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LEASE AGREEMENT

Lease Agreement

LEASE AGREEMENT | Document Parties: GEORESOURCES INC You are currently viewing:
This Lease Agreement involves

GEORESOURCES INC

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Title: LEASE AGREEMENT
Date: 8/14/2007
Industry: Oil and Gas Operations     Sector: Energy

LEASE AGREEMENT, Parties: georesources inc
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EXHIBIT 10.19

TABLE OF CONTENTS

 

 

     Page

1. THE PARTIES

   1

2. DEFINITIONS AND BASIC TERMS

   1

3. LEASE OF PREMISES

   3

4. TERM

   3

5. PAYMENT OF RENT

   3

6. ADDITIONAL RENT

   4

7. SECURITY DEPOSIT

   5

8. USE

   6

9. TENANT IMPROVEMENTS

   6

10. ALTERATIONS

   6

11. LANDLORD’S SERVICES

   6

12. REPAIRS

   7

13. TRANSFERS

   8

14. INDEMNITY & LIABILITY LIMITATION

   9

15. INSURANCE

   9

16. CASUALTY

   11

17. CONDEMNATION

   11

18. RULES AND REGULATIONS

   12

19. SUBORDINATION & MORTGAGEES

   12

20. TAXES

   13

21. EVENTS OF DEFAULT

   13

22. REMEDIES

   14

23. LANDLORD’S LIEN

   16

24. NON-WAIVER

   16

25. SURRENDER OF PREMISES

   16

26. HOLDING OVER

   17

27. RIGHTS RESERVED BY LANDLORD

   17

 

 


28. LANDLORD’S DEFAULT

   18

29. RELOCATION

   18

30. PARKING

   18

31. MISCELLANEOUS

   19

32. REPRESENTATIONS, WARRANTIES AND COVENANTS OF TENANT

   20

33. ENVIRONMENTAL PROVISIONS

   21

34. AUTHORITY PARAGRAPH

   22

 

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LEASE AGREEMENT

THIS LEASE AGREEMENT (“Lease”) is entered into between Landlord and Tenant, each as defined below in Section 1.

1. THE PARTIES

 

Landlord’s Name and

  
type of entity: a    Cypress Court Operating Associates, Limited Partnership
   New Mexico limited partnership
Landlord’ Address for Notices:    c/o BGK Texas Property Management, Inc.
   1235 North Loop West, Suite 1025
   Houston, Texas 77008
Landlord’s Payment   
Address:    c/o BGK Texas Property Management, Inc.
   1235 North Loop West, Suite 1025
   Houston, Texas 77008

Tenant’s Name and

type of entity:

   AROC Inc.
   a Delaware corporation

Tenant’s Address

for Notices:

   110 Cypress Station Drive, Suite 220
   Houston, Texas 77090

2. DEFINITIONS AND BASIC TERMS

The following definitions and basic terms shall have the indicated meanings when used in this Lease:

 

a.    Building:    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.
b.    Premises:    Suite Nos. 205, 220, 246, and 250 in the Building. The Premises are outlined on the plan attached to the Lease as Exhibit “B”.
c.    Property:    The Building, the parcel of land upon which the Building is situated and any other improvements located thereon.
d.    Tenant’s Rentable   
   Square Feet:    14,810
e.    Total Rentable Square   
   Feet in the Building:    100,352
f.    Tenant’s Proportionate   
   Share:    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.
g.    Scheduled Commencement Date:    June 1, 2001
h.    Commencement Date:    The Commencement Date is defined in Section 4.

 

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i.    Term:    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.
j.    Base Rent:    Lease Years    Monthly Base Rent    Annual Base Rent
      06/01/01-05/31/02    $19,746.67    $236,960.04
      06/01/02-05/31/03    $19,746.67    $236,960.04
      06/01/03-05/31/04    $19,746.67    $236,960.04
k.    Additional Rent:    Additional Rent is defined in Section 6.
l.    Rent:    Base Rent, Additional Rent and all other sums that Tenant may owe to Landlord under this Lease.
m.    Security Deposit:    $0.00
n.    Expense Stop/ Base Year:    Expense Stop: $ n/a Base Year: 2001
o.    Permitted Use:    General office use and no other.
p.    Property Management Company/Address:   

BGK Texas Property Management, Inc.

1235 North Loop West, Suite 215

Houston, Texas 77008

q.    Maximum Construction   
   Allowance:    $1.00 per Rentable Square Foot or $14,810.00 (lump sum)
r.    Landlord’s Broker   
   (name and address):    none
s.    Tenant’s Broker   
   (name and address):    none
t.    Guarantor(s)   
   (name and address):    none
u.    Parking Spaces:   

Fifty-four (54) unassigned, unreserved parking spaces and

five (5) reserved covered parking spaces

v.    Parking Rent:    $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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