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EXHIBIT 10.8
INDUSTRIAL LEASE
BETWEEN
PARKER METROPOLITAN, L.P.,
AS LANDLORD,
AND
HOME INTERIORS & GIFTS, INC.,
AS TENANT
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TABLE OF CONTENTS
Page
----
1. Definitions and Basic Lease Provisions................................................1
2. Leased Premises.......................................................................3
3. Acceptance of Leased Premises.........................................................3
4. Tenant Finish Work....................................................................3
5. Lease Term............................................................................3
6. Rent Payments.........................................................................3
7. Utilities.............................................................................4
8. Financial Statements..................................................................4
9. Intentionally Deleted.................................................................4
10. Assignment and Subletting.............................................................4
11. Additional Rent.......................................................................6
12. Repair and Maintenance................................................................7
13. Alterations and Additions by Tenant...................................................9
14. Surrender Upon Termination or Expiration; Holdover....................................9
15. Tenant's Service Providers............................................................9
16. Tenant's Property.....................................................................9
17. Mechanics' Liens.....................................................................10
18. Use and Occupancy....................................................................10
19. Limitations on Liability of Landlord Parties; Waiver.................................11
20. Tenant's Indemnification of Landlord Parties; Assumption; Employees' Claims..........12
21. Tenant's Insurance...................................................................13
22. Fire or Other Casualty...............................................................15
23. Waiver of Subrogation................................................................15
24. Condemnation.........................................................................16
25. Rights Reserved by Landlord..........................................................16
26. Events of Default....................................................................17
27. Landlord's Remedies..................................................................18
28. Notice of Landlord's Default.........................................................19
29. No Implied Waiver....................................................................20
30. Waiver by Tenant.....................................................................20
31. Legal Fees...........................................................................20
32. Subordination........................................................................20
33. Intentionally Deleted................................................................21
34. Rules and Regulations................................................................21
35. Estoppel Certificate.................................................................21
36. Notices..............................................................................21
37. Hazardous Substances.................................................................22
38. Severability.........................................................................22
39. Force Majeure........................................................................23
40. Brokerage............................................................................23
41. Joint and Several Liability..........................................................23
42. No Representations...................................................................23
43. Entire Agreement; Amendments.........................................................23
44. Paragraph Headings...................................................................24
45. Binding Effect.......................................................................24
46. Counterparts; Facsimile Signatures...................................................24
INDUSTRIAL LEASE -i-
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47. Rental Tax............................................................................24
48. Landlord's Lien.......................................................................24
49. Timeliness............................................................................24
50. Security Disclaimer...................................................................25
51. Signage...............................................................................25
52. Execution and Approval of Lease.......................................................25
53. Leasehold Mortgages...................................................................26
54. Governing Law; Venue..................................................................26
55. The Existing Lease....................................................................26
56. Exhibits..............................................................................26
EXHIBITS:
A: Leased Premises
B: Legal Description of the Land
C: Building Rules and Regulations
D: Contractor Insurance Requirements
E: Insurance Minimums
F: Insurance Questionnaire
INDUSTRIAL LEASE -ii-
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INDUSTRIAL LEASE
This Industrial Lease (this LEASE) is entered into effective as of
__________________, 2000 (the DATE OF THIS LEASE), by PARKER METROPOLITAN, L.P.,
a Texas limited partnership (LANDLORD), and HOME INTERIORS & GIFTS, INC., a
Texas corporation (TENANT).
1. Definitions and Basic Lease Provisions.
Some of the basic provisions and defined terms of this Lease are as
follows:
BUILDING: 815 South Coppell, Coppell, Texas, described
on EXHIBIT A The Building contains
approximately 78,750 rentable square feet.
LEASED PREMISES: The Building and related facilities, and the
land (the LAND) described on EXHIBIT B.
COMMENCEMENT DATE: August 1, 2000.
EXPIRATION DATE: July 31, 2005.
LEASE TERM: 60 months, beginning on the Commencement
Date and ending on the Expiration Date.
BASE RENT: See table below.
ADDITIONAL RENT: [See Paragraph 11].
RENT: The total of Base Rent as set forth in the
following table, Additional Rent, and all
other amounts payable by Tenant to Landlord
under this Lease:
Periods in Lease Term Base Rent Per Month
--------------------- -------------------
8/1/00 - 9/30/00: 2 months $19,687.50
10/1/00 - 12/31/00: 3 months ABATED
1/1/01 - 7/31/02: 19 months $20,343.75
8/1/02 - 7/31/05: 36 months $22,968.75
It is the purpose and intent of Landlord and Tenant that Base
Rent shall be net to Landlord and that all reasonable and
necessary costs, expenses, and charges related to Tenant's
operations of the Leased Premises, which may arise or become
due during the Lease, shall be paid by Tenant, and that Tenant
shall indemnify, defend, and hold Landlord harmless against
same.
INDUSTRIAL LEASE PAGE 1
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TENANT'S BROKER: None.
LANDLORD'S BROKER: Willis Realty Advisors.
PERMITTED USE: Any lawful use, specifically excluding
operating as an Internet services provider
through equipment located in the Leased
Premises.
TENANT PARTY(IES): Tenant and its officers, agents,
contractors, subcontractors, employees,
licensees, servants, invitees, and all
persons and entities claiming through any of
these person or entities.
LANDLORD PARTY(IES): Landlord and its authorized representatives
and their respective officers, directors,
shareholders, partners, trustees, members,
agents, employees, property manager,
contractors, and all persons, and entities
claiming through any of these persons or
entities.
Addresses for notices under this Lease:
LANDLORD: Parker Metropolitan, L.P.
c/o Parker Equities, Inc.
5956 Sherry Lane, Suite 1620
Dallas, Texas 75225
Attn: Jeff P. Howle
Fax: (214) 987-6095
With a copy to:
Munsch Hardt Kopf & Harr, P.C.
4000 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
Attn: Katherine W. Harmon
Fax: (214) 855-7584
LANDLORD'S MORTGAGEE:
Column Financial
5100 Tennyson Parkway, Suite 2400
Plano, Texas 75024
Attn: Greg Golden
Fax: (972) 473-8111
TENANT: Home Interiors & Gifts, Inc.
4055 Valley View
Dallas, Texas 75244
Attn: Mike Lohner, C.O.O.
Fax: (972) 386-1008
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With a copy to:
Home Interiors & Gifts, Inc.
4055 Valley View
Dallas, Texas 75244
Attn: Bettina Simon, General Counsel
Fax: (972) 386-1106
2. Leased Premises.
Landlord, in consideration of the Rent and the obligations of Tenant
under this Lease, leases the Leased Premises to Tenant, and Tenant
leases the Leased Premises from Landlord, under the terms of this
Lease.
3. Acceptance of Leased Premises.
Tenant currently occupies the Leased Premises, and accepts the Leased
Premises in their present condition, on an "AS IS, WHERE IS" basis, and
Landlord has no obligation to improve, repair, restore, or refurbish
the Leased Premises. Tenant's continued occupancy of the Leased
Premises is conclusive evidence that Tenant: (a) accepts the Leased
Premises as suitable for the purposes for which they are leased; (b)
accepts the Leased Premises as being in a good and satisfactory
condition; (c) waives any defects in the Leased Premises; and (d)
agrees that the square footage numbers used in this Lease are
conclusive and binding. Tenant acknowledges that neither Landlord nor
any other Landlord Party has made, and Tenant waives, any
representation or warranty with respect to the Leased Premises,
including, without limitation, any representation or warranty with
respect to the suitability or fitness of the Leased Premises for the
conduct of Tenant's business.
4. Tenant Finish Work.
If Tenant desires to make leasehold improvements to the Leased Premises
(the TENANT FINISH WORK) after the beginning of the Lease Term, then
Tenant shall, at Tenant's sole cost and expense, perform or cause to be
performed the Tenant Finish Work strictly in accordance with Paragraph
13 of this Lease.
5. Lease Term.
The Lease Term begins on the Commencement Date and ends on the
Expiration Date.
6. Rent Payments.
(a) The first installment of Base Rent is payable by Tenant when
this Lease is executed. Subsequent installments of Base Rent
are payable by Tenant in advance on the first day of each
calendar month during the Lease Term beginning on the first
day of the first full calendar month after the beginning of
the Lease Term. Base Rent for any partial calendar month is
prorated on a per diem basis.
(b) All Rent (which includes Base Rent and Additional Rent, as
defined in Paragraph 1) is payable by Tenant in legal U.S.
tender to Landlord at the following
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address, or to any other person or at any other address as
Landlord may designate by notice to Tenant:
Parker Metropolitan, L.P.
c/o Parker Equities, Inc.
5956 Sherry Lane, Suite 1620
Dallas, TX 75225
Attn: Jeff P. Howle
(c) Rent is payable by Tenant without notice, demand, abatement,
deduction, or setoff except as expressly specified in this
Lease. Tenant's obligation to pay Rent is independent of any
obligation of Landlord under this Lease. If any installment of
Rent is not paid within 7 days after it is due, Tenant shall
pay a late charge in an amount equal to 5% of the delinquent
installment of Rent when it pays the delinquent installment.
In addition, any Rent not paid when due (and which represents
amounts not already specified as bearing interest under other
provisions of this Lease) bears interest from the due date
until the date paid at a rate (the INTEREST RATE) equal to the
lesser of the highest rate allowable under applicable law or
18% per annum.
7. Utilities.
Landlord shall provide water, electricity, gas, and telephone
connections to the Leased Premises. Tenant shall pay for all water,
gas, heat, light, power, telephone, sewer, sprinkler charges, and other
utilities and services used on or from the Leased Premises, together
with any taxes, penalties, surcharges, or the like pertaining thereto,
and any maintenance charges for utilities. Tenant shall furnish all
electric light bulbs and tubes. Tenant's obligation to pay for utility
services provided during the Lease Term survives the termination or
expiration of the Lease. Landlord is not liable for any interruption or
failure of utility services on or to the Leased Premises.
8. Financial Statements.
Unless Tenant is a publicly-traded entity and Tenant publicly files its
financial statements on a regular basis, Tenant shall, from time to
time within 20 days after request by Landlord, but no more often than 4
times in any calendar year, deliver to Landlord certified financial
statements for Tenant, in a reasonably acceptable form.
9. Intentionally Deleted.
10. Assignment and Subletting.
(a) Except as specified in Paragraph 10(c) below, Tenant may not
assign this Lease or sublease all or any part of the Leased
Premises without the prior written consent of Landlord, which
shall not be unreasonably withheld, delayed, or conditioned.
If Tenant wants to assign this Lease or sublease all or part
of the Leased Premises, it shall deliver a notice to Landlord
specifying the name of, financial information for, and the
nature of the business of the proposed assignee or subtenant,
the proposed effective date of the assignment or sublease and
the amount of the commission, if any that Tenant is obligated
to pay in connection with such assignment or sublease. Tenant
may not assign or sublease all or any part
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of the Leased Premises at any time when Tenant is in default
under this Lease, whether or not an Event of Default (defined
in Paragraph 26) has occurred.
(b) Landlord has a period of 14 days from receipt of Tenant's
notice to notify Tenant that Landlord elects, in Landlord's
sole discretion, to:
(1) terminate this Lease as to the space that is the
subject of Tenant's notice as of the date specified
by Tenant provided, however, that Landlord shall pay
any broker's fee or commission for which Tenant is
liable in connection with such proposed assignment or
sublease;
(2) consent to the assignment or sublease. If the rent
payable to the Tenant by the sublessee is greater
than the Base Rent, then the excess rent, after
deducting all actual costs incurred by Tenant with
respect to the sublease, including but not limited to
brokerage commissions, legal fees, rent concessions
and tenant improvement costs incurred by Tenant with
respect to the sublease, is payable by Tenant as
additional Rent to Landlord within five (5) days of
the date on which Tenant receives the excess rent
from the sublessee; or
(3) reasonably refuse to consent to Tenant's assignment
or sublease of that space and to continue this Lease
in effect.
If Landlord elects to terminate this Lease as provided under
option (1), Tenant has 5 business days following receipt of
Landlord's notice to terminate within which to rescind its
notice of its proposed assignment or sublease and avoid a
termination of this Lease. If Landlord does not notify Tenant
of Landlord's election within the 14-day period, Landlord is
deemed to elect option (3).
(c) Tenant may, without the prior consent of Landlord, sublet all
or any part of the Leased Premises to an Affiliate (defined
below), or assign this Lease to an Affiliate, if (1) Tenant
provides Landlord a copy of the sublease or the assignment
within 10 days after its execution, (2) the transaction was
not entered into as a subterfuge to avoid the obligations and
restrictions of this Lease and (3) the net worth of the
assignee or sublessee is sufficient, in Landlord's reasonable
discretion, to satisfy Tenant's obligations under this Lease.
Landlord has no obligation to recognize an Affiliate that is
an assignee of this Lease, as the tenant under this Lease
unless Landlord timely receives a complete copy of the
assignment and Tenant pays Landlord its reasonable
administrative and legal costs, pursuant to Paragraph 10(d)
below. Tenant remains liable for the payment of Rent and
performance of all other obligations under this Lease after
any assignment or subletting to an Affiliate. The term
AFFILIATE means any entity that acquires all or part of
Tenant, or that is acquired in whole or in part by Tenant, or
which entity, directly or indirectly, controls, is controlled
by, or is under common control with Tenant. For purposes of
this Paragraph 10(c), CONTROL means the possession, directly
or indirectly, of the power to direct or cause the direction
of the management and policies of an entity, whether through
the ownership of voting securities or by contract or
otherwise.
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(d) As a condition to the effectiveness of each assignment or
subletting, Tenant shall pay to Landlord its reasonable
administrative and legal costs in connection therewith, not to
exceed $500.
(e) Any attempted assignment or sublease by Tenant in violation of
the terms of this Paragraph is void and is an Event of Default
(defined in Paragraph 26).
(f) Tenant remains liable for the payment of Rent and performance
of all other obligations under this Lease after any assignment
or subletting.
11. Additional Rent.
(a) Tenant shall pay to third parties (or to Landlord in the case
of ad valorem taxes and property insurance for the Leased
Premises, and otherwise as applicable), as ADDITIONAL RENT
(herein called): (i) all taxes, insurance, charges, costs and
expenses which are reasonable and necessary for the operation
and use of the Leased Premises by Tenant, or which Tenant
assumes or agrees to pay under any provisions of this Lease,
together with all interest and penalties that may accrue
thereon in the event of Tenant's failure to pay the same as
herein provided; (ii) all other damages, costs and expenses
which Landlord may suffer or incur and is entitled to
reimbursement by Tenant as provided in this Lease; and (iii)
any and all other sums which may become due, by reason of any
default of Tenant or failure by Tenant to comply with the
agreements, terms, covenants, and conditions of this Lease. If
Tenant fails to provide Landlord with satisfactory evidence of
the full payment of Additional Rent to third parties (where
applicable) within thirty (30) days following written request
by Landlord for such evidence, then except as otherwise
provided, Landlord may at its option, but is under no
obligation to, pay directly all past due amounts of Additional
Rent to be paid by Tenant to any third party, and Tenant shall
reimburse Landlord on demand for the Additional Rent so paid
by Landlord.
(b) Without limiting the generality of the foregoing, Tenant shall
pay ad valorem taxes and insurance for the Leased Premises to
Landlord in the same manner that Tenant is obligated to pay
those expenses under that certain lease agreement dated as of
December 1, 1999 (the EXISTING LEASE) between Landlord and
Tenant relating to the Leased Premises. Tenant shall pay
directly, as they become due and payable, and before they
become delinquent, AND SHALL INDEMNIFY, DEFEND, AND HOLD
LANDLORD PARTIES HARMLESS AGAINST, all taxes, special
assessments, and other governmental charges of every kind
levied or assessed against the personal property, furniture,
fixtures, and other improvements placed by or for Tenant in
the Leased Premises, and shall promptly submit to Landlord
evidence of such payment. During the Lease Term and at its
sole cost and expense, Tenant may contest, on behalf of
Landlord, any reappraisals of the Leased Premises for ad
valorem tax purposes.
(c) Tenant, at its expense, may elect to inspect, audit, and copy
Landlord's books and records concerning any Additional Rent
which is reimbursed to Landlord, at Landlord's (or other
designated) offices during normal office hours, within 90 days
after the date of any demand by Landlord for the applicable
Additional Rent (the ADDITIONAL RENT STATEMENT), by giving
Landlord at least 30 days' prior notice and
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specifying in that notice the particular documents which
Tenant will require for its audit (the AUDIT INFORMATION). Any
audit by Tenant is subject to the following:
(1) No audit may be conducted if Tenant is in default
under this Lease at the time Tenant delivers its
notice to Landlord requesting the audit or at the
time the audit would be conducted.
(2) No subtenant or assignee may conduct an audit under
this subparagraph or otherwise.
(3) If Tenant retains a third party (the AUDITOR) to
audit any Additional Rent, the Auditor must be a
nationally recognized accounting firm that is not
being compensated by Tenant on a contingent fee basis
or other "savings" based fee structure. Prior to
conducting an audit, Tenant and the Auditor must
execute a reasonably acceptable form of
confidentiality agreement relating to the audit.
(4) Tenant may not be in the Landlord's (or other
designated) offices for more than a total of 3 days.
Landlord shall make reasonable efforts to provide
Tenant on the first of those 3 days with any Audit
Information which was requested in accordance with
this Paragraph 11(c) and which is in Landlord's
control. Tenant shall minimize any disruption to
Landlord's business while in Landlord's (or other
designated) offices.
(5) Tenant shall deliver a copy of the audit to Landlord
within 10 days after it is finalized. If Tenant
disputes any Additional Rent Statement as a result of
its audit and Landlord does not contest the accuracy
of Tenant's dispute within 15 business days after
Landlord's receipt of Tenant's dispute notice, then
Landlord shall revise the Additional Rent Statement
accordingly.
(d) Tenant's payment of Additional Rent to Landlord is governed by
Paragraph 6(c). TENANT SHALL INDEMNIFY, DEFEND, AND HOLD ALL
LANDLORD PARTIES HARMLESS FROM ALL CLAIMS, FINES, SUITS,
LOSSES, COSTS, LIABILITIES, DEMANDS, EXPENSES, ACTIONS, AND
JUDGMENTS (COLLECTIVELY, CLAIMS) OF EVERY KIND AND CHARACTER
ARISING OUT OF OR RELATING TO ADDITIONAL RENT.
12. Repair and Maintenance.
(a) Tenant shall [to the extent the repair is not the obligation
of Landlord under Paragraph 12(e) below], at its sole cost and
expense, keep and maintain all parts of the Leased Premises
(including the Building and related facilities and the Land)
in the same condition as on December 1, 1999. Tenant shall
cause the Leased Premises [except those components of the
Leased Premises that are the obligation of Landlord under
Paragraph 12(e) below] to comply with Applicable Laws (defined
in Paragraph 18) at all times, promptly making all necessary
non-structural repairs and replacements, ordinary and
extraordinary. Tenant's obligations and expenses hereunder
include but are not limited to the windows, glass and plate
glass, doors, any special office entries, walls, finish work,
floors, floor coverings, ceilings, heating and air
conditioning systems, janitorial service, dock boards, truck
doors, dock bumpers, plumbing work and fixtures, pest
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extermination, landscaping, parking lot repair, and regular
removal of trash and debris.
(b) Tenant shall, at its sole cost and expense, enter into a
regularly scheduled preventive maintenance/service contract
with a maintenance contractor for servicing all hot water,
heating and air conditioning systems, and equipment within or
serving the Leased Premises. The maintenance contractor and
the contract must be approved by Landlord. The service
contract must include all services suggested by the equipment
manufacturer within the operation/maintenance manual and must
become effective (and a copy thereof delivered to Landlord)
within 30 days after the date Tenant takes possession of the
Leased Premises.
(c) Notwithstanding anything herein to the contrary, Tenant shall
repair and pay for any damage to the Leased Premises caused by
any Tenant Party or caused by Tenant's default under this
Lease.
(d) All repairs and replacements by Tenant must be equal in
quality and class to the original work, made to restore the
Leased Premises to the same condition as on December 1, 1999,
reasonable wear and tear excepted. Without diminishing this
obligation of Tenant, if Tenant does not make any repairs and
replacements required hereunder within 15 days after the date
of Landlord's notice of same (or, if the repairs or
replacements cannot reasonably be completed within the 15-day
period, and Tenant commences them promptly and then diligently
completes them within a reasonable time, not to exceed 40 days
after the date of Landlord's notice), Landlord may at its
option, but is under no obligation to, make the repairs and
replacements. Tenant shall pay Landlord on demand as
additional Rent the costs incurred by Landlord hereunder plus
an administrative fee equal to 10% of the costs.
(e) Landlord shall (except as expressly provided in this Lease),
at its sole cost and expense, keep and maintain the
foundation, exterior walls, roof, and other structural
elements of the Leased Premises in good condition and repair
as reasonably determined to be necessary by Landlord,
consistent with the condition existing on December 1, 1999.
Upon written notice given by Tenant to Landlord of the need
for repairs for which Landlord is responsible hereunder,
Landlord shall promptly repair the Leased Premises in a good,
workmanlike manner. Landlord shall have thirty (30) days after
written notice from Tenant to commence to perform its
obligations under this paragraph, unless, in the reasonable
judgment of Tenant, such existing condition constitutes an
emergency or hazard to persons or to the inventory of Tenant,
in which event Landlord shall commence to perform its
obligations hereunder immediately and shall diligently proceed
with such work until completed. If Landlord fails to commence
to perform its obligations hereunder in the event of an
emergency within 24 hours notice from Tenant, Tenant shall
have the right to act as needed to prevent the danger to
persons continuing or to prevent spoilage of its inventory,
and Landlord shall promptly pay the reasonable cost thereof to
Tenant upon written demand therefor. Tenant shall not have the
right to undertake permanent repairs to the foundation,
exterior walls, roof, and other structural elements of the
Leased Premises. Nothing in this paragraph shall be construed
as a waiver of Tenant's right to a claim against Landlord
arising from Landlord's failure or delay to make repairs
required to be made by Landlord
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hereunder; further, nothing contained herein shall be deemed
to require Tenant to make any repairs for which Landlord is
obligated under this Lease.
13. Alterations and Additions by Tenant.
Tenant may not make or permit any alterations, improvements, or
additions in or to the Leased Premises without Landlord's prior
consent, which consent may not be unreasonably withheld, except that
Landlord's consent to any alterations, improvements, or additions that
affect any structural or MEP (defined below) elements or systems, or
the external appearance or common areas, of the Leased Premises, is in
Landlord's sole discretion. Specifically, Tenant may not make
penetrations or alterations to the roof, exterior walls, or the
foundation without express written consent from Landlord. No equipment
or antenna of any kind may be installed on any portion of the roof or
exterior portion of the Building without express written consent from
Landlord. All alterations, additions, and improvements made to, or
fixtures or other improvements placed in or upon, the Leased Premises
become the property of Landlord upon the expiration or earlier
termination of the Lease Term. Alterations, improvements, and additions
in and to the Leased Premises requested by Tenant must be made in
accordance with complete and accurate plans and specifications and
construction documents [including, without limitation, complete
mechanical, electrical and plumbing (MEP) requirements] prepared by
Tenant or Tenant's contractor and approved in advance by Landlord. All
work must be performed at Tenant's expense either by Landlord or by
contractors and subcontractors reasonably approved in advance by
Landlord and in accordance with any conditions required by Landlord,
including compliance with the Contractor Insurance Requirements set
forth in EXHIBIT D. All alterations and improvements must comply with
all Applicable Laws. This Paragraph 13 applies to Tenant Finish Work,
if any, under this Lease.
14. Surrender Upon Termination or Expiration; Holdover.
(a) Upon the Expiration Date or any earlier termination of this
Lease, Tenant shall: (1) surrender to Landlord possession of
the Leased Premises in the same condition as on December 1,
1999, reasonable wear and tear and damages or destruction by
any insured casualty excepted, and (2) deliver to Landlord all
keys to the Building.
(b) If Tenant continues to hold any part of the Leased Premises
after the termination of this Lease, the holding over is a
tenancy from month-to-month at a monthly rental equal to 150%
of the monthly Base Rent payable at the time of termination,
plus the payment of Additional Rent and all other Rent payable
under this Lease. Any month-to-month tenancy is terminable
upon 30 days' notice from Landlord.
15. Tenant's Service Providers.
Tenant shall cause all contractors, moving companies, and other
entities providing services to Tenant to deliver evidence satisfactory
to Landlord that the insurance specified in EXHIBIT D is in force prior
to entering the Building.
16. Tenant's Property.
All furniture, movable trade fixtures, data and phone cables, and
equipment installed by or on behalf of Tenant remains the property of
Tenant and must be removed by Tenant at its
INDUSTRIAL LEASE PAGE 9
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expense at the termination of this Lease. Any removal of Tenant's
property must be accomplished in a good and workmanlike manner so as
not to damage the Leased Premises. Tenant, or Landlord at Tenant's
expense, shall repair any damage to the Leased Premises caused by any
removal. All furniture, movable trade fixtures, and equipment installed
by Tenant not removed within 15 days after termination of the Lease are
conclusively presumed to be abandoned by Tenant. Landlord may, at its
option, take the possession of the property and either (1) declare it
to be the property of Landlord by notice to Tenant or (2) at the sole
risk and expense of Tenant and without payment of any compensation to
Tenant, remove it or any part thereof in any manner that Landlord
chooses and store, sell, or otherwise dispose of it without incurring
liability to Tenant or any other person. All amounts payable to
Landlord under this subparagraph, plus interest at the Interest Rate
from date of payment by Landlord until paid by Tenant, are due on
demand as additional Rent.
17. Mechanics' Liens.
Tenant may not cause or permit any mechanic's or materialmen's liens to
be placed upon Landlord's interest in the Leased Premises or any part
thereof or against Landlord's interest under this Lease. If any lien is
filed on Landlord's or Tenant's interest in the Leased Premises, Tenant
shall cause the same to be discharged of record within 20 days after
filing. If Tenant does not discharge the lien within the 20-day period,
then, in addition to any other right or remedy of Landlord, Landlord
may, but is not obligated to, discharge the lien by paying the amount
claimed to be due or by procuring the discharge of the lien by deposit
in court or bonding. Any amount paid by Landlord relating to any lien
not caused by Landlord, and all reasonable legal and other expenses of
Landlord, including reasonable legal fees, in defending any action or
in procuring the discharge of any lien, with interest thereon at the
Interest Rate from date of payment by Landlord until paid by Tenant, is
payable by Tenant to Landlord on demand as additional Rent.
18. Use and Occupancy.
(a) The Leased Premises may be occupied and used by Tenant only
for the Permitted Use and for no other purpose without
Landlord's prior written consent, in its sole discretion.
Tenant shall use and maintain the Leased Premises in a clean,
careful, safe, and proper manner and shall comply with all
existing and future laws, ordinances, orders, rules, and
regulations of all governmental bodies (state, federal, and
municipal) applicable to or having jurisdiction over the use,
occupancy, and maintenance of the Leased Premises, including
without limitation, all applicable environmental laws and the
Americans With Disabilities Act of 1990 (as amended), the
Texas Architectural Barriers Act (as amended) [Tex. Rev. Civ.
Stat. Ann. Art. 9102] and any similar law, rule or regulation
relating to access by disabled persons to the Leased Premises
(collectively, ACCESS LAWS) and all applicable environmental
laws (those laws, ordinances, orders, rules, decisions, and
regulations being called APPLICABLE LAWS). Landlord represents
and warrants that, as of the date of this Lease, Landlord has
received no actual notice that the Leased Premises is not in
compliance with Applicable Laws.
(b) Tenant may not deface or injure the Leased Premises or any
part thereof or overload the floors of the Leased Premises.
Tenant may not commit waste or permit waste to be committed or
cause or permit any nuisance on or in the Leased Premises.
Tenant shall pay Landlord on demand as additional Rent for any
INDUSTRIAL LEASE PAGE 10
14
damage to the Leased Premises caused by any negligence or
willful act or any misuse or abuse (whether the misuse or
abuse results from negligence or willful acts) by Tenant or
any Tenant Party or any other person (except Landlord Parties)
not prohibited by Tenant from entering upon the Leased
Premises.
(c) Tenant may not use or allow the Leased Premises to be used for
any purpose prohibited by any Applicable Law or by any
restrictive covenants applicable to the Leased Premises.
Tenant shall conduct its business and occupy the Leased
Premises and control all Tenant Parties so as not to create
any nuisance and so as not to injure the reputation of the
Leased Premises.
(d) Tenant may not use or allow or permit the Leased Premises to
be used in any way or for any purpose that (1) Landlord deems
hazardous on account of the possibility of fire or other
casualty; (2) increases the rate of fire or other insurance
for the Building or its contents or in respect of the
operation of the Building; or (3) renders the Building
uninsurable at normal rates by responsible insurance carriers
authorized to do business in the State of Texas or renders
void or voidable any insurance on the Building. If insurance
premiums are increased because of Tenant's use of the Leased
Premises, then, in addition to any other remedies Landlord may
have, Tenant shall pay the amount of the increase to Landlord
as additional Rent within 5 days after demand.
(e) Use of or access to the roof of the Building by Tenant is
prohibited except when necessary for Tenant Parties to perform
repairs and maintenance as required under this Lease,
including but not limited to HVAC maintenance and repair.
19. LIMITATIONS ON LIABILITY OF LANDLORD PARTIES; WAIVER.
(a) TO THE FULLEST EXTENT PERMITTED BY LAW, TENANT, ON ITS BEHALF
AND ON BEHALF OF ALL TENANT PARTIES, WAIVES ALL CLAIMS AGAINST
ALL LANDLORD PARTIES ARISING OUT OF, KNOWINGLY AND VOLUNTARILY
ASSUMES THE RISK OF, AND AGREES THAT LANDLORD PARTIES ARE NOT
LIABLE TO ANY TENANT PARTIES FOR ANY OF THE FOLLOWING EVEN IF
THE CLAIMS ARE CAUSED SOLELY OR IN PART BY THE NEGLIGENCE, BUT
NOT THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OF ANY
LANDLORD PARTY:
(1) ANY INJURY OR DAMAGE TO PERSON OR PROPERTY (INCLUDING
THE RESULTING LOSS OF USE, ECONOMIC LOSSES AND
CONSEQUENTIAL OR RESULTING DAMAGES OF ANY KIND FROM
ANY CAUSE) DUE TO THE CONDITION OR DESIGN OF, OR ANY
DEFECT IN, THE LEASED PREMISES OR BUILDING THAT
EXISTS NOW OR OCCURS IN THE FUTURE;
(2) ANY INJURY OR DAMAGE TO PERSON OR PROPERTY (INCLUDING
THE RESULTING LOSS OF USE, ECONOMIC LOSSES AND
CONSEQUENTIAL OR RESULTING DAMAGES OF ANY KIND FROM
ANY CAUSE) DUE TO THE LEASED PREMISES OR BUILDING OR
RELATED IMPROVEMENTS OR APPURTENANCES BEING OUT OF
REPAIR, OR DEFECTS IN OR FAILURE OF PIPES OR WIRING,
OR BACKING UP OF DRAINS, OR THE BURSTING OR LEAKING
OF PIPES, FAUCETS, AND PLUMBING FIXTURES, OR GAS,
WATER, STEAM, ELECTRICITY, OR OIL LEAKING, ESCAPING,
OR FLOWING INTO THE LEASED PREMISES;
INDUSTRIAL LEASE PAGE 11
15
(3) ANY LOSS OR DAMAGE CAUSED BY THE ACTS OR OMISSIONS OF
ANY OTHER PERSONS; OR
(4) ANY LOSS OR DAMAGE TO PROPERTY OR PERSON OCCASIONED
BY THEFT, FIRE, ACT OF GOD, PUBLIC ENEMY, INJUNCTION,
RIOT, INSURRECTION, WAR, COURT ORDER, REQUISITION,
ORDER OF GOVERNMENTAL AUTHORITY, AND ANY OTHER CAUSE
BEYOND THE CONTROL OF LANDLORD PARTIES.
(b) NOTWITHSTANDING THE FOREGOING OR ANYTHING ELSE TO THE CONTRARY
CONTAINED IN THIS LEASE, THE LIABILITY OF LANDLORD TO ANY
TENANT PARTY FOR ANY DEFAULT OR INDEMNITY BY LANDLORD UNDER
THIS LEASE IS LIMITED TO THE INTEREST OF LANDLORD IN THE
LEASED PREMISES. NO LANDLORD PARTY HAS ANY PERSONAL LIABILITY
FOR ANY AMOUNTS PAYABLE OR OBLIGATIONS PERFORMABLE BY LANDLORD
UNDER THIS LEASE.
(c) THE PROVISIONS OF THIS PARAGRAPH 19 SHALL SURVIVE THE
EXPIRATION OR EARLIER TERMINATION OF THIS LEASE.
20. TENANT'S INDEMNIFICATION OF LANDLORD PARTIES; ASSUMPTION; EMPLOYEES'
CLAIMS.
(a) TENANT SHALL INDEMNIFY, DEFEND, AND HOLD ALL LANDLORD PARTIES
HARMLESS FROM ALL CLAIMS OF EVERY KIND AND CHARACTER
(INCLUDING THOSE CLAIMS RESULTING SOLELY OR IN PART FROM
NEGLIGENCE, BUT NOT THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, OF ANY LANDLORD PARTY) ARISING OUT OF OR RELATING
(DIRECTLY OR INDIRECTLY) TO THIS LEASE, THE TENANCY CREATED
UNDER THIS LEASE OR THE LEASED PREMISES, INCLUDING, WITHOUT
LIMITATION:
(1) ANY BREACH OR DEFAULT IN PERFORMANCE OF ANY
OBLIGATION ON TENANT'S PART TO BE PERFORMED UNDER
THIS LEASE, WHETHER DURING THE LEASE TERM OR AFTER
ITS EXPIRATION OR EARLIER TERMINATION;
(2) ANY ACT, OMISSION, NEGLIGENCE, OR MISCONDUCT OF
TENANT OR ANY TENANT PARTY, OR OF ANY OTHER PERSON
ENTERING UPON THE LEASED PREMISES UNDER OR WITH THE
EXPRESS OR IMPLIED INVITATION OR PERMISSION OF
TENANT;
(3) ANY ALTERATIONS, ACTIVITIES, WORK, OR THINGS DONE,
PERMITTED, ALLOWED, OR SUFFERED BY TENANT PARTIES IN,
AT, OR ABOUT THE LEASED PREMISES, INCLUDING THE
VIOLATION BY TENANT OR ANY TENANT PARTY OF ANY LAW,
ORDINANCE, OR GOVERNMENTAL ORDER OF ANY KIND; AND
(4) THE OCCUPANCY OR USE BY TENANT OR ANY TENANT PARTY OF
THE LEASED PREMISES.
(b) TENANT SHALL INDEMNIFY, DEFEND, AND HOLD ALL LANDLORD PARTIES
HARMLESS FROM ANY CLAIM FOR DAMAGE TO TENANT'S LEASEHOLD
IMPROVEMENTS OR PERSONAL PROPERTY, FIXTURES, FURNITURE, AND
EQUIPMENT IN THE LEASED PREMISES (INCLUDING THOSE CLAIMS
RESULTING SOLELY OR IN PART FROM NEGLIGENCE, BUT NOT THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, OF ANY LANDLORD PARTY), TO
THE EXTENT THAT THE DAMAGE IS COVERED BY INSURANCE (INCLUDING
ANY DEDUCTIBLE) THAT TENANT IS REQUIRED TO CARRY UNDER THIS
LEASE (OR WOULD HAVE
INDUSTRIAL LEASE PAGE 12
16
BEEN COVERED HAD TENANT CARRIED THE INSURANCE REQUIRED UNDER
THE PROVISIONS OF THIS LEASE).
(c) IF ANY LANDLORD PARTY IS MADE A PARTY TO ANY LITIGATION
COMMENCED AGAINST ANY TENANT PARTY OR RELATING TO THIS LEASE
OR TO THE LEASED PREMISES, THEN TENANT SHALL PAY ALL COSTS AND
EXPENSES, INCLUDING REASONABLE LEGAL FEES AND COURT COSTS,
INCURRED BY OR IMPOSED UPON THE LANDLORD PARTY BY VIRTUE OF
THE LITIGATION. THE AMOUNT OF ALL COSTS AND EXPENSES,
INCLUDING REASONABLE LEGAL FEES AND COURT COSTS, IS A DEMAND
OBLIGATION PAYABLE BY TENANT TO LANDLORD AS ADDITIONAL RENT
BEARING INTEREST AT THE INTEREST RATE FROM THE DATE OF DEMAND
BY LANDLORD UNTIL PAID BY TENANT.
(d) IF AN EMPLOYEE (FULL-TIME, PART-TIME, OR TEMPORARY) OF ANY
TENANT PARTY SUFFERS AN INJURY AT THE LEASED PREMISES, TENANT
SHALL USE REASONABLE EFFORTS TO CAUSE THE INJURED EMPLOYEE TO
EXHAUST ALL RIGHTS UNDER THE APPLICABLE WORKERS' COMPENSATION
LAWS BEFORE ANY CLAIM ARISING FROM THE INJURY IS ASSERTED
AGAINST ANY LANDLORD PARTY. TENANT SHALL INDEMNIFY, DEFEND,
AND HOLD LANDLORD PARTIES HARMLESS FROM ALL CLAIMS, DEMANDS,
ACTIONS, DAMAGES, LOSSES, COSTS, LIABILITIES, EXPENSES, AND
JUDGMENTS SUFFERED BY LANDLORD PARTIES ARISING FROM TENANT'S
FAILURE TO CAUSE ITS INJURED EMPLOYEE TO EXHAUST ALL RIGHTS
UNDER THE APPLICABLE WORKERS' COMPENSATION LAWS BEFORE MAKING
ANY CLAIM AGAINST LANDLORD PARTIES.
(e) THE PROVISIONS OF THIS PARAGRAPH 20 SURVIVE THE EXPIRATION OR
EARLIER TERMINATION OF THIS LEASE.
(f) THE INDEMNIFICATION PROVISIONS OF THIS PARAGRAPH 20 SHALL NOT
BE CONSTRUED OR INTERPRETED AS IN ANY WAY RESTRICTING,
LIMITING, OR MODIFYING TENANT'S INSURANCE OR OTHER OBLIGATIONS
UNDER THIS LEASE AND IS INDEPENDENT OF TENANT'S INSURANCE AND
OTHER OBLIGATIONS UNDER THIS LEASE.
21. Tenant's Insurance.
(a) Tenant shall, at its expense, maintain at all times during the
Lease Term (and prior to the Lease Term with respect to
activities of Tenant under the Lease at the Building)
insurance as set forth below:
(1) Commercial General Liability Insurance (1986 ISO Form
or its equivalent) written on an "occurrence" basis
with respect to the business carried on, in or from
the Leased Premises and Tenant's use and occupancy of
the Leased Premises (including a contractual
liability) in an amount not less than $2,000,000 per
occurrence and $4,000,000 general aggregate per
location for bodily injury and property damages (or
with increased limits as may be required from time to
time by Landlord by giving notice to Tenant) and
without any deductible;
(2) Statutory Workers' Compensation Insurance including
at least $100/500/100,000 Employers Liability
Insurance;
INDUSTRIAL LEASE PAGE 13
17
(3) Excess/Umbrella Liability Insurance, applying on at
least a "following form" basis, with a minimum limit
of $3,000,000 each Occurrence and Aggregate, where
applicable;
(4) "ISO Special Form" Property Insurance (the PROPERTY
INSURANCE), including but not limited to, coverage
for all office furniture, trade fixtures, office
equipment, merchandise, and all other items of
Tenant's property in, on, at, or about the Leased
Premises and the Building, including property
installed by, for, or at the expense of Tenant; and
Tenant's Property Insurance must also fulfill the
following requirements:
(A) It must be written on the equivalent of an
ISO "Special Form" Property Insurance Form
or an equivalent form acceptable to
Landlord;
(B) It must include an agreed amount endorsement
for not less than one-hundred percent (100%)
of the full replacement cost (new without
deduction for depreciation) of the covered
items and property; and
(C) It must have a deductible no greater than
$50,000 for each loss.
It is the parties' intent that Tenant structure its Property
Insurance program so that no coinsurance penalty is imposed
and there are no valuation disputes with any insurer or with
Landlord. The Property Insurance coverage must include
vandalism and malicious mischief coverage.
(b) Tenant's policies must be written by an insurance company or
companies reasonably satisfactory to Landlord and with a
current A.M. Best Company rating of A-/IX or better and be
admitted to do business in the State of Texas. Landlord and
Landlord's property management company, if any, must be named
as additional insureds without restriction under the
liability, property and umbrella policies, using ISO
endorsement Form CG 2026 1185. Tenant shall obtain a written
obligation on the part of each insurance company to notify
Landlord at least 30 days prior to cancellation, non-renewal,
or material reduction of the coverage. In addition, all of the
policies of insurance required in this Lease shall be written
in a form and with deductibles reasonably satisfactory to
Landlord and shall satisfy the requirements of any ground
lease, mortgage, security agreement or other financing lien on
the Leased Premises.
(c) Tenant shall deliver copies of all required insurance
policies, or certificates thereof (Acord Form 27, modified as
necessary for liability coverage), to Landlord within 5 days
after the date of this Lease (and, with respect to any renewal
policy, 30 days prior to the expiration of the existing
policy). If Tenant fails either to effect any insurance
required in this Lease, or to pay the premiums therefor, or to
deliver such polices or certificates thereof to Landlord at
the times required, then Landlord may, but has no obligation
to, after 10 days' notice to Tenant (or sooner if required to
prevent the expiration of any existing policy), effect such
insurance and pay the premiums therefor, in which case Tenant
shall upon demand reimburse Landlord as Additional Rent for
any such premiums.
INDUSTRIAL LEASE PAGE 14
18
(d) Tenant has completed the insurance questionnaire attached
hereto as EXHIBIT F and represents to Landlord that it
accurately reflects Tenant's intended use of the Leased
Premises.
22. Fire or Other Casualty.
(a) If the Leased Premises or any part thereof are damaged by fire
or other casualty, Tenant shall give prompt notice thereof to
Landlord. If the Building is so damaged by fire or other
casualty that substantial alteration or reconstruction of the
Building is, in Landlord's sole opinion, required, or if any
mortgagee under a mortgage or deed of trust covering the
Leased Premises requires that the insurance proceeds payable
as a result of the fire or other casualty be used to retire
the mortgage debt, Landlord may, in its sole discretion,
terminate this Lease by giving Tenant notice of termination
within 60 days after the date of the damage, in which event
the Rent abates as of the date of the damage.
(b) If Landlord does not elect to terminate this Lease, Landlord
shall within 90 days after the date of the damage commence to
repair and restore the Building (except that Landlord is not
responsible for delays outside its control) to substantially
the same condition in which it was immediately prior to the
casualty. Landlord is not required to rebuild, repair, or
replace any part of Tenant's furniture or furnishings or
fixtures and equipment removable by Tenant under the
provisions of this Lease. No Landlord Party is liable for any
inconvenience or annoyance to any Tenant Party or injury to
the business of Tenant resulting in any way from casualty
damage or the repairs (INCLUDING ANY INCONVENIENCE, ANNOYANCE
OR INJURY RESULTING SOLELY OR IN PART FROM THE NEGLIGENCE, BUT
NOT THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OF ANY
LANDLORD PARTY); provided, during the time and to the extent
the Building is unfit for occupancy, Landlord shall grant to
Tenant a fair reduction in Rent.
(c) If the damages are caused by the negligence or willful
misconduct of any Tenant Party, Rent does not reduce and
Tenant shall pay to Landlord on demand as additional Rent any
damages in excess of the amount paid by insurance proceeds
received by Landlord.
23. Waiver of Subrogation.
Each party waives all claims that arise or may arise in its favor
against the other party, or anyone claiming through or under them, by
way of subrogation or otherwise, during the Lease Term or any extension
or renewal thereof, for all losses of, or damage to, any of its
property (EVEN IF THE LOSS OR DAMAGE IS CAUSED BY THE FAULT OR
NEGLIGENCE OF THE OTHER PARTY OR ANYONE FOR WHOM THE OTHER PARTY IS
RESPONSIBLE), which loss or damage is covered by valid and collectible
Special Form Property insurance policies, to the extent that the loss
or damage is recovered under the insurance policies. These waivers are
in addition to, and not in limitation of, any other waiver or release
in this Lease with respect to any loss or damage to property of the
parties. Since these mutual waivers preclude the assignment of any
claim by way of subrogation (or otherwise) to an insurance company (or
any other person), each party shall immediately give each insurance
company issuing to it policies of Special Form Property insurance
written notice of the terms of these mutual waivers, and have the
insurance policies properly endorsed,
INDUSTRIAL LEASE PAGE 15
19
if necessary, to prevent the invalidation of the insurance coverages by
reason of these waivers.
24. Condemnation.
(a) If all or substantially all of the Building is taken for any
public or quasi-public use under any governmental law,
ordinance, or regulation or by right of eminent domain or is
sold to the condemning authority in lieu of condemnation, then
this Lease terminates as of the date when physical possession
of the portion of the Building is taken by the condemning
authority. If less than substantially all of the Building is
taken or sold, Landlord (whether or not the Leased Premises
are affected) may terminate this Lease by giving written
notice to Tenant within 60 days after the right of election
accrues, in which event this Lease terminates as of the date
when physical possession of the portion of the Building is
taken by the condemning authority.
(b) If this Lease is not terminated upon any taking or sale of
less than substantially all of the Building:
(1) the Rent reduces by an amount representing that
portion of the Rent allocable to the portion of the
Leased Premises taken or sold; and
(2) Landlord shall, at Landlord's sole expense, restore
the Building to substantially its former condition to
the extent reasonably deemed feasible by Landlord,
but:
(A) Landlord's restoration obligation shall not
include installing tenant finish
improvements, if any, in the Leased
Premises; and
(B) Landlord shall not be required to expend an
amount in excess of the amount received by
Landlord as compensation or damages (over
and above amounts going to the mortgagee of
the property taken) for the part of the
Building so taken.
(c) Landlord is entitled to receive all of the compensation
awarded upon a taking of any part or all of the Building,
including any award for the value of the unexpired Lease Term.
Tenant is not entitled to and expressly waives all claim to
any compensation; provided, Tenant is entitled to receive any
award for damages to Tenant's leasehold improvements.
25. Rights Reserved by Landlord.
Landlord reserves the following rights, exercisable without notice and
without liability to any Tenant Party for damage or injury to property,
persons, or business and without effecting an eviction, constructive or
actual, or disturbance of Tenant's use or possession or giving rise to
any claim for set-off or abatement of Rent:
(a) To change the Building's name or street address.
(b) To install, affix, and maintain any signs on the exterior and
interior of the Building.
INDUSTRIAL LEASE PAGE 16
20
(c) To designate and approve, prior to installation, all types of
window covers and similar equipment, and to control all
internal lighting that is visible from the exterior of the
Building.
(d) To enter upon the Leased Premises at reasonable hours to
inspect, clean, or make repairs or alterations to the Leased
Premises (but without any obligation to do so, except as
expressly specified in this Lease), to make repairs or
alterations to any part of the Building or the Building
systems (including adjacent premises), to show the Leased
Premises to prospective lenders, purchasers, and, during the
last 12 months of the Lease Term, to show the Leased Premises
to prospective tenants and, if the Leased Premises are vacant,
to prepare them for re-occupancy.
(e) To decorate and make repairs, alterations, additions, changes,
or improvements, whether structural or otherwise, in and about
the Building and for those purposes to enter upon the Leased
Premises and, during the continuance of the work, temporarily
close doors, entryways, public space, and corridors in the
Building, to interrupt or temporarily suspend Building
services and facilities, and to change the arrangement and
location of entrances or passageways, doors and doorways,
corridors, elevators, stairs, toilets, or other public parts
of the Building, all without abatement or setoff of Rent or
affecting any of Tenant's obligations under this Lease, so
long as the Leased Premises are reasonably accessible.
(f) To have and retain a paramount title to the Leased Premises
free and clear of any act of Tenant purporting to burden or
encumber the Leased Premises.
(g) To approve the weight, size, and location of safes, heavy
equipment, file cabinets, book shelves, and other heavy items
in and about the Leased Premises, to require all those items
and all furniture to be moved into and out of the Leased
Premises only at times and in a manner specified by Landlord,
and to require permits before allowing Tenant's property to be
moved into or out of the Leased Premises. Movements of
Tenant's property into or out of the Leased Premises and
within the Leased Premises are entirely at the risk and
responsibility of Tenant.
(h) To transfer, assign, or convey, in whole or in part, the
Leased Premises and Landlord's rights under this Lease. If
Landlord transfers, assigns, or conveys its rights under this
Lease, Landlord is released from any further obligations under
this Lease and Tenant shall look solely to the successor in
interest of Landlord for performance of the obligations of
"Landlord" under this Lease.
26. Events of Default.
The following are events of default (EVENTS OF DEFAULT) by Tenant under
this Lease:
(a) Tenant fails to pay any Rent when due and the failure
continues for a period of 7 days after notice from Landlord.
Landlord is required to give notice under this Paragraph 26(a)
only twice in any 12-month period. Landlord is not required to
give Tenant notice of default for the third and subsequent
Rent payment defaults during any 12-month period and, for
those defaults, an Event of Default occurs if Tenant fails to
pay any Rent when due and the failure continues for a period
of 7 days. Landlord is not required to give any notice that
any payment of Rent is due except as specified in the first
sentence of this Paragraph 26(a).
INDUSTRIAL LEASE PAGE 17
21
(b) Tenant fails to comply with any of the terms of this Lease,
other than the payment of Rent, and does not cure the failure
within 20 days after Landlord delivers notice of the failure
to Tenant, except that no Event of Default occurs if the
failure cannot reasonably be cured within the 20-day period
and Tenant commences the cure promptly and diligently
completes the cure within a reasonable time, not to exceed 60
days after Landlord first delivers notice of the failure to
Tenant.
(c) Tenant fails to unconditionally surrender to Landlord
possession of that certain property identified as 10351 Home
Road, Frisco, Texas, which Tenant currently leases from
Landlord under that certain Lease Agreement dated as of
December 1, 1999 (the FRISCO LEASE), by October 31, 2000.
(d) Tenant becomes insolvent, makes a transfer in fraud of
creditors, commits any act of bankruptcy, makes an assignment
for the benefit of creditors, or admits in writing its
inability to pay its debts as they become due.
(e) Tenant files a petition under any section or chapter of the
Bankruptcy Code of the United States, as amended, or under any
similar law or statute of the United States or any state
thereof, or Tenant is adjudged bankrupt or insolvent in
proceedings filed against Tenant, or a petition or answer
proposing the adjudication of Tenant as a bankrupt or its
reorganization under any present or future federal or state
bankruptcy or similar law is filed in any court and the
petition or answer is not discharged or denied within 60 days
after filing.
(f) A receiver or trustee is appointed for all or substantially
all of the assets of Tenant or of the Leased Premises or of
any of Tenant's property located therein in any proceeding
brought by Tenant, or any receiver or trustee is appointed in
any proceeding brought against Tenant, and is not discharged
within 60 days after appointment or Tenant shall consent to
the appointment.
27. Landlord's Remedies.
If an Event of Default occurs, Landlord may then or any time thereafter
pursue any one or more of the following remedies:
(a) Terminate this Lease by giving notice to Tenant, in which
event Tenant shall immediately surrender the Leased Premises
to Landlord. If Tenant fails to surrender the Leased Premises
immediately, Landlord may, without prejudice to any other
remedy it has for possession or arrearages in Rent, take
possession of the Leased Premises and expel or remove Tenant
and any other person occupying the Leased Premises, or any
part thereof, without being liable for prosecution or any
claim of damages. Tenant shall pay to Landlord on demand as
additional Rent the amount of all loss and damage Landlord
suffers by reason of the termination, whether through
inability to re-let the Leased Premises on satisfactory terms
or otherwise. Landlord has no duty to re-let the Leased
Premises except as required by Applicable Laws.
(b) Take possession of the Leased Premises and remove Tenant or
any other person occupying the Leased Premises, or any part
thereof, without having any civil or criminal liability and
without terminating this Lease. Landlord may (but is under no
obligation except as required by Applicable Laws to) re-let
the Leased Premises or
INDUSTRIAL LEASE PAGE 18
22
any part thereof for the account of Tenant, in the name of
Tenant or Landlord or otherwise, without notice to Tenant for
a term or terms, and on conditions, and for uses as Landlord
in its sole discretion may determine. Landlord may collect and
receive any rents payable by reason of any re-letting. Tenant
shall pay Landlord on demand as additional Rent all reasonable
expenses necessary to re-let the Leased Premises, including
the cost of renovating, repairing, and altering the Leased
Premises for a new tenant or tenants, advertisements, and
brokerage fees, as well as any deficiency that may arise by
reason of the re-letting. No taking of possession of the
Leased Premises by Landlord is an election on Landlord's part
to terminate this Lease unless a notice of termination is
given to Tenant under subparagraph (a).
(c) Enter upon the Leased Premises without having any civil or
criminal liability and do whatever Tenant is obligated to do
under the terms of this Lease. Tenant shall reimburse Landlord
on demand as additional Rent for any expenses Landlord incurs
in performing Tenant's obligations under this Lease, together
with interest at the Interest Rate from the date incurred
until repaid by Tenant. LANDLORD IS NOT LIABLE FOR ANY DAMAGES
RESULTING TO TENANT FROM ANY LANDLORD PARTY'S ACTIONS OR
OMISSIONS IN PERFORMING TENANT'S OBLIGATIONS, WHETHER CAUSED
BY THE NEGLIGENCE, BUT NOT THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, OF ANY LANDLORD PARTY, OR OTHERWISE.
No repossession or re-entering of all or any part of the Leased
Premises under subparagraphs (b) or (c) above or otherwise and no
re-letting of the Leased Premises or any part thereof under
subparagraph (b) relieves Tenant of any liabilities or obligations
under this Lease, all of which survive repossession or re-entering by
Landlord. No right or remedy of Landlord under this Lease is exclusive
of any other right or remedy. Each right and remedy of Landlord is
cumulative along with all other rights or remedies under this Lease or
now or hereafter existing at law, in equity or by statute. In addition
to other remedies provided in this Lease, Landlord is entitled, to the
extent permitted by Applicable Laws, to injunctive relief in case of
the violation, or attempted or threatened violation, of any of the
terms of this Lease, or to a decree compelling specific performance of
the terms of this Lease. Notwithstanding the foregoing or anything else
to the contrary contained in this Lease, the liability of Tenant for
any default under this Lease is limited to the assets owned by Tenant
in its capacity as a Texas corporation. No Tenant Party has any
personal liability for any amounts payable or obligations performable
by Tenant under this Lease.
28. Notice of Landlord's Default.
If any act or omission by any Landlord Party occurs that would give
Tenant the right to damages from Landlord or the right to terminate
this Lease due to constructive or actual eviction from all or part of
the Leased Premises or otherwise, Tenant may not sue for damages or
exercise any right to terminate or other remedy for Landlord default
until (a) it gives notice of the act or omission to Landlord and
Landlord's mortgagee, if any, whose name and address Landlord has
provided to Tenant, and (b) a period of 30 days following the giving of
the notice, during which time Landlord, its agents, employees, and
mortgagee are entitled to enter the Leased Premises upon prior notice
to Tenant and cure the act or omission. Such 30-day period will be
extended as may be reasonably necessary provided that Landlord, its
agents, employees or mortgagee, as applicable, commences to cure within
such period and proceeds diligently to completion.
INDUSTRIAL LEASE PAGE 19
23
29. No Implied Waiver.
The failure of Landlord to insist at any time upon the strict
performance of any of the terms of this Lease or to exercise any
option, right, power, or remedy contained in this Lease is not a waiver
of the right or remedy for the future. The waiver of any breach of this
Lease or violation of the Rules and Regulations attached to this Lease
does not prevent a subsequent act, which would have originally
constituted a breach or violation, from having all the force and effect
of an original breach or violation. No express waiver affects any terms
other than the ones specified in the waiver and those only for the time
and in the manner specifically stated. Acceptance by Landlord of any
Rent after the breach of any of the terms of this Lease or violation of
any Rule or Regulation is not a waiver of the breach or violation, and
no waiver by Landlord of any of the terms of this Lease is effective
unless expressed in writing and signed by Landlord.
30. WAIVER BY TENANT.
TENANT WAIVES AND SURRENDERS FOR ITSELF AND ALL PERSONS OR ENTITIES
CLAIMING BY, THROUGH, AND UNDER IT, INCLUDING CREDITORS OF ALL KINDS,
ANY RIGHTS, PRIVILEGES, AND LIENS SET OUT UNDER SECTION 91.004 OF THE
TEXAS PROPERTY CODE (AS AMENDED).
31. Legal Fees.
If either party commences legal action concerning the interpretation or
enforcement of this Lease, the prevailing party is entitled to recover
from the losing party the prevailing party's reasonable legal fees.
32. Subordination.
(a) This Lease and all rights of Tenant under this Lease are
subject and subordinate to:
(1) any mortgage or deed of trust now or hereafter
secured by a lien against the Leased Premises;
(2) all increases, renewals, modifications,
consolidations, replacements, and extensions of any
mortgage or deed of trust; and
(3) all leases, restrictions, easements, and encumbrances
recorded in the Real Property Records of Dallas
County, Texas, to the extent they validly affect the
Leased Premises.
Tenant shall, upon demand at any time or times, execute,
acknowledge, and deliver to Landlord, or to Landlord's
mortgagee, any instruments that may be necessary or proper to
more effectively effect or evidence this subordination to any
mortgage or deed of trust.
(b) If any mortgage or deed of trust against the Leased Premises
is foreclosed, Tenant shall, upon request by the purchaser at
the foreclosure sale:
(1) attorn to the purchaser and recognize the purchaser
as "Landlord" under this Lease; and
INDUSTRIAL LEASE PAGE 20
24
(2) execute, acknowledge, and deliver to the purchaser an
instrument in appropriate form acknowledging the
attornment.
(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 or election to terminate or otherwise
adversely affect this Lease and the obligations of Tenant
under this Lease if any foreclosure sale occurs. This Lease is
not affected in any way whatsoever by any foreclosure sale
unless the holder(s) of the indebtedness or other obligations
secured by the mortgages or deeds of trust declare otherwise.
(d) Landlord shall make commercially reasonable efforts to cause
Landlord's first mortgagee to execute and deliver to Tenant a
non-disturbance agreement on the mortgagee's approved form,
but Landlord's failure to obtain a non-disturbance agreement
will not be a default by Landlord under this Lease. Tenant may
directly contact Landlord's first mortgagee at the notice
address specified in Paragraph 1 and request a non-disturbance
agreement, and Landlord will reasonably cooperate with Tenant
with respect to the request.
33. Intentionally Deleted.
34. Rules and Regulations.
All Tenant Parties must comply with the Rules and Regulations (as
changed from time to time as hereinafter provided) attached as EXHIBIT
C. Landlord may at any time change the Rules and Regulations or
promulgate other Rules and Regulations as Landlord deems advisable for
the safety, care, cleanliness, or orderliness of the Leased Premises.
No changes are effective until a copy of the changes is delivered to
Tenant. Tenant is responsible for the compliance with the Rules and
Regulations by all Tenant Parties. Landlord shall use reasonable
efforts uniformly to enforce compliance by all other tenants with the
Rules and Regulations from time to time in effect, but Landlord is not
responsible to Tenant for failure of any person to comply with the
Rules and Regulations. The provisions of this Lease prevail if there is
a conflict with the provisions of the Rules and Regulations.
35. Estoppel Certificate.
Tenant shall, from time to time upon not less than 20 days' prior
notice by Landlord, execute, acknowledge, and deliver to Landlord an
Estoppel Certificate containing certifications relating to this Lease
as requested by Landlord, in a form reasonably required by Landlord.
36. Notices.
All notices, requests, approvals, and other communications required or
permitted to be delivered under this Lease must be in writing and are
effective:
(a) on the business day sent if sent by telecopier prior to 4:00
p.m., Dallas, Texas time, and the sending telecopier generates
a written confirmation of sending;
(b) the next business day after delivery to a
nationally-recognized overnight-courier service for prepaid
overnight delivery;
INDUSTRIAL LEASE PAGE 21
25
(c) 3 days after being deposited in the United States mail,
certified, return receipt requested, postage prepaid; or
(d) upon receipt if delivered personally or by any method other
than those listed above;
in each instance addressed to Landlord or Tenant, as the case may be,
at the address specified in Paragraph 1 of this Lease, or to any other
address either party may designate by 10 days' prior notice to the
other party.
37. Hazardous Substances.
(a) Tenant may not:
(1) cause or permit the escape, disposal, or release in
the Leased Premises of any biologically active,
chemically active, or hazardous substances or
materials (collectively, HAZARDOUS SUBSTANCES); or
(2) bring, or permit any other Tenant Party to bring, any
Hazardous Substances into the Leased Premises.
The term HAZARDOUS SUBSTANCES includes, but is not limited to, those
described in the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq., the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section
6901 et seq., the Texas Water Code, the Texas Solid Waste Disposal Act,
and other applicable existing or future state or local environmental
laws and the regulations adopted under those acts.
(b) Tenant shall execute affidavits, representations, and the like
from time to time at Landlord's re-quest concerning Tenant's
best knowledge and belief regarding the presence of Hazardous
Substances in the Leased Premises.
(c) TENANT SHALL INDEMNIFY AND HOLD ALL LANDLORD PARTIES HARMLESS,
IN THE MANNER PROVIDED IN PARAGRAPH 20 OF THIS LEASE, FROM AND
AGAINST ANY AND ALL CLAIMS ARISING FROM THE STORAGE,
GENERATION, RELEASE, HANDLING, TREATMENT, TRANSPORTATION, OR
DISPOSAL OF ANY HAZARDOUS SUBSTANCES IN OR ON THE LEASED
PREMISES CAUSED OR PERMITTED (WHETHER ACCIDENTAL, INTENTIONAL,
OR NEGLIGENTLY) BY ANY TENANT PARTY. Expenses related to such
Claims may include, without limitation, any and all expenses
(including legal and professional fees) Landlord may incur (i)
to comply with Applicable Laws, (ii) in studying or remedying
any Hazardous Substances in or from the Leased Premises, and
(iii) for any fines, penalties, or other sanctions assessed
upon Landlord.
(d) These covenants survive the expiration or earlier termination
of this Lease.
38. Severability.
Each of the terms of this Lease is, and must be construed to be,
separate and independent. If any of the terms of this Lease or its
application to any person or circumstances is to any extent invalid and
unenforceable, the remainder of this Lease, or
INDUSTRIAL LEASE PAGE 22
26
the application of that term to persons or circumstances other than
those as to which it is invalid or unenforceable, are not affected
thereby.
39. Force Majeure.
When this Lease prescribes a period of time for action to be taken by
either party, then that party is not liable or responsible for, and
there is excluded from the computation for the period of time, any
delays due to strikes, acts of God, shortages of labor or materials,
war, governmental laws, regulations, restrictions, or any other cause
of any kind that is beyond the control of that party. The prior
sentence does not apply to the obligation to pay Rent or any other sum
due under this Lease.
40. Brokerage.
(a) Tenant warrants that it has had no dealings with any broker or
agent in connection with the negotiation or execution of this
Lease other than Landlord's Broker and Tenant's Broker
(collectively, BROKERS). TENANT SHALL INDEMNIFY, DEFEND, AND
HOLD LANDLORD HARMLESS AGAINST ALL COSTS, EXPENSES, LEGAL
FEES, OR OTHER LIABILITY FOR COMMISSIONS OR OTHER COMPENSATION
OR CHARGES CLAIMED BY ANY BROKER OR AGENT OTHER THAN BROKERS
CLAIMING BY, THROUGH, OR UNDER TENANT WITH RESPECT TO THIS
LEASE OR ANY RENEWAL OR EXTENSION OR WITH RESPECT TO ANY
EXPANSION OF THE LEASED PREMISES.
(b) Landlord war-rants that it has had no dealings with any broker
or agent in connection with the negotiation or execution of
this Lease other than Brokers. LANDLORD SHALL INDEMNIFY,
DEFEND, AND HOLD TENANT HARMLESS AGAINST ALL COSTS, EXPENSES,
LEGAL FEES, OR OTHER LIABILITY FOR COMMISSIONS OR OTHER
COMPENSATION OR CHARGES CLAIMED BY ANY BROKER OR AGENT,
INCLUDING BROKERS, CLAIMING BY, THROUGH OR UNDER LANDLORD WITH
RESPECT TO THIS LEASE OR ANY RENEWAL OR EXTENSION OR WITH
RESPECT TO ANY EXPANSION OF THE LEASED PREMISES.
(c) Any brokerage commissions payable to Brokers are payable by
Landlord under the terms of separate agreements between
Landlord and Brokers.
41. Joint and Several Liability.
If there is more than one Tenant, the obligations imposed upon Tenant
under this Lease are joint and several.
42. No Representations.
Landlord and Landlord's agents have made no, and Tenant waives any,
representations or promises with respect to the Leased Premises except
as expressly set forth in this Lease. No rights, easements, or licenses
are acquired by Tenant by implication or otherwise except as expressly
set forth in this Lease.
43. Entire Agreement; Amendments.
This Lease is the entire agreement between the parties. All
negotiations, considerations, representations, and understandings
between Landlord and Tenant are incorporated in
INDUSTRIAL LEASE PAGE 23
27
this Lease. No act or omission of any employee or agent of Landlord or
of Landlord's Broker may alter, change, or modify any of the terms of
this Lease. No amendment or modification of this Lease is binding
unless expressed in a written instrument executed by Landlord and
Tenant.
44. Paragraph Headings.
The paragraph headings in this Lease are for convenience only and in no
way enlarge or limit the scope or meaning of the paragraphs in this
Lease.
45. Binding Effect.
All terms of this Lease are binding upon the respective heirs, personal
representatives, successors, and assigns (to the extent assignment is
permitted) of Landlord and Tenant.
46. Counterparts; Facsimile Signatures.
This Lease may be executed in two or more counterparts, each of which
is deemed an original and all of which together constitute one and the
same instrument. Facsimile signatures are binding upon the party
providing them.
47. Rental Tax.
Tenant shall pay as additional Rent all licenses, charges, and other
fees of every kind and nature as and when they become due arising out
of or in connection with Tenant's use and occupancy of the Leased
Premises, including but not limited to license fees, business license
taxes, and privilege, sales, excise, or other taxes (other than income)
imposed upon Rent or upon services provided by Landlord or upon
Landlord in an amount measured by Rent received by Landlord.
48. Landlord's Lien.
To secure payment of all Rent and any damages or losses Landlord
suffers by reason of the breach by Tenant of this Lease, Tenant grants
to Landlord a security interest in, and an express contractual lien on,
all goods, wares, equipment, fixtures, furniture, improvements, and
other personal property of Tenant presently or hereafter situated in
the Leased Premises (except parts of the property exchanged, replaced,
or sold from time to time in the ordinary course of Tenant's
operations) and all proceeds therefrom. The property may not be removed
from the Leased Premises without the written consent of Landlord until
all arrearages in Rent are paid and any other defaults cured by Tenant.
This security interest is governed by Article 9 of the Texas Business &
Commerce Code (the CODE). Upon request by Landlord, Tenant shall
execute and deliver to Landlord a financing statement in form
sufficient to perfect the security interest of Landlord in the property
and proceeds under the provisions of the Code. The security interest
granted in this Paragraph is in addition to Landlord's statutory and
constitutional liens.
49. Timeliness.
Time is of the essence in the performance of all terms of this Lease.
Landlord and Tenant must strictly conform with all time limits
specified in this Lease.
INDUSTRIAL LEASE PAGE 24
28
50. SECURITY DISCLAIMER.
LANDLORD DOES NOT MAKE, AND TENANT WAIVES, ANY GUARANTY OR WARRANTY,
EXPRESSED OR IMPLIED, WITH RESPECT TO SECURITY AT OR IN THE LEASED
PREMISES, OR THAT ANY SECURITY MEASURES WILL PREVENT OCCURRENCES OR
CONSEQUENCES OF CRIMINAL ACTIVITY. TENANT ACKNOWLEDGES THAT ANY
MECHANICAL SECURITY DEVICES CAN BE RENDERED INOPERATIVE AT ANY TIME.
LANDLORD IS NOT RESPONSIBLE FOR A TEMPORARY FAILURE OF SUCH DEVICES.
LANDLORD DOES NOT MAKE, AND TENANT WAIVES, ANY GUARANTY OR WARRANTY
THAT THE PRESENCE OF ANY SECURITY MEASURE AT OR IN THE LEASED PREMISES
IN ANY WAY INCREASES THE PERSONAL SECURITY OF ANY TENANT PARTY OR ITS
PROPERTY. LANDLORD PARTIES ARE NOT LIABLE TO ANY TENANT PARTY FOR ANY
INJURY, DAMAGE OR LOSS WHATSOEVER WHICH IS CAUSED (a) AS A RESULT OF
ANY PROBLEM, DEFECT, MALFUNCTION OR THE FAILURE OF THE PERFORMANCE OF
ANY SECURITY MEASURE OR (b) BY ANY PERSON ENGAGING IN CRIMINAL
ACTIVITY.
51. Signage.
Tenant may erect one sign in good taste only on the front face of the
entrance canopy or sign plaque of the Building, (or such other location
as may be designated or approved in writing by Landlord), subject to
all applicable laws, deed restrictions and regulations. Tenant shall
obtain and provide to Landlord copies of all necessary permits for
installation of the sign. The composition, location, and manner of
installation of the sign shall be subject to Landlord's approval for
the purposes of maintaining safety, architectural continuity,
compliance with law, and quality of design. The sign may not be
attached to the Building or canopy at right angles suspended by guy
wires, but rather shall be attached flush to the Building or canopy in
a safe and secure manner. The sign shall advertise Tenant's business
only; no revenue-producing advertising shall be placed on the Building
without express written consent of Landlord. Tenant shall not paint any
signs directly on the walls of the Building or otherwise deface, damage
or overload the Building. Tenant may place lettering upon the entrance
doors or upon the plate glass windows of the Leased Premises; provided,
however, that the lettering shall not exceed six inches in height and
shall be subject to Landlord's written approval. Tenant shall maintain
all signage in good condition and repair at all times. Tenant shall
remove all signs at the termination of this Lease at Tenant's sole risk
and expense and shall in a workmanlike manner properly repair any
damage and close any holes caused by the removal.
52. Execution and Approval of Lease.
Employees and agents of Landlord and of Landlord's Broker have no
authority to make or agree to make a lease or any other agreement or
undertaking in connection herewith. The submission of this Lease for
examination and negotiation is not an offer to lease or option to lease
the Leased Premises. This Lease is effective and binding on Landlord
only upon the execution and delivery of this Lease by Landlord and
Tenant. If Landlord's mortgagee requires any modifications of the terms
of this Lease as a condition to approving this Lease, other than a
modification of the Base Rent, then Tenant shall, within 10 days after
receipt of Landlord's demand, execute and deliver any required
modifications that do not materially increase Tenant's obligations or
materially decrease Tenant's rights under this Lease, and which are not
reasonably prohibited by Tenant's lender.
INDUSTRIAL LEASE PAGE 25
29
53. Leasehold Mortgages.
Tenant may, at any time and from time to time with Landlord's prior
written consent (which shall not be unreasonably withheld), mortgage,
encumber, assign, and hypothecate by mortgage, deed of trust, or
similar instrument (a MORTGAGE) all or any portion of Tenant's right,
title, and interest in the Leased Premises, and Tenant may grant or
pledge security interests and liens (collectively, LIENS) upon and
against any of Tenant's inventory, fixtures, machinery, equipment, and
other personal property located in the Leased Premises, to a lender or
lenders (or their successors) (collectively, MORTGAGEE). Except as
expressly provided in this Lease, the Mortgage and Liens and all rights
thereunder shall be subordinate to this Lease and subject to each and
every covenant, condition, and restriction of this Lease, and shall be
subject to all rights and interests of Landlord in the Leased Premises
and under this Lease.
54. Governing Law; Venue.
This Lease shall be governed by, and construed in accordance with, the
laws of the State of Texas, without regard to choice of law principals.
By entering into this Lease, Tenant consents to the jurisdiction of the
courts of the State of Texas for any and all purposes related to or
arising out of this Lease. The subject property of this Lease is real
property located in Dallas County, Texas, and this Lease is performable
only in Dallas County, Texas.
55. The Existing Lease.
This Lease supersedes and replaces the Existing Lease as of the
Commencement Date, except with respect to the provisions in the
Existing Lease relating to the payment of ad valorem taxes and
insurance, as described in Paragraph 11(b) above.
56. Exhibits.
All exhibits attached to this Lease are incorporated into and made a
part of this Lease as if set forth in the body of this Lease.
[SIGNATURES ON FOLLOWING PAGE.]
INDUSTRIAL LEASE PAGE 26
30
This Lease is executed in multiple originals as of the date
first above set forth.
LANDLORD:
PARKER METROPOLITAN, L.P.,
a Texas limited partnership
By: Parker (Texas) Metropolitan, Inc., a Texas
corporation, its general partner
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
TENANT:
Home Interiors & Gifts, Inc.,
a Texas corporation
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
INDUSTRIAL LEASE PAGE 27