EXHIBIT 10.18
AGREEMENT OF LEASE
BETWEEN
XXXXXX X. AND XXXXXX X. XXXXX
LANDLORD
AND
ACCURATE AIR SYSTEMS, INC.
TENANT
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DATED: JULY 1, 1997
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PREMISES
0000 Xxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
AGREEMENT OF LEASE, made as of the 1st day of July, 1997, among XXXXXX X.
XXXXX and XXXXXX X. XXXXX, collectively as Landlord, and ACCURATE AIR SYSTEMS,
INC., a Texas corporation, having an address at 0000 Xxxxxxx Xxxxx, Xxxxx 000X,
Xxxxxxx, Xxxxx 00000, as Tenant.
W I T N E S S E T H:
WHEREAS, the Landlord is the owner of certain premises known as and by the
street address of 0000 Xxxxxx Xxxx, Xxxxxxx, Xxxxx (as more particularly
described on Schedule "A", annexed hereto and made a part hereof) together with
all buildings and other improvements thereon, and all fixtures, materials,
equipment, apparatus, furniture, furnishings and other property, real and
personal installed or used on the above described property or the improvements
thereon; and
WHEREAS, the Landlord desires to rent the aforementioned premises to the
Tenant and the Tenant desires to rent the aforementioned premises from the
Landlord.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, for themselves,
as well as their respective legal representatives, heirs, successors and
assigns, hereby agree as follows:
ARTICLE 1
GLOSSARY
For the purposes of this Lease, the following terms shall have the
meanings indicated below:
"ADA" shall have the meaning set forth in Section 9.1 hereof.
"ADDITIONAL RENT" shall have the meaning set forth in Section 2.2 hereof.
"ALTERATION" or "ALTERATIONS" shall mean any and all alterations,
decorations, installations, repairs, improvements, additions, replacements or
other physical changes of any nature whatsoever in or about the Premises at any
time, now or hereafter.
"APPLICABLE RATE" shall mean the lesser of (x) three percentage points
above the then current Base Rate, or (y) the maximum rate permitted by
applicable law.
"BANKRUPTCY CODE" shall mean 11 U.S.C. Section 101 ET SEQ., or any
statute, federal or state, of similar nature and purpose, now or hereafter.
"BASE RATE" shall mean the rate of interest publicly announced from time
to time by Bank One, Texas, N.A., or its successor, as its "base rate" (or such
other term as may be used by Bank One, Texas, N.A., from time to time, for the
rate presently referred to as its "base rate").
"BUILDING SYSTEMS" shall mean the mechanical, electrical, sanitary,
heating, air conditioning, ventilating, elevator, plumbing, life-safety and
other service or support systems of any nature whatsoever located at or on the
Premises, but shall not include installations made by Tenant or fixtures or
appliances (regardless of whether or not such fixtures or appliances are owned
by the Tenant or the Landlord).
"BUILDING INSURANCE" shall have the meaning set forth in Section 11.2
hereof.
"BUSINESS DAYS" shall mean all days, excluding Saturdays, Sundays and all
days observed as holidays by the State of Texas or the federal government.
"COMMENCEMENT DATE" is July 1, 1997.
"DEFICIENCY" shall have the meaning set forth in Section 18.2(A)(2)
hereof.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 17.1
hereof.
"EXPIRATION DATE" shall mean the Fixed Expiration Date or such other date
on which the Term ends pursuant to any of the terms, conditions or covenants of
this Lease or pursuant to law.
"FIXED EXPIRATION DATE" is June 30, 2002.
"FIXED RENT" shall mean $46,700.04 per annum ($3,891.67 per month) for the
first Lease Year (as such term is hereinafter defined) to be adjusted thereafter
on each anniversary date from and after the Commencement Date in accordance with
the provisions of Article 8 of this Lease.
"GOVERNMENT AUTHORITY" or "GOVERNMENT AUTHORITIES" shall mean the United
States of America, the State of Texas, the county of Xxxxxx, the Municipality of
Houston, and/or any political subdivision thereof and any agency, department,
commission, board, bureau or instrumentality of any of the foregoing, now
existing or hereafter created, having jurisdiction over the Premises or any
portion thereof.
"HAZARDOUS MATERIALS" shall have the meaning set forth in Section 9.2(A)
hereof.
"INCREASE NOTICE" shall have the meaning set forth in Section 8.3 hereof.
"INDEMNITEES" shall mean Landlord, his agents and contractors (and the partners,
shareholders, officers, directors and employees of any of the Landlord's agents
or contractors).
"INITIAL TERM" shall mean five (5) years.
"LANDLORD", on the date as of which this Lease is made, shall mean Xxxxxx
X. and Xxxxxx X. Xxxxx, but thereafter, "Landlord" shall mean any fee owner of
the Premises.
"LEASE YEAR" shall mean each twelve (12) month period commencing on each
anniversary date from and after the Commencement Date.
"MORTGAGE(S)" shall mean any trust indenture or mortgage which may now or
hereafter affect the Premises and all extensions, supplements, amendments,
modifications, consolidations,
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refinancings and replacements thereof or thereto, substitutions therefor, and
advances made thereunder.
"MORTGAGEE(S)" shall mean any trustee or mortgagee or holder of a
Mortgage.
"NOTICE(S)" shall have the meaning set forth in Section 27.1(A) hereof.
"OPTION" or "OPTIONS" shall have the meaning set forth in Section 31.1
hereof.
"OPTION PERIOD" or "OPTION PERIODS" shall have the meaning set forth in
Section 31.1 hereof.
"PARTIES" shall have the meaning set forth in Section 34.2 hereof.
"PERMITTED USE" shall mean general, executive and administrative offices,
parking and related facilities in connection with Tenant's business as a air
conditioning systems business and uses related thereto including the evolution
of the Tenant's business consistent with the evolution of the air conditioning
systems industry in general.
"PERSON(S) OR PERSON(S)" shall mean any natural person or persons, a
partnership, a corporation and any other form of business or legal association
or entity.
"PERSONS WITHIN TENANT'S CONTROL" shall mean and include Tenant, all of
Tenant's respective shareholders, directors, officers, agents, contractors,
sub-contractors, servants, employees, licensees and invitees as well as any of
the heirs, successors, representatives and assigns of any of the foregoing.
"PREMISES" shall mean all that certain plot, piece and parcel of land,
known as and by the street address of 0000 Xxxxxx Xxxx, Xxxxxxx, Xxxxx 00000 (as
more particularly described on Schedule "A", annexed hereto and made a part
hereof) together with all buildings and other improvements thereon and hereafter
placed thereon, and all fixtures, materials, equipment, apparatus, furniture,
furnishings and other property, real and personal, now or hereafter installed or
used on the above described property or the improvements thereon.
"PRICE INDEX" shall have the meaning set forth in Section 8.1(ii) hereof.
"RENTAL" shall mean and be deemed to include Fixed Rent, Additional Rent
and any other sums payable, now or hereafter, by Tenant hereunder.
"REQUIREMENTS" shall mean (i) all present and future laws, rules,
ordinances, regulations, statutes, requirements, codes and executive orders,
extraordinary as well as ordinary, retroactive and prospective, of all
Governmental Authorities, now existing or hereafter created, which affect,
directly or indirectly, the Premises and/or the maintenance, use, operation or
occupation of the Premises, (ii) all requirements, obligations and conditions of
all instruments of record on the date of this Lease, and (iii) all requirements,
obligations and conditions imposed by any fire rating agency or by the carrier
of Landlord's hazard insurance policy for the Premises.
"TAXES" shall have the meaning set forth in Section 3.1 hereof.
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"TENANT", on the date as of which this Lease is made, shall mean the
Tenant named in this Lease, but thereafter "Tenant" shall mean only the tenant
under this Lease at the time in question; provided, however, that the Tenant
named in this Lease and any and all successor tenant(s) hereunder shall not be
released and relieved from any liability hereunder in the event of any
assignment of this Lease or a sublet, in whole or in part, of the Premises.
"TENANT'S PROPERTY" shall mean Tenant's movable fixtures and movable
partitions, telephone and other equipment, furniture, furnishings and other
movable items of personal property owned by the Tenant.
"TERM", on the date as of which this Lease is made shall mean five (5)
years, but thereafter shall be deemed to include any Option Period for which the
Tenant exercises its Option pursuant to the provisions of Article 31 hereof.
"TERMINATION NOTICE PERIOD" shall have the meaning set forth in Section
27.1 hereof.
"UNAVOIDABLE DELAYS" shall have the meaning set forth in Article 25
hereof.
ARTICLE 2
DEMISE; PREMISES; TERM; RENT
SECTION 2.1. Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord the Premises for the Term to commence on the Commencement Date and to
end on the Fixed Expiration Date, unless earlier terminated as provided herein.
SECTION 2.2. Commencing upon the Commencement Date, Tenant shall pay to
Landlord, in lawful money of the United States of America, without notice or
demand, by good and sufficient check at the office of Landlord or at such other
place as Landlord may designate from time to time, the following:
(A) the Fixed Rent, as such term is defined in Article 1 hereof,
which shall be payable in equal monthly installments in advance on the first day
of each and every calendar month during the Term, and
(B) additional rent ("ADDITIONAL RENT") consisting of all other sums
of money as shall become due from and be payable by Tenant hereunder (for
default in the payment of which Landlord shall have the same remedies as for a
default in the payment of Fixed Rent).
SECTION 2.3. If the Commencement Date is other than the first day of a
calendar month, or the Fixed Expiration Date is other than the last day of a
calendar month, Fixed Rent for such month shall be prorated on a per diem basis.
SECTION 2.4. Tenant shall pay the Fixed Rent and Additional Rent when due
without notice, demand (except as provided herein) and without abatement,
deduction, counterclaim, setoff or defense of any nature.
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ARTICLE 3
REAL ESTATE TAXES; MORTGAGE(S)
SECTION 3.1. The Tenant represents, warrants, covenants and agrees that it
shall, within five (5) days of written demand by the Landlord to the Tenant, pay
to the Landlord, as Additional Rent, any and all Taxes (as hereinafter defined)
of any nature whatsoever assessed or imposed against the Premises for each and
every Lease Year during the Term of this Lease. The Landlord hereby agrees that
any demand given by the Landlord to the Tenant pursuant to the provisions of
this Section 3.1 shall include an accurate copy of the invoice, statement, xxxx
or similar document issued by the relevant Governmental Authority or
Governmental Authorities, as the case may be, with respect to the Taxes for
which payment is demanded. For purposes of this Section 3.1, "TAXES" shall
include, without limitation, any and all taxes assessed against the Premises,
all personal property taxes, all ad valorem taxes, all license fees, all rent
taxes, all levies, all penalties and any and all other taxes assessed against
the Premises by any Governmental Authority, now or hereafter.
SECTION 3.2. The Tenant represents, warrants and covenants and agrees that
it shall, within five (5) days of written demand by the Landlord to the Tenant,
pay to the Landlord, as Additional Rent, any and all amounts which may be due
and owing under and pursuant to the terms and conditions of any Mortgage or
Mortgages, as the case may be, encumbering the Premises, now or hereafter,
during the Term of this Lease including, but not limited to, any extensions,
supplements, amendments, modifications, consolidations, refinancings and
replacements of any such Mortgage or Mortgages provided that:
(A) the principal balance of any Mortgage subsequent to any
extension, supplement, amendment, modification, consolidation, refinancing or
replacement shall not exceed the outstanding principal balance of the Mortgage
which is to be extended, supplemented, amended, modified, consolidated,
refinanced or replaced at the time of such extension, supplement, amendment,
modification, consolidation, refinancing or replacement, as the case may be; and
(B) the amount of the monthly payments of principal and interest
payable pursuant to the terms and conditions of any Mortgage subsequent to any
extension, supplement, amendment, modification, consolidation, refinancing or
replacement shall not exceed the amount of the monthly payments with respect to
the Mortgage which is to be extended, supplemented, amended, modified,
consolidated, refinanced or replaced at the time of such extension, supplement,
amendment, modification, consolidation, refinancing or replacement, as the case
may be; and
(C) the terms of any extended, supplemented, amended, modified,
consolidated, refinanced or replaced Mortgage shall be no more financially
onerous than the provisions of such Mortgage prior to such extension,
supplement, amendment, modification, consolidation, refinancing or replacement,
as the case may be; and
(D) the term of any Mortgage extended, supplemented, amended,
modified, consolidated, refinanced or replaced shall be no less than the term of
such Mortgage prior to such
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extension, supplementation, amendment, modification, consolidation, refinancing
or replacement, as the case may be.
Notwithstanding anything contained herein to the contrary, the provisions of
this Section 3.2 shall not apply with respect to any amounts which may be due
and owing under and pursuant to the terms and conditions of any Mortgage
securing additional indebtedness (above and beyond any Mortgage or Mortgages
existing as of the date hereof) which first becomes a recorded lien on the
Premises subsequent to the date of this Lease and which is executed and
delivered by the Landlord without the consent of the Tenant. The Landlord hereby
agrees that any demand given by the Landlord to the Tenant for payment of
Additional Rent pursuant to the provisions of this Section 3.2 shall include,
only to the extent provided to the Landlord by the Mortgagee, an accurate copy
of the invoice, statement, xxxx or similar document issued by such Mortgagee or
Mortgagees, as the case may be, with respect to any amount for which payment of
Additional Rent is demanded by the Landlord under and pursuant to the provisions
of this Section 3.2.
ARTICLE 4
UTILITIES
SECTION 4.1. The Tenant represents, warrants, covenants and agrees that it
shall, within five (5) days of written demand by the Landlord to the Tenant, pay
to the Landlord, as Additional Rent, any and all charges incurred by the
Landlord for any and ail utilities supplied to the Premises including, without
limitation, telephone, electricity, water, heating oil and/or natural gas. The
Landlord hereby agrees that any demand given by the Landlord to the Tenant
pursuant to the provisions of this Section 4.1 shall include an accurate copy of
the invoice, statement, xxxx or similar document issued by the public utility or
any private company providing such utility, as the case may be, with respect to
any utility for which payment is demanded.
SECTION 4.2. Landlord shall not be liable in any way to Tenant for any
interruption or failure of or defect in the supply or character of any utility
furnished to the Premises, now or hereafter, or for any loss, damage or expense
Tenant may sustain if either the quantity or character of any utility is changed
or is no longer suitable for Tenant's requirements, whether by reason of any
requirement, act or omission of the public utility serving the Premises or for
any other reason whatsoever. Notwithstanding the provisions of this Section 4.2,
the Landlord shall be responsible for any and all actual damages suffered by the
Tenant as a result of any interruption of utility service caused solely by the
Landlord's failure to remit (prior to the expiration of any applicable grace
period) to the appropriate public utility or private company providing such
utility, as the case may be, any amount which has been paid by the Tenant to the
Landlord pursuant to the provisions of Section 4.1 hereof.
SECTION 4.3. Tenant shall at all times comply with the rules, regulations,
terms and conditions applicable to service, equipment, wiring, as well as any
and all requirements of the public utility supplying electricity to the
Premises. Tenant shall not, without Landlord's prior written consent in each
instance (which consent may be withheld by the Landlord in its reasonable
discretion), connect any fixtures, machinery, appliances or equipment to the
Premises electric distribution system or make any alteration or addition to
Tenant's machinery, appliances or equipment, or the electric system of the
Premises, if the effect thereof would be to increase the electrical load in the
Premises. Should Landlord grant such consent, all additional risers or
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other equipment required therefor shall be provided by Landlord and the cost
thereof shall be deemed Additional Rent due hereunder and shall be forthwith
paid by Tenant within five (5) days of Landlord's written demand.
SECTION 4.4. If any Taxes are imposed upon Landlord with respect to any
utility furnished as a service to Tenant by any Governmental Authority, Tenant
agrees that such Taxes shall be reimbursed by Tenant to Landlord within five (5)
days of written demand. The Landlord hereby agrees that any demand given by the
Landlord to the Tenant pursuant to the provisions of this Section 4.4 shall
include an accurate copy of the invoice, statement, xxxx or similar document
issued by the relevant Governmental Authority or Governmental Authorities, as
the case may be, with respect to the Taxes for which payment is demanded.
ARTICLE 5
USE AND OCCUPANCY
SECTION 5.1. Tenant shall use and occupy the Premises for the Permitted
Use and for no other purpose of any nature whatsoever.
ARTICLE 6
ALTERATIONS
SECTION 6.1.
(A) (1) Prior to making any Alterations, Tenant shall (i) submit to
Landlord detailed plans and specifications for approval by the Landlord
(including layout, architectural, electrical, mechanical and structural
drawings) and that comply with all Requirements for each proposed Alteration,
and Tenant shall not commence any such Alteration without first obtaining
Landlord's approval of such plans and specifications, (ii) at Tenant's expense,
obtain all permits, approvals and certificates required by any Governmental
Authorities, and (iii) furnish to Landlord duplicate original policies or
certificates thereof for worker's compensation insurance (covering all persons
to be employed by Tenant, and Tenant's contractors and subcontractors, in
connection with such Alteration) and commercial general liability insurance
(including premises operation, bodily injury, personal injury, death,
independent contractors, products and completed operations, broad form
contractual liability and broad form property damage coverages) in such form,
with such companies, for such periods and in such amounts as Landlord may
reasonably approve, naming Landlord and its agents and any Mortgagee, as
additional insureds. Upon completion of such Alteration, Tenant, at Tenant's
expense, shall obtain certificates of final approval of such Alterations
required by any Governmental Authority and shall furnish Landlord with copies
thereof, together with the "as-built" plans and specifications for such
Alterations. All Alterations shall be made and performed in accordance with the
plans and specifications therefor as approved by Landlord and otherwise in
accordance with all Requirements. All materials and equipment to be incorporated
in the Premises as a result of any Alterations shall be first quality and no
such materials or equipment shall be subject to any lien, encumbrance, chattel
mortgage, title retention or security agreement.
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(2) Landlord reserves the right to disapprove any plans and
specifications, in whole or in part, to reserve approval of items shown thereon
pending its review and approval of other plans and specifications, and to
condition its approval upon Tenant making revisions to the plans and
specifications or supplying additional information. Tenant agrees that any
review or approval by Landlord of any plans and/or specifications with respect
to any Alteration is solely for Landlord's benefit, and without any
representation or warranty whatsoever to Tenant or any other Person with respect
to the adequacy, correctness or sufficiency thereof or with respect to
Requirements or otherwise.
(B) All Alterations shall become a part of the Premises and shall be
Landlord's property from and after the installation thereof and may not be
removed or changed without Landlord's prior written consent. Notwithstanding the
foregoing, Landlord, upon notice given at least thirty (30) days prior to the
Expiration Date or upon such shorter notice as is reasonable under the
circumstances upon the earlier expiration of the Term, may require Tenant to
remove any specified Alterations and to repair and restore in a good and
workmanlike manner any damage to the Premises caused by such removal all at
Tenant's sole cost and expense. All Tenant's Property shall remain the property
of Tenant and, on or before the Expiration Date or earlier end of the Term, may
be removed from the Premises by Tenant at Tenant's sole cost and expense;
provided, however, that Tenant shall repair and restore in a good and
workmanlike manner any damage to the Premises caused by such removal. The
provisions of this Section 6.1(B) shall survive the expiration or earlier
termination of this Lease.
(C) (1) Any and all Alterations shall be performed, at Tenant's sole
cost and expense, by contractors, subcontractors or mechanics previously
approved in writing by Landlord. Prior to making an Alteration, at Tenant's
request, Landlord shall furnish Tenant with a list of contractors who may
perform Alterations to the Premises on behalf of Tenant.
(2) Notwithstanding the terms and conditions of Section
6.1(C)(1) hereof, with respect to any Alteration affecting any Building Systems,
(i) Tenant shall only employ Landlord's designated contractor, and (ii) the
Alteration shall, at Tenant's expense, be designed by Landlord's engineer.
(D) (1) Any mechanic's lien filed against the Premises for work
claimed to have been done for, or materials claimed to have been furnished to,
Tenant shall be canceled or discharged by Tenant, at Tenant's expense, within
twenty (20) days after such lien shall be filed, by payment or filing of the
bond required by law, and Tenant shall indemnify and hold Landlord harmless from
and against any and all costs, expenses, claims, losses or damages resulting
therefrom by reason thereof.
(2) If Tenant shall fail to discharge such mechanic's lien
within the aforesaid period, then, in addition to any other right or remedy of
Landlord, Landlord may, but shall not be obligated to, discharge the same either
by paying the amount claimed to be due or by procuring the discharge of such
lien by deposit in court or bonding, and in any such event, Landlord shall be
entitled, if Landlord so elects, to compel the prosecution of an action for the
foreclosure of such mechanics lien by the lienor and to pay the amount of the
judgment, if any, in favor of the lienor, with interest, costs and allowances.
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(3) Any amount paid by Landlord for any of the aforesaid
charges and for all expenses of Landlord (including, but not limited to,
attorneys' fees and disbursements) incurred in defending any such action,
discharging said lien or in procuring the discharge of said lien, with interest
on all such amounts at the maximum legal rate of interest then chargeable to
Tenant from the date of payment, shall be repaid by Tenant within ten (10) days
after written demand therefor, and all amounts so repayable, together with such
interest, shall be considered Additional Rent.
SECTION 6.2. Landlord, at Tenant's expense, and upon the request of
Tenant, shall join in any applications for any permits, approvals or
certificates required to be obtained by Tenant in connection with any permitted
Alteration (provided that the provisions of the applicable Requirements shall
require that Landlord join in such application) and shall otherwise cooperate
with Tenant in connection therewith; provided, however, that Landlord shall not
be obligated to incur any cost or expense or liability in connection therewith.
SECTION 6.3. Tenant shall furnish to Landlord copies of records of all
Alterations and of the cost thereof within fifteen (15) days after the
completion of such Alterations.
SECTION 6.4. Tenant shall not, at any time prior to or during the Term,
directly or indirectly, employ, or permit the employment of, any contractor,
mechanic or laborer in the Premises, whether in connection with any Alteration
or otherwise, if such employment would interfere or cause any conflict with
other contractors, mechanics or laborers engaged in the construction,
maintenance or operation of the Premises by Landlord, Tenant or others, or of
any other property owned by Landlord. In the event of any such interference or
conflict, Tenant, upon demand of Landlord, shall cause all contractors,
mechanics or laborers causing such interference or conflict to leave the
Premises immediately.
ARTICLE 7
REPAIRS; REPLACEMENTS; MAINTENANCE
SECTION 7.1. Tenant, at Tenant's sole cost and expense, shall take good
care of the Premises and the fixtures, equipment and appurtenances therein and
make all repairs and replacements thereto, both structural and non-structural,
of any nature whatsoever as and when needed to preserve them in good working
order and condition, except for (a) reasonable wear and tear and (b)
obsolescence. If Tenant shall fail, after five (5) days notice (or such shorter
period as may be required because of an emergency), to proceed with due
diligence to make repairs required to be made by Tenant, the same may be made by
Landlord, at the expense of Tenant, and the expenses thereof incurred by
Landlord, with interest thereon at the Applicable Rate, shall be paid to
Landlord, as Additional Rent, within ten (10) days after rendition of a xxxx or
statement therefor. Tenant shall give Landlord prompt notice of any defective
condition in any Building Systems located in, servicing or passing through the
Premises.
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ARTICLE 8
INCREASES IN FIXED RENT
SECTION 8.1. For purposes of the Lease:
(i) "BUREAU" shall mean the Federal Bureau of Labor Statistics or
any successor agency that shall issue the indices or data referred to in
subparagraph (ii) below.
(ii) "PRICE INDEX" shall mean the Consumer Price Index for All Urban
Consumers for the Houston, Texas geographic area, 1982-1984=100, issued from
time to time by the Bureau or any other successor measure hereafter employed by
the Bureau in lieu of such price index that measures the cost of living for such
geographic area, failing such successor, the most nearly comparable index
(reflecting changes in costs of housing including rental housing, energy and
services), published by a Governmental Authority, appropriately adjusted.
Furthermore, if hereafter the Price Index is converted to a different standard
reference base or a substantial change is made in the terms or number of items
contained therein, the Price Index shall be adjusted (with the use of such
conversion factor, formula or table as is published by the Bureau, or if it
shall not publish same, the conversion factor published by Prentice Hall, Inc.,
or, failing such publication, by any other nationally recognized publisher of
similar statistical information) to the figure that would have resulted if not
for such conversion or change.
(iii) "APPLICABLE PRICE INDEX" for a Lease Year shall mean the Price
Index issued for August of the year in which such Lease Year commences.
SECTION 8.2. (A) Tenant shall pay to Landlord Fixed Rent in the amount set
forth in Article 1 of this Lease for the first Lease Year.
(B) For each Lease Year subsequent to the first Lease Year
(and for each and every Lease Year thereafter during the Term hereof), the
Tenant shall pay to the Landlord, as Fixed Rent, an amount equal to the greater
of:
(i) an amount equal to the sum of (x) the percentage by
which the Applicable Price Index for such Lease Year exceeds the Applicable
Price Index for the immediately preceding Lease Year, multiplied by the Fixed
Rent payable for such immediately preceding Lease Year and (y) such Fixed Rent
payable for the immediately preceding Lease Year (e.g., if the Base Index is
200, the Applicable Price Index for the second Lease Year is 203, the Applicable
Price Index for the third Lease Year is 215, and the Fixed Rent payable for the
second Lease Year is $50,000.00, then the Applicable Price Index for the third
Lease Year exceeds the Applicable Price Index for the second Year by 5.91% (i
.e., the difference between 203 and 215), and the Fixed Rent derived from the
aforesaid calculation shall be $52,955.75 (5.91% of $50,000.00, $2,955.00, plus
$50,000.00); or
(ii) an amount equal to the Fixed Rent for the
immediately preceding Lease Year.
The Landlord and the Tenant hereby acknowledge that it is the mutual intention
of the parties that for each and every Lease Year subsequent to the first Lease
Year during the Term hereof,
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the Fixed Rent payable by the Tenant to the Landlord hereunder shall never be
decreased from the prior Lease Year.
SECTION 8.3. Upon notice by the Landlord to the Tenant of an increase in
the Fixed Rent pursuant to the provisions of this Article 8 ("INCREASE NOTICE"),
the Tenant shall pay the Fixed Rent as set forth in the Increase Notice.
ARTICLE 9
REQUIREMENTS OF LAW
SECTION 9.1. Tenant shall not do, and shall not permit any act or thing in
or upon the Premises which will invalidate or be in conflict with the
certificate of occupancy for the Premises or violate any Requirements. Tenant
shall, at Tenant's sole cost and expense, immediately take all action, including
but not limited to, making any required Alterations necessary to comply with all
Requirements [including, but not limited to, the Americans With Disabilities Act
of 1990 (the "ADA"), as modified and supplemented from time to time] which shall
or may impose any violation, order or duty upon Landlord or Tenant arising from,
or in connection with, the Premises, Tenant's occupancy, use or manner of use of
the Premises (including, without limitation, any occupancy, use or manner of use
that constitutes a "place of public accommodation" under the ADA), or any
installations in the Premises, or required by reason of a breach of any of
Tenant's covenants or agreements under this Lease, whether or not such
Requirements shall now be in effect or hereafter enacted or issued, and whether
or not any work required shall be ordinary or extraordinary or foreseen or
unforeseen as of the date hereof.
SECTION 9.2. Tenant covenants and agrees that Tenant shall, at Tenant's
sole cost and expense, comply at all times with all Requirements governing the
use, generation, storage, treatment and/or disposal of any Hazardous Materials
(as defined below), the presence of which results from or in connection with the
act or omission of Tenant or Persons Within Tenant's Control or the breach of
this Lease by Tenant or Persons Within Tenant's Control. The term "HAZARDOUS
MATERIALS" shall mean any biologically or chemically active or other toxic or
hazardous wastes, pollutants or substances, including, without limitation,
asbestos, PCBS, petroleum products and by-products, substances defined or listed
as "hazardous substances" or "toxic substances" or similarly identified in or
pursuant to the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601 ET SEQ., and as hazardous wastes under the Resource
Conservation and Recovery Act, 42 U.S.C. ss. 6010, ET SEQ., any chemical
substance or mixture regulated under the Toxic Substance Control Act of 1976, as
amended, 15 U.S.C. 2601, ET SEQ., any "toxic pollutant" under the Clean Water
Act, 33 U.S.C. ss. 466 ET SEQ., as amended, any hazardous air pollutant under
the Clean Air Act, 42 U.S.C. ss. 7401 ET SEQ., hazardous materials identified in
or pursuant to the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1802,
ET SEQ., and any hazardous or toxic substances or pollutant regulated under any
other Requirements including, without limitation, ECRA (as such term is
hereinafter defined). Tenant agrees to execute, from time to time, at Landlord's
request, affidavits, representations and the like concerning Tenant's best
knowledge and belief regarding the presence of Hazardous Materials in, on, under
or about the Premises. Tenant shall indemnify and hold harmless all Indemnitees
from and against any loss, claim, cost, damage, liability or expense (including
attorneys' fees and disbursements) arising by reason of any clean up, removal,
remediation, detoxification action or any other activity required or recommended
of any Indemnitees by any
11
Governmental Authority by reason of the presence in, on, under or about the
Premises of any Hazardous Materials, as a result of or in connection with the
act or omission of Tenant or Persons Within Tenant's Control or the breach of
this Lease by Tenant or Persons Within Tenant's Control. The foregoing covenants
and indemnity shall survive the expiration or any termination of this Lease.
SECTION 9.3. If Tenant shall receive notice of any violation of, or
defaults under, any Requirements, liens or other encumbrances applicable to the
Premises, Tenant shall give immediate written notice thereof to Landlord.
SECTION 9.4. If any governmental license or permit shall be required for
the proper and lawful conduct of Tenant's business and if the failure to secure
such license or permit would, in any way, affect Landlord or the Premises, then
Tenant, at Tenant's expense, shall promptly procure and thereafter maintain,
submit for inspection by Landlord, and at all times comply with the terms and
conditions of, each such license or permit.
ARTICLE 10
SUBORDINATION
SECTION 10.1. This Lease shall at all times, now and hereafter, be subject
and subordinate to each and every Mortgage, whether made prior to or after the
execution of this Lease, and to all extensions, supplements, amendments,
modifications, consolidations and replacements thereof or thereto, substitutions
therefor, and advances made thereunder; provided, that Tenant has received from
the holder of any Mortgage an agreement that Tenant will not be disturbed in its
possession of the Premises, or have its rights under this Lease modified or
terminated other than pursuant to the terms of this Lease. This clause shall be
self-operative and no further agreement of subordination shall be required to
make the interest of any Mortgagee superior to the interest of Tenant hereunder.
In confirmation of such subordination, Tenant shall promptly execute and
deliver, at its own cost and expense, any document, in recordable form if
requested, that Landlord or any Mortgagee may request to evidence such
subordination; and if Tenant fails to execute, acknowledge or deliver any such
document within five (5) days after request therefor, Tenant hereby irrevocably
constitutes and appoints Landlord as Tenant's attorney-in-fact, coupled with an
interest, to execute, acknowledge and deliver any such document for and on
behalf of Tenant. Tenant shall not do anything that would constitute a default
under any Mortgage, or omit to do anything that Tenant is obligated to do under
the terms of this Lease so as to cause Landlord to be in default thereunder.
SECTION 10.2. If, at any time prior to the expiration of the Term, any
Mortgagee comes into possession of the Premises, by receiver or otherwise,
Tenant agrees, at the election and upon demand of any owner of the Premises, or
of any Mortgagee in possession of the Premises, to attorn, from time to time, to
any such owner or Mortgagee or any person acquiring the interest of Landlord as
a result of any such termination or as a result of a foreclosure of the Mortgage
or the granting of a deed in lieu of foreclosure, upon the then executory terms
and conditions of this Lease (except as provided below), for the remainder of
the Term, provided that such owner or Mortgagee, as the case may be, or receiver
caused to be appointed by any of the foregoing,
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is then entitled to possession of the Premises. Any such attornment shall be
made upon the condition that no such owner or Mortgagee shall be:
(1) liable for any act or omission of any prior landlord (including,
without limitation, the then defaulting landlord); or
(2) subject to any defense or offsets (except as expressly set forth
in this Lease) which Tenant may have against any prior landlord (including,
without limitation, the then defaulting landlord); or
(3) bound by any payment of Rental which Tenant might have paid for
more than the current month to any prior landlord (including, without
limitation, the then defaulting landlord); or
(4) bound by any obligation to make any payment to Tenant which was
required to be made prior to the time such owner or Mortgagee succeeded to any
prior landlord's interest; or
(5) bound by any obligation to perform any work or to make
improvements to the Premises except for (i) repairs to the Premises or any part
thereof as a result of damage by fire or other casualty pursuant to Article 12,
but only to the extent that such repairs can be reasonably made from the net
proceeds of any insurance actually made available to such owner or Mortgagee and
(ii) repairs to the Premises as a result of a partial condemnation pursuant to
Article 13, but only to the extent that such repairs can be reasonably made from
the net proceeds of any award made available to such owner or Mortgagee. Tenant,
upon demand of any such owner or Mortgagee, shall execute, from time to time,
agreements in confirmation of the foregoing provisions of this Section 10.2,
satisfactory to any such owner or Mortgagee, and acknowledging such attornment
and setting forth the terms and conditions of its tenancy. Nothing contained in
this Section 10.2 shall be construed to impair any right otherwise exercisable
by any such owner or Mortgagee.
SECTION 10.3. If requested by any Mortgagee or Landlord, Tenant shall
promptly execute and deliver, at Tenant's own cost and expense, any document in
accordance with the terms of this Article 10, in recordable form, to evidence
such subordination.
SECTION 10.4. At any time and from time to time upon not less than ten
(10) days' prior notice to Tenant or Landlord given by the other, or to Tenant
given by a Mortgagee, Tenant or Landlord, as the case may be, shall, without
charge, execute, acknowledge and deliver a statement in writing addressed to
such party as Tenant, Landlord or Mortgagee, as the case may be, may designate,
in form satisfactory to Tenant, Landlord or Mortgagee, as the case may be,
certifying all or any of the following: (i) that this Lease is unmodified and in
full force and effect (or if there have been modifications, that this Lease is
in full force and effect as modified and stating the modifications); (ii) the
date that the Term commenced and the date(s) that Fixed Rent and Additional Rent
became payable hereunder and the dates to which they have been paid; (iii)
whether or not, to the best knowledge of the signer of such certificate,
Landlord is in default in performance of any of the terms of this Lease and, if
so, specifying each such event of default of which the signer may have
knowledge; (iv) whether or not, to the best knowledge of the signer of such
certificate, Tenant has accepted possession of the Premises; (v) whether Tenant
has made
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any claim against Landlord under this Lease and, if so, the nature thereof and
the dollar amount, if any, of such claim; (vi) either that Tenant does not know
of any default in the performance of any provision of this Lease or specifying
the details of any default of which Tenant may have knowledge and stating what
action Tenant is taking or proposes to take with respect thereto; (vii) that, to
the best knowledge of Tenant, there are no proceedings pending or threatened
against Tenant before or by any court or administrative agency which, if
adversely decided, would materially or adversely affect the financial condition
or operations of Tenant or, if any such proceedings are pending or threatened to
the best knowledge of Tenant, specifying and describing the same; and (viii)
such further information with respect to the Lease or the Premises as Landlord
may reasonably request or Mortgagee may require; it being intended that any such
statement delivered pursuant hereto may be relied upon by any prospective
purchaser of the Premises or any part thereof or of the interest of Landlord in
any part thereof, by any Mortgagee or prospective Mortgagee or by any
prospective assignee of any Mortgage or by any assignee of Tenant.
The failure of either Tenant or Landlord to execute, acknowledge and
deliver a statement in accordance with the provisions of this Section 10.4
within said ten (10) day period shall constitute an acknowledgment by Tenant or
Landlord, as the case may be, which may be relied on by any person or entity of
any nature whatsoever who would be entitled to rely upon any such statement,
that such statement as submitted by Landlord or Tenant, as the case may be, is
true and correct.
SECTION 10.5. As long as any Mortgage exists, Tenant shall not seek to
terminate this Lease by reason of any act or omission of Landlord until Tenant
has given not less than thirty (30) days prior written notice of such act or
omission to all Mortgagees, and if any such Mortgagee notifies Tenant within
thirty (30) days following receipt of such notice of its intention to remedy
such act or omission, until a reasonable period of time shall have elapsed
following the giving of such notice, during which period such Mortgagee shall
have the right, but not the obligation, to remedy such act or omission.
ARTICLE 11
INSURANCE; PROPERTY LOSS OR DAMAGE; REIMBURSEMENT
SECTION 11.1.
(A) Neither Landlord nor Landlord's agents shall be liable for any
injury or damage to persons or property, or interruption of Tenant's business,
resulting from fire or other casualty; nor shall Landlord or Landlord's agents
be liable for any such damage caused by Persons other than the Landlord or the
Landlord's agents or by construction of any private, public or quasi-public
work; nor shall Landlord be liable for any latent defect in the Premises.
(B) Tenant shall give written notice to Landlord, immediately after
Tenant learns thereof, of any accident, emergency, occurrence for which Landlord
might be liable, fire or other casualty and all damages to or defects in the
Premises for the repair of which Landlord might be responsible or which
constitutes Landlord's property. Such notice shall be given by telecopy or
personal delivery to the address(es) of Landlord in effect for notice.
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SECTION 11.2. Tenant shall not do or permit to be done any act or thing in
or upon the Premises which will invalidate or be in conflict with the terms of
the State of Texas standard form of fire insurance with extended coverage, or
with rental, liability, boiler, sprinkler, water damage, war risk or other
insurance policies covering the Premises and the fixtures and property therein
(hereinafter referred to as "BUILDING INSURANCE"); and Tenant, at Tenant's own
expense, shall comply with all rules, orders, regulations and requirements of
all insurance boards, and shall not do or permit anything to be done in or upon
the Premises or bring or keep anything therein or use the Premises in a manner
which increases the rate of premium for any of the Building Insurance or any
property or equipment located therein over the rate in effect at the
commencement of the Term of this Lease.
SECTION 11.3.
(A) If, by reason of any failure of Tenant to comply with the
provisions of this Lease, the rate of premium for Building Insurance or other
insurance on the property and equipment of Landlord shall be higher than it
otherwise would be, Tenant shall reimburse Landlord for that part of the
insurance premiums thereafter paid by Landlord which shall have been charged
because of such failure by Tenant. Tenant shall make said reimbursement on the
first day of the month following such payment by Landlord.
(B) In any action or proceeding wherein Landlord and Tenant are
parties, a schedule of any insurance rate for the Premises issued by any
insurance board establishing insurance premium rates for the Premises shall be
prima facie evidence of the facts therein stated and of the several items and
charges in the insurance premium rates then applicable to the Premises.
SECTION 11.4.
(A) Tenant shall, at Tenant's own cost and expense, obtain, maintain
and keep in full force and effect during the Term, for the benefit of Landlord,
any Mortgagees and Tenant, commercial general liability insurance (including
premises operation, bodily injury, personal injury, death, independent
contractors, products and completed operations, broad form contractual liability
and broad form property damage coverages) in a combined single limit amount of
not less than Five Million and 00/100 ($5,000,000.00) Dollars, against all
claims, demands or actions with respect to damage, injury or death made by or on
behalf of any person or entity, arising from or relating to the conduct and
operation of Tenant's business in, on or about the Premises (which shall include
Tenant's signs, if any), or arising from or related to any act or omission of
Tenant or of Persons Within Tenant's Control. If Tenant shall install or
maintain one or more pressure vessels to serve Tenant's operations at the
Premises, Tenant shall, at Tenant's own cost and expense, obtain, maintain and
keep in full force and effect, for the benefit of Landlord, any Mortgagees and
Tenant, appropriate boiler or other insurance coverage therefor in an amount not
less than Three Million and 00/100 ($3,000,000.00) Dollars (it being understood
and agreed, however, that the foregoing shall not be deemed a consent by
Landlord to the installation and/or maintenance of any such pressure vessels in
the Premises, which installation and/or maintenance shall at all times be
subject to the prior written consent of Landlord). Whenever, in Landlord's
reasonable judgment, good business practice and changing conditions indicate a
need for additional amounts or different types of insurance coverage, Tenant
shall, within ten (10) days after Landlord's request, obtain such insurance
coverage, at Tenant's expense.
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(B) Tenant, at Tenant's sole cost and expense, shall maintain
insurance protecting and indemnifying Tenant against any and all damage to or
loss of any Alterations and leasehold improvements, including any made by
Landlord to prepare the Premises for Tenant's occupancy, and Tenant's Property,
and all claims and liabilities relating thereto.
(C) Landlord and any Mortgagees shall be named as insureds in said
policies and shall be protected against all liability occasioned by an
occurrence insured against. All said policies of insurance shall be: (i) written
as "occurrence" policies; (ii) written as primary policy coverage and not
contributing with or in excess of any coverage which Landlord may carry; and
(iii) issued by reputable and independent insurance companies rated in Best's
Insurance Guide, or any successor thereto (or if there be none, an organization
having a national reputation) as having a general policyholder rating of "A+"
and a financial rating of at least "13", and which are licensed to do business
in the State of Texas. Tenant shall deliver to Landlord the policies of
insurance or certificates thereof, together with evidence of payment of premiums
thereon, and shall thereafter furnish to Landlord, at least thirty (30) days
prior to the expiration of any such policies and any renewal thereof, a new
policy or certificate in lieu thereof, with evidence of the payment of premiums
thereon. Each of said policies shall also contain a provision whereby the
insurer agrees not to cancel, fail to renew, diminish or materially modify said
insurance policy(ies) without having given Landlord and any Mortgagees at least
thirty (30) days prior written notice thereof.
(D) Tenant shall pay all premiums and charges for all of said
policies, and, if Tenant shall fail to make any payment when due or carry any
such policy, Landlord may, but shall not be obligated to, make such payment or
carry such policy, and the amount paid by Landlord, with interest thereon (at
the Applicable Rate), shall be repaid to Landlord by Tenant on demand, and all
such amounts so repayable, together with such interest, shall be deemed to
constitute Additional Rent hereunder. Payment by Landlord of any such premium,
or the carrying by Landlord of any such policy, shall not be deemed to waive or
release the default of Tenant with respect thereto.
SECTION 11.5.
(A) Tenant shall cause each insurance policy carried by Tenant and
insuring the Premises and Tenant's Alterations, leasehold improvements, space
equipment, furnishings, furniture, contents and fixtures against loss, damage or
destruction by fire or other casualty, to be written in a manner so as to
provide that the insurance company waives all rights of recovery by way of
subrogation against Landlord or Tenant in connection with any loss or damage
covered by any such policy. If the release of either Landlord or Tenant shall
contravene any law with respect to exculpatory agreements, the liability of the
party in question shall be deemed not released, but no action or rights shall be
sought or enforced against such party unless and until all rights and remedies
against the insurer are exhausted and such party shall be unable to collect such
insurance proceeds.
(B) The waiver of subrogation referred to in Section 11.5(A) above
shall extend to the agents and employees of each party, but-only if and to the
extent that such waiver can be obtained without additional charge (unless such
party shall pay such charge). Nothing contained in this Section 11.5 shall be
deemed to relieve the Tenant from any duty imposed elsewhere in this Lease to
repair, restore and rebuild the Premises, in whole or in part.
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ARTICLE 12
DESTRUCTION BY FIRE OR OTHER CAUSE
SECTION 12.1. If the Premises or any part thereof shall be damaged by fire
or other casualty, Tenant shall give immediate written notice thereof to
Landlord. Landlord shall, subject to the provisions of Sections 12.2 and 12.3
below, proceed with reasonable diligence, after receipt of the net proceeds of
insurance, to repair or cause to be repaired such damage at its expense, but in
no event shall such repair or restoration be greater in scope than the quantity
or quality of construction of the Premises as of the Commencement Date; and, if
the Premises, or any part thereof, shall be rendered untenantable by reason of
such damage and such damage shall not be due to the fault of Tenant or Persons
Within Tenant's Control, then the Fixed Rent hereunder, or an amount thereof
apportioned according to the area of the Premises so rendered untenantable (if
less than the entire Premises shall be so rendered untenantable), shall be
abated for the period from the date of such damage to the date when the repair
of such damage shall have been substantially completed. If Landlord or any
Mortgagee shall be unable to collect the insurance proceeds (including rent
insurance proceeds) applicable to such damage because of some action or inaction
on the part of Tenant or Persons Within Tenant's Control, then the cost of
repairing such damage shall be paid by Tenant and there shall be no abatement of
Fixed Rent. Tenant covenants and agrees to cooperate with Landlord and any
Mortgagee in their efforts to collect insurance proceeds (including rent
insurance proceeds) payable to such parties. Landlord shall not be liable for
any delay which may arise by reason of adjustment of insurance on the part of
Landlord and/or Tenant, or any cause beyond the control of Landlord or
contractors employed by Landlord.
It is expressly understood that if Landlord is prevented from
substantially completing the repairs by reason of any acts of Tenant or Persons
Within Tenant's Control, including, without limitation, by reason of the
performance of any Alterations, or by reason of Tenant's failure or refusal to
comply or to cause its architects, engineers, designers and contractors to
comply with any of Tenant's obligations described or referred to in this Lease,
then such work shall be deemed substantially completed on the date when the work
would have been substantially completed but for such delay, and the expiration
of the abatement of Tenant's obligations to pay Fixed Rent shall not be
postponed by reason of such delay. Any additional costs to Landlord to complete
any work occasioned by such delay shall be paid by Tenant to Landlord, as
Additional Rent, within ten (10) days after demand therefor by Landlord.
SECTION 12.2. Landlord shall not be liable for any inconvenience or
annoyance to Tenant or injury to the business of Tenant resulting in any way
from damage from fire or other casualty or the repair thereof. Tenant
understands that Landlord, in reliance upon Section 11.4 hereof, will not carry
insurance of any kind on Tenant's furnishings, furniture, contents, fixtures,
space equipment and leasehold improvements, and that Landlord shall not be
obligated to repair any damage thereto or replace the same.
SECTION 12.3. (A) Notwithstanding anything to the contrary contained in
Sections 12.1 and 12.2 above, in the event that:
(i) at least fifty (50%) percent of the rentable square
feet of the Premises shall be damaged by a fire or other casualty so that
substantial alteration or
17
reconstruction of the Premises shall, in Landlord's sole opinion, be required
(whether or not the Premises shall have been damaged by such fire or other
casualty and without regard to the structural integrity of the Premises); or
(ii) the Premises shall be totally or substantially
damaged or shall be rendered wholly or substantially untenantable; or
(iii) there shall be any damage to the Premises within
the last two (2) years of the Term wherein the cost of repair exceeds an amount
equal to three (3) monthly installments of Fixed Rent, then, as a result of any
circumstances described in subparagraphs (i), (ii) or (iii) hereof, the Landlord
may, in Landlord's sole and absolute discretion, terminate this Lease and the
term and estate hereby granted, by notifying Tenant in writing of such
termination within one hundred twenty (120) days after the date of such damage.
In the event that such a notice of termination shall be given, then this Lease
and the term and estate hereby granted shall expire as of the date of
termination stated in said notice with the same effect as if that were the Fixed
Expiration Date, and the Fixed Rent and Additional Rent hereunder shall be
apportioned as of such date.
SECTION 12.4. Except as may be provided in Section 11.5, nothing herein
contained shall relieve Tenant from any liability to Landlord or to Landlord's
insurers in connection with any damage to the Premises by fire or other casualty
if Tenant shall be legally liable in such respect.
ARTICLE 13
EMINENT DOMAIN
SECTION 13.1. If the whole of the Premises is acquired or condemned for
any public or quasi-public use or purpose, this Lease and the Term shall end as
of the date of the vesting of title with the same effect as if said date were
the Fixed Expiration Date. If only a part of the Premises is so acquired or
condemned then, (1) except as hereinafter provided in this Section 13.1, this
Lease and the Term shall continue in effect but, if a part of the Premises is so
acquired or condemned, from and after the date of the vesting of title, the
Fixed Rent and Additional Rent, if any, shall be reduced in the proportion which
the area of the part of the Premises so acquired or condemned bears to the total
area of the Premises immediately prior to such acquisition or condemnation; (2)
whether or not the Premises are affected thereby, Landlord, at Landlord's
option, may give to Tenant, within sixty (60) days next following the date upon
which Landlord receives notice of vesting of title, a thirty (30) day notice of
termination of this Lease; and (3) if the part of the Premises so acquired or
condemned contains more than seventy-five (75%) percent of the total area of the
Premises immediately prior to such acquisition or condemnation, or if, by reason
of such acquisition or condemnation, Tenant no longer has access to the
Premises, Tenant, at Tenant's option, may give to Landlord, within thirty (30)
days next following the date upon which Tenant receives notice of vesting of
title, a thirty (30) day notice of termination of this Lease. If any such thirty
(30) day notice of termination is given, by Landlord or Tenant, this Lease and
the Term shall come to an end and expire upon the expiration of said thirty (30)
days with the same effect as if the date of expiration of said thirty (30) days
were the Fixed Expiration Date. In the event of any termination of this Lease
and the Term pursuant to the provisions of this Section 13.1, the Fixed Rent or
Additional Rent shall be apportioned as of
18
the date of sooner termination and any prepaid portion of the Fixed Rent for any
period after such date shall be refunded by Landlord to Tenant.
SECTION 13.2. In the event of any such acquisition or condemnation of all
or any part of the Premises, Landlord shall be entitled to receive the entire
award for any such acquisition or condemnation. Tenant shall have no claim
against Landlord or the condemning authority for the value of any unexpired
portion of the Term and Tenant hereby expressly assigns to Landlord all of its
right in and to any such award. Nothing contained in this Section 13.2 shall be
deemed to prevent Tenant from making a separate claim in any condemnation
proceedings for the value of any Tenant's Property included in such taking, and
for any moving expenses, so long as Landlord's award is not reduced thereby.
ARTICLE 14
ASSIGNMENT; SUBLETTING; MORTGAGE; ETC.
SECTION 14.1. (A) The Tenant shall not (a) assign this Lease (whether by
operation of law, transfers of interests in Tenant or otherwise); or (b)
mortgage or encumber Tenant's interest in this Lease, in whole or in part; or
(c) sublet, or permit the subletting of, the Premises or any part thereof.
Notwithstanding the provisions of this Section 14.1, the use of the Premises by
any Person affiliated (as such term is hereinafter defined) with the Tenant or
under the common control (as such term is hereinafter defined) of Comfort
Systems USA, Inc., as the case may be, shall not be deemed an assignment of this
Lease or a sublet of the Premises; provided, however, that such use of the
Premises as aforesaid shall not violate or be prohibited by any of the
provisions of any Mortgage then encumbering the Premises, if any. For purposes
of this Article 14, a Person shall be deemed to be an "AFFILIATE" of the Tenant
or under the "COMMON CONTROL" of Comfort Systems USA, Inc. if such Person is a
member of a "parent-subsidiary controlled group" [as such term is defined by
Section 1563(a)(1) of the Internal Revenue Code of 1986, as amended] or a member
of a "brother-sister controlled group" [as such term is defined by Section
1563(a)(2) of the Internal Revenue Code of 1986, as amended] of which either
Comfort Systems USA, Inc. or the Tenant, as the case may be, is a member.
(B) Notwithstanding the provisions otherwise set forth in this
Article 14, any reorganization, consolidation and/or restructuring of the Tenant
in which the issued and outstanding stock of the Tenant remains under the common
control (as such term is defined in Section 14.1 hereinabove) of Comfort Systems
USA, Inc. shall not be deemed an assignment of this Lease or a sublet of the
Premises; provided, however, that the same shall not violate or be prohibited by
any of the provisions of any Mortgage then encumbering the Premises, if any.
SECTION 14.2. If Tenant's interest in this Lease shall be assigned in
violation of the provisions of this Article 14, such assignment shall be invalid
and of no force and effect against Landlord; provided, however, that Landlord
may collect an amount equal to the then Fixed Rent plus any other item of Rental
from the assignee as a fee for its use and occupancy. If the Premises or any
part thereof are sublet to, or occupied by, or used by, any person other than
Tenant, whether or not in violation of this Article 14, Landlord, after default
by Tenant under this Lease, may collect any item of Rental or other sums paid by
the subtenant, user or occupant as a fee for its use and occupancy, and shall
apply the net amount collected to the Fixed Rent and the items of Rental
reserved in this Lease. No such assignment, subletting, occupancy, or use,
19
nor any such collection or application of Rental or fee for use and occupancy,
shall be deemed a waiver by Landlord of any term, covenant or condition of this
Lease or the acceptance by Landlord of such assignee, subtenant, occupant or
user as Tenant hereunder, nor shall the same, in any circumstances, relieve
Tenant of any of its obligations under this Lease.
SECTION 14.3. Except as otherwise set forth in Section 14.1 hereof, for
purposes of this Article 14, (i) any increase in the amount of issued and/or
outstanding capital stock of any corporate tenant and/or the creation of one or
more additional classes of capital stock of any corporate tenant, in a single
transaction or a series of related or unrelated transactions, resulting in a
change in the legal or beneficial ownership of such tenant so that the
shareholders of such tenant existing immediately prior to such transaction or
series of transactions shall no longer own a majority of the issued and
outstanding capital stock of such tenant shall be deemed an assignment of this
Lease and (ii) any Person or legal representative of Tenant, to whom Tenant's
interest under this Lease passes by operation of law, or otherwise, shall be
bound-by the provisions of this Article 14. Tenant agrees to furnish to Landlord
on request at any time such information and assurances as Landlord may
reasonably request that Tenant has not violated the provisions of this Article
14.
ARTICLE 15
ACCESS TO PREMISES
SECTION 15.1. Tenant shall permit Landlord, Landlord's agents and any
public utilities servicing the Premises to erect, use and maintain, now and
hereafter, concealed ducts, pipes and conduits in and through the Premises.
Landlord or Landlord's agents shall have the right to enter the Premises at all
reasonable times upon (except in case of emergency) reasonable prior notice,
which notice may be oral, to examine the same, to show the same to prospective
purchasers or Mortgagees and to make such repairs, alterations, improvements or
additions (i) as Landlord may deem necessary or desirable to the Premises, or
(ii) which Landlord may elect to perform at least ten (10) days after notice
(except in an emergency when no notice shall be required) following Tenant's
failure to make repairs or perform any work which Tenant is obligated to make or
perform under this Lease, or (iii) for the purpose of complying with
Requirements, and Landlord shall be allowed to take all material into and upon
the Premises that may be required therefor without the same constituting an
eviction or constructive eviction of Tenant in whole or in part and the Fixed
Rent (and any other item of Rental) shall in no respect xxxxx or be reduced by
reason of said repairs, alterations, improvements or additions, wherever
located, or while the same are being made, by reason of loss or interruption of
business of Tenant, or otherwise. Landlord shall promptly repair any damage
caused to the Premises by such work, alterations, improvements or additions.
SECTION 15.2. If Tenant is not present when for any reason entry into the
Premises may be necessary or permissible, Landlord or Landlord's agents may
enter the same without rendering Landlord or such agents liable therefor.
SECTION 15.3. Landlord also shall have the right at any time, without the
same constituting an actual or constructive eviction and without incurring any
liability to Tenant therefor, to change the arrangement or location of entrances
or passageways, doors and doorways, and corridors, stairs, toilets or other
parts of the Premises, provided any such change does not unreasonably
20
interfere with, or deprive Tenant of access to, the Premises; to put so-called
"solar film" or other energy-saving installations on the inside and outside of
the windows; and to change the name, number or designation by which the Premises
is commonly known.
ARTICLE 16
CERTIFICATE OF OCCUPANCY
SECTION 16.1. Tenant shall not at any time, now or hereafter, use or
occupy the Premises, directly or indirectly, in violation of the certificate of
occupancy for the Premises and in the event that any Governmental Authority
hereafter contends or declares by notice, violation, order or in any other
manner whatsoever that the Premises are used for a purpose that is a violation
of such certificate of occupancy, Tenant shall, upon three (3) Business Days'
written notice from Landlord or any Government Authority, immediately
discontinue such use of the Premises.
ARTICLE 17
DEFAULT
SECTION 17.1. Each of the following events shall be an "EVENT OF DEFAULT"
under this Lease:
(A) if Tenant shall on any occasion default in the payment when due
of any installment of Fixed Rent or Additional Rent or in the payment when due
of any other item of Rental and such default shall continue for five (5)
business days from and after the date when written notice has been received by
Tenant; or
(B) if the Premises shall become vacant or abandoned; or
(C) if Tenant's interest in this Lease shall devolve upon or pass to
any person, whether by operation of law or otherwise, except as specifically
permitted by the provisions of Article 14 hereof; or
(D) (1) if Tenant shall not, or shall be unable to, or shall admit
in writing Tenant's inability to, as to any obligation, pay Tenant's debts as
they become due; or
(2) if Tenant shall commence or institute any case, proceeding
or other action (a) seeking relief on Tenant's behalf as debtor, or to
adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to Tenant or Tenant's debts under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, or (b) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or any
substantial part of its property; or
(3) if Tenant shall make a general assignment for the benefit
of creditors; or
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(4) if any case, proceeding or other action shall be commenced
or instituted against Tenant (a) seeking to have an order for relief entered
against Tenant as debtor or to adjudicate Tenant a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to Tenant or Tenant's
debts under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors, or (b)
seeking appointment of a receiver, trustee, custodian or other similar official
for Tenant or for all or any substantial part of Tenant's property, which either
(i) results in any such entry of an order for relief, adjudication of bankruptcy
or insolvency or such an appointment or the issuance or entry of any other order
having a similar effect or (ii) remains undismissed for a period of sixty (60)
days; or
(5) if a trustee, receiver or other custodian shall be
appointed for any substantial part of the assets of Tenant which appointment is
not vacated or effectively stayed within thirty (30) days; or
(E) if Tenant shall default in the observance or performance of any
other term, covenant or condition of this Lease on Tenant's part to be observed
or performed including, without limitation, the terms and-conditions of Article
27 hereof, and Tenant shall fail to remedy such default within ten (10) days
after written notice by Landlord to Tenant of such default, or if such default
is of such a nature that it cannot with due diligence be completely remedied
within said period of ten (10) days and the continuation of which for the period
required for cure will not subject Landlord to the risk of criminal liability or
foreclosure of any Mortgage, if Tenant shall not, (i) within said ten (10) day
period advise Landlord of Tenant's intention duly to institute all steps
necessary to remedy such situation, (ii) duly institute within said ten (10) day
period, and thereafter diligently and continuously prosecutes to completion all
steps necessary to remedy the same and (iii) completes such remedy within such
time after the date of the giving of said notice by Landlord as shall reasonably
be necessary.
SECTION 17.2. If an Event of Default shall occur, Landlord may, at any
time thereafter, at Landlord's option, give written notice to Tenant stating
that this Lease and the Term shall expire and terminate on the date specified in
such notice whereupon this Lease and the Term and all rights of Tenant under
this Lease shall automatically expire and terminate as if the date specified in
the notice given pursuant to this Section 17.2 were the Fixed Expiration Date
and Tenant immediately shall quit and surrender the Premises, but Tenant shall
remain liable for damages as provided herein or pursuant to law. Anything
contained herein to the contrary notwithstanding, if such termination shall be
stayed by order of any court having jurisdiction over any proceeding described
in Section 17.1(D), or by federal or state statute, then, following the
expiration of any such stay, or if the trustee appointed in any such proceeding,
Tenant or Tenant as debtor-in-possession fails to assume Tenant's obligations
under this Lease within the period prescribed therefor by law or within one
hundred twenty (120) days after entry of the order for relief or as may be
allowed by the court, or if said trustee, Tenant or Tenant as debtor-
in-possession shall fail to provide adequate protection of Landlord's right,
title and interest in and to the Premises or adequate assurance of the complete
and continuous future performance of Tenant's obligations under this Lease,
Landlord, to the extent permitted by law or by leave of the court having
jurisdiction over such proceeding, shall have the right, at its election, to
terminate this Lease on three (3) days' notice to Tenant, Tenant as
debtor-in-possession or said trustee and upon the expiration of said three (3)
day period this Lease shall cease and expire as aforesaid and
22
Tenant, Tenant as debtor-in-possession or said trustee shall immediately quit
and surrender the Premises as aforesaid.
SECTION 17.3. If, at any time, (i) Tenant shall consist of two (2) or more
Persons, or (ii) Tenant's obligations under this Lease shall have been
guaranteed by any Person other than Tenant, or (iii) Tenant's interest in this
Lease has been assigned, the word "Tenant" as used and referred to in this
Lease, shall be deemed to mean any one or more of the persons primarily or
secondarily liable for Tenant's obligations under this Lease. Any monies
received by Landlord from or on behalf of Tenant during the pendency of any
proceeding of the types referred to in Section 17.1(D) hereof shall be deemed
paid as compensation for the use and occupancy of the Premises and the
acceptance of any such compensation by Landlord shall not be deemed an
acceptance of Rental or a waiver on the part of Landlord of any rights under
Section 17.2 hereof.
ARTICLE 18
REMEDIES AND DAMAGES
SECTION 18.1.
(A) If any Event of Default shall occur, or this Lease and the Term
shall expire and come to an end as provided in Article 17 hereof:
(1) Tenant shall quit and peacefully surrender the Premises to
Landlord, and Landlord and its agents may immediately, or at any time after such
Event of Default or after the date upon which this Lease and the Term shall
expire and come to an end, re-enter the Premises or any part thereof, without
notice, either by summary proceedings, or by any other applicable action or
proceeding or otherwise (without being liable to indictment, prosecution or
damages therefor), and may repossess the Premises and dispossess Tenant and any
other persons from the Premises by summary proceedings or otherwise and remove
any and all of their property and effects from the Premises (and Tenant shall
remain liable for damages as provided herein or pursuant to law); and
(2) Landlord, at Landlord's option, may relet the whole or any
part or parts of-the Premises from time to time, either in the name of Landlord
or otherwise, to such tenant or tenants, for such term or terms ending before,
on or after the Fixed Expiration Date, at such rent or rentals and upon such
other conditions, which may include concessions and free rent periods, as
Landlord, in Landlord's sole discretion, may determine; provided, however, that
Landlord shall have no obligation to relet the Premises or any part thereof and
shall in no event be liable for refusal or failure to relet the Premises or any
part thereof, or, in the event of any such reletting, for refusal or failure to
collect any rent due upon any such reletting, and no such refusal or failure
shall operate to relieve Tenant of any liability under this Lease or otherwise
affect any such liability, and Landlord, at Landlord's option, may make such
Alterations, in and to the Premises as Landlord, in Landlord's sole discretion,
shall consider advisable or necessary in connection with any such reletting or
proposed reletting, without relieving Tenant of any liability under this Lease
or otherwise affecting any such liability.
(B) Tenant hereby waives the service of any notice of intention to
re-enter or to institute legal proceedings to that end that may otherwise be
required to be given under any
23
present or future law. Tenant, on its own behalf and on behalf of all persons
claiming through or under Tenant, including all creditors of Tenant, does
further hereby waive any and all rights that Tenant and all such persons might
otherwise have under any present or future law to redeem the Premises, or to
re-enter or repossess the Premises, or to restore the operation of this Lease,
after (a) Tenant shall have been dispossessed by a judgment or by warrant of any
court, or (b) any re-entry by Landlord, or (c) any expiration or termination of
this Lease and the Term, whether such dispossess, re-entry, expiration or
termination is by operation of law or pursuant to the provisions of this Lease.
The words "re-entry", "re-enter" and "re-entered" as used in this Lease shall
not be deemed to be restricted to their technical legal meanings. In the event
of a breach or threatened breach by Tenant, or any persons claiming through or
under Tenant, of any term, covenant or condition of this Lease, Landlord shall
have the right to enjoin such breach and the right to invoke any other remedy
allowed by law or in equity as if reentry, summary proceedings and other special
remedies were not provided in this Lease for such breach. The right to invoke
the remedies hereinbefore set forth are cumulative and shall not preclude
Landlord from invoking any other remedy allowed at law or in equity.
SECTION 18.2.
(A) If this Lease and the Term shall expire and come to an end as
provided in Article 17 hereof, or by or under any summary proceeding or any
other action or proceeding, or if Landlord shall re-enter the Premises as
provided in Section 18.1 hereof, or by or under any summary proceeding or any
other action or proceeding, then, in any of said events:
(1) Tenant shall pay to Landlord all Fixed Rent, Additional
Rent and other items of Rental payable under this Lease by Tenant to Landlord to
the date upon which this Lease and the Term shall have expired and come to an
end or to the date of re-entry upon the Premises by Landlord, as the case may
be;
(2) Tenant also shall be liable for and shall pay to Landlord,
as damages, any deficiency ("DEFICIENCY") between the Rental for the period
which otherwise would have constituted the unexpired portion of the Term and the
net amount, if any, of rents collected under any reletting effected pursuant to
the provisions of Section 18.1(2) for any part of such period (after first
deducting from the rents collected under any such reletting all of Landlord's
expenses in connection with the termination of this Lease, Landlord's re-entry
upon the Premises and such reletting including, but not limited to, all
repossession costs, brokerage commissions, attorneys' fees and disbursements,
alteration costs and other expenses of preparing the Premises for such
reletting); any such Deficiency shall be paid in monthly installments by Tenant
on the days specified in this Lease for payment of installments of Fixed Rent;
Landlord shall be entitled to recover from Tenant each monthly Deficiency as the
same shall arise, and no suit to collect the amount of the Deficiency for any
month shall prejudice Landlord's right to collect the Deficiency for any
subsequent month by a similar proceeding; and
(3) whether or not Landlord shall have collected any
Deficiency as aforesaid, Landlord shall be entitled to recover from Tenant, and
Tenant shall pay to Landlord, on demand, in lieu of any further Deficiency as
and for liquidated and agreed final damages, a sum equal to the amount by which
the unpaid Rental for the period which otherwise would have constituted the
unexpired portion of the Term exceeds the then fair and reasonable rental value
of the Premises for the same period; if, before presentation of proof of such
liquidated damages
24
to any court, commission or tribunal, the Premises, or any part thereof, are
relet by Landlord for the period which otherwise would have constituted the
unexpired portion of the Term, or any part thereof, the amount of rent reserved
upon such reletting shall be deemed, prima facie, to be the fair and reasonable
rental value for the part or the whole of the Premises so relet during the term
of the reletting.
(B) Tenant shall in no event be entitled to any rents collected or
payable under any reletting, whether or not such rents exceed the Fixed Rent
reserved in this Lease. Nothing contained in Article 17 hereof or this Article
18 shall be deemed to limit or preclude the recovery by Landlord from Tenant of
the maximum amount allowed to be obtained as damages by any statute or rule of
law, or of any sums or damages to which Landlord may be entitled in addition to
the damages set forth in this Section 18.2.
ARTICLE 19
FEES AND EXPENSES
SECTION 19.1. If an Event of Default shall have occurred, Landlord may (l)
perform the same for the account of Tenant, or (2) make any expenditure or incur
any obligation for the payment of money in connection with any obligation owed
to Landlord, including, but not limited to, reasonable attorneys fees and
disbursements in instituting, prosecuting or defending any action or proceeding,
and in either case the cost thereof with interest thereon at the Applicable Rate
shall be deemed to be Additional Rent hereunder and shall be paid by Tenant to
Landlord within ten (10) days after rendition of any xxxx or statement to Tenant
therefor. In addition, Tenant shall pay Landlord any reasonable attorneys fees
and disbursements incurred by Landlord in connection with any proceeding in
which the value for the use and occupancy of the Premises by Tenant is being
determined (whether or not any such proceeding results from a default by Tenant
under this Lease).
SECTION 19.2. If Tenant shall fail to pay any installment of Fixed Rent,
Additional Rent or any other item of Rental for a period longer than five (5)
days after the same shall have become due, Tenant shall pay to Landlord, in
addition to such installment of Fixed Rent, Additional Rent or other item of
Rental, as the Case may be, as a late charge and as Additional Rent, a sum equal
to interest at the Applicable Rate on the amount unpaid, computed from the date
such payment was due, without regard to any such grace period, to and including
the date of payment.
ARTICLE 20
NO REPRESENTATIONS BY LANDLORD
SECTION 20.1. LANDLORD AND LANDLORD'S AGENTS HAVE MADE NO REPRESENTATIONS,
PROMISES OR WARRANTIES EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION,
WARRANTIES OF SUITABILITY, HABITABILITY AND FITNESS FOR A PARTICULAR USE OR
PURPOSE WITH RESPECT TO THE PREMISES EXCEPT AS HEREIN EXPRESSLY SET FORTH, AND
NO RIGHTS, EASEMENTS OR LICENSES ARE ACQUIRED BY TENANT BY IMPLICATION OR
OTHERWISE EXCEPT AS EXPRESSLY SET FORTH HEREIN. TENANT SHALL ACCEPT POSSESSION
OF THE
25
PREMISES IN ITS "AS IS" CONDITION ON THE COMMENCEMENT DATE, AND LANDLORD SHALL
HAVE NO OBLIGATION TO PERFORM ANY WORK OR MAKE ANY INSTALLATIONS IN ORDER TO
PREPARE THE PREMISES FOR TENANT'S OCCUPANCY. THE TAKING OF OCCUPANCY OF THE
WHOLE OR ANY PART OF THE PREMISES BY TENANT SHALL BE CONCLUSIVE EVIDENCE, AS
AGAINST TENANT, THAT TENANT ACCEPTS POSSESSION OF THE SAME AND THAT THE PREMISES
WERE IN GOOD AND SATISFACTORY CONDITION AT THE TIME SUCH OCCUPANCY
WAS SO TAKEN. All references in this Lease to the consent or approval of
Landlord shall be deemed to mean the written consent or approval executed by
Landlord and no other consent or approval of Landlord shall be effective for any
purpose whatsoever.
ARTICLE 21
END OF TERM
SECTION 21.1. Upon the expiration or other termination of this Lease,
Tenant shall quit and surrender to Landlord the Premises, vacant, broom clean,
in good order and condition, ordinary wear and tear excepted, and Tenant shall
remove all of Tenant's Alterations as may be required pursuant to Article 6.
Tenant shall also remove all of Tenant's Property and all other personal
property and personal effects of all persons claiming through or under Tenant,
and shall pay the cost of repairing all damage to the Premises occasioned by
such removal. Any Tenant's Property or other personal property that remains in,
on or at the Premises after the termination of this Lease shall be deemed to
have been abandoned and either may be retained by Landlord as its property or
may be disposed of in such manner as Landlord may see fit. If Tenant's Property
or other personal property or any part thereof is sold, Landlord may receive and
retain the proceeds of such sale as the property of Landlord. Any expense
incurred by Landlord in removing or disposing of Tenant's Property or other
personal property or Alterations required to be removed as provided in Article
6, as well as the cost of repairing all damage to the Premises caused by such
removal, shall be reimbursed to Landlord by Tenant, as Additional Rent, on
demand.
SECTION 21.2. If the Expiration Date falls on a day which is not a
Business Day, then Tenant's obligations under Section 21.1 shall be performed on
or prior to such Business Day.
SECTION 21.3. If the Premises are not surrendered upon the expiration or
other termination of this Lease, Tenant hereby indemnifies Landlord against
liability resulting from delay by Tenant in so surrendering the Premises,
including any claims made by any succeeding tenant or prospective tenant founded
upon such delay and agrees to be liable to Landlord for (i) any payment or rent
concession which Landlord may be required to make to any tenant obtained by
Landlord for all or any part of the Premises in order to induce such tenant not
to terminate its lease by reason of the holding-over by Tenant and (ii) the loss
of the benefit of the bargain if any such tenant shall terminate its lease by
reason of the holding-over by Tenant.
SECTION 21.4. Tenant's obligations under this Article 21 shall survive the
expiration or termination of this Lease.
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ARTICLE 22
POSSESSION
SECTION 22.1. If Landlord shall be unable to deliver possession of the
Premises on the Commencement Date for any reason whatsoever, Landlord shall not
be subject to any liability therefor and the validity of this Lease shall not be
impaired thereby nor the Expiration Date extended, but the Commencement Date
shall be postponed until five (5) Business Days following notice from Landlord
that the Premises are available for occupancy by Tenant. Tenant expressly waives
any right to rescind this Lease under any present or future statute and further
expressly waives the right to recover any damages that may result from
Landlord's failure to deliver possession of the Premises on the Commencement
Date.
ARTICLE 23
NO WAIVER
SECTION 23.1. No act or thing done by Landlord or Landlord's agents during
the Term shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept such surrender shall be valid unless in writing signed by
Landlord. No employee of Landlord or of Landlord's agents shall have any power
to accept the keys to the Premises prior to the termination of this Lease. The
delivery of keys to any employee of Landlord or of Landlord's agents shall not
operate as a termination of this Lease or a surrender of the Premises.
SECTION 23.2. The failure of Landlord to seek redress for violation of, or
to insist upon the strict performance of, any covenant or condition of this
Lease shall not prevent a subsequent act, which would have originally
constituted a violation, from having all of the force and effect of an original
violation. The receipt by Landlord of Fixed Rent, Additional Rent or any other
item of Rental with knowledge of the breach of any covenant of this Lease shall
not be deemed a waiver of such breach. No provision of this Lease shall be
deemed to have been waived by Landlord, unless such waiver shall be in writing
and shall be signed by Landlord. No payment by Tenant or receipt by Landlord of
a lesser amount than the Rental then due and payable shall be deemed to be other
than on account of the earliest item(s) of Rental, or as Landlord may elect to
apply the same, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment be deemed an accord and satisfaction,
and Landlord may accept such check or payment without prejudice to Landlord's
right to recover the balance due of the Rental or to otherwise pursue any other
remedy in this Lease provided. This Lease contains the entire agreement between
the parties and all prior negotiations and agreements are merged herein. Any
executory agreement hereafter made shall be ineffective to change, discharge or
effect an abandonment of this Lease in whole or in part unless such executory
agreement is in writing and signed by the party against whom enforcement of the
change, discharge or abandonment is sought.
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ARTICLE 24
WAIVER OF TRIAL BY JURY
SECTION 24.1. Tenant hereby waives trial by jury in any action or
proceeding brought by or against the Tenant with respect to any matters
whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises,
whether during or after the Term, or for the enforcement of any remedy under any
statute, emergency or otherwise. If Landlord shall commence any summary
proceeding against Tenant, Tenant will not interpose any counterclaim of
whatever nature or description in any such proceeding, and will not seek to
consolidate such proceeding with any other action which may have been or will be
brought in any other court by Tenant or Landlord.
ARTICLE 25
INABILITY TO PERFORM
SECTION 25.1. This Lease and the obligation of Tenant to pay Rental
hereunder and to perform all of the other covenants and agreements hereunder on
the part of Tenant to be performed shall in no way be affected, impaired or
excused because Landlord is unable to fulfill any of Landlord's obligations
under this Lease, expressly or implicitly to be performed by Landlord, or
because Landlord is unable to make or is delayed in making any repairs, or is
unable to supply or is delayed in supplying any services, if Landlord is
prevented from or delayed in so doing by reason of acts of God, casualty,
strikes or labor troubles, accident, governmental preemption in connection with
an emergency, Requirements, conditions of supply and demand which have been or
are affected by war or other emergency, or any other cause whatsoever, whether
similar or dissimilar to the foregoing, beyond Landlord's reasonable control
("UNAVOIDABLE DELAYS").
ARTICLE 26
NOTICES
SECTION 26.1.
(A) Except as otherwise expressly provided in this Lease, any bills,
statements, consents, notices, demands, requests or other communications given
or required to be given under this Lease ("NOTICE(S)") shall be in writing and
shall be deemed sufficiently given or rendered if delivered by hand (against a
signed receipt) or if deposited with a nationally recognized overnight courier
and in either case addressed:
IF TO TENANT:
0000 Xxxxxxx Xxxxx, Xxxxx 000X
Xxxxxxx, Xxxxx 00000
28
WITH A COPY TO:
Xxxxxxxxx & Xxxxxxxxx, L.L.P.
000 Xxxxxxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxx
(a) at Tenant's address first set forth in this Lease or (b) at any
place where Tenant or any agent or employee of Tenant may be found
if given subsequent to Tenant's vacating, deserting, abandoning or
surrendering the Premises, and
IF TO LANDLORD:
17402 Bending Cypress
Xxxxxxx, Xxxxx 00000
and any Mortgagee who may have requested the same, by Notice given
in accordance with the provisions of this Article 26, at the address
designated by such Mortgagee,
or to such other address(es) as either Landlord or Tenant may
designate as its new address(es) for such purpose by notice given to
the other in accordance with the provisions of this Article 26.
(B) Notices shall be deemed to have been rendered or given (a) on
the date delivered, if delivered by hand, or (b) on the day after being
deposited with a nationally recognized overnight courier as provided in Section
26.1(A) hereof.
ARTICLE 27
LANDLORD'S AGREEMENT ON WAIVER
SECTION 27.1. Landlord agrees that from time to time the Tenant shall
mortgage and grant security interest in the inventory, equipment, accounts,
general intangibles and other personal property of the Tenant (collectively, the
"Pledged Property") to Bank One, Texas, N.A., as Agent for a group of lenders
(in such capacity, the "Agent"), or to such other lender or lenders from time to
time, which Pledged Property may now or hereafter be situated upon the Premises.
For valuable consideration, the receipt of which is hereby acknowledged, by the
Landlord, the Landlord hereby waives all landlords' liens, whether contractual,
statutory, constitutional or otherwise that the Landlord now has or hereafter
may obtain against the Pledged Property, and all of the liens, security
interests, claims and other interests that the Landlord now has or hereafter may
obtain against the Pledged Property. The Landlord agrees that the Agent may, at
any time upon reasonable notice to the Landlord, enter and remove the Pledged
Property from the Premises. This waiver binds the Landlord, its successors, and
assigns.
29
ARTICLE 28
BROKER
SECTION 28.1. Landlord represents and warrants to Tenant that Landlord has
not dealt with any broker or Person in connection with this Lease. Tenant
represents and warrants to Landlord that Tenant has not dealt with any broker or
Person in connection with this Lease. The execution and delivery of this Lease
by Tenant shall be conclusive evidence that Tenant acknowledges that Landlord
has relied upon the foregoing representation and warranty. Tenant shall
indemnify and hold harmless Landlord from and against any and all claims for
commission, fee or other compensation by any broker or Person who claims to have
dealt with Tenant in connection with this Lease and for any and all costs
incurred by Landlord in connection with such claims, including, without
limitation, attorneys' fees and disbursements. The provisions of this Article 28
shall survive the expiration or earlier termination of this Lease.
ARTICLE 29
INDEMNITY
SECTION 29.1. Tenant shall not do or permit any act or thing to be done
in, at or upon the Premises that may subject any Indemnitee to any liability or
responsibility for injury, damage to persons or property or to any liability by
reason of the existence or application of, compliance with or violation of any
Requirement, but shall exercise such control over the Premises as to protect
each Indemnitee fully against any such liability and responsibility. Tenant
shall indemnify and save harmless the Indemnitees from and against (a) all
claims of whatever nature against the Indemnitees arising from any act, omission
or negligence of Tenant or Persons Within Tenant's Control, (b) all claims
against the Indemnitees arising from any accident, injury or damage whatsoever
caused to any person or to the property of any person and occurring in or about
the Premises during the Term or during Tenant's occupancy of the Premises,
unless and to the extent caused by the gross negligence of Landlord or its
shareholders, officers and employees, (c) all claims against the Indemnitees
arising from any accident, injury or damage occurring outside of the Premises
but anywhere within or about the Premises, where such accident, injury or damage
results or is claimed to have resulted from an act, omission or negligence of
Tenant or Persons Within Tenant's Control, and (d) any breach, violation or
non-performance of any covenant, condition or agreement contained in this Lease
to be fulfilled, kept, observed and performed by Tenant. This indemnity and hold
harmless agreement shall include indemnity from and against any and all
liability, claims, fines, suits, demands, costs and expenses of any kind or
nature (including, without limitation, attorneys' fees and disbursements)
incurred in or in connection with any such claim or proceeding brought thereon,
and the defense thereof.
SECTION 29.2. If any claim, action or proceeding is made or brought
against any Indemnitee, against which claim, action or proceeding Tenant is
obligated to indemnify such Indemnitee pursuant to the terms of this Lease,
then, upon demand by the Indemnitee, Tenant, at its sole cost and expense, shall
resist or defend such claim, action or proceeding in the Indemnitee's name, if
necessary, by such attorneys as the Indemnitee may select, including, without
limitation, attorneys for the Indemnitee's insurer. The provisions of this
Article 29 shall survive the expiration or earlier termination of this Lease.
30
ARTICLE 30
ADJACENT EXCAVATION
SECTION 30.1. If an excavation shall be made upon land adjacent to the
Premises, or shall be authorized to be made, Tenant shall, upon reasonable
advance notice, afford to the person or entity causing or authorized to cause
such excavation, a limited license to enter upon the Premises for the purpose of
doing such work as said person or entity deems necessary to preserve the walls
of any building located on the Premises from injury or damage and to support the
same by proper foundations without any claim for eviction or constructive
eviction, damages or indemnity against Landlord, or diminution or abatement of
Rental.
ARTICLE 31
RENEWAL OPTIONS
SECTION 31.1. Provided that the Tenant is not in default with respect to
any of its obligations to the Landlord under and pursuant to the terms and
conditions of this Lease at the time each Option (as such term is hereinafter
defined) is to be exercised, the Tenant shall have the option to renew this
Lease for two (2) additional five (5) year periods [the option with respect to
each additional five (5) year period is referred to herein as an "OPTION" and,
collectively, all of the options granted herein are referred to as the
"OPTIONS"] as follows:
OPTION PERIOD 1 shall commence on July 1, 2002 and shall continue up to
and including June 30, 2007.
OPTION PERIOD 2 shall commence on July 1, 2007 and shall continue up to
and including June 30, 2012.
(each of the aforementioned option periods is individually referred to
herein as an "OPTION PERIOD" and, collectively, all of the aforementioned
Option Periods are referred to herein as "OPTION PERIODS")
SECTION 31.2. Each Option granted to the Tenant pursuant to the provisions
of Section 31.1 hereof shall be exercised by the Tenant giving written notice to
the Landlord of the Tenant's intent to exercise the Option not less than
one-hundred eighty (180) days prior to the expiration of the Initial Term or not
less than one-hundred eighty (180) days prior to the expiration of the Option
Period which is then in effect, as the case may be. Time is of the essence in
the exercise of the Options and should Tenant fail to exercise any of said
Options by timely notice, said Options shall lapse and be of no further force or
effect.
SECTION 31.3. In the event that the Tenant exercises the Option with
respect to any Option Period, the Landlord and the Tenant hereby agree that this
Lease shall continue in full force and effect and remain unamended during the
applicable Option Period AND specifically, without limitation, that the Fixed
Rent payable by the Tenant to the Landlord during such Option Period shall be
increased on each anniversary date from and after the Commencement Date in
accordance with the provisions of Article 8 hereof.
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ARTICLE 32
RENT REGULATION
SECTION 32.1. If at any time or times during the Term of this Lease, the
Rental reserved in this Lease is not fully collectible by reason of any
Requirement, Tenant shall enter into such agreements and take such other steps
as Landlord may request and as may be legally permissible to permit Landlord to
collect the maximum rents that may from time to time during the continuance of
such legal rent restriction be legally permissible (and not in excess of the
amounts reserved under this Lease). Upon the termination of such legal rent
restriction (a) the Rental shall become and thereafter be payable hereunder in
accordance with the amounts reserved in this Lease for the remainder of the
Term, and (b) Tenant shall pay to Landlord, if legally permissible, an amount
equal to (i) the items of Rental that would have been paid pursuant to this
Lease but for such legal rent restriction less (ii) the rents paid by Tenant to
Landlord during the period or periods such legal rent restriction was in effect.
This provision shall survive the expiration or earlier termination of this Lease
to the maximum enforceable extent.
ARTICLE 33
COVENANT OF QUIET ENJOYMENT
SECTION 33.1. Landlord covenants that, upon Tenant paying all Fixed Rent
and Additional Rent and observing and performing all the terms, agreements,
covenants, provisions and conditions of this Lease on Tenant's part to be
observed and performed, Tenant may peaceably and quietly enjoy the Premises,
subject nevertheless to the terms and conditions of this Lease; provided,
however, that no eviction of Tenant by reason of the foreclosure of any Mortgage
now or hereafter affecting the Premises shall be construed as a breach of this
covenant nor shall any action by reason thereof be brought against Landlord, and
provided further that this covenant shall bind and be enforceable against
Landlord or any successor to Landlord's interest, subject to the terms hereof,
only so long as Landlord or any successor to Landlord's interest, is in
possession and is collecting rent from Tenant but not thereafter.
ARTICLE 34
MISCELLANEOUS
SECTION 34.1. This Lease is presented for signature by Tenant and it is
understood that this Lease shall not constitute an offer by or be binding upon
Landlord unless and until Landlord shall have executed and delivered a fully
executed copy of this Lease to Tenant.
SECTION 34.2. The obligations of Landlord under this Lease shall not be
binding upon Landlord named herein after the sale, conveyance, assignment or
transfer by such Landlord (or upon any subsequent landlord after the sale,
conveyance, assignment or transfer by such subsequent landlord) of its interest
in the Premises, as the case may be, and in the event of any such sale,
conveyance, assignment or transfer, Landlord shall be and hereby is entirely
freed and relieved of all covenants and obligations of Landlord under this Lease
thereafter arising, and the transferee shall be deemed to have assumed, subject
to the remaining provisions of this Section 34.2, all obligations of the
Landlord under this Lease arising after the effective date of the
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transfer. No trustee, partner, principal, shareholder, director or officer of
Landlord (collectively, the "PARTIES") shall have any direct or personal
liability for the performance of Landlord's obligations under this Lease, and
Tenant shall look solely to Landlord's interest in the Premises to enforce
Landlord's obligations hereunder and shall not otherwise seek any damages
against Landlord or any of the Parties whatsoever. Tenant shall not look to any
other property or assets of Landlord or any property or assets of any of the
Parties in seeking either to enforce Landlord's obligations under this Lease or
to satisfy a judgment for Landlord's failure to perform such obligations.
SECTION 34.3. Notwithstanding anything contained in this Lease to the
contrary, all amounts payable by Tenant to or on behalf of Landlord under this
Lease, whether or not expressly denominated Fixed Rent, Additional Rent or
Rental, shall constitute rent for the purposes of Section 502(b)(7) of the
Bankruptcy Code.
SECTION 34.4. Neither this Lease nor any memorandum of this Lease shall be
recorded without the prior written consent of the Landlord, which consent may be
withheld by the Landlord in its sole and absolute discretion.
SECTION 34.5. Except as otherwise expressly stated in this Lease, any
consent or approval required to be obtained from Landlord may be granted by
Landlord in its sole and absolute discretion. In any instance in which Landlord
agrees not to act unreasonably, Tenant hereby waives any claim for damages
against or liability of Landlord that Tenant may have based upon any assertion
that Landlord has unreasonably withheld or unreasonably delayed any consent or
approval requested by Tenant, and Tenant agrees that its sole remedy shall be an
action or proceeding to enforce any related provision or for specific
performance, injunction or declaratory judgment. If with respect to any required
consent or approval Landlord is required by the express provisions of this Lease
not to unreasonably withhold or delay its consent or approval, and if it is
determined in any such proceeding referred to in the preceding sentence that
Landlord acted unreasonably, the requested consent or approval shall be deemed
to have been granted; however, Landlord shall have no liability whatsoever to
Tenant for its refusal or failure to give such consent or approval. Tenant's
sole remedy for Landlord's unreasonably withholding or delaying consent or
approval shall be as provided in this Section 34.5.
SECTION 34.6. Landlord shall have the right at any time, and from time to
time, to amend unilaterally the provisions of this Lease if Landlord is advised
by its counsel that all or any portion of the Rental paid by Tenant to Landlord
hereunder is, or may be deemed to be, unrelated business taxable income within
the meaning of the United States Internal Revenue Code or regulations issued
thereunder, and Tenant agrees that it will execute all documents necessary to
effect any such amendment, provided that no such amendment shall increase
Tenant's payment obligations or other liability under this Lease nor reduce
Landlord's obligations hereunder.
SECTION 34.7. If Tenant shall remain in possession of the Premises after
the Expiration Date, without the execution by both Tenant and Landlord of a new
lease, Tenant, at the election of Landlord, shall be deemed to be occupying the
Premises as a Tenant from month-to-month, at a monthly rental equal to three
(3x) times the Rental payable during the last month of the Term, subject to all
the other conditions, provisions and obligations of this Lease insofar as the
same are applicable to a month-to-month tenancy.
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SECTION 34.8. This Lease shall be construed without regard to any
presumption or other rule requiring construction against the party causing this
Lease to be drafted. If any words or phrases in this Lease are stricken out or
otherwise eliminated, whether or not any other words or phrases have been added,
this Lease shall be construed as if the words or phrases so stricken out or
otherwise eliminated were never included in this Lease and no implication or
inference shall be drawn from the fact that such words or phrases were stricken
out or otherwise eliminated.
SECTION 34.9. If any of the provisions of this Lease, or the application
thereof to any person or circumstance, shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such
provisions to persons or circumstances other than those as to whom or which it
is held invalid or unenforceable, shall not be affected thereby and shall remain
valid and enforceable, and every provision of this Lease shall be valid and
enforceable to the fullest extent permitted by law.
SECTION 34.10. Landlord shall have the right to erect any gate, chain or
other obstruction or to close off any portion of the Premises to the public at
any time to the extent necessary to prevent a dedication thereof for public use.
SECTION 34.11. Tenant hereby represents to Landlord that it is not
entitled, directly or indirectly, to diplomatic or sovereign immunity and Tenant
agrees that in all disputes arising directly or indirectly out of this Lease
Tenant shall be subject to service of process in, and the jurisdiction of the
courts of, the State of Texas. The provisions of this Section 34.11 shall
survive the expiration of this Lease.
SECTION 34.12. This Lease contains the entire agreement between the
parties and all prior negotiations and agreements are merged into this Lease.
Except as provided in Section 34.6 this Lease may not be changed, abandoned or
discharged, in whole or in part, nor may any of its provisions be waived except
by a written agreement that (a) expressly refers to this Lease, (b) is executed
by the party against whom enforcement of the change, abandonment, discharge or
waiver is sought and (c) is permissible under the Mortgage(s).
SECTION 34.13. Any apportionment or prorations of Rental to be made under
this Lease shall be computed on the basis of a three hundred sixty (360) day
year, with twelve (12) months of thirty (30) days each.
SECTION 34.14. The laws of the State of Texas applicable to contracts made
and to be performed wholly within the State of Texas shall govern and control
the validity, interpretation, performance and enforcement of this Lease without
regard to principles of conflicts of law.
SECTION 34.15. If Tenant is a corporation, each person executing this
Lease on behalf of Tenant hereby covenants, represents and warrants that Tenant
is a duly incorporated or duly qualified (if foreign) corporation and is
authorized to do business in the State of Texas (a copy of evidence thereof to
be supplied to Landlord upon request); and that each person executing this Lease
on behalf of Tenant is an officer of Tenant and that he or she is duly
authorized to execute, acknowledge and deliver this Lease to Landlord (a copy of
a resolution to that effect to be supplied to Landlord upon request).
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SECTION 34.16. The captions are inserted only as a matter of convenience
and for reference and in no way define, limit or describe the scope of this
Lease nor the intent of any provision thereof.
SECTION 34.17. The covenants, conditions and agreements contained in this
Lease shall bind and inure to the benefit of Landlord and Tenant and their
respective legal representatives, heirs, successors, and, except as otherwise
provided in this Lease, their assigns.
SECTION 34.18. For the purposes of this Lease and all agreements
supplemental to this Lease, unless the context otherwise requires:
(A) The words "herein", "hereof", "hereunder" and "hereby"and words of
similar import shall be construed to refer to this Lease as a whole and not to
any particular Article or Section unless expressly so stated.
(B) Tenant's obligations hereunder shall be construed in every instance as
conditions as well as covenants, each separate and independent of any other
terms of this Lease.
(C) Reference to Landlord as having "no liability" or being "without
liability" shall mean that Tenant shall not be entitled to terminate this Lease,
or to claim actual or constructive eviction, partial or total, or to receive any
abatement or diminution of rent, or to be relieved in any manner of any of its
other obligations hereunder, or to be compensated for loss or injury suffered or
to enforce any other right or liability whatsoever against Landlord under or
with respect to this Lease or with respect to Tenant's use or occupancy of the
Premises.
(D) Reference to "termination of this Lease" or "expiration of this Lease"
and words of like import includes expiration or sooner termination of this Lease
and the Term and the estate hereby granted or cancellation of this Lease
pursuant to any of the provisions of this Lease or by law. Upon the termination
of this Lease, the Term and estate granted by this Lease shall end at noon on
the date of termination as if such date were the Fixed Expiration Date, and
neither party shall have any further obligation or liability to the other after
such termination except (i) as shall be expressly provided for in this Lease,
and (ii) for such obligations as by their nature under the circumstances can
only be, or by the provisions of this Lease, may be, performed after such
termination, and, in any event, unless expressly otherwise provided in this
Lease, any liability for a payment (which shall be apportioned as of such
termination) which shall have accrued to or with respect to any period ending at
the time of termination shall survive the termination of this Lease.
(E) Words and phrases used in the singular shall be deemed to include the
plural and vice versa, and nouns and pronouns used in any particular gender
shall be deemed to include any other gender.
(F) The rule of "ejusdem generis" shall not be applicable to limit a
general statement following or referable to an enumeration of specific matters
to matters similar to the matters specifically mentioned.
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IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease as of the
day and year first above written.
"LANDLORD":
XXXXXX X. XXXXX
By: ______________________________
XXXXXX X. XXXXX
By: ______________________________
"TENANT":
ACCURATE AIR SYSTEMS, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
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