Exhibit
10.11
COMMERCIAL INDUSTRIAL LEASE
AGREEMENT
CSHV TEXAS INDUSTRIAL, LP,
LANDLORD
AND
SOUTHERN IMAGING, INC.,
TENANT
TABLE OF CONTENTS
Page No.
1.
PREMISES, TERM, INITIAL
IMPROVEMENTS, ACCEPTANCE OF PREMISES
2.
RENT AND SECURITY
DEPOSIT
3.
TAXES
4.
LANDLORD’S
MAINTENANCE AND REPAIR OBLIGATIONS
5.
TENANT’S MAINTENANCE
AND REPAIR OBLIGATIONS
6.
ALTERATIONS BY TENANT
7.
SIGNS
8.
UTILITIES
10.
SUBROGATION OF RIGHTS OF
RECOVERY
11.
CASUALTY DAMAGE
12.
LIABILITY, INDEMNIFICATION,
AND NEGLIGENCE
13.
USE; COMPLIANCE WITH LAWS;
PARKING
14.
INSPECTION, ACCESS AND
RIGHT OF ENTRY; NEW CONSTRUCTION
15.
ASSIGNMENT AND
SUBLETTING
16.
CONDEMNATION
17.
SURRENDER AND REDELIVERY OF
PREMISES; HOLDING OVER
18.
QUIET ENJOYMENT
19.
EVENTS OF DEFAULT
20.
REMEDIES
21.
LANDLORD’S DEFAULT
AND LIMITATIONS OF LIABILITY
22.
MORTGAGES
23.
ENCUMBRANCES
27.
LANDLORD’S LIEN
25.
NOTICES
26.
HAZARDOUS WASTE
24.
MISCELLANEOUS
28.
TENANT’S
ACKNOWLEDGEMENTS
EXHIBIT A
EXHIBIT B
EXHIBIT B-I
EXHIBIT C
EXHIBIT E
EXHIBIT F
1
LEASE AGREEMENT
This Lease Agreement (this “Lease”) is dated effective
as of June 30, 2005, by and between CSHV TEXAS INDUSTRIAL,
L.P., a Delaware limited partnership (“Landlord”),
and SOUTHERN IMAGING, INC. (“Tenant”).
BASIC LEASE TERMS
(A)
“Base Rent” shall mean the base rent
payable by Tenant during the Term, as follows:
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Months
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Approx. Base Rent/RSF
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Monthly Base Rent
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Commencement Date - Month 4
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$0.00 NNN
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$0.00*
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Month 05 - Month 12
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$4.18 NNN
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$4,847.06
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Month 13 — Month 24
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$4.45 NNN
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$5,160.15
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Month 25 — Month 36
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$5.00 NNN
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$5,797.92
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Month 37 — Month 48
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$5.25 NNN
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$6,087.81
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Month 49 — Month 66
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$5.50 NNN
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$6,377.71
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*
Such abatement shall apply solely to payment of the monthly
installments of Base Rent and Operating Expenses and shall not be
applicable to separately metered utilities for the premises.
Landlord and Tenant agree that the abatement of rental is
conditional. In the event that Tenant defaults under the
terms and conditions of the Lease beyond any applicable notice and
cure period, all conditionally abated rental and other payments
shall become fully liquidated and immediately due and payable
(without limitation and in addition to any and all other rights and
remedies available to Landlord provided herein or at law and in
equity).
(B)
“Broker” shall mean:
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Landlord’s Broker-
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Holt Lunsford Commercial
5055 Keller Springs Road, Ste. 300
Addison, Texas 75001
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Tenant’s Broker-
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Robert Lynn Company
3030 LBJ Freeway, Ste. 1400
Dallas, Texas 75234
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(C)
“Building” shall mean that certain
building and other improvements having a street address of 2720
Commodore Drive, Carrollton, Texas 75007, and commonly referred to
as Frankford Trade Center #9.
(D)
“Commencement Date” shall mean the
later of September 1, 2005, or the Date of Substantial Completion,
as set forth in the Work Letter, attached hereto as Exhibit
B and incorporated herein by this reference.
(E)
“Expiration Date” shall mean the last
day of the sixty-sixth (66th) full calendar month following
the Commencement Date.
(F)
“Land” shall mean that certain real
property on which the Building is situated.
(G)
“Landlord’s Notice Address” shall
mean:
CSHV
Texas Industrial, LP
c/o PRINCIPAL LIFE INSURANCE COMPANY
801 Grand Ave.
Des Moines, Iowa 50392-1370
Attn: Commercial Real Estate Equities
With a
copy to:
Holt Lunsford Commercial
5055 Keller Springs Road, Ste. 300
Addison, Texas 75001
(972) 241-8300
(972) 241-7955
(H)
“Parking Spaces” shall mean
Tenant’s Pro Rata Share of the parking spaces in the parking
facility, if any, from time to time associated with the Building.
No parking spaces shall be designated or reserved.
(I)
“Permitted Use” shall mean receiving,
storing, shipping and selling products, materials and merchandise
made or distributed by Tenant.
(J)
“Premises” shall-mean that space
indicated on the floor plan annexed hereto as Exhibit
A and commonly numbered as 2720 Commodore of the Building,
containing approximately 13,915 deemed net rentable square feet of
space.
(K)
“Proportionate Share” shall mean
15.34%, based on approximately 90,691 deemed net rentable square
feet of space within the Building. Current estimate of
Operating Expenses for calendar year 2005, subject to adjustment,
is $1.39 per square foot of space.
(L)
“Rent Payment Address” shall mean:
To be provided to Tenant by written notice.
(M)
“Security Deposit” shall mean Seven
Thousand Four Hundred Nine and Seventy-Four/100ths Dollars
($7,409.74).
(N)
“Tenant’s Notice Address” shall
mean:
The
Premises
With a
copy to:
N/A
(O)
“Term” shall mean the period commencing
on the Commencement Date and ending on the Expiration Date, being
sixty-six (66) months and any partial month.
(P)
Amount due on execution of this Lease:
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Item
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Amount
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First Installment of Base Rent
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$ 4,847.06
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First Installment of Operating Expenses
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$ 1,611.82
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Security Deposit
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$ 7,409.74
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Total
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$13,868.62
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2
1.
PREMISES, TERM, INITIAL, IMPROVEMENTS,
ACCEPTANCE OF PREMISES
1.1
Premises . Landlord leases to Tenant,
and Tenant leases from Landlord, the Premises, for the original
Term as set forth above, subject to the terms and conditions in
this Lease. “ Common Areas ” will
mean all areas, space, facilities, and equipment (whether or not
located within the Building) made available by Landlord for the
common and joint use of Landlord, Tenant, and others designated by
Landlord using or occupying space in the Building or on the Land to
the extent that the Common Areas are not expressly made a part of
the Premises, and are made available for the use of all tenants in
the Building. Landlord hereby grants Tenant a non-exclusive
right to use the Common Areas during the lease Term, subject to the
terms and conditions of this Lease.
1.2
Tenant’s Acceptance of Premises .
By occupying the Premises, Tenant accepts the Premises in its
“AS-IS, WHERE IS” with all faults condition as
of the date of Tenant’s occupancy, subject to completion of
punch-lists, if any, relating to Landlord’s Work, and
Landlord shall have no obligation to perform or pay for any repair
or other work, other than as set forth in this Lease.
2.
RENT AND SECURITY DEPOSIT.
2.1
Rent; No Right of Offset . The Base
Rent, the Additional Rent and all other payments and reimbursements
required to be made by Tenant under this Lease shall constitute
“ Rent .” Tenant shall make each payment of the
following items of Rent when due, without prior notice, demand,
deduction or offset.
2.2
Base Rent . The first monthly
installment of Base Rent, plus the other monthly charges set forth
in Section 2.3, shall be due on the date Tenant signs the Lease.
Monthly installments of Base Rent shall then be due on the
first day of each calendar month following the Commencement Date.
If the Term begins on a day other than the first day of a
month or ends on a day other than the last day of a month, the Base
Rent and Additional Rent for each partial month shall be
prorated.
2.3
Additional Rent . On the same day that
Base Rent is due, Tenant shall pay as “ Additional
Rent ” its Proportionate Share of all costs incurred
in managing, operating and maintaining the Land, Building and
Common Areas (collectively “ Operating Expenses
”). Tenant also shall pay as “ Additional
Rent ” its Proportionate Share of Taxes (defined in
Section 3) and all late fees incurred by Tenant.
2.4
Operating Expenses Inclusions .
Operating Expenses shall include all expenses and
disbursements of every kind which Landlord incurs, pays or becomes
obligated to pay in connection with the management, operation and
maintenance of the Building (including the associated Parking Areas
as herein defined) and Land including, but not limited to, the
following: (1) Taxes (defined below) and the cost of any tax
consultant employed to assist Landlord in determining the fair tax
valuation of the Building and Land; (2) the cost of all utilities
which are not billed separately to a tenant of the Building for
above-building standard utility consumption; (3) the cost of
insurance; (4) the cost of repairs and replacements; (5) property
management fees and expenses, (6) landscaping installation and
maintenance costs; (7) the cost of security services (if provided),
sewer services (if provided), and trash services (if provided); (8)
replacement reserves for capital items which reserve shall not
exceed five cent per rentable square foot of the Premises per
calendar year; (9) the cost of dues, assessments, and other charges
applicable to the Land payable to any property or community owner
association under restrictive covenants or deed restrictions to
which the Premises are subject; (10) the cost of any labor-saving
or energy-saving device or other equipment installed in the
Building or on the Land, amortized over a period together with an
amount equal to interest at an amortization rate on the unamortized
balance, which calculation shall be reasonably determined by
Landlord; (11) alterations, additions, and improvements made by
Landlord to comply with Law (defined below); and (12) wages and
salaries of personnel up to and including the level of Property
Manager, provided that the wages of employees not fully devoted to
the Building shall be equitably prorated by Landlord). There
shall be no duplication of costs for reimbursements in calculating
Operating Expenses.
For the purpose of determining Tenant’s
Proportionate Share of Operating Expenses,
“controllable” Operating Expenses shall not increase by
more than ten percent (10%) per year on a cumulative and compounded
basis (for example, if controllable Operating Expenses are $1.00 /
rsf in year one, then they shall not exceed $1.10 in year two,
$1.21 in year three, $1.33 in year four and so on). It is
understood and agreed that controllable Operating Expenses shall
not include trash removal, utility expenses, taxes, management fees
that are
3
based on a percentage of expenses or revenues, insurance premiums
and any other cost beyond the reasonable control of Landlord.
The terms and conditions of this paragraph shall not commence
until after the completion of the first full calendar year that the
a tenant has occupied the Building and shall be subject to the
gross-up provision set forth in Section 2.7 below.
2.5
Operating Expense Exclusions .
Operating Expenses shall not include the following: (1)
any loan costs for interest, amortization, or other payments on
loans to Landlord; (2) expenses incurred in leasing or procuring
tenants; (3) legal expenses other than those incurred for the
general benefit of the Building’s tenants; (4) allowances,
concessions, and other costs of renovating or otherwise improving
space for occupants of the Building or vacant space in the
Building, (5) federal income taxes imposed on or measured by the
income of Landlord from the operation of the Building; (6) rents
due under ground leases; (7) costs incurred in selling,
syndicating, financing, mortgaging, or hypothecating any of
Landlord’s interests in the Building; and (8) wages and
salaries of personnel above the level of Property Manager.
2.6
Operating Expense Calculation and Notices .
The initial monthly payments for Operating Expenses shall be
calculated by taking 1/12 of Landlord’s estimate of
Tenant’s Proportionate Share of Operating Expenses for a
particular calendar year (or any portion of a year as determined by
Landlord). The initial monthly payments are estimates only,
and shall be increased or decreased annually to reflect the
projected actual Operating Expenses for a particular year. If
Landlord fails to give Tenant notice of its estimate of
Tenant’s Proportionate Share of Operating Expenses in
accordance with this subsection for any calendar year, then Tenant
shall continue making Additional Rent payments in accordance with
the estimate for the previous calendar year until a new estimate is
provided by Landlord. If during any year Landlord determines
that, because of an unexpected increase in Operating Expenses or
other reasons, Landlord’s estimate of Operating Expenses was
too low, then Landlord shall have the right to give a new statement
of the estimated Proportionate Share of Operating Expenses due from
Tenant for the applicable calendar year or the balance of the
estimated amount and to bill Tenant for any deficiencies which have
accrued during the calendar year or any portion of the year, and
Tenant shall then make monthly payments based on the new statement.
Within a reasonable time after the end of each calendar year
and the Expiration Date, Landlord shall prepare and deliver to
Tenant a statement showing Tenant’s actual Proportionate
Share of Operating Expenses for the previous calendar year.
Unless Tenant makes written exception to any item within
thirty (30) days after Landlord furnishes its annual statement of
Tenant’s Additional Rent, the statement shall be considered
as final and accepted by Tenant. If Tenant’s total
monthly payments of its Proportionate Share for the applicable
calendar year are more than Tenant’s actual Proportionate
Share of Operating Expenses, then Landlord shall retain the excess
and credit the amount against Tenant’s future Additional Rent
payments. If Tenant’s total monthly payments of its
Proportionate Share of Operating Expenses for any year are less
than Tenant’s actual Proportionate Share of Operating
Expenses for that year, Tenant shall pay the difference to Landlord
within ten (10) days after Landlord’s request for
payment.
2.7
Grossed-Up Operating Expenses . In the
event that the Building is not fully occupied during any year, an
adjustment shall be only to those particular items of Operating
Expenses that vary with the level of occupancy in the Building, as
reasonably determined by Landlord, so that Tenant pays its
equitable share of such expenses. The parties acknowledge
that certain most Operating Expenses do not change regardless of
how much space in the Building is leased. For example, the
cost of landscaping or maintaining the roof does not vary with the
level occupancy and, accordingly, is not subject to this Section
2.7. Landlord shall not collect more from Tenant (and other
tenants) than the actual expenses incurred.
2.8
Security Deposit . Tenant shall
deposit the Security Deposit with Landlord on the date this Lease
is executed by Tenant, which shall be held by Landlord to secure
Tenant’s obligations under this Lease. The Security
Deposit is not an advance rental deposit or a measure of
Landlord’s damages for an Event of Default (defined below).
Landlord may use any portion of the Security Deposit to
satisfy Tenant’s unperformed obligations under this Lease, to
reimburse Landlord for performing any such obligations or to
compensate Landlord for its damages arising from Tenant’s
failure to perform its obligations, without prejudice to any of
Landlord’s other remedies. If so used, Tenant shall,
upon request pay Landlord an amount that will restore the Security
Deposit to its original amount. The Security Deposit shall be
Landlord’s property. Tenant shall not be entitled to
interest on any security deposit amount and Landlord may commingle
such Security Deposit with any other of its funds. The unused
portion of the Security Deposit will be returned to Tenant within
thirty (30) days following the expiration or sooner termination of
this Lease, provided that Tenant has vacated the Premises.
4
3.
TAXES
3.1
Real Property Taxes . The term “
Taxes ” shall include all taxes, assessments
and governmental charges that accrue against the Premises, the
Land, and the Building, whether federal, state, county, or
municipal, and whether imposed by taxing or management districts or
authorities presently existing or hereafter created. Landlord
shall pay the Taxes, and Tenant shall pay Landlord for Tenants
Proportionate Share of the Taxes. If, during the Term, there
is levied assessed or imposed on Landlord a capital levy or other
tax directly on the Rent; or a franchise tax, assessment, levy or
charge measured by or based, in whole or in pan, upon the Rent;
then all such taxes, assessments, levies or charges, or any pan so
measured or based, shall be included within the term
“Taxes.” If the Building is occupied by more than one
tenant and the cost of any improvements constructed in the Premises
for Tenant is disproportionately higher than the cost of
improvements constructed in the premises of other tenants of the
Building, then Landlord may require that Tenant pay the amount of
Taxes attributable to such improvements in addition to its
Proportionate Share of other Taxes. In determining whether
the cost of any improvements constructed in the Premises for Tenant
is disproportionately higher than the cost of improvements
constructed in the premises of other tenants of the Building,
Landlord will consider factors including, but not limited to, the
following: (1) percentage of office finish of the Premises,
(2) levels of office finish, (3) air conditioning, (4) parking, (5)
and other differing and distinguishing factors between the
improvements constructed in the Tenants Premises and the
improvements constructed in the premises of other tenants which
Landlord reasonably determines impact the assessed value of the
Taxes.
3.2
Personal Property Taxes . Tenant shall
before delinquency pay all taxes and assessments levied or assessed
against any personal property, trade fixtures or alterations placed
in or about the Premises; and upon Landlord’s request,
deliver to it receipts from the applicable taxing authority or
other evidence acceptable to Landlord to verify that the taxes have
been paid. If any such taxes are levied or assessed against
Landlord or its property, and (1) Landlord pays them or (2) the
assessed value of Landlord’s property is increased and
Landlord pays the increased taxes, then Tenant shall pay to
Landlord the amount of all such taxes within ten (10) days after
Landlord’s request for payment.
4.
LANDLORD’S MAINTENANCE AND REPAIR
OBLIGATIONS . Landlord shall maintain the structural
portions of the Building, the roof, the parking areas and the
common areas of the Building in good working order and condition,
and otherwise in compliance with applicable laws, subject to
Tenant’s maintenance obligations and further subject to
reimbursement of the cost of such maintenance in accordance with
Article 3 above. Landlord shall not be responsible for:
(1) any such maintenance (except routine maintenance) until
Tenant delivers to Landlord written notice of the need for
maintenance, (2) such alterations to the Building’s Structure
required by law because of Tenant’s use of the Premises (all
alterations shall be performed by Tenant), or (3) repairs to
interior columns of the Building located within the Premises.
The Building’s structure does not include skylights,
windows, glass or plate glass, doors, special storefronts or office
entries, all of which shall be maintained by Tenant. Except
for maintaining the Building’s structure, Landlord shall not
be required to maintain or repair at Landlord’s expense any
other portion of the Premises. LANDLORD’S LIABILITY
FOR ANY DEFECTS, REPAIRS, REPLACEMENT OR MAINTENANCE FOR WHICH
LANDLORD IS RESPONSIBLE UNDER THIS LEASE SHALL BE LIMITED TO THE
COST OF PERFORMING SUCH WORK.
5.
TENANT’S MAINTENANCE AND REPAIR
OBLIGATIONS
5.1
Tenant’s Maintenance of the Premises .
Tenant shall maintain all parts of the Premises except for
maintenance work for which Landlord is expressly responsible for
under Section 4 in good condition and shall promptly make all
necessary repairs and replacements to the Premises. All
repairs and replacements performed by or on behalf of Tenant shall
be performed in a good and workmanlike manner acceptable in all
respects to Landlord, and in accordance with Landlord’s
standards applicable to alterations or improvements performed by
Tenant.
5
5.2
Tenant’s Maintenance of the Common
Areas . Tenant shall repair and pay for any damage caused
by a Tenant Party (defined below) or caused by any failure by
Tenant to perform obligations under this Lease. Tenant and
any Tenant Party shall not do anything that would inhibit or
prevent other tenants’ use and enjoyment of the Common
Areas.
5.3
HVAC System . Landlord warrants that
the HVAC system servicing the Premises shall be in good working
order and condition as of the Commencement Date. Tenant shall
maintain, the heating, air conditioning, and ventilation equipment
and system and the hot water equipment (collectively the “
HVAC System ”) in good repair and condition and
in accordance with law and with the equipment manufacturers’
suggested operation/maintenance service program. Such
obligation shall include the replacement of all equipment necessary
to maintain the HVAC System servicing the Premises in good working
order. Tenant shall have the benefit of all third-patty
warranties applicable to the HVAC System. Within ten (10)
days after the Commencement Date, Tenant shall deliver to Landlord
copies of contracts entered into by Tenant for regularly scheduled
preventive maintenance and service contracts for the HVAC System,
each contract in a form and substance and with a contractor
reasonably acceptable to Landlord. At least fourteen (14)
days before the Expiration Date, the earlier termination of this
Lease, or the termination of Tenant’s right to possess the
Premises, Tenant shall deliver to Landlord a certificate from an
engineer reasonably acceptable to Landlord certifying that the HVAC
System is then in good repair and working order.
5.4
Landlord’s Optional Performance of
Tenant’s Obligations . Landlord has the right, but
not the obligation, to perform or provide any maintenance, repairs
or replacements to be performed by Tenant under Section 5 and to
provide any utility service that Tenant is required to provide
under Section 8 below, if Tenant fails to commence such cure within
ten (10) days’ following written notice from Landlord and
thereafter fails to diligently prosecute such cure to completion.
If exercises its rights under the preceding sentence, then
Tenant shall reimburse Landlord for all expenses and costs incurred
by Landlord in performing Tenant’s obligations plus an
additional five percent (5%) of such amount to compensate Landlord
for the overhead and administrative costs relating to the
performance of all such obligations.
6.
ALTERATIONS BY TENANT.
6.1
No Tenant Alterations . Tenant shall
not make any changes, modifications, alterations, additions or
improvements to the Premises, or install any heat or cold
generating equipment, or other equipment, machinery or devices in
the Premises or any other part of the Building, without the prior
written consent of Landlord, which consent shall not be
unreasonably withheld, conditioned or delayed.
6.2
Requirements for Landlord’s Written
Consent . Landlord shall not be required to notify Tenant
of whether it consents to any alterations until it has received
plans and specifications which are sufficiently detailed to allow
construction of the work depicted in them to be performed in a good
and workmanlike manner, and Landlord has had a reasonable
opportunity to review them. Without in any way limiting
Landlord’s rights to refuse its consent to Tenant’s
proposed alterations, if Landlord consents in writing to
Tenant’s proposed alterations, then Landlord’s consent
shall be conditioned without limitation on all of the following:
(1) Landlord’s approval of the contractor and such
contractor’s insurance coverage, (2) Landlord’s
supervision of the installation, (3) Landlords approval of final
plans and specifications for the alterations, (4) the appropriate
governmental agency, if any, having final and complete plans and
specifications for such work, and (5) Landlord’s
determination of whether any alterations to the Premises, or
installations of any equipment would affect any other tenant or
occupant, the Building’s systems, or the Building’s
structure. If the alterations will affect the
Building’s Structure, HVAC System, or mechanical, electrical,
or plumbing systems, then the plans and specifications must be
prepared by a licensed engineer reasonably acceptable to Landlord.
Landlord’s approval of any plans and specifications
shall not be a representation that the plans or the work depicted
in them will comply with any applicable Law (defined below) or be
adequate for any purpose, but shall merely be Landlord’s
consent to Tenant’s installation of the alterations. If
Landlord’s consent is granted, any such alterations shall be
made at Tenant’s sole cost and expense. Upon completion
of any alteration, Tenant shall deliver to Landlord accurate,
reproducible “as-built” plans, if applicable. All
work performed by Tenant in the Premises, including work relating
to the alterations or their repair, shall be performed in a good
and workmanlike manner in accordance with Law (defined below) and
with Landlord’s and Landlord’s insurance
carriers’ specifications and requirements. Tenant may
erect shelves, bins, machinery and trade fixtures, provided that
such items (1) do not alter the basic character of the Premises or
the Building; (2) do not overload or damage the Building; and (3)
may be removed without damage to the Premises.
6
6.3
Ownership of Alterations . Upon the
Expiration Date or earlier termination of this Lease, Tenant shall
return the Premises to Landlord clean and in the condition existing
at the time Tenant took possession of the Premises, except for: (1)
ordinary wear and tear, (2) damage that Landlord has the obligation
to repair under the terms of this Lease, (3) all changes,
modifications, alterations, additions or improvements that Landlord
did not require Tenant to remove at the time of consent, and (4)
damage by casualty. Except as provided below, all changes,
modifications, alterations, additions or improvements and property
at the Premises (including wall to wall carpeting, paneling or
other wall covering and any other surface material attached to or
affixed to the floor, wall or ceiling of the Premises) will remain
in and be surrendered with the Premises upon the Expiration Date or
earlier termination of this Lease, and Tenant waives all rights to
any payment, reimbursement or compensation for the property that
must remain at the Premises in accordance with this subsection.
Tenant must, however, remove from the Premises prior to the
Expiration Date or earlier termination of this Lease any changes,
modifications, alterations, additions or improvements that Landlord
has designated for removal at the time of Landlord’s written
approval of such changes, modifications, alterations, additions or
improvements. Tenant shall not be required to remove from the
Premises any of the changes, modifications, alterations, additions
or improvements that are constructed in the Premises with the Plans
(as defined in Exhibit “B”) or those that do not
require Landlord’s approval. Tenant must promptly
repair any damage to the Premises caused by its removal of personal
property, changes, modifications, alterations, additions or
improvements.
6.4
Construction Management Fee . In
connection with any such alteration, addition, or improvement,
Tenant shall pay to Landlord a “ Construction
Management Fee ” of five percent (5%) of all costs
incurred for such work.
7.
SIGNS
7.1
Premises’ Exterior . Tenant
shall not without Landlord’s prior written consent, which
consent shall not be unreasonably withheld, (1) make any changes to
the exterior of the Premises or the Building, (2) install any
exterior lights, decorations, balloons, flags, pennants, banners or
paintings, (3) erect or install any signs, windows, blinds,
draperies, window treatments, bars, security installations, or door
lettering, decals, window or glass-front stickers, placards,
decorations or advertising media of any type that is visible from
the exterior of the Premises. Landlord shall not be required
to notify Tenant in writing of whether it consents to any sign
until Landlord has had reasonable opportunity to review detailed,
to-scale drawings specifying the design, material composition,
color scheme, and method of installation.
7.2
Sign Requirements . Signs and
lettering will generally be as reflected in
Exhibit E , if applicable. Tenant shall
erect any signs in accordance with the plans and specifications, in
a good and workmanlike manner, in accordance with all Laws and
architectural guidelines in effect for the area in which the
Building is located and will obtain all requisite approvals (the
“ Sign Requirements ”), and in a manner
so as not to unreasonably interfere with the use of the Building
grounds while such construction is taking place; thereafter, Tenant
shall maintain the sign in a good, clean, and safe condition in
accordance with the Sign Requirements.
7.3
Sign Removal . After the Expiration
Date or earlier termination of this Lease or after Tenant’s
right to possess the Premises has been terminated pursuant to
Section 20, Landlord may require that Tenant remove the sign by
delivering to Tenant written notice within thirty (30) days after
the termination of the Lease. If Landlord so requests, Tenant
shall within ten (10) days after Tenant’s receipt of the
notice remove the sign, repair all damage caused by the sign and
its installation and removal, and restore the Building to its
condition before the installation of the sign including, but not
limited to, making the following restoration and repair work: hole
punching, electrical work, and repair of Building exterior
discoloring or fading made noticeable by removal of the signage.
If Tenant fails timely to remove the sign and perform the
repair work, Landlord may, at Tenant’s expense, remove the
sign, perform the related restoration and repair work, and dispose
of the sign in any manner Landlord deems appropriate.
7
8.
UTILITIES . Tenant shall obtain
and pay for all water, gas, electricity, heat, telephone, sewer,
sprinkler charges and other utilities and services used at the
Premises, together with any taxes, penalties, surcharges,
maintenance charges, and similar charges pertaining to
Tenant’s use of the Premises. Tenant shall heat the
Premises as necessary to prevent any freeze damage to the Premises
or any portion. Tenant’s use of electric current shall
at no time exceed the capacity of the feeders or lines to the
Building or the risers or wiring installation of the Building or
the Premises. Landlord may, at Tenant’s expense,
separately meter and bill Tenant directly for its use of any such
utility service, in which case the amount separately billed to
Tenant for Building standard utility service shall not be
duplicated in Tenant’s obligation to pay Additional Rent
under Section 2.3. Landlord shall not be liable for any
interruption or failure of utility service to the Premises, and
Tenant shall not be entitled to any abatement or reduction of Rent
by reason of any interruption or failure of utilities or other
services to the Premises. Any interruption or failure in any
utility or service shall not be construed as an eviction,
constructive or actual of Tenant or as a breach of the implied
warranty of suitability, and shall not relieve Tenant from the
obligation to perform any covenant or agreement under this Lease.
In no event shall Landlord be liable for damage to persons or
property, including, without limitation, business interruption,
damages, or shall Landlord be in default under this Lease, as a
result of any such interruption or failure. All amounts due
from Tenant under this Section 8 shall be payable within ten (10)
days after Landlord’s request for payment.
9.
INSURANCE .
9.1
Tenant’s Insurance . Tenant
shall, during the Lease Term, procure at its expense and keep in
force the following insurance:
9.1.1
Commercial General Liability Insurance .
Commercial general liability insurance naming Landlord,
Landlord’s Mortgagee (defined below), and Property Manager as
additional insureds and loss payees against any and all claims for
bodily and property damage occurring in or about the Premises
arising from or in connection with Tenant’s use or occupancy
of the Premises. The insurance policy or policies shall have
a combined single limit of not less than Two Million Dollars
($1,000,000) per occurrence with a Three Million Dollar
($2,000,000) aggregate limit and excess umbrella liability
insurance in the amount of Three Million Dollars ($2,000,000).
If Tenant has other locations that it owns or leases, the
policy shall include an aggregate limit per location endorsement.
The liability insurance shall be primary and not
“contributing to” any insurance available to Landlord,
and Landlord’s insurance shall be in excess of all of
Tenant’s insurance. In no event shall the limits of
Tenant’s insurance limit its liability under this Lease.
Landlord recommends that Tenant also keep in force business
interruption and/or business income insurance covering, among other
things, the payment of Tenant’s continuing rental expenses
for a period of up to twelve (12) months that may occur as a result
of loss or damage to the Building caused by an insured peril: this
policy or policies should name Tenant and Guarantor as insured and
must also name Landlord, Property Manager and Landlord’s
Mortgagees (defined below) as additional insureds (endorsement form
CG 2026 1185, or its equivalent) and loss payees, and must contain
a mortgagee clause in favor of Landlord’s designated
mortgagees, and Tenant waives all claims against Landlord that
could have been covered had Tenant carried such a policy.
Tenant shall also keep in force all other insurance that
Landlord reasonably deems to be necessary and prudent or that is
required by Landlord’s beneficiaries or mortgagees of any
deed of trust or mortgage encumbering the Premises, the Building,
or the Land.
9.1.2
Property Insurance . Property insurance
insuring: 1) all fixtures, alterations, additions, partitions,
improvements and equipment installed in the Premises, 2) trade
fixtures, 3) inventory, and 4) personal property located on or in
the Premises for perils covered by the causes of loss - special
form (all risk), including coverage for flood, earthquake and
damages from any boiler and machinery, if applicable. The
insurance shall be written on a replacement cost basis in an amount
equal to one hundred percent of the full replacement value of the
aggregate of the foregoing.
9.1.3
Workers’ Compensation Insurance .
Workers’ compensation insurance in accordance with the
Laws of the State of Texas.
8
9.2
Standard of Tenant’s Insurance .
Each policy required to be maintained by Tenant shall be with
companies rated A-X or better in the most current issue of
Best’s Insurance Reports and will contain endorsements that
(1) such insurance may not lapse with respect to Landlord or its
Property Manager or be canceled or amended with respect to Landlord
or its Property Manager without the insurance company’s
giving Landlord and its Property Manager at least thirty (30) days
prior written notice of every cancellation or amendment, (2) Tenant
shall be solely responsible for payment of premiums, (3) in the
event of payment of any loss covered by any policy, Landlord or
Landlord’s designees shall be paid first by the insurance
company for Landlord’s loss and Tenant’s insurance
shall be primary in the event of overlapping coverage with
insurance which may be carried by Landlord. Insurers shall be
licensed to do business in the state in which the Premises are
located and domiciled in the United States. Any deductible
amounts under any required insurance policies shall not exceed
$10,000. Tenant shall deliver to Landlord copies of
certificates of insurance, and certified copies of the policies
when requested by Landlord. Tenant shall have the right to
provide insurance in a “blanket” policy, if the
required blanket policy expressly provides coverage to the Premises
and to Landlord as required by this Lease.
9.3
Landlord’s Rights . In the event
Tenant does not purchase the insurance required by this Lease or
keep any required insurance in full force and effect.
Landlord may, but shall not be obligated to, purchase the
necessary insurance and pay the premium. Tenant shall repay
to Landlord, as Additional Rent, the amount so paid promptly upon
demand. In addition, Landlord may recover from Tenant and
Tenant agrees to pay, as Additional Rent, any and all expenses,
including attorneys’ fees, litigation expenses, and damages
which Landlord may sustain by reason of the failure of Tenant to
obtain and maintain any insurance.
9.4
Landlord’s Insurance . Landlord
shall, during the Lease Term, procure and keep in force the
following insurance, the cost of which shall be deemed as
Additional Rent payable, by Tenant pursuant to Article 4 above:
1.
Property insurance insuring the building and improvements
and rental value insurance for perils covered by the causes of
loss-special form (all risk) and in addition coverage for flood,
earthquake and boiler and machinery (if applicable). Such
coverage (except for flood and earthquake) shall be written on a
replacement cost basis equal to one hundred percent (100%) of the
full insurable replacement value of the foregoing and shall not
cover Tenant’s equipment, trade fixtures, inventory, fixtures
or personal property located on or in the Premises.
2.
Commercial general liability insurance against any and
all claims for bodily injury and property damage occurring in or
about the Building or the Land. Such insurance shall have a
combined single limit of not less than One Million Dollars
($1,000,000) per occurrence with a Two Million Dollar ($2,000,000)
aggregate limit.
3.
Such other insurance as Landlord deems necessary and
prudent or required by Landlord’s beneficiaries or mortgages
of any deed of trust or mortgage encumbering the Premises.
10.
SUBROGATION OF RIGHTS OF RECOVERY .
LANDLORD AND TENANT MUTUALLY WAIVE THEIR RESPECTIVE
RIGHTS OF RECOVERY AGAINST EACH OTHER FOR ANY LOSS OF, OR DAMAGE
TO, EITHER PARTY’S PROPERTY, TO THE EXTENT THAT THE LOSS OR
DAMAGE IS INSURED UNDER AN INSURANCE POLICY REQUIRED UNDER THIS
LEASE TO BE IN EFFECT AT THE TIME OF THE LOSS OR DAMAGE.
Each party shall obtain any special endorsements, if required by
its insurer, under which the insurer shall waive its rights of
subrogation against the other party. The provisions of this
Section 10 shall not apply in those instances in which waiver of
subrogation would cause either party’s insurance coverage to
be voided or otherwise made uncollectible. Notwithstanding
the foregoing, Landlord’s waiver of liability under this
Section 10 shall not apply to Landlord’s right to seek
compensation from Tenant or any Tenant Party for any deductible
amounts under Landlords insurance.
9
11.
CASUALTY DAMAGE .
11.1
Casualty . Tenant immediately shall
give written notice to Landlord of any damage to the Premises, the
Building, or the Land. If the Premises, the Building, or the
Land are totally destroyed by an insured peril, or so damaged by an
insured peril that, in Landlord’s estimation, rebuilding or
repairs cannot be substantially completed (exclusive of leasehold
improvements Tenant makes) within one hundred eighty (180) days
after the date of Landlord’s actual knowledge of the damage,
then Landlord may terminate this Lease by delivering to Tenant
written notice of termination within thirty (30) days after the
damage. If the Premises, the Building, or the Land are
totally destroyed by an insured peril, or so damaged by an insured
peril that, in Landlord’s estimation, rebuilding or repairs
cannot be substantially completed (exclusive of leasehold
improvements Tenant makes) within one hundred eighty (180) days
after the date of Landlord’s actual knowledge of the damage,
then Landlord may, at its expense, relocate Tenant to space
reasonably comparable to the Premises, provided that Landlord
notifies Tenant of its intention to do so in a written notice
delivered to Tenant within thirty (30) days after the damage.
Such relocation may be for a portion of the remaining Term or
the entire Term. Landlord shall complete any such relocation
within ninety (90) days after Landlord has delivered such written
notice to Tenant. If the Premises, the Building, or the Land
are totally destroyed by an insured peril, or so damaged by an
insured peril that, in Landlord’s estimation, rebuilding or
repairs cannot be substantially completed (exclusive of leasehold
improvements Tenant makes) within one hundred eighty (180) days
after the date of Landlord’s actual knowledge of the damage,
and if Landlord does not elect to relocate Tenant following such
damage to the Premises or the Building, and a Tenant Party did not
cause such damage, then Tenant may terminate this Lease by
delivering to Landlord written notice of termination within (15)
days following the date on which Landlord notifies Tenant in
writing of the estimated time for the restoration.
11.2
Restoration of Premises . Subject to
Section 11.3, if this Lease is not terminated under Section 11.1,
(or if the Building or the Premises are damaged but not totally
destroyed by any insured peril, and in Landlord’s estimation,
rebuilding or repairs can be substantially completed within one
hundred eighty (180) days after the date of Landlord’s actual
knowledge of such damage, this Lease shall not terminate), then
Landlord shall restore the Premises to substantially its previous
condition, except that Landlord shall not be required to rebuild,
repair or replace any part of the alterations, other improvements,
or personal property required to be covered by Tenant’s
insurance under Section 9.
11.3
Rent Abatement . If the Premises is
untenantable, in whole or in part, then the Rent for that period
shall be reduced to such extent as may be fair and reasonable under
the circumstances; provided, however, Rent shall not abate (except
to the extent Landlord receives insurance proceeds) and Tenant may
not terminate the Lease if a Tenant Party caused the damage.
11.4
Insurance . If the Premises are
destroyed or substantially damaged by any peril not covered by the
insurance maintained by Landlord, or any Landlord’s Mortgagee
(defined below) requires that insurance proceeds be applied to the
indebtedness secured by its Mortgage (defined below) or to the
Primary Lease (defined below) obligations, or the insurance
proceeds available to Landlord to restore the building are
insufficient in Landlord’s opinion, then Landlord may
terminate this Lease by delivering written notice of termination to
Tenant within thirty (30) days of the later of the date upon which
any destruction or damage incurred, or the date upon which Landlord
learns there are not enough insurance proceeds, or Landlord learns
of any such requirement by any Landlord’s Mortgagee, as
applicable. In the event Landlord terminates the Lease, all
rights and obligations hereunder shall cease and terminate, except
for any liabilities of Tenant, which accrued before the Lease
terminates.
12.
LIABILITY, INDEMNIFICATION, AND
NEGLIGENCE .
12.1
TENANT’S INDEMNITY OF LANDLORD .
SUBJECT TO SECTION 12.2, TENANT SHALL INDEMNIFY, DEFEND, AND
HOLD HARMLESS THE INDEMNIFIED PARTIES (AS DEFINED IN SECTION 27.1)
FROM AND AGAINST ALL FINES, SUITS, LOSSES, COSTS, LIABILITIES,
CLAIMS, DEMANDS, ACTIONS AND JUDGMENTS OF EVERY KIND OR CHARACTER,
RELATING DIRECTLY OR INDIRECTLY TO (1) TENANT’S FAILURE TO
PERFORM ITS COVENANTS UNDER THIS LEASE, (2) THE ACTS OR OMISSIONS
OF A TENANT PARTY (DEFINED BELOW IN SECTION 27.1) OR ANY OTHER
PERSON ENTERING UPON THE PREMISES OR COMMON AREAS UNDER OR WITH A
TENANT PARTY’S EXPRESS OR IMPLIED INVITATION OR PERMISSION,
(3) THE OCCUPANCY OR USE OF THE PREMISES BY A TENANT PARTY, OR (4)
ANY OCCURRENCE IN THE PREMISES, HOWEVER CAUSED, OR SUFFERED BY,
RECOVERED FROM OR ASSERTED AGAINST ANY INDEMNIFIED PARTIES BY A
TENANT PARTY. INDEMNIFICATION OF THE
10
INDEMNIFIED PARTIES BY TENANT SHALL NOT APPLY TO THE EXTENT SUCH
LOSS, DAMAGE, OR INJURY IS CAUSED BY THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF ANY OF THE INDEMNIFIED PARTIES.
12.2
LIABILITY . THE INDEMNIFIED PARTIES
(AS DEFINED IN SECTION 27.1) SHALL NOT BE LIABLE TO THE TENANT
PARTIES FOR ANY INJURY TO OR DEATH OF ANY PERSON OR PERSONS OR THE
DAMAGE TO OR THEFT, DESTRUCTION, LOSS, OR LOSS OF USE OF ANY
PROPERTY OR INCONVENIENCE (COLLECTIVELY AND INDIVIDUALLY A “
LOSS ”) CAUSED BY CASUALTY, THEFT, FIRE, THIRD
PARTIES, REPAIR, OR FAILURE TO REPAIR, OR ALTERATION OF ANY PART OF
THIS BUILDING, OR ANY OTHER CAUSE, TO THE EXTENT NOT OTHERWISE
CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF THE
INDEMNIFIED PARTIES.
12.3
LANDLORD’S INDEMNIFICATION .
SUBJECT TO SECTION 12.4 BELOW, LANDLORD AGREES TO INDEMNIFY,
DEFEND AND HOLD TENANT AND ITS OFFICERS, DIRECTORS, PARTNERS AND
EMPLOYEES HARMLESS FROM AND AGAINST ALL LIABILITIES, LOSSES,
DEMANDS, ACTIONS, EXPENSES OR CLAIMS, INCLUDING REASONABLE
ATTORNEYS’ FEES AND COURT COSTS BUT EXCLUDING CONSEQUENTIAL
DAMAGES, FOR INJURY TO OR DEATH OF ANY PERSON OR FOR DAMAGE TO ANY
PROPERTY TO THE EXTENT SUCH ARE DETERMINED TO BE CAUSED BY THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD, ITS AGENTS,
EMPLOYEES, OR CONTRACTORS IN OR ABOUT THE PREMISES OR BUILDING.
NONE OF THE EVENTS OR CONDITIONS SET FORTH IN THIS PARAGRAPH
SHALL BE DEEMED A CONSTRUCTIVE OR ACTUAL EVICTION OR ENTITLE TENANT
TO ANY ABATEMENT OR REDUCTION OF RENT.
12.4
LIMITATION OF LIABILITY . IN
CONSIDERATION OF THE BENEFITS ACCRUING HEREUNDER, TENANT AND ALL
SUCCESSORS AND ASSIGNS COVENANT AND AGREE THAT, THE LIABILITY OF
LANDLORD TOA TENANT PARTY FOR ANY DEFAULT BY LANDLORD SHALL BE
LIMITED TO ACTUAL AND DIRECT DAMAGES. IN NO EVENT SHALL
LANDLORD BE LIABLE TO A TENANT PARTY FOR ANY CONSEQUENTIAL,
PUNITIVE OR SPECIAL DAMAGES. IN THE EVENT OF ANY ACTUAL OR
ALLEGED FAILURE, BREACH OR DEFAULT HEREUNDER BY LANDLORD, TENANTS
EXCLUSIVE AND SOLE REMEDY SHALL BE AN ACTION FOR DAMAGES.
SHOULD A TENANT PARTY RECOVER A MONEY JUDGMENT AGAINST
LANDLORD, THE TENANT PARTY AGREES THAT SUCH MONEY JUDGMENT SHALL BE
SATISFIED SOLELY BY LANDLORD’S INTEREST IN THE PREMISES AND
BUILDING (AND ANY CONDEMNATION AWARDS, INSURANCE PROCEEDS, AND
RENTAL INCOME APPLICABLE TO THE BUILDING), AS THE SAME MAY THEN BE
ENCUMBERED, AND LANDLORD, ITS AFFILIATES, PARTNERS, OFFICERS,
DIRECTORS, SHAREHOLDERS, AND EMPLOYEES SHALL NOT BE LIABLE
OTHERWISE FOR ANY OTHER CLAIM ARISING OUT OF OR RELATING TO THIS
LEASE.
12.5
Survival . The provisions of this
Section 12 shall survive the expiration or earlier termination of
this Lease.
13.
USE; COMPLIANCE WITH LAWS; PARKING
.
13.1
Permitted Use . The Premises shall be
used only for the Permitted Use and for no other purpose without
Landlord’s prior written consent, which consent shall not be
unreasonably withheld. Without limitation to the generality
of the foregoing, the Premises shall not be used for: (i)
retail sales, (ii) living or sleeping quarters or a residence,
(iii) any use which is disreputable, (iv) an escort service, a
massage parlor or spa, blood bank, abortion clinic, or for the
sale, distribution or display (electronically or otherwise) of
materials or merchandise of a pornographic nature or merchandise
generally sold in an adult book or adult videotape store (which are
defined as stores in which any portion of the inventory is not
available for sale or rental to children under 18 years old because
such inventory explicitly details with or depicts human sexuality),
or (v) receiving, storing or handling any product, material or
merchandise that is explosive or highly inflammable or hazardous or
would violate any provision in
11
Section 26 Tenant shall not sell, display, transmit or distribute
(electronically or otherwise) materials or merchandise of a
pornographic nature or merchandise generally sold in an adult book
or adult video tape store (as defined above). Outside
storage, including without limitation, storage in non-operative or
stationary trucks, trailers and other vehicles, and vehicle
maintenance or repair is prohibited without Landlord’s prior
written consent, which consent shall not be unreasonably withheld.
Tenant shall not permit any objectionable or unpleasant
odors, smoke, dust, gas, light, noise or vibrations to emanate from
the Premises; nor commit, suffer or permit any waste in or upon the
Premises: nor at any time sell, purchase or give away or permit the
sale, purchase or gift of food in any form by or to any of Tenants
agents or employees or other parties in the Premises, except
through vending machines in employees’ lunch or rest areas
within the Premises for use by Tenant’s employees only; nor
take any other action that would constitute a public or private
nuisance or would disturb the quiet enjoyment of any other tenant
of the Building, or unreasonably interfere with, or endanger
Landlord or any other person; nor permit the Premises to be used
for any purpose or in any manner that would (1) void the insurance
thereon, (2) increase the insurance risk, (3) cause the
disallowance of any sprinkler credits, (4) violate any Law (defined
below) including, but not limited to, any zoning ordinance, or (5)
be dangerous to life, limb or property. Tenant shall pay to
Landlord on demand any increase in the cost of any insurance on the
Premises or the Building incurred by Landlord, which is caused by
Tenant’s use of the Premises or because Tenant vacates the
Premises, and acceptance of such payment shall not constitute a
waiver of any of Landlord’s other rights or remedies nor a
waiver of Tenant’s duty to comply herewith.
13.2
Compliance with Laws . Tenant shall be
solely responsible for satisfying itself and Landlord that the
Permitted Use will comply with all applicable Laws. Tenant
shall, at its sole cost and expense, be responsible for complying
with all Laws (defined below) and Rules and Regulations (defined
below) applicable to the use, occupancy, and condition of the
Premises. Tenant shall promptly correct any violation of a
Law, or Rules or Regulations with respect to the Premises.
Tenant shall comply with any direction of any governmental
authority having jurisdiction which imposes any duty upon Tenant or
Landlord with respect to the Premises, Building, and/or Land, or
with respect to the occupancy or use thereof.
13.3
Compliance with Rules and Regulations .
Tenant will comply with such rules and regulations (the
“ Rules and Regulations ”) generally
applying to tenants in the Building as may be adopted from time to
time by Landlord for the management, cleanliness of, and the
preservation of good order and protection of the Premises, the
Building and the Land. Future Rules and Regulations shall not
be effective until written notice thereof is sent to Tenant and
future changes to the Rules and Regulations shall not materially
and adversely affect Tenant’s rights specifically granted in
this Lease. A current copy of the Rules and Regulations
applicable to the Building is attached hereto as Exhibit
C . Landlord hereby reserves all rights necessary to
implement and enforce the Rules and Regulations and each and every
provision of this Lease.
13.4
Parking . Tenant and its employees,
agents and invitees shall have the non-exclusive right to use, in
common with others, its proportionate share of such parking areas
associated with the Building which Landlord has designated for such
use (the “ Parking Areas ”), subject to
(1) such Rules and Regulations (as defined herein) as Landlord may
promulgate from time to time and (2) rights of ingress and egress
of other tenants and their employees, agents and invitees.
Landlord does not reserve or allocate parking spaces at the
Premises nor guarantee its availability on a daily basis.
Tenant shall take reasonable measures to ensure that its
employees, agents and invitees do not occupy more than
Tenant’s proportionate share of the above-referenced parking
areas. Tenant shall only permit parking by its employees,
agents or invitees of appropriate vehicles in appropriate
designated Parking Areas. Landlord shall not be responsible
for enforcing Tenant’s parking rights against any third
parties.
14.
INSPECTION; ACCESS AND RIGHT OF ENTRY; NEW
CONSTRUCTION . Upon twenty-four hours prior verbal
notice to Tenant (except in the event of an emergency), without
being deemed or construed as committing an actual or constructive
eviction of Tenant and without abatement of Rent, Landlord and
Landlord’s agents and representatives may enter the Premises
during business hours to inspect the Premises: to make such repairs
as may be required or permitted under this Lease; to perform any
unperformed obligations of Tenant hereunder, and to show the
Premises to prospective purchasers, mortgagees, ground lessors,
and, during the last six (6) months of the Term, tenants.
Landlord shall use commercially reasonable efforts to
minimize interference with the operation of Tenant’s business
from the Premises during any such entry; however, Tenant hereby
waives any claim for damages for any injury or inconvenience or
interference with Tenants business, any loss of occupancy or
12
quiet enjoyment of the Premises, and any other loss occasioned
thereby. Landlord shall have the right to use any and all
means which Landlord may deem proper to enter the Premises in an
emergency without liability therefor. During the last six (6)
months of the Term, Landlord may erect a sign on the Premises
indicating that the Premises are available. Furthermore,
Landlord hereby reserves the right and at all times shall have the
right to repair, change, redecorate, alter, improve, modify,
renovate, enclose or make additions to any part of the Building,
Building’s Structure, Common Areas or the Land, to enclose
and/or change the arrangement and/or location of driveways or
Parking Areas or landscaping or other Common Areas; and to
construct new improvements on adjacent parcels of land, all.
Tenant agrees, without having committed an actual or
constructive eviction of Tenant or breach of the implied warranty
of suitability and without an abatement of Rent (the “
Reserved Right ”). When exercising the
Reserved Right, Landlord will use reasonable efforts not to
substantially interfere with Tenant’s use and occupancy of
the Premises.
15.
ASSIGNMENT AND SUBLETTING .
15.1
Transfers . Tenant shall not, without
the prior written consent of Landlord, which consent shall not be
unreasonably withheld: (1) advertise that any portion of the
Premises is available for lease or cause or allow any such
advertisement, (2) assign, transfer, or encumber this Lease or any
estate or interest herein, whether directly or by operation of law,
(3) permit any other entity to become Tenant hereunder by merger,
consolidation, or other reorganization, (4) if Tenant is an entity
other than a corporation whose stock is publicly traded, permit the
transfer of an ownership interest in Tenant so as to result in a
change in the current control of Tenant, (5) sublet any portion of
the Premises, (6) grant any license, concession, or other right of
occupancy of any portion of the Premises, or (7) permit the use of
the Premises by any parties other than Tenant (any of the events
listed in Sections 15.1 (1) through (7) being a “
Transfer ”). Notwithstanding the
foregoing, provided that Tenant remains liable on this Lease,
provides Landlord with prior written notice and names of the
applicable transferee, and Tenant is not then in default, then the
following transfers will not require Landlord’s prior
consent: (i) a transfer to any entity which is wholly owned by
Tenant; (ii) a transfer to any entity which owns all of the
outstanding ownership interests of Tenant (“Parent”);
(iii) a transfer to any entity which is wholly owned by
Tenant’s Parent (iv) a transfer to any entity which merges
with Tenant or purchases substantially all of Tenant’s
assets, provided that such transferee or surviving corporation has
a net worth at least as favorable as Tenant; or (v) a transfer over
a nationally-recognized stock exchange.
15.2
Landlord’s Written Consent
Requirements . If Tenant requests Landlord’s
consent to a Transfer, then Tenant shall provide Landlord with a
written description of all terms and conditions of the proposed
Transfer, copies of the proposed documentation, and the following
information about the proposed transferee: name and address;
reasonably satisfactory information about its business; its
proposed use of the Premises; banking, financial, and other credit
information; and general references sufficient to enable Landlord
to determine the proposed transferee’s creditworthiness and
character. In determining whether Landlord shall consent to
any proposed assignment or subletting of the Premises, Landlord may
consider any factors it reasonably deems appropriate, including,
without limitation: (1) creditworthiness (publicly traded debt
quality (Baa2 or BBB- or higher, as rated by Moody’s and
Standard & Poor respectively), and tangible net worth,
financial condition, and operating performance, greater than or
equal to the tangible net worth, financial condition, and operating
performance of the Tenant and the Guarantor of Tenant’s
obligations hereunder), (2) reputation in the business community,
(3) type of use, (4) affect on other tenants and occupants of the
Building, and (5) proposed use. Tenant shall pay to Landlord
a transfer request fee of Five Hundred Dollars ($500.00) which
Tenant will submit to Landlord along with its written request for
review of the proposed assignment or subletting, regardless of
whether Landlord subsequently grants its approval of the proposed
assignment or subletting.
15.3
Obligations of Tenant and Proposed
Transferee . If Landlord consents to a proposed Transfer,
then the proposed transferee shall deliver to Landlord a written
agreement, in a form satisfactory to Landlord, whereby the proposed
transferee expressly assumes the Tenant’s obligations
hereunder (however, in the event of transfer of less than all of
the space in the Premises the proposed transferee shall be liable
only for obligations under this Lease that are properly allocable
to the space subject to the Transfer, and only to the extent of the
rent it has agreed to pay Tenant). Landlord’s consent
to a Transfer shall not release any Guarantor of Tenant’s
obligations hereunder nor release Tenant from performing its
obligations under this Lease, but rather Tenant and its transferee
shall be jointly and severally liable. No such Transfer shall
constitute a novation. Landlord’s consent to any
Transfer shall not
13
waive Landlord’s rights as to any subsequent Transfers.
If a default occurs while the Premises or any part thereof
are subject to a Transfer, then Landlord, in addition to its other
remedies, may collect directly from such transferee all rents
becoming due to Tenant and apply such rents against Tenant’s
Rent obligations. Tenant authorizes its transferees to make
payments of Rent directly to Landlord upon receipt of notice from
Landlord to do so. If Landlord should fail to notify Tenant
in writing of its decision within the thirty (30) day period after
Landlord’s receipt of Tenant’s written request for
Landlord’s consent to a Transfer, then Landlord shall be
deemed to have refused to consent to the proposed Transfer and to
have elected to keep this Lease in full force and effect.
15.4
Landlord’s Recapture Right .
Within ten (10) business days after Landlord’s receipt
of Tenant’s submission of Tenant’s written request for
Landlord’s consent to a Transfer, Landlord shall have the
option (without limiting Landlord’s other rights under this
Lease) of terminating this Lease (or, as to a subletting or
assignment, terminate this Lease as to the portion of the Premises
proposed to be sublet or assigned) upon the date that the proposed
Transfer was to be effective, unless Tenant revokes its request to
Transfer within five (5) business days following Landlord’s
exercise of its recapture rights. If Landlord terminates this
Lease as to all or any portion of the Premises, then this Lease
shall cease for such portion of the Premises and Tenant shall pay
to Landlord all Rent accrued through the cancellation date relating
to the portion of the Premises covered by the proposed Transfer.
Thereafter, Landlord may lease all or such portion of the
Premises to the prospective transferee (or to any other person or
entity) without liability to Tenant.
15.5
Excess Rent . Notwithstanding anything
to the contrary contained in Section 15 of this Lease, Tenant
hereby assigns, transfers and conveys fifty percent (50%) of all
consideration received by Tenant under any Transfer, which is in
excess of the Rent payable by Tenant under this Lease and Tenant
shall hold such amounts in trust for Landlord and pay them to
Landlord within ten (10) days after receipt. When determining
excess amounts, customary and reasonable costs incurred by Tenant,
such as marketing expenses shall be taken into consideration.
16.
CONDEMNATION . If more than
twenty percent (20%) of the Premises is taken for any public or
quasi-public use by right of eminent domain or private purchase in
lieu thereof (a “ Taking ”), and the
Taking prevents or materially interferes with the use of the
remainder of the Premises for the purpose for which they were
leased to Tenant, either party may terminate this Lease by
delivering to the other written notice thereof within thirty (30)
days after the Taking, in which case Rent shall be abated during
the unexpired portion of the Term, effective on the date of such
Taking. If (1) less than twenty percent (20%) of the Premises
are subject to a Taking, or (2) the Taking does not prevent or
materially interfere with the use of the remainder of the Premises
for the purpose for which they were leased to Tenant, then neither
party may terminate this Lease, but the Rent payable during the
unexpired portion of the Term shall be reduced to such extent as
may be fair and reasonable under the circumstances. All
compensation awarded for any Taking shall be the property of
Landlord, and Tenant hereby assigns any interest it may have in any
such award to Landlord: however, Landlord shall have no interest in
any separate award made to Tenant (which does not reduce
Landlord’s award) for loss of Tenant’s business or
goodwill, for the taking of Tenant’s trade fixtures, or on
account of Tenant’s moving and relocation expenses and
depreciation to and removal of Tenant’s physical personal
property, if a separate award for such items is made to Tenant.
17.
SURRENDER AND REDELIVERY OF PREMISES: HOLDING
OVER.
17.1
Surrender and Redelivery of Premises .
No act by Landlord shall be an acceptance of a surrender of
the Premises, and no agreement to accept a surrender of the
Premises shall be valid, unless it is in writing and signed by
Landlord. Tenant’s delivery of the keys or access cards
to Property Manager or any agent or employee of Landlord shall not
operate as a termination of this Lease or a surrender of the
Premises.
17.1.1
Joint
Inspection . Tenant shall notify Landlord in writing of
its intention to vacate the Premises at least sixty (60) days
before Tenant will vacate the Premises; such notice shall specify
the date on which Tenant intends to vacate the Premises (the
“ Vacation Date ”), which date shall not
be after the Expiration Date. At least thirty (30) days
before the Vacation Date, Tenant shall arrange to meet with
Landlord for a joint inspection of the Premises. After such
inspection, Landlord shall prepare a list of items that Tenant must
perform before the Vacation Date. If Tenant fails to arrange
for such inspection, then Landlord may conduct such inspection and
Landlord’s determination of the work Tenant is required to
perform before the Vacation Date shall be conclusive. If
Tenant fails to perform such work before the Vacation Date, then
Landlord may perform such work at Tenant’s cost. Tenant
shall pay all cost incurred by Landlord in performing such work
within ten (10) days after Landlord’s request thereof.
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17.1.2
Tenant’s Payment Obligations . Tenant
shall also, prior to vacating the Premises, pay to Lan
