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4.5 SR 05-16-2022Request for Action To Item Number Mayor and Ci T Council 4.5 Agenda Section Meeting Date Prepared by Consent May 16, 2022 Brent O'Neil, Economic Development Director Item Description Reviewed by Sub -lease of Multipurpose Facility Event Center Cal Portner, City Administrator Reviewed by Space Action Requested Approve, by motion, a request from iBackCheck, LLC, to sub -lease space at the Furniture and Things Community Event Center to Two Brothers Hockey, LLC. Background/Discussion The City recently entered into a lease agreement with iBackCheck Sports Therapy to utilize space at the Furniture and Things Community Event Center. Approximately 50% of the space is being converted into chiropractic offices. The remaining portion will remain open as therapeutic and athletic training space. iBackCheck intends to sub -let that space to Two Brothers Hockey to operate off -ice hockey training programs in addition to the on -ice training and coaching Two Brothers Hockey already provides at the facility. Any sub -letting of the space presently leased to iBackCheck requires city approval. Two Brothers Hockey intends to begin utilizing the space August 1, 2022, for a two-year term. Financial Impact N/A Mission/Policy/Goal Support business investment in Elk River. Attachments ■ Copy of Sub -lease between iBackCheck, LLC and Two Brothers Hockey, LLC. ■ Exhibit of Lease and Sub -lease space. The Elk River Vision A welcoming community with revolutionary and spirited resourcefulness, exceptional service, and community engagement that encourages and inspires pi ospei l_ y. M TUREJ Updated.• August 2020 04.27.2022 SUB -LEASE THIS SUB -LEASE, dated as of this 27+h day of April, 2022, between iBackCheck, PLLC d/b/a iBackCheck Sport Therapy ("Landlord"), and TWO BROTHERS HOCKEY, LLC, ("Tenant"), witnesses the parties' agreement as to the following terms, conditions, covenants, and agreements. ARTICLE 1. DEMISED PREMISES "Demised Premises" means the designated and assigned 48 percent portion of the leased property that Landlord has originally leased from the City of Elk River (the "Property Owner"), located at 1000 School Street, in the City of Elk River, State of Minnesota. The leased property of the Landlord consists of 3,038 rentable square feet in the building known as the Community Center and located at 1000 School Street, Elk River, MN (the `Building"). The Building is part of the "Property" legally described and originally leased by the Property Owner pursuant to "Lease Agreement" (the "Lease"), a copy of which is attached as Exhibit A hereto and incorporated herein. This Sub -Lease is subordinate to the Lease, and all articles of this Sub - Lease are intended to abide by and conform to the terms and conditions of the Lease Further, the Demised Premises to be sub -let from Landlord to Tenant is depicted in the floor plan attached as Exhibit B hereto, and has been or will be approved and confirmed by Property Owner prior to commencement of term below. ARTICLE 2. TERM The term of this Sub -Lease commences upon the scheduled Closing Date of May 3, 2022, with the understanding that the first rent payment shall be due on August 1, 2022, and the Sub - Lease shall expire on July 31, 2024, subject to earlier termination in accordance with this Sub - Lease. The Tenant agrees to take the Demised Premises in its "AS IS" condition at the time of the anticipated delivery date from Property Owner to Landlord (currently scheduled for July 2022). Upon nearing the expiration of the term, the Tenant shall give a minimum of sixty (60) days advance written notice of any intent to extend the Sub -Lease and interest in entering into a new Sub -Lease agreement with the Landlord. Landlord shall have exclusive right to enter into new Sub -Lease negotiations and potential agreement with Tenant, or with another third party, or take over the entire Demised Premises. ARTICLE 3. BASE RENT During the first year of the term of this Sub -Lease, the monthly Base Rent for the demised property shall be Two Thousand One Hundred Eight �-Seven and 36�100 Dollars 2,187.26), i.e., $1.50/rentable square foot payable in advance on or before August 1, 2022, and thereafter on or before the first day of each and every month during the term, at the office of the Landlord. Beginning with August 1, 2023 and throughout the second year of the term of this Sub - Lease, the monthly Base Rent for the demised property shall be Two Thousand Two Hundred Forty -Five and 68 100 Dollars�1 2,245 68 , t.e ITJ1.54 rentable square foot payable in advance on or before the first day of each and every month of the remainder of the term, at the office of the Landlord. ARTICLE 4. ADDITIONAL RENT A. Tenant shall pay, for each calendar year or partial calendar year during which this Sub -Lease is in force, as Additional Rent, its pro -rats share of the Real Estate Taxes, Personal Property Taxes, and Operating Expenses allocable to the Building and the Property of which it is a part. B. Upon completion of each calendar year during the term of this Sub -Lease, Landlord shall determine the actual amount of the Real Estate Taxes and Operating Expenses payable in such calendar year and Tenant's share thereof and deliver a written certification of these amounts to Tenant. Any overpayment or underpayment will be due from Landlord or Tenant, as the case may be, within twenty (20) days after Landlord provides the certification. C. Tenant recognizes that late payment of Rent will result in administrative expense and financial risk to the Landlord, the extent of which is difficult and economically impractical to ascertain. Tenant therefore agrees that if rent or any other sum is not paid when due and payable pursuant to this Lease, a late charge shall be imposed in an amount equalt to the greater of: (a) One Hundred and no/100 ($100.00) Dollars, or (b) a sum equal to five (5 %) percent per month of the unpaid rent or other payment. ARTICLE 5. DELIVERY OF PREMISES Tenant agrees to accept delivery of the Demised Premises in the same condition as Landlord accepts from Property Owner on May 3, 2022. Landlord agrees to work with Tenant during the "move -in period" set forth in Article 6 of the Lease to facilitate the preparation of the Demised Premises for use by both parties and commencement of business operations. See the Addendum hereto attached as Exhibit C and incorporated herein by reference. ARTICLE 6. USE Tenant shall use the Demised Premises for sports training and therapy and ancillary service purposes only, subject to all local, state, and federal laws regulating the use of the Demised Premises. Tenant shall not do anything to create any unusual nuisance, noise, or odor, or otherwise interfere with or disturb any other tenant of the Property or Landlord in its utilization of the Property as a chiropractic clinic. Tenant shall conduct no unlawful activity on the Demised Premises, or the Building or Property. Tenant acknowledges having received and read the Lease attached as Exhibit A, and agrees to abide by all of its terms and conditions as part of this Sub -Lease. -2- ARTICLE 7. ENVIRONMENTAL MATTERS Tenant shall defend, indemnify, and hold Landlord (and Property Owner) harmless from and against any and all actions, claims, proceedings, causes of action, damages, losses, and expenses (including, without limitation, attorneys' fees and environmental engineering fees) resulting from or relating to the existence of any Hazardous Substance at the Property that results from or relates to Tenant's use or occupancy of the Demised Premises. "Hazardous Substance' means any pollutant or other toxic or hazardous waste, or other substance regulated by any applicable law relating to environmental matters and any materials containing friable asbestos, urea formaldehyde or polychlorinated biphenyls. No waiver of liability provision set forth in Article 13 of this Sub -Lease shall apply to this indemnity. This indemnity shall survive expiration or termination of this Sub -Lease. ARTICLE 8. PARKING / RULES AND REGULATIONS Tenant will comply with such reasonable rules and regulations as the Property Owner and Landlord may prescribe, on written notice to Tenant, for the safety, care, cleanliness, or orderly management of the Building or Property. No more than three (3) parking spaces are to be occupied at any one time by Tenant and its invitees. Overnight storage of vehicles, and the storage at any time of any other items or materials outside the Demised Premises but within the Property, is prohibited. Property Owner and Landlord may regulate parking and allocate parking spaces within the Property to Tenant and the Landlord's other lessees, if the need arises. Landlord has the right, in the event of such an allocation, to designate specific space numbers for Tenant's exclusive use, and Tenant shall use those spaces only; provided, however, that Landlord shall, in making such a designation, consult with Tenant and use its best efforts to designate spaces in locations acceptable to Tenant. ARTICLE 9. MAINTENANCE AND REPAIRS Tenant will keep the Demised Premises continuously in a neat, clean, and sanitary condition and in as good condition as when turned over to it, reasonable wear and tear excepted. This maintenance and repair obligation extends to all interior walls, doors, windows, plumbing and electrical fixtures within the Demised Premises, except as these obligations may be covered by manufacturer or contractor warranties. Excepting matters that are Tenant's obligation under this Article, Landlord (and/or Property Owner) will maintain and manage the Building and Property by providing such services as are customary for like buildings in the area. Except as provided elsewhere in this Sub -Lease concerning damage caused by Tenant not subject to a waiver of claims, Landlord (and/or Property Owner) shall at its sole expense maintain, repair and replace the Building's roof and load bearing walls, floors and columns. Landlord shall perform, as a reimbursable Operating Expense, all other maintenance and repairs which are not Tenant's obligation under this Article. -3- If Tenant fails to maintain or repair the Demised Premises as required in this Sub -Lease after written notice shall have been given to Tenant, and after Tenant has had a reasonable time to make the repairs, Landlord may make such repairs, at Tenant's expense, without liability to Tenant for any ensuing loss or damage. ARTICLE 10. ALTERATIONS Tenant acknowledges that this Sub -Lease gives it no right to make material interior changes, additions, or other alterations to the Demised Premises without Landlord's prior written consent, and Tenant agrees not to do so. Landlord, at its discretion, may waive this prohibition under such circumstances and subject to such conditions as Landlord deems appropriate. ARTICLE 11. SIGNS Tenant understands that all signage is under the exclusive control of the Property Owner, and Landlord has sought permission to install at Tenant's own expense, one exterior entry sign (at a designated entry location) stating Tenant's name, which Tenant shall maintain, and may retain upon expiration of the Sub -Lease. Tenant shall place no other sign anywhere on the Property that is visible from outside the Demised Premises without Landlord's prior written consent. ARTICLE 12. UTILITIES The parties understand that the Property Owner has responsibility for all water, sewer, gas, heat, light, and power (standard utilities) supplied to the Demised Premises. Tenant shall pay its proportionate (48%) share for all other services provided to or by Landlord and shared with Tenant, including phone, cable, internet, etc. ARTICLE 13. INSURANCE A. Landlord shall at all times during the term of this Sub -Lease insure the Building against loss or damage by fire, explosion, or other insurable hazards and contingencies for full replacement value, provided that Landlord shall not be obligated to insure any trade fixtures or personal property belonging to or Sub -Leased by Tenant. Tenant shall not be responsible for payment of any deductible or co-insurance portion of Landlord's fire and extended coverage insurance. B. Notwithstanding any provision of this Sub -Lease to the contrary, Tenant shall not carry any stock of goods or do anything in or about the Demised Premises which will in any way impair or invalidate the obligation of the insurer under any policy of insurance required by this Sub -Lease. -4- C. Each insurance policy required hereunder shall provide that the insured party has relinquished all rights to recover against the other party for loss or damage resultingfrorn perils insured against by the policy, to the extent of the coverage" Each party waives any claim. against the otherfor any loss or damage which is covered. by insurancemaintained pursuant to this Sub -Lease. Landlord. and Tenant shall promptly notify their respective insurance carrier(s) of this waiver of stibrogatiora..rights. D. In the event that the use of the Demised Premises by Tenant increases the Premium rate for insurance carried by Landlord on the:property, the Building on any portion. thereof, Tenant slu.all pay Landlord upon. demand the amount of such premium. . increase. If Tennant i nstalls or uses any electrical egnuip e t that overloads the power fines to the Building or its iriuu.g, "I'errnant shall, at its own. expense, make whatever changes are necessary to comply its the requirements of the insurance underwriter,insurance rating bureau, and. governmental authorities having jurisdiction. E. Tenant shall duurin.g the term. hereof beep in. full force and effect at its expense a policy or policies of public liability isurance with respect to the Demised Premises and the business of Tenant, under limits of liabilitynot less than $1,000,000 combined single limit. Such policy or policies shall provide that term (10) days written notice must be given. to Landlord prior to cancellation. or material amendment thereof. Tenant shall furnish evidence satisfactory to Landlord at the time this Sub -Lease is executed and thereafter, on. request, that such. coverage is in full force and effect. Tenarnt"s provp.d° g insurance as prescribed herein. does not release Tenant from. liability to Landlord under this Sub -Lease or otherwise under applicable law, nor does it otherwise limit that liability, except as to those claims expressl-y waived under another provision. of this Sub Lease. Tenant will indemnify .. °fy and defend. Landlord and hold Landlord. harmless, including :reasonable attor ey s fees, from claims for personal. injury or property damage asserted. by Ternan.fs employees, agents,invitees, or any other person, or any business entity, arising from. Tenant's operations on the Demised. Premises during the term of this Sub - Lease. ARTICLE LL 14. NON-LIABILM Unless caused by Landlord's gross negligence, under no circumstances shall Landlord be liable to Tenant or persons claiming through Tenant for any loss or da ..age to any property of Tenant or of others by theft or destruction, any injury or damage to person.s or property resulting from. fare, explosion, falling plaster, steam, gas, electricity, water, rain. or snow or leaks :from. any part of the Property or from. the pipes, appliances, or plumbing works or from. the roof, street or subsurface or from. any other place or by dampness or by any other cause of whatsoever nature. finder no circumstances starn.ces ill Landlord be liable to Tenant or persons claiming through Tenant for any such. damage caused by any other tenant, other occupant, or invitee of the property, or thepuulalic, or caused by operations in construction of any private, public or quasi -public work, or caaused by the absence or interruption of utilities; anyloss or damage resulting from. acts of God. or any cause beyond. Larn.dlord"s neaso lble control; any Loss or damage caused. by Landlord's failure to :canna e the Dernised Premises available for occupancy on. the scheduu.led commencement date of theSub-Lease term; or any consequential damage no :matter what the cause. ARTICLE 15. EMINENT DOMAIN A. If the entirety of the Demised Premises are condemned (this term includes sales in lieu of condemnation, and so-called "quick takes"), then this Sub -Lease will terminate as of the date possession shall be taken by the condemning authority, and rent shall be paid to the date of such termination. Otherwise, this Sub -Lease will remain in effect notwithstanding any condemnation, but with an equitable abatement of Base Rent and/or Additional Rent based on the portion, if any, of the Demised Premises rendered unsuitable for office use and the extent of that unsuitability. Absent termination of this Sub -Lease, Landlord has the option of reducing or eliminating any unsuitability resulting from a condemnation by restoring or remodeling the Demised Premises or by making available substitute areas of the Property reasonably acceptable to Tenant. B. Landlord is entitled to all condemnation proceeds, no matter what the stated basis therefor; provided, however, that Tenant shall have the right to claim and recover from the condemning authority, but not from Landlord, such compensation as may be separately awarded or recoverable by Tenant in Tenant's own right on account of any relocation costs or any resulting damage to Tenant's business. Tenant shall have no claim against Landlord for the value of any unexpired term of this Sub -Lease. ARTICLE 16. DAMAGE OR DESTRUCTION In the event of any damage or destruction to the Property by fire or other cause during the term hereof, the following provisions shall apply: A. If the Building is damaged by fire or any other cause to such extent that the cost of restoration, as reasonably estimated by Landlord (and/or Property Owner), will equal or exceed thirty percent (30%) of the replacement value of the Building (exclusive of land value and foundations) just prior to the occurrence of the damage, then Landlord may, no later than the ninetieth (90th) day following the damage, give Tenant written notice of Landlord's election to terminate this Sub -Lease. In such event, this Sub -Lease shall be deemed to terminate on the thirtieth (30th) day after the date of Landlord's notice of election to terminate, and all rentals shall be paid up to said thirtieth (30th) day. Tenant shall have no claim against Landlord for the value of any unexpired term of this Sub -Lease. B. If the cost of restoration as estimated by Landlord (and/or Property Owner) is less than thirty percent (30%) of said replacement value of the Building, or if, despite the cost, Landlord does not elect to terminate this Sub -Lease, then Landlord shall restore the Demised Premises with reasonable promptness, subject to delays beyond Landlord's control and delays in the making of insurance adjustments; and Tenant shall have no right to terminate this Sub - Lease except as herein provided. Landlord shall not be responsible for restoring or repairing trade fixtures, leasehold improvements, personal property or equipment of Tenant. C. In any case where damage to the Demised Premises renders them materially unsuitable in whole or in part for office use, then unless such damage was wholly or partially caused by the negligence or breach of the terms of this Sub -Lease by Tenant, its employees or -6- invitees, a portion of the rent based upon the amount or the extent to which the Demised Premises are rendered unsuitable shall be abated until the Demised Premises are repaired or restored. If the destruction or damage was wholly or partially caused by negligence or breach of the terms of this Sub -Lease by Tenant as aforesaid and if Landlord elects to rebuild, there will be no abatement of rent. ARTICLE 17. SURRENDER Upon termination or expiration of this Sub -Lease, Tenant agrees to do the following on or before the expiration or termination date: (a) remove all signs, personal property, and trade fixtures belonging to or leased by Tenant; (b) repair all damage resulting from such removal; (c) promptly surrender all keys to Landlord at the place then fixed for payment of rent and inform Landlord of the combinations of any locks and safes that will remain behind; and (d) surrender possession of the Demised Premises broom clean and in as good condition and repair as the same were in at the commencement of this Sub -Lease except for (i) reasonable wear and tear, (ii) repairs and restorations required to be made by Landlord as herein provided, and (iii) damage or destruction covered by insurance required to be maintained under this Sub -Lease. Tenant agrees that Landlord will have the option, with respect to all or any of Tenant's personal property left behind in violation of this Article, to store it at Tenant's expense or declare and treat it as having been abandoned by Tenant. ARTICLE 18. HOLDING OVER Any holding over without Landlord's written consent after termination or expiration of this Sub -Lease is a breach hereof entitling Landlord to institute legal action to dispossess Tenant and to sue Tenant for any damages resulting from the holding over. Any holding over with Landlord's consent will, absent a contrary writing executed by the parties, be considered a month to month extension of this Sub -Lease with Base Rent payable as provided in the next sentence. In all cases, except insofar as Landlord may hereafter agree in writing, so long as Tenant remains in possession after termination or expiration of this Sub -Lease, Tenant agrees to pay Base Rent at double the rate in effect immediately prior to termination or expiration hereof, and otherwise to abide by all terms and obligations imposed on Tenant under this Sub -Lease. ARTICLE 19. DEFAULT OF TENANT A. In the event of any failure of Tenant to pay any Base Rent, Additional Rent, or other sum when due hereunder; or any failure of Tenant to perform any other term, condition or covenant of this Sub -Lease for more than five (5) days (or such additional time, in no event more than ninety (90) days, as is reasonably required to correct such failure) after written notice; or if Tenant or an agent of Tenant shall falsify any report required to be furnished to Landlord pursuant to the terms of this Sub -Lease, or otherwise misrepresent any material fact in any writing provided to Landlord; or if Tenant or any guarantor of this Sub -Lease shall become bankrupt or insolvent, or file any debtor proceedings, or any person shall take or have against -7- Tenant or any guarantor of this Sub -Lease in any court pursuant to any statute either of the United States or of any state a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Tenant's or any such guarantor's property; or if Tenant or any such guarantor makes an assignment for the benefit of creditors, or petitions for or enters into an arrangement; or if Tenant shall abandon the Demised Premises for a period of more than ninety-six (96) consecutive hours or suffer this Sub -Lease to be taken under any writ of execution; then, in any such event, Tenant shall be in default hereunder (a "Default"), and Landlord, in addition to other rights and remedies it may have, may declare all rents reserved under this Sub -Lease for the then unexpired balance of the term to be immediately due and payable, and shall have the immediate right of re-entry and may remove all persons and property from the Demised Premises, and such property may be removed and stored in a public warehouse or elsewhere at the cost and for the account of Tenant, all without service of further notice or resort to legal process and without Landlord's being guilty of trespass or becoming liable for any loss or damage which may be occasioned thereby. B. Should Landlord elect to re-enter the Demised Premises after Tenant's Default as herein provided, or should it take possession of the Demised Premises after Tenant's Default pursuant to legal proceedings or pursuant to any notice provided for by law, Landlord may either terminate this Sub -Lease or may from time to time, without terminating this Sub -Lease, make such alterations and repairs as may be necessary in order to relet the Demised Premises, and may relet the Demised Premises or any part thereof for such term or terms (which may be for a term extending beyond the term of this Sub -Lease) and at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable. Upon each such reletting, all rentals received by Landlord from such reletting shall be applied first to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; second, to the payment of Landlord's costs and expenses of such reletting, including reasonable brokerage fees, attorney's fees, and costs of alterations and repairs necessary to prepare the space for a new tenant; third, to the payment of rent due and unpaid hereunder; and the residue, if any, shall be held by Landlord and applied in payment of future rent as the same may become due and payable hereunder. If such rentals received from such reletting during any month be less than the rentals to be paid during that month by Tenant hereunder, then Tenant shall pay any such deficiency to Landlord on demand. No such re-entry or taking possession of the Demised Premises by Landlord, nor any other act or omission to act by Landlord, shall be construed as an election on Landlord's part to terminate this Sub -Lease unless a written notice of Landlord's intention to terminate be given to Tenant, or unless the termination hereof be decreed by a court of competent jurisdiction. Notwithstanding any such reletting without termination, Landlord may at any time after such re-entry and reletting elect to terminate this Sub -Lease for Tenant's said previous Default. Should Landlord at any time terminate this Sub -Lease by reason of any Default by Tenant, then in addition to any other remedies it may have, Landlord may recover from Tenant all damages it may incur by reason of such Default, including the cost of recovering possession of the Demised Premises, reasonable attorney's fees, and the net present value at the time of such termination (utilizing a discount rate of 7.5%) of the excess, if any, of (i) the amount of Base Rent and Additional Rent reserved in this Sub -Lease for the remainder of its stated term, over (ii) the then reasonable rental value of the Demised Premises for the remainder of the stated Sub -Lease Term, all of which amounts shall be immediately due and payable from Tenant to Landlord. -8- C. In the event suit shall be brought for recovery of possession of the Demised Premises or for any other remedy available to Landlord after Tenant's Default, and in the event such Default by Tenant shall be established in such action, then Tenant shall pay to Landlord all expenses therein incurred, including reasonable attorney's fees, together with interest at the rate of one and one-half percent (1.5%) per month from the date of Default on all damages awarded, attorney's fees and expenses. D. No remedy herein or elsewhere in this Sub -Lease, or otherwise by law, statute or equity conferred upon or reserved to Landlord or Tenant, shall be exclusive of any other rem- edy, but all such remedies shall be cumulative, and may be exercised from time to time and as often as the occasion may arise. ARTICLE 20. LANDLORD'S WARRANTY Landlord warrants and covenants that upon Tenant's paying the rents and performing the covenants and agreements herein stated, Tenant shall and may peaceably and quietly have, hold and enjoy the Demised Premises for the term herein set forth. Landlord shall not be deemed to be in default under this Sub -Lease until Tenant has given Landlord written notice specifying the nature of the default and Landlord does not cure such default within thirty (30) days after receipt of such notice or within such reasonable time thereafter as may be necessary to cure such default where such default is of such a character as to reasonably require more than thirty (30) days to cure. ARTICLE 21. RENT DUE ABSOLUTELY Tenant's obligations to pay Base Rent and Additional Rent are each independent of any other provision of this Sub -Lease, and such rents shall be due irrespective of any claim of setoff or other claim by Tenant against Landlord. All rents due under this Sub -Lease shall be due at the times specified herein; provided, however, that if Additional Rent is increased, the amount of the increase shall first be due on the later of the twentieth (20th) day following notice of the increase, or when the increase would otherwise be payable. Any monies other than rent payable by Tenant under this Sub -Lease shall be due on the twentieth (20th) day following Landlord's invoice therefor, unless this Sub -Lease provides a different time. All accrued rent and other monies, if not paid when due, shall unless otherwise specified herein bear interest at the lesser of eighteen percent (18%) per annum or the maximum rate permitted by law. All accrued rent and other monies, if not paid within ten (10) days of the due date, shall be subject to a late fee of the greater of $50.00 or two percent (2%) of the delinquent payment, to cover Landlord's costs of monitoring the delinquency. ARTICLE 22. RIGHT OF ENTRY As the space to the Demised Premises is entirely within Landlord's property originally leased by Landlord from Property owner, Tenant shall permit Landlord, its agents and contractors to enter the Demised Premises at all times for any purpose, including (but not by -9- way of limitation) the purpose of inspecting the same and making any necessary repairs, alterations and improvements. Nothing herein shall imply any duty upon the part of Landlord to do any repair, maintenance, inspection, or other work which, under any provision of this Sub -Lease, Tenant may be required to perform; and the performance thereof by Landlord shall not constitute a waiver of Tenant's nonperformance. Landlord will not unreasonably disturb Tenant's business in the course of performing work on the Property, but Landlord will not be liable for inconvenience, annoyance, disturbance, loss of business, or other damage to Tenant by reason of making repairs or the performance of any other work in the Demised Premises which this Sub -Lease requires or permits Landlord to perform, or on account of bringing materials, supplies and equipment into or through the Demised Premises during the course thereof, and the obligations of Tenant under this Sub -Lease shall not thereby be affected in any manner whatsoever. Landlord reserves the right to enter upon the Demised Premises at any time for any reason, and Tenant agrees to same. ARTICLE 23. ASSIGNMENT AND SUBLETTING Tenant shall not transfer or assign this Sub -Lease or sublet the Demised Premises or any part thereof, whether by voluntary act, operation of law, or otherwise, without obtaining the prior written consent of Landlord in each instance. Consent by Landlord to any assignment of this Sub -Lease or to any subletting of the Demised Premises shall not be a waiver of Landlord's rights under this Article as to any subsequent assignment or subletting. Landlord's rights to assign this Sub -Lease are and shall remain unqualified. Unless Landlord agrees otherwise in writing, no assignment or subletting by Tenant shall relieve Tenant from any of its obligations under this Sub -Lease. ARTICLE 24. SUBORDINATION, ATTORNMENT, NOVATION Tenant agrees to subordinate this Sub -Lease to any mortgage now or hereafter placed of record, to attorn to any successor in interest of Landlord (including the mortgagee under any such mortgage upon foreclosure or conveyance in lieu thereof), and to consent to a novation in the event that Landlord conveys the Property to a third party; provided, however, that the mortgagee, successor or third party shall agree that, upon obtaining or succeeding to Landlord's interest, it will keep this Sub -Lease in effect and abide by its terms until such time as it may be terminated in accord with its stated provisions. Tenant shall, within ten (10) business days of any written request by Landlord, execute and deliver to Landlord an "estoppel certificate' in any form reasonably designated by Landlord certifying that this Sub -Lease is in full force and effect and that there are no offsets against rent nor defenses to Tenant's performance under this Sub -Lease, or setting forth any such offsets or defenses claimed by Tenant, as the case may be, and certifying such other information as Landlord reasonably requests. ARTICLE 25. NOTICES Notices required or permitted under this Sub -Lease must be in writing and will be deemed sufficiently given if transmitted by overnight courier or first class, certified United -10- States mail with return receipt requested, postage prepaid, directed to the following addresses or such other addresses as either party may designate in writing: To Tenant: Ben Jaremko/Two Brothers, LLC Attn: Iv Phone: e-Mail: To Landlord: iBackCheck, PLLC Attn: Christi Jo Christian MN Phone: e-Mail: To Attorney: KELLER, WOODS & THOMPSON Attn: Paul A. Thompson 1300 Godward Street NE, #4000 Minneapolis, MN 55432 Phone: (763) 571-2345 e-Mail::�aui 1@woodsandthomp son.com Notices mailed as stated above will be deemed received (whether or not actually received) on the second business day after mailing. Notices given in any other manner will be deemed received only upon actual receipt. Unless Landlord specifies otherwise, rent will be payable to Landlord at the address designated for notices from time to time. ARTICLE 26. REPRESENTATIONS Tenant acknowledges that, except as expressly stated in this Sub -Lease, Landlord has made no representations, promises or warranties regarding the Demised Premises, Property, or this Sub -Lease. ARTICLE 27. NON -WAIVER Acceptance of rent following a Default by Tenant, known or unknown to Landlord, monetary or non -monetary, shall in all cases be deemed a matter of mitigating damages and not a waiver of such Default. Forbearance for any length of time shall not be deemed a waiver by Landlord. Landlord's rights can be waived only by a written express waiver particularly stating the matter waived. No other act, statement, or omission of any kind by Landlord shall be deemed a waiver of Landlord's rights. -11- ARTICLE 28. SUCCESSORS AND ASSIGNS This Sub -Lease shall inure to the benefit of and be binding upon the Landlord and Tenant and upon their respective successors in interest and assigns. ARTICLE 29. GENERAL PROVISIONS No Liabilil of Partners of Landlord. Notwithstanding anything herein to the contrary, Landlord and partners of Landlord, if any, are not and will not be personally liable for performance of the covenants and agreements of Landlord herein contained, and the enforcement of the remedies of Tenant in the event of default by Landlord will be strictly limited to the equity interests of Landlord in the Project. If Landlord sells or assigns its interest in the Project, Landlord will without further written agreement be freed and relieved of liability under such covenants and obligations. oint and_Several Liability. If, at any time, there is more than one person who is a Tenant under this Sub -Lease, the liability for keeping and performing Tenant's obligations under this Sub -Lease will be joint and several with respect to each such person or entity. No Partnership. Landlord does not, in any way or for any purpose, become a partner of Tenant in the conduct of Tenant's business, or otherwise, or become a joint venture, or a member of a joint enterprise with Tenant, by virtue of this Sub -Lease. Time of the Essence: Computation of Time. Time is of the essence for each and every provision of this Sub -Lease. Whenever the last day for the exercise of any right or discharge of any duty under this Sub -Lease will fall upon a Saturday, Sunday or any date on which banks in Minnesota are closed, the party having such right or duty may exercise such right or discharge such duty on the next succeeding day which is a regular business day. Minnesota rLaw Severabilit Cations. This Sub -Lease will be governed by and construed in accordance with the domestic laws of the State of Minnesota, without giving effect to any choice of law or conflicting provision or rule (whether of the State of Minnesota or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of Minnesota to be applied. In furtherance of the foregoing, the internal laws of the State of Minnesota control the interpretation and construction of this Sub -Lease, even if under such jurisdiction's choice of law or other conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply. Whenever possible, each provision of this Sub -Lease will be interpreted in such manner as to be effective and valid under such applicable laws, but, if any provision of this Sub -Lease will be held prohibited or invalid under such applicable law, such provisions will be effective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining portions of this Sub -Lease. The captions, articles and underscored portions of this Sub -Lease are for convenience only and will not be used in the interpretation of any of the provisions of this Sub -Lease. Exhibits. Included and incorporated herein by reference are exhibits A through D, set forth in the Schedule of Fundamental Sub -Lease Terms or otherwise stated in this Sub -Lease. -12- OFAC Covenant. Tenant will ensure, and cause each of its subsidiaries to ensure, that (i) no person who owns twenty percent (20%) or more of the equity interest in Tenant, or otherwise controls Tenant or any of its subsidiaries, is or shall be listed on the Specially Designated Nationals and Blocked Person List or other similar lists maintained by the OFAC, the Department of the Treasury or included in any Executive Order. Landlord's Riht of Recature a on Cessation of O erations. If Tenant ceases to operate its business in the Premises for a period in excess of sixty (60) days (unless in connection with a remodeling, condemnation, casualty, or Event of Force Majeure) (the "Dark Period"), in addition to Landlord's other rights and remedies under this Sub -Lease, Landlord has the right, but not the obligation, to terminate this Sub -Lease on the terms and conditions in this Section, at no cost to Landlord (the "Recapture Right"). Landlord may exercise its Recapture Right any time after said sixty (60) day Dark Period by providing written notice ("Landlord's Recapture Notice"). This Sub -Lease will terminate as of the date which is thirty (30) days after the date on which Tenant receives Landlord's Recapture Notice. Notwithstanding the foregoing, Landlord's Recapture Right will be null and void and this Sub -Lease will continue in full force and effect in the event that Tenant gives written notice to Landlord within thirty (30) days after receipt of Landlord's Recapture Notice that either Tenant or its permitted assignee or sublessee intends to commence operations at the Premises and Tenant (or its permitted assignee or sublessee, as the case may be) in fact commences operations at the Premises within sixty (60) days after receipt by Tenant of Landlord's Recapture Notice. Contmencies. Landlord's obligations under this Sub -Lease are contingent on Landlord's receipt of any consent or approval required by Landlord's lender. Landlord will diligently pursue its lender's consent and approval and will deliver Tenant notice of satisfaction on or before the Rent Commencement Date. Guarant �. Tenant will deliver to Landlord along with an executed copy of this Sub - Lease, a fully executed copy of the Lease Guaranty Agreement in form attached hereto as Exhibit D, wherein Ben Jaremko (hereinafter referred to as "Guarantor") shall guaranty Tenant's Sub -Lease obligations. Landlord shall not have any obligations under this Sub -Lease unless and until said executed Lease Guaranty Agreement is delivered to Landlord, and it will be an Event of Default if Tenant does not deliver the fully executed Lease Guaranty Agreement along with the executed copy of this Sub -Lease. Counter arts. This Sub -Lease may be executed in several counterparts, each of which will be deemed an original, and all of which together will constitute one and the same instrument. Effective Date. The Effective Date of this Sub -Lease will be the date set forth on the signature page of this Sub -Lease. Radius Restriction. Tenant covenants and agrees that it shall not at any time during the Term or any Option Term directly or indirectly, operate, manage or have any interest in any other business which is in competition with a business operated for the Permitted Use within a radius of three (3) miles of the Premises. -13- COVID-19 Provision. In the event of generally applicable governmental rules, laws, regulations, or executive orders enacted for the purpose of reducing the spread of COVID-19 temporarily prohibit the operation of a business for the Permitted Use at the Premises during the Initial Term (the "Temporary Prohibition Period"), and provided Tenant is not then in default under this Sub -Lease, then the Base Rent accruing during such Temporary Prohibition Period shall be deferred (with Base Rent during any partial calendar months during such period to be appropriately prorated) until the earlier to occur of (i) six (6) months after the end of the said Temporary Prohibition Period and (ii) the end of the Term. Tenant shall use commercially reasonable efforts to promptly apply for any and all governmental assistance, whether in the form of grants, loans, forgiveness, waivers, deferrals, or other economic stimulus benefits, that both would reasonably be expected to benefit Tenant and may now or hereafter be available to Tenant on account of or relating to the COVID-19 pandemic (collectively, "Stimulus Funds"), with Tenant's failure to do so constituting a material default under the Sub -Lease. If Tenant receives any Stimulus Funds or the economic benefits thereof, Tenant shall promptly, and in any event within 30 days, first apply the same (or the economic benefit thereof) toward the payment of the Base Rent deferred under this Section 58 to the extent permitted under applicable law, and upon payment of such amount to Landlord, the amount of Base Rent deferred under this Section 58 shall be reduced by the amount of the Stimulus Funds so paid to Landlord. Notwithstanding anything to the contrary in this Section 58, if any Event of Default occurs prior to the repayment of all Base Rent deferred under this Section 58, then Tenant shall not be entitled to any further Base Rent deferral hereunder and all Base Rent that has been deferred will become immediately due and payable to Landlord. In consideration for the Base Rent deferral provided herein, Tenant hereby waives any and all claims and defenses asserting: (i) Tenant has the right to otherwise or further offset, defer, or abate any Rent due under this Sub -Lease as a result of the COVID-19 pandemic or any related prior, existing, or future Federal, State, County, City or other local rules, regulations, Executive Orders or other regulations or edicts; or (ii) that the COVID-19 pandemic or any related prior, existing, or future Federal, State, County, City or other local rules, regulations, Executive Orders or other regulations or edicts constitute or result in a frustration of purpose of the Sub -Lease or otherwise entitle Tenant to terminate this Sub -Lease. Tenant acknowledges and agrees that as of the Effective Date there are no generally applicable governmental rules, laws, regulations, or executive orders that have been enacted for the purpose of reducing the spread of COVID-19 that would temporarily prohibit the operation of a business for the Permitted Use at the Premises. Counter warts. This Sub -Lease may be executed in several counterparts, each of which will be deemed an original, and all of which together will constitute one and the same instrument. Effective Date. The Effective Date of this Sub -Lease will be the date set forth on the signature page of this Sub -Lease. REMAINDER OF PAGE LEFT INTENTIONALLY BLANK ** Signature Page of Sub -Lease to Follow ** -14- IN TESTIMONY WHEREOF, the parties have executed this Sub -Lease as of the day and year first above written: LANDLORD: iBackCheck, PLLC By Christi Jo Christian Its: CEO/Manager TENANT: TWO BROTHERS HOCKEY, LLC Benjamin am Its: CEO/ Manager -15- Exhibit A Lease Agreement By and between iBackCheck, PLLC and City of Elk River -16- EXHIBIT B FLOOR PLAN OF DEMISED PREMISES EXHIBIT C ADDENDUMS TO SUB -LEASE 1. The parties to this Sub -Lease mutually agree that the designated space (attached Exhibit B) sub -let to the Tenant shall be utilized by Tenant for the specific purpose of sports training and services for athletes (both child and adult ages). Tenant shall not engage in the utilization of the sub -let space for purposes of offering group classes outside the scope of sports training and services (ie. yoga, Pilates, and other group exercise classes). 2. The parties to this Sub -Lease mutually agree that the designated space (attached Exhibit B) sub -let to the Tenant shall have mutually established hours solely for use by Tenant, and that the designated space may be utilized by Landlord, but with the express restriction as to Tenant's scheduled hours. ez e-D,- Initials of Tenant T' Initials of Landlorcr -18- EXHIBIT D GUARANTY FROM BEN JAREMKO GUARANTY In consideration of the execution by iBackCheck, PLLC ("Landlord") of that certain Sub - Lease (the "Sub -Lease') with Two Brothers, LLC, ("Tenant"), dated as of the 27th day of April 2022, pertaining to a portion of the the building commonly known as 1000 School Street, Elk River, Minnesota (the "Building"), the undersigned (hereinafter collectively referred to as the "Guarantors"), being the principals of Tenant, hereby agree as follows: 1. The Guarantors hereby absolutely, unconditionally, and jointly and severally guarantee to Landlord (i) the full and prompt payment, when due, of all sums payable by Tenant to Landlord under the terms of the Sub -Lease, (ii) the full and prompt performance, when due, of all other obligations imposed by the Sub -Lease on Tenant, and (iii) the full and prompt discharge of all obligations arising from Tenant's occupancy or use of any part of the Building. The Guarantors hereby absolutely, unconditionally and jointly and severally agree to indemnify, defend, and hold Landlord harmless from and against any and all claims, liabilities, judgments, expenses (including, without limitation, reasonable attorneys fees), and costs arising from any breach or violation by Tenant of its obligations under the Sub -Lease or under law, or from any such breach or violation asserted by a third party. The Guarantors hereby absolutely, unconditionally, and jointly and severally guarantee to Landlord payment of Landlord's costs and expenses, including, without limitation, reasonable attorneys' fees, incurred in enforcing this Guaranty, whether or not suit is filed, and whether or not incurred to obtain or enforce a judgment, and, if suit is filed and any party appeals, all costs incurred in prosecuting or defending any such appeal. The above -described payments and other obligations are hereby designated the "Obligations." 2. No act or thing need occur to establish the liability of any Guarantor hereunder, and with the exception of full payment and performance, no act or thing (including, but not limited to, a discharge in bankruptcy of the Obligations, and/or the running of the statute of limitations) relating to the Obligations, which but for this provision could act as a release of the liabilities of any Guarantor hereunder, shall in any way exonerate any Guarantor, or affect, impair, reduce, or release this Guaranty and the liability of any Guarantor hereunder; and this shall be a continuing, absolute, unconditional and joint and several guaranty and shall be in force and be binding upon each Guarantor until the Obligations are fully paid and performed. 3. The liability of each Guarantor hereunder shall not be affected or impaired in any way by any of the following acts or things (which Landlord is hereby expressly authorized to do, omit or suffer from time to time without notice to or consent of anyone): (i) any acceptance of collateral security, guarantors, accommodation parties or sureties for any or all Obligations; (ii) any extension or renewal of any Obligations (whether or not for longer than the original period) or modification of the terms of any Obligations; (iii) any waiver or indulgence granted to Tenant, any delay or lack of diligence in the enforcement of the Sub -Lease or any particular Obligation, or any failure to institute proceedings; (iv) any full or partial release of, compromise or settlement with, or agreement not to sue any other guarantor or other person liable on any -19- Obligations or the death of any other guarantor or obligor on any Obligations; (v) any release, surrender, cancellation or other discharge of any Obligations or the acceptance of any instrument in renewal or substitution for any instrument evidencing Obligations; (vi) any failure to obtain collateral security (including rights of setoff) for any Obligations, or to see to the proper or sufficient creation and perfection thereof, or to establish the priority thereof, or to preserve, protect, insure, care for, exercise or enforce any of the security for any of the Obligations; and (vii) any modification, alteration, substitution, exchange, surrender, cancellation, termination, release or other change, impairment, limitation, loss or discharge of any of the security for any of the Obligations. Each Guarantor waives any and all defenses and discharges available to a surety, guarantor, or accommodation co -obligor, dependent on their character as such. 4. Each Guarantor waives any and all of the following defenses, claims, setoffs, and discharges, pertaining to the Obligations: waiver, release, discharge in bankruptcy, and ultra vires acts, which may be available to Tenant in respect of the Obligations, or any setoff available against Landlord and to Tenant, whether or not on account of a related transaction. The liability of each Guarantor shall not be affected or impaired by any voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets, marshaling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar event or proceeding affecting, Tenant or any of its assets. 5. Each Guarantor also hereby waives: (i) presentment, demand for payment, notice of dishonor or nonpayment, and protest of the Obligations; (ii) notice of the acceptance hereof by Landlord; and (iii) notice of any amendment to or modification of any of the terms and provisions of the Lease or any other agreement evidencing any Obligations. 6. This Guaranty shall be binding upon the heirs, legal representatives, successors and assigns of each of the Guarantors, and shall inure to the benefit of the successors and assigns of Landlord. 2� IN WITNESS WHEREOF, each Guarantor has executed this Guaranty as of this day of . ',' ter. , .. ........ 12022. GUARANTOR: Benjamin P. Jareni o, Indi� ally -20- PROPOSED FLOOR PLAN 1/S"=V-0" N b zemae trcn I� roBA MAr Generals a '�A"�' Suble EY3e roBA MAT roxze ENc5be -.A Tszx O EQ ME. BALLS RBT Y of n.Nsr �M Me olm. u.dnresm «gym wwpewNeMme««wm,aina �om�aNab lim��,am Mmmnoa Dete:1 Reg. No: uw - - NOT FOR CONSTRUCTION - - a o W H 2 W U ZW g �00 a Draft Print mY 2 W �2 12/22/2021 11:12:10 AM Y °w. a SCALE: 1/8'=V-0- F (,� o¢ Q O $ 0 z 1w GY LL m �w d