EXHIBIT 10.6
LEASE AGREEMENT
By and Between
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
and
HOWELL CORPORATION
TABLE OF CONTENTS
ARTICLE I
Section l. 01 - Leased Premises................................ 1
Section 1.02 - Term............................................ 2
Section l.03 - Use............................................. 2
Section 1.04 - License to Use Certain of the Common Areas...... 2
ARTICLE II
Section 2.01 - Base Rental..................................... 2
Section 2.02 - Rental Payments................................. 3
Section 2.03 - Additional Rental............................... 3
Section 2.04 - Actual Operating Expenses....................... 4
Section 2.05 - Rental Abatement................................ 7
ARTICLE III
Section 3.01 - Services........................................ 7
Section 3.02 - Services Interruption........................... 7
Section 3.03 - Keys and Locks.................................. 10
Section 3.04 - Graphics, Building Directory and Name........... 11
Section 3.05 - Tunnel System................................... 11
ARTICLE IV
Section 4.01 - Care of the Leased Premises..................... 12
Section 4.02 - Entry for Repairs and Inspection................ 12
Section 4.03 - Nuisance........................................ 12
Section 4.04 - Laws and Regulations; Rules of Building......... 12
Section 4.05 - Legal Use and Violations of Insurance Coverage.. 13
Section 4.06 - Hazardous Substances............................ 13
ARTICLE V
Section 5.01 - Leasehold Improvements.......................... 15
Section 5.02 - Repairs by Landlord............................. 16
Section 5.03 - Repairs by Tenant............................... 16
ARTICLE VI
Section 6.01 - Condemnation.................................... 17
Section 6.02 - Damages from Certain Causes..................... 17
Section 6.03 - Casualty........................................ 17
Section 6.04 - Casualty Insurance.............................. 18
Section 6.05 - Liability Insurance............................. 18
Section 6.06 - Hold Harmless................................... 18
Section 6.07 - Waiver of Subrogation Rights.................... 18
ARTICLE VII
Section 7.01 - Intentionally Deleted........................... 19
Section 7.02 - Default b Tenant................................ 19
Section 7.03 - Abandonment of the Leased Premises.............. 21
Section 7.04 - Rent Computation................................ 22
Section 7.05 - Landlord's Right to Cure Defaults............... 22
Section 7.06 - Non-Waiver...................................... 22
Section 7.07 - Holding Over.................................... 22
Section 7.08 - Attorneys' Fees................................. 23
Section 7.09 - Subordination................................... 23
Section 7.10 - Estoppel Certificate............................ 24
Section 7.11 - Landlord Alterations or Modifications........... 25
Section 7.12 - Restrictions on Third-Party Leases.............. 25
Article VIII
Section 8.01 - Assignment or Sublease by Tenant................ 25
Section 8.02 - Assignment by Landlord.......................... 27
Section 8.03 - Peaceful Enjoyment.............................. 27
Section 8.04 - Limitation of Landlord's Personal Liability.... 28
ARTICLE IX
Section 9.01- Renewal Option................................... 28
ARTICLE X
Section 10.01 - Expansion Option............................... 29
ARTICLE XI
Section 11.01 - Preferential Right............................. 31
ARTICLE XII
Section 12.01 - Notices........................................ 33
Section 12.02 - Miscellaneous.................................. 34
EXHIBITS
Exhibit A-1 - Floor Plan of Leased Premises
Exhibit A-2 - Leased Premises on 16th Floor
Exhibit A-3 - Leased Premises on Basement Level
Exhibit B - Construction of Initial Leasehold Improvements
Exhibit B-1 - Approved Space Plans
Exhibit B-2 - Approved Construction Documents
Exhibit C - Janitorial Specifications
Exhibit D-1 - Building Rules and Regulations
Exhibit E - Parking
Exhibit E-1 - Location of Reserved Parking Spaces
Exhibit F - Tenant's Removable Items
Exhibit G - List of Buildings
Exhibit H - List of Existing Expansion, Renewal and Preferential Rights
Exhibit I - Rooftop Equipment
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease") is made and entered into to be effective as
of December 13, 1993 (the "Effective Date") by and between TEXAS COMMERCE BANK
NATIONAL ASSOCIATION, a national banking association (hereinafter called
"Landlord"), and HOWELL CORPORATION, a Delaware corporation (hereinafter called
"Tenant").
WITNESSETH:
1.01 Leased Premises. (a) Subject to and upon the terms, provisions and
conditions hereinafter set forth, and each in consideration of the duties,
covenants and obligations of the other hereunder, Landlord does hereby lease,
demise and let to Tenant and Tenant does hereby lease and take from Landlord
those certain premises (hereinafter sometimes called the "Leased Premises") in
building which is located at 1111 Fannin Street (the "Building") on the
southerly one-half (1/2) of Block 254, South Side Buffalo Bayou, in the City of
Houston, Harris County, Texas (hereinafter sometimes called the "Land"), the
Leased Premises being (i) Twelve Thousand One Hundred Sixty- Six (12,166) square
feet of Net Rentable Area (defined below) on the fifteenth (15th) floor of the
Building, as reflected on the floor plan attached hereto as EXHIBIT A-I (ii)
Thirty-Three Thousand Three Hundred Sixty-One (33,361) square feet of Net
Rentable Area on the sixteenth (16th) floor of the Building as reflected on the
floor plan attached hereto as EXHIBIT A-2 (the areas described in (i) and (ii)
being herein referred to as the "Office Space"), and (iii) approximately Two
Thousand (2,000) square feet of Net Rentable Area on the basement level of the
Building (the "Storage Space"), as reflected on the floor plan attached hereto
as EXHIBIT A-3.
(b) "Net Rentable Area," as used herein, shall refer to (i) in the case of an
entire floor leased to a single tenant, all floor area measured from the inside
surface of the outer glass line of the Building to the inside surface of the
opposite outer glass line excluding only the areas ("Service Areas") used for
building stairs, fire towers, elevator shafts, flues, vents, stacks, pipe shafts
and vertical ducts (which Service Areas shall be measured from the midpoint of
walls enclosing such Service Areas), but including any such Service Areas which
are for the specific use of the particular tenant such as special stairs or
elevators, plus an allocation of the square footage of the Building's elevator
machine rooms, mechanical and electrical rooms, and public lobbies based upon
the ratio which the tenant's Net Rentable Area (excluding Common Areas) bears to
the aggregate Net Rentable Area (excluding Common Areas) in the Building, and
(ii) in the case of a floor to be occupied by more than one tenant, all floor
areas within the inside surface of the outer glass walls enclosing the Leased
Premises and measured to the mid-point of the walls separating areas leased by
or held for lease to other tenants or from areas devoted to corridors, elevator
foyers, rest rooms, mechanical rooms, janitor closets, vending areas and other
similar facilities for the use of all tenants on the particular floor
(hereinafter sometimes called "Common Areas"), but including a proportionate
part of the Common Areas located on such floor based upon the ratio which the
tenant's Net Rentable Area (excluding Common Areas) on such floor bears to the
aggregate Net Rentable Area (excluding Common Areas) on such floor, plus an
allocation of the square footage of the Building's elevator machine rooms,
mechanical and electrical rooms, and public lobbies based upon the ratio which
the tenant's Net Rentable Area (excluding Common Areas) bears to the aggregate
Net Rentable Area (excluding Common Areas) in the Building. No deductions from
Net Rentable Area shall be made for columns necessary to the Building.
(c) The foregoing definition of Net Rentable Area has been used in calculating
the Net Rentable Area of the Leased Premises and the Net Rentable Area of the
Building, and Tenant and Landlord hereby stipulate and agree that the Net
Rentable Area of the Leased Premises is 47,527 and the Net Rentable Area of the
Building is 422,563. If the Building is ever demolished, altered,
remodeled, renovated, expanded or otherwise changed in such a manner as to alter
the amount of space contained therein, then the above calculation for the Net
Rentable Area of the Building shall be adjusted and recalculated by using the
foregoing method of determining Net Rentable Area, subject to Tenant's prior
written approval, which approval shall not be unreasonably withheld.
1.02 Term. (a) The term of this Lease shall commence on the earlier to occur of
(i) the Leasehold Improvements Deemed Completion Date (as defined in EXHIBIT B
attached hereto and made a part hereof for all purposes) and (ii) the date on
which Tenant occupies all or any part of the Leased Premises for purpose of
conducting its regular business therein (such earlier date being herein referred
to as the "Commencement Date") and, unless sooner terminated or renewed and
extended in accordance with the terms and conditions set forth herein, shall
expire on the one hundred thirty- second (132nd) monthly anniversary of the
Commencement Date. This Lease shall be effective as of the Effective Date and in
the event Tenant or its agents, employees or contractors enter the Leased
Premises prior to the Commencement Date, for purposes other than conducting its
regular business therein, such entry shall be subject to the terms and
conditions of this Lease, except that the Rent (as hereinafter defined) shall
not commence to accrue as a result of such limited use.
(b) Within five (5) days after the Commencement Date and at any time thereafter
upon the request of Landlord, Tenant shall execute and deliver to Landlord a
declaration (in the form to be submitted by Landlord) specifying the date upon
which the same occurred.
1.03 The Leased Premises shall be used for general office purposes and for no
other purpose, and Tenant (and its permitted assignees or subtenants) shall use
and maintain (except as otherwise provided herein) the Leased Premises in a
lawful manner. Such permitted use shall expressly include, but shall not be
limited to, the operation and sharing of computer facilities, conference
facilities, employee lunchroom (including vending machines for the sole
noncommercial use of Tenant, its employees and invitees)and coffee bars and
executive and other dining areas (including service facilities in support
thereof, and fixtures, appliances and equipment normally associated therewith,
such as microwave ovens, refrigerators, and ice making machines for use of
Tenant's employees and its visitors), photocopying and reproduction equipment
and facilities, and other uses incident thereto and consistent with the
character of the Building.
1.04 License to Use Certain of the Common Area. Landlord hereby grants Tenant,
its employees, invitees, licensees and other visitors a nonexclusive license for
the term of this Lease and all extensions and renewals thereof to use the public
or common entrances, lobbies, corridors, hallways, elevators, escalators, fire
escapes, restrooms, trash rooms, loading docks, tunnels and other public or
common facilities in or about the Building for their intended purposes and
subject to the terms and conditions of this Lease.
II.
2.01 Base Rental. During the term of this Lease, Tenant shall pay to Landlord a
base annual rental (hereinafter called "Base Rental") in monthly installments in
accordance with the provisions of Section 2.02 hereinbelow. For the initial term
of this Lease, the annual Base Rental shall equal (a) for the first sixty (60)
months of the initial lease term, (i) Eleven and No/100 Dollars ($11.00) per
square foot of Net Rentable Area within the Office Space and (ii) Six and No/100
Dollars ($6.00) per square foot of Net Rentable Area within the Storage Space,
payable in monthly installments equal to Forty-Two Thousand Seven Hundred
Thirty-Three and 08/100 Dollars ($42,733.08) each, and (b) for the final
seventy-two (72) months of the initial lease term,(i) Thirteen and No/100
Dollars ($13.00) per square foot of Net Rentable Area within the Office Space
and (ii) Six and No/100 Dollars ($6.00) per square foot of Net Rentable Area
within the Storage Space, payable in monthly installments equal to Fifty
Thousand Three Hundred Twenty and 92/100 Dollars ($50,320.92) each.
- -2-
2.02 Rental Payments. (a) Tenant hereby covenants and agrees to pay the Base
Rental as described in Section 2.01, plus Forecast Additional Rental and
Additional Rental as defined in Section 2.03. The Base Rental and Forecast
Additional Rental shall be due and payable in twelve (12) equal installments on
the first day of each calendar month during each year of the initial term of
this Lease and any extensions or renewals hereof, and Tenant hereby agrees to so
pay such rent to Landlord at Landlord's address as provided herein (or such
other address as may be designated by Landlord in writing from time to time)
monthly in advance. "Rent" as such term is used herein shall include all Base
Rental, Additional Rental, Forecast Additional Rental and all other sums payable
to Landlord by Tenant pursuant to the terms of this Lease.
(b) Any installment of Base Rental or Forecast Additional Rental which is
payable for less than a full calendar month shall be prorated and the
installment or installments so prorated shall be paid in advance. The payment
for such prorated month shall be calculated by multiplying the monthly
installment by a fraction, the numerator of which shall be the number of days of
the lease term occurring during said rent commencement or termination month, as
the case may be, and the denominator of which shall be the total number of days
occurring in said rent commencement or termination month. Also, the Base Rental
and Additional Rental which is payable for less than a full calendar year shall
be prorated for the partial year by multiplying each by a fraction, the
numerator of which shall be the number of days of the lease term during the
partial year and the denominator of which shall be 365 or 366, as appropriate,
Landlord and Tenant hereby agreeing that the provisions relating to Section 2.02
shall survive the termination of this Lease.
(c) Tenant shall pay all rent and other sums of money as shall become due from
and payable by Tenant to Landlord under this Lease at the times and in the
manner provided in this Lease, without demand, set-off or counterclaim. Tenant
hereby acknowledges and agrees that (i) Landlord and Tenant have expressly
negotiated that except as otherwise provided in this Lease, Tenant's covenants
to pay all rental under this Lease are separate and independent from Landlord's
covenant to provide services and other amenities hereunder and (ii) had the
parties not mutually agreed upon the independent nature of Tenant's covenants to
pay all rental hereunder, Landlord would have required a greater amount of Base
Rental in order to enter into this Lease. All rent and other sums of whatever
nature owed by Tenant to Landlord under this Lease shall bear interest from the
date due until paid at a floating rate (the "Default Rate") equal to the lesser
of (y) as of any day, a rate equal to three percent (3%) above the Prime Rate
reported in the Money Rates column or section of the most recent issue of the
Wall Street Journal (Southwest Edition), and (z) the maximum non- usurious rate
of interest (hereinafter called the "Maximum Rate") permitted by the applicable
laws of the State of Texas, as determined by reference to the indicated (weekly)
rate ceiling (as defined and described in Texas Revised Civil Statutes, Article
5069-1.04, as amended) at the applicable time in effect.
2.03 Additional Rental. (a) For each calendar year during the term of this Lease
after the calendar year 1994 (the "Base Calendar Year"), Tenant shall pay its
proportionate share of the amount, if any, by which the Actual Operating
Expenses (as hereinafter defined) for such year exceed the Actual Operating
Expenses for the Base Calendar Year (Tenant's proportionate share of such excess
for each year being herein referred to as" Additional Rental"). It is agreed
that, subject to the provisions of Section 2.04(c) of this Lease, Tenant's
proportionate share is a fraction, the numerator of which is the Net Rentable
Area of the Leased Premises and the denominator of which is the greater of (i)
the actual number of square feet of Net Rentable Area leased to tenants of the
Project and (ii) ninety-five percent (95%) of the Net Rentable Area of the
Building. Landlord's good faith estimate of the Actual Operating Expenses for
the Base Calendar Year (after adjustment pursuant to Section 2.04(c) below is
$5.60 per square foot of Net Rentable Area.
- -3-
(b) On or about December 15, 1994 and on December 15 of each calendar year
thereafter during the term of this Lease, Landlord shall present to Tenant a
good faith estimate of the Actual Operating Expenses for the forthcoming
calendar year and a calculation of the monthly installments of Additional Rental
("Forecast Additional Rental") to be due and payable by Tenant during such
forthcoming year. Thereafter, unless and until Landlord delivers to Tenant a
revision of the estimate, Tenant shall pay to Landlord the Forecast Additional
Rental for the applicable calendar year in accordance with Section 2.02
hereinabove. From time to time during any calendar year for which Additional
Rental is payable, Landlord may revise up or down its estimate of the Additional
Rental for such calendar year based on either actual or reasonably anticipated
increases in Actual Operating Expenses. Thereafter, the monthly installments of
Forecast Additional Rental payable by Tenant shall be appropriately adjusted in
accordance with the revised estimate so that by the end of such calendar year,
the total payments of Forecast Additional Rental paid by Tenant shall equal
Tenant's proportionate share of the amount by which the revised estimate of
Actual Operating Expenses exceeds the Actual Operating Expenses for the Base
Calendar Year.
(c) Within one hundred fifty (150) days after the end of the Base Calendar Year
and after the end of each subsequent calendar year during the term of this
Lease, Landlord shall provide Tenant a statement showing in reasonable detail
(including a line-item breakdown) the Actual Operating Expenses for said
calendar year, prepared in accordance with generally accepted accounting
practices, and a statement prepared by Landlord comparing the Forecast
Additional Rental paid by Tenant with the actual Additional Rental. If the
Forecast Additional Rental paid by Tenant exceeds the Additional Rental for said
calendar year, Landlord shall pay Tenant an amount equal to such excess at
Landlord's option, by either giving a credit against rentals next due, if any,
or by direct payment to Tenant within thirty (30) days of the date of such
statement. In the event that the Additional Rental exceeds the Forecast
Additional Rental for said calendar year, Tenant shall pay Landlord, within
thirty (30) days of receipt of the statement, an amount equal to such
difference. Tenant shall have the right to audit, at Tenant's expense and after
giving twenty (20) days' prior written notice to Landlord, Landlord's books and
records relating to Actual Operating Expenses for any period within the term of
this Lease and not more than two (2) years prior to the review; provided,
however, if such audit reveals a misstatement by more than five percent (5%) of
Actual Operating Expenses for the period being audited, Landlord shall reimburse
Tenant for the reasonable costs of such audit. The exercise by Tenant of its
audit rights hereunder shall not relieve Tenant of its obligation to pay all
sums due hereunder in a timely manner, including, without limitation, any
disputed Actual Operating Expenses.
2.04 Actual Operating Expenses. (a)" Actual Operating Expenses", as that term is
used herein, shall consist of all costs and expenses of every kind and nature,
computed on the accrual basis in accordance with generally accepted accounting
practices, relating to or incurred or paid in connection with the ownership and
operation of the Building, the Land, all existing underground pedestrian tunnels
owned or controlled by Landlord and servicing the Building and any such tunnels
constructed in the future (the "Building Tunnel System") and such additional
facilities to service any of the foregoing in subsequent years as may be
necessary or desirable in Landlord's discretion, subject to the qualifications,
limitations and exclusions set forth below and in Section 2.04(b) (the Building,
the Garage, the Land, the Building Tunnel System and said additional facilities
being hereinafter sometimes collectively called the "Project"). Actual Operating
Expenses shall include, but are not limited to, the following:
(i) Wages and salaries of all on-site personnel at or below the level of
property manager directly engaged in the management, operation and maintenance
of the Project, including taxes, insurance and benefits relating thereto;
provided, however, that the costs of any such personnel working on projects
other than the Project shall be limited to an equitable allocation.
- -4-
(ii) All supplies, tools, equipment and materials used in the operation and
maintenance of the Project.
(iii) Cost of all utilities for the Project, including but not limited to the
cost of water and power for heating, lighting, air conditioning and ventilating.
(iv) Cost of all property maintenance and service agreements for the Project and
the equipment therein, including but not limited to security service, window
cleaning, elevator maintenance and janitorial service.
(v) Cost of repairs and general maintenance for the Project (excluding repairs
and general maintenance costs that are or would be covered by insurance required
hereunder or paid by proceeds of insurance or by Tenant or other third parties).
(vi) Amortization of the cost of installation of capital investment items which
are installed for the purpose of reducing or avoiding increases in Actual
Operating Expenses or which may be required by governmental authority in
connection with any law enacted after the Effective Date, but specifically
excluding from Actual Operating Expenses" (A) any costs required by or incurred
in connection with any law enacted on or before the Effective Date, including,
without limitation, the Americans with Disabilities Act of 1990, laws relating
to accessibility, sprinklering or life safety, and laws relating to removal of
chloroflourocarbons (freon) from the Building's HVAC systems, (B) any costs
relating to the presence of asbestos or asbestos-containing materials located in
the Building as of or prior to the Commencement Date, including, without
limitation, costs of any encapsulation or removal thereof required by any laws
or regulations, whether currently existing or hereafter enacted, and (C) any
costs relating to the sprinklering of the Building which is required by law
enacted after the Effective Date hereof which are in excess of $0.80 per square
foot of Net Rentable Area of the Building.. All such costs which relate to the
installation of such capital investment items shall be amortized over the
reasonable life of the capital investment item (except that it is agreed that
any costs for sprinklering that Landlord is permitted to amortize as part of
Actual Operating Expenses as provided above shall be amortized over a period of
not less than 10 years), with the reasonable life and amortization schedule
being determined in accordance with generally accepted accounting principles
consistently applied and in no event to extend beyond the reasonable life of the
Project. Landlord shall provide a cost justification with respect to any such
voluntary capital expenditure comparing the anticipated savings to the
amortization charge therefor.
(vii) The cost of all insurance relating to the Project, including, but not
limited to, the cost of casualty insurance, rental abatement insurance (not to
exceed twelve (12) months) and liability insurance applicable to the Project and
Landlord's personal property used in connection therewith.
(viii) All taxes, assessments and governmental charges, whether or not directly
paid by Landlord, whether federal, state, county or municipal and whether they
be by taxing districts or authorities presently taxing the Project or by others
subsequently created or otherwise, and any other taxes and assessments
attributable to the Project or their operation, excluding, however, federal and
state taxes on income, death taxes, franchise taxes, and any taxes imposed or
measured on or by the income of Landlord from the operation of the Project;
provided, however, that if at any time during the term of this Lease, the
present method of taxation or assessment shall be so changed that the whole or
any part of the taxes, assessments, levies, impositions or charges now levied,
assessed or imposed on real estate and the improvements thereof shall be
discontinued and as a substitute therefor, or in lieu of an addition thereto,
taxes, assessments,
- -5-
levies, impositions or charges shall be levied, assessed and/or imposed wholly
or partially as a capital levy or otherwise on the rents received from the
Project or the rents reserved herein or any part thereof, then Landlord shall
make a reasonable determination of the amount of such substitute or additional
taxes, assessments, levies, impositions or charges, to the extent so levied,
assessed or imposed in connection with the Project, and such amount shall be
deemed to be included within Actual Operating Expenses to the extent that such
substitute or additional tax would be payable if the Project were the only
property of the Landlord subject to such tax. It is agreed that Tenant will be
responsible for ad valorem taxes on its personal property and on the value of
the leasehold improvements in the Leased Premises to the extent that the same
exceed Building standard allowances and to the extent the taxing authorities
separately assess such excess leasehold improvements. Landlord agrees to provide
Tenant with a written explanation from Landlord's ad valorem tax consultants of
the basis for any increase in the ad valorem taxes for the Project, and shall
exclude from Actual Operating Expenses that portion, if any, of such increase
that is attributable to the Garage.
(ix) Management fees paid by Landlord to third parties or to management
companies owned by, or management divisions of, Landlord, not to exceed the then
prevailing market rate for the management of other first class office buildings
located in the Central Business District of Houston, Texas; provided, however,
during the first five (5) years of the term of this Lease, the management fees
shall not exceed three percent (3%) of the Base Rental and Additional Rental
payable by Tenant for each calendar year.
(b) "Actual Operating Expenses" shall not include costs or expenses for (i) any
capital improvements and repairs (as determined by generally accepted accounting
principles consistently applied) made to the Land, Building or Project, except
as provided in Section 2.04(a)(vi); (ii) paint, redecorating or other work which
Landlord performs for any other tenant or prospective tenant in the Building;
(iii) repairs and other work occasioned by fire, windstorm or other insurable
casualty to the extent such repairs or other work would have been paid by
insurance proceeds had Landlord obtained standard fire and extended coverage
insurance; (iv) construction defects in the Building or Project; (v) marketing
the Building or Project; (vi) Landlord's partnership or corporate accounting
fees; (vii) interest or amortization payments in any mortgage or mortgages which
are liens on the Building or Project; (viii) ground rents or other lease
payments with respect to the Land, the Building or Project; (ix) costs incurred
by Landlord in connection with the negotiation of any tenant lease in the
Project, including leasing commissions, legal fees and leasehold improvements
expense (and/or allowances therefor), lease takeover costs, payment of moving
costs, any tenant allowances and inducements and other similar costs and
expenses; (x) amounts paid to subsidiaries or other affiliates of Landlord for
labor, materials or services on or to the Project, to the extent that such
amounts exceed the cost which Landlord would have incurred to obtain comparable
labor, materials or services from a comparably qualified and competent third
party unaffiliated with Landlord; (xi) any other costs and expenses for services
or amenities that are specifically for the benefit of a particular tenant and
that are of a nature not generally provided to all tenants in the Building or to
Tenant; (xii) specific costs for which Landlord is entitled to reimbursement by
any tenant or other third party; (xiii) costs attributable solely to the retail
areas of the Project; (xiv) amortization or depreciation, except as provided in
Section 2.04(a)(vi); (xv) costs and expenses relating to the closing of a sale
or financing of the Project; (xvi) costs relating to disputes with any tenant in
the Building (including Tenant) incurred by Landlord due to the violation by any
tenant in the Building of the terms and conditions of any lease in the Building
(including this Lease) or any applicable federal, state or local laws, codes or
regulations; (xvii) costs relating to the violation of applicable laws,
misconduct or other tortuous conduct of Landlord or any tenant in the Building
(including Tenant); (xviii) any other expense which, under generally accepted
accounting practices are not considered normal and reasonable operating expenses
for comparable office buildings located in the Central Business District of
Houston, Texas;
- -6-
(xix) any expenses relating to the Garage; or (xx) any expenses relating to the
removal and/or encapsulation of asbestos or asbestos-containing materials in the
Building.
(c) Notwithstanding any other provision herein to the contrary, it is agreed
that in the event the Building is not fully occupied during the Base Calendar
Year or any calendar year thereafter or in the event the entire Building is not
provided with Building standard services during any calendar year, an adjustment
shall be made in computing each component of the Actual Operating Expenses
(including those described in Section 2.04(a) (i) through (ix) above) for such
year so that the Actual Operating Expenses shall be computed for such year as
though the Building had been ninety-five percent (95%) occupied during such year
and as though ninety-five percent (95%) of the Building had been provided with
Building standard services during such year. The adjustment of Actual Operating
Expenses pursuant to this paragraph for each year after Base Calendar Year shall
be made in a manner consistent with the adjustment for Base Calendar Year.
2.05 Rental Abatement. Notwithstanding any provisions of this Lease to the
contrary, Landlord hereby agrees that in consideration for the execution of this
Lease by Tenant, and as an inducement to Tenant to so execute this Lease, the
payment of the Base Rental, Forecast Additional Rental. and Additional Rental
accruing from the Commencement Date until December 31, 1994 (the "Abatement
Period") is waived by Landlord and Tenant shall have no obligation to pay same;
provided, however, that the Abatement Period may be extended pursuant to the
terms and conditions of EXHIBIT B attached hereto.
III.
3.01 Services. (a) Landlord shall furnish to the Office Space the following:
----------
(i) Hot and cold domestic water at those points of supply provided for
general use of other tenants in the Building;
(ii) Subject to limitations as to temperatures as required by governmental laws,
rules or regulations, central heat, ventilation and air conditioning in season,
at such times, at such temperatures and in such amounts as are standard for
first class office buildings in the Central Business District of Houston, Texas,
Landlord will furnish such heating, ventilating and air conditioning between 7
a.m. and 6 p.m. on weekdays (from Monday through Friday, inclusive) and
Saturdays between 8 a.m. and 1 p.m., all exclusive of Holidays (defined below).
Upon request of Tenant made in accordance with the rules and regulations for the
Building, Landlord will furnish air conditioning and heating at other times
(that is, at times other than the times specified above), in which event Tenant
shall reimburse Landlord for furnishing such services at a rate of Forty-Five
and No/100 Dollars ($45.00) per hour per air handling unit which is activated to
provide the air conditioning or heating service, subject only to increases
resulting from an increase in kilowatt hour costs incurred by Landlord after the
Base Calendar Year; provided, however, such cost shall not exceed Landlord's
actual out-of-pocket costs less any contributions from other parties receiving
any benefit from such additional services. The following dates shall constitute
"Holidays" as said term is used herein New Year's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. If in the
case of any holiday described above, a different day shall be observed than the
respective day above-described, then the day which constitutes the day observed
by national banks in Houston, Texas, on account of such holiday shall constitute
the holiday under this Lease;
- -7-
(iii) Electric lighting service, maintenance, cleaning and painting where
needed, for all public areas and special service areas of the Building in the
manner and to the extent in keeping with the standards of a first class office
building;
(iv) Janitor service on a five (5) day week basis, in a manner consistent with
the standards of a first class office building as more fully set forth on
EXHIBIT C; provided, however, if as a result of any Alterations (as hereinafter
defined) by Tenant, Tenant's floor coverings or other improvements, other than
floor coverings or improvements included in the Initial Leasehold Improvements,
require special cleaning or care in excess of that provided for in EXHIBIT C,
Landlord will provide such additional cleaning or care only upon special
agreement with Tenant;
(v) Equipment and/or personnel to limit access to the Building after normal
business hours as described above; provided, however, Landlord shall have no
responsibility to prevent, and shall not be liable to Tenant for, liability or
loss to Tenant, its agents, employees and visitors arising out of losses due to
theft, burglary, or damage or injury to persons or property caused by persons
gaining access to the Building or the Leased Premises, except for any liability
or loss to the extent attributable to the negligence or willful misconduct of
Landlord, its agents or employees;
(vi) Sufficient electricity to operate typewriters, calculating machines,
photocopying machines and other machines of similar low electrical consumption
(120/208 volts); provided, however, total rated power consumption by said
machines of low electrical consumption (excluding lighting) shall not exceed two
and one-half (2t) watts per square foot of Net Rentable Area in the Leased
Premises; provided, further that the aggregate total rated power consumption by
all equipment in the Leased Premises (excluding lighting) shall not exceed one
(1) kilowatt hour per square foot of Net Rentable Area within the Leased
Premises per month (the "Electrical Consumption Limit"). Landlord shall have the
right to install a separate meter at Landlord's expense; provided, that if
during the first full three (3) calendar months following installation of such
meter, Tenant's total rated power consumption exceeds the Electrical Consumption
Limit for such three (3) month period, Tenant shall reimburse Landlord for the
cost of the installation of such meter. Tenant shall pay to Landlord, monthly as
billed, the charge for Tenant's electrical consumption in excess of the
Electrical Consumption Limit as measured by such separate meter, which charge
shall be at Landlord's actual cost therefor. Landlord (or Tenant, if Tenant is
required to reimburse Landlord for the installation costs) shall be responsible
for the cost of operation and maintenance of any such separate meter. If any
electrical equipment requires air conditioning in excess of Building standard,
the same shall be installed at Tenant's expense and Tenant shall pay all
operating costs relating thereto except that Landlord shall provide chilled
water therefor at no additional cost to Tenant;
(vii) All fluorescent bulb and ballast replacement in all areas of the Building
(including the Leased Premises) and all incandescent bulb and ballast
replacement in public areas, toilet and rest room areas and stairwells; and
(viii) Non-exclusive passenger elevator service to the Leased Premises
twenty-four (24) hours per day and non-exclusive freight elevator service during
normal business hours;
(b) Landlord shall furnish to the Storage Space only the following services:
(i) electricity sufficient for the lighting fixtures in the Storage Space, as
well as fluorescent bulb and ballast replacement;
- -8-
(ii) subject to limitations as set forth in Section 3.01(a)(ii) above,
central heat, ventilation and air conditioning in season; and
(iii) non-exclusive passenger elevator service to the basement twenty-four (24)
hours per day and non-exclusive freight elevator service during normal business
hours.
(c) To the extent any of the services described above (the "Landlord Services")
require electricity, gas and water supplied by public utilities, Landlord's
covenants hereunder shall only impose on Landlord the obligation to use its
reasonable good faith efforts to cause the applicable public utilities to
furnish the same.
(d) Tenant hereby acknowledges and agrees that Landlord is obligated to provide
only the Landlord Services under this Lease, and that Landlord, its agents and
representatives, have made no representations whatsoever of any additional
services or amenities to be provided by Landlord now or in the future under this
Lease. Notwithstanding the foregoing, Tenant recognizes that Landlord may
currently be providing additional services or amenities for the tenants of the
Building which Landlord is not obligated to provide under this Lease and may, in
the future and at Landlord's sole option, elect to provide additional services
or amenities for the tenants of the Building from time to time, and hereby
agrees that Landlord's discontinuance of any such additional services or
amenities, including any of same currently provided or announced, shall not
constitute a default of Landlord under this Lease nor entitle Tenant to any
abatement of or reduction in Base Rental or Forecast Additional Rental ,but none
of the costs of such services, unless offered to all tenants of the Building,
shall be included in Actual Operating Expenses.
3.02 Services Interruption. (a) Except as expressly provided in this Lease, no
cessation or discontinuance of any of Landlord Services, or failure by Landlord
to provide any of the Landlord Services in accordance with the standards of this
Lease (a "Services Interruption") shall render Landlord liable in any respect
for damages to either person or property, nor be construed as an eviction of
Tenant, nor relieve Tenant from fulfillment of any covenant or agreement hereof,
nor work an abatement of Rent. In the event of any Services Interruption,
Landlord covenants and agrees to use its best efforts to cure the cause thereof
and to restore such Landlord Services as soon as reasonably possible.
(b) In the event of a Services Interruption which results from the malfunction
or obsolescence of Building equipment or machinery, or from any other cause
which is reasonably within the control of Landlord (a "Services Interruption
Within Landlord's Control") which (i) is not attributable in whole or in part to
the negligence or willful misconduct of Tenant or its employees, agents or
contractors (to the extent such employees, agents or contractors are acting
within their scope of employment, agency or contract), (ii) renders all or any
portion of the Leased Premises untenantable, and (iii) continues for three (3)
consecutive business days or for any seven (7) out of ten (10) consecutive
business days after Landlord's receipt of notice thereof, Rent with respect to
the affected portion(s) of the Leased Premises shall be abated from the date
Landlord receives such notice until the Services Interruption ceases or the
affected portion(s)) of the Leased Premises are otherwise restored to a
tenantable condition. The Leased Premises or a portion thereof shall be
considered "untenantable" hereunder when the Leased Premises, or such portion
thereof, are not reasonably usable for the conduct of Tenant's business.
Notwithstanding anything else contained in this Section 3.02(b) to the contrary,
Rent with respect to the affected portion(s) of the Leased Premises shall be
abated to the extent rental interruption insurance proceeds are payable with
respect thereto.
(c) In the event of a Services Interruption which results from causes beyond the
reasonable control of Landlord (a "Services Interruption Beyond Landlord's
Control") which (i) is not
- -9-
attributable in whole or in part to the negligence or willful misconduct of
Tenant or its employees, agents or contractors (to the extent such employees,
agents or contractors are acting within their scope of employment, agency or
contract), (ii) renders all or any portion of the Leased Premises untenantable,
and (iii) continues for eight (8) consecutive business days after Landlord's
receipt of notice thereof, Rent with respect to the untenantable portion of the
Leased Premises shall be abated thereafter until such Services Interruption
ceases or the affected portion(s) of the Leased Premises are otherwise restored
to a tenantable condition. As used herein, the phrase "causes beyond the
reasonable control of Landlord" shall include, without limitation, acts of the
public enemy, restraining of government, unavailability of materials or any
public utility service, strikes, civil riots, floods, hurricanes, tornadoes,
earthquakes and other severe weather conditions or acts of God. Notwithstanding
anything else contained in this Section 3.O2(c) to the contrary, Rent with
respect to the affected portion(s) of the Leased Premises shall be abated to the
extent rental interruption insurance proceeds are payable with respect thereto.
(d) If a Services Interruption Within Landlord's Control occurs which (i)
renders forty percent (40%) or more of the Net Rentable Area of the Leased
Premises untenantable, (ii) is not attributable in whole or in part to the
negligence or willful misconduct of Tenant or its employees, agents or
contractors (to the extent such employees, agents or contractors are acting
within their scope of employment, agency or contract), and (iii) continues for
one hundred eighty (180) days after Landlord's receipt of notice thereof, then
Tenant, at its option, may terminate this Lease as to the entire Leased Premises
or only the untenantable portion(s) thereof, and all of its corresponding
obligations for the remaining balance of the term of this Lease, and any
renewals or extensions thereof, whichever shall be applicable, whereupon the
parties hereto shall be released and relieved of all liabilities and obligations
hereunder thereafter accruing with respect to the portion(s) of the Leased
Premises for which this Lease was terminated.
(e) If a Services Interruption Beyond Landlord's Control occurs which (i)
renders forty percent (40%) or more of the Net Rentable Area of the Leased
Premises untenantable, (ii) is not attributable in whole or in part to the
negligence or willful misconduct of Tenant or its employees, agents or
contractors (to the extent such employees, agents or contractors are acting
within their scope of employment, agency or contract), and (iii) continues for
one (1) year after Landlord's receipt of notice thereof, then Tenant, at its
option, may terminate this Lease as to the Leased Premises or only the
untenantable portion(s) thereof, and all of its corresponding obligations for
the remaining balance of the term of this Lease, and any renewals or extensions
thereof, whichever shall be applicable, whereupon the parties hereto shall be
released and relieved of all liabilities and obligations hereunder thereafter
accruing with respect to the portion(s) of the Leased Premises for which this
Lease was terminated.
(f) Any right of Tenant to terminate this Lease pursuant to Section 3.02 (d) or
(e) shall automatically expire and be of no further force and effect upon the
earlier to occur of (i) the date Landlord cures the applicable Services
Interruption, and (ii) the date that the affected portion(s) of the Leased
Premises are otherwise restored to a condition which is not untenantable.
(g) Any notice from Tenant to Landlord with respect to a Services Interruption
shall state the specific nature thereof and the area(s) of the Leased Premises
affected thereby.
3.03 Keys and Locks. Landlord shall furnish Tenant with twenty (20) keys for the
Building corridor doors entering the Leased Premises. Additional keys will be
furnished by Landlord upon an order signed by Tenant and payment by Tenant of
Landlord's charge therefor. All such keys shall remain the property of Landlord.
No additional locks shall be allowed on any door of the Leased Premises without
Landlord's permission, and Tenant shall not make or permit to be made any
duplicate keys, except those furnished by Landlord. Upon termination of this
Lease, Tenant shall
- -10-
surrender to Landlord all keys to any locks on doors entering or within the
Leased Premises, and give to Landlord the explanation of the combination of all
locks for safes, safe cabinets and vault doors, if any, in the Leased Premises.
Tenant shall have the right, at Tenant's sole cost and expense, to install
security devices on the transfer elevators between the 15th and 17th floors of
the Building to limit access to the sixteen (16th) floor of the Building and the
cost of installation of such security devices shall be included in the Tenant's
Construction Costs (as defined in EXHIBIT B).
3.04 Graphics, Building Directory and Name. (a) Tenant may install, at Tenant's
sole cost and expense, signage on the Building in approximately the same
locations as the previous First City, Texas signage. The size, location,
quality, material, graphic style and composition of all such signage shall be in
accordance with the specifications approved by Landlord, which approval shall
not be unreasonably withheld, conditioned or delayed; provided, however, it
shall not be unreasonable for Landlord to refuse to approve any change to such
specifications which are inconsistent with the architecture and design integrity
of the Building or which violates any applicable law, rule or ordinance. Tenant
shall not place any other signs, numerals, letters or other graphics on the
exterior of, or which are visible from outside, the Leased Premises or, with
respect to floors on which Tenant does not lease all of the leasable area, from
the elevators serving the Leased Premises, unless approved in advance and in
writing by Landlord, which approval shall not be unreasonably withheld,
conditioned or delayed. Landlord shall provide Tenant with an allowance of
$4,500.00 (the "Signage Allowance") to defer the costs and expenses incurred by
Tenant owing to third parties in connection with the installation of such new
signage to the Building. The Signage Allowance is in addition to and is not
included within the Allowances provided in EXHIBIT B attached hereto. Such
amount shall be payable to Tenant within thirty (30) days of receipt by Landlord
of lien releases, invoices and receipts evidencing the costs incurred by Tenant
in this regard.
(b) Landlord shall install primary directory board identification for Tenant on
the directory board located in the main lobby of the Building. Tenant shall also
be provided a number of listing strips on each Building directory in proportion
to the amount of the total Net Rentable Area of such Building which is included
within the Office Space.
(c) During the term of this Lease, Landlord will not provide any other Building
tenant exterior signage rights.
(d) Tenant shall pay all costs and expenses associated with (i) obtaining and
maintaining Tenant's exterior signage and all necessary permits relating
thereto, (ii) operating Tenant's exterior signage, including, without
limitation, all electrical costs relating thereto, and (iii) compliance with all
applicable codes and ordinances with respect to all rights granted to Tenant
pursuant to this Section 3.04. Additionally, all of Tenant's rights granted in
this Section 3.04 shall be subject to any and all applicable codes and
ordinances.
(e) Landlord shall repair any damage to the Building resulting from the removal
of the First City, Texas signage and shall attempt to restore the Building to
its original condition. Tenant agrees that within thirty (30) days after the
expiration or earlier termination of this Lease, Tenant shall, at Tenant's sole
cost and expense, remove Tenant's exterior signage and restore the Building to a
condition similar to which existed prior to the attachment of Tenant's exterior
signage onto the Building. In the event Tenant fails to remove such exterior
signage or make such restoration within the thirty (30) day period, Landlord may
remove such signage and restore the Building to such condition, and Tenant shall
pay the cost thereof.
3.05 Tunnel System. Tenant acknowledges that the Building Tunnel System is a
---------------
part of the tunnel system located in downtown Houston, Texas (the "Downtown
----------
Tunnel System"). Landlord makes no warranty or representation respecting the
- -----------------
use or availability of or access to any of the
- -11-
Downtown Tunnel System or any other space which is not within the property lines
of the Building or within Landlord's control. Any part of the Downtown Tunnel
System and all space not within the property lines of the Building or within
Landlord's control which Landlord is permitted to use or occupy under a
revocable license, may be revoked, curtailed or modified by a federal, state or
municipal authority, public utility or any other party. Landlord shall not be
subject to any liability nor shall Tenant be entitled to any compensation,
diminution or abatement of rental hereunder by virtue of such revocation or
modification nor shall such revocation or modification be deemed a constructive
or actual, total or partial eviction of Tenant hereunder (other than a
termination predicated upon Landlord's default).
IV.
4.01 Care of the Leased Premises. Tenant shall not commit or allow to be
committed any waste or damage to any portion of the Leased Premises or the
Building, and at the termination of this Lease, by lapse of time or otherwise,
Tenant shall deliver up the Leased Premises to Landlord in as good condition as
existed on the Commencement Date, ordinary wear and tear, casualty and
condemnation only excepted. Upon such termination of this Lease, Landlord shall
have the right to re-enter and resume possession of the Leased Premises.
4.02 Entry for Repairs and Inspection. Tenant shall permit Landlord and its
contractors, agents or representatives to enter into and upon any part of the
Leased Premises at all reasonable hours and upon reasonable advance notice
(except in the case of an emergency, in which event no notice shall be required)
to inspect or clean the same, to make repairs, alterations or additions thereto,
to show the same to prospective tenants (but only during the last 9 months of
the then current term of this Lease) or purchasers, to determine whether Tenant
is performing its obligations hereunder or for any other purpose as Landlord may
reasonably deem necessary or desirable. Such entry shall not constitute a
trespass or an eviction (constructive or otherwise) nor shall Tenant be entitled
to any abatement or reduction of rental or claim for damages for any injury to
or interference with Tenant's business, loss of occupancy or quiet enjoyment or
for any other consequential damages by reason thereof. All actions requiring
Landlord's entry into the Leased Premises shall be taken in such manner and at
such times as to minimize, to the extent reasonably possible, any interference
with the conduct of Tenant's business in the Leased Premises.
4.03 Nuisance. Tenant shall conduct its business and control its agents,
employees, invitees, contractors and visitors in such manner as not to create
any nuisance, or interfere with, annoy or disturb any other tenant or Landlord
in its operation of the Building.
4.04 Laws and Regulations: Rules of Building:. Except as otherwise provided
herein, Tenant, at Tenant's expense, shall comply with, and Tenant shall cause
its employees, contractors and agents to comply with, (a) all laws, ordinances,
orders, rules, regulations and requirements which impose any duty upon such
persons with respect to or otherwise relate to the use, condition, occupancy,
maintenance or alteration of the Leased Premises, including, without limitation,
such laws, ordinances, orders, rules, regulations or requirements relating to
health, occupational safety, handicapped access or the environment (all such
laws, ordinances, orders, rules, regulations and requirements described in this
Section 4.04(a) being herein collectively referred to as "Laws"), whether such
Laws are now in force or are hereafter enacted, and (b) all rules of the
Building reasonably adopted and altered by Landlord from time to time for the
safety, care and cleanliness of the Leased Premises and the Building and for
preservation of good order therein, all of which Building rules will be sent by
Landlord to Tenant in writing; provided that such modifications or additions:
(i) are reasonable and consistent with rules and regulations imposed in other
comparable office .buildings in the Central Business District of Houston, Texas;
(ii) are not inconsistent with any other provisions of this Lease; (iii) are
uniformly enforced among all tenants, licensees, contractors and
- -12-
visitors within the Building; and (iv) are effective only after Tenant has
received reasonable notice of such modification or addition. The initial rules
of the Building are attached hereto as EXHIBIT D and made a part hereof for all
purposes.
4.05 Legal Use and Violations of Insurance Coverage. Tenant shall not occupy or
use the Leased Premises, or permit any portion of the Leased Premises to be
occupied or used, for any business or purpose which is unlawful, disreputable or
deemed to be hazardous on account of fire or other hazards, or permit anything
to be done which would in any way increase the rate of fire or liability or any
other insurance coverage on the Building and/or its contents.
4.06 Hazardous Substances.
(a) Except as otherwise provided herein with respect to the Existing Asbestos
(as hereinafter defined); Tenant shall comply with all applicable federal, state
or local laws, regulations, orders, judgments and decrees regarding health,
safety or the environment ("Environmental Laws") pertaining to or governing
Tenant's particular use and occupancy of the Leased Premises or the conduct of
Tenant's business therein, including without limitation the application for and
maintenance of all required permits, the submittal of all notices and reports,
proper labeling, training and recordkeeping, and timely and appropriate response
to any release or other discharge by Tenant of a substance under Environmental
Laws.
(b) Tenant shall not bring or install or allow to be brought or installed, upon
the Leased Premises, or contained in any transformers or other equipment thereon
containing, any PCB's. "PCB" means any oil or other substance containing
polychlorinated biphenyl (as defined in 40 CFR ss.761.3). Except for the
Existing Asbestos Tenant shall not bring or install or allow to be brought or
installed, any friable asbestos, or any structures, fixtures, equipment or other
objects or materials containing friable asbestos in the Leased Premises. Tenant
shall immediately notify Landlord of the presence of any Reportable Quantity of
a hazardous substance, extremely hazardous substance or toxic pollutant on or
about the Leased Premises which is brought into the Leased Premises by Tenant or
of which Tenant is aware, other than as disclosed by Landlord. "Reportable
Quantity" means that amount defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Federal Water Pollution
Control Act, as amended, pertinent regulations thereunder or other relevant
state or local laws.
(c) Tenant shall indemnify, protect, defend (with counsel reasonably approved by
Landlord) and hold Landlord, and the directors, officers, shareholders,
employees and agents of Landlord, harmless from any and all obligations, claims,
administrative proceedings, judgments, damages, fines, costs, and liabilities,
including reasonable attorneys' fees incurred in enforcing this Lease,
performance on Tenant's behalf, or collecting any sums due hereunder,
(collectively, the "Costs") that arise directly or indirectly from or in
connection with the presence in or on, or the release from, the Leased Premises
of any hazardous waste, substance or pollutant (other than Existing Asbestos)
brought or introduced to the Leased Premises by Tenant in violation of any
Environmental Law, to the extent such presence or release is caused by Tenant
and not by Landlord. If Landlord incurs any Costs for which Tenant has so
indemnified Landlord, Tenant shall pay to Landlord the amount thereof upon
demand. Without limiting the generality of the foregoing, there shall be
included in Costs, capital, operating, and maintenance costs incurred in
connection with any investigation or monitoring of site conditions, any clean
up, containment, remedial, removal or restoration work required or performed by
any federal, state or local governmental agency or political subdivision or
performed by any non-governmental entity or person.
(d) Landlord shall comply with all Environmental Laws relating to the Existing
Asbestos and pertaining to or governing Landlord's ownership, operation,
maintenance and repair of the
- -13-
Building, including without limitation the application for and maintenance of
all required permits, the submittal of all notices and reports, proper labeling,
training and recordkeeping, and timely and appropriate response to any release
or other discharge by Landlord of a substance under Environmental Laws.
(e) Landlord shall use its diligent good faith efforts to cause each of the
other tenants of the Building to comply with all Environmental Laws pertaining
to or governing such tenant's particular use and occupancy of the space occupied
by such tenant or the conduct of such tenant's business therein, including
without limitation the application for and maintenance of all required permits,
the submittal of all notices and reports, proper labeling, training and
recordkeeping, and timely and appropriate response to any release or other
discharge by such tenant of a substance under Environmental Laws.
(f) Tenant hereby acknowledges that Landlord has disclosed to Tenant that
certain materials used in the construction, completion, repair or maintenance of
the Building may contain asbestos. Tenant hereby acknowledges the presence of
such asbestos-containing materials in the Building, whether such materials are
currently in the Building or were previously in the Building, and whether such
materials are known or unknown (the "Existing Asbestos"), and agrees that
Landlord shall in no event have any obligation to Tenant hereunder to remove the
Existing Asbestos unless such removal is required pursuant to Environmental Laws
or set forth below. Landlord covenants that as of the Commencement Date Landlord
will have removed all Existing Asbestos of which Landlord has knowledge that is
located in the Leased Premises (other than the overspray located on the
perimeter columns in the Leased Premises. If Tenant or Landlord discovers any
Existing Asbestos in any portion of the Leased Premises (other than the
perimeter columns), Landlord shall, at Landlord's sole cost and expense, remove,
encapsulate and dispose of such Existing Asbestos to the extent such action is
required pursuant to Environmental Laws, and Landlord shall reimburse Tenant for
any out-of-pocket expenses incurred by Tenant in connection therewith. Landlord
has implemented an operations and management program (the "O&M Program") in
order to manage the presence of the Existing Asbestos in the Building in
accordance with all applicable regulations, and shall continue such program to
the extent required by applicable regulations. In connection with the O&M
Program, Tenant agrees that all construction and maintenance activities
performed by Tenant or its employees, agents or contractors must be coordinated
through the manager of the Building and only trained and licensed personnel will
be allowed access to the service areas of the Building. Tenant acknowledges and
agrees that if Tenant desires to construct or install any alterations, additions
or improvements to the Leased Premises hereunder which would affect Existing
Asbestos (other than the Existing Asbestos located on the perimeter columns of
the Leased Premises), Landlord shall at Landlord's sole cost and expense remove
and dispose of any such Existing Asbestos to the extent required by applicable
regulations and Landlord shall pay any increase in the cost of such alterations,
additions or improvements which may result by virtue of the existence of the
Existing Asbestos (other than the Existing Asbestos located on the perimeter
columns of the Leased Premises). Tenant further acknowledges and agrees that if
Tenant desire to construct or install any alterations, additions or improvements
to the Leased Premises hereunder, which would affect the perimeter columns
located in the Leased Premises, Landlord shall, at Tenant's sole cost and
expense, remove and dispose of any Existing Asbestos located on the perimeter
columns in the Leased Premises to the extent such perimeter columns are affected
by Tenant's construction or alterations. In no event shall Landlord be liable
for any increase in the cost of such alterations, additions or improvements
which may result by virtue of the existence of the Existing Asbestos on the
perimeter columns of the Leased Premises and the necessary handling and
treatment of same.
(g) In the event (i) a condition occurs that results in a release of any
Existing Asbestos located on the perimeter columns, in the Leased Premises, and
(ii) such release requires the removal, encapsulation or disposal of such
Existing Asbestos pursuant to Environmental Laws, then if such
- -14-
condition results from the acts or omissions of Tenant, its employees, agents or
contractors, then Tenant shall reimburse Landlord for the cost and expense of
any such removal and disposal, along with the cost and expense of restoring the
leasehold improvements located in the Leased Premises. If such condition is not
attributable to the acts or omissions of Tenant, its employees, agents or
contractors, then Landlord shall pay the cost and expense of any such removal
and disposal, along with the cost and expense of restoring the leasehold
improvements located in the Leased Premises.
V.
5.01 Leasehold Improvements. (a) The Office Space shall be delivered to Tenant,
and Tenant shall accept same, in the condition and with only such leasehold
improvements, if any, as set forth in EXHIBIT B attached hereto. The Storage
Space shall be delivered to Tenant in its current condition, i.e., "AS IS" and
"WITH ALL FAULTS" as to leasehold improvements located therein. As used in this
Lease, the term "Initial Leasehold Improvements" shall include any and all
improvements and tenant finish existing in the Leased Premises as of the
Commencement Date, including all leasehold improvements, if any, as defined and
described in EXHIBIT B attached hereto, as well as any and all Alterations (as
defined below) and subsequent improvements made to the Leased Premises during
the term of this Lease. Notwithstanding any other provision of this Lease, in no
event shall Landlord be required, nor shall Tenant be permitted, to install in
the Leased Premises any improvements which are not first approved by Landlord or
Landlord's architect. Landlord's approval of Tenant's plans and specifications
for any of Tenant's requested leasehold improvements shall create no
responsibility or liability on the part of Landlord for, or warranty by Landlord
with respect to, the completeness or design sufficiency of such plans and
specifications or the compliance with any Laws applicable thereto. Tenant
acknowledges that no representations as to the repair of the Leased Premises or
the Project, nor promises to alter, remodel or improve the Leased Premises or
the Project, have been made by Landlord, except as are expressly set forth in
this Lease.
(b) Tenant shall not make or allow to be made (except as otherwise provided in
this Lease) any alterations, physical additions or further leasehold
improvements beyond those which may be provided for in EXHIBIT B hereto
(including fixtures) in or to the Leased Premises (other than cosmetic-type
changes such as painting and carpeting) (such alterations, additions and further
leasehold improvement being herein called "Alterations"), without first
obtaining the written consent of Landlord not to be unreasonably withheld.
Tenant shall submit copies of the plans and specifications for any requested
Alterations along with its request for Landlord's consent to same. If such
consent is granted, prior to commencement of construction Tenant shall deliver
to Landlord copies of all building permits required for such construction and a
copy of the executed construction contract covering such Alterations. Landlord's
consent, if granted, shall create no responsibility or liability on the part of
Landlord for, or warranty by Landlord with respect to, the completeness or
design sufficiency of such leasehold improvements or compliance with any Laws
applicable thereto. Tenant shall pay to Landlord, upon demand, any reasonable
out-of-pocket expenses incurred by Landlord in reviewing and monitoring the
construction of such Alterations. Tenant shall deliver to Landlord a copy of the
"final" plans and specifications for all Alterations so made in or to the Leased
Premises.
(c) All Alterations and Initial Leasehold Improvements, (including fixtures)
shall become the property of Landlord at the end of the term of this Lease and
shall be surrendered to Landlord upon termination of this Lease, whether by
lapse of time or otherwise; provided, however, this clause shall not apply to
trade fixtures, movable equipment or furniture owned by Tenant and to the items
listed on EXHIBIT F attached hereto and made a part hereof for all purposes.
(d) Except as otherwise provided herein, Tenant shall indemnify and hold
harmless Landlord from and against all costs (including reasonable attorneys'
fees and costs of suit), losses,
- -15-
liabilities, or causes of action arising out of or relating to any Alterations
made by Tenant to the Leased Premises, including but not limited to any
mechanics' or materialmen's liens asserted in connection therewith.
(e) Should any mechanic's or other liens be filed against any portion of the
Building and/or the Land or any interest therein by reason of Tenant's acts or
omissions or because of a claim against Tenant or its contractors, Tenant shall
cause the same to be cancelled or discharged of record by bond or otherwise
within thirty (30) days after notice by Landlord. If Tenant shall fail to cancel
or discharge said lien or liens, within said thirty (30) day period, which
failure shall be deemed to be a default hereunder, Landlord may, at its sole
option and in addition to any other remedy of Landlord hereunder, cancel or
discharge the same and upon Landlord's demand, Tenant shall promptly reimburse
Landlord for all costs incurred in cancelling or discharging such lien or liens.
5.02 Repairs by Landlord. Landlord shall maintain the roof, exterior walls,
load-bearing columns, foundation, floor slabs, and other structural components,
the mechanical, electrical and plumbing systems, the Common Areas and the
roadways and landscaping of the Building (excluding leasehold improvements) in a
good and operable condition, consistent with the standards of other first- class
office buildings in the Central Business District of Houston, Texas, and shall
make such repairs and replacements as may be required to maintain the Building
in such condition. This Section 5.02 shall not apply to damages resulting from
an exercise of eminent domain (as to which Section 6.01 shall apply) or to
damages resulting from a fire or other casualty (as to which Section 6.03 shall
apply). Unless otherwise expressly stipulated herein, Landlord shall not be
required to make any improvements to or repairs of any kind or character to the
Leased Premises or the leasehold improvements therein during the term of this
Lease; provided, however, leasehold improvements in the Leased Premises will, at
Tenant's written request, be maintained by Landlord at Tenant's expense, at a
cost or charge equal to Landlord's costs incurred for such work plus an
administrative fee. Tenant, however, shall have the right to use contractors of
its choice to perform any of such maintenance of the leasehold improvements in
the Leased Premises provided that: (i) the maintenance work will not materially
affect the Building structure or mechanical, electrical or plumbing systems, all
of which work shall be performed by Landlord or its contractors but shall be
paid for by Tenant in an amount equal to Landlord's cost plus an administrative
fee, and (ii) Tenant's contractors shall be subject to Landlord's prior
approval, not to be unreasonably withheld. The administrative fee charged by
Landlord under this Section 5.02 and Section 5.03 shall not exceed five percent
(5%) of Landlord's out-of-pocket costs relating thereto during the initial term
or any renewal term of this Lease.
5.03 Repairs by Tenant. Tenant shall at its own cost and expense, repair or
replace any damage or injury done to the leasehold improvements in the Leased
Premises or any part thereof caused by Tenant or Tenant's agents, contractors,
employees, invitees, or visitors, except for normal wear and tear and damage
resulting from a casualty. If Tenant fails to make such repairs or replacements
to such leasehold improvements promptly, Landlord may, at its option, make such
repairs or replacements, and Tenant shall repay the cost thereof plus an
administrative fee (subject to the limitations set forth in Section 5.02 above)
to the Landlord on demand. Any damage or injury to the structural components of
the Building or its systems (as opposed to those involving only Tenant's
leasehold improvements) and (notwithstanding the foregoing) any damage or injury
to Tenant's leasehold improvements which affects the Building's structural
components or major mechanical, electrical or plumbing systems, caused by
Tenant, its agents, contractors or employees shall be repaired or replaced by
Landlord, but at Tenant's expense plus an administrative fee (subject to the
limitations set forth in Section 5.02 above).
- -16-
VI.
6.01 Condemnation. If more than fifteen percent (15%) of the Leased Premises
shall be permanently taken or condemned for any public purpose, this Lease
shall, at the option of either party, forthwith cease and terminate as of the
date of such condemnation or taking. Otherwise, this Lease shall continue in
full force and effect and rental with respect to any portion of the Leased
Premises taken or condemned shall be reduced or abated on the basis of the
number of square feet of Net Rentable Area by which the Leased Premises have
been reduced. All proceeds payable from any taking or condemnation of all or any
portion of the Land or the Building shall belong to and be paid as follows:
first to Landlord until it receives the fair market value of the portion of the
Land and Building so taken; then to the tenants of the Building pro rata based
upon the respective Net Rentable Area occupied by each tenant prior to such
taking until each tenant receives the fair market value of its non-Building
standard improvements, if any, the cost of which were borne solely by such
tenant, and such tenant's personal property taken; and the remainder of the
award shall then be paid to Landlord. In connection with a taking or
condemnation, Tenant shall have the right to bring a separate suit against the
condemning authority to receive compensation for the loss of the value of
Tenant's rights under this Lease.
6.02 Damages from Certain Causes. Landlord shall not be liable or responsible to
Tenant for (i) any loss or damage to any property or person occasioned by theft,
fire, act of God, public enemy, injunction, riot, strike, insurrection, war,
court order, requisition or order of governmental body or authority, or any
cause beyond Landlord's control, or (ii) any damage or inconvenience which may
arise through repair or alteration of any part of the Building made necessary by
virtue of any such cause.
6.03 Casualty. In the event of a fire or other casualty in the Leased Premises,
Tenant shall immediately give notice thereof to Landlord. If the Building shall
be partially destroyed by fire or other casualty so as to render the Leased
Premises untenantable (defined below) in whole or in part, the rental provided
for herein shall, commencing as of the date of such damage or destruction, abate
as to the portion of the Leased Premises rendered untenantable until such time
as the Leased Premises are returned to a tenantable condition as reasonably
determined by Landlord and Landlord agrees to commence and prosecute such repair
work promptly and with all due diligence. Notwithstanding the above, Landlord
shall have the right to terminate this Lease in the event such destruction (a)
occurs at any time during the last twenty-four (24) calendar months of the term
of this Lease, and (b) results in damage to or destruction of all or
substantially all of the Building. If such destruction results in the Leased
Premises being untenantable in whole or in substantial part and the reasonable
estimation of a responsible contractor selected by Landlord as to the amount of
time necessary to rebuild or restore such destruction to the Leased Premises and
all other portions of the Building is twelve (12) months or more, then Tenant
shall have the right to terminate this Lease. In the event either Landlord or
Tenant terminate this Lease pursuant to a right granted under this Section 6.03,
all rental owed up to the time of such damage or destruction shall be paid by
Tenant and thenceforth this Lease shall cease and come to an end as of the date
of such termination as to all obligations thereafter accruing. Landlord and
Tenant shall give the other party written notice of any decisions, estimates or
elections under this Section 6.03 as soon as possible but in no event more than
sixty (60) days after any such damage or destruction. Notwithstanding anything
contained in this Section 6.03, to the extent Landlord is required to restore
the Leased Premises, Landlord shall only be obligated to restore or rebuild the
Leased Premises to the condition existing immediately prior to such casualty,
but in no event shall Landlord be required to expend more sums than received
from the proceeds of any insurance carried by Landlord or would have received if
insurance had been carried as required hereunder plus the deductible thereunder.
The Leased Premises or a portion thereof shall be considered "untenantable"
hereunder when the Leased Premises, or such portion thereof, are not reasonably
usable for the conduct of Tenant's business.
- -17-
6.04 Casualty Insurance. Landlord shall maintain "all risk" property insurance
on the Building and all permanent leasehold improvements (exclusive of trade
fixtures and moveable equipment) in an amount not less than the full replacement
cost thereof (exclusive of foundations and excavations). Said insurance shall be
maintained with a reputable insurance company authorized to do business in
Texas, in amounts maintained by first class office buildings in the Central
Business District of Houston, Texas and at the expense of Landlord (but with the
same to be included in the Operating Expenses of the Building as described in
Section 2.04) and payments for losses thereunder shall be made solely to
Landlord. If the annual premiums to be paid by Landlord shall exceed the
standard rates because of Tenant's operations within or contents of the Leased
Premises, Tenant shall promptly pay the excess amount of the premium upon
request by Landlord and reasonable evidence thereof. Tenant shall maintain at
its expense "all risk" property insurance on all of Tenant's personal property
and the value of trade fixtures and moveable equipment, such coverage to be for
an amount not less than the full replacement cost of such insured items.
Landlord and Tenant shall deliver certificates of insurance in a form reasonably
satisfactory to the other (a) not less than twenty (20) days prior to the
Commencement Date and (b) prior to the expiration of any such policies.
6.05 Liability Insurance. Landlord and Tenant shall each, at their respective
expense, maintain a policy or policies of comprehensive general liability
insurance with the premiums thereon fully paid on or before the due dates,
issued by and binding upon a solvent insurance company, such insurance to afford
minimum protection (which may be effected by primary and/or excess coverage) of
not less than $5,000,000 for personal injury or death in anyone occurrence and
of not less than $2,500,000 for property damage in anyone occurrence. All such
insurance required to be maintained by Tenant shall name Landlord as an
additional insured thereunder and shall provide that it shall not be
cancellable, nor shall the coverage thereunder be reduced, without at least ten
(10) days advance written notice to Landlord. In addition, such insurance
policies to be maintained by Landlord and Tenant shall have deductible or
self-insurance amounts not greater than $100,000. Landlord and Tenant shall
deliver certificates of insurance in a form satisfactory to the other (a) not
less than twenty (20) days prior to the Commencement Date and (b) prior to the
expiration of any such policies.
6.06 Hold Harmless. Except as expressly provided herein to the contrary,
including specifically, but without limitation, the terms of Section 6.07
hereof, Landlord shall not be liable to Tenant or its agents, servants,
employees, contractors, customers or invitees for any injury or damage to person
or property occurring in the Leased Premises and Tenant agrees to protect,
defend, indemnify and hold Landlord harmless from and against all liabilities,
claims, suits, actions and costs (including reasonable attorneys' fees and costs
of suit) arising out of or in connection with any such injury or damage,
including any such damage attributable in whole or in part to the negligence of
Landlord, but excluding any such damage to the extent attributable to the gross
negligence or willful misconduct of Landlord, its agents, servants, employees or
contractors. Except as expressly provided herein to the contrary, including
specifically, but without limitation, the terms of Section 6.07, hereof, Tenant
shall not be liable to Landlord, or to Landlord's agents, servants, employees,
contractors, customers or invitees for any injury or damage to person or
property occurring in all areas of the Building other than the leased premises
of all tenants of the Building and Landlord agrees to indemnify and hold Tenant
harmless from and against all claims for such injury or damage, including any
such damage attributable in whole or in part to the negligence of Ten ant, but
excluding any such damage to the extent attributable to the gross negligence or
willful misconduct of Tenant, its agents, servants, employees or contractors.
6.07 Waiver of Subrogation Rights. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant each, on behalf of themselves and their
respective heirs, successors, legal 'representatives, assigns and insurers,
hereby (i) waives any and all rights of recovery, claims, actions or causes of
action against the other and its respective officers, directors, partners,
shareholders,
- -18-
agents, servants, employees, guests, licensees or invitees for any loss or
damage that may occur to the Leased Premises or other portion of the Project, or
any improvements thereto, or any personal property of such party therein, by
reason of fire, the elements, or any other cause which is or would be insured
against under the terms of the insurance policies referred to in Sections 6.04
and 6.05 hereof, regardless of cause or origin, including negligence of the
other party hereto or its respective officers, directors, partners,
shareholders, agents, servants, employees, guests, licensees or invitees, and
(ii) covenants that no insurer shall hold any right of subrogation against such
other party; provided, however, the waiver set forth in this Section 6.07 shall
not apply to any deductibles on insurance policies carried by Landlord or Tenant
or to any coinsurance penalty which Landlord or Tenant might sustain. If the
respective insurer of Landlord and Tenant does not permit such a waiver without
an appropriate endorsement to such party's insurance policy, then Landlord and
Tenant each shall notify its insurer of the waiver set forth herein and to
secure from such insurer an appropriate endorsement to its respective insurance
policy with respect to such waiver.
VII.
7.01 Intentionally Deleted.
7.02 Default by Tenant. The occurrence of anyone or more of the following events
shall be a breach of and default under this Lease (an "Event of Default"):
(i) failure to pay, when due, any sum to be paid by Tenant under this Lease and
such failure shall continue for ten (10) days after written notice to Tenant
(provided, however, after Landlord has given Tenant written notice of such
default on two separate occasions during any calendar year, Landlord shall not
be required to give Tenant any further notice for subsequent failure(s)) during
any calendar year;
(ii) the failure of Tenant to execute or otherwise respond in good faith and in
writing to a request for confirmation of the subordination of this Lease
pursuant to Section 7.09 or for an estoppel certificate pursuant to Section 7.10
within thirty (30) days after submission of same to Tenant;
(iii) failure by Tenant in the performance of any of the other covenants or
conditions which Tenant is required to observe and to perform not included in
subparagraphs (i) and (ii) of this Section 7.02 and such failure shall continue
for thirty (30) days after written notice to Tenant; or, if such failure cannot
reasonably be cured within said thirty (30) day period despite Tenant's diligent
good faith efforts, the failure of Tenant to promptly commence its diligent good
faith efforts to cure such failure within said thirty (30) day period and/or the
continuance of such failure for a period of sixty (60) days notwithstanding
Tenant's efforts to cure;
(iv) the interest of Tenant under this Lease shall be levied on under
execution or other legal process;
(v) any petition shall be filed by or against Tenant to declare Tenant a
bankrupt or to delay, reduce or modify Tenant's debts or obligations,
(vi) any petition shall be filed or other action taken to reorganize or
modify Tenant's capital structure;
(vii) Tenant is declared insolvent according to law, or any assignment of
Tenant's property shall be made for the benefit of creditors;
- -19-
(viii) a receiver or trustee is appointed for Tenant or its property;
(ix) Tenant, if a corporation, shall cease to exist as a corporation in good
standing in the state of its incorporation, or Tenant, if a partnership or other
entity, shall be dissolved or otherwise liquidated; or
(x) the assignment of this Lease or the subletting of all or any part of the
Leased Premises without the prior written consent of Landlord as and if required
in accordance with Section 8.01.
(provided that no such levy, execution, legal process or petition filed against
Tenant as described in (iii), (iv), (v), (vi) or (vii) of this Section 7.02
shall constitute a breach of this Lease if Tenant shall vigorously contest the
same by appropriate proceedings and shall remove or vacate the same within
ninety (90) days from the date of its creation, service or filing). Thereupon,
at Landlord's option, for as long as an Event of Default is continuing hereunder
Landlord may have anyone or more of the following described remedies in addition
to all other rights and remedies provided at law or in equity:
(a) Landlord may terminate this Lease and forthwith repossess the Leased
Premises and be entitled to recover forthwith as damages a sum of money equal to
the total of (i) the cost of recovering the Leased Premises (including
reasonable attorneys' fees and costs of suit), (ii) the accrued and unpaid rent
at the date of termination, plus interest thereon at the Default Interest Rate,
(iii) the present value (discounted at the rate often percent (10%) per annum)
of the balance of the unpaid rent which would have accrued and become payable
under this Lease during the remainder of the lease term less the present value
(discounted at the same rate) of the fair market rental value (taking into
account factors relating to the interruption of a continuous rental stream (such
as reasonably estimated costs associated with the potential period of time until
a new tenant commences payment of rental) and actual out-of-pocket expenses
incurred by Landlord) of the Leased Premises for said period plus reasonable
costs to Landlord associated and incurred in connection with the reletting for
such period, (such as the cost of preparation of the Leased Premises, leasing
commissions and reasonable attorneys' fees associated with occupancy by a new
tenant) and (iv) any other sum of money and damages owed by Tenant to Landlord;
(b) Landlord may terminate Tenant's right of possession (but not this Lease) and
may repossess the Leased Premises by forcible entry and detainer suit or
otherwise, without thereby releasing Tenant from any liability hereunder and
without demand or notice of any kind to Tenant and without terminating this
Lease. Landlord shall use reasonable efforts under the circumstances to relet
the Leased Premises on such terms and conditions as Landlord in its sole
discretion may determine (including a term different than the term of this
Lease, rental concessions, alterations and repair of the Leased Premises);
provided, however, Landlord hereby reserves the right (i) to lease any other
comparable space available in the Building or in any other building owned by
Landlord prior to leasing the Leased Premises for lease and (ii) to refuse to
lease the Leased Premises to any potential tenant which does not meet Landlord's
standards and criteria for leasing other comparable space in the Building.
Landlord shall not be liable for, nor shall Tenant's obligations hereunder be
diminished because of, Landlord's failure to relet the Leased Premises or
collect rental due in respect of such reletting. For the purpose of such
reletting Landlord is authorized to decorate or to make any reasonable repairs,
changes, alterations or additions in or to Leased Premises as may be reasonably
necessary or desirable. If Landlord shall fail to relet the Leased Premises or
if the same are relet and a sufficient sum shall not be realized from such
reletting (after first deducting therefrom, for retention by Landlord, the
previously accrued but unpaid rental due hereunder at the time of
- -20-
reletting plus interest thereon at the rate specified in Section 2.02(c), the
cost of recovering possession [(including reasonable attorneys' fees and costs
of suit)], all of the reasonable costs and expenses of such decorations,
repairs, changes, alterations and additions, the expense of such reletting and
the cost of collection of the rental accruing therefrom) to satisfy the rental
obligations of Tenant provided for in this Lease, then (y) Tenant shall pay to
Landlord as damages a sum equal to the amount of the rental reserved in this
Lease for such period or periods, plus the cost of recovering possession of the
Leased Premises (including reasonable attorneys' fees and costs of suit), the
previously accrued but unpaid rent earned at the time of repossession, plus
interest thereon at the Default Interest Rate, and the reasonable costs incurred
in any attempt by Landlord to relet the Leased Premises, or (z) if the Leased
Premises have been relet, the Tenant shall satisfy and pay any such deficiency.
Any such payments due Landlord shall be made as and when due from time to time
and Tenant agrees that Landlord may file suit to recover any sums falling due
under the terms of this Section 7.02 from time to time. No delivery to or
recovery by Landlord of any portion due Landlord hereunder shall be any defense
in any action to recover any other amount not received by Landlord, nor shall
such reletting be construed as an election on the part of Landlord to terminate
this Lease unless a written notice of such intention be given to Tenant by
Landlord. Notwithstanding any such reletting without termination, Landlord may
at any time thereafter elect to terminate this Lease for such previous breach;
or
(c) Landlord may, and is hereby entitled and authorized to, without any notice
to Tenant whatsoever, enter upon the Leased Premises by use of a master key, a
duplicate key or other peaceable means, and to change, alter or modify the door
locks on all entry doors of the Leased Premises, thereby permanently excluding
therefrom Tenant and its officers, principals, agents. employees,
representatives and invitees. In the event that Landlord has either permanently
repossessed the Leased Premises or terminated this Lease pursuant to its right
to do so under the provisions of this Lease and by virtue of an Event of
Default, Landlord shall not thereafter be obligated to provide Tenant with a key
to the Leased Premises at any time except as set forth in this Section 7.02(c).
If Landlord elects to exclude Tenant from the Leased Premises without
permanently repossessing the Leased Premises or terminating this Lease pursuant
to the provisions of this Lease, then Landlord (at any time prior to permanent
repossession or termination) shall not be obligated to provide for Tenant a key
to re-enter the Leased Premises until such time as all delinquent rental and
other amounts due under this Lease have been paid in full (and all other Events
of Default, if any, have been completely cured to Landlord's satisfaction). Upon
any such permanent repossession or during any such temporary period of exclusion
by Landlord, Landlord will, during Landlord's regular business hours, at
Landlord's convenience and upon written request by Tenant, escort Tenant or its
authorized personnel to the Leased Premises to retrieve personal belongings of
Tenant's employees and Tenant's files, business records and other proprietary
materials and information. This remedy of Landlord is intended to override and
control any conflicting provisions of the Texas Property Code to the fullest
extent permitted.
7.03 Landlord's Event of Default. The occurrence of anyone or more of the
-----------------------------
following shall constitute an event of default by Landlord under this Lease:
(a) failure or refusal by Landlord to timely pay any payments hereunder and the
continuance of such failure for at least ten (10) days following written notice
by Tenant to Landlord; or
(b) failure by Landlord in the performance of any of the other covenants or
conditions which Landlord is required to observe and to perform not included in
subparagraph (a) of this Section 7.03 and such failure shall continue for thirty
(30) days after written notice to Tenant;
- -21-
or, if such failure cannot reasonably be cured within said thirty (30) day
period despite Landlord's diligent good faith efforts, the failure of Landlord
to promptly commence its diligent good faith efforts to cure such failure within
said thirty (30) day period and/or the continuance of such failure for a period
of sixty (60) days notwithstanding Landlord's efforts to cure.
Except as hereinafter provided, in the event of an event of default by Landlord,
Tenant's exclusive remedies shall be (i) to file suit for Tenant's actual
damages (but not any consequential or punitive damages) or specific performance
(ii) to make any such payment or perform any such act on Landlord's account, or
(iii) to terminate the Lease, but if, and only if, as a result of an event of
default by Landlord, forty percent (40%) or more of the Leased Premises is
untenantable for a period of one hundred and eighty (180) consecutive days,
which is not attributable in whole or in part to the negligence or willful
misconduct of Tenant or its employees, agents or contractors (to the extent such
employees, agents or contractors are acting within their scope of employment,
agency or contract). All sums so paid by Tenant and all reasonable costs
incurred by Tenant as a result of Tenant performing such acts on Landlord's
account shall be paid to Tenant on demand ten (10) days after notice of such
payment is given to Landlord or Tenant may offset such sums against future
payments of Rent due under this Lease.
7.04 Rent Computation. For purposes of computing unpaid rental which would have
accrued and become payable under this Lease during any future period, unpaid
rental shall consist of the sum of: (a) the total Base Rental for the balance of
the term; plus (b) Additional Rental for the balance of the term. For purposes
of computing Additional Rental for the calendar year of the default and each
future calendar year for the balance of the term, such Additional Rental shall
be assumed to be equal to Additional Rental for the calendar year prior to the
year in which default occurs.
7.05 Landlord's Right to Cure Defaults. Except as otherwise provided herein, all
agreements and provisions to be performed by Tenant under any of the terms of
this Lease shall be at Tenant's sole cost and expense and without any abatement
of rental. If an Event of Default has occurred and is continuing, other than a
failure to pay Base Rental, then Landlord may, but shall in no event be
obligated to, make any such payment or perform any such act on Tenant's account,
and such cure by Landlord shall not be deemed a waiver by Landlord of any of its
other remedies or a release of Tenant from any obligations hereunder or a cure
of such default. All sums so paid by Landlord and all costs incurred by Landlord
in taking such action shall be deemed additional rent hereunder and shall be
paid to Landlord ten (10) days after notice of such payment is given to Tenant,
and Landlord shall have (in addition to all other rights and remedies of
Landlord) the same rights and remedies in the event of the non-payment thereof
by Tenant as in the case of default by Tenant in the payment of rental
hereunder.
7.06 Non- Waiver. Failure of Landlord to declare any default immediately upon
occurrence thereof, or delay in taking any action in connection therewith, shall
not waive such default, but Landlord shall have the right to declare any such
default at any time and take such action as might be lawful or authorized
hereunder, either in law or in equity.
7.07 Holding Over. In the event of holding over by Tenant after expiration or
termination of this Lease without the prior written consent of Landlord, Tenant
shall pay as liquidated damages one and one-half times the monthly amount of
Base Rental and Forecast Additional Rental which was payable by Tenant
immediately prior to such expiration or termination. Landlord and Tenant agree
that because of the difficulty or impossibility of determining Landlord's actual
damages as a result of Tenant's holding over in the Leased Premises, the
difficulties of proof of loss, and the inconvenience or nonfeasibility of
Landlord otherwise having a remedy for such breach, the liquidated damages
calculated according to the foregoing formula is a reasonable amount to be paid
for such breach. No holding over by Tenant after the term of this Lease shall be
construed to extend this Lease. If
- -22-
Landlord shall have given Tenant not less than sixty (60) days prior written
notice of the date that Tenant must surrender possession of all or any portion
of the Leased Premises due to a reletting thereof, and Tenant shall holdover in
such space after the date specified in such notice, then in addition to the
liquidated damages stipulated above, Tenant shall also indemnify Landlord
against all actual and consequential damages, losses and liabilities (including
reasonable attorneys' fees and costs of suit) arising out of or relating to any
such unauthorized holdover, resulting from claims for damages by the other
tenant to whom Landlord has leased such space. Any holding over with the prior
consent of Landlord in writing shall thereafter constitute this Lease a lease
from month to month and shall create a tenancy at sufferance relationship
between Landlord and Tenant.
7.08 Attorneys' Fees. In the event either party defaults in the performance of
any of the terms, agreements or conditions contained in this Lease and the other
party places the enforcement of this Lease, or any part thereof, or the
collection (if any rental due or to become due hereunder, or recovery of the
possession of the Leased Premises, in the hands of an attorney who files suit
upon the same, and should such non-defaulting party prevail in such suit, the
defaulting party agrees to pay the other party's reasonable attorneys' fees.
7.09 Subordination.
(a) Agreement to Subordinate. Subject to Tenant and any future mortgagee,
beneficiary or ground lessor executing a non-disturbance and attornment
agreement as provided below, Tenant covenants and agrees with Landlord that this
Lease is subject and subordinate to any mortgage, deed of trust, ground lease
and/or security agreement which may hereafter encumber the Building or the Land
or any interest of Landlord therein and/or the contents of the Building, and to
any advances made on the security thereof and to any and all increases,
renewals, modifications, consolidations, replacements and extensions thereof.
Tenant will enter into a written non-disturbance and attornment agreement with
the mortgagee, beneficiary or lessor under any such future mortgage, deed of
trust or ground lease providing that in the event of foreclosure or other rights
asserted under the applicable mortgage, deed of trust or ground lease by the
holder or any assignee thereof (a) this Lease and all of the rights of Tenant
hereunder shall continue in full force and effect and shall not be terminated or
disturbed except in accordance with the provisions of this Lease, (b) Tenant
will automatically become the tenant of such ground lessor or successor in
interest without any change in the terms or other provisions of this Lease, (c)
such ground lessor or successor in interest shall not be liable for any default
of Landlord under this Lease occurring before such party takes title to the
Building or acquires Landlord's interest in this Lease, (d) such ground lessor
or successor in interest shall not be bound by (i) any payment of Base Rental or
Forecast Additional Rental for more than one month in advance, or (ii) any
amendment or modification of this Lease made without the written consent of such
ground lessor or such successor in interest after the date of such
non-disturbance and attornment agreement, and (e) such other terms and
conditions as may be reasonably required by such mortgagee, beneficiary or
ground lessor and agreed to by Tenant. Tenant shall execute or otherwise respond
in good faith in writing to a request to enter into a non-disturbance and
attornment agreement pursuant to this Section 7.09 within thirty (30) days
following Tenant's receipt of the proposed non-disturbance and attornment
agreement. Landlord will use its good faith diligent efforts to obtain a
non-disturbance agreement with respect to this Lease from the existing ground
lessor (the "Ground Lessor") which non-disturbance agreement shall be reasonably
acceptable to Tenant. Unless and until Landlord obtains such non-disturbance
agreement, Landlord covenants and agrees that it shall immediately forward to
Tenant a copy of any notice of default received by Landlord from the Ground
Lessor. Tenant shall have the right, at Tenant's sole option, to deliver the
amount of the past-due payments under the ground lease either (i) to Landlord
with instructions to forward such funds to the Ground Lessor, in which event
Landlord shall make such payments directly to the Ground Lessor, or (ii) to the
Ground Lessor, directly. Tenant shall be entitled to offset any amounts
delivered
- -23-
to Landlord or the Ground Lessor, as the case may be, under this Section 8.01(a)
against the next Rent due and owing Landlord under this Lease.
(b) Notice of and Opportunity to Cure Landlord Default. Notwithstanding anything
contained in this Lease to the contrary, in the event of any default by Landlord
in performing its covenants or obligations hereunder which would give Tenant the
right to terminate this Lease, Tenant shall not exercise such right unless and
until (a) Tenant gives written notice of such default (which notice shall
specify the exact nature of said default and how the same may be cured) to the
mortgagee, beneficiary or lessor under any such mortgage, deed of trust or
ground lease who has theretofore notified Tenant in writing of its interest and
the address to which notices are to be sent (such notice may be given
contemporaneously with any notice given to Landlord), and (b) said lessor and
holder(s) fail to cure or cause to be cured said default within thirty (30) days
from the receipt of such notice from Tenant.
(c) Mortgagee's Right to Subordinate to Lease. Notwithstanding anything to the
contrary set forth above, any beneficiary under any deed of trust may at any
time subordinate its deed of trust to this Lease in whole or in part, without
any need to obtain Tenant's consent, by execution of a written document
subordinating such deed of trust to this Lease and thereupon this Lease shall be
deemed prior to such deed of trust without regard to their respective dates
execution, delivery and/or recording. In that event, to the extent set forth in
such document, such deed of trust shall have the same rights with respect to
this Lease as would have existed if this Lease had been executed, and a
memorandum thereof, recorded prior to the execution, delivery and recording of
the deed of trust.
7.10 Estoppel Certificate. (a) Tenant agrees periodically to furnish within
thirty (30) days after written request by Landlord, ground lessor or the holder
of any deed of trust, mortgage or security agreement covering the Building, the
Land, or any interest of Landlord therein, a certificate signed by Tenant
certifying, if true, (i) that this Lease is in full force and effect and
unmodified (or if there have been modifications, that the same is in full force
and effect as modified and stating the modifications), (ii) as to the
Commencement Date and the date through which Base Rental and Forecast Additional
Rental have been paid, (iii) that Tenant has accepted possession of the Leased
Premises and that any improvements required by the terms of this Lease to be
made by Landlord have been completed to the satisfaction of Tenant, (iv) that
except as stated in the certificate no rental under this Lease has been paid
more than thirty (30) days in advance of its due date, (v) that the address for
notices to be sent to Tenant is as set forth in this Lease (or has been changed
by notice duly given and is as set forth in the certificate), (vi) that except
as stated in this Lease or the certificate, Tenant, as of the date of such
certificate, has no charge, lien, or claim of offset under this Lease or
otherwise against rentals or other charges due or to become due hereunder, (vii)
that except as stated in the certificate, Landlord is not then, to the knowledge
of Ten ant, in default under this Lease, (viii) as to the amount of Net Rentable
Area then occupied by Tenant, (ix) that there are no renewal or extension
options, purchase options, rights of first refusal or the like in favor of
Tenant except as set forth in this Lease and (x) as to such other matters as may
be reasonably requested by Landlord or ground lessor or the holder of any such
deed of trust, mortgage or security agreement. Any such certificate may be
relied upon by any ground lessor, prospective purchaser, secured party,
mortgagee or any beneficiary under any mortgage, deed of trust on the Building
or the Land or any part thereof or interest of Landlord therein.
(b) Landlord agrees periodically to furnish within thirty (30) days after
written request by Tenant, a certificate signed by Landlord certifying, if true,
(i) that this Lease is in full force and effect and unmodified (or if there have
been modifications, that the same is in full force and effect as modified and
stating the modifications), (ii) as to the Commencement Date and the date
through which Base Rental and Forecast Additional Rental have been paid, (iii)
that the address for notices to be sent to Landlord is as set forth in this
Lease (or has been changed by notice duly given and is as set
- -24-
forth in the certificate), (iv) that except as stated in the certificate, Tenant
is not then in default under this Lease, and (v) as to such other matters as may
be reasonably requested by Tenant. Any such certificate may be relied upon by
any permitted assignee or sublessee of Tenant's interest under this Lease.
7.11 Landlord Alterations or Modifications. Notwithstanding anything herein to
the contrary, Landlord hereby expressly reserves the right in its sole
discretion to (a) temporarily or permanently change the location of, close,
block or otherwise alter any entrances, corridors, skywalks, tunnels, doorways
or walkways leading to or providing access to the Building or any part thereof
or otherwise restrict the use of same provided such activities do not
unreasonably impair Tenant's access to or interfere with Tenant's use of the
Leased Premises and (b) demolish, rebuild, improve, remodel, add additional
floors to or otherwise alter any of the buildings located on the Land and
identified in the first paragraph of Section 1.01, other than the building in
which the Leased Premises are located (provided Landlord shall have the right to
improve, remodel and/or alter said building), and it is agreed that Landlord
shall not incur any liability whatsoever to Tenant as a consequence thereof and
such activities shall not be deemed to be a breach of any of Landlord's
obligations hereunder. In connection with any such alteration or modification,
Landlord shall equitably adjust the amount of the base calendar year Operating
Expenses to take into consideration any increase or decrease in the Operating
Expenses as a result of such alteration or modification which adjustment shall
be subject to Tenant's prior written approval, which approval shall not be
unreasonable withheld. Landlord agrees to exercise good faith in notifying
Tenant within a reasonable time in advance of any alterations, modifications or
other actions of Landlord under this Section 7.11. Any diminution or obstruction
of light, air or view by any structure which is not or may hereafter be
constructed on lands adjacent to the Project shall in no way affect this Lease
or impose any liability on Landlord. Noise, dust or vibration or other incidents
to new construction of improvements on lands adjacent to the Project, whether or
not owned by Landlord, shall in no way affect this Lease or impose any liability
on Landlord. All actions pursuant to this Section 7.11 are to be conducted in
such manner and at such times as to reasonably minimize any interference with
the conduct of Tenant's business in the Leased Premises.
7.12 Restrictions on Third-Party Leases. Landlord hereby agrees that, prior to
the expiration of the initial term of this Lease, Landlord shall not, without
Tenant's prior written consent, lease any portion of this Building to and
prospective tenant, if the nature and character of the prospective tenant, its
business and activities or intended use of its leased premises in the Building
would not be consistent with the standards of the Building as of the Effective
Date. Landlord shall not be required to obtain Tenant's prior written consent
for any prospective tenant, if the nature and character of the prospective
tenant, its business and activities or intended use of its leased premises in
the Building are comparable to existing tenants then leasing space in two (2) or
more of the buildings identified on EXHIBIT G attached hereto and made a part
hereof for all purposes.
VIII.
8.01 Assignment or Sublease by Tenant.
----------------------------------
(a) Assignment or Subletting to an Affiliate. Tenant may assign this Lease or
sublet the Leased Premises or any part thereof to an Affiliate (as hereinafter
defined) of Ten ant without the prior consent of Landlord; provided, however,
Tenant shall give Landlord written notice (which shall specify the assignee or
sublessee, and with respect to any sublease, the duration thereof, the date same
is to occur, and the exact location of the space affected thereby) of such
assignment or sublease within ten (10) days following such assignment or
sublease, and with respect to any assignment of this Lease, an original written
assumption in favor of Landlord of the duties, obligations and liabilities of
Tenant hereunder by such Affiliate. Tenant shall remain directly and primarily
liable for the performance of
- -25-
all of the obligations of Tenant hereunder (including, without limitation, the
obligation to pay Rent), and Landlord shall be permitted to enforce this Lease
in accordance with its terms against Tenant or such sublessee or assignee, or
both, notwithstanding any such subletting or assignment. Notwithstanding
anything else contained herein, Tenant shall have the right to allow a portion
of the Leased Premises to be used or occupied by Tenant's consultants, agents
and/or contractors in order to facilitate Tenant's business operations in the
Leased Premises.
(b) Assignment or Subletting to Non-Affiliate. Except as provided in Section
8.01(a), Tenant shall not assign this Lease or sublease all or any portion of
the Leased Premises without Landlord's prior written consent in accordance with
this Section 8.01(b). If Tenant should desire to assign this Lease or sublet the
Leased Premises or any part thereof or allow same to be used or occupied by
others, Tenant shall give Landlord written notice (which shall specify the
duration of said desired sublease or assignment, the date same is to occur, the
exact location of the space affected thereby and the proposed rentals on a
square foot basis chargeable thereunder) of such desire at least thirty (30)
days in advance of the date on which Tenant desires to make such assignment or
sublease or allow such a use or occupancy. Landlord shall then have a period of
fifteen (15) days following receipt of such notice within which to notify Tenant
in writing that Landlord elects:
(i) if Tenant is attempting to (A) assign this Lease or (B) to sublease a
portion of the Leased Premises and such sublease is for seventy-five percent
(75%) or more of the Net Rentable Area of the Leased Premises and such sublease
is for more than one-half (1/2) of the remaining term of this Lease, to
terminate this Lease as to the space so affected as of the date so specified by
Tenant, in which event Tenant shall be relieved of all obligations hereunder as
to such space arising from and after such date, or
(ii) permit Tenant to assign this Lease or sublet such space for the duration
specified in such notice, or
(iii) refuse to allow Tenant to assign or sublet, which refusal can only be
based on Landlord's reasonable judgment that (A) the nature and character of the
proposed assignee or sublessee, its business and activities or intended use of
the Leased Premises are consistent with the first class standards of the
Building, (B) the proposed occupancy would impose a material additional burden
upon the Building systems or Landlord's ability to provide services to other
tenants in the Building; provided, however, that Tenant shall have the
opportunity to agree to pay to rectify or alleviate such additional burden as
additional Rent, in which event this condition shall not be the basis for
Landlord's refusing its consent, or (C) the granting of such consent will
constitute a default of any exclusive or restrictive use provision of any other
lease in the Building, provided, that Landlord has given Tenant prior written
notice of such exclusive or restrictive use.
(c) Affiliate. As used herein, (a) the term "Affiliate" means as to any person,
any other person controlled by, under common control with, or which controls,
such person; (b) the term "person" means an individual or a corporation,
partnership, trust, unincorporated organization, association or other entity;
and (c) the term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of the
person referred to, whether through ownership of voting securities, by contract
or otherwise, and the terms "controlling" and "controls" have meanings
correlative to the foregoing. In the case of a partnership, "Affiliate" shall
include any person or entity controlled by, under common control with, or which
controls, any general partner of such partnership.
(d) Profit on Assignment or Subletting. One-half (1/2) of any Profit
-------------------------------------
realized by Tenant as a result of any assignment or sublease made pursuant to
Section 8.01(b) shall be payable to Landlord as
- -26-
it accrues as additional Rent hereunder. "Profit" as used herein shall mean (i)
in the case of an assignment of this Lease, any and all sums and other
consideration of whatever nature paid to Tenant for or by reason of the
assignment for the value of this Lease, less the Transaction Costs (as defined
below) in connection with the assignment, and (ii) in the case of a sublease of
all or any portion of the Leased Premises, the difference between (A) the base
rental, additional rental and all other consideration of whatever nature payable
to Tenant by such sublessee for or by reason of the sublease, and (B) the sum of
the Base Rental and Additional Rental and all other Rent with respect to the
Leased Premises. As used herein, the term "Transaction Costs" means with respect
to any assignment or subletting, Tenant's reasonable direct costs and expenses
associated with that transaction paid to third parties (which may include the
assignee or sublessee) including, but not limited to, brokerage commissions,
reasonable attorneys' fees, advertising and marketing costs, costs of repairs,
decorations, changes, alterations and additions and Tenant inducements paid to
or for the benefit of the assignee or sublessee (including, but not limited to,
tenant improvement allowances, relocation allowances, free rent and other
inducements to accept the assignment or sublease of such space), but
specifically excluding any downtime for Rents (relating to the time during which
the portion of the Leased Premises to be subleased or assigned is put on the
market until the date of commencement of the assignment or sublease).
(e) Agreements with Landlord. Except as to Affiliates, no assignment or
subletting by Tenant shall be effective unless Tenant shall execute, have
acknowledged and deliver to Landlord an instrument in form and substance
acceptable to Landlord in which Tenant acknowledges and agrees that,
notwithstanding such subletting or assignment, Tenant remains directly and
primarily liable for the performance of all the obligations of Tenant hereunder
(including, without limitation, the obligation to pay Rent), and Landlord shall
be permitted to enforce this Lease against Tenant without prior demand upon or
proceeding in any way against any other persons.
(f) Effect of Transfer. No consent by Landlord to an assignment or sublease
shall be deemed in any manner to be a consent to a use not permitted under
Section 1.03. Any consent by Landlord to a particular assignment or sublease
shall not constitute Landlord's consent to any other or subsequent assignment or
sublease, and any proposed sublease or assignment by any assignee or sublessee
shall be subject to the provisions of this Section 8.01 as if it were a proposed
sublease or assignment by Tenant. The prohibition against an assignment or
sublease described in this Section 8.01 shall be deemed to include a prohibition
against Tenant's mortgaging or otherwise encumbering its leasehold estate (but
not Tenant's equipment or trade fixtures located in the Leased Premises), each
of which shall be ineffective and void and shall constitute an Event of Default
under this Lease unless consented to by Landlord in writing in advance.
(g) Delivery to Landlord. In any situation in which Landlord consents to an
assignment or sublease hereunder, Tenant shall promptly deliver to Landlord a
fully executed copy of the final sublease agreement or assignment instrument and
all ancillary agreements relating thereto.
8.02 Assignment by Landlord. Landlord shall have the right to transfer and
assign, in whole or in part, all its rights and obligations hereunder and in the
Building, the Land and all other property referred to herein, and in such event
and upon such transfer (any such transferee to have the benefit of, and be
subject to, the provisions of Section 8.03 and 8.04 hereof) no further liability
or obligation shall thereafter accrue against Landlord hereunder; provided,
however any such transferee shall assume in writing all of the obligations and
duties of Landlord under this Lease.
8.03 Peaceful Environment. Landlord covenants that Tenant shall and may
peacefully have, hold and enjoy the Leased Premises, subject to the other terms
hereof, provided that Tenant pays the rental and other sums herein recited to be
paid by Tenant and performs all of Tenant's covenants and agreements herein
contained. It is understood and agreed that this covenant and any and all other
- -27-
covenants of Landlord contained in this Lease shall be binding upon Landlord and
its successors only with respect to breaches occurring during its and their
respective ownership of the Landlord's interest hereunder.
8.04 Limitation of Landlord's Personal Liability. Tenant specifically agrees to
look solely to Landlord's interest in the Building and the Land and to all
condemnation awards and insurance proceeds relating thereto for the recovery of
any judgment against Landlord, it being agreed that Landlord, its officers,
directors and employees shall never be personally liable for any such judgment.
The provision contained in the foregoing sentence is not intended to, and shall
not, limit any right that Tenant might otherwise have to obtain injunctive
relief against Landlord or Landlord's successors in interest, or to any suit or
action (against Landlord or otherwise) in connection with enforcement or
collection of amounts which may become owing or payable under or on account of
insurance maintained by Landlord. Notwithstanding the foregoing, Landlord shall
be personally liable for the recovery of any judgment to the extent resulting
from (a) Landlord's fraud, (b) Landlord's failure to maintain insurance in
effect as required hereunder or (c) Landlord's intentional misconduct.
IX.
9.01 Renewal Option. (a) Tenant is hereby granted an option (the "Renewal
Option") to renew the term of this Lease for a single additional period of five
(5) consecutive years ("Renewal Period"), commencing on the day immediately
following the date of the expiration of the initial term of this Lease (the
"Renewal Term Commencement Date"), and otherwise on the same terms and
conditions in effect under this Lease immediately prior to the Renewal Period,
except where otherwise so provided hereunder and except that (i) Tenant shall
have no further right to extend this Lease after the expiration of such Renewal
Period, (ii) the annual Base Rental rate shall be the Prevailing Rental Rate (as
defined in Section 12.02(1) below) for similar space in the Building as of the
Renewal Term Commencement Date, (iii) Landlord shall not be required to provide
(but may do so at its option) any improvement allowance, abatement of Rent as
provided with respect to the initial term of this Lease or any other inducements
or allowances, (iv) Tenant shall not have the right to assign its renewal rights
to any sublessee of the Leased Premises, nor may any such sublessee exercise
such renewal rights, and (v) the Leased Premises will be provided in their then
existing condition (on an "as is" basis) at the time the Renewal Term commences.
(b) If Tenant desires to exercise the Renewal Option, Tenant shall give written
notice thereof (the "Preliminary Notice") to Landlord not more than fifteen (15)
months nor less than nine (9) months prior to the expiration of the initial term
of this Lease. Within thirty (30) days following its receipt of the Preliminary
Notice, Landlord shall notify Tenant in writing of Landlord's good faith
determination of the Prevailing Rental Rate for leases commencing as of the
Renewal Term Commencement Date, and Tenant shall have an additional period of
thirty (30) days after receipt of such notice to make one of the following
elections by written notice (the "Final Notice") to Landlord:
(i) accept Landlord's determination of the Prevailing Rental Rate as the annual
Base Rental rate during the Renewal Period and confirm Tenant's exercise of the
Renewal Option; or
(ii) withdraw its exercise of the Renewal Option, in which event this Lease
shall terminate and expire at the end of the initial term of this Lease; or
(iii) object to Landlord's determination of the Prevailing Rental Rate but
confirm its exercise of the Renewal Option, in which event Landlord and Tenant
shall each promptly appoint a Qualified Broker (as defined below). As soon as
reasonably possible following their appointment, and in any event within thirty
(30) days after Tenant's election to exercise the
- -28-
Renewal Option, the two (2) Qualified Brokers selected by Landlord and Tenant
shall each make a separate determination of the Prevailing Rental Rate as of the
Renewal Term Commencement Date and shall deliver a written report of their
determination (including reasonable detail supporting such determination) to
Landlord and Tenant. If the higher of the two Prevailing Rental Rate
determinations is not more than one hundred five percent (105%) of the lower
determination, then the average of the two determinations shall be the annual
Base Rental rate during the Renewal Period. If the higher determination is more
than one hundred five percent (105%) of the lower determination, then the two
(2) Qualified Brokers selected by Landlord and Tenant shall, within ten (10)
days of such final determination, select a third Qualified Broker. If the first
two (2) brokers cannot agree upon a third broker within said ten (10) day
period, either Landlord or Tenant may elect to have the third broker appointed
by the President of the Houston Chapter of the American Arbitration Association
or its successor organization. Each party shall be responsible for the
compensation, if any, of the broker appointed by it and for one-half (t) of the
compensation, if any, or the third broker. As soon as reasonably possible
following its appointment, the third broker shall determine which of the first
two brokers' determinations most closely approximates the Prevailing Rental Rate
as of the Renewal Term Commencement Date, and the determination so selected
shall be the annual Base Rental rate for the Renewal Period. Landlord and Tenant
hereby covenant and agree that the annual Base Rental rate determined in
accordance with the foregoing procedure shall be binding upon each of them. As
used herein, the term "Qualified Broker" means a real estate broker who (A) is
licensed in the State of Texas, (B) has been actively and continuously engaged
in the leasing of office space in the Central. Business District of Houston,
Texas during the preceding five (5) year period, (C) has been the primary broker
representing either party to a lease covering at least 25,000 square feet of
space during the most recent three (3) year period, and (D) has not represented
Landlord or Tenant during the preceding five (5) year period.
(d) If Tenant shall fail to exercise the Renewal Option (either by failing to
deliver the Preliminary Notice or the Final Notice within the time periods set
forth above), the Renewal Option shall terminate, and shall be null and void and
of no further force and effect. Tenant's exercise of the Renewal Option shall
not operate to cure any default by Tenant of any of the terms or provisions in
this Lease, nor to extinguish or impair any rights or remedies of Landlord
arising by virtue of such default. If this Lease or Tenant's right to possession
of the Leased Premises shall terminate in any manner whatsoever before Tenant
shall exercise the Renewal Option, then immediately upon such termination, the
Renewal Option shall simultaneously terminate and become null and void.
X.
10.01 Expansion Option. (a) Tenant shall have the additional option ("First
Expansion Option"), by providing written notice thereof to Landlord (the "First
Expansion Election Notice") at any time between the thirtieth (30th) and the
thirty-sixth (36th) month of the initial term of this Lease, to include under
this Lease an additional 4,000 to 6,000 square feet of Net Rentable Area on the
fifteenth (15th) Floor of the Building. The amount of additional space to be
included under this Lease pursuant to the First Expansion Option shall be
identified by Tenant in the First Expansion Election Notice. The actual space to
be included under this Lease pursuant to the First Expansion Option shall be
designated by Landlord, provided, however, it shall be internally contiguous and
contiguous to the then existing Leased Premises and shall have a reasonable
configuration (the "First Expansion Space"). Landlord and Tenant shall then
enter into an amendment to this Lease to cover such First Expansion Space on the
same terms and provisions then in effect under this Lease, except as otherwise
provided hereunder and except that (i) the annual Base Rental rate for the First
Expansion Space shall be adjusted to reflect the Prevailing Rental Rate as of
the date such First Expansion Space will
- -29-
be made available to Tenant, (ii) Landlord shall not be required to provide (but
may do so at its option and with Tenant's consent) any improvement allowance,
abatement of Rent, or other incentives, inducements or allowances, (iii) Tenant
shall be entitled to one additional (1) unreserved parking permit per 680 square
feet of Net Rentable Area leased pursuant to such First Expansion Option, at the
prevailing market rate therefore as of the addition of such First Expansion
Space to the Leased Premises, and thereafter adjust in accordance with any such
changes to such market charges, (iv) Tenant shall not have the right to assign
its expansion rights to any sublessee of the Leased Premises, nor may any such
sublessee exercise such expansion rights, and (v) the First Expansion Space will
be provided in its then existing condition (on an "as is" basis; provided,
however, Landlord shall remove and dispose of any Existing Asbestos located in
the First Expansion Space, other than the Existing Asbestos located on the
perimeter columns of the First Expansion Space). The First Expansion Space shall
be made available to Tenant between the thirty-sixth (36th) and the forty-second
(42nd) month of the initial term of this Lease. Tenant's obligation to commence
paying Rent on such First Expansion Space shall commence on the earliest to
occur of (1) Tenant's occupancy of such First Expansion Space for the purpose of
conducting business therefrom, or (2) sixty (60) days following the delivery of
such First Expansion Space by Landlord to Tenant. Landlord shall, at Landlord's
cost and expense, be required to make any alterations to the First Expansion
Space and the Building which are required by law in order to provide such space
to Tenant (i.e. corridors, access, etc.)
(b) Tenant shall have the additional option ("Second Expansion Option"), by
providing written notice thereof to Landlord (the "Second Expansion Election
Notice")at any time between the sixty-sixth (66th) and the seventy-second (72nd)
month of the initial term of this Lease, to include under this Lease an
additional 4,000 to 6,000 square feet of Net Rentable Area on the fifteenth
(15th) Floor of the Building. The amount of additional space to be included
under this Lease pursuant to the Second Expansion Option shall be identified by
Tenant in the Second Expansion Election Notice. The actual space to be included
under this Lease pursuant to the Second Expansion Option shall be designated by
Landlord, provided, however, it shall be internally contiguous and contiguous to
the then existing Leased Premises and shall have a reasonable configuration (the
"Second Expansion Space"). Landlord and Tenant shall then enter into an
amendment to this Lease to cover such Second Expansion Space on the same terms
and provisions then in effect under this Lease, except as otherwise provided
hereunder and except that (i) the annual Base Rental rate for the Second
Expansion Space shall be adjusted to reflect the Prevailing Rental Rate, as of
the date such Second Expansion Space will be made available to Tenant (ii)
Landlord shall not be required to provide (but may do so at its option and with
Tenant's consent) any improvement allowance, abatement of Rent, or other
incentives, inducements or allowances, (iii) Tenant shall be entitled to one
additional (1) unreserved parking permit per 680 square feet of Net Rentable
Area leased pursuant to such Second Expansion Option at the prevailing market
rate therefore as of the addition of such Second Expansion Space to the Leased
Premises, and thereafter adjust in accordance with any such changes to such
market charges, (iv) Tenant shall not have the right to assign its expansion
rights to any sublessee of the Leased Premises, nor may any such sublessee
exercise such expansion rights, and (v) the Second Expansion Space will be
provided in its then existing condition (on an "as is" basis; provided, however,
Landlord shall remove and dispose of any Existing Asbestos located in the Second
Expansion Space, other than the Existing Asbestos located on the perimeter
columns of the Second Expansion Space). The Second Expansion Space shall be made
available to Tenant between the seventy-second (72nd) and the seventy-eighth
(78th) month of the initial term of this Lease. Tenant's obligation to commence
paying Rent on such Second Expansion Space shall commence on the earliest to
occur of (1) Tenant's occupancy of such Second Expansion Space for the purpose
of conducting business therefrom, or (2) sixty (60) days following the delivery
of such Second Expansion Space by Landlord to Tenant. Landlord shall, at
Landlord's cost and expense, be required to make any
- -30-
alterations to the Second Expansion Space and the Building which are required
by law in order to provide such space to Tenant (i.e. corridors, access, etc.)
(c) In the event Tenant exercises its right under either the First Expansion
Option or the Second Expansion Option, but objects to Landlord's determination
of the Prevailing Rental Rate, then the Prevailing Rental Rate shall be
determined in accordance with the procedure set forth in Section 12.02(1) of
this Lease..
(d) If Tenant exercises the Preferential Right under Section 11.01 and such
exercise results in a reduction of the number of square feet of Net Rentable
Area available for Tenant's First Expansion Option and Second Expansion Option
then the amount of expansion space contained in the First Expansion Option and
the Second Expansion Option shall be reduced to the amount of Net Rentable Area
available on the fifteenth (15th) floor at the respective times such expansion
options may be exercised by Tenant. In the event Tenant exercises its right
under either the First Expansion Option or the Second Expansion Option and as a
result of Tenant exercising its rights under the Preferential Right (as defined
in Section 11.01), the remaining space on the fifteenth (15th) Floor of the
Building that is not then being leased by Tenant is less than 4,000 square feet
of Net Rentable Area, then the First Expansion Option or the Second Expansion
Option, as the case may be, shall be revised to include all of the Net Rentable
Area on the fifteenth (15th) Floor of the Building which is not then being
leased by Tenant.
(e) Notwithstanding anything in this Section 10.01 to the contrary, Tenant's
First Expansion Option and Second Expansion Option shall terminate if this Lease
or Tenant's right to possession of the Leased Premises is terminated, or if
Tenant fails to timely exercise the First Expansion Option or the Second
Expansion Option; provided, however, Tenant's failure to timely exercise the
First Expansion Option shall not result in a termination of the Second Expansion
Option.
XI.
11.01 Preferential Right. (a) During the initial term of this Lease, and during
the Renewal Period as set forth in Section 9.01, and subject to the terms and
conditions set forth below, Tenant shall have a continuing and recurring right
of first opportunity (the "Preferential Right") to lease the remaining portion
of the fifteenth (15th) floor of the Building not then included in the Leased
Premises (the "Opportunity Space"), prior to the Opportunity Space being leased
to a third party, in an "as is" condition (except that, Landlord shall remove
and dispose of any Existing Asbestos located in the Opportunity Space, other
than the Existing Asbestos located on the perimeter columns of the Opportunity
Space), on the same terms and provisions then in effect under this Lease, except
that (i) the annual Base Rental rate for the Opportunity Space shall be adjusted
to reflect the Prevailing Rental Rate, (ii) Landlord shall not be required to
provide (but may do so at its option and with Tenant's consent) any improvement
allowance, abatement of Rent, or other incentives, inducements or allowances,
(iii) Tenant's parking charges for the additional parking spaces acquired with
such Opportunity Space shall be adjusted to the prevailing market rate therefore
as of the addition of such Opportunity Space to the Leased Premises, and
thereafter adjust in accordance with any such changes to such market charges as
of the addition of such Opportunity Space to the Leased Premises, and (iv)
Tenant shall not have the right to assign the Preferential Right to any
sublessee of the Leased Premises, nor may any such sublessee exercise the
Preferential Right.
(b) Landlord shall deliver written notice (the "Availability Notice") to Tenant
when Landlord enters or intends to enter serious negotiations with a third party
to lease all or any portion of the Opportunity Space (and Landlord's good faith
determination of whether serious negotiations have
- -31-
been entered or are about to be entered shall be conclusive and binding upon the
parties). The Availability Notice shall include a floor plan of the subject
Opportunity Space, and shall state the date that Landlord expects same to be
available, Landlord's determination of the Prevailing Rental Rate for such
space, and the other basic terms and conditions upon which Landlord is willing
to lease such space (including, without limitation, the term, renewal and
expansion options, and other preferential rights, the number of parking spaces
and rates therefore, if the base rental is to be other than a "net" rate, the
basis upon which Operating Expenses will be charged to the tenant, and if
Tenant's right to the subject Opportunity Space will be subject to expansion or
renewal rights held by other tenants). Upon request of Tenant, Landlord will
provide access to the subject Opportunity Space to Tenant and its
representatives during the period of time Tenant has the right to exercise its
Preferential Right with respect to such space. Tenant shall have a period of
fifteen, 15) days after receipt of the Availability Notice to lease the subject
Opportunity Space by delivering written notice to Landlord either (i) exercising
its right to lease same and accepting Landlord's determination of the Prevailing
Rental Rate as the annual Base Rental rate for such space; or (ii) exercising
its right to lease same but objecting to Landlord's determination of the
Prevailing Rental Rate, in which event the Prevailing Rental Rate shall be
determined in accordance with the procedure set forth in Section 12.02(1) of
this Lease. If Tenant fails to respond to Landlord's Availability Notice within
such fifteen (15) day period, Tenant shall be deemed to have elected not to
lease such Opportunity Space. If Tenant exercises the right to lease the
Opportunity Space, said lease shall commence on the earliest to occur of (x)
Tenant's occupancy of such space for the purpose of conducting business
therefrom, (y) forty-five (45) days after Landlord's delivery of such space to
Tenant, or (z) the date a third party would have commenced paying Rent (based
upon the same Prevailing Rental Rate) thereon had Tenant not exercised its
Preference Right with respect to such space. After Tenant validly exercises the
Preferential Right, the parties shall negotiate in good faith an amendment to
this Lease adding the Opportunity Space and confirming the leasing of such
Opportunity Space to Tenant, but an otherwise valid exercise of the Preferential
Right shall be fully effective, whether or not such amendment is executed.
(c) If the Prevailing Rental Rate has not been determined as of the commencement
of the lease for the Opportunity Space, Tenant shall pay, as Rent for the
Opportunity Space, until the Prevailing Rental Rate is determined, the amount of
Rent then in effect under this Lease on a per square foot of Net Rentable Area
basis (including annual Base Rental and all other charges). If the Prevailing
Rental Rate is determined to be greater than such amount, Tenant shall pay
Landlord, within ten (10) days after such determination, the difference between
the amount required by such determination of the Prevailing Rental Rate and the
amount theretofore paid by Tenant for the Opportunity Space. If the Prevailing
Rental Rate is determined to be less than such amount, Tenant shall receive a
credit against the next installments of Rent due and payable hereunder in an
amount equal to such overpayment.
(d) The Preferential Right shall apply only with respect to the entire
Opportunity Space offered by Landlord to Tenant, and may not be exercised with
respect to only a portion thereof, unless only a portion shall first become the
subject of Landlord's notice concerning negotiations with another party as
described above. If Tenant shall fail to exercise such Preferential Right after
notice by Landlord as provided herein, Landlord may lease the portion of the
Opportunity Space described in the Availability Notice, on such terms and
conditions as Landlord may determine in its sole and absolute discretion, except
that in no event shall the effective rental rate (taking into consideration all
amounts to be paid by Tenant to Landlord thereunder, such as annual Base Rental,
Additional Rental and parking charges, together with all allowances and monetary
concessions (such as tenant improvement allowance and free rent) to be provided
by Landlord to Tenant) in such lease be less than
- -32-
ninety-five percent (95%) of the effective rental rate offered to Tenant in the
Availability Notice, and the foregoing expansion right shall be of no further
force or effect with respect to such portion of the Opportunity Space until such
lease and any renewal or extension rights thereunder included in the applicable
Availability Notice expire or are terminated. If Landlord does not enter into a
lease of such space within six (6) months following the Availability Notice,
Tenant's Preferential Rights shall apply again to such space, and Landlord shall
be required to notify Tenant when Landlord enters or intends to enter serious
negotiations with another party to lease such space as provided above. The
Preferential Right shall be subject and subordinate to (y) the expansion,
renewal or preferential rights existing as of the Effective Date granted to
other tenants of the Building as described in EXHIBIT H attached hereto, or (z)
any expansion or renewal rights granted to a third party in a lease of
Opportunity Space that Tenant elected not to lease pursuant to this Section
11.01, provided that such rights were set forth in the applicable Availability
Notice. Landlord does not guarantee that the Opportunity Space will be available
on the availability date therefore described in such Availability Notice for any
reason beyond Landlord's reasonable control; provided, however, that if such
space is not delivered to Tenant within three (3) months after the anticipated
availability date stated in the Availability Notice, Tenant shall have the
right, at Tenant's sole option and as Tenant's sole and exclusive remedy, to
either (i) terminate its lease of such space by written notice to Landlord at
any time thereafter until possession thereof is delivered to Tenant, or (ii)
accept possession of such space at such time as Landlord is able to deliver
same. If Tenant elects to accept possession of such space at such time as
Landlord is able to deliver same, Landlord shall use reasonable efforts to find
other space in the Building to lease to Tenant during such interim on an "as is"
basis and at the Prevailing Rental Rate for comparable space on a month to month
basis. Tenant's exercise of such Preferential Right shall not operate to cure
any default by Tenant of any of the terms or provisions in this Lease, nor to
extinguish or impair any rights or remedies of Landlord arising by virtue of
such default. If this Lease or Tenant's right to possession of the Leased
Premises shall terminate in any manner whatsoever before Tenant shall exercise
the right herein provided, then immediately upon such termination, the right to
lease the Opportunity Space herein granted shall simultaneously terminate and
become null and void.
(e) Notwithstanding anything else contained herein, Tenant shall not be entitled
to exercise Tenant's Preferential Right during the last twenty-four (24) months
of (i) the initial term of this Lease or (ii) the Renewal Period; provided,
however, Tenant shall be entitled to exercise its Renewal Option prior to the
date specified under Section 9.01, in order to allow Tenant to exercise Tenant's
Preferential Right under this Section 11.01(e).
(f) In the event Tenant elects to exercise a Preferential Right and the effect
of exercising such Preferential Right will result in the balance of the Net
Rentable Area on the fifteenth (15th) Floor of the Building which is not then
being leased by Tenant being less than 3,000 square feet of Net Rentable Area,
then Tenant shall be required as a condition to exercising such Preferential
Right, to include the balance of the space remaining on the fifteenth (15th)
Floor of the Building in the Opportunity Space which is applicable to such
Preferential Right.
XII.
12.01 Notices. (a) Any notice or other communications to Landlord or Tenant
required or permitted to be given under this Lease (and copies of the same to be
given to the parties as below described) must be in writing and shall be
effectively given if delivered to the addresses for Landlord and Tenant set
forth below, or if sent by United States mail, certified or registered, return
receipt requested, to said addresses:
- -33-
The address for Landlord is:
Texas Commerce Bank National Association
11 TCB S 89
712 Main Street
Houston, Texas 77002
Attn: Corporate Real Estate Department
The address for Tenant prior to the Commencement Date is:
Howell Corporation
1010 Lamar Suite 1800
Houston, Texas 77002
Attn: Paul W. Funkhouser
The address for Tenant after the Commencement Date shall be the Leased Premises.
(b) Any notice mailed shall be deemed to have been given on the regular business
day next following the date of deposit of such item in a depository of the
United States Postal Service in Houston, Texas. Notice effected other than by
mail shall be deemed to have been given at the time of actual delivery. Either
party shall have the right to change its address to which notices shall
thereafter be sent by giving the other written notice thereof. Additionally,
Tenant shall send copies of all notices required or permitted to be given to
Landlord to each lessor under any ground or land lease covering all or part of
the Land and each holder of a mortgage or deed of trust encumbering the Building
and/or the Land who notifies Tenant in writing of its interest and the address
to which notices are to be sent.
12.02 Miscellaneous. (a) This Lease shall be binding upon and inure to the
benefit of the successors and assigns of Landlord, and shall be binding upon and
inure to the benefit of Tenant, its successors, and, to the extent provided
hereunder, Tenant's assigns. The pronouns of any gender shall include the other
genders, and either the singular or the plural shall include the other.
(b) All rights and remedies of Landlord under this Lease shall be cumulative and
none shall exclude any other rights or remedies allowed by law; and this Lease
is declared to be a Texas contract, and all of the terms thereof shall be
construed according to the laws of the State of Texas.
(c) This Lease may not be altered, changed or amended, except by an instrument
in writing executed by all parties hereto. Further, the terms and provisions of
this Lease shall not be construed against or in favor of a party hereto merely
because such party is the "Landlord" or the "Tenant" hereunder or such party or
its counsel is the draftsman of this Lease.
(d) The terms and provisions of all Exhibits described herein and attached
hereto are hereby made a part hereof for all purposes. This Lease constitutes
the entire agreement of the parties with respect to the subject matter hereof,
and all prior correspondence, memoranda, agreements or understandings (written
or oral) with respect hereto are merged into and superseded by this Lease.
(e) If Tenant is a corporation, partnership or other entity, Tenant warrants and
represents that (i) Tenant is a duly organized and existing legal entity,
authorized to do business in and in good standing with the State of Texas, (ii)
Tenant has full right and authority to execute,
- -34-
deliver and perform this Lease and all consents or approvals required of third
parties (including but not limited to its Board of Directors or partners) for
the execution, delivery and performance of this Lease have been obtained, (iii)
the person executing this Lease on behalf of Tenant is authorized to do so and
(iv) upon request by Landlord, such person shall deliver to Landlord
satisfactory evidence of his/her authority to so execute this Lease on behalf of
Tenant.
(f) Landlord warrants and represents that (i) Landlord is a duly organized and
existing legal entity, authorized to do business in and in good standing with
the State of Texas, (ii) Landlord has full right and authority to execute,
deliver and perform this Lease and all consents or approvals required of third
parties for the execution, delivery and performance of this Lease have been
obtained and, (iii) the person executing this Lease on behalf of Landlord is
authorized to do so.
(g) Tenant shall have no right, and Tenant hereby waives and relinquishes all
rights which Tenant may otherwise have, to claim any nature of lien against the
Building or to withhold, deduct from or offset against any rental or other sums
to be paid to Landlord by Tenant hereunder or in connection herewith, except as
otherwise provided herein.
(h) Time is of the essence in the payment and performance of Tenant's
obligations, and the exercise of his rights, under this Lease.
(i) 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 provision to persons or
circumstances other than those as to which it is invalid or unenforceable, shall
not be affected thereby, and each provision of this Lease shall be valid and
shall be enforceable to the extent permitted by law.
(j) Landlord agrees to pay to Trione & Gordon ("Landlord's Broker") a real
estate brokerage commission as set forth in a separate listing agreement between
Landlord and Landlord's Broker and Landlord agrees to pay Montgomery, Conine &
Robinson and McDade, Smith & Co. (collectively, "Tenant's Broker") a real estate
brokerage commission as set forth in a separate commission agreement between
Landlord and Tenant's Broker. Landlord and Tenant hereby represent and warrant
each to the other that they have not employed any other agents, brokers or other
such parties in connection with this Lease, and each agrees that they shall hold
the other harmless from and against any and all claims of all other agents,
brokers or other such parties claiming by, through or under the respective
indemnifying party.
(k) Parking permits shall be provided to Tenant during the term of this Lease in
accordance with the terms of EXHIBIT E attached hereto and made a part hereof
for all purposes.
(l) The term "Prevailing Rental Rate" as used herein shall mean the rate
(determined in the same manner as the annual Base Rental Rate is calculated for
this Lease) charged to non-renewing/non-extending tenants for space of
comparable size, location and condition, and for a comparable term, in
comparable, high-rise office buildings located in the Central Business District
of Houston, Texas, under new leases entered into within the twelve (12) months
immediately preceding the date Landlord first receives notice of Tenant's
interest in exercising (i) the Renewal Option under Section 9.01, (ii) the First
Expansion Option or the Second Expansion Option under Section 10.01, or (iii) a
Preferential Right under Section 11.01 (as may be applicable), for lease terms
commencing on the date that the Prevailing Rental Rate in question is to become
effective (or if there have been an insufficient number of new leases entered
into within such twelve (12) month period to make a meaningful determination of
the Prevailing Rental Rate, then within such longer period of time prior to such
date as shall reasonably be necessary to make such determination). In
determining the
- -35-
Prevailing Rental Rate, consideration shall be given to the location, quality
and age of each building (including the Building), use of the space in question,
location and/or floor level within each building, definition of "rentable" area,
leasehold improvements or improvement allowances to be provided, abatements
(including with respect to base rental, Operating Expenses and taxes, and
parking charges), lease takeovers/assumptions, moving/relocation allowances,
space planning allowances, refurbishment and repainting allowances and other
concessions, extent of services provided or to be provided, distinction between
"gross" and "net" lease, base year or dollar amount for escalation purposes
(inclusive of operating costs, management fees and ad valorem/real estate
taxes), and other adjustments (including by way of indexes) to base rental,
leasing or brokerage commissions, credit standing and financial stature of the
tenant, term or length of lease, and the time the particular rental rate under
consideration was agreed upon and became or is to become effective, or any other
relevant term or condition contained in comparable lease transactions.
(m) A non-exclusive license to locate a satellite dish on the roof of the
Building shall be provided to Tenant during the term of this Lease in accordance
with the terms of EXHIBIT I attached hereto and made a part hereof for all
purposes.
- -36-
IN TESTIMONY WHEREOF, the parties hereof have executed this Lease on the
respective dates set forth beside the signature block for each such party, to be
effective as of the Effective Date.
LANDLORD:
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
a national banking association
By: /s/ David Senior
---------------------------------------------
David Senior, Senior Vice President
Date: 12/16/93
TENANT:
HOWELL CORPORATION
By: /s/ Paul W. Funkhouser
------------------------------------------
Paul W. Funkhouser, President
Date: 12/13/93
- -37-
EXHIBIT B
CONSTRUCTION OF INITIAL LEASEHOLD IMPROVEMENTS
Landlord shall cause the Initial Leasehold Improvements to be constructed in the
Office Space in accordance with this EXHIBIT B. The "Initial Leasehold
Improvements" consist of all improvements and tenant finish desired by Tenant in
the Office Space.
ARTICLE I
Design of the Initial Leasehold Improvement
1.1 Design Professionals. All plans and specifications relating to the Initial
Leasehold Improvements shall be prepared by architects and engineers selected
and employed by Tenant and approved by Landlord. Tenant may employ other
consultants of its selection to assist with the design and construction of the
Initial Leasehold Improvements, Tenant's architects, engineers, and other
consultants shall be afforded access to all work in progress at the Building or
in the Leased Premises. Landlord has approved Kirskey-Meyer Architects as
Tenant's design professionals.
1.2 Approval of Space Plans. Landlord and Tenant have approved the plans and
-------------------------
specifications identified on EXHIBIT B-1 attached hereto (the" Approved Space
---------------------
Plans").
- ---------
1.3 Approval of Construction Documents. Landlord and Tenant have approved the
detailed architectural, structural, mechanical, electrical and plumbing working
drawings identified on EXHIBIT B-2 attached hereto (the" Approved Construction
Documents").
1.4 Information and Approval Standards. Within three (3) days after any written
request submitted from time to time by Tenant or its architects, engineers, or
other consultants, Landlord shall furnish any plans, specifications, drawings,
samples, or other materials or information within Landlord's possession
reasonably related to the design and construction of the Initial Leasehold
Improvements.
Tenant acknowledges, however, that Landlord's approval of the Approved
Construction Documents shall in no manner indicate that Landlord believes the
Approved Construction Documents are in compliance with applicable codes, law and
regulations.
1.5 Base Building. Landlord shall be responsible for the costs to rectify any
failure of the base Building (including without limitation, the bathrooms on the
15th and 16th floors of the building systems (including elevators and elevator
buttons) or "shell,". Portions of the Leased Premises (as opposed to the Initial
Leasehold Improvements, either those existing or to be installed by Landlord) to
comply with applicable governmental laws, regulations, codes and ordinances in
effect on the Effective Date. Landlord represents and warrants that there are no
restrictions affecting the Building which are applicable to the construction and
installation of the Initial Leasehold Improvements.
ARTICLE II
Construction
2.1 Employment of Contractors. The Landlord will enter into a contract agreement
with an unaffiliated third-party contractor, for the construction of the Initial
Leasehold Improvements in accordance with the Approved Construction Documents.
Landlord shall be solely responsible for all payments and other liabilities or
obligations to, and any liens or claims asserted by, contractors or other
persons employed by Landlord in connection with the Initial Leasehold
Improvements.
2.2 Selection of Contractors. Intentionally Deleted.
--------------------------
2.3 Construction Contract(s). Construction of the Initial Leasehold Improvements
shall be accomplished by Landlord in accordance with the Approved Construction
Documents under the terms of a single Construction Contract (herein so-called).
Landlord shall provide Tenant a copy of the Construction Contract not less than
ten (10) days prior to the scheduled commencement of construction. The
Construction Contract shall:
(a) Provide for a guaranteed maximum cost for the entire cost of the work.
(b) Separately state and account for the costs and any associated fee for the
modifications to the Base Building, Base Building systems and "shell" portions
of the Leased Premises, which costs and fees shall be the responsibility of
Landlord pursuant to Section 1.5 above and shall not be part of Ten ant's
Construction Costs.
(c) Require insurance coverage in amounts and types mutually and reasonably
acceptable to Landlord and Tenant.
(d) Provide that both Landlord and Tenant shall have the right to disapprove the
employment of any subcontractor.
(e) Provide for a schedule and sequence of construction activities and
completion reasonably acceptable to Tenant.
(f) Otherwise be in a form mutually and reasonably acceptable to Landlord and
Tenant including warranties of construction in a good and workmanlike manner
that shall survive the Leasehold Improvement Deemed Completion Date for not less
than one (1) year.
(g) Not be amended without tenant's prior written consent.
(h) Separately state and account for the cost and any associated fees relating
to the removal and disposal of the asbestos containing materials in the Leased
Premises, such cost and expense to be paid by Landlord and shall not be deemed
part of Tenant's Construction Costs (as hereinafter defined).
B-2
ARTICLE III Completion
3.1 Completion Date. The "Completion Date" means, for any part of the Leased
Premises, the date on which Tenant's architect issues a certificate of
Substantial Completion for all Initial Leasehold Improvements in the applicable
part of the Leased Premises in compliance with the following procedures and
standards:
(a) When Landlord believes that the Initial Leasehold Improvements in the
applicable part of the Leased Premises have been substantially completed in
accordance with the Approved Construction Documents, Landlord, Tenant, and
Tenant's architect shall walk through and inspect the Initial Leasehold
Improvements in the applicable part of the Leased Premises.
(b) The Initial Leasehold Improvements in the applicable part of the Leased
Premises shall be considered substantially completed if they conform to the
Approved Construction Documents and are capable of being occupied for their
intended purpose exclusive of touch-up, minor finish, and similar so-called
"punch-list" items that do not unreasonably interfere with occupancy or Tenant's
business activities. The "Punch-list" items shall be completed within sixty (60)
days of the Completion Date.
(c) Tenant's architect shall attach to each certificate of Substantial
Completion a list of all punch-list items needed to achieve final completion.
Landlord shall complete all punch-list items identified in any Substantial
Completion certificate as soon as possible.
(d) If Landlord and Tenant disagree as to any particular matters of
architectural judgment, and such dispute cannot be resolved by Landlord's and
Tenant's respective architects, then the issue shall be submitted to an
independent architect selected by Landlord's and Tenant's respective architects
for resolution, and the determination of such independent architect shall be
binding on both parties.
3.2 Leasehold Improvements Deemed Completion Date. The "Leasehold Improvements
Deemed Completion Date" of this Lease shall be the date on which each of the
following conditions have been satisfied, less the total number of days of
Tenant Delay (as hereinafter defined);
(a) The Completion Date has occurred for all parts of the Leased Premises;
and
(b) Landlord has delivered to Tenant a certificate of occupancy for all parts of
the Leased Premises issued by the city or other appropriate government
jurisdiction in which the Project is located.
3.3 Early Occupancy. Tenant may take early occupancy of all or a portion of
-----------------
the Leased Premises if permitted under applicable law once the Completion
Date has occurred.
B-3
ARTICLE IV
Schedule & Delays
4.1 Completion Schedule. Landlord shall use its diligent efforts to cause the
---------------------
Leased Premises to be Substantially Complete no later than March 15,1994,
subject to Tenant Delay.
4.2 Tenant Delays. "Tenant Delay" means any of the following:
------------------------------
(a) Delays in obtaining any building permits or certificates of occupancy
attributable to errors or omissions by Tenant's architects or engineers.
(b) Delays resulting from change orders (authorized by Tenant) to the
Approved
Construction Documents or the Construction Contract executed in accordance with
the provisions of this EXHIBIT B.
(c) Delays attributable to the nonavailability or excess procurement time for
specifically fabricated materials or equipment specifically identified by
Landlord as having the potential to cause a Tenant Delay in the Approved
Construction Documents or as part of the bidding process for the Construction
Contract.
(d) Any other delay in the completion of the Initial Leasehold Improvements
caused by Tenant, its employees, contractors or agents (including, without
limitation, Tenant's design professionals) .
Any Tenant Delay must be claimed by written notice to Tenant within ten (10)
days after the beginning of the circumstances that constitutes a Tenant Delay.
Failure to deliver the written notice within the required time waives the
particular Tenant Delay. Notwithstanding the above, subsections (a) through (d)
of this Section 4.2 shall only be considered Tenant Delays to the extent such
items actually delay the Leasehold Improvements Completion Date and such delay
is not attributable to a delay resulting from Landlord's actions or omissions.
4.3 Extension of Abatement Period. In the event the Leasehold Improvements
Deemed Completion Date has not occurred on or before April 15, 1994 (subject to
extension for Tenant Delays) for any reason, Landlord shall not be liable or
responsible for any claims, damages or liabilities in connection therewith or by
reason thereof; provided, however, the Abatement Period shall be extended an
additional day for each day after April 15, 1994 (subject to extension for
Tenant Delays) until the Leasehold Improvements Deemed Completion Date has
occurred.
ARTICLE V
Costs & Allowances
5.1 Tenant's Construction Cost. "Tenant's Construction Costs" means the total
amount actually paid by Landlord under the Construction Contract(s) for the
Initial Leasehold Improvements, including labor, material, and fees, and as
increased or decreased pursuant to any change order executed by Landlord and
Tenant in accordance with the provisions of this EXHIBIT B.
5.2 Construction Administration Fee. Intentionally Deleted.
---------------------------------
B-4
5.3 Allowances.
(a) Tenant shall receive an allowance (the "Architectural Allowance") in an
amount up to Sixty-Eight Thousand Two Hundred Ninety and 50/100 ($68,290.50) to
defer the cost and expense of the preparation of the Approved Space Plan and the
Approved Drawings, bid supervision and construction coordination (collectively,
the "Architectural Expenses").
(b) Tenant shall receive an allowance (the "Moving: Allowance") in an amount up
to Sixty-Eight Thousand Two Hundred Ninety and 50/100 ($68,290.50) to defer the
reasonable costs and expenses incurred by Tenant owing to third parties in
connection with the moving and relocating of Tenant's business operations to the
Building (the "Moving: Expenses"). Landlord shall make disbursements of the
Moving Allowance to Tenant from time to time within twenty (20) days after
delivery of a written statement from Tenant indicating any amounts owed by
Tenant for which Tenant is entitled to payment from the Moving Allowance,
together with such bills, invoices and such other supporting documentation as
Landlord may reasonably request.
(c) Tenant shall receive an allowance (the "Improvement Allowance") in an amount
up to One Million Forty-Seven Thousand One Hundred Twenty-One and No/100 Dollars
($1,047,121.00) to be applied to the payment and/or reimbursement of the
Tenant's Construction Costs. Landlord shall maintain and make available to
Tenant accurate records of any and all disbursements of the Improvement
Allowance for payment of Ten ant's Construction Costs, along with draw requests
signed by the contractor(s) and other bills or invoices.
5.4 Final Accounting of Allowances. Within thirty (30) days after the
Commencement Date, Landlord shall furnish Tenant a final accounting of the
disbursement of the Architectural Allowance, the Moving Allowance and the
Improvement Allowance (collectively, the "Allowances"). If the aggregate amount
of the cost and expense of the Architectural Expenses, the Moving Expenses and
the Tenant's Construction Costs which are paid by Landlord are greater than the
aggregate total of the Allowances, then the excess shall be paid to
Landlord in cash by Tenant in a single installment within twenty (20) days after
receipt of the final accounting. Notwithstanding anything else contained herein,
Landlord shall not be required to reimburse Tenant for any Architectural
Expenses and Moving Expenses which exceed in the aggregate $ 4.00 per square
foot of Net Rentable Area " in the Office Space. In the event any of the
Allowances are not fully advanced by Landlord, Tenant shall be entitled to a
credit against the next Rent payable under this Lease equal to one-half (1/2) of
the unadvanced portion of the Allowances.
ARTICLE VI
Other Provisions
6.1 Changes. Tenant may make changes in the Approved Construction Documents or
the Construction Contract(s) only if Tenant signs a change order requesting the
change, and then only if the change is consistent with applicable codes and laws
and does not materially impact the mechanical, electrical, plumbing or
structural components of the Building. Landlord may require changes in the
Approved Construction Documents or Construction Contract(s) only if necessary to
comply with applicable building codes and other laws, and then only if Landlord
and Tenant sign a change order. The terms "Approved Construction Documents" and
"Construction Contract" shall be deemed to include only changes authorized by a
change order signed by Landlord and Tenant in accordance with this Section.
B-5
6.2 Warranty. TENANT ACKNOWLEDGES THAT THE INITIAL LEASEHOLD IMPROVEMENTS WILL
BE CONSTRUCTED BY A CONTRACTOR UNAFFILIATED WITH LANDLORD AND THAT ACCORDINGLY,
EXCEPT AS OTHERWISE SET FORTH IN THIS LEASE, LANDLORD HAS MADE AND WILL MAKE NO
WARRANTIES TO TENANT AS TO THE QUALITY OF CONSTRUCTION OF THE INITIAL LEASEHOLD
IMPROVEMENTS OR OF THE CONDITION OF THE INITIAL LEASEHOLD IMPROVEMENTS UPON
COMPLETION THEREOF, EITHER EXPRESS OR IMPLIED, AND THAT LANDLORD AND TENANT
EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY THAT THE LEASED PREMISES ARE OR WILL BE
SUITABLE FOR TENANT'S INTENDED COMMERCIAL PURPOSE, Landlord agrees, however,
that if any defect in the Initial Leasehold Improvements is discovered, Landlord
will diligently pursue and seek to enforce any warranties and/or to pursue any
other liability of the General Contractor, any subcontractor which performed
defective work or supplied or installed defective materials, the manufacturer of
any defective materials incorporated therein, and any other person or entity
which provided defective labor, material or professional services in connection
with the Initial Leasehold ~ Improvements; provided, however, that in no event
shall Landlord be obligated to institute any litigation or other legal process
in connection therewith. If for any reason Tenant is dissatisfied with
Landlord's efforts to enforce any such warranties or liabilities, or if Landlord
determines that Landlord has exhausted its obligation to pursue such claims
without obtaining a rectification of the defect, then upon Tenant's request
Landlord will assign to Tenant any and all warranties and causes of action for
such defective labor, materials or professional services; provided, however,
that all such warranties and causes of action shall automatically revert to
Landlord upon the expiration or earlier termination of this Lease.
6.3 Authorized Construction Representative. Tenant and Landlord shall furnish
the other party with a written list of such party's authorized construction
representative for the Initial Leasehold Improvements. Only the authorized
construction representative so designated is authorized to sign any change
order, disbursement request for any Allowance, receipt, or other document on
behalf of such party related to the Initial Leasehold Improvements, and without
the signature of such an authorized construction representative, no such
document shall be binding upon the respective party. Each party may from time to
time change its authorized construction representative by giving the other party
written notice of the addition or change. Tenant's initial designated
representatives are Allyn Skelton and Ric Robinson. Landlord's initial
designated representative is Mark Russell.
B-6
<page>
EXHIBIT B-1
APPROVED SPACE PLANS
Space Plans for the Fifteenth (15th) Floor, dated November 3, 1993, prepared by
Kirskey-Meyer Architects, Job No. 93127.
Space Plans for the Sixteenth (16th) Floor, dated November 5, 1993, prepared by
Kirskey-Meyer Architects, Job No. 93127.
<page>
EXHIBIT B-2
APPROVED CONSTRUCTION DOCUMENTS
Drawings issued for Permit and Price, dated November 22, 1993, prepared by
Kirskey-Meyer Architects.
Bid Instructions, prepared by Kirskey-Meyer Architects, along with Addendum I,
Addendum II, Addendum III, and Addendum IV .
EXHIBIT C
JANITORIAL SPECIFICATIONS
A. OFFICE AREAS
-------------
1. Empty, clean and damp dust all waste receptacles and remove waste paper and
rubbish from the Leased Premises nightly; wash receptacles as necessary.
2. Empty and clean all ash trays, screen all sand urns nightly and supply and
replace sand as necessary.
3. Vacuum all rugs and carpeted areas in offices, lobbies and corridors
nightly.
4. Hand dust and wipe clean with damp or treated cloth all office furniture,
files, fixtures, paneling, window sills and all other horizontal surfaces
nightly; wash window sills when necessary. Only those portions of desks and
other furniture that are reasonably cleared of all items by Tenant shall be
eligible hereunder.
5. Damp wipe and polish all glass furniture tops nightly. Only those portions of
furniture that are reasonably cleared of all items by Tenant shall be eligible
hereunder.
6. Remove all finger marks and smudges from all vertical surfaces, including
doors, door frames around light switches, private entrance glass and partitions
nightly.
7. Wash clean all water coolers nightly.
8. Sweep all private stairways nightly, vacuum if carpeted.
9. Police all stairwells throughout the entire Building daily and keep in
clean condition.
10. Damp mop spillage in office and public areas as required.
11. Damp dust all telephones as necessary.
B. WASH ROOMS
-----------
1. Mop, rinse and dry floors nightly. 2. Scrub floors as necessary.
3. Clean all mirrors, bright work and enameled surfaces nightly.
4. Wash and disinfect all basins, urinals and bowls nightly, using non-abrasive
cleaners to remove stains and clean undersides of rims of urinals and bowls.
5. Wash both sides of all toilet seats with soap and water and disinfectant
nightly.
6. Damp wipe nightly, wash with disinfectant when necessary, all partitions,
tile walls and outside surface of all dispensers and receptacles.
C-1
7. Empty and sanitize all receptacles and sanitary disposals nightly;
thoroughly clean and wash at least once per week.
8. Fill toilet tissue, soap, towel, and sanitary napkin dispensers nightly.
9. Clean flushometers, piping, toilet seat hinges and other metal work
nightly.
10. Wash and polish all walls, partitions, tile walls and enamel surfaces
from trim to floor
monthly.
11. Vacuum all louvers, ventilating grilles and dust light fixtures monthly.
NOTE: It is the intention to keep the wash rooms thoroughly cleaned and not
to use a disinfectant or deodorant to kill odor. If a disinfectant is
necessary an odorless product will be used.
C. FLOORS
-------
1. Ceramic tile, marble and terrazzo floors to be swept and buffed nightly
and washed or scrubbed as necessary.
2. Asphalt, vinyl, rubber or other composition floors and bases to be swept
nightly using dust down preparation; such floors in public areas on multiple
tenancy floors to be waxed and buffed monthly.
3. Tile floors in office areas will be waxed and buffed monthly. 4. All
floors stripped and rewaxed as necessary.
5. All carpeted areas and rugs to be vacuum cleaned nightly.
6. Carpet shampooing will be performed at Tenant's request and billed to
Tenant. 7. Carpets will be spot cleaned on a nightly basis.
D. GLASS
------
1. Clean glass entrance doors and adjacent glass panels nightly.
E. HIGH DUSTING (Quarterly)
-------------------------
1. Dust and wipe clean all closet shelving when empty and carpet sweep or dry
mop all floors in closets if such are empty.
2. Dust all picture frames, charts, graphs and similar wall hangings.
3. Dust clean all vertical surfaces such as walls, partitions, doors, door bucks
and other surfaces above shoulder height.
4. Damp dust all ceiling air conditioning diffusers, wall grilles, registers
and other ventilating louvers.
5. Dust the exterior surfaces of lighting fixtures, including glass and
plastic enclosures.
C-2
F. DAY SERVICE
-----------
1. At least once, but not more that twice during the day, check men's washrooms
for soap, towels and toilet tissue replacements.
2. At least once, but not more than twice during the day, check ladies'
washrooms for soap, towels and toilet tissue and sanitary napkin replacements.
3. As needed, vacuuming of elevator cabs will be performed.
4. There will be a constant surveillance of public areas to insure
cleanliness.
G. GENERAL
--------
1. Wipe all interior metal window frames, mullions, and other unpainted interior
metal surfaces of the perimeter walls of the building each time the interior of
the windows is washed.
2. Keep slopsink rooms in a clean, neat and orderly condition at all times.
3. Wipe clean and polish all metal hardware fixtures and other bright work
nightly.
4. Dust and/or wash all directory boards as required, remove fingerprints and
smudges
nightly.
5. Maintain building lobby, corridors and other public areas in a clean
condition.
CLEANING SPECIFICATIONS
PRIMARY ITEM ACHIEVEMENT FREQUENCY
- ------------ ----------- ---------
A. ENTRANCE
--------
Steps & Foyer Police & Sweep 5 x week
Door Glass & Frames Clean 5 x week
B. PUBLIC AREAS
------------
Floors -carpet Vacuum & spot clean 5 x week
Floors -composition Dust Sweep & spot mop 5 x week
Furnishings Dust 5 x week
Ash trays . Empty & damp wipe 5 x week
Drinking fountain Clean & disinfect 5 x week
Walls, doors, frames Spot clean 5 x week
Telephones Damp wipe 5 x week
Stairs Police 5 x week
Janitor closets Keep clean 5 x week
Stairs Sweep 1 x week
Metal plates & knobs Polish 1 x week
Ledges, sills, rails Dust 1 x week
Stairs, all Dust mop & spot mop 1 x month
Light fixtures Dust or vacuum 1 x month
Walls Lambs wool dust 1 x quarter
Window coverings Dust or vacuum 1 x quarter
C. WORK AREAS (General & private offices, conferences & sales rooms)
-----------
Floors-carpet
Traffic lanes Vacuum 5 x week
All areas Vacuum 1 x week
Trash receptacles Empty & clean 5 x week
Floors -composition Dust sweep & spot mop 5 x week
Trash ..... Collect 5 x week
Ash trays . Empty & damp wipe 5 x week
Telephones Damp wipe 5 x week
Furnishings-horizontal Dust 5 x week
Glass desk tops Wash & Dry polish 5 x week
Glass partitions Spot clean 1 x week
Doors & frames Dust & spot wash 1 x week
Walls & switchplates Spot clean 1 x week
Furnishings-vertical Dust 1 x month
Low ledge & sills Dust 1 x month
High ledges & grills Dust 1 x 2 months
Glass partitions Wash 1 x 2 months
Light fixtures
-exterior surfaces Dust or vacuum 1 x quarter
D. RESTROOMS
----------
Floors .... Mop & disinfect 5 x week
Receptacles Empty & disinfect 5 x week
Fixtures .. Scour & disinfect 5 x week
Dispensers Refill & clean 5 x week
Mirrors ... Wash & dry polish 5 x week
Bright .... Metal Clean & polish 5 x week
C-3
<page>
Walls, dividers, doors Spot clean or wash 5 x week
Furnishings Dust or vacuum 5 x week
Vents, lights Dust or vacuum 1 x week
Floors .... Machine scrub as needed
E. FLOOR MAINTENANCE PROFILE -Top quality, anti-slip floor materials and
--------------------------
finishes will be used. Programmed floor care is:
Lobbies & halls Polish As needed
Lunchrooms & lounges Polish 1 x month
Offices Polish 1 x month
C-4
F. This schedule shall only apply to those features listed on the schedule which
are included in the Leased Premises and the common areas of the floor on which
the Leased Premises are located; this is not a list or itemization of the
features to be included or installed therein.
G. Landlord reserves the right to amend, modify or temporarily suspend any of
the Janitorial Specifications set forth herein as in its good faith judgment
shall from time to time be required for the care and cleanliness of the Building
and the operation thereof, and for the comfort of the tenants and their agents,
employees and invitees.
C-5
EXHIBIT D
BUILDING RULES AND REGULATIONS
1. Sidewalks, doorways, vestibules, halls, stairways, and other similar areas
shall not be used for the disposal of trash, be obstructed by tenants, or be
used by tenants for any purpose other than entrance to and exit from the leased
premises and for going from one part of the Building to another part of the
Building.
2. Plumbing fixtures shall be used only for the purposes for which they are
designed, and no sweepings, rubbish, rags or other unsuitable materials shall be
disposed into them. Damage resulting to any such fixtures from misuse by a
tenant shall be the liability of said tenant.
3. Signs, advertisements, or notices visible in or from public corridors or from
outside the Building shall be subject to Landlord's prior written approval.
4. Movement in or out of the Building of furniture, office equipment, or any
other bulky or heavy materials shall be restricted to such hours as Landlord
designates. Landlord will determine the method and routing of said items so as
to ensure the safety of all persons and property concerned. Advance written
notice of intent to move such items must be made to the Building management
office.
5. All routine deliveries to a tenant's leased premises during 8:00 a.m. to
5:00 p.m. weekdays shall be made through the freight elevators. Passenger
elevators are to be used only for the movement of persons, unless an
exception is approved by the Building management office.
6. Building management shall have the authority to prescribe the weight and
manner that heavy furniture and equipment are positioned.
7. Corridor doors, when not in use, shall be kept closed.
8. Tenant space that is visible from public areas must be kept neat and
clean.
9. All freight elevator lobbies are to be kept neat and clean. The disposal
of trash or storage of materials in these areas is prohibited.
10. No animals shall be brought into or kept in, on or about the Building.
11. Tenant shall not tamper with or attempt to adjust temperature control
thermostats in the leased premises. Landlord shall adjust thermostats as
required to maintain the Building standard temperature. Landlord requests that
all window blinds remain down and tilted at a 45 degree angle toward the street
to help maintain comfortable room temperatures and conserve energy.
12. Tenant will comply with all security procedures during business hours and
after hours and on weekends.
13. Tenants shall lock all office doors leading to public corridors.
D-1
14. All requests for overtime air conditioning or heating must be submitted
in writing to the Building management office by 2:00 p.m. on the day desired
for weekday requests, by 2:00 p.m. Friday for weekend requests and by 2:00
p.m. on the preceding business day for Holiday requests.
15. No flammable or explosive fluids or materials shall be kept or used within
the Building except in areas approved by Landlord, and Tenant shall comply with
all applicable building and fire codes relating thereto.
16. Tenant may not place any items on the balconies of the Building without
obtaining Landlord's prior written consent.
17. In accordance with City of Houston ordinance, smoking is prohibited in all
Common Areas of the Building, including, without limitation, elevators, lobbies,
restrooms, hallways and stairwells.
Landlord reserves the right to rescind any of these rules and regulations and to
make such other and further rules and regulations as in its reasonable judgment
shall, from time to time, be required for the safety. protection, care and
cleanliness of the Building, and the operation thereof, the preservation of good
order therein and the protection and comfort of the tenants and their agents,
employees and invitees. Such rules and regulations, when made and written notice
thereof is given to a tenant, shall be binding upon it in like manner as if
originally herein prescribed.
D-2
EXHIBIT E
PARKING
Landlord hereby agrees to make available to Tenant and Tenant hereby agrees to
pay for and take, during the full term of this Lease sixty-five (65) permits to
park one (1) automobile each (hereinafter collectively called the "Initial
Parking Permits") in the parking garage located in the Building (hereinafter
called the "Garage"), three (3) of which shall be assigned and reserved parking
spaces (the "Reserved Permits") and sixty-two (62) of which shall be unassigned
and unreserved parking spaces (the "Unreserved Permits"), upon the following
terms and conditions:
(1) Tenant shall pay as rental for the Parking Permits (defined hereinbelow) the
rates charged from time to time by the operator of the Garage, which rate shall
be comparable to the rates of other parking facilities which are (a) connected
to or (b) directly accessible by tunnel or skywalk, to a comparable, high-rise
office buildings located in the Central Business District of Houston, Texas,.
The initial monthly rate for each of the Parking Permits shall be as follows:
Ninety-Six and N 0/100 Dollars ($96.00) for each of the Unreserved Permits and
One Hundred Twenty and No/100 Dollars ($120.00) for each of the Reserved
Permits. Said rentals shall be due and payable to Landlord on the first day of
each-calendar month during the term of this Lease, and the failure of Tenant to
timely pay the same shall constitute a default by Tenant under this Lease.
(2) Tenant may from time to time during the term of this Lease elect to cancel
an aggregate total of fifteen (15) of the Initial Parking Permits by giving
written notice thereof to Landlord. Any such election by Tenant shall be
effective as of the first day of the first full calendar month following the
expiration of sixty (60) days after the date such notice is given.
(3) In the event Tenant shall desire to lease additional parking permits
(hereinafter called "Additional Parking Permits") for unassigned and unreserved
spaces in the Garage, Tenant shall notify Landlord in writing of Tenant's desire
to do so. Following Landlord's receipt of such written notice Landlord shall
make available to Tenant such number of Additional Parking Permits as Landlord
deems reasonable, if same are available; provided, however, to the extent Tenant
has cancelled any of the Initial Parking Permits pursuant to paragraph (2)
above, Landlord shall cancel any month-to-month contract parking permits with
parties that are not tenants in the Building in order to make available to
Tenant an equal number of Additional Parking Permits for the duration of the
term of this Lease. All other Additional Parking Permits shall be made available
to Tenant on a month-to-month basis only. Landlord hereby agrees that Tenant may
at any time and from time to time during the term of this Lease elect to
discontinue leasing or taking any or all of the Additional Parking Permits (but
not the Initial Parking Permits, except as set forth in paragraph (2) above) by
giving written notice thereof to Landlord. Tenant hereby agrees that Landlord
may at any time and from time to time during the term of this Lease elect to
cancel any or all of the Additional Parking Permits (but not the Initial Parking
Permits, except as set forth in paragraph (2) above or any replacements thereof)
by giving written notice thereof to Tenant. Any such election by Tenant or
Landlord, as the case may be, shall be effective as of the first day of the
first full calendar month following the expiration of thirty (30) days after the
date such notice is given (the Initial Parking Permits and the Additional
Parking Permits being hereinafter collectively called the "Parking: Permits").
(4) In the event the parking spaces covered by the Initial Parking Permits are
not available or become unavailable to Tenant during any portion of the term of
this Lease, then
E-1
Landlord shall make available to Tenant sufficient parking spaces (but not to
exceed the umber of spaces previously made available to Tenant) to meet Tenant's
needs located reasonably near the Building until the parking spaces covered by
the Initial Parking Permits re again made available to Tenant, said substitute
spaces to be at a rental rate not to exceed tie rate then being charged by the
operator of the Garage. Landlord shall use good faith efforts ) insure that the
parking spaces covered by the Initial Parking Permits are available to Tenant
throughout the term of this Lease."
(5) Landlord, at its discretion, shall have the right from time to time and
upon written notice to Tenant to designate the area(s) in the Garage within
which unassigned vehicles may be parked.
(6) The parking spaces in the Garage pertaining to Tenant's Reserved Permits
shall be the spaces indicated on EXHIBIT E-l attached hereto. Landlord shall not
redesignate the location of Tenant's Reserved Permits without obtaining Tenant's
prior written consent.
(7) If the term of this Lease commences on other than the first day of a
calendar month r terminates on other than the last day of a calendar month, then
rentals for Parking Permits hall be prorated on a daily basis.
(8) Landlord shall be required to provide not less than twenty-five (25) parking
spaces 1 the Garage for visitors to the Building in an area designated by
Landlord. Landlord, at its discretion, shall have the right from time to time to
relocate the visitor parking spaces in the garage as it deems necessary.
Landlord reserves the right to charge and collect a fee for parking in the
visitor parking area in an amount determined by the operator of the Garage to be
appropriate; provided that, Landlord agrees to allow Tenant to validate the
parking ticket of tenant's visitors with a stamp or other means approved in
advance by Landlord, and to bill tenant for the parking charges so validated by
Tenant on a monthly basis. Said visitor parking barges shall be due and payable
to Landlord as additional Rent within fifteen (15) days after tenant's receipt
of such statement. Alternatively, Landlord may establish a parking validation
program whereby tenants may, at their option, purchase prepaid parking
validation stickers or other means of identification for specific increments of
visitor parking charges, which the tenants may then distribute to their visitors
and invitees to be submitted to the Garage attendant as payment for the
applicable increment of visitor parking charge. Tenant acknowledges and agrees
that the actual use of any such validation system by Tenant's employees and
visitors shall be subject to Tenant's sole control, and that Landlord shall have
he right to bill Tenant, and Tenant shall be obligated to pay, for any properly
validated tickets, whether or not internally authorized by Tenant.
(9) Upon the occurrence of an Event of Default under this Lease, Landlord shall
have the right (in addition to all other rights, remedies and recourse hereunder
and at law) to suspend any or all of the Parking Permits without prior notice or
warning to Tenant.
E-2
EXHIBIT F
TENANT'S REMOVABLE ITEMS
All furnishings, including desks and credenzas (other than the receptionist's
desk) and electrified systems; furniture; artwork; graphic signage; interior
landscaping; filing cabinets and filing system assemblies (moving files on fixed
rails); computer network componentry, excluding branch cabling, but including
network hubs, rack assemblies, electronics, etc.; all other computer equipment;
exercise equipment, lockers and benches; audiovisual equipment, including
projectors, screens, monitors and controls.
EXHIBIT G
LIST OF BUILDINGS
First Interstate Bank Plaza
Texaco Heritage Plaza
Nationsbank (NCNB)
Texas Commerce Tower
Enron
1600 Smith
Chevron Tower
1100 Louisiana
1100 Milam
One Shell Plaza
Pennzoil Place -North Tower
Pennzoil Place -South Tower
1201 Louisiana
Citicorp Center
Three Allen (MCorp)
One Allen Center
1 Houston Center
2 Houston Center
4 Houston Center/The Park
First City Tower
Lyric Centre
1415 Louisiana
MW Kellogg (Dresser)
First City Bank -Main
Esperson Building
LMW&G
Bank One
Two Shell Plaza
500 Jefferson
600 Jefferson/Cullen Bank
1010 Lamar
801 Travis (Texas Crude)
First Central Plaza
First City Financial
Texas Commerce Bank Building
EXHIBIT H
LIST OF EXISTING EXPANSION, RENEWAL AND PREFERENTIAL RIGHTS TO LEASE SPACE ON
THE 15TH FLOOR OF THE BUILDING
1. Secondary right of refusal granted to 1510 Corporation on approximately
926 square feet of net rentable area currently known as Suite 1514. Such
right of refusal is secondary and inferior to the prior existing lease and
any renewal options held by F. R. McCauley or assigns.
2. Secondary right of refusal granted to 1510 Corporation on approximately 825
square feet of net rentable area currently known as Suite 1515. Such right of
refusal is secondary and inferior to the prior existing lease and any renewal
options held by Charles Wehring or assigns.
EXHIBIT I
ROOFTOP EQUIPMENT
1. Equipment Allowed on Roof. Landlord hereby grants a non-exclusive license to
tenant for the term of this Lease and any renewals and extensions thereof, to
install, operate, maintain, repair, replace and remove the following equipment,
at Tenant's sole cost and expense, on he roof of the Building and in the flues,
stacks, pipe shafts and vertical ducts thereof, pursuant to and in accordance
with the terms of this EXHIBIT I:
(a) One (1) satellite dish antenna (also sometimes referred to as microwave
dishes or earth satellite dishes) measuring not more than three (3) feet in
diameter; and
(b) The reasonably necessary conduit, wiring, sleeving amplifiers, pipes and
other equipment related to the installation, operation, maintenance, repair,
replacement and removal of the satellite dish antenna and supplemental air
conditioning equipment (the "Auxiliary Equipment").
The satellite dish antenna is referred to herein as the "Antenna" and the
Antenna and the Auxiliary :equipment are collectively referred to herein as the
"Rooftop Equipment".
2. General Terms and Conditions. The following terms and conditions shall
------------------------------
apply to tenant's installation, operation and maintenance of the Rooftop
Equipment pursuant to this :EXHIBIT I:
(a) Not less than thirty (30) days prior to the date on which Tenant desires to
commence installation of any Rooftop Equipment, Tenant shall submit for
Landlord's approval (which approval shall not be unreasonably withheld, delayed
or conditioned) detailed drawings and specifications for each proposed item of
Rooftop Equipment, Tenant's proposed method of attachment thereof to the roof of
the Building and the routing of the applicable Auxiliary i Equipment to the
Leased Premises. Landlord's approval shall extend to all aspects of the design
and installation of the Rooftop Equipment (including, without limitation, the
materials utilized, the exact location of each item of equipment on the roof of
the Building, and the aesthetic appearance thereof).
(b) The installation, operation, maintenance, repair, replacement and removal of
the Rooftop Equipment shall comply with all applicable federal, state and local
laws, ordinances, C codes, regulations and rules, and Tenant shall obtain and
maintain in full force and effect all ; required permits, licenses and approvals
with respect thereto.
(c) The delivery of the Rooftop Equipment to the roof of the Building, and the
installation thereof, shall be subject to Landlord's supervision and control,
and Tenant agrees to comply, and to cause its contractors to comply, with all
reasonable requirements of Landlord with respect thereto.
(d) Tenant's contractors for the installation, maintenance, repair, replacement
and removal of the Rooftop Equipment shall be approved in advance by Landlord,
which approval shall not be unreasonably withheld or delayed, but may be
conditioned upon such contractor's agreeing to indemnify Landlord and maintain
insurance in a manner reasonably satisfactory to Landlord. Tenant's approved
contractors shall have access to the roofs and core of the Building for purposes
of installing, operating, maintaining and repairing, replacing and removing the
Rooftop equipment.
(e) Once installed, Tenant shall maintain the Rooftop Equipment in a good and
operable condition, repair and appearance, and shall promptly remove any debris
and other loose materials placed on the roof by Tenant or its representatives.
Except in the event of an emergency (including equipment malfunction), all
maintenance, repair, replacement and removal work on the Rooftop Equipment shall
be scheduled in advance with Landlord, and shall be subject to Landlord's
supervision and control; provided, however, that Tenant shall not be charged a
fee for such supervision.
(f) Tenant covenants and agrees to indemnify, defend and save harmless Landlord,
its partners, shareholders, employees, agents and contractors from and against
any and all suits, proceedings, causes of action, claims, losses, liabilities,
damages, costs and expenses, including interest, penalties and reasonable
attorneys' fees arising out of, based upon or resulting from the installation,
operation, maintenance, repair, replacement and/or removal of any Rooftop
Equipment.
I-1
<page>
(g) Tenant shall remove the Rooftop Equipment within thirty (30) days after the
expiration or earlier termination of this Lease. If Tenant fails to do so,
Landlord shall have the right to cause the removal of same at Tenant's expense,
or, Landlord may at its sole option deem any or all of the remaining Rooftop
Equipment as abandoned by Tenant and make any use thereof as Landlord may
choose, in which event Landlord shall have no duty or obligation to account to
Tenant for any proceeds received by Landlord from such use.
(h) The Rooftop Equipment shall be used solely by Tenant in the ordinary course
of its business; in no event shall Tenant resell any use of same to other
tenants of the Building.
(i) Tenant agrees that in the event of loss of any Rooftop Equipment as a result
of repairs or maintenance of the Building, condemnation or casualty, or a change
in applicable federal, state and local laws, ordinances, codes, regulations and
rules of any governmental authority, Tenant shall have no claim for rebate or
abatement of Rent or for damages against Landlord on account thereof.
(j) Tenant shall install and maintain waterproofing materials around any
penetrations of the roof of the Building which are made during the installation,
maintenance, repair, replacement and removal of the Rooftop Equipment, and shall
provide waterproofing certification with respect to all such penetrations from
Landlord's roofing contractor so that Landlord is assured that such penetrations
do not void, limit or reduce any roof warranty in effect from time to time. Upon
final removal of the Rooftop Equipment, Tenant shall repair and restore all roof
penetrations and provide such waterproofing certification.
(k) If any repair or maintenance to the Building necessitates the moving or
relocation of any of the Rooftop Equipment, such moving or relocation shall be
performed by Tenant, at Tenant's sole cost and expense; provided, however,
Landlord agrees that any such repair or maintenance shall be performed in such a
manner as to minimize any interference with the Rooftop Equipment.
I-2