EXHIBIT 10.20
OFFICE LEASE
ARTICLE 1
DEFINITIONS AND CERTAIN BASIC PROVISIONS
1.1 The
following list sets out certain defined terms and certain financial
and other information pertaining to this lease and such defined
terms shall, as used in this lease, have the meanings set forth
below:
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(a) “Landlord”:
SLTS GRAND AVENUE, L.P. , a Texas limited
partnership
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(b) Landlord’s
address: c/o Cooper & Stebbins, L.P., 1256 Main Street, Suite
240, Southlake, Texas 76092.
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(c) “Tenant”:
QUALITY SYSTEMS INC. , a California corporation, d/b/a QSI,
Inc.
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(d) Tenant’s
address: 18191 Von Karman Ave., #450, Irvine, CA 92612
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(e) Tenant’s
trade name: “Nextgen” Healthcare Information
Systems
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(f) Tenant’s
Guarantor(s): None
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(g) “Agent”:
Jennifer Gray, Integrity Commercial Real Estate
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(h) “Cooperating
Agent”: Jim Kerns, Kern Olsen Real Estate Services
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(i) “Project”:
Grand Avenue District in Southlake Town Square, located in the City
of Southlake, Tarrant County, Texas, such term includes the Office
Building and all Common Areas shown on Exhibit
“A” . The adjacent Town Square development
presently consists of approximately 50 acres of land and
approximately 560,000 square feet of mixed use improvements
thereon. The planned Grand Avenue District is shown on Exhibit
“A” attached to this lease. Exhibit
“A-l” indicates the current plans for the first
stage of development of the Grand Avenue District, which will
include the buildings shown. Subsequent stages are projected to
include additional buildings, including, but not limited to, those
additional buildings shown on Exhibit “A” . The
larger Southlake Town Square development (current and projected are
as noted thereon) is shown on Exhibit “A-2” .
Exhibits “A”, “A-l” and
“A-2” indicate the current plans for development of
the Project and for the larger Southlake Town Square development
(which plans may change from time to time). Subsequent stages and
phases are projected to include additional buildings and additional
land area within the Project boundary shown on Exhibits
“A” and “A-2 ,” including, but not
limited to, those additional buildings shown on Exhibits
“A” and “A-2” . With regard to
Exhibits “A”, “A-l”, and
“A-2” , the parties agree that the exhibits are
attached solely for the purpose of locating the Project and the
Demised Premises within the Project and that no representation,
warranty, or covenant is to be implied by any other information
shown on the exhibit (e.g., any information as to buildings,
tenants or prospective tenants, etc. is subject to change at any
time). Tenant acknowledges that the Project is a mixed use project
combining retail and office space and that the building in which
the Demised Premises is located contains both retail and office
uses. For the purposes of this lease, the second and, if
applicable, third floor of the building in which the Demised
Premises is located, together with the lobby on the first floor
serving such floor(s) and the elevators, mechanical, electrical and
plumbing systems serving such floor(s) are referred to as the
“ Office Building .” The lobbies and common
corridors and restrooms located within the Office Building (other
than corridors and restrooms located entirely within or serving
only one tenant’s space) are referred to in this lease as the
“ Office Building Common Area .” The common
corridor on the first floor (as opposed to the lobby on the first
floor) is part of the Common Area of the Project and is not part of
the Office Building Common Area.
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(j) “Demised
Premises”: an office unit in the Project containing
approximately 2,556 square feet in usable area (measured by
calculating lengths and widths to the exterior of outside walls and
to the center of interior walls) and being conclusively deemed to
contain 2,939 square feet of rentable area, being located on the
second floor of Building GA2 of the Project at 286 Grand Avenue,
Suites 201 and 215, Southlake, Tarrant County, Texas, and being
described or shown on Exhibit “B” attached to
this lease. Landlord and Tenant are each entitled, within five (5)
days after the Commencement Date to re-measure the Demised
Premises. If the Demised Premises does not contain 2,556 usable
square feet, the re-measuring party is entitled, within such five
(5) day period, to notify the other party of such fact, which
notice must show the results of
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such re-measurement and must include the name of the architect
who re-measured the space and copies of such architect’s
worksheets and computations. If either Landlord or Tenant does not
send such notification within such five (5) day period, then the
party that does not send such notification will be deemed to have
waived the right of re-measurement. If they both fail to send the
notice, then they both will be deemed to have waived the right of
re-measurement and the Demised Premises will be deemed for all
purposes to contain 2,556 usable square feet. If one party sends
the notification of measurement discrepancy within such five
(5)-day period, then the party so notified will have five (5) days
after the receipt of such notice in which to re-measure the Demised
Premises and provide a written response to the first party
indicating that it either accepts or rejects that party’s
re-measurement figures, which response must show the results of
such re-measurement and must include the name of the architect who
re-measured the space for the responding party and copies of such
architect’s worksheets and computations. Should the party to
whom such notice was sent fail to respond as set forth in the
immediately-preceding sentence, then it will be deemed to have
accepted the other party’s measurement for all purposes under
this lease. If, on the other hand, such party notifies the other
party in accordance with the requirements of this paragraph that it
does not accept such other party’s calculations, then Tenant
and Landlord must select another, independent architect to
re-measure the Demised Premises and such architect’s
measurement will be binding unless it varies from either of the
other two (2) measurements by more than two percent (2%), in which
event the average of the two measurements that are numerically
closest will be deemed to be the total square footage of the
Demised Premises for all purposes under this lease. In the event
that the final determination of the total usable square footage of
the Demised Premises is not the same as the approximate total
usable square footage of the Demised Premises set forth in the
first sentence of this Section 1.1(j) , then the number of
rentable square feet in the Demised Premises will be calculated by
multiplying the number of usable square feet in the Demised
Premises by 115% and all terms and provisions of this lease will
automatically be altered in proportion to the change in such square
footage without the need for any further documentation, although
each party agrees to execute an amendment to this lease (in form
and content mutually and reasonably satisfactory to Landlord and
Tenant) reflecting such changes within ten (10) days after the
other party delivers to it a written lease amendment reflecting
such changes, with a request for execution.
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(k) “Commencement
Date”: the earlier of (i) the date upon which Landlord
substantially completes Landlord’s Work as described in
Exhibit “C” or (ii) the date upon which Tenant
opens for business at the Demised Premises. Landlord estimates that
it will substantially complete Landlord’s Work on or about
sixty (60) days after the date of this lease.
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(1) Lease
Term: Commencing on the Commencement Date and ending on the last
day of the month in which the fifth (5 th ) anniversary
of the Commencement Date occurs (“ Expiration Date
”).
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(m) Guaranteed
rental: Tenant must pay to Landlord monthly an amount determined by
multiplying the total number of square feet of rentable area within
the Demised Premises by the applicable rental rate set forth below
and then dividing such product by twelve (12):
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Period
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Annual Rental
Rate per
Square
Foot
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Commencement Date through
(and including) the 12 th full month of the
term
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$
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27.00
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13 th full
month of the term through (and including) the 24 th full
month of the term
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$
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27.00
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25 th full
month of the term through (and including) the 36 th full
month of the term
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$
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27.50
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37 th full
month of the term through (and including) the 48 th full
month of the term
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$
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28.00
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49 th full
month of the term through (and including) the Expiration
Date
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$
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28.50
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2
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This is a full service lease. Tenant’s payment of rent as
provided above includes Tenant’s proportionate share of
Common Area expenses, taxes and other real estate charges,
insurance, building standard janitorial services ( Section
5.1(a) ), building standard utilities (including a standard
allowance for electricity to the Demised Premises ( Section
5.1(c) and (d) ), and building repairs and maintenance for each
month of the Lease term, but excluding telephone,
telecommunication, and data transmission installation and
service.
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(n) Prepaid
rental: $6,612.75, such prepaid rental being due and payable upon
execution of this lease by Tenant.
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(o) Security
deposit: $6,612.75, such security deposit being due and payable
upon execution of this lease by Tenant.
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(p) Permitted
use: Tenant and Tenant’s permitted sublessees and assignees
shall use and occupy the Demised Premises solely for the following
purpose(s): professional offices with training room; provided,
however, in no event may Tenant or any occupant use the Demised
Premises for any purpose that violates any of the prohibited or
restricted uses listed on Exhibit “D” of this
lease. Tenant acknowledges and agrees that Tenant’s use of
the Demised Premises is subject to the terms and provisions of that
certain Amended and Restated Declaration of Covenants, Restrictions
and Easements for Southlake Town Square dated August 23, 2001 and
recorded in Volume 15097, Page 457 of the Deed Records of Tarrant
County, Texas (as amended and restated from time to time, the
“ CREs ”) which among other things, requires
Development Control Committee approval for any use of the Demised
Premises, in accordance with the procedures and standards more
particularly described in the CREs, and Tenant covenants and agrees
with Landlord that Tenant will not use the Demised Premises for any
purpose which is not so approved by the Development Control
Committee.
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Tenant
acknowledges that the above specification of a “permitted
use” means only that Landlord has no objection to the
specified use and does not include any representation or warranty
by Landlord as to whether or not such specified use complies with
applicable laws and/or requires particular governmental permits. In
this regard Tenant acknowledges that this Section 1.1(p) is
subject to Article 3 and Section 9.7 of this
lease.
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(q) Tenant’s
Proportionate Share: Tenant’s Proportionate Share: A
percentage, the numerator of which is the number of usable square
feet in the Demised Premises and the denominator of which is the
number of usable square feet in the gross leasable area of the
Project to which the applicable cost or expense applies (it being
understood and agreed that for tenants on the first floor, the
number of rentable square feet is the same as the number of square
feet in their premises (all of which are deemed usable)).
Notwithstanding the above, as to charges for which such percentage,
when applied uniformly, would have an inequitable result, Landlord
will determine the percentage that Landlord reasonably deems to be
equitable. Tenant’s proportionate share of Project costs and
expenses are included in the rent as provided in Section
1.1(m) above.
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(r) Lease
Year: The first “Lease Year” shall begin on the
Commencement Date and end on the succeeding December 31. The next
“Lease Year” shall be the twelve (12) calendar month
period following the first Lease Year. Each succeeding “Lease
Year” during the lease term shall be each successive 12
calendar month period. If this lease terminates or expires on a
date other than December 31, the final Lease Year shall be the time
period beginning on January 1 of the year of expiration or
termination and ending on the date of termination or
expiration.
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ARTICLE 2
GRANTING CLAUSE
Landlord
leases the Demised Premises to Tenant, and Tenant hereby leases the
Demised Premises from Landlord, subject to and upon the terms and
conditions set forth in this lease and subject to the rights and
interests of third parties under existing liens, ground leases,
easements and encumbrances affecting the Project or any part
thereof, public right-of-ways, all zoning regulations, rules,
ordinances, building restrictions and other laws and regulations
now in effect or hereafter adopted by any governmental authority
having jurisdiction over the Project or any part
thereof.
ARTICLE 3
DELIVERY OF PREMISES
Landlord
hereby represents and warrants that the foundation, structural
portion of exterior walls, and roof of the Demised Premises as well
as Landlord’s Work, if any, described in an exhibit attached
to this lease were (or if not yet constructed, will be) constructed
in a good and workmanlike manner and in accordance with all
applicable laws, statutes, and ordinances. Except as set forth in
the immediately
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preceding sentence, the Demised Premises is being leased
“AS IS,” with Tenant accepting all defects, if any; and
Landlord makes no warranty of any kind, express or implied, with
respect to the Demised Premises (without limitation, Landlord makes
no warranty as to the habitability, fitness or suitability of the
Demised Premises for a particular purpose nor as to the absence of
any toxic or otherwise hazardous substances). This Article 3
is subject to any contrary requirements under applicable law;
however, in this regard Tenant acknowledges that it has been given
the opportunity to inspect the Demised Premises and to have
qualified experts inspect the Demised Premises prior to the
execution of this lease.
ARTICLE 4
RENT
4.1 Rental
accrues from the Commencement Date, and is payable to Landlord, at
Landlord’s address as provided herein or at such other
address as Landlord may designate in writing to Tenant from time to
time.
4.2 Tenant
must pay to Landlord minimum guaranteed rental in monthly
installments in the amounts specified in Section 1.1(m) of
this lease. The first such monthly installment is due and payable
on or before the Commencement Date, and subsequent installments are
due and payable on or before the first day of each succeeding
calendar month during the lease term; provided that if the
Commencement Date is a date other than the first day of a calendar
month, Tenant must pay on or before such date as minimum guaranteed
rental for the balance of such calendar month a sum equal to that
proportion of the rent specified for the first full calendar month
as herein provided, which the number of days from the Commencement
Date to the end of the calendar month during which the Commencement
Date falls bears to the total number of days in such
month.
4.3 It
is understood that the minimum guaranteed rental is payable on or
before the first day of each calendar month (in accordance with
Section 4.1 and Section 4.2 above), without offset or
deduction of any nature. In the event any rental or other amount
owed to Landlord (including, without limitation, any amounts owed
under the terms of this Article 4 , or under Article 6,
Article 7, or Article 8 below) is not received by Landlord
before the date which is ten (10) days after such amount’s
due date, for any reason whatsoever, or if any payment for such an
amount is by check which is returned for insufficient funds, then
in addition to the past due amount, Tenant must pay to Landlord one
of the following (the choice to be at the sole option of the
Landlord unless one of the choices is improper under applicable
law, in which event the other alternative will automatically be
deemed to have been selected): (a) a late charge in an amount equal
to ten percent (10%) of the rental or other amount then due, in
order to compensate Landlord for its administrative and other
overhead expenses; or (b) interest on the rental or other amount
then due at the maximum contractual rate which could legally be
charged in the event of a loan of such amount to Tenant (but in no
event to exceed 1½% per month), such interest to accrue
continuously on any unpaid balance during the period commencing
with the due date of such rental or other amount and terminating
with the date on which Tenant makes full payment of all amounts
owing to Landlord at the time of such payment. Any such late charge
or interest payment is payable as additional rental under this
lease and is payable immediately on demand. If any payment for
rental or other amount owed to Landlord (including, without
limitation, any amounts owed under the terms of this Article
4 , or under Article 6, Article 7, or Article 8 below)
is by check which is returned for insufficient funds, Tenant must
immediately make the required payment to Landlord in good funds;
moreover, Tenant must also pay to Landlord all other amounts
specified by the terms of this lease (including, without
limitation, interest or other charges required under the terms of
this Article 4 , or under Article 6, Article 7, or
Article 8 below), plus an additional fee of $50.00 to
compensate Landlord for its expense and effort in connection with
the dishonored check.
4.4 Tenant
must, within ten (10) days after a request from Landlord (but not
more than once per calendar year), deliver to Landlord such
financial statements as are reasonably required by Landlord to
verify the net worth of Tenant and any guarantor of Tenant’s
obligations under this lease (including, without limitation, a
balance sheet showing the then-current net worth of Tenant together
with a profit and loss statement for the most current fiscal year
of Tenant). In the event that Tenant is a subsidiary comprising
only the operations conducted at the Demised Premises, Tenant must
also provide such statements from the parent company or larger
business of which Tenant is a part. In the event that Tenant is an
individual, the financial statement must include the operations
conducted at the Demised Premises as well as all other business
activities of Tenant.
4.5 If
Tenant fails in two consecutive months to make rental payments
within ten days after due, Landlord, in order to reduce its
administrative costs, may require, by giving written notice to
Tenant (and in addition to any late charge or interest accruing
pursuant to Section 4.3 above, as well as any other rights and
remedies accruing pursuant to Article 22 below, or any other
provision of this lease or at law), that minimum guaranteed rentals
are to be paid quarterly in advance instead of monthly and that all
future rental payments are to be made on or before the due date by
cash, cashier’s check or money order and that
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the delivery of Tenant’s personal or corporate check will
no longer constitute a payment of rental as provided in this lease.
Any acceptance of a monthly rental payment or of a personal or
corporate check thereafter by Landlord cannot be construed as a
subsequent waiver of such rights.
4.7 Landlord
and Tenant agree that each provision contained in this Lease for
determining any rent payments is commercially reasonable and, as to
each such charge or amount, constitutes a “method by which
the charge is to be computed” for purposes of Tex. Prop. Code
Ann. §93.012, as enacted by House Bill 2186, 77th
Legislature.
ARTICLE 5
OFFICE BUILDING SERVICES AND EXPENSES
5.1 Landlord
agrees to furnish to Tenant while Tenant is occupying the Demised
Premises in accordance with the terms of this lease, all of the
following services:
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(a) Janitorial
cleaning services and garbage and trash removal and, if Landlord
deems it appropriate, removal of recycled items, for the Demised
Premises and the Office Building Common Area on a standard five (5)
day week basis; provided, however, that if Tenant’s floor
coverings or other improvements are other than building standard,
Tenant must pay, as additional rent, the additional cleaning cost
incurred in cleaning such carpets and other improvements. Tenant
must pay such additional rent within thirty (30) days after
Landlord delivers a statement of such cost to Tenant.
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(b) Elevator
service (without an operator) in common with other tenants of the
Office Building; provided, however, that Landlord may reasonably
limit the number of elevators in operation on Saturdays, Sundays,
and State and Federal holidays.
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(c) Hot
and cold potable water, sewer, and electricity to the Office
Building and electricity to the Demised Premises. The electrical
facilities will not exceed one watt per square foot of usable area
per month and if Tenant’s electrical usage requires more than
such total wattage, includes any single machine that consumes more
than 0.5 kilowatts at rated capacity per month, or requires a
voltage other than 120 volts or if such equipment requires
additional air conditioning above that required by the building
standard system, then Tenant must pay for the additional electric
power source and usage, the different wiring, and the additional
air conditioning usage. Landlord may, in such event, require that
Tenant install additional air conditioning equipment serving only
the Demised Premises and an additional meter to measure its
electrical consumption.
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(d) Heated
and refrigerated air conditioning in season, to temperatures, and
during hours established by Landlord for the Demised Premises and
the Office Building Common Area (but not less than 6:30 a.m.
through 7:00 p.m. Monday through Friday (excepting State and
Federal holidays) and 6:30 a.m. through 2:00 p.m. on Saturdays
(again, excepting State and Federal holidays)); provided, however,
that Tenant will be entitled to receive heated or refrigerated air
conditioning, during their respective seasons, at hours in which
Landlord does not customarily provide such heated or refrigerated
air conditioning if, and only if, Tenant pays to Landlord
Landlord’s customary charge per hour of use for such heated
or refrigerated air conditioning service (which charge may include
a required minimum number of hours and may be based on the area of
the Demised Premises or the area served by the same heating, air
conditioning, and ventilating units as the Demised Premises). The
term “ State and Federal holidays ” means New
Year’s Eve, New Year’s Day, Memorial Day, Fourth of
July, Labor Day, Thanksgiving Day, Christmas Eve, Christmas Day
and, if any of the foregoing days is followed or preceded by a
Monday, or followed or preceded by a Friday, such Monday or
Friday.
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(e) Routine
maintenance and repair of the Office Building Common
Area.
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(f) Routine
maintenance and repair of the heating, air conditioning, and
ventilating system and the lighting, water, and electrical systems
serving the Demised Premises and replacement of building standard
fluorescent bulbs in all areas and incandescent bulbs in the Office
Building Common Area.
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5.2 Landlord
does not warrant that any of the above-described services will be
free from interruption or stoppage. Except as otherwise provided
herein, no partial or complete failure to furnish such services nor
any stoppage or interruption of such services will render Landlord
liable in any respect for damages to person, property or business.
Except as otherwise provided herein, no interruption, stoppage or
failure of such services will be deemed or construed as an
eviction, actual or constructive, of Tenant nor work an abatement
of rent nor relieve Tenant from the obligation to fulfill any
covenant or agreements contained in this lease, including, without
limitation, the obligation to pay rent; provided,
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however, if such interruption, stoppage or failure is caused by
Landlord’s negligence or intentional act and if such
interruption, stoppage, or failure materially, adversely interferes
with the conduct of Tenant’s business within the Demised
Premises for more than four (4) days, excluding Sundays or
holidays, after Landlord’s receipt of notice of such
interruption, then, commencing on the first business day after such
four (4) day period, excluding Sundays or holidays, Tenant shall be
entitled to an abatement of guaranteed rent until such service is
restored reflecting the extent such interruption, stoppage or
failure interferes with Tenant’s use of the Demised
Premises.
5.3 Tenant’s
Office Building Proportionate Share of the cost of operation and
maintenance of the Office Building is included in the rent as set
forth in Section 1.1(m) herein. “ Tenant’s
Office Building Proportionate Share ” is the ratio that
the total usable floor area of the Demised Premises bears to the
total usable floor area of the Office Building. If this lease
should commence on a date other than the first day of a calendar
year or terminate or expire on a date other than the last day of a
calendar year, Tenant’s allocated share of such expenses
under this Section 5.3 will be prorated based upon
Landlord’s expenses for the entire calendar year.
ARTICLE 6
TENANT’S RESPONSIBILITY FOR TAXES, OTHER REAL
ESTATE CHARGES AND INSURANCE EXPENSES
6.1
Tenant is liable for, and
agrees to pay prior to delinquency, all taxes levied against
personal property and trade fixtures placed by Tenant in the
Demised Premises. If any such taxes are levied against Landlord or
Landlord’s property and if Landlord elects to pay the same or
if the assessed value of Landlord’s property is increased by
inclusion of personal property and trade fixtures placed by Tenant
in the Demised Premises and Landlord elects to pay the taxes based
on such increase, Tenant must pay Landlord upon demand that part of
such taxes for which Tenant is primarily liable
hereunder.
6.2
Tenant’s Proportionate
Share (as defined in Section 1.1(q) above) of all
“real estate charges” (as defined below) and
“insurance expenses” (as defined below) related to the
Project or the Landlord’s ownership of the Project is
included in the rent set forth in Section 1.1(m) .
Tenant’s proportionate share of costs under this Section
6.2 will be prorated during any partial Lease Year (i.e., the
first Lease Year and the last Lease Year of the lease term).
“Real estate charges” includes ad valorem taxes,
general and special assessments, costs incurred in monitoring and
disputing taxes, whether paid to an outside consultant or
otherwise, parking surcharges, any tax or excise on rents, any tax
or charge for governmental services (such as street maintenance or
fire protection); and any tax or charge which replaces any of such
above described “real estate charges”; provided,
however, that “real estate charges” does not include
any franchise, estate, inheritance or general income tax.
“Insurance expenses” includes all premiums and other
expenses incurred by Landlord for commercial liability insurance
and Special Form or similar property insurance (plus whatever
endorsements or special coverages which Landlord, in
Landlord’s sole discretion, may consider
appropriate).
6.3
Intentionally
deleted.
6.4
Tenant agrees that, as
between Tenant and Landlord, Landlord has the sole and absolute
right to contest taxes levied against the Demised Premises and the
Project (other than taxes levied directly against Tenant’s
personal property within, or sales made from, the Demised
Premises). Therefore, Tenant, to the fullest extent permitted by
law, irrevocably waives any and all rights that Tenant may have to
receive from Landlord a copy of notices received by Landlord
regarding the appraisal or reappraisal, for tax purposes, of all or
any portion of the Demised Premises or the Project (including,
without limitation, any rights set forth in §41.413 of the
Texas Property Tax Code, as such may be amended from time to time).
Additionally, Tenant, to the fullest extent permitted by law,
hereby irrevocably assigns to Landlord any and all rights of Tenant
to protest or appeal any governmental appraisal or reappraisal of
the value of all or any portion of the Demised Premises or the
Project (including, without limitation, any rights set forth in
§41.413 and §42.015 of the Texas Property Tax Code, as
such may be amended from time to time). Tenant agrees without
reservation that it will not protest or appeal any such appraisal
or reappraisal before a governmental taxing authority without the
express written authorization of Landlord.
ARTICLE 7
COMMON
AREA
7.1
The term “ Common
Area ” is defined for all purposes of this lease as that
part of the Project intended for the common use of all tenants and
the public which is maintained by Landlord or the expense of which
is borne in whole or in part by Landlord, including among other
facilities (as such may be applicable to the Project), parking
areass, streets and alleys, common open spaces, landscaping, curbs,
loading areas, sidewalks and streetscapes, malls and promenades
(enclosed or otherwise), lighting facilities, drinking fountains,
meeting rooms, public toilets, and the like but excluding (i) space
in buildings (now or hereafter existing) designated for rental for
commercial purposes, as the same may exist
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from time to time, (ii) areas within the Project which may from
time to time not be owned by Landlord (unless subject to a
cross-access or similar agreement benefitting the area which
includes the Demised Premises), (iii) areas leased to a
single-purpose user (such as a bank or a fast-food restaurant)
where access is restricted, (iv) the roof(s) of the building(s) in
the Project, and (v) decorative awnings; provided, however, that if
Landlord bears all or any portion of the cost of maintaining,
repairing, or replacing any of the areas described in clauses (ii)
through (v) of the immediately-preceding sentence, such areas,
while not technically constituting part of the Common Area, will be
deemed included within the Common Area for the purposes of (1)
Landlord’s ability to prescribe rules and regulations
regarding same, and (2) their inclusion for purposes of common area
maintenance cost reimbursements. Landlord reserves the right to
change from time to time the dimensions and location of the Common
Area, as well as the dimensions, identities, locations and types of
any buildings, signs or other improvements in the Project. For
example, and without limiting the generality of the immediately
preceding sentence, Landlord may from time to time decrease the
size of any parking area or substitute for any parking area other
areas reasonably accessible to the tenants of the Project, which
areas may be elevated, surface or underground.
7.2 Tenant,
and its employees and customers, and when duly authorized pursuant
to the provisions of this lease, its subtenants, licensees and
concessionaires, have the nonexclusive right to use the Common Area
as constituted from time to time, such use to be in common with
Landlord, other tenants in the Project and other persons permitted
by Landlord to use the same, and subject to such reasonable rules
and regulations governing use as Landlord may from time to time
prescribe. For example, and without limiting the generality of
Landlord’s ability to establish rules and regulations
governing all aspects of the Common Area, Tenant agrees as
follows:
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(a) Tenant
is not permitted to solicit business, or distribute leaflets or
other materials in the Common Area nor take any action which in the
sole and exclusive judgment of Landlord would constitute a nuisance
or would disturb, endanger, or interfere with the rights of other
persons to use the Common Area or would tend to injure the
reputation of the Project.
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(b) Landlord
may temporarily close any part of the Common Area for such periods
of time as may be necessary to make repairs, alterations, or
improvements, or to prevent the public from obtaining prescriptive
rights.
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(c) With
regard to the roof(s) of the building(s) in the Project, use of the
roof(s) is reserved to Landlord or, with regard to any tenant
demonstrating to Landlord’s satisfaction a need to use same,
to such tenant after receiving prior written consent from Landlord.
Subject to Landlord’s approval, Tenant shall be allowed
access to the roof in order to install, replace, repair, and
maintain any heating and air conditioning rooftop unit which
exclusively serves the Demised Premises (“ Rooftop
Equipment ”). Tenant shall be allowed to place one (1)
satellite dish (“ Antenna ”), as more
particularly described on Exhibit “J” attached
hereto, on the roof above Tenant’s Demised Premises provided
that the installation and operation thereof and all maintenance and
repair is performed in accordance with all applicable laws, rules
and regulations and the terms and provisions for Communication
Antenna set forth on Exhibit “J” attached
hereto. With respect to Rooftop Equipment, Landlord shall provide
reasonable access thereto to Tenant and Tenant’s contractors,
subject to Landlord’s rules and regulations regarding
controlled access to the roof. Tenant’s access to the Rooftop
Equipment must be coordinated through Landlord and Landlord’s
representative may accompany any of Tenant’s contractors or
Tenant during such access. Any penetrations of the building roof
must be performed by a contractor designated by Landlord so as to
maintain the building roof warranties. Landlord may elect to
perform any of such work which affects building systems with its
own personnel or contractors, and Tenant shall promptly reimburse
Landlord therefor, as additional rent. Tenant shall maintain the
Rooftop Equipment in accordance with the requirements of the
insurers of the building and with reasonable rules, regulations and
technical standards of Landlord relating to use of the building
roof as Landlord may establish from time to time. Tenant shall
maintain the Rooftop Equipment in good working order and repair,
and shall keep the area immediately surrounding the Rooftop
Equipment neat and clean. Tenant’s use and maintenance of the
Rooftop Equipment may not create any nuisance or interfere with any
other licensee or tenant of the Building. Landlord has no
obligation to maintain, operate or safeguard the Rooftop Equipment.
IN ADDITION TO THE INDEMNIFICATION OBLIGATIONS OF THE PARTIES UNDER
ARTICLE 16 BELOW, TENANT SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS
LANDLORD FROM ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, CAUSES OF
ACTIONS, SUITS, JUDGMENTS, AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS’ FEES, COURT COSTS AND COSTS OF INVESTIGATION)
ARISING FROM OR IN CONNECTION WITH THE INSTALLATION, CONDITION,
OPERATION, REPAIR AND MAINTENANCE OF THE ANTENNA AND ROOFTOP
EQUIPMENT, EVEN IF SUCH CLAIMS, DEMANDS, LIABILITIES, CAUSES OF
ACTION, SUITS, JUDGMENTS AND
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EXPENSES ARE ATTRIBUTABLE TO THE CONCURRENT NEGLIGENCE OF
LANDLORD.
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(d) Landlord
may seasonally place kiosks or allow the placement of vending carts
in and around the Common Area in accordance with applicable
governmental laws, rules and regulations.
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7.3 Landlord
is responsible for the operation, management and maintenance of the
Common Area, the manner of maintenance and the expenditures
therefor to be in the sole discretion of Landlord, but to be
generally in keeping with similar projects within the same
geographical area as the Project.
7.4 Tenant’s
Proportionate Share of the cost of operation and maintenance of the
Common Area which may be incurred by Landlord in its discretion is
included in the rent set forth in Section 1.1 (m) herein.
Such costs shall include, among other costs, those for lighting,
painting, cleaning, landscaping (including landscaping of any
common open spaces maintained by Landlord or for whose maintenance
Landlord pays), parking (including valet parking), policing (to the
extent that security is provided by or otherwise arranged for by
Landlord, although Landlord has no obligation to do so), seasonal
decoration, inspecting, repairing, replacing, of any portion of the
Common Area, operation of the central portion and water lines of
any split heating, air conditioning and ventilating systems; trash
removal for the Common Area (to the extent not covered by the terms
of Section 9.5 below); a reasonable portion of whatever
management fee Landlord pays to the manager of the Project, a
reasonable allowance for Landlord’s overhead costs and the
cost of any insurance for which Landlord is not reimbursed pursuant
to Section 6.2 , but specifically excluding all expenses
paid or reimbursed pursuant to Article 6 . With regard to
capital expenditures (i) the original investment in capital
improvements, i.e., upon the initial construction of the Project,
cannot be included, and (ii) improvements and replacements, to the
extent capitalized on Landlord’s records may be included only
to the extent of a reasonable depreciation or amortization
(including interest accruals commensurate with Landlord’s
interest costs). If this lease should commence on a date other than
the first day of a calendar year or terminate or expire on a date
other than the last day of a calendar year, Tenant’s
proportionate share of costs under this Section 7.4 will be
prorated based upon Landlord’s expenses for the entire
calendar year.
ARTICLE 8
INTENTIONALLY DELETED
ARTICLE 9
USE AND CARE OF DEMISED PREMISES
9.1 Tenant
must commence business operations in the entirety of the Demised
Premises on or immediately after the Commencement Date and must
operate its business in an efficient, high class and reputable
manner. Tenant must not at any time leave the Demised Premises
vacant, but must in good faith continuously throughout the term of
this lease conduct and carry on in the entire Demised Premises the
type of business for which the Demised Premises is leased. Tenant
must, except during reasonable periods for repairing, cleaning and
decorating, keep the Demised Premises open to the public for
business with adequate personnel in attendance on all business
days, except to the extent Tenant may be prohibited from being open
for business by applicable law, ordinance or governmental
regulation.
9.2 The
Demised Premises may be used only for the purpose or purposes
specified in Section 1.1(p) above, and only under the trade
name specified in Section 1.1(e) above (or, if Section
1.1(e) is not filled in, any trade name approved in advance in
writing by Landlord), and for no other purpose and under no other
trade name, it being understood and acknowledged that Landlord has
entered into this lease in large part because it believes that such
use and trade name will benefit the Project as a whole.
9.3 Tenant
must not, without Landlord’s prior written consent, keep
anything within the Demised Premises or use the Demised Premises
for any purpose which creates a risk of toxic or otherwise
hazardous substances or which increases the insurance premium cost
or invalidates any insurance policy carried on the Demised Premises
or other parts of the Project. All property kept, stored or
maintained within the Demised Premises by Tenant is at
Tenant’s sole risk. Tenant shall indemnify Landlord and hold
Landlord harmless from and against any and all liability, liens,
claims, demands, damages, expenses, fees, costs, fines, penalties,
suits, proceedings, actions and causes of action (including without
limitation all attorneys’ fees and expenses) arising out of
or relating to, directly or indirectly, any violation or alleged
violation by Tenant of any law, rule, regulation, order or
determination of any government authority pertaining to health or
the environment relating to the Demised Premises and the Project
(“ Environmental Laws ”), now existing or
hereafter arising, except for violations of Environmental Laws
caused by Landlord. This indemnification survives the expiration or
termination of this lease. Tenant must immediately notify Landlord
if Tenant suspects, discovers or receives notice of any violation
of Environmental Laws at the Demised Premises or the Project, and
must cooperate with Landlord in identifying and investigating any
such violation or suspected violation. Tenant further agrees to
abide by
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the terms of any and all protocols, procedures and agreements
of which Landlord gives Tenant written notice and which address the
detection, management or remediation of environmental or health
hazards at the Demised Premises or the Project.
9.4 Tenant
must not permit any objectionable noises or odors to emanate from
the Demised Premises; nor place or permit any radio, television,
loudspeaker or amplifier on the roof or outside the Demised
Premises or where the same can be seen or heard from outside the
building; nor place any antenna, equipment, awning, fixture or
other projection on the exterior of or above the Demised Premises;
nor take any other action which would constitute a nuisance or
would disturb or endanger other tenants of the Project or
unreasonably interfere with their use of their respective demised
premises; nor permit any unlawful or immoral practice to be carried
on or committed on the Demised Premises; nor do anything which
would tend to injure the reputation of the Project.
9.5 Tenant
must take good care of the Demised Premises, keep the Demised
Premises secure (Tenant acknowledges that it is not relying on any
representation or warranty of Landlord in this regard), and keep
the Demised Premises free from waste at all times. Tenant at all
times must not overload the floors in the Demised Premises, nor
deface or injure the Demised Premises. Tenant at all times must
keep the Demised Premises neat, clean and free from dirt and
rubbish. Tenant must receive and deliver goods and merchandise and
remove garbage and trash in the frequency, schedule, manner, and
areas Landlord prescribes. Tenant must not operate an incinerator
or burn trash or garbage within the Project.
9.6 Tenant
must include the address and identity of its business activities in
the Demised Premises in all advertisements made by Tenant in which
the address and identity of any similar local business activity of
Tenant is mentioned.
9.7 Tenant
must procure at its sole expense any permits and licenses required
for the transaction of business in the Demised Premises and
otherwise comply with all applicable laws, ordinances and
governmental regulations. In addition, if the nature of
Tenant’s business makes it advisable for Tenant to take any
extra precautions (for example, in the case of a business which is
affected by so-called “dram shop” laws, Tenant’s
compliance with all “dram shop” educational programs
and procedures), Tenant must take all such extra precautions. At
Landlord’s request, Tenant must deliver to Landlord copies of
all such permits and licenses and proof of Tenant’s
compliance with all such laws, ordinances, governmental regulations
and extra precautions.
ARTICLE 10
MAINTENANCE AND REPAIR OF DEMISED PREMISES
10.1 Landlord
must keep the foundation, the exterior walls (except signs,
placards, decorations or other advertising media of any type; and
interior painting or other treatment of exterior walls) and roof
(subject to the first sentence in Section 7.1 above), all
mechanical, electrical, and plumbing systems, and the heating, air
conditioning, and ventilating systems of or serving the Demised
Premises in good repair. In the event any heating or air
conditioning is provided by a system that Tenant uses in common
with other occupants of the Project, then Landlord will perform the
maintenance and repair for such system. Landlord, however, is not
required to make any repairs occasioned by the act or negligence of
Tenant, its agents, employees, subtenants, licensees and
concessionaires (including, but not limited to roof leaks resulting
from any roof penetration or placement), although Landlord may do
so and bill Tenant for the cost as additional rent, due thirty (30)
days after Landlord delivers such bill to Tenant. The provisions of
the first sentence of this Section 10.1 are expressly
recognized to be subject to the provisions of Article 3 ,
Article 17 and Article 18 of this lease. In the event that
the Demised Premises should become in need of repairs required to
be made by Landlord hereunder, Tenant must give immediate written
notice thereof to Landlord and Landlord will have a reasonable time
after receipt by Landlord of such written notice in which to make
such repairs.
10.2 Tenant
must keep the Demised Premises in good, clean and habitable
condition and must make all repairs and replacements to the lamps
in the lighting system and to those mechanical, electrical,
plumbing, heating, and air conditioning systems of or serving the
Demised Premises which were not installed by Landlord. If any
repairs required to be made by Tenant hereunder are not made within
ten days after written notice delivered to Tenant by Landlord or,
in the case of a situation which by its nature requires an
immediate response or a response within less than ten (10) days,
Landlord may at its option make such repairs without liability to
Tenant for any loss or damage which may result to Tenant’s
stock or business by reason of such repairs; and Tenant must pay to
Landlord upon demand, as additional rental hereunder, the cost of
such repairs plus interest at the maximum contractual rate which
could legally be charged in the event of a loan of such payment to
Tenant (but in no event to exceed 1½% per month), such
interest to accrue continuously from the date of payment by
Landlord until repayment by Tenant. At the termination or
expiration of this lease, Tenant must surrender the Demised
Premises in good
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condition, excepting reasonable wear and tear and losses
required to be restored by Landlord in Section 10.1, Article 17
and Article 18 of this lease.
ARTICLE 11
ALTERATIONS
11.1 Tenant
must not make any alterations, additions or improvements to the
Demised Premises without the prior written consent of Landlord
(including, without limitation, consent as to all plans and
specifications therefor and contractor(s) to be used or employed
with respect thereto), except for the installation of unattached,
movable trade fixtures which may be installed without drilling,
cutting or otherwise defacing the Demised Premises and which are
not visible from the exterior of the Demised Premises.
11.2 All
construction work done by Tenant within the Demised Premises must
be performed in a good workmanlike manner, lien-free and in
compliance with all governmental requirements and all approved
plans and specifications therefor, and in such manner as to cause a
minimum of interference with other construction in progress and
with the transaction of business in the Project, and Tenant must
procure and/or cause its contractor to maintain the insurance
described in Exhibit “C” to this Lease and
provide Landlord with certificates of insurance evidencing such
coverage. Tenant agrees to indemnify Landlord and hold Landlord
harmless against any loss, liability (including, without
limitation, reasonable attorneys’ fees and expenses) or
damage resulting from such work, and Tenant must, if requested by
Landlord, furnish a bond or other security satisfactory to Landlord
against any such loss, liability or damage.
11.3 In
the event Tenant uses a contractor to perform construction work
within the Demised Premises, Tenant must, prior to the commencement
of such work, obtain Landlord’s approval of such contractor
and require such contractor to execute and deliver to Landlord a
waiver and release on the form attached hereto as Exhibit
“E” of any and all claims against Landlord and
liens against the Project to which such contractor might at any
time be entitled and to execute and record a Bond to Pay Claims
(the “ Bond ”) in accordance with Chapter 53,
Subchapter I of the Texas Property Code, as such may be amended,
superseded or replaced from time to time, and must deliver a copy
of the recorded Bond to Landlord. The delivery of the waiver and
release of lien and the Bond within the time period set forth above
is a condition precedent to Tenant’s ability to enter on and
begin its construction work at the Demised Premises and, if
applicable, to any reimbursement from Landlord for its construction
work.
11.4 In
the event that Landlord elects to remodel all or any portion of the
Project, Tenant will cooperate with such remodeling, including
Tenant’s tolerating temporary inconveniences (and even the
temporary removal of Tenant’s signs in order to facilitate
such remodeling, as it may relate to the exterior of the Demised
Premises).
ARTICLE 12
LANDLORD’S RIGHT OF ACCESS
12.1 Landlord
is entitled to enter upon the Demised Premises at any time upon
reasonable notice for the purpose of inspecting the same, or of
making repairs to the Demised Premises, or of making repairs,
alterations or additions to adjacent premises, or of showing the
Demised Premises to prospective purchasers, tenants or
lenders.
12.2 Tenant
will permit Landlord to place and maintain “For Rent”
or “For Lease” signs on the Demised Premises during the
last 180 days of the lease term or during any period that an event
of default is continuing hereunder, it being understood that such
signs in no way affect Tenant’s obligations pursuant to
Section 9.4, Section 13.1 or any other provision of this
lease.
12.3 Except
as described in Section 7.2(c) above, use of the roof above the
Demised Premises is reserved to Landlord.
ARTICLE 13
SIGNS; STORE FRONTS
13.1 Tenant
acknowledges that because of the unique nature of the Project,
Tenant’s sign will consist of lettering on the exterior
window of the Demised Premises. Tenant can only have one (1) such
sign unless the Demised Premises have more than one (1)
frontage (e.g. the Demised Premises is a corner space and therefore
have two (2) frontages), in which case Tenant must have one (1)
sign on each frontage. The sign must comply with Landlord’s
sign criteria, which will address such matters as (a) the size of
the letters, (b) the materials used, (c) the content of the sign,
and (d) the location of the sign. Landlord’s current sign
criteria is attached to and made a part of this lease as Exhibit
“F” .
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13.2 Except
as required under the term of Section 13.1 above, Tenant
must not, without Landlord’s prior written consent (a) make
any changes to the exterior of the Demised Premises, or (b) install
any exterior lighting, decorations, paintings, awnings, canopies or
the like, or (c) erect or install any signs, window or door
lettering, placards, decorations or advertising media of any type
which can be viewed from the exterior of the Demised Premises;
provided, however, Tenant shall have the right, at its sole cost
and expense, to place signage on the building directories at both
building entries as well as the building directory at the elevator
and at Tenant’s entry door. All signs, lettering, placards,
banners, portable signs, decorations and advertising media
(including the sign required by Section 13.1 above) must
conform in all respects to the sign criteria established by
Landlord for the Project time to time in the exercise of its sole
discretion and must further comply with all applicable laws. All
signs are subject to Landlord’s requirements as to
construction, method of attachment, size, shape, height, lighting,
color and general appearance. Tenant must keep all signs in good
condition and in proper operating order at all times.
ARTICLE 14
UTILITIES
14.1 Landlord
agrees to cause to be provided to the Project the necessary mains,
conduits and other facilities necessary to supply water, gas (if
deemed appropriate by Landlord), electricity, telephone service and
sewerage service to the building in which the Demised Premises are
located.
14.2 Intentionally
Deleted
14.3 Landlord
is not liable for any interruption whatsoever in utility services
not furnished by Landlord, nor for interruptions in utility
services furnished by Landlord which are due to fire, accident,
strike, acts of God or other causes beyond the control of Landlord
or which are necessary or useful in connection with making any
alterations, repairs or improvements.
ARTICLE 15
INSURANCE COVERAGES
15.1 Landlord
must procure and maintain throughout the term of this lease a
policy or policies of insurance, at its sole cost and expense (but
subject to Article 6 above), causing the Project to be
insured under Special Form or similar property insurance and
commercial general liability insurance (with whatever deductibles,
endorsements, exceptions or special coverages Landlord, in its sole
discretion, may consider appropriate), to the extent necessary to
comply with Landlord’s obligations pursuant to other
provisions of this lease.
15.2 Tenant
must procure and maintain throughout the term of this lease a
policy or policies of insurance, at its sole cost and expense, (a)
causing Tenant’s fixtures and contents to be fully insured
for their replacement value under standard Special Form or similar
property insurance, (b) providing commercial general liability
insurance insuring Tenant, on an occurrence basis, against all
claims, demands, or actions arising out of or in connection with
Tenant’s use or occupancy of the Demised Premises, or by the
condition of the Demised Premises, and (c) providing worker’s
compensation insurance in statutory amounts and employer’s
liability coverage with limits of not less than $500,000.00.
Tenant’s commercial general liability policy or policies must
provide coverage with a combined single limit of not less than
$1,000,000 per occurrence (with no offset for occurrences on
property other than the Demised Premises), must list Landlord as a
loss payee (as to the Special Form or similar property insurance),
as to Landlord’s interest in any of Tenant’s property,
and as an “additional insured” (as to all other
insurance, including, without limitation, the commercial general
liability insurance), and must be written by insurance companies
and on forms and with deductibles satisfactory to Landlord, and
Tenant’s insurance shall be primary (with any policies of
Landlord or Landlord’s mortgagees being excess, secondary and
non-contributory). Additionally, Tenant’s worker’s
compensation and employer’s liability policies must include
waivers of subrogation in favor of Landlord. Tenant must obtain a
written obligation on the part of each insurance company to notify
Landlord at least thirty (30) days prior to cancellation or
modification of such insurance. Tenant must promptly deliver such
policies or duly executed certificates of insurance to Landlord
before Tenant occupies any portion of the Demised Premises and must
promptly deliver renewals thereof as required to Landlord at least
thirty days prior to the expiration of the respective policy terms.
If Tenant should fail to comply with the foregoing requirements
relating to insurance, Landlord may obtain such insurance and
Tenant must pay to Landlord on demand as additional rental
hereunder the premium cost thereof plus interest at the maximum
contractual rate (but in no event to exceed 1 ½% per month)
from the date of payment by Landlord until repaid by
Tenant.
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ARTICLE 16
INDEMNIFICATION; WAIVER OF LIABILITY; MUTUAL WAIVER OF
SUBROGATION
16.1 Landlord
and Landlord’s agents and employees are not liable to Tenant,
nor to Tenant’s employees, agents or visitors, nor to any
other person whomsoever, for any injury to person or damage to
property caused by the Demised Premises becoming out of repair or
by defect or failure of any structural element of the Demised
Premises or of any equipment, pipes or wiring, or broken glass, or
by the backing up of drains, or by gas, water, steam, electricity
or oil leaking, escaping or flowing into the Demised Premises
(except where due to Landlord’s willful failure to make
repairs required to be made by Landlord hereunder after the
expiration of a reasonable time after written notice to Landlord of
the need for such repairs and in such case, Landlord’s
liability to Tenant therefor shall be limited to the cost to repair
such items), nor is Landlord liable to Tenant, nor to
Tenant’s employees, agents or visitors, nor to any other
person whomsoever, for any loss or damage that may be occasioned by
or through the acts or omissions of other tenants of the Project or
of any other persons whomsoever. Landlord cannot be held
responsible in any way on account of any construction, repair or
reconstruction (including widening) of any private or public
roadways, walkways or utility lines.
16.2 TENANT
SHALL INDEMNIFY, DEFEND, AND HOLD LANDLORD AND ITS AFFILIATED
ENTITIES, AND THEIR AGENTS, EMPLOYEES, OFFICERS, DIRECTORS,
SHAREHOLDERS, PARTNERS AND PRINCIPALS (COLLECTIVELY, THE “
INDEMNITEES ” OR INDIVIDUALLY, AN “
INDEMNITEE ”) HARMLESS FROM AND AGAINST ANY AND ALL
LOSS, COST, LIABILITY, CLAIM, DAMAGE, AND EXPENSE FOR ANY INJURY TO
PERSON OR DAMAGE TO PROPERTY (INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEYS’ FEES) (COLLECTIVELY, THE “
DEMISED PREMISES LIABILITIES ”) OCCURRING IN THE
DEMISED PREMISES, EVEN IF THE DEMISED PREMISES LIABILITIES ARE
CAUSED IN PART BY LANDLORD’S OR ANY OTHER INDEMNITEE’S
NEGLIGENCE. TENANT’S INDEMNIFICATION DOES NOT APPLY, HOWEVER,
TO ANY DEMISED PREMISES LIABILITIES CAUSED BY LANDLORD’S
WILLFUL ACT OR OMISSION.
16.3 EXCEPT
AS MAY BE OTHERWISE EXPRESSLY PROVIDED HEREIN TO THE CONTRARY,
LANDLORD SHALL INDEMNIFY, DEFEND AND HOLD TENANT AND ITS AFFILIATED
ENTITIES, AND THEIR AGENTS, EMPLOYEES, OFFICERS, DIRECTORS,
SHAREHOLDERS, PARTNERS AND PRINCIPALS HARMLESS FROM AND AGAINST ANY
AND ALL LOSS, COST, LIABILITY, CLAIM, DAMAGE AND EXPENSE FOR ANY
INJURY TO PERSON OR DAMAGE TO PROPERTY (INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS’ FEES) (COLLECTIVELY, THE
“ COMMON AREA LIABILITIES ”) OCCURRING IN THE
COMMON AREAS OF THE PROJECT, EVEN IF THE COMMON AREA LIABILITIES
ARE CAUSED IN PART BY TENANT’S NEGLIGENCE. LANDLORD’S
INDEMNIFICATION DOES NOT APPLY, HOWEVER, TO ANY COMMON AREA
LIABILITIES CAUSED BY TENANT’S WILLFUL ACT OR
OMISSION.
16.4 Landlord
and Tenant each hereby release the other from any and all liability
or responsibility to the other, or to any other party claiming
through or under them by way of subrogation or otherwise, for any
loss or damage to property caused by a casualty which is insurable
under standard Special Form or similar property insurance and agree
to obtain an endorsement to that effect in their respective Special
Form or similar property insurance policies, EVEN IF SUCH LIABILITY
OR LOSS IS CAUSED BY THE NEGLIGENCE OF THE OTHER PARTY; provided,
however, that this mutual waiver and agreement is applicable only
with respect to a loss or damage occurring during the time when
Special Form or similar property insurance policies which are
readily available in the marketplace contain a clause or permit an
endorsement to the effect that any such release does not adversely
affect or impair the policy or the right of the insured party to
receive proceeds under the policy; provided, further, that this
release is not applicable to the portion of any damage which is not
reimbursed by the damaged party’s insurer because of the
“deductible” in the damaged party’s insurance
coverage. The release specified in this Section 16.4 is
cumulative with any releases or exculpations which may be contained
in other provisions of this lease.
ARTICLE 17
DAMAGES BY CASUALTY
17.1 Tenant
must give immediate written notice to the Landlord of any damage
caused to the Demised Premises by fire or other
casualty.
17.2 In
the event that the Demised Premises are damaged or destroyed by
fire or other casualty insurable under standard Special Form or
similar property insurance and Landlord does not elect to terminate
this lease as hereinafter provided, Landlord must proceed with
reasonable diligence and at its sole cost and expense to rebuild
and repair the Demised Premises. In the event (a) the building in
which
12
the Demised Premises are located is destroyed or substantially
damaged by a casualty not covered by Landlord’s insurance, or
(b) such building is destroyed or rendered untenantable to an
extent in excess of fifty percent of the first floor area by a
casualty covered by landlord’s insurance, or (c) the holder
of a mortgage, deed of trust or other lien on such building at the
time of the casualty elects, pursuant to such mortgage, deed of
trust or other lien, to require the use of all or part of
Landlord’s insurance proceeds in satisfaction of all or part
of the indebtedness secured by the mortgage, deed of trust or other
lien, then Landlord may elect either to terminate this lease or to
proceed to rebuild and repair the Demised Premises. Landlord must
give written notice to Tenant of such election within sixty days
after the occurrence of such casualty and, if it elects to rebuild
and repair, must proceed to do so with reasonable diligence and at
its sole cost and expense.
17.3 Landlord’s
obligation to rebuild and repair under this Article 17 is in
any event limited to restoring one of the following (as may be
applicable): (a) if this lease does not include an attached exhibit
describing Landlord’s initial construction responsibility
(defined in such exhibit as “ Landlord’s Work
”), restoring the Demised Premises to substantially the
condition in which the same existed immediately prior to such
casualty, exclusive of any alterations, additions, improvements,
fixtures and equipment installed by Tenant; or (b) rebuilding
concrete floors, walls made of metal studs and drywall, a roof (but
no ceiling), and Landlord’s Work, as described in an exhibit
attached to this lease, to substantially the same condition in
which the same existed immediately prior to the casualty. Tenant
agrees that promptly after completion of such work by Landlord,
Tenant will proceed with reasonable diligence and at Tenant’s
sole cost and expense to restore, repair and replace all
alterations, additions, improvements, fixtures, signs and equipment
installed by Tenant, or, if an exhibit describing Tenant’s
Work is attached hereto, all items of Tenant’s Work as
described in such exhibit, as the case may be, and to re-commence
business operations at the Demised Premises as soon as reasonably
possible.
17.4 Tenant
agrees that during any period of reconstruction or repair of the
Demised Premises, it will continue the operation of its business
within the Demised Premises to the extent practicable. During the
period from the occurrence of the casualty until Landlord’s
repairs are completed, the minimum guaranteed rental will be
reduced to such extent as may be fair and reasonable under the
circumstances; however, there will be no abatement of the other
charges provided for herein.
17.5 Notwithstanding
the above, should the Demised Premises be damaged by casualty to
the extent it becomes uninhabitable and Landlord does not restore
the Demised Premises to a habitable condition within two hundred
seventy (270) days of the casualty, then Tenant may terminate this
lease by written notice to Landlord delivered on or before the
earlier of (i) thirty (30) days after the end of such two hundred
seventy (270) day period or (ii) Landlord’s restoration of
the Demised Premises to a habitable condition. Additionally, should
the casualty occur in the last twelve (12) months of the lease
term, then either Landlord or Tenant may terminate this lease by
written notice to the other delivered on or before sixty (60) days
after the occurrence of such casualty.
ARTICLE 18
EMINENT DOMAIN
18.1 In
the event (a) thirty percent (30%) or more of the floor area of the
Demised Premises or (b) fifty percent (50%) or more of the building
in which the Demised Premises are located (whether or not the
Demised Premises are affected) should be taken for any public or
quasi-public use under any governmental law, ordinance or
regulation or by right of eminent domain or by private purchase in
lieu thereof, then Landlord may terminate this lease. Landlord must
give written notice to Tenant of such termination within sixty (60)
days after the occurrence of such taking. If this lease is so
terminated, the rent will be abated during the unexpired portion of
this lease, effective on the date physical possession is taken by
the condemning authority.
18.2 If
less than (a) thirty percent (30%) of the floor area of the Demised
Premises or (b) less than fifty percent (50%) of the building in
which the Demised Premises are located (whether or not the Demised
Premises are affected) should be taken as aforesaid; or if this
lease is not terminated pursuant to Section 18.1 above
following a taking, then this lease will continue in effect
following such taking, however, the minimum guaranteed rental
payable hereunder during the unexpired portion of this lease will
be reduced in proportion to the area taken, effective on the date
physical possession is taken by the condemning authority. In such
case, Landlord must make all necessary repairs or alterations to
the remaining Demised Premises or, if an exhibit describing
Landlord’s Work is attached to this lease, all necessary
repairs within the scope of Landlord’s Work as described in
such exhibit, as the case may be, required to make the remaining
portions of the Demised Premises an architectural whole.
18.3 If
any part of the Common Area should be taken as aforesaid, this
lease will not terminate, nor will the rent payable hereunder be
reduced, except that either Landlord or Tenant may terminate this
lease if the size of the parking area remaining following such
taking plus any additional
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parking area provided by Landlord in reasonable proximity to
the Project is less than seventy percent of the size of the parking
area immediately prior to the taking. Any election to terminate
this lease in accordance with this provision must be evidenced by
written notice of termination delivered to the other party within
thirty days after the date physical possession is taken by
condemning authority.
18.4 All
compensation awarded for any taking (or the proceeds of private
sale in lieu thereof) of the Demised Premises or Common Area is the
property of Landlord, and Tenant hereby assigns its interest in any
such award to Landlord; provided, however, Landlord has no interest
in any award made to Tenant for Tenant’s moving and
relocation expenses or for the loss of Tenant’s fixtures and
other tangible personal property if a separate award for such items
is made to Tenant as long as such separate award does not reduce
the amount of the award that would otherwise be awarded to
Landlord.
ARTICLE 19
ASSIGNMENT AND SUBLETTING
19.1 Tenant
is not permitted to assign or in any manner transfer this lease or
any estate or interest therein, or sublet the Demised Premises or
any part thereof, or grant any license, concession or other right
of occupancy of any portion of the Demised Premises without the
prior written consent of Landlord. Landlord agrees that it will not
withhold consent in a wholly unreasonable and arbitrary manner (as
further explained in Section 28.4 of this lease); however,
in determining whether or not to grant its consent, Landlord is
entitled to take into consideration factors such as (a)
Landlord’s desired tenant mix; (b) the experience, reputation
and financial condition of the proposed transferee; (c) whether
Landlord is already in negotiation with such proposed transferee;
(d) whether such proposed transferee is already an occupant of the
Project; (e) whether such proposed transferee is a governmental
agency; (f) whether such proposed transferee is incompatible with
the character of occupancy of the Project; (g) whether such
proposed transferee would subject the Demised Premises to a use
which would: (i) involve increased personnel or wear upon the
Project, (ii) conflict with the primary use of another tenant or
violate any exclusive right granted to another tenant of the
Project, (iii) require any addition to or modification of the
Demised Premises or the Project in order to comply with building
code or other governmental requirements, or (iv) involve a
potential environmental risk or issue; and (h) and the then current
market conditions (including market rentals). In addition, Landlord
is entitled to charge Tenant a reasonable fee for processing
Tenant’s request. Consent by Landlord to one or more
assignments or sublettings does not operate as a waiver of
Landlord’s rights as to any subsequent assignment and
sublettings.
19.2 If
Tenant is a corporation, partnership or other entity and if at any
time during the term of this lease the person or persons who own a
majority of either the outstanding voting rights or the outstanding
ownership interests of Tenant at the time of the execution of this
lease cease to own a majority of such voting rights or ownership
interests or otherwise lose control (except as a result of
transfers by devise or descent), then such loss or transfer of a
majority of such voting rights or ownership interests or control is
deemed to be an assignment of this lease by Tenant and, therefore,
subject in all respects to the provisions of Section 19.1
above. The previous sentence does not apply, however, if at the
time of the execution of this lease, Tenant is a corporation and
the outstanding voting shares of capital stock of Tenant are listed
on a recognized security exchange or over-the-counter
market.
19.3 Any
assignee or sublessee of an interest in and to this lease will be
deemed, by acceptance of such assignment or sublease or by taking
actual or constructive possession of the Demised Premises, to have
assumed all of the obligations set forth in or arising under this
lease. Such assumption will be effective as of the earlier of the
date of such assignment or sublease or the date on which the
assignee or sublessee obtains possession of the Demised Premises.
If requested by Landlord, however, such assignee or sublessee shall
additionally execute a commercially reasonable form of assumption
agreement.
19.4 Notwithstanding
any assignment or subletting, Tenant and any guarantor of
Tenant’s obligations under this lease will at all times
remain fully responsible and liable for the payment of the rent
herein specified and for compliance with all of its other
obligations under this lease (even if future assignments and
sublettings occur subsequent to the assignment or subletting by
Tenant, and regardless of whether or not Landlord’s approval
has been obtained for such future assignments and sublettings).
Moreover, in the event that the rental due and payable by a
sublessee (or a combination of the rental payable under such
sublease plus any bonus or other consideration therefor or incident
thereto) exceeds the rental payable under this lease, or if with
respect to a permitted assignment, permitted license or other
transfer by Tenant permitted by Landlord, the consideration payable
to Tenant by the assignee, licensee or other transferee exceeds the
rental payable under this lease, then Tenant is bound and obligated
to pay Landlord all such excess rental and other excess
consideration within ten (10) days following receipt thereof by
Tenant from such sublessee, assignee, licensee or other transferee,
as the case may be [after first deducting therefrom (i) any
reasonable costs incurred by Tenant for alterations or
improvements
14
(including, but not limited to, third-party architectural and
space planning costs) in the Demised Premises in connection with
such assignment or subletting, and (ii) any real estate commissions
and reasonable attorneys’ fees actually incurred by Tenant in
connection with such assignment or subletting]. Finally, in the
event of an assignment or subletting, it is understood and agreed
that Tenant will receive all rentals paid to Tenant by an assignee
or sublessee in trust for Landlord, to be forwarded immediately to
Landlord without offset or reduction of any kind; and upon election
by Landlord such assignee or sublessee must pay all rentals
directly to Landlord as specified in Section 4.2 of this
lease (to be applied as a credit and offset to Tenant’s
rental obligation).
19.5 Tenant
is not permitted to mortgage, pledge or otherwise encumber its
interest in this lease or in the Demised Premises.
19.6 In
the event of the transfer and assignment by Landlord of its
interest in this lease and in the building containing the Demised
Premises to a person expressly assuming Landlord’s
obligations under this lease, Landlord will thereby be released
from any further obligations hereunder, and Tenant agrees to look
solely to such a successor-in-interest of the Landlord for
performance of such obligations. Any security given by Tenant to
secure performance of Tenant’s obligations hereunder may be
assigned and transferred by Landlord to such successor-in-interest
and Landlord will thereby be discharged of any further obligation
relating thereto.
ARTICLE 20
SUBORDINATION; ATTORNMENT; ESTOPPELS
20.1 Tenant
accepts this lease subject and subordinate to any mortgage, deed of
trust or other lien presently existing or hereafter placed upon the
Project or any portion of the Project which includes the Demised
Premises, and to any renewals and extensions thereof. Tenant
further agrees to attorn to any mortgagee, ground lessor, trustee
under a deed of trust, or purchaser at a foreclosure sale or
trustee’s sale as landlord under this lease (as the case may
be, “ Mortgagee ”); provided, however, as part
of such attornment, Tenant agrees for the benefit of any Mortgagee
that if such Mortgagee succeeds to Landlord’s (or any
successor’s) interest in this lease, such Mortgagee will have
no liability for any act or omission of any prior landlord under
this lease that occurs prior to the date such Mortgagee succeeds to
Landlord’s (or any successor’s) interest in this lease
nor any liability for claims, offsets, or defenses that Tenant
might have had against Landlord (or any successor). Tenant agrees
that any Mortgagee has the right at any time to subordinate its
mortgage, deed of trust or other lien to this lease; provided,
however, whether or not that this lease may be (or be made to be)
superior to a mortgage, deed of trust or other lien, the Mortgagee
will not be liable for prepaid rentals, security deposits and
claims accruing during Landlord’s ownership; further provided
that the provisions of a mortgage, deed of trust or other lien
relative to the rights of the Mortgagee with respect to proceeds
arising from an eminent domain taking (including a voluntary
conveyance by Landlord) and provisions relative to proceeds arising
from insurance payable by reason of damage to or destruction of the
Demised Premises will be prior and superior to any contrary
provisions contained in this instrument with respect to the payment
or usage thereof. Landlord is hereby irrevocably vested with full
power and authority to subordinate this lease to any mortgage, deed
of trust or other lien hereafter placed upon the Demised Premises
or the Project as a whole, and Tenant agrees upon demand to execute
such further instruments subordinating this lease (or evidencing
the subordination of this lease pursuant to the terms he
