EXHIBIT 10.84
OFFICE LEASE
THIS OFFICE LEASE (this "Lease") is made as of the 1st day of August,
2004, by and between Cocanougher Asset #1, Ltd., a Texas Limited Partnership
("Landlord"), and the Tenant named below.
WITNESSETH:
1. BASIC PROVISIONS.
(a) Tenant: Funimation Productions, Ltd.
6851 N.E. Loop 820, Suite 247
North Richland Hills, Texas 76180
(b) Building: Office Building located at:
6851 N.E. Loop 820
North Richland Hills, Texas 76180
(c) Premises: Suite 400, on the fourth floor of
the Building.
Approximate Rentable Area of the
Premises: 15,681 square feet.
Approximate Rentable Area of the
Building: 60,405 square feet.
(d) Basic Rental: Months 1-60: $11.107.38 per month;
annual rental rate per square foot of
Rentable Area: $ 8.50.
(e) Security Deposit: $ NONE.
(f) Lease Term: FIVE years.
(g) Estimated
Commencement Date: August 1, 2004.
(h) Operating Expense Stop: $ NONE.
(i) Permitted Use: General office use, but excluding any
use for a bank, savings bank, savings
and loan, credit union or other
similar use that includes any retail
banking operations, including
automated teller machines and night
depositories.
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2. LEASE GRANT. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the Premises described above, which will consist of
approximately 15,681 square feet of Rentable Area (herein so called) located on
the fourth floor of the building described above (the "Building"), as shown in
Exhibit A-l attached hereto. The Premises are located in the Building which is
located on the real property described in Exhibit A-2 attached hereto (the
"Land"). The Land, the Building, the parking facilities and other structures and
improvements, landscaping, fixtures, appurtenances and other common areas now or
hereafter placed, constructed or erected thereon, comprise the project (the
"Project"). Tenant is hereby granted a nonexclusive right to use the Common
Areas during the term of this Lease for their intended purposes, in common with
others, subject to the terms and conditions of this Lease, including, without
limitation, the rules and regulations promulgated by Landlord. "Common Areas"
will mean all areas, spaces, facilities, and equipment (whether or not located
within the Building) made available by Landlord for the common and joint use of
Landlord, Tenant and others, including, but not limited to, tunnels, walkways,
sidewalks and driveways necessary for access to the Building, Building lobbies,
landscaped areas, enclosed mall areas, loading areas, public corridors, public
rest rooms, Building stairs and elevators, drinking fountains and such other
areas and facilities, if any, as are designated by Landlord from time to time as
Common Areas. "Service Areas" will refer to areas, spaces, facilities and
equipment serving the Building (whether or not located within the Building) but
to which Tenant and other occupants of the Building will not have access,
including, but not limited to, mechanical, telephone, electrical and similar
rooms, and air and water refrigeration equipment. This Lease is granted subject
to the terms hereof, the rights and interests of third parties under existing
liens, ground leases, easements and encumbrances affecting such property, all
zoning regulations, rules, ordinances, building restrictions and other laws and
regulations now in effect or hereafter adopted by any governmental authority
having jurisdiction over the Project or any part thereof.
3. LEASE TERM. This Lease shall be for the term of years described
above, commencing on the earlier of (a) the Estimated Commencement Date set
forth in Paragraph 1, (g) ten (10) days after Landlord's substantial completion
of the Finish Work, as such term is defined in the Construction Agreement (as
defined in Paragraph 4), or (c) the date on which Tenant in fact occupies the
Premises for the conduct of business. The date the Lease Term commences shall be
referred to in this Lease as the "Commencement Date". If the Lease Term expires
on a date other than the last day of a calendar month, Landlord and Tenant shall
be deemed to have agreed that the Lease Term shall be extended through the last
day of the calendar month in which the expiration date falls (the "Expiration
Date"). On the Commencement Date and as often thereafter as may be requested by
Landlord, Tenant will, within ten (10) days after request from Landlord,
execute, acknowledge, and deliver to Landlord a statement in the form of Exhibit
B attached hereto.
4. CONSTRUCTION. In the event any construction of tenant improvements
is necessary for the Premises, such construction will be accomplished and the
cost of such construction will be paid in accordance with a separate
"Construction Agreement" (herein so called) between Landlord and Tenant. Except
as expressly provided in this Lease or in the Construction Agreement, if any,
Tenant acknowledges that Landlord has not undertaken to perform any
modification, alteration or improvement to the Premises.
5. TENANT'S BASIC RENTAL OBLIGATION. Beginning on the Commencement
Date, all Basic Rental and Additional Rent (the "Rent") shall be paid monthly
by Tenant to Landlord in advance on or
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before the first day of each calendar month during the Lease Term, without
demand, deduction or setoff. All Rent and other payments which are due hereunder
shall be made payable to Landlord. Tenant agrees to pay said rental and other
payments to Landlord at Cocanougher Asset #1, Ltd., 6851 N.E. Loop 820, Suite
247, North Richland Hills, Texas 76180, or at such other place as may from time
to time be designated in writing by Landlord, in lawful money of the United
States of America without any prior demand therefor and without any deduction or
setoff whatsoever. If the day on which Rent is first due is other than the first
day of a calendar month, Rent for such partial month shall be prorated on a
daily basis.
6. TENANT'S ADDITIONAL RENTAL OBLIGATIONS.
(a) Additional Rental. Beginning on the Commencement Date, Tenant
shall pay to Landlord each calendar year the Additional Rental (herein so
called) equal to Tenant's proportionate share of (i) the Actual Operating
Expenses (defined below) for the Project for such calendar year in excess
of (ii) the Operating Expense Stop multiplied by the number of square feet
of Rentable Area in the Building. Additional Rental shall be prorated on a
daily basis for each partial calendar year in the Lease Term. Tenant's
proportionate share shall be based on the ratio which the Rentable Area in
the Premises (adjusted for office expansions) bears to the Rentable Area
within the Building. Rentable Area of the Premises and Rentable Area of
the Building shall be computed in accordance with Paragraph 19(x).
(b) Adjustment of Actual Operating Expenses. Notwithstanding any
language herein to the contrary, if the Building is not fully occupied
during any calendar year of the Lease Term, Actual Operating Expenses
shall be determined as if the Building had been fully occupied during such
year. For the purposes of this Lease, "fully occupied" shall mean
occupancy of one hundred percent (100%) of the Rentable Area in the
Building.
(c) Actual Operating Expenses Enumerated. Actual Operating Expenses
shall include all expenses, costs and disbursements of every kind and
nature incurred or paid by Landlord in connection with the ownership
and/or the operation, maintenance, repair and security of the Project,
including, without limitation, expenses for the following:
(i) garbage and waste disposal;
(ii) janitorial service and window cleaning for the Building
and the Common Areas and Service Areas (including materials,
supplies, Building Standard light bulbs and ballasts, equipment and
tools therefor and rental and depreciation costs related to any of
the foregoing) or contracts with third parties to provide same (the
term "Building Standard" as used herein shall mean the type, brand
and/or quality of materials Landlord designates from time to time to
be the minimum quality to be used in the Building or the exclusive
type, grade or quality of material to be used in the Building);
(iii) security;
(iv) insurance premiums (including, without limitation,
property, liability and
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any other types of insurance carried by Landlord with respect to the
Building and the Common Areas and Service Areas, the costs of which
may include an allocation of a portion of the premium of a blanket
insurance policy maintained by Landlord);
(v) real estate taxes, assessments, business taxes, excises,
and any other governmental levies and charges of every kind and
nature whatsoever, general and special, extraordinary and ordinary,
foreseen and unforeseen, which may during the Lease Term be levied
or assessed against, or arising in connection with the ownership,
use, occupancy, operation or possession of, the Building and the
Common Areas and Service Areas, or any part thereof, or substituted,
in whole or in part, for a real estate tax, assessment, excise or
governmental charge or levy previously in existence, by any
authority having the direct or indirect power to tax, including
interest on installment payments and all costs and fees (including
attorneys' fees) incurred by Landlord in contesting or negotiating
with taxing authorities as to same, but excluding any inheritance,
estate, succession, transfer, gift, franchise, corporation, income
or profits tax imposed upon Landlord; provided, however, Landlord
will have the option to pay any of the foregoing as rentals under a
ground lease arrangement with the fee simple titleholder to the land
upon which the Building is, or is to be, constructed;
(vi) water and sewer charges and any add-ons;
(vii) operation, maintenance, and repair (to include
replacement of components) of the Building, including but not
limited to all floor, wall and window coverings and personal
property in the Common Areas, Building systems (such as heat,
ventilation and air conditioning systems), elevators, escalators,
and all other mechanical or electrical systems seeing the Building
and the Common Areas and Service Areas and service agreements for
all such systems and equipment;
(viii) any ground lease relating to the Project or easement
maintained for the benefit of the Project;
(ix) license, permit and inspection fees;
(x) compliance with any fire safety or other governmental
rules, regulations, laws, statutes, ordinances or requirements,
imposed by any governmental authority or insurance company with
respect to the Building during the Lease Term;
(xi) wages, salaries, employee benefits and taxes (or an
allocation of the foregoing) for personnel working full or part time
in connection with the operation, maintenance and management of the
Building and the Common Areas and Service Areas;
(xii) accounting and legal services (but excluding legal
services in connection with negotiations and disputes with specific
tenants unless the matter involved affects all tenants of the
Building);
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(xiii) administrative and management fees for the Building and
Landlord's overhead expenses directly attributable to the Building,
including without limitation, the cost of an office in the Building
maintained for management of the Project;
(xiv) indoor and outdoor landscaping;
(xv) depreciation (or amortization) of Required Capital
Improvements and Cost Savings Improvements. "Required Capital
Improvements" will mean capital improvements or replacements made in
or to the Building in order to conform to any Applicable Law. "Cost
Savings Improvements" will mean any capital improvements or
replacements which are intended to reduce, stabilize or limit
increases in Actual Operating Expenses. The cost of Cost Savings
Improvements will be amortized by spreading such costs uniformly
over a term equal to the lesser of (a) the period of years over
which the amount by which Actual Operating Expenses are reduced
would be equal to the cost of such installation or (b) ten (10)
years. The cost of Required Capital Improvements and depreciable (or
amortizable) maintenance and repair items (e.g., painting of Common
Areas, replacement of carpet in elevator lobbies), will be amortized
by spreading such costs uniformly over a term equal to the lesser of
(A) the period employed by Landlord for federal income tax purposes
or (B) ten (10) years;
(xvi) Interest (at an annual rate equal to the lesser of (A)
two percent (2%) over the "base" or "prime" rate published from time
to time by Citibank, N.A., or (B) the maximum lawful rate) upon the
undepreciated (or unamortized) balance of the original cost of items
which the Landlord is entitled to depreciate (or amortize) as an
Actual Operating Expense;
(xvii) expenses and fees (including attorneys' fees) incurred
contesting the validity or applicability of any governmental
enactments which may affect Actual Operating Expenses; and
(xviii) the costs incurred by Landlord for (A) any and all
forms of fuel or energy utilized in connection with the operation,
maintenance, and use of the Project, (B) sales, use, excise and
other taxes assessed by governmental authorities on energy sources
supplied to the Project, and (C) other costs of providing energy to
the Project.
(d) Exclusions from Actual Operating Expenses. Actual Operating
Expenses shall exclude the following:
(i) leasing commissions, attorneys' fees, costs and
disbursements and other expenses incurred in connection with
leasing, renovating or improving space for tenants or prospective
tenants of the Building;
(ii) costs (including permit, license and inspection fees)
incurred in renovating or otherwise improving or decorating,
painting or redecorating space for tenants or vacant
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space;
(iii) Landlord's costs of any services sold to tenants for
which Landlord is entitled to be reimbursed by such tenants as an
additional charge or rental over and above the Basic Rental and
Actual Operating Expenses payable under the lease with such tenant
or other occupant;
(iv) any depreciation and amortization on the Building except
as expressly permitted herein;
(v) costs incurred due to violation by Landlord of any of the
terms and conditions of this Lease or any other lease relating to
the Building;
(vi) interest on debt or amortization payments on any
mortgages or deeds of trust or any other debt for borrowed money,
except as included in subparagraph (c)(xvi) above;
(vii) all items and services for which Tenant reimburses
Landlord outside of Actual Operating Expenses or pays third persons
or which Landlord provides selectively to one or more tenants or
occupants of the Building (other than Tenant) without reimbursement;
(viii) repairs or other work occasioned by fire, windstorm or
other work paid for through insurance or condemnation proceeds; and
(ix) repairs resulting from any defect in the original design
or construction of the Building.
(e) Credits. Landlord will credit against Actual Operating Expenses
any refunds received as a result of tax contests, after deduction for
Landlord's costs in connection with same.
(f) Discretionary Items. The foregoing provisions of this Paragraph
6 will not be deemed to require Landlord to furnish or cause to be
furnished any service or facility not otherwise required to be furnished
by Landlord pursuant to the provisions of this Lease, although Landlord,
in Landlord's absolute discretion, may choose to do so from time to time.
(g) Estimated Actual Operating Expenses. Landlord shall have the
right to estimate Additional Rental to accrue hereunder and Tenant shall
pay to Landlord one-twelfth (1/12) of the amount of such estimate monthly
with each of Tenant's Basic Rental payments. If Landlord estimates
Additional Rental in advance, then by each April 1 or as soon thereafter
as practical, Landlord shall furnish to Tenant a statement of Landlord's
Actual Operating Expenses for the previous calendar year. If for any
calendar year Tenant's Additional Rental collected for the prior year, as
a result of payment of Tenant's estimated Additional Rental, is in excess
of Tenant's Additional Rental actually due during such prior year, then,
so long as Tenant is not in default
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hereunder, Landlord shall refund to Tenant any overpayment (or, at
Landlord's option, apply such amount against rentals due or to become due
hereunder). Likewise, Tenant shall pay to Landlord, on demand, any
underpayment with respect to the prior year, which obligation of Tenant
shall survive the expiration or earlier termination of this Lease.
7. LANDLORD'S OBLIGATIONS.
(a) Water, Heat, Air Conditioning, Janitorial and Elevator Service
and Maintenance Obligations. Subject to the limitations hereinafter set
forth, Landlord agrees to furnish Tenant while occupying the Premises and
while Tenant is not in default under this Lease: (i) water (hot and cold)
at those points of supply provided for general use of tenants of the
Building; (ii) Building Standard heat and air conditioning in season, as
determined by Landlord, weekdays (other than holidays) between 7:00 a.m.
and 6:00 p.m., at such temperatures and in such amounts as are reasonably
considered by Landlord to be standard (Landlord shall only furnish heat
and air conditioning weekdays after 6:00 p.m., on Saturdays and on Sundays
and holidays at the written request of Tenant (which must be received by
Landlord at least twenty-four (24) hours in advance, but no later than
12:00 noon of the preceding Friday, if the request is for Saturday, Sunday
or a holiday), and at Tenant's cost payable within fifteen (15) days after
receipt of an invoice); (iii) Building Standard janitorial service on
weekdays other than holidays for Building installations and Building
Standard window washing; (iv) operatorless passenger elevators for ingress
and egress to the floor on which the Premises are located; and (v)
replacement of Building Standard light bulbs and fluorescent tubes, but
Landlord's standard charge for such bulbs and tubes shall be paid by
Tenant. Landlord additionally agrees to maintain in the Building the
exterior walls, roof, windows, structural steel, load-bearing nondemising
walls, floors below the level of Tenant's floor covering and the HVAC,
electrical and plumbing systems serving the Premises, but located outside
the Premises, subject to the terms and conditions of this Lease which may
limit Landlord's maintenance, repair and rebuilding obligations under
various circumstances.
(b) Electrical Service. Tenant's use of electrical services
furnished by Landlord shall be subject to the following:
(i) Landlord shall not be required to furnish electrical
current for computers, electronic data processing equipment, special
lighting, equipment that requires more than 110 volts, or any other
equipment whose electrical energy consumption exceeds normal office
usage.
(ii) The amount of electricity consumed by Tenant shall be
determined, at the election of Landlord, either (A) based upon a
survey performed by a reputable consultant to be selected by
Landlord and paid by Tenant, or (B) through a separate meter to be
installed, maintained and read by Landlord at the sole cost of
Tenant.
(iii) If Tenant's requirements for or consumption of
electrical services exceeds the usage amount specified in Paragraph
7(b)(i) hereof, then Tenant shall remove such equipment and/or
lighting to achieve compliance within ten (10) days after receiving
notice
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from Landlord. Notwithstanding the foregoing sentence, such
equipment and/or lighting may remain in the Premises, subject to
Landlord's prior written approval and subject to the following
terms:
(A) Tenant shall pay for all costs of installation and
maintenance of submeters, wiring, air conditioning and other
items required by Landlord, in Landlord's discretion, to
accommodate Tenant's excess design loads and capacities.
(B) Tenant shall pay to Landlord, upon demand, the cost
of the excess demand and consumption of electrical service at
rates determined by Landlord which shall be in accordance with
any Applicable Laws.
(C) Landlord may, at its option, upon not less than
thirty (30) days prior written notice to Tenant, discontinue
the availability of such extraordinary electrical service. If
Landlord gives any such notice, Tenant shall contract directly
with the public utility for the supplying of such electrical
service to the Premises.
(c) Interruption of Services. Failure to any extent to make
available, or any slow-down, stoppage or interruption of any services
described in this Paragraph 7 resulting from any cause whatsoever (other
than Landlord's gross negligence) shall not render Landlord liable in any
respect for damages, nor be construed as an eviction of Tenant, nor
relieve Tenant from fulfillment of any covenant or agreement hereof.
Should any service being furnished by Landlord be interrupted for any
cause whatsoever, Tenant shall notify Landlord and Landlord shall use
reasonable diligence to restore such service promptly.
(d) Discontinuance of Service. Landlord reserves the right, upon not
less than thirty (30) days written notice to Tenant, to discontinue the
availability of electrical service to the Premises. If Landlord elects
such option, Tenant will contract directly with such public utility for
the continuance of service to the Premises.
8. TENANT'S COVENANTS. Tenant covenants and agrees as follows:
(a) Alterations. Tenant shall make no alterations, changes or
improvements to the Premises without first submitting to Landlord plans
and specifications and obtaining the prior written consent of Landlord.
All work done by Tenant shall be performed in a good and workmanlike
manner by a contractor approved by Landlord, in compliance with Applicable
Laws and at such times and in such manner as not to cause interference
with construction in progress or with other tenants in the Building.
(b) Mechanic's and Materialmen's Liens. Tenant shall have no
authority or power, express or implied, to create or cause any mechanic's
or materialmen's lien, charge or encumbrance of any kind against the
Premises, the Building or the Project or any portion thereof. Tenant shall
promptly cause any such liens which have arisen by reason of any work or
materials, claimed to have been provided to or undertaken by or through
Tenant to be released by payment, bonding or
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otherwise within thirty (30) days after request by Landlord, and Tenant
shall indemnify Landlord against losses arising out of any such claim.
Tenant's indemnification of Landlord contained in this Paragraph 8(b)
shall survive the expiration or earlier termination of this Lease.
(c) Permitted Use of Premises. Tenant shall not permit the Premises
to be used for any purpose other than for the use specified in Paragraph 1
of this Lease. Tenant will, at Tenant's sole cost, promptly comply with
all Applicable Laws. The judgment of any court of competent jurisdiction
or the admission of Tenant in any action against Tenant, whether Landlord
is a party thereto or not, that Tenant has violated any Applicable Law
will be conclusive of that fact between Landlord and Tenant. Tenant will
conduct its business and occupy the Premises and will control its agents,
employees, licensees and invitees in such a manner so as not to create any
nuisance or interfere with, annoy or disturb any of the other tenants in
the Building or Landlord in its management of the Building and so as not
to injure the reputation of the Building.
(d) Repairs. Tenant will not in any manner deface or injure the
Building, and will pay the cost of repairing and replacing any damage or
injury done to the Building or any part thereof by Tenant or Tenant's
agents, contractors or employees. Tenant shall throughout the Lease Term
keep the Premises free from deterioration, waste and nuisance of any kind,
excluding (i) ordinary and customary wear and tear, and (ii) damage
resulting from a fire or other casualty not caused by the act or omission
of Tenant or Tenant's agents, contractors or employees. Tenant agrees to
keep the Premises in good condition and repair and Tenant shall make all
necessary repairs and replacements. If Tenant fails to make such repairs
or replacements within fifteen (15) days after notice from Landlord,
Landlord may at its option make such repairs or replacements, and Tenant
shall upon demand pay Landlord for the cost thereof.
(e) Security. Tenant shall take all reasonable steps necessary to
adequately secure the Premises from unlawful intrusion, theft, fire and
other hazards, and shall keep and maintain all security devices in or on
the Premises in good working order, including, but not limited to, locks,
smoke detectors and burglar alarms, and shall cooperate with Landlord and
other tenants in the Building with respect to Building security matters.
9. ASSIGNMENT AND SUBLETTING.
(a) Assignment and Subletting. Tenant shall not sublet the Premises
in whole or in part or market the Premises for sublease and shall not
sell, assign or in any manner transfer this Lease or any interest herein,
directly or indirectly (by transfer of control of Tenant, for example), or
voluntarily or by operation of law or otherwise, or permit any transfer of
Tenant's interest created hereby, or allow any lien upon Tenant's interest
by operation of law or otherwise, or permit the use or occupancy of the
Premises or any part thereof, by anyone other than Tenant, nor shall
Tenant sublease space in the Building from another tenant thereof, without
Landlord's prior written consent. If this Lease or any interest in this
Lease is sold, assigned or transferred, or Tenant subleases any part of
the Premises, without Landlord's consent, Landlord may, cumulative of any
other right or remedy available to Landlord, elect to terminate this Lease
(as it affects the portion of the Premises sought to be sublet or
assigned) as of the effective date of the proposed transfer.
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Landlord's acceptance of any name for listing on the Building directory
will not be deemed, nor will it substitute for, Landlord's consent, as
required by this Lease, to any sublease, assignment or other occupancy of
the Premises.
(b) Consent to Assignment. Consent by Landlord to one or more
assignments or sublettings shall not operate as a waiver of Landlord's
rights as to any subsequent assignments and sublettings. Notwithstanding
any assignment or subletting, Tenant and any guarantor of Tenant's
obligations under this Lease shall at all times remain fully responsible
and liable for the payment of the rent and other sums herein specified and
for compliance with all of Tenant's other obligations under this Lease,
and Landlord may proceed against Tenant (or any guarantor) for the
enforcement of such obligations without first proceeding against any other
party. No direct collection by Landlord from any such assignee or
sublessee shall be construed to constitute a release of Tenant or any
guarantor of Tenant from the further performance of its obligations
hereunder. If the proposed sublessee or assignee is subject to compliance
with additional requirements under The Americans with Disabilities Act
beyond those requirements which are applicable to the Tenant desiring to
sublet or assign, Landlord may condition Landlord's consent upon receipt
of (i) plans and specifications acceptable to Landlord for complying with
the additional requirements, and (ii) security acceptable to Landlord that
such construction will be completed timely and lien-free. In addition, any
rights which Tenant may have relating to the renewal or extension of the
Lease or the expansion of the Premises, if any, are personal to Tenant and
shall not be available to any proposed or actual sublessee, assignee or
transferee.
(c) Excess Rents. If any rents or other sums received by Tenant
under any sublease are in excess of the rent and other sums payable by
Tenant under this Lease (prorated for a sublease of less than one hundred
percent (100%) of the Premises), or if any additional consideration is
paid to Tenant by any assignee under any assignment, then such excess
rents under any sublease or such additional consideration under any
assignment shall be paid by Tenant to Landlord as additional rent
hereunder within ten (10) days after Tenant receives the same.
(d) Landlord's Right to Transfer. Landlord shall have the right to
transfer, assign and convey, in whole or in part, the Building and any and
all of its rights under this Lease, and in such event, Landlord shall
thereby be released from any further obligations hereunder, and Tenant
agrees to look solely to such successor-in-interest of Landlord for
performance of such obligations.
10. INDEMNITY AND INSURANCE.
(a) Indemnity. Tenant hereby agrees to indemnify, protect, defend
and hold harmless Landlord and its partners, affiliated companies,
officers, directors, shareholders, employees, agents and attorneys
(collectively, "Indemnities") for, from and against all liabilities,
claims, fines, penalties, costs, damages or injuries to persons, damages
to property, losses, liens, causes of action, suits, judgments and
expenses (including court costs, attorneys' fees and costs of
investigation), of any nature, kind or description of any person or
entity, directly or indirectly arising out of, caused by, or resulting
from (in whole or part) (1) Tenant's construction of or Use, occupancy or
enjoyment of the Premises, (2) any activity, work or other things done,
permitted or
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suffered by Tenant and its agents and employees in or about the Premises, (3)
any breach or default in the performance of any obligation on Tenant's part to
be performed under the terms of this Lease including, but not limited to,
Tenant's security obligations set forth in Paragraph 8(e) of this Lease, (4) any
act, omission, negligence or willful misconduct of Tenant or any of its agents,
contractors, employees, business invitees or licensees, or (5) damage to
Tenant's property, or the property of Tenant's agents, employees, contractors,
business invitees or licensees, located in or about the Premises (collectively,
"Liabilities"), EVEN IF SUCH LIABILITIES ARE CAUSED SOLELY OR IN PART BY THE
NEGLIGENCE OF LANDLORD OR ANY OTHER INDEMNITEE, BUT NOT IF SUCH LIABILITIES ARE
CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD OR ANY OTHER
INDEMNITEE. Tenant shall promptly advise Landlord in writing of any action,
administrative or legal proceeding or investigation as to which this
indemnification may apply, and Tenant, at Tenant's expense, shall assume on
behalf of Landlord (and the other Indemnities) and conduct with due diligence
and in good faith the defense thereof with counsel satisfactory to Landlord;
provided, however, that any Indemnitee shall have the right at its option, to be
represented therein by advisory counsel of its own selection and at its own
expense. In the event of failure by Tenant to fully perform in accordance with
this Paragraph 10(a), Landlord, at its option, and without relieving Tenant of
its obligations hereunder, may so perform, but all costs and expenses so
incurred by Landlord in that event shall be reimbursed by Tenant to Landlord,
together with interest on the same from the date any such expense was paid by
Landlord until reimbursed by Tenant, at the rate of interest provided to be paid
on judgments, by the law of the jurisdiction to which the interpretation of this
Lease is subject. This indemnification shall not be limited to damages,
compensation or benefits payable under insurance policies, workers' compensation
acts, disability benefit acts or other employees' benefit acts and shall survive
the expiration or earlier termination of this Lease.
(b) Insurance.
(i) Tenant at all times during the Lease Term shall, at its
own expense, keep in full force and effect (A) commercial general
liability insurance providing coverage against bodily injury and
disease, including death resulting therefrom, personal injury and
property damage to a combined single limit of $3,000,000 to one or more
than one person as the result of any one accident or occurrence, which
shall include provision for contractual Liability coverage insuring
Tenant for the performance of its indemnity obligations set forth in
Paragraphs 10(a) and 18 of this Lease, (B) worker's compensation
insurance to the statutory limit and employer's liability insurance to
the limit of $500,000 per occurrence, and (C) all risk personal
property insurance covering full replacement value of all of Tenant's
personal property. Landlord shall be named an additional insured on
each of said policies (excluding the worker's compensation policy) and
said policies shall be issued by an insurance company or companies
acceptable to Landlord. Each of said policies shall also include a
waiver of subrogation provision or endorsement in favor of Landlord,
and an endorsement providing that Landlord shall receive ninety (90)
days prior notice of any cancellation of, non-renewal of, reduction of
coverage or material change in coverage on said policies. Tenant hereby
waives its right of recovery of any amounts paid by Tenant or
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on Tenant's behalf to satisfy applicable worker's compensation laws.
The policies or duly executed certificates for the same, together with
satisfactory evidence of the payment of the premiums therefor, shall be
deposited with Landlord on the date Tenant first occupies the Premises
and upon renewals of such policies not less than fifteen (15) days
prior to the expiration of the term of such coverage.
(ii) It is expressly understood and agreed that the coverages
required represent Landlord's minimum requirements and such are not to
be construed to void or limit Tenant's indemnity obligations in this
Lease. Neither shall (A) the insolvency, bankruptcy or failure of any
insurance company carrying Tenant, (B) the failure of any insurance
company to pay claims occurring nor (C) any exclusion from or
insufficiency of coverage be held to affect, negate or waive any of
Tenant's indemnity obligations under Paragraphs 10(a) and 18 or any
other provision of this Lease. With respect to insurance coverages,
except worker's compensation, maintained hereunder by Tenant and
insurance coverage separately obtained by Landlord, all insurance
coverages afforded by policies of insurance maintained by Tenant shall
be primary insurance as such coverages apply to Landlord, and such
insurance coverages separately maintained by Landlord shall be excess,
and Tenant shall have its insurance policies endorsed to reflect that
policies maintained by Tenant naming Landlord as an additional insured
are primary, and policies separately maintained by Landlord are excess.
The amount of liability insurance under insurance policies maintained
by Tenant shall not be reduced by the existence of insurance coverage
under policies separately maintained by Landlord. Tenant shall be
solely responsible for any premiums, assessments, penalties, deductible
assumptions, retentions, audits, retrospective adjustments or any other
kind of payment due under its policies.
(iii) Tenant's occupancy of the Premises without delivering
the certificates of insurance shall not constitute a waiver of Tenant's
obligations to provide the required coverages. If Tenant provides to
Landlord a certificate that does not evidence the coverages required
herein, or that is faulty in any respect, such shall not constitute a
waiver of Tenant's obligations to provide the proper insurance.
(c) Mutual Waivers of Recovery. It is the intent of Landlord and Tenant
not to hold each other responsible for that portion of any loss or damage paid
or reimbursed by an insurer of Landlord or Tenant under any fire, extended
coverage or other property insurance policy maintained by Tenant with respect to
its Premises or by Landlord with respect to the Building. Therefore, with
respect to the amount of any damage, loss, claim or liability paid or reimbursed
by an insurer under any fire, extended coverage or property insurance policy
maintained by Tenant with respect to Premises, or Landlord with respect to the
Building, Landlord, Tenant and all parties claiming under them each mutually
release and discharge each other from such damages, losses, claims or
liabilities, no matter how caused, including negligence, and each waives any
right of recovery from the other including, but not limited to, claims for
contribution or indemnity, which might otherwise exist on account thereof. Any
fire, extended coverage or property insurance policy maintained by Tenant with
respect to the Premises, or Landlord with respect to the Building, shall
contain, in the case of Tenant's policies, a waiver of subrogation provision or
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endorsement in favor of Landlord, and in the case of Landlord's policies,
a waiver of subrogation provision or endorsement in favor of Tenant, or,
in the event that such insurers cannot or will not include or attach such
waiver of subrogation provision or endorsement, Tenant and Landlord shall
obtain the approval and consent of their respective insurers, in writing,
to the terms of this Lease. Neither Tenant nor its insurers shall be
entitled to receive any contribution from any insurance policies
separately maintained by Landlord, and Tenant agrees to indemnify,
protect, defend and hold harmless Landlord and any of Landlord's insurers
from any claim, suit or cause of action asserted or brought by Tenant's
insurers for, on behalf of, or in the name of Tenant, including but not
limited to, claims for contribution, indemnity or subrogation. The mutual
releases, discharges and waivers contained in this provision shall apply
EVEN IF THE LOSS OR DAMAGE TO WHICH THIS PROVISION APPLIES IS CAUSED
SOLELY OR IN PART BY THE NEGLIGENCE OF LANDLORD OR TENANT.
(d) Business Interruption. Landlord shall not be responsible for,
and Tenant releases and discharges Landlord from, and Tenant further
waives any right of recovery from Landlord for, any loss from business
interruption or loss of use of the Premises suffered by Tenant in
connection with Tenant's use or occupancy of the Premises, EVEN IF SUCH
LOSS IS CAUSED SOLELY OR IN PART BY THE NEGLIGENCE OF LANDLORD.
(e) Adjustment of Claims. Tenant shall cooperate with Landlord and
Landlord's insurers in the adjustment of any insurance claim pertaining to
the Building or Landlord's use thereof.
(f) Increase in Landlord's Insurance Costs. Tenant agrees to pay to
Landlord any increase in premiums for Landlord's insurance policies
resulting from Tenant's use or occupancy of the Premises.
(g) Failure to Maintain Insurance. Any failure of Tenant to obtain
and maintain the insurance policies and coverages required hereunder or
failure by Tenant to meet any of the insurance requirements of this Lease
shall constitute a material breach hereof, and such failure shall entitle
Landlord to pursue, exercise or obtain any of the remedies provided for in
Paragraph 13, and Tenant shall be solely responsible for any loss suffered
by Landlord as a result of such failure. In the event of failure by Tenant
to maintain the insurance policies and coverages required by this Lease or
to meet any of the insurance requirements of this Lease, Landlord, at its
option, and without relieving Tenant of its obligations hereunder, may
obtain said insurance policies and coverages or perform any other
insurance obligation of Tenant, but all costs and expenses incurred by
Landlord in obtaining such insurance or performing Tenant's insurance
obligations shall be reimbursed by Tenant to Landlord, together with
interest on same from the date any such cost or expense was paid by
Landlord until reimbursed by Tenant, at the rate of interest provided to
be paid on judgments, by the law of the jurisdiction to which the
interpretation of this Lease is subject.
11. FIRE OR CASUALTY. In the event that(a) the Premises or the
Building should be so damaged by fire or other casualty that rebuilding or
repairs cannot be completed within one (1) year after the date of
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commencement of reconstruction, as determined by Landlord, or (b) the Premises
shall be so damaged during the last two (2) years of the Lease Term to the
extent that more than thirty percent (30%) of the area thereof is rendered
untenantable, Landlord may at its option terminate this Lease within ninety (90)
days after such damage by giving written notice to Tenant, in which event rent
shall be abated effective with the date of such damage. If, following any such
casualty, Landlord does not terminate this Lease, or in the event of casualty
damage of a lesser extent to the Building, Landlord shall, following receipt of
insurance proceeds if such proceeds are made available to Landlord by the holder
of any mortgage encumbering the Project or the Building, rebuild or repair the
Premises or the Building to substantially the same condition in which they were
immediately prior to the happening of the fire or other casualty, except that
Landlord shall not be required to (i) spend more than the amount of insurance
proceeds actually received, or (ii) rebuild, repair or replace any part of the
furniture, equipment, fixtures and other personal property which may have been
placed by Tenant or other tenants within the Building or the Premises. Landlord
shall allow Tenant a fair diminution of rental during the time the Premises are
unfit for occupancy, and at Landlord's option, the Lease Term shall be extended
for a period equal to the period that the Premises are unfit for occupancy.
12. CONDEMNATION. In the event that the Premises or the Building or any
part thereof shall be taken for public use or condemned under eminent domain or
conveyed under threat of such a taking or condemnation, or access to the
Premises precluded by any such event, either Landlord or Tenant may cancel and
terminate this Lease as it affects the portion of the Premises taken, or the
portion to which access is precluded, by giving notice to the other within ten
(10) days after the date on which title to the property taken vests in the
condemnor. Notwithstanding the foregoing, Tenant may not terminate this Lease
pursuant to the preceding sentence as a result of the condemnation of the
Building or any part thereof unless such condemnation materially affects
Tenant's use of or access to the Premises. If this Lease is not terminated as to
all of the Premises following any of said actual takings or conveyances of any
part of the Premises, then Landlord shall, to the extent of an equitable
proportion of the award for the portion of the Premises taken (excluding any
award for land) and to the extent such award is made available to Landlord from
the holder of any mortgage encumbering the Project or the Building, make such
repairs to the Premises as are necessary to constitute a complete architectural
and tenantable unit. In the event of a partial taking or conveyance of the
Premises, Landlord shall allow Tenant a fair diminution of rental. Tenant shall
not be entitled to claim, or have paid to Tenant, any compensation or damages
whatsoever for or on account of any taking or conveyance of any right, interest
or estate of Tenant under this Lease, and Tenant hereby relinquishes and assigns
to Landlord any rights to any such compensation or damages. Tenant does not
hereby waive or release claims for moving expenses, inconvenience or business
interruption related to a condemnation of the Premises, but any such claim shall
be asserted, if at all, in a proceeding independent of Landlord's primary
condemnation suit.
13. DEFAULT AND REMEDIES.
(a) Events of Default. The following events shall be deemed to be
events of default (herein so called) by Tenant under this Lease: (i)
Tenant shall fail to pay within five (5) days of the due date Basic
Rental, Additional Rental or any other rental or sums payable by Tenant
hereunder; (ii) Tenant shall fail to comply with or observe any other
provision of this Lease and such failure shall continue for ten (10) days
after written notice to Tenant (or, in the case of Tenant's failure to
14
comply with or observe any other single provision of this Lease more than
three (3) times during the Lease Term, upon the occurrence of the fourth
and all subsequent such failures, without notice from Landlord); (iii)
Tenant or any guarantor of Tenant's obligations hereunder shall make a
general assignment for the benefit of creditors; (iv) any petition shall
be filed by or against Tenant or any guarantor of Tenant's obligations
hereunder under the United States Bankruptcy Code, as amended, or under
any similar law or statute of the United States or any state thereof, and
such petition shall not be dismissed within forty-five (45) days of
filing, or Tenant or any guarantor of Tenant's obligations hereunder shall
be adjudged bankrupt or insolvent in proceedings filed thereunder; (v) a
receiver or trustee shall be appointed for all or substantially all of the
assets of Tenant or any guarantor of Tenant's obligations hereunder, and
such appointment shall not be vacated or otherwise terminated, and the
action in which such appointment was ordered dismissed, within forty-five
(45) days of filing; (vi) Tenant shall fail to take possession of or shall
desert, abandon or vacate the Premises; (vii) the death or dissolution of
any guarantor; (viii) the occurrence of an event described in clauses (iv)
or (v) of this Paragraph 13 (a) (without regard to any cure periods
contained therein) and the failure thereafter of Tenant (A) to timely and
fully make any payment of rent or any other sum of money due hereunder or
(B) to perform or observe any other covenant, condition or agreement to be
performed or observed by it hereunder; or (ix) the breach of any guarantee
of this Lease.
(b) Remedies. Upon the occurrence of any event of default specified
in this Lease, Landlord shall have the option to pursue any one or more of
the following remedies without any notice or demand whatsoever and without
releasing Tenant from any obligation under this Lease:
(i) Landlord may enter the Premises without terminating this
Lease and perform any covenant or agreement or cure any condition
creating or giving rise to an event of default under this Lease and
Tenant shall pay to Landlord on demand, as additional rent, the
amount expended by Landlord in performing such covenants or
agreements or satisfying or observing such condition. Landlord or
its agents or employees shall have the right to enter the Premises,
and such entry and such performance shall not terminate this Lease
or constitute an eviction of Tenant.
(ii) Landlord may terminate this Lease by written notice to
Tenant (and not otherwise) or Landlord may terminate Tenant's right
of possession without terminating this Lease. In either of such
events Tenant shall surrender possession of and vacate the Premises
immediately and deliver possession thereof to Landlord, and Tenant
hereby grants to Landlord full and free license to enter the
Premises, in whole or in part, with or without process of law and to
expel or remove Tenant and any other person, firm or corporation who
may be occupying the Premises or any part thereof and remove any and
all property therefrom, using such lawful force as may be necessary.
(iii) In the event Landlord elects to re-enter or take
possession of the Premises after Tenant's default, with or without
terminating this Lease, Landlord may change or pick locks or alter
security devices and lock out, expel or remove Tenant and any other
person who may be occupying all or any part of the Premises without
being liable for any claim
15
for damages. Notwithstanding anything to the contrary contained
herein or in Section 93.002 of the Texas Property Code, Landlord may
exercise any and all of its rights or remedies under this Lease
following an event of default by Tenant without compliance with
Section 93.002 of the Texas Property Code, the benefits of which are
hereby expressly waived by Tenant.
(iv) If Landlord elects to re-enter or take possession of the
Premises without terminating this Lease, then Tenant shall be liable
for and shall pay to Landlord all Basic Rental and any other amounts
of money due to Landlord hereunder as of the date of such election.
Tenant shall also pay to Landlord all Basic Rental required to be
paid by Tenant during the remainder of the Lease Term as such
amounts become due, diminished by any net sums received by Landlord,
if any, through reletting the Premises during said period (after
deducting all expenses incurred by Landlord in connection with any
reletting of the Premises). Landlord is not obligated to relet the
Premises, and if no reletting occurs, Tenant shall be responsible
for the full amounts due. If Landlord elects to relet, Landlord
shall have the sole and unfettered right to relet all or any part of
the Premises for such rent and upon such terms as shall be
satisfactory to Landlord (including but not limited to the right to
relet the Premises for a term shorter or longer than that remaining
under this Lease, the right to relet the Premises as a part of a
larger area and the right to change the character or use made of the
Premises). Tenant shall not in any event be entitled to any sums
collected in connection with a reletting of the Premises that exceed
the amount of Basic Rental and other sums of money due hereunder.
Landlord shall not be required to wait until the expiration of the
Lease Term in order to collect any such deficiencies, and shall have
the right to file suit from time to time, on one or more occasions,
to collect the deficiencies then due. Any such suit shall not
prejudice in any way the right of Landlord to bring similar actions
for any subsequent deficiency or deficiencies.
(v) Notwithstanding any prior election by Landlord to not
terminate this Lease, Landlord may at any time, including subsequent
to any re-entry or taking of possession of the Premises as allowed
hereinabove, elect to terminate this Lease. Tenant shall be liable
for and shall immediately pay to Landlord the amount of all Basic
Rental and other sums of money due under this Lease as may have
accrued as of the date of termination. Tenant shall also immediately
pay to Landlord, as agreed and liquidated damages, an amount of
money equal to the Basic Rental and other amounts due for the
remaining portion of the Lease Term (had such term not been
terminated by Landlord prior to the expiration of the Lease Term),
less the fair rental value of the Premises for the residue of the
Lease Term, both discounted to their present value based upon an
interest rate of eight percent (8%) per annum. In determining fair
rental value, Landlord shall be entitled to take into account the
time and expenses necessary to obtain a replacement tenant or
tenants, including anticipated expenses hereinafter described
relating to recovery, preparation and reletting of the Premises;
provided, however, the parties hereto stipulate and agree that the
fair rental value shall never be deemed to exceed eighty-five
percent (85%) of the Basic Rental provided for herein for said
residual period. If Landlord elects to relet the Premises, or any
portion thereof, before presentation of proof of such liquidated
damages, the amount of
16
rent reserved upon such reletting shall be deemed prima facie
evidence of the fair rental value of the portion of the Premises so
relet.
(vi) In addition to any sum provided to be paid above, Tenant
shall also be liable for and shall immediately pay to Landlord all
broker's fees incurred by Landlord in connection with any reletting
of the whole or any part of the Premises, the costs of removing and
storing Tenant's or any other occupant's property, the cost of
repairing, altering, remodeling, renovating or otherwise putting the
Premises into a condition acceptable to a new tenant or tenants, the
cost of removal and replacement of signage and all reasonable
expenses by Landlord in enforcing Landlord's remedies, including
reasonable attorneys' fees.
(vii) Landlord may apply Tenant's Security Deposit to the
extent necessary to make good any rent arrearage, to pay the cost of
remedying Tenant's default or to reimburse Landlord for expenditures
made or damages suffered as a consequence of Tenant's default.
Following any such application of the Security Deposit, Tenant shall
pay to Landlord on demand the amount so applied in order to restore
the Security Deposit to its original amount.
(viii) Nothing contained in this Paragraph 13(b) shall be
construed as imposing any enforceable duty upon Landlord to relet
the Premises or otherwise mitigate or minimize Landlord's damages by
virtue of Tenant's default. Landlord shall not be liable in any
manner, nor shall Tenant's obligations hereunder be diminished, by
the failure of Landlord to relet the Premises, or in the event of
reletting to collect rent.
(c) Effect of Suit or Partial Collection. Institution of a forcible
detainer action to re-enter the Premises shall not be construed to be an
election by Landlord to terminate this Lease. Landlord may collect and
receive any rent due from Tenant and the payment thereof shall not
constitute a waiver of or affect any notice or demand given, suit
instituted or judgment obtained by Landlord, or be held to waive or alter
the rights or remedies which Landlord may have at law or in equity or by
virtue of this Lease at the time of such payment.
(d) Remedies Cumulative. All rights and remedies of Landlord herein
or existing at law or in equity are cumulative and the exercise of one or
more rights or remedies shall not be taken to exclude or waive the right
to the exercise of any other.
(e) Notice to Mortgagees. If Landlord defaults under this Lease and,
if as a consequence of such default, Tenant will have the right to
terminate this Lease, Tenant will not exercise such right to terminate
unless and until (i) Tenant gives notice of such default (specifying the
exact nature of such default and how such default may be remedied) to any
lessor under a ground lease or any mortgagee of the Building, and (ii)
such lessor and/or mortgagee fails to cure, or to cause to be cured, such
default within thirty (30) days after such lessor's or mortgagee's receipt
of notice.
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14. SURRENDER OF PREMISES.
(a) Surrender. Upon the Expiration Date or earlier termination of
this Lease, Tenant shall peaceably surrender to Landlord the Premises,
including the alterations, improvements and changes (except as provided in
Paragraph 14(b) other than Tenant's fixtures remaining the property of
Tenant, broom-clean and in the condition the same were in on the
Commencement Date, subject only to (i) ordinary and customary wear and
tear, and (ii) damage resulting from a fire or other casualty not caused
by the act or omission of Tenant or Tenant's agents, contractors or
employees.
(b) Removal of Alterations and Tenant's Property.
(i) Notwithstanding anything in this Lease to the contrary,
all permanent or built-in fixtures or improvements and all
mechanical, electrical and plumbing equipment in the Premises shall
be the property of Landlord upon the termination of this Lease.
Except as otherwise provided, all furnishings, equipment, furniture,
trade fixtures and other removable equipment installed in the
Premises by Tenant paid for by Tenant shall remain the property of
Tenant and shall be removed by Tenant upon the expiration or
termination of this Lease. Tenant shall repair any damage caused by
such removal.
(ii) If any furnishings, equipment, furniture, trade fixtures
or other removable equipment are not removed within five (5)
business days after the expiration of this Lease, then Tenant hereby
grants to Landlord the option, exercisable at any time thereafter
without the requirement of any notice to Tenant, (A) to treat such
property, or any portion thereof, as being abandoned by Tenant to
Landlord, whereupon Landlord shall be deemed to have full rights of
ownership thereof; (B) to elect to remove and store such property,
or any portion thereof, on Tenant's behalf (but without assuming any
liability to any person) and at Tenant's sole cost and expense, with
reimbursement therefor to be made to Landlord upon demand; and/or
(C) to seize, give away, donate or dispose of as trash or refuse any
or all of such property without any responsibility to deliver to
Tenant any proceeds therefrom. If (a) Landlord elects not to
exercise its contractual and/or statutory lien rights covering
Tenant's property as may be granted herein, (b) Tenant ceases to
occupy the Premises, or its rights to occupy the Premises are
terminated by Landlord, prior to Landlord's termination or the
expiration of this Lease, and (c) any of Tenant's furnishings,
equipment, furniture, trade fixtures or other removable equipment
are not removed within five (5) business days thereafter, then
Tenant hereby grants to Landlord the option, exercisable at any time
thereafter without the requirement of notice to Tenant, (x) to treat
such property, or any portion thereof, as being abandoned by Tenant
to Landlord, whereupon Landlord shall be deemed to have full rights
of ownership thereof; (y) to elect to remove and store such
property, or any portion thereof, on Tenant's behalf (but without
assuming any liability to any person) and at Tenant's sole cost and
expense, with reimbursement therefor to be made to Landlord upon
demand; and/or (z) to sell, give away, donate or dispose of as trash
or refuse any or all of such property without responsibility to
deliver to Tenant any proceeds therefrom. Landlord shall have no
liability of any kind whatsoever to Tenant in respect of the
exercise or failure to exercise the options set forth in this
Paragraph 14(b). Specifically,
18
Tenant shall not have the right to assert against Landlord a claim
either for the value, or the use, of any such property, either as an
offset against any amount of money owing to Landlord or otherwise.
The provisions of this Paragraph 14(b) shall supersede the
provisions of Section 93.002(d) and (e) of the Texas Property Code,
as such may be amended from time to time, and any other law which
purports to restrict the options granted to Landlord herein.
15. HOLDING OVER. If Tenant remains in possession of the Premises after
the expiration of the tenancy created hereunder and without the execution of a
new lease, Tenant shall be deemed to be occupying the Premises as a tenant at
will and subject to all of the provisions of this Lease except those relating to
term and except that the Basic Rental and Additional Rental shall be double the
amount payable during the last month of the Lease Term (without waiver of
Landlord's right to recover damages as permitted by this Lease or by law). Said
tenancy may be terminated by Landlord or Tenant by giving written notice to the
other at any time. Landlord's acceptance during any such holdover period of
Basic Rental and/or Additional Rental payments from Tenant of less than the full
amounts to which Landlord is entitled under this Paragraph 15 shall not be
deemed to constitute a waiver of Landlord's right to later collect from Tenant
the difference between the amounts actually paid by Tenant and the full amounts
due hereunder.
16. MORTGAGES. This Lease shall be subordinate to all deeds of trust and
ground leases now or hereafter encumbering the Building, and all refinancings,
replacements, renewals, modifications, extensions or consolidations thereof.
Tenant agrees to attorn to any mortgagee, ground lessor, trustee under a deed of
trust or purchaser at a foreclosure sale or trustee's sale as Landlord under
this Lease. Tenant covenants and agrees that Tenant shall within five (5) days
after Landlord's request, execute in recordable form and deliver to Landlord
whatever instruments may be required to acknowledge and further evidence the
subordination of this Lease and/or the attornment by Tenant to such mortgagee,
ground lessor, trustee or purchaser. If within five (5) business days after
submission of any such instrument, Tenant fails to execute the same, Landlord is
hereby authorized to execute the same as attorney-in-fact for Tenant. Any holder
of a deed of trust covering all or any part of the Building may at any time
elect to have this Lease have priority over its deed of trust by executing
unilaterally an instrument of subordination or placing a clause of such
subordination in any pleadings or in its deed of trust and recording the same.
17. CERTAIN RIGHTS RESERVED BY LANDLORD. Landlord shall have the following
rights:
(a) Common and Service Area Alterations. To decorate and to make
repairs, alterations, additions, changes or improvements, whether
structural or otherwise, in, about or on the exterior of the Building, or
any part thereof, and to change, alter, relocate, remove or replace
Service Areas and/or Common Areas; to place, inspect, repair and replace
in the Premises (below floors, above ceilings or next to columns) utility
lines, pipes, cables and the like to serve other areas of the Building
outside the Premises; and to otherwise alter or modify the Project, and
for such purposes to enter upon the Premises and, during the continuance
of any such work, to take such measures, for safety or for the expediting
of such work as may be required, in Landlord's judgment, all without
affecting any of Tenant's obligations hereunder, provided Landlord's
entries
19
in the Premises shall be subject to the terms of Paragraph 19(1).
(b) Parking. To permit Tenant and its employees to use the parking
facilities associated with the Building only in accordance with, rules and
regulations promulgated from time to time by Landlord and/or the operator
of the parking facilities and at such charges as then may be in effect;
and to prohibit Tenant and its employees to use any on site surface
parking spaces within the Project designated for visitors, occupants of
the Building, or otherwise. The number of parking spaces available for
Tenant's use shall not exceed one (1) space for every three hundred
thirty-three (333) square feet of Rentable Area in the Premises. Parking
spaces will be unassigned, provided that Landlord may at any time assign
parking spaces. Landlord shall not be obligated to control any
unauthorized parking in any reserved or assigned parking spaces of Tenant.
Tenant shall, if requested by Landlord, furnish to Landlord a complete
list of the license plate numbers of all vehicles operated by Tenant and
Tenant's employees and agents. Landlord shall not be liable for any damage
of any nature whatsoever to, or any theft of, vehicles, or contents
therein, in or about such parking facility. If, for any reason, Landlord
fails or is unable to provide, or Tenant is not permitted to use, all or
any portion of the parking spaces to which Tenant is entitled hereunder,
then Tenant's obligation to pay for such spaces, if any, shall be abated
for so long as Tenant does not have the use thereof; this abatement shall
be in full settlement of all claims that Tenant might otherwise have
against Landlord because of Landlord's failure or inability to provide
Tenant with such parking spaces.
(c) Rules and Regulations. To establish and amend from time to time
rules and regulations governing all tenants' use and occupancy of the
Building, provided that in the event of a conflict between those rules and
this Lease, this Lease shall control. The rules and regulations now
enforced by Landlord are available upon request.
(d) Food Preparation. To prohibit the preparation of food within the
Premises for commercial purposes or the placing of vending or dispensing
machines of any kind in or about the Premises if such vending or
dispensing machines are available to the general public.
(e) Signs. To prohibit all signs, posters, advertisements, or
notices from being painted or affixed on any of the windows, or doors, or
any other part of the Building, except of such color, size, and style, and
in such places as shall be first approved in writing by Landlord.
(f) Security Measures. To take all such reasonable measures as
Landlord may deem advisable for the security of the Building and its
occupants. LANDLORD, HOWEVER, SHALL HAVE NO LIABILITY TO TENANT OR ITS
EMPLOYEES, AGENTS, INVITEES OR LICENSEES FOR LOSS OF PROPERTY OR PERSONAL
INJURY EXCEPT TO THE EXTENT CAUSED BY LANDLORD'S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. Tenant shall cooperate fully in Landlord's efforts to
maintain security in the Building and shall follow all regulations
promulgated by Landlord with respect thereto.
(g) Right To Relocate Tenant. At any time after the execution of
this Lease and on thirty (30) days prior written notice, Landlord may
substitute for the Premises other premises in the
20
Building (the "New Premises"), in which event the New Premises shall be
deemed to be the Premises for all purposes hereunder, provided: (i) the
New Premises shall be similar in area, finish and appropriateness for the
Permitted Use; (ii) the Basic Rental and other rentals payable under this
Lease shall remain the same; and (iii) reasonable out-of-pocket costs in
connection with relocation to the New Premises shall be reimbursed by
Landlord after receipt of third party invoices therefor.
18. HAZARDOUS MATERIAL; INDEMNITY.
(a) Indemnity. For purposes of this Paragraph 18, the Project shall
be referred to as the "Property". Tenant shall not cause or permit any
Hazardous Material (as hereinafter defined) to be brought upon, kept or
used in or about the Premises or the Property by Tenant or its agents,
employees, contractors or invitees without the prior written consent of
Landlord (which Landlord shall not unreasonably withhold as long as Tenant
demonstrates to Landlord reasonable satisfaction that such Hazardous
Material is necessary or useful to Tenant's business and will be used,
kept and stored in a manner that complies with all laws regulating any
such Hazardous Material so brought upon or used or kept in or about the
Premises or the Property). If Tenant breaches the obligations stated in
the preceding sentence, or if the presence of Hazardous Material on the
Premises or the Property caused or permitted by Tenant results in
contamination of the Premises or the Property, or if contamination of the
Premises or the Property by Hazardous Material otherwise occurs for which
Tenant is legally liable to Landlord for damage resulting therefrom, then
Tenant shall indemnify, defend and hold Landlord harmless from any and all
claims, judgments, damages, penalties, fines, costs, liabilities or
losses, including, without limitation, diminution in value of the Premises
or the Property, damages, penalties, fines, costs, liabilities or losses
(including, without limitation, restriction on use of rentable or usable
space or of any amenity of the Premises or the Properly, damages arising
from any adverse impact on marketing of space, and sums paid in settlement
of claims, attorneys' fees, consultant fees and expert fees) which arise
during or after the Lease Term as a result of such contamination. This
indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any
clean up, remedial, removal or restoration work required by any federal,
state or local governmental agency or political subdivision because of
Hazardous Material present in the soil or ground water on or under the
Premises or the Property. Without limiting the foregoing, if the presence
of any Hazardous Material on the Premises or the Property caused or
permitted by Tenant results in any contamination of the Premises or the
Property, Tenant shall promptly take all actions at its sole expense as
are necessary to return the Premises or the Property to the condition
existing prior to the introduction of any such Hazardous Material to the
Premises or the Property; provided that Landlord's approval of such
actions shall first be obtained, which approval shall not be unreasonably
withheld so long as such actions would not potentially have any material
adverse long-term or short-term effect on the Premises or the Property.
The indemnification of Landlord by Tenant contained in this Paragraph 18
shall survive the expiration or earlier termination of this Lease.
(b) Definition. As used herein, the term "Hazardous Material" means
any hazardous or toxic substance, material or waste which is or becomes
regulated by any local governmental
21
authority, the State of Texas or the United States Government, including,
but not limited to, any material or substance that is (i) petroleum, (ii)
asbestos, (iii) designated as a "hazardous substance" pursuant to Section
311 of the Water Pollution Control Act (33 U.S.C. Section 1321), (iv)
defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, (v) defined as a
"hazardous substances" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section
9601, or (vi) defined as a "regulated substance" pursuant to Subchapter
IX, Solid Waste Disposal Act, 42 U.S.C. Section 6991.
19. MISCELLANEOUS.
(a) Time Is of the Essence. The time of the performance of all of
the covenants, conditions and agreements of this Lease is of the essence.
(b) Force Majeure. If either Landlord or Tenant is prevented or
hindered from timely satisfying any provisions set forth herein because of
a shortage of or inability to obtain materials or equipment, strikes or
other labor difficulties, governmental restrictions, casualties or any
other cause beyond such party's reasonable control, such party shall be
permitted an extension of time of performance by the number of days during
which such performance was prevented or hindered; provided, however, that
this paragraph shall not apply to the payment of rent or other monies by
Landlord or Tenant, nor shall the provisions of this paragraph postpone
the date that rent is payable pursuant to this Lease, except as expressly
provided to the contrary in the Construction Agreement (if any) entered
into pursuant to Paragraph 4.
(c) No Personal Liability of Landlord. If Landlord shall fail to
perform any covenant term or condition of this Lease and, as a
consequence, if Tenant shall recover a money judgment against Landlord,
such judgment shall be satisfied only out of the proceeds received at a
judicial sale upon execution and levy against the right, title and
interest of Landlord in the Building and in the rents or other income from
the Building receivable by Landlord, and neither Landlord nor Landlord's
affiliated companies nor their respective owners, partners, venturers,
shareholders, directors or officers shall have any personal, corporate or
other liability hereunder.
(d) Quiet Enjoyment. Landlord hereby covenants and agrees that if
Tenant shall perform all of the covenants and agreements herein stipulated
to be performed on Tenant's part, Tenant shall at all times during the
continuance hereof have peaceable and quiet enjoyment and possession of
the Premises without hindrance from Landlord or any person or persons
lawfully claiming the Premises by or through Landlord, subject, however,
to the terms of this Lease and to all mortgages, ground leases, deeds of
trust, leases and agreements to which this Lease is subordinate.
(e) Entire Agreement and Amendments. This Lease is the only
agreement between the parties hereto and their representatives and agents.
There are no representations or warranties between the parties other than
the representations and warranties contained in this document. No
agreement shall be effective to change, modify or terminate this Lease in
whole or in part unless
22
such agreement is in writing and duly signed by the party against whom
enforcement of such change, modification or termination is sought.
(f) Interpretation. The necessary grammatical changes required to
make the provisions of this Lease apply in the plural sense where there is
more than one Tenant and to either corporations, associations,
partnerships or individuals, male or female, shall in all instances be
assumed as though in each case fully expressed. The laws of the State of
Texas shall govern the validity, performance and enforcement of this
Lease. All obligations hereunder are performable in Tarrant County, Texas.
If this Lease is executed by more than one person or entity as "Tenant",
each such person or entity executing this Lease as Tenant shall be jointly
and severally bound and liable hereunder.
(g) Severability. No provision of this Lease shall be construed or
interpreted in any manner which would render such provision invalid. If
any provision of this Lease is held to be invalid, such invalid provision
shall be deemed to be severable from and shall not affect the validity of
the remainder of this Lease.
(h) Terms Binding. Subject to the limitations on subletting and
assignment set forth in this Lease, all covenants, promises, conditions,
representations and agreements herein contained shall be binding upon and
apply and inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors and assigns.
(i) Estoppel Certificates. Within five (5) days after request by
Landlord, Tenant agrees to execute and deliver to Landlord estoppel or
offset letters as required by Landlord or by Landlord's lenders. The
letters shall certify the date of this Lease and any amendments, that
Landlord is not in default of any of the terms and provisions of this
Lease or specifying the provisions as to which Landlord is in default if
Landlord shall be in default, that Landlord has performed all inducements
required of Landlord in connection with this Lease, including any
construction obligations, specifying any inducements which have not been
fulfilled by Landlord, the date to which rent has been paid, and any other
matters which Landlord or its lenders may reasonably require. Tenant's
failure to deliver such letters to Landlord within said five (5) day
period will be conclusive evidence of the matters set forth therein.
Tenant further agrees to furnish to Landlord from time to time when
requested by Landlord a letter of acceptance in conformity with any
requirements made by any existing or proposed lenders.
(j) Late Payment Charge and Interest Payable. Landlord may impose a
late payment charge equal to five percent (5%) of any amount due if not
paid within five (5) days from the date required to be paid hereunder. In
addition, any payment due under this Lease not paid within ten (10) days
after the date herein specified to be paid shall bear interest from the
date such payment is due to the date of actual payment at the rate of
eighteen percent (18%) per annum or the highest lawful rate of interest
permitted by Texas or federal law, whichever rate of interest is lower.
(k) Security Deposit. Tenant shall deposit with Landlord the amount
shown in Paragraph 1 (e) above as a Security Deposit contemporaneously
with the execution hereof.
23
Landlord shall hold Tenant's Security Deposit without interest, and the
same shall not be considered prepaid rent or a measure of Landlord's
damages in case of default by Tenant. The remaining balance of the
Security Deposit (after application of any part thereof in accordance with
Paragraph 13(b) or for necessary repairs to the Premises) shall be
refundable to Tenant within thirty (30) days after the expiration or
earlier termination of this Lease.
(l) Access to Premises. Tenant agrees that Landlord and its agents
may enter the Premises for the purpose of inspecting and making such
repairs (structural or otherwise), additions, improvements, changes or
alterations to the Premises or the Building as may be permitted or
required under this Lease or as Landlord may elect, and to exhibit the
same to prospective purchasers, mortgagees or tenants. In the event of any
such repairs, additions, improvements, changes or alterations, Tenant
shall cooperate with Landlord to facilitate Landlord's efforts. Landlord's
entries in the Premises shall be preceded by reasonable notice (except in
the case of an emergency) and shall not unreasonably interfere with
Tenant's use and occupancy of the Premises for the Permitted Use.
(m) Notices. Notices hereunder must be hand-delivered or sent by
nationally recognized overnight courier or by certified mail, return
receipt requested, postage prepaid, addressed, if to Landlord, at Suite
247, N.E. Loop 820, North Richland Hills, Texas 76180, and if to Tenant,
at the address specified for Tenant in Paragraph 1(a) above prior to the
Commencement Date and to the Premises thereafter, or to such other address
as may be specified by written notice actually received by the other
party. Notice shall be deemed given upon tender of delivery (in the case
of a hand delivered notice) or upon posting of same with the overnight
courier service or in an official depository of the United States Postal
Service (in the case of a certified or registered letter), provided that
no notice of either party's change of address shall be effective until
fifteen (15) days after the addressee's actual receipt thereof.
(n) Acceptance of Premises and Building by Tenant. LANDLORD HEREBY
DISCLAIMS ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY THAT THE
PREMISES ARE SUITABLE FOR TENANT'S INTENDED PURPOSE OR USE. THE TAKING OF
POSSESSION BY TENANT SHALL BE CONCLUSIVE EVIDENCE THAT TENANT:
(I) ACCEPTS THE PREMISES AS SUITABLE FOR THE PURPOSES FOR
WHICH THEY WERE LEASED;
(II) ACCEPTS THE BUILDING AND EVERY PART AND APPURTENANCE
THEREOF AS BEING IN GOOD AND SATISFACTORY CONDITION; AND
(III) WAIVES ANY DEFECTS IN THE PREMISES AND ITS APPURTENANCES
EXISTING NOW OR IN THE FUTURE, EXCEPT THAT TENANT'S TAKING OF
POSSESSION SHALL NOT BE DEEMED TO WAIVE LANDLORD'S COMPLETION OF
MINOR FINISH WORK ITEMS THAT DO NOT
24
INTERFERE WITH TENANT'S OCCUPANCY OF THE PREMISES.
TENANT ACKNOWLEDGES THE DISCLAIMER BY LANDLORD SET FORTH HEREIN AND WAIVES
ALL CLAIMS BASED ON ANY IMPLIED WARRANTY OF SUITABILITY. FURTHERMORE,
TENANT CONFIRMS THAT ITS OBLIGATIONS TO PAY BASIC RENTAL, ADDITIONAL
RENTAL AND OTHER AMOUNTS OF MONEY DUE TO LANDLORD HEREUNDER ARE NOT
DEPENDENT ON THE CONDITION OF THE PREMISES OR THE BUILDING, THE COMPLETION
OF ANY MINOR FINISH WORK ITEMS OR THE PERFORMANCE BY LANDLORD OF ITS
OBLIGATIONS HEREUNDER. TENANT SHALL CONTINUE TO PAY BASIC RENTAL,
ADDITIONAL RENTAL AND OTHER AMOUNTS OF MONEY DUE TO LANDLORD HEREUNDER,
WITHOUT ABATEMENT, SETOFF OR DEDUCTION, NOTWITHSTANDING ANY BREACH OR
ALLEGED BREACH BY LANDLORD OF ITS OBLIGATIONS HEREUNDER.
(o) Building Name. Landlord shall have the exclusive right at all
times during the Lease Term to change, modify, add to or otherwise alter
the name of the Building, and Landlord shall not be liable for claims or
damages of any kind which may be attributed thereto or result therefrom.
(p) Landlord's Lien. In addition to the statutory landlord's lien,
if any, Landlord shall have at all times a valid security interest to
secure payment of all rentals and other sums of money becoming due
hereunder from Tenant, and to secure payment of any damage or loss which
Landlord may suffer by reason of the breach by Tenant of any covenant,
agreement or condition contained herein, upon all goods, wares, equipment,
fixtures, furniture, improvements and other personal property of Tenant
presently or which may hereafter be situated in the Premises and all
proceeds therefrom (including proceeds of insurance), and such properly
shall not be removed therefrom without the consent of Landlord until all
arrearages in rent as well as any and all other sums of money then due to
Landlord hereunder shall first have been paid and discharged and all the
covenants, agreements and conditions hereof have been fully complied with
and performed by Tenant. Upon the occurrence of an event of default by
Tenant, Landlord may, in addition to any other remedies provided herein,
enter upon the Premises and take possession of any and all goods, wares,
equipment, fixtures, furniture, improvements and other personal property
of Tenant situated in the Premises, without liability for trespass or
conversion, and sell the same at public or private sale, with or without
having such property at the sale, after giving Tenant reasonable notice of
the time and place of any public sale or of the time after which any
private sale is to be made, at which sale(s) Landlord or its assigns may
purchase unless otherwise prohibited by law. Unless otherwise provided by
law, and without intending to exclude any other manner of giving Tenant
reasonable notice, the requirement of reasonable notice shall be met if
such notice is given at least five (5) days before the time of sale. Such
notice shall be deemed to be delivered if personally delivered or when
deposited in the United States mail, postage prepaid, certified or
registered mail (with or without return receipt requested), addressed to
the parties hereto at the addresses as shown herein, whether or not
actually received. The proceeds from any such disposition, less any and
all expenses connected with the taking of possession; holding and selling
of the property (including reasonable attorneys' fees and other expenses),
shall be applied as a credit against the indebtedness
25
secured by the security interest granted in this paragraph. Any surplus
shall be paid to Tenant or as otherwise required by law; and Tenant shall
pay any deficiencies forthwith. Upon request by Landlord, Tenant agrees to
execute and deliver to Landlord a financing statement in form sufficient
to perfect the security interest of Landlord in the aforementioned
property and proceeds thereof under the provisions of the Uniform
Commercial Code in force in the State of Texas. The statutory lien for
rent is not hereby waived, the security interest herein granted being in
addition and supplementary thereto. Landlord shall be entitled to file a
carbon, photographic or other reproduction of this Lease as a financing
statement as is permitted under Section 9.402(a) of the Texas Business and
Commerce Code.
(q) Authority To Sign Lease. If Tenant is a corporation or a
partnership (general or limited), each person(s) signing this Lease as an
officer or partner of Tenant represents to Landlord that such person(s) is
authorized to execute this Lease without the necessity of obtaining any
other signature of any other officer or partner, that the execution of
this Lease has been authorized by the board of directors of the
corporation or by the partners of the partnership, as the case may be, and
that this Lease is fully binding on Tenant. Landlord reserves the right to
request evidence of the approval of this Lease and authorization of
Tenant's signatories to bind Tenant, which evidence shall be satisfactory
in form and content to Landlord and its counsel.
(r) Attorneys' Fees. In the event either party is in default beyond
any applicable grace or notice period in the performance of any of the
terms of this Lease and the other party employs an attorney in connection
therewith, the non-prevailing party agrees to pay the prevailing party's
reasonable attorneys' fees.
(s) Execution of Lease. The submission of this Lease for examination
does not constitute a reservation of or option for the Premises or any
other space within the Building and shall vest no right in either party.
This Lease shall become effective only after the full execution and
delivery hereof by all of the parties hereto and upon the approval by the
holder of any mortgage encumbering the Project.
(t) No Attornment. All checks tendered to Landlord as and for the
Basic Rental and/or Additional Rental required hereunder shall be deemed
payments for the account of Tenant. Acceptance by Landlord of Basic Rental
and/or Additional Rental from anyone other than Tenant shall not be deemed
to operate as an attornment to Landlord by the payor of such Basic Rental
and/or Additional Rental or as a consent by Landlord to an assignment of
this Lease or subletting by Tenant of the Premises to such payor, or as a
modification of any of the provisions of this Lease.
(u) Applicable Laws. As used herein, the term "Applicable Laws"
shall mean all laws, statutes, ordinances, regulations, guidelines or
requirements now in force or hereafter enacted and the requirements of any
governmental authority having jurisdiction over the Building, board of
fire underwriters, utility company serving the Building or other similar
body now or hereafter constituted, relating to or affecting the condition,
use or occupancy of the Premises, including without limitation, Title III
of The Americans with Disabilities Act of 1990, all regulations issued
26
thereunder, and the Accessibility Guidelines for Buildings and Facilities
issued pursuant thereto, and the Texas Architectural Barriers Act, as the
same are in effect on the date of this Lease and as hereafter amended.
(v) Arms-Length Transaction. This Lease has been entered into by the
undersigned after arms-length negotiation, with each party acknowledging
that it and its counsel, if it so chooses, have had an opportunity to
review this Lease, and therefore, the parties agree that this Lease shall
not be construed against Landlord on the ground that Landlord's
representatives prepared this Lease.
(w) Waiver. No covenant, term or condition or the breach thereof
will be deemed waived, except by written consent of the party against whom
the waiver is claimed and any waiver of the breach of any covenant, term
or condition will not be deemed to be a waiver of any preceding or
succeeding breach of the same or any other covenant, term or condition.
Acceptance by Landlord of any performance by Tenant after the time the
same was due will not constitute a waiver by Landlord of the breach or
default of any covenant, term or condition unless otherwise expressly
agreed to by Landlord in writing.
(x) Computation of Rentable Area.
(1) Single Tenant Floor. With respect to a single tenant
floor, "Rentable Area" will mean the sum of (i) the floor area (in
square feet) bounded by the inside surfaces of the exterior glass
walls of the Building, excluding standard openings in the floor slab
used, for example, for Building stairs, elevator and other shafts
and vertical ducts (collectively, the "Excluded Spaces"), and (ii)
an allocation of the floor area of Common Areas and Service Areas
located in or serving the Building.
(2) Multiple Tenant Floor. With respect to a multiple tenant
floor, "Rentable Area" will mean the sum of (i) the floor area (in
square feet) bounded by the inside surfaces of the exterior glass
walls, the outside surfaces of partitions separating the Premises
from corridors and other Common Areas and Service Areas, and the
center line of partitions separating the Premises from adjoining
leasable spaces, less any Excluded Spaces located within such
boundaries, and (ii) an allocation of the floor area of the Common
Areas and Service Areas on such floor, and (iii) an allocation of
the floor area of Common Areas and Service Areas located in or
serving the Building.
(3) Columns and Non-Standard Openings. No deductions will be
made in either Paragraph 19(x)(1) or Paragraph 19(x)(2) for (i)
columns and projections necessary to the structural support of the
Building or (ii) for openings in the floor slab which were made at
the request of Tenant or to accommodate items installed at the
request of Tenant.
(y) Brokers. Landlord and Tenant each represent and warrant to the
other that it has had no dealings with any real estate broker or agent in
connection with the negotiation of this Lease, except NONE whose
commission shall be
27
payable by Lessor, and that it knows of no other real estate broker or
agent who is or might be entitled to a commission in connection with this
Lease. Landlord and Tenant each agree to indemnify, defend and hold the
other harmless from all costs and liabilities, including reasonable
attorney's fees and costs, arising out of or in connection with claims
made by any other broker or individual who alleges that it is entitled to
commissions or fees with regard to this Lease as a result of dealings it
had with the indemnifying party.
(z) Certificate of Occupancy. It is the Tenants responsibility to
obtain a Certificate of Occupancy. Tenant may, prior to the commencement
of the term of this Lease, apply for a Certificate of Occupancy from the
municipality in which the Premises are located. If Tenant is unable to
obtain a Certificate of Occupancy prior to the Commencement Date, Tenant
shall have the right to terminate this Lease by written notice to Landlord
if Landlord or Tenant is unwilling or unable to cure the defects which
prevented the issuance of the Certificate of Occupancy. Landlord may, but
has no obligation to, cure any such defects preventing the issuance of a
Certificate of Occupancy, including any repairs, installations, or
replacements of any items which are not presently existing on the
Premises, or which have not been expressly agreed upon by Landlord in
writing.
(aa) Undue Burden. Whenever in this Lease there is imposed upon
Landlord the obligation to use its best efforts, reasonable efforts or
diligence, Landlord shall be required to do so only to the extent the same
is economically feasible and otherwise will not impose upon Landlord
extreme financial or other business burdens.
(ab) Exhibits and Riders. The following exhibits and riders are
attached hereto, incorporated herein and made a part of this Lease for all
purposes:
Exhibit A-1: Floor Plan of Premises
Exhibit A-2: Property Description
Exhibit B: Certificate of Acceptance of Premises
Exhibit C: Construction Agreement
Guaranty: None
(ac) Counterparts. This Lease may be executed in several
counterparts, each of which will be deemed an original, and all of which
will constitute but one and the same instrument.
20. OTHER PROVISIONS.
(a) EARLY TERMINATION. Tenant shall have the right to change the
Expiration Date of this Lease to any month end between December 31,2005 and
August 31, 2009 provided that Tenant is not in default of any provision of this
Lease as of the date of the Notice of Early Termination or the actual date of
Early Termination by giving written notice to Landlord of Tenant's election of
Early Termination 90 days prior
28
to the actual Early Termination date, AND UPON PAYING TO LANDLORD AN EARLY
TERMINATION FEE EQUIVALENT TO 6 MONTHS RENT.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Lease as of the day and year first above written.
LANDLORD:
COCANOUGHER ASSET #1, LTD, a Texas
Limited Partnership
BY: /s/ Robert Cocanougher
------------------------------------
Name: Robert Cocanougher
Title: Vice President
TENANT:
FUNIMATION PRODUCTIONS, LTD., a Texas
Limited Partnership
By: FUNimation Productions Management
Company, LLC, its, General Partner
By: /s/ Gen Fukunaga
------------------------------------
Name: Gen Fukunaga
Title: Manager
29
EXHIBIT A-1
FLOOR PLAN OF PREMISES
(To be prepared)
30
EXHIBIT A-2
PROPERTY DESCRIPTION
Lot 1, Block 17, Snow Heights North Addition to the City of North Richland
Hills, Tarrant County, Texas, according to the Plat recorded in Volume 388-183,
Page 55, Plat Records, Tarrant County, Texas.
31
EXHIBIT B
CERTIFICATE OF ACCEPTANCE OF PREMISES
Re: Office Lease dated the 1st day of August, 2004, between Cocanougher Asset
#1, Ltd. ("Landlord"), and Funimation Productions, Ltd. ("Tenant").
Landlord and Tenant hereby agree that:
1. Except for those items shown on the attached "punch list", if any,
Landlord has fully completed any construction work required under the terms of
the Lease.
2. The Premises are tenantable, the Landlord has no further obligation for
construction (except as specified above), and Tenant acknowledges that both the
Building and the Premises are satisfactory in all respects.
3. The Commencement Date of the Lease is the ______ day of ________, 2004.
4. The Expiration Date of the Lease is to be the ____ day of ______, 2009.
All other terms and conditions of the Lease are hereby ratified and
acknowledged to be unchanged.
EXECUTED this 2 day of August, 2004.
TENANT: LANDLORD:
FUNIMATION PRODUCTIONS, LTD COCANOUGHER ASSET #1, LTD.
a Texas Limited Partnership a Texas Limited Partnership
By: FUNimation Productions Management
Company, LLC, its, General Partner
By: /s/ Gen Fukunaga By: /s/ Robert Cocanougher
------------------------------------ ------------------------------
Name: Gen Fukunaga Name: Robert Cocanougher
Title: Manager Title: Vice President
32
EXHIBIT C
CONSTRUCTION AGREEMENT
This Construction Agreement is executed by and between Cocanougher Asset
#1, Ltd. a Texas Limited Partnership ("Landlord") and Funimation Productions,
Ltd. ("Tenant") in connection with that certain Office Lease (the "Lease")
executed by the parties on even date herewith (the "Effective Date") relating to
the lease by Landlord to Tenant of certain premises known as Suite 400 in the
building located at 6851 N.E. Loop 820, North Richland Hills, Texas. All defined
terms used herein, unless otherwise defined herein, shall have the same meanings
given to such terms in the Lease.
(a) Construction. Landlord agrees to construct leasehold
improvements (the "Finish Work") in a good and workmanlike manner in and
upon the Premises at its sole cost and expense so long as the cost of the
Finish Work does not exceed $ 7.00 per rentable square foot of the
Premises (the "Finish Allowance") in accordance with construction drawings
approved by both Landlord and Tenant ("Final Working Drawings"). The cost
of all space planning and construction drawings shall be included in the
cost of the Finish Work and may be paid out of the Finish Allowance, to
the extent sufficient funds are available for such purpose. In the event
that the total cost of the Finish Work exceeds the Finish Allowance,
Tenant may elect to (i) pay such excess amount to Landlord promptly upon
demand prior to Landlord's commencing construction, or (ii) with respect
to such excess amount (the "Amortizable Amount"), increase the amount of
monthly payments of Basic Rental due under the Lease by an amount equal to
the amount of the monthly installment payment which would be required to
fully amortize a loan of a principal amount equal to the Amortizable
Amount bearing interest at fifteen percent (15%) per annum, and having a
loan term equal to the initial term of this Lease. Landlord will employ an
experienced, licensed contractor to construct the Finish Work and will
require in the construction contract that such contractor construct the
Finish Work in a good and workmanlike manner and in compliance with all
Applicable Laws; provided, however, Tenant will be solely responsible for
determining whether or not Tenant is a public accommodation under The
Americans with Disabilities Act and whether or not the Final Working
Drawings comply with such laws and the regulations thereunder. The parties
acknowledge that Landlord is not an architect or engineer, and that the
Finish Work will be designed and performed by independent architects,
engineers and contractors. Accordingly, Landlord does not guarantee or
warrant that the plans or Final Working Drawing will be free from errors
or omissions, nor that the Finish Work will be free from defects, and
Landlord will have no liability therefor. In the event of such errors,
omissions, or defects, Landlord will use reasonable efforts to cooperate
in any action Tenant desires to bring against such parties.
(b) Costs. Costs to be incurred by Landlord in excess of the Finish
Allowance shall be paid by Tenant to Landlord promptly upon demand prior
to Landlord's commencing construction. Change orders requested by Tenant
and approved by Landlord after construction has commenced and which
increase the cost of construction shall be paid by Tenant to Landlord
promptly upon demand. All installations and improvements now or hereafter
placed in the Premises other than Building Standard (as defined in the
Lease) improvements shall be for Tenant's account and at Tenant's cost
(and Tenant shall pay ad valorem taxes and increased insurance thereon or
attributable thereto), which cost shall be payable by Tenant to Landlord
upon demand as additional rent. Tenant further agrees to pay Landlord a
fee of five percent (5%) of the contract price for the
33
Finish Work (the "Construction Management Fee") as compensation for
Landlord's supervision of the construction and installation of the Finish
Work on the commencement of construction thereof. Landlord and Tenant
agree that the Construction Management Fee may be paid out of the Finish
Allowance to the extent funds are available for such purpose. Tenant
agrees that in the event of default of payment thereof, Landlord (in
addition to all other remedies) shall have the same rights as in the event
of default of payment of rent under the Lease.
(c) Delays. If Landlord is delayed in completing such construction
within the specified time, the delay in commencement of Tenant's
obligation to pay rent under the Lease shall constitute full settlement of
all claims that Tenant may have against Landlord based on the delay. If
Landlord is unable to complete the Finish Work within the specified time
due to a delay caused by Tenant or for any other cause related to Tenant's
acts or omissions, Tenant's rental obligations under the Lease shall begin
on the date on which Landlord would have delivered possession of the
Premises to Tenant absent such delay, and such date shall be the
Commencement Date.
EXECUTED as of the Effective Date.
TENANT: LANDLORD:
FUNIMATION PRODUCTIONS, LTD. COCANOUGHER ASSET #1, LTD.
a Texas Limited Partnership a Texas Limited Partnership
By: FUNimation Productions Management
Company, LLC, its, General Partner
By: /s/ Gen Fukunaga By: /s/ Robert Cocanougher
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Name: Gen Fukunaga Name: Robert Cocanougher
Title: Manager Title: Manager
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