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EXHIBIT 10.19
TABLE OF CONTENTS
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1. THE PARTIES
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1 |
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2. DEFINITIONS AND BASIC
TERMS
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1 |
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3. LEASE OF PREMISES
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3 |
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4. TERM
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3 |
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5. PAYMENT OF RENT
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3 |
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6. ADDITIONAL RENT
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4 |
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7. SECURITY DEPOSIT
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8. USE
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6 |
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9. TENANT IMPROVEMENTS
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6 |
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10. ALTERATIONS
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6 |
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11. LANDLORD’S SERVICES
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6 |
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12. REPAIRS
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7 |
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13. TRANSFERS
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8 |
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14. INDEMNITY & LIABILITY
LIMITATION
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9 |
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15. INSURANCE
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9 |
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16. CASUALTY
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11 |
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17. CONDEMNATION
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11 |
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18. RULES AND REGULATIONS
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12 |
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19. SUBORDINATION &
MORTGAGEES
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12 |
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20. TAXES
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13 |
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21. EVENTS OF DEFAULT
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13 |
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22. REMEDIES
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14 |
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23. LANDLORD’S LIEN
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16 |
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24. NON-WAIVER
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16 |
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25. SURRENDER OF PREMISES
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16 |
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26. HOLDING OVER
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17 |
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27. RIGHTS RESERVED BY
LANDLORD
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17 |
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28. LANDLORD’S DEFAULT
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18 |
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29. RELOCATION
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18 |
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30. PARKING
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18 |
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31. MISCELLANEOUS
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19 |
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32. REPRESENTATIONS, WARRANTIES AND
COVENANTS OF TENANT
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20 |
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33. ENVIRONMENTAL PROVISIONS
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21 |
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34. AUTHORITY PARAGRAPH
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22 |
2
LEASE
AGREEMENT
THIS LEASE AGREEMENT
(“Lease”) is entered into between Landlord and Tenant,
each as defined below in Section 1.
1. THE PARTIES
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Landlord’s Name and
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entity: a |
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Cypress
Court Operating Associates, Limited Partnership |
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New Mexico
limited partnership |
| Landlord’ Address for Notices: |
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c/o BGK
Texas Property Management, Inc. |
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1235 North
Loop West, Suite 1025 |
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Houston,
Texas 77008 |
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| Landlord’s Payment |
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| Address: |
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c/o BGK
Texas Property Management, Inc. |
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1235 North
Loop West, Suite 1025 |
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Houston,
Texas 77008 |
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Tenant’s Name and
type of entity:
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AROC
Inc. |
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a Delaware
corporation |
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Tenant’s Address
for Notices:
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110
Cypress Station Drive, Suite 220 |
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Houston,
Texas 77090 |
2. DEFINITIONS AND BASIC
TERMS
The following definitions and basic
terms shall have the indicated meanings when used in this
Lease:
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| a. |
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Building: |
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The building
known as Cypress Court located or to be located on the land
described on Exhibit “A” attached hereto and whose
street address is 110 Cypress Station Drive, Houston, Texas
77090. |
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| b. |
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Premises: |
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Suite Nos.
205, 220, 246, and 250 in the Building. The Premises are outlined
on the plan attached to the Lease as Exhibit
“B”. |
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| c. |
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Property: |
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The
Building, the parcel of land upon which the Building is situated
and any other improvements located thereon. |
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| d. |
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Tenant’s Rentable |
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Square
Feet: |
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14,810 |
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| e. |
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Total
Rentable Square |
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Feet in the
Building: |
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100,352 |
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| f. |
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Tenant’s Proportionate |
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Share: |
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14.758%
which is the percentage obtained by dividing (i) Tenant’s
Rentable Square Feet by (ii) the Total Rentable Square Feet in the
Building. |
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| g. |
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Scheduled Commencement Date: |
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June 1,
2001 |
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| h. |
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Commencement Date: |
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The
Commencement Date is defined in Section 4. |
1
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| i. |
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Term: |
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Thirty-six (36) months, commencing on the Commencement Date and
ending at 5:00 p.m., May 31, 2004 subject to adjustment and
earlier termination as provided in the Lease. |
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Base
Rent: |
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Lease
Years |
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Monthly
Base Rent |
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Annual
Base Rent |
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06/01/01-05/31/02 |
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$19,746.67 |
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$236,960.04 |
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06/01/02-05/31/03 |
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$19,746.67 |
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$236,960.04 |
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06/01/03-05/31/04 |
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$19,746.67 |
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$236,960.04 |
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Additional
Rent: |
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Additional Rent is defined in Section 6. |
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| l. |
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Rent: |
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Base Rent, Additional Rent and all other sums that Tenant may
owe to Landlord under this Lease. |
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| m. |
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Security
Deposit: |
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$0.00 |
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| n. |
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Expense
Stop/ Base Year: |
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Expense Stop: $ n/a Base Year: 2001 |
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| o. |
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Permitted
Use: |
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General office use and no other. |
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| p. |
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Property
Management Company/Address: |
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BGK Texas Property Management,
Inc.
1235 North Loop West, Suite
215
Houston, Texas 77008
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| q. |
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Maximum
Construction |
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Allowance: |
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$1.00 per Rentable Square Foot or $14,810.00 (lump
sum) |
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| r. |
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Landlord’s Broker |
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(name and
address): |
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none |
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| s. |
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Tenant’s Broker |
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(name and
address): |
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none |
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| t. |
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Guarantor(s) |
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(name and
address): |
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none |
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| u. |
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Parking
Spaces: |
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Fifty-four (54) unassigned, unreserved
parking spaces and
five (5) reserved covered parking
spaces
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| v. |
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Parking
Rent: |
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$0.00 per month per Parking Space. |
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3. LEASE OF PREMISES
Landlord, in consideration of
the Rent to be paid and the covenants and agreements to be
performed by Tenant, does hereby lease unto Tenant the Premises,
together with the non-exclusive right and easement to use the
parking, if any, and any other common areas and facilities
in or on the Building and the Property (including, without
limitation, the driveways, sidewalks, loading and unreserved
parking areas, lobbies and hallways) which may from time to time be
furnished by Landlord, in common with Landlord and the tenants and
occupants of the Building, and their respective agents, employees,
customers and invitees; subject however to reasonable restrictions
by Landlord as to the use of the foregoing.
4. TERM
The Commencement Date shall be
the later of: June 1, 2001.
a. the Scheduled
Commencement Date or;
b. the date of
substantial completion of the Premises by Landlord, as defined
below; provided the Commencement Date shall not be extended for
delays which are due to (x) special changes or additions
required by Tenant; (y) delays of Tenant in submitting plans
or specifications, supplying information, giving authorization, or
otherwise; or (z) any default or other delay of Tenant
(collectively, “Tenant Delays”). The Tenant shall be
bound by a written certification by Landlord as to the date that
the Premises are ready for occupancy by the Tenant and, in the
event that there are Tenant Delays, the Landlord’s architect
shall determine in its reasonable discretion the date that the
Premises would have been ready for occupancy but for such Tenant
Delays.
If the Commencement Date is
not the first day of a calendar month, then the Term shall be
extended by the time between the Commencement Date and the first
day of the next month. If this Lease is executed before the
Premises become vacant or otherwise available and ready for
occupancy by Tenant, or if any present occupant of the Premises
holds over and Landlord cannot acquire possession of the Premises
before the Commencement Date, then (a) Landlord shall not be
in default hereunder or be liable for damages therefore and
(b) Tenant shall accept possession of the Premises when
Landlord tenders possession thereof to Tenant. Notwithstanding the
foregoing, by occupying the Premises, Tenant shall be deemed to
have accepted the Premises in their condition as of the date of
such occupancy, and the Commencement Date shall be the date of such
occupancy. Tenant shall execute and deliver to Landlord, within ten
days after Landlord has requested same, a letter confirming
(i) the Commencement Date, (ii) that Tenant has accepted
the Premises, and (iii) that Landlord has performed all of its
obligations with respect to the Premises (except for punch-list
items specified in such letter). The term “substantial
completion” (or “substantially complete”) as used
in the Lease means the date when the Premises are ready for
occupancy by Tenant, subject to completion of minor details of
construction or minor mechanical adjustments that do not materially
interfere with Tenant’s occupancy.
5. PAYMENT OF RENT
a. Payment . Tenant
shall timely pay to Landlord, without demand, deduction, abatement
or offset (except as otherwise expressly set forth herein), the
Base Rent, Additional Rent and all other rent at Landlord’s
Payment Address. Base Rent shall be payable monthly in advance in
United States dollars. As security for the payment of rent,
Tenant shall post a Letter of Credit in accordance with the terms
of Lease Addendum I attached hereto. Any monies drawn on the Letter
of Credit shall be applied (in this order) to any and all costs
incurred by Landlord in the course of enforcing the Lease, damages
incurred as stated in Paragraph 22(g) of the Lease, repairs
necessitated pursuant to Paragraph 12(b) of the Lease, Additional
Rent, Rent and interest on any of these obligations.
The first monthly installment
of Base Rent shall be due and payable contemporaneously with the
execution of this Lease; thereafter, monthly installments of Base
Rent shall be due on the first day of the second full calendar
month of the Term and continuing thereafter on the first day of
each succeeding calendar month during the Term. Base Rent for any
fractional month shall be prorated based on 1/365 of the current
annual Base Rent for each day of the partial month this Lease is in
effect, and shall be due on the Commencement Date. Landlord
agrees to notify Tenant in writing in advance of any changes in
Rent, excluding scheduled Base Rent.
b. Late Payments .
Landlord may charge Tenant a fee equal to the greater of $20.00 or
6% of any delinquent payment to reimburse Landlord for its cost and
inconvenience incurred as a consequence of Tenant’s
delinquency. In addition, Landlord may charge interest at the
lessor of 18% per annum or the maximum rate permitted by
applicable law for all payments which are over (30) days late.
In no event, however, shall the charges permitted under this
Section or elsewhere in this Lease, to the extent the
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same are considered to be
interest under applicable law, exceed the maximum rate of interest
permitted by applicable law.
6. ADDITIONAL RENT
a. Payment of Additional
Rent . Tenant shall pay as Additional Rent an amount equal to
Tenant’s Proportionate Share multiplied by the difference of
(a) the total annual Operating Expenses, as defined below, for
the calendar year in question and (b) the Operating Expenses
for the Base Year. Landlord may collect such amount in a lump sum,
due within 30 days after Landlord furnishes to Tenant an annual
Operating Expense Statement as defined below. Tenant’s
Proportionate Share of Operating Expenses shall not increase in any
calendar year by more than five percent (5%), computed annually, on
a non-cumulative basis from the first year during the Lease Term,
excluding ad valorem taxes, property insurance and utilities.
Alternatively, Landlord may make a good faith estimate of the
Additional Rent to be due by Tenant for any calendar year or part
thereof during the Term, and, unless Landlord delivers to Tenant a
revision of the estimated Additional Rent, Tenant shall pay to
Landlord, on the Commencement Date and on the first day of each
calendar month thereafter, an amount equal to the estimated
Additional Rent for such calendar year or part thereof divided by
the number of months in such calendar year during the Term. From
time to time during any calendar year, Landlord may estimate and
re-estimate the Additional Rent to be due by Tenant for that
calendar year and deliver a copy of the estimate or re-estimate to
Tenant. Thereafter, the monthly installments of Additional Rent
payable by Tenant shall be appropriately adjusted in accordance
with the estimations so that, by the end of the calendar year in
question, Tenant shall have paid all of the Additional Rent as
estimated by Landlord. Any amounts paid based on such an estimate
shall be subject to adjustment pursuant to Section 6c when
actual “Operating Expenses” are available for each
calendar year.
b. Operating Expenses
. “ Operating Expenses ” shall mean all expenses
and disbursements of every kind (subject to the limitations set
forth below) which Landlord incurs, pays or becomes obligated to
pay in connection with the ownership, operation, and maintenance of
the Property (including any parking facilities), including but not
limited to the following:
(i) all taxes and assessments
and governmental charges whether federal, state, county or
municipal, and whether they be by taxing or management districts or
authorities presently taxing or by others, subsequently created or
otherwise, and any other taxes and assessments attributable to the
Property (or its operation), and the grounds, parking areas,
driveways, and alleys around the Property, excluding, however,
federal and state taxes on income (collectively, “
Property Taxes ”); if the present method of taxation
changes so that in lieu of the whole or any part of the Property
Taxes, there is levied on Landlord a capital tax directly on the
rents received therefrom or a franchise tax, assessment, or charge
based, in whole or in part, upon such rents for the Property, then
all such taxes, assessments, or charges, or the part thereof so
based, shall be included within the term “Property
Taxes”;
(ii) wages and salaries
(including management fees) of all employees engaged in the
operation, repair, replacement, maintenance, and security of the
Property, including taxes, insurance and benefits relating
thereto;
(iii) all supplies and
materials used in the operation, maintenance, repair, replacement,
and security of the Property;
(iv) annual cost of all
capital improvements made to the Property which can reasonably be
expected to reduce the normal operating costs of the Property, as
well as all capital improvements made in order to comply with any
law hereafter promulgated by any governmental authority, as
amortized over the useful economic life of such improvements as
determined by Landlord in its reasonable discretion (without regard
to the period over which such improvements may be depreciated or
amortized for federal income tax purposes);
(v) cost of all utilities,
other than the cost of utilities actually reimbursed to Landlord by
the Building’s tenants;
(vi) cost of any insurance or
insurance related expense applicable to the Property and
Landlord’s personal property used in connection
therewith;
(vii) cost of repairs,
replacements, and general maintenance of the Property;
(viii) cost of service or
maintenance contracts with independent contractors for the
operation, maintenance, repair, replacement, or security of the
Property (including, without limitation, alarm service, window
cleaning, and elevator maintenance); and
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(ix) the amount of basic rent
payable under and pursuant to any ground lease pertaining to the
land on which the Building is located.
There are specifically excluded from the
definition of the term “Operating Expenses” the
following costs:
(1) capital improvements made
to the Property, other than capital improvements described in
subparagraph (iv) above and except for items which, though
capital for accounting purposes, are properly considered
maintenance and repair items, such as painting of common areas,
replacement of carpet in elevator lobbies, and the like;
(2) repair, replacements and
general maintenance paid by proceeds of insurance or by Tenant or
other third parties, and alterations attributable solely to tenants
of the Property other than Tenant;
(3) interest, amortization or
other payments on loans by Landlord;
(4) depreciation of the
Building;
(5) leasing
commissions;
(6) legal expenses, other
than those incurred for the general benefit of the Property’s
tenants (e.g., tax disputes);
(7) renovating or otherwise
improving tenant space for other tenants of the Property or vacant
space in the Building (except common areas);
(8) correcting defects in the
construction of the Building; and
(9) federal income taxes
imposed on or measured by the income of Landlord from the operation
of the Property.
c. Operating Expense
Statement . Landlord shall provide an annual Operating Expense
statement including a statement of Landlord’s actual
Operating Expenses for the previous year adjusted as provided in
Section 6d. If the annual Operating Expense Statement reveals
that Tenant paid more for Additional Rent than the actual amount
due in the year for which such statement was prepared, then
Landlord shall promptly credit (or reimburse, if the Lease has
terminated and Tenant is not in default) Tenant for such excess.
Likewise, if Tenant paid less than the actual amount due, then
Tenant shall promptly pay Landlord such deficiency. This provision
applies only to Tenant’s Additional Rent and shall never
require a refund or credit of Base Rent.
d. Building Occupancy
. With respect to any calendar year or partial calendar year in
which the Building is not occupied to the extent of at least
ninety-five percent (95%) of the Total Rentable Square Feet in
the Building thereof, the Operating Expenses for such period shall
be increased to the amount which would have been incurred had the
Building been occupied to the extent of ninety-five percent
(95%) of the Total Rentable Square Feet in the Building
thereof.
7. SECURITY DEPOSIT
Contemporaneously with the
execution of this Lease, Tenant shall pay to Landlord, in
immediately available funds, the Security Deposit, which shall be
held by Landlord without liability for interest and as security for
the performance by Tenant of its obligations under this Lease. The
Security Deposit is not an advance payment of Rent or a measure or
limit of Landlord’s damages upon an Event of Default (defined
below). Landlord may, from time to time and without prejudice to
any other remedy, use all or a part of the Security Deposit to
perform any obligation which Tenant was obligated, but failed, to
perform hereunder. Following any such application of the Security
Deposit, Tenant shall pay to Landlord on demand the amount so
applied in order to restore the Security Deposit to its original
amount. Within a reasonable time after the Term ends or the
Lease is terminated in accordance with its terms , provided
Tenant has performed all of its obligations hereunder, Landlord
shall return to Tenant the balance of the Security Deposit not
applied to satisfy Tenant’s obligations. If Landlord
transfers its interest in the Premises, then Landlord
may shall assign the Security Deposit to
the transferee and Landlord thereafter shall have no further
liability for return of the Security Deposit.
8. USE
Tenant shall continuously
occupy and use the Premises only for the Permitted Use and shall
comply with all laws, orders, rules, and regulations relating to
the use, condition, and occupancy of the Premises. The Premises
shall not be used for any use which is disreputable or creates
extraordinary fire
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hazards or results in an
increased rate of insurance on the Building or its contents or the
storage of any hazardous materials or substances. If, because of
Tenant’s acts, the rate of insurance on the Building or its
contents increases (or if Landlord self-insures, if the cost of
insurance would have increased), then such acts shall be an Event
of Default, Tenant shall pay to Landlord the amount of such
increase on demand (or, if Landlord self-insures, an amount which
compensates Landlord for the increased risk under the
self-insurance program), and acceptance of such payment shall not
constitute a waiver of any of Landlord’s rights including,
without limitation, the Event of Default caused by such act. Tenant
shall conduct its business and control its agents, employees, and
invitees in such a manner as not to create any nuisance or
interfere with other tenants or Landlord in its management of the
Building.
9. TENANT IMPROVEMENTS
Improvements. Any
Tenant finish improvements to be provided by Landlord for the
Premises are described on Exhibit “E” attached
hereto.
10. ALTERATIONS
All improvements to the
Premises made after the Commencement Date shall be installed at the
expense of Tenant only in accordance with plans and specifications
which have been previously submitted to and approved in writing by
Landlord. After the initial Tenant improvements are made, no
alterations or physical additions in or to the Premises may be made
without Landlord’s prior written consent, which shall not be
unreasonably withheld , conditioned or delayed; however,
Landlord may withhold its consent to any alteration or addition
that would affect the Building’s structure, or the
Building’s HVAC, plumbing, electrical, or mechanical systems.
Tenant shall not paint or install lighting or decorations, signs,
window or door lettering, or advertising media of any type on or
about the Premises without Landlord’s prior consent ,
which shall not be unreasonably withheld, conditioned or
delayed . All alterations, additions, or improvements (whether
temporary or permanent in character, and including all
air-conditioning equipment and all other equipment that is in any
manner connected to the Building’s plumbing system) made in
or upon the Premises, either by Landlord or Tenant, shall be
Landlord’s property at the end of the Term and shall remain
on the Premises (unless Landlord requires removal of same) without
compensation to Tenant. Approval by Landlord of Tenant’s
plans and specifications prepared in connection with any
improvements in the Premises shall not constitute a representation
or warranty as to the adequacy or sufficiency of such plans and
specifications, or the improvements to which they relate, for any
use, purpose, or condition, but such approval shall merely be the
consent of Landlord as required hereunder. Tenant shall be
responsible for the cost of all action required to comply with the
requirements of the Americans with Disabilities Act of 1990 (the
“ADA”), and all rules, regulations, and guidelines
promulgated thereunder, as the same may be amended from time to
time, necessitated by any installations, additions, or alterations
made in or to the Premises at the request of or by Tenant or by
Tenant’s use of the Premises (other than retrofit whose cost
has been particularly identified as being payable by Landlord in an
instrument signed by Landlord and Tenant). If Landlord’s
prior consent is required, such consent shall not be unreasonably
withheld or delayed; however, Landlord may withhold its consent to
any such painting or installation which would affect the appearance
of the exterior of the Building or of any common areas of the
Building. Landlord shall be responsible for the cost of compliance
with the ADA for all portions of the Property not subject to the
Premises or other leases with tenants.
11. LANDLORD’S
SERVICES
a. Services . Provided
no Event of Default exists, and subject to interruptions beyond
Landlord’s control, Landlord shall use all reasonable efforts
to furnish to Tenant the services outlined on Exhibit
“D” attached hereto. Landlord shall maintain the common
areas and facilities of the Building
Property in reasonably good order and condition, except for
damage occasioned by Tenant, or its employees, agents or
invitees.
b. Excess Utility Use
. Landlord shall use reasonable efforts to furnish electrical
current for a reasonable number of computers, electronic data
processing equipment, special lighting, and other equipment that
requires more than 110 volts, or other equipment whose electrical
energy consumption exceeds normal office usage through the
then-existing feeders and risers serving the Building and the
Premises, and Tenant shall pay to Landlord the cost of such service
within ten (10) days after Landlord has delivered to Tenant an
invoice therefor. The amount of such additional consumption and
potential consumption shall be paid by Tenant and shall be
determined by a separate meter in the Premises which shall be
installed by Landlord, at Tenant’s expense. Tenant shall not
install any electrical equipment requiring special wiring or
requiring voltage in excess of 110 volts or otherwise exceeding
Building capacity unless approved in advance by Landlord. The use
of electricity in the Premises shall not exceed the capacity of
existing feeders and risers to or wiring in the Premises. Any
risers or wiring required to meet Tenant’s excess electrical
requirements shall, upon Tenant’s written request,
be
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installed by Landlord, at
Tenant’s cost, if, in Landlord’s sole and absolute
judgment, the same are necessary and shall not cause permanent
damage or injury to the Building or the Premises, cause or create a
dangerous or hazardous condition, entail excessive or unreasonable
alterations, repairs, or expenses, or interfere with or disturb
other tenants of the Building. If Tenant uses machines or equipment
(other than general office machines, excluding computers and
electronic data processing equipment) in the Premises which affect
the temperature otherwise maintained by the air conditioning system
or otherwise overload any utility, Landlord may install
supplemental air conditioning units or other supplemental equipment
in the Premises, and the cost thereof, including the cost of
installation, operation, use, and maintenance, shall be paid by
Tenant to Landlord within ten (10) days after Landlord has
delivered to Tenant an invoice therefor.
c. Change or
Discontinuance . Landlord’s obligation to furnish
services under Section 11a shall be subject to the rules and
regulations of the supplier of such services and governmental rules
and regulations. Landlord may change or discontinue services as
needed to comply with such rules or regulations.
d. Restoration of
Services; Abatement . Landlord shall use reasonable efforts to
restore any service that becomes unavailable. Any unavailability
shall not render Landlord liable for any damages caused thereby,
nor shall be a constructive eviction of Tenant, constitute a breach
of any implied warranty, or, except as provided in the next
sentence, entitle Tenant to any abatement of Tenant’s
obligations hereunder. However, if Tenant is prevented from making
reasonable use of the Premises for more than thirty (30) days in
any forty-five (45) consecutive days
day period because of the unavailability of any such
service, Tenant shall, as its exclusive remedy therefor, be
entitled to a reasonable abatement of Rent for each
consecutive day (after such forty five
(45) day period) that Tenant is so prevented from
making reasonable use of the Premises. Tenant agrees to promptly
notify Landlord in writing of any interruption of
services.
e. Additional Services
. Should Tenant desire any additional services beyond those
described here or service outside the normal times Landlord
provides such services, Landlord may (at Landlord’s option),
upon reasonable advance notice from Tenant, furnish such services
and Tenant shall pay Landlord such charges as may be agreed on
between Landlord and Tenant, but in no event at a charge less than
Landlord’s actual cost plus overhead for the additional
services provided. By way of illustration and not limitation,
special equipment requiring abnormal use of water or electricity
used as a power source for data processing machines, including air
conditioning costs therefor, large business machines and similar
equipment of high electrical consumption shall not be standard and
the costs thereof shall be paid by Tenant within ten (10) days
after Landlord delivers to Tenant an invoice therefor. Landlord
shall, at Tenant’s sole cost and expense, install separate
meters for measuring consumption of non-standard services within
the Premises. Landlord hereby agrees that the equipment and
machinery of Tenant in the Premises on June 1, 2001 is standard and
no additional charge shall be attributed thereto.
12. REPAIRS
a. Landlord’s Repair
Obligations . Within a reasonable time following receipt of
written notice from Tenant of the necessity therefor, Landlord
shall make necessary repairs to maintain the structure of the
Premises and the Building. “Structure” or
“structural” for purposes of this Lease shall mean only
the following: exterior windows, pavement, foundation, roof
framing and roof, weight bearing columns and weight bearing walls
(specifically excluding interior surfaces). If any such repair is
required because of any act, neglect, or fault of Tenant, its
agents, employees, licensees, or contractors, then Tenant shall pay
all costs therefor within ten (10) days after Landlord has
delivered the Tenant an invoice therefor.
b. Tenant’s
Repairs . Tenant agrees to promptly make all repairs (including
replacements and alterations where necessary) necessary to keep the
interior of the Premises in good order, repair and condition,
except for those necessitated by reasonable use and wear and to
repair any damage caused by Tenant or Tenant’s agents,
contractors, or invitees to any of the Property. The interior shall
include:
(i) interior faces of the
exterior walls of the building;
(ii) interior face of the
ceilings;
(iii) floor
coverings;
(iv) portion of the wiring,
plumbing, pipes, conduits and other water, sewerage, utility, and
sprinkler fixtures and equipment in the Premises which serve the
Premises exclusively; and which are not located within the floors,
walls or ceiling; and
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(v) all interior
glass.
c. Performance of Work
. All work described in Sections 9 and 10 above and in this
Section 12 shall be performed only by Landlord or by
contractors and subcontractors approved in writing by Landlord.
Prior to beginning any work, Tenant shall cause all contractors and
subcontractors to procure and maintain insurance against such
risks, in such amounts, and with such companies as set forth in
Section 15c and as Landlord may reasonably require, and shall
procure payment and performance bonds reasonably satisfactory to
Landlord covering the cost of the work. All such work shall place
the Property in as good or better condition as that which existed
at the time of such repair and shall be performed in accordance
with all legal requirements and in a good and workmanlike manner so
as not to damage any portion of the Property. Any such work which
may affect the HVAC, electrical system, or plumbing must be
approved by an engineer acceptable to Landlord.
d. Mechanic’s
Liens . Tenant shall not permit any mechanic’s or other
liens to be filed against the Premises or the Property for any
obligation incurred by or at the request of Tenant. If such a lien
is filed, then Tenant shall, no later than ten (10) days after
Landlord has notified Tenant, either pay the amount of the lien or
diligently contest such lien and deliver to Landlord a bond or
other security reasonably satisfactory to Landlord. If Tenant fails
to timely take either such action, then Landlord may pay the lien
claim without inquiry as to the validity thereof, and any amounts
so paid, including expenses and interest, shall be paid by Tenant
to Landlord within ten (10) days after Landlord has delivered
to Tenant an invoice therefor.
13. TRANSFERS
a. Transfers; Consent
. Tenant shall not, without the prior written consent of Landlord
(which Landlord may grant or deny in its sole
discretion) (which consent shall not be unreasonably
withheld) ; (a) advertise that any portion of the Premises
is available for lease; (b) assign, transfer, or encumber this
Lease or any estate or interest herein, whether directly or by
operation of law; (c) permit any other entity to become Tenant
hereunder by merger, consolidation, or other reorganization;
(d) 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; (e) sublet any portion of the Premises;
(f) grant any license, concession, or other right of occupancy
of any portion of the Premises; or (g) permit the use of the
Premises by any parties other than Tenant (any of the events listed
in clauses (b) through (g) being a “
Transfer ”). Notwithstanding, Landlord’s
prior written consent shall not be required for a Transfer pursuant
to provisions (c) and/or (d) above provided that the successor
entity has a net worth equal to or greater than that of Tenant and
provided that Tenant and the proposed transferee comply with all
other terms and conditions of this Section 13. 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 and business history; 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 credit worthiness and character. Tenant
shall reimburse Landlord for its attorneys’ fees and other
expenses incurred in connection with considering any request for
its consent to a Transfer. If Landlord consents to a proposed
Transfer, then the proposed transferee shall deliver to Landlord a
written agreement whereby it expressly assumes Tenant’s
obligations hereunder; however, any transferee of less than all of
the space in the Premises 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 therefor. Landlord’s consent to a Transfer
shall not release Tenant from performing its obligations under this
Lease, but rather Tenant and its transferee shall be jointly and
severally liable therefor and Tenant shall execute any documents
reasonably required by Landlord to confirm same. Landlord’s
consent to any Transfer shall not waive Landlord’s rights as
to any subsequent Transfers. If an Event of 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 Rent. Tenant authorizes its transferees to make
payments of rent directly to Landlord upon receipt of notice from
Landlord to do so.
b. Additional
Compensation . Tenant shall pay to Landlord, immediately upon
receipt thereof, fifty percent (50%) of all compensation
received by Tenant for a Transfer (whether permitted or not) that
exceeds the Rent paid by Tenant to Landlord for the applicable
portion of the Premises covered thereby. Landlord’s
acceptance of such Additional Compensation shall not constitute
Landlord’s approval of any Transfer that was not approved by
Landlord or permitted by this Lease.
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14. INDEMNITY & LIABILITY
LIMITATION
Tenant shall, to the extent
permitted by applicable law, defend, indemnify and hold harmless
Landlord from all loss, claims, demand, damage, liability or
expense, including, attorneys’ fees, resulting from any
injury to or death of any person or any loss of or damage to any
property caused by or resulting from any act, omission or
negligence of Tenant or any officer, employee, agent contractor,
licensee, guest, invitee or visitor of Tenant in or about the
Premises or the Property. The foregoing provision shall not be
construed to make Tenant responsible for loss, damage, liability or
expense resulting from injuries caused by any act, omission or
negligence of Landlord or of any officer, employee, agent,
contractor, invitee or visitor of Landlord. Landlord shall not be
liable for any loss or damage to person, property or Tenant’s
business sustained by Tenant, or other persons, which may be caused
by the Property or the Premises, or any appurtenances thereto,
being out of repair or by the bursting or leakage of any water,
gas, sewer or steam pipe, or by theft or by any act of neglect of
any tenant or occupant of the Property, or any other
person.
15. INSURANCE
a. Insurance by
Landlord . Landlord shall insure the Building, including the
Premises, against loss or damage by fire or other hazards by
maintaining a broad form property insurance policy with extended
coverages and traditional business interruption coverage. Landlord
shall not be obligated to insure against damage to Tenant’s
personal property, trade fixtures, or improvements to the Premises.
If the tenant finish improvements installed by or for Tenant are in
excess of those provided for in Exhibit E or if any alterations or
improvements made by Tenant result in an increase in
Landlord’s insurance premiums, then such increase shall be
borne by Tenant, who shall reimburse Landlord within ten
(10) days after being invoiced therefor.
b. Insurance by Tenant
. Tenant shall obtain and keep in effect the following insurance
insuring Tenant, Landlord and all mortgagees and any other person
or entity designated by Landlord as having an interest in the
Property (as their interests may appear):
(i) Insurance upon all
property in the Premises owned by Tenant or for which Tenant is
legally liable and on fixtures and improvements installed in the
Premises. Such policies shall be for an amount of the full
replacement cost with broad form property coverage with traditional
“extended coverage”, including but not limited to
vandalism, malicious mischief, sprinkler leakage and water
damage;
(ii) Business
interruption insurance in an amount sufficient to reimburse Tenant
for direct or indirect loss of earnings attributable to prevention
of use or access to the Building or Premises as a result of such
perils;
(iii) Commercial general
liability insurance including fire, legal liability and
“insured contracts” coverage with respect to the
Tenant’s operations associated with the Building and the
Premises, including activities conducted by Tenant and any other
person associated with the Tenant in the Premises and Tenant and
any other person performing work on behalf of Tenant and those for
whom Tenant is by law responsible in any other part of the
Building. Such insurance shall be written with inclusive limits of
not less than One Million Dollars ($1,000,000) for each occurrence
for bodily injury and property damage, personal injury, or other
injury, or such higher limits as Landlord, acting reasonably, may
require from time to time. The limit of said insurance shall not,
however, limit the liability of Tenant hereunder. Landlord shall be
added as additional insured on all liability policies maintained by
Tenant;
(iv) Worker’s
compensation insurance for all Tenant’s employees working in
the Premises in an amount sufficient to comply with applicable laws
or regulations, including employer’s liability coverage with
limits not less than $500,000; and
(v) Any other form of
insurance as Tenant, Landlord or its mortgagee, may reasonably
require from time to time. Such insurance shall be in form,
amounts, and for the risks which a prudent Tenant would
insure.
All policies of insurance
maintained by Tenant shall be in a form acceptable to Landlord with
an A.M. Best rating of at least (A-)(VIII); issued by an insurer
acceptable to Landlord and licensed to do business in the State of
Texas; require at least thirty (30) days written notice to
Landlord of termination or material alteration; and provide that
the interests of Landlord, its mortgagee or those insured parties
designated by Landlord shall not be invalidated because of any
breach or violation of any warranties, representations,
declarations or conditions contained in the policies. All policies
must contain a severability of interest clause, a cross-liability
clause or similar policy language incorporated within the
controlling policy form, and shall be primary and shall not provide
for contribution of any other insurance available to Landlord, its
mortgagee, or those named insured parties designated by Landlord.
If requested by Landlord, Tenant shall, upon the Commencement Date,
and thereafter within fifteen
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(15) days prior to the
expiration date of each such policy, promptly deliver to Landlord,
or Landlord’s designated representative, certified copies and
written evidence satisfactory to Landlord that all premiums have
been paid and all polices are in effect. If Tenant fails to secure
or maintain any insurance coverage required by Landlord, or should
insurance secured not be approved by Landlord and such failure or
approval not be corrected within forty eight (48) hours after
written notice from Landlord, Landlord may, without obligation,
purchase such required insurance coverage at Tenant’s
expense. Tenant shall promptly reimburse Landlord for any monies so
expended as additional rent.
c. Tenant’s
Contractor’s Insurance . Tenant shall require any
contractor of Tenant permitted to perform work in, on, or about the
Premises to obtain and maintain the following insurance coverage at
no expense to Landlord:
(i) Commercial general
liability insurance, including the traditional broad form general
liability coverages, in the amount of One Million Dollars
($1,000,000), adding Landlord and Tenant as additional insured
parties;
(ii) Worker’s
compensation insurance for all contractor’s employees working
in the Premises in an amount sufficient to comply with applicable
laws or regulations;
(iii) Employers liability
insurance in an amount not less than One Hundred Thousand Dollars
($100,000); and
(iv) Any other insurance as
Tenant, Landlord or its mortgagee may reasonably require from time
to time.
d. Increase of
Premiums . Tenant will not do anything or fail to do
anything If Tenant changes its current use of the
Premises which will cause the cost of Landlord’s
insurance to increase or which will prevent Landlord from procuring
policies (including but not limited to public liability) from
companies and in a form satisfactory to Landlord. If any breach of
this Section 15d by Tenant shall cause the rate of fire or
other insurance to be increased, Tenant shall pay the amount of
such increase as additional rent promptly upon being billed
therefor.
e. Tenant’s
Additional Insurance . Landlord makes no representation that
the limits of liability specified to be carried by Tenant under the
terms of this Lease are adequate to protect Tenant against
Tenant’s undertaking under this Section 15.
16. CASUALTY
a. Repair Estimate .
If the Premises or the Building are damaged by fire or other
casualty (a “ Casualty ”), Landlord shall,
within thirty (30) days after such Casualty, deliver to Tenant
a good faith estimate (the “ Damage Notice ”) of
the time needed to repair the damage caused by the
Casualty.
b. Landlord’s and
Tenant’s Rights . If, because of a Casualty, Tenant is
prevented from conducting its business in the Premises in a manner
reasonably comparable to that conducted immediately before such
Casualty and Landlord estimates that the damage caused thereby
cannot be repaired within one hundred eighty (180)
ninety (90) days after the commencement of
repair date of the Casualty ( “Substantial
Casualty” ), then Landlord may, at its expense, relocate
Tenant to office space reasonably comparable to the Premises,
provided that Landlord notifies Tenant of its intention to do so in
the Damage Notice. If Landlord relocates Tenant, Rent shall be
abated only from the date of such damage
Substantial Casualty until the relocation premises are
tendered to Tenant, and thereafter, Tenant shall pay to Landlord
the lesser of the Rent or the fair market rental value of the
replacement premises (including all additional rent and expenses
associated therewith). Such relocation may be for a portion of or
the entire remaining Term. Land
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