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EXHIBIT 10.5
LEASE AGREEMENT
THE STATE OF TEXAS *
*
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COUNTY OF HARRIS *
THIS AGREEMENT, hereinafter referred to as "Lease", made and entered into this
10th day of March, 1997, but effective as of February 18, 1997, by and between
Delta Steel, Inc. hereinafter referred to as "Delta", and FWT, Inc. hereinafter
referred to as "FWT", WITNESSETH:
THAT WHEREAS, Delta desires to lease to FWT a portion of the building and
improvements, machinery and equipment, being situated in Tarrant County, Fort
Worth, Texas; and
WHEREAS, FWT desires to accept a lease of such building and improvements,
machinery and equipment, all to be subject to the terms and conditions
hereinafter set forth:
NOW, THEREFORE, in consideration of the premises and the covenants hereinafter
set forth, Delta hereby leases to FWT, the portion of the warehouse building
and improvements, machinery and equipment, located at 9217 South Freeway, Fort
Worth, Texas 76140, as per the attached Exhibit A. Said building and
improvements, machinery and equipment, hereinafter referred to as the "Leased
Premises", all to be subject to the following terms and conditions:
1. TERM The Lease shall be for a term of five (5) years commencing the
18th day of February, 1997, and ending on the 17th day of February, 2002,
hereafter called the "Initial Lease Period". If the Leased Premises, and
Delta's burning table, press-brake and cranes, are not available and fully
operational on the above lease commencement date, the lease term and lease
payments will begin on the date the Leased Premises and Delta's aforementioned
equipment are available and fully operational, and the ending date shall be
extended accordingly.
2. RENT FWT agrees to pay Delta rent at Delta's office at 5599 San Felipe,
Suite 600, Houston, Texas 77056 in Harris County for the Leased Premises. The
rent is payable in monthly installments, in advance, as calculated pursuant to
section 3 below, beginning April 1, 1997 and on the same day of each succeeding
month during the term of this Lease. Rent for the period February 18 through
March 31, 1997 shall be payable in March 1997.
3. RENT CALCULATION The monthly rent shall be calculated on the following
basis:
o The total construction cost of the Leased Premises attributable to
FWT will be amortized over sixty (60) months, plus interest at an
annual rate of 8%. This amount will be included in the rent
calculation. The construction cost of FWT's Leased Premises includes,
but is not limited to, the building, drive, cranes, new gate,
warehouse and manager's office, but excludes the press-brake
foundation costs and fencing. The construction cost is based on the
contractor's final invoice to Delta and will include such costs as
contractor's overhead, permit costs, etc. Plus
o FWT's portion of the annual property taxes as provided for under the
section entitled TAXES below, in section 5. Plus
o Property insurance on the Leased Premises as provided for under the
section entitled INSURANCE below, in section 7.
o The cost of capital additions made during the Lease term which both
Delta and FWT agree are for the direct benefit of FWT, such as
additional cranes, equipment or warehouse space, will be
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LEASE AGREEMENT
amortized over the remainder of the Lease term with interest at 8%.
This amount will be added to the monthly rent.
4. REPAIRS, MAINTENANCE AND ALTERATIONS FWT agrees to maintain the Leased
Premises in good condition at its own expense and cost. FWT will be responsible
for the maintenance and repairs to the crane and other machinery and equipment
associated with normal wear and for any damage due to misuse or abuse. FWT
shall follow Delta inspection and maintenance procedures. Delta has the right,
in the event FWT does not maintain the Leased Premises as required herein and
after giving FWT written notice and ten (10) days to cure such default, to
order such repairs or maintenance as may be deemed necessary by Delta, and to
charge the cost thereof to FWT, said cost to be an additional amount due from
FWT on the first day of the month following notice to FWT that such work has
been performed.
The Leased Premises shall remain the property of Delta and, at the end of this
Lease, FWT shall deliver all of the Leased Premises in good order or condition,
normal wear and tear, natural deterioration and the elements excepted. No
improvements or alterations may be made in or to the Leased Premises without
the prior written consent of Delta, which consent shall not be unreasonably
withheld, conditioned or delayed.
5. TAXES FWT agrees to pay all real estate and personal property taxes
assessed against the Leased Premises during the Lease period. An amount equal to
1/12 of the prior year's actual annual property taxes will be included in the
monthly rent. This will be adjusted to the actual tax amount once the final
assessment is received. FWT shall have 30 days to pay any such adjustments. The
property taxes applicable to the Leased Premises shall be calculated by a
property tax consultant selected by mutual agreement of the parties.
6. UTILITY CHARGES FWT shall pay all service charges for meters and for
water, gas and power charges that may accrue by reason of the occupancy and/or
use of the premises by FWT. Electric bills will be split between the parties
based on a study by a consultant selected by mutual agreement of the parties.
7. INSURANCE Delta shall carry and keep in force owners property coverage on
the Leased Premises. FWT will reimburse Delta for the cost of this insurance in
the amount of $125 per month. FWT will maintain insurance coverage on its
contents in the Leased Premises. The insurance and liability provisions of the
Cooperative Production Agreement between the parties dated March 10, 1997, shall
control, subject to the terms of this paragraph.
8. DAMAGE TO PREMISES In case the Leased Premises are partially damaged or
destroyed by fire, windstorm, tornado or other casualty, FWT shall immediately
give notice to Delta, who shall, at its own expense, repair the damage and
restore the Leased Premises to substantially the same condition as existed
immediately prior to the damage. If the Leased Premises can not be repaired or
restored in 120 days, FWT shall have the right to terminate the Lease. Should
the damage be of such a nature as to render it impractical for FWT to conduct
normal business activities in the Leased Premises, then the rent shall be abated
in proportion to the inability of FWT to conduct such normal business activities
and for the period such inability exists. If the Premises are totally destroyed
or deemed by Delta to be unfit for restoration or reconstruction, or if Delta
should elect not to repair the damage and restore the premises, then this Lease
shall terminate and neither party shall have any further right, duty or
obligation hereunder and the rent due shall be paid to the time-of such damage
or casualty.
9. USE FWT agrees to use the Leased Premises for the sole and only purpose of
seam-welding and prepping poles and further agrees not to use the Leased
Premises for the purpose of conducting an illegal or unlawful business.
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LEASE AGREEMENT
10. ASSIGNMENT, SUBLETTING FWT shall not assign this Lease or sublease the
Leased Premises or any part thereof without the written consent of Delta. No
subletting or assignment will release FWT from any obligations under this
Lease.
11. LAWS AND GOVERNMENTAL REGULATIONS FWT shall promptly comply with all of
the ordinances and laws applicable to the Leased Premises and the business being
conducted thereon and all orders and requirements imposed by the Board of
Health, Sanitation and Police Departments for the correction, prevention and
abatement of nuisances in or upon or connected with said premises during the
term of this Lease, all at FWT's expense.
12. SIGNS Delta agrees to place a FWT logo on a sign (approximately 4' by
8') near the entrance to FWT's leased facility as well as paint a FWT logo
(approximately 15' by 25') on the top, northwest corner of the FWT-leased
building.
13. PARKING Delta shall provide parking for eight (8) to ten (10) FWT
employees at no charge.
14. DEFAULT In case of default in any of the covenants herein and the
continuance thereof for a period of at least thirty (30) days after receipt by
FWT of written notice of such default from Delta, then Delta may enforce the
performance of this Lease in any mode provided by law. This Lease may be
forfeited at Delta's discretion if a default continues for a period of thirty
(30) days after written notice by Delta to FWT of such default and its intention
to declare the lease forfeited. Unless FWT completely removes or cures said
default, this Lease shall cease and come to an end as if that were the day
originally fixed herein for the expiration of this Lease. Delta shall have alien
right as security for the rent aforesaid upon all the goods, wares, chattels,
implements, fixtures, furniture, tools and other personal property which are or
may be put on the Leased Premises.
15. BANKRUPTCY In the event that the FWT shall become bankrupt or shall make a
voluntary assignment for the benefit of creditors, or in the event that a
receiver of FWT shall be appointed, then, at the option of Delta and upon twenty
(20) days notice to FWT of the exercise of such option, this Lease shall
terminate.
16. CONDEMNATION If, during the term of this Lease, there is a taking of all
the Leased Premises, or so large a part thereof that the remainder is rendered
unsuitable for continued operation of FWT's business or cannot be practicably
and economically restored to operating condition, then this Lease shall
terminate.
If a lesser part of the Leased Premises than described in the preceding
paragraph should be so taken, then the rental hereunder shall be reduced in the
same proportion that the Leased Premises are taken. This provision shall be
also applicable to any conveyance in lieu of condemnation proceeding.
17. INSPECTION OF PREMISES Delta shall have the right to enter upon the Leased
Premises at all reasonable hours for the purpose of inspecting same.
18. HOLDING OVER In the event FWT remains in possession of the Leased Premises
after the expiration or termination of this Lease and without the execution of a
new lease, FWT shall be deemed to be occupying said premises as a tenant from
month-to-month at a rate equal to 150% of the last monthly rental amount paid
hereunder. All other provisions of this Lease shall remain in effect.
19. MORTGAGES Delta reserves the right to subordinate this Lease at all times to
the lien of any mortgage or mortgages upon Delta's interest in the premises, and
upon the lands of which the premises are a part, or upon any building hereafter
placed upon the lands of which the premises form a part. Upon demand by Delta,
FWT shall execute and deliver such further instruments subordinating this Lease
in the event of conveyance in lieu of foreclosure, as long as FWT shall not be
in default under the terms of this Lease.
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20. RECORDING OF LEASE This Lease shall not be filed for record. If
recording of the pertinent provisions is desired by either party, the parties
will execute a memorandum of lease for such purposes which in no event shall
exceed one page (8 1/2 inches by 14 inches), including acknowledgments.
21. LIEN FOR RENT Notwithstanding any provision herein to the contrary, Delta
shall have at all times the right to distrain for rent due and shall have a
valid first lien right upon all personal property of FWT placed in or upon the
Leased Premises, whether such personal property is exempt by law or not, as
security for the payment of the rent herein reserved.
22. WAIVER OF BREACH Any assent or waiver expressed or implied by Delta to any
breach by FWT or any condition herein contained, shall operate as assent or
waiver only in that specific instance and shall not be construed as an assent or
waiver of any such covenant or condition generally or of any subsequent breach
of the covenants and conditions hereof.
23. RENEWAL Terms and conditions for the renewal period will be negotiated
at the end of the third year of the Initial Lease Period. If at the end of the
Initial Lease Period, FWT is not in default of any of the terms and conditions
of this Lease, the Lease shall be renewed with the previously negotiated terms
for the renewal period. Delta and FWT will execute a lease extension for this
renewal period.
After the Initial Lease Term, the lease rate will be set at a mutually
agreeable market rate for comparable space, equipment and terms but in no case
shall the new lease rate exceed 80% of the current lease rate unless capital
improvements are made or more equipment is added at the request of FWT. Any new
capital improvements will be amortized over the new lease period.
24. HEIRS AND ASSIGNS The agreements, covenants, terms and conditions
contained in this Lease shall be binding on the heirs, devises, successors and
assigns of all parties hereto.
25. PLACE OF NOTICE Any notice or document required or permitted to be
delivered hereunder shall be deemed to be delivered, whether actually received
or not, when deposited in the United States mail, postage prepaid, certified
mail, return receipt requested, addressed to the parties hereto at the
respective addresses set out below, or at such other address as they have
heretofore specified by written notice delivered in accordance herewith.
DELTA STEEL, INC. FWT, Inc.
5599 San Felipe, Suite 600 P.O. Box 8597
Houston, TX 77056 Fort Worth, TX 76124
ATTN: V. Thomas Rudd
EXECUTED on the day and year first above written.
TENANT
DELTA STEEL, INC. FWT, Inc.
BY: /s/ R. A. EMBRY BY: /s/ T. W. MOORE
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