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PROS HOLDINGS, INC. | HOUSTON COMMUNITY COLLEGE SYSTEM. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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This Office Lease (the "Lease") is entered into, and shall be effective, as of the 31st day of January 2001 (the "Effective Date"), by and between Houston Community College System, a local governmental entity organized pursuant to the Texas Education Code ("Landlord") and PROS Revenue Management, Inc. , ("Tenant"). 1. Basic Lease Information. The key business terms used in this Lease are defined as follows: A. "Building" shall mean the building located at 3100 Main Street (Exhibit A-1) and commonly known as the "ComTech Center" . B. "Rentable Square Footage of the Building" is deemed to be 531,000 square feet. C. "Premises" shall mean the area shown on Exhibit A-2 to this Lease, as well as any additional areas within the Building which have been leased by Tenant pursuant to the terms of this lease. As of the date of execution of this Lease, the Premises are located on floors 9 and 10. The "Rentable Square Footage of the Premises" or "RSF" is deemed to be 65,831 square feet with respect to the Initial Premises and will increase to 73,200 square feet when the Subsequent Premises is added to the Premises. RSF will increase as additional Premises are leased by Tenant. If the Premises include one or more floors in their entirety, all corridors and restroom facilities located on such full floor(s) shall be considered part of the Premises. Landlord and Tenant stipulate and agree that the Rentable Square Footage of the Building and the Rentable Square Footage of the Premises are correct and will not be remeasured. The Premises will be located in an area of the Building which will be part of a condominium regime to be created by a "Condominium Declaration" to be filed by Landlord in the Official Records of Harris County, Texas after the date of execution of this Lease. Upon filing of the Condominium Declaration, the description of the Premises area set forth in the Condominium Declaration will become the description of the Premises for the purpose of this Lease. D. "Base Rent "will commence on the later of (i) the Commencement Date; or (ii) a date which is 120 days after the Landlord has substantially completed the Landlord Construction Obligation as set forth in paragraphs 1a through 1g of Exhibit D for the Initial Premises and Subsequent Premises, as well as premises leased pursuant to the First Expansion Option, Second Expansion Option or any Preferential Right Area. Base Rent will be:
(1) Commencing as of the Commencement Date of the Term of this Lease, the Tenant will be entitled to receive a credit as prepaid Rental of Base Rent equal to $0.3152 per RSF multiplied by the number of months remaining on the Term (up to 60 months) of the Initial Premises, to be applied monthly against Base Rent as it falls due. 1 (2) Commencing on the Commencement Date of the Subsequent Premises, the Tenant will be entitled to receive a credit as prepaid Rental of Base Rental equal to $0.3152 per RSF multiplied by the number of months remaining on the Term (up to 60 months) with respect to the Subsequent Premises, to be applied monthly against Base Rent as it becomes due. (3) Commencing on the Commencement Date of the First Expansion space (see Rider No. 1) the Tenant will be entitled to receive a credit as prepaid Rental of Base Rental equal to $0.3152 per RSF multiplied by the number of months remaining on the Term of the First Expansion Space up to 60 months, to be applied monthly against Base Rent as it becomes due. (4) Commencing on the Commencement Date of the Term of the Second Expansion Space (see Rider No. 1) the Tenant will be entitled to receive a credit as prepaid Rental of Base Rental equal to $0.3152 per RSF for each month remaining on the Term of the Second Expansion Space up to 60 months, to be applied monthly against Base Rent as it becomes due. (5) Commencing as of the Commencement Date of the Term of any Leased Space within the Preferential Rights Area (see Rider No. 1), the Tenant will be entitled to receive a rebatement of the Base Rental equal to $0.3152 per RSF multiplied by the number of months remaining on the Term (up to 60 months) with respect to space leased pursuant to a Preferential Right, to be applied monthly against Base Rental as it becomes due. E. " Tenant's Pro Rata Share" is equal to the Rentable Square Footage of the Premises divided by the Rentable Square Footage of the Building and currently equals 12.3976% with respect to the Initial Premises and will increase to 13.7853% when the Subsequent Premises is added to the Premises. F. " Base Year" for Operating Expenses: 2001 . G. " Term": The Term for the Initial Premises will be 60 months and the Term for the Subsequent Premises will be equal to the remaining term of the Lease on the Initial Premises. Notwithstanding the above, Tenant may at any time prior to June 1, 2002 elect to extend the Term of the Initial Premises and Subsequent Premises so that the Term for the Initial Premises and the Subsequent Premises will equal 60 months from the Commencement Date of the Subsequent Premises. All other items and conditions, including Base Rent, will remain the same. H. " Commencement Date": The Lease Commencement Date will be June 1, 2001 subject to Force Majeure so long as the Landlord has substantially completed the Landlord Construction Obligation as set forth in paragraphs 1a through 1g of Exhibit D. The Landlord will complete the Landlord Construction Obligation with respect to the Initial Premises on or before February 1, 2001 . The Commencement Date with respect to the Subsequent Premises will be no later than June 1, 2002 , so long as the Landlord has completed the Landlord Construction Obligation at least 120 days prior to such date. I. " Landlord Completion Date" will be the date the Landlord has substantially completed the Landlord Construction Obligation as set forth in paragraphs 1a through 1g of the attached Exhibit D, which will be December 31, 2000 with respect to the Initial Premises. J. "Security Deposit": $96,003.54 to be increased to $106,750 on or before the Commencement date of the Subsequent Premises provided that after the expiration of 60 months following the 2 Commencement Date, the Security Deposit shall be refunded to Tenant, so long as no default has occurred under this Lease during such period. K. " Permitted Use": General office and related office uses. L. "Notice Addresses": On or after the Commencement Date, notices shall be sent to Tenant at the Premises. Prior to the Commencement Date, notices shall be sent to Tenant at the following address:
Rent (defined in Section 4.A. ) is payable to the order of Landlord, 3100 Main Street, 12th Floor, Houston, Texas 77002. M. "Business Day(s)" are Monday through Friday of each week, exclusive of New Year's Day, Martin Luther King Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, the day after Thanksgiving Day and Christmas Day ( "Holidays") . Landlord may designate additional Holidays, provided that the additional Holidays are commonly recognized by other office buildings in the area where the Building is located. N. "Landlord Work" means the work that the Landlord is obligated to perform in or to the Premises pursuant to Exhibit D . O. "Law(s)" means all applicable statutes, codes, ordinances, orders, rules and regulations of any municipal or governmental entity, now or hereafter adopted, including but not limited to the Americans with Disabilities Act ( "ADA" ) and all laws pertaining to the environment, including but not limited to the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. §960 et. seq. ( "CERCLA" ). P. "Normal Business Hours" for the Building are 7:00 A.M . to 6:00 P.M . on Business Days and 8:00 A.M. to 12:00 P.M . on Saturdays. Q. "Property" means the Building and the parcel(s) of land on which it is located as more fully described on Exhibit A-1 together with all other buildings and improvements located thereon; and the Parking Facilities and other improvements serving the Building, if any, and the parcel(s) of land on which they are located. R. "Default" means a default which has not been cured. 2. Lease Grant. Landlord leases the Premises to Tenant and Tenant leases the Premises from Landlord, together with the right in common with others to use any portions of the Property that are designated by Landlord for the common use of tenants and others, such as sidewalks, common corridors, elevator foyers, restrooms, vending areas and lobby areas (the "Common Areas" ), but specifically excluding any portion of any "common areas" on any full floor leased by Landlord to third parties or any full floor utilized by Landlord. 3 3. Term; Adjustment of Commencement Date; Possession. A. Term. The Term of this Lease will commence on the Commencement Date and, unless terminated early in accordance with this Lease, continue through the last day of the Term specified in Section 1.G. (the "Expiration Date" ). If Landlord is delayed in delivering possession of the Premises or any other space due to any reason, including Landlord's failure to Substantially Complete the Landlord Construction Obligation by the Landlord Completion Date, such delay will be a default by Landlord and at Tenant's option, the Tenant may, upon 60 days prior written notice cancel this Lease, unless within such period Landlord has cured such default. If Landlord is so delayed, the Commencement Date shall be postponed until the date Landlord delivers possession of the Initial Premises to Tenant and the Expiration Date shall be postponed by an equal number of days. Promptly after the determination of the Commencement Date, Landlord and Tenant will enter into a commencement letter agreement in the form attached as Exhibit C . If Tenant fails to execute such commencement letter agreement, the Commencement Date shall be deemed to be the date certified as the Commencement Date by the Landlord. Notwithstanding any other provision of this Lease to the contrary, if the Expiration Date would occur on a date other than the last day of a calendar month, then the Expiration Date shall be automatically extended to the last day of such calendar month. B. Substantial Completion. The Landlord Work shall be deemed to be "Substantially Complete" on the date that all Landlord Work has been performed, other than any details of construction, mechanical adjustment or other similar matter, the noncompletion of which does not materially interfere with Tenant's ability to proceed with any Tenant Improvements approved by Landlord. C. Acceptance of Premises. Subject to Landlord's obligation to perform the Landlord Work and Landlord's repair obligations under Section 10.B, the Premises are accepted by Tenant in "AS IS WHERE IS" condition and configuration. By taking possession of the Premises, Tenant agrees that the Premises are in good order and satisfactory condition, and that no representations or warranties have been made by the Landlord regarding the condition of the Premises or the Building except as may be specifically set forth in this Lease. D. Possession of Premises Prior to Commencement Date. If Tenant takes possession of the Premises or commences business activities at the Premises before the Commencement Date with Landlord's permission, such possession and occupancy will be subject to the terms and conditions of this Lease, however, during this period Tenant will not be required to pay Rent for any days of possession before the Commencement Date. A Certificate of Occupancy must be issued to permit possession by the Tenant for any reason other than for the purpose of constructing Tenant Improvements pursuant to Landlord approved Construction Documents, installing furniture, equipment or other personal property. 4. Rent. A. Payments. As consideration for this Lease, commencing on the dates specified in paragraph 1D with respect to the applicable premises therein specified, Tenant will pay Landlord, without any setoff or deduction, unless a setoff is specifically permitted by an express provision of this Lease, the total amount of Base Rent and Additional Rent due and payable for the Term in the manner set forth in this Lease. "Additional Rent" means all sums (exclusive of Base Rent) that Tenant is required to pay Landlord, subject to the prepaid rental credit specified in paragraph 1d. Additional Rent and Base Rent are sometimes collectively referred to as "Rent" . Tenant will pay and be liable for all rental, sales and use taxes (but excluding income taxes), if any, imposed upon or measured by Rent under applicable Law. Base Rent and recurring monthly charges of Additional Rent shall be due and payable in advance on the first day of each calendar month without notice or demand. All other items of Rent will be due and payable by Tenant on or before 30 days after billing by Landlord. All payments of Rent will be by good and sufficient check acceptable to Landlord. If the Term commences on a day other than the first day of a calendar month, the monthly Base Rent and Tenant's Pro Rata Share of 4 any Excess Operating Expenses (defined in Section 4.B. ) for the month will be prorated on a daily basis based on a 360 day calendar year. Landlord's acceptance of less than the correct amount of Rent will be considered a payment on account of the earliest Rent due. No endorsement or statement on a check or letter accompanying a check or payment shall be considered an accord and satisfaction, and either party may accept such check or payment without such acceptance being considered a waiver of any rights such party may have under this Lease or applicable Law, unless a setoff is specifically permitted by an express provision of this Lease. Tenant's covenant to pay Rent is independent of every other covenant in this Lease. B. Excess Operating Expenses. Tenant will pay Tenant's Pro Rata Share of the amount, if any, by which Operating Expenses (defined in Section 4.D. ) for each calendar year during the Term exceed Operating Expenses for the Base Year (the "Excess Operating Expenses" ). In no event will Base Rent be reduced if Operating Expenses for any calendar year are less than Operating Expenses for the Base Year No later than January 1 of each calendar year, Landlord will provide Tenant with a good faith estimate of the Excess Operating Expenses for such calendar year during the Term. On or before the first day of each month, Tenant will pay to Landlord a monthly installment equal to one-twelfth of Tenant's Pro Rata Share of Landlord's estimate of the Excess Operating Expenses. If Landlord determines that its good faith estimate of the Excess Operating Expenses was incorrect, Landlord will within a reasonable period of time provide Tenant with a revised estimate. If Landlord does not provide Tenant with an estimate of the Excess Operating Expenses by January 1 of a calendar year, Tenant will continue to pay monthly installments based on the most recent estimate(s) until Landlord provides Tenant with the new estimate. Upon delivery of the new estimate, an adjustment will be made for any month for which Tenant paid monthly installments based on the previous year's estimate(s). Tenant will pay Landlord the amount of any underpayment within 30 days after receipt of the new estimate. Any overpayment will be refunded to Tenant within 30 days or credited against the next due future installment(s) of Additional Rent, at Tenant's option. The obligation of Tenant to pay for Excess Operating Expenses as provided herein will survive the expiration or earlier termination of this Lease. C. Reconciliation of Operating Expenses. Within 120 days after the end of each calendar year or as soon thereafter as is practicable, Landlord shall furnish Tenant with a statement of the actual Operating Expenses and Excess Operating Expenses for such calendar year. If the estimated Excess Operating Expenses paid by Tenant for such calendar year are more than the actual Excess Operating Expenses for such calendar year, Landlord shall apply any overpayment by Tenant against Rent due or next becoming due; provided, if the Term expires before the determination of the overpayment, Landlord shall refund any overpayment to Tenant after first deducting the amount of Rent due. If the estimated Excess Operating Expenses paid by Tenant for the prior calendar year are less than the actual Excess Operating Expenses for such year, Tenant shall pay Landlord, within 30 days after its receipt of the statement of Operating Expenses, any underpayment for the prior calendar year. D. Operating Expenses Defined. "Operating Expenses" means all costs and expenses incurred or accrued in each calendar year in connection with the ownership, operation, maintenance, management, repair and protection of the Property which are directly attributable to and reasonably allocable to the Building or Property, including Landlord's personal property used in connection with the Property and including, but not limited, to all reasonable costs and expenditures relating to the following: (1) Operation, maintenance, repair and replacements of any part of the Property, including the mechanical, electrical, plumbing, HVAC, vertical transportation, fire prevention and warning and security systems; materials and supplies (such as light bulbs and ballast); equipment and tools; floor, wall and window coverings; personal property; required or beneficial easements; and related service agreements and rental expenses. (2) Administrative and management fees, including accounting, information and professional services (except for negotiations and disputes with specific tenants not affecting other parties); 5 management office(s); and wages, salaries, benefits, reimbursable expenses and taxes (or allocations thereof) for full and part time personnel involved in operation, maintenance and management. (3) Janitorial service; window cleaning; waste disposal; gas, water and sewer and other utility charges (including add-ons); and landscaping, including all applicable tools and supplies. (4) Property, liability and other insurance coverages carried by Landlord, including deductibles and risk retention programs and an allocation of a portion of the cost of blanket insurance policies maintained by Landlord and/or its affiliates. (5) Real estate taxes, assessments, business taxes, excises, association dues directly related to the Property, fees, levies, charges and other taxes of every kind and nature whatsoever, general and special, extraordinary and ordinary, foreseen and unforeseen, including interest on installment payments, which may be levied or assessed against or arise in connection with ownership, use, occupancy, rental, operation or possession of the Property (including, without limitation, personal property taxes for property that is owned by Landlord and used in connection with the operation, maintenance and repair of the Property), or substituted, in whole or in part, for a tax previously in existence by any taxing authority, or assessed in lieu of a tax increase, or paid as rent under any ground lease. Real estate taxes do not include Landlord's income, franchise or estate taxes (except to the extent such excluded taxes are assessed in lieu of taxes included above). The Tenant's share of real estate taxes for the Building will be based upon that portion of the Building which is assessed for taxation by the Harris County Appraisal District ("HCAD"). The Tenant's share of such real estate taxes will be a fraction, the denominator of which will be that portion of the Building which is assessed for taxation by HCAD and the numerator of which will be the Premises. Real estate taxes for the Parking Facility, if any, will be based upon Tenant's Prorata Share. (6) Compliance with Laws, including license, permit and inspection fees; and all expenses and fees, including attorneys' fees and court costs, incurred in negotiating or contesting real estate taxes or the validity and/or applicability of any governmental enactments which may affect Operating Expenses; provided Landlord shall credit against Operating Expenses any refunds received from such negotiations or contests to the extent originally included in Operating Expenses (less Landlord's reasonable costs). (7) Security services, to the extent provided or contracted for by Landlord. (8) Goods and services purchased from landlord's subsidiaries and affiliates to the extent the cost of same is generally consistent with rates charged by unaffiliated third parties for similar goods and services and under similar circumstances (except no such limitation shall apply in emergencies). (9) Depreciation (or amortization) of capital expenditures incurred: (A) to conform with Laws; (B) to provide or maintain building standards (other than building standard tenant improvements); or (C) with the intention of promoting safety or reducing or controlling increases in Operating Expenses, such as lighting, retrofit and installation of energy management systems. Such expenditures shall be depreciated or amortized uniformly over a reasonable period of time determined by Landlord, together with interest on the undepreciated or unamortized balance at the Prime Rate (hereinafter defined) (as of the date incurred) plus 2%. (10) Utilities used in the operation, maintenance and use of the Property (including all premises occupied by tenants); sales, use, excise and other taxes assessed by governmental authorities on electrical services supplied to the Property, and other costs of providing utility services to the Property. 6 E. Exclusions from Operating Expenses. Operating Expenses exclude the following expenditures: (1) Leasing commissions, attorneys' fees and other expenses related to leasing tenant space and constructing improvements for the sole benefit of an individual tenant. (2) Goods and services furnished to an individual tenant of the Building above building standard which are separately reimbursable directly to Landlord in addition to Excess Operating Expenses. (3) Repairs required because of casualty or condemnation damage to the extent of insurance or condemnation proceeds actually received by Landlord. (4) Except as provided in Section 4.D(9) , depreciation, amortization, interest payments on any encumbrances on the Building and the cost of capital improvements or additions and replacements. F. Proration of Operating Expenses; Adjustments. If Landlord incurs Operating Expenses for the Property together with one or more other buildings or properties, whether pursuant to a reciprocal easement agreement, common area agreement or otherwise, the shared costs and expenses shall be equitably prorated and apportioned by Landlord between the Property and the other buildings or properties. If the Building is not 100% occupied during any calendar year or if Landlord is not supplying services to 100% of the total Rental Square Footage of the Building at any time during a calendar year, Operating Expenses shall be determined as if the Building had been 100% occupied and Landlord had been supplying services to 100% of the Rentable Square Footage of the Building during that calendar year. If Tenant pays for its Pro Rata Share of Operating Expenses based on increases over a "Base Year" and Operating Expenses for a calendar year are determined as provided in the prior sentence, Operating Expenses for the Base Year shall also be determined as if the Building had been 100% occupied and Landlord had been supplying services to 100% of the Rental Square Footage of the Building. The extrapolation of Operating Expenses under this Section shall be performed by Landlord by adjusting the cost of those components of Operating Expenses that are impacted by changes in the occupancy of the Building. G. Audit Rights. Within 60 days (the "Audit Election Period" ) after Landlord furnishes its statement of actual Operating Expenses for any calendar year (including the Base Year), Tenant may, at its expense during Landlord's normal business hours, elect to audit Landlord's Operating Expenses for such calendar year only, subject to the following conditions: (1) there is no uncured event of default under this Lease; (2) the audit shall be prepared by an independent certified public accounting firm of recognized national standing; (3) in no event shall any audit be performed by a firm retained on a "contingency fee" basis; (4) the audit shall commence within 30 days after Landlord makes Landlord's books and records available to Tenant's auditor and shall conclude 90 days after commencement; (5) the audit shall be conducted where Landlord maintains its books and records and shall not unreasonably interfere with the conduct of Landlord's business; (6) Tenant and its accounting firm shall treat any audit in a confidential manner and shall each execute Landlord's confidentiality agreement for Landlord's benefit prior to commencing the audit; and (7) the accounting firm's audit report shall, at a no charge to Landlord, be submitted in draft form for Landlord's review and comment before the final audit report is delivered to Landlord, and any reasonable comments by Landlord shall be incorporated into the final audit report. This paragraph shall not be construed to limit, suspend, or abate Tenant's obligation to pay Rent when due, including estimated Excess Operating Expenses. Landlord shall credit any overpayment determined by the approved audit against the next sums due and owing by Tenant or, if such credit shall equal an amount greater than one months' Rent, or if no further Rent is due, refund such overpayment or the amount thereof in excess of one month's Rent directly to Tenant. Likewise, Tenant shall pay Landlord any underpayment determined by the approved audit within 30 days of determination. The foregoing obligations shall survive the Expiration Date. If Tenant does not give written notice of its election to audit Landlord's Operating Expenses during the 7 Audit Election Period, Landlord's Operating Expenses for the applicable calendar year shall be deemed approved for all purposes, and Tenant shall have no further right to review or contest the same. If Tenant's audit should reveal that Tenant has been overcharged for excess operating expense by a sum greater than 10% and such overcharge is confirmed by Landlord's own audit conducted by an independent certified public accounting firm, then in such case Landlord will reimburse the Tenant the reasonable cost incurred by Tenant's auditors. H. Parking Permits/Charges. The Tenant will be entitled to parking permits for use in the Parking Facility based upon a ratio of 4 permits per 1,000 RSF NRF on the first 73,200 sq. feet leased by Tenant. Thereafter the ratio will be 3 permits per 1,000 RSF. The Tenant will be obligated to take and pay for 230 parking permits on the Lease Commencement Date. The Tenant will be obligated to take and pay for an additional 63 parking permits on the Commencement Date of the Subsequent Premises. Landlord will use reasonable efforts to make any excess unused permits available to Tenant on a month-to-month basis. The current market rate for unreserved space permits—subject to change during the term of this Lease—is $45 plus tax per month. If the rate should change, Tenant will not pay a rate in excess of the market rate for such permits. 5. Compliance with Laws; Use. The Premises will be used only for the Permitted Use and for no other use whatsoever. Tenant will not use or permit the use of the Premises for any purpose which is illegal, creates obnoxious odors (including but not limited to tobacco smoke), noises or vibrations, is dangerous to persons or property, could increase Landlord's insurance costs, or which, in Landlord's reasonable opinion, unreasonably disturbs any other tenants of the Building or interferes with the operation of the Building. Except as provided below, the following uses are expressly prohibited in the Premises; government offices or agencies; personnel agencies; collection agencies; credit unions; telemarketing or reservation centers; medical treatment and health care; restaurants and other retail; customer service offices of a public utility company; or any other purpose which would, in Landlord's reasonable opinion, impair the reputation or quality of the Building, overburden any of the Building systems, Common Areas or parking, impair Landlord's efforts to lease space or otherwise interfere with the operation of the Property. Notwithstanding the foregoing, the following ancillary uses are permitted in the Premises only so long as they do not, in the aggregate, occupy more than 10% of the Rental Square Footage of the Premises or any single full floor (whichever is less): (A) the following services provided by Tenant exclusively to its employees: schools, training and other educational services; credit unions; and similar employee services; and (B) the following services directly and exclusively supporting Tenant's business; telemarketing; reservations; storage; debt collection; and similar support services. Subject to completion of Landlord's Construction Obligation, Tenant shall comply with all Laws, including the ADA as well as any law, rule or regulation which must be complied with to obtain a Certificate of Occupancy, regarding the operation of Tenant's business and the use, condition, configuration and occupancy of the Premises. Tenant, within 10 days after receipt, shall provide Landlord with copies of any notices Tenant receives regarding a violation of alleged violation of any Laws. Tenant shall comply with the rules and regulations of the Building attached as Exhibit B and such other reasonable rules and regulations (or modifications thereto) adopted by Landlord from time to time. Tenant shall also cause its agents, contractors, subcontractors, employees, customers, and subtenants to comply with all rules and regulations. Whenever a conflict shall arise between the language of this Lease and the rules and regulations, the terms of this Lease shall prevail. 6. Security Deposit. The Security Deposit will be delivered to Landlord 30 days prior to the point in time when the Base Rent Credit specified in paragraph 1D(1) has been exhausted and shall be held by Landlord without liability for interest (unless required by Law) as security for the performance of Tenant's obligations. The Security Deposit is not an advance payment of Rent or a measure of Tenant's liability for damages. Landlord may, from time to time, without prejudice to any other remedy, use all or a portion of the Security Deposit to satisfy past due Rent or to cure any uncured default by Tenant after any applicable cure period. If Landlord uses the Security Deposit, Tenant shall on demand restore 8 the Security Deposit to its original amount. Landlord shall return any unapplied portion of the Security Deposit to Tenant within 30 days after the later to occur of: (A) the determination of Tenant's Pro Rata Share of any Excess Operating Expenses for the final year of the Term; (B) the date Tenant surrenders possession of the Premises to Landlord in accordance with this Lease; or (C) the Expiration Date. If Landlord transfers its interest in the Premises, Landlord may assign the Security Deposit to the transferee and, following the assignment, Landlord shall have no further liability for the return of the Security Deposit. Landlord shall not be required to keep the Security Deposit separate from its other accounts. 7. Services to be Furnished by Landlord. A. Standard Services. Landlord agrees to furnish Tenant with the following services during the Term: (1) Water service for use in the lavatories on each floor on which the Premises are located—24 hours a day 7 days a week. (2) Heating, ventilation and air condition service ("HVAC") as appropriate for the season will be provided during the hours, and at the temperature levels set forth below or as may be established by applicable governmental guidelines. In the absence of governmental guidelines HVAC service will be provided during normal business hours 7:00 A.M. to 6:00 P.M. Monday through Friday and 8:00 A.M. to 12:00 noon on Saturday in a temperature range between 68° to 72°. The temperature range after hours and Holiday service will be between 66° to 78°. After hour and Holiday service within the specified temperature range will be provided at no additional cost. Tenant, after giving such advance notice as is reasonably required by Landlord, and subject to the capacity of the Building systems, may request HVAC service in "excess" of the above. Tenant will pay Landlord the standard charge for the additional service which will be $40 per hour per floor during the initial 60 months of this Lease and thereafter at a rate established by Landlord for the Building. (3) Maintenance and repair of the Property as described in Section 10.B , including replacement of building standard fluorescent bulbs and ballasts. (4) Janitor service five days per week (excluding Holidays), as determined by Landlord. If Tenant's use, floor covering or other improvements require special services in excess of the standard services for the Building, Tenant shall pay the additional cost attributable to the special services. Janitor service will be generally in conformity with the Janitorial Schedule attached as Rider No. 2. (5) Elevator service during normal business hours will be provided. After hours, elevator service is also available, but with a reduced number of cabs. Freight elevator service is available, subject to proper authorization and Landlord's policies and procedures for use of the freight elevator(s) in the Building. Subject to the approval of the Landlord, the Tenant at its expense may install a security access system to limit elevator access by third parties at Tenant's Premises. Any security system installed by Tenant must be approved by Landlord and must be in compliance with Landlord's systems. (6) Exterior window washing at such intervals as determined by Landlord, but in no event less than 2 times per year. (7) Electricity to the Premises (during normal business and after hours) for general office use, in accordance with and subject to the terms and conditions in Article 8 . (8) On-site security personnel and equipment for the Building and Parking Facility will include, at a minimum 2 guards on a twenty-four hour basis and camera monitoring of all entrances/exits of the Building and Parking Facility; provided however, the Tenant agrees that Landlord will 9 not be responsible for the adequacy or effectiveness of such security provided that (i) Landlord has exercised reasonable care in the selection of the security contractor and equipment; and (ii) the scope and extent of the security services contracted or implemented by Landlord are generally in keeping with the standards of other comparable office buildings in the Midtown Area of Houston Texas." Notwithstanding the above, Landlord will have the right to provide the above security service through its own police department and/or personnel without further guaranteeing the adequacy or effectiveness of such service . (9) Signage. Tenant will have the right to signage on the granite walls at the corner of Travis and Elgin and Main and Elgin. Landlord will provide an area for identification signage for Tenant directing its visitors to the parking garage. Tenant's directional signage regarding visitors parking in the garage shall be placed in a mutually acceptable location. All exterior signage (including Building and parking garage signage) shall be at Tenant's sole cost and expense and its design and appearance will be subject to written approval by Landlord at its sole discretion. Such approval by Landlord will not be unreasonably withheld, delayed or denied. (10) Landlord will provide up to 25 tons of chilled water for the sole purpose of operating Tenant's supplemental air conditioning equipment in its computer room and its UPS backup system. Tenant will pay for (i) the actual usage of chilled water on a 24-hour basis pursuant to Landlord's established BTU rate to be charged to Tenant and other tenants of the Building for such chilled water usage; (ii) all electrical costs associated with the operation of connecting Tenant's supplemental AC equipment (pursuant to Article 8 of the Lease); an (iii) any and all costs associated with connecting Tenant's supplemental AC equipment to the Building's chilled water unit (including but not limited to all costs associated with riser pipe, electrical conduits and electrical connections). The installation of any supplemental AC equipment will be installed in accordance with Article 10 of the Lease. B. Service Interruptions. Landlord's failure to furnish, or any interruption or termination of, services due to the application of Laws, the failure of any equipment (not attributable to Landlord's gross negligence), the performance of repairs, improvements or alterations, or the occurrence of any other event or cause whether or not within the reasonable control of Landlord (a "Service Failure" ) shall not render Landlord liable to Tenant, constitute a constructive eviction of Tenant, give rise to an abatement of Rent, nor relieve Tenant from the obligation to fulfill any covenant or agreement . In no event shall Landlord be liable to Tenant for any loss or damage, including the theft of Tenant's Property (defined in Paragraph 15), arising out of or in connection with the failure of any security services, personnel or equipment (not attributable to Landlord's gross negligence or willful misconduct). Provided, however, if there is a cessation of HVAC service, electrical service, water service or elevator service which renders the Premises untenable for a period of 5 business days, Rental will abate until such services has been reasonably re-established. If such essential services have not been reasonably re-established within a 45-day period after their initial termination, Tenant, upon 30 days prior written notice, may cancel this Lease unless within such notice period essential services are re-established. C. Third Party Services. If Tenant desires any service which Landlord has not specifically agreed to provide in this Lease, such as private security systems or telecommunications services serving the Premises, Tenant shall procure such service directly from a reputable third party service provider ( "Provider" ) for Tenant's own account. Tenant shall require each Provider to comply with the Building's rules and regulations, all Laws, and Landlord's reasonable policies and practices for the Building. Tenant acknowledges Landlord's current policy that requires all Providers utilizing any area of the Building outside the Premises to be approved by Landlord and to enter into a written agreement 10 acceptable to Landlord prior to gaining access to, or making any installations in or through, such area. Accordingly, Tenant shall give Landlord advance written notice sufficient for such purposes. D. Technology & Communications. Tenant shall have the right, at no cost during the initial term to (i) utilize Landlord's designated riser space in the building for Tenant's cabling between the Premises and to connect to Tenant's telecommunications service providers; (ii) Landlord designated area on the rooftop for Tenant's installation of a microwave tower, antenna, and up 3 satellite dishes (which microwave tower, antenna, and satellite dishes shall be for use only by Tenant and its permitted assigns or subtenant); and (iii) a pad (if required) in the Parking Facility, or other mutually acceptable location, for an emergency generator and diesel fuel tank (which generator and fuel tank shall be for use only by Tenant and its permitted assignees or subtenants), and the right to install and maintain cabling and wiring between the Lease Area and such generator through any trays, chases and risers in the Parking Facility and the Building. The type of equipment discussed in this section, as well as the manner of installation and location of installation of such equipment, shall be subject to Landlord's prior written approval such approval not to be unreasonably withheld, delayed, or denied. Landlord will charge Tenant is actual cost in order to supervise any engineering or construction related to this technology and communications section. Notwithstanding the above, should any modifications or improvements to any existing riser or chase space in the Building and Parking Facility be necessary to provide adequate riser or chase capacity for Tenant's purposes, any such modification or improvement shall be at Tenant's sole cost and expense. 8. Use of Electrical Services by Tenant. A. Landlord's Electrical Service. Landlord will furnish building standard electrical service to the Premises sufficient to operate customary lighting, office machines and other equipment of similar low electrical consumption, provided, however, the foregoing will consist of a 2 watts per RSF for high voltage and at 4 watts per RSF for low voltage ("Tenant's Electrical Allowance"). B. Selection of Electrical Service Provider. Landlord reserves the right to select the provider of electrical services to the Building and/or the Property ("Electrical Provider"). To the fullest extent permitted by Law, Landlord shall have the continuing right, upon 30 days written notice, to change such utility provider and install such components as may be necessary in order to deliver electricity to the Premises. All charges and expenses incurred by Landlord due to any such changes in electrical services, including maintenance, repairs, installation and related costs, shall be included in the electrical services costs referenced in Section 4.D(10). C. Excess Electrical Service. Tenant's use of electrical service is for normal office use and Tenant's consumption of electricity will not exceed, either in voltage, rated capacity or overall load beyond the Tenant Electrical Allowance set out in this Lease. If Tenant requests permission to consume excess electrical service, Landlord will consent to such excess service so long as Tenant complies with conditions reasonably required by Landlord (including, without limitation, the installation of utility service upgrades, meters, submeters, air handlers or cooling units). The costs of any approved additional consumption (to the extent permitted by Law), installation and maintenance and usage (via submetering) will be paid by Tenant. D. Submetering. In the event any electrical equipment in the Premises is separately submetered for the purposes of monitoring Tenant electrical consumption in excess of the Tenant Electrical Allowance, Tenant will pay for Tenant's actual excess electrical consumption monthly in arrears at the same rate as that charged to Landlord, or separately billed to Tenant by the Electrical Provider. Tenant will remain obligated to pay Tenant's Pro Rata Share of the cost of electrical services as provided in Section 4.D (10). 9. Tenant Improvements. All improvements to the Premises installed by Landlord or Tenant (collectively, "Tenant Improvements" ) will be owned by Landlord and will remain upon the Premises 11 without compensation to Tenant. However, Tenant, by written notice to Landlord, may remove, at Tenant's expense, any or all of the following on or before the Expiration Date (or earlier termination): (1) any Tenant Improvements that were installed by the Tenant that are in excess of the costs associated with standard office improvements; and (2) Tenant's personal property (collectively, "Tenant's Removable Property" ). Tenant will be required to remove any batteries, generators, fuel tanks and security systems (not including interior wiring) installed by Tenant. The Tenant will replace all Removed "Tenant Improvements" which were in "excess of standard" with leasehold improvements which would be considered STANDARD, in order to leave the Premises in a reasonably leaseable/useable condition by an office tenant. Tenant's Removable Property shall be removed by Tenant before the Expiration Date or date of termination of this Lease, if earlier than the Expiration Date, provided that upon Landlord's prior written consent, which shall not be unreasonably withheld, Tenant may remain in the Premises for up to five days after the Expiration Date for the sole purpose of removing Tenant's Removable Property. Tenant's possession of the Premises for such purpose shall be subject to all terms and conditions of this Lease, including the obligation to pay Rent on a per diem basis at the rate in effect for the last month of the Term. Tenant shall repair damage caused by the installation or removal of Tenant's Removable Property. If Tenant fails to remove any of Tenant's Removable Property, Landlord may, to the fullest extent permitted by Law: (1) treat such Tenant's Removable Property as abandoned by Tenant with full rights of ownership in Landlord; (2) remove and store any of Tenant's personal property at Tenant's expense with reimbursement by Tenant to Landlord upon demand; and/or (3) sell or dispose of such Tenant's Removable Property without delivering any proceeds to Tenant. To the fullest extent permitted by applicable Law, any unused portion of Tenant's Security Deposit may be applied to offset Landlord's costs set forth in the preceding sentence. Notwithstanding the foregoing, Tenant, at the time it requests approval for a proposed Alteration (defined in Section 10.C. ), may request in writing that Landlord advise Tenant whether the Alteration or any portion of the Alteration will be designated as Tenant's Removable Property. 10. Repairs and Alterations. A. Tenant's Repair Obligations. Tenant will, at its sole cost and expense, promptly perform all maintenance and repairs to the Premises that are not Landlord's express responsibility under this Lease, and shall keep the Premises in good condition and repair, ordinary wear and tear excepted. Tenant's repair obligations include, without limitation, repairs to: (1) floor covering and/or raised flooring; (2) interior partitions; (3) doors; (4) the interior side of demising walls; (5) electronic, phone and data cabling and related equipment (collectively, "Cable" ) that is installed by or for the benefit of Tenant and located in the Premises or other portions of the Building; (6) supplemental air conditioning units, private showers and kitchens, including hot water heaters, plumbing, dishwashers, ice machines and similar facilities serving Tenant exclusively; (7) phone rooms used exclusively by Tenant; (8) Alterations performed by contractors retained by Tenant, including related HVAC balancing; and (9) all of Tenant's furnishings, trade fixtures, equipment and inventory. All work shall be performed in accordance with the rules and procedures described in Section 10.C. below. If Tenant fails to make any repairs to the Premises for more than 15 days after notice from Landlord (although notice shall not be required if there is an emergency and any notice of default given pursuant to Section 19.B. describing such failure shall be deemed to constitute such notice), Landlord may make the repairs, and Tenant shall pay the reasonable cost of the repairs to Landlord within 30 days after receipt of an invoice, together with an administrative charge in an amount equal to 7.5% of the cost of the repairs. B. Landlord's Repair Obligations. Landlord will keep and maintain in good repair and working order and make repairs to and perform maintenance upon: (1) structural elements of the Building; (2) standard mechanical (including HVAC), electrical, plumbing and fire/life safety systems serving the Building generally; (3) Common Areas; (4) the roof of the Building; (5) exterior windows of the Building; and (6) elevators serving the Building. Landlord shall promptly make repairs (considering the nature and urgency of the repair) for which Landlord is responsible. If any of the foregoing 12 maintenance or repair is necessitated due to the acts or omissions of any Tenant Party, Tenant shall pay the costs of such repairs or maintenance to Landlord within 30 days after receipt of an invoice, together with an administrative charge in an amount equal to 7.5% of the cost of the repairs. C. Alterations. Tenant shall not make alterations, additions or improvements to the Premises or install any Cable in the Premises or other portions of the Building including its initial tenant buildout (collectively, "Alterations" ) without first obtaining the written consent of Landlord in each instance, which consent shall not be unreasonably withheld, conditioned, or delayed so long as (i) the buildout is in conformity with the general guidelines and operating criteria of the Building and (ii) will provide for the complete buildout of the Premises to at least a "Building Standard" level buildout. However, Landlord's consent shall not be required for any Alteration that satisfies all of the following criteria (a "Minor Alteration" ): (1) is of a cosmetic nature such as painting, wallpapering, hanging pictures and installing carpeting; (2) is not visible from outside the Premises or Building; (3) will not affect the systems or structure of the Building; and (4) does not require work to be performed inside the walls or above the ceiling of the Premises. However, even though consent is not required, the performance of Minor Alterations shall be subject to all the other provisions of this Section 10.C . Prior to the commencement of any construction, Tenant will submit to the Landlord a complete set of architectural and construction drawings and plans and specifications showing the build out, the modification to any MEP systems, as well as all other improvements to be constructed, altered or modified by the Tenant in the Premises ("Construction Documents"). Within 10 days after submission of such Construction Documents, the Landlord will (i) approve and return the Construction Documents to the Tenant; or (ii) provide the Tenant with Landlord's written changes to the Construction Documents in order to reasonably accommodate Landlord's requested modifications. In the event the Landlord fails to respond or comment on the Construction Documents within such 10 day period, same will be deemed approved. The Tenant must also deliver to Landlord the names of all contractors who must be reasonably acceptable to Landlord (provided that Landlord may designate specific contractors with respect to Building systems); copies of contracts; necessary permits and approvals; evidence of contractor's and subcontractor's insurance in amounts reasonably required by Landlord; and any security for performance that is reasonably required by Landlord. Changes to the plans and specifications must also be submitted to Landlord for its approval. All Alterations or Minor Alterations must be constructed in a good and workmanlike manner using materials of a quality that is at least equal to the quality designated by Landlord in its reasonable discretion as the minimum standard for the Building. Landlord may designate reasonable rules, regulations and procedures for the performance of work in the Building and, to the extent reasonably necessary to avoid disruption to the occupants of the Building, shall have the right to designate the time when Alterations may be performed. Tenant will reimburse Landlord within 30 days after receipt of an invoice for all reasonable sums paid by Landlord for third party examination of Tenant's plans for Alterations. The Landlord will be entitled to supervise and monitor all construction in order to verify compliance with Landlord approved Construction Documents, however, Landlord's supervision will be without cost to Tenant and will not be deemed to modify, amend, or alter in any manner the terms of this Lease or the Landlord approved Construction Documents. The Landlord will have the right to stop construction in the event it determines that construction is not substantially in accordance with the Landlord approved Construction Documents. Upon completion, Tenant shall furnish "as-built" plans (except for Minor Alterations), completion affidavits, full and final waivers of lien and receipts bills covering all labor and materials. Tenants shall assure that the Alterations comply with all insurance requirements and Laws. Landlord's approval of any Alteration shall not be a representation by Landlord that the Alteration complies with applicable Laws or will be adequate for Tenant's use. Tenant acknowledges that Landlord is not an architect or engineer, and that the Alterations will be designed and/or constructed using independent architects, engineers and contractors reasonably approved by Landlord. Accordingly, Landlord does not guarantee or warrant that the applicable construction documents will comply with Laws or be free from errors or omissions, nor that the Alterations will be free from defects, and Landlord will have no liability 13 therefor. Approved Landlord Construction Documents will not be interpreted to have modified the terms and conditions of the Lease, and to the extent any Construction Document or Landlord approved Construction Document does not comply with the terms and conditions of the Lease, then same is expressly disapproved. Modification of the Lease may only occur through written lease modifications, signed by both the Landlord and the Tenant and not through any "deemed approval" process or through the process of obtaining approved Construction Documents. Construction Documents must comply with Landlord policies concerning (i) communications and fire alarm services; (ii) electrical design parameters, including harmonic distortion; (iii) floor load capacity; and (iv) HVAC requirements. 11. Entry by Landlord. Landlord, its agents, contractors and representatives may enter the Premises to inspect or show the Premises, to clean and make repairs, alterations or additions to the Premises, and to conduct or facilitate repairs, alterations or additions to any portion of the Building, including other tenants' premises. Except in emergencies or to provide janitorial and other Building services after Normal Business Hours, Landlord shall provide Tenant with reasonable prior notice of entry into the Premises, which may be given orally. If reasonably necessary for the protection and safety of Tenant and its employees, Landlord shall have the right to temporarily close all or a portion of the Premises to perform repairs, alterations and additions but will endeavor to do so at times which will not unduly inconvenience the Tenant. However, except in emergencies, Landlord will not close the Premises if the work can reasonably be completed on weekends and after Normal Business Hours; provided, however, that Landlord is not required to conduct work on weekends of after Normal Business Hours if such work can be conducted without closing the Premises. Entry by Landlord for any such purposes shall not constitute constructive eviction or entitle Tenant to an abatement or reduction of Rent. 12. Assignment and Subletting. A. Landlord's Consent Required. Except in connection with a Permitted Transfer (defined in Section 12.D ), Tenant may not assign, transfer or encumber any interest in this Lease or sublease or allow any third party to use any portion of the Premises (collectively or individually, a "Transfer" ) without the prior written consent of Landlord, which consent shall not be unreasonably withheld if Landlord does not elect to exercise its termination rights under Section 12.B below. Without limitation, Tenant agrees that Landlord's consent shall not be considered unreasonably withheld if: (1) the proposed transferee's financial condition does not meet the criteria Landlord reasonably uses to select Building tenants having similar leasehold obligations; (2) the proposed transferee is a governmental agency; (3) the proposed transferee is a present occupant of the Building (but only if Landlord has available space within the Building which could accommodate the proposed transferee); (4) Landlord is engaged in active lease negotiations with the proposed transferee for other premises in the Building; (5) an event of default exists under this Lease; (6) any portion of the Building or Premises would likely become subject to additional or different Laws as a consequence of the proposed Transfer and as such would increase Landlord's or other tenants Operating Expenses; (7) the proposed transferee's use of the Premises conflicts with the Permitted Use or any exclusive usage rights granted to any other tenant in the Building; (8) the use, nature, business, activities or reputation in the business community of the proposed transferee (or its principals, employees or invitees) are not acceptable to Landlord;; or (9) the proposed transferee is currently involved in litigation with Landlord or any of its affiliates. Tenant shall not be entitled to receive monetary damages based upon a claim that Landlord unreasonably withheld its consent to a proposed Transfer and Tenant's sole remedy shall be an action to enforce any such provision through specific performance or declaratory judgment. Any attempted Transfer in violation of this Article is voidable at Landlord's option. Consent by Landlord to one or more Transfer(s) shall not operate as a waiver of Landlord's rights to approve any subsequent Transfers. In no event shall any Transfer or Permitted Transfer release or relieve Tenant from any obligation under this Lease. 14 B. Consent Procedure; Termination. As part of its request for Landlord's consent to a Transfer or notification to Landlord of a Permitted Transfer, Tenant shall provide Landlord with financial statements for the proposed transferee, a complete copy of the proposed assignment, sublease and other contractual documents and such other information as Landlord may reasonably request. Landlord shall, by written notice to Tenant within 20 days of its receipt of the required information and documentation, either (1) consent to the Transfer or approve the Permitted Transfer by the execution of a consent agreement in a form reasonably designated by Landlord or reasonably refuse to consent to the Transfer in writing; or (2) refuse to consent to such proposed assignment or sublease if same is not a Permitted Transfer. The failure of the Landlord to respond will be deemed an approval by the Landlord of such proposed transfer. C. Payment to Landlord. If the aggregate consideration paid to Tenant for a Transfer exceeds that payable by Tenant under this Lease (prorated according to the transferred interest), Tenant shall pay Landlord 50% of such excess (after deducting therefrom reasonable leasing commissions and all reasonable costs associated with the Transfer). Tenant shall pay Landlord for Landlord's share of any excess within 30 days after Tenant's receipt of such excess consideration. If Tenant is in Monetary Default (defined in Section 19.A. ), Landlord may require that all sublease payments be made directly to Landlord, in which case Tenant shall receive a credit against Rent in the amount of any payments received (less Landlord's share of any excess). D. No Consent Requested. Tenant may assign its entire interest under this Lease without the consent of Landlord, provided that all of the following conditions are satisfied (a "Permitted Transfer" ): (1) no event of default shall have occurred under this Lease; (2) The Assignee shall have a net worth which is at last equal to the greater of Tenant's net worth at the date of this Lease; (3) no portion of the Building or Premises would likely become subject to additional or different Laws as a consequence of the proposed Transfer; (4) Tenant's successor's use of the Premises shall not conflict with the Permitted Use or any exclusive usage rights granted to any other tenant in the Building; and (5) Tenant shall give Landlord written notice at least 60 days prior to the effective date of the proposed assignment. Tenant's notice to Landlord shall include information and documentation showing that each of the above conditions has been satisfied. If requested by Landlord, the assignee shall sign a commercially reasonable form of assumption agreement. 13. Liens. Tenant shall not permit mechanic's or other liens to be placed upon the Property, Premises or Tenant's leasehold interest in connection with any work or service done or purportedly done by or for the benefit of Tenant. If a lien is so placed, Tenant shall, within 10 days of notice from Landlord of the filing of the lien, fully discharge the lien by settling the claim which resulted in the lien or by bonding or insuring over the lien in the manner prescribed by the applicable lien Law. If Tenant fails to discharge the lien, then, in addition to any other right or remedy of the Landlord, Landlord may bond or insure over the lien or otherwise discharge the lien. Tenant shall reimburse Landlord for any amount paid by Landlord to bond or insure over the lien or discharge the lien, including, without limitation, reasonable attorney's fees within 30 days after receipt of an invoice from Landlord. 14. Intentionally Omitted 15. Insurance. A. Tenant's Insurance. Tenant shall carry and maintain the following insurance ( "Tenant's Insurance" ), at its sole cost and expense: (1) Commercial General Liability Insurance applicable to the Premises and its appurtenances providing, on an occurrence basis, a minimum combined single limit of $4,000,000.l00 (coverage in excess | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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