Exhibit 10.12
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SUBLEASE
between
INSPIRE INSURANCE SOLUTIONS, INC., debtor and debtor-in-possession,
And
ARROWHEAD GENERAL INSURANCE AGENCY, INC.
Dated as of May 14, 2002
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SUBLEASE
This Sublease ("Sublease") is made and entered into as of May 14, 2002,
by and between INSPIRE INSURANCE SOLUTIONS, INC., a Texas corporation and debtor
and debtor-in-possession (hereafter "Sublessor"), and Arrowhead General
Insurance Agency, Inc., a Minnesota corporation (hereafter "Sublessee"), with
reference to the following facts:
RECITALS
A. Sublessor, as successor-in-interest to Arrowhead General
Insurance Agency, Inc., and Xxxxxx Realty, L.P., a Delaware limited partnership,
as successor-in-interest to ADI Arrow Partners, L.P ("Master Landlord"), entered
into a Lease dated as of April 10, 1996 (the "Master Lease"), attached to this
Sublease as Exhibit "B" and incorporated herein by reference. The Master Lease
covers the building containing approximately 93,000 rentable square feet located
at 0000 Xxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx ("Building" or "Master Premises"),
as more particularly described in Exhibit "A", attached to this Sublease and
incorporated herein by reference..
B. On February 15, 2002, Sublessor filed a voluntary petition for
relief under Chapter 11 of the United States Bankruptcy Doe (the "Bankruptcy
Code") in the United States Bankruptcy Court for the Northern District of Texas,
Fort Worth Division (the "Bankruptcy Court"), under Case No. 02-41228-DML (the
"Bankruptcy Case").
C. Sublessor desires to assume the Master Lease in the Bankruptcy
Court pursuant to Section 365 of the Bankruptcy Code.
D. Sublessor and Sublessee desire to enter into this Sublease in
order for Sublessee to sublease a portion of the Building containing
approximately 40,000 rentable square feet and as depicted on Exhibit A attached
hereto (the "Premises"), on the terms and conditions set forth herein.
E. Sublessor and Sublesee are also entering into various other
agreements in conjunction with this Sublease, including, but not limited to, a
Software License Agreement, a Policy Processing and Administration Agreement, a
Claims Administration Agreement, a Professional Services Agreement, an Asset
Purchase Agreement and a Comprehensive Preferred Escrow Agreement (collectively,
the "Other Agreements").
F. Sublessor and Sublessee desire that this Sublease, as well as
the other agreements referenced in the preceding Recital, shall only be
effective and binding on them if (1) all of such agreements are approved by a
final order of the Bankruptcy Court as provided for herein, and (2) Sublessor's
rejection of the Policy Administration Agreement is approved by a final order of
the Bankruptcy Court acceptable in form and substance to Sublessee.
NOW, THEREFORE, in consideration of the mutual agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as set forth
below.
1. DEFINED TERMS. Terms with initial capital letters not otherwise
defined herein shall have the respective meanings set forth in the Master Lease.
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2. PREMISES. Sublessor hereby subleases to Sublessee and Sublessee
hereby hires from Sublessor, on and subject to the terms, conditions and
covenants hereinafter set forth, the Premises. Sublessee agrees to use the
Premises solely for the office uses and for no other use or purpose without the
prior written consent of Master Landlord. Sublessor agrees to deliver the
Premises in a clean and orderly state to Sublessee. This shall include cleaned
carpets, items removed from walls and any holes in walls repaired.
3. WARRANTY BY SUBLESSOR. Sublessor warrants and represents to
Sublessee that Sublessor is not now, and as of the commencement of the Term (as
defined below) will not be, in default or material breach of any of the
provisions of the Master Lease, and the Sublessor has received no notice from
Master Landlord that Sublessor is in default or breach of any of the provisions
of the Master Lease. Sublessor further represents and warrants that (a) a true
and correct copy of the Master Lease, as amended to date, is attached hereto as
Exhibit B, (b) the Master Lease has not been otherwise amended or modified, is
in full force and effect, and represents the entire agreement between Sublessor
and Master Landlord relating to the Premises and (c) to the best of Sublessor's
actual knowledge, Master Landlord is not in default with respect to the Master
Lease. From and after the date of this Agreement, Sublessor agrees that it will
not amend or terminate the Master Lease in any way that affects the Premises or
Sublessee's rights under this Sublease without the written consent of the
Sublessee, which shall not be unreasonably withheld or delayed. Sublessor shall
perform all obligations under the Master Lease except to the extent such
obligations are expressly required to be performed by the Sublessee under this
Sublease. Sublessor shall seek to assume the Master Lease in the Bankruptcy
Case, pursuant to Section 365 of the Bankruptcy Code. Sublessor agrees to
indemnify, defend and hold sublessee harmless from any and all claims, damages,
liabilities, costs and expenses (including reasonable attorneys' fees and costs)
arising from or relating to any breach of Sublessor's representations and
warranties or breach of any or its other obligations under this section.
4. TERM. The term of this Sublease shall commence on the 5th day (or
such sooner or later day as the parties may agree) after this sublease has been
approved by a final order of the Bankruptcy Court ("Commencement Date"), and
shall expire on April 13, 2007, unless sooner terminated pursuant to the
provisions hereof.
5. RENT. Sublessee shall pay to Sublessor $60,000 per month as rent for
the Premises ("Rent"), at the address for Sublessor set forth in Section 21
below, or at such other place as Sublessor shall designate from time to time by
written notice to Sublessee, in advance on the first day of each calendar month
of the term of this Sublease, starting on the Commencement Date, without
deduction, offset, prior notice or demand.
5.1 FULL SERVICE RATE. The Rent is on a "full service gross"
basis and Sublessee shall not be responsible for any charges for Additional
Rent, including, without limitation, any Impositions, insurance premiums,
utility costs or any other operating expenses; provided, however, that Sublessor
shall have the right to increase the Rent by an amount equal to 43% of any
unforeseen increases in electricity costs applicable during the term of this
Sublease to the extent such increases result in the electricity costs for the
Premises exceeding one hundred five percent (105%) of such electricity costs for
the prior calendar year, on a cumulative basis.
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5.2 SECURITY DEPOSIT. Upon obtaining Master Landlord's consent
to this Sublease, Sublessee shall deliver into an escrow account in the name of
Sublessor a security deposit in the amount of $60,000, which amount shall be
funded in equal payments over the course of five (5) months ($12,000 per month).
Sublessee shall retain the interest payments from the escrow account. In the
event of a default on the part of Sublessee, funds shall be released to
Sublessor to the extent of the default and Sublessee shall, within three (3)
business days replenish the escrow account with the amount withdrawn by
Sublessor. The security deposit shall not constitute the last months rent; such
funds shall be dispersed to Sublessee within thirty (30) days after the
expiration or termination of this Sublease.
5.3 INTEREST ON PAYMENTS DUE. Any sum due Sublessor pursuant
to this Agreement that is not paid by the date on which payment is due shall
bear interest from that date until the date such sum is paid at the lesser of
1.5 % per month or the maximum rate of interest allowed by applicable law.
Sublessee will also pay Sublessor for any reasonable expenses, including
attorney's fees, incurred by Sublessor in the collection of any amounts due and
payable under this Agreement.
5.4 ELECTRONIC FUNDS TRANSFER. Sublessor will provide
Sublessee bank routing information. All payments are to be via Electronic Funds
Transfer (EFT), unless otherwise agreed to in writing by the parties, to the
account specified in writing by Sublessor.
5.5 PAYMENT OF UNDISPUTED AMOUNTS. In the event that there is
an amount in dispute, Sublessee is still obligated to pay all undisputed amounts
on all invoices.
6. OTHER PROVISIONS OF SUBLEASE. This Sublease is made subject and
subordinate to all of the terms and conditions of the Master Lease. All
applicable terms and conditions of the Master Lease are incorporated into and
made a part of this Sublease as if Sublessor were the lessor thereunder,
Sublessee the lessee thereunder, and the Premises the Master Premises, but only
to the extent relating to the Premises and Sublessee's use thereof, except for
the following ("Excluded Provisions"): Sections 1.1 and 1.2, Article II,
Sections 3.1 through 3.6, inclusive, Article V, Sections 6.1, 6.2(b) and 6.2(c),
Article VII, Section 8.2, Section 9.3, Section 11.1, Article XIII, Article
XVIII, and Sections 20.8 and 20.20. Sublessee assumes and agrees to perform the
Tenant's obligations under the Master Lease (other than the Excluded Provisions)
during the term of this Sublease to the extent that such obligations are
applicable to the Premises, except that the obligation to pay rent to Master
Landlord under the Master Lease shall be considered performed by Sublessee to
the extent and in the amount Rent is paid to Sublessor in accordance with
Section 5 of this Sublease. Sublessee shall not commit or suffer any act or
omission that will violate or cause Sublessor to violate any of the provisions
of the Master Lease. Sublessor shall exercise due diligence in attempting to
cause Master Landlord to perform its obligations under the Master Lease for the
benefit of Sublessee. If the Master Lease terminates, this Sublease shall
terminate and the parties shall be relieved of any further liability or
obligation under this Sublease, unless such termination is due to Sublessor's or
Sublessee's default or breach. Sublessee shall be entitled to all rights against
Sublessor under this Sublease as Sublessor enjoys against Master Landlord under
the Master Lease, and Sublessor shall be entitled to all rights against
Sublessee under this Sublease as Master Landlord enjoys against Sublessor under
the Master Lease.
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6.1 ATTORNMENT. At the Master Landlord's option, in the event
of cancellation or termination of the Master Lease for any reason, whether
voluntarily, involuntarily, by operation of law or otherwise, prior to the
expiration of this Sublease, Sublessee shall attorn to the Landlord for the
balance of the Term.
7. ASSIGNMENT AND SUBLETTING. Sublessee shall have the right to
sub-sublease any portion of their Premises or to assign this Sublease to any
related entity, subsidiary, or purchaser of substantially all of Sublessee's
assets or equity ("Affiliate"), subject to the Sublessor's consent, which
consent shall not be unreasonably withheld, conditioned or delayed, and to
Master Landlord's consent. Any such sub-sublease or assignment to an Affiliate
shall not relieve Sublessee from liability under this Sublease. In the event of
any sub-subleasing or assignment to a party other than an Affiliate, Sublessor
shall have the right to re-capture the Premises as provided below and shall have
the right to fifty percent (50%) of any rents payable by any such sublessee or
assignee in excess of (a) the Rent under this Sublease, plus (b) Sublessee's
reasonable costs of sub-subleasing or assigning, including, without limitation,
commissions, legal fees, tenant improvements and any other concessions
reasonably required to induce a sub-subtenant or assignee, and the balance of
such excess rents may be retained by Sublessee. Sublessor may exercise its
recapture right by delivering written notice thereof to Sublessee within ten
(10) days after Sublessee requests Sublessor's consent to a sub-sublease or
assignment to a party other than an Affiliate. If Sublessor timely exercises its
recapture right, then this Sublease shall terminate and the parties shall be
released from all further liabilities and obligations hereunder; provided,
however, that, if Sublessee withdraws its request for consent to the proposed
sub-sublease or assignment within ten (10) days after receipt of Sublessor's
election to exercise its recapture right, then this Sublease shall remain in
full force and effect and Sublessor shall not be entitled to recapture the
Premises.
8. SIGNAGE. To the extent permitted under the Master Lease, Sublessee
shall be allowed to install outside building signage on the Building and to
display Sublessee's logo in the main suite entrance to the Building at
Sublessee's sole expense. The costs associated with the purchase, installation,
maintenance and eventual removal of such signage shall be borne by Sublessee.
All such signage shall conform to all zoning requirements and existing
conditions, covenants and restrictions affecting the Building. Sublessor and
Master Landlord shall have the right to review and approve Sublessee's signage,
which approval by Sublessor shall not be unreasonably withheld, conditioned or
delayed.
9. PARKING. Sublessee shall, at no additional charge, be entitled to
one hundred thirty (130) parking spaces during the term of this Sublease. Such
parking spaces shall be used on a non-exclusive basis, except that Sublessee
shall have the right to designate ten (10) of such parking spaces behind the
Premises for use exclusively by Sublessee and its employees and invitees. Such
parking spaces shall be located on the Land in a location adjacent to the back
entrance to the Premises and reasonably acceptable to Sublessor and Sublessee.
Sublessee shall be allowed to share with Sublessor the parking spaces designated
as Visitor in the front of the Premises. If Sublessee needs additional parking
spaces due to growth, Sublessor will work with Sublessee to reach a mutual
agreement to provide additional spaces.
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10. RIGHT OF FIRST OFFER. During the term of this Sublease, Sublessor
hereby grants to Sublessee a right of first offer ("First Right") to lease, on
the same terms and conditions as this Sublease, including the Rent, any portion
of the Master Premises adjacent to the Premises within the Building that becomes
available from time to time. Prior to marketing any such space, or making or
accepting any offers to sublease such space, Sublessor shall deliver written
notice to Sublessee of any such space becoming available for sublease. Sublessee
may exercise its First Right with respect to such space by delivering written
notice to Sublessor within seven (7) business days after delivery of Sublessor's
notice that such space is available. If Sublessee so exercises the First Right,
then Sublessor shall sublease to Sublessee, and Sublessee shall sublease from
Sublessor, the space described in Sublessor's notice on the terms and conditions
set forth in this Sublease, including payment of the same rent per square
footage for the additional space that Sublessee is paying at the time the First
Right is exercised. In addition, Sublessee shall increase its security deposit
by a like amount per square foot of such additional space.
11. FURNITURE. Sublessor agrees that, within thirty (30) days of the
Commencement Date, it shall remove at its sole expense all furniture and other
various assets owned or controlled by Sublessor not attached as fixtures to the
Premises.
12. INSURANCE. In addition to Sublessee maintaining insurance as
required by Section 6.2(a) of the Master Lease, Sublessee will name both Master
Landlord and Sublessor as additional insureds under such liability insurance
policy, and Sublessor and Sublessee each hereby release and relieve each other,
and waive their entire right of recovery against the other, for loss or damage
arising out of or incident to the perils insured against by any insurance
policies maintained or required by this Sublease or the Master Lease to be
maintained by the waiving party, which perils occur in, on or about the Premises
or the Master Premises. Sublessee and Sublessor shall give notice to its
insurance company of such release and waiver of subrogation contained herein.
13. DAMAGE OR DESTRUCTION/CONDEMNATION. If the Premises, the Building
or the common areas are materially damaged or destroyed or taken pursuant to a
condemnation (or a conveyance under threat thereof), all applicable terms and
conditions of the Master Lease concerning the parties rights in any such
event(s) shall are incorporated into and made a part of this Sublease as if
Sublessor were the lessor thereunder, Sublessee the lessee thereunder, and the
Premises the Master Premises, but only to the extent relating to the Premises
and Sublessee's use thereof.
14. ATTORNEYS'_FEES. In the event any action or proceeding is brought
by either party against the other relating to or arising from the subject matter
of this Sublease, the prevailing party shall be entitled, in addition to any
other relief granted therein, to recover from the other party attorneys' fees
and costs incurred in connection therewith.
15. SUCCESSORS_AND ASSIGNS. This Sublease and all terms and conditions
contained herein, subject to the provisions as to assignment or sublease set
forth herein, shall be binding upon and inure to the benefit of the successors
and assigns of all parties hereto, including but not limited to any Chapter 11
trustee or Chapter 7 trustee appointed in the Bankruptcy Case.
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16. AUTOMATIC STAY. The automatic stay under the Bankruptcy Code will
not in any way limit or restrict Sublessee from exercising its rights or
remedies upon default, expiration or termination of this Agreement.
17. NO_BROKERS. Sublessor and Sublessee each hereby represent and
warrant that they have had no dealings with any broker or agents in connection
with the negotiation of this Sublease. Each party agrees to indemnify, defend
and hold harmless the other from any and all claims, costs, expenses, damages,
liabilities (including but not limited to reasonable attorneys' fees) arising
from or in connection with any claim by any broker or agent, whether or not
licensed, for a commission or fee or other amount due in connection with this
Sublease based upon the action of the indemnifying party.
18. PRIOR_AGREEMENTS. This Sublease and the Master Lease contains all
of the agreements of the parties hereto with respect to any matter covered in
this Sublease, and no prior agreements or understanding pertaining to any such
matter shall be effective for any purpose. No provisions of this Sublease may be
amended or added to except by and agreement in writing signed by the parties
hereto.
19. COMMON AREAS. Sublessee shall have the non-exclusive right to use
all common areas, including the reception area, break room, gymnasium, and
bathrooms and conference rooms provided such use does not materially interfere
with Sublessor's right to use such common areas.
20. JANITOR & MAINTENANCE SERVICES. Janitorial and maintenance services
for the Premises shall be provided to the satisfaction of Sublessee by Sublessor
at no additional cost.
21. NOTICES. All notices or demands of any kind required or desired to
be given by Sublessor or Sublessee hereunder shall be in writing and shall be
deemed delivered upon personal delivery or two (2) business days after the
depositing the notice or demand in the United States mail, certified or
registered, postage prepaid, or one (1) business day after timely sending by
Federal Express or other reputable overnight delivery service, addressed to the
Sublessor or Sublessee, respectively, at the address set forth below, or to such
other address as Sublessor and Sublessee may, from time to time, designate to
the other in writing.
For Sublessee: Attn: Chief Executive Officer
Arrowhead General Insurance Agency, Inc.
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
For Sublessor: INSpire Insurance Solutions, Inc.
000 Xxxxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Attention: Xxx Xxxxxxxx
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With copy to: Xxxxxx X. Xxxxxx
Jenkens & Xxxxxxxxx, P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
22. LANDLORD'S CONSENT. This Sublease and the obligations of the
parties hereunder are conditioned upon Sublessor obtaining Master Landlord's
consent hereto by Master Landlord executing the Consent of Master Landlord at
the end of this Sublease. If such consent is not obtained prior to the
Commencement Date, either party shall have the right to terminate this Sublease,
in which case neither party shall have any rights or obligations under this
Sublease.
23. BANKRUPTCY COURT APPROVAL. This Sublease and the obligations of the
parties hereunder are further expressly conditioned upon Sublessor obtaining a
final order from the Bankruptcy Court approving (a) Sublessor's assumption of
the Master Lease under Section 365 of the Bankruptcy Code, (b) Sublessor's
assumption of the Sublease dated January 11, 2002 between Sublessor and
Arrowhead Claims Management, Inc., and (c) this Sublease and the Other
Agreements, all without amendment or modification, unless such amendment or
modification is approved in writing by both Sublessor and Sublessee, within
forty-five (45) days after this Sublessee is entered into. If the court order
approving this Sublease is not obtained within the time specified, this
Agreement and all of its terms and provisions are and shall be null and void.
IN WITNESS WHEREOF, this Sublease is executed as of the date first set
forth above.
SUBLESSEE:
ARROWHEAD GENERAL INSURANCE AGENCY, INC.,
a Minnesota corporation
By:________________________________________
Xxxxxx X. Xxxxxxx, President & CEO
SUBLESSOR:
INSPIRE INSURANCE SOLUTIONS, INC.,
a Texas corporation debtor and
debtor-in-possession
By:________________________________________
Xxxxxxx Xxxxxx, President & CEO
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CONSENT OF MASTER LANDLORD
The undersigned hereby consents to the foregoing
Sublease.
XXXXXX REALTY, L.P., a Delaware limited partnership
By: Xxxxxx Realty Corporation,
a Maryland corporation,
general partner
By: ______________________________
Its: ____________________________
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Exhibit "A"
Premises
[To Be Attached]
Exhibit "B"
Master Lease
[To Be Attached]
