EXHIBIT 10.9
LEASE
BY AND BETWEEN
KEMAH DEVELOPMENT CORPORATION
(LANDLORD)
AND
ENERGY DRILLING INDUSTRIES, INC.
(TENANT)
LEASE
This Lease is entered into between Kemah Development Corporation
("Landlord"), a Texas corporation, and Energy Drilling Industries, Inc.
("Tenant"), a Nevada corporation.
In consideration of the mutual covenants and agreements of this lease, and
other good and valuable consideration, Landlord demises and leases to Tenant,
and Tenant leases from Landlord, the premises situated at 000 Xxxxxx Xxxx,
Xxxxx, Xxxxx 00000, (collectively referred to as "the premises" or "the leased
premises" in this lease).
ARTICLE 1. TERM
TERM OF LEASE
Section 1.01. The term of this lease is 1 year, beginning on May 1, 1998,
and ending on May 1, 1999, unless terminated sooner as provided in this lease.
OPTION TO EXTEND TERM
Section 1.02. Tenant may extend the term of this lease beyond the
expiration date provided in Section 1.01 by giving Landlord notice of its
intention to do so not later than one month before the then current lease term
expires, in the case of the initial option to extend, or the extended lease
term, in the case of successive options to extend. Notice of an intention to
exercise an option under this lease must, to be effective, be sent by mail or
fax to Landlord and must be postmarked no later than the latest date provided in
this section for Tenant's exercising the option.
HOLDOVER
Section 1.03. If Tenant holds over and continues in possession of the
premises after the lease term (or any extension) expires, other than as provided
in Section 1.02, Tenant will be considered to be occupying the premises on a
month-to-month tenancy, subject to all the terms of this lease.
ARTICLE 2. RENT
FIXED RENT
Section 2.01. Tenant will pay Landlord $750 per month on or before the
first day of each month as a fixed rent for the next month. Rent for any
fractional month at the beginning or end of the lease term will be prorated on a
per-day basis.
ARTICLE 3. USE OF PREMISES
Section 3.01. [Reserved]
COMPLIANCE WITH LAWS
Section 3.02. a. Tenant may not use, or permit using, the premises in any
manner that results in waste of premises or constitutes a nuisance or for any
illegal purpose. Tenant, at its own expense, will comply, and will cause its
officers, employees, agents, and invitees to comply, with all applicable laws,
ordinances, and governmental rules and regulations concerning the use of the
premises, including Hazardous Materials Laws.
b. Tenant, at its sole cost, must comply with all Hazardous Materials Laws
in connection with Tenant's use of the premises.
c. "Hazardous Materials" means any substance, material, or waste that is
or becomes regulated by any local governmental agency, the State of Texas, or
the federal government.
ARTICLE 4. REPAIRS AND MAINTENANCE
REPAIRS AND MAINTENANCE BY TENANT
Section 4.01. Tenant will, throughout the lease term and any extensions of
it, at its own expense and risk, maintain the premises and all improvements on
them in good order and condition, including but not limited to making all
repairs and replacements necessary to keep the premises and improvements in that
condition. All maintenance, repairs, and replacements required by this section
must be performed promptly when required.
ARTICLE 5. UTILITIES AND GARBAGE REMOVAL
UTILITY CHARGES
Section 5.01. Tenant will pay all utility charges for water, electricity,
heat, gas, and telephone service used in and about the premises during the lease
term. Tenant will pay the charges directly to the utility company or
municipality furnishing the service before the charges are delinquent.
GARBAGE REMOVAL
Section 5.02. Tenant will pay for all garbage removal from the premises
during the lease term.
ARTICLE 6. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS
CONSENT OF LANDLORD
Section 6.01. Tenant may not make any alterations, additions, or
improvements to the premises without Landlord's prior written consent. Landlord
may not unreasonably withhold consent for nonstructural alterations, additions,
or improvements.
PROPERTY OF LANDLORD
Section 6.02. All alterations, additions, or improvements made by Tenant
will become Landlord's property when the lease terminates. However, Landlord
may, when the lease terminates, remove any alterations, additions, and
improvements made by Tenant and any other property it placed in the premises,
and charge Tenant the cost of removal plus interest.
ALTERATIONS REQUIRED BY ACCESSIBILITY LAWS
Section 6.03. If any alterations, additions, or improvements to the
premises are mandated by legal requirements related to accessibility by persons
with disabilities ("accessibility alterations"), Tenant is responsible for
making them. This allocation of responsibility for compliance with such legal
requirements is a material inducement for the parties to enter this lease.
ARTICLE 7. TRADE FIXTURES AND SIGNS
TRADE FIXTURES
Section 7.01. Tenant may, at all times, erect or install shelves, bins,
machinery, equipment, or other trade fixtures, in, on, or about the premises, if
Tenant complies with all applicable governmental laws, ordinances, and
regulations regarding the fixtures. Tenant may remove all trade fixtures when
this lease terminates, if Tenant is not in default under the lease and the
fixtures can be removed without structural damage to the building. Tenant must
repair any damage to the premises caused by removing trade fixtures, and all the
repairs must be completed before the lease terminates. Any trade fixtures not
removed by Tenant when this lease terminates are considered abandoned by Tenant
and will automatically become Landlord's property. If any trade fixture
installed by Tenant is abandoned when the lease terminates, Tenant must pay
Landlord any reasonable expense actually incurred by Landlord to remove the
fixture from the premises, less the fair market value of the fixture once
removed, if the fixture is removed within 30 days after Tenant has surrendered
possession of the premises OR before any subsequent tenant enters the premises
OR Landlord uses the trade fixtures.
ARTICLE 8. MECHANIC'S LIEN
Tenant will not permit any mechanic's lien to be placed on the premises or
improvements on the premises. Tenant will promptly pay any mechanic's lien that
is filed on the premises or on improvements located on the premises. If default
in payment of the lien continues for 20 days after Landlord's written notice to
Tenant, Landlord may, at its option, pay the lien or any portion of it without
inquiring into its validity. Any amounts Landlord pays to remove a mechanic's
lien caused by Tenant to be filed against the premises or improvements on them,
including expenses and interest, are due from Tenant to Landlord and must be
repaid to Landlord immediately on rendition of notice, together with interest at
fifteen percent annually until repaid.
ARTICLE 9. INSURANCE AND INDEMNITY
PROPERTY INSURANCE
Section 9.01. Tenant must, at its own expense during the lease term, keep
all buildings and improvements on the premises reasonably insured against loss
or damage by fire or theft, with extended coverage if obtainable at a reasonably
price, to include direct loss by windstorm, hail, explosion, riot or riot
attending a strike, civil commotion, aircraft, vehicles, and smoke, in the total
amounts of not less than the full fair insurable value of the buildings and
improvements. The insurance is to be carried by one or more insurance companies
authorized or admitted to do business in Texas. The insurance policy or policies
must name both Landlord and Tenant as insureds. The policies must provide that
any proceeds for loss or damage to buildings or to improvements are payable to
solely to Landlord, who will use the sum for repair and restoration purposes.
LIABILITY INSURANCE
Section 9.02. Tenant, at its own expense, must provide and maintain in
force during the lease term, reasonable liability insurance. This insurance is
to be carried by one or more insurance companies authorized or admitted to
transact business in Texas. The policy must cover Landlord as well as Tenant,
for any liability for property damage or personal injury arising from Tenant's
occupying or Landlord's owning the premises.
REMEDY FOR FAILURE TO PROVIDE INSURANCE
Section 9.03. If Tenant allows any insurance required under this article
to lapse, Landlord may, at its option, take out and pay the premiums on the
necessary insurance to comply with Tenant's obligations under this article.
Landlord is entitled to reimbursement from Tenant for all amounts spent to
procure and maintain the insurance, with interest at the rate of fifteen percent
annually from the date Tenant receives Landlord's notice of payment until
reimbursement.
Section 9.04. [Reserved]
Section 9.05. [Reserved]
Hold-Harmless Clause
Section 9.06. Tenant will indemnify and hold Landlord harmless against any
claims, demands, damages, costs, and expenses, including reasonable attorney's
fees for defending claims and demands, arising from the conduct or management of
Tenant's business on the premises or its use of them; from any breach by Tenant
of any conditions of this lease; or from any act of negligence of Tenant, its
agents, contractors, employees, subtenants, concessionaires, or licensees in or
about the premises. If any action or proceeding is brought against Landlord by
reason of any such claim, Tenant, on notice from Landlord, will defend the
action or proceeding by counsel acceptable to Landlord.
ARTICLE 10. DAMAGE OR DESTRUCTION OF PREMISES
NOTICE TO LANDLORD
Section 10.01. If the premises, or any structures or improvements on them,
are damaged or destroyed by fire, tornado, or other casualty, Tenant must
immediately give Landlord written notice of the damage or destruction, including
a general description of the damage and, as far as known to Tenant, the cause of
the damage.
TOTAL DESTRUCTION
Section 10.02. If the building on the premises is totally destroyed by
fire, tornado, or other casualty by other than the negligence, gross negligence,
or intentional tort of Tenant or any person in or about the premises with
Tenant's express or implied consent, or if it is so damaged that rebuilding or
repairs cannot reasonably, and the damage exceeds the insurance recovery, this
lease will terminate, and rent will be abated for the unexpired portion of this
lease, effective as of the date of written notification as provided in Section
10.01.
PARTIAL DESTRUCTION
Section 10.03. If the building or other improvements on the premises are
damaged by fire, tornado, or other casualty by other than the negligence, gross
negligence, or intentional tort of Tenant or any person in or about the premises
with Tenant's express or implied consent, but not to such an extent that
rebuilding or repairs cannot reasonably be completed and the damage exceeds the
insurance recovery, this lease will not terminate except as follows:
a. If the premises are partially destroyed, Landlord must, at its sole
cost and risk, proceed immediately to rebuild or repair the damaged buildings
and improvements to substantially the condition they were in before the damage.
If the damage renders the premises untenantable in whole or in part, the rent
payable during the period in which they are untenantable will be adjusted
equitably. If Landlord fails to complete the rebuilding or repairs within six
months from the date of Tenant's written notification to Landlord of the damage,
Tenant may terminate this lease by written notification to Landlord. On the
notification, all rights and obligations under this lease will cease.
ARTICLE 11. CONDEMNATION
TOTAL CONDEMNATION
Section 11.01. If, during the lease term or any extension or renewal of
it, all of the premises are taken for any public or quasi-public use under any
governmental law, ordinance, or regulation, or by right of eminent domain, or
are sold to the condemning authority under threat of condemnation, this lease
will terminate, and the rent will be abated during the unexpired portion of this
lease, effective as of the date the condemning authority takes the premises.
PARTIAL CONDEMNATION
Section 11.02. If less than all, but more than fifty percent, of the
premises is taken for any public or quasi-public use under any governmental law,
ordinance, or regulation, or by right of eminent domain, or is sold to the
condemning authority under threat of condemnation, Tenant may terminate the
lease by giving Landlord written notice within 30 days after the entity
exercising the power of condemnation takes possession of the condemned portion.
In addition, if fifty percent of the parking area, or all of the signage, of the
premises is taken for any public or quasi-public use under any governmental law,
ordinance, or regulation or by right of eminent domain, or is sold to the
condemning authority under threat of condemnation, Tenant may terminate the
lease by giving Landlord written notice within 30 days after the entity
exercising the power of condemnation takes possession of the condemned portion.
If the premises are partially condemned and Tenant fails to exercise the
option to terminate the lease under this section, or if less than fifty percent
of the premises is condemned, this lease will not terminate, but Tenant may, at
its sole expense, restore and reconstruct the building and other improvements
situated on the premises to make them reasonably tenantable and suitable for the
uses for which the premises are leased. The fixed rent payable under Section
2.01 of this lease will be adjusted equitably during the unexpired portion of
this lease.
CONDEMNATION AWARD
Section 11.03. Landlord is entitled to receive and retain the entire award
in any condemnation proceedings, except for any portion attributable to trade
fixtures, which Tenant is entitled to receive and retain. The termination of
this lease will not affect the right to this award.
ARTICLE 12. DEFAULT
TENANT'S DEFAULT
Section 12.01. If Tenant allows the rent to be in arrears more than ten
days after payment is due, or remains in default under any other condition of
this lease for ten days, Landlord may, at its option, without notice to Tenant,
terminate this lease, or, in the alternative, Landlord may reenter and take
possession of the premises and remove all persons and property without being
considered guilty of any manner of trespass and may (but is not required to)
relet the premises (or any part of them) for all or any part of the remainder of
the lease term, to a party satisfactory to Landlord and at the monthly rental as
Landlord can secure with reasonable diligence. If Landlord cannot relet after
reasonable efforts to do so or if the monthly rental is less than the rental
Tenant was obligated to pay under this lease (or any renewal of it) plus the
expense of reletting, then Tenant must pay Landlord the amount of the
deficiency.
Section 12.02. [Reserved]
CUMULATIVE REMEDIES
Section 12.03. All Landlord's and Tenant's rights and remedies under this
Article are cumulative, and none will exclude any other right or remedy provided
by law or any other provision of this lease. All the consistent rights and
remedies may be exercised and enforced concurrently and whenever occasion for
their exercise arises.
WAIVER OF BREACH
Section 12.04. All Landlord's or Tenant's waiving a breach of this lease
by the other party does not constitute a continuing waiver or a waiver of any
subsequent breach.
ARTICLE 13. INSPECTION BY LANDLORD
Tenant will permit Landlord and its agents, representatives, and employees
to enter the premises at all reasonable times for the purpose of inspection or
any other purpose necessary to protect Landlord's interest in the premises or to
perform Landlord's duties under this lease.
ARTICLE 14. MISCELLANEOUS
NOTICES AND ADDRESSES
Section 14.01. [RESERVED]
PARTIES BOUND
Section 14.02. This agreement binds, and inures to the benefit of, the
parties to the lease and their respective heirs, executors, administrators,
legal representatives, successors, and assigns when this agreement permits.
TEXAS LAW TO APPLY
Section 14.03. This agreement is to be construed under Texas law, and all
obligations of the parties created by this lease are performable in Xxxxxx
County, Texas.
LEGAL CONSTRUCTION
Section 14.04. If one or more of the provisions contained in this
agreement are for any reason held by a court of competent jurisdiction to be
invalid, illegal, or unenforceable in any respect, the invalidity, illegality,
or unenforceability will not affect any other provision of the agreement, which
will be construed as if it had not included the invalid, illegal, or
unenforceable provision.
PRIOR AGREEMENTS SUPERSEDED
Section 14.05. This agreement constitutes the parties' sole agreement and
supersedes any prior understandings or written or oral agreements between the
parties with respect to the subject matter.
AMENDMENT
Section 14.06. No amendment, modification, or alteration of this agreement
is binding unless in writing, dated subsequent to the date of this agreement,
and duly executed by the parties.
RIGHTS AND REMEDIES CUMULATIVE
Section 14.07. The rights and remedies provided by this lease are
cumulative, and either party's using any right or remedy will not preclude or
waive its right to use any other remedy. These rights and remedies are in
addition to any other rights the parties may have by law, statute, ordinance, or
otherwise.
ATTORNEY'S FEES AND COSTS
Section 14.08. If, as a result of either party's breaching this agreement,
the other party employs an attorney to enforce its rights under this lease, then
the breaching or defaulting party will pay the other party the reasonable
attorney's fees and costs incurred to enforce the lease.
FORCE MAJEURE
Section 14.09. Neither Landlord nor Tenant is required to perform any term
or covenant in this lease so long as performance is delayed or prevented by
FORCE MAJEURE, which includes acts of God, strikes, lockouts, material or labor
restrictions by any governmental authority, civil riot, floods, and any other
cause not reasonably within Landlord's or Tenant's control and that Landlord or
Tenant cannot, by exercising due diligence and paying money, prevent or
overcome, in whole or part.
TIME OF ESSENCE
Section 14.10. Time is of the essence of this agreement.
The undersigned Landlord and Tenant execute this agreement on this 1st day of
April 1998.
LANDLORD: TENANT:
KEMAH DEVELOPMENT CORPORATION ENERGY DRILLING INDUSTRIES, INC.
------------------------------------- -----------------------------------
By: Xxxxxxx Xxxxx-Xxxxxxxxx, Sec./Treas. By: D. Xxxxx Xxxxxxxxx, Treasurer
