "B" attached hereto and made a part hereof (the
"Building"). The two properties, including access, loading and parking areas,
and the Building are collectively referred to as the "Premises." It is the
parties' intention that this Lease includes all property described in Exhibit
"A" but in no event, less area than the improvements, parking and loading areas
shown on Exhibit "B".
SECTION 2
---------
TERM
2.1 COMMENCEMENT. The term of this Lease shall commence (the
------------------
"Commencement Date") on August 1, 1994 with respect to the 890 Premises,
and, with respect to the 888 Premises, 90 days after notification from Landlord
that the 888 Premises will be available for occupancy.
2.2 TERM. The term of this Lease shall continue for sixty-two (62)
----------
months, until September 30, 1999.
SECTION 3
---------
RENT
3.1 MONTHLY RENT. The basic monthly rent for the sixty-two (62)
------------------
months of this Lease (exclusive of Additional Rental, as hereinafter set
forth, shall be twenty-five cents ($.25) per square foot per month.
Thus, the monthly rent for the 890 Premises shall be $4,285.00, and the
monthly rent for the 888 premises shall be $4,465.00.
Tenant agrees to pay to Landlord on the first (1st) day of the
commencement of the term of this Lease and the first (1st) day of every
calendar month thereafter for the first full sixty-two (62) months of the term
of this Lease, in lawful money of the United States of America, without
deduction, or offset, prior notice or demand, except as hereinafter provided,
the amounts described above calculated upon a total square footage area of
17,140 square feet for the 890 Premises effective August 1, 1994, and the
amount described above calculated upon a total square footage of 17,860 for the
888 Premises, effective the first day the the month following the 90 days after
notice that the premises will be available, as the "Total Monthly Rental",
which Total Monthly Rental represents part of the total consideration for this
Lease.
Commencing with the thirty-first (31st) month of this Lease, the rent
shall be adjusted by an amount equivalent to the percentage change in the
Consumer Price Index between the index for the month of July, 1994, and the
Index for the month of January, 1997.
3.2 ADDITIONAL RENTAL. Tenant shall also be obligated to pay directly
-----------------------
as "Additional Rental" hereunder the amount set forth below of "Property
Taxes" and "All-Risk Insurance", and, if applicable, and "Rail Spur
Maintenance" (as such terms are hereinafter defined) with respect to each
calendar year of the Lease Term:
2
(i) PROPERTY TAXES; ALL-RISK INSURANCE.
(a) The term "Property Taxes" for the purposes of this Lease means all
general and special taxes, including all assessments for local
improvements, and all other general and special, ordinary and
extraordinary, governmental charges assessed, levied, charges, or imposed
upon the Premises or Building during the term of the Lease, or any holdover
or renewal period, by any political or governmental body, or subdivision
thereof, having jurisdiction over the Premises or Building; excluding,
however, franchise, inheritance, succession, capital levy, transfer, income
or excess profits taxes imposed upon Landlord. In the event that any
political body, or sub-division thereof, or any governmental authority
having jurisdiction over the Premises or Building imposes a tax,
assessment, or charge either upon or against or measured by the rentals
payable by Tenant to Landlord or upon or against the occupation of renting
land and/or buildings, either by way of substitution for the taxes and
assessments levied against the Premises or Building, such tax, assessment,
or charge shall not be deemed to constitute a Property Tax for purposes of
this Lease.
(b) Landlord shall pay directly to the appropriate taxing authority
and Tenant shall reimburse Landlord for 48.97% of all Property Taxes levied
or assessed for the 890 Premises, and 51.03% for the 888 Premises.
(c) Landlord shall maintain Utah standard "all-risk" insurance
covering the Building in the amount of at least eighty percent (80%) of the
full insurable value thereof, excluding cost of land, foundation, and
footings and Tenant shall reimburse Landlord for its prorata share of the
premium. (The "All-Risk Insurance").
(d) Landlord will also maintain Utah standard "all-risk" insurance
covering the Building and/or Premises to the extent Landlord is required to
maintain same.
(ii) GENERAL REPAIRS, MAINTENANCE AND ALTERATIONS.
(a) Except in the case of Tenant's negligence, causing
3
damage to such items, Landlord will at Landlord's expense during the entire
term of this Lease, maintain and repair the roof, roof trusses and
structure, foundations, outside walls, interior stress bearing walls and
columns, structural members, gutters, downspouts, concealed and underground
plumbing and electrical of the Premises in good condition and repair.
Tenant, at its sole expense, shall maintain the heating, ventilation and
air conditioning systems which service the Premises. In the event
replacement of such heating and air conditioning equipment becomes
necessary, the Landlord and Tenant will negotiate in good faith and within
a reasonable period of time, the responsibility of payment. Replacement and
repair parts, materials, and equipment shall be of quality equivalent to
those initially installed within the Premises; repair and maintenance work
shall be done in accordance with the then existing federal, state and local
laws, regulations and ordinances pertaining thereto. Notwithstanding the
foregoing, however, Landlord shall have no obligation to make repairs to
the above-specified items if such repairs are necessitated solely by
actions of Tenant in damaging the item(s).
(b) PRESENCE OF HAZARDOUS SUBSTANCES. In the event that at any point in
---------------------------------
time the Premises or the Building are determined to contain hazardous
substances (as defined by applicable laws), unless such hazardous
substances were caused by tenant, Tenant shall have the right, by notice to
Landlord, to require Landlord to remove, at Landlord's sole cost and
expense, any and all such hazardous substances within one hundred twenty
------------------
(120) days following Landlord's receipt of such notice, and if Landlord
-----
shall fail to remove such hazardous substances within such time period,
Tenant shall have the right to remove, encapsulate, contain, or otherwise
dispose of such hazardous substances, and the cost incurred by Tenant in
connection therewith shall be reimbursed by Landlord to Tenant within
fifteen (15) business days after receipt by Landlord from Tenant of an
invoice documenting and evidencing such costs.
(c) Except for the foregoing, Tenant at Tenant's expense, shall
maintain the interior of the Premises in good condition and repair,
reasonable use and wear and damage or destruction by fire, act of God or
other casualty excepted. Tenant shall maintain or repair and replace if
replacement
4
is necessary or desirable in Tenant's sole determination the existing
heating and air conditioning systems servicing the Building. Except as
provided in Paragraph 13.6 below, Tenant hereby waives any right to make
repairs at Landlord's expense.
Tenant shall pay for the replacement of doors or windows upon the Premises
which are cracked or broken by Tenant, except in the event that such loss
or damage is covered by Landlord's policy of fire insurance with extended
coverage endorsement in which case the same shall be repaired or replaced
out of the proceeds from said insurance. It is specifically agreed by
Tenant that the cleaning or policing of the driveway area immediately
adjoining the dock area of the Premises shall be the responsibility of
Tenant. Tenant shall be responsible for disposal of its trash and will
maintain adequate receptacles for such disposal. Replacement and repair
parts, materials, and equipment shall be of quality equivalent to those
initially installed within the Premises: repair and maintenance work shall
be done in accordance with the then existing federal, state and local laws,
regulations and ordinances pertaining thereto.
Landlord and Tenant shall cause an inspection of the 888 Premises to be
made immediately prior to the commencement of the term at a mutually
agreeable time by their respective representatives to determine and record
the condition of the Premises. These representatives shall prepare and sign
a statement indicating any damage or deterioration existing at the time of
the inspection.
Tenant shall not be responsible to return any item on said statement to
Landlord in a condition better than its condition on the date of the
inspection indicated on said statement. Tenant agrees to accept the 888
Premises in "as is" condition. However, if Tenant determines that the 888
Premises are not in reasonably usable condition, the Lease shall not be
effective as to the 888 Premises.
(iii) RAIL SPUR MAINTENANCE.
(a) "Rail Spur Maintenance" means and includes the costs of maintenance,
repair and replacement of the railroad spur, if any, located adjacent to
the Building
5
as shown on Exhibit "A" which may be incurred by Landlord.
(b) The Tenant's amount of Rail Spur Maintenance shall be computed by
the ratio that the number of railroad cars making deliveries to Tenant
during any month bears to the total number of railroad cars using the spur
track during the same time period; provided that if rail service is not
charged on a per car basis, Landlord may charge for rail service on the
basis of the number of tenants served by the rail spur.
(c) The Tenant shall pay its amount of Rail Spur Maintenance within ten
(10) days after receipt of statements from Landlord.
(d) In no event shall Tenant be charged or assessed Rail Spur
Maintenance unless Tenant is actually using the adjacent railroad spur.
SECTION 4
---------
LEASEHOLD IMPROVEMENTS
In the event that Landlord shall, by agreement between the parties
hereto, undertake to construct leasehold improvements within the Premises, such
leasehold improvements shall be built in accordance with preliminary
specifications to be agreed to by each party, copies of which plans and
specifications together with a floor plan showing their approximate location
within the Premises shall then be initialled and considered to be a part of
this Lease for all intents and purposes. Such plans and specifications must be
agreed to, if at all, prior tocommencement of construction of the Premises.
SECTION 5
---------
USE
5.1 PRESCRIBED USE. Tenant shall use the Premises for offices and
--------------------
warehouse and reasonably related activities.
6
5.2 NUISANCE. Neither Landlord nor Tenant shall permit, or suffer to
--------------
be committed, upon the Premises, any nuisance or thing which may disturb the
quiet enjoyment of Tenant or any other lessee of any person or business within
a reasonable distance from the Premises.
5.3 COMPLIANCE WITH LAWS. Tenant shall, at Tenant's sole cost and
--------------------------
expense, comply with all laws, ordinances, orders, rules and regulations
promulgated by all federal, state, county, municipal bodies and agencies having
jurisdiction, which laws, ordinances, orders, rules and regulations relate to
the business of Tenant.
5.4 DANGEROUS GOODS AND ACTIVITIES. Tenant hereby agrees not to
------------------------------------
engage in any activity or store upon the Premises such goods or equipment
which would render the insurance described in Section 3.2(i) hereof void.
SECTION 6
---------
UTILITIES
Tenant shall be responsible for and promptly pay all charges incurred
for all utility services to the Premises, including, but not limited to water,
natural gas, sanitary sewer, electricity and telephone. Tenant shall also
provide all replacement light bulbs and tubes after the Commencement Date of
this Lease. In no event shall Landlord be liable for any interruption or
failure of utility service to the Premises.
SECTION 7
---------
INSURANCE
7.1 INDEMNIFICATION OF LANDLORD. Tenant will indemnify Landlord and save
---------------------------------
it harmless from and against any and all claims, actions, damages, liability and
expense in connection with the loss of life, personal injury, and/or damage to
property arising from or out of (i) any occurrence in, upon or at the Premises,
however caused, including occurrences caused by the sole or contributory
negligence of Tenant or its respective
7
agents, customers, invitees, concessionaires, contractors, servants, vendors,
materialmen or suppliers, or (ii) any occurrence elsewhere on the Premises
occasioned wholly or in part by any act or omission caused by the Tenant or its
agents, customers, invitees, concessionaires, contractors, servants, vendors,
materialmen or suppliers. In case the Landlord shall be made a party to any
litigation commenced by or against the Tenant for any of the above reasons, then
Tenant shall protect and hold the Landlord harmless and pay all reasonably
required costs, penalties, charges, damages, expenses and reasonable attorneys'
fees paid by the Landlord. It is understood that the provisions of this Section
7.1 shall not be applicable to any such claims actions, liabilities, or
expenses, arising out of any act or omission of Landlord, its agents,
materialmen, vendors or suppliers.
7.2 INDEMNIFICATION OF TENANT. Landlord will indemnify Tenant and save it
------------------------------
harmless from and against any and all claims, actions, damages, liability and
expenses in connection with the loss of life, bodily and personal injury, and/or
damage to property arising from or out of (i) any occurrence in, upon or at the
Premises, however caused, including occurrences caused by the sole or
contributory negligence of Landlord, its agents, customers, invitees,
concessionaires, contractors, servants, vendors, materialmen or suppliers, or
(ii) any occurrence elsewhere on the Premises occasioned wholly or in part by
any act or omission caused by the Landlord or its agents, customers, invitees,
concessionaires, contractors, servants, vendors, materialmen or suppliers, or
(iii) any occurrence occasioned by the violation of any law, regulation or
ordinance by Landlord or its agents, customers, invitees, concessionaires,
contractors, servants, vendors, materialmen or suppliers. In case the Tenant
shall be made a party to any litigation commenced by or against the Landlord for
any of the above reasons, then Landlord shall protect and hold the Tenant
harmless and pay all costs, penalties, charges, damages, expenses and attorneys'
fees paid by the Tenant. It is understood that the provisions of this Section
7.2 shall not be applicable to any such claims, actions, liabilities, or
expenses, arising out of any act or omission of Tenant, its agents, materialmen,
vendors or suppliers.
7.3 WAIVER OF SUBROGATION. Anything in this Lease to the contrary
---------------------------
notwithstanding, Landlord and Tenant each hereby waives any and all right to
recovery, claim, action or cause of action, against the other, its agents,
directors, officers or employees, for any loss or damage that may occur to the
Premises, or any
8
improvements thereto, or the Building, or any improvements thereto, or any
personal property of such party therein, by reason of fire, the elements, or
any other cause which could be insured against under the terms of insurance
policies referred to in Section 3.2(i) hereof, regardless of cause or origin,
including negligence of the other party hereto, its agents, directors, officers
of employees, and covenants that no insurer shall hold any right of subrogation
against such other party.
7.4 PUBLIC LIABILITY AND PROPERTY DAMAGE. Bodily injury liability
------------------------------------------
insurance and property damage liability insurance will be carried and
maintained by Tenant, at Tenant's sole cost and expense, after the date of
delivery of the Premises from Landlord to Tenant in the following amounts:
Bodily Injury or Death, per occurrence: $1,000,000
Property Damage: $1,000,000
All such bodily injury liability insurance and property damage liability
insurance shall specifically make reference to the indemnity agreement in
Section 7.1 hereof.
7.5 POLICY FORM. All policies of insurance provided for herein to be
-----------------
carried by Tenant shall be issued by insurance companies certified to do
business by the State of Utah and its insurance regulatory bodies and shall be
issued in the names of both Landlord and Tenant. Executed copies of such
policies of insurance or certificates thereof shall be delivered to the
Landlord within ten (10) days after delivery of possession of the Premises and
thereafter within thirty (30) days prior to the expiration of such policy. As
often as any such policy shall expire or terminate, renewal or additional
policies shall be procured and maintained by the Tenant in like manner and to
like extent. All policies of insurance delivered to Landlord must contain a
provision that the company writing said policy will give to the Landlord at
least twenty (20) days notice in writing in advance of any cancellation or
lapse or the effective date of any reduction in the amounts of insurance. All
public liability and property damage policies shall be written as primary
policies, not contributing with and not in excess of coverage which the
Landlord may carry, if any. Notwithstanding the foregoing, any insurance
coverage required to be carried by Tenant hereunder may be carried in whole or
in part (i) under any plan of self-insurance which Tenant may from time-to-time
have in force and effect so long as Tenant or any assignee of this Lease who is
liable hereunder shall have a net worth of $25,000,000.00
9
or more, or (ii) under a "blanket" policy or policies covering other properties
of Tenant and its subsidiaries, controlling or affiliated of the insurance
protection afforded Landlord pursuant to this article shall not be diminished as
a result of any rights of self-insurance as hereinabove provided.
7.6 RECIPROCAL INDEMNITY. Notwithstanding any other provisions of the
--------------------------
Lease to the contrary, Tenant shall not be required to indemnify and hold
Landlord harmless from any loss, cost, liability, damage or expense, including,
but not limited to, penalties, fines, attorneys' fees or costs (collectively
"Claims"), to any person, property or entity resulting from the acts or
omissions or willful misconduct of Landlord or its agents, contractors,
servants, employees or licensees, in connection with Landlord's activities in
the Building (except for damage to the Tenant Improvements and Tenant's personal
property, fixtures, furniture and equipment in the Premises, to the extent
Tenant is required to obtain the requisite insurance coverage pursuant to the
Lease), and Landlord hereby so indemnifies and holds Tenant harmless from any
such Claims, including but not limited to Claims arising from any noncompliance
of the Building and/or the Site with any laws relating to disabled access
(provided Tenant uses the Premises solely for commercial purposes and not as a
place of public accommodation), or Claims arising from the presence in the
Premises, the Building and/or the Site of hazardous substances, except to the
extent such hazardous substances were placed in or on the Premises, the Building
and/or the Site by Tenant (Landlord's indemnity hereunder will survive the
expiration of the term of, or any termination of the Lease). Provided, further,
to the extent any damage or repair obligation is covered by insurance obtained
by Landlord as part of Operating Expenses, but is not covered by insurance
obtained by Tenant, then Tenant shall be relieved of its indemnity obligation up
to the amount of the insurance proceeds which Landlord is entitled to receive.
Tenant's agreement to indemnify and hold Landlord harmless pursuant to this
Lease and the exclusion from Tenant's indemnity and Landlord's agreement to
indemnify and hold Tenant harmless pursuant to this provision are not intended
to and shall not relieve any insurance carrier of its obligations under policies
required to be carried by Landlord or Tenant, respectively, pursuant to the
Lease to the extent that such policies cover the results of such acts, omissions
or willful misconduct. If Landlord or Tenant has been or at any time hereafter
is granted the right to self insure or if either party breaches this agreement
by its failure to carry required insurance, such failure shall automatically be
deemed to be a covenant and
10
agreement by Landlord or Tenant, respectively, to self-insure to the full extent
of such required coverage, with full waiver of subrogation.
SECTION 8
---------
ALTERATIONS AND FIXTURES
8.1 PRIOR CONSENT. Tenant shall not make any alterations, improvements
-------------------
modifications, having obtained the written consent of Landlord: provided,
however, planned modifications and improvements, including minor modification or
improvements to the office facilities, the sprinkler and lighting systems and
the installation of normal trade fixtures, shelves, machinery, racks and
apparatus are hereby specifically approved. Tenant shall notify Landlord upon
completion of any other alterations, improvements, modifications, or additions
and Landlord may inspect same for workmanship and compliance with the approved
plans and specifications. Any alteration, improvement, modification, or fixture
which is installed by either Landlord or Tenant on the Premises and which is in
any manner attached to the floors, walls, or ceilings shall remain upon the
Premises when the Premises are surrendered by Tenant except as described
hereinbelow.
8.2 TRADE FIXTURES. Notwithstanding anything in this Section 8 to the
--------------------
contrary, all normal trade fixtures, equipment, shelves, machinery, signs
and furniture installed in the Premises at the cost of Tenant, may be removed
by Tenant on or before the termination date of this Lease provided (i) Tenant
is not in default under this Lease, and (ii) removal shall be done in a
workmanlike manner so as not to damage the fundamental structural integrity of
the Building.
8.3 MECHANICS' LIEN. Neither Landlord nor Tenant will create or permit
--------------------
to be created or to remain any lien (including but not limited to, the liens
of mechanics, laborers, artisans, or materialmen for work or materials alleged
to be done or furnished in connection with the Premises), encumbrance or other
charge upon the Premises or any part thereof, upon Landlord's interest therein,
or upon Tenant's leasehold interest; provided that Tenant shall not be required
to discharge any such liens, encumbrances or charges as may be placed upon the
Premises by the act of Landlord.
11
SECTION 9
---------
GRAPHICS AND ARCHITECTURAL CONTROL
9.01. Tenant may place reasonable signage on the Building all at Tenant's
-----
own cost and expense and Tenant shall retain liable for the upkeep and
maintenance thereof.
9.02. Landlord agrees it will not alter or change the name of the
-----
Building, Premises or street address thereof without first obtaining the prior
written consent of Tenant or in the alternative, by paying directly all costs,
expenses, fees and charges incurred by Tenant due to such change in name or
address.
SECTION 10
----------
ASSIGNMENT AND SUBLETTING
In the event Tenant should desire to assign this Lease or sublet the
Premises or any part thereof, Tenant shall give Landlord written notice of such
desire and Landlord shall then have a period of twenty (20) days following
receipt of such notice within which to notify Tenant in writing that Landlord
does not approve of such assignment or subletting. If Landlord should fail to
notify Tenant in writing of such disapproval within the twenty (20) day period,
Landlord shall be deemed to have elected to permit such assignment or
subletting. Landlord shall not unreasonably withhold its consent to any such
assignment or subletting. No assignment or subletting by Tenant shall relieve
Tenant of any obligations under this Lease.
SECTION 11
----------
RIGHT OF ACCESS
Landlord shall have the right to enter the Premises under ordinary
circumstances during normal business hours upon twenty-four (24) hours prior
written notice to Tenant, to examine the same and to make such repairs,
alterations, improvements, or additions as Landlord may deem necessary or
desirable to comply with this Lease, Landlord shall be allowed to take all
materials into and upon the Premises that may be required therefor without the
same constituting an eviction of Tenant, actual or constructive, and the rent
shall in no way abate while such repairs, alterations, improvements or additions
are being made, by reason
12
of loss or interruption of business of Tenant unless such repairs, alterations,
improvements or additions restrict or interfere with Tenant's use of a portion
of the Building. In that event, the rent should abate as to that portion of the
Building wherein the use thereof is restricted. Landlord shall take reasonable
efforts not to interfere with the normal business operations of Tenant. In any
event of an emergency, no prior written notice on the part of the Landlord will
be required to enter the Building and Premises. During the three (3) months
prior to the expiration of the term of this Lease, Landlord may exhibit with
twenty-four (24) hour notice the Premises to prospective lessees or purchasers
during normal business hours and place upon the Premises the usual notices "For
Sale or For Rent", and Tenant shall permit the same to remain.
SECTION 12
----------
HOLDING OVER
Upon any termination of this Lease, Tenant shall surrender the Premises in
a condition and repair similar to their original condition, reasonable wear and
tear, events of destruction, and modifications, alterations and improvements for
office facilities, storage, lighting and sprinklers excepted. Should Tenant
remain in possession of the Premises, or any part thereof, after termination of
this Lease (whether by the expiration of the term of this Lease or otherwise)
without the execution of a new lease by Landlord and Tenant, Tenant, at the
option of Landlord, shall become a tenant from month-to-month of the Premises,
or part thereof occupied, at one and one-half the Total Monthly Rent, and under
all other terms, conditions, provisions and obligations of this Lease insofar as
the same are applicable to a tenancy from month-to-month.
SECTION 13
----------
DEFAULTS AND REMEDIES
13.1 EVENTS OF DEFAULT BY TENANT. The occurrence of one or more of
----------------------------------
the following events shall constitute a default pursuant to the terms of
this Lease: (i) the failure of Tenant to comply with or to observe any terms,
provisions, or conditions of this Lease performable by and obligatory upon
Tenant, within thirty (30) days after written notice by Landlord; (ii) the
assignment of this Lease or subleasing of the Premises by Tenant without the
13
prior written approval of Landlord; or (iii) the taking of Tenant's
leasehold estate by execution or other process of law.
13.2 LANDLORD'S REMEDIES. Upon the occurrence of any event of default
--------------------------
enumerated in Section 13.1 hereof, Landlord shall have the option of (i)
terminating this Lease by written notice thereof to Tenant, or (ii) continuing
this Lease in full force and effect, or (iii) curing the default of Tenant, or
(iv) pursuing any other remedy to which it may be entitled by law.
(i) In the event Landlord shall elect to terminate this Lease, upon
written notice to Tenant, this Lease shall be ended as to Tenant and all
persons holding under Tenant, and all of Tenant's rights shall be forfeited
and lapsed, as fully as if this Lease had expired by lapse of time. In such
event, Tenant shall be required immediately to vacate the Premises and
there shall immediately become due and payable the amount by which (a) the
present value (determined using the then current Prime Rate per annum as
charged by Zion's Bank (Bank) of Utah) of the total rent and other benefits
which would have accrued to Landlord under this Lease for the remainder of
the Lease term if the terms and provisions of this Lease had been fully
complied with by Tenant exceeds (b) the total fair market rental value
(determined using the then current Prime Rate per annum as charged by
Zion's Bank (Bank) of Utah) of the Premises for the balance of the Lease
term (it being the intention of both parties hereto that Landlord shall
receive the benefit of its bargain); and the Landlord shall at once have
all the rights of re-entry upon the Premises, without becoming liable for
damages, or guilty of trespass. In addition to the sum immediately due from
Tenant under the foregoing provision, there shall be recoverable from
Tenant: (a) the cost of restoring the Premises to good condition, normal
wear and tear excepted, (b) all accrued, unpaid sums, plus interest at the
maximum rate then permitted by law and late charges, if in arrears, under
the terms of this Lease up to the date of termination, (c) Landlord's cost
of recovering possession of the Premises, and (d) rent and sums accruing
subsequent to the date of termination pursuant to the holdover provisions
of Section 12.
(ii) In the event that Landlord shall elect to continue
14
this Lease in full force and effect, Tenant shall continue to be liable for
all rents. Landlord Premises without becoming liable for damages, or guilty
of a trespass and Landlord may relet the Premises, or any part thereof, to
a substitute tenant or tenant, for a period of time equal to or lesser or
greater than the remainder of the Lease term on whatever terms and
conditions Landlord, at Landlord's sole discretion, deems advisable.
Against the rents and sums due from Tenant to Landlord during the remainder
of the term, credit shall be given Tenant in the net amount of rent
received from the new tenant after deduction by Landlord for: (a) the costs
incurred by Landlord in reletting the Premises (including, without
limitation, remodeling costs, brokerage fees, legal fees, and the like),
(b) the accrued sums, plus interest and late charges if in arrears, under
the terms of this Lease, (c) Landlord's cost of recovering possession of
the Premises, and (d) the cost of storing any of Tenant's property left on
the Premises after re-entry. Notwithstanding any provision in this Section
13.2(ii) to the contrary, upon the default of any substitute tenant or upon
the expiration of the Lease term of such substitute tenant before the
expiration of the Lease term hereof, Landlord may, at Landlord's election,
either relet to still another substitute tenant, or terminate this Lease
and exercise its rights under Section 13.2(i) hereof.
13.3 ATTORNEYS' FEES. In the event either party hereto defaults in the
---------------------
performance of any of the terms, covenants, agreements or conditions contained
in this Lease and the other party hereto places the enforcement of this Lease,
or any part thereof, or the or to become due, or the recovery or the possession
of the Premises, in the hands of attorneys, or files suit upon the same, the
party in default agrees to pay the reasonable attorneys' fees of the non-
defaulting party.
13.4 WAIVER. Failure on the part of Landlord or Tenant to complain of any
------------
action or non-action on the part of Landlord or Tenant, no matter how long the
same may continue, shall never be deemed to be a waiver by either party of any
of his rights hereunder. Further, it is covenanted and agreed that no waiver at
any time of any of the provisions hereof by either party shall be construed as a
waiver of any of the other provisions hereof and that a waiver at any time of
any of the provisions hereof shall not be construed as a waiver at any
subsequent time of the same
15
provisions.
13.5 LANDLORD'S DEFAULT. The occurrence of one or more of the following
-------------------------
events shall constitute a default pursuant to the terms of this Lease: (i) the
failure of Landlord to comply with or observe any terms, provisions, or
conditions of this Lease performable by and obligatory upon Landlord within ten
(10) days after notice to Landlord; (ii) the assignment of this Lease by
Landlord without prior written notification to Tenant; or (iii) the taking of
Landlord's interest herein by execution or other process of law.
13.6 TENANT'S REMEDIES. Upon the occurrence of any event of default
------------------------
enumerated in Section 13.5 hereof, Tenant shall have the option of (i)
terminating this Lease by written notice thereof to Landlord, (ii) continuing
this Lease in full force and effect with the Fixed Rent abating until Landlord's
default has been cured; (iii) curing the default of Landlord and offsetting any
and all costs of curing same against the Total Monthly Rental or (iv) pursuing
any other remedy to which it may be entitled by law.
13.7 LANDLORD BANKRUPTCY PROCEEDING. In the event that the obligations of
-------------------------------------
Landlord under this Lease are not performed during the pendency of a bankruptcy
proceeding involving the Landlord as the debtor, or following the rejection of
this Lease in accordance with Section 365 of the United States Bankruptcy Code
and the election of the Tenant to remain in possession of the Premises in a
bankruptcy or insolvency proceeding involving the Landlord as the debtor, then
notwithstanding any provision of this Lease to the contrary, tenant shall have
the right to set off against rents next due and owing under this Lease (a) any
and all damages that it demonstrates to the Bankruptcy Court were caused by such
non-performance of the Landlord's obligations under this Lease by Landlord,
debtor-in-possession, or the bankruptcy trustee and (b) any and all damages
caused by the non-performance of the Landlord's obligations under this Lease
following any rejection of this Lease in accordance with Section 365 of the
United States Bankruptcy Code.
SECTION 14
----------
SUBORDINATION
16
14.1 SUBORDINATION. This Lease shall be subject and subordinate to any
--------------------
mortgages or deeds of trust that may have been placed or may be hereafter placed
upon the Premises by Landlord and to any advances to be made thereunder, and to
any interest thereon, and all renewals, replacements and extensions thereof.
Provided however, that any mortgagee or trustee may elect by written
notification to give the rights and interests of Tenant under this Lease
priority over the lien of its mortgage or deed of trust. In the event of
foreclosure or trustee's sale thereunder, the purchaser of Landlord's interest
shall become Landlord hereunder subject to all the terms, provisions and
obligations created hereby. Tenant shall, in the event any proceedings are
brought for foreclosure of the Premises, or the power of sale under any mortgage
made by Landlord covering the Premises is exercised, attorn to the purchaser (at
the option of said purchaser, and not otherwise) upon any such foreclosure or
sale and recognize such purchaser as the Landlord under this Lease.
14.2 NECESSARY INSTRUMENTS. Tenant shall execute and deliver instruments
----------------------------
that may be reasonably required by Landlord's mortgagees for the purpose of
evidencing the subordination of this Lease within ten (10) days of written
notice by Landlord or such mortgagee or its trustee, the language thereof to be
agreed upon by the parties hereto.
SECTION 15
----------
ESTOPPEL CERTIFICATES
Tenant agrees within ten (10) days following request by Landlord (i) to
execute and deliver to Landlord reasonably required documents (including an
estoppel certificate) (a) certifying that this Lease is unmodified and in full
force and effect, or, if modified, stating the nature of such modification and
certifying that this Lease, 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, and (b)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, or so specifying such defaults, if any, as are
claimed, evidencing the status of the Lease.
SECTION 16
----------
17
DESTRUCTION
16.1 LANDLORD'S OBLIGATIONS. (i) In the event the Premises shall be
-----------------------------
damaged by fire or other casualty, but shall not be rendered untenantable in
whole or in part, regardless of the time remaining in the term of this Lease,
Landlord shall, at its own expense, cause such damage to be repaired, and the
rent shall not be abated. (ii) If the Premises shall be reentered partially
untenantable, unless the damage occurs within the last one (1) year of the term
of this Lease, Landlord shall, at its own expense, cause the damage to be
repaired, and the Total Monthly Rental shall be abated proportionately as to the
portion of the Premises rendered untenantable. If, however, the damage occurs
within the last one (1) year of the term of this Lease, Landlord may, at its
option, cause such damage to be repaired or either party may terminate this
Lease by giving the other party written notice of termination within thirty (30)
days from the date of such occurrence, and in the event of such termination,
rent shall be adjusted as of the date of such occurrence. (iii) If the Premises
shall be rendered wholly untenantable by reason of such occurrence, regardless
of the time remaining in the term of this Lease, Landlord may at its own cost
and expense cause such damage to be repaired, and the Total Monthly Rental shall
abate until the Premises have been restored and reentered tenantable, or
Landlord may at its election terminate this Lease by giving Tenant written
notice of termination within thirty (30) days from the date of said occurrence,
and in the event of such termination, rent shall be adjusted as of the date of
such occurrence. (iv) If the Building shall be damaged to such an extent that
Landlord shall determine that the repairs shall not be made or that demolition
of the building is appropriate, then notwithstanding anything to the contrary
contained above, and whether or not the Premises have been damaged, Landlord or
Tenant may terminate this Lease by giving the other party written notice of
termination, in which event rent shall be adjusted as of the date of
termination. (v) If Landlord has not initiated repair or restoration within
thirty (30) days of the event of the casualty, Tenant shall have the right to
terminate this Lease by written notice to Landlord at any time within thirty
(30) days after said thirty (30) days.
16.2 SCOPE OF LANDLORD'S OBLIGATIONS. shall be obligated to repair or to
--------------------------------------
restore any damage or destruction aforesaid, Building and Standard Leasehold
Improvements, and time of completion shall be subject to the
18
provisions of Section 20, ("Force Majeure"). If Landlord notifies Tenant within
thirty (30) days after the casualty that the insurance proceeds are inadequate
to restore the Building and the standard leasehold improvements as aforesaid,
Tenant shall have the right to terminate this Lease by giving written notice to
Landlord within thirty (30) days after Landlord's notice to Tenant.
SECTION 17
----------
EMINENT DOMAIN
17.1 TOTAL TAKING. In the event of a taking of the Premises or damage
-------------------
related to the exercise of the power of eminent domain by any agency, authority,
public utility, person, or corporation or entity empowered to condemn property
("Taking") of the entire Premises or so much thereof as to prevent or
substantially impair their use by Tenant during the Lease term (i) the rights of
Tenant under the Lease and the leasehold estate of Tenant in and to the Premises
shall cease and terminate as of the date upon which title to the Premises, or a
portion thereof, passes to and vests in the condemnor or the effective date of
any order for possession if issued prior to the date title vests in the
condemnor ("Date of Taking"), (ii) Landlord shall refund to Tenant any prepaid
rent, (iii) Tenant shall pay to Landlord any rent or charges due Landlord under
the Lease, each prorated as of the Date of Taking, (iv) Tenant shall receive
from the Award those portions of the Award attributable to relocation of Tenant,
improvements to the Premises made and paid for by Tenant and trade fixtures,
equipment, and furniture of Tenant, and (v) the remainder of the Award shall be
paid to and be the property of Landlord.
17.2 PARTIAL TAKING. In the event of a Taking of only a part of the Premise
--------------------
which does not constitute a "Total Taking" during the Lease term (i) the rights
of Tenant under the Lease and the leasehold estate of Tenant in and to the
portion of the Premises taken shall cease and terminate as of the Date of
Taking, (ii) from and after the Date of Taking the Total Monthly Rent shall be
the product obtained by multiplying (a) the Total Monthly Rent by (b) the
quotient obtained by dividing the total square feet of the Premises after the
Taking by the total square feet of the Premises prior to the Taking, (iii)
Tenant shall receive from the Award those portions of the Award attributable to
improvements to the Premises made and paid for by Tenant and trade fixtures,
19
equipment, and furniture of Tenant, and (iv) the remainder of the Award shall be
paid to and be the property of Landlord. Landlord, from his portion of the
Award, shall restore the remainder of the Premises, as nearly as possible, to
one architectural unit, and (v) if Landlord has not initiated repair or
restoration within ninety (90) days of the Partial Taking, Tenant shall have the
right to terminate this Lease by written notice to Landlord within thirty (30)
days after said ninety (90) days.
SECTION 18
----------
FORCE MAJEURE
In the event Landlord shall be delayed, hindered or prevented from the
performance of any act required hereunder by reason of acts of God, strikes,
lockouts, labor disputes, labor troubles, inability to procure materials,
failure of power, restrictive governmental laws or regulations, riots,
insurrection, war or other cause not within the reasonable control of Landlord,
then the performance of such act shall be excused for the period of the delay
and the period for the performance of any such act shall be extended for a
period equivalent to the period of such delay.
SECTION 19
----------
PARKING
Tenant shall have the use of the parking spaces and loading dock areas located
on the Premises. Tenant agrees that it will employ its best efforts to prevent
the use by Tenant's employees and visitors of parking spaces allocated to other
tenants. Landlord represents that it now has access and will retain access to
the Building and Premises for the use and benefit of Tenant, its employees,
agents, licensees and invitees.
SECTION 20
----------
INTERPRETATIVE PROVISIONS
20.1 NOTICE. Any notice, request, approval, consent or other communication
-------------
required or contemplated by this Lease must be in writing, and may, unless
otherwise in this Lease expressly provided, by given or be served by depositing
the same in the
20
United States Postal Service, post-paid and certified and addressed to the party
to be notified, with return receipt requested, or by delivering the same in
person to such party (or, in the case of a corporate party, to an officer of
such party), or by prepaid telegram, when appropriate, addressed to the party to
be notified. Notice deposited in the mail in the manner hereinabove described
shall be effective from and after two (2) days (exclusive of Saturdays, Sundays
and postal holidays) after such deposit. Notice given in any other manner shall
be effective only if and when delivered to the party to be notified to such
party or at such party"s address for purposes of notice as set forth herein. For
purposes of notice the addresses of the parties shall, until changed as herein
provided, be as follows:
For Landlord: The Bettilyon Corporation
Attention: Bernard Bettilyon
333 West 21st Street
Salt Lake City, Utah 84115
For Tenant: United Stationers Supply Co.
2200 East Golf Road
Des Plaines, Illinois 60016-1267
Attention: President
However, the parties hereto shall have the right from time to time to change
their respective addresses by giving at least fifteen (15) days written notice
to the other party.
20.2 CAPTIONS. The title captions appearing in this Lease are inserted and
---------------
included solely for convenience and shall never be considered or given any
effect in construing this Lease, or any provision or provisions hereof, or in
connection with the duties, obligations or liabilities of the respective parties
hereto or in ascertaining intent, if any question of intent exists.
20.3 ENTIRE CONTRACT; AMENDMENT. It is expressly agreed by Tenant, as a
---------------------------------
material consideration for the execution of this Lease, that this Lease,
including written extrinsic documents referred to herein is the entire agreement
of the parties, and that there are, and have been, no verbal representations,
understandings, stipulations, agreements or promises pertaining to this Lease or
the expressly mentioned written extrinsic documents not incorporated in writing
in this Lease. It is likewise agreed that this Lease may not be
21
altered, amended or extended except by an instrument in writing signed by
both Landlord and Tenant.
20.4 SEVERABILITY. If any term or provision of this Lease, or the
-------------------
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such term of provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Lease shall be valid and enforced to the fullest
extent permitted by law.
20.5 SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections 11
-----------------------------
and 16 of this Lease, all covenants and obligations as contained within this
Lease shall bind and extend and inure to the benefit of Landlord, its successors
and assigns, and shall be binding upon Tenant, its successors and assigns.
20.6 PERSONAL PRONOUNS. All personal pronouns used in this Lease
------------------------
shall include the other genders, whether used in the masculine, feminine or
neuter gender, and the singular shall include the plural (and vice versa)
whenever and as often as may be appropriate.
20.7 SHORT FORM LEASE. Tenant agrees not to record this Lease, but each
-----------------------
party hereto agrees, on request of the other, to execute a Short Form Lease in
form recordable and complying with applicable Utah laws. In no event shall such
document set forth the rental or other charges payable by Tenant under this
Lease; and any such document shall expressly state that it is executed pursuant
to the provisions contained in this Lease, and is not intended to vary the terms
and conditions of this Lease.
20.8 LEGAL INTERPRETATION. This Lease and the rights and obligations of
---------------------------
the parties hereto shall be interpreted, construed and enforced in accordance
with the laws of the State of Utah.
20.9 ACCEPTANCE OF PAYMENTS UNDER PROTEST. The acceptance by Landlord
-------------------------------------------
of payments by Tenant under protest shall not be deemed an acknowledgement by
landlord, or a validation of, any contention or reservation of rights by Tenant.
20.10 RENEWAL OPTION. Tenant shall have the right and option to renew this
----------------------
Lease for one (1) additional five (5) year term by delivering written notice of
the exercise thereof to Landlord at
22
least 60 days prior to the expiration of the primary lease term, provided
that at the time of the commencement of any such extended lease term Tenant is
not in default hereunder. Upon the delivery of said notice and subject to the
conditions set forth in the preceding sentence, and upon the execution by
Landlord and Tenant of an extension agreement containing such terms and
provisions which are consistent with the provisions of this paragraph, this
Lease shall be extended upon the same terms, covenants and conditions as
provided in this Lease except that the Total Monthly Rent shall be established
between Landlord and Tenant at the market rate in effect at that time. If the
parties are unable to agree to a market rate, the Lease shall terminate upon
the expiration thereof.
EXECUTED IN MULTIPLE ORIGINAL COUNTERPARTS, which constitute but one and
the same instrument, as of the day and year first above written.
"LANDLORD"
BETTILYON MORTGAGE LOAN COMPANY
By: [SIGNATURE NOT LEGIBLE]
-------------------------------
Its President
"TENANT"
UNITED STATIONERS SUPPLY CO.
By: /s/ Otis H. Halleen
-------------------------------
Its Vice President
23