EXHIBIT 10.1
LOOP CENTRAL TWO
HOUSTON, TEXAS
OFFICE LEASE
ENCYSIVE PHARMACEUTICALS, INC.
Tenant
November 18, 2004
TABLE OF CONTENTS
OFFICE LEASE
LOOP CENTRAL TWO
HOUSTON, TEXAS
SECTION PAGE
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1. BASIC LEASE PROVISIONS...................................................................................1
2. DEMISE...................................................................................................2
3. TERM.....................................................................................................2
4. RENT.....................................................................................................2
5. SECURITY DEPOSIT.........................................................................................6
6. USE OF PREMISES..........................................................................................6
7. RULES AND REGULATIONS....................................................................................6
8. SERVICES PROVIDED........................................................................................6
9. LEASEHOLD IMPROVEMENTS; ALTERATIONS......................................................................8
10. CONDITION OF PREMISES....................................................................................9
11. SURRENDER...............................................................................................10
12. DAMAGE OR DESTRUCTION...................................................................................10
13. EMINENT DOMAIN..........................................................................................12
14. WAIVER OF CERTAIN CLAIMS................................................................................12
15. INSURANCE; WAIVER OF SUBROGATION........................................................................13
16. LANDLORD'S RIGHT OF ACCESS..............................................................................14
17. RIGHTS RESERVED TO LANDLORD.............................................................................14
18. ABANDONMENT.............................................................................................15
19. TRANSFER OF LANDLORD'S INTEREST; LIABILITY OF LANDLORD..................................................15
20. TRANSFER OF TENANT'S INTEREST...........................................................................16
21. DEFAULT: LANDLORD'S RIGHTS AND REMEDIES.................................................................17
22. INDEMNIFICATION; COUNTERCLAIMS..........................................................................19
23. HOLDING OVER............................................................................................20
24. SUBORDINATION...........................................................................................20
25. ESTOPPEL CERTIFICATE....................................................................................21
26. RELOCATION OF TENANT....................................................................................21
27. NOTICES AND DEMANDS.....................................................................................21
28. CONSTRUCTION OF LEASE...................................................................................22
29. REAL ESTATE BROKERS.....................................................................................22
30. ENVIRONMENTAL COMPLIANCE................................................................................23
31. MISCELLANEOUS...........................................................................................24
32. SIGNAGE.................................................................................................26
33. LIMITATION OF LIABILITY.................................................................................26
EXHIBITS
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Exhibit A - Floor Plan
Exhibit B - Rules and Regulations
Exhibit C - Workletter
Exhibit D - Form of Tenant Estoppel Certificate
Exhibit E - Operating Expense Exclusions
Exhibit F - Janitorial Cleaning Specifications
Rider No. 1 - Extension Options
Rider No. 2 - Arbitration Procedures
OFFICE LEASE
Lease made in Houston, Texas as of the 18th day of November, 2004.
1.
BASIC LEASE PROVISIONS
1.01 Landlord and Address:
W9/LWS II Real Estate Limited Partnership
101 Constitution Avenue, NW
Washington, DC 20001
Attn: Bari S. Nichols
Tenant and Current Address:
Encysive Pharmaceuticals Inc.
6700 West Loop South, Suite 400
Houston, Texas 77401
1.02 Guarantor(s) and Current Address(es):
N/A
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1.03 Premises: Suites No. 700 and 800, comprising all of the seventh
(7th) and eighth (8th) floors of the Building (as hereinafter defined), as shown
on the floor plan attached hereto as Exhibit A.
1.04 Term: Thirty-six (36) months, as may be extended pursuant to Rider
1 attached hereto and incorporated herein for all purposes.
1.05 Commencement Date: January 1, 2005.
1.06 Expiration Date: December 31, 2007.
1.07 Monthly Base Rent: Monthly Base Rent shall be payable in the
following amounts during the periods indicated:
<Table>
<Caption>
LEASE YEAR BASE RENT PER SQUARE FOOT MONTHLY BASE RENT
- ---------------------------------------- ------------------------------------ ------------------------------------
1 $16.00 $54,306.67
- ---------------------------------------- ------------------------------------ ------------------------------------
2 $16.75 $56,852.29
- ---------------------------------------- ------------------------------------ ------------------------------------
3 $17.50 $59,397.92
- ---------------------------------------- ------------------------------------ ------------------------------------
</Table>
The foregoing notwithstanding, Monthly Base Rent shall be abated for the first
four (4) months of the Term. Notwithstanding anything to the contrary in this
Lease, Tenant shall be entitled to a reimbursement of Seven Dollars and 50/100
($7.50) per square foot of Rentable Area of the Premises, for its costs of
Leasehold Improvements (as hereinafter defined) in the Premises. Subject to the
provisions of Paragraph 3 of the Workletter attached as Exhibit C to this Lease,
Tenant shall be reimbursed by Landlord for the Leasehold Improvement expenses in
the form of a credit against Monthly Base Rent in an amount of Nine Thousand
Sixty-Eight and 79/100 ($9,068.79) per month beginning in month five (5) of the
Term and continuing through month thirty-six (36) of the Term. As used herein,
"Lease Year" shall mean the twelve (12) month period commencing on the
Commencement Date and each successive twelve (12) month period thereafter
commencing on each anniversary of the Commencement Date.
1.08 Rentable Area of Premises: 40,730 rentable square feet.
1.09 Rentable Area of Building: 197,603 rentable square feet
1.10 Tenant's Share: 20.61%.
1.11 Security Deposit: None
1.12 Leasing Broker:
Lincoln Property Company Commercial, Inc.
4888 Loop Central Drive, Suite 860
Houston, Texas 77081
1.13 Landlord's Management Agent and Address:
Lincoln Property Company
4888 Loop Central Drive, Suite 860
Houston, Texas 77081
or such other Management Agent as Landlord may designate from time to
time.
The words identified in this Section 1 shall have the meanings ascribed to them
in this Section 1 for all purposes of this Lease.
2.
DEMISE
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord
the Premises in the building commonly known as LOOP CENTRAL TWO, HOUSTON, TEXAS
(which, together with the land parcel on which it is situated and all
appurtenances thereto are referred to herein as the "Building") for the Term and
upon the terms, covenants and conditions set forth in this Lease. This Lease
shall be in full force and effect from the date it is signed and delivered by
Landlord and Tenant. Landlord and Tenant covenant as a material part of the
consideration for this Lease to keep and perform each and all of the terms,
covenants and conditions by it to be kept and performed. This Lease is made upon
the condition of such performance.
3.
TERM
The term of this Lease shall commence on the Commencement Date and
expire on the Expiration Date unless sooner terminated as provided in this
Lease, or extended pursuant to Rider No. 1.
4.
RENT
4.01 DEFINITIONS. For purposes of this Lease, the following terms shall
have the meanings ascribed to them in this Section 4.01:
(a) "Adjustment Year" shall mean each calendar year or part
thereof during the Term.
(b) "Base Year" shall mean the calendar year 2005.
(c) "Operating Expenses" shall mean and include all amounts,
expenses and costs of whatever nature that Landlord incurs because of or in
connection with the ownership, control, operation, repair, management,
replacement or maintenance of the Building, any parking areas and garages
serving the Building, the land on which such improvements are located, any
present or future associated underground or elevated pedestrian tunnels or
walkways, all additional facilities which may be added to the Property, and all
machinery, equipment, landscaping, fixtures and other facilities, including
personal property, as may now or hereafter exist in or on the Building (the
"Property"). Operating Expenses shall be determined in accordance with generally
accepted accounting principles consistently applied and shall include, but shall
not be limited to, the following:
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1. Wages, salaries, fees, related taxes, insurance costs, benefits
(including amounts payable under medical, pension and welfare plans
and any amounts payable under collective bargaining agreements) and
reimbursement of expenses of and relating to all personnel engaged in
operating, repairing, managing, replacing and maintaining the
Property; provided that if any person is engaged in connection with
other properties, an equitable allocation of such Operating Expenses
shall be made among the Property and such other properties.
2. All supplies and materials, including sales tax imposed in connection
with the purchase thereof.
3. Legal and accounting fees and expenses incurred with respect to the
Property (except for legal fees incurred in connection with the
negotiation or the collection of amounts due under leases).
4. Cost of all utilities for the Building, including, without limitation,
water, sewer, power, fuel, heating, lighting, air conditioning and
ventilating.
5. Fees and other charges payable under or in respect of all maintenance,
repair, janitorial, scavenger and other service agreements for or
pertaining to the Property.
6. Cost of all insurance relating to the Building, or the ownership, its
occupancy or operations thereof and the Property.
7. Cost of repairs and maintenance of the Property, excluding only such
costs which are paid by the proceeds of insurance, by Tenant or by
other third parties (other than payment by Tenant or other tenants of
the Building of Expense Adjustment or similar reimbursement of
Building costs and expenses).
8. Amortization of the cost (plus interest at the then current market
rate on the unamortized portion of such cost from time to time) of
purchasing and installing capital investment items (including
"retrofitting" or capital replacements) that are for the purpose of
reducing costs includible in the definition of Operating Expenses (but
only to the extent of savings achieved) or that may be required by
governmental or quasi governmental authority as a result of federal,
state, county or municipal laws, ordinances, codes, regulations or
other legal requirements that become effective after the Commencement
Date or new promulgations or interpretations of existing laws, codes,
ordinances or regulations which become effective after the
Commencement Date. All such costs shall be amortized, in equal monthly
installments, over the reasonable life of the capital investment
items, with the reasonable life and amortization schedule being
determined in accordance with generally accepted accounting
principles.
9. Management fees and reimbursed expenses of Landlord's Management Agent
and administrative expenses not borne by the Landlord's Management
Agent, not to exceed what is commonly charged for managing comparable
office buildings in the Bellaire/West Loop area of Houston, Texas.
10. Fees and charges under any declaration of covenants, easements or
restrictions affecting the Building.
Notwithstanding the foregoing, Operating Expenses shall not include those items
listed on Exhibit E attached hereto and incorporated herein by this reference.
If at any time the Building is not fully occupied or Landlord is not supplying
services to all rentable areas of the Building during an entire calendar year
(including the Base Year), then Landlord may adjust actual Operating Expenses to
Landlord's estimate of that amount which would have been paid or incurred by the
Landlord as Operating Expenses had the Building been ninety-five percent (95%)
occupied or serviced, and the Operating Expenses as so adjusted shall be deemed
to be the actual Operating Expenses for such calendar year. If Landlord does not
furnish during any Adjustment Year any particular work or service (the cost of
which, if performed by Landlord, would constitute an Operating Expense) to a
tenant which has
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undertaken to perform such work or service in lieu of the performance thereof by
Landlord, then Operating Expenses shall be deemed to be increased by an amount
equal to the additional expense which would reasonably have been incurred during
such Adjustment Year by Landlord if it had, at its cost, furnished such work or
service to such tenant. The provisions of the preceding sentences will apply
only to those Operating Expenses that either vary with occupancy or by reason of
one or more tenants not receiving goods or services the cost of which
constitutes all or part of such Operating Expenses.
(d) Notwithstanding anything to the contrary contained herein, for
the purposes of calculating Expense Adjustment for any Adjustment Year, the
"Controllable Operating Expenses" (hereinafter defined) component of Operating
Expenses for such Adjustment Year shall not exceed the "Controllable Operating
Expenses" component of Operating Expenses for the Base Year by more than seven
percent (7%) on a cumulative, compounded basis. As used herein, "Controllable
Operating Expenses" shall mean all Operating Expenses except (i) wages and
salaries referred to and described in Sections 4.01(c)(1) to the extent of
increases in minimum wage required by federal or state law, (ii) utilities
referred to and described in Section 4.01(c)(4), (iii) insurance referred to and
described in Section 4.01(c)(6), (iv) Taxes, and (v) fees for management
services referred to and described in Section 4.01(c)(9).
(e) "Taxes" shall mean and include all federal, state and local
government taxes, assessments and charges of any kind or nature (other than
later charges or penalties) whether general, special, ordinary or extraordinary,
paid by Landlord in a calendar year with respect to the Property; provided, real
estate taxes and special assessments (except as provided below) shall be
included in Taxes for a calendar year only to the extent such taxes and
assessments are paid during such calendar year, regardless of when assessed.
Taxes shall include, without limitation, real estate and transit district taxes
and assessments, sales and use taxes (except to the extent included in Operating
Expenses), ad valorem taxes, personal property taxes, any lease or lease
transaction tax and all taxes, assessments and charges in lieu of, substituted
for, or in addition to, any or all of the foregoing taxes, assessments and
charges. Notwithstanding any provision of this Section 4.01(e) to the contrary,
Taxes shall not include any federal, state or local governmental income,
franchise, capital stock, inheritance or estate taxes, except to the extent such
taxes are in lieu of or a substitute of any of the taxes, assessments and
charges previously described in this Section 4.01(e).
Taxes shall also include the amount of all fees, costs and
expenses (including, without limitation, attorneys' fees and court costs) paid
or incurred by Landlord each calendar year in seeking or obtaining any refund or
reduction of Taxes or for contesting or protesting any imposition of Taxes,
whether or not successful and whether or not attributable to Taxes assessed,
paid or incurred in such calendar year. If any special assessment payable in
installments is levied against all or any part of the Property, then at the
Landlord's reasonable discretion, Taxes for the calendar year in which such
assessment is levied and for each calendar year thereafter shall include only
the amount of any installments of such assessment plus interest thereon paid or
payable during such calendar year (without regard to any right to pay, or
payment of, such assessment in a single payment). If the Building is not
assessed as fully improved for any calendar year or part thereof, Landlord may
make an adjustment to the amount of Taxes for each such calendar year to reflect
the amount of Taxes which would have been assessed if the Building had been
assessed as fully improved, and the amount of any such adjustment shall be
included on the amount of Taxes for such calendar year.
4.02 PAYMENT OF RENT. Tenant shall pay to Landlord's Management Agent,
or such other person or entity or at such other place as Landlord may from time
to time direct in writing, all amounts due Landlord from Tenant hereunder,
including, without limitation, Monthly Base Rent, Expense Adjustment and Tax
Adjustment (Expense Adjustment and Tax Adjustment being defined hereinafter and
referred to collectively as "Adjustments", and all amounts due hereunder being
referred to collectively as "Rent"). Except as specifically provided in this
Lease, Rent shall be paid without abatement, deduction or setoff of any kind, it
being the intention of the parties that, to the full extent permitted by law,
Tenant's covenant to pay Rent shall be independent of all other covenants
contained in this Lease, including Tenant's continued occupancy of the Premises.
Tenant's obligation hereunder to pay Rent accruing during the Term (whether or
not the amount thereof is determined or determinable as of the date of
termination or expiration of this Lease) shall survive the termination of this
Lease.
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4.03 PAYMENT OF MONTHLY BASE RENT. Monthly Base Rent shall be payable
monthly, in advance, on the first day of each calendar month during the Term,
except that Monthly Base Rent for the first full calendar month of the Term for
which Monthly Base Rent is due shall be paid concurrently with the execution of
this Lease by Tenant. If the Term commences on a day other than the first day of
a calendar month, then Monthly Base rent for such month will be prorated on a
per diem basis based on a 30 day month and the excess of the installment of
Monthly Base Rent paid concurrently with the execution of this Lease by Tenant
over such prorated amount for the first calendar month of the Term shall be
applied against Monthly Base Rent for the first full calendar month of the Term.
4.04 EXPENSE AND TAX ADJUSTMENT. In addition to Monthly Base Rent,
Tenant shall pay with respect to each Adjustment Year (i) an amount equal to
Tenant's Share of Operating Expenses for the Adjustment Year in excess of
Operating Expenses for the Base Year ("Expense Adjustment") and (ii) an amount
equal to Tenant's Share of Taxes for the Adjustment Year in excess of Taxes for
the Base Year ("Tax Adjustment"). As to any Adjustment Year which does not begin
on January 1st or does not end on December 31st, Expense Adjustment and Tax
Adjustment with respect to such Adjustment Year shall be prorated on a per diem
basis.
Expense Adjustment and Tax Adjustment with respect to each Adjustment
Year shall be paid in monthly installments in advance on the first day of each
calendar month during such Adjustment Year in amounts sufficient to satisfy
payment of the Expense Adjustment and Tax Adjustment for such Adjustment Year as
reasonably estimated by Landlord from time to time prior to or during any
Adjustment Year and communicated to Tenant by written notice ("Estimated Expense
Adjustment" and "Estimated Tax Adjustment", respectively). If Landlord does not
deliver such a notice (an "Estimate") prior to the commencement of any
Adjustment Year, Tenant shall continue to pay Estimated Expense Adjustment and
Estimated Tax Adjustment as provided in the most recently received Estimate (or
Updated Estimate, as defined below) or the latest determined Expense Adjustment
or Tax Adjustment, whichever is greater, until the Estimate for such Adjustment
Year is delivered to Tenant. If, during any Adjustment Year, Landlord reasonably
determines that Taxes or Operating Expenses for such Adjustment Year have
increased or will increase, Landlord may deliver to Tenant an updated Estimate
("Updated Estimate") for such Adjustment Year. Monthly installments of Estimated
Expense Adjustment and Estimated Tax Adjustment paid subsequent to Tenant's
receipt of the Estimate or Updated Estimate for any Adjustment Year shall be in
the amounts provided in such Estimate or Updated Estimate, as the case may be.
In addition, Tenant shall pay to Landlord within twenty (20) days after receipt
of such Estimate or Updated Estimate, the amount, if any, by which the aggregate
installments of the Estimated Expense Adjustment and Estimated Tax Adjustment
provided in such Estimate or Updated Estimate, as the case may be, with respect
to prior months in such Adjustment Year exceed the aggregate installments of the
Estimated Expense Adjustment and Estimated Tax Adjustment paid by Tenant with
respect to such prior months.
Within ninety (90) days after the end of each Adjustment Year, or as
soon thereafter as practicable, Landlord shall send to Tenant a statement (the
"Final Adjustment Statement") showing (i) the calculation of the Expense
Adjustment and Tax Adjustment for such Adjustment Year, (ii) the aggregate
amount of the Estimated Expense Adjustment and Estimated Tax Adjustment
previously paid by Tenant for such Adjustment Year; and (iii) the amount, if
any, by which the aggregate amount of the installments of Estimated Expense
Adjustment paid by Tenant with respect to such Adjustment Year exceeds or is
less than the Expense Adjustment for such Adjustment Year and the amount, if
any, by which the aggregate amount of the installments of Estimated Tax
Adjustment paid by Tenant with respect to such Adjustment Year exceeds or is
less than the Tax Adjustment for such Adjustment Year. Landlord shall have the
right to bill Tenant separately for Expense Adjustment and Tax Adjustment in
which event the provisions hereof shall apply to each as a separate Final
Adjustment Statement. Tenant shall pay the amount of any deficiency to Landlord
within twenty (20) days after the sending of such statement. Any excess shall,
at Landlord's option, either be credited against payments past or next due under
this Lease or refunded by Landlord, provided Tenant is not then in default under
this Lease.
On reasonable advance notice, which Tenant shall give during the sixty
(60) day period following the receipt by Tenant of the Final Adjustment
Statement with respect to each Adjustment Year, Landlord will make available to
Tenant Landlord's books and records
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maintained with respect to the Operating Expenses or Taxes, as applicable, for
such Adjustment Year. If Tenant wishes to contest any item within any Final
Adjustment Statement, Tenant shall do so in a written notice ("Contest Notice")
received by Landlord within sixty (60) days following the date Landlord makes
such books and records available to Tenant. The Contest Notice shall specify in
detail the item or items being contested and the specific grounds therefor.
However, the giving of a Contest Notice shall not relieve Tenant from the
obligation to pay any deficiency in such statement in accordance with this
Section 4.04. If Tenant timely gives a Contest Notice to Landlord, any dispute
with respect to any item or items in such Final Adjustment Statement, including
any calculations therein, shall be submitted to an independent certified public
accountant or firm of certified public accountants mutually agreed upon by
Landlord and Tenant ("CPA") whose decision shall be binding on the parties.
Tenant shall pay on demand all fees of the CPA with respect to any such dispute,
unless the amount of the Expense Adjustment or Tax Adjustment, as applicable, as
provided in such Final Adjustment Statement exceeds the amount of Expense
Adjustment or Tax Adjustment as finally determined by the CPA by more than 5%.
Notwithstanding anything else in this Section 4.04 to the contrary, if Tenant
fails to give a Contest Notice within said sixty (60) day period or fails to pay
any deficiency in such statement in accordance with this Section 4.04, whether
or not contested, Tenant shall have no further right to contest any item or
items in such Final Adjustment Statement and Tenant shall be deemed to have
accepted such Final Adjustment Statement.
5.
SECURITY DEPOSIT
No security deposit shall be required of the original named Tenant
under this Lease.
6.
USE OF PREMISES
6.01 Tenant shall use and occupy the Premises solely for general office
purposes in connection with the operation of Tenant's customary business and any
incidental uses related thereto, and for no other use or purpose.
6.02 Tenant shall not commit, or suffer to be committed, any annoyance,
waste, nuisance, act or thing against public policy, or which may disturb the
quiet enjoyment of Landlord or any other tenant or occupant of the Building.
Tenant agrees not to deface or damage the Building in any manner.
7.
RULES AND REGULATIONS
Tenant agrees to observe the reservations and rights reserved to
Landlord in this Lease. Tenant shall comply, and shall cause its employees,
agents, clients, customers, guests and invitees to comply, with the rules and
regulations attached hereto as Exhibit B, and such reasonably revised or
additional rules and regulations adopted by Landlord during the Term and applied
generally to all office tenants of the Building. Any violation by Tenant or any
of its employees, agents, clients, customers, guests or invitees of any of the
rules and regulations so adopted by Landlord shall be a Default by Tenant under
this Lease (after a reasonable opportunity afforded to Tenant to cure) and may
be restrained by court injunction; but whether or not so restrained, Tenant
acknowledges and agrees that it shall be and remain liable for all damages,
loss, costs and expense resulting from any violation by Tenant or such other
persons of any of said rules and regulations. Nothing in this Lease contained
shall be construed to impose upon Landlord any duty or obligation to enforce
said rules and regulations or the terms, covenants and conditions of any other
lease against any other tenant or any other persons, and Landlord shall not be
liable to Tenant for violation of the same by any other tenant, its employees,
agents, guests, invitees, licensees, customers, clients, family members, or by
any other person.
8.
SERVICES PROVIDED
8.01 Landlord shall furnish the following services in a manner
reasonably considered to be standard for comparable office buildings in the
Bellaire/West Loop area of Houston, Texas:
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(a) Cooled or heated air in season to provide a temperature
condition required, in Landlord's reasonable judgment, for comfortable occupancy
of the Premises under normal business operations and in the absence of the use
of equipment which affects the temperature or humidity which would otherwise be
maintained in the Premises, daily from 8:00 A.M. to 6:00 P.M. (Saturdays 8:00
A.M. to 1:00 P.M.) ("Business Hours"), Sundays and Holidays (as defined below)
excepted. After-hours HVAC shall be furnished by Landlord, upon reasonable prior
notice, at the rate of $30.00 per hour, which rate shall remain in effect during
the entire 36 month initial Term. If the use of heat generating equipment in the
Premises affects the temperatures otherwise maintained by the air conditioning
system for normal business operations, and thereby requires, in the reasonable
judgment of Landlord, the modification of the air conditioning or ventilation
systems (including installation of supplementary air conditioning units in the
Premises), Landlord may elect to perform such modification, and the reasonable
cost thereof shall be paid by Tenant to Landlord at the time of completion of
such modification. Any increased expense in maintaining or operating the system
resulting, in Landlord's reasonable opinion, from such modification shall be
paid by Tenant. In addition, Tenant shall, at Tenant's expense, perform all
maintenance on any supplementary air conditioning units installed in accordance
with this Section 8.01(a) unless, in the exercise of its right hereby expressly
reserved, Landlord elects to perform any part or all of such maintenance at
Tenant's expense. Tenant agrees to keep and cause to be kept closed all windows
in the Premises and at all times to cooperate fully with Landlord in the
operation of said system and to abide by all reasonable regulations and
requirements which Landlord may prescribe to permit the proper functioning and
protection of said heating, ventilation and air conditioning systems. For
purposes of this Lease, "Holidays" means those federal or state holidays
observed by national banks in Houston, Texas.
(b) Washroom facilities, not within the Premises (unless Tenant
leases an entire floor), for use by Tenant in common with other tenants in the
Building.
(c) Janitor service in and about the Building and the Premises,
Saturdays, Sundays and Holidays excepted, in accordance with the specifications
set forth in Exhibit F attached hereto.
(d) Passenger elevator service in common with other tenants and
occupants 24 hours per day 7 days a week, which service may be reduced during
non-Business Hours. Landlord shall provide limited freight elevator service at
such times as Landlord shall reasonably determine.
(e) Electric lighting service for all public portions of the
Building.
(f) Sufficient electrical panel, riser and transformer capacity to
support a connected load of 5.6 watts per square foot of Rentable Area of
Premises (excluding lighting and Building HVAC). Without Landlord's prior
written consent, Tenant shall not be entitled to employ lighting in the Premises
which consumes electrical current in excess of building standard nor utilize any
office equipment that consumes more than 0.5 kilowatts per hour per square foot
contained within the Premises at rated capacity or requires a voltage other than
120 volts single phase.
(g) Replacement of fluorescent light bulbs in any fluorescent
light fixtures which are located in the Premises and which contain the building
standard light fixture.
(h) Equipment and personnel to limit access to the Building after
normal business hours. Landlord shall furnish to Tenant without charge, one (1)
access card for each 250 square feet of Rentable Area of the Premises.
8.02 Tenant agrees that compliance with any mandatory or voluntary
energy conservation measures or other legal requirements instituted by any
appropriate governmental authority shall not be considered a violation of any
terms of this Lease and shall not entitle Tenant to terminate this Lease or
require abatement or reduction of Rent hereunder.
8.03 Tenant acknowledges that it shall be responsible for making
arrangements for and shall pay the cost of the installation, repair and
maintenance of its own telephone system. At no time shall Tenant permit the use
of electricity consumed in the Premises to exceed the capacity of feeders to the
Building or the risers or wiring installation. Landlord does not warrant or
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represent that such capacity shall be adequate for Tenant's purposes. Tenant
shall reimburse Landlord for the cost of Tenant's excessive use or consumption
of heating or air conditioning or excessive use or consumption of electrical
services in violation of Section 8.01(f) above as may be separately metered or
reasonably computed.
8.04 Landlord shall in no event be obligated to furnish any services or
utilities, other than those specified in Section 8.01. If Landlord elects to
furnish services or utilities requested by Tenant in addition to those specified
in Section 8.01 (including utility services at times other than those
specified), Tenant shall pay to Landlord Landlord's then prevailing rates for
such services and utilities within ten (10) days after receipt of Landlord's
invoices therefor. If Tenant shall fail to make any such payment, Landlord may,
without notice to Tenant, and in addition to Landlord's other remedies under
this Lease, discontinue any or all of the additional services. Except as set for
the below, no failure to furnish or discontinuance of any service pursuant to
this Section 8 shall result in any liability of Landlord to Tenant or be deemed
to be a constructive eviction or a disturbance of Tenant's use of the Premises.
The foregoing notwithstanding, in the event Landlord fails to furnish an
Essential Service (hereinafter defined) to the Premises for a period of 5
consecutive business days after receipt of written notice from Tenant, Tenant is
not able to conduct business in or utilize the Premises for the purposes for
which they were let in the absence of the Essential Service(s), and the
interruption is not the result of the negligence or willful misconduct of Tenant
or Tenant's agents, employees, invitees or licensees or due to a casualty (which
is otherwise covered by Section 12 of this Lease), and if the restoration of the
Essential Service(s) in question is within Landlord's reasonable control, then,
as Tenant's sole and exclusive remedy for the failure of such Essential
Service(s), Monthly Base Rent and Adjustments under this Lease shall abate as to
the portion(s) of the Premises so affected beginning on the 6th day after and
continuing until all Essential Services are restored or the Premises are
otherwise rendered usable again. In the event Landlord fails to furnish an
Essential Service (hereinafter defined) to the Premises for a period of 120
consecutive business days after receipt of written notice from Tenant, Tenant is
not able to conduct business in or utilize the Premises for the purposes for
which they were let in the absence of the Essential Service(s), and the
interruption is not the result of the negligence or willful misconduct of Tenant
or Tenant's agents, employees, invitees or licensees or due to a casualty (which
is otherwise covered by Section 12 of this Lease), and if the restoration of the
Essential Service(s) in question is within Landlord's reasonable control, then,
as Tenant's sole and exclusive remedy for the failure of such Essential
Service(s), Tenant shall have the right to terminate this Lease by giving
written notice to Landlord within 15 days after the expiration of the 120 day
period; provided, however, Tenant's notice and right to terminate this Lease
shall be overridden and of no force of effect if all Essential Services are
restored within 10 days after Landlord's receipt of the notice. "Essential
Services" are defined as electrical power, air-conditioning and heating to the
Premises; the service of at least one elevator to the floors on which the
Premises are located; and water to all lavatories on the 7th and 8th floors of
the Building.
9.
LEASEHOLD IMPROVEMENTS; ALTERATIONS
9.01 [This Section 9 governs leasehold improvements and alterations
performed subsequent to the initial build-out of the Premises which is
separately covered under the Workletter attached as Exhibit C to this Lease]
Tenant shall not, without Landlord's prior written consent, permit any
alteration, improvement, addition or installation in or to the Premises (all of
which is collectively referred to as "Work"), including installation of
telephone, computer or internal sound or paging systems or other similar
systems, or the performance of any decorating, painting and other similar work
in the Premises. In the event Landlord consents to any Work, Landlord reserves
the right to cause such Work to be performed by contractors and subcontractors
designated by Landlord. Tenant shall pay the cost of preparation of the plans
for the Work, all permit fees and the fees of said contractors and
subcontractors. Except with respect to the Work described in the Workletter, if
any, or Work performed by Landlord's designated contractor as general
contractor, Tenant shall pay Landlord's designated contractor a supervision fee
equal to 5% of the total cost of such Work, which shall include Landlord's costs
for reviewing plans. Before commencement of any Work or delivery of any
materials into the Premises or the Building, Tenant shall furnish to Landlord,
for its prior written approval, architectural plans and specifications certified
by a licensed architect or engineer reasonably acceptable to Landlord, and such
other documentation as Landlord shall reasonably request.
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Tenant agrees to hold Landlord, its beneficiaries and their respective agents,
partners, officers, servants and employees forever harmless against all claims
and liabilities of every kind, nature and description which may arise out of or
in any way be connected with any such Work. At the request of Landlord, Tenant
will deliver a written indemnity against claims or damages to tenants or
occupants of any other premises affected by such Work. Tenant shall pay
Landlord's reasonable out-of-pocket third party costs of reviewing plans and
materials submitted to Landlord for approval if, due to the nature or complexity
of the Work, a third party engineer is required to review such plans and
materials. Tenant shall pay the cost of all such Work and the cost of decorating
and altering the Premises and the Building occasioned by any such Work. Landlord
shall have the right to require Tenant to deliver to Landlord cash or other
security in an amount and form acceptable to Landlord to be held in escrow by
Landlord to assure prompt payment for the cost of any such Work. All
alterations, improvements, additions and installations to or in the Premises
shall become part of the Premises at the time of installations.
9.02 In the event that Landlord permits Tenant to hire its own
contractors for the performance of any Work, then in addition to the provisions
of Section 9.01, the following shall apply: (i) prior to the commencement of the
Work or the delivery of any materials to the Building, Tenant shall submit to
Landlord for Landlord's approval, the names and addresses of all contractors,
contracts, necessary permits and licenses, certificates of insurance (including,
without limitation, Worker's compensation, comprehensive general liability and
adequacy of design insurance) and instruments of indemnification and waivers of
lien against any and all claims, costs, expenses, damages and liabilities which
may arise in connection with the Work, all in such form and amount as shall be
satisfactory to Landlord; (ii) all such Work shall be done only by union
contractors or mechanics approved by Landlord (which approval shall not be
unreasonably withheld) and at such time and in such manner as Landlord may from
time to time designate; (iii) upon completion of any Work, Tenant shall furnish
Landlord with as-built plans, contractors' affidavits, full and final waivers of
lien, receipted bills covering all labor and materials expended and used in
connection with such Work; and (iv) all such Work shall comply with all
insurance requirements, all laws, ordinances, rules and regulations of all
governmental authorities, and all collective bargaining agreements applicable to
the Building, and shall be done in a good and workmanlike manner and with the
use of good grades and new materials.
9.03 Without limitation of the provisions of Section 9.01, Tenant
agrees not to suffer or permit any lien of any mechanic or materialman to be
placed or filed against the Premises or the Building. In case any such lien
shall be filed, Tenant shall, within ten (10) business days of such filing,
satisfy and release such lien of record. If Tenant shall fail to have such lien
satisfied and released of record within such ten (10) business day period,
Landlord may, on behalf of Tenant, without being responsible for making any
investigation as to the validity of such lien and without limiting or affecting
any other remedies Landlord may have, pay the same and Tenant shall pay Landlord
on demand the amount so paid by Landlord.
9.04 Subject to the rules and regulations, Tenant, at any time Tenant
is not in default hereunder, may remove from the Premises its movable trade
fixtures and personal property. Tenant shall repair any damage to the Premises
caused by such removal, failing which Landlord may remove the same and repair
the Premises and Tenant shall pay the cost thereof to Landlord on demand.
10.
CONDITION OF PREMISES
10.01 No agreements or representations, except such as are expressly
contained herein and in the Workletter attached hereto, if any, have been made
to Tenant respecting the condition of the Premises. By taking possession, Tenant
conclusively waives all claims relating to the condition of the Premises and
accepts the Premises as being free from defects and in good, clean and sanitary
order, condition and repair, and agrees to keep the Premises in such condition.
10.02 Subject to Sections 12 and 13, Tenant shall, at its own expense,
keep the Premises clean and safe and in as good repair and condition as when all
of the work described in the Workletter was completed (or as to subsequent Work,
as and when such Work was completed) and shall promptly and adequately repair
all damage to the Premises and the Building caused by Tenant or any of its
employees, agents, guests or invitees, including replacing or repairing all
damaged or broken glass, fixtures and appurtenances resulting from any such
damage, under the
9
supervision and with the approval of Landlord. If Tenant does not adequately
make such repairs or replacements and such failure continues after receipt of
written notice thereof from Landlord and a reasonable opportunity to remedy such
failure, Landlord may, but need not, make such repairs and replacements and
Tenant shall pay Landlord the reasonable cost thereof on demand.
10.03 Landlord, subject to Sections 12 and 14, shall be obligated to
maintain and make necessary repairs to the structural elements of the Building,
the public corridors, common areas, public washrooms and lobby of the Building,
the parking facilities, the exterior windows, and roof of the Building, and
subject to the provisions of Sections 12 and 14, the electrical, plumbing,
heating, ventilation and air conditioning systems of the Building to the
standard of comparable buildings in the Bellaire/West Loop area of Houston,
Texas.
10.04 In the event that, during the Term, a governmental authority
notifies Landlord or Tenant in writing that the Premises must be altered,
modified or improved in order to be in compliance with the requirements of the
American with Disabilities Act ("ADA") in effect on the Commencement Date, and
such required alteration, modification or improvement is not being required as a
result of Tenant's use of the Premises or as a result of any improvement to the
Premises made by or on behalf of Tenant since Landlord's delivery of the
Premises to Tenant for construction, such alteration, modification or
improvement shall promptly be undertaken by Landlord at the sole cost of
Landlord. Notwithstanding Section 9 of this Lease, Landlord shall be obligated,
at its sole cost, for delivery of the Premises with all ADA and life safety
requirements in compliance with applicable law, including, but not limited to,
replacement of light fixtures and installing new ceiling tiles in the Premises,
and providing parawedge fixtures throughout the Premises.
11.
SURRENDER
11.01 At the termination of this Lease, by lapse of time or otherwise,
Tenant shall surrender possession of the Premises to Landlord and deliver all
keys to the Premises and all locks therein to Landlord and make known to the
Landlord the combination of all combination locks in the Premises, and shall,
subject to Sections 12 and 13, return the Premises and all equipment and
fixtures of the Landlord therein to Landlord in broom clean condition and in as
good condition as when Tenant originally took possession, ordinary wear and tear
excepted, failing which Landlord may restore the Premises and such equipment and
fixtures to such condition and the Tenant shall pay the reasonable cost thereof
to Landlord on demand.
11.02 Upon termination of this Lease or of Tenant's right to possession
of the Premises, by lapse of time or otherwise, all installations, additions,
partitions, hardware, light fixtures, floor coverings, non-trade fixtures and
improvements, temporary or permanent, whether placed there by Tenant or
Landlord, shall be Landlord's property and shall remain upon the Premises, all
without compensation, allowance or credit to Tenant; provided, however, that if
prior to any such termination or within thirty (30) days thereafter Landlord so
directs by notice, Tenant, at Tenant's sole expense, shall promptly remove such
of the installations, additions, partitions, hardware, light fixtures, floor
coverings, non-trade fixtures and improvements in or to the Premises by or on
behalf of Tenant as are designated in such notice and repair any damage to the
Premises caused by such removal, failing which Landlord may remove the same and
repair the Premises, and Tenant shall pay the reasonable cost thereof to
Landlord on demand.
11.03 All obligations of Tenant under this Section 11 shall survive the
termination of this Lease, by lapse of time or otherwise.
12.
DAMAGE OR DESTRUCTION
12.01 If, during the Term, more than twenty percent (20%) of either of
the Premises or the Building is damaged by fire or other casualty, cause,
condition or thing whatsoever, so as to render the Premises untenantable,
Landlord may, by written notice to Tenant given within sixty (60) days after
such damage, terminate this Lease. Such termination shall become effective as of
the date of such damage if the Premises are substantially untenantable. Unless
this Lease is terminated, if the Premises are made partially or wholly
untenantable as aforesaid, Landlord, subject to the provisions of this Section
12, shall restore the same at Landlord's expense with
10
reasonable promptness. If, as a result of a fire or other casualty, the Premises
are made partially or wholly untenantable, and if Landlord fails to commence
such restoration within sixty (60) days after Landlord is able to take
possession of the damaged space in the Premises and fails to reasonably
diligently complete the restoration of the Premises, Tenant may terminate this
Lease by giving notice thereof to Landlord (i) not later than seventy-five (75)
days after Landlord is able to take possession if Landlord has not theretofore
commenced such restoration or (ii) prior to the substantial completion of such
restoration, if Landlord commences such restoration within said sixty (60) day
period, but fails to complete the restoration of the Premises within two hundred
seventy (270) days after the date of such damage, and such termination shall be
effective as of the fifth (5th) day after receipt of said notice by Landlord. In
the event of termination of this Lease, Monthly Base Rent and Adjustments shall
be prorated on a per diem basis and paid only to the effective date of such
termination. If all of the Premises are untenantable but this Lease is not
terminated, all Monthly Base Rent and Adjustments shall abate from the date of
the fire or other casualty until the Premises are ready for occupancy and
reasonably accessible to Tenant. If part of the Premises is untenantable,
Monthly Base Rent and Adjustments shall be prorated on a per diem basis and
apportioned in accordance with the part of the Premises which is usable by
Tenant from the date of the fire or other casualty until the damaged part is
ready for Tenant's occupancy. In all cases, with respect to Landlord's
obligations under this Section 12, such obligations shall be adjusted and all
time periods extended by the period on account of delay caused by adjustment of
insurance loss, strikes, governmental approvals, labor difficulties or any cause
beyond Landlord's reasonable control.
The following provision shall apply if, as an economic concession set
forth in this Lease, Landlord has granted Tenant a credit against Monthly Base
Rent or Adjustments, or both, or has granted Tenant an abatement period with
respect to Monthly Base Rent or Adjustments, or both (such credits or the amount
of Monthly Base Rent or Adjustments which would have accrued but for such
abatement period being hereinafter referred to as "Rent Concession"): In the
event that, pursuant to any provision of this Lease, Monthly Base Rent or
Adjustments abate, in whole or in part, by reason of the occurrence of a fire or
other casualty ("Casualty Abatement") and this Lease is not terminated, then to
the extent that the period of any Casualty Abatement coincides with any period
that a Rent Concession would otherwise have been applicable, the Rent Concession
or such portion thereof as would otherwise have been applicable if the Casualty
Abatement had not occurred ("Rent Concession Balance") will be deferred until
the Casualty Abatement period expires and the Rent Concession Balance will be
effective and applied at the rate set forth in this Lease during the period
immediately following the expiration of the Casualty Abatement, provided that if
the Casualty Abatement does not apply to all Monthly Base Rent or Adjustments
then the Rent Concession Balance will apply to the full extent possible to that
portion of the Monthly Base Rent or Adjustments, or both, which is not abated
during the Casualty Abatement period. Notwithstanding the foregoing, (a) the
Rent Concession Balance will not be applicable to the extent it exceeds the
amount of rent loss insurance proceeds recovered by Landlord with respect to the
Casualty Abatement, (b) Tenant will not be entitled to any cash refund or credit
against any other amounts due Landlord by reason of the foregoing provision and
(c) the Term will not be extended by reason of the applicability of the
foregoing provision.
12.02 If Landlord repairs and restores the Premises as provided in
Section 12.01 above, Landlord shall repair or restore any decorations (excluding
personal property), alterations or improvements to the Premises installed or
approved by Landlord. Tenant shall be responsible for repair and replacement of
trade fixtures, furnishings, equipment, personal property or leasehold
improvements belonging to Tenant. Notwithstanding any provision of this Section
12 to the contrary, but subject to Tenant's termination rights under this
Section 12, Landlord shall not be obligated to make any restorations or repairs
to the Premises, the cost of which would exceed the proceeds of insurance
received by Landlord with respect thereto.
12.03 Notwithstanding anything to the contrary in this Section, but
subject to Tenant's termination rights under this Section 12, Landlord shall not
have any obligation whatsoever to repair, reconstruct or restore the Premises or
the Building when the damage resulting from any casualty covered under this
Section occurs during the last twelve (12) months of the Term or any extension
thereof.
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13.
EMINENT DOMAIN
13.01 In the event that the whole or a substantial part of the Premises
shall be condemned or taken in any manner for any public or quasi-public use (or
sold under threat of such taking), and as a result thereof, the remainder of the
Premises cannot be used for the same purpose as prior to such taking, this Lease
shall terminate as of the date possession is taken.
13.02 If less than ten percent (10%) of the Premises shall be so
condemned or taken (or sold under threat thereof) and after such taking the
Premises can be used for the same purposes as prior thereto, this Lease shall
cease only as to the part so taken as of the date possession shall be taken by
such authority, and Tenant shall pay full Rent up to that date (with appropriate
refund by Landlord of such Rent attributable to the part so taken as may have
been paid in advance for any period subsequent to the date possession is taken)
and thereafter Monthly Base Rent and Adjustments shall be equitably adjusted to
reflect the reduction in the Premises by reason of such taking. Landlord shall,
at its expense, make all necessary repairs or alterations to the Building so as
to constitute the remaining Premises a complete architectural unit, provided
that Landlord shall not be obligated to undertake any such repairs or
alterations if the cost thereof exceeds the award resulting from such taking.
13.03 If part of the Building shall be so condemned or taken (or sold
under threat thereof), or if any adjacent property or street shall be condemned
or improved by a public or quasi-public authority in such a manner as to alter
the use of any part of the Premises or the Building and, in the reasonable
opinion of Landlord, the Building or any part thereof should be altered,
demolished or restored in such a way as to materially alter the Premises, either
party may terminate this Lease by notifying the other of such termination within
sixty (60) days following the taking of possession by such public or
quasi-public authority, and this Lease shall expire on the date specified in the
notice of termination, which shall be not less than sixty (60) days after the
giving of such notice, as fully and completely as if such date were the date
hereinbefore set forth as the expiration of the Term, and the Monthly Base Rent
and Adjustments hereunder shall be apportioned as of such date.
13.04 Landlord shall be entitled to receive the entire award, including
the damages for the property taken and damages to the remainder, with respect to
any condemnation proceedings affecting the Building. Tenant agrees not to make
any claim against Landlord or the condemning authority for any portion of such
award or compensation, whether attributable to the value of any unexpired
portion of the Term, the loss of profits, goodwill, leasehold improvements or
otherwise, Tenant irrevocably assigning any and all such claims to Landlord.
Nothing herein shall be construed, however, to preclude Tenant from prosecuting
a separate claim directly against the condemning authority for moving expenses
and damage to, and cost of removal of, trade fixtures, furniture and other
personal property belonging to Tenant; provided, however, that Tenant shall make
no claim which shall diminish or adversely affect any award claimed or received
by Landlord.
14.
WAIVER OF CERTAIN CLAIMS
14.01 To the extent not expressly prohibited by law, Tenant releases
Landlord, and its agents, partners, officers, servants and employees, from, and
waives, all claims for damages to person or property sustained by Tenant or by
any occupant of the Premises, resulting directly or indirectly from fire or
other casualty, cause or any existing or future condition, defect, matter or
thing in the Premises, the Building or any part thereof, or from any equipment
or appurtenance therein, or from any accident in or about the Building, or from
any act or neglect of any tenant or other occupant of the Building or of any
other person, except for matters caused by the negligence or willful misconduct
of Landlord.
14.02 To the extent not expressly prohibited by law, and except for
claims and liabilities caused by the negligence or willful misconduct of
Landlord, Tenant agrees to hold harmless and indemnify Landlord, all Mortgagees
and all of their respective agents, partners, officers, servants and employees,
against claims and liabilities, including reasonable attorneys' fees, for
injuries to all persons and damage to or theft or misappropriation or loss of
property occurring in or about the Premises arising from Tenant's occupancy of
the Premises or the conduct of its business, or
12
from activity, work, or thing done, permitted or suffered by Tenant, its
employees, agents, guests or invitees in or about the Premises, or from any
breach or default on the part of Tenant in the performance of any covenant or
agreement on the part of Tenant to be performed pursuant to the terms of this
Lease or due to any other act or omission of Tenant, its agents or employees.
Landlord may, at its option, repair such damage or replace such loss, and Tenant
shall upon demand by Landlord reimburse Landlord for all reasonable costs of
such repairs, replacement and damages in excess of amounts, if any, paid to
Landlord under insurance covering such damages. In the event any action or
proceeding is brought against Landlord, any Mortgagee or any of their respective
agents, beneficiaries, partners, officers, servants or employees by reason of
any such claims, then, upon notice from Landlord, Tenant covenants to defend
such action or proceeding by counsel reasonably satisfactory to Landlord.
14.03 If any damage to the Building or any equipment or appurtenance
therein, whether belonging to Landlord or to other tenants in the Building,
results from any act or neglect of Tenant, its agents, employees, guests or
invitees, Tenant shall be liable therefor and Landlord may, at Landlord's
option, repair such damage, and Tenant shall, upon demand by Landlord, reimburse
Landlord the reasonable total cost of such repairs and damages to the Building.
If Landlord elects not to repair such damage, Tenant shall promptly repair such
damages at its own cost and in accordance with the provisions of Section 9 as if
such repair constituted Work under such Section. If Tenant occupies space in
which there is exterior glass, then Tenant shall be responsible for the damage,
breakage or repair of such glass, except to the extent such loss or damage is
recoverable under Landlord's insurance, if any.
15.
INSURANCE; WAIVER OF SUBROGATION
15.01 Tenant shall procure and maintain at its own cost policies of
commercial general public liability and property damage insurance with
contractual liability coverage for the agreements of indemnity provided for
under this Lease and a broad form general liability endorsement to afford
protection with such limits as may be reasonably requested by Landlord from time
to time (which as of the date hereof shall be not less than $2,000,000 under a
combined single limit of coverage) insuring Landlord and its respective agents,
partners, officers, servants and employees and Tenant from all claims, demands
or action for injury to or death of any person or persons and for damage to
property made by, or on behalf of, any person or persons, firm or corporation,
arising from, related to or connected with the Premises. The insurance shall be
issued by companies and be in form and substance satisfactory to Landlord and
any Mortgagee of the Building and shall, if requested by Landlord or any
Mortgagee, include any Mortgagee and its respective agents and employees as
additional insureds. The aforesaid insurance policies shall provide that they
shall not be subject to cancellation except after at least thirty (30) days'
prior written notice to Landlord and all such Mortgagees (unless such
cancellation is due to non-payment of premiums, in which event ten (10) days'
prior written notice shall be required). Copies of insurance certificates,
together with satisfactory evidence of payment of the premium thereon, shall be
deposited with Landlord prior to the commencement of the Term and renewals
thereof not less than thirty (30) days prior to the end of the term of each such
coverage.
15.02 Tenant shall carry insurance of the type typically referred to as
"all risk" insurance, including water damage, insuring its interest in the
tenant improvements in the Premises (to the extent not covered by Landlord's
property insurance) and its interest in all its personal property and trade
fixtures located on or within the Building, without limitation, its office
furniture, equipment and supplies.
15.03 Notwithstanding any other provision of this Lease to the
contrary, Landlord and Tenant each hereby waive all rights of action against the
other for loss or damage to the Premises, or the Building and property of
Landlord and Tenant in the Building, which loss or damage is insured or is
required pursuant to this Lease to be insured by valid and collectible insurance
policies, EVEN IF SUCH LOSS OR DAMAGE IS CAUSED BY THE NEGLIGENCE OR OTHER
TORTIOUS CONDUCT, ACTS OR OMISSIONS OF THE RELEASED PARTY OR THE RELEASED
PARTY'S DIRECTORS, EMPLOYEES, OFFICERS, AGENTS, OR INVITEES OR THE RELEASED
PARTY WOULD BE STRICTLY LIABLE FOR SUCH LOSS OR DAMAGE UNDER APPLICABLE LAW, to
the extent of the proceeds collected or collectible under such insurance
policies, subject to the condition that this
13
waiver shall be effective only when the waiver is permitted by such insurance
policies or when, by the use of good faith effort, such waiver could have been
permitted in the applicable insurance policies. The policies of insurance
required to be maintained by Tenant under the terms of this Lease shall contain
waiver of subrogation clauses in form and content satisfactory to Landlord.
15.04 Tenant shall not conduct or permit to be conducted by its
employees, agents, guests or invitees any activity, or place any equipment in or
about the Premises or the Building that will in any way increase the cost of
fire insurance or other insurance on the Building. If any increase in the cost
of fire insurance or other insurance is stated by any insurance company or by
the applicable Insurance Rating Bureau, if any, to be due to any activity or
equipment of Tenant in or about the Premises or the Building, such statement
shall be conclusive evidence that the increase in such cost is due to such
activity or equipment and, as a result thereof, Tenant shall be liable for the
amount of such increase. Tenant shall reimburse Landlord for such amount upon
written demand from Landlord and any such sums shall be considered additional
Rental payable hereunder. Tenant, at its sole expense, shall comply with any and
all requirements of any insurance organization or company necessary for the
maintenance of reasonable fire and public liability insurance covering the
Premises and the Building.
16.
LANDLORD'S RIGHT OF ACCESS
16.01 Landlord and its contractors and representatives shall have the
right to enter the Premises at all reasonable times to perform janitorial and
cleaning services and, after 24 hour prior oral notice (except in the case of
emergencies when such prior notice as is reasonably practicable shall be given),
to inspect the same, to make repairs, alterations and improvements, to maintain
the Premises and the Building, specifically including, but without limiting the
generality of the foregoing, to make repairs, additions or alterations within
the Premises to mechanical, electrical and other facilities serving other
premises in the Building, to post such reasonable notices as Landlord may desire
to protect its rights, to exhibit the Premises to Mortgagees and purchasers,
and, during the three hundred sixty-five (365) days prior to the expiration of
the Term, to exhibit the Premises to prospective tenants. In the event the
Premises are vacant, Landlord may place upon the doors or in the windows of the
Premises any usual or ordinary "To Let", "To Lease", or "For Rent" signs. Tenant
shall permit Landlord to erect, use, maintain and repair pipes, cables, conduit,
plumbing, vents and wires, in, to and through the Premises to the extent
Landlord may now or hereafter deem necessary or appropriate for the property
operation, maintenance and repair of the Building and any portion of the
Premises so long as Landlord does not unreasonably interfere with Tenant's use
of the Premises.
16.02 Landlord shall also have the right to take all material into the
Premises that may be required for the purposes set forth in the foregoing
Section 16.01 without the same constituting a constructive eviction of Tenant,
in whole or in part, and Rent shall not abate (except as provided in Sections 12
or 14) while said repairs, alterations, improvements or additions are being
made, by reason of loss or interruption of business of Tenant, or otherwise. If
Tenant shall not be personally present to open and permit entry into the
Premises, at any time, when for any reason entry therein shall be necessary or
desirable, Landlord or Landlord's agents may enter the Premises by a master key,
or may forcibly enter the same, without rendering Landlord or such agents liable
therefor (if during such entry Landlord or Landlord's agents shall accord
reasonable care to Tenant's property), and without in any manner affecting the
obligations and covenants of this Lease.
16.03 In exercising its rights under this Section 16, Landlord will use
reasonable efforts to minimize any interference with Tenant's use or occupancy
of the Premises, provided that Landlord will not be obligated to provide
overtime labor or perform work after regular Building hours.
17.
RIGHTS RESERVED TO LANDLORD
Landlord shall have the following rights, exercisable without notice
and without liability to Tenant for damage or injury to property, person or
business (all claims for damage being
14
hereby waived and released by Tenant) and without effecting an eviction or
disturbance of Tenant's use or possession or giving rise to any claim for
set-offs or abatement of Rent:
(a) To change the name or street address of the Building provided
that Landlord pays Tenant's reasonable costs for replacement stationery and
similar business materials which contain the name or address of the Building;
(b) To install and maintain signs on the exterior and interior of
the Building;
(c) To reasonably approve all sources furnishing sign painting and
lettering, towels, coffee cart service, vending machines or toilet supplies used
or consumed on the Premises and the Building; and Tenant shall be permitted at
Tenant's sole cost, to install vending machines in the Premises for use solely
by Tenant's employees;
(d) To have pass keys to the Premises;
(e) To grant to anyone the exclusive right to conduct any business
or render any service in the Building, provided such exclusive right shall not
operate to interfere with, or exclude Tenant from, the use expressly permitted
by this Lease;
(f) To make repairs, additions or alterations to the Building
which may change, eliminate or remove common areas, parking areas, if any, or
the method of ingress to or egress from the Building and such areas, to convert
common areas into leasable areas, or otherwise alter, repair or reconstruct the
common areas or change the use thereof, to change the arrangement or location of
entrances or passageways, doors and doorways, corridors, elevators, stairs,
toilets or other public parts of the Building, and to close entrances, doors,
corridors, elevators, plaza or other facilities, and to perform any acts related
to the safety, protection, preservation, reletting, sale or improvement of the
Premises or the Building. Landlord will use commercially reasonable efforts to
perform all repair, maintenance, management and other services performed in the
Building in a manner so as not to unreasonably interfere with Tenant's business.
(g) To have access to all mail chutes or boxes according to the
rules of the United States Postal Service;
(h) To require all persons entering or leaving the Building during
such hours as Landlord may from time to time reasonably determine to identify
themselves to security personnel by registration or otherwise, and to establish
their right to enter or leave and to exclude or expel any peddler, solicitor or
beggar at any time from the Premises or the Building;
(i) To close the Building at 6:00 p.m. on weekdays, 1:00 p.m. on
Saturdays, and all day on Sundays and Holidays, or at such other reasonable
times as Landlord may determine, subject, however, to Tenant's right to
admittance under such regulations as shall be prescribed from time to time by
Landlord in its reasonable discretion (provided, however, that Landlord shall do
nothing that materially interferes with Tenant's access to the Premises or
Tenant's business operations conducted within the Premises, and Landlord shall
at all times during the Term make available to Tenant the number of parking
spaces set forth in this Lease.
18.
ABANDONMENT
Intentionally deleted.
19.
TRANSFER OF LANDLORD'S INTEREST;
LIABILITY OF LANDLORD
Upon any sale, assignment or transfer of the Building by Landlord,
other than merely as security, Tenant agrees to look solely to the purchaser,
assignee or transferee with respect to all matters in connection with this Lease
and, upon such purchaser's, assignee's or transferee's assumption of the
obligations of Landlord under this Lease, the transferor Landlord shall be
released from any further obligations hereunder.
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20.
TRANSFER OF TENANT'S INTEREST
20.01 Tenant shall not sell, assign, encumber, mortgage or transfer
this Lease or any interest therein, sublet or permit the occupancy or use by
others of the Premises or any part thereof, or allow any transfer hereof or any
lien upon Tenant's interest by operation of law or otherwise (collectively, a
"Transfer") without the prior written consent of Landlord, which consent, if
Landlord does not exercise its rights of a recapture set forth below, shall not
be unreasonably withheld, delayed or conditioned. Any Transfer which is not in
compliance with the provisions of this Section 20, shall, at the option of
Landlord, be void and of no force or effect. Tenant shall, by written notice in
the form specified in the following sentence, advise Landlord of Tenant's
intention on a stated date (which shall not be less than sixty (60) days after
date of Tenant's notice) to sublet, assign, mortgage or transfer any part or all
of the Premises or its interest therein for the balance or any part of the Term,
and, in the case of sublease, Landlord shall have the right, to be exercised by
giving written notice to Tenant within thirty (30) days after receipt of
Tenant's notice, to recapture the space described in Tenant's notice and such
recapture notice shall, if given, cancel and terminate this Lease with respect
to the space therein described as of the date stated in Tenant's notice.
Tenant's notice shall state the name and address of the proposed subtenant,
assignee, pledgee, mortgagee or transferee, and a true and complete copy of the
proposed sublease, assignment, pledge, mortgage or other conveyance and all
related documentation, executed by both parties, shall be delivered to Landlord
with said notice. If Tenant's notice shall cover all of the space hereby
demised, and Landlord shall elect to give the aforesaid recapture notice with
respect thereto, then the Term shall expire and end on the date stated in
Tenant's notice as fully and completely as if the date had been herein
definitely fixed for the expiration of the Term. If, however, this Lease is
terminated pursuant to the foregoing with respect to less than the entire
Premises, the Monthly Base Rent and Adjustments then in effect shall be adjusted
on the basis of the number of rentable square feet retained by Tenant in
proportion to the original Rentable Area of Premises, and this Lease as so
amended shall continue thereafter in full force and effect. In such event,
Tenant shall pay the reasonable cost of erecting demising walls and public
corridors and making other required modifications to physically separate the
portion of the Premises remaining subject to this Lease from the rest of the
Premises. If Landlord, upon receiving Tenant's notice that it intends to sublet
any such space, shall not exercise its right to recapture the space described in
Tenant's notice, Landlord will not unreasonably withhold its consent to Tenant's
subletting the space covered by its notice. Without limiting Landlord's right to
reasonably withhold such consent, the withholding of such consent in connection
with an assignment or sublease will be deemed reasonable if:
(1) In the reasonable judgment of Landlord, the subtenant or
assignee (A) is of a character or engaged in a business or proposes to use the
Premises in a manner which is not in keeping with the standards of Landlord for
the Building or (B) has an unfavorable credit standing;
(2) Either the area of the Premises to be sublet or the remaining
area of the Premises is not regular in shape with appropriate means of ingress
or egress suitable for normal renting purposes;
(3) Tenant is in default under this Lease.
As a condition to Landlord's execution of a document memorializing Landlord's
consent to any Transfer, Tenant shall pay Landlord's reasonable attorneys' fees
incurred in connection with the handling of any tenant request for consent under
this Section 20.
20.02 If Tenant individually, or as debtor or debtor in possession or
if a trustee in bankruptcy acting on behalf of Tenant pursuant to the Bankruptcy
Code, 11 U.S.C. 101 et seq., shall sublet or assign the Premises or any part
thereof or assign any interest in this Lease at a rental rate (or additional
consideration) in excess of the then current Monthly Base Rent and Adjustments
per rentable square foot, fifty percent (50%) of said excess Rent (or additional
consideration) net of any expenses Tenant has reasonably incurred in subleasing
or assigning the space, shall be and become the property of Landlord and shall
be paid to Landlord as it is received by Tenant. If Tenant shall sublet the
Premises or any part thereof, Tenant shall be responsible for all actions and
neglect of the subtenant and its officers, partners, employees, agents, guests
and invitees as if such subtenant and such persons were employees of Tenant.
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Nothing in this Section 20.02 shall be construed to relieve Tenant from the
obligation to obtain Landlord's prior written consent to any proposed sublease.
20.03 The consent by Landlord to any Transfer shall not be construed as
a waiver or release of Tenant from liability for the performance of all
covenants and obligations to be performed by Tenant under this Lease, and Tenant
shall remain liable therefor, nor shall the collection or acceptance of Rent
from any assignee, subtenant or occupant constitute a waiver or release of
Tenant from any of its obligations or liabilities under this Lease. Any consent
given pursuant to this Section 20 shall not be construed as relieving Tenant
from the obligation of obtaining Landlord's prior written consent to any
subsequent assignment or subletting.
20.04 If Tenant is a partnership, a withdrawal or change, whether
voluntary, involuntary or by operation of law or in one or more transactions, of
partners owning a controlling interest in Tenant shall be deemed a voluntary
assignment of this Lease and subject to the provisions of this Section 20. If
Tenant is a corporation, any dissolution, merger, consolidation or other
reorganization of Tenant, or the sale, transfer or redemption of a controlling
interest of the capital stock of Tenant in one or more transactions, shall be
deemed a voluntary assignment of this Lease and subject to the provisions of
this Section 20. However, the preceding sentence shall not apply to corporations
the stock of which is traded through a national or regional exchange or
over-the-counter. Neither this Lease nor any interest herein nor any estate
created thereby shall pass by operation of law or otherwise to any trustee,
custodian or receiver in bankruptcy of Tenant or any assignee for the assignment
of the benefit of creditors of Tenant. The foregoing notwithstanding, Tenant
shall have the right, upon 30 days prior written notice to Landlord, to (i)
assign or sublet all or part of the Premises to any related corporation or other
entity which controls Tenant, is controlled by Tenant or is under common control
with Tenant provided that such assignment or sublease would not violate any
exclusive or restriction to which Landlord is bound under the terms of any other
lease of space in the Project, or (ii) assign this Lease to a successor
corporation or other entity into which or with which Tenant is merged or
consolidated or which acquires all or substantially all of the ownership
interests in Tenant or Tenant's assets and property, provided that such
successor corporation or other entity assumes all of the obligations and
liabilities of Tenant, including this Lease, and shall have assets,
capitalization and net worth at least equal to the assets, capitalization and
net worth of Tenant as of the date of this Lease as determined by generally
accepted accounting principles. For the purpose of this Section 20.04, "control"
shall mean ownership of more than 50% of all the voting stock or legal and
equitable interest in such corporation or entity. In no event shall any such
assignment or sublease release Tenant from liability under this Lease.
21.
DEFAULT: LANDLORD'S RIGHTS AND REMEDIES
21.01 The occurrence of any one or more of the following matters
constitutes a default ("Default") by Tenant under this Lease:
(a) Failure by Tenant to pay, within five (5) business days after
written notice from Landlord, any rent or any other amounts due and payable by
Tenant under this Lease;
(b) Failure by Tenant to observe or perform any of the covenants
in this Lease in respect to assignment and subletting;
(c) Failure by Tenant to cure forthwith, after notice thereof from
Landlord or another tenant acquiring knowledge thereof, any hazardous condition
that Tenant has created in violation of law or of this Lease;
(d) Failure by Tenant to observe or perform any other covenant,
agreement, condition or provision of this Lease, if such failure shall continue
for thirty (30) days after written notice thereof to Tenant by Landlord;
provided, however, if the nature of the default is such that it cannot be cured
with the exercise of all reasonable efforts within the 30-day period, the
failure to cure within such 30-day period shall not be a Default provided that
Tenant undertakes the curative action within the 30-day period and thereafter
diligently and continuously proceeds with reasonable diligence and in good faith
to effect the remedy as soon as practicable using all reasonable efforts;
provided, however, that in no event shall Tenant's total cure period, in the
aggregate, exceed 60 days;
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(e) The levy upon execution or the attachment by legal process of
the leasehold interest of Tenant, or the filing or creation of a lien in respect
of such leasehold interest;
(f) Tenant or any guarantor of this Lease becomes insolvent or
bankrupt or admits in writing its inability to pay its debts as they mature,
makes an assignment for the benefit of creditors, or applies for or consents to
the appointment of a trustee or receiver for itself or for all or a part of its
property;
(g) Proceedings for the appointment of a trustee, custodian or
receiver of Tenant or any guarantor of this Lease or for all or a part of
Tenant's or such guarantor's property are filed against Tenant or such guarantor
and are not dismissed within sixty (60) days;
(h) Proceedings in bankruptcy, or other proceedings for relief
under any law for the relief of debtors, are instituted by or against tenant or
any guarantor of this Lease, and, if instituted against Tenant or such
guarantor, are allowed against either or are consented to by either or are not
dismissed within sixty (60) days thereof;
(i) Tenant shall repeatedly default in the timely payment of Rent
or any other charges required to be paid, or shall repeatedly default in
keeping, observing or performing any other covenant, agreement, condition or
provision of this Lease, whether or not Tenant shall timely cure any such
payment or other default. For the purposes of this subsection, the occurrence of
similar defaults three times during any twelve month period shall constitute a
repeated default.
Any notice periods provided for under this Section 21.01 shall run concurrently
with any statutory notice periods, and any notice given hereunder may be given
simultaneously with or incorporated into any such statutory notice.
21.02 If a Default occurs, Landlord shall have the following rights and
remedies, which shall be distinct, separate and cumulative, and which may be
exercised by Landlord concurrently or consecutively in any combination and with
or without notice or demand, and which shall not operate to exclude or deprive
Landlord of any other right or remedy which Landlord may have in law or equity:
(a) Landlord may terminate this Lease by giving to Tenant notice
of Landlord's intention to do so, in which event the Term shall end, and all
right, title and interest of Tenant hereunder shall expire, on the date stated
in such notice;
(b) Landlord may terminate the right of Tenant to possession of
the Premises without terminating this Lease by giving notice to Tenant that
Tenant's right of possession shall end on the date stated in such notice,
whereupon the right of Tenant to possession of the Premises or any part thereof
shall cease on the date stated in such notice but Tenant's obligations under
this Lease shall continue in full force and effect; and
(c) Landlord may enforce the provisions of this Lease and may
enforce and protect the rights of Landlord hereunder by a suit or suits in
equity or at law for the specific performance of any covenant or agreement
contained herein, or for the enforcement of any other appropriate legal or
equitable remedy, including injunctive relief and recovery of all moneys due or
to become due from Tenant under any of the provisions of this Lease.
21.03 If Landlord exercises either of the remedies provided for in
subparagraphs (a) and (b) of Section 21.02, Landlord may, without additional
notice and without court proceedings, re-enter and repossess the Premises and
remove all persons and property therefrom and Tenant hereby agrees to surrender
possession of the Premises and waives any claim arising by reason thereof or by
reason of issuance of any distress warrant or writ of sequestration and agrees
to hold Landlord harmless from any such claim. Notwithstanding any rule or
provision of law to the contrary, in the event Landlord shall, for the purpose
of re-entering or regaining possession of the Premises, or for the purpose of
excluding Tenant therefrom, as authorized by law and/or the terms of this Lease,
change the lock(s) to the Premises, Landlord shall not be obligated to provide
Tenant with the key(s) to the Premises unless and until Tenant shall wholly and
completely remedy any event of default occurring on the part of Tenant
hereunder. Further, the
18
provisions of this Lease pertaining to Tenant's waiver of notice and demand in
the event of the exercise of any right or remedy by Landlord hereunder shall
supersede the provisions of the Texas Property Code, as then amended, pertaining
to the affixation of notice on the door of the Premises advising of any lock out
and/or disclosing the time at which, and/or perform from whom, the key(s) to the
Premises may be obtained, and Tenant hereby waives the requirement of any such
notice. If Landlord elects to terminate this Lease, it may treat the Default as
an entire breach of this Lease and Tenant shall immediately become liable to
Landlord for damages equal to the total of (i) the cost of recovering, reletting
(including without limitation the cost of lease commissions attributable to the
unexpired portion of the Term of this Lease), and remodeling the Premises, (ii)
all unpaid Rent and other amounts earned or due through such termination, (iii)
the unamortized cost to Landlord, computed and determined in accordance with
generally accepted accounting principles, of any tenant improvements provided by
Landlord at its expense, (iv) the value of any other concessions or inducements
granted to Tenant under or in connection with this Lease, plus (v) the total
Rent and other amounts to be paid by Tenant hereunder for the remainder of the
full Term. If Landlord elects to terminate Tenant's right to possession of the
Premises without terminating this Lease, Landlord shall use reasonable efforts
to rent the Premises (or portions thereof) for the account of Tenant to any
person or persons for such rent and for such terms and conditions as Landlord
reasonably deems appropriate and Tenant shall be liable to Landlord for the
amount, if any, by which the Rent for the unexpired balance of the Term exceeds
the net amount, if any, received by Landlord less the costs of repossession,
reletting, remodeling, and other expenses incurred by Landlord in reletting the
Premises. Such sum or sums shall be paid by Tenant in monthly installments on
the first day of each month of the Term. In no case shall Landlord be liable for
failure to relet the Premises or to collect the rent due under such reletting,
and in no event shall Tenant be entitled to any excess rents received by
Landlord.
21.04 All property removed from the Premises by Landlord pursuant to
any provisions of this Lease or of law shall be handled, removed or stored by
Landlord at the cost, expense and risk of Tenant, and Landlord shall in no event
be responsible for the value, preservation or safekeeping thereof. Tenant shall
pay Landlord upon demand for all expenses incurred by Landlord in such removal
and storage.
21.05 Tenant shall pay all costs, charges and expenses, including court
costs and reasonable attorneys' fees incurred by Landlord in enforcing Tenant's
obligations under this Lease, in the exercise by Landlord of any of its remedies
in the event of a default, in any litigation, negotiations or transactions in
which Tenant causes Landlord, without Landlord's fault, to become involved or
concerned, or in consideration of any request for approval of or consent to any
action by Tenant which is prohibited by this Lease or which may be done only
with Landlord's approval or consent, whether or not such approval or consent is
given.
21.06 All of Landlord's rights and remedies under this Lease shall be
cumulative with and in addition to any and all rights and remedies which
Landlord may have at law or equity. Any specific remedy provided for in any
provision of this Lease shall not preclude the concurrent or consecutive
exercise of a remedy provided for in any other provision hereof.
22.
INDEMNIFICATION; COUNTERCLAIMS
22.01 If any person not a party to this Lease shall institute an action
against Tenant or arising out of any act or omission of Tenant, in which
Landlord, any Mortgagee or any of their respective beneficiaries, partners,
officers, employees, agents or servants (collectively, "Indemnified Persons")
shall be made a party, Tenant shall indemnify and hold harmless all such
Indemnified Persons from all liabilities by reason thereof, including reasonable
attorneys' fees and other costs incurred by the Indemnified Persons in such
action.
22.02 Tenant hereby waives any right to plead any counterclaim, offset
or affirmative defense in any action or proceedings brought by Landlord against
Tenant pursuant to any forcible detainer statute or otherwise, for the recovery
of possession based upon the non-payment of Rent or any other Default. This
shall not, however, be construed as a waiver of Tenant's right to assert any
claim in a separate action brought by Tenant against Landlord. Tenant agrees to
pay all Rent without offset or reduction of any kind whatsoever. Tenant waives
trial by jury in any action brought by Landlord under or in respect of this
Lease.
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23.
HOLDING OVER
If Tenant retains possession of the Premises or any part thereof after
the termination of the Term or any extension thereof, by lapse of time or
otherwise, Tenant, unless Landlord otherwise elects, shall become a tenant at
sufferance and shall pay Landlord monthly rent, at one hundred fifty percent
(150%) of the rate of Monthly Base Rent and Adjustments in effect for the month
immediately preceding said holding over, computed on a per month basis, for each
month or part thereof (without reduction for any such partial month) that Tenant
thus remains in possession. Tenant agrees to indemnify and hold Landlord
harmless from and against any and all losses, costs, damages, expenses, claims
and liabilities incurred or sustained by Landlord as a result of retention of
possession of the Premises by Tenant. The provisions of this Section 23 do not
exclude Landlord's right of reentry or any other right hereunder.
24.
SUBORDINATION
24.01 Landlord may have heretofore encumbered or may hereafter encumber
with a mortgage or trust deed the Building, or any interest therein, and may
have heretofore sold and leased back or may hereafter sell and lease back the
land on which the Building is located, and may have heretofore encumbered or may
hereafter encumber the leasehold estate under such lease with a mortgage or
trust deed. (Any such mortgage or trust deed is herein called a "Mortgage" and
the holder of any such mortgage or the beneficiary under any such trust deed is
herein called a "Mortgagee". Any such lease of the underlying land is herein
called a "Ground Lease", and the lessor under any such lease is herein called a
"Ground Lessor". Any Mortgage which is a first lien against the Building, the
land on which the Building is located, the leasehold estate of the lessor under
a Ground Lease (if the property is not then subject to an unsubordinated
mortgage) is herein called a "First Mortgage" and the holder or beneficiary of
or Ground Lessor under any First Mortgage is herein called a "First Mortgagee").
This Lease is, or shall be, subject and subordinate to any First Mortgage now or
hereafter encumbering the Building. This provision shall be self-operative, and
no further instrument of subordination shall be required to effectuate such
subordination.
24.02 If requested by a First Mortgagee, Tenant will either (i)
subordinate its interest in this Lease to said First Mortgage, and to any and
all advances made thereunder and to the interest thereon, and to all renewals,
replacements, supplements, amendments, modifications and extensions thereof, or
(ii) make certain of Tenant's rights and interest in this Lease superior
thereto, and Tenant will promptly execute and deliver such agreement or
agreements as may be reasonably required by such Mortgagee or Ground Lessor;
provided, however, Tenant covenants it will not subordinate this Lease to any
Mortgage or Ground Lease other than a First Mortgage (including a Ground Lease
defined as a First Mortgage hereunder) without the prior written consent of the
First Mortgagee.
24.03 It is further agreed that (a) if any Mortgage shall be
foreclosed, or if any Ground Lease be terminated, (i) the liability of the
Mortgagee or purchaser at such foreclosure sale or the liability of a subsequent
owner designated as Landlord under this Lease shall exist only so long as such
Mortgagee, purchaser or owner is the owner of the Building or the land on which
the Building is located, and such liability shall not continue or survive after
further transfer of ownership; and (ii) upon request of the Mortgagee, if the
Mortgage shall be foreclosed, Tenant will attorn, as Tenant under this Lease, to
the purchaser at any foreclosure sale under any Mortgage or upon request of the
Ground Lessor, if any Ground Lease shall be terminated, Tenant will attorn as
Tenant under this Lease to the Ground Lessor, and Tenant will execute such
instruments as may be necessary or appropriate to evidence such attornment; (b)
this Lease may not be modified or amended so as to reduce the Rent or shorten
the Term provided hereunder, or so as to adversely affect in any other respect
to any material extent the rights of the Landlord or its successor, nor shall
this lease be cancelled or surrendered, without the prior written consent, in
each instance, of the First Mortgagee; and (c) Tenant waives the provisions of
any statute or rule of law, now or hereafter in effect, that may give or purport
to give Tenant any right to terminate or otherwise adversely affect Landlord's
interest in this Lease or reduce or limit the obligations of Tenant hereunder in
the event of the prosecution or completion of any such foreclosure proceeding.
No Mortgagee or any purchaser at a foreclosure sale shall be liable for any act
or omission of the Landlord which occurred prior to such sale or conveyance, nor
shall
20
Tenant be entitled to any offset against or deduction from Rent due after such
date by reason of any act or omission of the Landlord prior to such date.
Further, Tenant agrees that no Mortgagee shall be bound by the prepayment of
Rent made in excess of ninety (90) days before the date on which such payment is
due. Notwithstanding anything the contrary contained herein, Tenant's
subordination of its interest in this Lease to a First Mortgage is conditioned
upon Landlord procuring from any First Mortgage a written non-disturbance
agreement in commercially reasonable form in which such Mortgagee agrees not to
disturb Tenant's possession of the Premises so long as Tenant is not in default
or breach of this Lease.
24.04 Should any prospective First Mortgagee require a modification or
modifications of this Lease, which modification or modifications will not cause
an increased cost or expense to Tenant or in any other way materially and
adversely change the rights and obligations of Tenant hereunder, in the
reasonable judgment of Tenant, then and in such event, Tenant agrees that this
Lease may be so modified and agrees to execute whatever documents are required
therefor and deliver the same to Landlord within ten (10) days following the
request therefor. Should any prospective Mortgagee or Ground Lessor require
execution of a short form of lease for recording (containing, among other
customary provisions, the names of the parties, a description of the Premises
and the Term of this Lease), Tenant agrees to execute such short form of lease
and deliver the same to Landlord within ten (10) days following the request
therefor.
24.05 If Tenant fails within ten (10) days after written demand
therefor to execute and deliver any instruments as may be necessary or proper to
effectuate any of the covenants of Tenant set forth above in this Section,
Tenant hereby makes, constitutes and irrevocably appoints Landlord as its
attorney-in-fact (such power of attorney being coupled with an interest) to
execute and deliver any such instruments for and in the name of Tenant.
25.
ESTOPPEL CERTIFICATE
Concurrently with the execution and delivery of this Lease and
thereafter from time to time, upon not less than twenty (20) days' prior written
request by Landlord, Tenant will, and Tenant will cause any subtenant, licensee,
concessionaire or other occupant of the Premises to, promptly complete, execute
and deliver to Landlord or any party or parties designated by Landlord a tenant
estoppel certificate substantially in the form attached hereto as Exhibit D or
such other substantially similar form as may be required by Landlord's lender or
a future purchaser of the Building. Any purchaser or Mortgagee of any interest
in the Building shall be entitled to rely on said statement. Failure to give
such a statement within thirty (30) days after said written request shall be
deemed a Default by Tenant under this Lease.
26.
RELOCATION OF TENANT
Intentionally deleted.
27.
NOTICES AND DEMANDS
27.01 All notices, demands, approvals, consents, requests for approval
or consent or other writings in this Lease provided to be given, made or sent by
either party hereto to the other ("Notice") shall be in writing and shall be
deemed to have been fully given, made or sent when made by personal service or
two (2) business days after deposit in the United States mail, certified or
registered and postage prepaid and properly addressed as follows:
To Landlord: Landlord's Management Agent at the address set forth in
Section 1.13 with a copy to Lincoln Property Company, 101 Constitution Avenue,
NW, Washington, DC 20001, Attention: Ms. Bari Nichols; and a copy to Piper
Rudnick, 203 North LaSalle Street, Suite 1800, Chicago, Illinois 60601-1293,
Attention: Shepard Gould, Esq.
To Tenant: (i) If any Notice is to be given Tenant prior to
occupancy, to the address set forth in
Section 1.02 with a copy to Porter & Hedges,
L.L.P., 700 Louisiana, 35th Floor, Houston,
Texas, Attn: Jack G. Wise, Esq.
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(ii) If any Notice is to be given Tenant after
occupancy, to the Premises; provided,
however, if the Premises shall have been
vacated, Notice may be posted on the door to
the Premises with a copy to Porter & Hedges,
L.L.P., 700 Louisiana, 35th Floor, Houston,
Texas, Attn: Jack G. Wise, Esq.
The address to which any Notice should be given, made or sent to either party
may be changed by written notice given by such party as above provided.
27.02 Tenant agrees to give any First Mortgagee, by registered or
certified mail, a copy of any notice or claim of default served upon the
Landlord by Tenant, provided that prior to such notice Tenant has been notified
in writing (by way of service on Tenant of a copy of an assignment of Landlord's
interest in leases, or otherwise) of the address of such First Mortgagee. Tenant
further agrees that if Landlord shall have failed to cure such default within
twenty (20) days after such notice to Landlord (or if such default cannot be
cured or corrected within that time, then such additional time as may be
necessary if Landlord has commenced within such twenty (20) days and is
diligently pursuing the remedies or steps necessary to cure or correct such
default), then the First Mortgagee shall have an additional thirty (30) days
within which to cure or correct such default (or if such default cannot be cured
or corrected within that time, then such additional time as may be necessary if
such First Mortgagee has commenced within such thirty (30) days and is
diligently pursuing the remedies or steps necessary to cure or correct such
default, including the time necessary to obtain possession if possession is
necessary to cure or correct such default) before Tenant may exercise any right
or remedy which it may have on account of any such default by Landlord.
27.03 Any notice, demand, request or consent to be made by or required
of Landlord, may be made and given by Landlord's Management Agent with the same
force and effect as if made and given by Landlord.
28.
CONSTRUCTION OF LEASE
28.01 The language in all parts of this Lease shall in all cases be
construed as a whole according to its fair meaning and neither strictly for nor
against either Landlord or Tenant. Section and Subsection headings in this Lease
are for convenience only and are not to be construed as part of this Lease or in
any way defining, limiting, amplifying, construing, or describing the provisions
hereof. Time is of the essence of this Lease and every term, covenant and
condition hereof, the words "Landlord" and "Tenant", as herein used, shall
include the plural as well as the singular. The neuter gender includes the
masculine and feminine. In the event there is more than one person or entity
which executes this Lease as Tenant, the obligations to be performed and
liability of all such persons and entities shall be joint and several. All of
the covenants of Tenant hereunder shall be deemed and construed to be
"conditions" as well as "covenants" as though the words specifically expressing
or importing conditions were used in each separate instance. Landlord and Tenant
agree that in the event any term, covenant or condition herein contained (other
than with respect to the payment of Rent) is held to be invalid or void by any
court of competent jurisdiction, the invalidity of any such term, covenant or
condition shall in no way affect any other term, covenant or condition herein
contained.
28.02 This Lease contains and embodies the entire agreement of the
parties hereto, and no representation, inducements or agreements, oral or
otherwise, not contained in this Lease shall be of any force or effect. This
Lease may not be modified in whole or in part in any manner other than by an
instrument in writing duly signed by both parties hereto.
29.
REAL ESTATE BROKERS
Tenant represents and warrants unto Landlord that Tenant has directly
dealt with and only with Landlord's Management Agent and the Leasing Broker(s),
if any, identified in Section 1.12 of this Lease as broker in connection with
this Lease, and agrees to indemnify and hold harmless Landlord from and against
any and all claims or demands, damages, liabilities and expenses of any type or
nature whatsoever arising by reason of the incorrectness or breach of the
aforesaid representation or warranty. Landlord shall pay, and agrees to
indemnify and hold
22
harmless Tenant from and against any claim by, Landlord's Management Agent and
the Leasing Broker(s) for its commission arising out of the execution and
delivery of this Lease.
30.
ENVIRONMENTAL COMPLIANCE
During the Term of this Lease, Tenant shall fully comply with any laws
or rules and regulations promulgated thereunder relating to the Premises and
Tenant's use thereof, including, but not limited to, Occupational Safety and
Health Act, 29 U.S.C. Sections 651, et seq.; the Toxic Substances Control Act,
15 U.S.C. Sections 2601, et seq.; the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et seq.; the Clean Air Act, 42 U.S.C. Sections 7901, et
seq.; the Clean Water Act, 33 U.S.C. Sections 1251, et seq.; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and the 1986
Superfund Amendments and Reauthorization Act, 42 U.S.C. Sections 9601, et seq.;
the National Environmental Policy Act, 42 U.S.C. Sections 4231, et seq.; the
Refuse Act, 33 U.S.C. Sections 407, et seq.; the Safe Drinking Water Act, 42
U.S.C. Sections 300(f), et seq.; the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Sections 11001, et seq.; or any other federal,
state or local law, ordinance or regulation promulgated under any of those
statutes and any amendments thereto, as well as applicable Department of
Transportation regulations. Tenant shall notify Landlord immediately if Tenant
receives any notice of non-compliance with any laws or rules and regulations
promulgated thereunder, including, but not limited to, those enumerated above.
Tenant shall not cause or permit its business in the Premises to be
used to generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce or process hazardous substances, or other dangerous or toxic
substances, or solid waste, except in compliance with all applicable federal,
state and local laws or regulations. Tenant shall notify Landlord immediately if
Tenant learns of any non-compliance or of any facts (such as the existence of
any release or the threat of release of hazardous substances at, on, from or
beneath the surface of the Premises) which could give rise to a claim of
non-compliance with such laws or rules and regulations promulgated thereunder.
During the Term of this Lease, Tenant shall obtain, shall fully comply
with, and shall maintain in full force and effect, all governmental licenses,
permits, registrations and approvals (federal, state, local, county and foreign)
necessary to conduct its business in the Premises including, but not limited to,
those required by the statutes enumerated in the first paragraph of this Section
30. During the Term of this Lease, Tenant shall keep a copy of all such permits
at the Premises and shall make the same available at all times for Landlord's
inspection. Tenant warrants and represents that if during the Term of this
Lease, any violations are recorded or any notices are received with respect to
any of such licenses, permits, registrations and approvals or if a proceeding is
commenced or threaten to revoke or limit any of them, Tenant shall notify
Landlord immediately.
In addition to all other indemnities under this Lease, Tenant hereby
assumes for itself and for its successors and assigns any and all environmental,
health and safety liabilities or obligations relating to the Tenant Work in the
Premises and or Tenant's use and occupancy of Premises, including, but not
limited to, any liabilities or obligations in breach of the obligations imposed
under this Section on Tenant and its successors and assigns. Tenant, for itself
and its successors and assigns, shall indemnify, defend and hold Landlord, its
successors, assigns, owners and affiliates harmless from and against any claims,
demands, liabilities and damages (including, but not limited to, attorneys' fees
and court costs) arising out of or in connection with any environmental
contamination or pollution of the Premises, or the existence on, or removal
from, the Premises of any hazardous substance provided that any such
contaminant, pollutant or hazardous substance was introduced into the Premises
by Tenant or its agents, employees, invitees, contractors or any other party
acting on behalf of Tenant or for whom Tenant is responsible. The obligations of
this Section shall survive the expiration or termination of this Lease.
Landlord represents that to the best of its knowledge, no part of the
Building or Premises (including the walls, ceilings, structural steel, flooring
or pipes) is wrapped, insulated or fireproofed with any asbestos,
asbestos-containing material or other hazardous material and that there has
never been environmental pollution to the Land. If any hazardous substances
prohibited by law are found on the Premises and the presence of the materials
has not been
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caused by Tenant or by Tenant's use of the Premises, Landlord shall, at its sole
cost, remove and clean up the material as required by law which obligations
shall survive the termination of this Lease.
31.
MISCELLANEOUS
31.01 BENEFIT. Subject to the provisions of Sections 19 and 20 hereof,
all terms, covenants and conditions of this Lease shall be binding upon and
inure to the benefit of and shall apply to the respective heirs, executors,
administrators, successors, assigns and legal representatives of Landlord and
Tenant.
31.02 EXECUTION AND DELIVERY. The execution of this Lease by Tenant and
delivery of the same to Landlord or Landlord's Management Agent do not
constitute a reservation of or option to lease the Premises or an agreement by
Landlord to enter into a lease, and this Lease shall become effective only if
and when Landlord executes and delivers a counterpart hereof to Tenant;
provided, however, the execution and delivery by Tenant of this Lease to
Landlord or Landlord's Management Agent shall constitute an irrevocable offer by
Tenant to lease the Premises on the terms and conditions herein contained, which
offer may not be withdrawn or revoked for twenty (20) days after such execution
and delivery. If Tenant is a corporation, it shall deliver to Landlord
concurrently with the delivery to Landlord of an executed Lease, certified
resolutions of Tenant's directors authorizing execution and delivery of this
Lease and the performance by Tenant of its obligations hereunder. If Tenant is a
partnership, it shall deliver to Landlord concurrently with the delivery to
Landlord of an executed Lease, a certified copy of its partnership agreement or
other satisfactory evidence of execution and performance authority. Tenant shall
not record this Lease but Tenant may execute a memorandum of Lease, in form
mutually approved by Landlord and Tenant, at Tenant's sole cost.
31.03 DEFAULT UNDER OTHER LEASE. Intentionally deleted.
31.04 APPLICABLE LAW. This Lease shall be governed by and construed in
accordance with the laws of the State of Texas.
31.05 LATE CHARGES. At the option of Landlord, Landlord may impose a
late payment fee equal to ten percent (10%) of the amount due if any payment of
Rent is paid more than five (5) business days after its due date. In addition,
any amount due hereunder shall bear interest after default in the payment
thereof at the annual rate of two percent (2%) above the prime rate of interest
as announced by Chase Bank N.A. ("Chase") from time to time, or if the use of
the prime rate is discontinued by Chase, such other similar rate as may
thereafter be announced from time to time by Chase or any other major bank in
Houston, Texas selected by Landlord as a measure of the cost to its borrowers of
short-term commercial loans, until said past due amount shall be paid by Tenant
to Landlord or, in the absence of any such rate, 10% per year, provided that in
no event shall such interest rate exceed the maximum nonusurious rate of
interest at which Tenant may legally contract in Texas.
31.06 NON-WAIVER OF DEFAULTS. No waiver of any provision of this Lease
shall be implied by any failure of Landlord to enforce any remedy on account of
the violation of such provision, even if such violation be continued or repeated
subsequently, and no express waiver shall affect any provision other than the
one specified in such waiver and in that event only for the time and in the
manner specifically stated. No receipt of monies by Landlord from Tenant after
the termination of this Lease will in any way alter the length of the Term or
Tenant's right of possession hereunder or, after the giving of any notice, shall
reinstate, continue or extend the Term or affect any notice given Tenant prior
to the receipt of such monies, it being agreed that after the service of notice
or the commencement of a suit or after final judgment for possession of the
Premises, Landlord may receive and collect any Rent due, and the payment of Rent
shall not waive or affect said notice, suit or judgment, nor shall any such
payment be deemed to be other than on account of the amount due, nor shall the
acceptance of Rent be deemed a waiver of any breach by Tenant of any term,
covenant or condition of this Lease. No endorsement or statement on any check or
any letter accompanying any check or payment of Rent shall be deemed an accord
and satisfaction. Landlord may accept any such check or payment without
prejudice to Landlord's right to recover the balance due of any installment or
payment of Rent or pursue any other remedies available to Landlord with respect
to any existing Defaults. None of
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the terms, covenants or conditions of this Lease can be waived by either
Landlord or Tenant except by appropriate written instrument.
31.07 FORCE MAJEURE. Neither party shall be deemed in default with
respect to the failure to perform any of the terms, covenants and conditions of
this Lease on such party's part to be performed, if such failure is due in whole
or in part to any strike, lockout, labor dispute (whether legal or illegal),
civil disorder, inability to procure materials, failure of power, restrictive
governmental laws and regulations, riots, insurrections, war, fuel shortages,
accidents, casualties, Acts of God, acts caused directly or indirectly by the
other party (or the other party's agents, employees, guests or invitees), acts
of other tenants or occupants of the Building or any other cause beyond the
reasonable control of such party. In such event, the time for performance shall
be extended by an amount of time equal to the period of the delay so caused. No
interruption of service resulting from any causes described in the first
sentence of this Section 31.07 shall relieve Tenant of any of its obligations
under this Lease, except as expressly provided in Section 8.04, or render liable
for damages. Unless caused by Landlord's negligence or willful misconduct,
Landlord shall not be liable to Tenant for any expense, injury, loss or damage
resulting from work done in or upon, or the use of, any adjacent or nearby
building, land, street, alley or underground vault or passageway. In no event
shall this Section 31.07 apply to excuse a party from any financial obligation
or any obligation to execute documents.
31.08 LANDLORD'S RIGHT TO PERFORM TENANT'S DUTIES. If Tenant fails
timely to perform any of its duties under this Lease, Landlord shall have the
right (but not the obligation), after the expiration of any grace period
provided by this Lease, to perform such duty on behalf and at the expense of
Tenant without further notice to Tenant, and all sums expended or expenses
incurred by Landlord in performing such duty shall be deemed to be Rent under
this Lease and shall be due and payable to Landlord upon demand by Landlord.
31.09 PARKING. Landlord agrees to provide, and Tenant agrees to rent,
through the Term of this Lease, 3.5 unreserved spaces per 1,000 square feet of
Rentable Area of Premises (or 142 spaces based on 40,730 rentable square feet),
for the parking of automobiles in the parking garage located at the Building. Of
such 142 spaces, Tenant shall have the right, by at least thirty (30) days prior
written notice to Landlord, to designate up to forty (40) of such 142 spaces as
reserved spaces. As rental for parking spaces provided to Tenant hereunder,
Tenant shall pay to Landlord or the operator of the garage, as may be designated
from time to time by Landlord, monthly in advance, rental on each such parking
space at the rate of $50 per month per reserved space and $-0- per month per
unreserved space, payable at the same times, in the same manner, and in addition
to, the Base Rent provided in this Lease. Tenant shall comply with all traffic,
security, safety and other rules and regulations promulgated from time to time
by Landlord and shall use its unreserved spaces in common with all other tenants
of the Building. Tenant shall indemnify and hold harmless Landlord from and
against all claims, losses, liabilities, damages, costs and expenses (including,
but not limited to, attorneys' fees and court costs) arising or alleged to arise
out of Tenant's use of any such parking spaces. In the event any of the above
parking spaces are or become unavailable at any time or from time to time
throughout the Term, whether due to casualty or any other cause, this Lease
shall continue in full force and effect, and Tenant's sole remedy shall be an
abatement of rentals for those parking spaces rendered unavailable, which
abatement shall continue until such time as said parking spaces, or substitutes
therefor, again become available; it being expressly agreed and understood that
Landlord shall have no duty to provide substitute parking spaces for those
spaces rendered unavailable.
31.10 NOTICE OF INDEMNIFICATION. THIS LEASE CONTAINS INDEMNIFICATION
PROVISIONS WHICH EACH SHALL EXPRESSLY SURVIVE THE EXPIRATION OR TERMINATION OF
THIS LEASE.
31.11 WAIVER. TENANT HEREBY WAIVES THE PROVISIONS OF Section
93.002(g)(1) OF THE TEXAS PROPERTY CODE.
31.12 EXHIBITS. The Exhibits attached hereto are hereby incorporated in
this Lease by reference and all terms and conditions of this Lease shall apply
to the provisions set forth in such Exhibits.
31.13 LIEN FOR RENT. Intentionally deleted.
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31.14 FINANCIAL STATEMENTS. No financial statements shall be required
from Tenant so long as it is a public company.
31.15 ABATEMENT PERSONAL. If and to the extent that this Lease provides
for the abatement of any Rent or other charges due from Tenant under this Lease,
including, without limitation, parking charges or storage space charges, any
such abatement is personal to the original named Tenant under this Lease and
intended for its benefit only, and is not transferable to any assignee of
Tenant's rights under this Lease. If Tenant's rights are assigned, then, as of
the effective date of such assignment, any such abatements shall terminate and
be rendered of no force or effect and the Rent or other charges in question
shall be payable at the rate otherwise applicable for the period in question.
32.
SIGNAGE
32.01 Tenant is hereby granted the right to install and maintain the
signage described in Section 32.02 below ("Tenant Signage"). The design and size
of, and materials used (including lighting) for, all Tenant Signage shall be
subject to Landlord's prior written approval. All Tenant Signage shall comply
with all applicable laws, codes, ordinances and regulations. Tenant shall pay
the cost to construct, install and maintain all Tenant Signage (including the
cost of lighting therefor). Landlord shall use reasonable efforts to obtain from
Universal Ensco, another tenant of the Building, a waiver of the provisions of
its lease which would then permit Tenant to install signage on the facade of the
Building.
32.02 Tenant will have the right to have its name displayed, on a
non-exclusive basis, on the existing Building monument sign on Loop Central
Drive. The signage rights granted to Tenant in this Section 32 are conditioned
upon there being no Default under this Lease. If a Default exists, Landlord may
give Tenant written notice that Landlord requires Tenant to remove all Tenant
Signage.
32.03 Landlord shall provide, at its sole cost, Building standard
tenant signage at the main entry doors to the Premises on the 7th and 8th floors
of the Building, as well as a directory board listing in the lobby of the
Building.
33.
LIMITATION OF LIABILITY
In consideration of the benefits accruing hereunder, Tenant and all
successors and assigns of Tenant covenants and agree that, anything contained
herein to the contrary notwithstanding, the obligations under this Lease do not
constitute personal obligations of the individual partners, directors, officers
or shareholders of Landlord, or the partners, directors, officers or
shareholders of the partners of Landlord. Any claim based on or in respect to
any liability of Landlord under this Lease shall be enforced only against the
Property and not against any other assets, properties or funds of: (1) Landlord
or any director, officer, general partner, limited partner, employee or agent of
Landlord or its general partners (or any legal representative, heir, estate,
successor or assign thereof); (2) any predecessor or successor partnership or
corporation (or other entity) of Landlord or its general partners, either
directly or through Landlord or its predecessor or successor partnership or
corporation (or other entity) of Landlord or its general partners; and (3) any
other person or entity. Tenant further agrees that each of the foregoing
provisions shall be applicable to any covenant or agreement either expressly
contained in this Lease or imposed by statute or at common law. Tenant's
covenants and agreements contained in this Section 32 are enforceable both by
Landlord and also by any partner of Landlord.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the day and year first above written.
LANDLORD:
W9/LWS II REAL ESTATE LIMITED PARTNERSHIP, a
Delaware limited partnership
BY: W9/LWS II GEN-PAR, INC., a Delaware
corporation, its General Partner
By: /s/ Bari Nichols
---------------------------------------
Name: Bari Nichols
-------------------------------------
Title: Sr. Vice President
------------------------------------
Date: Nov. 23, 2004
------------------------------------------
TENANT:
ENCYSIVE PHARMACEUTICALS, INC.,
a Delaware corporation
By: /s/ Bruce D. Given, M.D.
--------------------------------------------
Name: Bruce D. Given, M.D.
------------------------------------------
Title: President & CEO
-----------------------------------------
Date: Nov. 19, 2004
------------------------------------------
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