This Deed Prepared By and After Recording Return To:
Scott A. Dyche, Esquire
Kane, Russell, Coleman & Logan, P.C.
3700 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
(214) 777-4228
ASSIGNMENT OF LEASE, INDEMNITY AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT OF LEASE, INDEMNITY AND ASSUMPTION AGREEMENT is
made and entered into as of August 27, 2003 ("Assignment"), by
CYPRESS/GR WOODLANDS I, L.P., a Texas limited partnership
("Assignor") to AEI REAL ESTATE FUND XV LIMITED PARTNERSHIP (21%
undivided ownership interest); AEI REAL ESTATE FUND XVIII LIMITED
PARTNERSHIP (24% undivided ownership interest); AEI INCOME AND
GROWTH FUND XXII LIMITED PARTNERSHIP (32% undivided ownership
interest); and AEI INCOME AND GROWTH FUND 24 LLC (undivided 23%
ownership interest), (herein collectively referred to as
"Assignee").
W I T N E S S E T H
WHEREAS, pursuant to that certain Purchase Agreement dated
effective July 25, 2003, by and between Assignor and Assignee (the
"PURCHASE AGREEMENT"), Assignor is selling to Assignee and Assignee
is purchasing certain real property legally described in Exhibit A
attached hereto and made a part hereof, together with the
improvements and certain personal property located thereon
(collectively, the "PROPERTY").
WHEREAS, in connection with such transfer of the Property,
Assignor desires to assign to Assignee that certain Lease made and
entered into by Assignor, as landlord ("LANDLORD") and Garden Ridge,
L.P., a Texas limited partnership, as tenant ("TENANT"), security
and other deposits, if any, and Assignee desires to accept such
assignment;
NOW, THEREFORE, in consideration of TEN DOLLARS ($10.00) and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. All capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to them in the
Purchase Agreement.
2. The Lease. Assignor hereby agrees and warrants as
follows: (i) a true and correct originals of the Lease (defined
below) has been delivered by Assignor to Assignee; (ii) the Lease
constitutes the sole agreement between Assignor and the Tenant
(defined below) with respect to the premises therein described;
(iii) the Lease is unmodified and in full force and effect in
accordance with their terms; and (iv) Assignor has not given, made
or received, any notice of default or claim under or with respect to
the Lease.
3. Assignment of Lease by Assignor. Assignor hereby
assigns and transfers unto Assignee all of its right, title, claim
and interest, if any, in and under that certain lease dated July 13,
2000 (the "Lease"), made and entered into by and between Assignor,
as Landlord, and Garden Ridge, L.P., a Texas limited partnership
("Garden Ridge"), as Tenant, with respect to the Property and all
security and other deposits, if any, paid or deposited by Garden
Ridge in respect thereof.
4. Assumption of Lease by Assignee. Assignee hereby
accepts the foregoing assignment and assumes and agrees to perform
all obligations, covenants and provisions accruing or arising or
required from and after the date hereof with respect to the Lease.
5. Indemnity from Assignor. Assignor shall indemnify,
defend, and hold harmless Assignee from all claims, causes of
action, costs, losses, damages and attorney's fees arising out of or
incurred in connection with the Lease, if any, prior to the
Effective Date of this Agreement.
6. Indemnity from Assignee. Subject to the
representations and warranties made by Assignor in Section 1 of this
Agreement, Assignee shall indemnify, defend and hold harmless
Assignor from all claims, causes of action, costs, losses, damages
and attorney's fees arising out of or incurred in connection with
the Lease from and after the Effective Date of this Agreement.
4. Successors and Assigns. This Assignment shall be
binding on and inure to the benefit of the parties hereto, their
heirs, executors, administrators, successors in interest and
assigns.
5. Execution in Counterparts. This Assignment may be
executed in counterparts, each of which shall constitute an
original, but all together shall constitute one and the same
Assignment.
6. Attorneys' Fees. If any litigation between Assignor
and Assignee arises out of the obligations of the parties under this
Assignment or concerning the meaning or interpretation of any
provision contained herein, the losing party shall pay the
prevailing party's costs and expenses of such litigation including,
without limitation, reasonable attorneys' fees.
7. Conflict Between Assignment and Purchase Agreement.
In the event of any conflict or inconsistency between the terms of
this Assignment and the terms of the Purchase Agreement, the terms
of the Purchase Agreement shall prevail.
8. Governing Applicable Law. This Agreement shall be
construed under and enforced in accordance with the laws of the
State of Texas.
IN WITNESS WHEREOF, Assignor and Assignee have executed this
Agreement the day and year first above written.
ASSIGNOR: CYPRESS/GR WOODLANDS I, L.P.,
a limited partnership
By: CYPRESS WOODLANDS, INC.,
a Texas corporation,
its general partner
By: Chiristopher C Maguire
Christopher C. Maguire,
President
ASSIGNEE: AEI REAL ESTATE FUND XV, LIMITED
PARTNERSHIP (21% undivided ownership
interest)
By:AEI FUND MANAGEMENT 86-A,
INC., a Minnesota corporation
By: /s/ Robert P Johnson
Name: Robert P. Johnson
Title: President
AEI REAL ESTATE FUND XVIII LIMITED
PARTNERSHIP (24% undivided ownership
interest)
By:AEI FUND MANAGEMENT XVIII, INC.,
a Minnesota corporation
By: /s/ Robert P Johnson
Name: Robert P. Johnson
Title: President
AEI INCOME AND GROWTH FUND XXII
LIMITED PARTNERSHIP (32% undivided
ownership interest)
By:AEI FUND MANAGEMENT XXII, INC.,
a Minnesota corporation
By: /s/ Robert P Johnson
Name: Robert P. Johnson
Title: President
AEI INCOME AND GROWTH FUND 24 LLC (23%
undivided ownership interest)
By:AEI FUND MANAGEMENT XXI,
INC., a Minnesota corporation
By: /s/ Robert P Johnson
Name: Robert P. Johnson
Title: President
STATE OF TEXAS
COUNTY OF DALLAS
BEFORE ME, the undersigned authority, a Notary Public in and f
or the State of Texas, on this day personally appeared Christopher
C. Maguire, as president of Cypress/GR Woodlands, Inc., a Texas
corporation, as general partner for Cypress/GR Woodlands I, L.P., a
Texas limited partnership, known to me (or has produced
as identification) to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the
same as his/her free act and deed, for the purposes and
consideration therein expressed and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 25 day of
September 2003.
/s/ Merrilee Biagioni
[notary stamp] Notary Public, State of Texas
My Commission Expires: Merrilee Biagioni
STATE OF MINNESOTA
COUNTY OF Ramsey
BEFORE ME, the undersigned authority, a Notary Public in and
for the State of Minnesota, on this day personally appeared Robert
P. Johnson, President of AEI Fund Management 86-A, Inc., a Minnesota
corporation, AEI Fund Management XVIII, Inc., a Minnesota
corporation, AEI Fund Management XXII, Inc., a Minnesota
corporation, and SEI Fund Management XXI, Inc., a Minnesota
corporation, known to me (or has produced as identification) to be
the person whose name is subscribed to the foregoing instrument,
and acknowledged to me that he executed the same as his/her free
act and deed,for the purposes and consideration therein expressed
and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 25 day of August
2003.
/s/ Michael B Daugherty
Notary Public, State of Minnesota
My Commission Expires: Michael B Daugherty
[notary stamp]
Exhibit "A"
Legal Description of the Property
TRACT I (FEE SIMPLE):
BEING a 9.9996 acre (called 9.9991 acre)(435,580 square feet)
tract of land, being the same parcel of land described in an
"Annexation" dated July 17, 2000 as recorded in Montgomery
County Clerk File Number (MCCF#) 2000-059756 and Film Code
Number (FC#) 741-00-0315 and being a portion of a called
1,972.22 acre tract, as described in a deed dated July 31, 1997
between The Woodlands Commercial Properties Company, L.P. and
The Woodlands Land Development Company, L.P., as recorded in
MCCF# 9747722 Montgomery County Real Property Records (MCRPR)
and The Woodlands College Park, Section One, an addition to
Montgomery County as recorded in Cabinet M, Sheet 55, of the
Montgomery County Map Records (M.C.M.R.), all bearings related
to said plat, which is referenced to the Texas State Plane
Coordinate System, South Central Zone (NAD 27) and being more
particularly described by metes and bounds as follows:
COMMENCING at a 5/8 inch iron rod with cap, found for the
northwest corner of said plat, also being the point of
beginning of said plat, having a coordinate value of
X=3,116,971.62, Y=881,621.38;
THENCE, along a curve to the right, having a radial line
bearing of S 84 degrees 34 minutes 16 seconds W, a central
angle of 02 degrees 20 minutes 51 seconds, a radius of 500.00
feet, a chord which bears of S 04 degrees 14 minutes 54 seconds
E, a distance of 20.48 feet, an arc distance of 20.49 feet, to
a 5/8" iron rod with cap, found for the end of curve, also
being a point on the west line of said College Park Section One
and the east line The Woodlands Commerce Center Section One, as
recorded in Cabinet "H", Sheets 109A and 109B (M.C.M.R.);
THENCE, along said common line S 03 degrees 04 minutes 51
seconds E, a distance of 146.35 feet, to a point;
THENCE, leaving said common line, N 86 degrees 55 minutes 30
seconds E, a distance of 888.72 feet, to a 5/8" iron rod with
cap found, as called, for the southwest corner of herein
described tract and the POINT OF BEGINNING;
THENCE N 03 degrees 04 minutes, 30 seconds W, a distance of
491.00 feet to a 5/8 inch iron rod with cap, found as called,
for the most westerly northwest corner of the herein described
tract, said point also being a point of curvature;
THENCE, along a curve to the right and northeasterly, an arc
distance of 47.12 feet to a 5/8 inch iron rod with cap, found,
as called, for the point of tangency and the most northerly
northwest corner of the herein described tract, said curve
having a central angle of 90 degrees 00 minutes 00 seconds, a
radius of 30.00 feet, and a long chord with bears N 41 degrees
55 minutes 30 seconds E, 42.43 feet;
THENCE N 86 degrees 55 minutes 30 seconds E, a distance of
791.33 feet to a "PK" nail in concrete, found, as called, for
the northeasterly corner of the herein described tract;
THENCE S 06 degrees 23 minutes 28 seconds E, a distance of
521.87 feet to a 5/8" iron rod, with cap, set, for the
southeast corner of the herein described tract;
THENCE S 86 degrees 55 minutes 30 seconds W, a distance of
851.52 feet to the POINT OF BEGINNING, delineating and
encompassing within the metes recited 9.9996 acres (435,580
square feet) of land, more or less.
TRACT II (NON-EXCLUSIVE EASEMENT):
Non-exclusive easement estate appurtenant to Tract I created in
Reciprocal Easement Agreement dated December 15, 1999, recorded
under Clerk's File No. 99104055 of the Real Property Records of
Montgomery County, Texas, as amended by Designation of
Additional Tract and Easement dated July 17, 2000, recorded in
the Real Property Records of Montgomery County, Texas, covering
and affecting the real property more particularly described
therein.
FIRST AMENDMENT TO LEASE
This First Amendment to Lease (this "First Amendment") is
entered into between CYPRESS/GR WOODLANDS I, L.P. ("Landlord") and
GARDEN RIDGE, L.P. ("Tenant") dated as of May 31, 2001.
Recitals
A. Landlord and Tenant entered into a Lease, dated as of July
13, 2000 (the "Lease") regarding the lease of certain property
located in the City of Houston, County of Harris, State of Texas, as
more particularly defined therein (the "Premises").
B. Landlord and Tenant want to amend certain provisions of
the Lease subject to the terms and conditions contained herein.
C. Unless otherwise defined herein, all capitalized terms
used in this First Amendment shall have the meaning given to them in
the Lease.
In consideration of the foregoing recitals, and the provisions
contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Base Rent. Section 4.1 is deleted in its entirety and the
following language is inserted in its place:
"(a) Commencing on the Rent Commencement Date of this Lease and
terminating on the last day of the twentieth (20th) Lease Year
hereunder, monthly Base Rent of Seventy Eight Thousand Five Hundred
Forty Four and 62/100 Dollars ($78,544.62);"
2. Miscellaneous.
(a) The Lease, as amended by this First Amendment,
constitutes the understanding between the parties relating to the
subject matter of this First Amendment, and all prior agreements,
proposals, negotiations, understandings and correspondence between
the parties in this regard, whether written or oral, are superseded
and merged with this First Amendment. Except as modified in this
First Amendment, the Lease remains in fill force and effect and is
hereby ratified in all respects.
(b) This First Amendment may be executed simultaneously
in counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. The
use of telecopied signatures in place of original signatures on this
First Amendment is expressly allowed. Landlord and Tenant intend to
be bound by the signatures on the telecopied document, are aware
that the other parties will rely on the telecopied signatures, and
waive any defenses to enforcement of the terms of this First
Amendment based on the form of signature.
1
(c) The recitals set forth above are incorporated herein
by this reference.
Landlord and Tenant have duly executed this First
Amendment as of the day and year first above written.
LANDLORD:
CYPRESS/GR WOODLANDS I, L.P.
By: Cypress/GR Woodlands, Inc.,
General Partner
By: /s/ Christopher C Maguire
Christopher C. Maguire,
President
TENANT:
GARDEN RIDGE, L.P.
By: Garden Ridge Management, Inc.,
General Partner
By:/s/ Jane Arbuthnot
Name: Jane Arbuthnot
Title: CFO
2
AMENDED AND RESTATED
FIRST AMENDMENT TO LEASE
This Amendment and Restated First Amendment to Lease (this
"Amended First Amendment") is entered into between CYPRESS/GR
WOODLANDS I, L.P. ("Landlord") and GARDEN RIDGE, L.P. ("Tenant")
dated as of January 31, 2002, but effective as of May 31, 2001.
Recitals
A. Landlord and Tenant entered into a Lease, dated as of July
13, 2000 (the "Lease") regarding the lease of certain property
located in the City of Houston, County of Harris1 State of Texas, as
more particularly defined therein (the "Premises").
B. Landlord and Tenant entered into a certain First Amendment
to Lease (the "Amendment"), dated as of May 31, 2001, amending the
Lease in certain respects.
C. Landlord and Tenant desire to amend and restate the
Amendment in its entirety to correct a typographical error,
In consideration of the foregoing recitals, and the provisions
contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Base Rent. Section 4.1(a) only is deleted in its entirety
and the following language is inserted in its place:
"(a) Commencing on the Rent Commencement Date of this Lease and
terminating on the last day of the twentieth (20th) Lease Year
hereunder, monthly Base Rent of Seventy Eight Thousand Five Hundred
Forty Four and 62/100 Dollars ($78,544.62);"
2. Miscellaneous
(a) The Lease, as amended by this Amended First
Amendment, constitutes the understanding between the parties
relating to the subject matter of this Amended First Amendment, and
all prior agreements, proposals, negotiations, understandings and
correspondence between the parties in this regard, whether written
or oral, are superseded and merged with this Amended First
Amendment. Except as modified in this Amended First Amendment, the
Lease remains in full force and effect and is hereby ratified in all
respects.
(b) This Amended First Amendment may be executed
simultaneously in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument. The use of telecopied signatures in place of
original signatures on this Amended First Amendment is expressly
allowed. Landlord and Tenant intend to be bound by the signatures on
the telecopied document, are aware that the other parties will rely
on the telecopied signatures, and waive any defenses to enforcement
of the terms of this Amended First Amendment based on the form of
signature. 1
(c) The recitals set forth above are incorporated herein
by this reference.
Landlord and Tenant have duly executed this Amended First
Amendment as of the day and year first above written.
LANDLORD:
CYPRESS/OR WOODLANDS 1, LP.
By: Cypress/GR Woodlands, Inc.,
General Partner
By:
Christopher C. Maguire,
President
TENANT:
GARDEN RIDGE, L.P.
By: Garden Ridge Management, Inc.,
General Partner
By: /s/ Jane Arbuthnot
Name: Jane Arbuthnot
Title: CFO
2
LEASE
BY AND BETWEEN
CYPRESS/GR WOODLANDS I, L.P.
AS LANDLORD,
AND
GARDEN RIDGE, L.P.
AS TENANT
WOODLANDS, MONTGOMERY COUNTY, TEXAS
INDEX TO
LEASE PROVISIONS
ARTICLE I Incorporation of Preambles - Certain Definitions 1
1.1 Incorporation of Preambles 1
1.2 Certain Definitions 1
ARTICLE II Lease of Premises 2
ARTICLE III Term and Extensions 2
3.1 Initial Term 2
3.2 Lease Year 3
3.3 Extensions 3
3.4 Rent Commencement Date 3
ARTICLE IV Rent 4
4.1 Base Rent 4
4.2 Partial Month Rent 5
4.3 Terms of Payment 5
4.4 Additional Rent 5
4.5 Rent 5
4.6 Guaranty 5
ARTICLE V Absolute Net Lease 5
ARTICLE VI Use 6
ARTICLE VII Subletting and Assignment 6
7.1 Subletting and Assignment 6
7.2 Assignment by Landlord 7
ARTICLE VIII Quiet Enjoyment - Landlord's Warranty 7
ARTICLE IX Alterations 7
9.1 Tenant's Alterations 7
9.2 Method of Alterations 8
ARTICLE X Tenant's Property 8
10.1 Installation, Removal 8
10.2 Required Removal 8
10.3 Title at Termination 9
10.4 Tenant Financing 9
ARTICLE XI Lien or Encumbrance 9
11.1 No Liens 9
11.2 No Consent to Work, Lien or Encumbrance 9
ARTICLE XII Repairs and Maintenance 10
12.1 DutytoRepair 10
12.2 Definition and Standard of Repair 10
12.3 No Obligation to Repair 10
ARTICLE XIII Requirements of Law 11
13.1 Requirements 11
13.2 Nullification of Termination 11
13.3 Recapture of Landlord's Payment; Additional Rent 12
ARTICLE XIV Damage or Destruction 12
14.1 Tenant's Obligation to Rebuild 12
14.2 Approval of Plans and Specifications 12
14.3 Payment from Escrow 12
14.4 Failure to Reconstruct: Termination 13
14.5 Force Majeure 13
14.6 No Abatement of Rent 13
14.7 Default in Payment of Rent 13
ARTICLE XV Insurance 14
15.1 Casualty Property Insurance 14
15.2 Boiler Insurance 14
15.3 Public Liability Insurance 14
15.4 Workers' Compensation,Employer's Liability Insurance 15
15.5 Business Interruption 15
15.6 Insurance on Tenant's Property 15
15.7 No Separate Insurance 15
15.8 Conduct of Business, Cooperation 15
15.9 Requirements of Policies 15
15.10Release, Waiver of Subrogation 16
ARTICLE XVI Indemnification of Landlord 17
ARTICLE XVII Condemnation 18
17.1 Authority 18
17.2 Taking 18
17.3 Termination 18
17.4 Restoration 18
ARTICLE XVIII Default 19
18.1 Events of Default 19
18.2 Landlord's Rights Upon Tenant's Default 19
18.3 Re-letting 20
18.4 Damages Upon Termination 21
ARTICLE XIX Signs 22
ARTICLE XX Taxes and Other Liens 22
20.1 Impositions 22
20.2 Tax on Tenant Additions 22
20.3 Exceptions 22
20.4 Proof of Payment 23
20.5 Refunds 23
20.6 Protest 23
20.7 Requirements of Mortgage 23
ARTICLE XXI Utilities 24
21.1 Payment of Charges 24
21.2 Provision of Services 24
ARTICLE XXII Holding Over 24
ARTICLE XXIII Notice 24
23.1 Notice Address 24
23.2 Service of Notice 25
ARTICLE XXIV Subordination 25
24.1 Lease Subordinate 25
24.2 Attomment 26
24.3 Attomment to Successor 26
ARTICLE XXV Landlord's Access to the Premises 26
ARTICLE XXVI Environmental Compliance 27
26.1 Definitions 27
26.2 Compliance 27
ARTICLE XXVII Landlord's Work 28
ARTICLE XXVIII Estoppel Certificates 28
ARTICLE XXIX Reports 29
ARTICLE XXX Declarations, Covenants, Conditions Restrictions and
Agreements 29
ARTICLE XXXI Provisions of General Application 30
LEASE
THIS LEASE (hereinafter sometimes referred to as this "Lease"
or this "Agreement"), as of the 13th day of July, 2000, by and
between CYPRESS/GR WOODLANDS I, L.P., a Texas limited partnership;
having its principal place of business at 15601 Dallas Parkway,
Suite 400, Dallas, Texas 75001 (hereinafter referred to as
"Landlord"), and GARDEN RIDGE, L.P., a Texas limited partnership,
maintaining its headquarters at 19411 Atrium Place, Suite 170,
Houston, Texas 77084 (hereinafter referred to as "Tenant");
WITNESSETH THAT:
WHEREAS, Tenant desires to lease from Landlord upon the terms
and conditions set out herein, the real property described in
Exhibit A (the "Site") and illustrated in Exhibit B (the "Site
Plan") located in the City of Woodlands, County of Montgomery, State
of Texas; and
WHEREAS, Landlord is willing to purchase and improve said real
property and to lease said real property to Tenant upon the terms
and conditions set out herein;
NOW, THEREFORE, for and in consideration of the foregoing
preambles, of the mutual promises and covenants contained herein, of
Ten Dollars ($10.00) in hand paid by Tenant to Landlord, and of
other good and valuable consideration, the receipt and sufficiency
of all of which is hereby acknowledged by both Landlord and Tenant,
Landlord and Tenant hereby agree as follows:
ARTICLE I
Incorporation of Preambles - Certain Definitions
1.1 Incorporation of Preambles. The foregoing preambles and
the exhibits referenced herein are hereby incorporated into this
Lease as a part hereof by this reference thereto.
1.2 Certain Definitions. Reference is made in this Article 1.2
to certain defined terms used herein which are defined in the
Articles referred to opposite each such term, as follows:
Term Article Where Defined
"Additional Rent" Article 4.4
"Agreement" Preamble
"Base Rent" Article 4.1
"Covenants and Agreements" Article VI
"Environmental Laws" Article 26.1(a)
"Force Majeure" Article 14.5
"Improvements" Article II
"Initial Term" Article 3.1
"Landlord" Preamble
1
"Laws" Article 13.1
"Lease" Preamble
"Lease Year" Article 3.2
"Premises" Article II
"Prime Rate" Article 18.3(c)
"REA" Exhibit C, Paragraph (A)(4)
"Regulated Substance" Article 26.1(b)
"Rent" Article 4.5
"Rent Adjustment Date" Article 4.1
"Rent Commencement Date" Article 3.1
"Site" Preamble
"Site Plan" Preamble
"Tenant" Preamble
"Tenant Delay" Exhibit C, Paragraph (G)
"Tenant's Building" Article II
"Tenant Environmental Event" Article 26.2(a)
"Tenant's Property" Article 10.1
"Term" Article 3.3
ARTICLE II
Lease of Premises
Landlord, for and in consideration of the rent to be paid and
of the covenants and agreements herein contained to be kept and
performed by Tenant, does hereby exclusively lease and demise to
Tenant, and Tenant does hereby exclusively hire from Landlord, the
real property being located in the City of Woodlands, County of
Montgomery, State of Texas, described in Exhibit A and illustrated
on Exhibit B, including all improvements now or hereafter to be
constructed thereon, which improvements are to consist of a retail
sales building containing approximately one hundred eleven thousand
five hundred seventy (111,570) square feet (the same, as modified in
accordance with Article IX below is herein called the "Tenant's
Building") and all fixtures and accessory improvements now or
hereafter thereon, including all roadway, parking areas and
landscaped areas now or hereafter located thereon (collectively such
Tenant's Building, fixtures and improvements are hereinafter
referred to as the "Improvements") together with all easements,
rights, privileges and amenities otherwise appurtenant to such real
property (herein called the "Premises"). Said Premises and
Improvements are indicated upon the site plan attached hereto as
Exhibit B (the "Site Plan").
ARTICLE III
Term and Extensions
3.1 Initial Term. The initial term ("Initial Term") of this
Lease shall commence on the day (the "Rent Commencement Date") which
is the earlier to occur of (x) ninety (90) days following the
Delivery Date (defined below) or (y) the date Tenant commences the
conduct of its normal and customary business therefrom.
Notwithstanding the foregoing, if the Delivery Date occurs between
December 1 and the following January 15, the Delivery Date shall be
deemed to be such January 15. The "Delivery Date" shall mean the
date upon which all of the following have been accomplished: (i)
exclusive (subject to Landlord's, its agents', contractors' or
2
employees', entry for the purposes of completing the punch list),
actual possession of the Premises is delivered to Tenant with all of
the Landlord's Work (defined in Exhibit C attached hereto) having
been substantially completed in accordance with, and as defined in,
said Exhibit C, (ii) Landlord has obtained and delivered to Tenant a
duly executed subordination, non-disturbance and attornment
agreement in the form of Exhibit D attached hereto from all lenders
holding a lien on any of the land upon which the Premises is
located, (iii) Landlord has delivered to Tenant a certificate of
occupancy (or the equivalent thereof) with respect to the Landlord's
Work from all applicable governmental authorities and under the
Covenants and Agreements; Landlord shall be deemed to have obtained
such certificate if the same is not issued because of work being
conducted by Tenant within the Premises or due to Tenant Delays
(defined in Exhibit C hereto). The Initial Term shall end on the
twentieth (20th) complete Lease year following the Rent Commencement
Date. Regardless of the exercise or non-exercise by Tenant of any or
all of the options to renew set forth in this Lease, Tenant shall
have, unless the last day of the Term shall be January 31 of any
year, the option to extend (or further extend, as the case may be)
the Term of this Lease for such period of time as shall cause the
last day of the Term of this Lease to be the January 31 next
succeeding the date upon which the term of this Lease would expire
but for the exercise of this option. This option shall be exercised
by notice to Landlord not less than six (6) months prior to the
expiration of the Term of this Lease or any extension thereof. Base
Rent during this option period shall be the same Base Rent payable
under the terms of this Lease at the time Tenant notifies Landlord
of its intention to exercise this option.
3.2 Lease Year. The first Lease Year during the Term shall be
the period commencing on the Rent Commencement Date and terminating
at the end of the twelfth (12th) calendar month thereafter. Each
subsequent Lease Year during the Term shall consist of a year,
except that the last Lease Year during the Term shall terminate on
the date that this Lease is terminated.
3.3 Extensions. Provided that Tenant is not in default of this
Lease, Landlord hereby grants to Tenant four (4) successive options
to extend the Term for periods of five (5) years each on the same
terms and conditions as applied during the Initial Term, each
exercisable by Tenant's written notice to Landlord of such exercise
given (i) not less than twelve (12) months prior to the expiration
of the Initial Term hereof, or of the then existing option period,
as the case may be, or (ii) within ten (10) days following service
of notice from Landlord advising Tenant that it has not timely
exercised any option to extend the Term of this Lease. Should Tenant
fail to exercise any prior extension option offered hereunder, all
subsequent extension options shall be deemed waived as well. Tenant
shall have no other renewal rights hereunder, except as set forth in
Section 3.1 above. No assignee or subtenant of Tenant shall have the
right to exercise any renewal rights nor shall any assignee (other
than any assignee as a result of a merger of Tenant with another, an
assignee who is controlled by, under common control with or
controlling Tenant, or an assignee who has acquired, in a single
transaction or a series of transactions, all or substantially all of
the assets of Tenant). The Initial Term of this Lease, plus all
options validly exercised by Tenant as provided in this Article III,
are herein collectively referred to as the "Term".
3.4 Rent Commencement Date. When the Rent Commencement Date
has been determined, Landlord and Tenant shall execute and deliver
to one another a memorandum in the form of Exhibit E attached
hereto, which shall expressly confirm the Base Rent, the Rent
3
Commencement Date, the expiration date of the Initial Term, that the
Landlord's Work has been completed (other than punch-list items) and
accepted by Tenant and which shall ratify and affirm all of the
provisions of this Lease.
ARTICLE IV
Rent
4.1 Base Rent. Tenant shall pay to Landlord as base rent
("Base Rent"), without, except as expressly provided for in Articles
XVII, XVIII, XXVII, and XXX(p) of this Lease, demand, notice,
abatement, deduction or offset, for the Premises, on the first day
of each month in advance, during the Term of this Lease and any
extensions hereof, as follows:
(a) Commencing on the Rent Commencement Date of this Lease and
terminating on the last day of the twentieth (20th) Lease Year
hereunder, monthly Base Rent of Seventy-Nine Thousand Four Hundred
Sixty-Nine and 58/100 Dollars ($79,469.58);
(b) "Rent Adjustment Date" shall be on the first day after the
end of the Fifth (5th), Tenth (10th), Fifteenth (15th) and every
Fifth (5th) Lease Year thereafter and continuing throughout the term
of this Lease and any extension thereof. On each Rent Adjustment
Date, the annual Base Rent shall be increased and shall be equal to
the lesser of (x) 110% of the annual Base Rent for the immediately
preceding Lease Year or (y) the CPI Adjusted Rent (hereinafter
defined).
(c) Notwithstanding anything to the contrary contained in this
Lease, the monthly Base Rent to be paid by Tenant pursuant to this
Section 4.1 from time to time during the Lease Term shall be the
lesser of (x) the amount of monthly Base Rent as stipulated in this
Section 4.1(a), (b) and (c), or (y) an amount (the "CPl Adjusted
Rent") equal to (i) the product of the monthly Base Rent first
required to be paid by Tenant pursuant to this Lease, times (ii) one
(1) plus a fraction, the numerator of which is thirty (30) times the
difference between the Consumer Price Index (as hereinafter defined)
most recently published at the time of calculation (the "Current
CPI") minus the Consumer Price Index as published at the time Tenant
commenced its payment of Base Rent hereunder (the "Base CPI"), and
the denominator of which shall be the Base CPI (provided, however,
that in no event shall such fraction be less than zero). The CPI
Adjusted Rent is illustrated by the following formula:
Original Base Rent x 1 + 30 x (Current CPI - Base CPI)
Base CPI
(d) "Consumer Price Index" shall mean the United States Department
of Labor, Bureau of Labor Statistics, Consumer Price Index - U.S.
City Average, All Items (1982-84 = 100). The Consumer Price Index
for any year shall be that published in December for that year. If
the manner in which the Consumer Price Index is determined by the
Bureau of Labor Statistics shall be substantially revised,
including, without limitation, a change in the base index year, an
adjustment shall be made by the parties in such revised index which
would produce results equivalent, as nearly as possible, to those
which would have been obtained if such Consumer Price Index had not
been so revised. If the Consumer Price Index shall become
unavailable to the
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public because publication is discontinued, or otherwise, or if
equivalent data is not readily available to enable the parties to
make the calculations referred to herein, then the parties shall
substitute therefor a comparable index based upon changes in the
cost of living or purchasing power of the consumer dollar published
by any other governmental agency, or if no such index shall be
available, then a comparable index published by a major bank or
other financial institution or by a university or a recognized
financial publication.
4.2 Partial Month Rent. If the Rent Commencement Date or the
date upon which the Term expires shall be other than the first or
last day of a calendar month, as the case may be, Base Rent shall be
pro-rated for such month (based upon a month consisting of 30 days).
4.3 Terms of Payment. All Rent and other payments to be made by
Tenant to Landlord hereunder shall be made payable to Landlord in
current legal tender of the United States of America and sent to
Landlord at the place in the United States to which notice to
Landlord is required to be sent hereunder unless Landlord shall
direct otherwise by notice to Tenant. Extensions, indulgences, or
changes by Landlord upon any occasion in the mode or time of payment
of rent or any other payment to be made by Tenant to Landlord
hereunder shall not be construed as any continuing waiver or change,
or as requiring or allowing in the future any similar change or
indulgence. Any Rent not paid when due shall bear interest from the
date due until paid at an annual rate equal to the lesser of (x) the
maximum non-usurious rate of interest permitted by law or (y) 18%.
Additionally, should Tenant fail to pay Rent when due and such
failure continues for a period of three (3) business days following
Landlord's notice to Tenant of such failure, then Tenant shall also
pay to Landlord a late fee equal to four percent (4%) of the past
due Rent; provided, that, Landlord shall not be obligated to provide
notice as described in this sentence on more than two (2) occasions
in any Lease Year.
4.4 Additional Rent. All amounts other than Base Rent which
Tenant is required to pay or discharge pursuant to this Lease
including, but not limited to, charges for taxes, insurance,
utilities, and any penalties for late payment of Base Rent shall
constitute "Additional Rent".
4.5 Rent. The term "Rent" shall mean all amounts due as Base
Rent and Additional Rent.
4.6 Guaranty. Concurrent herewith, Tenant has caused Garden
Ridge Corporation to execute and deliver to Landlord a guaranty of
this Lease in the form of Exhibit H attached hereto.
ARTICLE V
Absolute Net Lease
It is the purpose and intent of Landlord and Tenant that the
Rent hereinabove provided to be paid to Landlord by Tenant be
absolutely net to Landlord so that this Lease shall yield net to
Landlord without abatement, set-off or deduction therefrom the Rent
as hereinabove provided, to be paid during the Term of this Lease or
any extensions hereof, and, that all costs, expenses, and
impositions of every kind or nature whatsoever relating to the
Premises which may become due during the Term of this Lease or any
extensions hereof (including, without limitation, pursuant to the
Covenants and Agreements) be paid by Tenant, and Landlord be
indemnified, defended and
5
saved harmless by Tenant from and against the same. Tenant hereby
assumes and agrees to perform all duties and obligations with
relation to the Premises, as well as the use, operation, and
maintenance thereof even though such duties and obligations would
otherwise be construed to be those of the Landlord. Nothing herein
contained, however, shall be deemed to require Tenant to pay or
discharge any franchise taxes imposed on Landlord or income taxes
imposed upon Landlord or liens or mortgages of any character
whatever which may be placed upon the Premises by the affirmative
act of Landlord, or the costs and expenses incurred by Landlord in
connection with any sale of the Premises. Furthermore, nothing
herein shall release or relieve Landlord from its warranty
obligations with respect to the Landlord's Work set forth in Exhibit
C attached hereto.
ARTICLE VI
Use
The Premises shall be initially occupied and used by Tenant for
the purpose of conducting Tenant's business as is generally
conducted in Tenant's other stores as of the date hereof; provided,
that, at anytime after conducting such business for any period of
time, Tenant may thereafter use and occupy the Premises for the
conduct of any lawful business, subject to compliance with the
Covenants and Agreements. Tenant shall use and occupy the Premises
in accordance with all governmental laws, statutes, orders,
ordinances, rules and regulations of any governmental authority with
jurisdiction affecting the Premises from time to time, including,
without limitation, applicable zoning ordinances. Tenant agrees to
comply with the agreements identified on Exhibit F hereto and
incorporated herein by reference (the "Covenants and Agreements")
and those to which the Premises or Lease is later made in accordance
with this Lease and to assume and perform any duties or obligations
thereunder applicable to the Premises or to the owner of the
Premises. Tenant shall not use, or allow the Premises to be used,
for any purpose other than as specified herein and shall not use or
permit the Premises to be used for any unlawful purpose or in any
way in violation of any certificate of occupancy applicable to the
Premises, or permit the Premises to be occupied in whole or in part
by any other person, except as otherwise provided herein.
ARTICLE VII
Subletting and Assignment
7.1 Subletting and Assignment. Tenant may assign this Lease or
sublet all or any part of the Premises for occupancy without the
prior written consent of Landlord; provided, that, in the case of
subleases where demising walls are to be constructed, Tenant may not
have, at any one time, more than two (2) such subtenancies in effect
at any one time. In the event of any assignment or subletting,
Tenant shall nevertheless at all times remain fully responsible and
liable for the payment of Rent and for compliance with all of its
other obligations under the terms, provisions and covenants of this
Lease and Tenant's assignee shall assume in writing and agree to
keep and perform all of the terms of this Lease on the part of
Tenant to be kept and performed and shall be and become jointly and
severally liable with Tenant for the keeping and performing thereof.
A copy of such assignment or sublease and, in the case of an
assignment, an executed assumption agreement shall be delivered to
Landlord at the time of any assignment. Tenant shall also deliver to
Landlord copies of any financial statements provided to Tenant by
such assignee or sublessee. In addition, Tenant shall have the right
to transfer and assign this
6
Lease without Landlord's consent to any parent, subsidiary or
affiliated company of Tenant, with Tenant remaining liable for the
performance of the terms of this Lease.
7.2 Assignment by Landlord. Landlord shall have the right to
transfer all or any part of Landlord's interest in the Lease and the
Premises without the consent or approval of Tenant and without
notice to Tenant, which transfer shall work an absolute release of
Landlord's liabilities and obligations hereunder arising after the
date of such assignment provided that the assignee assumes all
obligations of Landlord hereunder and Landlord shall not have the
right to assign this Lease prior to the Rent Commencement Date.
ARTICLE VIII
Quiet Enjoyment - Landlord's Warranty
Landlord covenants and agrees with Tenant that so long as
Tenant keeps and performs all of the covenants and conditions to be
kept and performed by Tenant hereunder, Tenant shall have quiet,
undisturbed and continued possession of the Premises free from any
claims by any persons claiming under, by or through Landlord,
subject, however, to the Covenants and Agreements and the other
matters affecting title to the Premises as described on Exhibit F-I
attached hereto.
ARTICLE IX
Alterations
9.1 Tenant's Alterations. Tenant shall have the right, at its
sole cost and expense, at the commencement of and during the term of
this Lease or any extension thereof to make such alterations in
and/or additions to the Premises, including without limiting the
generality of the foregoing, alterations in the water, gas and
electrical wiring systems as may be necessary to fit the same for
Tenant's business, upon first delivering to Landlord written plans
and specifications for all such work and, in the case where the
proposed alteration would materially and adversely affect the
structural components of the Premises (including without limitation
weight bearing members, footings, foundations, walls and roof),
obtaining the written approval of Landlord as to written plans and
specifications and the materials to be used and the manner of making
such alterations and/or additions, which consent shall not be
unreasonably withheld, delayed or conditioned. Landlord shall
respond to such request for such consent within thirty (30) days of
receipt of the same. If Landlord does not object to the request
within such thirty (30) day period, Landlord shall be deemed to have
consented to the same. Upon the termination of this Lease, Tenant
shall not be required to remove any of the original Improvements
comprising part of the Landlord's Work still in existence or any
subsequent alterations or improvements approved by Landlord (unless,
at the time Landlord approves the same, Landlord concurrently gives
notice to Tenant that Landlord will require Tenant to remove such
alteration upon termination of the Lease), or to restore the
Premises to its original condition provided, however, at Landlord's
election, Tenant shall remove alterations made without the approval
of Landlord and restore the Premises to its original condition,
ordinary wear and tear excepted. Upon the termination or expiration
of this Lease, such Improvements and alterations (excluding Tenant'
s Property [as defined in Article X]) as are not already the
property of Landlord shall, at Landlord's election, become the
property of Landlord. Tenant's obligations under this Section 9.1
are subject to the provisions of Articles XIV and XVII of this
Lease.
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9.2 Method of Alterations. All alterations, additions and
improvements made by Tenant shall be done in a good and workmanlike
manner without impairing the structural soundness of the Premises.
All such work shall be performed in accordance with the Covenants
and Agreements, all applicable laws, ordinances, rules, and
regulations and requirements of all governmental authorities having
jurisdiction over the Premises. Before commencing any work, Tenant
shall obtain or cause to be obtained, workers' compensation (if
required by law) and employees liability insurance covering all
persons employed in connection with the work and with respect to
whom death or bodily injury claims could be asserted against
Landlord and/or Tenant, and general liability insurance insuring
Landlord and Tenant against any liability that may be incurred as a
result of any work done by Tenant in, to or upon the Premises, such
insurance to be in such amounts as are reasonably satisfactory to
Landlord. A certificate of insurance or copy of said policy shall be
delivered to Landlord and such policy shall name Landlord as an
additional insured. Tenant shall procure and pay for all permits,
licenses and authorizations required in connection with any such
alteration, addition or improvement, and Landlord agrees to
cooperate with Tenant, at Tenant's expense, in procuring such
permits, licenses and authorizations.
ARTICLE X
Tenant's Property
10.1 Installation. Removal. Tenant may, at its sole cost and
expense, install any trade fixtures, equipment, and other personal
property used in connection with its business on the Premises, and
Tenant shall have the right at any time during the Term or upon
expiration or earlier termination of the Lease, provided Tenant is
not in default of any of the terms of this Lease, to remove any and
all such trade fixtures, equipment, and other personal property that
it may have stored or installed upon the Premises ("Tenant's
Property"); provided, however, that Tenant shall have no right to
remove any item which is necessary for the operation or maintenance
of the Premises as an integrated building, without regard to the
nature of the business conducted therein; and provided, further,
that in the event of such removal, Tenant shall repair any damage
caused by the removal of such trade fixtures, equipment, and other
personal property and restore the Premises substantially to the same
condition, ordinary wear and tear excepted, in which they were at
the time Tenant took possession. Tenant's obligations under this
Section 10.1 to repair the Premises are subject to the provisions of
Articles XIV and XVII of the Lease.
10.2Required Removal. In case Tenant shall decide not to
remove any part of Tenant's Property upon expiration or earlier
termination of this Lease, Tenant shall notify Landlord in writing
not fewer than ninety (90) days prior to the expiration of the Term
of this Lease, specifying those items of Tenant's Property that
Tenant has decided not to remove. If, within thirty (30) days after
service of such notice, Landlord shall request Tenant to remove any
of said Tenant's Property, Tenant shall, at its own expense, at or
before the expiration or earlier termination of the Term, remove
said Tenant's Property and, in case of damage by reason of such
removal, repair such damage, such obligation to repair to survive
the expiration or sooner termination of this Lease. Tenant will pay
all costs and expenses incurred by Landlord in removing, storing, or
disposing of Tenant's Property and repairing all damage to the
Premises caused by removal of Tenant's Property which Tenant has
failed to remove despite Landlord's request therefor. Any of
Tenant's Property not removed by Tenant upon the expiration of the
8
Term or earlier termination of this Lease shall be considered
abandoned by Tenant and may be appropriated, sold, destroyed, or
otherwise disposed of by Landlord without liability or obligation on
Landlord's part to pay or account same.
10.3 Title at Termination. As to the Tenant's Property that
Tenant has not elected to remove pursuant to Section. 10.1 or that
Tenant is not required to remove pursuant to Sections 9.01 or 10.2
above, at the expiration of the Term or earlier termination of this
Lease, all remaining Tenant's Property shall become and remain the
property of Landlord, free and clear of any claim or interest
whatsoever including, without limitation, any claim or interest of
Tenant or anyone claiming thereunder. At the request of Landlord,
Tenant ~iill, at such time, execute, acknowledge, and deliver to
Landlord a bill of sale or other appropriate conveyance document
(with disclaimers of warranty, express or implied, except as to
title) evidencing the transfer to Landlord of all right, title and
interest of Tenant in and to the remaining Tenant's Property. Tenant
shall also assign to Landlord, without recourse, all assignable,
third party warranties with respect to Tenant's Property.
10.4 Tenant Financing. Notwithstanding anything contained in
this Lease to the contrary, Tenant is hereby given the right,
without Landlord's prior consent, to mortgage or otherwise encumber
its interests in Tenant's Property and any inventory of Tenant
located within the Premises and Landlord agrees that any statutory
or common law Landlord's lien in such Tenant's Property or inventory
is and shall be subordinate to such mortgage or encumbrance.
ARTICLE XI
Lien or Encumbrance
11.1 No Liens. Tenant will pay or cause to be paid all charges
for all work done, including without limitation all labor and
materials for all repairs, alterations, and additions, to or upon
the Premises during the Term and will not suffer or permit any
mechanic's, materialman's, or similar liens for labor or materials
furnished to the Premises during the Term to be filed against the
Premises; and if any such lien shall be filed, Tenant will either
pay the same or procure the discharge thereof by giving security or
by posting a bond within thirty (30) days after such filing or
within such shorter time period as may be required by law. Tenant
shall have the right, however, at its sole cost and expense, in its
name or in the name of Landlord or in the name of both, to contest
any such lien, provided the existence of such lien pending such
contest shall not jeopardize Landlord's interest in the Premises.
Tenant shall indemnify and defend Landlord against, and save
Landlord harmless from, any and all loss, damage, claims,
liabilities, judgments, interest, costs, expenses, and attorney's
fees arising out of the filing or contesting of any such lien, such
obligations to expressly survive the termination or expiration of
this Lease.
11.2No Consent to Work, Lien or Encumbrance. Nothing contained
herein shall constitute any consent or request by Landlord, express
or implied, to or for the performance of any labor or services or
the furnishing of any materials or other property in respect of the
Premises nor as giving Tenant any right, power, or authority to
contract for or permit the performance of any labor or services or
the furnishing of any materials or other property in such fashion as
would permit the making of any claim against Landlord or the
Premises in respect thereto. Nothing in this Lease shall be
construed as empowering Tenant to encumber or cause to be encumbered
the title or interest of Landlord in the Premises in any manner
whatsoever.
9
ARTICLE XII
Repairs and Maintenance
12.1Duty to Repair. During the Term Tenant shall, at its sole
cost and expense, keep the Premises and the adjoining sidewalks,
curbs, parking areas and passageways, if required by governmental
authority, free from unlawful obstructions, and will keep the
Premises in as good condition and repair as they were upon
commencement of the Term, ordinary wear and tear excepted, and will
make all necessary repairs thereto, interior and exterior,
structural and non-structural, ordinary and extraordinary, and
foreseen and unforeseen, including but not limited to maintenance
and repair of the plumbing, electrical wiring, air conditioning and
heating equipment, maintenance of the parking area, painting of the
walls of the Improvements, and repair of all glass and casualty
damage. The provisions of this Article XII are subject to and Tenant
shall have no obligation thereunder to repair the Premises in the
event the Lease is terminated as permitted in Articles XIV and XVII
below. Except for repairs of an emergency nature with respect to
which Tenant shall take reasonable measures to advise Landlord,
Tenant shall, prior to making any repair to the structural
components of the Premises which, if not made or improperly made,
could effect the structural integrity of the Improvements, deliver
to Landlord written plans and specifications for all such work and
obtain the written approval of Landlord as to the materials to be
used and the manner of making such repairs. Landlord shall not
unreasonably withhold, delay or condition its approval of said
repairs proposed to be made by Tenant. Landlord shall respond to
such request for such consent within thirty (30) days of receipt of
the same. If Landlord does not object to this request within such
thirty (30) day period, Landlord shall be deemed to have consented
to the same. Landlord agrees to cooperate with Tenant, at Tenant's
expense, in the enforcement of all warranties and guarantees of
third party contractors and suppliers obtained or provided in
connection with the construction of the Improvements. Nothing in
this section shall release or relieve Landlord from its warranty
obligations set forth in Exhibit C attached hereto.
12.2Definition and Standard of Repair. The term "repairs"
shall include all necessary replacements, renewals, alterations,
additions, and betterments. The necessity for and adequacy of
repairs to the Improvements shall be measured by the standard which
is appropriate for buildings of similar quality of construction,
class, type of materials, and age provided that Tenant shall in any
event make repairs necessary to avoid any structural damage or
injury to any of the Improvements. All repairs made by Tenant shall
be equal in quality and class to the original work, shall meet the
same requirements as are set out in Article 9.2 of this Lease to the
extent necessary and shall be made in a good and workmanlike manner
and in compliance with all applicable permits and authorizations and
building and zoning laws and with all other laws, rules,
regulations, and ordinances governing such work. Tenant will perform
all necessary shoring of foundations and walls of any of the
Improvements and every other act or thing for the safety and
preservation thereof which may be necessary by reason of any
excavation or other building operation upon any adjoining property
or Street, alley or passageway. Tenant will not commit any waste of
the Premises.
12.3No Obligation to Repair. Landlord shall not under any
circumstances be required to furnish any services or facilities or
to make any repairs, replacements or alterations of any nature or
description in or to the Premises whether ordinary or extraordinary,
structural or nonstructural, foreseen or unforeseen, or to make any
expenditure whatsoever in connection with
10
this Lease or to maintain the Premises in any way. Tenant hereby
waives the right to make repairs at the expense of Landlord pursuant
to any law in effect at the time of the execution of this Lease or
thereafter enacted, and assumes the full and sole responsibility for
the condition, operation, repair, replacement, maintenance, and
management of the Premises. Landlord covenants to cooperate with
Tenant, at Tenant's expense, in processing claims with respect to
matters covered by such insurance. Nothing in this section shall
release or relieve Landlord from its warranty obligations set forth
in Exhibit C attached hereto.
ARTICLE XIII
Requirements of Law
13.1 Requirements. Tenant shall, at its expense, comply with,
or cause to be complied with, all insurance requirements imposed by
insurers providing insurance to Tenant hereunder, and all current
and future laws, statutes, ordinances and regulations of federal,
state, county and, municipal authorities including, but not limited
to, the Americans With Disabilities Act (collectively, "Laws"), the
Covenants and Agreements and those to which the Premises or this
Lease is later made in accordance with this Lease, which shall
impose any duty or obligation on the Premises or the owner thereof
including, but not limited to, a duty to construct additional
improvements or modify the Improvements or with respect to the
conduct of Tenant's business therein to the extent the last date for
mandatory compliance falls within the Term; provided, however, in
the event of a required compliance with laws if two (2) years or
less remain in the Term and the cost of a mandated improvement or
alteration (competitively bid) exceeds the sum of One Hundred
Thousand and No/100 Dollars ($100,000.00), Tenant may, unless
nullified by Landlord as provided in Section 13.2 hereof, terminate
the Lease effective upon ninety (90) days notice to Landlord and in
the event of such termination shall have no obligation to construct
such additional improvements or modify the Improvements to comply
with such laws. Tenant shall, together with its notice of
termination, provide Landlord with copies of all bids secured by
Tenant to perform such improvement or alteration and any plans or
specifications prepared by or for Tenant. Tenant shall have the
right at Tenant's own expense, to object to and appeal from any
administrative or judicial decision requiring compliance and
Landlord shall cooperate at Tenant's expense with any such appeal
and/or objection by Tenant. In the event compliance shall require
improvements or alterations to the Premises during the Term and
Tenant is obligated to perform the same as provided for in this
Section 13.1, Tenant shall, at Tenant's sole expense, construct such
improvements in accordance with the provisions for Tenant's
alterations contained in Article IX of this Lease.
13.2Nullification of Termination. Landlord may nullify
termination of the Lease by Tenant on account of compliance with the
requirement of law as permitted in Section 13.1 above, on the
condition that Landlord, within forty-five (45) days following
receipt of notice from Tenant electing to terminate this Lease,
gives written notice to Tenant that Landlord will pay that part of
the cost of such mandated improvement or alteration in excess of One
Thousand and No/100 Dollars ($100,000.00) (the "Landlord's
Payment"). Landlord may require that the contracts for construction
of the mandated improvement or alteration required by law shall be
competitively bid and implemented through a fixed or guaranteed
maximum price construction contract or contracts that have been
approved by Landlord, approval not to be unreasonably withheld,
conditioned or delayed.
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13.3 Recapture of Landlord's Payment: Additional Rent. Tenant
shall pay as Additional Rent amounts sufficient to fully amortize
the Landlord's Payment as finally determined at an interest rate of
ten percent (10%) per annum over the period measured by the
remaining part of the Initial Term, if any, plus five (5) Lease
Years. The payments of Additional Rent to amortize the Landlord's
Payment shall commence upon the first month following the month in
which Landlord pays the Landlord's Payment and continue until the
sooner to occur of the end of the Term or the complete amortization
of the Landlord's Payment.
ARTICLE XIV
Damage or Destruction
14.1 Tenant's Obligation to Rebuild. In the event of damage to
or destruction of the Improvements during the Term of this Lease by
fire, the elements, or other casualty for which the insurance
carried pursuant to Article 15 of this Lease entitled "Insurance" is
paid, said insurance proceeds shall be paid into an escrow account
with Landlord's first mortgage lender or a bank selected by Landlord
and reasonably agreed to by Tenant. The insurance proceeds shall be
used by Tenant for the prompt reconstruction or repair, as the case
may be, of the Improvements. Tenant shall rebuild or repair the same
in such manner that the Improvements shall be substantially the same
as existed immediately prior to such damage or destruction and in a.
good and workmanlike condition, and shall have same rebuilt or
repaired and ready for occupancy within eighteen (18) months from
the time and loss or destruction occurred, subject to force maj
cure. Tenant covenants to seek prompt recovery of the insurance
proceeds and agrees to commence re-construction as soon as
reasonably practicable, but in any event within six (6) months
following the date of the payment of the insurance proceeds. If the
insurance proceeds exceed the cost of repair or restoration, Tenant
shall receive said excess upon completion of such repair or
restoration. If the insurance proceeds are insufficient to pay the
cost of repair or restoration, Tenant shall nonetheless be obligated
to repair and restore the Improvements.
14.2Approval of Plans and Specifications. In the event of a
loss hereunder, Tenant shall submit to Landlord the plans and
specification for reconstruction or repair for Landlord's approval.
Landlord shall have a fifteen (15) business day period within which
to review and approve or disapprove the plans and specifications by
delivering written notice to Tenant, which approval shall not be
unreasonably withheld, delayed or conditioned. Failure by Landlord
to disapprove the same within such fifteen (15) business day period
shall constitute Landlord's approval.
14.3Payment from Escrow. Amounts shall be paid out from said
escrow account established pursuant to Section 14.1 from time to
time upon the certification of Tenant's architect that said amount
is being applied to the payment of the reconstruction or repair (and
associated design and related costs) at a reasonable cost therefor
and that the disbursement then requested, plus all previous
disbursements and the amount of any applicable "deductible" do not
exceed the cost of the repair or restoration already completed and
paid for, and that the balance in said escrow account is sufficient
to pay for the estimated cost of completing the repair or
restoration. If the insurance proceeds shall be less than the cost
of repair or restoration, Tenant shall pay the excess cost.
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14.4 Failure to Reconstruct: Termination. In case of
Tenant's failure to enter into the reconstruction or repair of the
Improvements within six (6) months from the date of payment of such
insurance proceeds and to prosecute said reconstruction or repair
with such dispatch as may be necessary to complete the same within
eighteen (18) months after the occurrence of such damage or
destruction, subject to force majeure, then, at Landlord's election,
the amount so collected, or the balance thereof remaining in the
escrow account, shall be paid to Landlord and Landlord shall
complete the repair and restoration (if the cost to completed the
same exceeds the balance of insurance proceeds released from escrow
to Landlord, Tenant shall pay the same). Notwithstanding any
contrary provision of this Article XIV, Tenant shall have the right
to terminate this Lease if less than two (2) years remain in the
Term at the time of any such casualty and the reasonable estimate of
the time to repair the damage caused thereby exceeds thirty (30)
days, and in such event Tenant shall have no obligation to rebuild
the Improvements, Landlord shall have the sole and exclusive right
to adjust the loss with the insurance carriers and all insurance
proceeds shall be paid to and retained by Landlord.
14.5Force Maieure.
"Force maieure" shall mean events beyond the control of the
parties, including, without limitation, fire, flood, tornado, or
earthquake, war, riot, insurrection, strike, lockout, boycott or
embargo, acts of God, unavoidable casualties, labor disputes, and
unusual delays in transportation, unavailability of materials,
adverse weather conditions not reasonably anticipatable.
Any party who asserts the occurrence of force majeure shall
give written notice within five (5) business days after the
commencement of a delay caused by an event of force majeure. and any
party making claim therefor shall give a supplemental notice of the
period of time such delay caused by an event of force majeure is
expected to last otherwise any right of claim therefor shall be
deemed waived.
14.6No Abatement of Rent. Notwithstanding any contrary law,
Rent shall not be suspended or abated as a result of such damage or
destruction, and restoration or rebuilding, but will cease to accrue
or be due if this Lease is terminated as a consequence thereof as is
provided for herein.
14.7Default in Payment of Rent. If, at any time after such
insurance proceeds come into possession of Tenant or are placed in
escrow pursuant to this Article after destruction or damage by
casualty, Tenant is in default of any Rent or other charges payable
under this Lease, then Landlord shall be entitled to so much of said
proceeds as may be necessary to pay and discharge any such Rent or
other charges of which Tenant is in default, whenever and as often
as any such default shall occur. Tenant shall forthwith reimburse
such escrow account by depositing therein any amount so paid out on
account of Tenant's default. Nothing herein contained, however,
shall be construed as permitting Tenant to default in the payment of
Rent or other charges herein stipulated to be paid or in the
performance of any other covenants of this Lease, and Landlord may,
at its option, proceed against Tenant for the collection of such
Rent or other charges in default and recover and take possession of
the Premises in accordance with the provisions of this Lease without
prejudice to Landlord's right to the benefit of such insurance money
as security for Tenant's performance under the terms of this Lease.
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ARTICLE XV
Insurance
15.1 Casualty Property Insurance. Tenant shall, throughout
the Term, at Tenant's sole cost and expense, provide and keep in
force for the benefit of Landlord and Tenant insurance against loss
or destruction of or damage or injury to any Improvements now or
hereafter erected on the Premises resulting from fire or from any
casualty or hazard included in the so-called extended coverage
endorsement (including plate glass insurance, increased cost of
construction endorsement, sprinkler leakage, collapse and vandalism
and malicious mischief, also known as "All Risks of Physical Loss"
coverage). In addition to the foregoing, Tenant shall, at Tenant's
sole cost and expense, provide and keep in force for the benefit of
Landlord and Tenant, throughout the Term of this Lease, flood
insurance, provided the Tenant's Building (or any portion thereof)
is located within the "Federal Flood Plain Area" of the United
States, as well as insurance against loss or damage or injury or
destruction of any Improvements now or hereafter erected on the
Premises resulting from water or earthquake damage. Tenant shall
provide and keep in full force all such insurance in an amount
sufficient to prevent Landlord or Tenant from becoming a co-insurer
under the terms of the applicable policy, but in no event less than
the full replacement cost of the Improvements, including the
fixtures and equipment appurtenant thereto and used in connection
with the Premises. Such replacement cost shall be determined
annually by a method required by the insurer(s). The deductible
under each of said policies shall be an amount not greater than One
Hundred Thousand Dollars ($100,000), which deductible may .be
increased with increases in the Consumer Price Index (or the
equivalent thereof) for U.S. Wage Earners in the Dallas, Texas area.
Such insurance policies to be provided for and kept in force by
Tenant shall provide that the loss, if any, be payable to Landlord
and Tenant, as their respective interests may appear, except as
herein provided, and such insurance policies may exclude
foundations, excavation and the usual items customarily excluded in
such insurance policies, and that the proceeds thereof shall be used
to repair or replace the damage sustained by the casualty. Landlord
may require that the interest of any mortgagee under a fee mortgage
covering the Premises, be protected by proper endorsements to any
such policies of insurance, and that duplicate originals of such
policies of insurance be delivered to such mortgagee. Tenant shall
provide Landlord certificates confirming that such insurance is in
full force and effect.
15.2Boiler Insurance. Tenant shall also provide and maintain
insurance, at Tenant's cost and expense throughout the Term of this
Lease, for loss or damage by explosion of steam boilers, pressure
vessels, air conditioning systems or similar apparatus to be now or
hereafter installed on the Premises, to the extent applicable. Said
insurance shall be on a Boiler and Machinery Broad Form Policy on a
repair and replacement basis, with Use and Occupancy coverage for at
least one (1) year.
15.3Public Liability Insurance. During the Term, at Tenant's
sole cost and expense, Tenant shall maintain in full force and
effect broad form commercial or comprehensive general liability
insurance, including blanket contractual liability coverage
specifically endorsed to provide coverage for the obligations
assumed by Tenant pursuant to the Lease against claims and liability
for personal injury, bodily injury, death or property damage
occurring on, in or about the Premises, with limits of liability of
not less than Five Million Dollars ($5,000,000.00) arising out of
any one occurrence or annual aggregate. Tenant shall cause such
insurance policy or policies
14
to name Landlord, and/or any successor Landlord and Landlord's
mortgagee as additional insured (to the extent of Tenant's
indemnification obligations hereunder), as their interests may
appear.
15.4Workers' Compensation. Employer's Liability Insurance.
Tenant shall also provide and maintain, at Tenant's sole cost and
expense throughout the Term, workers' compensation insurance, if
required by law, with statutory limits of liability and employer's
liability insurance with limits of liability of not less than Five
Hundred Thousand Dollars ($500,000.00) in respect of any work or
other operations done or performed on or about the Premises. If
workers' compensation insurance is not required by law, Tenant shall
maintain supplemental accident, medical and income replacement
programs or coverages for all employees as may be required to "opt
out" of workers' compensation insurance requirements.
15.5Business Interruption. Tenant shall, during the Term of
this Lease, at its sole cost and expense, procure and maintain
business interruption (or use and occupancy) insurance including, at
a minimum, coverage for rent and other charges for which Tenant is
obligated hereunder for a period not to exceed twelve (12) months.
15.6Insurance on Tenant's Property. It is understood and
agreed that Tenant may self-insure with respect to any damage to or
destruction of Tenant's Property.
15.7No Separate Insurance. Tenant shall not take out separate
insurance concurrent in form or contributing in the event of loss
with that required herein to be furnished by Tenant unless Landlord
is included therein as additional insured, and as loss payee with
loss payable as set out herein. Tenant shall immediately notify
Landlord whenever any such separate insurance is taken out and shall
deliver the policy or policies or duplicates thereof, or
certificates evidencing the same at Landlord's request or as
otherwise provided herein.
15.8Conduct of Business. Cooperation. Tenant shall comply with
all requirements of said insurance policies and shall not conduct or
allow to be conducted business or other activities or fail to
maintain or take other actions with regard to the Premises in such a
manner as will result in an increase in said premiums (unless Tenant
pays each increase) or a decrease in the recovery thereunder. Any
casualty insurance proceeds payable by reason of any insured loss
pursuant to or this Article XV shall, subject to the rights of the
holders of any mortgage upon the Premises be used exclusively for
the purpose of restoring and rebuilding the Premises (subject to the
provisions of Article XV). Subject to the foregoing, Tenant shall
have the sole right to adjust with the insurance carriers the amount
of the loss upon any such policies, and Landlord shall, at Tenant's
cost and expense, cooperate in all reasonable respects with Tenant
in order to obtain the largest possible insurance recovery and shall
execute any and all consents and other instruments and take all
other actions reasonably necessary or desirable in order to
effectuate the same and to cause such proceeds to be paid; provided,
however, that in the event of a termination pursuant to the
provisions of this Lease, Landlord shall have the right to adjust
the amount of the loss with the insurance carriers.
15.9Requirements of Policies.
(a) All policies required to be carried pursuant to this
Article XV:
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(i) shall be written and signed by solvent and
responsible insurance companies authorized to do business in the
jurisdiction wherein the Premises are located having a rating of not
less than Best A+, Class XV and having a claims paying ability
rating of not less than Standard & Poor's A;
(ii)shall contain an agreement by the insurer that such
policy or policies shall not be canceled or non-renewed without at
least thirty (30) days prior written notice to Landlord, Landlord's
mortgagee and Tenant;
(iii) may be carried under so-called blanket policies,
provided that the protection afforded thereunder as to the Premises
shall be not less than that which would have been afforded under
separate policy or policies relating only to the Premises and
provided, however, any such policy of blanket insurance shall
specify therein, or Tenant shall furnish Landlord a written
statement from the insurer under such policy so specifying, the
amount of the total insurance allocated to the Premises, which
amount shall be not less than the amount required herein and any
such policy shall comply in all respects with the requirements set
out in this Article.
(iv) may be carried under a combination of primary
insurance and umbrella coverage;
(v) the policies described in Section 15.1 and 15.2 shall
name Landlord and Landlord's mortgagee as additional insureds;
and
(v) shall be primary insurance by the party obligated
under Article XV, which will not call upon any other insurance
effected or procured by the other party for defense, contribution or
payment.
(b) Tenant retains full responsibility for payment of all
deductibles under each policy provided for hereunder.
(c) Annually, Tenant will promptly furnish to Landlord and
Landlord's mortgagee (if Tenant has been provided the name and
address of such mortgagee) certificates evidencing that the
insurance required pursuant to this Article XV is in full force and
effect. If the certificates of insurance do not provide for thirty
(30) days prior written notice of cancellation or non-renewal to
Landlord and Landlord's mortgagee, Tenant shall no later than twenty
(20) days prior to termination by cancellation or non-renewal
provide to Landlord and its mortgagee paid receipts evidencing
continuation or renewal of insurance.
(d) If Tenant shall fail or refuse to effect or maintain any
of said insurance, Landlord may, but shall have no obligation to do
so, following Tenant's failure to remedy such default within five
(5) business days following written notice to Tenant of such
default, effect or maintain said insurance and the amount of money
so paid, with interest at the Prime Rate, shall be payable by Tenant
to Landlord as Additional Rent immediately due and payable
hereunder.
15.10 Release, Waiver of Subrogation. Tenant hereby
releases Landlord and Landlord's respective officers, directors,
employees and agents, from and waives all claims against such
parties for liability or responsibility for any loss or damage in,
about, or to the Premises
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(including, without limitation, loss or damage to Tenant's personal
property, or Tenant's business) AND THIS RELEASE AND WAIVER SHALL
APPLY NOTWITHSTANDING THE FAULT OR NEGLIGENCE OF LANDLORD OR ANYONE
FOR WHOM LANDLORD MAY BE RESPONSIBLE. The aforesaid policies shall
contain an endorsement recognizing this release and waiving all
rights of subrogation by the respective property and liability
insurance carriers.
ARTICLE XVI
Indemnification of Landlord
Tenant will defend, indemnify, and hold harmless Landlord from
and against any and all liabilities, claims, losses, damages,
actions, judgments, costs, and expenses (including without
limitation attorney's fees and expenses) of every kind imposed upon
or asserted against Landlord or Landlord's title in the Premises
arising by reason of or in connection with (a) the making of this
Lease and the ownership by Tenant of the interest created in this
Lease or Tenant's possession, use, occupancy, or control of the
Premises; (b) any accident, injury to or death of persons, or loss
of or damage to property occurring on or about the Premises or
adjoining public passageways not caused, by Landlord's negligent act
or willful misconduct, (c) the possession, operation, use, misuse,
maintenance, or repair of the Premises; (d) any damage to the
environment and `any property and persons injured thereby; (e) a
claim by any employee, agent, or contractor of Tenant that would be
subject to applicable workers' compensation laws if Tenant provided
workers' compensation coverage; (f) any failure on the part of
Tenant to perform or comply with any of the terms of the covenants
and agreements applicable to the Premises or to Landlord as owner of
the Premises; and (g) any failure on the part of Tenant to perform
or comply with any of the terms of this Lease. LANDLORD'S NEGLIGENT
ACT SHALL BE UNDERSTOOD TO REQUIRE THE AFFIRMATIVE ACT OF LANDLORD
AND SHALL EXCLUDE ANY CLAIM OR DETERMINATION OF NEGLIGENCE BASED
UPON AN OMISSION, A CONDITION OF THE PREMISES, THE MAKING OF THE
LEASE OR THE PERFORMANCE BY LANDLORD OF ANY OBLIGATION OF TENANT
HEREUNDER IN THE EVENT OF TENANT'S DEFAULT. If Tenant fails to
undertake defense of Landlord when required to do so by this Article
XVI and it becomes necessary for Landlord to defend any action
seeking to impose any such liability, Tenant will pay Landlord all
costs, expenses, and attorney's fees incurred by Landlord in
effecting such defense, in addition to any other sums which Landlord
may be called upon to pay by reason of the entry of judgment against
Landlord in the litigation (including arbitration, mediation, and
appeals from any of the same) in which such claim is asserted.
Landlord shall not be responsible for the loss of or damage to
property or injury to or death of persons occurring in or about the
Premises by reason of any existing or future condition, defect,
matter, or thing in the Premises, or the property of which the
Premises are a part, or for the acts, omissions, or negligence of
other persons or tenants in and about the Premises; and Tenant
agrees to defend, indemnify, and hold Landlord harmless from and
against all claims and liability for same. Nothing in this section
shall release or relieve Landlord from any of its warranty
obligations set forth in Exhibit C hereto, nor shall the indemnity
obligations of Tenant extend to or cover any claims, liabilities,
losses, damages, actions, judgments, costs or expenses suffered or
incurred by Landlord in the performance of the Landlord's Work. The
obligations of Tenant set forth in this Article XVI shall survive
the expiration of the Term or sooner termination of this Lease with
respect to matters within Tenant's obligations which occur during
the Term. 17
ARTICLE XVII
Condemnation
17.1 Authority. If eminent domain proceedings are
instituted by any entity having powers of eminent domain, Landlord
shall have the exclusive right and authority to act in said
proceedings, although Tenant may participate in such proceedings at
its expense if it so desires.
17.2 Taking. Subject to the rights of Tenant hereinafter
set forth, Tenant hereby irrevocably assigns to Landlord any award
or payment to which Tenant may become entitled by reason of any
taking of the Premises, or any part thereof, in or by condemnation
or other eminent domain proceedings pursuant to any law or by reason
of the temporary requisition of the use or occupancy of the Premises
or any part thereof by any governmental authority, whether same
shall be paid or payable in respect of Tenant's leasehold interest
hereunder or otherwise, but nothing in this Lease shall impair
Tenant's right to any separate award or payment on account of
Tenant's trade fixtures, equipment, and other tangible property,
moving expenses, loss of business and the like, and Tenant shall
have the right to a separate claim therefor against the appropriate
governmental authority provided such separate award or claim is not
based in whole or in part upon the value of Tenant's leasehold
interest and will not diminish the award or payment to Landlord. To
the extent of such right, Tenant shall not be deemed to have
assigned the same to Landlord, and Tenant shall be entitled to
participate in any such proceedings described in this section at
Tenant's sole expense. Tenant's rights thereto shall survive the
termination of this Lease.
17.3 Termination. If all of the Premises shall be taken in
or by such proceedings, or if Landlord shall convey all of the
Premises under the threat of the exercise of the power of eminent
domain, this Lease shall terminate as of the day preceding the date
of the vesting of title to the Premises or portion thereof in the
condemning authority, and all rent and other amounts payable by
Tenant hereunder shall be apportioned as of the date of such
vesting.
17.4Restoration. If less than all of the Premises shall be
taken by condemnation or other eminent domain proceedings and if as
a result (x) access to the Premises to and from either Interstate 1-
45 or State Highway 242 is permanently, materially and adversely
impaired such that Tenant no longer has access to said roads in a
manner reasonably equivalent to that existing as of the Delivery
Date, or (y) any part of the Premises is taken and following such
taking, there are less than 450 parking spaces within the Premises
(and Landlord fails to provide substantially equivalent parking [in
terms of number of spaces and utility and convenience to Tenant and
its customers] within thirty (30) days following such taking), or
(z) any part of the Premises taken includes any portion of Tenant's
Building and the same is no longer suitable for the conduct of
Tenant's business as reasonably determined by Tenant, Tenant shall
have the right and option to terminate this Lease. In the event
Tenant does not elect to terminate this Lease within ninety (90)
days after the occurrence of such event, then this Lease shall
continue in full force and effect. In the event of any such lesser
taking where Tenant does not terminate this Lease, Landlord shall
promptly make payment of the award, payment, or compensation
received by Landlord into escrow (following the procedures set forth
in Article XIV with regard to the escrow of insurance proceeds), and
Tenant shall have the right to disbursement of such funds (following
the procedures set forth in Section 14.3 above), in the same manner
as insurance proceeds are used to repair casualty damage hereunder,
to promptly repair any damage caused by
18
any such taking or requisition such that, after completion of such
repair, the Premises shall be as nearly as possible in a condition
as good as the condition thereof immediately prior to such taking or
requisition, ordinary wear and tear excepted. Any proceeds not so
used by Tenant shall be disbursed to and shall belong solely to
Landlord. In the event any portion of the Tenant's Building shall be
taken by condemnation or conveyed in lieu thereof and this lease is
not terminated, then the square footage of Tenant's Building shall
be reduced by the number of square feet taken and the Rent and
Additional Rent shall be thereafter reduced proportionately. Subject
to the application of the proceeds as described herein, all sums
awarded for the taking of fee title or the leasehold estate, whether
as damages or as compensation, will be the property of Landlord as
is provided for in Section 17.2 above.
ARTICLE XVIII
Default
18.1 Events of Default.
Each of the following shall be deemed a default by Tenant:
(a) Tenant's failure to pay Rent when such becomes due as
herein provided and/or any other charges or payments herein
reserved, included or agreed to be treated or collected as Rent
and/or any other charge, expense or cost herein agreed to be paid by
Tenant, provided that Landlord shall have first given Tenant ten
(10) days' prior written notice and opportunity to cure the same,
with no cure having been made within such ten (10) day period;
provided, further, that Landlord shall be obligated to provide such
notice on no more than two (2) occasions in any Lease Year; or
(b) Tenant's failure to perform, within thirty (30) days after
written notice from Landlord (or within a reasonable time thereafter
if the default is of such a nature that it cannot reasonably be
expected to be cured within such thirty (30) day period, and Tenant
does not either commence the cure within thirty (30) days from such
notice and complete the same in good faith and with reasonable
diligence) any other terms, conditions or covenants of this Lease to
be observed by Tenant; or
(c) The adjudication of Tenant as a bankrupt or insolvent; or
the making by Tenant of a general assignment for the benefit of
creditors; or the appointment of a receiver in equity for the
property of Tenant, provided such appointment is not released,
bonded according to law or otherwise provided for by indemnity
within thirty (30) days after written notice thereof first given to
Tenant, within a reasonable time after the occurrence thereof; or
the appointment of a trustee, custodian or receiver for Tenant's
Property in a reorganization, arrangement or other bankruptcy
proceeding; or Tenant's filing of a voluntary or involuntary
petition in bankruptcy or for a bankruptcy organization, liquidation
or arrangement; or Tenant's filing of an answer admitting bankruptcy
or agreeing to a bankruptcy reorganization, liquidation or
arrangement.
18.2Landlord's Rights Upon Tenant's Default. In the event of
any default set forth in Article 18.1, Landlord, in addition to any
other rights or remedies it may have at law or in equity, may do any
one or more of the following:
(a) elect to terminate this Lease; or
19
(b) perform, on behalf and at the expense of Tenant (entering
upon the Premises for such purpose, if necessary), any obligation of
Tenant under this Lease which Tenant has failed to perform and of
which Landlord shall have given Tenant notice, the cost of which
performance or liability by Landlord shall be deemed Additional Rent
and incurred for the account of Tenant and Tenant shall reimburse
Landlord therefor and save Landlord harmless therefrom upon demand
provided, however, that Landlord may cure any such default described
in this subparagraph prior to the expiration of the waiting period
established in Section 18.1, but after notice to Tenant if the
curing of such default prior to the expiration of said waiting
period is reasonably necessary to protect the Premises or Landlord's
interest in the Premises, or to prevent injury or damage to persons
or property. If Tenant shall fail to reimburse Landlord upon demand
for any amount paid for the account of Tenant hereunder, said amount
shall be added to and become due as a part of the next payment of
Rent due hereunder. Notwithstanding anything to the contrary
contained herein, in the case of emergency, notice required pursuant
to this Article 18 may be given verbally or in any other reasonably
due and sufficient manner having regard to the emergency and the
attending circumstances. If any such notice shall not be given in
the manner described in Article XXIII of this Lease entitled
"Notice", then as soon thereafter as practicable, such notice shall
be followed up by notice given in the manner prescribed in said
Article. No entry by Landlord, in accordance with the provisions of
this Article, shall be deemed to be an eviction of Tenant.
Landlord's performance of any such covenant shall neither subject
Landlord to liability for any loss, inconvenience or damage to
Tenant nor be construed as a waiver of Tenant's default or of any
other right or remedy of Landlord in respect of such default, or as
a waiver of any covenant, term or condition of this Lease; or
(c) immediately, using such force as may be reasonably
necessary, re-enter upon the Premises, remove all persons and
property therefrom, and store such property in a public warehouse or
elsewhere at the sole cost and for the account of Tenant, all
without service of notice or resort to legal process, without being
deemed guilty of trespass or becoming liable for any loss or damage
which may be occasioned thereby (except for any loss or damage
resulting from or caused by the gross negligence or criminal act of
Landlord or its employees, agents or contractors), and without such
re-entry being deemed to terminate this Lease.
(d) Tenant, its bankruptcy trustee, or any entity authorized
by court order to act on behalf of Tenant, shall reject this Lease
under 11 USC sec. 365(a) or any other provision of Title 11 of the
United States Code, or the deemed rejection of this Lease by
operation of law under 11 USC sec. 365(d)(4). Any such rejection of
this Lease terminates this Lease, without notice of any kind to
Tenant, effective on the later of: (1) the date Tenant vacates the
Premises following such rejection; (2) the date the Bankruptcy Court
with jurisdiction over Tenant's bankruptcy case enters and order on
its docket authorizing Tenant to reject this Lease; or (3) the date
this Lease is deemed rejected under 11 USC sec. 365(d)(4).
18.3Re-1etting. In the event Landlord re-enters upon the
Premises as provided in clause (c) of the foregoing Section 18.2, or
takes possession of the Premises as provided herein or pursuant to
legal proceedings or pursuant to any notice provided for by law,
Landlord may in addition to all other rights and remedies provided
at law or in equity:
(a) Landlord may terminate this Lease and forthwith repossess
the Premises and remove all persons or property therefrom and be
entitled to recover from Tenant, as damages, the
20
sum of money equal to the total of (i) the reasonable cost of
recovering the Premises, (ii) the accrued and unpaid rentals owed at
the time of termination plus interest thereon from such due date at
Prime Rate, as hereinafter defined, or the maximum rate permitted by
law, (iii) the discounted net present value, at the Prime Rate, of
the balance of the Base Rent for the remainder of the Term to the
extent the same exceeds the then fair market rental value of the
Premises for the balance of the Term (with due consideration for the
costs and delay in reletting), and (iv) any other sum of money and
damages owed by Tenant to Landlord; or
(b) Landlord may terminate Tenant's right of possession (but
not this Lease) and may repossess the Premises without demand or
notice of any kind to Tenant and without terminating this Lease in
which event Landlord shall, to the extent required under applicable
law, relet the same for the account of Tenant for such rent and upon
such terms as shall be satisfactory to Landlord. For the purpose of
such reletting, Landlord is authorized to make repairs, changes,
alterations or additions to the Premises to make same relettable,
and (i) jf Landlord shall be unable to relet the Premises, or (ii)
if the same are relet and sufficient sums shall not be realized from
such reletting (after paying: (a) the unpaid rentals due under the
Lease earned, but unpaid at the time of reletting plus interest
thereon at the lesser of the Prime Rate or the maximum rate
permitted by applicable law, (b) the cost of recovering possession,
including Landlord's attorney's fees, (c) all of the costs and
expenses of reletting including advertising therefor, decorations,
repairs, changes, alterations and additions by Landlord, and (d) the
expense of the collection of the Rent accruing therefrom) to satisfy
the rent and all other charges provided for in this Lease to be paid
by Tenant then Tenant shall pay to Landlord, as damages, the sum
equal to the amount of the Rent and other expenses payable by Tenant
for such period or periods, or if the Premises have been relet,
Tenant shall satisfy and pay any such deficiency upon demand
therefore from time to time and Tenant agrees that Landlord may file
suit to recover any sums falling due under the terms of this Article
from time to time upon one or more occasions without Landlord being
obligated to wait until expiration of the term of this Lease. Such
reletting shall not be construed as an election on the part of
Landlord to terminate this Lease unless a written notice of such
intention be given to Tenant by Landlord. Notwithstanding any such
reletting without termination, Landlord may at any time thereafter
elect to terminate this Lease for such previous breach. Failure of
Landlord to declare any default immediately upon occurrence thereof
or delay in taking any action in connection therewith shall not
waive such default but Landlord shall have the right to declare any
such default at any time thereafter.
(c) As used herein "Prime Rate" shall mean the base rate on
corporate loans charged by Bank One, Dallas, Texas.
18.4Damages Upon Termination. In the event that Landlord at
any time terminates this Lease for any default by Tenant, in
addition to any other remedies Landlord may have, Landlord may
recover from Tenant (i) all damages Landlord may incur by reason of
such default, including, without limitation, all repossession costs,
brokerage commissions, court costs, attorneys' fees, alteration,
reletting advertising and refitting and repair costs, (ii) the
accrued and unpaid rentals owed at the time of termination plus
interest thereon from such due date at the Prime Rate, or the
maximum rate permitted by law, (iii) the discounted net present
value, at the Prime Rate, of the balance of the fixed annual minimum
rent for the remainder of the Term to the extent the same exceeds
the then fair market rental value of the Premises for the balance of
the Term (with due consideration given to the costs and delay of
reletting), and (iv) any other sum of
21
money and damages owed by Tenant to Landlord. All such amounts shall
be immediately due and payable from Tenant to Landlord.
ARTICLE XIX
Signs
Tenant shall have the right to erect, at its expense and in
accordance with the Covenants and Agreements and all applicable
laws, ordinances, rules and regulations, in or on the Premises such
sign or signs as it may desire.
ARTICLE XX
Taxes and Other Liens
20.1 Impositions. Tenant shall pay before any fine, penalty,
interest, or cost may be added thereto for the nonpayment thereof,
all real estate, municipal utility district and other similar taxes,
assessments, ad valorem taxes (including municipal utility and other
similar district taxes), water and sewer charges, vault charges,
license and permit fees, dues or assessments, general or special of
any association to which the Premises is subject and other
governmental levies and charges, general and special, ordinary, and
extraordinary, unforeseen as well as foreseen, of any kind and
nature (collectively "Impositions") which may be charged, assessed,
levied, imposed upon or become due and payable, during the Term;
provided, however, that if, by law, any Imposition is payable or at
the option of the taxpayer may be paid in installments (whether or
not interest shall accrue on the unpaid balance thereof), Tenant
shall pay the same (and any accrued interest on the unpaid balance)
in installments and shall be required to pay only such installments
as may become due during the Term as the same respectively become
due and before any fine, penalty, interest, or cost may be added
thereto for nonpayment thereof and provided further, that any
Imposition relating to a fiscal period of a taxing authority, a part
of which period is included within the Term and a part of which is
included in a period of time before the commencement of the Term or
after the termination of this Lease, other than a termination of
this Lease pursuant to Article 18, shall (whether or not such
Imposition shall be assessed, levied, confirmed, imposed, or become
a lien upon the Premises or shall become payable, during the term of
this Lease) be appropriately pro rated between Landlord and Tenant.
20.2Tax on Tenant Additions. Tenant shall pay all additional
taxes levied, assessed or becoming payable during the Term by reason
of or assessed against the improvements, alterations or additions to
the Premises installed by Tenant at any time during the Term of this
Lease.
20.3Exceptions. Nothing in this Lease shall require Tenant to
pay any franchise, corporate, estate, inheritance, succession,
capital levy, stamp, transfer or similar tax of Landlord, or any
income, excess profits, revenue or similar tax or any other tax,
assessment, charge, or levy upon the Base Rent, or any other Rent
payable under this Lease, nor shall any tax, assessment, charge, or
levy of the character described in this Section 20.3 be deemed to be
included within the term "Imposition"; provided, however, that if at
any time under the laws of the State or any political subdivision
thereof in which the Premises is located a future change in the
method of taxation or in the taxing authority, or for any other
reason, a franchise, income, transfer, profit or other tax or
governmental imposition, however designated, shall be levied against
Landlord in
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substitution in whole or in part for any imposition, or in lieu of
additions to or increases of said impositions then said franchise,
income, transfer, profit or other tax or governmental imposition
shall be deemed to be included within the term "Imposition," and
Tenant shall pay and discharge such Imposition in accordance with
Section 20.1 in respect of the payment of Impositions, to the extent
it would be payable if the Premises were the only property of
Landlord subject to such Imposition.
20.4Proof of Payment. Tenant agrees to submit to Landlord
official receipts evidencing payment of said Impositions prior to
delinquency thereof at the place at which rental payments are
required to be made.
20.5Refunds. If Landlord shall receive a refund of any
Imposition theretofore paid by Tenant pursuant to the provisions
hereof, such refund, net of Landlord's reasonable out-of-pocket
costs of recovery, shall be promptly paid to Tenant.
20.6Protest. If Tenant shall, in good faith, desire to contest
the validity of such Impositions, Tenant shall have the right to do
so without being in default hereunder provided that Tenant shall
give Landlord prompt written notice of Tenant's intention to
institute such legal proceedings as are appropriate, which
proceedings shall be promptly instituted and conducted in good faith
and with due diligence; such proceedings shall suspend the
collection of such Impositions, and the Premises shall not be in
danger of being sold, forfeited, or lost; and Tenant shall furnish
Landlord or the appropriate governmental agency with a bond made by
a surety company qualified to do business in the State in which the
Premises is located and reasonably satisfactory to Landlord or shall
pay cash to a recognized escrow agent in the County within which the
Premises is located in the amount of such Impositions, conditioned
to pay such Impositions when the validity thereof shall have been
finally determined, which said written notice and security shall be
given by Tenant to Landlord or the appropriate governmental agency
not fewer than ten (10) days before such Impositions proposed to be
contested would otherwise become delinquent. Upon the conclusion of
such contest, Landlord shall return to Tenant the security
hereinabove required to be deposited by Tenant, provided that Tenant
shall first evidence payment of such Impositions.
20.7Requirements of Mortgage. In the event the financing
institution where Landlord has financing on the Premises shall
require Landlord to prepay the Impositions in monthly installments
of one-twelfth (1/12th) of the annual amount thereof, then Tenant
shall make to Landlord, in addition to the Rent reserved hereunder,
monthly payments of one-twelfth (1/12th) of such Impositions, and to
the extent it does so, Tenant shall be deemed to have satisfied its
obligations to pay the Impositions and Tenant shall not be required
to provide the evidence described in Section 20.3 above and Landlord
shall cause all such Impositions to be timely paid. If Landlord
fails to timely pay or cause payment of an Imposition where Tenant
has made monthly installments as provided in this Section, and
provided the failure to pay the Imposition would constitute a lien
upon Tenant's Property or Tenant's leasehold interest in the
Premises will be subordinate to the lien of such Imposition, then
Tenant may, but shall have no obligation (to the extent Tenant has
already made monthly payments as provided in this Article 20.7) to
pay such Imposition. If Landlord fails to pay or cause the payment
of an Imposition prepaid by Tenant and Tenant makes separate payment
of such Impositions as provided in this Article 20.7, Tenant shall
from and after such payment by Tenant no longer be obligated to make
payment in
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monthly installments as provided in this section but shall
thereafter make direct payment of Impositions to the taxing
authority as otherwise provided in this Article and Landlord shall
refund to Tenant such prepayments not applied in payment of
Impositions, any interest or penalties on such Impositions paid by
Tenant on account thereof, together with interest thereon at the
Prime Rate accruing from the date of payment by Tenant to the taxing
authority.
ARTICLE XXI
Utilities
21.1 Payment of Charges. Tenant shall, during the Term,
pay and discharge punctually as and when the same shall become due
and payable without penalty all water and sewer rents, rates, and
charges, charges for removal of waste materials, and charges for
water, steam heat, gas, electricity, light, and power, and other
service or services furnished to the Premises or the occupants
thereof during the Term of this Lease or any extensions hereof.
Tenant shall indemnify, defend, and hold harmless Landlord against
any and all liability on such account, such obligations to expressly
survive the expiration of the Term or earlier termination of this
Lease.
21.2Provision of Services. Landlord shall not be required to
furnish any services or facilities (except as part of the Landlord's
Work) to the Premises and shall not be liable for any failure of
water supply or electric current or of any service by any utility,
nor for injury or damage to person (including death) or property
caused by or resulting from steam, gas, electricity, water, heat, or
by rain or snow that may flow or leak from any part of the Premises
or from any pipes, appliances, or plumbing works of the same or from
the Street or subsurface or from any other place, nor for
interference with light or other incorporeal hereditaments or
easements, however caused, unless due to the affirmative acts of
Landlord. Tenant hereby assumes the full and sole responsibility for
the condition or the Improvements and the operation, repair,
replacement, maintenance, and management of the Premises; provided,
that, nothing herein shall release or relieve Landlord from its
warranty obligations set forth in Exhibit C attached hereto.
ARTICLE XXII
Holding Over
If Tenant or anyone claiming under Tenant remains in possession
of the Premises at the expiration of the Term, such continuing
possession shall create a month-to-month tenancy on the terms herein
specified, if Rent in the amount of one hundred and fifty percent
(150%) of the immediately preceding monthly installment of Rent is
paid by Tenant and accepted by Landlord. Such tenancy may be
terminated by either party by giving at least thirty (30) days
notice thereof to the other party.
ARTICLE XXIII
Notice
23.1 Notice Address. Any notice or demand which either
party hereto either is required to or may desire to serve upon the
other, must be in writing, and shall be sufficiently served if (1)
personally delivered, (ii) sent by registered or certified mail,
postage prepaid, or (iii) sent by commercial overnight carrier, and
addressed, in the instance of Landlord, to:
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Cypress/GR Woodlands I, L.P.
do Cypress Equities, Inc.
15601 Dallas parkway, Suite 400
Dallas, Texas 75001
Attention: Christopher C. Maguire
with a copy to:
Kane, Russell, Coleman & Logan, P.C.
3700 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
Attention: Raymond J. Kane
or any other address which Tenant may be notified of in writing
by Landlord, and in the instance of Tenant, to:
Garden Ridge, L.P.
19411 Atrium Place, Suite 170
Houston, Texas 77084
Attention: President
with a copy to:
Stephen C. Jacobs
Locke Liddell & Sapp LLP
600 Travis
3200 Chase Tower
Houston, Texas 77002
or such other address which Landlord may be notified in writing by
Tenant.
23.2Service of Notice. Such notice shall be deemed to have
been served within three (3) days of the time of the mailing thereof
(certified mail, return receipt requested) or upon receipt in the
event of personal service or overnight courier; provided, however,
that should such notice pertain to the change of address to either
of the parties hereto, such notice shall be deemed to have been
served upon receipt thereof by the party to whom such notice is
given.
ARTICLE XXIV
Subordination
24.1Lease Subordinate. Tenant agrees to subordinate this Lease
and all of Tenant's right, title, and interest in and under this
Lease to the lien of any and all ground leases underlying leases,
mortgages, and deeds of trust and to any and all terms, conditions,
provisions, extensions, renewals or modification of any such leases,
mortgages, or deeds of trust which Landlord or any
25
grantee or assignee of Landlord or may place upon the Premises in
the same manner and to the same extent as if this Lease had been
executed subsequent to the execution, delivery, and recording of
such Lease, mortgage, or deed of trust; provided, that, concurrent
with and as a condition to Tenant's obligation to subordinate,
Tenant is provided, from the holder of such lien, an agreement
whereby the holder thereof agrees that for so long as Tenant is not
in default under this Lease, Tenant's rights under this Lease shall
not be disturbed. The form of such an agreement is attached hereto
as Exhibit D. Tenant agrees to execute and deliver such instrument
to Landlord within fifteen (15) days following Landlord's request
therefor.
24.2Attornment. Tenant covenants and agrees that, upon any
mortgage foreclosure or foreclosure under a deed of trust, it will
attom to any mortgagee, trustee, assignee, or any purchaser at any
foreclosure sale as its Landlord, and this Lease shall continue in
full force and effect as a direct Lease between Tenant herein and
such party upon all terms, conditions, and agreements set forth in
this Lease.
24.3 Attornment to Successor. In the event Landlord or any
successor owner of the Premises shall transfer the Premises, which
transfer may be freely effected by Landlord without the consent or
approval of Tenant and such assignee assumes the obligation of
Landlord hereunder, Landlord or such successor owner, as the case
may be, shall thereupon be released from all future liabilities and
obligations of Landlord under this Lease and all such future
liabilities and obligations shall thereupon automatically be binding
upon the new owner, and Tenant will attorn to any new owner as its
Landlord, and this Lease shall continue in full force and effect as
a direct Lease between Tenant herein and such party upon all terms,
conditions, and agreements set forth in this Lease.
ARTICLE XXV
Landlord's Access to the Premises
Landlord, or its agents or authorized representatives, upon not
less than two (2) business days prior notice, shall have access to
the Premises during normal business hours for the purposes of
examining or inspecting the condition of same. Such inspection to be
performed in such a manner as to minimize, to the maximum extent
practicable, interference with Tenant's conduct of its business. In
the event of any emergency such as, but not limited to, a fire,
flood, or severe windstorm, Landlord shall have free access to the
Premises for the purpose of examining or inspecting damage done to
them. Unless Tenant shall have given notice of its intention to
exercise its option to extend the Term of this Lease pursuant to
Article III of this Lease entitled "Term and Extensions", Landlord
shall have the right, within twelve (12) months prior to expiration
of this Lease or any extensions hereof, to show the Premises to
prospective tenants, at reasonable times during normal business
hours and upon not less than two (2) business days prior notice.
Landlord further reserves the right to show the Premises to
prospective purchasers any time during the Term of the Lease, during
normal business hours, or at other times upon reasonable notice to
Tenant.
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ARTICLE XXVI
Environmental Compliance
26.1 Definitions. For purposes of this Lease:
(a) the term "Environmental Laws" shall mean and include the
Resource Conversation and Recovery Act, as amended by the Hazardous
and Solid Waste Amendments of 1984, the Comprehensive Environmental
Response, Compensation and Liability Act, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act and all applicable state
and local environmental laws, ordinances, rules, requirements,
regulations and publications, as any of the foregoing may have been
or may be from time to time amended, supplemented or supplanted and
any and all other federal, state or local laws, ordinances, rules,
requirements, regulations and publications, now or hereafter
existing, relating to the preservation of the environment or the
regulation or control of toxic or hazardous substances or materials;
and
(b) the term "Regulated Substance" shall mean and include any,
each and all substances or materials now or hereafter regulated
pursuant to any Environmental Laws, including, but not limited to,
any such substance or material now or hereafter defined as or deemed
to be a "regulated substance," "pesticide,~~ "hazardous substance"
or "hazardous waste" or included in any similar or like
classification or categorization thereunder.
26.2Compliance. Tenant shall:
(a) not cause or permit any Regulated Substance to be placed,
held, located, released, transported or disposed on, under, at or
from the Premises in violation of any Environmental Laws due to the
acts or omissions of Tenant, its agents, contractors or employees (a
"Tenant Environmental Event");
(b) at its own cost and expense or at the cost and expense of
any party other than Landlord, contain at or remove from the
Premises, or perform any other necessary or desirable remedial
action regarding any Tenant Environmental Event in any way affecting
the Premises if, as and when such containment, removal or other
remedial action is required under and in a manner satisfying any
Environmental Laws;
(c) provide Landlord with written notice (and a copy as may be
applicable) of any of the following within ten (10) days thereof:
(i) Tenant's obtaining actual knowledge or notice of any kind of the
presence, or any actual or threatened release, of any Regulated
Substance in any way affecting the Premises in a manner which
violates any Environmental Laws; (ii) Tenants receipt or submission,
or Tenant's obtaining actual knowledge or notice of any report,
citation, notice or other communication from or to any federal,
state or local governmental or quasi-governmental authority
regarding any Regulated Substance in any way affecting the Premises;
or (iii) Tenant's obtaining actual knowledge or notice of the
incurrence of any cost or expense by any federal, state or local
governmental or quasi-governmental authority or any private party in
connection with the assessment, monitoring, containment, removal or
remediation of any kind of any Regulated Substance in any way
affecting the Premises, or of the filing or recording of any lien on
the Premises or any portion thereof in connection with any such
action or Regulated Substance in any way affecting the Premises; and
27
(d) defend all actions against the Landlord and its mortgagee
and pay, protect, indemnify, defend and save harmless Landlord and
its mortgagee from and against any and all liabilities, losses,
damages, costs, expenses (including, without limitation, attorneys'
and consultant's fees, response and clean-up costs, court costs, and
litigation expenses), causes of action, suits, claims demands or
judgments of any nature relating to any of the following which occur
during the Term or arise out of an event that occurred during the
Term: (i) a Tenant Environmental Event; (ii) any personal injury
(including wrongful death) or property damage (real or personal)
arising out of or relating to any Tenant Environmental Event; or
(iii) any violation of Environmental Laws due to a Tenant
Environmental Event. If at the expiration or other termination of
this Lease any response or clean up of a condition involving a
Tenant Environmental Event is required by any federal, state or
local governmental authority, Tenant shall remain solely responsible
for such requirement and this Lease shall remain in full force and
effect pursuant to the terms of Article XXII until such response or
clean up is completed to the satisfaction of the respective
governmental authority. The indemnity and defense obligations
contained in this Article 26.2 shall survive the expiration or
earlier termination of this Lease but in no event shall it extend to
any of the foregoing if caused by the affirmative acts of Landlord,
its agents, contractors or employees.
Landlord hereby represents and warrants to Tenant that the
Premises are free from Regulated Substances and agrees to indemnify,
defend and hold Tenant harmless of, from, and against any and all
liabilities related to or arising out of the presence or existence
of Regulated Substances in, on, or about the Premises as of the Rent
Commencement Date.
ARTICLE XXVII
Landlord's Work
Landlord agrees to construct the initial Improvements and other
elements of the Landlord's Work pursuant to the provisions of
Exhibit C attached hereto at Landlord's sole cost and expense.
Notwithstanding any contrary provisions hereof, in the event
Landlord does not achieve the Delivery Date within eighteen (18)
months following the date of this Lease: (i) Tenant shall have the
right and option to terminate this Lease at anytime thereafter and
prior to the day upon which the Delivery Date is achieved by
providing written notice to Landlord to such effect (in which case
neither party hereto shall have any further rights, duties, or
obligations one to the other hereunder) or, (ii) alternatively,
Tenant may elect to assume control over completion of the Landlord's
Work (in which case Landlord shall fully cooperate with Tenant in
transferring equipment and materials to Tenant and in permitting
Tenant to supervise the completion of the Landlord's Work). In such
later case, Tenant shall be entitled to recover all costs and
expenses incurred by Tenant in causing such work to be completed,
plus interest
thereon from the date expended until repaid at the Prime Rate, by
offset against Rent thereafter accruing hereunder.
ARTICLE XXVIII
Estoppel Certificates
Upon the request of either party hereto, the other party will,
within ten (10) days following such request, execute, acknowledge,
and deliver a certificate, certifying that this Lease is unmodified
and is a full force and effect (or, if modified, that this Lease is
in full force and
28
effect, as modified, and stating the date of each instrument so
modifying this lease); the dates, if any, to which Rent and other
charges payable hereunder have been paid; and, whether, in the
opinion of the party delivering the same, any default exists
hereunder and, if so, the nature and period of existence thereof and
what action should be taken with respect thereto and whether notice
thereof has been given to the other and such other and further
matters as may reasonably be requested. If such certificate is
required to be delivered by a corporation, the same shall be signed
by the President or a Vice President and the Secretary or an
Assistant Secretary thereof, and if such certificate is required to
be delivered by a partnership, the same shall be signed by a general
partner thereof. Any certificate required under this Article may be
relied upon by a prospective purchaser, mortgagee, or other
transferee of Landlord's `or Tenant's interest under this Lease.
ARTICLE XXIX
Reports
Tenant agrees to furnish to Landlord, with reasonable
promptness, copies of financial statements of Tenant (including, but
not limited to, annual balance sheets, income statements and surplus
statements) prepared in accordance with generally accepted
accounting principles consistently applied and certified by
independent certified public accountants which shall be prepared not
less often than annually. If Tenant prepares financial statements
certified by Tenant's public accountants more often than annually,
Tenant agrees to provide a copy of the same to Landlord.
Additionally, if requested in writing by (i) an institutional lender
with a mortgage lien on the Premises, (ii) an institutional lender
proposing to make a loan to Landlord secured by the Premises, or
(iii) a prospective purchaser of the Premises, Tenant will deliver
to such requesting party a copy of Tenant's most recent quarterly
financial statements within fifteen (15) days following such request
and upon the agreement of such party to maintain the same in
confidence by executing and delivering to Tenant a confidentiality
agreement in form and substance reasonably satisfactory to Tenant.
Landlord agrees to maintain such statements in confidence and may
disclose the same only to its lenders and prospective purchasers and
then only if such parties execute and deliver to Tenant an agreement
whereby such parties agree to keep the same confidential, such
agreement to be in form and substance reasonably satisfactory to
Tenant.
ARTICLE XXX
Declarations, Covenants, Conditions
Restrictions and Agreements
The Premises is subject to and has the benefit of the Covenants
and Agreements and is made subject to and shall have the benefits of
those new or additional covenants and agreements to which the
Premises may hereafter be made subject in accordance herewith.
Tenant shall pay all costs with respect to the Premises or the
ownership thereof that are due and owing during the Term hereof on
account of the Covenants and Agreements, or such declarations,
conditions, warranties, restrictions, and agreements as though an
Imposition. Tenant shall provide Landlord with evidence of payment
in accordance with the provisions of Article XX. Tenant shall
perform and satisfy all of the terms and conditions of such
agreements that are applicable to the Premises or the ownership
thereof during the Term of this Lease. Landlord agrees that
Landlord's rights and benefits under the Covenants and Agreements
pertaining to ingress and egress and cross
29
parking and rights to signage shall inure to Tenant's benefit during
the Term. Landlord agrees to enforce such agreements, at Tenant's
expense, for the benefit of the Premises and Landlord shall, at
Tenant's sole cost and expense, cooperate and execute all documents
necessary to do so upon Tenant's request. Landlord and Tenant each
covenants and agrees it will not enter into any amendments or
modifications to such agreements or enter into new agreements made
after the date of this Lease without the other parties' prior
written consent, not to be unreasonably withheld or delayed.
Tenant's consent to any requested amendments or new or additional
covenants shall not be deemed unreasonably withheld, conditioned or
delayed if the potential effect of the requested amendment or new or
additional covenant that would materially increase Tenant's
obligations under this Lease or materially reduce or impair its
rights under this Lease, or impose additional limitations on the
uses which can be made of the Premises. Tenant may also request that
Landlord consent to and execute amendments to the Covenants and
Agreements, or to enter into new, similar agreements. Landlord may
refuse to grant consent to any Tenant requested amendments or
modifications or new agreements if the same would impose additional
limitations on uses which can be made of the Premises or would have
a material adverse effect on the value of the Premises.
ARTICLE XXXI
Provisions of General Application
(a) Landlord hereby represents and warrants to Tenant as
follows:
(i) That Landlord is duly organized and validly existing
under the laws of the state of Texas and has full power and
authority to enter into this Lease.
(ii)That Landlord is not a party to any agreement or
litigation which could adversely affect the ability of Landlord to
perform its obligations under this Lease or which would constitute a
default on the part of the Landlord under this Lease, or otherwise
adversely affect Tenant's rights or entitlements under this Lease.
(iii) That the execution, delivery and performance of this
Lease will not: (i) violate any provisions of the law of the State
of Texas or any applicable regulation, order, writ, injunction or
decree of any court or governmental authority; or (ii) conflict
with, be inconsistent with, or result in any breach or default of
any of the terms, covenants, conditions or provisions of any
indenture, mortgage, deed of trust, instrument, document, agreement
or contract of any kind or nature to which Landlord is a part or by
which Landlord or the Premises may be bound.
(b) Tenant hereby represents and warrants to Landlord as
follows:
(i) That Tenant is duly organized and validly existing
under the laws of the state of Texas and has full power and
authority to enter into this Lease.
(ii)That Tenant is not a party to any agreement or
litigation which could adversely affect the ability of Tenant to
perform its obligations under this Lease or which would
30
constitute a default on the part of the Tenant under this Lease, or
otherwise adversely affect Landlord's rights or entitlements under
this Lease.
(iii) That the execution, delivery and performance of this
Lease will not: (i) violate any provisions of the law of the State
of Texas or any applicable regulation, order, writ, injunction or
decree of any court or governmental authority; or (ii) conflict
with, be inconsistent with, or result in any breach or default of
any of the terms, covenants, conditions or provisions of any
indenture, mortgage, deed of trust, instrument, document, agreement
or contract of any kind or nature to which Landlord is a part or by
which Tenant or the Premises may be bound.
(c) The language in all parts of this Lease shall in all cases
be construed as a whole and according to its fair meaning, and not
strictly for or against either Landlord or Tenant, and the
construction of this Lease and any of its various provisions shall
be unaffected by any argument or claim, whether or not justified, it
has been prepared, wholly or in substantial part, by or on that
behalf of Landlord or Tenant.
(d) The Article and section headings in this Lease are for
convenience only and are not a part of this Lease, and do not in any
was limit or simplify the terms and provisions of this Lease, nor
should they be used to determine the intent of the parties. Each
reference herein to an "Article" or "section" shall mean and refer
to the indicated numbered Article or section within an Article.
(e) If any term, covenant, condition or provision of this
Lease, or the application thereof to any person or circumstances,
shall, to any extent, be invalid, illegal, or unenforceable, the
remainder of this Lease, or the application of such term or
provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby;
and it is the intention of the parties hereto that if any provision
of this Lease is capable of two constructions, one of which would
render the provision invalid, and the other which would render the
provision valid, then the provision shall have the meaning which
renders it valid; and each term, covenant, condition and provision
of this Lease shall be valid and be enforced to the fullest extent
permitted by law.
(f) It is mutually covenanted and agreed by and between the
parties that no waiver of a breach of any of the covenants or
conditions of this Lease shall be construed to be a waiver of any
preceding or succeeding breach of the same covenant or condition. It
is further agreed by and between the parties that no modification,
release, discharge or waiver of any provision of this Lease shall be
of any force, effect or value unless in writing and signed by the
Landlord and Tenant.
(g) This Lease shall be governed and construed in accordance
with the laws of the State wherein the Premises are located.
(h) The words "Landlord" and "Tenant" and the pronouns
referring thereto, as used in this Lease, shall mean, where the
context requires or permits, the persons named, herein as Landlord
and as Tenant, respectively, and their respective heirs, legal
representatives, successors, and assigns, irrespective of whether
singular or plural, or masculine, feminine, or neuter. The
agreements and conditions in this Lease contained on the part of
Landlord to be performed and
31
observed shall be binding upon Landlord and its heirs, legal
representatives, successors, and assigns, and shall enure to the
benefit of Tenant and its heirs, legal representatives, successors,
and assigns; and the agreements and conditions on the part of Tenant
to be performed and observed hereunder shall be binding upon Tenant
and its heirs, legal representatives, successors and assigns, and
shall enure to the benefit of Landlord and its heirs, legal
representatives, successors, and assigns.
(i) Landlord and Tenant represent to each other that no broker
or person is entitled to any commission by reason of the negotiation
and execution of this Lease except that Tenant has engaged Staubach
Retail Services, Inc. and Landlord agrees to pay~ such party
pursuant to a separate agreement. Landlord and Tenant agree to hold
each other harmless against any and all claims by any person for
brokerage commissions arising out of any conversation, negotiations
or other dealings held by the other party with any broker regarding
this Lease (except that Tenant's indemnity shall not extend to the
claims of Staubach Retail Services, Inc.).
(j) The parties will, at any time at the written request of
either one, promptly execute duplicate originals of an instrument,
in recordable form, which will constitute a short form of lease in
the form of Exhibit G attached hereto. All costs incurred in
connection with recording the short form of lease shall be paid by
Tenant.
(k) If Landlord or Tenant uses the services of an attorney in
order to secure compliance with this Lease or to recover damages
therefor from the other the prevailing party in any litigation
resulting therefrom or settlement associated therewith shall be
entitled to recover from the other party any and all reasonable
attorneys' fees and expenses incurred by the prevailing party in
connection with such dispute.
(l) This instrument contains the entire and only agreement
between the parties relating to the subject matter hereof, and no
oral statements or representations or written matter not contained
in this instrument shall have any force or effect. This Lease shall
not be amended or modified in any way except by a writing executed
by both parties.
(m) The relationship between the parties hereto is solely that
of Landlord and Tenant, and nothing in this Lease shall be construed
as creating a partnership or joint venture between the parties
hereto, it being the express intent of Landlord and Tenant that the
business of Tenant on the Premises and elsewhere, and the good will
thereof, shall be and remain the sole property of Tenant.
(n) Throughout this Lease, wherever the context so requires,
the singular shall include the plural, and the masculine gender
shall include the feminine and neuter genders.
(o) There shall be no merger of this Lease or the leasehold
estate created by this Lease with any other estate or interest in
the Premises by reason of the fact of the same person, firm,
corporation, Or other entity acquiring or owning or holding,
directly or indirectly, this Lease or the leasehold interest created
by this Lease or any interest in this Lease, and any such other
estate or interest in the Premises or any part thereof, and no such
merger shall occur unless and until all corporations, firms, and
other entities having an interest (including a security interest) in
this Lease or the leasehold interest created by this Lease and any
such other estate or interest in the Demised
32
premises or any part thereof, shall join in a written instrument
effecting such merger and shall duly record the same.
(p) Notwithstanding any other provision hereof, Landlord shall
not have any personal liability hereunder. In the event of any beach
or default by Landlord of any term or provision of this Lease,
Tenant agrees to look solely to the equity or interest then owned by
Landlord in the Premises or of the Building of which the Premises
are a part. Nothing herein shall prohibit or prevent Tenant from
obtaining injunctive or other equitable relief. Furthermore, Tenant
shall have the right to seek and obtain a monetary judgment against
Landlord but shall only be entitled to collect the same from
Landlord's interests in the Premises, insurande maintained hereunder
by Landlord or by offset against rent then due and thereafter
becoming due under this Lease.
Landlord and Tenant have duly executed this Lease on the day
and year first above written.
LANDLORD:
CYPRESS/GR WOODLANDS I, L.P.
By: Cypress/GR Woodlands, Inc. general
partner
/s/ Christopher C Maguire
By: Christopher C. Maguire, President
TENANT:
GARDEN RIDGE, L.P.
By: Garden Ridge Management, Inc.,
General Partner
By: /s/ Jane Arbuthnot
Name: Jane Arbuthnot
Title: CFO
Exhibits
A- Site
B- Site Plan
C - Landlord's Work
D - Subordination, Non-Disturbance and
Attornment Agreement
E - Rent Commencement Date Memorandum
F - Covenants and Agreements
F-I Additional Title Matters
G - Memorandum of Lease
H - Guaranty
33
EXHIBIT A
METES AND BO~SNDS DESCRIPTION
9.9991 ACRES OUT OF THE
GEORGE TAYLOR SURVEY, A-555
JAMF,S MCCAMBRDGE SURVEY, A-390
MONTGOMERY COUNTY, TEXAS
A tract or parcel of land containing 9.9991 acres (435,562 square
feet) out of the George Taylor Survey, Abstract 555 and the Jarnes
McCamhridge Survey, Abstract 390, Montgomery County, Texas, out of
lands owned by The Woodlands Land Development Company, LY., a Texas
Limited Partnership by virtue of Memorandum of Merger and Ownership
dated July 31, 1997 recorded in File No. 9747722 of the Montgomery
County Real Property Records, also being a portion of Restricted
Reserve "A" of The Woodlands College Park Section One as shown on a
plat recorded in Cabinet "M" Sheet 55 of the Montgomery county Map
Records, said 9.9991 acre tract being more particularly described by
metes and bounds as follows with all control referred to the 1927
Texas State Plane Coordinate System, Lambert Projection, South
Central Zone.
BEGINNTING at the southwest corner of the herein described tract
having a Texas State Plane Coordinate Value of X=3,117,868.40,
Y=881,502.36 and being NORTH 57 degrees 05 minutes 40 seconds EAST,
2,046.21 feet from the southwest corner of said James McCambridge
Survey, A-390, common to the northwest corner of the George Taylor
Survey, A-555, located in the east line of the Daniel F. Whillden
Survey, A-640;
THENCE NORTH 03 degrees 04 minutes 30 seconds WEST, 491.00 feet to a
point of curvature and a northwest corner of the herein described
tract;
THENCE NORTHEASTERLY along a curve to the right though a central
angle of 90 degrees 00 minutes 00 seconds to a point of tangency and
a northwest corner of the herein described tract, said curve having
a radius o 130.00 feet, an arc length of 47.12 feet, and a long
chard bearing NORTH 41 degrees 55 minutes 30 seconds EAST, 42.43
feet;
THENCE NORTH 86 degrees 55 minutes 30 seconds EAST, 791.33 feet to
the northeast corner of the herein described tract;
THENCE SOUTH 06 degrees 23 minutes 00 seconds EAST, 521.87 feet to
the southeast corner of the herein described tract;
THENCE SOUTH 86 degrees 55 minutes 30 seconds WEST, 851.44 feet to
the POINT OF BEGINNING, containing 9.9991 acres (435,562 square
feet) of land.
EXHIBIT B
RENT COMMENCEMENT DATE MEMORANDUM
Reference is made to that Lease Agreement (the "Lease") dated
July 13, 2001, between Cypress/GR Woodlands I, LY., as Landlord, and
GARDEN RIDGE, L..P., a Texas limited partnership, as Tenant. Terms
that are defined in the Lease have the same meanings when used in
this acknowledgment. The parties agree as follows:
1. Landlord has satisfactorily completed the construction of
Landlord's Work, including, without limitation, Tenant's Building
and parking areas, that Landlord undertook to build under the terms
of the Lease, subject to cure of defective materials and
workmanship, if any, which Landlord obligated to satisfy under the
Lease and the completion of the punch list items listed on the
attachment to this acknowledgment.
2. Landlord has tendered exclusive possession of the Premises
to Tenant and Tenant has accepted possession.
3. The Rent Commencement Date of the Initial Term is March 5,
2001, and the Expiration Date is March 4, 2021.
4. The monthly Base Rent payable during the fist full 60
months of the Initial Term is $78,544.62 and the monthly Base Rent
payable during the remainder of the Initial Term shall be adjusted
as is provided for in Article 4.1(c) of the Lease.
5. The terms and conditions of the Lease will continue in
full force and effect and
the parties ratify arid confirm those terms and conditions.
LANDLORD:
CYPRESS/GR WOODLANDS I, L.P.
By: Cypress/GR Woodlands, Inc. general
partner
/s/ Christopher C Maguire
By: Christopher C. Maguire, President
TENANT:
GARDEN RIDGE, L.P.
By: Garden Ridge Management, Inc.,
General Partner
By: /s/ Jane Arbuthnot
Name: Jane Arbuthnot
Title: CFO