EXHIBIT 10(a)
CRESCENT [R]
OFFICE LEASE
BETWEEN
CRESCENT REAL ESTATE FUNDING I, L.P.
("LANDLORD")
AND
HALLMARK FINANCIAL SERVICES, INC.
("TENANT")
TABLE OF CONTENTS
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PAGE
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1. Basic Lease Information 1
2. Lease Grant 2
3. Term; Adjustment of Commencement Date; Early Access 3
4. Rent 4
5. Tenant's Use of Premises 7
6. Security Deposit 8
7. Services to be Furnished by Landlord 8
8. Use of Electrical Services by Tenant 9
9. Repairs and Alterations 10
10. Entry by Landlord 11
11. Assignment and Subletting 12
12. Liens 13
13. Indemnity 13
14. Insurance 14
15. Mutual Waiver of Subrogation 14
16. Casualty Damage 15
17. Condemnation 15
18. Events of Default 16
19. Remedies 16
20. Limitation of Liability 18
21. No Waiver 18
22. Tenant's Right to Possession 18
23. Relocation 19
24. Holding Over 19
25. Subordination to Mortgages; Estoppel Certificate 19
26. Attorneys' Fees 20
27. Notice 20
28. Reserved Rights 20
29. Surrender of Premises 20
30. Hazardous Materials 21
31. Miscellaneous 22
EXHIBITS AND RIDERS:
--------------------
EXHIBIT A-1 OUTLINE AND LOCATION OF PREMISES
EXHIBIT A-2 LEGAL DESCRIPTION OF PROPERTY
EXHIBIT B RULES AND REGULATIONS
EXHIBIT C COMMENCEMENT LETTER
EXHIBIT D WORK LETTER
EXHIBIT E PARKING AGREEMENT
EXHIBIT F LANDLORD'S FF&E
EXHIBIT G FORM OF SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT
RIDER NO. 1 OPTION TO EXTEND
RIDER NO. 4 RIGHT OF FIRST REFUSAL
OFFICE LEASE
This Office Lease (this "Lease") is entered into by and between CRESCENT
REAL ESTATE FUNDING I, L.P., a Delaware limited partnership ("Landlord"),
and HALLMARK FINANCIAL SERVICES,. INC., a Nevada corporation ("Tenant"), and
shall be effective as of the date set forth below Landlord's signature (the
"Effective Date")
1. Basic Lease Information. The key business terms used in this Lease are
defined as follows:
A. "Building": The building commonly known as Xxxxxx Xxxxxxx Plaza and
located at 000 Xxxx Xxxxxx, Xxxx Xxxxx, Xxxxx 00000.
B. "Rentable Square Footage of the Building" is agreed and stipulated
to be 936,373 square feet.
C. "Premises": The area shown on Exhibit A-1 to this Lease. The
Premises are located on floor 10 of the Building and known as suite number
1000. The "Rentable Square Footage of the Premises" is deemed to be 27,808
square feet. If the Premises include, now or hereafter, one or more floors
in their entirety, all corridors and restroom facilities located on such
full floor(s) shall be considered part of the Premises. Landlord and Tenant
stipulate and agree that the Rentable Square Footage of the Building and the
Rentable Square Footage of the Premises are correct and shall not be
remeasured.
D. "Base Rent':
Annual Rate Monthly
Period Per Square Foot Base Rent
------ --------------- ---------
6/1/03 to 10/31/03 $0.00 $0.00
11/1/03 to 6/30/05 $13.45 $31,168.13
7/1/05 to 6/30/07 $13.95 $32,326.80
7/1/07 to 6/30/09 $14.45 $33,485.47
7/1/09 to 6/30/11 $14.95 $34,644.13
E. "Tenant's Pro Rata Share": The percentage equal to the Rentable
Square Footage of the Premises divided by the Rentable Square Footage of the
Building. As of the Effective Date, Tenant's Pro Rata Share is 2.97%.
F. "Base Year" for Operating Expenses: 2003.
G. "Term.": The period of approximately 97 months starting on June 1,
2003 and continuing through and including June 30, 2011.
H. "Commencement Date": June 1, 2003.
I. "Security Deposit": $N/A.
J. "Guarantor(s)": N/A.
K "Business Day(s)": Monday through Friday of each week, exclusive of
New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
the day after Thanksgiving and Christmas Day ("Holiday"). Landlord may
designate additional Holidays, provided that the additional Holidays are
commonly recognized by other office buildings in the area where the Building
is located.
L. "Law(s)": All applicable statutes, codes, ordinances, orders, rules
and regulations of any municipal or governmental entity, now or hereafter
adopted, including the Americans with Disabilities Act and any other law
pertaining to disabilities and architectural barriers (collectively, "ADA"),
and all laws pertaining to the environment, including the Comprehensive
Environmental Response, Compensation and Liability Act as amended, 42 U.S.C.
S9601 et seq. ("CERCLA"), and all restrictive covenants existing of record
and all rules and requirements of any existing association or improvement
district affecting the Property.
M. "Normal business Hours": 7:00 AM. to 7:00 P.M. on Business Days and
8:00 A.M. to 1:00 P.M. on Saturdays, exclusive of Holidays.
N. "Notice Addresses":
Tenant: On or after the Commencement Date, notices shall be sent to Tenant
at the Premises with a copy to the address set forth below. Prior to the
Commencement Date, notices shall be sent to Tenant at the following address:
With a copy to:
Hallmark Financial Services, Inc. Hallmark Financial Services, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000 000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, XX 00000 Xxxx Xxxxx, XX 00000
Attn: Chief Financial Officer Attn: General Counsel
Phone #: (817) ________ Phone #: (817) ________
Fax #: (817) ________ Fax #: (817) ________
Landlord: With a copy to;
000 Xxxx Xxxxxx, 000 Xxxxxxxx Xxxxx,
Xxxxx 0000 Xxxxx 000
Xxxx Xxxxx, XX 00000 Xxxxxx, XX 00000
Attn: Property Manager Attn: Senior Vice President,
Phone #: (000) 000-0000 Asset Management and Leasing
Fax #: (000) 000-0000 Phone #: (000) 000-0000
Fax: (000) 000-0000
And to:
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attn: Legal Department
Phone #: (000) 000-0000
Fax: (000) 000-0000
Rent (defined in Section 4-A) is payable to the order Crescent Real
Estate Funding I, L.P. at the following address: X.X. Xxx 000000, Xxxxxx,
Xxxxx 00000-0000 or by wire transfer to Bank of America, Dallas, Texas,
ABA [ deleted for confidentiality ], for further credit to Crescent Real
Estate Funding I, L.P. Account [ deleted for confidentiality ].
O. "Other Defined Terms": In addition to the terms defined above, an
index of the other defined terms used in the text of this Lease set forth
below, with a cross-reference to the paragraph in this Lease in which the
definition of such term can be found:
Affiliate 11.E Mortgagee 25
Alterations 9-C(1) Operating Expenses 4.D
Audit Election Period 4.G Permitted Transfer 11.E
Cable 9.A Permitted Use 5.A
Claims 13 Prime Rate 19.B
Collateral 19.E Property 2
Commencement Date 3.A Provider 7.C
Common Areas 2 Relocated Premises 23
Completion Estimate 16.B Relocation Date 23
Contamination 30.C Rent 4.A
Costs of Reletting 19.B Service Failure 7.B
Excess Operating Expenses 4.B Special Installations 29
Expiration Date 3.A Substantial Completion Work Letter
Force Majeure 31.C Taking 17
Hazardous Materials 30.C Tenant Parties 13
Landlord Parties 13 Tenant's Insurance 14.A
Landlord Work 3.A Tenant's Property 14.A
Landlord's Rental Damages 19.B Tenant's Removable Property 29
Leasehold Improvements 29 Time Sensitive Default 18.B
Minor alterations 9.C(1) Transfer 11.A
Monetary Default 18.A Work Letter 3.A
Mortgage 25
2. Lease Grant. Landlord leases the Premises to Tenant and Tenant leases
the Premises from Landlord, together with the right in common with others to
use any portions of the Property (defined below) that are designated by
Landlord for the common use of tenants and others, such as sidewalks, common
corridors, vending areas, lobby areas and, with respect to multi-tenant
floors, restrooms and elevator foyers (the "Common Areas"). "Property" means
the Building and the parcel(s) of land on which it is located as more fully
described on Exhibit A-2. together with all other buildings and improvements
located thereon; and the Building garage(s) and other improvements serving
the Building, if any, and the parcel(s) of land on which they are located.
3. Term: Adjustment of Commencement Date: Early Access.
A. Term. This Lease shall govern the relationship between Landlord and
Tenant with respect to the Premises from the Effective Date through the last
day of the Term specified in Section 1.G (the "Expiration Date"), unless
terminated early in accordance with this Lease. The Term of this Lease (as
specified in Section 1.G) shall commence on the "Commencement Date", which
shall be June 1, 2003. If Landlord is delayed in delivering possession of
the Premises or any other space due to any reason, including Landlord's
failure to Substantially Complete the Landlord Work by the Estimated
Commencement Date, the holdover or unlawful possession of such space by any
third party, or for any other reason, such delay shall not be a default by
Landlord, render this Lease void or voidable, or otherwise render Landlord
liable for damages. Promptly after the determination of the Commencement
Date, the Expiration Date, the Rent schedule and any other variable matters,
Landlord shall prepare and deliver to Tenant a commencement letter agreement
substantially in the form attached as Exhibit C. If such commencement letter
is not executed by Tenant within 30 days after delivery of same by Landlord,
then Tenant shall be deemed to have agreed with the matters set forth
therein. Notwithstanding any other provision of this Lease to the contary,
if the Expiration Date would otherwise occur on a date other than the last
day of a calendar month, then the Term shall be automatically extended to
include the last day of such calendar month, which shall become the
Expiration Date. "Landlord Work" means the work, if any, that Landlord is
obligated to perform in the Premises pursuant to a separate work letter
agreement (the "Work Letter"), if any, attached as Exhibit D. If a Work
Letter is not attached to this Lease or if an attached Work Letter does not
require Landlord to perform any work, the occurrence of the Commencement
Date shall not be conditioned upon the performance of work by Landlord.
Tenant shall have the option to terminate this Lease effective as of the day
prior to the 6th anniversary of the Commencement Date (the "Termination
Date"), provided Tenant gives notice thereof to Landlord not less than nine
(9) months prior to the Termination Date and provided Tenant is not in
default under the Lease at the time of the giving of such notice nor on the
Termination Date. Tenant's right to terminate hereunder is conditioned upon
the payment in full by Tenant, on or before the Termination Date, of (i) all
Rent through and including the Termination Date, (ii) the cash sum of
$160,000.00, and (iii) the unamortized cost of all tenant improvement
allowances, leasing commissions and other transaction costs actually paid by
Landlord in connection with the Lease, calculated using a cost of funds rate
equal to ten percent (10%) (collectively, the "Termination Payment"). After
Landlords receipt of the Termination Payment and so long as Tenant has
surrendered the Premises in the condition required under this Lease, neither
party shall have any rights, liabilities or obligations under this Lease for
the period accruing after the Termination Date, except those which, by the
provisions of this Lease, expressly survive the termination of this Lease.
B. Acceptance of Premises. The Premises are accepted by Tenant in "as
is" condition and configuration subject to (1) any Landlord obligation to
perform Landlord Work, and (2) any latent defects in the Premises of which
Tenant notifies Landlord within one year after the Commencement Date [other
than work performed by Tenant Parties (defined below)]. TENANT HEREBY AGREES
THAT THE PREMISES ARE IN GOOD ORDER AND SATISFACTORY CONDITION AND THAT,
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS LEASE, THERE ARE NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, BY LANDLORD
REGARDING THE PREMISES, THE BUILDING OR THE PROPERTY.
C. Early Access. Landlord and Tenant hereby acknowledge and agree that
Tenant is currently occupying the Premises as of the Effective Date.
Tenant's access to the Premises shall be subject to the terms and conditions
of this Lease and Tenant shall pay Rent (defined in Section 4.A) to Landlord
for each day of such early access. However; except for the cost of services
requested by Tenant (e.g., freight elevator usage), Tenant shall not be
required to pay Base Rent and Tenant's Pro Rata Share of Excess Operating
Expenses for any days of such early access prior to June 1, 2003.
4. Rent.
A. Payments. As consideration for this Lease, commencing on the
Commencement Date, Tenant shall pay Landlord, without any demand, setoff or
deduction, the total amount of Base Rent, Tenant's Pro Rata Share of Excess
Operating Expenses (defined in Section 4.B) and any and all other sums
payable by Tenant under this Lease (all of which are sometimes collectively
referred to as "Rent"). Tenant shall pay and be liable for all rental, sales
and use taxes (but excluding income taxes), if any, imposed upon or measured
by Rent under applicable Law. The monthly Base Rent and Tenant's Pro Rata
Share of Excess Operating Expenses shall be due and payable in advance on
the first day of each calendar month without notice or demand. All other
items of Rent shall be due and payable by Tenant on or before 30 days after
billing by Landlord. All payments of Rent shall be by good and sufficient
check or by other means (such as automatic debit or electronic transfer)
acceptable to Landlord. If the Term commences on a day other than the first
day of a calendar month, the monthly Base Rent and Tenant's Pro Rata Share
of any Excess Operating Expenses for the month shall be prorated on a daily
basis based on a 360 day calendar year. Landlord's acceptance of less than
the correct amount of Rent shall be considered a payment on account of the
earliest Rent due. No endorsement or statement on a check or letter
accompanying a check or payment shall be considered an accord and
satisfaction, and either party may accept such check or payment without such
acceptance being considered a waiver of any rights such party may have under
this Lease or applicable Law. Tenant's covenant to pay Rent is independent
of every other covenant in this Lease.
B. Excess Operating Expenses. Tenant shall pay Tenant's Pro Rata Share
of the amount, if any, by which Operating Expenses (defined in Section 4.D)
for each calendar year during the Term, exceed Operating Expenses for the
Base Year (the "Excess Operating Expenses"). If Operating Expenses in any
calendar year decrease below the amount of Operating Expenses for the Base
Year, Tenant's Pro Rata Share of Operating Expenses for that calendar year
shall be $0. In no event shall Base Rent be reduced if Operating Expenses
for any calendar year are less than Operating Expenses for the Base Year. On
or about January 1 of each calendar year, Landlord shall provide Tenant with
a good faith estimate of the Excess Operating Expenses for such calendar
year during the Term. On or before the first day of each month, Tenant shall
pay to Landlord a monthly installment equal to one-twelfth of Tenant's Pro
Rata Share of Landlord's estimate of the Excess Operating Expenses. Prior to
May 1 of each calendar year of the Term, if Landlord determines that its
good faith estimate of the Excess Operating Expenses was incorrect, Landlord
may provide Tenant with a revised estimate. After its receipt of the revised
estimate, Tenant's monthly payments shall be based upon the revised
estimate. If Landlord does not provide Tenant with an estimate of the Excess
Operating Expenses by January 1 of a calendar year, Tenant shall continue to
pay monthly installments based on the most recent estimate(s) until Landlord
provides Tenant with the new estimate (no later than May 1 of each calendar
year during the Term). Upon delivery of the new estimate an adjustment shall
be made for any month for which Tenant paid monthly installments based on
the same year's prior incorrect estimate(s). Tenant shall pay Landlord the
amount of any underpayment within 30 days after receipt of the new estimate.
Any overpayment shall be credited against the next sums due and owing by
Tenant or, if no further Rent is due, refunded directly to Tenant within 30
days of determination. The obligation of Tenant to pay for Excess Operating
Expenses as provided herein shall survive the expiration or earlier
termination of this Lease. If the Expiration Date falls on a date other than
December 31st", Tenant's Excess Operating Expenses shall be prorated on a
daily basis based on a 360 day calendar year.
C. Reconciliation of Operating Expenses. Within 120 days after the end
of each calendar year or as soon thereafter as is practicable but no later
than May 1 of each calendar year, Landlord shall furnish Tenant with a
statement of the actual Operating Expenses and Excess Operating Expenses for
such calendar year. If the most recent estimated Excess Operating Expenses
paid by Tenant for such calendar year are more than the actual Excess
Operating Expenses for such calendar year, Landlord shall apply any
overpayment by Tenant against Rent due or next becoming due; provided, if
the Term expires before the determination of the overpayment, Landlord
shall, within 30 days of determination, refund any overpayment to Tenant
after first deducting the amount of Rent due. If the most recent estimated
Excess Operating Expenses paid by Tenant for the prior calendar year are
less than the actual Excess Operating Expenses for such year, Tenant shall
pay Landlord, within 30 days after its receipt of the statement of Operating
Expenses, any underpayment for the prior calendar year.
D. Operating Expenses Defined. "Operating Expenses" means all costs and
expenses incurred or accrued in each calendar year in connection with the
ownership, operation, maintenance, management, repair and protection of the
Property which are directly attributable or reasonably allocable to the
Property, including Landlord's personal property used in connection with the
Property and including all costs and expenditures relating to the following,
except that if such replacements are properly classified as capital in
nature under sound real estate accounting principles consistently applied,
the cost of such replacements shall be included in Operating Expenses and
amortized pursuant to Section 4.D(9) below. As used in this Lease, the
"sound real estate accounting principles" used by Landlord in calculating
Operating Expenses will, to the extent applicable and except as otherwise
provided in this Lease, be consistent with "generally accepted accounting
principles" or "GAAP":
(1) Operation, maintenance, repair and replacements of any part of
the Property, including the mechanical, electrical, plumbing, HVAC, vertical
transportation, fire prevention and warning and access control systems;
materials and supplies (such as light bulbs and ballasts); equipment and
tools; floor, wall and window coverings; personal property; required or
beneficial easements; and related service agreements and rental expenses
(except for repairs, replacements and general maintenance paid by insurance
proceeds).
(2) Administrative and management fees, including accounting,
information and professional services (except for negotiations and disputes
with specific tenants not affecting other parties); management office(s);
and wages, salaries, benefits, reimbursable expenses and taxes (or
allocations thereof) for full and part time personnel involved in operation,
maintenance and management (except for fees and expenses paid by insurance
proceeds).
(3) Janitorial service; window cleaning waste disposal; gas, water
and sewer and other utility charges (including add-ons); and landscaping,
including all applicable tools and supplies.
(4) Property, liability and other insurance coverages carried by
Landlord, including deductibles and risk retention programs and a
proportionate allocation to the Property of the cost of blanket insurance
policies maintained by Landlord and/or its Affiliates (defined below).
(5) Real estate taxes, assessments, business taxes excises,
association dues fees, levies, charges and other taxes of every kind and
nature whatsoever, general and special, extraordinary and ordinary, foreseen
and unforeseen, including interest on installment payments, which may be
levied or assessed against or arise in connection with ownership. use,
occupancy, rental, operation or possession of the Property (including
personal property taxes for property that is owned by Landlord and used in
connection with the operation, maintenance and repair of the Property), or
substituted, in whole or in part, for a tax previously in existence by any
taxing authority, or assessed in lieu of a tax increase, or paid as rent
under any ground lease. Operating Expenses do not include Landlord's income,
franchise or estate taxes (except to the extent such excluded taxes are
assessed in lieu of taxes included above).
(6) Compliance with Laws, including license, permit and inspection
fees (but not in duplication of capital expenditures amortized as provided
in Section 4.D(9)); and all expenses and fees, including attorneys' fees and
court or other venue of dispute resolution costs, incurred in negotiating or
contesting real estate taxes & the validity and/or applicability of any
governmental enactments which may affect Operating Expenses; provided
Landlord shall credit against Operating Expenses any refunds received from
such negotiations or contests to the extent originally included in Operating
Expenses (less Landlord's costs).
(7) Building safety services to the extent provided or contracted
for by Landlord
(8) Goods and services purchased from Landlord's subsidiaries and
Affiliates to the extent the cost of same is consistent with rates charged
by unaffiliated third parties for similar goods and services. Such goods and
services shall from time to time be competitively bid on by third party
providers.
(9) Amortization of capital expenditures incurred: (a) to conform
with Laws; (b) to provide or maintain building standards (other than
building standard tenant improvements); or (c) with the intention of
promoting safety or reducing or controlling increases in Operating Expenses,
such as lighting retrofit and installation of energy management systems.
Such expenditures shall be amortized uniformly over the following periods of
time (together with interest on the unamortized balance at the Prime Rate
(defined in Section 19.B) as of the date incurred plus 2%): for building
improvements, the shorter of 10 years or the estimated useful life of the
improvement; for equipment, 7 years; for furniture and fixtures, 5 years;
for computer equipment and software, 3 years; and for all other items, 3
years for expenditures under $50,000 and 5 years for expenditures in excess
of $50,000. Notwithstanding the foregoing, Landlord may elect to amortize
capital expenditures under this subsection over a longer period of time
based upon (i) the purpose and nature of the expenditure. (ii) the relative
capital burden on the Property, (iii) for cost savings projects, the
anticipated payback period and (iv) otherwise in accordance with sound real
estate accounting principles consistently applied.
(10) Electrical services used in the operation, maintenance and
use of the Property; sales, use, excise and other taxes assessed by
governmental authorities on electrical services supplied to the Property,
and other costs of providing electrical services to the Property.
E. Exclusions from Operating Expenses. Operating Expenses exclude the
following expenditures:
(1) Leasing commissions, attorneys' fees and other expenses related
to leasing tenant space and constructing improvements for the sole benefit
of an individual tenant.
(2) Goods and services furnished to an individual tenant of the
Building which are above building standard and which are separately
reimbursable directly to Landlord in addition to Excess Operating Expenses.
(3) Repairs, replacements and general maintenance paid by insurance
proceeds or condemnation proceeds or another tenant or responsible third
party.
(4) Except as provided in Section 4.D(9), depreciation,
amortization, interest payments on any encumbrances on the Property and the
cost of capital improvements or additions.
(5) Costs of installing any specialty service, such as an
observatory, broadcasting facility, luncheon club, or athletic or
recreational dub.
(6) Expenses for repairs or maintenance related to the Property
which have been reimbursed to Landlord pursuant to warranties or service
contracts.
(7) Costs (other than maintenance costs) of any art work (such as
sculptures or paintings) used to decorate the Building.
(8) Principal payments on indebtedness secured by liens against the
Property, or costs of refinancing such indebtedness.
(9) Transfer, gains, inheritance, estate, income, excess profits or
franchise taxes or other such taxes imposed on or measured by the income of
Landlord from the operation of the Property.
(10) Expenses incurred in leasing or procuring new tenants,
including advertising and marketing expenses and expenses for preparation of
leases or renovating space for new tenants, rent allowances, lease takeover
costs, payment of moving costs and similar costs and expenses.
(11) Costs relating to disputes between Landlord and a specific
tenant of the Building
(12) The cost of any work or service performed for any tenant
(including Tenant) at such tenant's cost.
(13) Costs of correcting latent defects in the Premises which are
disclosed to Landlord within one year after the Commencement Date
F. Proration of Operating Expenses: Adjustments. If Landlord incurs
Operating Expenses for the Property together with one or more other
buildings or properties, whether pursuant to a reciprocal easement
agreement, common area agreement or otherwise, the shared costs and expenses
shall be equitably prorated and apportioned by Landlord between the Property
and the other buildings or properties. If the Building is not 100% occupied
during any calendar year or partial calendar year or if Landlord is not
supplying services to 100% of the total Rentable Square Footage of the
Building at any time during a calendar year or partial calendar year,
Operating Expenses shall be determined as if the Building had been 100%
occupied and Landlord had been supplying services to 100% of the Rentable
Square Footage of the Building during that calendar year. If Tenant pays for
Tenant's Pro Rata Share of Operating Expenses based on increases over a
"Base Year"' and Operating Expenses for a calendar year are determined as
provided in the prior sentence, Operating Expenses for the Base Year shall
also be determined as if the Building had been 100% occupied and Landlord
had been supplying services to 100% of the Rentable Square Footage of the
Building. The extrapolation of Operating Expenses under this Section shall
be performed by Landlord by adjusting the cost of those components of
Operating Expenses that are impacted by changes in the occupancy of the
Building.
G. Audit Rights. Within 60 days after Landlord furnishes its statement
of actual Operating Expenses for any calendar year (including the Base Year)
(the "Audit Election Period"), Tenant may, at its expense (except as
otherwise set forth below), elect to audit landlord's Operating Expenses for
such calendar year only, subject to the following conditions: (1) there is
no uncured event of default under this Lease; (2) the audit shall be
prepared by an independent certified public accounting firm of recognized
national standing; (3) in no event shall any audit be performed by a firm
retained on a "contingency fee" basis; (4) the audit shall commence within
60 days after Landlord makes Landlord's books and records available to
Tenant's auditor and shall conclude within 90 days after commencement; (5)
the audit shall be conducted during landlord's normal business hours at the
location where Landlord maintains its books and records and shall not
unreasonably interfere with the conduct of Landlord's business; (6) Tenant
and its accounting firm shall treat any audit in a confidential manner and
shall each execute Landlord's confidentiality agreement for Landlord's
benefit prior to commencing the audit, and (7) the accounting firm's audit
report shall, at no charge to Landlord, be submitted in draft form for
Landlord's review and comment before the final approved audit report is
delivered to Landlord, and any reasonable comments by Landlord shall
accompany the final audit report. This paragraph shall not be construed to
limit, suspend, or xxxxx Tenant's obligation to pay Rent when due, including
estimated Excess Operating Expenses. Landlord shall credit any overpayment
determined by the final approved audit report against the next Rent due and
owing by Tenant or, if no further Rent is due, refund such overpayment
directly to Tenant within 30 days of determination. Likewise, Tenant shall
pay Landlord any underpayment determined by the final approved audit report
within 30 days of determination. The foregoing obligations shall survive the
expiation or termination of this Lease. If Tenant does not give written
notice of its election to audit Landlord's Operating Expenses during the
Audit Election Period, Landlord's Operating Expenses for the applicable
calendar year shall be deemed approved for all purposes, and Tenant shall
have no further right to review or contest the same. The right to audit
granted hereunder is personal to the initial Tenant named in this Lease and
to any assignee under a Permitted Transfer (defined below) and shall not be
available to any subtenant under a sublease of the Premises, if the audit
proves that Landlord's calculation of Operating Expenses for the calendar
year under inspection was overstated by more than five percent (5%), then,
after verification. Landlord shall pay Tenant's actual reasonable out-of-
pocket audit and inspection fees applicable to the review of said calendar
year statement within thirty (30) days after receipt of Tenant's invoice
therefor.
5. Tenant's Use of Premises.
A. Permitted Uses. 'The Premises shall be used only for general office
use (the "Permitted Use") and for no other use whatsoever. Tenant shall not
use or permit the use of the Premises for any purpose which is illegal,
creates obnoxious odors (including tobacco smoke), noises or vibrations, is
dangerous to persons or property, could increase Landlord's insurance costs,
or which, in Landlord's reasonable opinion, unreasonably disturbs any other
tenants of the Building or interferes with the operation or maintenance of
the Property. Except as provided below, the following uses are expressly
prohibited in the Premises: schools, government offices or agencies;
personnel agencies; collection agencies; credit unions; data processing,
telemarketing or reservation centers; medical treatment and health care;
radio, television or other telecommunications broadcasting; restaurants and
other retail; customer service offices of a public utility company; or any
other purpose which would, in Landlord's reasonable opinion, impair the
reputation or quality of the Building, overburden any of the Building
systems, Common Areas or parking facilities (including any use which would
create a population density in the Premises which is in excess of the
density which is standard for the Building), impair Landlord's efforts to
lease space or otherwise interfere with the operation of the Property.
Notwithstanding the foregoing, the following ancillary uses are permitted in
the Premises only so long as they do not, in the aggregate, occupy more than
10% of the Rentable Square Footage of the Premises or any single floor
(which ever is less): (A) the following services provided by Tenant
exclusively to its employees: schools, training and other educational
services; credit unions; and similar employee services; and (B) the
following services directly and exclusively supporting Tenant's business:
telemarketing; reservations; storage; data processing; debt collection; and
similar support services.
B. Compliance with Laws. Tenant shall comply with all Laws regarding
the operation of Tenant's business and the use, condition, configuration and
occupancy of the Premises and the use of the Common Areas. Tenant, within 10
days after receipt, shall provide Landlord with copies of any notices Tenant
receives regarding a violation or alleged or potential violation of any
Laws. Tenant shall comply with the rules and regulations of the Building
attached as Exhibit B and such other reasonable rules and regulations (or
modifications thereto) adopted by Landlord from time to time with written
notice to Tenant. Such rules and regulations will be applied in an equitable
manner as determined by Landlord. Tenant shall also cause its agents,
contractors, subcontractors, employees, customers, and subtenants to comply
with all rules and regulations.
C. Tenant's Security Responsibilities. Tenant shall (1) lock the doors
to the premises and take other reasonable steps to secure the Premises and
the personal property of all Tenant Parties (defined in Section 13) in the
Common Areas and parking facilities of the Building and Property, from
unlawful intrusion, theft, fire and other hazards; (2) keep and maintain in
good working order all security and safety devices installed in the Premises
by or for the benefit of Tenant (such as locks, smoke detectors and burglar
alarms); and (3) cooperate with Landlord and other tenants in the Building
on Building safety mailers. Tenant acknowledges that any security or safety
measures employed by Landlord are for the protection of Landlords own
interests; that Landlord is not a guarantor of the security or safety of the
Tenant Parties or any of Tenant's transferees, contractors or licensees or
their property; and that such security and safety matters are the
responsibility of Tenant and the local law enforcement authorities.
6. Security Deposit Intentionally deleted.
7. Services Furnished by Landlord.
A. Standard Services. Subject to the provisions of this Lease, Landlord
agrees to furnish (or cause a third party provider to furnish) as an
Operating Expense (as set forth in Section 4.D.), the following services to
Tenant during the Term:
(1) Water service for use in the lavatories on each floor on which
the Premises are located.
(2) Heat and air conditioning in season during Normal Business
Hours, at such temperatures and in such amounts as required by governmental
authority or as Landlord determines are standard for the Building. Tenant
upon such notice as is reasonably required by Landlord, and subject to the
capacity of the Building systems, may request HVAC service during hours
other than Normal Business Hours. Tenant shall pay Landlord for such
additional service at a rate equal to $60.00 per requested hour of operation
per floor (the "Hourly HVAC Charge") Landlord shall have the right, upon 30
days prior written notice to Tenant, to adjust the Hourly HVAC Charge from
time to time, but not more than once per calendar year, based upon increases
in HVAC costs, which costs include utilities, taxes, surcharges, labor,
equipment, maintenance and repair.
(3) Maintenance and repair of the Property as described in Section
9.B.
(4) Janitorial service five days per week (excluding Holidays), as
determined by Landlord. If Tenant's use of the Premises, floor covering or
other improvements require special services in excess of the standard
services for the Building, Tenant shall pay the additional cost attributable
to the special services.
(5) Elevator service, subject to proper authorization and Landlord's
policies and procedures for use of the elevator(s) in the Building.
(6) Exterior window washing at such intervals as determined by
Landlord.
(7) Electricity to the Premises for general office use, in
accordance with and subject to the terms and conditions in Article 8.
(8) On-site building safety personnel services consistent with
comparable buildings in the Fort Worth, Texas area from 7:00 a.m. to 7:00
p.m. on weekdays other than Holidays, subject to the provisions of Section
5.C.
(9) Landlord agrees that the above-described services and
maintenance of the Building and its components, including the Common Areas,
shall be comparable to services and maintenance provided to other comparable
office buildings in Fort Worth, Texas, taking into account age, size and
other relevant operating factors during the Term (arid any renewals or
extensions thereof).
B. Service Interruptions. For purposes of this Lease, a 'Service
Failure" shall mean any interruption, suspension or termination of services
being provided to Tenant by Landlord or by third-party providers, whether
engaged by Tenant or pursuant to arrangements by such providers with
Landlord, which are due to (1) the application of Laws; (2) the failure,
interruption or malfunctioning of any electrical or mechanical equipment,
utility or other service to the Building or Property; (3) the performance of
repairs, maintenance, improvements or alterations; or (4) the occurrence of
any other event or cause whether or not within the reasonable control of
Landlord. No Service Failure shall render Landlord liable to Tenant,
constitute a constructive eviction of Tenant, give rise to an abatement of
Rent, or relieve Tenant from the obligation to fulfill any covenant or
agreement. Commencing on the 6th consecutive Business Day of any Service
Failure within Landlord's control, (unless the Service Failure is caused by
a fire or other casualty, in which event Section 16 controls), Tenant shall,
as its sole remedy, be entitled to an equitable diminution of Base Rent
based upon the pro rata portion of the Premises which is rendered unfit for
occupancy for the Permitted Use, except to the extent such Service Failure
is caused by a Tenant Party. In no event shall Landlord be liable to Tenant
for any loss or damage, including the theft of Tenant's Property (defined in
Article 14), arising out of or in connection with any Service Failure or the
failure of any Building safety services, personnel or equipment.
C. Third Party Services, If Tenant desires any service which Landlord
has not specifically agreed to provide in this Lease, such as private
security systems or telecommunications services serving the Premises, Tenant
shall procure such service directly from a reputable third party service
provider ("Provider") for Tenant's own account Tenant shall require each
Provider to comply with the Building's rules and regulations, all Laws, and
Landlord's reasonable policies and practices for the Building. Tenant
acknowledges Landlord's current policy that requires all Providers utilizing
any area of the Property outside the Premises to be approved by landlord and
to enter into a written agreement acceptable to Landlord prior to gaining
access to, or making any installations in or through, such area.
Accordingly, Tenant shall give Landlord written notice sufficient for such
purposes.
8. Use of Electrical Services by Tenant
A. Landlord's Electrical Service. Subject to the terms of this Lease,
Landlord shall furnish building standard electrical service to the Premises
sufficient to operate customary lighting, office machines and other
equipment of similar low electrical consumption. Landlord and Tenant
acknowledge and agree that Tenant's electrical consumption conforms to the
building standards as of the Effective Date. Landlord may, at any time and
from time to time, calculate Tenant's actual electrical consumption in the
Premises by a survey conducted by a reputable consultant selected by
Landlord, all at Tenant's expense. The cost of any electrical consumption in
excess of that which Landlord determines is standard for the Building shall
be paid by Tenant in accordance with Section 8.D. The furnishing of
electrical services to the Premises shall be subject to the rules,
regulations and practices of the supplier of such electricity and of any
municipal or other governmental authority regulating the business of
providing electrical utility service. Landlord shall not be liable or
responsible to Tenant for any loss, damage or expense which Tenant may
sustain or incur if either the quantity or character of the electrical
service is changed or is no longer available or no longer suitable for
Tenant's requirements.
B. Selection of Electrical Service Provider. Landlord shall have and
retain the sole right to select the provider of electrical services to the
Building and/or the Property. To the fullest extent permitted by Law,
Landlord shall have the continuing right to change such utility provider.
All charges and expenses incurred by Landlord due to any such changes in
electrical services, including maintenance, repairs, installation and
related costs, shall be included in the electrical services costs referenced
in Section 4.D(10), unless paid directly by Tenant.
C. Submetering. Landlord shall have the continuing right, upon 30 days
written notice, to install a submeter for the Premises at Tenant's expense,
but such expense shall only be charged to Tenant if Landlord has a
reasonable belief that Tenant's electrical consumption is above building
standard. If submetering is installed for the Premises, Landlord may charge
for Tenant's actual electrical consumption monthly in arrears for the
kilowatt hours used, a rate per kilowatt hour equal to that charged to
Landlord by the provider of electrical service to the Building during the
same period of time (plus, to the fullest extent permitted by applicable
Laws, an administrative fee equal to 2.5% of such charge; provided, however,
if Landlord is installing submeters for all tenants of the Building and is
not installing a submeter for the Premises because Landlord has a reasonable
belief that Tenant's electrical consumption is above building standard,
Tenant shall not be charged such administrative fee or an installation fee
for Tenant's submeter), except as to electricity directly purchased by
Tenant from third party providers after obtaining Landlord's consent to the
same. In the event Landlord is unable to determine the exact kilowatt hourly
charged during the period of time, Landlord shall use the average kilowatt
hourly charge to the Building for the first billing cycle ending after the
period of time in question. Even if the Premises are submetered, Tenant
shall remain obligated to pay Tenant's Pro Rata Share of the cost of
electrical services as provided in Section 4.B, except that Tenant shall be
entitled to a credit against electrical services costs equal to that portion
of the amounts actually paid by Tenant separately and directly to Landlord
which are attributable to building standard electrical services submetered
to the Premises.
D. Excess Electrical Service. Tenant's use of electrical service shall
not exceed, in voltage, rated capacity, use beyond Normal Business Hours or
overall load, that which Landlord deems to be standard for the Building. If
Tenant requests permission to consume excess electrical service, Landlord
may refuse to consent or may condition consent upon conditions that Landlord
reasonably elects (including the installation of utility service upgrades,
meters, submeters, air handlers or cooling units). The costs of any approved
additional consumption (to the extent permitted by Law), installation and
maintenance shall be paid by Tenant.
9. Repairs and Alterations.
A. Tenant's Repair Obligations. Tenant shall keep the Premises in good
condition and repair, ordinary wear and tear excepted Tenant's repair
obligations include, without limitation, repairs to: (1) floor covering
and/or raised flooring; (2) interior partitions; (3) doors; (4) the interior
side of demising walls; (5) electronic, phone and data cabling and related
equipment (collectively, "Cable") that is installed by or for the benefit of
Tenant whether located in the Premises or in other portions of the Building;
(6) supplemental air conditioning units, private showers and kitchens,
including hot water heaters, plumbing, dishwashers, ice machines and similar
facilities serving Tenant exclusively; (7) phone rooms used exclusively by
Tenant; (8) Alterations (defined below) performed by contractors retained by
Tenant, including related HVAC balancing; and (9) all of Tenant's
furnishings, trade fixtures, equipment and inventory. Prior to performing
any such repair obligation, Tenant shall give written notice to Landlord
describing the necessary maintenance or repair. Upon receipt of such notice,
Landlord may elect either to perform any of the maintenance or repair
obligations specified in such notice in a reasonably timely manner, or
require that Tenant perform such obligations by using contractors approved
by Landlord, which approval shall not be unreasonably withheld. All work
shall be performed at Tenants expense in accordance with the rules and
procedures described in Section 9.C below. If Tenant fails to make any
repairs to the Premises for more than 15 days after notice from Landlord
(although notice shall not be required if there is an emergency), Landlord
may, in addition to any other remedy available to Landlord, make the
repairs, and Tenant shall pay to Landlord the reasonable cost of the repairs
within 30 days after receipt of an invoice, together with an administrative
charge in an amount equal to 10% of the cost of the repairs.
B. Landlord's Repair Obligations. Landlord shall keep and maintain in
good repair and working order and make repairs to and perform maintenance
upon: (1) structural elements of the Building; (2) standard mechanical
(including HVAC), electrical, plumbing and fire/life safety systems serving
the Building generally; (3) Common Areas; (4) the roof of the Building; (5)
exterior windows of the Building; and (6) elevators serving the Building.
Landlord shall promptly make repairs (taking into account the nature and
urgency of the repair) for which Landlord is responsible . If any of the
foregoing maintenance or repair is necessitated due to the acts or omissions
of any Tenant Party (defined in Section 13) and such costs are not fully
covered by insurance, Tenant shall pay the costs of such repairs or
maintenance to Landlord within 30 days after receipt of an invoice, together
with an administrative charge in an amount equal to 10% of the cost of the
repairs; provided however, such costs shall be reduced by any insurance
proceeds actually received by Landlord from Landlord's insurer relating to
such repair.
C. Alterations.
(1) When Consent Is Required. Tenant shall not make alterations,
additions or improvements to the Premises or install any Cable in the
Premises or other portions of the Building (collectively, "Alterations")
without first obtaining the written consent of Landlord in each instance,
which consent shall not be unreasonably withheld. However, Landlord's
consent shall not be required for any Alteration that satisfies all of the
following criteria (a "Minor Alteration"): (a) is of a cosmetic nature such
as painting, wallpapering, hanging pictures and installing carpeting; (b) is
not visible from outside the Premises or Building; (c) will not affect the
systems or structure of the Building; and (d) does not require work to be
performed inside the walls or above the ceiling of the Premises.
(2) Requirements For All Alterations. Including Minor Alterations.
Prior to starting work on any Alteration, Tenant shall finish to Landlord
for review and approval: plans and specifications; names of proposed
contractors (provided that Landlord may designate specific contractors with
respect to Building systems); copies of contracts; necessary permits and
approvals; evidence of contractors' and subcontractors' insurance; and
Tenant's security for performance of the Alteration. Changes to the plans
and specifications must also be submitted to Landlord for its approval. Some
of the foregoing requirements may be waived by Landlord for the performance
of specific Minor Alterations; provided that such waiver is obtained in
writing prior to the commencement of such Minor Alterations. Landlord's
waiver on one occasion shall not waive Landlord's right to enforce such
requirements on any other occasion. Alterations shall be constructed in a
good and workmanlike manner using materials of a quality that is at least
equal to the quality designated by Landlord as the minimum standard for the
Building. Landlord may designate reasonable rules, regulations and
procedures for the performance of Alterations in the Building and, to the
extent reasonably necessary to avoid disruption to the occupants of the
Building, shall have the right to designate the time when Alterations may be
performed. Tenant shall reimburse Landlord within 30 days after receipt of
an invoice for reasonable out-of-pocket sums paid by Landlord for third
party examination of Tenant's plans for Alterations. No later than 30 days
after completion of the Alterations, Tenant shall furnish "as-built" plans
(which shall not be required for Minor Alterations). completion affidavits,
full and final waivers of liens, receipts and bills covering all labor and
materials. Tenant shall assure that the Alterations comply with all
insurance requirements and Laws.
(3) Landlord's Liability For Alterations. Landlord's approval of an
Alteration shall not be a representation by Landlord that the Alteration
complies with applicable Laws or will be adequate for Tenant's use. Tenant
acknowledges that Landlord is not an architect or engineer, and that the
Alterations will be designed and/or constructed using independent
architects, engineers and contractors. Accordingly, Landlord does not
guarantee or warrant that the applicable construction documents will comply
with Laws or be free from errors or omissions, or that the Alterations will
be free from defects, and Landlord will have no liability therefore, unless
Landlord is directly acting as general contractor of the work.
10. Entry by Landlord. Landlord, its agents, contractors and representatives
may enter the Premises to inspect or show the Premises, to clean and make
repairs, alterations or additions to the Premises, and to conduct or
facilitate repairs, alterations or additions to any portion of the Building,
including other tenants' premises. Except in emergencies or to provide
janitorial and other Building services after Normal Business Hours or at any
time during the last 9 months of the Term, Landlord shall provide Tenant
with 24 hour prior notice of entry into the Premises, which may be given
orally. Landlord shall have the right to temporarily close all or a portion
of the Premises to perform repairs, alterations and additions, if reasonably
necessary for the protection and safety of Tenant and its employees. Except
in emergencies. Landlord will not close the Premises if the work can
reasonably be completed on weekends and after Normal Business Hours;
provided, however, that landlord is not required to conduct work on weekends
or after Normal Business Hours if such work can be conducted without closing
the Premises. Entry by Landlord for any such purposes shall not constitute
a constructive eviction or entitle Tenant to an abatement or reduction of
Rent.
11. Assignment and Subletting.
A. Landlord's Consent Required. Subject to the remaining provisions of
this Article 11, but notwithstanding anything to the contrary contained
elsewhere in this Lease, Tenant shall not assign, transfer or encumber any
interest in this Lease (either absolutely or collaterally) or sublease or
allow any third party to use any portion of the Premises (collectively or
individually, a "Transfer") without the prior written consent of Landlord,
which consent shall not be unreasonably withheld. Without limitation, Tenant
agrees that Landlord's consent shall not be considered unreasonably withheld
if: (1) the proposed transferee's financial condition does not meet the
criteria Landlord uses to select Building tenants having similar leasehold
obligations; (2) the proposed transferee is a governmental organization or
present occupant of the Property, or Landlord is otherwise engaged in lease
negotiations with the proposed transferee for other premises in the
Property; (3) any uncured event of default exists under this Lease; (4) any
portion of the Building or Premises would likely become subject to
additional or different Laws as a consequence of the proposed Transfer; (5)
the proposed transferee's use of the Premises conflicts with the Permitted
Use or any exclusive usage rights granted to any other tenant in the
Building; (6) the use, nature, business, activities or reputation in the
business community of the proposed transferee (or its principals, employees
or invitees) does not meet Landlord's standards for Building tenants; (7)
either the Transfer or any consideration payable to Landlord in connection
therewith adversely affects the real estate investment trust qualification
tests applicable to landlord or its Affiliates; or (8) the proposed
transferee is or has been involved in litigation with Landlord or any of its
Affiliates. Tenant shall not be entitled to receive monetary damages based
upon a claim that Landlord unreasonably withheld its consent to a proposed
Transfer and Tenant's sole remedy shall be an action to enforce any such
provision through specific performance or declaratory judgment. Any
attempted Transfer in violation of this Article is voidable at Landlord's
option.
B. Consent Parameters/Requirements. As part of Tenant's request for,
and as a condition to, Landlord's consent to a Transfer, Tenant shall
provide Landlord with financial statements for the proposed transferee, a
complete copy (unexecuted) of the proposed assignment or sublease and other
contractual documents, and such other information as Landlord may reasonably
request. Landlord shall then have the right (but not the obligation) to
terminate this Lease as of the effective date of Transfer with respect to
the portion of the Premises which Tenant desires to Transfer. In such event,
the rent and other charges payable shall be proportionately reduced. Consent
by Landlord to one or more Transfer(s) shall not operate as a waiver of
Landlord's rights to approve any subsequent Transfers. In no event shall any
Transfer or Permitted Transfer release or relieve Tenant from any obligation
under this Lease, nor shall the acceptance of Rent from any assignee,
subtenant or occupant constitute a waiver or release of Tenant from any of
its obligations or liabilities under this Lease. Tenant shall pay Landlord
for Landlord's review of any Permitted Transfer or requested Transfer
Landlord's actual reasonable costs and expenses (including reasonable
attorney's fees).
C. Payment to Landlord If the aggregate consideration paid to a Tenant
Party for a Transfer exceeds that payable by Tenant under this Lease
(prorated according to the transferred interest), Tenant shall pay Landlord
50% of such excess (after deducting therefrom reasonable leasing
commissions, reasonable legal fees and reasonable costs of tenant
improvements paid to unaffiliated third parties in connection with the
Transfer, with proof of same provided to Landlord). Tenant shall pay
Landlord for Landlord's share of any excess within 30 days after Tenant's
receipt of such excess consideration. If any uncured event of default exists
under this Lease (or a condition exists which, with the passage of time or
giving of notice, would become an event of default), Landlord may require
that all sublease payments be made directly to Landlord, in which case
Tenant shall receive a credit against Rent in the amount of any payments
received, but not to exceed the amount payable by Tenant under this Lease.
D. Change in Control of Tenant. Except for a Permitted Transfer, if
Tenant is a corporation, limited liability company, partnership, or similar
entity, and if the entity which owns or controls a majority of the voting
shares/rights at any time changes fix any reason (including a merger,
consolidation or reorganization), such change of ownership or control shall
constitute a Transfer. The foregoing shall not apply so long as, both before
and after the Transfer, Tenant is an entity whose outstanding stock is
listed on a recognized security exchange, or if at least 80% of its voting
stock is owned by another entity, the voting stock of which is so listed;
provided, however, that Tenant shall give Landlord written notice at least
30 days prior to the effective date of such change in ownership or control.
E. No Consent Required. Tenant may assign its entire interest under
this Lease to its Affiliate (defined below) or to a successor to Tenant by
purchase, merger, consolidation or reorganization without the consent of
Landlord, provided that all of the following conditions are satisfied in
Landlord's reasonable discretion (a "Permitted Transfer"): (1) no uncured
event of default exists under this Lease; (2) Tenant's successor shall own
all or substantially all of the assets of Tenant; (3) such Affiliate or
successor shall have a net worth which is at least equal to $17,000,000.00
as of the day prior to the proposed purchase, merger, consolidation or
reorganization; (4) no portion of the Building or Premises would likely
become subject to additional or different Laws as a consequence of the
proposed Transfer, (5) such Affiliate's or successor's use of the Premises
shall not conflict with the Permitted Use or any exclusive usage rights
granted to any other tenant in the Building; (6) neither the Transfer nor
any consideration payable to Landlord in connection therewith adversely
affects the real estate investment trust qualification tests applicable to
Landlord or its Affiliates; (7) such Affiliate or successor is not and has
not been involved in litigation with Landlord or any of Landlord's
Affiliates; and (8) Tenant shall give Landlord written notice at least 30
days prior to the effective date of the proposed Transfer, along with all
applicable documentation and other information necessary for landlord to
determine that the requirements of this Section 11.E have been satisfied,
including if applicable, the qualification of such proposed transferee as an
Affiliate of Tenant. The term "Affiliate' means any person or entity
controlling, controlled by or under common control with Tenant or Landlord,
as applicable. If requested by Landlord, the Affiliate or successor shall
sign a commercially reasonable form of assumption agreement.
12. Liens. Tenant shall not permit mechanic's or other liens to be placed
upon the Property, Premises or Tenant's leasehold interest in connection
with any work or service done or purportedly done by or for the benefit of
Tenant. If a lien is so placed, Tenant shall, within 10 days of notice from
Landlord of the filing of the Lien, fully discharge the lien by settling the
claim which resulted in the lien or by bonding or insuring over the lien in
the manner prescribed by the applicable lien Law. If Tenant fails to
discharge the lien, then, in addition to any other right or remedy of
Landlord, Landlord may bond or insure over the lien or otherwise discharge
the lien. Tenant shall, within 30 days after receipt of an invoice from
Landlord, reimburse Landlord for any amount paid by Landlord, including
reasonable attorneys' fees, to bond or insure over the lien or discharge the
lien.
13. Indemnity. Subject to Article 15 Tenant shall hold Landlord, its
trustees, Affiliates, subsidiaries, members, principals, beneficiaries,
partners, officers, directors, shareholders, employees, Mortgagee(s)
(defined in Article 25) and agents (including the manager of the Property)
(collectively, "Landlord Parties") harmless from, and indemnify and defend
such parties against, all liabilities, obligations, damages, penalties,
claims, actions, costs, charges and expenses, including reasonable
attorneys' fees and other reasonable professional fees that are imposed
upon, incurred by or asserted against any of such indemnified parties (each
a "Claim" and collectively "Claims") that arise out of or in connection
with any damage or injury occurring in the Premises except to the extent
caused by the gross negligence or willful misconduct of Landlord Parties.
Provided Landlord Parties are properly named as additional insureds in the
policies required to be carried under this Lease, and except as otherwise
expressly provided in this Lease, the indemnity set forth in the preceding
sentence shall be limited to the greater of (A) $5,000,000, and (B) the
aggregate amount of general/umbrella liability insurance actually carried by
Tenant Subject to Articles 9.B, 15 and 20, Landlord shall hold Tenant, its
trustees, Affiliates, members, principals, beneficiaries, partners,
officers, directors, shareholders, employees and agents (collectively,
"Tenant Parties) harmless from, and indemnify and defend such parties
against all Claims that arise out of or in connection with any damage or
injury occurring in or on the Property (excluding the Premises), except to
the extent caused by the gross negligence or willful misconduct of a Tenant
Party, to the same extent the Tenant Parties would have been covered had
they been named as additional insureds on the commercial general liability
insurance policy required to be carried by Landlord under this Lease. The
indemnity set forth in the preceding sentence shall be limited to the amount
of $5,000,000.
14. Insurance.
A. Tenant's Insurance. Tenant shall maintain the following insurance
("Tenant's Insurance"), at its sole cost and expense: (1) commercial general
liability insurance applicable to the Premises and its appurtenances
providing, on an occurrence basis, a per occurrence limit of no less than
$1,000,000; (2) causes of loss-special form (formerly "all risk") property
insurance, covering all above building standard leasehold improvements and
Tenant's trade fixtures, equipment, furniture and other personal property
within the Premises ("Tenant's Property" in ) amount of the full replacement
cost thereof; (3) business income (formerly "business interruption")
insurance written on an actual loss sustained form or with sufficient limits
to address reasonably anticipated business interruption losses; (4) business
automobile liability insurance to cover all owned, hired and nonowned
automobiles owned or operated by Tenant providing a minimum combined single
limit of $1 .000,000; (5) workers' compensation insurance as required by the
state in which the Premises is located and in amounts as may be required by
applicable statute (provided, however, if no workers' compensation insurance
is statutorily required, Tenant shall carry workers' compensation insurance
in a minimum amount of $500,000); (6) employer's liability insurance in an
amount of at least $500,000 per occurrence; and (7) umbrella liability
insurance that follows form in excess of the limits specified in (1), (4)
and (6) above, of no less than $4,000,000 per occurrence and in the
aggregate. Any company underwriting any of Tenant's Insurance shall have,
according to A.M Best Insurance Guide, a Best's rating of not less than A-
and a Financial Size Category of not less than VIII. All commercial general
liability, business automobile liability and umbrella liability insurance
policies shall name landlord (or any successor), Landlord's property
manager, Landlord's Mortgagee (if any), and their respective members,
principals, beneficiaries, partners, officers, directors, employees, and
agents, and other designees of Landlord as the interest of such designees
shall appear, as "additional insureds" and shall be primary with Landlord's
policy being secondary and noncontributory. If any aggregate Limit is
reduced because of losses paid to below 75% of the limit required by this
lease, Tenant will notify Landlord in writing within 10 days of the date of
reduction. All policies of Tenants Insurance shall contain endorsements that
the insurer(s) shall give Landlord and its designees at least 30 days'
advance written notice of any change, cancellation, termination or lapse of
insurance. Tenant shall provide Landlord with a certificate of insurance and
all required endorsements evidencing Tenant's Insurance prior to the earlier
to occur of the Commencement Date or the date Tenant is provided access to
the Premises for any reason, and upon renewals at least 10 days prior to the
expiration of the insurance coverage. All of Tenant's Insurance policies,
endorsements and certificates will be on forms and with deductibles and
self-insured retention, if any, reasonably acceptable to Landlord. The
limits of Tenant's insurance shall not limit Tenant's liability under this
Lease.
B. Landlord's Insurance. Landlord shall maintain: (1) commercial
general liability insurance applicable to the Property which provides, on an
occurrence basis, a minimum combined single limit of no less than $5,000,000
(coverage in excess of $1,000,000 may be provided by way of an
umbrella/excess liability policy); and (2) causes of loss-special form
(formerly "all risk") property insurance on the Building in the amount of
the replacement cost thereof, as reasonably estimated by Landlord. The
foregoing insurance and any other insurance carried by Landlord may be
effected by a policy or policies of blanket insurance and shall be for the
sole benefit of Landlord and under Landlord's sole control. Consequently,
Tenant shall have no right or claim to any proceeds thereof or any other
rights thereunder.
15. Mutual Waiver of Subrogation. Notwithstanding anything in this Lease to
the contrary, Tenant waives, and shall cause its insurance carrier(s) and
any other party claiming through or under such carrier(s), by way of
subrogation or otherwise, to waive any and all rights of recovery, Claim,
action or causes of action against all Landlord Parties for any loss or
damage to Tenant's business, any loss of use of the Premises, and any
loss, theft or damage to Tenant's Property (including Tenant's automobiles
or the contents thereof). INCLUDING ALL RIGHTS (BY WAY OF SUBROGATION OR
OTHERWISE) OF RECOVERY, CLAIMS, ACTIONS OR CAUSES OF ACTION ARISING OUT
OF THE NEGLIGENCE OF ANY LANDLORD PARTY, which loss or damage is (or would
have been, had the insurance required by this Lease been maintained) covered
by insurance. In addition, Landlord waives (except to the extent of
Landlords property insurance deductible) and shall cause its insurance
carrier(s) and any other party claiming through or under such carrier(s), by
way of subrogation or otherwise, to waive any and all rights of recovery,
Claim, action or causes of action against all Tenant Parties for any loss of
or damage to or loss of use of the Building, any additions or improvements
to the Building, or any contents thereof, INCLUDING ALL RIGHTS (BY WAY OF
SUBROGATION OR OTHER WISE) OF RECOVERY, CLAIMS, ACTIONS OR CAUSES OF ACTION
ARISING OUT OF THE NEGLIGENCE OF ANY TENANT PARTY, which loss or damage is
(or would have been, had the insurance required by this Lease been
maintained) covered by insurance.
16. Casualty Damage.
A. Repair or Termination by Landlord. If all or any part of the
Premises are damaged by fire or other casualty, Tenant shall immediately
notify, Landlord in writing. Landlord shall have the right to terminate this
lease if: (1) the Building shall be damaged so that, in Landlord's judgment
substantial alteration or reconstruction of the Building shall be required
(whether or not the Premises have been damaged); (2) Landlord is not
permitted by Law to rebuild the Building in substantially the same form as
existed before the fire or casualty; (3) the Premises have been materially
damaged and there is less than 2 years of the Term remaining on the date of
the casualty; (4) any Mortgagee requires that the insurance proceeds be
applied to the payment of the mortgage debt; or (5) an uninsured loss of the
Building occurs notwithstanding Landlord's compliance with Section 14.B
above. Landlord may exercise its right to terminate this Lease by notifying
Tenant in writing within 90 days after the date of the casualty. If landlord
does not terminate this Lease under this Section 16.A, Landlord shall
commence and proceed with reasonable diligence to repair and restore the
Building and/or the Premises to substantially the same condition as existed
immediately prior to the date of damage; provided, however, that Landlord
shall only be required to reconstruct building standard leasehold
improvements existing in the Premises as of the date of damage, and Tenant
shall be required to pay the cost for restoring any other leasehold
improvements. However, in no event shall Landlord be required to spend more
than the insurance proceeds received by Landlord.
B. Timing for Repair; Termination by Either Party. If all or any
portion of the Premises is damaged as a result of fire or other casualty,
Landlord shall, with reasonable promptness, cause an architect or general
contractor selected by Landlord to provide Landlord and Tenant with a
written estimate of the amount of time required to substantially complete
the repair and restoration of the Premises, using standard working methods
("Completion Estimate"). If the Completion Estimate indicates that the
Premises cannot be made tenantable within 270 days from the date of damage,
then regardless of anything in Section 16.A above to the contrary, either
party shall have the right to terminate this Lease by giving written notice
to the other of such election within 10 days after receipt of the Completion
Estimate. Tenant, however, shall not have the right to terminate this Lease
if the fire or casualty was caused by the negligence or intentional
misconduct of any of the Tenant Parties. If neither party terminates this
Lease under this Section 16.B, then Landlord shall repair and restore the
Premises in accordance with, and subject to the Limitations of, Section
16.A.
C. Abatement. In the event a material portion of the Premises is
damaged as a result of a fire or other casualty, the Base Rent shall xxxxx
for the portion of the Premises that is not used by Tenant until substantial
completion of the repairs and restoration required to be made by Landlord
pursuant to Section 16.A. Tenant, however, shall not be entitled to such
abatement if the fire or other casually was caused by the negligence or
intentional misconduct of any of the Tenant Parties. Landlord shall not be
liable for any loss or damage to Tenant's Property or to the business of
Tenant resulting in any way from the fire or other casualty or from the
repair and restoration of the damage. Landlord and Tenant hereby waive the
provisions of any Law relating to the matters addressed in this Article, and
agree that their respective rights for damage to or destruction of the
Premises shall be those specifically provided in this Lease.
17. Condemnation. Either party may terminate this Lease if the whole or any
material part of the Premises are taken or condemned for any public or
quasi-public use under Law, by eminent domain or private purchase in lieu
thereof (a "Taking"). Landlord shall also have the right to terminate this
Lease if there is a Taking of any portion of the Building or Property which
would leave the remainder of the Building unsuitable for use as an office
building in a manner comparable to the Building's use prior to the Taking.
In order to exercise its right to terminate this lease under this Article
17, Landlord or Tenant, as the case may be, must provide written notice of
termination to the other within 45 days after the terminating party first
receives notice of the Taking. Any such termination shall be effective as of
the date the physical taking of the Premises or the portion of the Building
or Property occurs, If this Lease is not terminated, the Rentable Square
Footage of the Building, the Rentable Square Footage of the Premises and
Tenant's Pro Rata Share shall, if applicable, be appropriately adjusted by
Landlord. In addition, Base Rent for any portion of the Premises taken or
condemned shall be abated during the unexpired Term effective when the
physical taking of the portion of the Premises occurs. All compensation
awarded for a Taking, or sale proceeds, shall be the property of Landlord,
any right to receive compensation or proceeds being expressly waived by
Tenant. However, Tenant may file a separate claim at its sole cost and
expense for Tenant's Property (excluding above building standard leasehold
improvements) and Tenant's reasonable relocation expenses, provided the
filing of such claim does not diminish the award which would otherwise be
receivable by Landlord.
18. Events of Default. Tenant shall be considered to be in default under
this Lease upon the occurrence of any of the following events of default:
A. Tenant's failure to pay when due all or any portion of the Rent
("Monetary Default"); provided that the first two such failures during any
consecutive 12 month period shall not be a Monetary Default if Tenant pays
the amount due within 5 business days after written notice from Landlord.
B. Tenant's failure to perform any of the obligations of Tenant in the
manner set forth in Article, 14, 23, 24 or 25 (a "Time Sensitive Default ").
C. Tenant's failure (other than a Monetary Default or a Time Sensitive
Default) to comply with any term, provision or covenant of this Lease, if
the failure is not cured within 10 days after written notice to Tenant.
However, if Tenant's failure to comply cannot reasonably be cured within 10
days, Tenant shall be allowed additional time (not to exceed an additional
10 days) as is reasonably necessary to cure the failure so long as: (1)
Tenant commences to cure the failure within the 10 day period following
Landlord's initial written notice, and (2) Tenant diligently pursues a
course of action that will cure the failure and bring Tenant back into
compliance with this Lease. However, if Tenant's failure to comply creates
a hazardous condition, the failure must be cured immediately upon notice to
Tenant In addition, if Landlord provides Tenant with notice of Tenant's
failure to comply with the same specific term, provision or covenant of this
Lease on more than two (2) occasions during any 12 month period, Tenant's
subsequent violation of the same term, provision or covenant shall, at
Landlord's option, be deemed an incurable event of default by Tenant.
D. Tenant or any Guarantor becomes insolvent, files a petition for
protection under the U.S. Bankruptcy Code (or similar Law) or a petition is
filed against Tenant or any Guarantor under such Laws and is not dismissed
within 45 days after the date of such filing, makes a transfer in fraud of
creditors or makes an assignment for the benefit of creditors, or admits in
writing its inability to pay its debts when due.
E. The leasehold estate is taken by process or operation of Law.
F. Intentionally deleted.
G. Tenant is in default beyond any notice and the period under any
other lease or agreement with Landlord in connection with the Property,
including any lease or agreement for parking.
19. Remedies.
A. Landlord's Remedies. Upon any default (subject to applicable notice
and cure periods), Landlord shall have the right without notice or demand
(except as provided in Article 18) to pursue any of its rights and remedies
at Law or in equity, including any one or more of the following remedies:
(1) Terminate this Lease;
(2) Re-enter the Premises, change locks, alter security devices and
lock out Tenant or terminate Tenant's right of possession of the Premises
without terminating this Lease, and without complying with applicable Law,
the benefits of which are waived by Tenant to the fullest extent permitted
by applicable Law;
(3) Remove and store, at Tenant's expense, all the property in the
Premises using such lawful force as may be necessary;
(4) Cure such event of default for Tenant at Tenant's expense (plus
a 15% administrative fee);
(5) Withhold or suspend payment of sums Landlord would otherwise be
obligated to pay to Tenant under this Lease or any other agreement;
(6) Require all future payments to be made by cashier's check, money
order or wire transfer after the first time any check is returned for
insufficient funds, or the second time any sum due hereunder is more than
five (5) days late;
(7) Apply any Security Deposit as permitted under this Lease; and/or
(8) Recover such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable Law, including
any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under this
Lease or which in the ordinary course of events would be likely to result
therefrom.
B. Measure of Damages.
(1) Calculation. If Landlord either terminates this Lease or
terminates Tenant's right to possession of the Premises, Tenant shall
immediately surrender and vacate the Premises and pay Landlord on demand:
(a) all Rent accrued through the end of the month in which the termination
becomes effective; (b) interest on all unpaid Rent from the date due at a
rate equal to the lesser of 18% per annum or the highest interest rate
permitted by applicable Law; (c) all expenses reasonably incurred by
Landlord in enforcing its rights and remedies under this Lease, including
all reasonable legal expenses; (d) Costs of Reletting (defined below); and
(e) all Landlord's Rental Damages (defined below). In the event that
Landlord relets the Premises for an amount greater than the Rent due during
the Term, Tenant shall not receive a credit for any such excess.
(2) Definitions. "Costs of Reletting" shall include commercially
reasonable costs losses and expenses incurred by Landlord in reletting all
or any portion of the Premises including, without limitation, the cost of
removing and storing Tenant's furniture, trade fixtures, equipment,
inventory or other property, repairing and/or demolishing the Premises,
removing and/or replacing Tenant's signage and other fixtures, making the
Premises ready for a new tenant, including the cost of advertising,
commissions, architectural fees, legal fees and leasehold improvements, and
any allowances and/or concessions provided by Landlord. "Landlords Rental
Damage" shall mean the total Rent which Landlord would have received under
this Lease (had Tenant made all such Lease payments as required) for the
remainder of the Term minus the fair rental value of the Premises for the
same period, or, if the Premises are relet, the actual rental value (not to
exceed the Rent due during the Term), both discounted to present value at
the Prime Rate (defined below) in effect upon the date of determination.
For purposes hereof, the "Prime Rate" shall be the per annum interest rate
publicly announced by a federally insured bank mutually selected by Landlord
and Tenant in the state in which the Building is located as such bank's
prime or base rate.
(3) Landlord's Alternative Calculation. Because future market rental
rates, and the costs or time involved in reletting may be uncertain and
difficult to determine at the time of Tenant's default, the parties agree
that Landlord may in its sole discretion elect to recover, in lieu of
calculating damages under Section 19.B(1)(d) and (e) above (but without
limiting damages under Section l9.B(1)(a) and (b) above), the sum of (a) the
unamortized portion of all costs, losses and expenses incurred by Landlord
as a result of entering into the Lease, and (b) twenty five percent (25%) of
the total nominal Rent which landlord would have received under this Lease
(had Tenant made all such Rent payments as required) for the remainder of
the Term, which the parties agree is a fair and reasonable estimate of
landlord's Rental Damages and the Costs of Reletting.
C. Tenant Not Relieved from Liabilities. Unless expressly provided in
this Lease the repossession or re-entering of all or any part of the
Premises shall not relieve Tenant of its liabilities and obligations under
this Lease. In addition, Tenant shall not be relieved of its liabilities
under this Lease, nor be entitled to any damages hereunder, based upon minor
or immaterial errors in the exercise of Landlord's remedies. No right or
remedy of Landlord shall be exclusive of any other right or remedy. Each
right and remedy shall be cumulative and in addition to any other right and
remedy now or subsequently available to Landlord at Law or in equity. If
Tenant fails to pay any amount when due hereunder, Landlord shall be
entitled to receive interest on any unpaid item of Rent at a rate equal to
the lesser of 18% per annum or the highest rate permitted by Law. In
addition, if Tenant fails to pay any item or installment of Rent when due,
Tenant shall pay Landlord an administrative fee equal to 5% of the past due
Rent. However, in no event shall the charges permitted under this Section
19.C or elsewhere in this Lease, to the extent they are considered interest
under applicable Law, exceed the maximum lawful rate of interest. If any
payment by Tenant of an amount deemed to be interest results in Tenant
having paid any interest in excess of that permitted by Law, then it is the
express intent of Landlord and Tenant that all such excess amounts
theretofore collected by Landlord be credited against the other amounts
owing by Tenant under this Lease. Receipt by Landlord of Tenant's keys to
the Premises shall not constitute an acceptance or surrender of the
Premises. NOTWITHSTANDING ANY OTHER PROVISION OF THIS LEASE TO THE CONTRARY,
TENANT SHALL HOLD LANDLORD PARTIES HARMLESS FROM AND INDEMNIFY AND DEFEND
SUCH PARTIES AGAINST, ALL CLAIMS THAT ARISE OUT OF OR IN CONNECTION WITH A
BREACH OF THIS LEASE, SPECIFICALLY INCLUDING ANY VIOLATION OR APPLICABLE
LAWS OR CONTAMINATION (DEFINED IN ARTICLE 30) CAUSED BY A TENANT PARTY.
D. Mitigation of Damages. Upon termination of Tenant's right to possess
the Premises, Landlord shall, only to the extent required by Law, use
objectively reasonable efforts to mitigate damages by reletting the
Premises. Landlord shall not be deemed to have failed to do so if Landlord
refuses to lease the Premises to a prospective new tenant with respect to
whom Landlord would be entitled to withhold its consent pursuant to Section
11.A, or who (1) is an Affiliate, parent or subsidiary of Tenant; (2) is not
acceptable to any Mortgagee of Landlord (3) requires improvements to the
Premises to be made at Landlord's expense; or (4) is unwilling to accept
lease terms then proposed by Landlord, including: (a) leasing for a shorter
or longer term than remains under this Lease; (b) re-configuring or
combining the Premises with other space, (c) taking all or only a part of
the Premises; and/or (d) changing the use of the Premises. Notwithstanding
Landlord's duty to mitigate its damages as provided herein, Landlord shall
not be obligated (i) to give any priority to reletting Tenant's space in
connection with its leasing of space in the Building or any complex of which
the Building is a part, or (ii) to accept below market rental rates for the
Premises or any rate that would negatively impact the market rates for the
Building. To the extent that Landlord is required by applicable Law to
mitigate damages, Tenant must plead and prove by clear and convincing
evidence that Landlord failed to so mitigate in accordance with the
provisions of this Section 19.D, and that such failure resulted in an
avoidable and quantifiable detriment to Tenant.
E. Landlord's Lien. Intentionally deleted.
20. Limitation of Liability. Notwithstanding anything to the contrary
contained in this Lease, the liability of Landlord (and of any successor
Landlord) to Tenant (or any person or entity claiming by, through or under
Tenant) shall be limited to the interest of Landlord in the Property. Tenant
shall look solely to Landlord's interest in the Property for the recovery of
any judgment or award against Landlord. No Landlord Party shall be
personally liable for any judgment or deficiency. Before filing suit for an
alleged default by Landlord, Tenant shall give Landlord and the Mortgagee(s)
(defined in Article 25) whom Tenant has been notified hold Mortgages
(defined in Article 25) on the Property, Building or Premises, notice and
reasonable time to cure the alleged default. Tenant hereby waives all claims
against all Landlord Parties for consequential, special or punitive damages
allegedly suffered by any Tenant Parties, including lost profits and
business interruption.
21. No Waiver. Neither party's failure to declare a default immediately
upon its occurrence or delay in taking action for a default shall constitute
a waiver of the default, nor shall it constitute an estoppel. Neither
party's failure to enforce its rights for a default shall constitute a
waiver of that party's rights regarding any subsequent default.
22. Tenant's Right to Possession. Provided Tenant pays the Rent and fully
performs all of its other covenants and agreements under this Lease, Tenant
shall have the right to occupy the Premises without hindrance from Landlord
or any person lawfully claiming through Landlord, subject to the terms of
this Lease, all Mortgages, insurance requirements and applicable Law. This
covenant and all other covenants of Landlord shall be binding upon Landlord
and its successors only during its or their respective periods of ownership
of the Building, and shall not be a personal covenant of any Landlord
Parties.
23. Relocation. Landlord may, upon 90 days notice to Tenant, relocate the
Premises to any other premises within the Property ("Relocated Premises") on
a date of relocation (the "Relocation Date") specified therein. The
Relocated Premises shall in all respects be substantially the same or
better, as reasonably determined by Landlord, in area, finish, and
appropriateness for the Permitted Use. In such event all reasonable expenses
of moving Tenant and decorating the Relocated Premises with substantially
the same leasehold improvements shall be at the expense of Landlord,
including the physical move, relocating Tenant's existing telephone
equipment and other costs set forth below. All moving costs (including the
cost to relocate phones, computers and other systems of similar nature), all
costs of reprinting stationery, cards and other printed material bearing
Tenant's address at the Premises if such address changes due to the
relocation (but only the quantity existing immediately prior to the
relocation) and all other out-of-pocket costs directly incurred by Tenant in
connection with relocation to the Relocated Premises, including reasonable
decorating and design costs, shall be paid by Landlord within thirty (30)
days after receipt of third-party invoices therefor. Tenant shall have the
option, effective as of the Relocation Date, either to enter into an
appropriate lease amendment relocating the Premises, or to terminate this
Lease, which option shall be exercised within 10 Business Days following
receipt of Landlord's relocation notice. Failure of Tenant to choose either
option within such period shall constitute Tenant's election to relocate. If
Tenant elects (or is deemed to have elected) to relocate, Landlord shall
have the option to tender the Relocated Premises to Tenant on any date
within a 30 day period after the Relocation Date, in which event the date of
tender of possession of the Relocated Premises shall become the Relocation
Date. From the Relocation Date through the Expiration Date, the aggregate
Base Rent for the Relocated Premises shall be the same as for the original
Premises. Tenant's failure to vacate the Premises and move into the
Relocated Premises on the Relocation Date shall constitute a Time Sensitive
Default.
24. Holding Over. Except for any permitted occupancy by Tenant under Article
29, if Tenant or any party claiming by, through or under Tenant fails to
surrender the Premises at the expiration or earlier termination of this
Lease, the continued occupancy of the Premises shall be that of a tenancy at
sufferance. Tenant shall pay an amount (on a per month basis without
reduction for partial months during the holdover) equal to 150% of the Base
Rent and 100% of Tenant's Pro Rata Share of Operating Expenses following
expiration or termination. No holdover by Tenant or payment by Tenant after
the expiration or early termination of this Lease shall be construed to
extend the Term or prevent Landlord from immediate recovery of possession of
the Premises by summary proceedings or otherwise. In addition to the payment
of the amounts provided above, if Landlord is unable to deliver possession
of the Premises to a new tenant, or to perform improvements for a new
tenant, as a result of Tenant's holdover and Tenant fails to vacate the
Premises within 15 days after Landlord notifies Tenant of Landlord's
inability to deliver possession, or perform improvements, such failure shall
constitute a Time Sensitive Default hereunder; and notwithstanding any other
provision of this Lease to the contrary, TENANT SHALL BE LIABLE TO LANDLORD
FOR, AND SHALL PROTECT LANDLORD FROM AND INDEMNIFY AND DEFEND LANDLORD
AGAINST, ALL LOSSES AND DAMAGES, INCLUDING ANY CLAIMS MADE BY ANY SUCCEEDING
TENANT RESULTING FROM SUCH FAILURE TO VACATE, AND ANY CONSEQUENTAL DAMAGES
THAT LANDLORD SUFFERS FROM THE HOLDOVER.
25. Subordination to Mortgages: Estoppel Certificate. Tenant accepts this
Lease subject and subordinate to any mortgage(s), deed(s) of trust, ground
lease(s) or other lien(s) now or subsequently affecting the Premises, the
Building or the Property, and to renewals, modifications, refinancings and
extensions thereof (collectively, a "Mortgage"). The party having the
benefit of a Mortgage shall be rehired to as a "Mortgagee." This clause
shall be self-operative, but upon request from a Mortgagee, Tenant shall
execute a commercially reasonable subordination agreement in favor of the
Mortgagee. Landlord shall use reasonable efforts to obtain, at Tenant's
costs, Landlord's Mortgagee's nondisturbance agreement for the benefit of
Tenant in the form attached hereto as Exhibit G. The fee for such
nondisturbance agreement is currently $500.00. In lieu of having the
Mortgage be superior to this Lease, a Mortgagee shall have the right at any
time to subordinate its Mortgage to this Lease. If requested by a successor-
in-interest to all or apart of Landlord's interest in this Lease, Tenant
shall, without charge, attorn to the successor-in-interest Tenant shall,
within 5 business days after receipt of a written request from Landlord,
execute and deliver an estoppel certificate to those parties as are
reasonably requested by Landlord (including a Mortgagee or prospective
purchaser). The estoppel certificate shall include a statement certifying
that this Lease is unmodified (except as identified in the estoppel
certificate) and in full force and effect, describing the dates to which
Rent and other charges have been paid, representing that, to the best of
Tenant's knowledge, there is no default (or stating with specificity the
nature of the alleged default) and certifying other matters with respect to
this Lease that may reasonably be requested. Tenant's failure to provide any
estoppel certificate within the 5 business day period specified above, and
the continuation of such failure for a period of 5 business days after
Landlord delivers a second written notice requesting same, shall constitute
a Time Sensitive Default under this Lease.
26. Attorney' Fees. If either party institutes a suit against the other for
violation of or to enforce any covenant or condition of this Lease, or if
either party intervenes in any suit in which the other is a party to enforce
or protect its interest or rights, the prevailing party shall be entitled to
all of its costs and expenses, including reasonable attorneys' fees.
27. Notice, If a demand, request, approval, consent or notice (collectively,
a "notice") shall or may be given to either party by the other, the notice
shall be in writing and delivered by hand or sent by registered or certified
mail with return receipt requested, or sent by overnight or same day courier
service, or sent by facsimile, at the party's respective Notice Address(es)
set forth in Article 1, except that if Tenant has vacated the Premises (or
if the Notice Address for Tenant is other than the Premises, and Tenant has
vacated such address) without providing Landlord a new Notice Address
Landlord may serve notice in any manner described in this Article or in any
other manner permitted by Law. Each notice shall be deemed to have been
received or given on the earlier to occur of actual delivery (which, in the
case of delivery by facsimile, shall be deemed to occur at the time of
delivery indicated on the electronic confirmation of the facsimile) or the
date on which delivery is first refused, or, if Tenant has vacated the
Premises or the other Notice Address of Tenant without providing a new
Notice Address, three (3) days after notice is deposited in the U.S. mail or
with courier service in the manner described above. Either party may, at any
time, change its Notice Address by giving the other party written notice of
the new address in the manner described in this Article.
28. Reserved Rights. This Lease does not grant any rights to light or air
over or about the Building. Landlord excepts and reserves exclusively to
itself the use of: (A) roofs, (B) telephone electrical and janitorial
closets, (C) equipment rooms, Building risers or similar areas that are used
by Landlord for the provision of Building services, (D) rights to the land
and improvements below the floor of the Premises, (E) the improvements and
air rights above the Premises, (F) the improvements and air rights outside
the demising walls of the Premises, (G) the areas within the Premises used
for the installation of utility lines and other installations serving
occupants of the Building, and (H) any other areas designated from time to
time by Landlord as service areas of the Building. Tenant shall not have the
right to install or operate any equipment producing radio frequencies,
electrical or electromagnetic output or other signals, noise or emissions in
or from the Building without the prior written consent of Landlord. To the
extent permitted by applicable Law Landlord reserves the right to restrict
and control the use of such equipment. Landlord has the right to change the
Building's name or address. Landlord also has the right to make such other
changes to the Property and Building as Landlord deems appropriate, provided
the changes do not materially affect Tenant's ability to use the Premises
for the Permitted Use. Landlord shall also have the right (but not the
obligation) to temporarily close the Building if Landlord reasonably
determines that there is an imminent danger of significant damage to the
Building or of personal) injury to Landlord's employees or the occupants of
the Building. The circumstances under which landlord may temporarily close
the Building shall include, without limitation, electrical interruptions,
hurricanes and civil disturbances. A closure of the Building under such
circumstances shall not constitute a constructive eviction nor entitle
Tenant to an abatement or reduction of Rent.
29. Surrender of Premises. All improvements to the Premises (collectively,
"Leasehold Improvements" shall be owned by Landlord and shall remain upon
the Premises with out compensation to Tenant. At the expiration or earlier
termination of this Lease or Tenant's right o possession, Tenant shall
remove Tenant's Removable Property (defined below) from the Premises and
quit and surrender the Premises to Landlord, broom clean, and in good order,
condition and repair, ordinary wear and tear excepted. As used herein, the
term "Tenant's Removable Property" shall mean (A) Cable installed by or for
the benefit of Tenant and located in the Premises or other portions of the
Building (B) any Leasehold improvements that are installed by or for the
benefit of Tenant and, in Landlord's reasonable judgment, are of a nature
that would require removal and repair costs that are materially in excess of
the removal and repair costs associated with standard office improvements
("Special Installations"); and (C) Tenant's personal property. Landlord
shall within 10 Business Days after its receipt of (i) the Approved
Construction Documents (as defined in the Work Letter attached hereto as
Exhibit D) with respect to the Landlord Work, and (ii) the plans and
specifications with respect to any Alterations, notify Tenant in writing
whether any Leasehold Improvements to be constructed in the Premises
constitute Special Installations. Notwithstanding the foregoing, Landlord
may, in Landlord's sole discretion and at no cost to Landlord, require
Tenant to leave any of its Special Installations in the Premises . If Tenant
fails to remove any of Tenant's Removable Property (other than Special
Installations which Landlord has designated to remain in the Premises)
within 5 days after the termination of this Lease or of Tenant's right to
possession, Landlord, at Tenant's sole cost and expense, shall be entitled
(but not obligated) to remove and store Tenant's Removable Property.
Landlord shall not be responsible for the value, preservation or safekeeping
of Tenant's Removable Property. Tenant shall pay Landlord, upon demand, the
expenses and storage charges incurred for Tenant's Removable Property. To
the fullest extent permitted by applicable Law, any unused portion of
Tenant's Security Deposit maybe applied to offset Landlord's costs set forth
in the preceding sentence. In addition, if Tenant fails to remove Tenant's
Removable Property from the Premises or storage, as the case may be, within
30 days after written notice, Landlord may deem all or any part of Tenant's
Removable Property to be abandoned, and title to Tenant's Removable Property
(except with respect to any Hazardous Material [defined in Article 30])
shall be deemed to be immediately vested in Landlord. Except for Special
Installations designated by Landlord to remain in the Premises, Tenant's
Removable Property shall be removed by Tenant before the Expiration Date;
provided that upon Landlord's prior written consent (which must be requested
by Tenant at least 30 days in advance of the Expiration Date and which shall
not be unreasonably withheld), Tenant may remain in the Premises for up to 5
days after the Expiration Date for the sole purpose of removing Tenant's
Removable Property. Tenant's possession of the Premises for such purpose
shall be subject to all of the terms and conditions of this Lease, including
the obligation to pay Base Rent and Tenant's Pro Rata Share of Excess
Operating Expenses on a per diem basis at the rate in effect for the last
month of the Term. In the event this Lease is terminated prior to the
Expiration Date, Tenant's Removable Property (except for Special
Installations designated by Landlord to remain in the Premises) shall be
removed by Tenant on or before such earlier date of termination. Tenant
shall repair damage caused by the installation or removal of Tenant's
Removable Property.
30. Hazardous Materials.
A. Restrictions. No Hazardous Material (defined below) (except for de
minimis quantities of household cleaning products and office supplies used
in the ordinary course of Tenant's business at the Premises and that are
used, kept and disposed of in compliance with Laws) shall be brought upon,
used, kept or disposed of in or about the Premises or the Property by any
Tenant Parties or any of Tenant's transferees, contractors or licensees
without Landlord's prior written consent, which consent may be withheld in
Landlord's sole and absolute discretion. Tenant's request for such consent
shall include a representation and warranty by Tenant that the Hazardous
Material in question (1) is necessary in the ordinary course of Tenant's
business, and (2) shall be used, kept and disposed of in compliance with all
Laws. Tenant shall, at its expense, monitor the Premises for the presence of
Hazardous Materials or conditions which may reasonably give rise to
Contamination (defined below) and promptly notify Landlord if it suspects
Contamination in the Premises.
B. Remediation. If Contamination occurs as a result of an act or
omission of any Tenant Party, Tenant shall, at its expense, promptly take
all actions necessary to comply with Laws and to return the Premises, the
Building, the Property and/or any adjoining or affected property to its
condition prior to such Contamination, subject to Landlord's prior written
approval, which shall not be unreasonably withheld, of Tenant's proposed
methods, times and procedures for remediation. Tenant shall provide Landlord
reasonably satisfactory evidence that such actions shall not adversely
affect any Landlord Party or property. Landlord may require that a
representative of Landlord be present during any such actions and/or that
such actions be taken after Normal Business Hours. If Tenant fails to take
and diligently prosecute any necessary remediation actions within 30 days
after written notice from Landlord or an authorized governmental agency (or
any shorter period required by any governmental agency) that such
remediation is required, Landlord may take such actions and Tenant shall
reimburse Landlord therefor, plus a 15% administrative fee, within 30 days
of' Landlord's invoice.
C. Definitions. For purposes of this Article 30, a "Hazardous Material
is any substance (1) the presence of which requires, or may hereafter
require, notification, investigation or remediation under any Laws; (2)
which is now or hereafter defined, listed or regulated by any governmental
authority as a "hazardous waste", "extremely hazardous waste", "solid
waste", "toxic substance", "hazardous substance", "hazardous material" or
"regulated substance", or otherwise regulated under any Laws; or (3) which
is now or hereafter considered a biological contaminant or which could
adversely impact air quality, including mold, fungi and other bacterial
agents. "Contamination" means the existence or any release or disposal of a
Hazardous Material in, on, under, at or from the Premises, the Building or
the Property which may result in any liability, fine, use restriction, cost
recovery lien, remediation requirement or other government or private party
action or imposition affecting any Landlord Party. For purposes of this
Lease, claims arising from Contamination shall include diminution in value,
restrictions on use, adverse impact on leasing space, and all costs of site
investigation, remediation, removal and restoration work, including response
costs under CERCLA and similar statutes.
D. Reports, Surveys and Acceptance of Premises. All current surveys or
reports prepared for the Property regarding the presence of Hazardous
Materials (if any) in the Building are available for inspection by Tenant in
the office of the Property manger With respect to Hazardous Materials,
Tenant hereby (1) accepts full responsibility for reviewing any such surveys
and reports and satisfying itself prior to the execution of this Lease as to
the acceptability of the Premises under Section 3.B above, and (2)
acknowledges and agrees that this provision satisfies all notice
requirements under applicable Law. In the event Tenant performs or causes
to be performed any test on or within the Premises for the purpose of
determining the presence of a Hazardous Material, Tenant shall obtain
Landlord's prior written consent and use a vendor approved by Landlord for
such testing. In addition, Tenant shall provide to Landlord a copy of such
test within 10 days of Tenant's receipt
31. Miscellaneous.
A. Governing Law: Jurisdiction and Venue: Severability: Paragraph
Heading. This Lease and the rights and obligations of the parties shall be
interpreted, construed and enforced in accordance with the Laws of the state
in which the Property is located. All obligations under this Lease are
performable in the county or other jurisdiction where the Property is
located, which shall be venue for all legal actions, If any term or
provision of this Lease shall be invalid or unenforceable, then such term or
provision shall be automatically reformed to the extent necessary to render
such term or provision enforceable, without the necessity of execution of
any amendment or new document. The remainder of this Lease shall not be
affected, and each remaining and reformed provision of this Lease shall be
valid and enforced to the fullest extent permitted by Law. The headings mid
titles to the Articles and Sections of this Lease are for convenience only
and shall have no effect on the interpretation of any part of this Lease.
The words "include", "including" and similar words will not be construed
restrictively to limit or exclude other items not listed.
B. Recording. Tenant shall not record this Lease or any memorandum
without Landlord's prior written consent.
C. Force Majeure. Whenever a period of time is prescribed for the
taking of an action by Landlord or Tenant, the period of time for the
performance of such action shall be extended by the number of days that the
performance is actually delayed due to strikes, acts of God, shortages of
labor or materials, war, terrorist attacks (including bio-chemical attacks),
civil disturbances and other causes beyond the reasonable control of the
performing party ("Force Majeure"). However, events of Force Majeure shall
not extend any period of time for the payment of Rent or other sums payable
by either party or any period of time for the written exercise of an option
or right by either party.
D. Transferability: Release of Landlord. Landlord shall have the right
to transfer and assign, in whole or in part, all of its rights and
obligations under this Lease and in the Building and/or Property, and upon
such transfer Landlord shall be released from any further obligations
hereunder, and Tenant agrees to look solely to the successor in interest of
Landlord for the performance of such obligations.
E. Brokers. Tenant represents that it has dealt directly with and only
with Xxxxxx X. Xxxxxxx (whose commission shall be paid by Landlord pursuant
to a separate written agreement) in connection with this Lease. TENANT AND
LANDLORD SHALL EACH INDEMNTIY THE OTHER AGAINST ALL COSTS, EXPENSES,
ATTORNEYS' FEES, LIENS AND OTHER LIABILITY FOR COMMISSIONS OR OTHER
COMPENSATION CLAIMED BY ANY BROKER OR AGENT CLAIMING THE SAME BY, THROUGH OR
UNDER THE INDEMNIFYING PARTY, OTHER THAN THE BROKER(S) SPECIFICALLY
IDENTIFIED ABOVE.
F. Authority: Joint and Several Liability. Landlord covenants, warrants
and represents that each individual executing, attesting and/or delivering
this Lease on behalf of Landlord is authorized to do so on behalf of
Landlord, this Lease is binding upon and enforceable against Landlord, and
Landlord is duly organized and legally existing in the state of its
organization and is qualified to do business in the state in which the
Premises are located. Similarly, Tenant covenants, warrants and represents
that each individual executing, attesting and/or delivering this Lease on
behalf of Tenant is authorized to do won behalf of Tenant, this Lease is
binding upon and enforceable against Tenant; and Tenant is duly organized
and legally existing in the state of its organization and is qualified to do
business in the state in which the Premises are located. If there is more
than one Tenant, or if Tenant is comprised of more than one party or entity,
the obligations imposed upon Tenant shall be joint and several obligations
of all the parties and entities. Notices, payments and agreements given or
made by, with or to any one person or entity shall be deemed to have been
given or made by, with and to all of them.
G. Time Is of the Essence: Relationship: Successors and Assigns. Time
is of the essence with respect to Tenant's performance of its obligations
and the exercise of any expansion, renewal or extension rights or other
options granted to Tenant. This Lease shall create only the relationship of
landlord and tenant between the parties, and not a partnership, joint
venture or any other relationship. This Lease and the covenants and
conditions in this Lease shall inure only to the benefit of and be binding
only upon landlord and Tenant and their permitted successors and assigns.
H. Survival of Obligations. The expiration of the Term, whether by
lapse of time or otherwise shall not relieve either party of any obligations
which accrued prior to or which may continue to accrue after the expiration
or early termination of this Lease. Without limiting the scope of the prior
sentence, it is agreed that Tenant's obligations under Sections 4.A, 4.B,
and 4.C, and under Articles 6, 8, 12, 13, 19, 24, 29 and 30 shall survive
the expiration or early termination of this Lease.
I. Binding Effect. Landlord has delivered a copy of this Lease to
Tenant for Tenant's review only, and the delivery of it does not constitute
an offer to Tenant or an option. This Lease shall not be effective against
any party hereto until an original copy of this Lease has been signed by
such party and delivered to the other party.
J. Full Agreement: Amendments. This Lease contains the parties' entire
agreement regarding the subject matter hereof. All understandings,
discussions, and agreements previously made between the parties, written or
oral are superseded by this Lease, and neither party is relying upon any
warranty, statement or representation not contained in this Lease. This
Lease may be modified only by a written agreement signed by Landlord and
Tenant The exhibits and riders attached hereto are incorporated herein and
made a part of this Lease for all purposes
K. Tax Waiver. Tenant waives all rights pursuant to all Laws to contest
any taxes or other levies or protest appraised values or receive notice of
reappraisal regarding the Property (including Landlord's personalty),
irrespective of whether Landlord contests same.
L. Method of Calculation. Tenant is knowledgeable and experienced in
commercial transactions and does hereby acknowledge and agree that the
provisions of this Lease for determining charges and amounts payable by
Tenant are commercially reasonable and valid and constitute satisfactory
methods for determining such charges and amounts as required by Section
93.004 (assessment of charges) of the Texas Property Code, as enacted by
House Xxxx 2186, 77th Legislature. TENANT FURTHER VOLUNTARILY AND KNOWINGLY
WAIVES (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ALL RIGHTS AND
BENEFITS OF TENANT UNDER SUCH SECTION, AS IT NOW EXISTS OR AS IT MAY BE
HEREAFTER AMENDED OR SUCCEEDED.
M. Waiver of Consumer Rights. TENANT HEREBY WAIVES ALL ITS RIGHTS UNDER
THE TEXAS DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41
ET SEQ. OF THE TEXAS BUSINESS AND COMMERCE CODE, A LAW THAT GIVES CONSUMERS
SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WE AN ATTORNEY OF
TENANT'S OWN SELECTION, TENANT VOLUNTARILY ADOPTS THIS WAIVER.
N. Landlord's Personal Property. Tenant may, at no charge to Tenant
during the initial Term, use the furniture, fixtures and equipment listed on
Exhibit F attached hereto "Landlord's FF&E") located in the Premises in
connection with Tenant's use of the premises. Tenant shall have no right to
remove all or any portion of Landlord's FF&E from the Premises without
Landlord's prior written consent. Tenant shall maintain Landlord's FF&E and
shall be responsible for any damage thereto except normal wear and tear
Landlord's FF&E will remain the property of Landlord.
O. Confidentiality. Landlord and Tenant agree to hold the terms of this
Lease in strict confidence, and will not disclose, except for any disclosure
required by Laws, such terms to any person other than the respective
partners' directors, officers, employees, attorneys, accountants or
financing sources of Landlord and Tenant, without the prior written consent
of the other party. Notwithstanding the foregoing, Landlord may disclose any
information in Landlord's newsletter and in public notices required by Laws
or otherwise traditionally made by publicly-traded entities to investors and
the financial community.
Landlord and Tenant have executed this Lease as of the Effective Date
specified below Landlord's signature.
LANDLORD:
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CRESCENT REAL ESTATE FUNDING I,
L.P., a Delaware limited partnership
By: CRE Management I Corp., a
Delaware corporation, its General
Partner
By: /s/
----------------------------------------
Name: Xxxxxxx X. Xxxxx
---------------------------------------
Title: Vice President Leasing & Marketing
-------------------------------------
Effective Date June 12, 2003
TENANT:
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HALLMARK FINANCIAL SERVICES,
INC., a Nevada corporation
By: /s/
--------------------------------------------
Name: Xxxxx X. Xxxxxxxx
------------------------------------------
Title: CFO
-----------------------------------------
