Exhibit 10.1
WAREHOUSE ASSOCIATES
INDUSTRIAL/WAREHOUSE LEASE
ARTICLE 1
BASIC PROVISIONS
This Article contains the basic provisions of this lease between the
Landlord and Tenant identified below (the "Lease").
A. Date of Lease: July 13, 2006
B. Landlord: Warehouse Associates Corporate Centre Kirby II, Ltd.
1345Campbell Road
Suite 222
Houston, Texas, 77055
C. Tenant: Sharps Compliance, Inc.
9220 Kirby
Suite 500
Houston, TX 77054
D. Premises: approximately 18,231 rentable square feet having an address of
9220 Kirby, Suite 500, Houston, TX 77054 and shown on Exhibit A hereto and
cross-hatched as a portion of the Building or Project on Exhibit B hereto.
E. Building: the building in which the Premises is located.
F. Site: the tract of land and grounds and any Common Areas associated with
the Building, including landscaping, parking, walkways and other facilities
and installations therein, as reasonably determined by Landlord and as may
be further outlined on Exhibit B hereto.
G. Project: the Building and Site, and any other buildings, sites and Common
Areas collectively owned or managed by Landlord or Landlord's partners,
agents or affiliates as a complex as outlined on Exhibit B hereto and
deemed to contain 109,450 rentable square feet.
H. Commencement Date: October 1, 2006.
I. Expiration Date: September 30, 2011.
J. Permitted Use: General office, distribution, product assembly and
warehousing purposes.
K. Term: Five (5) years.
L. Net Monthly Base Rent: Years 1-5 $ 16,773 per month.
M. Security Deposit: $20,054.
N. Taxes, Insurance and Common Area Expenses: Tenant shall make the payments
required under Articles 4, 5 and 6. The initial monthly escrow payment
shall be $3,282.
O. Initial Monthly Rent: $20,054.
P. Broker with Whom Tenant Dealt (if any): None.
Q. Utilities and Repairs: Tenant shall be responsible for utilities and
repairs as required under Articles 7 and 8.
R. Exhibits: Exhibit A (Premises), Exhibit B (Project), Exhibit C (Rules),
Exhibit D (Work Letter Agreement)
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The foregoing provisions shall be interpreted and applied in accordance
with the other provisions of this Lease. The terms of this Article, and the
terms defined in Article 29 and other Articles, shall have the meanings
specified therefor when used as capitalized terms in other provisions of this
Lease.
ARTICLE 2
TERM AND COMMENCEMENT DATE ADJUSTMENTS; OCCUPANCY;
CONDITION OF PREMISES
A. Term. Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the Premises for a term ("Term") commencing on the Commencement Date
and ending on the Expiration Date, subject to the provisions herein contained.
Tenant may occupy and conduct business from the Premises prior to the
Commencement Date at no cost. On or before October 1, 2006, Landlord, at
Landlord's sole cost and expense, shall deliver the Premises to Tenant ready for
occupancy. If the Commencement Date is delayed, the Expiration Date shall be
similarly extended. The Commencement Date shall be confirmed in writing by the
parties promptly after the construction is complete and reasonably acceptable to
both Landlord and Tenant.
B. Occupancy. Nothing set forth in this Lease shall be construed, in any
manner whatsoever, as an express or implied covenant on the part of Tenant to
commence business operations or thereafter to continuously occupy or operate any
business operations in the Premises, and Landlord specifically acknowledges that
there is no covenant of initial or continuous occupancy or operation on the part
of Tenant, express or implied. In that regard, it is hereby expressly agreed
that Tenant shall have no obligation (i) to initially open for business upon the
Premises, or (ii) to continue occupancy or any business operation at the
Premises for any specified period of time.
C. Condition of Premises. Landlord represents, warrants and covenants that
the Building and the Project do conform or that Landlord will promptly cause
them to conform to every applicable requirement of all Laws, including but not
limited to the Americans with Disabilities Act of 1990 and any Laws concerning
fire sprinklers and security. Notwithstanding anything contained herein to the
contrary, as of the Commencement Date: (i) the Premises will be in full
compliance with all Laws; (ii) there will be no known material defects in the
Premises and if any material defects created on or before the Commencement Date
are discovered after the execution of this Lease, the same will be the
responsibility of Landlord; and (iii) all equipment installed by Landlord
servicing the Premises shall be in good working order.
ARTICLE 3
PAYMENT OF RENT AND OTHER CHARGES
A. Base Rent. Tenant shall pay Landlord the monthly Base Rent in advance on
or before the fifth (5th) day of each calendar month during the Term, commencing
on the Commencement Date.
B. Taxes, Insurance and Common Area Expenses. Tenant shall pay Landlord the
Taxes, Insurance, and Common Area Expenses required under Articles 4, 5 and 6 of
this Lease. Landlord may reasonably estimate the amounts Tenant will be required
to pay for Taxes, Insurance and Common Area Expenses from time to time in
advance of, or during, each year. In such case: (i) Tenant shall pay the
estimated amounts on a monthly basis on or before the first day of each calendar
month, together with Tenant's payment of Base Rent, (ii) within 180 days after
the end of each calendar year, or as soon thereafter as practicable, Landlord
shall provide a statement showing the amount of actual Taxes, Insurance and
Common Area Expenses (including a listing of amounts for major categories of
Common Area Expenses) for such year, (iii) if Tenant's estimated payments exceed
the actual amounts, Landlord shall provide a credit or refund the difference as
selected by Tenant, (iv) if the actual amounts exceed Tenant's estimated
payments, Tenant shall pay the difference to Landlord together with Tenant's
next payment of Base Rent, and (v) if Landlord also adjusts the estimated
amounts for the current year, Tenant shall also pay any additional amount
required for the portion of the year that has elapsed, and shall thereafter pay
based on the new estimated amounts until the same are further revised. Tenant
shall have the right, at it own expense and at a reasonable time, but not more
than once per calendar year, to audit Landlord's books with respect to Taxes,
Insurance and Common Area Expenses, upon at least twenty (20) days prior notice.
If an audit discloses a discrepancy of five percent (5%) or more in the amount
of Taxes, Insurance and Common Area Expenses for any calendar year, the cost of
the audit and such discrepancy shall be paid for by the Landlord.
C. Finality of Statements. Unless Tenant takes exception by written notice
to Landlord within one hundred eighty (180) days after Landlord provides any
statement to Tenant concerning Taxes, Insurance or Common Area Expenses, such
statement shall be considered final and binding on Tenant. Tenant acknowledges
that Landlord's ability to budget and incur expenses depends on the finality of
such statements, and accordingly agrees that time is of the essence in this
Paragraph. If Tenant takes exception to any matter contained in any such
statement as provided herein, upon request of Tenant, Landlord shall refer the
matter to an independent certified public accountant, whose certification as to
the proper amount shall be final and binding as between Landlord and Tenant.
Tenant shall promptly pay the cost of such certification unless such
certification determines that Tenant was overbilled by more than 3% in which
case Landlord shall be responsible for the cost of such certification. Pending
resolution of any such exceptions, Tenant shall pay the amounts determined by
Landlord, subject to adjustment between the parties after any such exceptions
are resolved. Tenant shall have the right, at it own expense and at a reasonable
time, but not more than once per calendar year, to audit Landlord's books with
respect to Taxes, Insurance and Common Area Expenses, upon at least twenty (20)
days prior notice. If an audit discloses a discrepancy of five percent (5%) or
more in the amount of Taxes, Insurance and Common Area Expenses for any calendar
year, the cost of the audit and such discrepancy shall be paid for by the
Landlord.
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D. Prorations. If the Term commences on a day other than the first day of a
calendar month or ends on a day other than the last day of a calendar month, the
Base Rent and any other amounts payable on a monthly basis shall be prorated on
a per diem basis for such partial calendar months. If the Base Rent is scheduled
to increase under Article 1 other than on the first day of a calendar month, the
amount for such month shall be prorated on a per diem basis to reflect the
number of days of such month at the then current and increased rates,
respectively. If the Term commences other than on January 1, or ends other than
on December 31, Tenant's obligations to pay amounts towards Taxes, Insurance and
Common Area Expenses for such first or final calendar years shall be prorated on
a per diem basis to reflect the portion of such years included in the Term.
Taxes based on a fiscal year other than a calendar year shall be subject to the
provisions of Article 4.
E. General Payment Matters and Rent Taxes. Rent shall be paid to Landlord
at the address set forth in Article 1 or such other address as to which Landlord
shall provide Tenant thirty (30) days' advance notice. Tenant shall pay any rent
tax, sales tax, service tax, transfer tax, or any other tax on the Rent. Rent
shall be paid without any prior demand or notice therefor (except as expressly
provided in this Lease), and shall be paid without any deduction, recoupment,
set-off or counterclaim (except as expressly provided in this Lease), and
without relief from any valuation or appraisement laws. Although this Lease
contemplates the computation of Taxes, Insurance and Common Area Expenses on a
cash basis, Landlord may make reasonable and appropriate accrual adjustments and
Landlord reserves the right to change to a full accrual system of accounting. In
lieu of providing one statement covering Taxes, Insurance and Common Area
Expenses, Landlord may provide separate statements at the same or different
times. No delay by Landlord in providing any statements respecting such items
shall be deemed a default by Landlord or a waiver of Landlord's right to require
payment of Tenant's obligations for actual or estimated Taxes, Insurance or
Common Area Expenses (provided, however, if for any calendar year, Landlord
fails to deliver to Tenant, prior to the date that is twelve (12) months after
the expiration of such calendar year, a final statement of Taxes, Insurance or
Common Area Expenses for such calendar year, then Landlord shall be deemed to
have waived its right to collect from Tenant any Taxes, Insurance or Common Area
Expenses otherwise payable to Landlord that are in excess of the Taxes,
Insurance or Common Area Expenses that were paid or payable by Tenant based on
the charges for the previous year). Landlord may apply payments received from
Tenant to any obligations of Tenant then accrued, without regard to such
obligations as may be designated by Tenant.
ARTICLE 4
TAXES
A. Separate or Joint Assessment. If the Premises includes all rentable
space in the Building and the Building and Site are assessed separately from
other property, Tenant shall pay all Taxes applicable thereto during the Term
(including Taxes on or resulting from any leasehold improvements made to the
Premises by or for Tenant). Landlord may elect from time to time to require that
Tenant pay such bills directly to the taxing authority. In the alternative,
Landlord may elect from time to time to pay such bills directly to the taxing
authority and to require payments by Tenant to Landlord for such Taxes. If such
separate assessment does not cover Common Areas of the Project, Tenant shall pay
a share of the Taxes applicable to such Common Areas, as reasonably determined
by Landlord, based on the rentable square footage of the Premises as a
percentage of the total rentable square feet in the Project. If Tenant is not
subject to separate assessment, Tenant shall pay Tenant's share of Taxes based
on the rentable square footage of the Premises as a percentage of the total
rentable square feet in all buildings included in such assessment; provided, if
the Premises is located in a Project which includes other tax parcels, Landlord
may require that Tenant pay a share of the total Taxes for the Project based on
the rentable square footage of the Premises as a percentage of the total
rentable square feet in all buildings in such Project. Landlord shall use
commercially reasonable efforts and take actions reasonably necessary to ensure
that the Building and Site are properly assessed in a manner that will limit
Taxes on the Building and Site. "Taxes" shall have the meaning specified
therefor in Article 29.
B. Tax Protests, Refunds, Supplemental Billings and Fiscal Tax Years.
Landlord reserves the sole right to protest, appeal and otherwise seek to reduce
or minimize Taxes hereunder, and any expenses incurred by Landlord in connection
therewith (including, without limitation, reasonable fees and expenses for
attorneys, consultants, appraisers and other experts) shall be included in
"Taxes" during the year paid. Tenant shall reasonably cooperate with Landlord in
any such efforts. Tax refunds shall be deducted from Taxes in the year received
by Landlord, but if any refund shall relate to Taxes paid in a prior year of the
Term and the Lease shall have expired, Landlord shall mail Tenant's share of
such net refund (after deducting reasonable expenses and attorneys' fees), up to
the amount Tenant paid towards such Taxes during such year, to Tenant's last
known address. If Taxes for any period during the Term shall be increased after
payment for any reason, including without limitation error, reassessment, or
supplemental billing, Tenant shall pay Tenant's share of such increased Taxes as
required hereunder. If any Taxes shall be paid based on bills by a taxing
authority using a fiscal year other than a calendar year, Landlord may elect
from time to time to require payments by Tenant based on: (i) amounts paid or
payable for or during each fiscal tax year, (ii) amounts paid or payable during
each calendar year, averaging the bills for each calendar year based on the
number of days or months of such year included in each fiscal tax year, or (iii)
amounts paid or payable during each calendar year without regard to such fiscal
years. If Landlord determines Taxes based on fiscal tax years as provided in
clause (i), Taxes for any initial or final partial fiscal tax years included in
the Term shall be prorated on a per diem basis. If Landlord determines Taxes
based on calendar years as provided in clauses (ii) or (iii) or because the
taxing body uses a calendar fiscal year, Taxes for any initial or final partial
calendar years included in the Term shall be prorated on a per diem basis.
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C. Tenant's Personal Property Taxes. Tenant shall pay before delinquent all
taxes, assessments, license fees, charges or other governmental impositions
assessed against or levied or imposed upon Tenant's business operations,
Tenant's leasehold interest, or based on Tenant's use or occupancy of the
Premises, or Tenant's fixtures, furnishings, equipment, leasehold improvements,
inventory, merchandise, or personal property located in or about the Premises
(whether or not title shall have vested in Landlord pursuant to any provision
hereof). Whenever possible, Tenant shall cause all such items to be assessed and
billed separately from the property of Landlord and other parties. If any such
items shall be assessed and billed with the property of Landlord or another
party, Landlord shall include the same or an appropriate portion thereof in
Taxes hereunder or shall reasonably allocate the same or an appropriate share
thereof between Tenant and such other party (and Tenant shall pay the amount so
allocated to Tenant).
ARTICLE 5
INSURANCE
A. Tenant's Insurance. Tenant shall maintain during the Term: (i)
commercial general liability insurance, with a contractual liability endorsement
covering Tenant's indemnity obligations under this Lease, and with limits of not
less than $2,000,000 per occurrence for personal injury, bodily injury or death,
or property damage or destruction (including loss of use thereof), (ii)
automobile liability insurance with limits of not less than $2,000,000 combined
single limit per occurrence for personal injury, bodily injury or death, or
property damage or destruction (including loss of use thereof), (iii) workers'
compensation insurance as required by statute, and employer's liability
insurance in the amount of at least $500,000 per occurrence, and (iv) "all-risk"
property damage insurance covering Tenant's inventory, personal property,
business records, furniture, floor coverings, fixtures and equipment, and all
leasehold improvements or Work (as defined in Article 10) installed by or for
Tenant for damage or other loss caused by fire or other casualty or cause
including, but not limited to, vandalism and malicious mischief, theft,
explosion, business interruption, and water damage of any type, including
sprinkler leakage, bursting and stoppage of pipes, and other insurable risks.
Such property damage insurance shall be in amounts not less than the full
insurable replacement value of such property and full insurable replacement
value of such other interests of Tenant. All insurance required hereunder shall
be provided by responsible insurers rated at least A and X in the then current
edition of Best's Insurance Guide and shall be licensed in the State in which
the Project is located. Tenant's insurance shall be primary, and any insurance
maintained by Landlord or any other additional insureds hereunder shall be
excess and noncontributory. Landlord shall have the right to reasonably increase
the amount or expand the scope of insurance to be maintained by Tenant hereunder
from time to time consistent with insurance customarily required of similar
tenants in the Houston, Texas industrial market.
B. Landlord's Insurance. Landlord shall maintain or cause to be maintained
in full force and effect such insurance ("Insurance") respecting the Project
issued by a responsible carrier or carriers licensed to do business in the State
in which the Project is located and rated at least A and X in the then current
edition of Best's Insurance Guide which affords the following coverage on a
primary basis (with umbrella coverage):
(a) Commercial general liability insurance, with
a contractual liability endorsement covering
Landlord's indemnity obligations under this
Lease, and with limits of not less than
$2,000,000 per occurrence for personal
injury, bodily injury or death, or property
damage or destruction (including loss of use
thereof);
(b) Property damage coverage insuring against
physical loss under Form CP10300695, or its
equivalent or successor, for the full
replacement cost of the Building and its
structure, walls, foundations, roof, and
operating systems in the Building with a
replacement cost endorsement, and loss of
rental income; and
(c) All physical loss, fire and extended
coverage, vandalism and malicious mischief,
earthquake insurance to cover Landlord as to
its respective interest therein.
All such insurance carried by Landlord shall provide for Landlord to be the
named insured, and proceeds of the insurance shall be used by Landlord to
rebuild the Building and the Premises to the extent such rebuilding is permitted
by Landlord's lender. Upon Tenant's written request, Landlord shall provide a
certificate of insurance with respect to all insurance coverage required to be
carried by Landlord with respect to the Building. Tenant shall pay Landlord for
Tenant's share of the costs for such Insurance which Landlord shall pay during
any calendar year any portion of which occurs during the Term (subject to
proration for partial initial or final years as provided in Article 3). In
determining Tenant's share, Landlord shall allocate the premiums between Tenant
and other tenants based on the rentable square footage of the Premises as a
percentage of the total rentable square feet in all buildings covered by such
insurance. Landlord may require that Tenant make estimated Insurance payments in
advance on a monthly basis as further described in Article 3.
C. Certificates, Subrogation and Other Matters. Tenant shall provide
Landlord with certificates evidencing the coverage required hereunder (and with
respect to liability and automobile coverage showing Landlord and Landlord's
managing agent for the Project and others designated by Landlord as additional
insureds). Tenant shall provide such certificates upon Tenant's execution of the
Lease. Tenant shall provide renewal certificates to Landlord at least five (5)
business days after the date renewal insurance is bound by Tenant. Such
certificates shall state that the coverage may not be reduced or cancelled
without at least thirty (30) days prior written notice to Landlord. The parties
mutually hereby waive all rights and claims against each other for all losses
covered by their respective insurance policies, and waive all rights of
subrogation of their respective insurers. The parties agree that their
respective insurance policies are now, or shall be, endorsed so that such
waivers of subrogation shall not affect their respective rights to recover
thereunder.
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D. Waiver of Claims. Except for claims arising from Landlord's intentional
or grossly negligent acts or willful misconduct that are not covered by
Tenant's insurance hereunder, Tenant waives all claims against Landlord for
injury or death to persons, damage to property or to any other interest of
Tenant sustained by Tenant or any party claiming through Tenant resulting from:
(i) leaking of roofs, bursting, stoppage or leaking of water, gas, sewer or
steam pipes or equipment, including sprinklers, (ii) wind, rain, snow, ice,
flooding, freezing, fire, explosion, earthquake, excessive heat or cold, fire
or other casualty, and (iii) vandalism, malicious mischief, theft or other acts
or omissions of any other parties including, without limitation, other tenants,
contractors, customers, visitors and invitees.
E. Construction Indemnification. Should Tenant move any furniture,
equipment and/or supplies of any kind, including the installation of computer
and/or telephone cabling, into the Premises prior to completion of the required
tenant improvements, Tenant shall indemnify and save and hold harmless the
Landlord, Landlord's Manager, and any and all contractors and subcontractors
against any and all claims arising from Tenant's use of the Premises during any
such construction activity, including but not limited to, accident or injury to
any person, theft, vandalism, maintenance and/or breakage of any materials
placed in the Premises.
ARTICLE 6
COMMON AREAS AND EXPENSES
A. Common Areas. Tenant and Tenant's employees, customers, visitors and
invitees (including Tenant's vendors and couriers) may use the Common Areas on a
non-exclusive basis in common with all other parties to whom the right to use
such Common Areas has been or is hereafter granted. Tenant shall not interfere
in any way with the use of the Common Areas by such other parties, and Tenant's
use of the Common Areas shall be subject to the other provisions of this Lease.
"Common Areas" shall have the meaning specified therefor in Article 29. If the
Building is in a Project containing one or more other buildings, Landlord may
designate separate Common Areas for the Building and Site ("Building and Site
Common Areas"), for the Project as a whole ("Project Common Areas"), and for
other portions of the Project ("Other Common Areas"). In such case, Tenant and
Tenant's employees and invitees shall not use the Other Common Areas.
B. Common Area Maintenance and Expenses. Landlord shall administer,
operate, clean, maintain and repair the Common Areas. Tenant shall pay Tenant's
share of Landlord's "Common Area Expenses" (as defined in Article 29) which
Landlord pays during any calendar year any portion of which occurs during the
Term (subject to proration for partial initial or final years as provided in
Article 3). Landlord shall determine Tenant's share of Common Area Expenses
applicable to any Building and Site Common Areas ("Building and Site Common Area
Expenses") based on the rentable square footage of the Premises as a percentage
of the total rentable square feet in all buildings in the Project (excluding
single tenant buildings for which the tenants maintain the Other Common Areas
applicable thereto).
ARTICLE 7
MAINTENANCE AND REPAIR OF PREMISES, BUILDING AND PROJECT
A. Condition of Premises, Building and Project. Tenant has inspected the
Premises, Building and Project and the systems and equipment serving the
Premises, Building and Project, or has had an opportunity to do so, and, subject
to Landlord's warranty set forth in Section 3E. below, agrees to accept the same
"as is" without any agreements, representations, understandings or obligations
on the part of Landlord to perform any alterations, repairs or improvements
except as may be expressly provided in this Lease; provided, however, Landlord
shall correct any Latent Defects (hereinafter defined) in the Premises which
materially impairs Tenant's use of the Premises, provided that Tenant delivers
to Landlord written notice thereof within twelve (12) months after the
Commencement Date. As used herein, the term "Latent Defect" shall mean a defect
in the physical condition of the Premises existing as of the date the Premises
is delivered to Tenant that could not have reasonably been discovered prior to
Tenant taking possession of the Premises by a commercially reasonable inspection
of the Premises performed by a reasonably prudent architect or engineer
exercising a professionally reasonable level of due diligence in such
inspection.
B. Tenant Maintenance and Repairs. Tenant shall keep the Premises in good
working order, repair and condition (which condition shall also be clean,
sanitary, sightly and free of pests and rodents, and which repairs shall include
necessary replacements, and expenditures required to comply with all Laws now or
hereafter enacted, whether the work involves a capital expenditure or results in
a benefit extending beyond the Term). Tenant's obligations hereunder shall
include but not be limited to: (a) Tenant's trade fixtures and equipment, (b)
ceilings, (c) interior sides of demising walls and all interior walls, (d)
interior wall-coverings and paint, (e) entrances, entry and interior doors (and
hardware and frames), (f) security gates, (g) showcases and storefronts, (h)
signs, (i) exterior and interior glass (including plate glass), (j) window
mullions and gaskets, (k) cabinets, (l) millwork, paneling and other finish
work, (m) floors, carpets and other floor coverings, (n) refrigeration systems
and equipment, (o) roof penetrations made or used exclusively by or for Tenant,
(p) dock boards, dock levelers and/or dock bumpers, (q) overhead truck doors,
(r) interior drainage systems, interior plumbing fixtures and equipment,
interior lines for water and sewer (including free flow up to the common sewer
line), (s) light fixtures, ballasts, tubes and bulbs, (t) keys and locks, (u)
HVAC, electrical, gas, steam, and mechanical systems and facilities, (v)
sprinklers and other fire protection systems located within and exclusively
serving the Premises, and (w) other systems, equipment, fixtures, alterations
and improvements which serve the Premises exclusively, whether located within or
outside the Premises, whether installed by Landlord or Tenant. Tenant shall also
at Landlord's option perform or reimburse Landlord for any repairs, maintenance
and replacements to areas of the Building or Project outside the Premises caused
as a result of moving any furniture, fixtures, or other property to or from the
Premises, or otherwise caused by Tenant or any other occupant of the Premises,
or any of their employees, agents, customers, visitors, invitees or contractors.
Any repairs or other work by Tenant hereunder shall be deemed "Work" under
Article 10, and shall be subject to all of the requirements thereunder. The
installation of any new or replacement equipment, components or parts shall be
subject to Landlord's prior written approval (which approval shall not be
unreasonably withheld, delayed or conditioned) as to make, manufacturer,
quality, installation, contractor, and such other items as Landlord may
reasonably require and shall in all cases be the same or better quality than the
original items.
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C. HVAC Maintenance. If the Premises is served exclusively by any HVAC
units or other systems or equipment, Tenant shall enter annual, written
maintenance contracts with competent, licensed contractors reasonably approved
or designated by Landlord. Such contracts shall include, and Tenant shall
require that such contractors provide: (i) inspection, cleaning and testing at
least semi-annually (or more frequently if required by applicable Law), (ii) any
servicing, maintenance, repairs and replacements of filters, belts or other
items determined to be necessary or appropriate as a result of such inspections
and tests, or by the manufacturers' warranty, service manual or technical
bulletins, or otherwise required to ensure proper and efficient operation,
including emergency work, (iii) all other work as shall be reasonably required
by Tenant, Landlord or Landlord's insurance carriers, (iv) a detailed record of
all services performed, and (v) an annual service report at the end of each
calendar year (Tenant shall provide Landlord with a copy of such annual reports
promptly upon Tenant's receipt thereof). Not later than ten (10) days after the
Commencement Date and annually thereafter, Tenant shall provide Landlord with a
copy of all maintenance contracts required hereunder, and written evidence
reasonably satisfactory to Landlord that the annual fees therefor have been
paid. Such maintenance contracts represent part of Tenant's obligations under
this Article, and shall not be deemed to limit Tenant's general obligations to
keep any HVAC equipment and other systems and equipment hereunder in good
working order, repair and condition.
D. Landlord Maintenance and Repairs. Landlord warrants and represents that
the water and sewage systems and equipment within the Premises are in good
working order as of the date hereof and shall remain so for the initial twelve
(12) months of the Term, normal wear and tear and negligence of the Tenant
excepted. Landlord shall keep the roof, foundation, structural components of
exterior walls of the Premises, sprinklers and other fire protection systems
located outside of the Premises in good working order and repair. As conditions
to Landlord's repair obligations, Tenant shall give Landlord reasonable prior
notice of the necessity for such repairs, and any damage shall not have been
caused by any act or omission of Tenant or any other occupant of the Premises,
or any of their employees, agents, invitees, customers, visitors or contractors.
Landlord's failure to repair or cure such defect after a reasonable notice and
right-to-cure period (but in no event less than thirty (30) days) shall be a
default hereunder by Landlord and Tenant may, in addition to all other remedies
available hereunder, complete such repairs and offset all amounts expended in
connection with such repairs against any rent or other charges payable by Tenant
under this Lease.
ARTICLE 8
UTILITIES AND SERVICES
A. Tenant to Obtain Utilities and Services. Except for water and sewer
service which will be provided by Landlord to the Premises, Tenant shall obtain
in Tenant's own name and pay the utility company or other provider directly for
all utilities and services furnished to or for the Premises, including without
limitation, electricity, gas, fire protection, telephone and other communication
services, heating, ventilating and air-conditioning ("HVAC"), alarm and other
security services, pest and rodent control, janitorial, cleaning and trash
collection, including all connection, disconnection and maintenance charges,
deposits, taxes or fees therefor.
B. Separate Metering. If any utilities are not separately metered for the
Premises, Landlord may: (i) require that Tenant make reasonable arrangements to
share such utilities with the other parties whose premises are on such meter,
(ii) require that Tenant pay Landlord a share of such utilities based on the
rentable square footage of the Premises as a percentage of the total rentable
square footage of the space that is jointly metered, or (iii) require that
Tenant pay Landlord a share of such utilities based on consumption estimates of
Landlord's engineer or consultant (in which case, such engineer's or
consultant's fees and costs shall be added to the utility bills). In such case,
either Landlord or Tenant may elect to install separate meters (but the costs of
installing, maintaining and reading such meters shall be borne by Tenant).
Landlord may reasonably estimate in advance any amounts payable by Tenant to
Landlord hereunder and Tenant shall pay such amounts within ten (10) days after
the same are billed, subject to periodic adjustment (and additional payment by
Tenant or credit or refund by Landlord) after the actual amounts have been
determined.
C. Installation, Connection and Use of Utility Equipment. Tenant shall
install and connect all equipment and lines required to supply such utilities to
the extent not already available at or serving the Premises. Tenant shall
maintain, repair and replace all such items, operate the same, and keep the same
in good working order and condition, as further provided in Article 7. Tenant
shall not install any equipment or fixtures, or use the same, so as to exceed
the safe and lawful capacity of any utility equipment or lines serving the same.
The installation, alteration, replacement or connection of any utility equipment
and lines shall be subject to the requirements for alterations of the Premises
set forth in Article 10. Tenant shall ensure that all HVAC equipment is
installed and operated at all times in a manner to prevent roof leaks, damage or
noise due to vibrations or improper installation, maintenance or operation.
Tenant shall at all times keep the Premises sufficiently heated to avoid
freezing of pipes.
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D. Interruptions. Landlord shall not be liable in damages or otherwise for
any failure or interruption of any utilities or services and Tenant shall not be
entitled to terminate this Lease or abate any portion of the Rent due under the
Lease as a result of such failure or interruption; provided, however, if for
reasons within the control of Landlord and not caused by Tenant, or any of its
employees or agents, or caused by strikes, scarcity of labor and/or materials,
or acts of God or any other event of force majeure any interruption or stoppage
of any services that Landlord is required hereunder to provide to the Building
shall continue for more than three (3) consecutive days, then the Rent payable
hereunder shall be abated for the period beginning on the fourth (4th)
consecutive day of such failure and shall continue until such interrruption has
been corrected.
ARTICLE 9
USE AND RULES
Tenant shall use the Premises for the purpose set forth in Article 1 and no
other purpose whatsoever, subject to and in compliance with Tenant's valid
certificate of occupancy for the Premises, and without unreasonably disturbing
or interfering with any other tenant or occupant of the Building or Project or
of any other property. Tenant shall not use the Premises in any manner so as to
cause a cancellation of Landlord's insurance policies, or an increase in the
premiums thereunder, and Tenant shall comply with all requirements of Landlord's
insurers and Lenders respecting Tenant's use of the Premises. Tenant
acknowledges that the use of the Premises permitted hereunder is subject to any
restrictions or requirements contained in any Laws (as defined in Article 29),
and any covenants, conditions or restrictions of record which Landlord
represents and warrants do not prohibit or impair Tenant's permitted use set
forth in Article 1; Tenant shall comply with all such requirements relating to
the Premises or Tenant's use thereof during the Term, shall obtain any necessary
variances, business licenses, certificates, approvals or permits required
thereunder prior to the Commencement Date (including, without limitation, any
fire department approvals) and shall maintain the same during the Term (and any
failure to obtain or revocation of the same shall not invalidate this Lease). In
addition, Tenant shall comply with the rules set forth in Exhibit C hereto as
the same may be amended or supplemented hereunder (the "Rules"). Landlord shall
have the right by notice to Tenant or by posting at the Project to reasonably
amend such Rules and supplement the same with other reasonable Rules relating to
the Project or the promotion of safety, care, cleanliness or good order therein.
Landlord shall enforce the Rules against Tenant in a non-discriminatory manner
and in the event of any conflict between this Lease and the Rules, this Lease
shall control. Nothing herein shall be construed to give Tenant or any other
party any claim against Landlord arising out of the violation of such Rules by
any other tenant, occupant, customer, invitee or visitor of the Project, or out
of the enforcement, modification or waiver of the Rules by Landlord in any
particular instance.
ARTICLE 10
TRADE FIXTURES, ALTERATIONS AND LIENS
A. Approval. Subject to the express terms of the Work Letter Agreement
which governs the construction of the initial Tenant Improvements and except for
Permitted Alterations (as defined below), Tenant shall not attach any fixtures,
equipment or other items to the Premises or make any additions, changes,
alterations or improvements to the Premises or the systems or equipment serving
the Premises (all such work referred to collectively herein as the "Work"),
without the prior written consent of Landlord. Landlord shall not unreasonably
withhold, delay or condition consent, except that Landlord reserves the right to
withhold consent in Landlord's sole discretion for Work affecting the structure,
safety or security of the Project or Premises, the systems or equipment, or the
appearance of the Premises from any Common Areas. Notwithstanding anything
contained in this Article 10 to the contrary, Tenant shall have the right to
make Permitted Alterations in the Premises, without Landlord's consent. A
Permitted Alteration shall mean any Work in the Premises that could not (i)
affect the structure or safety of the Building; (ii) affect the electrical,
plumbing or mechanical systems of the Building or the functioning thereof; (iii)
be or become visible from the exterior of the Premises; (iv) interfere with the
operation of the Building or the provision of services or utilities to other
tenants in the Building; (v) cost more than the lesser of One Hundred Thousand
Dollars ($100,000.00) or the amount which when added to all other Alterations
made within the prior twelve (12) months equals $200,000.00, and (vi) require a
permit. Provided the foregoing conditions are satisfied, Permitted Alterations
shall include, without limitation, the following Work to the Premises: (i) paint
and install wall coverings; (ii) install and remove office furniture; (iii)
install normal and customary office equipment and workstations (other than floor
to ceiling workstations) that are not affixed to the Premises and are designed
to be free-standing (i.e., not "built-in"), (iv) install and remove Tenant's
computer and telecommunication equipment and perform cable pulls in connection
therewith; and (v) install and remove carpeting and other floor coverings.
B. Conditions. Landlord reserves the right to impose requirements as a
condition of such consent or otherwise in connection with the Work, including
without limitation, requirements that Tenant: (i) submit for Landlord's prior
written approval detailed plans and specifications prepared by licensed and
competent architects and engineers, (ii) submit for Landlord's prior written
approval the names, addresses, insurance and background information concerning
all contractors, subcontractors and suppliers, (iii) obtain and post permits,
bonds, and additional insurance, (iv) submit contractor, subcontractor and
supplier lien waivers, (v) permit Landlord to inspect the Work at reasonable
times, and (vi) comply with such other reasonable requirements as Landlord may
impose concerning the manner and times in which such Work shall be done.
Landlord may require that all Work be performed under Landlord's supervision. If
Landlord consents, inspects or supervises, or recommends any suppliers,
contractors, architects or engineers, the same shall not be deemed a warranty as
to the adequacy of the design, workmanship or quality of materials, or
compliance of the Work with the plans and specifications or any Laws.
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C. Performance of Work. All Work shall be performed: (i) in a good and
workmanlike manner, (ii) only with materials that are new, high quality, and
free of material defects, (iii) strictly in accordance with plans and
specifications approved by Landlord in advance in writing, (iv) not to adversely
affect the systems and equipment or the structure of the Building, (v)
diligently to completion and so as to cause the least possible interference with
other tenants and the operation of the Building and Project, and (vi) in
compliance with all Laws and other provisions of this Lease. If Tenant fails to
perform the Work as required herein or the materials supplied fail to comply
herewith or with the specifications approved by Landlord, and Tenant fails to
cure such failure within 48 hours after notice by Landlord (except that notice
shall not be required in emergencies), Landlord shall have the right to stop the
Work until such failure is cured (which shall not be in limitation of Landlord's
other remedies and shall not serve to abate the Rent or Tenant's other
obligations under this Lease). Upon completion of any Work hereunder (other than
Permitted Alterations), Tenant shall provide Landlord with "as built" plans,
copies of all construction contracts, and proof of payment for all labor and
materials.
D. Removal of Work Upon Termination of Lease. All Work hereunder shall
remain or be removed from the Premises upon expiration or earlier termination of
this Lease to the extent required under Article 13 hereof.
E. Liens. Tenant shall keep the Project, Building, Premises and the Lease
free from any mechanic's, materialman's or similar liens or encumbrances, and
any claims therefor, in connection with any Work. Tenant shall give Landlord
notice at least ten (10) days prior to the commencement of any Work (or such
additional time as may be necessary under applicable Laws), to afford Landlord
the opportunity of posting and recording appropriate notices of
non-responsibility. Tenant shall remove any such claim, lien or encumbrance by
bond or otherwise within twenty (20) days after notice by Landlord. If Tenant
fails to do so, Landlord may pay the amount or take such other action as
Landlord deems necessary to remove such claim, lien or encumbrance, without
being responsible for investigating the validity thereof. The amount so paid and
costs incurred by Landlord shall be deemed additional Rent under this Lease
payable upon demand, without limitation as to other remedies available to
Landlord. Nothing contained in this Lease shall authorize Tenant to do any act
which shall subject Landlord's title to the Project, Building or Premises to any
such notices, liens or encumbrances whether claimed by operation of statute or
other Law or express or implied contract.
ARTICLE 11
CASUALTY DAMAGE
A. Restoration by Landlord. If the Premises shall be damaged by fire or
other casualty or the Premises are rendered inaccessible, Landlord shall use
available insurance proceeds to repair the Premises (including, without
limitation, the initial Tenant Improvements) and/or restore accessibility within
one hundred eighty (180) days following the date of such fire or other casualty
or the date the Premises are rendered inaccessible, except that Landlord shall
not be required to repair or replace any of Tenant's furniture, furnishings,
fixtures or equipment, or any alterations or improvements installed by or for
Tenant (other than the initial Tenant Improvements), and Landlord's obligations
shall be subject to any governmental requirements or requirements of any Lender
and such Lender's right to control, apply or withhold such insurance proceeds.
Landlord shall not be liable for any inconvenience or annoyance to Tenant or
injury to Tenant's business resulting in any way from such damage or the repair
thereof.
B. Abatement of Rent. Landlord shall allow Tenant a proportionate abatement
of Rent from the date of the casualty through the date that Landlord
substantially completes Landlord's repair obligations hereunder (or the date
that Landlord would have substantially completed such repairs, but for delays by
Tenant, or any other occupant of the Premises, or any of their agents,
employees, invitees, visitors, Transferees and contractors), provided such
abatement: (i) shall apply only to the extent the Premises is untenantable for
the purposes permitted under this Lease and not used by Tenant as a result
thereof, based proportionately on the square footage of the Premises so affected
and not used, and (ii) shall not apply if Tenant or any other occupant of the
Premises, or any of their agents, employees, invitees, visitors, Transferees or
contractors cause the damage.
C. Termination of Lease -- Landlord. Notwithstanding the foregoing to the
contrary, in lieu of performing the repair work, Landlord may elect to terminate
this Lease, but only if the Building or Project is damaged by fire or other
casualty or cause such that: (a) more than 25% of the Premises is affected by
the damage, (b) the damage occurs less than one (1) year prior to the end of the
Term, (c) any Lender requires that the insurance proceeds or any portion thereof
be applied to the mortgage debt (or terminates the ground lease, as the case may
be), or the damage is not fully covered by Landlord's insurance policies, or (d)
in Landlord's reasonable opinion, the cost of the repairs, alterations,
restoration or improvement work would exceed 50% of the replacement value of the
Building or Project (whether or not the Premises is affected). In any such case,
Landlord may terminate this Lease by notice to Tenant within ninety (90) days
after the date of damage (such termination notice to include a termination date
providing at least thirty (30) days for Tenant to vacate the Premises). Except
as provided in Section 11D. below, Tenant agrees that Landlord's obligation to
restore, and the abatement of Rent provided herein, shall be Tenant's sole
recourse in the event of such damage, and waives any other rights Tenant may
have under any applicable Law to terminate this Lease by reason of damage to the
Premises, Building or Project.
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D. Termination of Lease -- Tenant. If (i) Landlord does not give Tenant
notice that such damage can be substantially repaired within such one hundred
eighty (180) day period as set forth above within forty-five (45) days after the
date of such fire or other casualty or the date the Premises are rendered
inaccessible, or (ii) Landlord fails to repair the Premises (including, without
limitation, the initial Tenant Improvements) in accordance with Section 11A.
above within one hundred eighty (180) days from the date such work is commenced,
and such failure does not result from force majeure, or a delay caused by Tenant
or any of its employees or agents, then Tenant shall have the right, during the
thirty (30) day period immediately following the expiration of such fifteen (15)
day notice period or one hundred eighty (180) day construction period, as
applicable, to terminate this Lease by delivering a termination notice to
Landlord, specifying an effective date, not less than thirty (30) nor more than
sixty (60) days after the giving of such termination notice, on which the Term
shall expire as fully and completely as if such date were the date originally
fixed for the expiration of the Term.
ARTICLE 12
CONDEMNATION
If at least 25% of the Premises shall be taken by power of eminent domain
or condemned by a competent authority or by conveyance in lieu thereof for
public or quasi-public use ("Condemnation"), including any temporary taking for
a period of one year or longer, this Lease shall terminate on the date
possession for such use is so taken. If: (i) less than 25% of the Premises is
taken, but the taking includes a material portion of the Building or Project, or
(ii) the taking is temporary and will be in effect for less than one year but
more than thirty (30) days, then in either such event, Landlord and Tenant may
elect to terminate this Lease upon at least thirty (30) days' prior written
notice to the non-terminating party. The parties further agree that: (a) if this
Lease is terminated, all Rent shall be apportioned as of the date of such
termination or the date of such taking, whichever shall first occur, (b) if the
taking is temporary, Rent shall be abated for the period of the taking (but the
Term shall not be extended thereby), and (c) if this Lease is not terminated but
any part of the Premises is taken, the Rent shall be proportionately abated
based on the square footage of the Premises so taken. Tenant shall be entitled
to receive and retain such separate award and portions of any lump sum award as
may be allocated to any and all damages to Tenant's business by reason of such
condemnation and for the value of Tenant's trade fixtures, furniture, equipment,
personal property, interruption or dislocation of business, loss of good will
and for moving and remodeling expenses. Except as specifically provided
otherwise in this section, Landlord shall receive the entire portion of any
award or other compensation for the Project and the Building. The termination of
this Lease shall not affect the rights of the respective parties to such awards.
ARTICLE 13
RETURN OF POSSESSION
A. Condition of Premises and Removal of Property. At the expiration or
earlier termination of this Lease or Tenant's right of possession, Tenant shall:
(a) surrender possession of the Premises in broom-clean condition and good
repair, free of debris, and otherwise in the condition required under Article 7,
ordinary wear and tear and damage by fire and other casualty excepted, (b)
ensure that all signs, movable trade fixtures and personal property have been
removed from the Premises (subject to Article 28), (c) ensure that any damage
caused by such removal has been repaired in a good and workmanlike manner (and
Landlord may deny permission to remove items where such removal may damage the
structural integrity of the Building), and (d) ensure that all actions required
under Rule N. set forth in Exhibit C to this Lease have been taken.
B. Removal of Leasehold Improvements. At Landlord's option, all leasehold
improvements and other non-trade fixtures, equipment, systems and decorations
for the Premises or Building in or serving the Premises, whether installed by
Tenant or Landlord, shall be Landlord's property and shall remain, all without
compensation, allowance or credit to Tenant. The term "leasehold improvements
and non-trade fixtures" shall include, without limitation, light fixtures,
electrical wiring and panels, HVAC equipment, plumbing fixtures, hot water
heaters, fire suppression and sprinkler systems, wall coverings, drapes, blinds
or other window treatments, carpeting, refrigeration systems, vaults, special
storefronts, overhead truck doors, cabinets, shelves, bins, millwork, paneling
and other finish work, interior drainage systems, dock boards, dock levelers and
dock bumpers, security gates and fences. However, if prior to termination of
this Lease or within thirty (30) days thereafter Landlord so directs by notice,
Tenant shall promptly remove such of the foregoing items as are designated in
such notice, repair any damage to the Premises caused by such removal in a good
and workmanlike manner, and restore such area of the Premises to the condition
prior to the installation of such items. However, under no circumstances shall
Tenant be obligated to remove the initial leasehold improvements and non-trade
fixtures from the Premises following termination or expiration of this Lease.
Furthermore, Tenant shall have no obligation to remove other leasehold
improvements and non-trade fixtures to the Premises unless such leasehold
improvements and non-trade fixtures make Landlord's subsequent reuse or
renovation of the Premises materially more difficult, and Landlord, in the same
instrument containing Landlord's approval of Tenant's proposed leasehold
improvements and non-trade fixtures, specifically requires that such leasehold
improvements and non-trade fixtures be removed at the expiration of this Lease;
provided that for any installations made without Landlord's written approval, it
shall not be necessary for Landlord to have previously required that such
leasehold improvements and non-trade fixtures be removed at the expiration of
this Lease.
C. Abandoned Property. If Tenant shall fail to perform any repairs or
restoration, or fail to remove any items from the Premises as required
hereunder, Landlord may do so at Tenant's expense as provided in Article 18 and
Tenant shall pay Landlord's charges therefor upon demand. All property removed
from the Premises by Landlord hereunder may be handled, discarded or stored by
Landlord at Tenant's expense, and Landlord shall in no event be responsible for
the value, preservation or safekeeping thereof. All such property shall at
Landlord's option be conclusively deemed to have been conveyed by Tenant to
Landlord as if by bill of sale without payment by Landlord. If Landlord arranges
for storage of any such property, Landlord shall have a lien against such
property for costs incurred in removing and storing the same.
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D. Holding Over. Tenant shall pay Landlord one hundred fifty percent (150%)
for the first three (3) months, one hundred seventy-five percent (175%) for the
next three (3) months and two hundred percent (200%) thereafter of the amount of
Rent then applicable prorated on a full month basis for any full or partial
month during which Tenant shall retain possession of the Premises or any part
thereof after expiration or earlier termination of this Lease, together with all
damages sustained by Landlord on account thereof. This provision shall not serve
as permission for Tenant to holdover nor serve to extend the Term (although
Tenant shall become a tenant at sufferance bound to comply with all provisions
of this Lease until Tenant vacates the Premises; however, Tenant must, once the
tenancy at sufferance begins, give Landlord thirty (30) days prior written
notice to terminate said tenancy at sufferance). Landlord shall have the right,
at any time after expiration or earlier termination of this Lease or Tenant's
right to possession, to reenter and possess the Premises and remove all property
and persons therefrom, and Landlord shall have such other remedies for holdover
as may be available to Landlord under other provisions of this Lease or
applicable Laws. Tenant shall pay rent hereunder until such time as all
alterations and corrections as may be required to be made by Tenant are made and
until such time as all fixtures and property as Tenant may be required or
entitled to remove have been removed. Notwithstanding anything contained herein
to the contrary, Tenant will have no liability for consequential damages
resulting from holdover unless at least sixty (60) days prior to the Expiration
Date of this Lease Landlord delivers to Tenant a lease between Landlord and an
unrelated third party for a term commencing on the Expiration Date of this
Lease. Any consequential damages for which Tenant may be liable will be limited
to Landlord's actual lost profit under the successor lease.
ARTICLE 14
SUBORDINATION, ATTORNMENT AND MORTGAGEE PROTECTION
This Lease is subject and subordinate to all Mortgages now or hereafter placed
upon the Project (not to exceed a total of two (2) Mortgages in effect at any
one time), and all other encumbrances and matters of public record applicable to
the Project, including without limitation, any reciprocal easement or operating
agreements, covenants, conditions and restrictions (and Tenant shall not act or
permit the Premises to be operated in violation thereof); provided, however,
Tenant's subordination and attornment to any Mortgage as set forth in this
Article 14 shall be conditioned upon (a) Lender's agreement to recognize this
Lease and not to disturb Tenant's possession of the Premises as long as Tenant
is not in default hereunder and (b) Landlord obtaining a commercially reasonable
subordination, non-disturbance and attornment agreement for Tenant from Lender.
If any foreclosure or power of sale proceedings are initiated by any Lender or a
deed in lieu is granted (or if any ground lease is terminated), Tenant agrees,
upon written request of any such Lender or any purchaser at such sale, to attorn
and pay Rent to such party and to execute and deliver any instruments necessary
or appropriate to evidence or effectuate such attornment. Any Lender may elect
to make this Lease prior to the lien of its Mortgage, and if the Lender under
any prior Mortgage shall require, this Lease shall be prior to any subordinate
Mortgage; such elections shall be effective upon written notice to Tenant.
Tenant agrees to give any Lender by certified mail, return receipt requested, a
copy of any notice of default served by Tenant upon Landlord, provided that
prior to such notice Tenant has been notified in writing (by way of service on
Tenant of a copy of an assignment of leases, or otherwise) of the name and
address of such Lender. Tenant further agrees that if Landlord shall have failed
to cure such default within the time permitted Landlord for cure under this
Lease, any such Lender whose address has been so provided to Tenant shall have
an additional period of ten (10) days in which to cure (or such additional time
as may be required due to causes beyond such Lender's control, including time to
obtain possession of the Project by power of sale or judicial action). The
provisions of this Article shall be self-operative; however Tenant shall execute
such documentation as Landlord or any Lender may request from time to time in
order to confirm the matters set forth in this Article in recordable form.
Tenant hereby waives the provisions of any Law now or hereafter adopted which
may give or purport to give Tenant any right or election to terminate or
otherwise adversely affect this Lease or Tenant's obligations hereunder if such
foreclosure or power of sale proceedings are initiated, prosecuted or completed.
ARTICLE 15
ESTOPPEL CERTIFICATES
A. Tenant Estoppel. Tenant shall from time to time (but not more often than
twice per calendar year), within fifteen (15) business days after written
request from Landlord, execute, acknowledge and deliver a statement: (i)
certifying that this Lease is unmodified and in full force and effect (or if
this Lease is claimed to have been modified or not to be in force and effect,
specifying the grounds therefor) and the dates to which the Base Rent and other
charges hereunder have been paid, and the amount of any Security Deposit, (ii)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults on
the part of Landlord hereunder, or specifying such defaults if any are claimed,
and (iii) certifying such other matters as Landlord may reasonably request, or
as may be reasonably requested by Landlord's current or prospective Lenders,
insurance carriers, auditors, and prospective purchasers. Any such statement may
be relied upon by any such parties. If Tenant shall fail to execute and return
such statement within the time required herein, Tenant shall be deemed to have
agreed with the matters set forth therein.
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B. Landlord Estoppel. Landlord shall from time to time (but not more often
than twice per calendar year), within fifteen (15) business days after written
request from Tenant, execute, acknowledge and deliver a statement: (i)
certifying that this Lease is unmodified and in full force and effect (or if
this Lease is claimed to have been modified or not to be in force and effect,
specifying the grounds therefor) and the dates to which the Base Rent and other
charges hereunder have been paid, and the amount of any Security Deposit, (ii)
acknowledging that there are not, to Landlord's knowledge, any uncured defaults
on the part of Tenant hereunder, or specifying such defaults if any are claimed,
and (iii) certifying such other matters as Tenant may reasonably request, or as
may be reasonably requested by Tenant's current or prospective insurance
carriers, auditors, and prospective purchasers. Any such statement may be relied
upon by any such parties. If Landlord shall fail to execute and return such
statement within the time required herein, Landlord shall be deemed to have
agreed with the matters set forth therein.
ARTICLE 16
ASSIGNMENT AND SUBLETTING
A. Transfers. Tenant shall not, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed as further described below: (i) assign, mortgage, pledge, hypothecate,
encumber, permit any lien to attach to, or otherwise transfer, this Lease or any
interest hereunder, by operation of law or otherwise, (ii) sublet the Premises
or any part thereof, or (iii) permit the use of the Premises by any parties
other than Tenant and its employees (all of the foregoing are hereinafter
sometimes referred to collectively as "Transfers" and any party to whom any
Transfer is made or sought to be made is hereinafter sometimes referred to as a
"Transferee"). If Tenant shall desire Landlord's consent to any Transfer, Tenant
shall notify Landlord in writing, which notice shall include: (a) the proposed
effective date (which shall not be less than thirty (30) nor more than one
hundred eighty (180) days after Tenant's notice), (b) the portion of the
Premises to be Transferred (herein called the "Subject Space"), (c) The terms of
the proposed Transfer and the consideration therefor, the name and address of
the proposed Transferee, and a copy of all documentation pertaining to the
proposed Transfer, (d) current financial statements of the proposed Transferee
certified by an officer, partner or owner thereof, and (e) Payment of $500.00
towards Landlord's review and processing expenses and any other information to
enable Landlord to determine the financial responsibility, character, and
reputation of the proposed Transferee, nature of such Transferee's business and
proposed use of the Subject Space, and such other reasonable information as
Landlord may reasonably require. Any Transfer made without complying with this
Article shall, at Landlord's option, be null, void and of no effect, or shall
constitute a Default under this Lease. Whether or not Landlord shall grant
consent, Tenant shall pay any reasonable legal fees incurred by Landlord (not to
exceed $1,000.00) in connection with processing any such request within ten (10)
days after written request by Landlord. If (i) Landlord fails to notify Tenant
whether or not it will consent to such proposed Transfer within thirty (30) days
after receipt of a request for consent to a Transfer, and, thereafter, Tenant
delivers notice ("Transfer Response Failure Notice") to Landlord of such failure
(which Transfer Response Failure Notice must refer to this provision and state
in capital bold letters in the Transfer Response Failure Notice the following:
"LANDLORD MUST RESPOND TO TENANT'S REQUEST CONTAINED HEREIN WITHIN TEN (10) DAYS
OF RECEIPT OR SUCH REQUEST SHALL BE DEEMED APPROVED," and (ii) Landlord fails to
respond to such request within ten (10) days after Landlord's receipt of the
Transfer Response Failure Notice, then Landlord's consent to the proposed
Transfer shall be deemed given.
B. Approval. Landlord will not unreasonably withhold consent to any
proposed Transfer of the Subject Space to the Transferee subject to Tenant's
compliance with the terms and conditions detailed in Article 16 (a). The parties
hereby agree that it shall be reasonable under this Lease and any applicable Law
for Landlord to withhold consent to any proposed Transfer where one or more of
the following applies (without limitation as to other reasonable grounds for
withholding consent): (i) the Transferee is of a character or reputation or
engaged in a business which is not consistent with the quality of the Property
or the businesses of the then current tenants in any material respect, (ii) the
Transferee intends to use the Subject Space for purposes which are not permitted
under this Lease, (iii) the Subject Space is not regular in shape with
appropriate means of ingress and egress suitable for normal renting purposes,
(iv) the Transfer involves a partial or collateral assignment of this Lease, (v)
the Transferee is a government (or agency or instrumentality thereof), (vi) the
proposed Transferee has a parking requirement greater than that of Tenant, or
(vii) Tenant has committed and failed to cure a Default at the time Tenant
requests consent to the proposed Transfer.
C. Transfer Premium. If Landlord consents to a Transfer, and as a condition
thereto which the parties hereby agree is reasonable, Tenant shall pay Landlord
fifty percent (50%) of any Transfer Premium derived by Tenant from such
Transfer. "Transfer Premium" shall mean all rent, additional rent or other
monetary consideration paid by such Transferee in excess of the Rent payable by
Tenant under this Lease (on a monthly basis during the Term, and on a per
rentable square foot basis, if less than all of the Premises is transferred)
less any costs associated with consummation of the Transfer. The percentage of
the Transfer Premium due Landlord hereunder shall be paid within ten (10) days
after Tenant receives any Transfer Premium from the Transferee.
D. Recapture. Notwithstanding anything to the contrary contained in this
Article, Landlord shall have the option, by giving notice to Tenant within
thirty (30) days after receipt of Tenant's notice of any proposed Transfer
(except a Permitted Transfer (as defined below)), to recapture the Subject
Space; provided, however, Tenant may withdraw its notice of proposed Transfer
within five (5) business days after receipt of written notice from Landlord that
it intends to exercise it recapture right. Such recapture notice shall terminate
this Lease with respect to the Subject Space as of the date stated in Tenant's
notice as the effective date of the proposed Transfer (or at Landlord's option,
shall cause the Transfer to be made to Landlord or its agent, in which case the
parties shall execute the Transfer documentation promptly thereafter). If this
Lease shall be terminated with respect to less than the entire Premises, the
Rent herein shall be prorated on the basis of the number of rentable square feet
retained by Tenant in proportion to the number of rentable square feet contained
in the Premises. This Lease as so amended shall continue thereafter in full
force and effect, and upon request of either party, the parties shall execute
written confirmation of the same in the form of a lease amendment to be executed
within ten (10) days thereof.
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E. Terms of Consent. If Landlord consents to a Transfer: (a) the terms and
conditions of this Lease, including among other things Tenant's liability for
the Subject Space and the purposes for which the Premises may be used under
Article 1, shall in no way be deemed to have been waived or modified, (b) such
consent shall not be deemed consent to any further Transfer by either Tenant or
a Transferee, (c) Tenant shall deliver to Landlord promptly after execution, an
original executed copy of all documentation pertaining to the Transfer in form
reasonably acceptable to Landlord, and (d) Tenant shall furnish upon Landlord's
request a complete statement, certified by an independent certified public
accountant or Tenant's chief financial officer, setting forth in detail the
computation of any Transfer Premium Tenant has derived and shall derive from
such Transfer. Landlord or its authorized representatives shall have the right
at all reasonable times to audit the books, records and papers of Tenant
relating to any Transfer, and shall have the right to make copies thereof. If
the Transfer Premium respecting any Transfer shall be found understated, Tenant
shall within ten (10) days after demand pay the deficiency, and if understated
by more than 5%, Tenant shall pay Landlord's costs of such audit. Any sublease
hereunder shall be subordinate and subject to the provisions of this Lease, and
if this Lease shall be terminated during the term of any sublease, Landlord
shall have the right to: (i) treat such sublease as cancelled and repossess the
Subject Space by any lawful means, or (ii) require that such subtenant attorn to
and recognize Landlord as its landlord under any such sublease. If Tenant shall
Default and fail to cure within the time permitted for cure under Article 18,
Landlord is hereby irrevocably authorized to direct any Transferee to make all
payments under or in connection with such Transfer directly to Landlord (which
Landlord shall apply towards Tenant's obligations under this Lease).
F. Certain Transfers. For purposes of this Lease, the term "Transfer" shall
also include: (a) if Tenant is a partnership, the withdrawal or change,
voluntary, involuntary or by operation of law, of a majority of the partners, or
a transfer of a majority of partnership interests, or the dissolution of the
partnership, and (b) if Tenant is a closely held corporation (i.e., whose stock
is not publicly held and not traded through an exchange or over the counter),
the dissolution, merger, consolidation or other reorganization of Tenant, or:
(i) the sale or other transfer of more than an aggregate of 50% of the voting
shares of Tenant (other than to immediate family members by reason of gift or
death) or (ii) the sale, mortgage, hypothecation or pledge of more than an
aggregate of 50% of Tenant's net assets.
G. Permitted Transfers. Notwithstanding anything contained in this Article
16 to the contrary and subject to both (1) prior written notice to Landlord and
(2) compliance with each of the provisions of this Article 16A. (other than the
requirements of obtaining Landlord's consent), Tenant may (a) either assign this
Lease or sublet the Premises to a corporation or banking association wholly
owned by Tenant or to a corporation or banking association of which Tenant owns
at least fifty-one percent (51%) of each class of voting stock, or to a
corporation or banking association that succeeds Tenant through a merger or
other similar acquisition, (b) either assign this Lease or sublet the Premises
to a Qualified Tenant Affiliate (as defined below), (c) permit the use of the
Premises by licensees and concessionaires. Tenant shall also be permitted to
sell its stock on the public market. A "Qualified Tenant Affiliate" shall mean a
corporation or other entity which shall control, be controlled by or be under
common control with Tenant. For purposes of the immediately preceding sentence,
"control" shall be deemed to be ownership of more than fifty percent (50%) of
the legal and equitable interest of the controlled corporation or other business
entity. (Each of the Transfers described in this Article 16G. is hereinafter
referred to as a "Permitted Transfer").
ARTICLE 17
RIGHTS RESERVED BY LANDLORD
Except to the extent expressly limited herein, Landlord reserves all rights
to control the Project (which rights may be exercised without subjecting
Landlord to claims for constructive eviction, abatement of Rent, damages or
other claims of any kind), including more particularly, but without limitation,
the following rights:
A. Access to Premises. Landlord and its authorized representatives may,
during Tenant's normal business hours: (i) inspect the Premises (except for
network control rooms and any restricted areas), (ii) exhibit the Premises
(except for network control rooms and any restricted areas) to current and
prospective tenants (during the last one hundred eighty (180) days of the Term
only), purchasers, Lenders, insurers, governmental authorities, and brokers,
(iii) place in and upon the Premises or such other places as may be determined
by Landlord "For Rent" signs or notices if Tenant shall abandon or vacate the
Premises, or at any time during the last one hundred eighty (180) days of the
Term, and (iv) enter or permit entry to the Premises in emergencies or for any
other reasonable purpose, or for the purpose of exercising any other rights or
remedies expressly granted or reserved to Landlord under this Lease or
applicable Law. However, in connection with entering the Premises to exercise
any of the foregoing rights, Landlord shall take reasonable steps to minimize
any interference with Tenant's business, and following completion of the work,
shall return Tenant's leasehold improvements, fixtures, property and equipment
to the original locations and condition to the fullest extent reasonably
possible. Landlord shall give Tenant at least twenty-four (24) hours notice
(except in the case of an emergency when no such notice shall be required) prior
to entering the Premises pursuant to this Article 17. Tenant shall be entitled
to provide Landlord with an escort to accompany Landlord or its representatives
when Landlord or its representatives enter the Premises pursuant to this Article
17.
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B. Reserved Areas. Landlord reserves the right to use (or grant other
parties the right to use) and Tenant shall have no right, title or interest in:
(i) the roof of the Building [except to perform Tenant's maintenance obligations
(i.e., HVAC) under this Lease], (ii) exterior portions of the Premises
(including, without limitation, demising walls and outer walls of the Building),
(iii) air rights above the Premises and rights to the land and improvements
below the floor level of the Premises, and (iv) areas within the Premises
necessary for utilities, services, safety and operation of the Building or
Project, including systems and equipment (except for the fire sprinkler system
serving the Premises), fire stairways, and space between any suspended ceiling
of the Premises and the slab of the floor or roof of the Project thereabove;
provided, Tenant shall have the right (at no additional rent or charge) to
install, maintain and operate upon the roof of the Building (in a location
reasonably approved by Landlord) equipment to include antennae, cabling, wiring,
and telecommunications equipment and systems, and to bring into the Premises
from underground locations approved by Landlord wires and cables (collectively,
the "Communications Equipment") for its use in the conduct of Tenant's business.
Tenant may maintain, protect, remove, replace, change and add to the such wires
and cables, subject to reasonable regulation by the Landlord. Tenant agrees to
pay all costs incurred in connection with Tenant's installation, operation,
utilization, replacement, maintenance and removal of such Communications
Equipment. Upon the expiration or earlier termination of this Lease, Tenant
shall remove all of the Communications Equipment and all repair any damage to
the roof caused thereby, all at Tenant's sole cost and expense.
C. Emergency Closings and Restricted Access. Landlord shall have the right
(but not the obligation) to prevent or restrict access to the Project or
designated portions thereof by such security procedures as Landlord may from
time to time reasonably impose and necessitated by emergency circumstances that
directly affect the Building and/or the Project. Landlord reserves the right to
control, prevent access by and remove, any person whose presence in the
reasonable judgment of Landlord shall be prejudicial to the safety, character,
reputation and interests of the Project, or who in the judgment of Landlord, is
intoxicated or under the influence of liquor or drugs. Landlord shall also have
the right (but not the obligation) to limit or prevent access to all or any
portion of the Project, shut down elevator service, activate emergency controls
or procedures, or otherwise take such action or preventive measures reasonably
deemed necessary by Landlord for the safety of tenants or other occupants of the
Project or the protection of the Project or other property located thereon or
therein, in case of fire or other casualty, riot or other civil disorder, strike
or labor unrest, public excitement or other dangerous condition, or threat
thereof.
D. Other Tenants. Landlord reserves the right to lease any portion of the
Project to such other tenants as Landlord, in Landlord's sole discretion, deems
appropriate, whether or not engaged in the same or similar business for which
Tenant is permitted to use the Premises under this Lease. Tenant acknowledges
that Landlord has made no representation as to the presence of any specific
tenant or number or types of tenants at the Project as of or after the
Commencement Date.
E. Changes to the Project. Landlord reserves the right to: (i) change the
name of the Project and the address or designation of the Premises or Building,
(ii) install, maintain, alter and remove signs on or about the Project (except
Tenant's signage), (iii) add land, easements or other interests to or eliminate
the same from the Project, and grant easements and other interests and rights in
the Project to other parties, (iv) inspect, repair, maintain, improve, add,
alter, expand, reduce, eliminate, relocate or change the shape, size, location,
character, design, appearance, use, number or height of the Building, any other
permanent or temporary buildings, structures, improvements, and Common Areas,
change the striping of parking areas and direction and flow of traffic, and
convert Common Areas to rentable areas and rentable areas to Common Areas,
provided that such changes shall not unreasonably interfere with Tenant's access
to or use of the Premises, or with access to the Premises by couriers,
messengers and delivery people, (v) add structural support columns and shear
walls, and (vi) in connection with the foregoing matters, or as a result of any
casualty, incident, strike, condemnation, act of God, Law or governmental
requirement or request, or any other cause, erect scaffolding, barricades, and
other structures reasonably required in, or otherwise close, Common Areas or
portions thereof. However, in connection with exercising such rights, Landlord
shall: (a) take reasonable steps to minimize or avoid any denial of or
materially changing access to the Premises except when necessary on a temporary
basis, (b) take reasonable steps to avoid materially changing the configuration
or reducing the square footage of the Premises or the Common Areas, unless
required by Laws or other causes beyond Landlord's reasonable control (and in
the event of any permanent material reduction in the square footage of the
Premises, the Base Rent and other charges shall be proportionately reduced), and
(c) if Landlord enters the Premises in connection with any of the foregoing
matters, Landlord shall comply with Paragraph A above.
F. Relocation. Landlord reserves the right to substitute for the Premises
other premises (herein referred to as the "new premises") at the Project,
provided: (a) the new premises shall be similar to the Premises in square
footage, and Landlord shall improve or reimburse Tenant's direct, out-of-pocket
reasonable expenses of improving the new premises so that it is substantially
similar to the Premises, (b) Landlord shall give Tenant at least thirty (30)
days' notice before making such change, and the parties shall execute an
amendment to this Lease confirming the change within thirty (30) days after
either party shall request the same, and (c) if Tenant shall already have taken
possession of the Premises, Landlord shall pay the direct, out-of-pocket,
reasonable expenses of Tenant in moving from the Premises to the new premises.
ARTICLE 18
LANDLORD'S REMEDIES
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A. Default. The occurrence of any one or more of the following events shall
constitute a "Default" by Tenant and shall give rise to Landlord's remedies set
forth in Paragraph (B), below: (i) failure to make when due any payment of Rent
and such failure is not cured within five (5) business days after written notice
from Landlord of such failure (a "Monetary Default"); (ii) failure to observe or
perform any term or condition of this Lease other than the payment of Rent,
unless such failure is cured within thirty (30) days following notice (provided,
if the nature of Tenant's failure is such that more time is reasonably required
in order to cure, Tenant shall not be in Default if Tenant commences to cure
within such period and thereafter diligently seeks to cure such failure to
completion); and (iii) (a) making by Tenant or any guarantor of this Lease
("Guarantor") of any general assignment for the benefit of creditors, (b) filing
by or against Tenant or any Guarantor of a petition to have Tenant or such
Guarantor adjudged a bankrupt or a petition for reorganization or arrangement
under any Law relating to bankruptcy or insolvency (unless, in the case of a
petition filed against Tenant or such Guarantor, the same is dismissed within
ninety (90) days), (c) appointment of a trustee or receiver to take possession
of substantially all of Tenant's assets located in the Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within ninety
(90) days, (d) attachment, execution or other judicial seizure of substantially
all of Tenant's assets located on the Premises or of Tenant's interest in this
Lease, (e) Tenant's or any Guarantor's convening of a meeting of its creditors
or any class thereof for the purpose of effecting a moratorium upon or
composition of its debts, (f) Tenant's or any Guarantor's insolvency or
admission of an inability to pay its debts as they mature, or (g) a violation by
Tenant or any affiliate of Tenant under any other lease or agreement with
Landlord relating to the Project which is not cured within the time permitted
for cure thereunder. Failure by Tenant to comply with the same term or condition
of this Lease on two (2) occasions during any twelve (12) month period shall
cause any failure to comply with such term or condition during the succeeding
(12) twelve month period, at Landlord's option, to constitute an incurable
Default. The notice and cure periods provided herein are in lieu of, and not in
addition to, any notice and cure periods provided by Law.
B. Remedies - Monetary Default. If a Monetary Default occurs, Landlord
shall have the rights and remedies hereinafter set forth to the extent permitted
by Law, which shall be distinct, separate and cumulative with and in addition to
any other right or remedy allowed under any Law or other provisions of this
Lease:
(1) Landlord may terminate Tenant's right of possession, reenter and
repossess the Premises by detainer suit, summary proceedings or other lawful
means, with or without terminating this Lease, and recover from Tenant: (i) any
unpaid Rent as of the termination date, (ii) the amount by which: (a) any unpaid
Rent which would have accrued after the termination date during the balance of
the Term exceeds (b) the reasonable rental value of the Premises under a lease
substantially similar to this Lease for the balance of the Term, taking into
account among other things, the condition of the Premises, market conditions and
the period of time the Premises may reasonably remain vacant before Landlord is
able to re-lease the same to a suitable replacement tenant, and Costs of
Reletting (as defined in Paragraph I below) that Landlord may incur in order to
enter into such replacement lease, and (iii) any other amounts necessary to
compensate Landlord for all damages proximately caused by Tenant's failure to
perform its obligations under this Lease. For purposes of computing the amount
of Rent herein that would have accrued after the termination date, Tenant's
obligations for Taxes, Insurance and Common Area Expenses shall be projected,
based upon the average rate of increase, if any, in such items from the
Commencement Date through the termination date. The amounts computed in
accordance with the foregoing subclauses (a) and (b) shall both be discounted to
the then present value at the discount rate of the Federal Reserve Bank of
Dallas at the time of award, plus one percent (1%).
(2) Landlord may terminate Tenant's right of possession, reenter and
repossess the Premises by detainer suit, summary proceedings or other lawful
means, with or without terminating this Lease and recover from Tenant: (i) any
unpaid Rent as of the date possession is terminated, (ii) any unpaid Rent which
accrues during the Term from the date possession is terminated through the time
of judgment (or which may have accrued from the time of any earlier judgment
obtained by Landlord), less any consideration received from replacement tenants
as further described and applied pursuant to Paragraph I below, and (iii) any
other amounts necessary to compensate Landlord for all damages proximately
caused by Tenant's failure to perform its obligations under this Lease,
including without limitation, all Costs of Reletting (as defined in Paragraph
I). Tenant shall pay any such amounts to Landlord as the same accrue or after
the same have accrued from time to time upon demand. At any time after
terminating Tenant's right to possession as provided herein, Landlord may
terminate this Lease as provided in clause (1) above by written notice to
Tenant, and Landlord may pursue such other remedies as may be available to
Landlord under this Lease or applicable Law.
C. Mitigation of Damages. If Landlord terminates this Lease or Tenant's
right to possession, Landlord shall have no obligation to mitigate Landlord's
damages except to the extent required by applicable Law. If Landlord is required
to mitigate damages as provided herein: (a) Landlord shall be required only to
use reasonable efforts to mitigate, which shall not exceed such efforts as
Landlord generally uses to lease other space at the Project, (b) Landlord will
not be deemed to have failed to mitigate if Landlord or its affiliates lease any
other portions of the Project or other projects owned by Landlord or its
affiliates in the same geographic area, before reletting all or any portion of
the Premises, and (c) any failure to mitigate as described herein with respect
to any period of time shall only reduce the Rent and other amounts to which
Landlord is entitled hereunder by the reasonable rental value of the Premises
during such period, taking into account the factors described Clause B(1),
above. In recognition that the value of the Project depends on the rental rates
and terms of leases therein, Landlord's rejection of a prospective replacement
tenant based on an offer of rentals below Landlord's published rates for new
leases of comparable space at the Project at the time in question, or at
Landlord's option, below the rates provided in this Lease, or containing terms
less favorable than those contained herein, shall not give rise to a claim by
Tenant that Landlord failed to mitigate Landlord's damages.
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D. Reletting. If this Lease or Tenant's right to possession is terminated,
or Tenant vacates or abandons the Premises, Landlord may: (i) enter and secure
the Premises, change the locks, install barricades, remove any improvements,
fixtures or other property of Tenant therein, perform any decorating,
remodeling, repairs, alterations, improvements or additions and take such other
actions as Landlord shall determine in Landlord's sole discretion to prevent
damage or deterioration to the Premises or prepare the same for reletting, and
(ii) relet all or any portion of the Premises (separately or as part of a larger
space), for any rent, use or period of time (which may extend beyond the Term
hereof), and upon any other terms as Landlord shall determine in Landlord's sole
discretion, directly or as Tenant's agent (if permitted or required by
applicable Law). The consideration received from such reletting shall be applied
pursuant to the terms of Paragraph I hereof, and if such consideration, as so
applied, is not sufficient to cover all Rent and damages to which Landlord may
be entitled hereunder, Tenant shall pay any deficiency to Landlord as the same
accrues or after the same has accrued from time to time upon demand, subject to
the other provisions hereof.
E. Specific Performance, Collection of Rent and Acceleration. Landlord
shall at all times have the right without prior demand or notice except as
required by applicable Law to: (i) seek any declaratory, injunctive or other
equitable relief, and specifically enforce this Lease or restrain or enjoin a
violation of any provision hereof, and (ii) sue for and collect any unpaid Rent
which has accrued. Notwithstanding anything to the contrary contained in this
Lease, to the extent not expressly prohibited by applicable Law, in the event of
any Default by Tenant, Landlord may terminate this Lease or Tenant's right to
possession and accelerate and declare that all Rent reserved for the remainder
of the Term shall be immediately due and payable (in which event, Tenant's
obligations for Taxes, Insurance and Common Area Expenses herein that would have
accrued thereafter shall be projected in the manner described in Section B(1),
above); provided the Rent so accelerated shall be discounted to the then present
value at the discount rate of the Federal Reserve Bank of Dallas at the time of
award, plus one percent (1%), and Landlord shall, after receiving payment of the
same from Tenant, be obligated to turn over to Tenant any actual net reletting
proceeds (net of all Costs of Reletting) thereafter received during the
remainder of the Term.
F. Late Charges and Interest. Tenant shall pay, as additional Rent, a
service charge of Two Hundred Dollars ($200.00) or five percent (5%) of the
delinquent amount, whichever is greater, if any portion of Rent is not received
within five (5) days of when due. In addition, any Rent not paid within five (5)
days of when due shall accrue interest from the due date at the Default Rate
until payment is received by Landlord. Such service charges and interest
payments shall not be deemed consent by Landlord to late payments, nor a waiver
of Landlord's right to insist upon timely payments at any time, nor a waiver of
any remedies to which Landlord is entitled as a result of the late payment of
Rent. "Default Rate" shall mean eighteen percent (18%) per annum, or the highest
rate permitted by applicable Law, whichever is less.
G. Remedies - Non-Monetary Default. If Tenant fails to perform any
non-monetary obligation under this Lease for thirty (30) days after notice
thereof by Landlord (except that no notice shall be required in emergencies),
Landlord shall have the right (but not the duty), to perform such obligation on
behalf and for the account of Tenant. In such event, Tenant shall reimburse
Landlord upon demand, as additional Rent, for all expenses incurred by Landlord
in performing such obligation together with an amount equal to ten percent (10%)
thereof for Landlord's overhead, and interest thereon at the Default Rate from
the date such expenses were incurred. Landlord's performance of Tenant's
obligations hereunder shall not be deemed a waiver or release of Tenant
therefrom.
H. Bad Rent Checks. If during the Term, as it may be extended, Landlord
receives two (2) or more checks from Tenant which are returned by Tenant's bank
for insufficient funds, Landlord may require that all checks thereafter be bank
certified or cashier's checks (without limiting Landlord's other remedies). All
bank service charges resulting from any bad checks shall be borne by Tenant.
I. Other Matters. No re-entry or repossession, repairs, changes,
alterations and additions, reletting, acceptance of keys from Tenant, or any
other action or omission by Landlord shall be construed as an election by
Landlord to terminate this Lease or Tenant's right to possession, or to accept a
surrender of the Premises, nor shall the same operate to release Tenant in whole
or in part from any of Tenant's obligations hereunder, unless express written
notice of such intention is sent by Landlord to Tenant. Landlord may bring suits
for amounts owed by Tenant hereunder or any portions thereof, as the same accrue
or after the same have accrued, and no suit or recovery of any portion due
hereunder shall be deemed a waiver of Landlord's right to collect all amounts to
which Landlord is entitled hereunder, nor shall the same serve as any defense to
any subsequent suit brought for any amount not theretofor reduced to judgment.
Landlord may pursue one or more remedies against Tenant and need not make an
election of remedies until findings of fact are made by a court of competent
jurisdiction. All rent and other consideration paid by any replacement tenants
shall be applied at Landlord's option: first, to the Costs of Reletting, second,
to the payment of all costs of enforcing this Lease against Tenant or any
Guarantor, third, to the payment of all interest and service charges accruing
hereunder, fourth, to the payment of Rent theretofore accrued, and the residue,
if any, shall be held by Landlord and applied to the payment of other
obligations of Tenant to Landlord as the same become due (with any remaining
residue to be promptly delivered to Tenant). "Costs of Reletting" shall include
without limitation, all reasonable costs and expenses incurred by Landlord for
any repairs, maintenance, changes, alterations and improvements to the Premises
(whether to prevent damage or to prepare the Premises for reletting), brokerage
commissions, advertising costs, reasonable attorneys' fees, any economic
incentives given to enter leases with replacement tenants, and costs of
collecting rent from replacement tenants. Landlord shall be under no obligation
to observe or perform any provision of this Lease on its part to be observed or
performed which accrues after the date of any Default by Tenant unless and until
any Default by Tenant is cured or waived by Landlord. The times set forth herein
for the curing of violations by Tenant are of the essence of this Lease. Tenant
hereby waives any right otherwise available under any Law to redeem or reinstate
this Lease or Tenant's right to possession after this Lease or Tenant's right to
possession is terminated based on Default by Tenant.
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J. Texas Property Code. The following provisions shall override and control
any conflicting provisions of Section 93.002 of the Texas Property Code, as well
as any successor statute governing the right of a landlord to change the door
locks of commercial tenants. In the event of a Default by Tenant, Landlord is
entitled and is hereby authorized, without any notice to Tenant whatsoever, to
enter upon the Premises by use of master key, a duplicate key or other peaceable
means, and to change, alter and/or modify the door locks on all entry doors of
the Premises, thereby permanently excluding Tenant, and its officers,
principals, agents, employees and representatives therefrom. In the event that
Landlord has either permanently repossessed the Premises, or has terminated the
Lease, Landlord shall not thereafter be obligated to provide Tenant with a key
to the Premises at any time, regardless of any amounts subsequently paid by
Tenant; provided, however, that in any such instance, during Landlord's regular
business hours, Landlord will escort Tenant or its authorized personnel to the
Premises to retrieve any personal belongings or other property of Tenant. If
Landlord elects to exclude Tenant from the Premises without permanently
repossessing or terminating this Lease, then Landlord shall not be obligated to
provide Tenant a key to reenter the Premises until such time as all delinquent
rent and other amounts due under this Lease have been paid in full and all other
violations of this Lease, if any, have been completely cured to Landlord's
reasonable satisfaction (if such cure occurs prior to any actual permanent
repossession or termination), and Landlord has been given assurances reasonably
satisfactory to Landlord evidencing Tenant's ability to satisfy its remaining
obligations under this Lease. During any such temporary period of exclusion,
Landlord will, during Landlord's regular business hours, upon receipt of written
notice from Tenant (accompanied by such written waivers and releases as Landlord
may reasonably require), escort Tenant or its authorized personnel to the
Premises to retrieve personal belongings of Tenant or its employees, and such
other property of Tenant. Landlord shall not be deemed to have permanently
repossessed the Premises or to have terminated this Lease unless Landlord
expressly so elects by written notice to Tenant. This remedy of Landlord shall
be in addition to and not in lieu of any of its other remedies set forth in this
Lease, or otherwise available to Landlord at law or in equity.
ARTICLE 19
LANDLORD'S DEFAULT
If Landlord fails to comply with any provision of this Lease and such
failure continues for more than thirty (30) days after written notice thereof
from Tenant specifying the nature of such alleged failure (or if such failure
cannot be corrected through the exercise of reasonable diligence within such
thirty (30)-day period, if Landlord does not commence to correct same within
such thirty (30)-day period and thereafter diligently pursue correction of same
within a period of sixty (60) days), Landlord shall be in default hereunder.
Tenant may, at its option and in addition to all other rights and remedies
available to Tenant at law or in equity, cure such default on behalf of and at
the expense of Landlord and do all necessary work and make necessary payments in
connection therewith to the extent necessary to protect Tenant's leasehold
interest and continued use and occupancy of the Premises. Landlord shall pay to
Tenant, on demand, the reasonable costs incurred and any reasonable amount so
paid by Tenant together with interest thereon at the Default Rate until paid.
Tenant may offset such amounts against any rent or other charges payable by
Tenant under this Lease.
ARTICLE 20
INDEMNIFICATION
A. Tenant's Indemnification. Except to the extent arising solely from the
intentional or grossly negligent acts of Landlord or Landlord's agents or
employees, Tenant shall defend, indemnify and hold Landlord harmless from and
against any and all claims, demands, losses, penalties, fines, fees, charges,
assessments, liabilities, damages, judgments, orders, decrees, actions,
administrative or other proceedings, costs and expenses (including, without
limitation, court costs, reasonable attorneys' fees, expert witness fees, costs
for tests, inspections, investigations, feasibility or impact studies,
preparation and implementation of any Hazardous Materials remedial or cleanup
plan), and any diminution in value or loss or interference with the transfer,
use or enjoyment of the Premises, Project or other property or business or
affecting title thereto, arising from or relating to: (i) any violation of this
Lease or applicable Law by any Tenant Parties (as defined below), (ii) damage,
loss or injury to persons, property or business occurring in, about or from the
Premises, (iii) damage, loss or injury to persons, property or business directly
or indirectly arising out of any Tenant Party's use of the Premises or Project,
or out of any other act or omission of any Tenant Parties. For purposes of this
provision, "Tenant Parties" shall mean Tenant, any other occupant of the
Premises and any of their respective agents, employees, invitees, customers,
visitors, Transferees and contractors. Without limiting the generality of the
foregoing, Tenant specifically acknowledges that the indemnity undertaking
herein shall apply to claims in connection with or arising out of any Work in
the Premises under Article 10 or any Hazardous Materials in the Premises under
Article 22 (whether or not such matters shall have been theretofore permitted or
approved by Landlord). In the event that a defense is required hereunder, Tenant
shall defend Landlord at Tenant's expense with counsel reasonably acceptable to
Landlord or, at Landlord's election, Tenant shall reimburse Landlord for any
reasonable legal fees or costs incurred by Landlord.
B. Landlord's Indemnification. Except to the extent arising solely from the
intentional or grossly negligent acts of Tenant or Tenant's agents or employees,
Landlord shall defend, indemnify and hold Tenant harmless from and against any
and all claims, demands, losses, penalties, fines, fees, charges, assessments,
liabilities, damages, judgments, orders, decrees, actions, administrative or
other proceedings, costs and expenses (including, without limitation, court
costs, reasonable attorneys' fees and expert witness fees), and any diminution
in value or loss or interference with the transfer, use or enjoyment of the
Premises arising from or relating to: (i) any violation of this Lease or
applicable Law by any Landlord Parties (as defined below), (ii) damage, loss or
injury to persons, property or business occurring in, about or from the Project
(other than the Premises), (iii) damage, loss or injury to persons, property or
business directly or indirectly arising out of any Landlord Party's use of the
Premises or Project, or out of any other act or omission of any Landlord
Parties. For purposes of this provision, "Landlord Parties" shall mean Landlord
and any of its agents, employees, invitees, customers, visitors and contractors.
In the event that a defense is required hereunder, Landlord shall defend Tenant
at Landlord's expense with counsel reasonably acceptable to Tenant or, at
Tenant's election, Landlord shall reimburse Tenant for any reasonable legal fees
or costs incurred by Tenant.
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ARTICLE 21
SAFETY AND SECURITY DEVICES, SERVICES AND PROGRAMS
A. Landlord's Safety and Security Measures. The parties acknowledge that
safety and security devices, services and programs provided by Landlord, if any,
while intended to deter crime and enhance safety, may not in given instances
prevent theft or other injurious acts or ensure safety of parties or property.
The risk that any safety or security device, service or program may not be
effective, malfunction, or be circumvented, is assumed by Tenant with respect to
Tenant's property and interests, and Tenant shall obtain insurance coverage to
the extent Tenant desires protection against such acts and other losses beyond
that described in Article 5. Any changes in the safety and security devices,
services and programs provided by Landlord shall require Tenant's subsequent
written approval and Landlord shall be required to provide Tenant with access to
the Premises 24 hours a day, 7 days a week and shall provide Tenant with all
security codes, keys and card keys necessary to ensure such access. Tenant
agrees to reasonably cooperate in any safety or security program developed by
Landlord or required by Law.
B. Tenant's Safety and Security Measures. Notwithstanding anything
contained herein to the contrary, Tenant shall have the right to install a
separate security system for the Premises provided that (i) such system does not
affect any Building structure or Building systems, and (ii) Landlord approves
the detailed plans and specifications for such system, which approval shall not
be unreasonably withheld, conditioned or delayed. The separate security system
installed by Tenant shall be located only in the Premises and shall not provide
security or access control to the Building or to any other space within the
Building. Tenant's separate security system shall be maintained during the Term
and removed (at the end of the Term) by Tenant at Tenant's sole expense. In
addition, Tenant may, at Tenant's sole cost and expense, install, connect to and
utilize the Building fire sprinker system in order to provide fire sprinkler
service to the Premises.
ARTICLE 22
HAZARDOUS MATERIALS
A. Hazardous Materials Generally Prohibited. Tenant shall not transport,
use, store, maintain, generate, manufacture, handle, dispose, release, discharge
or spill any "Hazardous Material" (as defined below), or permit any of the same
to occur, or permit any Hazardous Materials to leak or migrate, on or about the
Project or Premises. However, the foregoing provisions shall not prohibit the
transportation to and from, and use, storage, and handling within, the Premises
of substances customarily and lawfully used as an incidental and minor part of
the business or activity expressly permitted to be undertaken in the Premises
under Article 1, provided: (a) such substances shall be used and stored only in
such quantities as are reasonably necessary for such permitted use of the
Premises and the ordinary course of Tenant's business therein, strictly in
accordance with applicable Laws, highest prevailing standards, and the
manufacturers' instructions therefor, and as Landlord shall reasonably require,
(b) such substances shall be kept in leak-proof containers which comply with
applicable Laws, and as Landlord shall reasonably require, (c) such substances
shall not be disposed of, released, discharged or permitted to spill, leak or
migrate in or about the Premises or the Project (and under no circumstances
shall any Hazardous Materials be disposed of within the drains or plumbing
facilities in or serving the Premises or Project or in any other public or
private drain or sewer, regardless of quantity or concentration), (d) if any
applicable Law or Landlord's trash removal contractor requires that any such
substances be disposed of separately from ordinary trash, Tenant shall make
arrangements at Tenant's expense for such disposal in approved containers
directly with a qualified and licensed disposal company at a lawful disposal
site, (e) any remaining such substances shall be completely, properly and
lawfully removed from the Project by Tenant upon expiration or earlier
termination of this Lease, and (f) for purposes of removal and disposal of any
such substances, Tenant shall be named as the owner, operator and generator,
shall obtain a waste generator identification number, and shall execute all
permit applications, manifests, waste characterization documents and any other
required forms.
B. Landlord's Representations and Warranties. Landlord represents and
warrants to Tenant that, as of the date hereof, the Building and other portions
of the Property do not contain any asbestos or Hazardous Materials in violation
of any federal or applicable state law, ordinance or statute, or any regulations
promulgated thereunder. Landlord shall remove any Hazardous Materials from the
Building or the other portions of the Property if such Hazardous Materials are
introduced thereto by Landlord in violation of any applicable Law then in effect
and Landlord is required to undertake such removal by the order of any
governmental authority with jurisdiction over the Building. To the extent any
Hazardous Materials are in the Premises or the Common Areas inside the Building
as of the date hereof in violation of any requirement of any applicable Law
currently in effect (except if brought into the Premises or the Building by or
on behalf of Tenant), Landlord shall be responsible for the cost of any removal
thereof so required by the order of any governmental authority.
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C. Notifications. Tenant shall immediately notify Landlord of: (i) any
inspection, enforcement, cleanup or other regulatory action taken or threatened
by any regulatory authority with respect to any Hazardous Material on or from
the Premises or the migration thereof from or to other property, (ii) any
demands or claims made or threatened by any party relating to any loss or injury
claimed to have resulted from any Hazardous Material on or from the Premises,
(iii) any release, discharge, spill, leak, migration, disposal or transportation
of any Hazardous Material on or from the Premises in violation of this Article,
and any damage, loss or injury to persons, property or business resulting or
claimed to have resulted therefrom, and (iv) any matters where Tenant is
required by Law to give a notice to any regulatory authority respecting any
Hazardous Material on or from the Premises. Landlord shall have the right (but
not the obligation) to notify regulatory authorities concerning actual and
claimed violations of this Article, and to join and participate, as a party, in
any legal proceedings or actions affecting the Premises and concerning Hazardous
Materials or otherwise initiated in connection with any environmental, health or
safety Law.
D. Hazardous Materials Questionnaire. At such times as Landlord may
reasonably request, Tenant shall accurately and completely fill out, sign (and
certify to be accurate and complete) and return Landlord's then current form of
Tenant Hazardous Materials Questionnaire and Disclosure Statement ("Hazardous
Materials Questionnaire") which shall: (i) identify, describe and list
quantities of any Hazardous Materials that have been transported to or from,
used, stored, generated, handled, maintained, disposed, released, discharged,
spilled, leaked or migrated in or from the Premises since the Commencement Date
or the last such Hazardous Materials Questionnaire, and any such activity that
is anticipated during the next twelve (12) months, (ii) provide information
concerning past, present and anticipated disposal practices, storage tanks,
process tanks, dip tanks, waste management practices, waste water
discharge/treatment practices, air discharges, regulatory actions, and such
other information as Landlord reasonably requires, and (iii) include copies of
any material safety data sheets ("MSDS") issued by the manufacturer, distributor
or importer for any such Hazardous Materials. Landlord shall not require such
Environmental Questionnaires more than once per year, except if required by Law
or a Lender, or in connection with a proposed sale or financing of the Building
or Project, or if based on Tenant's answers to any prior Environmental
Questionnaire or an inspection of the Premises, or if Landlord determines that
more frequent Environmental Questionnaires are reasonably required.
E. Hazardous Materials Records; Inspections, Tests and Studies. Tenant
shall immediately upon written request from time to time provide Landlord with
copies of all permits, approvals, memos, reports, correspondence, complaints,
demands, claims, subpoenas, requests, feasibility and impact studies, storage
and management plans, business plans, remediation and cleanup plans, closure
plans, documentation evidencing that a clean-up or other action required
hereunder has been properly and lawfully completed, and all papers of any kind
filed with or by any regulatory authority and any other books, records or items
pertaining to Hazardous Materials that are subject to the provisions of this
Article (collectively referred to herein as "Tenant's Hazardous Materials
Records"). Landlord reserves the right to conduct, and to request that
regulatory authorities conduct, from time to time, detailed inspections, tests
and studies at or respecting the Premises, and of Tenant's operations therein
including, without limitation, air, soil, water and the contents of any cans,
bottles, jars, drums, barrels or other containers, and Tenant's Hazardous
Materials Records, respecting Tenant's compliance with this Article. In
connection therewith, Tenant shall fully cooperate and shall instruct Tenant's
officers and employees to answer all questions truthfully and completely. Such
inspections, tests and studies may be made with or without prior notice. If
Landlord or any Lender or regulatory authority arranges for any inspections,
tests or studies showing this Article has been violated, or otherwise in
connection with any request by Tenant for permission to engage in any activity
or to waive any requirement involving Hazardous Materials, Tenant shall pay for
the cost of such inspections, tests and studies and an amount equal to ten
percent (10%) of such cost to cover Landlord's overhead in connection therewith.
F. Clean Up Responsibility. If any Hazardous Material is released,
discharged or disposed of, or permitted to spill, leak or migrate, in violation
of the foregoing provisions, Tenant shall immediately, properly and in
compliance with applicable Laws, clean up and remove the Hazardous Material from
the Premises, Project and any other affected property and clean or replace any
affected personal property (whether or not owned by Landlord), at Tenant's
expense (without limiting Landlord's other remedies therefor). Such clean up and
removal work shall be considered "Work" under Article 10 and subject to the
provisions thereof including, without limitation, Landlord's prior written
approval (except in emergencies), and any testing, investigation, feasibility
and impact studies, and the preparation and implementation of any remedial
action plan required by any court or regulatory authority having jurisdiction or
reasonably required by Landlord. If any Hazardous Material is released,
discharged, disposed of, or permitted to spill, leak or migrate on or about the
Project and is not caused by Tenant or other occupants of the Premises, or their
agents, employees, Transferees, or contractors, such release, discharge,
disposal, spill, leak or migration shall be deemed casualty damage under Article
11 to the extent that the Premises and Tenant's use thereof is affected thereby;
in such case, Landlord and Tenant shall have the obligations and rights
respecting such casualty damage provided under such Article.
G. Storage Tanks and Ponds. Except as provided in Article 32I. below,
Tenant shall not install or use storage tanks on or about the Premises (whether
under, on or above ground) without Landlord's prior written consent, which
consent may be withheld in Landlord's sole discretion. Tenant shall not engage
in or permit ponding or surface storage or treatment of Hazardous Materials
under any circumstances. If Landlord permits Tenant to install or use a storage
tank, Tenant shall comply with all applicable Laws in connection therewith, and
at Landlord's request shall properly and lawfully remove such tank upon
expiration or earlier termination of this Lease (or sooner if such tank is found
to leak or removal is required by applicable Laws) in accordance with removal
procedures approved by Landlord in advance in writing.
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H. Hazardous Material Defined. The term "Hazardous Material" for purposes
hereof shall mean any flammable, explosive, toxic, radioactive, biological,
corrosive or otherwise hazardous chemical, substance, liquid, gas, device, form
of energy, material or waste or component thereof including, without limitation,
all items now or hereafter listed, defined or regulated as a hazardous or toxic
chemical, substance, liquid, gas, device, form of energy, material or waste or
component thereof by any federal, state or local governing body or agency having
jurisdiction, or which would trigger any employee or community "right-to-know"
requirements adopted by any such body or agency or for which any such body or
agency has adopted any requirements for the preparation or distribution of an
MSDS. Without limiting the generality of the foregoing, "Hazardous Material"
means any item defined as a "hazardous substance", "hazardous material",
hazardous waste", "regulated substance" or "toxic substance" under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. ss.9601, et seq., Hazardous Materials Transportation Act, 49
U.S.C. ss.1801, et seq., Resource Conservation and Recovery Act of 1976, 42
U.S.C. ss.6901 et seq., Clean Water Act, 33 U.S.C. ss. 125 1, et seq., Safe
Drinking Water Act, 14 U.S.C. ss.300f, et seq., Toxic Substances Control Act, 15
U.S.C. ss.260 1, et seq., Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. ss. 136 et seq., Atomic Energy Act of 1954, 42 U.S.C. ss.2014 et seq.,
and any similar federal, state or local Laws, and all regulations, guidelines,
directives and other requirements thereunder, all as may be amended or
supplemented from time to time. Hazardous Material includes, but is not limited
to, petroleum-based products, diesel fuel, paints, solvents, lead, radioactive
materials, cyanide, DDT, printing inks, acids, pesticides, ammonia compounds and
other chemical products, asbestos, polychlorinated biphenyls (PCB's) and similar
compounds, and any other items which now or subsequently are found to have an
adverse effect on the environment or the health and safety of persons or animals
or the presence of which requires investigation or remediation under any Law or
governmental policy.
I. Fees, Taxes, Fines and Remedies. Tenant shall pay, prior to delinquency,
any and all fees, taxes (including excise taxes), penalties and fines arising
from or based on Tenant's activities involving Hazardous Materials on or about
the Premises or Project, and shall not allow such obligations to become a lien
or charge against the Premises or Project or Landlord. If Tenant violates any
provision of this Article with respect to any Hazardous Materials, Landlord may:
(i) require that Tenant immediately remove all Hazardous Materials from the
Premises and discontinue using, storing and handling Hazardous Materials in the
Premises, (ii) obtain a temporary restraining order and/or preliminary or
permanent injunctive relief requiring compliance by Tenant with the provisions
of this Article (in which case, Tenant waives any right to require that Landlord
post a bond in connection therewith), and/or (iii) pursue such other remedies as
may be available to Landlord under this Lease or applicable Law.
ARTICLE 23
NO WAIVER
No provision of this Lease will be deemed waived by either party unless
expressly waived in writing signed by the waiving party. No waiver shall be
implied by delay or any other act or omission of either party. No waiver by
either party of any provision of this Lease shall be deemed a waiver of such
provision with respect to any subsequent matter relating to such provision, and
Landlord's consent respecting any action by Tenant shall not constitute a waiver
of the requirement for obtaining Landlord's consent respecting any subsequent
action. Acceptance of Rent by Landlord shall not constitute a waiver of any
breach by Tenant of any term or provision of this Lease. No acceptance of a
lesser amount than the Rent herein stipulated shall be deemed a waiver of
Landlord's right to receive the full amount due, nor shall any endorsement or
statement on any check or payment or any letter accompanying such check or
payment be deemed an accord and satisfaction, and Landlord may accept such check
or payment without prejudice to Landlord's right to recover the full amount due.
The acceptance of Rent or the performance of any other term or provision from
any party other than Tenant, including any Transferee, shall not constitute
approval of any Transfer or a waiver of Landlord's right to approve any
Transfer.
ARTICLE 24
ATTORNEYS' FEES AND JURY TRIAL
In the event of any litigation between the parties relating to this Lease,
the Premises or Project, the prevailing party shall be entitled to recover its
reasonable attorneys' fees and costs as part of the judgment or settlement
therein. In the event of a breach of this Lease by either party which does not
result in litigation but which causes the non-breaching party to incur
reasonable attorneys' fees or costs, the breaching party shall reimburse such
reasonable fees and costs to the non-breaching party upon demand. If either
party or any of its officers, directors, trustees, beneficiaries, partners,
agents, affiliates or employees shall be made a party to any litigation
commenced by or against the other party and is not found to be at fault, the
other party shall pay all costs, expenses and attorneys' fees incurred by any
such party in connection with such litigation. IN THE INTEREST OF OBTAINING A
SPEEDIER AND LESS COSTLY HEARING OF ANY DISPUTE, LANDLORD AND TENANT HEREBY
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER
PARTY AGAINST THE OTHER ARISING OUT OF OR RELATING TO THIS LEASE, THE PREMISES
OR THE PROJECT. Although such jury waiver is intended to be self-operative and
irrevocable, Landlord and Tenant each further agree, if requested, to confirm
such waivers in writing at the time of commencement of any such action,
proceeding or counterclaim.
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ARTICLE 25
CONVEYANCE BY LANDLORD AND LIABILITY
In case Landlord or any successor owner of the Project shall convey or
otherwise dispose of any portion thereof in which the Premises is located to
another party (and nothing herein shall be construed to restrict or prevent such
conveyance or disposition), such other party shall thereupon be and become
landlord hereunder and shall be deemed to have fully assumed and be liable for
all obligations of this Lease to be performed by Landlord which first arise
after the conveyance, including the disposition of any Security Deposit. Tenant
shall attorn to such other party, and Landlord or such successor owner shall,
from and after the date of conveyance, be free of all liabilities and
obligations hereunder not then incurred. The liability of Landlord to Tenant for
any default by Landlord under this Lease or arising in connection herewith or
with Landlord's operation, management, leasing, repair, renovation, alteration,
or any other matter relating to the Project or the Premises, shall be limited to
the interest of Landlord in the Project (and rental proceeds). Tenant agrees to
look solely to Landlord's interest in the Project (and rental proceeds) for the
recovery of any judgment against Landlord, and Landlord shall not be personally
liable for any such judgment or deficiency after execution thereon.
Notwithstanding the foregoing, if Tenant has received a final, non-appealable
judgment for damages against Landlord as a result of an uncured default by
Landlord under this Lease, and, despite Tenant's use of all reasonable efforts
to levy against Landlord's interest in the Premises, such judgment has
nonetheless not been satisfied within sixty (60) days after the date that the
judgment became final and non-appealable, then Tenant shall have the right to
deduct the unpaid amount of such judgment against the fixed annual rent,
additional rent and all other sums to become due under this Lease until fully
credited. Under no circumstances shall any present or future general or limited
partner of Landlord (if Landlord is a partnership), or trustee or beneficiary
(if Landlord or any partner of Landlord is a trust) have any liability for the
performance of Landlord's obligations under this Lease. Furthermore,
notwithstanding the foregoing limitation on liability, Landlord shall have
personal liability for insured claims to the extent of Landlord's liability
insurance available for such claims and this Article 25 is not intended to, and
shall not, limit any right that Tenant might otherwise have to obtain injunctive
relief against Landlord or Landlord's successors in interest or any suit or
action in connection with enforcement or collection of amounts which may become
owing or payable under or on account of insurance maintained by Landlord.
ARTICLE 26
NOTICES
Except as expressly provided to the contrary in this Lease, every notice,
demand or other communication given by either party to the other with respect
hereto or to the Premises or Project, shall be in writing and shall be served
personally or by national air courier service, or United States registered or
certified mail, return receipt requested, postage prepaid, addressed, if to
Tenant, at the address first set forth in this Lease and to Tenant at PO Box
44220, Madison, WI 53744-4220, and if to Landlord, at the address at which the
last payment of Rent was required to be made and to Landlord c/o Industrial
Management Company, 1345 Campbell Road, Suite 222, Houston, Texas 77055, Attn:
Director of Lease Administration, or such other address or addresses as Tenant
or Landlord may from time to time designate by notice given as above provided.
Every notice or other communication hereunder shall be deemed to have been given
as of the third business day following the date of such mailing or the first
business day following the date of dispatch by national air courier service (or
as of any earlier date evidenced by a receipt from such national air carrier
service or the United States Postal Service) or immediately if personally
delivered. Notices not sent in accordance with the foregoing shall be of no
force or effect until received by the foregoing parties at such addresses
required herein.
ARTICLE 27
REAL ESTATE BROKERS
Tenant shall defend, indemnify and hold Landlord harmless from all damages,
judgments, liabilities and expenses (including attorneys' fees) arising from any
claims or demands of any broker, agent or finder with whom Tenant has dealt for
any commission or fee alleged to be due in connection with its participation in
the procurement of Tenant or the negotiation with Tenant of this Lease, other
than the broker, if any, designated in Article 1 (who shall be paid by Landlord
pursuant to a separate written agreement with such broker relating to this
Lease).
ARTICLE 28
SECURITY DEPOSIT AND WAIVER OF LANDLORD'S LIEN
A. Security Deposit. Tenant shall deposit with Landlord the amount set
forth in Article 1 as a Security Deposit upon Tenant's execution and submission
of this Lease. The Security Deposit shall serve as security for the prompt, full
and faithful performance by Tenant of the terms and provisions of this Lease. If
Tenant commits a Default, or owes any amount to Landlord upon the expiration of
this Lease, Landlord may use or apply the whole or any part of the Security
Deposit for the payment of Tenant's obligations hereunder. The use or
application of the Security Deposit shall not prevent Landlord from exercising
any other right or remedy available to Landlord and shall not be construed as
liquidated damages except as otherwise provided herein. If the Security Deposit
is reduced by such use or application, Tenant shall deposit with Landlord within
ten (10) days after written notice, an amount sufficient to restore the full
amount of the Security Deposit. In the event of bankruptcy or other insolvency
proceeding against Tenant or Tenant's guarantor, the Security Deposit shall be
deemed automatically applied to the payment of overdue Rent from the earliest
time such Rent became overdue prior to the filing of such proceeding. Landlord
shall not be required to keep the Security Deposit separate from Landlord's
general funds or pay interest on the Security Deposit. Any remaining portion of
the Security Deposit shall be returned to Tenant within sixty (60) days after
Tenant has vacated the Premises in accordance with Article 13.
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ARTICLE 29
CERTAIN DEFINITIONS
A. "Common Areas" shall mean areas of the Building, Site or Project made
available and maintained by Landlord from time to time for the general use or
benefit of Tenant and other tenants of the Building, as such areas currently
exist and as they may be changed from time to time. The Common Areas may, at
Landlord's election, include areas in adjoining properties which are or become
available to Landlord and tenants of the Building or Project and which are
maintained with other Common Areas under any reciprocal easement agreement,
operating agreement or other such agreement now or hereafter in effect. Without
limiting the generality of the foregoing, the Common Areas include any parking
areas and structures, enclosures and building roofs, exterior walls,
foundations, sidewalks, streets or roadways, passageways, service corridors,
loading platforms, truck docks, delivery areas, ramps, stairs, landscaped areas,
directory signs and equipment, common lighting facilities, drainage facilities
and areas, and all furniture, decorations, fixtures, improvements, systems and
equipment, and other facilities, located in or serving any of the foregoing,
except to the extent reserved for use by designated tenants. Landlord may
establish "Building and Site Common Areas", "Project Common Areas" and "Other
Common Areas" as described in Article 6.
B. "Common Area Expenses" shall mean all expenses, costs and amounts of
every kind and nature which Landlord shall pay during any calendar year any
portion of which occurs during the Term in connection with the management,
repair, maintenance, replacement, insurance and operation of the Common Areas,
including without limitation, any amounts paid for: (a) utilities, (b) personnel
and other parties engaged in operation, maintenance or security, including
salaries, benefits, Social Security payments, workers' compensation insurance,
unemployment insurance, payroll taxes and other compensation and costs, and the
fair rental value and operating costs of any on-site office space provided to
such personnel, (c) payments under any easement, operating agreement,
declaration, restrictive covenant, or instrument pertaining to the sharing of
costs in any development of which the Building or Project is a part, (d) alarm
monitoring, police and fire protection, pest and rodent control, janitorial
service, trash removal, removal of ice and snow (and salting and sanding in
connection therewith), (e) parking surcharges or fees that may result from any
environmental or other Law or guideline, and the cost of obtaining, providing
and operating public transportation or shuttle bus systems to bring workers to
or from the Project if required by such Laws or guidelines, (f) appropriate
reserves for roof replacement, exterior painting and other appropriate reserves,
(g) customary management fees, (h) inspection, legal, accounting and consulting
services, (i) permits, licenses and certificates to operate the Project, (j)
supplies, materials, tools, equipment, and vehicles used in the operation,
repair, maintenance, security, cleaning, landscaping, and other services for the
Project, including rental, installment purchase and financing agreements
therefor and interest thereunder, and (k) operation, maintenance, repair,
installation, replacement, inspection, testing, painting, decorating and
cleaning of: (i) sidewalks, curbs, gutters, guardrails, bumpers, fences, signs,
directional signs, traffic signals and markers, including those located off-site
but installed for the benefit of the Building or Project, (ii) parking
structures and lots, loading and service areas, sidewalks and driveways
(including sweeping, cleaning, re-striping, repairing, sealing, re-surfacing and
replacement), (iii) storm and sanitary drainage systems, including disposal
plants, lift stations and retention ponds and basins, (iv) fire protection and
sprinkler systems for the Project, (v) Common Area lighting and other systems
and equipment, (vi) gardening, landscaping, and outdoor sprinkler systems, (vii)
exterior walls and foundations, (viii) gutters and downspouts, roof flashings
and roofs in the Project (including repairs and replacements of roofs over
demised space and other Common Areas), and (ix) any rail spurs serving the
Building or Project (except to the extent paid by one or more tenants pursuant
to agreements with Landlord or the rail company). Landlord may retain
independent or affiliated contractors to provide any such services, in which
case the costs thereof shall be deemed Common Area Expenses. Common Area
Expenses shall not, however, include: (1) the cost of any capital improvement,
except as specifically provided in this Lease; (2) any costs resulting from
defects in design or construction which are covered by warranty; (3) expenses
for repairs and other work occasioned by fire, windstorm or other insurable
casualty, except for any deductible; (4) expenses incurred in leasing or
procuring new tenants, including lease commissions, advertising expenses and
expenses of renovating space for new tenants; (5) legal expenses incurred in
enforcing the terms of any lease, except as otherwise provided herein; (6)
interest or amortization payment(s) under any mortgages; (7) depreciation and
other non-cash expenses, except as specifically provided in this Lease; (8)
costs and expenses attributable directly to individual tenants other than
Tenant; (9) legal fees incurred by Landlord in connection with tenant disputes
or evictions, except as otherwise provided herein; (10) the cost of any judgment
rendered against Landlord; (11) amounts paid to any party related to or
affiliated with Landlord in excess of commercially reasonable amounts; (12)
lease payments for any items which, if purchased by Landlord, would constitute a
capital improvement, except as otherwise provided herein; (13) Landlord's costs
of any services sold to tenants for which Landlord is entitled to be reimbursed
by such tenants as an additional charge or rental over and above the basic
annual rental and operating expenses payable under the lease with such tenant or
other occupant; (14) costs incurred due to violation by Landlord of any of the
terms and conditions of this Lease or any other lease relating to the Building
or the Project; (15) general corporate overhead and administrative expenses of
Landlord (including salaries, fringe benefits and other compensation paid to
partners, officers and executives of Landlord) not incurred in the operation of
the Building; (16) the cost of any work or service performed for any tenant of
the Building (other than Tenant) to a materially greater extent or in a
materially more favorable manner than that furnished generally to the tenants
and other occupants (including Tenant); (17) the cost of any work or service
performed for any facility other than the Building except service areas located
in facilities other than in the Building and Common Areas of the Project; (18)
rental under any ground lease or other underlying lease; (19) other than as
provided above, rentals and other related expenses incurred in leasing air
conditioning systems, elevators or other Building equipment ordinarily
considered to be of a capital nature, except equipment not affixed to the
Building which is used in providing janitorial or similar services, if the cost
of which equipment would not constitute an expense under Generally Accepted
Accounting Principles consistently applied if the equipment were purchased; (20)
franchise or income taxes imposed upon Landlord; (21) charitable contributions;
21
(22) costs of removal, abatement or treatment of any Hazardous Substances in or
under the Building or land associated therewith (other than in the normal course
of business of operating, maintaining and repairing the Building and equipment
therein); (23) electrical power costs above normal consumption for which any
tenant is separately metered or directly contracts with the local public service
company; (24) costs incurred in connection with the sale, financing,
refinancing, mortgaging, selling or change of ownership of Landlord, the
Building or the land associated therewith and any real estate taxes or increase
in real estate taxes resulting from a sale or refinancing of the Building; (25)
moving expense costs of tenants of the Building; (26) management fees in excess
of four percent (4%) of the aggregate of all gross receipts from rental income
derived from the Tenant; (27) late charges, fines, penalties and interest
incurred by Landlord for its failure to pay timely mortgage installment or real
estate tax; (28) rent for any on-site management office and salaries or other
compensation paid by Landlord to persons who are engaged in the management,
repair, maintenance or operation of the Building (at the level of a "property
manager") shall be included as Common Area Expenses, but not any office
furniture, equipment or any other articles or fixtures which could be utilized
by Landlord in its business generally. (Such management office rent and salary
or other compensation shall be allocated equitably to the Building based upon
the rentable square footage of the Building and the total rentable square
footage of all other buildings to which such persons provide management, repair,
maintenance or operational services.); (29) bad debt loss, rent loss, or
reserves for either of these, and any other reserves for repairs, maintenance or
replacements unless pursuant to Generally Accepted Accounting Principles; and
(30) any other costs or expense that would not be commercially reasonable and
consistent with the practices for facilities of a like kind and character.
C. "Landlord" and "Tenant" shall be applicable to one or more parties as
the case may be, and the singular shall include the plural, and the neuter shall
include the masculine and feminine; and if there be more than one, the
obligations thereof shall be joint and several. If Tenant is a partnership, all
new general partners admitted to the partnership after this Lease is entered
shall be deemed jointly and severally liable for all obligations of Tenant
hereunder, along with general partners at the time this Lease is entered,
whether such obligations accrue before or after admission of such new partners.
For purposes of any provisions indemnifying or limiting the liability of
Landlord, the term "Landlord" shall include Landlord's present and future
partners, beneficiaries, trustees, officers, directors, employees, shareholders,
principals, Lenders, agents, affiliates, successors and assigns.
D. "Law" and "Laws" shall mean all applicable federal, state, and local
governmental and municipal laws, statutes, ordinances, rules, regulations,
codes, decrees, orders and other such requirements, applicable equitable
remedies and decisions by courts in cases where such decisions are binding
precedents in the state in which the Project is located, and decisions of
federal courts applying the Laws of such state. This Lease shall be construed in
accordance with the Laws applicable in the state, county and municipality in
which the Project is located.
E. "Lender" shall mean the holder of any Mortgage at the time in question,
or in the case of a ground lease, such term shall refer to the ground lessor.
F. "Mortgage" shall mean all mortgages, deeds of trust, ground leases and
other such encumbrances now or hereafter placed upon the Project or any part
thereof, and all renewals, modifications ' consolidations, replacements or
extensions thereof, and all indebtedness now or hereafter secured thereby and
all interest thereon.
G. "Rent" shall mean Base Rent, Taxes, Insurance, Common Area Expenses and
any other amounts Tenant is or becomes obligated to pay Landlord under this
Lease or any other agreement between the parties relating to this Lease, the
Premises or the Project, and all remedies applicable to the non-payment of Rent
shall apply thereto.
H. "Taxes" shall mean all federal, state, county or local governmental,
special district, improvement district, municipal or other political subdivision
taxes, fees, levies, assessments, charges or other impositions of every kind and
nature, whether foreseen or unforeseen, general, special, ordinary or
extraordinary (unless required to be paid by Tenant under Article 3) including,
without limitation, real estate and ad valorem taxes, general and special
assessments, interest on any special assessments paid in installments, transit
taxes, water and sewer rents, license and business license fees, occupation
taxes, gross receipts taxes applicable to the receipt of rent, personal property
taxes, taxes on fees paid by Landlord for professional property management
services, and taxes or charges for fire protection, streets, sidewalks, road
maintenance, refuse or other services. Notwithstanding the foregoing, Taxes
shall not include franchise taxes, inheritance taxes, estate taxes, federal and
state income taxes, and other taxes to the extent applicable to Landlord's
general or net income (as opposed to rents, receipts or income attributable to
the Building or Project). If the method of taxation of real estate prevailing at
the time of execution hereof shall be, or has been altered, so as to cause the
whole or any part of the taxes now, hereafter or theretofor levied, assessed or
imposed on real estate to be levied, assessed or imposed on Landlord, wholly or
partially, as a capital levy or otherwise, or on or measured by the rents
received therefrom, then such new or altered taxes shall be included within the
term "Taxes," except that the same shall not include any enhancement of said tax
attributable to other income of Landlord. Tenant shall pay Taxes whether Taxes
are increased as a result of increases in assessment or valuation (whether based
on a sale, change of ownership or refinancing or otherwise), increases in tax
rates, reduction or elimination of any rollbacks or other deductions available
under current law, scheduled reductions of any tax abatement, elimination, or
invalidity or withdrawal of any tax abatement.
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ARTICLE 30
MISCELLANEOUS
A. Captions and Severability. The captions of the Articles and Paragraphs
of this Lease are for convenience of reference only and shall not be considered
or referred to in resolving questions of interpretation. If any term or
provision of this Lease or portion thereof shall be found invalid, void,
illegal, or unenforceable generally or with respect to any particular party, by
a court of competent jurisdiction, it shall not affect, impair or invalidate any
other terms or provisions or the remaining portion thereof, or its
enforceability with respect to any other party.
B. Successors and Assigns. Each of the terms and provisions of this Lease
shall be binding upon and inure to the benefit of the parties hereto, their
respective heirs, executors, administrators, guardians, custodians, successors
and assigns, subject to the provisions of Article 16 respecting Transfers.
C. Survival of Provisions. All obligations (including indemnity
obligations) or rights of either party arising during or attributable to the
period prior to expiration or earlier termination of this Lease shall survive
such expiration or earlier termination, except as provided to the contrary in
Article 25.
D. Quiet Enjoyment. Landlord agrees that if Tenant timely pays the Rent and
performs the terms and provisions hereunder, Tenant shall hold and enjoy the
Premises during the Term, free of lawful claims by any party acting by or
through Landlord, subject to all other terms and provisions of this Lease.
E. Rule Against Perpetuities. Subject to Section 5.043 of the Texas
Property Code, if the Commencement Date is delayed in accordance with Article 2
for more than one year, Landlord may declare this Lease terminated by notice to
Tenant, and if the Commencement Date is so delayed for more than three years,
this Lease shall thereupon be deemed terminated without further action by either
party.
F. Deed of Lease. If applicable Laws require that this Lease be in the form
of a deed, this Lease shall be deemed a deed of lease for all purposes, and
Landlord shall be deemed to have granted and demised the Premises to Tenant for
the Term hereof, subject to the other terms and provisions contained herein.
ARTICLE 31
OFFER
The submission and negotiation of this Lease shall not be deemed an offer
to enter the same by Landlord, but the solicitation of such an offer by Tenant.
Tenant agrees that its execution of this Lease constitutes a firm offer to enter
the same that may not be withdrawn for a period of six (6) weeks after delivery
to Landlord. During such period and in reliance on the foregoing, Landlord may,
at Landlord's option, deposit any Security Deposit and Rent, proceed with any
alterations or improvements, and permit Tenant to enter the Premises and make
alterations or improvements. If Landlord shall fail to execute and mail or
deliver this Lease to Tenant within such period, Tenant may revoke its offer to
enter this Lease by sending notice thereof to Landlord before Landlord mails or
delivers an executed copy of this Lease to Tenant. In such case, Landlord shall
return any Security Deposit and Rent to Tenant, but Tenant shall not be
obligated to remove any alterations, improvements, fixtures or personal property
made or placed in or upon the Premises by Tenant or its contractors, agent or
employees. If Tenant shall seek to revoke its offer to enter this Lease in
violation of the foregoing provisions, Landlord shall, at its sole and exclusive
remedy, retain any Security Deposit and Rent theretofor paid, as liquidated
damages without executing and delivering this Lease to Tenant.
ARTICLE 32
SPECIAL PROVISIONS
A. Tenant Improvements. The design and construction of the Premises shall
be completed pursuant to the Work Letter Agreement attached hereto as Exhibit F.
B. Signage. Tenant shall be entitled to install and maintain throughout the
Term (1) exterior Building signage identifying Tenant in the locations and
described on Exhibit G, and (2) reasonable door and other identification and
directional signage as Tenant may select from time to time. In the event Tenant
assigns or sublets the Premises in accordance with the terms of this Lease, the
assignee or subtenant, as appropriate, shall have similar signage rights during
the terms of its occupancy.
C. Operating Expenses. The first year estimated monthly operating expenses
are as follows:
Taxes: $ .085
Insurance: $ .005
CAM: $ .08
Reserves: $ .01
-----
Total: $ .18
D. Total Monthly Payment. The initial Total Monthly Payment is as follows:
Base Rent $ 16,773
Operating Expenses $ 3,282
--------
Total Monthly Payment $ 20,054
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E. Reserved Parking: Tenant shall have eighteen (18) reserved parking
spaces in front of the Premises and four (4) reserved parking spaces in the rear
of the Premises. Prior to commencement of lease, Landlord shall install, at
landlord's expense, mutually agreed-upon no parking signs on all reserved spaces
as well as curb painting on each reserved space. Upon commencement of the Lease,
Tenant shall have the right to hire a wrecker company to legally enforce towing
from said spaces. Landlord will provide such wrecking company with any such
approvals that may be necessary.
F. Renewal Options: While this Lease is in full force and effect, provided
the Tenant is not in default of any of the terms, covenants and conditions
thereof, Tenant shall have the right or option to extend the term of the Lease
with two (2) renewal periods of sixty (60) months each (each a "Renewal Period"
and collectively, the "Renewal Periods"). The Renewal Period shall be on the
same terms, covenants and conditions as provided for in the original term,
except the Base Rent during each Renewal Period shall be at the then prevailing
Market Rental Rate (as defined below) for the prior term, provided, however,
that the rate shall be no less than the rate provided herein..
Notice of Tenant's intention to exercise the first and/or the second option
must be given to Landlord in writing at least one hundred and eighty (180) days
prior to the expiration of the original term of the Lease or prior Renewal
Period, as applicable ("Intention Notice"). Within thirty (30) days of
Landlord's receipt of the Intention Notice, but not earlier than twelve (12)
months before the end of the then current Term, Landlord shall give written
notice to Tenant of its statement of the Market Rental Rate (the "Rent Quote").
Such Rent Quote shall not be binding on Tenant (except as provided below), nor
shall Landlord's failure to give a Rent Quote preclude Tenant from exercising
its renewal option hereunder (in which event Tenant shall pay to Landlord during
such Renewal Period the same monthly Base Rent as being paid for the then
current Term). Tenant may exercise Tenant's option to renew the Term for the
applicable Renewal Period by delivering to Landlord written notice of Tenant's
exercise of the option (the "Exercise Notice") in person or by certified mail,
return receipt requested, within fifteen (15) business days from the date of
Tenant's receipt of the Rent Quote, or if Landlord does not give a Rent Quote,
within fifteen (15) business days after the expiration of the thirty (30) day
period set forth above. The rental rates set forth in the Rent Quote shall be
binding on Landlord and also shall be binding on Tenant unless Tenant shall
state in the Exercise Notice a lower rental rate for the Premises which Tenant
asserts is the Market Rental Rate which should be applicable. If such dispute is
not resolved prior to ninety (90) days before the expiration of the then current
Term, Tenant or Landlord shall have the right to demand binding arbitration of
the Market Rental Rate, such arbitration to be conducted in Houston, Texas,
before a MAI Real Estate Appraiser or real estate broker approved by Landlord
and Tenant, who has been actively involved in industrial real estate and is
familiar with the Houston, Texas markets, who will be required to select either
Landlord's last offer or Tenant's last offer. The Market Rental Rate selected by
such arbitrator shall be the Base Rent rate for the ensuing Renewal Period. It
shall be a condition of the exercise of the renewal option that Tenant shall not
be in default of the terms of this Lease beyond the expiration of any applicable
cure period at the time of the exercise of the option. In the event the
arbitrator's decision is not made by the date of the commencement of the
applicable Renewal Period, Tenant shall continue to pay to Landlord the Base
Rent paid for the last month of the immediately preceding Term, and Tenant's
proportionate share of applicable Common Area Expenses, until the decision is
made. If as finally determined, the Market Rental Rate for the applicable
Renewal Period is more than the Base Rent paid for the last month of the
preceding Term, within thirty (30) days after such determination, Tenant shall
pay Landlord the difference attributable to that portion of the applicable
Renewal Period that has passed.
"Market Rental Rate" means the rental rate per rentable square foot
(adjusted to account for the value of market concessions not provided Tenant
hereunder) at which tenants entering into new leases lease of Comparable Space
(as defined below) as of the commencement of the applicable Renewal Period (or
adjusting the rental rate as appropriate for differences therein), taking into
consideration the location, quality and age of the building, as the case may be,
with respect to which such rental rates are computed, rent concessions or other
allowances, abatements, lease assumptions or take-overs, differences in terms
and provisions of the applicable leases such as pass-throughs of operating
expenses and taxes, moving expenses, tenant improvements, parking rights and
costs therefor, the term of the lease under consideration, and the extent of
services provided thereunder, applicable distinctions between "gross" leases and
"net" leases, base year or expense stop figures for escalation purposes, other
tenant concessions and benefits such as new carpeting, paint and wall coverings
for the Premises, and any other relevant term or condition in making such
evaluation. For this purpose, "Comparable Space" shall be warehouse space in
comparable buildings within a three (3) mile radius of the Project that are
comparable in size, location, tenant improvements and quality to the Premises
and leased for a term comparable to the applicable Renewal Period.
G. Warranties: All Tenant Improvements built for Tenant shall have a one
(1) year warranty. All manufacturer and installer warranties longer than one (1)
year shall be assigned to Tenant.
ARTICLE 33
ENTIRE AGREEMENT
This Lease, together with the Exhibits referenced in Article 1 and attached
hereto (WHICH COLLECTIVELY ARE HEREBY INCORPORATED WHERE REFERRED TO HEREIN AND
MADE A PART HEREOF AS THOUGH FULLY SET FORTH), contains all the terms and
provisions between Landlord and Tenant relating to the matters set forth herein
and no prior or contemporaneous agreement or understanding pertaining to the
same shall be of any force or effect. Without limiting the generality of the
foregoing, Tenant hereby acknowledges and agrees that Landlord's leasing and
field personnel are only authorized to show the Premises and negotiate terms and
conditions for leases subject to Landlord's final approval, and are not
authorized to make any agreements, representations, understandings or
obligations binding upon Landlord, respecting the present or future condition of
the Premises or Project, suitability of the same for Tenant's business, or any
other matter, and no such agreements, representations, understandings or
obligations not expressly contained herein shall be of any force or effect.
Neither this Lease nor any Exhibits referred to above may be modified, except in
writing signed by both parties.
24
IN TESTIMONY WHEREOF, the parties have caused this Lease to be signed by
their respective representatives designated below, or if either party is a
corporation, it has caused these presents to be signed by its president or
other officer designated below, as its act and deed as of the day and year
first above written.
LANDLORD:
WAREHOUSE ASSOCIATES CORPORATE CENTRE
KIRBY II, LTD., a Texas limited partnership
By:
-----------------------------------------------------
David R. David, Authorized Agent
TENANT:
SHARPS COMPLIANCE, INC.
By:
----------------------------------------------------
David P. Tusa, Executive Vice President
Chief Financial Officer and Business Development
25
WAREHOUSE ASSOCIATES
INDUSTRIAL/ WAREHOUSE LEASE
Exhibit A
Premises
26
WAREHOUSE ASSOCIATES
INDUSTRIAL/ WAREHOUSE LEASE
Exhibit B
Project
27
WAREHOUSE ASSOCIATES
INDUSTRIAL/ WAREHOUSE LEASE
Exhibit C
Rules
A. No Exterior Storage. Nothing shall be stored outside the Premises,
unless exterior storage is required by Law and approved in writing by Landlord.
B. Dust and Fume Control. No wood-shaping or spraying material processes or
any activity creating dust or fumes that may be hazardous shall be performed in
the Premises except in an environment controlled by air-handling equipment
properly and lawfully designed and utilized, which shall be maintained and
operated at all times to prevent hazardous accumulations of wood, chemical or
other pollutants in the atmosphere within the Premises or Project.
C. Parking. Subject to the express terms and conditions set forth in the
Lease, parking of cars shall be available in areas designated generally for
tenant parking, if any, on a "first come", "first served" unassigned basis in
common with Landlord, other tenants and other parties to whom parking privileges
have been or are hereafter granted. Parking is prohibited in areas: (1) not
striped or designated for parking, (2) aisles, (3) where "no parking" signs are
posted, (4) on ramps, and (5) loading areas and other specially designated
areas. Delivery trucks and vehicles shall use only those areas designated
therefor. Landlord reserves the right to: (i) assign specific spaces, and
reserve spaces for small cars, disabled individuals, and other tenants,
customers of tenants or other parties (and Tenant shall not park in any such
assigned or reserved spaces) and (ii) restrict or prohibit full size vans and
other large vehicles. In case of any violation of these provisions or any
applicable Laws, Landlord may, as its sole and exclusive remedy, refuse to
permit the violator to park, and remove the vehicle owned or driven by the
violator from the Project without liability whatsoever, at such violator's risk
and expense. These provisions shall be in addition to any other remedies
available to Landlord under this Lease or otherwise.
D. Trash. All garbage, refuse, trash and other waste shall be kept in the
kind of container, placed in the areas, and prepared for collection in the
manner and at the times and places specified by Landlord, subject to the
provisions of this Lease respecting Hazardous Materials. If Landlord designates
a service to pick up such items, Tenant shall use the same (and the cost shall
be included in Common Area Expenses). Landlord reserves the right to require
that Tenant participate in any recycling program designated by Landlord;
provided, however, Tenant may elect to contract separately for the disposal and
recycling of Tenant's confidential waste.
E. Signs. Except as permitted under the express terms of the Lease, Tenant
shall not place any signs outside the Premises (including without limitation,
exterior walls and roof), or on the interior or exterior surfaces of glass panes
or doors, or that are otherwise visible from outside the Premises, without
Landlord's prior written approval. All Tenant's signs shall: (i) be
professionally designed, prepared and installed, (ii) not detract from the
general appearance of the Premises or the Project, (iii) not advertise any
product, and (iv) and comply with any commerically reasonable sign criteria
developed by Landlord from time to time. All signs hereunder shall be subject to
all Laws and any covenants, conditions and restrictions applicable to the
Project or Building. Tenant shall maintain all signs hereunder in good repair
and sightly first class condition. The term "sign" in this Rule shall mean any
sign, placard, picture, name, direction, lettering, insignia or trademark,
advertising material, advertising display, awning or other such item, except
that any storefront sign shall be an actual sign. Blinds, shades, drapes or
other such items shall not be placed in or about the windows in the Premises
except to the extent, if any, that the character, shape, design, color, material
and make thereof is first approved by Landlord in writing.
F. Common Areas. Tenant shall not allow anything to remain in any Common
Area passageway, sidewalk, court, corridor, ramp, entrance, exit, loading area,
or other area outside the Premises. Common utility closets, telephone closets,
and other such closets, rooms and areas shall be used only for the purposes and
in the manner designated by Landlord, and may not be used by Tenant, or its
contractors, agents, employees, or other parties without Landlord's prior
written consent.
G. Plumbing Equipment. Toilet rooms, urinals, wash bowls, drains, sewers
and other plumbing fixtures, equipment and lines shall not be misused or used
for any purpose other than that for which they were constructed and no foreign
substance of any kind whatsoever shall be disposed of therein.
H. Roof: Awnings and Projections. Except as permitted under the express
terms of the Lease, Tenant shall not install any sign, antennae, satellite dish
or any other device on the roof or Common Areas of the Project. Tenant may
install and have access to rooftop HVAC equipment only to the extent approved or
required by Landlord from time to time in connection with Tenant's maintenance,
repair or HVAC obligations under this Lease. No awning or other projection shall
be attached by or for Tenant to the exterior walls of the Premises or the
Building.
I. Overloading Floors. Tenant shall not overload any floor or part thereof
in the Premises or Project.
J. Going-Out-Of-Business Sales and Auctions. Tenant shall not use, or
permit any other party to use, the Premises for any distress, fire, bankruptcy,
close-out, "lost our lease" or going-out-of-business sale or auction. Tenant
shall not display any signs advertising the foregoing anywhere in or about the
Premises. This prohibition shall also apply to Tenant's creditors.
28
K. Labor Relations. Tenant shall conduct its labor relations and relations
with employees so as to avoid strikes, picketing, and boycotts of, on or about
the Premises or Project. If any employees strike, or if picket lines or boycotts
or other visible activities objectionable to Landlord are established, conducted
or carried out against Tenant, other occupants of the Premises or their
employees, agents, Transferees or contractors in or about the Premises or
Project, Tenant shall immediately close the Premises and remove or cause to be
removed all such occupants, employees, agents, Transferees and contractors until
the dispute has been settled.
L. Prohibited Activities. Tenant shall not: (i) use strobe or flashing
lights in or on the Premises or in any signs therefor, (ii) use, sell or
distribute any leaflets, handbills, bumper stickers, other stickers or decals,
balloons or other such articles in the Premises (or other areas of the Project),
(iii) operate any loudspeaker, television set, phonograph, radio, or other
musical or sound producing instrument or device so as to be heard outside the
Premises, (iv) operate any electrical or other device which interferes with or
impairs radio, television, microwave, or other broadcasting or reception from or
in the Project or elsewhere, (v) make or permit objectionable noise, vibration
or odor to emanate from the Premises or any equipment serving the same, (vi) do
or permit anything in or about the Premises that is unlawful, immoral, obscene,
pornographic, or which tends to create or maintain a nuisance, or do any act
tending to injure the reputation of the Project, or (vii) violate any
requirements of the American Insurance Association and any board of fire
underwriters.
M. Responsibility for Compliance. Tenant shall be responsible for ensuring
compliance with these Rules, as they may be amended, by Tenant's employees and
as applicable, by Tenant, any other occupant of the Premises, and their
respective agents, employees, invitees, Transferees and contractors.
N. Condition At Expiration Or Termination. Upon expiration or earlier
termination of this Lease, in addition to the requirements under Article 13 of
this Lease, Tenant shall ensure that the following matters are addressed in a
commercially reasonable manner:
(1) All interior and exterior lights and bulbs are operational.
(2) All exhaust, ceiling and overhead fans are operational.
(3) Warehouse floor areas are broom swept and clean of all trash and
materials.
(4) Warehouse floor areas are cleaned of oils, fluids and other foreign
materials.
(5) All electrical, plumbing and other utilities which are terminated are
disconnected, capped and/or terminated according to applicable building
codes and all other governmental requirements.
(6) Intentionally Omitted.
(7) Overhead interior and exterior doors are operational and in good
condition.
(8) Any bolts secured to the floor are cut off flush and sealed with
epoxy.
(9) Warehouse fencing or partitions are removed if Landlord so requires.
(10) All furniture, trash and debris are removed.
(11) All signs and pictures, posters, signage, stickers and all similar
items of Tenant and any other occupant of the Premises are removed from
all walls, windows, doors and all other interior and exterior surfaces of
the Premises and other locations of the Project where Landlord permitted
installation.
(12) All carpeted areas are vacuumed.
(13) All uncarpeted office floors are swept and polished, and any excess
wax build-up on tile and vinyl floors is properly removed.
(14) Intentionally Omitted.
(15) All windows and miscellaneous hardware are operational and in good
condition.
(16) All heating, air conditioning and mechanical systems and equipment
are operational .
(17) Ceiling tiles with no holes or stains, and grid, light lenses, air
grills and diffusers are in place.
(18) There are no broken windows or other glass items.
(19) Bathroom walls, floors, and fixtures are clean and in good condition.
(20) All plumbing fixtures are intact, operational, free of leaks and in
good condition.
29
(21) All gutters and downspouts are undamaged and operational.
(22) Walls (internal and external) are clean and any holes are properly
and permanently patched.
(23) All keys to all locks to or within the Premises, any key cards and
parking stickers, the codes for all gates, the combination to any vaults
that Landlord permits or requires Tenant to leave on the Premises, all
plans and specifications for all leasehold improvements made to the
Premises, and all reports, studies and other materials relating to
Hazardous Materials that were ever on the Premises, shall be turned over
to Landlord.
30
WAREHOUSE ASSOCIATES
INDUSTRIAL/ WAREHOUSE LEASE
Exhibit D
WORK LETTER AGREEMENT
Landlord shall construct, or install and permanently affix, certain
improvements to the Premises (the "Tenant Improvements") in accordance with the
Lease of which this Exhibit D is part. The Tenant Improvement Plans and
Specifications (as hereinafter defined) for the Tenant Improvements to be
constructed in the Premises shall be approved by Landlord and Tenant in
accordance with the following procedures and requirements prior to commencing
any Tenant Improvement work. The cost of such services shall be paid for by
Landlord.
Landlord shall deliver to Tenant complete plans and specifications for the
Tenant Improvements, prepared or sealed by a licensed architect or engineer if
required for issuance of a building permit, certificate of occupancy and high
pile permit (the "Tenant Improvement Plans and Specifications"). Landlord shall
select a qualified contractor to be the Tenant Improvement Contractor. Prior to
commencement of work by the Tenant Improvement Contractor, Landlord and Tenant
Improvement Contractor shall enter into a construction contract for the
construction of the Tenant Improvements (the "Construction Contract").
31