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GROUND LEASE AGREEMENT
between
BRAZOS BELTLINE DEVELOPMENT, INC.
and
VARI-LITE, INC.,
SHOWCO, INC.,
SHOWCO CREATIVE SERVICES, INC.,
CONCERT PRODUCTION LIGHTING, INC.
and
IRIDEON, INC.
Dated as of December 21, 1995
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THIS GROUND LEASE AGREEMENT HAS BEEN ASSIGNED AS SECURITY
FOR INDEBTEDNESS OF BRAZOS BELTLINE DEVELOPMENT, INC.
SEE SECTION 18.10
This Ground Lease Agreement has been manually executed in six counterparts,
numbered consecutively from 1 through 6, of which this is No. ___. To the
extent, if any, that this Ground Lease Agreement constitutes chattel paper (as
such term is defined in the Uniform Commercial Code as in effect in Texas) no
security interest in this
Ground Lease Agreement may be created or perfected through the transfer or
possession of any counterpart other than the original executed counterpart
which shall be the counterpart identified as counterpart No. 1.
GROUND LEASE AGREEMENT
THIS GROUND LEASE AGREEMENT (this "GROUND LEASE") is made and entered into
as of December 21, 1995, by and between BRAZOS BELTLINE DEVELOPMENT, INC., a
Texas corporation ("BRAZOS"), and VARI-LITE, INC., SHOWCO, INC., SHOWCO CREATIVE
SERVICES, INC., CONCERT PRODUCTION LIGHTING, INC. and IRIDEON, INC., each a
Delaware corporation (collectively, "VARI-LITE").
W I T N E S S E T H:
WHEREAS, on or about the date of this Ground Lease, Brazos will acquire by
assignment all rights to purchase that certain tract of real property subject to
that certain Contract of Sale dated August 15, 1995, by and between Xxxxx X.
Xxxxxx, Trustee, as buyer, and MCDLF Holding Company, a California corporation,
as seller, as amended by that certain letter agreement dated September 12, 1995,
and as further amended by that certain Second Amendment of Contract of Sale date
November 7, 1995, and as further amended by that certain letter agreement dated
December 4, 1995 (together the "CONTRACT OF SALE"); and
WHEREAS, upon reliance of and after acquisition of such real property by
Brazos, Vari-Lite wishes to lease such real property under the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Brazos and Vari-Lite hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINED TERMS. For the purposes of this Agreement each of the
following terms shall have the meaning specified with respect thereto:
"ACQUISITION COST" means the amount of the Initial Advance made pursuant to
the Credit Agreement under Tranche A plus the Brazos equity advanced for the
acquisition of the Property.
"ADDITIONAL RENT" has the meaning set forth in SECTION 6.3 hereof.
"AFFILIATE" means any other person controlling, controlled by or under
direct or indirect common control with any Person. For the purposes of this
definition, "control," when used with respect to any specified Person, means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract, or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"APPROVED PURPOSE" means, if the Property is developed, general office use,
light manufacturing, assembly work, repairs, sales, marketing, advertising,
warehousing, storage and distribution.
"ASSIGNEE" means any lender or agent for a lender under the Credit
Agreement to which any part of Brazos' interest under this Ground Lease or in
the Property shall at the time have been assigned, conditionally or otherwise,
by Brazos pursuant to SECTION 18.10 hereof.
"ASSIGNMENT" means each assignment or security agreement referred to in
SECTION 18.10 hereof between Brazos and any lender or agent for a lender under
the Credit Agreement, pursuant to which Brazos assigns or grants a security
interest in any of its rights under this Ground Lease, as from time to time
amended.
GROUND LEASE AGREEMENT - Page 1
"BASIC RENT" means for each calendar month the amount computed by
multiplying the following:
(i) the Acquisition Cost of the Property as of the Effective Date
with respect to the initial Basic Rent Payment Date and
thereafter, as of the preceding Basic Rent Payment Date, by
(ii) a fraction having a numerator equal to the number of days in such
month and a denominator of 360, by
(iii) 0.40% plus (A) if no BR Borrowings will be outstanding
during the Computation Period (as defined below) the
weighted average percentage cost per annum of LIBOR
Borrowings outstanding at any time during the period from
the first day of the month to and including the last day of
the month (the "COMPUTATION PERIOD") for which Basic Rent is
being computed; or (B) if no LIBOR Borrowings will be
outstanding during the Computation Period, the weighted
average cost per annum of BR Borrowings; or (C) if both BR
Borrowings and LIBOR Borrowings are outstanding during the
Computation Period, the cost as determined above with
respect to each proportionate amount of the outstanding BR
Borrowings and LIBOR Borrowings,
plus, on the first Basic Rent Payment Date for which Basic Rent is due, an
additional amount computed by multiplying (i) and (iii) above by a fraction
having a numerator equal to the number of days from the Effective Date to the
first Basic Rent Payment Date for which Basic Rent is due and a denominator of
360. If any LIBOR Borrowings are subject to an Interest Period (as defined in
the Credit Agreement) which is due to expire prior to the next Basic Rent
Payment Date, the cost per annum of the relevant LIBOR Borrowings or BR
Borrowings two Business Days prior to such Basic Rent Payment Date shall be used
for purposes of calculating the weighted average cost per annum of the relevant
LIBOR Borrowings or BR Borrowings pursuant to (iii) above for the month. If the
actual weighted average cost per annum of the relevant LIBOR Borrowings or BR
Borrowings for such month is lower than the weighted average cost per annum of
the relevant LIBOR Borrowings or BR Borrowings, the amount of Basic Rent which
Vari-Lite overpaid shall be credited towards Basic Rent on the following Basic
Rent Payment Date and, if the actual weighted average cost per annum of the
relevant LIBOR Borrowings or BR Borrowings for such month is higher than the
weighted average cost per annum of the relevant LIBOR Borrowings or BR
Borrowings, the amount of Basic Rent which Vari-Lite underpaid shall be paid by
Vari-Lite on the following Basic Rent Payment Date.
"BASIC RENT PAYMENT DATE" means the first day of any calendar month during
the Lease Term or Renewal Term of the Property or, if such day is not a Business
Day, the next succeeding Business Day.
"BBH&CO" means Xxxxx Brothers Xxxxxxxx & Co., a New York limited
partnership.
"BRAZOS" means Brazos Beltline Development, Inc., a Texas corporation which
is a wholly-owned subsidiary of Brazos River Leasing, L.P., or any successor or
successors to all of its rights and obligations hereunder and, for purposes of
SECTION 10.1(c), shall include any corporation, trust, individual, or other
person or entity which computes its liability for income or other taxes on a
consolidated basis with Brazos or the income of which for purposes of such taxes
is determined or affected directly or indirectly by the income of Brazos or its
successor or successors.
"BR BORROWINGS" means all borrowings by Brazos under the Credit Agreement
which bear interest based on a base rate of interest specified by BBH&Co under
the Credit Agreement.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day on
which commercial banks in Dallas, Texas or New York City, New York are
authorized or required by law to close.
"CODE" means the Internal Revenue Code of 1986, as amended.
GROUND LEASE AGREEMENT - Page 2
"CONSENT" means each consent of Guarantor to an Assignment, pursuant to
which, among other things, Guarantor consents to the terms of such Assignment
insofar as they relate to this Ground Lease, as from time to time amended.
"CONSTRUCTION AGREEMENT" means the construction agreement to be entered
into by Brazos with a party designated by Brazos and acceptable to the Agent to
construct the Facility.
"CONSTRUCTION CONSULTANT" means, if the Property is developed, Xxxxx
Associates, Inc., a Texas corporation.
"CONTRACTOR" means, if the Property is developed, the party appointed by
Brazos, subject to acceptance of such party by the Agent, Vari-Lite and the
Guarantor.
"CREDIT AGREEMENT" means the Credit Agreement dated as of December 21, 1995
among Brazos, and BBH&Co as agent for the lenders related to the financing of
the Property, as it may be amended, restated, modified or supplemented, from
time to time.
"EFFECTIVE DATE" means with respect to the Property, the date on which the
Property is acquired by Brazos and leased hereunder by Brazos to Vari-Lite, as
evidenced by this Ground Lease.
"ENVIRONMENTAL CLAIM" means any third party (including government agencies
and employees, Brazos, BBH&Co, the lenders under the Credit Agreement and their
respective successors and assigns) action, lawsuit, claim, demand, regulatory
action or proceeding, order, decree, consent agreement or notice of potential or
actual responsibility or violation (including claims or proceedings under the
Occupational Safety and Health Acts or similar laws or requirements relating to
health or safety of employees) which seeks to impose liability under any
Environmental Law.
"ENVIRONMENTAL LAW" means all Legal Requirements arising from, relating to,
or in connection with the Environment (as defined in 43 U.S.C. Section 9601(8)
(1988)), health, or safety, including without limitation (i) the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, and
(ii) Legal Requirements relating to (a) pollution, contamination, injury,
destruction, loss, protection, cleanup, reclamation or restoration of the air,
surface water, groundwater, land surface or subsurface strata, or other natural
resources; (b) solid, gaseous or liquid waste generation, treatment, processing,
recycling, reclamation, cleanup, storage, disposals, hazardous materials or
wastes; (c) the safety or health or transportation; (d) exposure to pollutants,
contaminant of the public or employees; or (e) the manufacture, processing,
handling, transportation, distribution in commerce, use, storage or disposal of
hazardous, medical, infectious, or toxic substances, materials or waste.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 13.1 hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
all regulations promulgated by the Securities and Exchange Commission
thereunder.
"FACILITY" means, if the Property is developed, all improvements of
whatever kind or character now or hereafter located on, in or under or affixed
to the Property, including, without limitation, the office building, any
utilities, paving, signage or lighting, and all fixtures installed in such
improvements, and all additions, replacements and subsequent replacements
thereof which is leased pursuant to any Facility Lease, but excluding all
parcels of land on which such Facility sits.
"FACILITY LEASE" means any lease of the Facility acceptable to Brazos,
BBH&Co, Vari-Lite and each of the lenders under the Credit Agreement.
"GOVERNMENTAL AUTHORITY" means any foreign governmental authority, the
United States of America, any state of the United States of America and any
subdivision of any of the foregoing, and any agency, department, commission,
board, authority or instrumentality, bureau or court having jurisdiction over
any Bank, Brazos, the Guarantor, Vari-Lite, or any of their respective
properties.
GROUND LEASE AGREEMENT - Page 3
"GOVERNMENTAL REQUIREMENTS" shall mean all statutes, laws, ordinances,
orders, writs, injunctions, decrees, rules and regulations of any Governmental
Authority applicable to Brazos, Vari-Lite, the Ground or any Facility.
"GROUND LEASE" means this Ground Lease Agreement.
"GUARANTOR" means Vari-Lite Holdings, Inc., a Texas corporation having its
principal office at 000 Xxxxx Xxx, Xxxxxx, Xxxxx 00000, and its successors.
"GUARANTOR CONSENT" means the Consent and Agreement dated as of December
21, 1995 among the Guarantor, Brazos and BBH&Co, as it may be amended or
supplemented from time-to-time.
"GUARANTY" means the Guaranty Agreement, dated as of December 21, 1995, by
and between the Guarantor and Brazos, as it may be further amended, restated,
modified or supplemented, from time to time, in accordance with the terms
thereof.
"INDEBTEDNESS" means, with respect to any Person, (a) all obligations of
such Person for borrowed money, or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person under conditional
sale or other title retention agreements relating to property purchased by such
Person, (d) all obligations of such Person issued or assumed as the deferred
purchase price of property or services (other than accounts payable to suppliers
incurred in the ordinary course of business and paid when due), (e) all
obligations of such Person under leases required to be accounted for as capital
leases under generally accepted accounting principles, (f) all obligations of
such Person to reimburse the issuer of any letter of credit, (g) all guarantees
of payment or collection of liabilities or obligations of the nature specified
in clauses (a) through (f) above of another Person or similar arrangement
pursuant to which such Person has assured a creditor of the other Person against
loss and (h) all obligations of others of the types referred to in clauses (a)
through (g) above secured by (or for which the holders of such obligations have
an existing right, contingent or otherwise, to be secured by) any lien on
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed.
"INDEMNIFIED PERSON" has the meaning set forth in SECTION 10.1 hereof.
"INSURANCE REQUIREMENTS" means all requirements of this Ground Lease with
respect to insurance, all terms of any insurance policy covering or applicable
to the Property, all requirements of the issuer of any such policy, all
statutory requirements and all orders, rules, regulations and other requirements
of any governmental body related to insurance applicable to the Property.
"LEASE DOCUMENTS" means any Facility Lease, this Ground Lease, any Facility
Leasing Record (as defined in the Facility Lease), and the Property Leasing
Record (as defined in this Ground Lease) and all documents and instruments
executed in connection therewith including, without limitation, the Guaranty,
the Lessee Consent, the Guarantor Consent and the Construction Agreement.
"LEASE TERM" has the meaning set forth in SECTION 5.1 hereof.
"LEGAL REQUIREMENTS" means all laws, judgments, decrees, ordinances and
regulations and any other governmental rules, orders and determinations and all
requirements having the force of law, now or hereinafter enacted, made or
issued, whether or not presently contemplated, and all agreements, covenants,
conditions and restrictions applicable to the Property and/or the ownership,
operation or use thereof, including, without limitation, all requirements of the
Americans With Disabilities Act (P.L. 101-335) and environmental statutes,
compliance with which is required at any time during the Lease Term and any
Renewal Term, whether or not such compliance shall require structural,
unforeseen or extraordinary changes to the Property or the operation, occupancy
or use thereof.
"LESSEE CONSENT" means the Consent and Agreement dated as of December 21,
1995 among Vari-Lite, Brazos and BBH&Co, as it may be amended or supplemented
from time-to-time.
GROUND LEASE AGREEMENT - Page 4
"LIBOR BORROWINGS" means all borrowings by Brazos under the Credit
Agreement which bear interest based on the per annum rate of interest at which
dollar deposits are offered by major banks in the London inter-bank market.
"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement and any capital lease having substantially the same economic
effect as any of the foregoing).
"LIEN OF RECORD" means, with the exception of the Lien of a lender or
lender's agent under the Credit Agreement, any mechanics' or materialmen's lien
for which retainage is held in amounts required by applicable law, lien securing
the payment of taxes, assessments or governmental charges and levies which are
due, payable and delinquent, judgment lien or any other filed, recorded, or
docketed matter (whether or not the same shall constitute a Permitted
Encumbrance or be the subject of a Permitted Contest) which (a) may result in a
sale for satisfaction of same, a loss, forfeiture, reversion of title, or right
of reentry with respect to the Property or (b) whether or not valid, is
reasonably likely to interfere with the due and timely payment of any sum
payable or the exercise of any of the rights or the performance of any of the
duties or responsibilities of Vari-Lite under this Ground Lease.
"MATERIAL ADVERSE CHANGE" means any circumstance or event that (a) can
reasonably be expected to cause an Event of Default; (b) otherwise can
reasonably be expected to (i) be material and adverse to the continued operation
of Vari-Lite or (ii) be material and adverse to the financial condition,
business operations, prospects or properties of Vari-Lite (provided
consolidation of the Acquisition Cost for financial accounting purposes of Vari-
Lite or the Guarantor shall not be a Material Adverse Change in financial
condition); (c) could reasonably be expected to adversely affect the performance
by Vari-Lite of its obligations under any Facility Lease or this Ground Lease;
or (d) in any manner whatsoever does or can reasonably be expected to materially
and adversely affect (i) the validity or enforceability of any Facility Lease or
this Ground Lease or (ii) the fair market value of the Property.
"MAXIMUM RATE" has the meaning set forth in SECTION 18.8 hereof.
"PERMITTED CONTEST" has the meaning set forth in paragraph (a) of ARTICLE
XVII hereof.
"PERMITTED ENCUMBRANCES" means the following Liens and other matters
affecting the title of the Property: (a) mechanics' and materialmen's liens
incurred in good faith in the ordinary course of business and securing
obligations that are junior to any Liens of Assignee not exceeding $100,000 in
the aggregate which are not yet due or which are subject to a Permitted Contest;
(b) Liens securing the payment of taxes, assessments and governmental charges or
levies, either not delinquent or subject to a Permitted Contest; (c) zoning and
planning restrictions, subdivision and platting restrictions, easements,
rights-of-way, licenses, reservations, covenants, conditions, waivers,
restrictions on the use of property, minor encroachments or minor irregularities
of title which do not materially impair (i) the intended use of the Property by
Vari-Lite or (ii) the value of the Property; (d) reservations of mineral
interests, provided that the holders of such mineral reservations shall have
waived the right to, or otherwise be precluded from, entering on the Property
for the purpose of removing or extracting such minerals; and (e) the lien
created contemporaneously with the acquisition of the Property pursuant to, and
securing the obligations under, the Credit Agreement.
"PERSON" means an individual, partnership, corporation, business trust,
joint venture, joint stock company, trust, unincorporated association or
Governmental Authority or other entity of whatever nature.
"POTENTIAL DEFAULT" means any event which, but for the lapse of time, or
giving of notice, or both, would constitute an Event of Default.
"PROPERTY" means that certain parcel of land purchased by Brazos pursuant
to the Purchase Contract and leased hereunder, as such land is more particularly
described on EXHIBIT A attached hereto and incorporated herein by reference for
all purposes and when leased subject to the respective easements, rights and
appurtenances relating to such parcels of land, but excluding the Facility.
GROUND LEASE AGREEMENT - Page 5
"PROPERTY LEASING RECORD" means an instrument evidencing the lease of the
Property under this Ground Lease, as prepared and executed by Brazos, as lessor,
accepted and executed by Vari-Lite, as lessee.
"PURCHASE CONTRACT" means that certain Contract of Sale dated August 15,
1995, by and between Xxxxx X. Xxxxxx, Trustee, as buyer, and MCDLF Holding
Company, a California corporation, as seller, as amended by that certain letter
agreement dated September 12, 1995, and as further amended by that certain
Second Amendment of Contract of Sale date November 7, 1995, and as further
amended by that certain letter agreement dated December 4, 1995.
"RENEWAL TERM" has the meaning set forth in SECTION 11.3 hereof.
"REPORTS" has the meaning set forth in SECTION 2.5 hereof.
"UNECONOMIC NOTICE" has the meaning set forth in SECTION 12.1 hereof.
"UNECONOMIC PROPERTY" has the meaning set forth in SECTION 12.1 hereof.
"UNITARY METHOD OF TAXATION" means a method of taxation under which the
business income of individual corporations in a commonly controlled enterprise
which may be deemed to operate in the same general line of business as a
corporation or corporations subject to a state's taxing jurisdiction is
aggregated regardless of whether the individual corporations have a tax nexus
with, or presence in, such state and is then apportioned to such state based on
an apportionment formula.
"VARI-LITE" has the meaning set forth in the first paragraph of this Ground
Lease.
Section 1.2 FORMS. All forms specified by the text hereof or by reference
to exhibits attached hereto shall be substantially as set forth herein, subject
to such changes by Brazos and Vari-Lite by mutual consent that do not alter the
substantive rights of the parties hereto or of the Assignees or as may be
required by applicable laws hereafter enacted.
Section 1.3 RECITALS, TABLE OF CONTENTS, TITLES, AND HEADINGS. The terms
and phrases used in the recitals of this Ground Lease have been included for
convenience of reference only and the meaning, construction, and interpretation
of such words and phrases for purposes of this Ground Lease shall be determined
solely by reference to SECTION 1.1 hereof. The table of contents, titles, and
headings of the Articles and Sections of this Ground Lease have been inserted
for convenience of reference only and are not to be considered a part hereof and
shall not in any way modify or restrict any of the terms or provisions hereof
and shall not be considered or given any effect in construing this Ground Lease
or any provision hereof or in ascertaining intent, if any question of intent
should arise.
Section 1.4 INTERPRETATION. Unless the context requires otherwise, words
of the masculine gender shall be construed to include correlative words of the
feminine and neuter genders and vice versa, and words of the singular number
shall be construed to include correlative words of the plural number and vice
versa. This Ground Lease, and all the terms and provisions hereof, shall be
liberally construed to effect the purposes set forth herein and to sustain the
validity of this Ground Lease.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
VARI-LITE
Vari-Lite represents and warrants to Brazos and agrees as follows:
GROUND LEASE AGREEMENT - Page 6
Section 2.1 CORPORATE MATTERS. Each corporation constituting a lessee
under this Ground Lease and named in the definition of Vari-Lite (i) has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware, (ii) has full corporate power and
authority to own and operate its properties and to conduct its business as
presently conducted and full corporate power, authority and legal right to
execute, deliver and perform its obligations under this Ground Lease and any
Consent, (iii) is in good standing in the State of Texas and any other
jurisdiction where its activities require qualification; and (iv) is a wholly-
owned subsidiary of Guarantor.
Section 2.2 AUTHORIZATION; BINDING AGREEMENT. This Ground Lease has been
duly authorized, executed and delivered by Vari-Lite and, assuming the due
authorization, execution and delivery of this Ground Lease by Brazos, this
Ground Lease is a legal, valid and binding obligation of Vari-Lite, enforceable
according to its terms, subject, as to enforceability, to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
Section 2.3 POWER AND AUTHORITY. The consummation of the transactions
herein contemplated and the performance and observance of Vari-Lite's
obligations under this Ground Lease and any Consent have been duly authorized by
all necessary corporate action on the part of Vari-Lite. The execution,
delivery and performance by Vari-Lite of this Ground Lease and any Consent will
not result in any violation of any term of the certificate of incorporation or
the by-laws of Vari-Lite, do not require stockholder approval or the approval or
consent of any trustee or holders of Indebtedness of Vari-Lite except such as
have been obtained prior to the date hereof and will not conflict with or result
in a breach of any terms or provisions of, or constitute a default under, or
result in the creation or imposition of any Lien (other than a Permitted
Encumbrance on the Property as may be contemplated herein) upon any property or
assets of Vari-Lite under any indenture, mortgage or other agreement or
instrument to which Vari-Lite is a party or by which it or any of its property
is bound where breach or default, singly or in the aggregate, could materially
adversely affect (i) the financial condition or creditworthiness of Vari-Lite or
(ii) its ability to perform its obligations under this Ground Lease, any
Facility Lease, or the Consent executed by Vari-Lite of even date herewith, or
any existing applicable law, rule, regulation, license, judgment, order or
decree of any Governmental Authority or court having jurisdiction over Vari-Lite
or any of its activities or properties.
Section 2.4 CONSENTS, APPROVALS, AUTHORIZATIONS. There are no consents,
licenses, orders, authorizations or approvals of, or notices to or registrations
with, any Governmental Authority which are required in connection with the valid
execution, delivery and performance of this Ground Lease that have not been
obtained or made, except such permits and licenses as Vari-Lite will be required
to obtain for the occupancy, use or operation of the Property and which, in the
ordinary course of business, are not obtained until just prior to the
commencement of such occupancy, use or operation, and any such consents,
licenses, orders, authorizations, approvals, notices and registrations that have
been obtained or made are in full force and effect.
Section 2.5 FINANCIAL STATEMENTS. Vari-Lite has caused to be furnished to
Brazos copies of Guarantor's most recent consolidated balance sheet, income
statement and cash flow statement (the "REPORTS"). The financial statements
contained in the Reports fairly present the financial position, results of
operations and changes in financial position of Guarantor as of the dates and
for the periods indicated therein.
Section 2.6 CHANGES. Since the date of the most recent Reports delivered
pursuant to SECTION 2.5, there has been no adverse change in the financial
condition or business of Vari-Lite or the Guarantor which would materially
impair the ability of Vari-Lite to perform its obligations under this Ground
Lease or which would materially impair the ability of the Guarantor to perform
its obligations under the Guaranty.
Section 2.7 LITIGATION. Except as disclosed in the Reports, there is no
action, suit, proceeding or investigation at law or in equity by or before any
court, governmental body, agency, commission or other tribunal now pending or,
to the best knowledge of Vari-Lite after due inquiry, threatened against or
affecting Vari-Lite or the Guarantor or any property or rights of Vari-Lite or
the Guarantor, which affects the Property, as to which there is a significant
possibility of an adverse determination, and which if adversely determined, may
have a material adverse impact on the financial condition or business of
Vari-Lite or the Guarantor or which, if adversely determined, could materially
impair the ability of Vari-Lite to perform its obligations hereunder or of the
Guarantor to perform
GROUND LEASE AGREEMENT - Page 7
its obligations under the Guaranty, or which, if adversely determined, may
have a material adverse impact on the value or intended use of the Property
and there is no action, suit, proceeding or investigation at law or in equity
by or before any court, governmental body, agency, commission or other
tribunal now pending or, to the best knowledge of Vari-Lite after due
inquiry, threatened, which questions or would question the validity of this
Ground Lease.
Section 2.8 DELIVERY OF INFORMATION. Vari-Lite shall deliver to Brazos
from time to time, (i) so long as Vari-Lite and the Guarantor are not subject to
filing requirements under the Exchange Act, Vari-Lite's and Guarantor's most
recent consolidated balance sheet, income statement and cash flow statement
within 90 days of the end of each fiscal quarter, and upon becoming subject to
such filing requirements, promptly upon filing under the Exchange Act or mailing
to shareholders, copies of the Guarantor's Annual Reports on Form 10-K, the
Guarantor's Quarterly Reports on Form 10-Q and any other reports the Guarantor
files under the Exchange Act, and any report or mailing made to Guarantor's
shareholders, (ii) promptly upon request, such other information with respect to
Vari-Lite's and the Guarantor's operations, business, property, assets or
financial condition as Brazos shall reasonably request, (iii) promptly after an
officer of Vari-Lite obtains knowledge of any Event of Default hereunder or of
any Potential Default, a certificate of an officer of Vari-Lite specifying the
nature and period of existence of such Event of Default or Potential Default,
and what action, if any, Vari-Lite has taken, is taking, or proposes to take
with respect thereto, (iv) promptly after an officer of Vari-Lite obtains
knowledge of any material adverse change in the financial condition or business
of Vari-Lite or Guarantor or of any litigation of the type described in
SECTION 2.7, a certificate of an officer of Vari-Lite describing such change or
litigation as the case may be, (v) promptly after Vari-Lite obtains knowledge of
any and all Liens, other than Permitted Encumbrances, or other matters,
including any litigation affecting the Property, which may materially adversely
affect the value or intended use of the Property, a detailed statement
describing each such Lien or other matter and (vi) promptly after Vari-Lite
obtains knowledge of any Environmental Claim, a detailed statement describing
such Environmental Claim and what action, if any, Vari-Lite has taken, is
taking, or proposes to take with respect thereto.
Section 2.9 COMPLIANCE WITH LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS.
The operation, use and physical condition of the Property comply in all material
respects with the Insurance Requirements and are in full compliance with all
Legal Requirements.
Section 2.10 CONFIDENTIALITY. Brazos hereby agrees to maintain the
confidentiality of all financial information submitted to it by Vari-Lite or by
the Guarantor pursuant to SECTION 2.5 or 2.8 hereof. Vari-Lite hereby consents
to a delivery of such information to the lenders under the Credit Agreement,
Brazos' legal counsel and Brazos' auditors.
ARTICLE III
LEASE OF PROPERTY
Section 3.1 LEASE. Subject to the terms and conditions hereof, Vari-Lite
agrees to lease the Property from Brazos simultaneously upon Brazos' acquisition
of the Property.
Section 3.2 PROPERTY LEASING RECORD.
The Property Leasing Record shall give a full legal description of the
Property, the Acquisition Cost of the Property, the Lease Term for the Property,
the location of the Property and such other details as Brazos, Vari-Lite and any
Assignee may from time to time agree. Execution and delivery by Vari-Lite of
the Property Leasing Record shall constitute (i) acknowledgment by Vari-Lite
that the Property has been delivered to Vari-Lite in good condition and has been
accepted for lease hereunder by Vari-Lite as of the Effective Date of the
Property Leasing Record, (ii) acknowledgment by Vari-Lite that the Property
specified in the Property Leasing Record is subject to all of the covenants,
terms and conditions of this Ground Lease, and (iii) certification by Vari-Lite
that the representations and warranties contained in ARTICLE II of this Ground
Lease are true and correct in all material respects on and as of the Effective
Date of the Property Leasing Record as though made on and as of such date and
that there exists on such date no Event of Default or Potential Default.
GROUND LEASE AGREEMENT - Page 8
Section 3.3 OPERATING LEASE. Brazos and Vari-Lite hereby declare that it
is their mutual intent that for accounting purposes this Ground Lease be treated
as an operating lease and not an instrument or evidence of indebtedness, and
that the relationship between Brazos and Vari-Lite under this Ground Lease shall
be that of lessor and lessee only. Title to and ownership of the Property shall
at all times remain in Brazos and at no time become vested in Vari-Lite except
in accordance with an express provision of this Ground Lease. Vari-Lite does
not hereby acquire any right, equity, title or interest in or to the Property,
except pursuant to the terms hereof. Vari-Lite hereby grants to Lessor a
security interest in the Property and all proceeds thereof as collateral
security for the payment and performance by Vari-Lite of Vari-Lite's obligations
as Lessee hereunder.
(a) Brazos and Vari-Lite intend that the transactions and
arrangements contemplated by this Ground Lease have a dual, rather than a single
form, and that (i) for financial accounting purposes with respect to Vari-Lite
(A) this Ground Lease will be treated as an "operating lease" pursuant to
Statement of Financial Accounting Standards No. 13, as amended, and (B)
Vari-Lite will be treated as the lessee of the Property, but (ii) for federal,
state and local income tax purposes (A) this Ground Lease will be treated as a
financing arrangement (rather than a "true lease"), (B) Brazos will be treated
as a lender making a loan to Vari-Lite in an amount equal to the sum of the
advances under the Credit Agreement, which amounts are secured by the Property,
and (C) Vari-Lite will be treated as the owner of the Property and will be
entitled to all tax benefits ordinarily available to an owner of property like
the Property for such tax purposes.
(b) Brazos and Vari-Lite further intend and agree that, for the
purpose of securing Vari-Lite's obligations for the repayment of the advances
under the Credit Agreement, (i) this Ground Lease shall also be deemed to be a
deed of trust, mortgage, security agreement, assignment of rental and financing
statement, and Vari-Lite hereby grants a lien and security interest upon and a
collateral assignment of the Property and all proceeds thereof; (ii) the
possession by Brazos or any of its agents of notes and such other items of
property as constitute instruments, money, negotiable documents or chattel paper
shall be deemed to be "possession by the secured party" for purposes of
perfecting the security interest pursuant to Section 9-305 of the Uniform
Commercial Code; and (iii) notifications to Persons holding such property, and
acknowledgments, receipts or confirmations from financial intermediaries,
bankers or agents (as applicable) of Vari-Lite shall be deemed to have been
given for the purpose of perfecting such security interest under applicable law.
Brazos and Vari-Lite shall, to the extent consistent with this Ground Lease,
take such actions as may be necessary to ensure that, to the extent this Ground
Lease is deemed to create a Lien on the Property in accordance with this SECTION
3.3, such Lien shall be deemed to be a perfected Lien of first priority under
applicable law and will be maintained as such throughout the Lease Term.
(c) Brazos and Vari-Lite further intend and agree that in the event
of any insolvency or receivership proceedings or a petition under the United
States bankruptcy laws or any other applicable insolvency laws or statute of the
United States of America or any State or Commonwealth thereof affecting
Vari-Lite or Brazos, this Ground Lease shall be regarded as financial
accommodations made by an unrelated third party to Vari-Lite for purposes of
applicable bankruptcy and insolvency laws.
ARTICLE IV
DELIVERY AND ACCEPTANCE
Section 4.1 ACCEPTANCE. Pursuant to this Ground Lease Vari-Lite shall
accept the Property. Brazos shall not be liable to Vari-Lite for any failure to
obtain, or delay in obtaining, the Property or any delay in the delivery of
possession thereof to Vari-Lite. Vari-Lite has examined the title and other
matters pertaining to the Property, including restrictive covenants requiring
approvals of certain uses of the Property, easements, zoning and other matters
and accepts the Property subject to all such restrictions, required approvals
and other matters.
Section 4.2 PAYMENTS FINAL. Each payment of Basic Rent, Additional Rent
and any other amount due hereunder made by Vari-Lite shall be final, and
Vari-Lite, without waiving any other remedies it may have, will not seek or have
any right to recover all or any part of such payment from Brazos or any Assignee
for any reason whatsoever. The making of payments under this Ground Lease by
Vari-Lite (including payments pursuant to
GROUND LEASE AGREEMENT - Page 9
ARTICLE X) shall not be deemed to be a waiver of any claim or claims that
Vari-Lite may assert against Brazos or any other person. Brazos agrees to
repay Vari-Lite amounts paid to Brazos to the extent such payments were in
error and are not required by the various terms and provisions of this Ground
Lease.
Section 4.3 NO WARRANTIES OR REPRESENTATIONS. Notwithstanding any other
provision contained in this Ground Lease, it is specifically understood and
agreed that neither Brazos nor any Assignee nor any Affiliate of either, nor
anyone acting on behalf of any of them makes any warranties or representations
or has any responsibility to disclose any relevant information, or has any other
responsibility or duty, nor, except as set forth in SECTION 18.11 of this Ground
Lease, has Brazos or any Assignee or any Affiliate of either, or anyone acting
on behalf of any of them made any covenants or undertakings, as to the
accounting treatment to be accorded Vari-Lite or as to the U.S. Federal or any
state income or any other tax consequences, if any, to Vari-Lite as a result of
or by virtue of the transactions contemplated by this Ground Lease.
Section 4.4 QUIET ENJOYMENT. During the Lease Term or Renewal Term, if
any, so long as no Event of Default or Potential Default shall have occurred
and be continuing, Brazos covenants that as between Brazos and Vari-Lite,
Vari-Lite shall have the right to quiet enjoyment of the Property on the terms
and conditions provided in this Ground Lease without any interference from
Brazos. Vari-Lite agrees to attorn to any Assignee in the event such Assignee
succeeds to Brazos' interest in the Property, and Vari-Lite will not hold the
Assignee responsible for Brazos' obligations incurred in the period prior to the
succession of the Assignee to Brazos' interest.
Section 4.5 CONSTRUCTION OF THE FACILITY. Vari-Lite hereby agrees
that, if the Property is developed, Brazos, the Construction Consultant, the
Contractor, any subcontractors, architects, engineers and other personnel or
agents of any of the foregoing parties may have access to and may exert
control over the Property as may reasonably be required for the purpose of
planning, constructing, furnishing and completing the Facility.
ARTICLE V
LEASE TERM
Section 5.1 LEASE TERM. The "LEASE TERM" with respect to the Property
shall commence on the Effective Date and shall end on December 21, 2000. The
lease of the Property may be renewed for six (6) additional five year terms
pursuant to, and in accordance with, SECTION 11.3. The Lease Term or any Renewal
Term may be terminated earlier pursuant to ARTICLES XI, XII, XIII, XIV, OR XV
hereof or otherwise pursuant to operation of any Legal Requirements.
Section 5.2 TERMINATION. Notwithstanding anything contained in this
ARTICLE V OR ARTICLE XI, this Ground Lease shall terminate on December 21, 2000,
unless earlier terminated or renewed; PROVIDED that any obligations that, by
their terms, survive this Ground Lease and any obligations that exist at the
time of such termination shall not terminate upon any termination under this
SECTION 5.2.
ARTICLE VI
RENT AND OTHER PAYMENTS
Section 6.1 BASIC RENT. Vari-Lite hereby agrees to pay Brazos on each
Basic Rent Payment Date, Basic Rent for the calendar month in which such Basic
Rent Payment Date falls. Brazos shall notify Vari-Lite at least two Business
Days prior to each Basic Rent Payment Date of the amount of the Basic Rent due
on such Basic Rent Payment Date; but failure to notify shall not relieve
Vari-Lite of its obligation to pay Basic Rent.
Section 6.2 OTHER AMOUNTS. Vari-Lite hereby agrees to pay within ten (10)
days of delivery of a statement therefor all amounts (other than Basic Rent) due
hereunder, including, without limitation, all amounts payable to any Indemnified
Person pursuant to ARTICLE X hereof.
GROUND LEASE AGREEMENT - Page 10
Section 6.3 ADDITIONAL RENT. Vari-Lite shall pay to Brazos from time to
time, on demand, as additional rent ("ADDITIONAL RENT") (i) amounts required to
reimburse Brazos for its obligations, costs and expenses (not previously
included in the formula for Basic Rent) incurred in planning, acquiring,
constructing, financing and leasing the Property, which is intended to include
all ordinary and extraordinary costs and expenditures under the Credit
Agreement, but which shall not include general and administrative overhead
expenses of Brazos, and (ii) to the extent legally enforceable, interest on each
overdue amount not paid by Vari-Lite to Brazos as provided in this Ground Lease
from the date such overdue amount was due until paid at the per annum rate of
interest equal to the most recent rate of interest calculated pursuant to
paragraph (iii) of the definition "BASIC RENT" plus two percent (2%). Vari-Lite
shall also pay to Brazos on demand an amount equal to any reasonable expenses
and attorneys' fees incurred by Brazos in collecting such unpaid sums and
enforcing the obligations for such unpaid sums.
Section 6.4 PAYMENT IN ADVANCE. Basic Rent and Additional Rent and any
other amount payable by Vari-Lite to Brazos shall be paid sufficiently in
advance of the date due to assure that immediately available funds in the full
amount due are available on the date due, to such account of Brazos at such
bank, or to such account of such other person at such bank, or otherwise as
Brazos may from time to time designate.
Section 6.5 CREDIT AGREEMENT LOSSES. In addition to all other payment
obligations hereunder, if this Ground Lease is terminated for any reason prior
to the end of the Lease Term or, if applicable, Renewal Term, then Vari-Lite
shall pay to Brazos within three Business Days after receipt of the billing
statement referred to below an additional amount compensating Brazos for all
penalties, costs and expenses (including out-of-pocket costs and expenses) as
are incurred by Brazos under the Credit Agreement in connection with such
termination and as are set forth in a billing statement sent by Brazos to
Vari-Lite containing the calculation thereof in reasonable detail.
Section 6.6 NET LEASE; NO SETOFF; ETC. This Ground Lease is a net lease.
Notwithstanding any term or provision of this Ground Lease, it is intended that
Basic Rent and Additional Rent, together with any amounts due pursuant to
SECTION 6.5, shall be paid without notice, demand, counterclaim, setoff,
deduction or defense and without abatement, suspension, deferment, diminution or
reduction. Except to the extent otherwise expressly specified herein, the
obligations and liabilities of Vari-Lite hereunder shall in no way be released,
discharged or otherwise affected for any reason including, without limitation,
the following: (a) any defect in the condition, quality or fitness for use of
the Property; (b) any damage to, removal, abandonment, salvage, loss, scrapping
or destruction of or any requisition or taking of the Property by act of God or
enemy, any other force majeure event or any cause whatsoever; (c) any
restriction, prevention or curtailment of or interference with any use of the
Property; (d) any defect in title to or rights to the Property or any Lien on
such title or rights or on the Property; (e) any change, waiver, extension,
indulgence or other action or omission in respect of any obligation or liability
of Vari-Lite, Brazos or any other Person; (f) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceedings relating to Vari-Lite, Brazos or any other Person, or any action
taken with respect to this Ground Lease by any trustee or receiver of Vari-Lite,
Brazos or any other Person, or by any court in any such proceeding; (g) any
claim that Vari-Lite has or might have against any Person including, without
limitation, Brazos or any lender under the Credit Agreement; (h) any failure on
the part of Brazos to perform or comply with any of the terms hereof or of any
other agreement; (i) any invalidity or unenforceability or disaffirmance of this
Ground Lease against or by Vari-Lite or any provision hereof or the Ground Lease
or any provision thereof; (j) any prohibition, limitation, restriction or
prevention of Vari-Lite's use, occupancy or enjoyment of the Property by any
Person; (k) any condemnation, confiscation, seizure, or requisition of use or
title to all or any portion of the Property by any governmental authority under
the power of eminent domain including, without limitation, a temporary event;
(l) any prohibition, limitation, restriction or prevention of Vari-Lite's use,
occupancy or enjoyment of the Property by any Person; (m) any eviction of Vari-
Lite from, or loss of possession by Vari-Lite of, the Property or any part
thereof, by reason of title paramount or otherwise; (n) the invalidity or
unenforceability of any provision hereof or the impossibility of illegality of
performance by Brazos or Vari-Lite or both; (o) any action of any Governmental
Authority; or (p) any other cause or occurrence whatsoever, whether similar or
dissimilar to the foregoing.
Vari-Lite shall remain obligated under this Ground Lease in accordance with
its terms and shall not take any action to terminate, rescind or avoid this
Ground Lease, notwithstanding any bankruptcy, insolvency, reorganization,
liquidation, dissolution or other proceeding affecting Brazos or any other
Person or any action with respect to this Ground Lease which may be taken by any
trustee, receiver or liquidator or by any court. Except as
GROUND LEASE AGREEMENT - Page 11
expressly permitted in this Ground Lease, Vari-Lite waives all rights to
cancel, terminate or surrender this Ground Lease, or to any abatement,
diminution or deferment of Basic Rent, Additional Rent or other sums payable
hereunder, and also hereby waives any and all rights now or hereafter conferred
by any Governmental Requirement or otherwise to modify or to avoid strict
compliance with Vari-Lite's obligation under this Ground Lease. All payments
made to or for the benefit of Brazos or any other Person hereunder as required
hereby shall be final and Vari-Lite shall not seek to recover any such payment
or any part thereof for any reason whatsoever, absent manifest error.
Section 6.7 HOLDOVER RENT. Notwithstanding anything provided in this
Ground Lease to the contrary, upon termination of this Ground Lease (whether by
the expiration of the Lease Term or otherwise) and unless Vari-Lite purchases or
has purchased the Property on such date, Vari-Lite must immediately vacate the
Property, but if Vari-Lite fails to do so, then without the execution of a new
lease by Brazos and Vari-Lite, Vari-Lite, at the option of Brazos, shall
immediately become a tenant from month-to-month of the Property at a Basic Rent
rate equal to the lesser of (a) one hundred fifty percent (150%) of the Basic
Rent effective in the month immediately preceding termination of this Ground
Lease or (b) the maximum amount of Basic Rent that may lawfully be charged to
Vari-Lite under the circumstances, and under all other terms, conditions,
provisions and obligations of this Ground Lease including, without limitation,
payment of all Additional Rent.
ARTICLE VII
RESTRICTED USE; COMPLIANCE WITH LAWS
Section 7.1 INSURANCE REQUIREMENT AND LEGAL REQUIREMENT. So long as no
Event of Default shall have occurred and be continuing, Vari-Lite may use the
Property in the regular course of its business for any lawful Approved Purpose
or keep the Property idle. Vari-Lite will not do or permit any act or thing
which is contrary in any material respect to any Insurance Requirement or which
is contrary to any Legal Requirement or which might impair, other than in the
normal use thereof, the value or usefulness of the Property subject to the right
of access and control granted by Vari-Lite under SECTION 4.5.
Section 7.2 FILINGS. Vari-Lite shall promptly and duly execute, deliver,
file and record, at Vari-Lite's expense, all such documents, statements, filings
and registrations, and take such further action as Brazos or any Assignee shall
from time to time reasonably request in order to establish, perfect and maintain
Brazos' or such Assignee's title to and interest in the Property and any
Assignee's interest in this Ground Lease as against Vari-Lite or any third party
in any applicable jurisdiction.
Section 7.3 COMPLIANCE WITH OTHER REQUIREMENTS. Vari-Lite shall use every
precaution which is commercially reasonable and which is usually employed by
corporations engaged in a business which involves owning or operating similar
property to prevent loss or damage to the Property and to prevent injury to
third persons or property of third persons. Vari-Lite shall cooperate fully
with Brazos and all insurance companies providing insurance pursuant to
ARTICLE IX hereof in the investigation and defense of any claims or suits
arising from the ownership, use, or occupancy of the Property, provided that
nothing contained in this SECTION 7.3 shall be construed as imposing on Brazos
any duty to investigate or defend any such claims or suits. Vari-Lite shall
comply and shall cause all persons using or occupying the Property to comply
with all Insurance Requirements and Legal Requirements regarding acquiring,
titling, registering, leasing, insuring, using, occupying and operating the
Property, and, if applicable, the licensing of operators thereof.
Section 7.4 INSPECTION. Brazos or any Assignee or any authorized
representative of either may during reasonable business hours from time to time
inspect the Property and deeds, registration certificates, certificates of title
and related documents covering the Property wherever the same may be located,
but neither Brazos nor any Assignee shall have any duty to make any such
inspection.
Section 7.5 NO LIENS. Vari-Lite shall not permit or suffer to exist on
the Property any Lien, other than Liens which are the subject of a Permitted
Contest or Permitted Encumbrances and Liens placed thereon by, or arising from,
Brazos' own actions or those of any Assignee or Affiliate of Brazos (provided,
that any Liens of
GROUND LEASE AGREEMENT - Page 12
Record, other than Liens placed thereon by, or arising from, Brazos' own
actions or those of any Assignee or Affiliate of Brazos, may not exceed the
amount of $100,000 with respect to the Property and any related Facility),
nor may it assign any right or interest herein or in the Property. Vari-Lite
shall not without the prior written consent of Brazos and Assignee, which
consent shall not be unreasonably withheld, sublease or otherwise relinquish
possession of the Property, except that Vari-Lite may otherwise relinquish
possession of the Property to any contractor for use in performing work for
Vari-Lite, provided that such relinquishment of possession shall in no way
affect the obligations of Vari-Lite or the rights of Brazos hereunder and
with respect to the Property. Brazos shall have the present and continuing
right to collect and enjoy all rents and other sums of money payable under
any such sublease, and Vari-Lite hereby irrevocably assigns such rents and
other sums to Brazos for the benefit and protection of Brazos, provided that
unless an Event of Default or Potential Default shall have occurred and be
continuing hereunder, Vari-Lite shall be entitled to collect and enjoy such
rents and other sums. Vari-Lite shall, within thirty (30) days after the
execution of any such sublease, deliver a conformed copy thereof to Brazos.
Nothing contained in this Ground Lease shall be construed as constituting the
consent or request of Brazos, express or implied, to or for the performance
by any contractor, laborer, materialman or vendor of any labor or services or
for the furnishing of any materials for any construction, alteration,
addition, repair or demolition of or to the Property or any part thereof.
Notice is hereby given that Brazos will not be liable for any labor, services
or materials furnished or to be furnished to Vari-Lite, or to anyone holding
the Property or any part thereof through or under Vari-Lite.
Section 7.6 INTERFERENCE. If any Lien or charge of any kind or any
judgment, decree or order of any court or other governmental authority
(including, without limitation, any state or local tax lien affecting the
Property), whether or not valid, shall be asserted or entered which is
reasonably likely to interfere with the due and timely payment of any sum
payable or the exercise of any of the rights or the performance of any of the
duties or responsibilities under this Ground Lease or cause a Material Adverse
Change, Vari-Lite shall, upon obtaining knowledge thereof or upon receipt of
notice to that effect from Brazos, promptly take such action as may be necessary
to prevent or terminate such interference.
ARTICLE VIII
MAINTENANCE OF PROPERTY
Section 8.1 WARRANTIES. Brazos, so long as no Event of Default or
Potential Default shall have occurred and be continuing, hereby assigns and
agrees to make available to Vari-Lite any and all rights Brazos may have under
any vendor's warranties or undertakings with respect to the Property. If any
Event of Default shall have occurred and be continuing, the assignment of such
rights from Brazos to Vari-Lite shall be deemed to be terminated.
Section 8.2 COSTS AND EXPENSES. Vari-Lite shall pay all costs, expenses,
fees and charges incurred in connection with the ownership, use or occupancy of
the Property during the Lease Term and Renewal Term, if any. Except as
otherwise provided in ARTICLE XII hereof, Vari-Lite shall at all times, at its
own expense, and subject to reasonable wear and tear, keep the Property in good
operating order, repair, condition and appearance. The foregoing undertaking to
maintain the Property in good repair shall apply regardless of the cause
necessitating repair, regardless of the availability or adequacy of insurance or
condemnation proceeds and regardless of whether Vari-Lite has possession of the
Property, and as between Brazos and Vari-Lite all risks of damage to the
Property are assumed by Vari-Lite. The undertaking to maintain the Property in
good repair shall include, without limitation, all common area maintenance
including, without limitation, removal of dirt, snow, ice, rubbish and other
obstructions and maintenance of sidewalks and landscaping. Vari-Lite hereby
agrees to indemnify and hold Brazos and any Assignee harmless from and against
all costs, expenses, claims, losses, damages, fines or penalties, including
reasonable counsel fees, arising out of or due to Vari-Lite's failure to fulfill
its obligations under this SECTION 8.2.
Section 8.3 PAYMENT OF TAXES. Vari-Lite shall make all required reports
to the appropriate taxing authorities and shall pay: (i) all taxes, assessments,
levies, fees, water and sewer rents and charges, and all other governmental,
quasi-governmental and nongovernmental charges, general and special, ordinary
and extraordinary, foreseen and unforeseen, which are, at any time during the
Lease Term or any Renewal Term hereof, imposed or levied upon or assessed
against (A) the Property, (B) any Basic Rent, any Additional Rent or other sum
payable
GROUND LEASE AGREEMENT - Page 13
hereunder or (C) this Ground Lease, the leasehold estate hereby created, or
which arises in respect of the ownership, operation, occupancy, possession or
use of the Property; (ii) all gross receipts or similar taxes (I.E., taxes
based upon gross income which fail to take into account all customary
deductions (E.G., depreciation and interest)) imposed or levied upon,
assessed against or measured by any Basic Rent, or any Additional Rent or
other sum payable hereunder; (iii) all sales, value added, use and similar
taxes at any time levied, assessed or payable on account of the acquisition,
leasing or use of the Property; and (iv) all charges of utilities and
communications services serving the Property. Vari-Lite shall not be
required to pay any franchise, estate, inheritance, transfer, federal,
foreign, state or local income or similar tax of Brazos (other than any tax
referred to in clause (ii) above) unless such tax is imposed, levied or
assessed in substitution for any other tax, assessment, charge or levy which
Vari-Lite is required to pay pursuant to this SECTION 8.3; provided, however,
that if at any time during the term of this Ground Lease, the method of
taxation shall be such that there shall be levied, assessed or imposed on
Brazos a capital levy or other tax directly on the rents received therefrom,
or upon the value of the Property or any present or any future improvement or
improvements on the Property, then all such taxes, assessments, levies, or
charges, or the part thereof so measured or based, shall be payable by
Vari-Lite, but only to the extent that such taxes would be payable if the
Property affected were the only property of Brazos, and Vari-Lite shall pay
and discharge the same as herein provided. Vari-Lite will furnish to Brazos,
promptly after demand therefor, proof of payment of all items referred to
above, the payment of which is the responsibility of Vari-Lite. If any such
assessments may legally be paid in installments, Vari-Lite may pay or permit
to be paid such assessment in installments. So long as, in the reasonable
opinion of Vari-Lite's counsel, Vari-Lite shall have reasonable grounds to
contest the existence, amount, applicability or validity of any tax Vari-Lite
is required to pay pursuant to this Ground Lease, Vari-Lite may contest such
tax pursuant to the provisions of ARTICLE XVII of this Ground Lease so long
as adequate reserves therefor are maintained by Vari-Lite.
Section 8.4 ENVIRONMENTAL REPORTS. At any reasonable time and from
time-to-time, upon reasonable notice, Vari-Lite shall furnish Brazos a report
prepared by a qualified independent consultant, at the expense of Vari-Lite,
concerning the condition and status of the Property in respect of any
Environmental Laws, provided that the party requesting such report has
demonstrable evidence that the Property may be affected by a Hazardous
Substance, a Hazardous Waste or an Environmental Claim not adequately addressed
in any environmental assessment previously delivered to Brazos or any Assignee
in connection with the Property.
ARTICLE IX
INSURANCE
Section 9.1 LIABILITY AND PROPERTY DAMAGE. Vari-Lite shall, at its sole
cost and expense, maintain such liability and property damage insurance with
respect to the Property and insurance against loss or damage to the Property of
the types usually carried by corporations engaged in the same or a similar
business, of similar size as Vari-Lite, and owning similar property and which
cover risks of the kind customarily insured against by such corporations and
such other insurance as may be required by law or as may be reasonably requested
by Brazos for purposes of assuring compliance with this ARTICLE IX, including,
without limitation, the insurance described on the Schedule of Insurance
attached hereto as EXHIBIT B. Such insurance shall be written by financially
sound and reputable companies which are legally qualified to issue such
insurance. Vari-Lite may, at its cost and expense, prosecute any claim against
any insurer or contest any settlement proposed by any insurer, and Vari-Lite may
bring any such prosecution or contest in the name of Brazos, Vari-Lite, or both,
and Brazos will join therein at Vari-Lite's request, provided that Vari-Lite
shall indemnify Brazos against any losses, costs or expenses (including
reasonable attorneys' fees) which Brazos may incur in connection with such
prosecution or contest.
Section 9.2 ADDITIONAL INSUREDS; NOTICE. Any policies of insurance
carried in accordance with this ARTICLE IX and any policies taken out in
substitution or replacement for any such policies (i) shall name Brazos and
Assignee as additional insureds, as their respective interests may appear (but
without imposing upon any such person any obligation imposed on the insured,
including, without limitation, the liability to pay the premium for any such
policy), (ii) shall have attached thereto a lender's loss payable endorsement
for the benefit of Brazos and Assignee as loss payees and (iii) shall provide
that as against Brazos and Assignee the insurers shall waive any rights of
GROUND LEASE AGREEMENT - Page 14
subrogation. Vari-Lite shall make a written request to the insurers, and
provide evidence of such request to Brazos and Assignee, to give notice to
Brazos and its assigns of any modification or cancellation of any insurance to
be maintained under this Article. Vari-Lite shall give a copy to Brazos and any
Assignee of any notice received by Vari-Lite regarding the cancellation or other
termination of the insurance included in the Schedule of Insurance attached
hereto as EXHIBIT B. Each liability policy (A) shall be primary without right
of contribution from any other insurance which is carried by Brazos or Assignee
with respect to its interest as such in the Property and (B) shall expressly
provide that all of the provisions thereof, except the limits of liability,
shall operate in the same manner as if there were a separate policy covering
each insured.
Section 9.3 APPLICATION OF PROCEEDS OF LOSS OR SUBSTANTIAL TAKING. Any
insurance or condemnation proceeds received as the result of the occurrence of
(i) any event of loss described in SECTION 14.3 hereof or (ii) any event of
substantial Taking described in SECTION 15.1 shall be paid to Brazos, and
disposed of as contemplated by SECTION 14.3 hereof.
Section 9.4 APPLICATION OF PROCEEDS OF OTHER THAN LOSS OR SUBSTANTIAL
TAKING. As between Vari-Lite and Brazos, if any insurance or condemnation
proceeds received as a result of any loss or Taking, other than a loss described
in SECTION 14.3 or an event of substantial Taking described in SECTION 15.1, is
less than $100,000, it is agreed that such proceeds will be paid to Vari-Lite to
be used for repairs, replacement, reconstruction or restoration in accordance
with the terms of SECTIONS 14.2 AND 15.2 hereof. If the proceeds equal or
exceed $100,000, then the proceeds shall be deposited in a special purpose
account held by Assignee, to be used only for the purpose set forth in this
paragraph, and Vari-Lite shall be entitled (i) to receive the amounts so
deposited against certificates, invoices or bills in form satisfactory to Brazos
and Assignee, delivered to Brazos and Assignee from time to time as such work or
repair progresses, and (ii) to direct the investment of the amounts so deposited
as provided in SECTION 9.5. Any moneys remaining in the aforesaid account after
final payment for repairs has been made shall be paid to Vari-Lite.
Section 9.5 INVESTMENT. Assignee, at Vari-Lite's instruction, shall
invest the amounts deposited with Assignee pursuant to SECTION 9.4 in the
following:
(i) direct obligations of the United States Government; or
(ii) interest-bearing time deposits at, or obligations of, any Assignee.
Such investments shall mature in such amounts and on such dates so as to provide
that amounts shall be available on the draw dates sufficient to pay the amounts
requested by and due to Vari-Lite. Any interest earned on investments of such
funds shall be paid to Vari-Lite. Brazos and Assignee shall not be liable for
any loss resulting from the liquidation of each and every such investment and
Vari-Lite shall be liable for such loss, if any.
Section 9.6 APPLICATION IN DEFAULT. Any amount referred to in
SECTIONS 9.3 AND 9.4 which is payable to Vari-Lite shall not be paid to
Vari-Lite or, if it has been previously paid to Vari-Lite and not applied by
Vari-Lite as provided in SECTIONS 9.3 OR 9.4, shall not be retained by
Vari-Lite, if at the time of such payment an Event of Default or Potential
Default shall have occurred and be continuing. In such event, all such amounts
shall be paid to and applied by Brazos toward payment of any of such obligations
of Vari-Lite at the time due hereunder as Brazos may elect. At such time as
there shall not be continuing any Event of Default or Potential Default, all
such amounts at the time held by Brazos in excess of the amount, if any, which
Brazos shall have elected to apply as above provided shall be applied as
provided in SECTIONS 9.3 AND 9.4.
Section 9.7 CERTIFICATES. On or before the execution of this Ground
Lease, and annually on or before the anniversary of the date of this Ground
Lease, Vari-Lite will furnish to Brazos and Assignee certificates or other
evidence reasonably acceptable to Brazos and Assignee certifying that the
insurance then carried and maintained on the Property complies with the terms
hereof.
GROUND LEASE AGREEMENT - Page 15
Section 9.8 COVENANT TO KEEP INSURANCE IN FORCE. Vari-Lite covenants that
it will not use or occupy the Property or permit the use or occupancy of the
Property at a time when the insurance required by this ARTICLE IX is not in
force.
ARTICLE X
INDEMNITIES
Section 10.1 INDEMNIFIED PERSONS. Vari-Lite shall indemnify and hold
harmless Brazos, any Assignee, any successor or successors, and any Affiliate of
Brazos, and their respective officers, directors, incorporators, shareholders,
partners (general and limited, including without limitation, the general and
limited partners of the sole shareholder of Brazos), employees, agents,
attorneys and servants (each of the foregoing an "INDEMNIFIED PERSON") from and
against all liabilities, taxes, losses, obligations, claims, damages, penalties,
causes of action, suits, costs and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and expenses) or judgments of any
nature relating to or in any way arising out of:
(a) The acquisition, title on acquisition, rejection, possession, titling,
retitling, registration, reregistration, custody by Vari-Lite of title and
registration documents, ownership, use, non-use, misuse, lease, operation,
repair, control or disposition of the Property leased or to be leased hereunder,
(i) except to the extent that such costs are included in the Acquisition Cost of
the Property and (ii) except for any general administrative expenses of Brazos;
(b) The assertion of any claim or demand based upon any infringement or
alleged infringement of any right, by or in respect of the Property or any
indemnification claim asserted against Brazos under the Contract of Sale;
provided, however, that upon request of Vari-Lite, Brazos will make available to
Vari-Lite Brazos' rights under any similar indemnification arising from any
vendor's warranties or undertakings with respect to the Property;
(c) All U.S. Federal, state, county, municipal, foreign or other fees and
taxes of whatsoever nature arising from or relating to ownership of the
Property, including but not limited to license, qualification, franchise, sales,
use, gross income, gross receipts, ad valorem, business, personal property, real
estate, value added, excise, motor vehicle, occupation fees and stamp or other
taxes or tolls of any nature whatsoever, and penalties and interest thereon,
whether assessed, levied against or payable by Brazos or otherwise, with respect
to the Property or the acquisition, purchase, sale, rental, use, operation,
control, ownership or disposition of the Property (including without limitation
any claim by any governmental authority for transfer tax, transfer gains tax,
mortgage recording tax, filing or other similar taxes or fees in connection with
the acquisition of the Property by Brazos or otherwise in connection with this
Ground Lease) or measured in any way by the value thereof or by the business of,
investment in, or ownership by Brazos with respect thereto, provided that this
indemnity shall not apply to (i) taxes that Vari-Lite is not required to pay
under SECTION 8.3 and (ii) net income taxes or capital gains taxes imposed by
any state or local taxing authority utilizing the Unitary Method of Taxation.
(d) Any violation or alleged violation (other than an alleged violation
alleged by Brazos) by Vari-Lite of this Ground Lease or of any contracts or
agreements to which Vari-Lite is a party or by which it is bound or any laws,
rules, regulations, orders, writs, injunctions, decrees, consents, approvals,
exemptions, authorizations, licenses and withholdings of objection, of any
governmental or public body or authority and all other Legal Requirements,
including, without limitation, any Legal Requirements with respect to the
environment or the regulation of hazardous materials or substances, or any
breach of a representation or warranty by Vari-Lite under this Ground Lease;
(e) Any Environmental Claim or requirement of Environmental Law concerning
or relating to the Property, or the operations or business in respect of the
Property; or
(f) Any claim against Brazos' title or Assignee's interest in the Property
to the extent such claim is not fully paid by title insurance.
GROUND LEASE AGREEMENT - Page 16
Section 10.2 PAYMENTS. Vari-Lite shall reimburse any Indemnified
Person for any sum or sums expended with respect to any of the items set
forth in SECTION 10.1 or, upon request from any Indemnified Person, shall pay
such amounts directly. Any payment made to or on behalf of any Indemnified
Person pursuant to this ARTICLE X shall be increased to such amount as will,
after taking into account all taxes imposed with respect to the accrual or
receipt of such payment (as the same may be increased pursuant to this
sentence), equal the amount of the payment, reduced by the amount of any
savings in such taxes actually realized by the Indemnified Person as a result
of the payment or accrual of the amounts in respect of which the payment to
or on behalf of the Indemnified Person hereunder is made. Any Indemnified
Person seeking indemnification under this ARTICLE X shall give Vari-Lite
written evidence supporting the amount demanded, and such written evidence
shall be deemed to be conclusive, absent manifest error. To the extent that
Vari-Lite in fact indemnifies any Indemnified Person under the indemnity
provisions of this Ground Lease, Vari-Lite shall be subrogated to such
Indemnified Person's rights in the affected transaction and shall have a
right to determine the settlement of claims therein.
Section 10.3 CONTINUING INDEMNIFICATION. The indemnities contained in
this ARTICLE X shall not be affected by and shall survive any termination of
this Ground Lease .
Section 10.4 LIMITATIONS.
(a) Notwithstanding any provisions of this ARTICLE X to the contrary,
Vari-Lite shall not indemnify and hold harmless any Indemnified Person
against any claims and liabilities arising solely from the gross negligence
(as between such Indemnified Person or an Affiliate of such Indemnified
Person and Vari-Lite) or willful misconduct (as between such Indemnified
Person or an Affiliate of such Indemnified Person and Vari-Lite) of such
Indemnified Person, BUT SHALL OTHERWISE INDEMNIFY ANY INDEMNIFIED PERSON
AGAINST ITS OWN NEGLIGENCE.
(b) Brazos and Vari-Lite agree that the activities of Vari-Lite under
this Ground Lease relating to the preparation or approval of any maps,
drawings, opinions, reports, surveys, change orders, designs, or
specifications relating to the Property is being done by Vari-Lite in its
capacity as the lessee of the Property and not as the agent or employee of
Brazos.
Section 10.5 LITIGATION. If any claim, action, proceeding or suit is
brought against an Indemnified Person with respect to which Vari-Lite would
be required to indemnify such Indemnified Person, Vari-Lite shall have the
right to assume the defense thereof, including the employment at its expense
of counsel; provided that Vari-Lite shall not have such right to the extent
that such Indemnified Person shall deliver to Vari-Lite a written notice
waiving the benefits of the indemnification of such Indemnified Person
provided by this ARTICLE X in connection with such claim, action, proceeding
or suit. Notwithstanding the foregoing, if (i) any claim, action, proceeding
or suit is brought against an Indemnified Person who is an individual, (ii)
the action threatens to restrain or adversely affect the conduct of the
business of the Indemnified Person, but not the business of Brazos' ownership
of the Property under this Ground Lease, (iii) the claim, action, proceeding
or suit seeks damages of more than $1,000,000, or (iv) independent counsel
to an Indemnified Person shall conclude that there may be defenses available
to the Indemnified Person which are different from, or additional to, and may
conflict with those available to Vari-Lite, Vari-Lite shall not have the
right to assume the defense of any such action on behalf of the Indemnified
Person if such Indemnified Person chooses to defend such action, and all
reasonable costs, expenses and attorneys' fees incurred by the Indemnified
Person in defending such action shall be borne by Vari-Lite. Notwithstanding
the assumption of its defense by Vari-Lite pursuant to this paragraph, any
Indemnified Person shall have the right to employ separate counsel and to
participate in its defense, but the fees and expenses of such counsel shall
be borne by the Indemnified Person. In addition, Vari-Lite will not be
liable for any settlement of any claim, action, proceeding or suit unless
Vari-Lite has consented thereto in writing. Any decision by an Indemnified
Person to employ its own counsel rather than counsel selected by Vari-Lite
(whether or not at Vari-Lite's expense) shall in no way affect any rights of
such Indemnified Person otherwise arising under this ARTICLE X.
ARTICLE XI
GROUND LEASE AGREEMENT - Page 17
RENEWAL AND TERMINATION
Section 11.1 VARI-LITE'S RIGHT TO TERMINATE. So long as no Event of
Default or Potential Default has occurred and is continuing, Vari-Lite shall
have the right, at any time during the Lease Term or any Renewal Term, upon
not less than thirty (30) days' written notice to Brazos and Assignee, to
terminate on the Basic Rent Payment Date specified in such notice this Ground
Lease with respect to the Property, if (a) indemnity payments to Brazos
pursuant to SECTION 10.1(C) shall have been required and can be reasonably
expected to occur subsequently and such payments are or would be in the
aggregate (taking into account the recurring nature of the payments)
sufficient in the reasonable judgment of Vari-Lite to render this Ground
Lease uneconomic with respect to the Property, (b) due to a change in
accounting rules or treatment, this Ground Lease is no longer treated as an
operating lease for accounting purposes or (c) there exists an event of
default under the Credit Agreement and the payment obligations of Brazos
thereunder are declared to be immediately due and payable. Upon exercising
its rights under this SECTION 11.1 Vari-Lite shall either (i) purchase, on
the Basic Rent Payment Date stipulated in the written notice contemplated by
this SECTION 11.1, the Property for cash at its Acquisition Cost or (ii) with
the consent of Brazos, arrange, at its own cost and expense, for the Property
to be sold for cash pursuant to SECTION 11.4 and with the consequences
therein provided, except that such purchase and sale must occur on the Basic
Rent Payment Date stipulated in the written notice contemplated by this
SECTION 11.1.
Section 11.2 BRAZOS' RIGHT TO TERMINATE. Brazos shall have the right
upon at least thirty (30) days' prior written notice to Vari-Lite, to
terminate the ground lease of the Property as of a Basic Rent Payment Date
stipulated in such notice if at any time: (1) by reason of a nexus between a
state or local taxing jurisdiction and the Property or the activities of any
user (other than Brazos) of the Property, Brazos incurs, or, in its
reasonable judgment, in the future would incur, a state or local tax based
upon the Unitary Method of Taxation which, in its sole judgment, renders the
Ground Lease uneconomic and Vari-Lite refuses to reimburse Brazos for such
tax; or (2) any other instrument relating to this Ground Lease shall be held
by a court of competent jurisdiction to require the payment or deemed to
permit the collection of interest in excess of the Maximum Rate and any such
interest in excess of such Maximum Rate cannot be spread and allocated either
to the preceding or subsequent periods in which such excess interest is to be
paid or collected pursuant to SECTION 18.8 of this Ground Lease. In the
event of a termination of this Ground Lease with respect to the Property
pursuant to this SECTION 11.2, Vari-Lite shall either (i) purchase, on the
Basic Rent Payment Date stipulated in the written notice contemplated by this
SECTION 11.2, the Property for cash at its Acquisition Cost or (ii) with the
consent of Brazos, arrange, at its own cost and expense, for the Property to
be sold for cash pursuant to SECTION 11.4 and with the consequences therein
provided, except that such purchase and sale must occur on the Basic Rent
Payment Date stipulated in the written notice contemplated by this SECTION
11.2.
Section 11.3 RENEWAL.
(a) Not later than twelve months prior to the end of the Lease Term or
the first Renewal Term, if any, as applicable, Brazos shall give notice to
Vari-Lite as to whether it desires to renew this Ground Lease with respect to
the Property and the terms and conditions (including the rental amounts) of
any such renewal. Not later than nine months prior to the end of the Lease
Term or Renewal Term, as applicable, Vari-Lite shall give notice to Brazos as
to whether it will renew or not renew the lease for the Property. Failure of
Vari-Lite to give such notice with respect to the Property shall be deemed an
election not to renew the lease for the Property. So long as (i) Vari-Lite
elects to renew this Ground Lease, (ii) no Event of Default or Potential
Default has occurred and is continuing, and (iii) Brazos shall have received
a commitment for financing for the Property through the last day of the
Renewal Term (as defined below) from the lender(s) under a then-existing
Credit Agreement or from a third party (which commitment will be in the sole
discretion of such lender(s) or third party), the lease shall be renewed for
a term (the "RENEWAL TERM") equal to five years commencing on the first day
following the last day of the Lease Term or Renewal Term, as applicable,
thereof; provided, however, the Lease Term or Renewal Term, as applicable,
shall not be renewed if on the first day of the new Renewal Term (a) the
lender(s) under the Credit Agreement fails to fund under its commitment
pursuant to the terms of such commitment or (b) a third party fails to fund
under its commitment for any reason, or (c) if any terms of this Ground Lease
must be modified in accordance with the commitment for financing, Vari-Lite
does not agree to such modifications.
GROUND LEASE AGREEMENT - Page 18
(b) In the event the lease for the Property is not being renewed,
Vari-Lite shall, at its option, not later than eight months prior to the end
of the Lease Term or Renewal Term, as applicable, give notice to Brazos
either that it will (i) purchase the Property for cash at its Acquisition
Cost during the period from one (1) month before the end of the Lease Term or
Renewal Term, as applicable, to five (5) Business Days before the end of the
Lease Term or Renewal Term, as applicable, or (ii) arrange, at Vari-Lite's
own cost and expense, for the Property to be sold for cash pursuant to
SECTION 11.4 and with the consequences therein provided during the period
from six (6) months before the end of the Lease Term or Renewal Term, as
applicable, to one (1) month before the end of the Lease Term or Renewal
Term, as applicable. Any notice given by Vari-Lite pursuant to the preceding
sentence shall be irrevocable, except that Vari-Lite may revoke the election
to sell the Property to a third party if Vari-Lite purchases the Property.
Section 11.4 SALES TO THIRD PARTIES. (a) If Vari-Lite exercises its
right to arrange for a sale of the Property to a third party pursuant to
SECTIONS 11.1, 11.2 OR 11.3:
(i) if the proceeds of sale are greater than the Acquisition Cost of the
Property, Brazos shall pay to Vari-Lite the amount by which such
proceeds exceed such Acquisition Cost;
(ii) if the proceeds of sale are equal to or less than the Acquisition
Cost, but greater than or equal to 15% of the Acquisition Cost, Vari-
Lite shall pay to Brazos an amount equal to (A) such Acquisition Cost
less (B) the proceeds of such sale; and
(iii) if the proceeds of sale are less than 15% of the Acquisition
Cost, Vari-Lite shall pay to Brazos an amount equal to the sum
of (A) 85% of such Acquisition Cost and (B) the amount by which
the residual value of the Property has been reduced by wear and
tear in excess of that attributable to normal use, plus the
amount by which, in the good faith judgment of Brazos, the
proceeds of sale for the Property has been reduced due to Liens
attaching to the Property at the time of sale.
For purposes of this SECTION 11.4, in connection with the sale of the
Property, "proceeds of sale" shall mean the aggregate proceeds from the sale
of the Property without reduction for any amounts paid by Vari-Lite.
(b) All payments and credits referred to in paragraph (a) above shall
be made on the date of the sale of the Property, and the parties shall
account to each other for such payments and credits. In consideration for
the receipt by Brazos of the proceeds of sale and all other amounts then due
and owing hereunder, Brazos shall transfer title to the Property to the
purchaser at the sale designated by Vari-Lite. In the event of a sale
pursuant to this SECTION 11.4, neither Vari-Lite nor any Affiliate of
Vari-Lite shall purchase the Property. If the Property is sold to a third
party pursuant to this SECTION 11.4 the Property shall be free of any Liens
at the time of sale, including Liens which would otherwise be Permitted
Encumbrances if such Liens would reduce the value to the purchaser of the
Property.
(c) If the Property and any Facility thereon are sold to the same third
party, the proceeds of sale shall be allocated pro rata between the Property
and such Facility based on the Acquisition Cost of the Property and the
Acquisition Cost (as defined in the Facility Lease) of such Facility.
Section 11.5 ADDITIONAL PAYMENTS. In connection with any purchase or
sale of the Property under this ARTICLE XI, on or before the date such
purchase or sale occurs, Vari-Lite shall pay to Brazos, in addition to any
purchase price payable, all Basic Rent payable (pro rated as of the date of
purchase or sale), any Additional Rent, all amounts owing under SECTION 11.4,
and other amounts owing hereunder.
Section 11.6 TERMINATION OF GROUND LEASE. Upon receipt by Brazos of
the purchase price payable in connection with any sale or purchase of the
Property under this ARTICLE XI, together with all additional payments
required under SECTION 11.5 with respect to the Property, this Ground Lease
shall terminate . All representations and warranties contained in this Ground
Lease or made in writing by or on behalf of Vari-Lite in connection herewith
and all obligations of Vari-Lite pursuant to ARTICLE X shall survive
termination of this Ground Lease.
GROUND LEASE AGREEMENT - Page 19
Section 11.7 SURRENDER OF PROPERTY. Subject to the provisions of this
ARTICLE XI AND ARTICLES XII, XIII, XIV AND XV hereof, upon termination of the
ground lease of the Property hereunder, Vari-Lite shall surrender the
Property to Brazos. In connection with the sale of the Property by Brazos,
in consideration of the receipt of the purchase price and all other amounts
which may be owing to Brazos under SECTION 11.5, Brazos shall execute and
deliver all instruments of transfer necessary to convey Brazos' interest to
the purchaser of the Property.
Section 11.8 CONVEYANCE OF PROPERTY. Upon any sale or transfer of the
Property by Brazos, the transfer shall be accomplished by a special warranty
deed and xxxx of sale, "AS IS AND WITH ALL FAULTS," and without
representations or warranties regarding the Property (other than warranties
of title contained in the special warranty deed).
ARTICLE XII
ECONOMIC DISCONTINUANCE
Section 12.1 UNECONOMIC PROPERTY. If, at any time prior to the end of
the Lease Term, in the good faith judgment of Vari-Lite, the Property shall
have become uneconomic for continued use and occupancy by Vari-Lite (the
Property hereinafter sometimes called an "UNECONOMIC PROPERTY"), then
Vari-Lite shall deliver to Brazos and Assignee a written notice (an
"UNECONOMIC NOTICE") containing (i) notice of Vari-Lite's intention to
terminate the Ground Lease to the Property as of a Basic Rent Payment Date
specified in such notice, which Basic Rent Payment Date shall be within sixty
(60) days of such notice, and (ii) a certificate of an officer of Vari-Lite
stating that Vari-Lite has determined that the Property has become uneconomic
for continued use and occupancy by Vari-Lite.
Section 12.2 UNECONOMIC NOTICE. Simultaneously with the delivery of an
Uneconomic Notice, Vari-Lite shall deliver to Brazos notice of Vari-Lite's
intent to terminate this Ground Lease to the Property and either to purchase
the Property at its Acquisition Cost on the Basic Rent Payment Date specified
in such notice or to sell the Uneconomic Property on such date; provided,
that if the proceeds of the sale of the Property are less than the
Acquisition Cost of the Property, then in addition to the purchase price
Vari-Lite shall pay to Brazos an amount equal to such Acquisition Cost less
the proceeds of such sale.
Section 12.3 PAYMENT. In connection with any purchase or sale pursuant
to this ARTICLE XII, on the Basic Rent Payment Date upon which such purchase
or sale occurs, Vari-Lite shall pay or cause the purchaser to pay to Brazos
the purchase price, and Vari-Lite shall pay all Basic Rent payable and any
Additional Rent and other amounts owing hereunder.
Section 12.4 NO RIGHT TO USE. If Vari-Lite terminates this Ground
Lease with respect to the Property pursuant to this ARTICLE XII, neither
Vari-Lite nor any Affiliate of Vari-Lite shall have the right for one year
following the date of such termination to use, and shall not use, the
Property.
ARTICLE XIII
EVENTS OF DEFAULT
Section 13.1 EVENTS OF DEFAULT. Any of the following events of default
shall constitute an "EVENT OF DEFAULT" and shall give rise to the rights on
the part of Brazos described in SECTION 13.2 hereof:
(a) FAILURE TO MAKE PAYMENTS. Failure of Vari-Lite to pay amounts due
to Brazos at the time of any scheduled sale of the Property hereunder,
failure of Vari-Lite to pay Basic Rent or Additional Rent for more than five
(5) days after such payment is due pursuant to ARTICLE VI hereof, or failure
of Vari-Lite to pay any other amount payable by Vari-Lite hereunder within
ten (10) days after written demand for such payment.
(b) FAILURE TO MAINTAIN INSURANCE. Failure of Vari-Lite to maintain
the insurance required by ARTICLE IX hereof, or default in the performance of
the covenant contained in SECTION 9.4 hereof.
GROUND LEASE AGREEMENT - Page 20
(c) OTHER DEFAULTS. Vari-Lite shall default in the performance or
observance of any other term, covenant, condition or obligation contained in
this Ground Lease or the other Lease Documents and such default shall (i)
continue for fifteen (15) days after notice shall have been given to
Vari-Lite by Brazos or any Assignee specifying such default and requiring
such default to be remedied or (ii) if such default is of a nature that it is
not capable of being cured within such 15-day period, Vari-Lite shall not
have diligently commenced curing such default, proceeded diligently and in
good faith thereafter to complete curing such default, or cured such default
within forty-five (45) days.
(d) BANKRUPTCY. (i) The entry of a decree or order for relief in
respect of Vari-Lite or the Guarantor by a court having jurisdiction in the
premises in an involuntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of Vari-Lite
or the Guarantor or of any substantial part of Vari-Lite's or the Guarantor's
property, or ordering the winding up or liquidation of Vari-Lite's or the
Guarantor's affairs, and the continuance of any such decree or order unstayed
and in effect for a period of thirty (30) consecutive days; or (ii) the
general suspension or discontinuance of Vari-Lite's or the Guarantor's
business operations, its insolvency (however evidenced) or its admission of
insolvency or bankruptcy, or the commencement by Vari-Lite or the Guarantor
of a voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy, insolvency
or other similar law, or the consent by it to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of Vari-Lite or of the Guarantor of
any substantial part of its property, or the making by it of an assignment
for the benefit of creditors, or the failure of Vari-Lite or the Guarantor
generally to pay its debts as such debts become due, or the taking of
corporate action by Vari-Lite or the Guarantor in furtherance of any such
action.
(e) PAYMENT OF OBLIGATIONS. A default or event of default, the effect
of which is to permit the holder or holders of any Indebtedness of Vari-Lite
or any Guarantor, or a trustee or agent on behalf of such holder or holders,
to cause such Indebtedness to become due prior to its stated maturity shall
occur under the provisions of any instrument evidencing Indebtedness in
excess of $1,000,000 of Vari-Lite or any Guarantor (or under the provisions
of any agreement pursuant to which such instrument was issued).
(f) MISREPRESENTATIONS. Any representation or warranty made by
Vari-Lite in this Ground Lease or any of the other Lease Documents or which
is contained in any certificate, document or financial or other statement
furnished under or in connection herewith or therewith proves to be false or
inaccurate in any material respect when made or deemed made.
(g) GUARANTY. Any representation or warranty made by the Guarantor in
the Guaranty, any Consent or any document contemplated hereby or thereby
proves to be false or inaccurate in any material respect when made or deemed
made, or the Guarantor defaults in the performance of any term, covenant,
condition or obligation contained in the Guaranty or any Consent, and such
default shall not have been cured within any applicable grace or cure period.
(h) OTHER AGREEMENTS. Vari-Lite or Guarantor shall default in any
material respect in the performance or observance of any term, covenant,
condition or obligation contained in any other written agreement between
Vari-Lite or the Guarantor and Brazos and such default shall not have been
cured within any applicable grace or cure period.
(i) UNAUTHORIZED ASSIGNMENT. Any assignment, sale, conveyance or other
transfer by Vari-Lite of any interest in this Ground Lease and any mortgage,
pledge, encumbrance or other hypothecation by or on behalf of Vari-Lite, or
all or any of its right, title, interest or privileges under this Ground
Lease except for a pledge that is required by its lenders.
(j) UNSATISFACTORY TITLE. If at any time title to the Property is not
satisfactory to Brazos or Assignee by reason of any Lien or other defect not
disclosed in writing at the time of any advance under the Credit Agreement
GROUND LEASE AGREEMENT - Page 21
(even though the same may have existed at the time of any such advance),
except the Permitted Exceptions, and such Lien, encumbrance or other defect
is not corrected within thirty (30) days after written notice to Vari-Lite.
(k) NON-COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. If Vari-Lite fails
to comply with any requirement of any Governmental Authority with respect to
the Property or to contest such requirement by means of a Permitted Contest
under ARTICLE XVII (i) within thirty (30) days after notice in writing of
such requirement shall have been given to Vari-Lite by such Governmental
Authority or by Brazos or Assignee, or (ii) if such requirement is of a
nature that it cannot be completely complied with within such 30-day period,
if Vari-Lite shall fail after such notice either diligently to commence
complying with such requirement or to proceed thereafter with reasonable
diligence and in good faith to comply with such requirement; provided,
however, that Vari-Lite shall in any event comply with such requirement prior
to the date on which the Property may be seized or sold as a result of such
non-compliance.
Section 13.2 RIGHTS UPON DEFAULT. Upon the occurrence and continuation
of any Event of Default either Brazos or any Assignee may, in either's sole
discretion, declare this Ground Lease to be in default and do any one or
more of the following:
(a) Terminate this Ground Lease;
(b) Whether or not any action has been taken under (a) above, sell the
Property (with or without the concurrence or request of Vari-Lite);
(c) Hold, use, occupy, lease or keep idle the Property, without any
duty to account to Vari-Lite with respect to any such action or inaction or
for any proceeds thereof; and
(d) Exercise any other right or remedy which may be available under
applicable law and in general proceed by appropriate judicial proceedings,
either at law or in equity, to enforce the terms hereof or to recover damages
for the breach hereof.
Suit or suits for the recovery of any default in the payment of any sum
due hereunder or for damages may be brought by Brazos from time to time at
Brazos' election, and nothing herein contained shall be deemed to require
Brazos to await the date whereon this Ground Lease or the term hereof would
have expired by limitation had there been no such default by Vari-Lite or no
such termination or cancellation.
The receipt of any payments under this Ground Lease by Brazos with
knowledge of any breach of this Ground Lease by Vari-Lite or of any default
by Vari-Lite in the performance of any of the terms, covenants or conditions
of this Ground Lease shall not be deemed to be a waiver of any provision of
this Ground Lease.
No receipt of moneys by Brazos from Vari-Lite after the termination or
cancellation hereof in any lawful manner shall reinstate, continue or extend
the Lease Term or any Renewal Term, or affect any notice theretofore given to
Vari-Lite, or operate as a waiver of the right of Brazos to enforce the
payment of Basic Rent or Additional Rent or other charges payable hereunder,
or operate as a waiver of the right of Brazos to recover possession of the
Property by proper suit, action, proceedings or remedy; it being agreed that,
after the service of notice to terminate or cancel this Ground Lease, and the
expiration of the time therein specified, if the default has not been cured
in the meantime, or after the commencement of suit, action or summary
proceedings or of any other remedy, or after a final order, warrant or
judgment for the possession of the Property, Brazos may demand, receive and
collect any moneys payable hereunder, without in any manner affecting such
notice, proceedings, suit, action, order, warrant or judgment; and any and
all such moneys so collected shall be deemed to be payments on account for
the use, operation and occupation of the Property, or at the election of
Brazos, on account of Vari-Lite's liability hereunder. Acceptance of the
keys to the Property, or any similar act, by Brazos, or any agent or
employee, during the term hereof, shall not be deemed to be an acceptance of
a surrender of the Property unless Brazos shall consent thereto in writing.
If, after an Event of Default shall have occurred, Vari-Lite fails to
surrender promptly after written request by Brazos or converts or destroys
the Property, Vari-Lite shall be liable to Brazos for all Basic Rent and
Additional
GROUND LEASE AGREEMENT - Page 22
Rent then due and payable with respect to the Property, all other amounts
payable under this Ground Lease, the Acquisition Cost of the Property as of
the date of such request, conversion or destruction and all losses, damages
and expenses (including, without limitation, attorneys' fees and expenses)
sustained by Brazos by reason of such Event of Default and the exercise of
Brazos' remedies with respect thereto.
If, after an Event of Default, Brazos repossesses the Property,
notwithstanding any termination of this Ground Lease, Vari-Lite shall be
liable for and Brazos may recover from Vari-Lite all Basic Rent accrued and
any Additional Rent owing with respect to the Property to the date of such
repossession, all other amounts payable under this Ground Lease, and all
losses, damages and expenses (including, without limitation, reasonable
attorneys' fees and expenses) sustained by Brazos by reason of such Event of
Default and the exercise of Brazos' remedies with respect thereto. In
addition, Brazos may sell Brazos' interest in the Property upon any terms
that Brazos deems satisfactory, free of any rights of Vari-Lite or any person
claiming through or under Vari-Lite. In the event of such sale, in addition
to the amounts payable under the first sentence of this paragraph, Brazos
shall be entitled to recover from Vari-Lite, as liquidated damages, and not
as a penalty, an amount equal to the Acquisition Cost of the Property so
sold, minus the net proceeds of such sale (deducting from the gross proceeds
of such sale any reasonable legal expenses, commissions, sales taxes or other
costs or expenses associated with such sale) received by Brazos; provided
however, if the proceeds of such sale are in excess of the amount payable to
Brazos pursuant hereto, such excess shall be the property of Vari-Lite. In
lieu of such sale, in addition to the amounts payable under the first
sentence of this paragraph, Brazos may cause Vari-Lite to pay to Brazos, and
Vari-Lite shall pay to Brazos, as liquidated damages, and not as a penalty,
an amount equal to the Acquisition Cost of any or all of the Property, and
upon payment in full of all such amounts Brazos shall transfer all of Brazos'
right, title and interest in and to the Property to Vari-Lite.
Following an Event of Default, to the extent deemed necessary or
advisable by counsel for Brazos, Brazos shall have the right, and is hereby
granted the power by Vari-Lite, to sell all or any part of the Property at
public venue pursuant to power of sale in accordance with the laws of the
State.
No remedy referred to in this SECTION 13.2 is intended to be exclusive,
but each shall be cumulative and in addition to any other remedy referred to
above or otherwise available to Brazos at law or in equity, and the exercise
in whole or in part by Brazos of any one or more of such remedies shall not
preclude the simultaneous or later exercise by Brazos of any or all such
other remedies. No waiver by Brazos of any Event of Default hereunder shall
in any way be, or be construed to be, a waiver of any future or subsequent
Event of Default.
With respect to the termination of this Ground Lease as to the Property
as a result of an Event of Default, Vari-Lite hereby waives service of any
notice of intention to re-enter. Following an Event of Default, Vari-Lite
hereby waives any and all rights to recover or regain possession of the
Property or to reinstate this Ground Lease as permitted or provided by or
under any statute, law or decision now or hereafter in force and effect.
ARTICLE XIV
LOSS OF OR DAMAGE TO PROPERTY
Section 14.1 VARI-LITE'S RISK. Vari-Lite hereby assumes all risk of
loss of or damage to the Property, however caused. No loss of or damage to
the Property shall impair any obligation of Vari-Lite under this Ground
Lease, which shall continue in full force and effect.
Section 14.2 REPAIR. In the event of damage of any kind whatsoever to
the Property (unless the same is determined by Vari-Lite to be damaged beyond
repair) Vari-Lite, at its own cost and expense, shall place the same in good
operating order, repair, condition and appearance.
Section 14.3 PROPERTY DAMAGED BEYOND REPAIR. If the Property is
seized, confiscated, rendered unfit for use or if any improvements thereon
are destroyed or damaged beyond repair (in the reasonable judgment of
Vari-Lite), or if the use of the Property by Vari-Lite or the use of any
improvement by the party entitled thereto in
GROUND LEASE AGREEMENT - Page 23
the ordinary course of business is prevented by the act of any third person
or persons or governmental instrumentality for a period exceeding ninety (90)
days (other than an act which is a Taking which is substantial as described
in SECTION 15.1 of this Ground Lease), or if the Property is attached (other
than on a claim against Brazos as to which Vari-Lite is not obligated to
indemnify Brazos) and the attachment is not removed within ninety (90) days,
or if a Taking which is substantial as described in SECTION 15.1 shall occur,
then in any such event, (i) Vari-Lite shall promptly notify Brazos and
Assignee in writing of such event, (ii) on the Basic Rent Payment Date
following such event, unless such Basic Rent Payment Date occurs within ten
(10) days of such event, in which case on the next Basic Rent Payment Date,
Vari-Lite shall pay to Brazos an amount equal to the Acquisition Cost of the
Property (after deducting any insurance proceeds received by Brazos in
respect of such event or the net amount after Brazos' expenses of proceeds to
Brazos from any award or sale made in connection with a Taking), provided
that insurance or net Taking proceeds, if any, received by Brazos in excess
of the Acquisition Cost of the Property shall be paid by Brazos to Vari-Lite,
(iii) the Lease Term or Renewal Term of the Property shall continue until the
Basic Rent Payment Date on which Brazos receives payment from Vari-Lite of
the amount payable pursuant to this SECTION 14.3 and the Basic Rent and any
Additional Rent and other amounts owing hereunder, and shall thereupon
terminate and (iv) Brazos shall on such Basic Rent Payment Date transfer
title to the Property to Vari-Lite, and Vari-Lite shall be subrogated to
Brazos' rights in the affected transaction.
ARTICLE XV
CONDEMNATION OF PROPERTY
Section 15.1 TAKING OF SUBSTANTIALLY ALL OF THE PROPERTY. If Vari-Lite
or Brazos shall receive notice that the use, occupancy or title to all or
substantially all of the Property is to be taken, requisitioned or sold in,
by or on account of eminent domain proceedings or other action by any person
or authority having the power of eminent domain (such events collectively
referred to as a "TAKING"), and such Taking is substantial, then the Lease
Term or Renewal Term shall terminate as provided in SECTION 14.3. A Taking
shall be deemed substantial if the remainder of the Property is unusable for
Vari-Lite's ordinary business purposes.
Section 15.2 TAKING OF LESS THAN SUBSTANTIALLY ALL OF THE PROPERTY. If
less than substantially all of the Property is subject to a Taking, then this
Ground Lease shall continue in effect as to the portion of the Property not
taken and Vari-Lite, at its own cost and expense, shall place the same in
good operating order, repair, condition and appearance. Brazos and Vari-Lite
each hereby waives any statutory or common law right allowing either of them
to petition any court to terminate this Ground Lease in the event of a Taking
of less than substantially all of the Property. In the event of a Taking as
described in this SECTION 15.2, all proceeds from the Taking shall be payable
to Brazos and held by Brazos pending their application in accordance with the
direction of the Agent.
Section 15.3 GRANT OF MINOR EASEMENTS. So long as no Event of Default
or Potential Default has occurred and is continuing hereunder, Vari-Lite
shall have the right (i) to xxxxx xxxxx easements for the benefit of the
Property or which are deemed reasonably necessary for Vari-Lite's use of the
Property; (ii) voluntarily to dedicate or convey, as required, portions of
the Property for road, highway and other public purposes as required in the
good faith judgment of Vari-Lite in order to obtain or maintain the use of
all or part of the Property for the purposes intended by Vari-Lite; and (iii)
voluntarily to execute petitions to have the Property or a portion thereof
annexed to any municipality or included within any utility, highway or other
improvement or service district, provided that no more than minor restoration
is required. If Vari-Lite receives any monetary consideration for such
easement or dedication, Vari-Lite shall promptly deliver such consideration
to Brazos. Vari-Lite shall exercise the above power to grant without the
joinder of Brazos, except that Brazos will cooperate, at Vari-Lite's
expense, as necessary and join in the execution of any appropriate
instrument. As a condition precedent to Vari-Lite's exercise of its powers
under this Article, Vari-Lite shall give Brazos ten (10) days' prior written
notice of the proposed action. Upon the giving of such notice, Vari-Lite
shall be deemed to have certified that such action will not materially
adversely affect either the market value of the Property or the use of the
Property for its intended purpose, will not affect Brazos' or any Assignee's
ability to exercise its rights and remedies under this Ground Lease and that
Vari-Lite undertakes to remain obligated under this Ground Lease to the same
extent as if Vari-Lite had not exercised its powers under this Article and
Vari-Lite will perform all obligations under such instrument and shall
prepare all required documents and provide all other instruments and
certificates as Brazos may reasonably request.
GROUND LEASE AGREEMENT - Page 24
ARTICLE XVI
EXPENDITURES
Section 16.1 EXPENDITURES BY VARI-LITE. Vari-Lite may expend its own
funds for any purpose relating to the Property subject to this Ground Lease,
including expenditures relating to the construction of any Facility to the
extent Brazos is unwilling or unable to expend its funds for such purposes.
ARTICLE XVII
PERMITTED CONTESTS
(a) Vari-Lite shall not be required, nor shall Brazos have the right, to
pay, discharge or remove any tax, assessment, levy, fee, rent, charge, Lien or
encumbrance, or to comply or cause the Property to comply with any Legal
Requirements applicable to the Property or the occupancy, use or operation
thereof, so long as no Event of Default or Potential Default exists under this
Ground Lease with respect to the Property, and, in the opinion of Vari-Lite's
counsel, Vari-Lite shall have reasonable grounds to contest, and shall be
diligently contesting, the existence, amount, applicability or validity thereof
by appropriate proceedings, which proceedings in the reasonable judgment of
Brazos, (i) shall not involve any material danger that the Property or any Basic
Rent or any Additional Rent would be subject to sale, forfeiture or loss, as a
result of failure to comply therewith, (ii) shall not affect the payment of any
Basic Rent or any Additional Rent or other sums due and payable hereunder,
(iii) unless any criminal liability could result from a failure to comply
therewith, could not reasonably be expected to cause either Brazos or any
Assignee to incur civil liability which, in the sole judgment of Brazos or any
Assignee, is not adequately indemnified (Vari-Lite's obligations under ARTICLE X
of this Ground Lease shall be deemed to be adequate indemnification if no Event
of Default or Potential Default exists and if such civil liability is reasonably
likely to be less than $100,000), (iv) shall not cause a Material Adverse
Change, (v) if involving taxes, shall suspend the collection of such taxes, and
(vi) shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Vari-Lite or the Property is subject
and shall not constitute a default thereunder. Vari-Lite shall conduct all such
contests in good faith and with due diligence and shall promptly after the final
determination (including appeals) of such contest, pay and discharge all amounts
which shall be determined to be payable therein. Notwithstanding anything in
this paragraph (a) to the contrary, Vari-Lite shall not be obligated to actively
contest any mechanics' or materialmen's Lien or claim which does not exceed
$25,000, provided that the failure to so contest does not violate
clauses (i)-(iii) or (v) above, provided further, that such Lien is junior to
any Lien of an Assignee on the Property, and provided further that Vari-Lite
shall in any event diligently contest and defend against the enforcement of any
such Lien or claim in good faith and with due diligence and shall promptly,
after the final determination (including appeals of such contest), pay and
discharge all amounts which shall be determined to be payable therein.
(b) At least ten (10) days prior to the commencement thereof, Vari-Lite
shall notify Brazos in writing of any such proceeding in which the amount in
contest exceeds $25,000, and shall describe such proceeding in reasonable
detail. If a taxing authority or subdivision thereof proposes an additional
assessment or levy of any tax for which Vari-Lite is obligated to reimburse
Brazos under this Ground Lease, or if Brazos is notified of the commencement of
an audit or similar proceeding which could result in such an additional
assessment, then Brazos shall in a timely manner notify Vari-Lite in writing of
such proposed levy or proceeding.
ARTICLE XVIII
MISCELLANEOUS
Section 18.1 SURVIVAL. All agreements, indemnities, representations and
warranties, and the obligation to pay Additional Rent contained in this Ground
Lease shall survive the expiration or other termination hereof.
GROUND LEASE AGREEMENT - Page 25
Section 18.2 ENTIRE AGREEMENT. This Ground Lease, the Memorandum of
Ground Lease and the Property Leasing Records covering the Property leased
pursuant hereto and the instruments, documents or agreements referred to herein
constitute the entire agreement between the parties and no representations,
warranties, promises, guarantees or agreements, oral or written, express or
implied, have been made by any party hereto with respect to this Ground Lease or
the Property, except as provided herein or therein.
Section 18.3 MODIFICATIONS. This Ground Lease may not be amended,
modified or terminated, nor may any obligation hereunder be waived orally, and
no such amendment, modification, termination or waiver shall be effective for
any purpose unless it is in writing and is signed by the party against whom
enforcement thereof is sought. A waiver on one occasion shall not be construed
to be a waiver with respect to any other occasion.
Section 18.4 GOVERNING LAW. THIS GROUND LEASE SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF TEXAS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
ANY PROVISION OF THIS GROUND LEASE WHICH IS PROHIBITED BY LAW OR UNENFORCEABLE
SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR UNENFORCEABILITY
WITHOUT INVALIDATING THE REMAINING PROVISIONS HEREOF, AND THE PARTIES HERETO
SHALL NEGOTIATE IN GOOD FAITH APPROPRIATE MODIFICATIONS TO REFLECT SUCH CHANGES
AS MAY BE REQUIRED BY LAW, AND, AS NEARLY AS POSSIBLE, TO PRODUCE THE SAME
ECONOMIC EFFECTS AS THE PROVISION WHICH IS PROHIBITED OR UNENFORCEABLE. TO THE
EXTENT PERMITTED BY APPLICABLE LAW, VARI-LITE AND BRAZOS HEREBY WAIVE ANY
PROVISION OF LAW WHICH RENDERS ANY PROVISION HEREOF PROHIBITED OR UNENFORCEABLE
IN ANY RESPECT.
Section 18.5 NO OFFSETS. The obligations of Vari-Lite to pay all amounts
payable pursuant to this Ground Lease (including specifically and without
limitation amounts payable due under ARTICLES VI AND X hereof) shall be absolute
and unconditional under any and all circumstances of any character, and such
amounts shall be paid without notice, demand, defense, setoff, deduction or
counterclaim and without abatement, suspension, deferment, diminution or
reduction of any kind whatsoever, except as herein expressly otherwise provided.
The obligation of Vari-Lite to lease and pay Basic Rent, Additional Rent or any
other amounts provided for in this Ground Lease is without any warranty or
representation, express or implied, as to any matter whatsoever on the part of
Brazos or any Assignee or any Affiliate of either, or anyone acting on behalf of
any of them.
NEITHER BRAZOS NOR ANY ASSIGNEE NOR ANY AFFILIATE OF EITHER, NOR ANYONE
ACTING ON BEHALF OF ANY OF THEM, MAKES ANY REPRESENTATION OR WARRANTY OF ANY
KIND WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, AS TO THE
SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS FOR USE, MERCHANTABILITY,
CONFORMITY TO SPECIFICATION, ENVIRONMENTAL CONDITION (INCLUDING THE PRESENCE OR
ABSENCE OF HAZARDOUS MATERIALS), OR ANY OTHER CHARACTERISTIC, OF THE PROPERTY,
OR AS TO WHETHER THE PROPERTY OR THE OWNERSHIP, USE, OCCUPANCY OR POSSESSION
THEREOF COMPLIES WITH ANY LAWS, RULES, REGULATIONS OR REQUIREMENTS OF ANY KIND.
AS BETWEEN BRAZOS, ANY ASSIGNEE OR ANY INDEMNIFIED PERSON AND VARI-LITE AND
TO THE EXTENT ALLOWED BY LAW, VARI-LITE ASSUMES ALL RISKS AND WAIVES ANY AND ALL
DEFENSES, SET-OFFS, DEDUCTIONS, COUNTERCLAIMS (OR OTHER RIGHTS), EXISTING OR
FUTURE, TO ITS OBLIGATION TO PAY BASIC RENT, ADDITIONAL RENT AND ALL OTHER
AMOUNTS PAYABLE HEREUNDER, INCLUDING, WITHOUT LIMITATION, ANY RELATING TO:
(A) THE SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS FOR USE,
MERCHANTABILITY, CONFORMITY TO SPECIFICATION, OR ANY OTHER QUALITY OR
CHARACTERISTIC OF THE PROPERTY, LATENT OR NOT;
(B) ANY SET-OFF, COUNTERCLAIM, RECOUPMENT, ABATEMENT, DEFENSE OR OTHER
RIGHT WHICH VARI-LITE MAY HAVE AGAINST BRAZOS, ANY ASSIGNEE, OR ANY INDEMNIFIED
GROUND LEASE AGREEMENT - Page 26
PERSON FOR ANY REASON WHATSOEVER ARISING OUT OF THIS OR ANY OTHER TRANSACTION OR
MATTER;
(C) ANY DEFECT IN TITLE OR OWNERSHIP OF THE PROPERTY OR ANY TITLE
ENCUMBRANCE NOW OR HEREAFTER EXISTING WITH RESPECT TO THE PROPERTY;
(D) ANY FAILURE OR DELAY IN DELIVERY OR ANY LOSS OR DESTRUCTION OF, OR
DAMAGE TO, THE PROPERTY, IN WHOLE OR IN PART, OR CESSATION OF THE USE OR
POSSESSION OF THE PROPERTY BY VARI-LITE FOR ANY REASON WHATSOEVER AND OF
WHATEVER DURATION, OR ANY CONDEMNATION, CONFISCATION, REQUISITION, SEIZURE,
PURCHASE, TAKING OR FORFEITURE OF THE PROPERTY, IN WHOLE OR IN PART;
(E) ANY INABILITY OR ILLEGALITY WITH RESPECT TO THE USE, OWNERSHIP,
OCCUPANCY OR POSSESSION OF THE PROPERTY BY VARI-LITE;
(F) ANY INSOLVENCY, BANKRUPTCY, REORGANIZATION OR SIMILAR PROCEEDING BY OR
AGAINST VARI-LITE OR BRAZOS OR ANY ASSIGNEE;
(G) ANY FAILURE TO OBTAIN, OR EXPIRATION, SUSPENSION OR OTHER TERMINATION
OF, OR INTERRUPTION TO, ANY REQUIRED LICENSES, PERMITS, CONSENTS,
AUTHORIZATIONS, APPROVALS OR OTHER LEGAL REQUIREMENTS;
(H) THE INVALIDITY OR UNENFORCEABILITY OF THIS GROUND LEASE OR ANY OTHER
INFIRMITY HEREIN OR ANY LACK OF POWER OR AUTHORITY OF BRAZOS OR VARI-LITE TO
ENTER INTO THIS GROUND LEASE; OR
(I) ANY OTHER CIRCUMSTANCES OR HAPPENINGS WHATSOEVER, WHETHER OR NOT
SIMILAR TO ANY OF THE FOREGOING.
VARI-LITE HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHTS WHICH IT MAY NOW HAVE OR WHICH AT ANY TIME HEREAFTER MAY BE CONFERRED
UPON IT, BY STATUTE OR OTHERWISE, TO TERMINATE, CANCEL, QUIT, RESCIND OR
SURRENDER THIS GROUND LEASE EXCEPT IN ACCORDANCE WITH THE EXPRESS TERMS HEREOF.
Section 18.6 NON-RECOURSE. Brazos' obligations hereunder are intended to
be the limited obligations of the corporation. Notwithstanding any other
provision of this Ground Lease, Vari-Lite agrees that the personal liability of
Brazos shall be strictly and absolutely limited to the Property and the proceeds
thereof and no recourse for the payment of any amount due under this Ground
Lease, or for any claim based thereon or otherwise in respect thereof, shall be
had against any other assets of the corporation or any incorporator,
shareholder, officer, director or Affiliate (past, present or future) of Brazos,
or of any Affiliate of either, or of any successor corporation to Brazos, it
being understood that Brazos is a corporation entering into the transactions
involved in and relating to this Ground Lease on the express understanding
aforesaid.
Section 18.7 NOTICES.
(a) Any notice or request which by any provision of this Ground Lease is
required or permitted to be given by either party to the other shall be deemed
to have been given when delivered by hand (including, delivery by courier), when
actually received by mail or, if promptly confirmed by mail or by hand-delivery,
as provided above, when sent by telex, or other written telecommunication,
addressed to the following specified addresses or to such other addresses as
Brazos or Vari-Lite may specify by written notice to the other party:
GROUND LEASE AGREEMENT - Page 27
If to Brazos:
Brazos Beltline Development, Inc.
0000 Xxxxxx Xxxxx Xxxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
telephone: (000) 000-0000
telecopy: (000) 000-0000
If to Vari-Lite:
Vari-Lite, Inc.
000 Xxxxx Xxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxx
telephone: (000) 000-0000
telecopy: (000) 000-0000
With a Copy to:
Xxxxx Brothers Xxxxxxxx & Co.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Credit Officer
telephone: (000) 000-0000
telecopy: (000) 000-0000
Xxxxx X. Xxxxxx, Esq.
Kasmir & Xxxxx, L.L.P.
0000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
telephone: (000) 000-0000
telecopy: (000) 000-0000
(b) Brazos shall within five (5) Business Days give to Vari-Lite a copy of
all notices received by Brazos pursuant to the Credit Agreement and any other
notices received with respect to the Property.
Section 18.8 USURY. No provision of this Ground Lease or any other
instrument relating to this Ground Lease shall require the payment or permit the
collection of interest in excess of the maximum non-usurious interest rate under
applicable law (the "MAXIMUM RATE"). If any excess interest in such respect is
so provided for, or shall be adjudicated to be so provided for, the provisions
of this SECTION 18.8 shall govern, and neither Vari-Lite nor its successors or
assigns shall be obligated to pay the amount of such interest to the extent it
is in excess of the Maximum Rate. In determining the Maximum Rate, any interest
shall be spread over the term of the Ground Lease to the extent permitted by
applicable U.S. Federal or state law, notwithstanding the actual time for the
payment of any rent or other amounts hereunder. It is expressly stipulated and
agreed to be the intent of Brazos and Vari-Lite at all times to comply with
applicable state law governing the Maximum Rate or the amount of interest
payable pursuant to this Ground Lease (or applicable U.S. Federal law to the
extent that it permits Brazos to contract for, charge, take, reserve or receive
a greater amount of interest than under state law). If the applicable law is
ever judicially interpreted so as to render usurious any amount called for under
this Ground Lease or any of the other documents relating to this Ground Lease or
any amount contracted for, charged, taken, reserved or received with respect to
this Ground Lease, or if Brazos' exercise of any option herein or in any other
document to accelerate the payment of amounts required hereunder results in
Vari-Lite having paid any interest in excess of that permitted by applicable
law, then it is Brazos' and Vari-Lite's intent that all excess amounts
theretofore collected by Brazos be
GROUND LEASE AGREEMENT - Page 28
credited on the remaining balance of payments due hereunder (or, if all
amounts due hereunder have been or would thereby be paid in full, refunded to
Vari-Lite) and the provisions of this Ground Lease shall immediately be
deemed reformed in the amounts thereafter collectible hereunder and so
reduced, without the necessity of the execution of any new documents, so as
to comply with the applicable law, but so as to permit the recovery of the
fullest amount otherwise called for hereunder and under any other document
relating hereto. If at any time the amount of any interest for a year would,
but for this SECTION 18.8, exceed the amount of interest that would have been
accrued during such year if the Maximum Rate had from time to time been in
effect, the total interest payable for such year shall be limited to the
amount that would have been accrued if the Maximum Rate had from time to time
been in effect, and to the fullest extent permitted by applicable law, such
excess, shall be (i) spread and allocated to the preceding periods in which
the interest paid was less than the interest that would have been accrued at
the Maximum Rate or (ii) spread and allocated to subsequent periods in which
the total payments on account of interest are less than the interest that
would have accrued at the Maximum Rate.
Section 18.9 NO MERGER. There shall be no merger of this Ground Lease or
of the leasehold estate hereby created with the fee estate in the Property by
reason of the fact that the same person acquires or holds, directly or
indirectly, this Ground Lease or the leasehold estate hereby created or any
interest herein or in such leasehold estate as well as the fee estate in the
Property or any interest in such fee estate.
Section 18.10 SALE OR ASSIGNMENT BY BRAZOS.
(a) Subject to SECTION 18.13(b), Brazos shall not sell or assign its
right, title, interest or obligations under this Ground Lease, except that
Brazos shall have the right to finance the acquisition and ownership of the
Property by selling, assigning or granting a security interest in its right,
title and interest in this Ground Lease and any or all amounts due from
Vari-Lite or any third party under this Ground Lease.
(b) Upon the occurrence of an event of default under the Credit Agreement,
any Assignee shall, except as otherwise agreed by Brazos and Assignee, have all
the rights, powers, privileges and remedies of Brazos hereunder, and Vari-Lite's
obligations as between itself and such Assignee hereunder shall not be subject
to any claims or defense that Vari-Lite may have against Brazos. Upon written
notice to Vari-Lite of any such assignment, Vari-Lite shall attorn to any
Assignee, and Vari-Lite shall thereafter make payments of Basic Rent, Additional
Rent and other sums due hereunder to Assignee, to the extent specified in such
notice, and such payments shall discharge the obligation of Vari-Lite to Brazos
hereunder to the extent of such payments. Anything contained herein to the
contrary notwithstanding, no Assignee shall be obligated to perform any duty,
covenant or condition required to be performed by Brazos hereunder, and any such
duty, covenant or condition shall be and remain the sole obligation of Brazos.
Section 18.11 INCOME TAXES. Brazos agrees that it will not file any
Federal, state or local income tax returns during the Lease Term or Renewal
Term, if any, with respect to the Property that are inconsistent with the
treatment of Vari-Lite as owner of the Property for Federal, state and local
income tax purposes.
Section 18.12 TRANSFER ON AS-IS BASIS. In connection with the sale of the
Property pursuant to this Ground Lease, when Brazos transfers title, such
transfer shall be on an as-is, non-installment sale basis, without warranty by,
or recourse to, Brazos, but free of the Lien created by the Credit Agreement.
Section 18.13 RIGHT TO PERFORM FOR VARI-LITE.
(a) If Vari-Lite fails to perform or comply with any of its covenants or
agreements contained in this Ground Lease, and after knowledge or notice of such
failure, Vari-Lite does not undertake to cure such failure, Brazos may, upon
notice to Vari-Lite but without waiving or releasing any obligations or default,
itself perform or comply with such covenant or agreement, and the amount of the
reasonable expenses of Brazos incurred in connection with such performance or
compliance shall be payable by Vari-Lite not later than ten (10) days after
written notice by Brazos; and such amounts, if not timely paid, shall accrue
interest at the current interest rate applicable to a BR Borrowing plus 4.5%.
GROUND LEASE AGREEMENT - Page 29
(b) Without in any way limiting the obligations of Vari-Lite hereunder,
Vari-Lite hereby irrevocably appoints Brazos as its agent and attorney at the
time at which Vari-Lite is obligated to deliver possession of the Property to
Brazos, to demand and take possession of the Property in the name and on behalf
of Vari-Lite from whomsoever shall be at the time in possession thereof.
Section 18.14 MERGER, CONSOLIDATION OR SALE OF ASSETS.
(a) Vari-Lite may not consolidate with or merge into any other corporation
or sell all or substantially all of its assets to any Person, except by and
between Affiliates of the Guarantor.
(b) Brazos may not consolidate with or merge into any other corporation or
sell all or substantially all of its assets to any Person.
(c) The terms and provisions of this Ground Lease shall be binding upon
and inure to the benefit of Brazos and Vari-Lite and their respective successors
and permitted assigns.
Section 18.15 EXPENSES. Vari-Lite shall pay all of the out-of-pocket
costs and expenses incurred by Brazos and any Assignee in connection with this
Ground Lease, including without limitation the reasonable fees and disbursements
of counsel to Brazos and counsel to any Assignee.
Section 18.16 PAYMENT OF TAXES AND PURCHASER EXPENSES. In connection with
the sale or purchase of the Property pursuant to this Ground Lease, Vari-Lite
shall pay or shall cause the purchaser of the Property to pay, in addition to
the purchase price, all transfer taxes, transfer gains taxes, mortgage recording
tax, if any, recording and filing fees and all other similar taxes, fees,
expenses and closing costs (including reasonable attorneys' fees) in connection
with the conveyance of the Property to Vari-Lite or any purchaser; provided that
Vari-Lite or any purchaser shall not be required to pay U.S. Federal net income
or capital gains taxes or to pay state and local net income, franchise or
capital gains taxes of Brazos.
Section 18.17 RULE AGAINST PERPETUITIES. The parties hereto do not
intend any interest created by this Ground Lease to be a perpetuity or to be
subject to invalidation under the perpetuities rule, however, if the rule is to
be applied, then the perpetuities period shall be twenty-one (21) years after
the last to die of the currently living great-grandchildren and/or grandchildren
of Xxxxxx X. X. Xxxx.
Section 18.18 PROTECTION OF LESSOR'S MORTGAGEES.
(a) SUBORDINATION AND NON-DISTURBANCE. As of the date hereof, Brazos,
Vari-Lite and Assignee have entered into a Subordination Non-Disturbance and
Attornment Agreement covering this Ground Lease. With respect to any future
mortgage or deed of trust encumbering the Property, Brazos and Vari-Lite agree
that the rights of Vari-Lite under this Ground Lease shall be subject and
subordinate to each such future mortgage or deed of trust, as well as to all
renewals, modifications, consolidations, replacements and extensions thereof but
only if Brazos, Vari-Lite and the holder of any such future mortgage or deed of
trust enter into a non-disturbance agreement (a "NON-DISTURBANCE AGREEMENT")
reasonably satisfactory to Vari-Lite and the holder of any such mortgage or deed
of trust.
(b) NOTICE TO ASSIGNEE. In the event of any default by Brazos hereunder,
Vari-Lite shall notify Assignee (and any other mortgagee with respect to whom a
Non-Disturbance Agreement has been executed), by registered or certified mail,
provided that Assignee or such mortgagee, or its trustee, shall have furnished
Brazos with its mailing address. Assignee or such mortgagee shall thereafter
have a reasonable opportunity (but no obligation) to cure Brazos' default,
including time to obtain possession of the Property by power of sale or judicial
foreclosure, if same should prove necessary in Assignee's sole judgment to
effect a cure, before Vari-Lite may take any action against Brazos. Vari-Lite
shall accept a cure of Brazos' default from Assignee or such mortgagee in the
event that Assignee or such mortgagee tenders such cure.
GROUND LEASE AGREEMENT - Page 30
(c) DIRECT PAYMENT OF AMOUNTS HEREUNDER. Brazos shall have the right, at
its option, to direct Vari-Lite to pay any amounts due hereunder directly to
Assignee, and upon such a request from Brazos, Vari-Lite hereby agrees to pay
any amounts due hereunder to Assignee. The parties confirm that, by execution
hereof, Vari-Lite has been directed as provided herein to pay all amounts due
hereunder directly to Assignee. The final payment to Assignee of all amounts
due to Brazos under this Ground Lease from Vari-Lite shall be a full and
complete release, discharge and acquittance of Vari-Lite to the extent of any
such amounts actually received by Assignee described below in this sentence, and
no provision of this Ground Lease permitting or requiring Brazos to direct
Vari-Lite to pay rent or other amounts due hereunder directly to Assignee shall
relieve Brazos of its obligation to pay to Assignee any or all of the amounts
due from Brazos to Assignee pursuant to any instrument or agreement evidencing
or securing the indebtedness owed to Assignee by Brazos.
(d) LENDER AS MORTGAGEE. Contemporaneous with the execution of this
Ground Lease, Brazos has acquired the Property in part with the proceeds of
advances under the Credit Agreement, which advances are secured by, among other
things, a Lien and direct and absolute assignment of amounts owing hereunder.
Brazos and Vari-Lite may agree to construct a Facility on the Property which
Brazos may finance with proceeds of advances under the Credit Agreement.
Notwithstanding anything in this Ground Lease, so long as the advances or any
portion or renewal thereof, or any amount owing under the Credit Agreement
remains unpaid, in whole or in part, (a) Assignee and its successors and assigns
shall be third party beneficiaries of the provisions of this Ground Lease; (b)
neither Vari-Lite nor Brazos shall enter into any agreements with any other
mortgagee as contemplated in this SECTION 18.18 without the prior written
consent of Assignee; (c) Brazos and Vari-Lite acknowledge that each has been
sufficiently notified and apprised of Assignee's interest as mortgagee and its
mailing address as contemplated in this SECTION 18.18 and any other provision of
this Ground Lease; (d) this Ground Lease shall not be amended, modified or
assigned (collaterally or directly), or the Property or any part thereof sublet
(except as expressly permitted hereby) without the prior written consent of
Assignee; and (e) Vari-Lite shall forward a copy of the documentation and
information described in SECTION 18.18(B) to Assignee simultaneously with
forwarding a copy of same to Brazos.
Section 18.19 PURCHASE OR SALE OF FACILITY. Notwithstanding anything to
the contrary herein, Vari-Lite shall not have the right to purchase the Property
or arrange for the sale of the Property to a third party unless simultaneous
with such purchase or sale any Facility which may hereafter be constructed or
located on the Property is purchased by Vari-Lite or sold to a third party or
unless such Facility is constructed solely at the expense of Vari-Lite with the
prior written consent of Brazos and BBH&Co.
Section 18.20 SEVERABILITY. In case one or more provisions of this Ground
Lease shall be invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected or impaired thereby.
Section 18.21 LESSEE REPRESENTATION. Each of the corporations
constituting Vari-Lite hereby appoints Vari-Lite, Inc. as its representative and
authorizes Vari-Lite, Inc. to take any and all actions, give any and all
consents, waivers or approvals and to generally represent the interest of each
such corporation in connection with its interests under this Ground Lease. Each
of the corporations constituting Vari-Lite further agrees that any party to any
of the Lease Documents may rely upon any consent, waiver, approval, notice or
other action by Vari-Lite, Inc. if the document or instrument communicating such
action indicates on its face that Vari-Lite, Inc. is acting in its capacity as
representative of such corporations as provided in this SECTION 18.21.
Section 18.22 JOINT AND SEVERAL LIABILITY. Each of the corporations
constituting Vari-Lite hereby agrees that all obligations of Vari-Lite under
this Ground Lease are joint and several among such corporations.
GROUND LEASE AGREEMENT - Page 31
IN WITNESS WHEREOF, Brazos and Vari-Lite have caused this Ground Lease
Agreement to be executed and delivered by their duly authorized officers as of
the day and year first above written.
BRAZOS BELTLINE DEVELOPMENT, INC.,
a Texas corporation
By: /s/Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, President
VARI-LITE, INC.,
a Delaware corporation
By: /s/ X.X. Xxxxxxxx III
------------------------------------
X.X. Xxxxxxxx, III, President and Chief
Executive Officer
SHOWCO, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, Vice President Finance and
Chief Financial Officer
SHOWCO CREATIVE SERVICES, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, Vice President Finance and
Chief Financial Officer
CONCERT PRODUCTION LIGHTING, INC.,
a Delaware corporation
By: /s/ X.X. Xxxxxxxx III
------------------------------------
X.X. Xxxxxxxx, III, President and Chief
Executive Officer
IRIDEON, INC.,
a Delaware corporation
By: /s/ X.X. Xxxxxxxx III
------------------------------------
X.X. Xxxxxxxx, III, President and Chief
Executive Officer
GROUND LEASE AGREEMENT - Page 32
EXHIBIT A
PROPERTY DESCRIPTION
Being a tract of land situated in the XXXXXXXX XXXXX SURVEY, ABSTRACT NO. 56,
City of Coppell, Dallas County, Texas, and being part of "Tract 1" as described
by Deed to MCDLF HOLDING COMPANY, recorded in Volume 90150, Page 1511 of the
Deed Records, Dallas County, Texas and being more particularly described as
follows:
BEGINNING at a 1/2" found iron rod for the intersection of the West line of
Belt Line Road (a variable width right-of-way) and the North line of Lakeshore
Drive (a 90 foot right-of-way at this point), a dedicated street in Northlake
635 Business Park, an Addition to the City of Coppell, Texas according to the
plat recorded in Volume 85056, Page 0000, Xxxx Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx;
THENCE with the North, Northeast and East lines of said Lakeshore Drive the
following:
North 89 degrees 30 minutes 00 seconds West, 185.34 feet to a 1/2" found
iron rod with Xxxxxx and Xxxxxx cap (1/2" found iron rod with cap) for
the point of curvature of a circular curve to the left having a central
angle of 12 degrees 50 minutes 19 seconds and a radius of 300.00 feet;
With said curve in a Westerly direction an arc distance of 67.22 feet to
a 1/2" found iron rod with cap for the point of reverse curvature of a
circular curve to the right having a central angle of 12 degrees 50
minutes 19 seconds and a radius of 300.00 feet;
With said curve in a Westerly direction an arc distance of 67.22 feet to
a 1/2" iron rod with cap for the point of tangency (Lakeshore Drive a 60
foot right-of-way at this point);
North 89 degrees 30 minutes 00 seconds West, 388.27 feet to a 1/2" iron
rod with cap for the point of curvature of a circular curve to the right
having a central angle of 52 degrees 53 minutes 07 seconds and a radius
of 320.00 feet;
With said curve in a Northwesterly direction an arc distance of 295.37
feet to a 1/2" found iron rod with cap for the point of tangency;
North 36 degrees 36 minutes 53 seconds West, 398.49 feet to a 1/2" found
iron rod with cap for the point of curvature of a circular curve to the
right having a central angle of 37 degrees 06 minutes 53 seconds and a
radius of 320.00 feet;
With said curve in a Northerly direction an arc distance of 207.29 feet
to a 1/2" iron rod with cap for the point of tangency;
North 00 degrees 30 minutes 00 seconds East, 556.13 feet to a 1/2" set
iron rod with yellow plastic cap stamped Halff Associates Inc. (Set iron
rod with cap) for a corner at the intersection of said East line of
Lakeshore Drive and a line 5 foot North of and parallel to the North
line of a 50 foot open Channel Drainage Easement, a dedicated easement
in said Northlake 635 Business Park;
THENCE departing said East line and with said parallel line the following:
South 89 degrees 30 minutes 00 seconds East, 629.41 feet to a 1/2" set
iron rod with cap for the point of curvature of circular curve to the
left, having a central angle of 27 degrees 17 minutes 51 seconds and a
radius of 470.00 feet;
GROUND LEASE AGREEMENT - Page 33
With said curve in an Easterly direction, an arc distance of 223.92 feet
to a 1/2" set iron rod with cap for the point of reverse curvature of a
circular curve to the Right, having a central angle of 27 degrees 17
minutes 51 seconds and a radius of 530.00 feet;
With said curve in an Easterly direction, an arc distance of 252.51 feet
to a 1/2" set iron rod with cap for the point of tangency;
South 89 degrees 30 minutes 00 seconds East, 168.37 feet to a point for
a corner at the intersection of said parallel line and the said west
line of Belt Line Road, which bears North 00 degrees 30 minutes 00
seconds East, a distance of 30.00 feet from a 1/2" set iron rod with cap
at the intersection of the center line of said 50 foot easement and the
said West line of Belt Line Road.
THENCE South 00 degrees 30 minutes 00 seconds West, 1235.26 feet, with the said
West line of Belt Line Road, to a 1/2" set iron rod with cap for a corner;
THENCE South 10 degrees 48 minutes 36 seconds East 56.09 feet, with the said
West line of Belt Line Road, to the PLACE OF BEGINNING and containing 1,430,213
square feet or 32.8332 acres of land, more or less.
GROUND LEASE AGREEMENT - Page 34
