Exhibit 10.40
Standard Commercial Lease Agreement
1986
COMMERCIAL LEASE AGREEMENT
THIS Lease AGREEMENT is entered into by:
1. LANDLORD: Valley View Tech, Inc. ("Landlord").
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2. TENANT: Monitronics International, Inc. ("Tenant").
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3. LEASED PREMISES: In consideration of the rents, terms and covenants of
this Lease Agreement (the "Lease"), Landlord hereby leases to Tenant certain
premises (the "Leased Premises") containing approximately 9,434 square feet
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within the building or project known as Valley View Tech Center I, and located
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at 2300 Valley View Lane Suite 230 on a certain tract of Land in Farmers Branch,
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Dallas County, Texas. Such Land (which is described in the attached Exhibit A),
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together with the building(s), landscaping, parking and driveway areas,
sidewalks, and other improvements thereon shall be referred to in this Lease as
the "Project". In the case of a multi-building Project, the word "Building"
shall refer to the particular building in which the Leased Premises are located
and the tract of land upon which such building is located. In the case of a
single building Project the term "Building" as used herein shall be synonymous
with the term "Project". If the Leased Premises encompass an entire building,
then the term "Leased Premises" shall be synonymous with "Building". A fuller
description of the Leased Premises, including a floor plan thereof, is contained
in Exhibit B to be attached.
4. TERM:
(a) The term of this Lease shall be Sixty (60) months commencing on
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July 1, 1998 (the "Commencement Date") and terminating on the last day of June
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2003 (the "Termination Date"). The Commencement Date may be subject to change,
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however, pursuant to Subparagraphs (b) and (c) below. However, any such change
in the Commencement Date shall have no effect upon the Termination Date.
(b) Tenant acknowledges that it has inspected and accepts the Leased
Premises in their present condition as suitable for Tenant's purposes. If this
Lease is executed before the Leased Premises become vacant or otherwise
available for occupancy, or if any present tenant or occupant of the Leased
Premises holds over and Landlord cannot acquire possession of the Leased
Premises prior to the Commencement Date stated above, Tenant agrees to accept
possession of the Leased Premises at such time as Landlord is able to tender the
same, which date shall then be the Commencement Date of the Lease term.
(c) (Intentionally Deleted)
(d) Tenant acknowledges that no representations or promises regarding
repairs, alterations, remodeling, or improvements to the Leased Premises have
been made by Landlord, its agents, employees, or other representatives, unless
such are expressly set forth in this Lease, and that Tenant is solely
responsible for applying for and obtaining a certificate of occupancy for the
Leased Premises. Tenant agrees that if its occupancy of the Leased Premises is
delayed under the circumstances described in Subparagraph (b) or (c) above, this
Lease shall nonetheless continue in full force and effect. However, any rental
amounts applicable to such period of delay shall be abated and such abatement
shall constitute full settlement of all claims by Tenant against Landlord by
reason of any such delay in possession of the Leased Premises. Tenant's taking
possession of the leased Premises shall conclusively establish that the
improvements, if any, to be made by Landlord under the terms of this Lease, have
been completed in accordance with the plans and specifications therefor and that
the Leased Premises are in good and satisfactory condition as of the date of
Tenant's possession, unless Tenant notifies Landlord in writing specifying any
defects within ten (10) days after taking possession. Landlord shall use
reasonable diligence to repair promptly such items but Tenant shall have no
claim for damages or rebate or abatement of rent by reason thereof. After the
Commencement Date and upon completion of any necessary repairs as provided
above, Tenant shall, upon demand, execute and deliver to Landlord a letter of
acceptance of the Leased Premises and acknowledgment of the date of the
Commencement Date.
5. BASE RENT AND SECURITY DEPOSIT:
(a) Tenant agrees to pay to Landlord as rent the sum of Three Hundred
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Seventy Two Thousand One Hundred Eighty and 00/100 Dollars ($372,180,00) subject
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to adjustment for early or delayed occupancy under the terms hereof. Such rent
shall be payable in monthly amounts of *See Below Dollars ($See Below) each, in
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advance, without demand deduction or offset (sometimes referred to in this Lease
as the "Base Rent" or "Base Rental"). Such rental amounts shall be due and
payable to Landlord in lawful money of the United States of America at the
address shown below. An amount equal to one monthly Base Rental payment shall be
due and payable on the date Tenant executes this Lease and such amount shall be
applied to the rent due for the first complete calendar month occurring after
the Commencement Date, provided that if the Commencement Date should be a date
other than the first day of a calendar month the rent for such partial month
shall be prorated. All succeeding installments of rent shall be due and payable
on or before the first day of each succeeding calendar month during the Lease
term. The amount of the Base Rent shall be adjusted as provided in Paragraph 6
below.
(b) On the date Tenant executes this Lease there shall be due and
payable by Tenant a security deposit in an amount equal to one monthly Base
Rental installment. Such deposit shall be held by Landlord (without any
* Monthly Base Rent Schedule
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July 1, 1998 - June 30, 2001 @ $6,093.00 per month
July 1, 2001 - June 30, 2003 @ $6,368.00 per month
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obligation to pay interest thereon or segregate such monies from Landlord's
general funds) as security for the performance of Tenant's obligations under
this Lease. Tenant agrees to increase such security deposit from time to time so
that it is at all times equal to one monthly Base Rental installment, as
adjusted pursuant to Paragraph 6(a) below. Tenant shall deposit cash with
Landlord in an amount sufficient so to increase the security deposit within five
(5) days after written demand by Landlord. It is expressly understood that the
security deposit is not an advance payment of rental or a measure of Landlord's
damages in the event of Tenant's default under this Lease. Upon the occurrence
of any event of default by Tenant or breach by Tenant of its covenants under
this Lease, Landlord may, from time to time, without prejudice to any other
remedy provided herein or provided by law, use, apply, or retain all or part of
the security deposit for the payment of any rent or other sum in default, or for
the payment of any other amount which Landlord may spend or become obligated to
spend by reason of Tenant's default, or for payment of any other amount which
Landlord may spend or become obligated to spend by reason of Tenant default or
breach, or to compensate Landlord for any damage, injury, expense or liability
caused to Landlord by such default or breach. If any portion of the security
deposit is so used or applied, Tenant shall, within five (5) days after written
demand therefor, deposit cash with Landlord in an amount sufficient to restore
the security deposit to the amount required by this Paragraph. Tenant's failure
to do so shall be a default under this Lease. The balance of the security
deposit shall be returned by Landlord to Tenant at such time after termination
of this Lease that all of Tenant's obligations have been fulfilled.
(c) Other remedies for nonpayment of Rent notwithstanding, if the
monthly Base Rental payment is not received by Landlord on or before the tenth
(10th) day of the month for which such rent is due, or if any other payment due
Landlord by Tenant hereunder (such sums being deemed to be additional Rent) is
not received by Landlord on or before the tenth (10th) day of the month next
following the month in which Tenant was invoiced, a service charge of five
percent (5%) of such past due amount shall be additionally due and payable by
Tenant. Such service charge shall be cumulative of any other remedies Landlord
may have for nonpayment of Rent and other sums payable under this Lease.
(d) If three (3) consecutive monthly Rental payments or any five (5)
monthly Rental payments during the Lease term (or any renewal or extension
thereof) are not received by Landlord on or before the tenth (10th) day of the
month for which such Rent was due, the Base Rent hereunder shall automatically
become due and payable by Tenant in advance in quarterly installments equal to
three (3) months' Base Rent each. The first of such quarterly Base Rent payments
shall be due and payable on the first day of the next succeeding calendar month
and on the first day of every third (3rd) calendar month thereafter. This remedy
shall be cumulative of any other remedies of Landlord under this Lease for
nonpayment of Rent.
6. ADDITIONAL RENT:
(a) Taxes, Insurance and Common Area Maintenance
(1) In the event the "Tax, Insurance and Common Area Maintenance
Expenses" (as defined below) of the Building shall in any calendar year during
the term of this Lease exceed the sum of $Base Year 1998 per square foot, then
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with respect to such excess (the "Tax, Insurance and Common Area Maintenance
Differential"), Tenant agrees to pay as additional rental Tenant's pro rata
share of the Tax, Insurance and Common Area Maintenance Differential within ten
(10) days following receipt of an invoice from Landlord stating the amount due.
The pro rata share to be paid by Tenant is Sixteen and Thirty Two Hundredths
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percent (16.32%) subject, however, to adjustment for any expansion of the Leased
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Premises. In the case of a multi-building Project, if such Tax, Insurance and
Common Area Maintenance Expenses are not separately assessed to the Building but
are assessed against the Project as a whole, Landlord shall determine the
portion of such Tax, Insurance and Common Area Maintenance Expenses allocable to
the Building in which the Leased Premises are located.
(2) At or prior to the commencement of this Lease and at any time
during the Lease term, Landlord may deliver to Tenant a written estimate of any
additional rent applicable to the Leased Premises (based on the pro rata share
stated above) which may be anticipated for excess Tax, Insurance and Common
Area Maintenance Expenses during the calendar year in which this Lease commences
or for any succeeding calendar year, as the case may be. Based upon such written
estimate, the monthly Base Rental shall be increased by one-twelfth (1/12) of
the estimated additional rent.
(3) Statements showing the actual Tax and Insurance Expenses (as
well as the actual Common Area Maintenance Expenses, as defined in Paragraph
6(b) below) and Tenant's proportionate share thereof (hereinafter referred to as
the "Statement of Actual Adjustment") shall be delivered by Landlord to Tenant
after any calendar year in which additional rental was paid or due by Tenant.
Within ten (10) days after the delivery by Landlord to Tenant of such Statement
of Actual Adjustment, Tenant shall pay Landlord the amount of any additional
rental shown on such statement as being due and unpaid. If such Statement of
Actual Adjustment shows that Tenant has paid more than the amount of additional
rental actually due from Tenant for the preceding calendar year and if Tenant is
not then in default under this Lease, Landlord shall credit the amount of such
excess to the next Base Rental installment due from Tenant.
(4) "Tax and Insurance Expenses" shall mean: (i) all ad valorem,
rental, sales, use, and other taxes (other than Landlord's income taxes),
special assessments, and other governmental charges, and all assessments due to
deed restrictions and/or owner's associations which accrue against the Building
during the term of this Lease; and (ii) all insurance premiums paid by Landlord
with respect to the Building including, without Limitation, public liability,
casualty, rental, and property damage insurance.
(b) Common Area Maintenance
(1) "Common Area Maintenance Expenses" shall mean all expenses
(other than the Tax and Insurance Expenses described above) incurred by Landlord
for the maintenance, repair, and operation of the Building, (excluding only
structural soundness of the roof, foundation and exterior walls) including, but
not limited to, management fees, utility expenses (if not separately metered),
maintenance and repair costs, sewer, landscaping, trash and security costs (if
furnished by Landlord), wages and fringe benefits payable to employees of
Landlord whose duties are connected with the operation and maintenance of the
Building, amounts paid to contractors or subcontractors for work or services
performed in connection with the operation and maintenance of the Building, all
services, supplies, repairs, replacements or other expenses for maintaining,
repairing, and operating the Building, including without limitation common areas
and parking areas and roof, exterior wall and foundation work that is not
related to structural soundness.
(2) The term "Common Area Maintenance Expenses" does not include
the cost of any capital improvement to the Building other than the reasonably
amortized cost of capital improvements which result in the reduction of
Insurance Expenses or Common Area Maintenance Expenses. Further, the term
"Common Area Maintenance Expenses" shall not include repair, restoration or
other work occasioned by fire, windstorm or other casualty with respect to which
Landlord actually receives insurance proceeds, income and franchise taxes of
Landlord, expenses incurred in leasing to or procuring of tenants, leasing
commissions, advertising expenses, expenses for the renovating of space for new
tenants, interest or principal payments on any mortgage or other indebtedness of
Landlord, compensation paid to any employee of Landlord above the grade of
building superintendent, or depreciation allowance or expense.
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(c) If the Commencement Date of this Lease is a day other than the
first day of a month, or if the Termination Date is a day other than the last
day of a month, the amount shown as due by Tenant on the Statement of Actual
Adjustment shall reflect a proration based on the ratio that the number of days
this Lease was in effect during such month bears to the actual number of days in
said month.
(d) The failure of Landlord to exercise its rights hereunder to
estimate expenses and require payment of same as additional rental shall not
constitute a waiver of such rights which rights may be exercised from time to
time at Landlord's discretion.
(e) If the nature of Tenant's business or use of the Leased Premises
is such that additional costs are incurred by Landlord for cleaning, sanitation,
trash collection or disposal services, Tenant agrees to pay as additional rental
to Landlord the amount of such additional costs upon demand.
7. TENANT REPAIRS AND MAINTENANCE:
(a) Tenant shall maintain all parts of the Leased Premises and their
appurtenances (except those for which Landlord is expressly responsible under
this Lease) in good, clean and sanitary condition at its own expense. Tenant
shall promptly make all necessary repairs and replacements to the Leased
Premises, including but not limited to, electric light lamps or tubes, windows,
glass and plate glass, interior and exterior doors, any special office entry,
interior walls and finish work, floors and floor coverings, (Intentionally
Deleted) heating and air conditioning systems, dock boards, truck doors, dock
bumpers, plumbing work and fixtures other than common building sewage lines.
Tenant shall be obligated to repair wind damage to glass caused by events other
than hurricanes or tornadoes. Otherwise, however, Tenant shall not be obligated
to repair any damage caused by fire, hurricane, tornado or other casualty
covered by the insurance maintained by Landlord.
(b) Tenant shall not damage or disturb the integrity, structural
soundness, or support of any wall, roof, or foundation of the Leased Premises.
Any damage to these walls caused by Tenant or its employees, agents or invitees
shall be promptly repaired by Tenant at its sole cost and expense.
(c) Landlord shall have the right to coordinate any repairs and other
maintenance of any rail tracks serving or to serve the Project, and if Tenant
uses such rail tracks, Tenant shall reimburse Landlord from time to time upon
demand for a share of the cost of such repairs and maintenance and any other
sums specified in any agreement to which Landlord is a party respecting such
tracks. Tenant's share of such costs shall be additional rent and shall reflect
a proration based on the ratio that the space contained in the Leased Premises
bears to the entire space occupied by rail users in the Project.
(d) Tenant shall, at its own cost and expense, enter into a regularly
scheduled preventive maintenance/service contract with a maintenance contractor
for servicing all heating and air conditioning systems and equipment within the
Leased Premises. The maintenance contractor and the contract must be approved by
Landlord. The service contract must include all services suggested by the
equipment manufacturer within the operation/maintenance manual and must become
effective (and a copy delivered to Landlord) within thirty (30) days of the date
Tenant takes possession of the Leased Premises. If Tenant fails to enter into
such service contract as required, Landlord shall have the right to do so on
Tenant's behalf and Tenant agrees to pay Landlord the cost and expense of same
upon demand.
(e) Tenant shall pay all charges for pest control and extermination
within the Leased Premises.
(f) At the termination of this Lease, Tenant shall deliver the Leased
Premises "broom clean" to Landlord in the same good order and condition as
existed at the Commencement Date of this Lease, ordinary wear, natural
deterioration beyond the control of Tenant, damage by fire, tornado or other
casualty excepted.
(g) Not in limitation on the foregoing, it is expressly understood
that Tenant shall repair and pay for all damage caused by the negligence of
Tenant, Tenant's employees, agents or invitees, or caused by Tenant's default
hereunder. All requests for repairs or maintenance that are the responsibility
of Landlord under this Lease must be made in writing to Landlord at the address
set forth below.
8. LANDLORD'S REPAIRS: Landlord shall be responsible, at its expense, only
for the structural soundness of the roof, foundation and exterior walls of the
Building. Any repair to the roof, foundation or exterior walls occasioned by the
act or omission of Tenant, or its agents, employees, guests or invitees shall be
the responsibility of Tenant. The term "walls" as used in this Paragraph 8 shall
not include windows, glass or plate glass, interior doors, special store fronts,
office entries or exterior doors. Landlord's liability with respect to any
defects, repairs or maintenance for which Landlord is responsible at its expense
under this Lease shall be limited to the cost of such repairs or maintenance or
the curing of such defect. As expenses included in Common Area Maintenance
Expenses, Landlord will be responsible for landscaping and maintenance of common
areas and parking areas, exterior painting, and common sewage line plumbing.
Tenant shall immediately give Landlord written notice of defects or need for
repairs, after which Landlord shall have a reasonable opportunity to repair same
or cure such defect. Landlord shall not be required to perform any covenant or
obligation of this Lease, or be liable in damages to Tenant, so long as the
performance or non-performance of the covenant or obligation is delayed, caused
by, or prevented by an act of God or force majeure. An "act of God" or "force
majeure" is defined for purposes of this Lease as strikes, lockouts, sit-downs,
material or labor restrictions by any governmental authority, riots, floods,
washouts, explosions, earthquakes, fire, storms, acts of the public enemy, wars,
insurrections and any other similar cause not reasonably within the control of
Landlord, and which by the exercise of due diligence Landlord is unable, wholly
or in part, to prevent or overcome.
9. UTILITY SERVICE: Tenant shall pay the cost of all utility services,
including, but not limited to, initial connection charges and all charges for
gas, water, and electricity used on the Leased Premises. If the Leased Premises
are separately metered, Tenant shall pay such costs directly to the appropriate
utility company. Otherwise, Tenant shall pay such costs pursuant to Paragraph
6(b) above. Tenant shall pay all costs caused by Tenant introducing excessive
pollutants into the sanitary sewer system, including permits, fees and charges
levied by any governmental subdivision for any pollutants or solids other than
ordinary human waste. If Tenant can be clearly identified as being responsible
for obstructions or stoppage of the common sanitary sewage line, the Tenant
shall pay the entire cost thereof, upon demand, as additional rent. Tenant shall
be responsible for the installation and maintenance of any dilution tanks,
holding tanks, settling tanks, sewer sampling devices, sand traps, grease traps
or similar devices which may be required by the appropriate governmental
subdivision for Tenant's use of the sanitary sewer system. Tenant shall also pay
all surcharges (i.e. charges in excess of normal charges) levied due to Tenant's
abnormal use of sanitary sewer or waste removal services so that no such
surcharges shall affect Landlord or other tenants in the Project under Paragraph
6(b) above.
10. SIGNS: No sign, door plaques, advertisement, or notice shall be
displayed, painted or affixed by Tenant on any part of the Project or Building,
parking facilities, or Leased Premises without prior written consent of
Landlord. The color, size, character, style, material, and placement shall be
approved by Landlord, and subject to any applicable governmental laws,
ordinances, regulations, project specifications, and other requirements. Sign on
doors and entrances to the Leased Premises, if approved by Landlord, shall be
placed thereon by a contractor approved by Landlord and paid for by Tenant.
Tenant shall remove all such signs at the
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termination of this lease. Such installations and removals shall be made in such
manner as to avoid injury or defacement of the Project and other improvements,
and Tenant, at its sole expense, shall repair any injury or defacement,
including, without limitation, any discoloration caused by such installation
and/or removal.
11. USAGE: Tenant warrants and represents to Landlord that the Leased
Premises shall be used and occupied only for the purpose of general office
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/distribution and wholesale of security alarms and related products. Any change
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in the stated usage purposes or in the scope or extent of such usage as
previously described to Landlord by Tenant shall be subject to the prior written
approval of Landlord. Tenant shall occupy the Leased Premises, conduct its
business and control its agents, employees, invitees and visitors in a lawful
and reputable way and as not to create any nuisance or otherwise interfere with,
annoy or disturb any other tenant in its normal business operations or Landlord
in its management of the project. Tenant shall not commit, or allow to be
committed, any waste on the Leased Premises.
12. INSURANCE:
(a) Tenant shall not permit the Leased Premises to be used in any way
which would, in the opinion of Landlord, be hazardous or which would in any way
increase the cost of or render void the fire insurance on improvements or
contents in the Project belonging to Landlord or other tenants. If at any time
during the term of this Lease the State Board of Insurance or other insurance
authority disallows any of Landlord's sprinkler credits or imposes an additional
penalty or surcharge in Landlord's insurance premiums because of Tenant's
original or subsequent placement or use of storage racks or bins, method of
storage, or nature of Tenant's inventory or any other act of Tenant, Tenant
agrees to pay as additional rental the increase in Landlord's insurance
premiums. If an increase in the fire and extended coverage premiums paid by
Landlord for the Building in which Tenant occupies space is caused by Tenant's
use or occupancy of the Leased Premises; or if Tenant vacates the Leased
Premises and causes an increase, then Tenant shall pay as additional rental the
amount of such increase to Landlord.
(b) Tenant shall procure and maintain throughout the term of this
Lease a policy or policies of insurance, at its sole cost and expense, insuring
both Landlord and Tenant against all claims, demands or actions arising out of
or in connection with: (i) the Leased Premises; (ii) the condition of the Leased
Premises; (iii) Tenant's operations in and maintenance and use of the Leased
Premises; and (iv) Tenant's liability assumed under this Lease. The limits of
such policy or policies shall be not less than one million dollars ($1,000,000)
combined single limit coverage per occurrence for injury to persons (including
death) and/or property damage or destruction, including loss of use. All such
policies shall be procured by Tenant from responsible insurance companies
satisfactory to Landlord. Certified copies of such policies, together with
receipts for payment of premiums, shall be delivered to Landlord prior to the
Commencement Date of this Lease. Not less than fifteen (15) days prior to the
expiration date of any such policies, certified copies of renewal policies and
evidence of the payment of renewal premiums shall be delivered to Landlord. All
such original and renewal policies shall provide for at least thirty (30) days
written notice to Landlord before such policy may be cancelled or changed to
reduce insurance coverage provided thereby. Upon request of Landlord, Tenant
further agrees to complete and return to Landlord an insurance questionnaire
(such form to be provided by Landlord) regarding Tenant's insurance coverage and
intended use of the Leased Premises. Tenant warrants and represents that all
information contained in such questionnaire shall be true and correct as of the
date thereof and shall be updated by Tenant from time to time upon Landlord's
request.
13. RELOCATION: Upon request by Landlord during the term of this Lease,
Tenant agrees to relocate to other space in the Building and/or Project
designated by Landlord, provided such other space is as large or larger than the
Leased Premises and has at least the same number of windows. Landlord shall pay
all out-of-pocket expenses of any such relocation, including the expenses of
moving and reconstructing all Tenant furnished and Landlord furnished
improvements. In the event of such relocation, this Lease shall continue in full
force and effect without any change in its terms other than substitution of the
new description of the Leased Premises for the original description set forth in
Paragraph 3 of this Lease.
14. COMPLIANCE WITH LAWS, RULES AND REGULATIONS: Tenant shall comply with
all applicable laws, ordinances, orders, rules and regulations of state,
federal, municipal, or other agencies or bodies relating to the use, condition
and occupancy of, and business conducted on, the Leased Premises, including
without limitation, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response Act, and the rules, regulations and
directives of the U.S. Environmental Protection Agency. Tenant shall also comply
with the rules of the Project which may hereafter be adopted by Landlord.
Landlord shall have the right at all times to change the rules and regulations
of the Project or to amend them in any reasonable manner as may be deemed
advisable for the safety, care, cleanliness, and good order of the Project and
Leased Premises. All rules and regulations of the Project and any changes or
amendments thereto will be sent by Landlord to Tenant in writing and shall
thereafter be carried out and observed by Tenant.
15. ASSIGNMENT AND SUBLETTING: The Tenant agrees not to assign, transfer,
or mortgage this Lease or any right or interest therein, or sublet the Leased
Premises or any part thereof, without the prior written consent of Landlord. No
assignment or subletting made with the consent of Landlord shall relieve Tenant
of its obligations hereunder, and Tenant shall continue to be liable as a
principal (and not as a guarantor or surety) to the same extent as though no
assignment or sublease had been made. Consent by Landlord to an assignment or
sublease shall not be construed to be consent to any additional assignment or
subletting. Each such successive act shall require similar consent of Landlord.
Landlord shall be reimbursed by Tenant for any costs or expenses incurred as a
result of Tenant's request for consent to any such assignment or subletting. In
the event Tenant subleases the Leased Premises, or any portion thereof, or
assigns this Lease with the consent of the Landlord at an annual Base Rental
exceeding that stated herein, such excess shall be paid by Tenant to Landlord as
additional rental hereunder within ten (10) days after receipt by Tenant. Upon
the occurrence of an "event of default" as defined below, if all or any part of
the Leased Premises are then assigned or sublet, Landlord may, in addition to
any other remedies provided by this Lease or provided by law, collect directly
from the assignee or subtenant all rents due to Tenant. Landlord shall have a
security interest in all properties on the Leased Premises to secure payment of
such sums. Any collection directly by Landlord from the assignee or subtenant
shall not be construed, however, to constitute a novation or release of Tenant
from the further performance of its obligations under this Lease.
Notwithstanding the foregoing, it is expressly agreed that if this Lease is
assigned to any person or entity pursuant to the provisions of the Bankruptcy
Code, 11 U.S.C. (S) 101 et esp. (the "Bankruptcy Code"), any and all monies or
other considerations payable or otherwise to be delivered in connection with
such assignment shall be paid or delivered to Landlord, shall be and remain the
exclusive property of Landlord and shall not constitute property of Tenant or of
the estate of Tenant within the meaning of the Bankruptcy Code. Any and all
monies or other considerations constituting Landlord's property under the
preceding sentence not paid or delivered to Landlord shall be held in trust for
the benefit of Landlord and be promptly paid or delivered to Landlord. Any
person or entity to which this Lease is assigned pursuant to the provisions of
the Bankruptcy Code shall be deemed without further act or deed to have assumed
all of the obligations arising under this Lease on and after the date of such
assignment. Any such assignee shall upon demand execute and deliver to Landlord
an instrument confirming such assumption.
16. ALTERATIONS AND IMPROVEMENTS:
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(a) Tenant shall not make or perform, or permit the making or
performance of, any initial or subsequent tenant finish work or any alterations,
installations, decorations, improvements, additions or other physical changes in
or about the Leased Premises (referred to collectively as "Alterations") without
Landlord's prior consent. Landlord agrees not to withhold its consent
unreasonably to any nonstructural Alterations proposed to be made by Tenant to
adapt the Leased Premises for Tenant's business purposes. Notwithstanding the
foregoing provisions or Landlord's consent to any Alterations, all Alterations
shall be made and performed in conformity with and subject to the following
provisions: All Alterations shall be made and performed at Tenant's sole cost
and expense and at such time and in such manner as Landlord may from time to
time reasonably designate. Alterations shall be made only by contractors or
mechanics approved by Landlord, such approval not to be unreasonably withheld.
No Alteration shall affect any part of the Building other than the Leased
Premises or adversely affect any service required to be furnished by Landlord to
Tenant or to any other tenant or occupant of the Building or reduce the value of
the Building. No alteration shall affect the outside appearance of the Building.
Tenant shall submit to Landlord detailed plans and specifications (including
layout, architectural, mechanical and structural drawings) for each proposed
Alteration and shall not commence any such Alteration without first obtaining
Landlord's written approval of such plans and specifications. Prior to the
commencement of each proposed Alteration, Tenant shall furnish to Landlord
duplicate original policies of worker's compensation insurance covering all
persons to be employed in connection with such Alterations, including those to
be employed by all contractors and subcontractors and comprehensive public
liability insurance (including property damage coverage) in which Landlord, its
agents, and any lessor under any ground or underlying lease, and any mortgagee
of the Building shall be named as parties insured, which policies shall be
issued by companies, and shall be in form and amounts, satisfactory to Landlord
and shall be maintained by Tenant until the completion of such Alteration. If
Landlord shall require Tenant to assure payment of all costs of such
alterations, prior to commencement of any approved Alteration, Tenant shall
cause to be issued and delivered to Landlord an irrevocable documentary letter
of credit or payment bond in the full amount of the cost of the said approved
Alterations issued by a substantial banking institution reasonably acceptable to
Landlord payable in whole or in part, from time to time to the order of Landlord
upon written demand accompanied by Landlord's certification that Tenant has
defaulted with respect to the obligation secured thereby. The term of the letter
of credit shall be from date of issuance through ninety (90) days after
completion of construction of the approved Alterations. Tenant shall cause its
contractor to provide Landlord with a certificate of completion of the
Alterations and a bills paid affidavit and full lien waiver; and upon receipt of
same, and no fewer than thirty-one (31) days following completion if Tenant is
not in default hereunder, Landlord shall return the letter of credit to Tenant
unused and endorsed for cancellation. Tenant shall, if requested by Landlord at
the time of Landlord's consent to the Alterations, agree to restore the Leased
Premises at the termination of this Lease to their condition prior to making
such Alterations. All permits, approvals and certificates required by all
governmental authorities shall be timely obtained by Tenant and submitted to
Landlord. Notwithstanding Landlord's approval of plans and specifications for
any Alterations, all Alterations shall be made and performed in full compliance
with applicable laws, orders and regulations of Federal, State, County, and
Municipal authorities and with all directions, pursuant to law, of all public
officers, and with all applicable rules, orders, regulations and requirements of
the Dallas Board of Fire Underwriters or any similar body. All alterations shall
be made and performed in accordance with the Building rules. All materials and
equipment to be incorporated in the Leased Premises as a result of all
Alterations shall be new and first quality. No such materials or equipment shall
be subject to any lien, encumbrance, chattel mortgage or title retention or
security agreement. If such Alterations are being performed by Tenant in
connection with Tenant's initial occupancy of the Leased Premises, Tenant agrees
to make proper application for, and obtain, a certificate of occupancy from the
city in which the Leased Premises are located. Tenant shall furnish such
certificate to Landlord promptly after issuance of same.
(b) Tenant shall not at any time prior to or during the term of this
Lease, directly or indirectly employ or permit the employment of, any
contractor, mechanic, or laborer in the Leased Premises, whether in connection
with any Alteration or otherwise, if such employment will interfere or cause any
conflict with other contractors, mechanics, or laborers engaged in the
construction, maintenance or operation of the Building by Landlord, Tenant, or
other. In the event of any such interference or conflict. Tenant, upon demand of
Landlord, shall cause all contractors, mechanics, or laborers causing such
interference or conflict to leave the Building immediately.
(c) All appurtenances, fixtures, improvements, and other property
attached to or installed in the Leased Premises, whether by Landlord or Tenant
or others, and whether at Landlord's expense or Tenant's expense, or the joint
expense of Landlord and Tenant, shall be and remain the property of Landlord,
except that any such fixtures, improvements, additions, and other property
which have been installed at the sole expense of Tenant and which are removable
without material damage to the Leased Premises shall be and remain the property
of Tenant. At Landlord's option, Tenant shall remove any property belonging to
Tenant at the end of the term hereof, and Tenant shall repair or, at Landlord's
option, shall pay to Landlord the cost of repairing any damage arising from such
removal. Any replacements of any property of Landlord, whether made at Tenant's
expense or otherwise, shall be and remain the property of Landlord.
17. CONDEMNATION:
(a) If, during the term (or any extension or renewal) of this Lease,
all or a substantial part of the Leased Premises are taken for any public or
quasi-public use under any governmental law, ordinance or regulation, or by
right of eminent domain or by private purchase in lieu thereof, and the taking
would prevent or materially interfere with the then current use of the Leased
Premises, this Lease shall terminate and the Rent shall be abated during the
unexpired portion of this Lease effective on the date physical possession is
taken by the condemning authority.
(b) If a portion of the Leased Premises is taken as described above
and this Lease is not terminated as provided in subparagraph (a) above, the Rent
payable under this Lease during the unexpired portion of the term shall be
adjusted to such an extent as may be fair and reasonable under the
circumstances.
(c) In the event of such taking or private purchase in lieu thereof,
Landlord and Tenant shall each be entitled to receive any sums separately
awarded to each party by the condemning authority. In the event separate awards
to Landlord and Tenant are not made, Landlord shall be entitled to receive any
and all sums by the condemning authority.
18. FIRE AND CASUALTY:
(a) If the Building should be damaged or destroyed by fire, tornado,
or other casualty, Tenant shall give immediate written notice thereof to
Landlord.
(b) If the Building should be totally destroyed by fire, tornado, or
other casualty, or if it should be so damaged thereby that rebuilding or repairs
cannot in Landlord's estimation be completed within one hundred eighty (180)
days after the date on which Landlord is notified by Tenant of such damage, this
Lease shall terminate and the Rent shall be abated during the unexpired portion
of this Lease, effective upon the date of occurrence of such damage.
(c) If the Building should be damaged by any peril covered by the
insurance maintained by Landlord, but only to such extent that rebuilding or
repairs can in Landlord's estimation be completed within one hundred eighty
(180) days after the date on which Landlord is notified by Tenant of such
damage, this Lease shall not
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terminate and Landlord shall, to the extent of insurance proceeds received, then
proceed with reasonable diligence to rebuild and repair the Building to
substantially the same condition in which it existed prior to such damage.
Landlord shall not be required, however, to rebuild, repair, or replace any part
of the partitions, fixtures, additions, and other improvements which may have
been placed in, on, or about the Lease Premises by Tenant. If the Leased
Premises are untenantable in whole or in part following such damage, the Rent
payable hereunder during the period in which they are untenantable shall be
reduced to such extent as may be fair and reasonable under all of the
circumstances. If Landlord should fail to complete such repairs and rebuilding
within one hundred eighty (180) days after the date on which Landlord is
notified by Tenant of such damage, Tenant may terminate this Lease by delivering
written notice of termination to Landlord. Such termination shall be Tenant's
exclusive remedy and all rights and obligations of the parties under this Lease
shall then cease. Notwithstanding the foregoing provisions of this subparagraph
(c), Tenant agrees that if the Leased Premises, the Building and/or Project are
damaged by fire or other casualty caused by the fault or negligence of Tenant or
Tenant's agents, employees or invitees, Tenant shall have no option to terminate
this Lease, even if the damage cannot be repaired within one hundred eighty
(180) days, and the Rent shall not be abated or reduced before or during the
repair period.
(d) Notwithstanding anything herein to the contrary, if the holder of
any indebtedness secured by a mortgage or deed of trust covering the Building
and/or Project requires that the insurance proceeds be applied to such
indebtedness, then Landlord shall have the right to terminate this Lease by
delivering written notice of termination to Tenant within fifteen (15) days
after such requirement is made. All rights and obligations under this Lease
shall then cease.
19. CASUALTY INSURANCE: Landlord shall at all times during the term of this
Lease maintain a policy or policies of insurance with the premiums paid in
advance, issued by and binding upon some solvent insurance company, insuring the
Building against loss or damage by fire, explosion, or other hazards and
contingencies. Landlord shall not be obligated, however, to insure any personal
property (including, but not limited to any furniture machinery goods or
supplies) of Tenant or which Tenant may have in the Leased Premises or any
fixtures installed by or paid for by Tenant upon or within the Leased Premises
or any improvements which Tenant may construct or install on the Leased Premises
or any signs identifying Tenant's business located on the exterior of the
Building.
20. WAIVER OF SUBROGATION: To the extent that Landlord or Tenant receives
casualty insurance proceeds, such recipient hereby waives and releases any and
all rights, claims, demands and causes of action such recipient may have against
the other on account of any loss or damage occasioned to such recipient or its
businesses real and personal properties, the Leased Premises, the Building, the
Project, or its contents arising from any risk or peril covered by any insurance
policy carried by either party. In as much as the above mutual waivers will
preclude the assignment of any such claim by way of subrogation (or otherwise)
to an insurance company (or any other person), each party hereto hereby agrees
immediately to give to its respective insurance companies written notice of the
terms of such mutual waivers and to have their respective insurance policies
properly endorsed, if necessary, to prevent the invalidation of such insurance
coverages by reason of such waivers. This provision shall be cumulative of
Paragraph 21 below.
21. HOLD HARMLESS: Landlord shall not be liable to Tenant, Tenant's
employees, agents, invitees, licensees or visitors, or to any other person, for
any injury to person or damage to property on or about the Leased Premises or
the Project caused by the negligence or misconduct of Tenant, its agents,
employees, invitees, or of any other persons entering upon the Leased Premises
or the Project under express or implied invitation by Tenant. Tenant agrees to
indemnify and hold Landlord harmless from any and all loss, attorney's fees,
expenses, or claims arising out of any such damage or injury.
22. QUIET ENJOYMENT: Landlord warrants that it has full right to execute
and to perform this Lease and to grant the estate demised and that Tenant, upon
payment of the required Rent and performing the covenants and agreements
contained in this Lease, shall peaceably and quietly have, hold, and enjoy the
Leased Premises during the full term of this Lease, including any extensions or
renewals thereof.
23. LANDLORD'S RIGHT OF ENTRY: Landlord shall have the right, at all
reasonable hours, to enter the Leased Premises for the following reasons:
inspection, cleaning or making repairs, making such alterations or additions as
Landlord may deem necessary or desirable; installation of utility lines
servicing the Leased Premises or any other space in the Building; determining
Tenant's use of the Leased Premises, or for determining if any act of default
under this Lease has occurred. Landlord shall give twenty-four (24) hours
written notice to Tenant prior to such entry, except in cases of emergency when
Landlord may enter the Leased Premises at any time and without prior notice.
During the period that is six (6) months prior to the end of the Lease term,
Landlord and Landlord's agents and representatives shall have the right to enter
the Leased Premises at any reasonable time during business hours, without
notice, for the purpose of showing the Leased Premises and shall have the right
to erect on the Leased Premises a suitable sign indicating the Leased Premises
are available for lease. Tenant shall give written notice to Landlord at least
thirty (30) days prior to vacating the Leased Premises and shall arrange to meet
with Landlord for a joint inspection of the Leased Premises prior to vacating.
In the event of Tenant's failure to give such notice or arrange such joint
inspection, Landlord's inspection at or after Tenant's vacating the Leased
Premises shall be conclusively deemed correct for purposes of determining
Tenant's responsibility for repairs and restoration.
24. ASSIGNMENT OF LANDLORD'S INTEREST IN LEASE: Landlord shall have the
right to transfer and assign, in whole or in part, its rights and obligations
with respect to the Project and premises that are the subject of this Lease,
including Tenant's security deposit. In such event, Landlord shall be released
from any further obligation under this Lease and Tenant agrees to look solely to
Landlord's successor for the performance of such obligations.
25. LANDLORD'S LIEN: In addition to any statutory lien for Rent in
Landlord's favor. Landlord shall have and Tenant hereby grants to landlord a
continuing security interest for all Rentals and other sums of money becoming
due under this Lease from Tenant, upon all goods, wares, equipment, fixtures,
furniture, inventory, accounts, contract rights, and other personal property of
Tenant situated on or arising from the Leased Premises. Such property shall not
be removed without the consent of Landlord, which consent may be withheld by
Landlord without cause so long as any of Tenant's duties or obligations
hereunder have not been fully performed. In the event of a default under this
Lease, Landlord shall have, in addition to any other remedies provided in this
Lease or by law, all rights and remedies under the Texas Uniform Commercial
Code, including without limitation the right to sell the property described in
the Paragraph at public or private sale upon five (5) days notice to Tenant.
Tenant hereby agrees to execute such financing statements and other instruments
necessary or desirable in Landlord's discretion to perfect the security interest
hereby created. The express contractual lien herein granted, is in addition and
supplementary to any statutory lien for Rent. Landlord agrees to subordinate its
----------------------------------
lien hereunder to Tenant's primary Lender.
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26. DEFAULT BY TENANT: The following shall be events of default by Tenant
under this Lease:
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(a) Tenant shall fail to pay when due any installment of Rent or other
payment required pursuant to this Lease;
(b) Tenant shall abandon or vacate any substantial portion of the
Leased Premises, whether or not Tenant is in default of the Rental payments due
under this Lease;
(c) Tenant shall fail to comply with any term, provision or covenant
of this Lease, other than the defaults listed in this paragraph 26, and the
failure is not cured within ten (10) days after written notice thereof to
Tenant;
(d) Tenant shall file a petition or be adjudged a debtor or bankrupt
or insolvent under the National Bankruptcy Code, as amended, or any similar law
or statute of the United States or any state; or a receiver or trustee shall be
appointed for all or substantially all of the assets of Tenant; or Tenant shall
make a transfer in fraud of creditors or shall make an assignment for the
benefit of creditors;
(e) Tenant shall do or permit to be done any act which results in a
lien being filed against the Leased Premises.
27. REMEDIES FOR TENANT'S DEFAULT: Upon the occurrence of any event of
default set forth in this Lease, Landlord shall have the option to pursue any
one or more of the following remedies without any prior notice or demand;
(a) Landlord may terminate this Lease, in which event Tenant shall
immediately surrender the Leased Premises to Landlord, and if Tenant fails to do
so, Landlord may, without prejudice to any other remedy which it may have, enter
upon and take possession of the Leased Premises, and expel or remove Tenant and
any other person who may be occupying all or any part of the Leased Premises.
Landlord shall not be liable for prosecution or any claim for damages as a
result of such actions. Tenant agrees to pay on demand the amount of all losses,
costs, expenses, deficiencies, and damages, including, without limitation,
reconfiguration expenses, rental concessions and other inducements to new
tenants, advertising expenses and broker's commissions, which Landlord may incur
or suffer by reason of Tenant's default or the termination of the Lease under
this subparagraph, whether through inability to relet the Leased Premises on
satisfactory terms or otherwise. Tenant acknowledges that its obligation to pay
Base Rent and all additional Rent hereunder is not only compensation for use of
the Leased Premises but also compensation for sums already expended and/or being
expended by Landlord with respect to its obligations hereunder and with respect
to the Leased Premises, and Tenant acknowledges that Tenant's default in timely
payment of all sums due hereunder shall constitute significant financial loss to
Landlord. Tenant further acknowledges that any failure to pay any sum due
hereunder shall evidence Tenant's inability to meet its debts as they become
due. In such event, in addition to Landlord's other remedies hereunder, Landlord
shall be entitled to accelerate all Base Rental remaining unpaid hereunder, the
entirety of which shall, at the option of Landlord be immediately due and
payable.
(b) Landlord may enter upon and take possession of the Leased Premises
and expel or remove Tenant and any other person who may be occupying all or any
part of the Leased Premises (without being liable for prosecution or any claim
for damages therefor) and relet the Leased Premises on behalf of Tenant and
receive directly the rent of the reletting. Tenant agrees to pay Landlord on
demand any deficiency that may arise by reason of any reletting of the Leased
Premises and to reimburse Landlord on demand for any losses, costs, and
expenses, including without limitation, reconfiguration expenses, rental
concessions and other inducements to new tenants, advertising costs or broker's
commissions, which Landlord may incur or suffer as a result of Tenant's default
or in reletting the Leased Premises. Tenant further agrees to reimburse Landlord
for any expenditures made by it for remodeling or repairs necessary in order to
relet the Leased Premises. In the event Landlord is successful in reletting the
Leased Premises at a rental in excess of that agreed to be paid by Tenant
pursuant to this Lease, Landlord and Tenant agree that Tenant shall not be
entitled, under any circumstances, to such excess rental, and Tenant does hereby
specifically waive any claim to such excess rental.
(c) Landlord may enter upon the Leased Premises (without being liable
for prosecution or any claim for damages therefor) and do whatever Tenant is
obligated to do under the terms of this Lease. Tenant agrees to reimburse
Landlord on demand for any losses, costs and expenses which Landlord may incur
in effecting compliance with Tenant's obligations under this Lease. Tenant
further agrees that Landlord shall not be Liable for any damages resulting to
Tenant from effecting compliance with Tenant's obligations under this
subparagraph, whether caused by the negligence of Landlord or otherwise.
(d) Landlord may pursue any remedy provided at law or in equity.
(e) Landlord shall have no duty to relet the Premises, and the failure
of Landlord to do so shall not release or affect Tenant's Liability for Rentals
and other charges due hereunder or for damages.
(f) No re-entry or reletting of the Premises or any filing or service
of an unlawful detainer action or similar action shall be construed as an
election by Landlord to terminate Tenant's right to possession under this Lease
unless a written notice of such intention is given by Landlord to Tenant.
Notwithstanding any such reletting without termination. Landlord may at any time
thereafter elect to terminate this Lease and Tenant's right to possession
hereunder.
28. TERMINATION OF OPTIONS: If there exist any options or special rights
which Landlord may have granted Tenant under this Lease including, but not
limited to, options or rights regarding extensions of the Lease term, expansion
of the Leased Premises, or acquisition of any other interest in the Leased
Premises or the Building, then all such options and rights are independent of
the leasehold estate hereby granted to Tenant by Landlord. Landlord and Tenant
agree and acknowledge that the negotiated consideration for any such options or
special rights is Tenant's entry into this Lease and that no portion of any sums
due and payable by Tenant to Landlord hereunder is attributable thereto. In
addition to, and not in lieu of, the above remedies of Landlord for Tenant's
default, any and all such options or special rights shall be automatically
terminated upon the occurrence of the following events:
(a) Tenant shall have failed to pay when due any installment of Rent
or other sums payable under this Lease for any three (3) consecutive months
during the Lease term or any renewal or extension thereof, or for any five (5)
months during the Lease term or any renewal or extension thereof, whether or not
said defaults are cured by Tenant; or
(b) Tenant shall have received two (2) or more notices of default
under Paragraph 26(c) above with respect to any other covenant of this Lease,
whether or not such default(s) is/are cured; or
(c) Tenant shall have committed or suffered to exist any other event
of default described under Paragraph 26 above, whether or not such default is
cured by Tenant.
29. WAIVER OF DEFAULT OR REMEDY: Failure of Landlord to declare a default
immediately upon its occurrence, or delay in taking any action in connection
with an event of default, shall not be waiver of the
7
default. Landlord shall have the right to declare the default at any time and
take such action as is lawful or authorized under this Lease. Pursuit of any one
or more of the remedies set forth in Paragraphs 27 or 28 above shall not
preclude pursuit of any one or more of the other remedies provided therein or
elsewhere in this Lease provided by law, nor shall pursuit of any remedy be a
forfeiture or waiver of any Rent or damages accruing to Landlord by reason of
the violation of any of the terms of this Lease. Failure by Landlord to enforce
one or more of its remedies upon an event of default shall not be construed as a
waiver of the default or of any other violation or breach of any of the terms
contained in this Lease.
30. ATTORNEY'S FEES: In the event any litigation arises hereunder, it is
specifically stipulated that this Lease shall be interpreted and construed
according to the laws of the State in which the Leased Premises are located.
Further, the prevailing party in any such litigation between the parties shall
be entitled to recover, as a part of its judgement, reasonable attorney's fees.
31. HOLDING OVER: Tenant will, at the termination of this Lease by lapse of
time or otherwise, surrender immediate possession to Landlord. If Landlord
agrees in writing that Tenant may hold over after the expiration or termination
of this Lease and if the parties do not otherwise agree, the hold over tenancy
shall be subject to termination by Landlord at any time upon not less than five
(5) days advance written notice, or by Tenant at any time upon not less than
thirty (30) days advance written notice. Further, all of the terms and
provisions of this Lease shall be applicable during the hold over period, except
that Tenant shall pay Landlord from time to time upon demand, as Base Rent for
the period of any hold over, an amount equal to one and one-half times (1-1/2)
the Base Rent in effect on the termination date, computed on a daily basis for
each day of the hold over period, plus all additional rental and other sums due
hereunder. If Tenant shall fail immediately to surrender possession of the
Leased Premises to Landlord upon termination of this Lease, by lapse of time or
otherwise, and Landlord has not agreed to such continued possession as above
provided, then, until Landlord can dispossess Tenant under the terms hereof or
otherwise, Tenant shall pay Landlord from time to time upon demand, as Base Rent
for the period of any such holdover, an amount equal to twice the Base Rent in
effect on the termination date, computed on a daily basis for each day of the
hold over period, plus all additional rental and other sums due hereunder. No
holding over by Tenant, whether with or without consent of Landlord, shall
operate to extend this Lease except as otherwise expressly agreed by the
parties. The preceding provisions of this Paragraph shall not be construed as
Landlord's consent for Tenant to hold over.
32. RIGHTS OF MORTGAGEE: Tenant accepts this Lease subject and subordinate
to any recorded mortgage, deed of trust or other lien presently existing or
hereafter to exist with respect to the Leased Premises. Landlord is hereby
irrevocably vested with full power and authority to subordinate Tenant's
interest under this Lease to any mortgage, deed of trust or other lien hereafter
placed on the Leased Premises, and Tenant agrees upon demand to execute such
additional instruments subordinating this Lease as Landlord or the holder of any
such mortgage, deed of trust, or lien may require. If the interests of Landlord
under this Lease shall be transferred by reason of foreclosure or other
proceedings for enforcement of any mortgage on the Leased Premises. Tenant shall
be bound to the transferee (sometimes called the "Purchaser") under the terms
and conditions of this Lease for the balance of the remaining lease term,
including any extensions or renewals, with the same force and effect as if the
Purchaser were Landlord under this Lease. Tenant further agrees to attorn to the
Purchaser, including the mortgagee under any such mortgage if it be the
Purchaser, as its Landlord. Such attornment shall be effective without the
execution of any further instruments upon the Purchaser succeeding to the
interest of Landlord under this Lease. The respective rights and obligations of
Tenant and the Purchaser upon the attornment, to the extent of the then
remaining balance of the term of this Lease, and any extensions and renewals,
shall be and are the same as those set forth in this Lease. Each such holder of
any mortgage, deed of trust, or lien, and each such Purchaser, shall be a
third-party beneficiary of the provisions of this Paragraph.
33. ESTOPPEL CERTIFICATES: Tenant agrees to furnish within ten (10) days,
from time to time, upon request of Landlord or Landlord's mortgagee, a statement
certifying that Tenant is in possession of the Leased Premises; the Leased
Premises are acceptable; the Lease is in full force and effect; the Lease is
unmodified; Tenant claims no present charge, lien, or claim of offset against
Rent; the Rent is paid for the current month, but is not paid and will not be
paid for more than one month in advance; there is no existing default by reason
of some act or omission by Landlord; and such other matters as may be reasonably
required by Landlord or Landlord's mortgagee.
34. SUCCESSORS: This Lease shall be binding upon and inure to the benefit
of Landlord and Tenant and their respective heirs, personal representatives,
successors and assigns. It is hereby covenanted and agreed that should
Landlord's interest in the Leased Premises cease to exist for any reason during
the term of the Lease, then notwithstanding the happening of such event this
Lease shall nevertheless remain unimpaired and in full force and effect and
Tenant hereunder agrees to attorn to the then owner of the Leased Premises.
35. REAL ESTATE COMMISSION: Tenant represents and warrants that it has
dealt with no broker, agent, or other person in connection with this transaction
and that no other broker, agent, or other person brought about this transaction
other than The Weitzman Group and JSC Realty Services, Inc.; and Tenant agrees
------------------------------------------------
to indemnify and hold Landlord harmless from and against any claims by any other
broker, agent, or other person claiming a commission or other form of
compensation by virtue of having dealt with Tenant with regard to this leasing
transaction. The provisions of this paragraph shall survive the termination of
this Lease.
36. EXPANSION: If during the term of this Lease, Tenant occupies, under a
new written Lease with Landlord, space of a size substantially larger than the
present Leased Premises within any development owned by Landlord, this Lease
shall be terminated upon execution of the Lease for such substitute space.
Notwithstanding the above-stated, Tenant shall remain obligated to pay for any
Rents or other sums due Landlord as a result of Tenant's tenancy hereunder, and
such obligation shall survive the termination of this Lease pursuant to this
Paragraph 36.
37. MECHANIC'S LIENS: Tenant shall have no authority, express or implied,
to create or place any lien or encumbrance of any kind or nature whatsoever
upon, or in any manner to bind, the interest of Landlord in the Leased Premises
or to charge the Rentals payable hereunder for any claim in favor of any person
dealing with Tenant, including those who may furnish materials or perform labor
for any construction or repairs. Each such claim shall affect and each such lien
shall attach to, if at all, only the leasehold interest granted to Tenant by
this Lease. Tenant covenants and agrees that it will pay or cause to be paid all
sums legally due and payable by it on account of any labor performed or
materials furnished in connection with any work performed on the Leased Premises
on which any lien is or can be validly and legally asserted against its
leasehold interest in the Leased Premises or the improvements thereon. Tenant
further agrees to save and hold Landlord harmless from any and all loss, cost,
or expense based on or arising out of asserted claims or liens against the
leasehold estate or against the right, title and interest of the Landlord in the
Leased Premises or under the terms of this Lease. Under no circumstances shall
Tenant be or hold itself out to be the agent or representative of Landlord with
respect to any alteration of the Leased Premises whether or not consented to or
approved by Landlord hereunder.
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38. ENTIRE AGREEMENT, AND LIMITATION OF WARRANTIES: It is expressly agreed
by Tenant, as a material consideration for the execution of this Lease, that
this Lease is the entire agreement of the parties and that there are and were no
verbal representations, warranties, understandings, stipulations, agreements, or
promises pertaining to this Lease not incorporated in this Lease. Landlord and
Tenant expressly agree that there are and shall be no implied warranties of
merchantability or fitness or of any other kind arising out of this Lease and
that Tenant's acceptance of the Leased Premises shall be "as is". It is likewise
agreed that this Lease may not be altered, waived, amended, or extended except
by an instrument in writing signed by both Landlord and Tenant. Not in
limitation upon the foregoing, Landlord agrees that to the extent assignable,
all warranties, if any shall exist, from contractors or suppliers with respect
to the improvements to the Leased Premises hereunder are hereby assigned to
Tenant.
39. MISCELLANEOUS:
(a) Words of any gender used in this Lease shall be held and construed
to include any other gender; and words in the singular number shall be held to
include the plural, unless the context otherwise requires.
(b) Each party agrees to furnish to the other, promptly upon demand, a
corporate resolution, proof of due authorization by partners, or other
appropriate documentation evidencing the due authorization and power of such
party to enter into this Lease.
(c) The captions inserted in this lease are for convenience only and
in no way define, limit, or otherwise describe the scope or intent of this Lease
or any provision hereof, or in any way affect the interpretation of this Lease.
(d) If any clause or provision of this Lease is illegal, invalid, or
unenforceable under present or future laws effective during the term of this
Lease, then and in that event, it is the intention of the parties hereto that
the remainder of this Lease shall not be affected thereby; and it is also the
intention of the parties to this Lease that in lieu of each clause or provision
of this Lease that is illegal, invalid, or unenforceable there be added as a
part of this Lease a clause as similar in terms to such illegal, invalid, or
unenforceable clause or provision as may be possible and be legal, valid, and
enforceable.
(e) Because the Leased Premises are on the open market and are
presently being shown, this Lease shall be treated as an offer to lease only.
Unless and until this Lease is accepted by Landlord and Tenant in writing and a
fully executed copy delivered to both parties, this offer is subject to
withdrawal or non-acceptance by Landlord and the Leased Premises may be leased
to another party or used for another purpose by Landlord without notice.
(f) All references in this Lease to "the date hereof" or similar
references shall be deemed to refer to the last date, in point of time, on which
all parties hereto have executed this Lease.
(g) If the Commencement Date shall be determined under Paragraphs 4(b)
or (c) of this Lease, Landlord and Tenant shall enter into an agreement in
recordable form setting forth the Commencement Date and Termination Date of the
Lease term.
(h) In the event that Tenant shall fail to perform any duty or
obligation hereunder, whether maintenance, repair or replacement of the Leased
Premises, maintenance of insurance, or otherwise, then Landlord may, but shall
in no event be obligated to, without notice of any kind, take such actions as
Landlord deems necessary or appropriate to remedy such Tenant failure, and any
sums expended by Landlord and fair and just compensation for the time and effort
of Landlord shall be deemed additional Rental hereunder due and payable by
Tenant on demand.
(i) If Tenant shall fail to pay, when the same is due and payable, any
Rent, any additional Rent, or any other sum due hereunder, such unpaid amount
shall bear interest from the due date thereof to the date of payment at the
highest non-usurious rate permitted by applicable law.
(j) Landlord does not in any way or for any purpose become a partner
of Tenant in the conduct of its business or otherwise, nor a member of a joint
venture with Tenant.
(k) Tenant shall not record this Lease without the prior written
consent of Landlord. However, upon the request of either party hereto, the other
party shall join in the execution of a memorandum or so-called "short form" of
this Lease for the purposes of recordation.
(l) Time is of the essence in the performance of all the covenants,
conditions, and agreements contained in this Lease.
(m) Any duty, obligation, or debt and any right or remedy arising
hereunder and not otherwise consummated and/or extinguished by the express terms
hereof at or as of the time of termination of this Lease, whether at the end of
the term hereof or otherwise, shall survive such termination as continuing
duties, obligations, and debts of the obligated party to the other or continuing
rights and remedies of the benefitted party against the other.
(n) This Agreement may be executed in one or more counterparts, each
of which counterparts shall for all purposes be deemed to be an original; but
all such counterparts together shall constitute but one instrument.
(o) Attached hereto, marked Exhibit "A" through Exhibit "E", are
-
certain exhibits to this Lease all of which are hereby incorporated herein by
reference.
(p) Tenant shall be allowed early occupancy of the Leased Premises
upon full Lease execution by Landlord and Tenant for the purpose of move in set
up. All terms and conditions of the Lease shall be in full force and effect upon
Tenant taking occupancy with the exception of Base rent. Base Rent shall begin
on the Commencement Date as stated in Paragraph 4.
40. NOTICE:
(a) All Rent and other payments required to be made by Tenant shall be
payable to Landlord at the address set forth below or any other address Landlord
may specify from time to time by written notice delivered to Tenant.
(b) All payments, if any, required to be made by Landlord to Tenant
shall be payable to Tenant at the address set forth below or at any other
address within the United States as Tenant may specify from time to time by
written notice.
(c) Any notice or document required or permitted to be delivered by
this Lease shall be deemed to be delivered (whether or not actually received)
when deposited in the United States Mail, postage prepaid,
9
certified mail, or return receipt requested, addressed to the parties at the
respective addresses set out below or such other address as hereinafter
specified by notice given in accordance with this paragraph.
LANDLORD: TENANT:
Valley View Tech, Inc. Monitronics International, Inc.
EXECUTED by Landlord and Tenant on the date below stated as their respective
Dates of Execution.
LANDLORD: TENANT:
Valley View Tech, Inc. Monitronics International, Inc.
c/o Madison Group 2300 Valley View Lane, Suite 230
6116 North Central Expressway Farmers Branch, TX
Suite 901
Dallas, TX 75206-5130
214-739-2442
By: /s/ John D. Gourley By: /s/ James R. Hull
---------------------------- ----------------------------
John D. Gourley James R. Hull
Its: Vice President Its: Chief Executive Officer
Date: 6-22-98 Date: 6/22/98
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EXHIBIT "A"
LEGAL DESCRIPTION
-----------------
NOT AVAILABLE AT THIS TIME
11
EXHIBIT "B"
LEASEHOLD IMPROVEMENTS
----------------------
Tenant accepts premises in its "As Is" condition.
Leasehold Improvements: Beginning upon full lease execution and provided Tenant
is not in default of any term, condition or covenant in the Lease, Landlord will
provide a ten thousand and no/100 dollars ($10,000.00) construction allowance
for interior modifications to the Tenant's Leased Premises. Such construction
allowance will be based on floor plans approved in writing by Landlord. Tenant
will provide Landlord receipts for the ten thousand dollars no later than August
31, 1998, all at one time, along with full lien waiver releases from each
contractor on the job, and Landlord will reimburse Tenant in one (1) lump sum
payment within thirty (30) days upon receipt of same.
Tenant at its expenses is responsible for obtaining a Certificate of Occupancy.
[MAP]
[MAP]
No warranty or representative, expressed or implied, is made as to the accuracy
of information contained herein and same is submitted subject to errors,
omissions, change of price or other conditions, or withdrawal without notice.
Dimensions shown on drawing are approximate. Purchaser should verify
measurements if and where room dimensions are critical.
12
EXHIBIT "C"
RENEWAL OPTION
--------------
Provided that at the end of the primary term of this Lease, Tenant not being in
default of any term, condition or covenant contained in this Lease, Tenant (but
not any assignee or sublessee) shall have the right and option to renew this
Lease by written notice to Landlord (by registered mail, return receipt
requested) no later than one hundred eighty (180) days prior to the expiration
of the primary term, for the additional term of thirty-six (36) months, under
the same terms, conditions and covenants contained herein except:
1. Tenant shall have no further renewal options unless expressly granted by
Landlord in writing; and
2. The Base Rental for the Renewal term shall be equal to prevailing rental
rates for properties of equivalent quality, size, utility and location;
however, in no event is the Landlord obligated to renew lease for subject
space at less than a Base Rate of $8.10 p.s.f. with Tenant paying all
----
pro-rata share of increases over the expense stop as set forth in Paragraph
#6 of the Lease.
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EXHIBIT "D"
RULES AND REGULATIONS
---------------------
The following Rules and Regulations are prescribed by Landlord in
order to provide and maintain, to the best of Landlord's ability, orderly, clean
and desirable Leased Premises, building and parking facilities for the tenants
therein and to regulate conduct in and use of Leased Premises, the building and
parking facilities in such a manner as to minimize interference by others in the
proper use of Leased Premises by Tenant. In the following Rules and Regulations,
all references to Tenant include not only the Tenant, but, also, Tenant's
agents, servants, employees, invitees, licensees, visitors, assignees, and/or
sublessees:
1. Tenant shall not block or obstruct any of the entries, passages, doors,
hallways, or stairways of building or parking area, or place, empty, or throw
any rubbish, litter, trash, or material of any nature into such areas, or permit
such areas to be used at any time except for ingress or egress of Tenants.
2. Landlord will not be responsible for lost or stolen personal property,
equipment, money, or any article taken from the Leased Premises, building, or
parking facilities regardless of how or when loss occurs.
3. The plumbing facilities shall not be used for any other purpose than that for
which they are constructed, and no foreign substance of any kind shall be placed
therein, and the expense of any breakage, stoppage, or damage resulting from a
violation of this provision shall be borne by Tenant.
4. Tenant shall permit Landlord, during the six (6) months prior to the
termination of this lease to show Leased Premises during business or
non-business hours to prospective lessees and to advertise Leased Premises for
rent.
5. Any additional keys required by Tenant during the term of this lease shall be
requested from Landlord and shall be paid for by Tenant upon delivery of keys to
premises. In the event new locks are requested by Tenant, then all costs
associated with such request (including hardware, installation and keys) shall
be paid by Tenant.
6. The common parking facilities are available for use by any and all Tenants.
Landlord reserves the right to assign or allocate parking in the event of
conflicts, abuse or improper use of these common parking facilities. It is
generally understood that any Tenant should utilize only those parking spaces
immediately adjacent to that Tenant's specific Leased Premises. Tenant
------
acknowledges that its pro rata share of the parking is 20 unreserved parking
- ----------------------------------------------------------------------------
spaces (Twelve (12) parking spaces in the front of the Leased Premises and eight
- --------------------------------------------------------------------------------
(8) parking spaces in the rear of the Leased Premises). Tenant agrees not to
- ----------------------------------------------------------------------------
violate its' pro rata share of the parking.
- ------------------------------------------
Proper use of the common parking facilities is deemed to be that use
which is occasioned by the normal in and out traffic required by the Tenant, in
the normal course of the Tenant's business operations.
Vehicles that are abandoned, disabled, have expired registration
stickers, obstructing any means of ingress or egress to any Leased Premises, or
in any way a general nuisance or hazard are subject to removal, without notice
by Landlord's designated wrecker and towing service. All costs associated with
such removal shall be at the Tenant's/Vehicle Owner's expense.
7. Tenant shall not use the building, Leased Premises, or parking facilities for
housing, lodging, or sleeping purposes without express consent of Landlord in
writing.
8. No birds or animals shall be brought into or kept in or about the Premises or
any other part of the Building.
9. No sign, placard, picture, advertisement, name or notice shall be inscribed,
displayed or printed or affixed on or to any part of the outside of the Building
without the written consent of Landlord. Landlord shall have the right to remove
any such sign, placard, picture, advertisement, name or notice without notice
to, and at the expense of Tenant.
Tenant shall not place anything, or allow anything to be placed, near
the glass of any window, door, partition, or wall which may appear unsightly
from outside the Leased Premises; Tenant shall not, without prior written
consent of Landlord, cause or otherwise sunscreen any window.
10. Tenant shall not use or keep in the Leased Premises or in the Building, any
kerosene, gasoline or inflammable or combustible fluid or material, or use any
method of heating or air conditioning other than that supplied by Landlord.
11. Tenant shall not use, keep or permit to be used or kept, any foul or noxious
gas or substance in the Leased Premises, or permit or suffer the Leased Premises
to be occupied or used in a manner offensive or objectionable to the Landlord or
other occupant of the Building by reason of notice, odors, and/or vibrations, or
interfere in any way with other tenants or those having business therein, nor
shall any animals or birds brought in or kept in or about the Leased Premises or
the Building.
12. The following acts shall not be allowed or suffered to be done or conditions
to exist upon the Leased Premises or any part thereof:
a. Any violation of any federal, state, or municipal statute or
ordinance or any regulation, order, or directive, of a
governmental agency, as such statutes, ordinances, regulation,
orders, or directives now exist or may hereafter provide,
concerning the use and safety of the Leased Premises.
b. Any violation of any certificate of occupancy covering or
affecting the use of the Leased Premises or any part hereof.
c. Any public or private nuisance.
d. The display or distribution of drug paraphernalia, or sexual
paraphernalia, except as the same may be legally dispensed by a
physician or surgeon, dentist or pharmacist, duly licensed to
practice such profession.
e. The sale or dispensing of alcoholic beverages, except as the same
may be incidental to the permitted use of the Leased Premises, as
provided in the Lease Agreement.
f. The sale or dispensing of alcoholic beverages on all other
portions of the real property conveyed hereunder, except as the
same shall be only incidental to any business, including
restaurants, hotels or delicatessens which may be hereafter
located on said other portions of the real property hereby
conveyed.
g. The showing, displaying, viewing, renting or selling of movie
films which would be classified rated as "X-rated" under present
standards or criteria for such classification and rating; and
provided, that insofar as movie films, whether present or future
are shown, displayed, viewed, rented, or sold upon the said real
property, preference shall be given to those films which meet the
standards and criteria presently existing for classification and
rating as "G rated" or "PG rated".
h. Gambling.
i. The establishment or maintenance of a bawdy house, bar, nightclub
or tavern.
j. Any other act or condition which shall be lewd, obscene or
licentious.
EXHIBIT "E"
HAZARDOUS SUBSTANCES, TENANT'S COMPLIANCE WITH APPLICABLE REQUIREMENTS
----------------------------------------------------------------------
AND COMPLIANCE WITH LAW
-----------------------
1.0 Hazardous Substances
(a) Reportable Uses Require Consent. The term "Hazardous Substance" as
used in this Lease shall mean any product, substance, chemical, material or
waste whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Leased
Premises, is either; (i) potentially injurious to the public health, safety or
welfare, the environment, or the Leased Premises; (ii) regulated or monitored by
any governmental authority; or (iii) a basis for potential liability of Landlord
to any governmental agency or third party under any applicable statute or common
law theory. Hazardous substance shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, crude oil or any products or by products
thereof, Tenant shall not engage in any activity in or about the Leased Premises
which constitutes a Reportable Use (as hereinafter defined) of Hazardous
substances without the express prior written consent of Landlord and compliance
in a timely manner (at Tenant's sole cost and expense) with all Applicable
Requirements (as defined in Paragraph 2.0). "Reportable Use" shall mean (i) the
installation or use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of Hazardous
Substance that requires a permit from, or with respect to which a report,
notice, registration or business plan is required to be filed with any
governmental authority, and (iii) the presence in, on or about the Leased
Premises of a Hazardous Substance with respect to which any Applicable Laws
require that a notice be given to persons entering or occupying the Leased
Premises or neighboring properties. Notwithstanding the foregoing, Tenant may,
without Landlord's prior consent, but upon notice to Landlord and in compliance
with all Applicable Requirements, use any ordinary and customary materials
reasonably required to be used by Tenant in the normal course of the permitted
use (as specified in paragraph 11), so long as such use is not a Reportable Use
and does not expose the Leased Premises or neighboring properties to any
meaningful risk of contamination or damage or expose Landlord to any liability
therefor. In addition, Landlord may (but without any obligation to do so)
condition its consent to any Reportable Use of any Hazardous Substance by Tenant
upon Tenant's giving Landlord such additional assurances as Landlord, in its
reasonable discretion, deems necessary to protect itself, the public, the Leased
Premises and the environment against damage, contamination or injury and/or
liability therefor, including but no limited to the installation (and, at
Landlord's option, removal on or before Lease expiration or earlier termination)
of reasonably necessary protective modifications to the Leased Premises (such as
concrete encasements) and/or the deposit of an additional Security Deposit under
Paragraph 5 hereof.
(b) Duty to inform Lessor, if Tenant knows or had reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or
about the Leased Premises or the Building, other than as previously consented to
by Landlord, Tenant shall immediately give Landlord written notice thereof,
together with a copy of any statement, report, notice, registration, application
permit, business plan, license, claim, action or proceeding given to or received
from, any governmental authority or private party concerning the presence,
spill, release, discharge of, or exposure to, such Hazardous Substance including
but not limited to all such documents as may be involved in any Reportable Use
involving the Leased Premises, Tenant shall not cause or permit any Hazardous
Substance to be spilled or released in, on, or under or about the Leased
Premises (including, without limitation, through the plumbing or sanitary sewer
system).
(c) Indemnification. Tenant shall indemnify, protect, defend and hold
Landlord, its agents, employees, lenders and ground Landlord, if any and the
Leased Premises, harmless from and against any and all damages, liabilities,
judgements, costs claims, liens, expenses, penalties, loss of permits and
attorneys' and consultants' fees arising out of or involving any Hazardous
Substance brought onto the Leased Premises by or for Tenant or by anyone under
Tenant's control. Tenant's obligations under this Paragraph 1.0(c) shall
include, but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Tenant, and the cost
of investigation (including consultant's and attorneys' fees and testing),
removal, remediation, restoration and/or abatement thereof, or of any
contamination therein involved and shall survive the expiration or earlier
termination of this Lease. No termination, cancellation or release agreement
entered into by Landlord and Tenant shall release Tenant from its obligations
under this Lease with respect to Hazardous Substances, unless specifically so
agreed by Landlord in writing at the time of such agreement.
2.0 Tenants' Compliance with Requirements. Tenant shall, at Tenant's sole cost
and expense, fully, diligently and in a timely manner, comply with all
"Applicable Requirements", which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau and the recommendations of Landlord's
engineers and/or consultants, relating in any manner to the manner to the Leased
Premises (including but not limited to matters pertaining to (i) industrial
hygiene, (ii) environmental conditions on, in, under or about the Leased
Premises, including soil and groundwater conditions and (iii) the use,
generation, manufacture, production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous Substance), now in
effect or which may hereafter come into effect, Tenant shall, within five (5)
days after receipt of Landlord's written request, provide Landlord with copies
of all documents and information, including but not limited to permits,
registration, manifests, applications, reports and certificates, evidencing
Tenant's compliance with any Applicable Requirements specified by Landlord, and
shall immediately upon receipt, notify Landlord in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, compliant or report pertaining to or involving failure by Tenant or the
Leased Premises to comply with any Applicable Requirements.
3.0 Inspection; Compliance with Law. Tenant, Landlord's agents, employees,
contractors and designated representative, and the holders of any mortgages,
deeds of trust or ground leases on the Leased Premises ("Lenders") shall have
the right to enter the Leased Premises at any time in the case of an emergency,
and otherwise at reasonable times, for the purpose of inspecting the condition
of the Leased Premises and for verifying compliance by Tenant with this Lease
and all Applicable Requirements (as defined in Paragraph 2.0) and Landlord shall
be entitled to employ experts and/or consultants in connection therewith to
advise Landlord with respect to Tenant's activities, including but not limited
to Tenant's installation, operation, use, monitoring, maintenance, or removal of
any Hazardous Substance on or from the Leased Premises. The costs and expenses
of any such inspections shall be paid by the party requesting same, unless a
Default or Breach of this Lease by the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent violation
or contamination, in such case, Tenant shall upon request reimburse Landlord or
Landlord's Lender, as the case may be, for the costs and expenses of such
inspections.
15