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EXHIBIT 10.49
LEASE AGREEMENT
BETWEEN
XXXXXX/XXXXXXX 1, LTD.
AS LANDLORD,
AND
SOLO SERVE CORPORATION,
AS TENANT
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LEASE BETWEEN XXXXXX/XXXXXXX 1, LTD., AS LANDLORD,
AND SOLO SERVE CORPORATION, AS TENANT
TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
TERMS OF LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Article I: Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Lease Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Landlord's Mortgagee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Landlord's Property Manager . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Article II: Lease Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Lease of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Permitted Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Memorandum of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Article III: Term and Options to Extend . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Options to Extend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Holding Over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Article IV: Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Net Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Base Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.4 Late Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.5 Payment of Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.6 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.7 Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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Article V: Use of the Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.1 Use of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.2 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Article VI: Property Taxes and Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.1 Ad Valorem Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.2 Payment of Real Estate Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.3 Tax Protests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.4 Personal Property Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.5 Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Article VII: Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.1 Utility Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.2 Interruption of Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Article VIII: Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8.1 Minimum Acceptable Insurance Coverage Requirements . . . . . . . . . . . . . . 13
8.2 Insurance Company Requirement . . . . . . . . . . . . . . . . . . . . . . . . 14
8.3 Insurance Certificate Requirements . . . . . . . . . . . . . . . . . . . . . . 15
8.4 Additional Insureds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.5 Mortgage Endorsement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.6 Renewals, Lapses or Deficiencies . . . . . . . . . . . . . . . . . . . . . . . 16
8.7 Payment of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Article IX: Furniture, Fixtures and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.1 Furniture, Fixtures and Equipment . . . . . . . . . . . . . . . . . . . . . . 17
9.2 Landlord's Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.3 Removal of Furniture, Fixtures, and Equipment at
Expiration of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.4 Right to Affix Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Article X: Maintenance of the Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.1 Obligation to Maintain the Premises . . . . . . . . . . . . . . . . . . . . . 18
10.2 Specific Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.3 Surrender of the Premises . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.4 No Obligation of Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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Article XI: Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
11.1 Right to Make Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . 20
11.2 Tenant Shall Not Render Premises Liable for Any Lien . . . . . . . . . . . . . 20
Article XII: Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Article XIII: Indemnity and Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.1 Indemnification by Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.2 No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Article XIV: Waiver of Subrogation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.1 Waiver of Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14.2 Waiver Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Article XV: Partial and Total Destruction of the Premises . . . . . . . . . . . . . . . . . . . 23
Article XVI: Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
16.1 Condemnation Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
16.2 Termination of Lease Due to Condemnation . . . . . . . . . . . . . . . . . . . 24
Article XVII: Assignment and Subletting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
17.1 Tenant's Right of Assignment and Subletting . . . . . . . . . . . . . . . . . 25
17.2 Landlord's Right of Assignment . . . . . . . . . . . . . . . . . . . . . . . . 25
Article XVIII: Default and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
18.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
18.2 Landlord's Remedies on Tenant Default . . . . . . . . . . . . . . . . . . . . 26
18.3 Effect of Tenant's Default . . . . . . . . . . . . . . . . . . . . . . . . . . 30
18.4 Right of Landlord to Re-Enter . . . . . . . . . . . . . . . . . . . . . . . . 30
18.5 Surrender of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
18.6 Default by Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
18.7 Interest Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Article XIX: Subordination, Attornment and Estoppel . . . . . . . . . . . . . . . . . . . . . . 31
19.1 Subordination and Non-Disturbance . . . . . . . . . . . . . . . . . . . . . . 31
19.2 Attornment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
19.3 Estoppel Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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Article XX: Tenant's Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Article XXI: Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
21.1 Notice Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
21.2 Payments Under Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Article XXII: Attorney's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
22.1 Recovery of Attorneys' Fees and Costs of Suit . . . . . . . . . . . . . . . . 33
22.2 Party to Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
22.3 Non-Jury Trial; Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Article XXIII: Relationship of Parties, Waiver and Consent . . . . . . . . . . . . . . . . . . 35
23.1 Relationship of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
23.2 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
23.3 No Obligation to Give consent . . . . . . . . . . . . . . . . . . . . . . . . 35
Article XXIV: Authority to Make Lease; Covenant of Quiet Enjoyment . . . . . . . . . . . . . . 35
24.1 Full Power and Authority to Enter Lease . . . . . . . . . . . . . . . . . . . 35
24.2 Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Article XXV: Hazardous Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
25.1 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
25.2 Tenant's Responsibility for Hazardous Materials . . . . . . . . . . . . . . . 36
25.3 Landlord's Responsibility for Hazardous Materials . . . . . . . . . . . . . . 36
25.4 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Article XXVI: General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
26.1 Gender; Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
26.2 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
26.3 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
26.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
26.5 Drafting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
26.6 Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
26.7 Joint and Several Liability . . . . . . . . . . . . . . . . . . . . . . . . . 38
26.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
26.9 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
26.10 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
26.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
26.12 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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26.13 Independent Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
26.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SCHEDULE OF EXHIBITS
Exhibit "A" - Legal Description of Real Property
Exhibit "B" - Permitted Exceptions
Exhibit "C" - Memorandum of Lease
Exhibit "D-1" - Sanwa Lien Waiver
Exhibit "D-2" - MetLife Lien Waiver
Exhibit "E" - Security Agreement
Exhibit "F" - Insurance from Deed of Trust
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LAND AND BUILDING LEASE AGREEMENT
This Land and Building Lease Agreement (this "Lease"), this 6th day of
April, 1998, is made by and between XXXXXX/XXXXXXX 1, LTD., a Texas limited
liability company ("Landlord") and SOLO SERVE CORPORATION, a Delaware
corporation ("Tenant") with reference to the recitals set forth below.
RECITALS
A. Landlord is the owner of a building containing approximately
Four Hundred Forty Thousand (440,000) square feet of space together with other
improvements and appurtenances located thereon (collectively the "Building") on
an approximate 18.323 acre tract being Xxx 0, Xxxxx 0, XXX 00000, Xxxxxxxxxxx
Subdivision Unit 3-A, in San Antonio, Bexar County, Texas, as depicted on
Exhibit "A", attached hereto and incorporated herein by reference, and commonly
known as 0000 Xxxxxxxxx Xxxx., Xxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxx 00000 (the
"Land"). The Building and the Land, together with all licenses, rights,
privileges and easements appurtenant thereto, shall be collectively known as
the "Premises".
B. Landlord desires to lease the Premises to Tenant, and Tenant
desires to lease the Premises from Landlord pursuant to the provisions of this
Lease.
TERMS OF LEASE
ARTICLE I: CERTAIN DEFINITIONS
The following terms, when used in this Lease, shall have the meaning
set forth in this Section.
1.1 Lease Year. The term "Lease Year" shall mean the first twelve
(12) full calendar months after the Commencement Date (as defined in Section 3)
and each subsequent twelve (12) month period thereafter commencing on the
anniversary date thereof during the term and any extensions. Provided however,
if the Commencement Date is a day other than the first day of a calendar month,
the first Lease Year shall include that period of time from the Commencement
Date to the first day of the next calendar month.
1.2 Business Day. The term "Business Day" means any day other
than (i) Saturday or Sunday, or (ii) a day on which banks in Texas are required
by law to be closed or are customarily closed.
1.3 Hazardous Material. The term "Hazardous Material" means any
substance, material, or waste which is toxic, ignitable, reactive, or corrosive
and which is or becomes regulated by any local or state governmental authority
or the United States Government. The term "Hazardous Material" includes,
without limitation, any material or substance
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which is (i) defined as a "hazardous waste," "extremely hazardous waste,"
"restricted hazardous waste," "hazardous substance," or "hazardous material,"
by any local or state law, (ii) oil and petroleum products and their
by-products, (iii) asbestos, or asbestos-containing materials, (iv) designated
as a "hazardous substance" pursuant to the Federal Water Pollution Control Act,
(v) defined as a "hazardous waste" pursuant to the Federal Resource
Conservation and Recovery Act, or (vi) defined as a "hazardous substance"
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act.
1.4 Environmental Law. The term "Environmental Law" shall mean
any law, statute, regulation, order, or rule now or hereafter promulgated by
any governmental entity, whether local, state, or federal, relating to air
pollution, water pollution, noise control, and/or transporting, storing,
handling, discharge of or disposal of Hazardous Material, including, without
limitation, the following: the Clean Air Act; the Resource Conservation and
Recovery Act, as amended by the Hazardous Waste and Solid Waste Amendments of
1984; the Comprehensive Environmental Response Compensation and Liability act,
as amended by the Superfund Amendments and Reauthorization Act of 1986; the
Toxic Substances Control Act; the Federal Insecticide, Fungicide and
Rodenticide Act, as amended; the Safe Drinking Water Act; OSHA; the Hazardous
Material Pipeline Safety Act; the Hazardous Materials Transportation Act; and
the National Environmental Policy Act, as the same may be amended from time to
time.
1.5 Landlord's Mortgagee. The term "Landlord's Mortgagee" means
any holder of a lien evidenced by a mortgage or deed of trust on property which
includes the Premises, or any subsequent purchaser, transferee or assignee of
the right of any such holder(s) (or person holding a beneficial interest in the
rights of any such purchaser, transferee or assignee), as to each of which
Landlord has given notice to Tenant in accordance with Article XXIII.
1.6 Landlord's Property Manager. The term "Landlord's Property
Manager" means any entity and/or individual(s) acting as the managing agent of
the Premises for and on behalf of Landlord.
ARTICLE II: LEASE PREMISES
2.1 Lease of Premises. Landlord leases to Tenant and Tenant
leases from Landlord the Premises, subject to the Permitted Exceptions (defined
below) on the terms and conditions set forth in this Lease.
2.2 Permitted Exceptions. Tenant specifically accepts the
Premises subject to the encumbrances, exceptions, and obligations described on
Exhibit "B", attached hereto and incorporated herein by reference (the
"Permitted Exceptions"). Tenant specifically agrees to comply with the terms,
conditions and obligations made a part of the Permitted Exceptions.
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2.3 Memorandum of Lease. The parties hereto have simultaneously,
with the execution and delivery of this Lease, executed and delivered a
"Memorandum of Lease", in the form attached hereto as Exhibit "C", and
incorporated herein by reference (the "Memorandum of Lease"). Landlord shall,
at its sole expense, cause the Memorandum of Lease to be recorded not later
than thirty (30) days from the date of execution of this Lease. In the event
of a discrepancy between the Lease and the Memorandum of Lease, this Lease
shall control.
ARTICLE III: TERM AND OPTIONS TO EXTEND
3.1 Term. The primary term of this Lease (the "Initial Term")
shall commence on April 6, 1998 (the "Commencement Date") and shall terminate
at midnight on April 15, 2008 [the last day of the tenth (10th) Lease Year
following the Commencement Date] (the "Expiration Date").
3.2 Options to Extend.
a. Tenant shall have two (2) successive options to
extend the Term of this Lease for an additional period of five (5) years each
(the "Renewal Options"), which Renewal Options shall each be exercised by
serving written notice (the "Renewal Notice") upon Landlord at least six (6)
months, but not more than twelve (12) months, prior to the expiration of the
Initial Term (or then extended Option Term, if applicable) of the Lease
(collectively the "Option Term(s)"); provided that such option is conditioned
upon the Lease being in full force and effect, and there being no Event of
Default existing under the Lease, at the time of delivery of the Renewal
Notice. Any termination of the Lease during the Initial Term (or then extended
Option Term, if applicable) shall terminate all rights of extension hereunder.
b. Upon the service of the Renewal Notice, and subject
to the conditions set forth herein, the Lease shall be extended without the
necessity of the execution of any further instrument or document. Such
extended Term shall commence upon the expiration date of the initial Term (or
then extended Option Term, if applicable) of the Lease, expire upon the
expiration of sixty (60) months thereafter, and be upon the same terms,
covenants and conditions as provided in the Lease for the initial Term, except
that the Base Rent during the extended Term of the Renewal Options shall be the
then Fair Market Rate (as defined below).
c. The term "Fair Market Rate" shall mean the annual
amount per rentable square foot that a willing, comparable, non-equity,
non-renewal, non-expansion, new tenant would pay and a willing, comparable
landlord for comparable space of a warehouse/office building in San Antonio,
Texas (the "Comparison Area") would accept at arm's length, giving appropriate
consideration to, without limiting the scope thereof, annual rental rates per
rentable square foot, the type of lease escalation clauses (including, but
without limitation, operating expense, real estate taxes, CPI), the extent of
liability under the escalation clauses (e.g., whether determined on a "net
lease" basis or by
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increases over a particular base year or base dollar amount), brokerage
commissions, if any, length of lease term, size and location of premises being
leased, and other generally applicable terms and conditions of tenancy for the
space in question.
d. Within thirty (30) days following Landlord's receipt
of the Renewal Notice, Landlord and Tenant shall exercise good faith efforts to
agree on the Fair Market Rate for the Premises. Absent an agreement as to the
Fair Market Rate value within ninety (90) days following Landlord's receipt of
the Renewal Notice, then the Fair Market Rate shall be determined as follows:
(i) Landlord and Tenant shall each appoint one arbitrator
who shall by profession be a real estate appraiser who shall have been active
during the 5-year period ending on the date of Tenant's exercise of said option
in the appraisal of commercial and industrial properties in the Comparison Area
and who shall not be affiliated with the party nominating said arbitrator. Each
such arbitrator shall be appointed within fifteen (15) days after the
expiration of the 30-day mutual agreement period described hereinabove.
(ii) The two arbitrators so appointed shall within fifteen
(15) days of the date of the appointment of the last appointed arbitrator agree
upon and appoint a third independent arbitrator who shall be qualified under
the same criteria set forth hereinabove to qualify the initial two arbitrators.
(iii) The three arbitrators shall within thirty (30) days
of the appointment of the third arbitrator reach a decision and notify Landlord
and Tenant thereof.
(iv) The decision of the majority of the three arbitrators
shall be binding upon Landlord and Tenant. Failure of the majority of said
arbitrators to reach an agreement shall result in the prevailing fair market
rental for similar properties in the Comparison Area being determined by
averaging the appraisal of each arbitrator, ignoring for the purpose of such
averaging any portion of the high and the low appraisal which is more than ten
percent (10%) in excess of or less than the middle appraisal.
(v) If either Landlord or Tenant fails to appoint an
arbitrator within the time period in subparagraph (a) hereinabove, the
arbitrator appointed by either one of them shall reach a decision, notify
Landlord and Tenant thereof, and such arbitrator's decision shall be binding
upon Landlord and Tenant.
(vi) If the two arbitrators fail to agree upon and appoint
a third arbitrator, both arbitrators shall be dismissed and the matter to be
decided shall be forthwith submitted to arbitration under the provisions of the
American Arbitration Association ("AAA").
(vii) The cost of arbitration and/or the arbitrators shall
be paid by Landlord and Tenant equally.
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In no event shall the Fair Market Rate with respect to any
renewal Term be less than the Base Rent for the term (whether the initial term
or the first renewal term, as the case may be) of the Lease immediately
preceding such renewal term.
3.3 Term. The Initial Term of the Lease as extended by any Option
Term(s) are collectively referred to herein as the "Lease Term" or "Term".
3.4 Holding Over. In the event of holding over by Tenant after
expiration or other termination of this Lease without the prior written consent
of Landlord (and Landlord shall be under no duty to provide such consent), then
(i) such possession shall be an unlawful detainer, (ii) no tenancy or interest
shall result from such possession, (iii) any options to renew, options to
expand, and/or any rights of first refusal under this Lease shall be terminated
to the extent such rights and options have not been properly exercised pursuant
to the terms of this Lease, and (iv) Tenant shall be subject to immediate
eviction and removal. Tenant shall, throughout the entire holdover periods,
pay rent equal to (i) one hundred fifty percent (150.0%) of the Base Rental
plus (ii) any and all Additional Rent (including, without limitation Monthly
Tax Payments) and other charges which would have been applicable had the Term
of this Lease continued through the period of such holding over by Tenant;
Landlord and Tenant hereby agree in advance that such rent is a fair rental
rate for such tenancy. No holding over by Tenant after the expiration of the
Term of this Lease shall be construed to extend the Term of this Lease; and in
the event of any holding over, Tenant shall indemnify Landlord against all
claims for damages by any other Tenant or prospective Tenant to whom Landlord
may have leased all or any part of the Premises effective before or after the
expiration of the Term of this Lease, resulting from delay by Landlord in
delivering possession of all or any part of the Premises. Notwithstanding any
discussions or negotiations of any nature then pending between Landlord and
Tenant, any holding over, with or without the consent of Landlord, if any,
shall thereafter constitute a tenancy from month-to-month, under the terms and
provisions of this Lease to the extent applicable to a tenancy from
month-to-month unless and until Landlord and Tenant, in each of their sole and
absolute discretion, and with no obligation to do so, enter into a specific
written agreement to the contrary. Notwithstanding anything herein to the
contrary, pursuant to Section 91.001(c) of the Texas Property Code, Landlord
and Tenant specifically agree that no notice to terminate Tenant's tenancy
hereunder will be required from and after the expiration of the Term of this
Lease under Section 91.001 or Section 24.005 of the Texas Property Code before
Landlord files a forcible detainer suit on grounds that the tenant is holding
over beyond the end of the rental term or renewal period (if any) hereof; and
any sublease hereunder shall not be approved unless it also contains a specific
comparable waiver by the subtenant thereunder.
ARTICLE IV: RENT
4.1 Net Lease. This is an absolute net lease to Landlord. Tenant
shall pay all costs and expenses relating to the Premises during the Term and
the business carried on therein to include, but not limited to, taxes,
utilities, insurance, and maintenance costs,
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unless otherwise expressly provided in the Lease. It is the intent of the
parties hereto that the Base Rent payable under this Lease shall be an
absolutely net return to the Landlord and that the Tenant shall pay all costs
and expense relating to the Premises and the business carried on therein,
unless otherwise expressly provided in this Lease. Any amount or obligation
herein relating to the Premises which is not expressly declared to be that of
the Landlord shall be deemed to be an obligation of the Tenant to be performed
by the Tenant at the Tenant's expense. Base Rent, Additional Rent and all
other sums payable hereunder by Tenant, shall be paid without notice (except as
expressly provided herein), demand, setoff, counterclaim, abatement,
suspension, deduction or defense.
4.2 Base Rent.
a. Base Rent. During the Initial Term, Tenant shall pay
to Landlord as Base Rent the following sums (the "Base Rent"):
Year 1-5
Total: $ 975,000.00
Per Month: $ 81,250.00
Year 6-10
Total: $1,072,500.00
Per Month: $ 89,375.00
The Base Rent for Option Terms shall be determined per the
terms of Section 3.2, above.
b. Payment of Base Rent. Except as provided in Section
4.2(c), below, the Base Rent shall be due and payable by Tenant to Landlord in
advance in equal monthly installments on the first day of each calendar month,
without prior notice, invoice, demand, deduction, or offset whatsoever.
Landlord shall have the right to accept all rent and other payments, whether
full or partial, and to negotiate checks and payments thereof without any
waiver of rights, irrespective of any conditions to the contrary sought to be
imposed by Tenant.
c. Prepaid Rent. Upon execution of this Lease, Tenant
will be required to prepay Base Rent payable under the Lease in the amount of
Five Hundred Thousand and No/Hundredths Dollars ($500,000.00) (the "Prepaid
Rent"). Beginning with the Fourth Lease Year, such Prepaid Rent will be
credited against Base Rent, as follows:
(i) 4th Lease Year. One Hundred Thousand Dollars
($100,000.00) of the Prepaid Rent will be applied to the Base Rent for the 4th
Lease Year as follows: $25,000.00 per month against the Base Rent due and
owing for each of the first four (4) months of the 4th Lease Year.
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(ii) 5th Lease Year. One Hundred Thousand Dollars
($100,000.00) of the Prepaid Rent will be applied to the Base Rent for the 5th
Lease Year as follows: $25,000.00 per month against the Base Rent due and
owing for each of the first four (4) months of the 5th Lease Year.
(iii) 6th Lease Year. One Hundred Thousand Dollars
($100,000.00) of the Prepaid Rent will be applied to the Base Rent for the 6th
Lease Year as follows: $25,000.00 per month against the Base Rent due and
owing for each of the first four (4) months of the 6th Lease Year.
(iii) 10th Lease Year. The balance of the Prepaid Rent
consisting of Two Hundred Thousand and No/100 Dollars ($200,000.00), will be
applied towards the Base Rent due and owing for the last three months of the
Initial Term of this Lease.
o 10th Month: $ 21,250.00
o 11th Month: $ 89,375.00
o 12th Month: $ 89,375.00
4.3 Additional Rent.
a. Any amounts which Tenant is required to pay to
Landlord pursuant to this Lease (other than Base Rent), including (without
limitation) all Monthly Tax Payments (defined herein), and the Monthly
Insurance Payments (defined herein), together with every fine, penalty,
interest and cost which may be added pursuant to the terms hereof by reason of
Tenant's non-payment or late payment thereof or of Base Rent (including,
without limitation, Taxes and Insurance), shall constitute additional rent
("Additional Rent"). If Tenant shall fail to pay any Additional Rent after
notice and the expiration of any applicable cure period provided pursuant to
the terms of this Lease, Landlord shall have the right, but not the obligation,
to pay the same and shall have all rights, powers and remedies with respect
thereto as are provided herein in the case of nonpayment of Base Rent.
b. Except with respect to the Monthly Tax Payments
(which will be payable as provided in Article VI) and the Monthly Insurance
Payment (which will be payable as provided in Article VIII) and as indicated
herein, Landlord shall submit to Tenant an invoice or invoices for all sums
comprising the Additional Rent and shall state the time period relating
thereto. Tenant shall pay Landlord the amount invoiced within thirty (30) days
from receipt of such invoice or invoices which shall be accompanied by copies
of any applicable receipts and backup invoices. Landlord shall provide Tenant
within five (5) Business Days of Tenant's request therefor with such additional
information as Tenant may reasonably request to determine the amount due from
Tenant. Tenant reserves the right, upon reasonable prior notice, to inspect
Landlord's records with respect to such accounting for the prior two (2)
calendar year period and to make specific
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objections thereto in writing. Any payment hereunder shall be paid within ten
(10) Business Days of demand therefor.
4.4 Late Charge. If Tenant fails to pay when due any payment of
rent or other charges which Tenant is obligated to pay to Landlord under this
Lease, there shall be a late charge, immediately payable by Tenant as
Additional Rent, in the amount of Five Hundred and No/Hundredths Dollars
($500.00) (the "Late Rate"). Landlord and Tenant agree that this sum is
reasonable to compensate Landlord for accounting and administrative expenses
incurred by Landlord. In addition to the late charge, any and all rent or
other charges which Tenant is obligated to pay to Landlord under this Lease
which are unpaid shall bear interest at the rate set forth in Section 18.7 from
the date said payment was due until paid, said interest to be payable by Tenant
as Additional Rent. Landlord and Tenant agree that this sum is reasonable to
compensate Landlord for the loss of the use of funds.
4.5 Payment of Rent. Tenant hereby agrees to pay Rent to Landlord
at Landlord's address provided herein (or such other address as may be
designated by Landlord in writing from time to time), monthly, and without
further notice or demand. If the Term of this Lease commenced on a day other
than the first day of a month , then the installments of Rent for such month or
months shall be prorated, based on thirty (30) days per month, and the
installment or installments so prorated shall be paid in advance.
4.6 Rent. Base Rent and Additional Rent are collectively referred
to herein as "Rent."
4.7 Security Interest.
a. Consistent with the terms of the security agreement
attached hereto as Exhibit "E", and incorporated herein by reference (the
"Security Agreement"), Tenant hereby grants Landlord a lien and security
interest in the Prepaid Rent as further security for Tenant's performance under
this Lease, including without limitation security for (a) payments of all rent
and any other sums due under the Lease; (b) payment of any and all Landlord
claims which may arise out of any Tenant Default, whether monetary or
non-monetary; (c) payment of any offset for rejection damages incurring as the
result of any bankruptcy or insolvency filing; and (d) payment of reasonable
attorney's fees, and costs incurred in connection with any Tenant Default,
including without limitation reasonable attorneys' fees and costs incurred in
connection with any bankruptcy or insolvency proceeding, to the extent not
expressly prohibited by applicable law.
b. Tenant expressly agrees to execute any such documents
required to perfect Landlord's security interest in the Prepaid Rent including
without limitation the execution of the notice to the depository institution in
which the Prepaid Rents are deposited.
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c. Upon a Default, Tenant further acknowledges and
expressly agrees that Landlord may use or apply the whole or any part of the
Prepaid Rent for the payment of Tenant's obligations hereunder and, in the
event of bankruptcy or other insolvency proceeding against Tenant or any of
Tenant's guarantors, the Prepaid Rent shall be deemed automatically applied to
the payment of overdue Rent from the earliest time such Rent became overdue
prior to the filing of such proceeding. In such event, Landlord may apply any
remaining Prepaid Rent to amounts due and owing to Landlord, as it deems
appropriate, in its sole and absolute discretion. The use and application of
the Prepaid Rent shall not prevent Landlord from exercising any other right or
remedy available to Landlord and shall not be construed as liquidated damages.
ARTICLE V: USE OF THE PREMISES
5.1 Use of Premises. Tenant shall use the Premises solely for a
warehouse and distribution center and corporate headquarters in connection with
Tenant's business. Tenant has satisfied itself, and represents to Landlord,
that such use is lawful and conforms to all applicable zoning and other use
restrictions and regulations applicable to the Premises.
5.2 Compliance with Laws.
a. Tenant shall, at Tenant's expense, procure any
permits and licenses required for it to transact business in the Premises and
comply promptly with all applicable statutes, ordinances, rules, regulations,
orders, covenants and restrictions of record, and requirements now in effect or
hereafter enacted or passed during the term or any part of the term hereof,
regulating the use and occupancy of the Premises, including, without
limitation, the obligation at Tenant's cost, to alter, maintain, or restore the
Premises in compliance and conformity with all laws relating to the condition,
use, or occupancy of the premises during the Term (including, without
limitation, any and all requirements as set forth in the Americans with
Disabilities Act, The Architectural Barriers Act of 1968, The Rehabilitation
Act of 1973, The Fair Housing Act of 1988, and The Texas Elimination of
Architectural Barriers Act). Tenant shall not perform any acts or carry on any
practices which may injure the premises.
b. Tenant covenants to perform and observe all terms,
covenants and conditions of any reciprocal easement or maintenance agreement to
which it may at any time be a party or to which the Premises may be subject.
Tenant shall, at its expense, use its best efforts to enforce compliance with
any reciprocal easement or maintenance agreement benefiting the Premises by any
other person subject to such agreement.
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ARTICLE VI: PROPERTY TAXES AND ASSESSMENTS.
6.1 Ad Valorem Taxes.
a. Tenant shall be solely responsible for all ad valorem
real estate taxes and all assessments, annual benefits, levies, fees, water and
sewer rents and charges and all other governmental charges, general and
special, ordinary and extraordinary, foreseen and unforeseen, levied upon or
assessed against the Premises or the use and occupancy thereof by Tenant and
allocable to the period commencing with the Commencement Date and continuing
through the Lease Term (collectively, "Real Estate Taxes").
b. It is the intention of Tenant and Landlord that all
new and increased assessments, taxes, fees, levies, and charges, and all
similar assessments, taxes, fees, levies, and charges be included within the
definition of Real Estate Taxes for the purpose of this Lease. If at any time
during the Lease term the laws concerning the methods of real property taxation
prevailing at the commencement of the Lease term are changed so that a tax or
excise on rents or any other tax, however described, is levied or assessed
against Landlord as a substitution in whole or in part for any real property
taxes, then Real Estate Taxes shall include, but not be limited to, any such
assessment, tax, fee, levy, or charge allocable to or measured by the area of
the Premises or the rent payable hereunder, including, without limitation, any
gross income tax with respect to the receipt of such rent, or upon or with
respect to the possession, leasing, operating, management, maintenance,
alteration, repair, use, or occupancy by Tenant of the Premises, or any portion
thereof.
c. Tenant shall also pay all taxes or assessments of the
state or any political subdivision thereof in which the Premises are located
which are levied, assessed or imposed on Landlord or Tenant on account of the
use and occupancy of the Premises or receipt by or on behalf of Landlord of
Base Rent or Additional Rent payable hereunder. Any such taxes payable by
Tenant hereunder shall be deemed to be included in the definition of "Real
Estate Taxes" for all purposes of this Lease.
d. Except for Real Estate Taxes, nothing herein shall
require Tenant to pay or reimburse Landlord for the payment of (i) any income,
profit, inheritance, estate, succession, gift, franchise or transfer taxes
which are or may be imposed upon Landlord, its successors or assigns, by
whatever authority imposed or however designated, (ii) any tax imposed upon the
sale of all or a part of the Premises by Landlord, or (iii) any tax,
assessment, charge or levy imposed or levied upon or assessed against any
property of Landlord other than the Premises or any income to, or business
activity of, Landlord not in connection with the Premises. Nothing herein
shall require Tenant to pay or reimburse Landlord for the payment of any tax if
Tenant's payment of such tax or reimbursement of Landlord for the payment of
such tax would violate any applicable law.
6.2 Payment of Real Estate Taxes.
a. Tenant shall pay all Real Estate Taxes in advance in
monthly installments on or before the first day of each month in an amount
reasonably estimated by Landlord in good faith to be one-twelfth (1/12) of the
total Real Estate Taxes that will be due and owing for the Calendar Year in
which such month comprises a part ("Monthly
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Tax Payments); if Landlord's Mortgagee requires an escrow of Real Estate Taxes,
Landlord may, but shall not be obligated to, use the required escrow amount as
a basis for its estimate of such monthly installments and such amount shall not
be subject to objection by Tenant. Prior to or on the Commencement Date and
from time to time throughout the Term, Landlord shall notify Tenant in writing
of Landlord's estimate of such monthly installments (the "Estimated Tax
Statement").
b. The Monthly Tax Payments shall be payable by Tenant
to Landlord in advance in equal monthly installments on the first day of each
calendar month in the amounts specified in the Estimated Tax Statement, without
prior notice, invoice, demand, deduction, or offset whatsoever, and in addition
to the Base Rent and an other Additional Rent charged hereunder. Landlord
shall have the right to accept all payments for Monthly Tax Payments, Base
Rent, and any Additional Rent, whether full or partial, and to negotiate checks
and payments thereof without any waiver of rights, irrespective of any
conditions to the contrary sought to be imposed by Tenant.
c. After receipt of all tax and assessment bills
attributable to any Calendar Year during the Term, Landlord shall furnish
Tenant with a written statement of the actual Real Estate Taxes for such
Calendar Year and evidence of the payment of such Real Estate Taxes by Landlord
(the "Tax Statement"). Landlord shall ensure that the amount of all Real
Estate Taxes for the taxing year collected from Tenant and escrowed with
Landlord are paid to the appropriate taxing authority, whether or not
Landlord's lender pays same to the appropriate taxing entity. If the total of
Monthly Tax Payments paid by Tenant during such Calendar Year is less than the
sum due from Tenant as shown on the Tax Statement, then Tenant shall pay to
Landlord the deficiency within ten (10) days of receipt of such statement; in
the event, that the total of Monthly Tax Payments paid by Tenant during such
Calendar Year is more than the sum due from Tenant as shown on the Tax
Statement, then Landlord shall credit the excess against the subsequent Monthly
Tax Payments next due and owing for the subsequent Calendar Year. Landlord's
delay or failure to furnish such Tax Statement shall not impair Tenant's
continuing obligation to pay any deficiency. A copy of the tax or assessment
xxxx from the applicable taxing authorities shall be sufficient evidence of the
amount of Real Estate Taxes. Landlord's and Tenant's obligations under this
Article shall survive the expiration or termination of this Lease.
d. If the Term of this Lease commenced on a day other
than the first day of any Calendar Year , then the Real Estate Taxes due and
payable by Tenant (as well as the Estimated Tax Statement determined by
Landlord) for such Calendar Year shall be prorated, based on a 365 day Calendar
Year.
6.3 Tax Protests.
a. Tenant shall have the right to participate in all
negotiations of tax assessments or to contest any tax assessments against the
Premises. Tenant shall also have the right to contest the validity or the
amount of any Real Estate Taxes levied against the
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Premises by such appellate or other proceedings as may be appropriate in the
jurisdiction, and may, if applicable, request that Landlord defer payment of
such obligations if payment would operate as a bar to such contest; and, if
applicable, request that Landlord pay same under protest, or take such other
steps as Tenant may deem appropriate, provided, however, that Tenant
indemnifies Landlord from any reasonable expense (including reasonable
attorney's fees) or liability arising out of such contest, pursues such contest
in good faith and with due diligence, posts any bond or security required by
law in connection with such contest, gives Landlord prompt written notice of
its intention to contest, and takes no action which will cause or allow the
institution of any foreclosure proceedings or similar action against the
Premises. Notwithstanding the above, Landlord shall not be required to join in
any proceedings or contest brought by Tenant unless the provisions of the law
require that the proceeding or contest be brought by or in the name of Landlord
or the owner of the Premises; in that case, Landlord shall, at Tenant's
expense, cooperate in the institution and prosecution of any such proceedings
initiated by Tenant and will execute any documents which Landlord may be
reasonably required to execute and will make any reasonable appearances which
Landlord may be required to make in connection with such proceedings. If,
during the protest period, any Default under this Lease occurs and the
protested taxes or assessments have not been paid, then, at the request of
Landlord, Tenant shall furnish to Landlord a surety bond issued by an insurance
company qualified to do business in the state where the Premises are located.
The amount of bond shall equal one hundred ten percent (110%) of the total
amount of taxes in dispute. The bond shall hold Landlord and the Premises
harmless from any damage arising out of the proceeding or contest and shall
insure the payment of any judgment that may be rendered.
b. Should any of the proceedings referred to in the
preceding Section 6.3(a) of this Article VI result in reducing the total annual
Real Estate Taxes liability against the Premises, Tenant shall be entitled to
receive all refunds by the taxing authorities attributable to the Premises for
any period for which Tenant has paid Real Estate Taxes, provided Landlord shall
deduct payment of all of Landlord's expenses incurred in any such proceeding in
which a refund is paid. Any remaining sum shall be refunded to Tenant. If no
refund shall be secured in any such proceeding, the party instituting the
proceeding shall bear the entire cost; provided, however, that if Landlord
institutes the proceedings at Tenant's request, then Tenant shall bear the
entire cost.
6.4 Personal Property Taxes. Tenant shall pay and discharge, when
due, all taxes assessed during the term of this Lease against any leasehold
interest or personal property of any kind owned by or placed in or on the
Premises by Tenant.
6.5 Assessments. If any assessment for a capital improvement made
by public or governmental authority shall be levied or assessed against the
Premises, and the assessment is payable either in a lump sum or on an
installment basis, then (if Landlord's Mortgagee approves) Tenant shall have
the right to elect the basis of payment. If Tenant shall elect to pay the
assessment on the installment basis, then Tenant shall pay only those
installments which shall become due and payable during the term of this Lease.
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ARTICLE VII: UTILITIES
7.1 Utility Payments. Tenant shall promptly pay when due all
charges for water, gas, electricity, and all other utilities furnished to or
used upon the Premises, including all charges for installation, termination,
and relocations of such service, and will save and hold Landlord harmless from
any charge or liability for same.
7.2 Interruption of Utilities. Landlord shall not be liable for,
and Tenant shall not be entitled to, any damages, howsoever caused or incurred,
direct or consequential, nor any abatement or reduction of rent, by reason of
any interruption whatsoever in or failure to provide any utility service. In
the event of any failure, stoppage, or interruption of utility service(s)
furnished by Landlord (if any) Landlord shall use reasonable diligence to
restore such service in any circumstances in which such failure, stoppage, or
interruption is caused by Landlord.
ARTICLE VIII: INSURANCE
8.1 Minimum Acceptable Insurance Coverage Requirements.
a. Tenant shall, at Tenant's expense, obtain and keep in
full force during the term of this Lease commercial general liability insurance
coverage which, without limitation, shall contain combined single limit bodily
injury, property damage insurance, and contractual liability insuring Tenant
(with Landlord and Landlord's Property Manager, if any, as additional insureds)
against any liability arising out of the ownership, use, occupancy, or
maintenance of the Premises and all of its appurtenant areas. The insurance
shall be in an amount not less than One Million Dollars ($1,000,000.00) per
occurrence. The policy shall provide blanket contractual liability coverage;
however, the limits of the insurance shall not limit the liability of Tenant
under this Lease.
b. Tenant shall, at Tenant's expense, obtain and keep in
full force during the term of this Lease an additional umbrella liability
policy in an amount not less than Ten Million Dollars ($10,000,000.00).
c. Tenant shall, at Tenant's expense, obtain and keep in
force during the term of this Lease a policy or policies of insurance covering
loss or damage to the Premises on an "all risk" coverage basis. The insurance
shall be in an amount equal to one hundred percent (100.0%) of full replacement
cost thereof against all perils of fire, extended coverage, vandalism,
malicious mischief, and special extended perils ("All Risks," as such term is
used in the insurance industry). In addition, Tenant shall, at Tenant's
expense, obtain and keep in force during the term of this Lease a policy or
policies of insurance covering loss or damage due to earthquake, flood and
boiler and machinery (if applicable), if reasonably required by Landlord or
Landlord's Mortgagee.
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d. Tenant shall also obtain and keep in force during the
term of this Lease a policy of Loss of Rents insurance covering a period of two
(2) years. This insurance shall cover all Real Estate Taxes and Insurance
costs for the same period in addition to two (2) years' Base Rent and shall
name Landlord exclusively as loss payee, Section 8.4 notwithstanding. Landlord
agrees that any proceeds from a Loss of Rents policy will be applied by
Landlord against any Base Rent and Additional Rent then owed to Landlord.
e. Tenant shall also obtain and keep in force during the
term of this Lease a worker's compensation policy, insuring against and
satisfying Tenant's obligations and liabilities under the worker's compensation
laws of the state in which the Premises are located, including Employer's
Liability insurance, in an amount of not less than One Million Dollars
($1,000,000.00), with a waiver of subrogation endorsement in favor of Landlord
as described in Section 14.1(b), to the extent available.
f. Tenant shall also obtain and keep in force during the
term of this Lease an automobile liability policy with a combined single limit
of $1,000,000.00 which policy shall include coverage for hired and non- owned
vehicles.
8.2 General Insurance Requirements. All insurance secured by
Tenant under this Lease shall comply with the following:
(a) Shall be issued by companies holding a general policyholder's
rating of at least "A:X" as set forth in the most current issue of Best's
Insurance Guide and authorized to do business in the state in which the
Premises are located; if this publication is discontinued, then another
insurance rating guide or service generally recognized as authoritative shall
be substituted by Landlord;
(b) Provide that the insurance may not be cancelled or materially
reduced in the scope or amount of coverage unless ten (10) days' prior written
notice is given to Landlord, provided Landlord shall receive proof of payment
of premium prior to expiration of any insurance policy as set forth in Section
8.6;
(c) Have deductibles not greater than $25,000 (or such greater
amount with the prior written consent of Landlord) (applicable only to general
liability and property casualty policies);
(d) Be maintained during the entire Term; and
(e) Contain a clause that such policy and the coverage evidenced
thereby shall be "primary" with respect to any policies carried by Landlord,
and that any coverage carried by Landlord shall be excess insurance.
(f) The insurance required to be maintained herein may be carried
under blanket policies; provided, however, if the Tenant has other locations
that it owns or
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leases, the policy shall include a Ten Million Dollar ($10,000,000.00)
aggregate per location endorsement. The insurance shall provide for payment of
loss jointly to Landlord and Tenant. A stipulated value or agreed amount
endorsement deleting the co-insurance provision to the building policy shall be
procured.
(g) All insurance secured by Tenant under this Lease shall also
comply with Section 8 of the Deed of Trust between Landlord, as Mortgagor, and
Nationwide Insurance Company, as Mortgagee, a copy of such Section 8 being
attached hereto as Exhibit "F" and incorporated herein by reference. Tenant
also agrees to provide, comply with and be bound by the requirements and
obligations of Mortgagor as set forth in Exhibit "F," attached, including the
requirement to deposit additional funds with Mortgagee as needed to complete
the restoration of the Property in the event of a casualty during the Term of
this Lease, in the event Landlord's Mortgagee elects to make insurance proceeds
available for such restoration, or Landlord agrees to deposit the amount of
insurance proceeds applied by Landlord's Mortgagee to Landlord's Note.
8.3 Insurance Certificate Requirements. Tenant shall deliver to
Landlord certificates evidencing, without limitation, the existence and amounts
of the insurance with loss payable clauses as required herein. No policy shall
be cancelable or subject to reduction of coverage or other modification except
after ten (10) days' prior written notice to Landlord.
8.4 Additional Insureds. To the extent available, Tenant
shall name as additional insureds or a loss payee on all insurance the
following:
(a) the Landlord, Landlord's successor(s), assignee(s),
nominee(s), Nominator(s), and agents with an insurable interest as follows:
Landlord, its officers, directors, and all successor(s), assignee(s),
subsidiaries, corporations, partnerships, proprietorships, joint ventures,
firms, and individuals as heretofore, now, or hereafter constituted on which
the named insured has the responsibility for placing insurance and for which
similar coverage is not otherwise more specifically provided; and
(b) Landlord's Mortgagee and any other lender of Landlord.
(c) Landlord's Property Manager.
8.5 Mortgage Endorsement. If requested by Landlord, the policies
of insurance required to be maintained hereunder shall bear a standard first
mortgage endorsement in favor of any holder or holders of a first mortgage lien
or security interest in the property with loss payable to such holder or
holders as their interests may appear, insofar as it relates to loss on the
Building located on the Land.
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8.6 Renewals, Lapses or Deficiencies. Tenant shall, at least
thirty (30) days prior to the expiration of the insurance policies required
hereunder, furnish Landlord with renewal certificates of insurance or renewal
binders for same. Should Tenant fail to provide to Landlord the renewal
certificate or renewal binders, or in the event of a lapse or deficiency of any
insurance coverage specified herein for any reason, Landlord may immediately
replace the deficient insurance coverage with a policy of insurance covering
the Premises of the type and in the limits set forth above. Upon written
notice from Landlord of the placement of insurance, Tenant shall immediately
pay to Landlord, as Additional Rent, an amount equal to the total cost of the
premiums and expense of such insurance placements; but Tenant will nevertheless
be in default hereunder (such failure to be deemed an "Event of Default") until
Landlord is fully reimbursed for all such costs. Tenant shall not do or permit
to be done anything which shall invalidate the insurance policies. If Tenant
does or permits to be done anything which shall increase the cost of the
insurance policies, then upon Landlord's demand, Tenant shall immediately pay
to Landlord, as Additional Rent, an amount equal to the additional premiums
attributable to any acts or omissions or operations of Tenant causing the
increase in cost.
8.7 Payment of Insurance
a. Tenant shall pay the premium for the insurance
required to be carried by Tenant hereunder in advance, in monthly installments,
on or before the first day of each month in an amount reasonably estimated by
Landlord in good faith to be one-twelfth (1/12) of the total insurance premium
due and owing for the entire year (the "Monthly Insurance Payment"); if
Landlord's Mortgagee requires an escrow of insurance premium, Landlord may, but
shall not be obligated to, use the required escrow amount as a basis for its
estimate of such monthly installments and such amount shall not be subject to
objection by Tenant. Prior to or on the Commencement Date and from time to
time throughout the Term, Landlord shall notify Tenant in writing of Landlord's
estimate of such monthly installments (the "Estimated Insurance Statement").
b. The monthly insurance payments shall be payable by
Tenant to Landlord in advance in equal monthly installments on the first day of
each calendar month in the amount specified in the Estimated Insurance
Statement, without prior notice, invoice, demand, or offset whatsoever, and in
addition to the Base Rent and any other Additional Rent charged hereunder, and
the Monthly Tax Payments. Landlord shall have the right to accept all payments
for monthly insurance payments, Base Rent, any Additional Rent, and Monthly Tax
Payments, whether full or partial, and to negotiate checks and payments thereof
without any waiver of rights, irrespective of any conditions to the contrary
sought to be imposed by Tenant.
c. After receipt of all insurance bills attributable to
any calendar year or portion thereof during the term, Landlord shall furnish
Tenant with a written statement of the actual insurance premiums for such
calendar year in evidence of the payment of such insurance premiums by Landlord
(the "Insurance Statement"). Landlord shall ensure that the amount of all
insurance premiums for the period billed and collected from Tenant
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and escrowed with Landlord are paid to the appropriate insurance company,
whether or not Landlord's Lender pays same to the appropriate insurance
company. If the total of the Monthly Insurance Payments paid by Tenant during
such calendar year is less than the sum due from Tenant as shown on the
Insurance Statement, then Tenant shall pay to Landlord the deficiency within
ten (10) days of receipt of such statement; in the event, that the Monthly
Insurance Payments paid by Tenant during the year is more than the sum due from
Tenant as shown on the Insurance Statement, then Landlord shall credit the
excess against the subsequent Monthly Insurance Payment next due and owing for
the next year. Landlord's delay or failure to furnish such Insurance Statement
shall not impair Tenant's continuing obligation to pay any deficiency. A copy
of the insurance xxxx from the insurance company shall be sufficient evidence
of the amount of insurance premium due. Landlord and Tenant's obligations
under this article shall survive the expiration or termination of this Lease.
d. If the term of this Lease commenced on a day other
than the first day of any calendar year, then the insurance premium due and
paid by Tenant for such year shall be prorated, based on a 365 day calendar
year.
ARTICLE IX: FURNITURE, FIXTURES AND EQUIPMENT
9.1 Furniture, Fixtures and Equipment. During the term Tenant
may, at Tenant's expense, place or install such furniture, fixtures, and
equipment on the Premises as may be needed for the conduct of Tenant's
business.
9.2 Landlord's Waiver. Tenant may finance equipment, trade
fixtures, signs, and furniture which may be installed in or about the Premises.
Landlord shall execute and deliver to any lenders a Landlord's Waiver in such
form as may be agreed upon by Tenant's lender, Tenant and Landlord. A copy of
Landlord's Lien Waiver with Sanwa Business Credit Corporation and Landlord's
Agreement and Subordination with MetLife Capital Corporation is attached hereto
as Exhibits D-1 and D-2, respectively, and Landlord agrees to execute said
waivers contemporaneously with Landlord's execution of this Lease. Tenant may
specifically enforce Landlord's obligations under this Section 9.2. Any
furniture, fixtures, and equipment placed in the Premises by Tenant may be
replaced by Tenant periodically during the term.
9.3 Removal of Furniture, Fixtures, and Equipment at Expiration of
Lease. At the expiration or earlier termination of the Lease, the furniture,
fixtures, and equipment, including, without limitation, the conveyor systems,
rail systems, racking and decking system and equipment currently in place,
shall be removed by Tenant. Tenant immediately shall make such repairs and
restoration of the Premises as are necessary to correct any damage to the
Premises from the installation and removal of the furniture, fixtures, and
equipment by Tenant. Furniture, fixtures, and equipment not so removed shall,
at Landlord's option, become the property of Landlord, and Landlord may cause
such property to be removed from the Premises and disposed of, but the cost of
any such
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removal shall be borne by Tenant. The provisions of this paragraph shall
survive the expiration or termination of this Lease with respect to the
Premises.
9.4 Right to Affix Signs.
a. Tenant shall have the right, at Tenant's expense, to
use and maintain the signage as it currently exists at the Premises. Any
revisions or changes to signage shall be at the sole cost of Tenant, subject to
Landlord's prior written consent. All signage is contingent upon approval by
applicable local governmental authorities.
b. Upon the termination or expiration of the Term of the
Lease or of Tenant's right of possession of the Premises, then Tenant shall, at
Tenant's sole expense, (i) "de-indentify" (i.e. remove Tenant's name from) any
and all pylon signage on the Premises, and (ii) cause the removal of any other
signage in or on the Premises, to the same condition existing prior to its
installation or in such condition otherwise acceptable to Landlord.
ARTICLE X: MAINTENANCE OF THE PREMISES
10.1 Obligation to Maintain the Premises.
a. Tenant acknowledges that it has received the Premises
in good condition, repair and maintenance, except as set forth in Section 10.2,
below. Tenant shall, at its own expense, promptly perform or cause to be
performed all maintenance, replacement, and repair (whether ordinary or
extraordinary, structural or non-structural, foreseen or not foreseen, or
otherwise) necessary to keep the Premises, and any part thereof, including
(without limitation) the Building, in a safe, dry and tenantable condition and
good state of repair and appearance (ordinary wear and tear excepted),
including (without limitation) (i) the repair and/or replacement of any damage
or injury done to the Premises, or any part thereof, caused by Tenant or
Tenant's agents, employees, invitees or visitors (including specifically any
water damage resulting from any plumbing leak), (ii) all structural and
non-structural components of Building and all of its components, to all
maintenance, replacement and repair to the roof, outer walls and its
electrical, plumbing, heating, ventilating, air conditioning and other
operating systems in the Building, and (iii) the maintenance of all outdoor
areas located on the Land. Tenant shall promptly make such repairs and
replacements as may be necessary, regardless of whether the benefit of such
repair or replacement extends beyond the term of this Lease. Such repairs,
when made, shall restore the Premises or any part thereof, to the same or as
good a condition as existed prior to such injury or damage, and shall be
effected in compliance with all building and fire codes and other applicable
laws and regulations.
b. During the term of this Lease, Tenant shall also
maintain a service contract providing for the proper maintenance of the HVAC
system and elevators servicing the Building on a quarterly basis. Landlord
agrees to assign to Tenant (or enforce for Tenant's benefit) all warranties,
extended warranties and guarantees with
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respect to the HVAC system and elevators, and all other systems, of any kind or
nature, serving the Premises and which tenant is required to repair hereunder.
c. Tenant shall keep the Premises, including, without
limitation, sidewalks, drives and loading areas on the Premises, clean and free
from rubbish and debris at all times. Tenant shall store all trash and garbage
within the Premises and arrange for regular pickup and cartage of such trash
and garbage at Tenant's expense.
d. If Tenant fails (i) to make such repairs or
replacement within thirty (30) days after receipt of written notice from
Landlord, or (ii) if such repairs cannot reasonably be complied with within
thirty (30) days, to commence repairs within said thirty (30) day period and
diligently pursue such repairs until completion (or sooner if required in the
case of emergency), then Landlord, may at its option, make such repairs and
replacements, and Tenant shall pay the cost thereof to Landlord, as Additional
Rent, within thirty (30) days after written demand. In addition, Tenant shall
indemnify and hold harmless the Landlord from and against any and all damages
and liability incurred by Landlord arising from and out of such failure to make
such repairs and replacements.
e. Anything to the contrary herein notwithstanding,
Landlord and Tenant hereby agree that the costs paid by Tenant for the
replacement of a major mechanical component of the HVAC System during the last
two (2) years of the Lease Term, if any, shall be prorated based on the number
of years in the term of the manufacturer's warranty on said component. If the
warranty extends beyond the expiration of the Lease Term, the Landlord shall,
within thirty (30) days of receipt of Tenant's final payment of any and all
sums due to Landlord under this Lease, reimburse the prorata share of such
component replacement cost for the period of warranty extending beyond the
expiration of the Lease Term. For the purposes of this section 10.1(e), "Lease
Term" shall mean the Initial Term plus any executed Option Term.
10.2 Specific Repairs. It is understood and agreed that the
maintenance, repair and replacement obligations of Tenant provided in Section
10.1, above, is intended to specifically include (without limitation) any and
all repairs and replacements necessary to cause the Premises to be in a safe,
dry and tenantable condition and good state of repair and appearance, as of the
Commencement Date of the Lease. Notwithstanding the preceding sentence,
specifically excluded from Tenant's obligation to make repairs on the Premises
is (i) the repair of the heaving of the ground floor slab in the office area of
the Building (other than minor repairs necessary to ensure that the ground
floor slab will be kept reasonably safe for use by Tenant and its employees,
invitees, agents and contractors), (ii) the obligation to replace the ground
floor slab in the office area of the Building, and/or (iii) the obligation to
remediate the condition causing the heaving of the ground floor slab in the
office area of the Building. Any and all consequential repairs resulting from
the heaving of the ground floor slab shall, however, explicitly be the
obligation of the Tenant.
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10.3 Surrender of the Premises. Except as otherwise set forth in
Sections 10.1(e) and 10.2(a), above, the Premises shall be returned to Landlord
at the termination or expiration of this Lease broom clean, and in good
condition (ordinary wear and damage by casualty or condemnation excepted). In
the event of destruction of the Premises by fire or casualty, the condition of
the Premises upon termination of this Lease shall be governed by Section XV.
10.4 No Obligation of Landlord. Notwithstanding anything else
contained herein to the contrary, Landlord shall have no obligation to
maintain, repair or rebuild, or to make any alterations, replacements or
renewals of any nature to the Premises, or any part thereof, whether ordinary
or extraordinary, structural or non-structural, foreseen or not foreseen, or
otherwise cause the Premises to be maintained in any respect; and Landlord
shall have no liability for any damages or injury arising out of any condition
or occurrence causing a need for such repairs or maintenance. Tenant hereby
expressly waives the right to make any repairs at the expense of Landlord which
may be provided for in any law in effect at the time of the commencement of the
Term or which may thereafter be enacted.
ARTICLE XI: ALTERATIONS
11.1 Right to Make Alterations. Tenant shall not have the right to
make alterations, additions, and improvements to the interior or exterior of
the Premises and parking areas adjacent to the Premises (except for non-
structural repairs under Five Thousand Dollars ($5,000.00)) without the prior
written consent of Landlord, which will not be unreasonably withheld or
delayed. Any alterations, additions, and improvements approved by Landlord
which may be made or installed by Tenant shall remain upon the Premises, and,
at the termination or expiration of this Lease, shall be surrendered with the
Premises to Landlord. Any alteration, addition, or improvement by Tenant shall
be accomplished by Tenant in a good workmanlike manner, with new materials, in
conformity with applicable laws and regulations and by a contractor approved by
Landlord. Upon completion of any alteration, addition, or improvement for
which Landlord gives its written consent, Tenant shall provide to Landlord
"as-built" plans, copies of all construction contracts, building permits,
inspection reports and all other required governmental approvals, and proof of
payment of all labor and materials, and lien waivers. For any and all
non-structural alterations made by Tenant under Five Thousand Dollars
($5,000.00), upon completion of any such work, Tenant shall provide to Landlord
sketches of any alterations made, and proof of payment of all labor and
materials, and lien waivers. Tenant shall pay when due all claims for such
labor and materials and shall give Landlord at least ten (10) days' prior
written notice of the commencement of any such work. Landlord may enter upon
the Premises, in such case, for the purpose of posting appropriate notices,
including, but not limited to, notices of non-responsibility.
11.2 Tenant Shall Not Render Premises Liable for Any Lien. Tenant
shall have no right, authority, or power to bind Landlord, or any interest of
Landlord in the premises, nor to render the Premises liable for any lien or
right of lien for the payment of any claim
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for labor, material, or for any charge or expense incurred to maintain, to
repair, or to make alterations, additions, and improvements to the Premises.
Tenant shall in no way be considered the agent of Landlord in the construction,
erection, modification, repair, or alteration of the Premises. Notwithstanding
the above, Tenant shall have the right to contest the legality or validity of
any lien or claim filed against the Premises. No contest shall be carried on
or maintained by Tenant after the time limits in the sale notice of the
Premises for any such lien or claim unless Tenant (i) shall have duly paid the
amount involved under protest; (ii) shall have procured and recorded a lien
release bond from a bonding company acceptable to Landlord in an amount not
less than one and one-half (1 1/2) times the amount involved; or (iii) shall
have procured a stay of all proceedings to enforce collection. Upon a final
adverse determination of any contest, Tenant shall pay and discharge the amount
of the lien or claim determined to be due, together with any penalties, fines,
interest, cost, and expense which may have accrued, and shall provide proof of
payment to Landlord.
ARTICLE XII: INSPECTION
Landlord and Landlord's authorized representatives shall have the
right to enter upon the Premises at all reasonable hours, after reasonable
efforts to provide advance notice to Tenant, for the purpose of inspecting the
Premises or of making repairs, additions, or alterations in or upon the
Premises, and, for the purpose of exhibiting the Premises to prospective
tenants, purchasers, or others, provided any such entry does not unreasonably
interfere with Tenant's operations.
ARTICLE XIII: INDEMNITY AND RELEASE
13.1 Indemnification by Tenant. Other than damages proximately
caused by reason of the gross negligence or willful misconduct of Landlord or
its agents and employees, or causes for which Landlord expressly assumes
responsibility under this Lease, Tenant shall indemnify, defend, and protect
Landlord, Landlord's Property Manager and Landlord's Mortgagee, if any, and
hold Landlord, Landlord's Property Manager and Landlord's Mortgagee, if any,
harmless from any and all loss, cost, damage, expense, liability (including,
without limitation, court costs, the amount of the deductible under any
insurance policy, and reasonable attorney's fees) incurred in connection with
or arising at any time during or prior to the Lease Term, and from any cause
whatsoever in or about the Premises, including, without limiting the generality
of the foregoing: (i) any default by Tenant in the observance or performance
of any of the terms, covenants, or conditions of this Lease on Tenant's part to
be observed or performed; (ii) the use or occupancy of the Premises by Tenant
or any person claiming by, through, or under Tenant; (iii) except as otherwise
agreed in Section 25(c), herein, the condition of the premises or any
occurrence or happening on the Premises from any cause whatsoever, or (iv) any
acts, omissions, or negligence of Tenant or any person claiming by, through, or
under tenant, or of the contractors, agents, servants, employees, visitors, or
licensees of Tenant or any such person, in, on, or about the Premises, either
prior to or during the Lease Term (including, without limitation, any holdovers
in connection therewith),
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including, without limitation, any acts, omissions, or negligence in the making
or performance of any alterations. TENANT FURTHER AGREES TO INDEMNIFY AND HOLD
HARMLESS LANDLORD, LANDLORD'S AGENT, AND LANDLORD'S MORTGAGEE, IF ANY, FROM AND
AGAINST ANY AND ALL LOSS, COST, LIABILITY, DAMAGE, AND EXPENSE (INCLUDING,
WITHOUT LIMITATION, REASONABLE ATTORNEY'S FEES) INCURRED IN CONNECTION WITH OR
ARISING FROM ANY CLAIMS BY ANY PERSONS BY REASON OF INJURY TO PERSONS OR DAMAGE
TO PROPERTY OCCASIONED BY ANY USE, OCCUPANCY, CONDITION, OCCURRENCE, HAPPENING,
ACT, OMISSION, OR NEGLIGENCE REFERRED TO IN THE PRECEDING SENTENCE, EXCEPT TO
THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
INDEMNIFIED PARTY, OR AS SET FORTH IN SECTION 25(c), HEREIN. THE INDEMNITY BY
TENANT TO LANDLORD AS SET FORTH IN THIS SECTION 13.1 SHALL BE IN EFFECT EVEN IF
THE NEGLIGENCE OR STRICT LIABILITY OF LANDLORD IS ALLEGED OR PROVED TO BE A
CAUSE THEREOF; PROVIDED, HOWEVER, THIS INDEMNITY SHALL NOT APPLY IF AND TO THE
EXTENT THAT LANDLORD'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT IS A CAUSE
THEREOF. The provisions of this Section shall survive the expiration or sooner
termination of this Lease with respect to any claims or liability occurring
prior to such expiration or termination, and shall not be limited by reason of
any insurance carried by Landlord and Tenant. Notwithstanding anything to the
contrary which may be set forth in this Section 13.1, above, Tenant shall have
no duty to cover any loss, damage or cost that may be needed to repair, or
replace the ground floor slab, or remediate the condition causing the heaving
of the ground floor slab in the office area of the building, to the extent it
is specifically excluded in Section 10.2, herein.
13.2 No Liability. Neither the shareholders, officers,
directors, trustees, individuals, or partners comprising Landlord or Landlord's
Property Manager, nor the shareholders (nor any of the partners comprising
same), directors, trustees, officers or partners of any of the foregoing, nor
their agents (collectively the "Parties") shall incur any liability for the
performance of Landlord's obligations under this Lease. Tenant shall look
solely to Landlord to enforce Landlord's obligations hereunder and shall not
seek any damages against any of the Parties. The liability of Landlord for
Landlord's obligations under this Lease shall not exceed and shall be limited
to the value of Landlord's interest in the Premises and the proceeds and rents
derived therefrom from and after Landlord's default hereunder, and Tenant shall
not look to any other property or assets of Landlord or any of the Parties in
seeking either to enforce Landlord's obligations under this Lease or to satisfy
a judgment for Landlord's failure to perform such obligations.
ARTICLE XIV: WAIVER OF SUBROGATION RIGHTS
14.1 Release; Waiver of Subrogation. Anything in this Lease to the
contrary notwithstanding:
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(a) Landlord hereby releases Tenant from any and all
liability or responsibility to the Landlord or anyone claiming through or under
Landlord, by way of subrogation or otherwise, for any (i) loss or damage to any
building, structure, or other tangible property, (ii) liability for personal
injury or other tortious conduct or (iii) losses under workers' compensation
laws and benefits, even though such loss, damages, or liability might be caused
by the negligence of such party, its agents, contractors, invitees, or
employees, whether or not such claims are or would be covered by insurance
policies carried by Landlord covering the Premises; and
(b) Tenant hereby releases Landlord, Landlord's Property
Manager, and Landlord's Mortgagee, and their agents, and any other tenant which
is leasing space in the Project, from any and all liability or responsibility
to the Tenant or anyone claiming through or under Tenant, by way of subrogation
or otherwise, for any (i) loss or damage to any building, structure, or other
tangible property, (ii) liability for personal injury or other tortious
conduct, or (iii) losses under workers' compensation laws and benefits, even
though such loss, damages, or liability might be caused by the negligence of
such party, its agents, contractors, invitees, or employees (whether or not
such claims are or would be covered by insurance policies carried or required
to be carried by Tenant hereunder).
14.2 Waiver Provision.
a. All insurance policies (other than worker's
compensation insurance) which Tenant must carry pursuant to Article VIII of
this Lease shall contain one of the following provisions and/or endorsements
("Waiver Provision"):
(i) An express waiver of any right of subrogation
by the insurance company against Landlord, Landlord's Property Manager,
Landlord's Mortgagee, and its agents and employees; or
(ii) A statement that the policy shall not be
invalidated should the insured waive in writing, prior to a loss, any or all
rights of recovery against any party for losses covered by such policies.
b. Any property insurance of Landlord covering the
Premises shall also contain a Waiver Provision in one of the alternative forms
provided in subsection 14.2(a), above; provided, this clause shall not cause
Landlord to be obligated to secure any insurance over and above what is
specifically contemplated herein. Any increased premium cost incurred by
Landlord by reason of such Waiver Provision shall be paid by Tenant, provided,
however, if Landlord is unable to obtain a waiver of subrogation from its
insured, then any agreement to obtain such a waiver shall be null and void.
ARTICLE XV: PARTIAL AND TOTAL DESTRUCTION OF THE PREMISES
In the event any part or all of the Premises shall at any time during
the term of this Lease be damaged or destroyed, regardless of cause, Tenant
shall give prompt notice to
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Landlord, subject to the terms of this Article XV. Tenant shall repair and
restore the Premises to its original condition, including buildings and all
other improvements on the Premises, as soon as circumstances permit. Provided
Tenant maintains the insurance required hereunder, and proceeds are received
from the casualty insurance policy to be maintained by Tenant hereunder, in the
event that Landlord's Mortgagee requires that any such insurance proceeds be
delivered to the Landlord's Mortgagee and applied as a payment on the debt
payable to Landlord's Mortgagee, Landlord agrees to contribute the amount of
the proceeds delivered to Landlord's Mortgagee and applied as a payment on the
Note payable to Lender, up to a maximum of Five Hundred Thousand Dollars
($500,000.00). In the event the amount of insurance proceeds applied to
Lender's Note exceeds $500,000.00, Landlord may, in its sole discretion, elect
to contribute the additional amount necessary to cover the entire amount of the
insurance proceeds applied by Landlord's Mortgagee to the Note. However, if
Landlord does not elect to contribute the additional amount necessary, either
Landlord or Tenant may elect to terminate this Lease. In the event of a
termination of the Lease by either Landlord or Tenant under this Section XV,
Tenant shall deliver to Landlord the amount of Tenant's deductible, as well as
any amount by which the entire insurance proceeds paid as a result of such
casualty would be insufficient to rebuild the Building but for the Landlord's
Mortgagee's application of the insurance proceeds hereunder. Tenant shall hold
Landlord free and harmless from any and all liability of any nature whatsoever
resulting from such damage or destruction, and such repairs and restoration.
Tenant, and not Landlord, shall be responsible for paying for any cost of
repairs or restoration in excess of the proceeds paid by insurance policies
procured by Tenant, but not for any such amounts paid by the insurer but
applied by Landlord's Mortgagee as a payment on its debt. Tenant is not
entitled to any rent abatement during or resulting from any disturbance on or
partial or total destruction of the Premises from Tenant. However, in the
event of a termination under this Article XV, once Tenant has delivered to
Landlord the sums due from Tenant hereunder, Landlord shall refund to Tenant
any remaining rent paid in advance, including, without limitation, the Prepaid
Rent.
ARTICLE XVI: CONDEMNATION
16.1 Condemnation Damages. In the event of the taking or
conveyance of the whole or any part of the Premises by reason of condemnation
by any public or quasi-public body, Landlord and Tenant shall represent
themselves independently in seeking damages before the condemning body. Each
party shall be entitled to the amount awarded respectively to each. Landlord
shall not make a claim in such proceedings for any portion of the award
attributable to tenant's furniture, fixtures, and equipment installed in the
Premises in accordance with this Lease which are to remain in the Premises as a
result of such taking.
16.2 Termination of Lease Due to Condemnation. In the event that
the taking includes the Building and materially adversely affects the use of
the Premises (as defined in Article V), Tenant may terminate the Lease by
giving Landlord sixty (60) days' written notice of its intention to terminate
the Lease after receiving notice of the Condemnation
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from the condemning authority. The effective date of the termination shall be
the actual date of such taking. In the event of termination, the rent for the
last month of Tenant's occupancy shall be prorated and Landlord shall refund to
Tenant any rent paid in advance and Tenant shall thereupon be released from its
obligation to pay rent.
ARTICLE XVII: ASSIGNMENT AND SUBLETTING
17.1 Tenant's Right of Assignment and Subletting.
a. No Assignment. Tenant shall not voluntarily or by
operation of law assign or encumber its interest in this Lease or in the
Premises, or sublease all or any part of the Premises, or allow any other
person or entity to occupy or use any part of the Premises, without first
obtaining the written consent of Landlord, which consent may be granted or
withheld in Landlord's sole and absolute discretion. Any assignment,
encumbrance, or sublease without Landlord's consent shall be voidable and, at
Landlord's election, shall constitute a Default. No transfer permitted by
Landlord shall release Tenant or change Tenant's primary liability to pay the
rent and to perform all other obligations of Tenant under this Lease.
b. Landlord's Option to Preserve Subtenancies. In the
event of Tenant's surrender of this Lease or the termination of this Lease in
any other manner, Landlord may, at its option, either terminate any or all
subtenancies, if any, or succeed to the interest of Tenant as sublandlord
thereunder. No merger shall result from Tenant's sublease of the Premises
under this Section, Tenant's surrender of this Lease, or the termination of
this Lease in any other manner. Tenant immediately and irrevocably assigns to
Landlord, as security for Tenant's obligations under this Lease, all rent from
any subletting of all or a part of the Premises as permitted by this Lease. In
the event of a default by Tenant, Landlord, as assignee and as attorney-in-fact
for Tenant, or a receiver for Tenant appointed on Landlord's application, may
collect the rent and apply it toward Tenant's obligations under this Lease.
c. Fees and Costs with Regard to Proposed Assignment or
Sublease. If Tenant requests Landlord to consent to a proposed assignment or
sublease, Tenant shall pay to Landlord, whether or not consent is ultimately
given, Landlord's reasonable attorney's fees and other costs incurred in
connection with each such request.
17.2 Landlord's Right of Assignment. Landlord shall be free at all
times, without need of consent or approval by Tenant, to assign its interest in
this Lease and/or to convey fee title to the Premises. Each conveyance by
Landlord of Landlord's interest in the Lease or the Premises prior to
expiration or termination hereof shall be subject to this Lease and shall
relieve the grantor of any further obligations or liability as Landlord, and
Tenant shall look solely to Landlord's successor-in-interest for all future
obligations of Landlord. Tenant hereby agrees to attorn to Landlord's
successors in interest, whether such interest is acquired by sale, transfer,
foreclosure, deed in lieu of foreclosure, or otherwise. The term "Landlord" as
used in this Lease, so far as covenants and obligations
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on the part of Landlord are concerned, shall be limited to mean and include
only the owner at the time in question of the fee title of the Premises.
Without further agreement, the transferee of such title shall be deemed to have
assumed and agreed to observe and perform any and all obligations of Landlord
hereunder during its ownership of the Premises.
ARTICLE XVIII: DEFAULT AND TERMINATION
18.1 Events of Default. The occurrence of any of the following
events (each an "Event of Default" or "Default") shall constitute a default by
Tenant:
a. Failure by Tenant to pay Base Rent, Additional Rent
(including, without limitation any Monthly Tax Payments) or other sum of money
payable hereunder when due and the continuance of such failure for ten (10)
days after written notice thereof from Landlord to Tenant; provided, however,
if Tenant shall fail in the performance of any such covenant or agreement of
this Lease necessitating notice by Landlord and shall receive notice from
Landlord hereunder two (2) or more times in any twelve (12) month period,
notwithstanding such failures have each been cured by Tenant on each previous
occasion, at Landlord's option, any further similar failure during such
12-month period may be deemed an Event of Default without the ability for cure;
b. Failure by Tenant to perform or comply with any
provision of this Lease [other than as set forth in Subsection 18.1(a)] if the
failure is not cured within thirty (30) days after notice has been given to
Tenant. If, however, the failure cannot reasonably be cured within thirty (30)
days after notice has been given to Tenant, Tenant shall not be in default of
this Lease if Tenant commences to cure the failure within the cure period and
diligently and in good faith continues to cure the failure.
c. To the extent permitted by law: (i) a general
assignment by Tenant or any guarantor of the Lease for the benefit of
creditors, or the filing by or against Tenant or any guarantor of any
proceeding or arrangement under any law relating to any insolvency or
bankruptcy, unless in the case of a proceeding filed against Tenant or any
guarantor the same is dismissed within sixty (60) days, or the appointment of a
trustee or receiver to take possession of all or substantially all of the
assets of Tenant or any guarantor, unless possession is restored to Tenant or
such guarantor within thirty (30) days, or any attachment, execution or other
judicially authorized seizure of all or substantially all of Tenant's assets
located upon the Premises or of Tenant's interest in this Lease, unless such
seizure is discharged within thirty (30) days; (ii) Tenant's or any guarantor's
convening of its creditors or any class thereof for the purpose of effecting a
moratorium upon or; (iii) Tenant's or any guarantor's insolvency or admission
of inability to pay its debts as they mature; and/or (iv) a violation by Tenant
or any affiliate of Tenant under any other lease or agreement with Landlord
relating to the Premises which is not cured within the time permitted
thereunder.
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d. A receiver or trustee shall be appointed for all or
substantially all of the assets of Tenant or any guarantor or of the Premises
or any of Tenant's property located thereon in any proceedings brought by
Tenant or any guarantor, or any such receiver or trustee shall be appointed in
any proceeding brought against Tenant or any guarantor and shall not be
discharged within sixty (60) days after such appointment or Tenant or such
guarantor shall consent to or acquiesce in such appointment; or
e. The leasehold hereunder shall be taken on execution
or other process of law in any action against Tenant.
18.2 Landlord's Remedies on Tenant Default.
18.2.1 Landlord shall have any one or more of the following
remedies after the occurrence of a Default by Tenant:
a. Terminate Lease. Terminate this Lease by giving
written notice of termination to Tenant, in which event Tenant immediately
shall surrender the Premises to Landlord. If Tenant fails to so surrender the
Premises, then Landlord, without prejudice to any other remedy it has for
possession of the Premises or arrearages in rent or other damages, may re-enter
and take possession of the Premises and expel or remove Tenant and any other
person or entity occupying the Premises or any part thereof, without being
liable for any damages, whether caused by the negligence of Landlord or
otherwise. No act by Landlord other than giving notice of termination to
Tenant shall terminate this Lease. Acts of maintenance, efforts to relet the
Premises, or the appointment of a receiver on Landlord's initiative to protect
Landlord's interest under this Lease shall not constitute a termination of this
Lease. On termination of the Lease, Landlord shall have the right to recover
from Tenant the aggregate sum of the following:
(i) The cost of recovering the Premises; plus
(ii) The unpaid Rent (including Base Rent and
Additional Rent) earned at the time of termination, including interest thereon
at the per annum interest rate provided in accordance with Article IV, above,
from the due date; plus
(iii) The amount equal to: (1) the total Rent which
Landlord would have received under this Lease for the remainder of the Term,
discounted at the Prime Rate then in effect to the then present value, less (2)
the then fair market value of the remaining unexpired portion of the Lease
determined at the then Fair Market Rate for the Premises, discounted at the
Prime Rate then in effect to the then present value, and taking into
consideration the likelihood and probable timing of the reletting of the
Premises; plus
(iv) All other reasonable expenses incurred by
Landlord in connection with Tenant's default and all other sums of money and
damages due to Landlord.
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For the purposes of this Section, the term "Prime Rate" shall
mean the per annum rate of interest announced or published from time to time by
The Frost National Bank (or its successors or assigns) as its Prime Commercial
Lending rate; provided, however, that the Prime Rate shall at all times be
limited to the maximum rate of interest from time to time permitted under
applicable federal and Texas law.
b. Re-take Possession. Landlord may terminate Tenant's
right of possession (but not the Lease) and may repossess the Premises by
forcible entry or detainer suit or otherwise, without demand or notice of any
kind to Tenant and without terminating this Lease and without being liable for
any damages, whether caused by the negligence of Landlord or otherwise; in such
case, Landlord may relet the Premises, or any part of them, to third parties,
but has no obligation to do so, except as may be required under Texas law.
Except to the extent Texas law requires otherwise, such reletting by Landlord
of the Premises may be on whatever terms and conditions Landlord, in its sole
discretion, deems advisable. Reletting can be for a period shorter or longer
than the remaining term of this Lease. Landlord's action under this Subsection
is not considered an acceptance of Tenant's surrender of the Premises unless
Landlord so notifies Tenant in writing. Tenant shall be immediately liable to
Landlord for all reasonable costs Landlord incurs in reletting the Premises,
including brokers' commissions, expenses of remodeling the Premises required by
the reletting, and like costs. Tenant shall pay to Landlord the Rent due under
this Lease on the dates the Rent is due, less the rent Landlord receives from
any reletting.
If Landlord relets the Premises without terminating this
Lease, any rent received will be applied to the account of Tenant, not to
exceed Tenant's total indebtedness to Landlord; no reletting by Landlord is
considered to be for its own account unless Landlord has notified Tenant in
writing that the Lease has been terminated. If Landlord relets the Premises,
rent that Landlord receives from reletting will be applied to the payment of:
(i) first, any indebtedness from Tenant to Landlord other than Rent due from
Tenant; (ii) second, any Additional Rent; (iii) third, all costs, including
maintenance, incurred by Landlord in reletting; and (iv) fourth, Base Rent due
and unpaid under the Lease. After deducting the payments referred to in this
Subsection, any sum remaining from the rent Landlord receives from reletting
will be held by Landlord and applied in payment of future Rent as Rent becomes
due under this Lease. If, on the date Rent is due under this Lease, the rent
received from the reletting is less than the rent due on that date, Tenant will
pay to Landlord, in addition to the remaining rent due, all costs, including
maintenance, Landlord incurred in reletting which remain after applying the
rent received from the reletting. Tenant shall have no right to or interest in
the rent or other consideration received by Landlord from reletting to the
extent it exceeds Tenant's total indebtedness to Landlord.
Tenant agrees that Landlord may file suit to recover any sums
falling due under the terms of this Section 18.2.1 from time to time; and that
no delivery or recovery of any portion due Landlord hereunder shall be any
defense in any action to recover any
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amount not theretofore paid to Landlord, nor shall such reletting be construed
as an election on the part of Landlord to terminate this Lease unless a written
notice of such intention be given to Tenant by Landlord. Notwithstanding any
such reletting without termination, Landlord may at any time thereafter elect
to terminate this Lease for such previous breach.
d. Perform on behalf of Tenant. Landlord may re-enter
the Premises without terminating this Lease and without being liable for any
damages, whether caused by the negligence of Landlord or otherwise, and do
whatever Tenant is obligated to do under the terms of this Lease. The expenses
incurred by Landlord in affecting compliance with Tenant's obligations under
this Lease immediately shall become due and payable to Landlord as Additional
Rent.
The above remedies are not exclusive; they are cumulative in addition to any
remedies now or later allowed by law, in equity, or otherwise.
18.2.2 In all events, Tenant is liable for all damages of
whatever kind or nature, direct or indirect, suffered by Landlord as a result
of the occurrence of an Event of Default. If Tenant fails to pay Landlord in a
prompt manner for the damages suffered, Landlord may pursue a monetary recovery
from Tenant. Included among these damages are all expenses incurred by
Landlord in repossessing the Premises (including, but not limited to, increased
insurance premiums resulting from Tenant's vacancy), all expenses incurred by
Landlord in reletting the Premises (including, but not limited to, those
incurred for advertisements, brokerage fees, repairs, remodeling, and
replacements), all concessions granted to a new tenant on a reletting, all
losses incurred by Landlord as a result of Tenant's default, a reasonable
allowance for Landlord's administrative costs attributable to Tenant's default,
and all reasonable attorney's fees incurred by Landlord in enforcing any of
Landlord's rights or remedies against Tenant.
18.2.3 Pursuit of any of the foregoing remedies does not
constitute an irrevocable election of remedies nor preclude pursuit of any
other remedy provided elsewhere in this Lease or by applicable law, and none is
exclusive of another unless so provided in this Lease or by applicable law.
Likewise, forbearance by Landlord to enforce one or more of the remedies
available to it on an Event of Default does not constitute a waiver of that
default or of the right to exercise that remedy later or of any rent, damages,
or other amounts due to Landlord hereunder.
18.2.4 Whether or not Landlord elects to terminate this
Lease or Tenant's right to possession of the Premises on account of any default
by Tenant, Landlord shall have all rights and remedies at law or in equity,
including, but not limited to, the right to re-enter the Premises and, to the
maximum extent provided by law, Landlord shall have the right to terminate any
and all subleases, licenses, concessions, or other consensual arrangements for
possession entered into by Tenant and affecting the Premises or, in Landlord's
sole discretion, may succeed to Tenant's interest in such subleases, licenses,
concessions, or arrangements. In the event of Landlord's election to succeed
to Tenant's
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interest in any such subleases, licenses, concessions, or arrangements, Tenant
shall have no further right to or interest in the rent or other consideration
receivable thereunder as of the date of notice by Landlord of such election.
18.3 Effect of Tenant's Default. If Tenant is in Default of the
Lease, then, in addition to the above, all costs of de-identification of the
Premises shall be paid by Tenant whether or not Landlord terminates this Lease.
18.4 Right of Landlord to Re-Enter. In the event of any
termination of this Lease, Landlord shall have the immediate right (but under
no obligation) to enter upon and repossess the Premises, and any personal
property of Tenant may be removed from the Premises and stored in any public
warehouse at the risk and expense of Tenant.
18.5 Surrender of Premises. No act or thing done by Landlord or
any agent or employee of Landlord during the Lease Term shall be deemed to
constitute an acceptance by Landlord or a surrender of Premises unless such
intent is specifically acknowledged in a writing signed by Landlord. The
delivery of keys to the Premises to Landlord or any agent or employee of
Landlord shall not constitute a surrender of the Premises or effect a
termination of this Lease, whether or not the keys are thereafter retained by
Landlord and, notwithstanding such delivery, Tenant shall be entitled to the
return of such keys at any reasonable time upon request until this Lease shall
have been terminated properly. The voluntary or other surrender of this Lease
by Tenant, whether accepted by Landlord or not, or a mutual termination hereof,
shall not work a merger, and at the option of Landlord shall operate as an
assignment to Landlord of all subleases or subtenancies affecting the Premises.
18.6 Default by Landlord. Landlord shall be in default if Landlord
fails to perform any provision of this Lease required of it and the failure is
not cured within thirty (30) days after notice has been given to Landlord. If,
however, the failure cannot reasonably be cured within the cure period,
Landlord shall not be in default of this Lease if Landlord commences to cure
the failure within the cure period and diligently and in good faith continues
to cure the failure. Notices given under this Article XVIII shall specify the
alleged breach and the applicable Lease provisions. If Landlord shall at any
time default beyond the applicable notice and cure period, Tenant shall, in
addition to any other rights or remedies which Tenant may have as a result of
such default, have the right to cure such default on Landlord's behalf. Any
sums expended by Tenant in doing so, and all reasonably necessary incidental
costs and expenses incurred in connection therewith, shall be payable by
Landlord to Tenant within thirty (30) days following demand therefor by Tenant.
Tenant shall not be entitled to an offset against rent.
18.7 Interest Charges. Any amount not paid by one part to the
other when due to the other party will bear interest from the date due at the
lesser of (i) the rate of eighteen percent (18%) per annum; or (ii) the maximum
rate permitted by law.
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ARTICLE XIX: SUBORDINATION, ATTORNMENT AND ESTOPPEL
19.1 Subordination and Non-Disturbance. Subject to the provisions
of this Section, this Lease and the leasehold estate created hereby shall be
subject, subordinate, and inferior to the lien and estate of any liens, trust
deeds, and encumbrances including without limitation any lien held by
Landlord's Mortgagee ("Mortgages"), and all renewals, extensions, or
replacements thereof, now or hereafter imposed by Landlord upon the Premises.
In confirmation of such subordination, Tenant shall, at Landlord's request, or
upon the request of Landlord's Mortgagee, execute promptly any certificate or
instrument evidencing such subordination that Landlord, or Landlord's
Mortgagee, may request. Tenant hereby constitutes and appoints Landlord the
attorney-in-fact for Tenant to execute any such certificate or instrument for
and on behalf of Tenant. Provided, however, that this Lease shall not be
subordinate to any Mortgage arising after the date of this Lease, or any
renewal, extension, or replacement thereof, unless and until Landlord provides
Tenant with an agreement ("Non-Disturbance Agreement"), in form and content
reasonably acceptable to Tenant, Landlord, and Landlord's Lender, signed and
acknowledged by each holder of any such interest setting forth that (i) so long
as Tenant is not in Default hereunder, Tenant's rights and obligations
hereunder shall remain in full force and Tenant's right to possession shall be
upheld, and (ii) any party succeeding to Landlord's interest shall be bound by
Tenant's payment of the Prepaid Rent and the provisions of this Lease regarding
thereto, if any of the Prepaid Rent remains unapplied at such time. Tenant
shall, promptly following a request by Landlord and after receipt of the Non-
Disturbance Agreement, execute and acknowledge any subordination agreement or
other documents required to establish of record the priority of any such
encumbrance over this Lease, so long as such agreement does not otherwise
increase Tenant's obligations or diminish Tenant's rights hereunder. The form
of Non-Disturbance Agreement attached hereto as Exhibit "G", is deemed approved
by Tenant as an acceptable form of Non-Disturbance Agreement; provided, the
approval of such form of Non-Disturbance Agreement in the form attached, shall
not limit or restrict the ability of Landlord to require the execution of a
different form of Non-Disturbance Agreement so long a such different form
complies with the conditions of this Section 19.1.
19.2 Attornment. In the event of foreclosure of any Mortgage,
whether superior or subordinate to this Lease, then (i) this Lease shall
continue in force; (ii) Tenant's quiet possession shall not be disturbed if
Tenant is not in default hereunder; (iii) Tenant shall attorn to and recognize
the mortgagee or purchaser at foreclosure sale ("Successor Landlord") as
Tenant's landlord for the remaining term of this Lease; and (iv) the Successor
Landlord shall not be bound by (a) any payment of rent for more than one month
in advance, unless same was required by the terms of this Lease; (b) any
amendment or modification of this Lease made without the Successor Landlord's
consent after the Successor Landlord's name is given to Tenant, unless the
amendment or modification is specifically authorized by the original lease and
does not require Landlord's prior agreement of consent; (c) any personal
liability for any act or omission of a prior Landlord; and (d) any termination
of Lease by Tenant except as authorized under this Lease or by law. At the
request of the Successor Landlord, Tenant shall execute a
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new lease for the Premises, setting forth all of the provisions of this Lease
except that the term of the new lease shall be for the balance of the term of
this Lease.
19.3 Estoppel Certificate. Tenant shall execute and deliver to
Landlord, within ten (10) days after receipt of Landlord's request, any
estoppel certificate or other statement to be furnished to any prospective
purchaser of or any lender against the Premises. Such estoppel certificate
shall acknowledge and certify each of the following matters, to the extent each
may be true: that the Lease is in effect and not subject to any rental offsets,
claims, or defenses to its enforcement; the commencement and termination dates
of the term; that Tenant is paying rent on a current basis; that any
improvements required to be furnished under the Lease have been completed in
all respects; that the Lease constitutes the entire agreement between Tenant
and Landlord relating to the Premises; that Tenant has accepted the Premises
and is in possession thereof; that the Lease has not been modified, altered, or
amended except in specified respects by specified instruments; and that Tenant
has no notice of any prior assignment, hypothecation, or pledge of rents or the
Lease.
ARTICLE XX: TENANT'S FINANCIAL STATEMENTS
During the term of the Lease and for such period as the Tenant remains
a registrant subject to the periodic reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, Tenant shall provide Landlord
with all financial information required on Forms 10-Q, 10-K, 8-K, as well as
any proxy materials, on a basis concurrent with its public reporting
obligations. Failure of the Tenant to file its required reports with the
Securities and Exchange Commission on a timely basis does not alter the
Tenant's obligation to provide Landlord with timely financial information
pursuant to the Lease. Should the Tenant's status as a registrant change
during the term of the Lease such that it is no longer subject to public
reporting requirements, then Tenant shall provide Landlord with quarterly
financial statements within sixty (60) days of the end of each fiscal quarter
and annual financial statements within ninety (90) days of the end of each
fiscal year.
ARTICLE XXI: NOTICES
21.1 Notice Requirements. All notices, requests, or demands herein
provided to be given or made, or which may be given or made by either party to
the other, shall be given or made only in writing and shall be deemed to have
been duly given: (i) when delivered personally at the address set forth below,
or to any agent of the party to whom notice is being given; or (ii) on the date
delivered when sent via Overnight Mail, properly addressed and postage prepaid;
or (iii) on the date sent via facsimile transmission; or (iv) seventy-two (72)
hours after the time the same is deposited in the United States mail, properly
addressed and first class postage prepaid, return receipt requested. The
proper addresses to which notices, requests, or demands may be given or made by
either party shall be the address set forth at the end of this Section or to
such other address or to such
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other person as any party shall designate. Such address may be changed by
written notice given to the other party in accordance with this Section.
If to Landlord:
XXXXXX/XxXXXXX 1, LTD.
Attn: Xxxx X. Xxxxxx, President
000 Xxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxxxxxxx
Xxxxx, Adami & Xxxxxxx, Inc.
0000 Xxxxx Xxxxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to Tenant:
Solo Serve Corporation
Attn: Xx. Xxxx Xxxxx
0000 Xxxxxxxxx Xxxx.
Xxx Xxxxxxx, Xxxxx 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With copy to:
Xxxxx X. Xxxxxxxxx
Xxx & Xxxxx, Inc.
000 X. Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
21.2 Payments Under Lease. Rent and all other payments due to
Landlord under this Lease shall be paid in lawful money of the United States of
America without offset or deduction to the name and at the address first given
above or to such other persons or parties or at such other places as Landlord
may from time to time designate in writing.
ARTICLE XXII: ATTORNEY'S FEES AND VENUE
22.1 Recovery of Attorneys' Fees and Costs of Suit. Tenant or
Landlord, as the case may be, shall reimburse the other party upon demand, for
any costs or expenses
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incurred in connection with any breach or default by the other party under this
Lease, whether or not suit is commenced or judgment entered, including without
limitation, enforcement proceedings of any type whether formal or informal, or
filed in state, federal or bankruptcy court. Such costs shall include legal
fees and costs incurred for the negotiation of a settlement, enforcement of
rights, or otherwise. Furthermore, if any action for breach of or to enforce
the provisions of this Lease is commenced, the court in such action shall award
to the party in whose favor a judgment is entered, a reasonable sum as
attorneys' fees and costs; such attorneys' fees and costs shall be paid by the
losing party in such action.
22.2 Party to Litigation. Tenant shall indemnify Landlord against
and hold Landlord harmless from all costs, expenses, demands, and liability
incurred by Landlord if Landlord becomes or is made a party to any claim or
action (i) instituted by Tenant, or by any third party against Tenant, unless
resulting from the default by Landlord hereunder, or by or against any person
holding any interest under or using the Premises by license of or agreement
with Tenant; (ii) for foreclosure of any lien for labor or material furnished
to or for Tenant or such other person; (iii) otherwise arising out of or
resulting from any action or transaction of Tenant or such other person during
or prior to the Term, hereof, other than a proceeding by Nationwide under the
Nationwide Note and Deed of Trust with Landlord's Mortgagee; or (iv) necessary
to protect Landlord's interest under this Lease in a bankruptcy proceeding, or
other proceeding commencing by or against Tenant, under Title 11 of the United
States Code, as amended. Tenant shall defend Landlord against any such claim
or action at Tenant's expense with counsel reasonably acceptable to Landlord
or, at Landlord's election, Tenant shall reimburse Landlord for any legal fees
or costs incurred by Landlord in any such claim or action. For purposes of
this Section 22.2, the term "Landlord" shall be deemed to include Landlord,
Landlord's Property Manager, and their officers, directors, trustees,
beneficiaries, partners, agents, affiliates and/or employees.
22.3 Non-Jury Trial; Venue. In the interest of obtaining a
speedier and less costly hearing of any dispute, each of Landlord and Tenant
hereby expressly waives trial by jury in any action, proceeding or counterclaim
brought by either party against the other and any rights to a trial by jury
under any statute, rule of law or public policy in connection with any matter
whatsoever arising out of or in any way related to this Lease and the Premises.
Although such jury waiver is intended to be self-operative and irrevocable,
Landlord and Tenant each further agree, if requested, to confirm such waivers
in writing at the time of commencement of any such action, proceeding, or
counterclaim. If Landlord commences any detainer suit, summary proceedings or
other action seeking possession of the premises, Tenant agrees not to interpose
by consolidation of actions, removal to chancery or otherwise, any
counterclaim, claim for set- off, recoupment, reduction of Rent, or other claim
seeking affirmative relief of any kind (except a mandatory or compulsory
counterclaim which Tenant would forfeit if not so interposed). Any action or
proceeding brought by either party against the other for any matter arising out
of or in any way relating to the Lease or the Premises, shall be heard, in the
County where the Premises are located.
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ARTICLE XXIII: RELATIONSHIP OF PARTIES, WAIVER AND CONSENT
23.1 Relationship of Parties. This Lease shall not be deemed or
construed by the parties, nor by any third party, as creating the relationship
of (i) principal and agent, (ii) partnership, or (iii) joint venture between
the parties. Neither the method of computation of rent nor any other provision
of this Lease, nor any acts of the parties are other than in the relationship
of Landlord and Tenant.
23.2 No Waiver. No waiver by Landlord of any breach of any one or
more of the terms, covenants, conditions, or agreements of this Lease shall be
deemed to imply or constitute a waiver of any succeeding or other breach.
Failure of Landlord to insist upon the strict performance of any of the terms,
conditions, covenants, and agreements of this Lease shall not constitute or be
considered as a waiver or relinquishment of Landlord's rights to subsequently
enforce any default, term, condition, covenants, or agreement, which shall all
continue in full force and effect. The rights and remedies of Landlord under
this Lease shall be cumulative and in addition to any and all other rights and
remedies which Landlord has or may have.
23.3 No Obligation to Give Consent. Landlord shall have no
liability for damages resulting from Landlord's failure to give any consent,
approval, or instruction reserved to Landlord. Tenant's sole remedy in any
such event shall be an action for injunctive relief.
ARTICLE XXIV: AUTHORITY TO MAKE LEASE;
COVENANT OF QUIET ENJOYMENT
24.1 Full Power and Authority to Enter Lease. The parties covenant
and warrant that each has full power and authority to enter into this Lease.
24.2 Quiet Enjoyment. Landlord covenants and warrants that Tenant
shall have and enjoy full, quiet, and peaceful possession of the Premises, its
appurtenances and all rights and privileges incidental thereto during the term,
subject to the provisions of this Lease and any title exceptions or defects in
existence at the time of the conveyance of the Premises to Landlord by Tenant.
ARTICLE XXV: HAZARDOUS MATERIAL
25.1 Environmental Compliance. Tenant shall not cause or permit
any Hazardous Material to be brought upon, or used in or about, the Premises by
Tenant, its agents, employees, contractors, or invitees, without the prior
written consent of Landlord. If Tenant breaches the obligations stated in the
preceding sentence, if the presence of Hazardous Material on the Premises
caused or permitted by Tenant results in contamination of the Premises, or if
contamination of the Premises by Hazardous Material otherwise occurs, during or
prior to the Term hereof, except as set forth in Section 25.3,
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below, and Landlord, its agents, employees or contractors are not responsible
for the contamination, then Tenant shall indemnify, defend, and hold Landlord
harmless from any and all claims, judgments, damages, penalties, fines, costs,
liabilities, or losses (including, without limitation, diminution in value of
the Premises, damages for the loss or restriction on use of rentable or usable
space or of any amenity of the Premises, damages arising from any adverse
impact on marketing of space of the Premises, and sums paid in settlement of
claims, attorneys' fees, consultation fees, and expert fees) which arise during
or after the term of the Lease as a result of such contamination. This
indemnification by Tenant shall survive the termination or expiration of this
Lease. This indemnification of Landlord by Tenant includes, without
limitation, costs incurred in connection with any investigation or site
conditions or any cleanup, remedial, removal, or restoration work required by
any federal, state, or local governmental agency or political subdivision
because of Hazardous Material present in the soil or ground water on or under
the Premises, unless Landlord is responsible of same under Section 25.3, below.
Without limiting the foregoing, if the presence of any Hazardous Material on
the Premises caused or permitted by Tenant results in any contamination of the
Premises, Tenant shall promptly take all actions at its sole expense as are
recommended by environmental engineers hired by Tenant and are necessary to
return the Premises to a condition which is in compliance with all applicable
Laws ; provided that Landlord's approval of such actions shall first be
obtained, which approval shall not be unreasonably withheld so long as such
actions would not potentially have any material adverse long-term or short-term
effect on the Premises.
25.2 Tenant's Responsibility for Hazardous Materials. Landlord and
Tenant acknowledge that Landlord may become legally liable for the costs of
complying with laws relating to Hazardous Material which are not the
responsibility of Landlord or the responsibility of Tenant including the
following: (i) a change in Laws which relate to Hazardous Material which make
Hazardous Material present on the Premises as of the Commencement Date, whether
known or unknown to Landlord, a violation of such new Laws; (ii) Hazardous
Material present or under the Premises as a result of any discharge, dumping,
or spilling (whether accidental or otherwise) on the surface of the Premises by
other tenants of the Premises, or their agents, employees, contractors, or
invitees, or by others during or prior to the Term hereof. Accordingly,
Landlord and Tenant agree that, except to the extent set forth in Section 25.3,
hereof, the cost of complying with Laws relating to Hazardous Material on the
Premises for which Landlord is legally liable as set forth in this Section 25.2
shall be the responsibility and shall be paid by Tenant. To the extent any
such expense relating to Hazardous Material is subsequently recovered or
reimbursed through insurance, or recovery from responsible third parties, or
other action, Tenant shall be entitled to a reimbursement to the extent it has
paid the maintenance expense to which such recovery or reimbursement relates.
Tenant shall also be responsible for remediation, environmental clean- up
and/or debris removal and related damages in connection with any fire or other
casualty which may occur on the premises.
25.3 Landlord's Responsibility for Hazardous Material. Landlord
agrees that it shall be responsible for Hazardous Material that migrates,
flows, percolates, diffuses, or in any other way moves beneath the surface of
the Premises from outside the Premises after
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the Commencement Date, provided such Hazardous Material is not caused by
Tenant, its agents, employees, contractors or invitees. The cost of complying
with Laws relating to Hazardous Material on the Premises for which Landlord is
legally liable under this Section 25.3, shall be the responsibility and shall
be paid by Landlord. In the event Landlord or Tenant discovers any Hazardous
Material located under the Demised Premises which Landlord is responsible for
under this Section 25.3, Landlord shall promptly proceed to remove such
Hazardous Material, at Landlord's sole cost and expense, necessary to return
the subsurface of the Property to a condition which is in compliance with all
applicable governmental regulations. Landlord hereby agrees to indemnify and
hold Tenant harmless from and against and to reimburse Tenant with respect to
(which obligation shall survive the termination or expiration of this Lease)
any and all claims, demands, causes of action, loss, damage, liabilities, cost
and expenses (including attorneys' fees and court costs) of any and every
character, known or unknown, fixed or contingent, asserted against Tenant at
any time and from time to time directly related to Landlord's failure to
promptly remove any Hazardous Material for which Landlord is responsible under
this Section 25.3.
25.4 Survival. Provisions of this Article XVII shall survive
termination of the Lease.
ARTICLE XXVI: GENERAL PROVISIONS
26.1 Gender; Number. The use of (i) the neuter gender includes the
masculine and feminine and (ii) the singular number includes the plural,
whenever the context requires.
26.2 Captions. Captions in this Lease are inserted for the
convenience of reference only and do not define, describe, or limit the scope
of the intent of this Lease or any of its terms.
26.3 Exhibits. All attached exhibits are a part of this Lease and
are incorporated in full by this reference. Except as specifically provided
herein, if any provision contained in any exhibit hereto is inconsistent or in
conflict with any provisions of this Lease, the provisions of this Lease shall
supersede the provisions of such exhibit and shall be paramount and
controlling.
26.4 Entire Agreement. This Lease contains the entire agreement
between the parties relating to the transactions contemplated hereby and all
prior or contemporaneous agreements, understandings, representations and
statements, oral and written, are merged into this Lease.
26.5 Drafting. This Lease shall not be construed more strictly
against one party than the other because it may have been drafted by one of the
parties or its counsel, each having contributed substantially and materially to
the negotiation and drafting hereof.
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26.6 Modification. No modification, waiver, amendment, discharge,
or change of this Lease shall be valid unless it is in writing and signed by
the party against which the enforcement of the modification, waiver, amendment,
discharge, or change is or may be sought.
26.7 Joint and Several Liability. If any party consists of more
than one person or entity, the liability of each such person or entity signing
this Lease shall be joint and several.
26.8 Governing Law. This Lease shall be construed and enforced in
accordance with the laws of the state in which the Premises are located.
26.9 Attorneys' Fees. With respect to Article XXIV and any other
provision in this Lease providing for payment or indemnification of attorneys'
fees, such fees shall be deemed to include reasonable fees incurred through any
applicable appeal process.
26.10 Time of Essence. Time is of the essence of every provision
of this Lease.
26.11 Severability. In the event any term, covenant, condition, or
provision of this Lease is held to be invalid, void, or otherwise unenforceable
by any court of competent jurisdiction, the fact that such term, covenant,
condition, or provision is invalid, void, or otherwise unenforceable shall in
no way affect the validity or enforceability of any other term, covenant,
condition, or provision of this Lease.
26.12 Successors and Assigns. Except as otherwise provided herein,
all terms of this Lease shall be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective legal representatives,
successors, and assigns.
26.13 Independent Covenants. This Lease shall be construed as
though the covenants herein between Landlord and Tenant are independent and not
dependent, and Tenant hereby expressly waives the benefit of any statute to the
contrary and agrees that if Landlord fails to perform its obligations set forth
herein, Tenant shall not be entitled to make any repairs or perform any acts
hereunder at Landlord's expense, unless otherwise provided herein, or to any
offset of the rent or other amounts owing hereunder against Landlord; provided,
however, the foregoing shall in no way impair the right of Tenant to commence a
separate action against Landlord for any violation by Landlord of the
provisions hereof so long as notice is first given to Landlord and any holder
of a mortgage or deed of trust covering the Building or all or any portion of
the Project (of whose address Tenant has theretofore been notified) and an
opportunity is granted to Landlord and such holder to correct such violation as
provided above.
26.14 Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be deemed an original. The counterparts
shall together constitute but one agreement. Any signature on a copy of this
Lease or any document necessary or
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convenient thereto sent by facsimile shall be binding upon transmission by
facsimile and the facsimile copy may be utilized for the purposes of this
Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LANDLORD:
XXXXXX/XxXXXXX 1, LTD.,
a Texas limited partnership,
By: Xxxxxx/XxXxxxx, LLC,
a Texas limited liability company,
Its General Partner
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Xxxx X. Xxxxxx, President
TENANT:
SOLO SERVE CORPORATION,
a Delaware corporation,
By: /s/ Xxxx X. Xxxxx
--------------------------------------
Xxxx X. Xxxxx
Executive Vice President
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