Exhibit 10.11
LEASE AGREEMENT
STATE OF TEXAS
COUNTY OF XXXXXX
This Lease Agreement ("this Lease") is made and entered into by and between
INDUSTRIAL PROPERTIES CORPORATION ("Landlord") and
NANO-PROPRIETARY, INC. ("Tenant");
1. PREMISES AND TERM. In consideration of the obligation of Tenant to pay
Rent as provided in this Lease, and in consideration of the other terms,
provisions, and covenants of this Lease, Landlord hereby demises and leases to
Tenant, and Tenant hereby takes from Landlord certain premises described and
delineated on the demising plan contained in Exhibit A attached hereto and
incorporated herein by this reference, situated within a building (the
"Building") located on certain real property (the "Land") within the above-named
County and State and more particularly described as follows:
Approximately 16,111 square feet of space located at 0000 Xxxxxxxx Xxxxxxxxx,
Suites 105, 106, 107, 108, and 109, Xxxxxx, Xxxxxx County, Texas,
together with the other improvements erected upon said premises (the said
premises and the improvements located therein being herein referred to as the
"Premises").
To Have and to Hold the Premises, subject to the other terms and provisions
of this Lease, for a term (the "Term") commencing on FEBRUARY 15, 2004 (the
"Commencement Date") and ending THIRTY-SIX (36) months thereafter. If this Lease
is executed before the Premises become vacant or otherwise available and ready
for occupancy, or if any present tenant or occupant of the Premises holds over
and Landlord cannot acquire possession of the Premises prior to the originally
scheduled commencement date, Landlord shall not be deemed to be in default, and
Tenant agrees to accept possession of the Premises at such time as Landlord is
able to tender the same; and Landlord hereby waives payment of rent covering any
period prior to the tendering of possession of the Premises to Tenant. Landlord
will not be liable to Tenant if Landlord does not deliver possession of the
Premises to Tenant on the Commencement Date stated above. Landlord's
non-delivery of possession of the Premises to Tenant on the Commencement Date
will not affect this Lease or the obligations of Tenant under this Lease.
However, the Commencement Date will be delayed until possession of the Premises
is delivered to Tenant. The Term will be extended for a period equal to the
delay in delivery of possession of the Premises to Tenant. If delivery of
possession of the Premises to Tenant is delayed, Landlord and Tenant shall, upon
such delivery, execute an amendment to this Lease setting forth the revised
Commencement Date and expiration date of the Term. If Tenant occupies the
Premises before the Commencement Date, Tenant's occupancy of the Premises will
be subject to all of the provisions of this Lease. By taking possession of the
Premises, Tenant shall be deemed to have acknowledged that it has inspected the
Premises and accepts the Premises in their then present condition as suitable
for the purpose for which the Premises are leased. Tenant further acknowledges
that no representations as to the repair of the Premises, nor promises to alter,
remodel, or improve the Premises, have been made by Landlord, except for those
expressly set forth in this Lease.
2. RENT.
2.1 As used in this Lease, "Rent" means "Base Rent" (defined in Section
2.2) and "Additional Rent" (defined in Section 3).
2.2 Tenant agrees to pay to Landlord rent for the Premises, without
deduction, set off, or abatement, for the Term, at the rate of $4,477.75 PER
MONTH FOR THE PERIOD BEGINNING FEBRUARY 15, 2004 AND ENDING MAY 15, 2004 AND
$7,462.62 PER MONTH FOR THE PERIOD BEGINNING MAY 16, 2004 AND ENDING FEBRUARY
14, 2007 (the "Base Rent"). One such monthly installment shall be due and
payable on the Commencement Date recited above, and a like monthly installment
shall be due and payable in advance without demand on or before the same day of
each succeeding month during the Term. However, if such Commencement Date should
be a date other than the first day of a calendar month, there shall be due and
payable on said Commencement Date as Base Rent for the balance of the calendar
month during which said Commencement Date shall
fall, a sum equal to that portion of the Base Rent for a full month as herein
provided which the number of days from said Commencement Date to the end of the
calendar month during which said Commencement Date shall fall bears to the total
number of days in such month, and all succeeding installments of Base Rent shall
be payable in advance on or before the first day of each succeeding calendar
month during the Term. Tenant shall cause payments to be properly mailed or
otherwise delivered so as to be actually received by Landlord on or before the
due date (and not merely deposited in the mail).
3. TENANT'S OBLIGATION TO PAY REIMBURSABLE EXPENSES AS ADDITIONAL RENT. As
"Additional Rent" (herein so called), in addition to and separate from the Base
Rent payable under Section 2.2, Tenant shall pay to Landlord the Reimbursable
Expenses (as herein defined), as adjusted from time to time, pursuant to the
provisions herein stated. For purposes of this Lease, the following terms shall
have the herein indicated meanings:
3.1 "Reimbursable Expenses" means "Tenant's Share" of "Taxes," "Common
Area Maintenance", and "Insurance Premiums" (as all such terms are herein
defined).
3.2 The term "Tenant's Share" means a fraction (expressed as a
percentage to two decimal places), the numerator of which is the floor area (in
square feet) of the Premises and the denominator of which is the aggregate
leaseable floor area (in square feet) in all buildings (including the Building)
now or hereafter situated on the Land as of the first day of January for the
relevant calendar year. Landlord and Tenant hereby stipulate that Tenant's Share
is 32.22 % as of the commencement of the Term hereof. "Tenant's Share" of
Insurance Premiums shall include the amount of increased Insurance Premiums, if
any, attributable to any use of the Premises by Tenant, whether approved by
Landlord or not, that causes the Insurance Premiums to increase, and such
amounts of Insurance Premiums shall be excluded from the calculations of other
tenants' Tenant's Share of Insurance Premiums.
3.3 "Taxes" means all real estate taxes (including, without limitation,
rent taxes and other governmental or quasi-governmental charges) and all
assessments, both general and special (including, without limitation,
assessments of any and all property owners' associations, utility districts,
water districts, and other governmental and private authorities having the power
to make assessments), lawfully levied or assessed against the Land, Building,
and Premises or any part thereof. If applicable, Landlord shall have the right,
in Landlord's sole discretion, to allocate in a reasonable manner the values of
multiple properties carried by taxing authorities on a single tax account.
3.4 "Common Area Maintenance" ("CAM") means, for each calendar year (or
portion thereof) during the Term, the aggregate of all costs, expenses, and
liabilities of every kind or nature paid or incurred by Landlord in connection
with Landlord's obligation to take reasonable care of the Land and Building as
provided in Section 8.
3.5 "Insurance Premiums" means all of Landlord's insurance premiums
attributable to the Building, including but not limited to insurance for fire,
casualty, extended coverage, general liability, and property damage.
3.6 Monthly during the first year of the Term, Tenant shall pay
Landlord the sum of $2,078.33 per month, monthly in advance, as an initial
estimate of the Reimbursable Expenses, payable at the same time and place as the
Base Rent is payable; provided, however, if the Term does not begin on the first
day of a calendar month, Tenant shall pay a pro rata portion of such sum for
such partial month; such applicable amount being herein referred to as the
"Estimated Charge." Landlord shall have the right to adjust such monthly
estimate on an annual basis pursuant to Section 3.7 hereof. The monthly amount
payable to Landlord under this Section 3.6 will be made up of $1,635.27 per
month, as an estimate of the monthly Expense Reimbursement with respect to
Taxes, $333.50 per month, as an estimate of the monthly Expense Reimbursement
with respect to CAM, and $109.56 per month, as an estimate of the monthly
Expense Reimbursement with respect to Insurance Premiums.
3.7 Within 120 days after the end of each calendar year occurring
during the Term (and subsequent to the expiration or other termination of this
Lease if such occurs on a date other than the last day of a calendar year),
Landlord shall give Tenant notice of the total amount paid by Tenant for the
relevant calendar year together with the actual amount of Tenant's Reimbursable
Expenses for such calendar year. If the actual amount of the Reimbursable
Expenses with respect to such period exceeds the aggregate amount previously
paid by Tenant with respect thereto during such period, Tenant shall pay to
Landlord the deficiency within ten (10) days following notice from Landlord.
However, if the aggregate amount previously paid by Tenant with respect thereto
exceeds the Reimbursable Expenses for such period, then, at Landlord's election,
such surplus (net of any amounts then owing by Tenant to Landlord) shall be
credited against the next ensuing installment of the Reimbursable Expenses due
hereunder by Tenant, or Landlord may refund such net surplus to Tenant within
thirty (30) days
2
following Landlord's calculation of the Reimbursable Expenses with respect to
any calendar year. Landlord shall be entitled to adjust, in its reasonable
discretion, the Estimated Charge, such adjusted Estimated Charge to be payable
on the first day of the calendar month immediately following Landlord's notice
of such adjustment and to remain in effect until further notice from Landlord.
3.8 Landlord's books and records with respect to Taxes, CAM, and
Insurance Premiums shall be made available for inspection by Tenant at
Landlord's offices during Landlord's business hours.
4. DEPOSIT. Tenant agrees to deposit with Landlord on the date hereof the
sum of $9,540.95, which sum shall be held by Landlord, without obligation for
interest, as security for the performance of Tenant's covenants and obligations
under this Lease, it being expressly understood and agreed that such deposit is
not an advance rental deposit or a measure of Landlord's damages in case of
Tenant's default. Upon the occurrence of any "event of default," as herein
defined, by Tenant, Landlord may, from time to time, without prejudice to any
other remedy provided herein or provided by law, use such deposit to the extent
necessary to make good any arrears of Rent and any other damage, injury,
expense, or liability caused by such event of default; and Tenant shall pay to
Landlord on demand the amount so applied in order to restore the security
deposit to its original amount. If no event of default by Tenant has occurred
and is continuing, any remaining balance of such deposit shall be returned by
Landlord to Tenant upon expiration of this Lease. Notwithstanding anything
contained in this Lease to the contrary, all amounts payable by Tenant to or on
behalf of Landlord under this Lease, whether or not expressly denominated as
rent, shall constitute rent for the purposes of this Lease and for purposes of
section 502(b)(6) (or comparable provision of any future bankruptcy law) of the
Federal Bankruptcy Code, 11 U.S.C. Sections 101 et seq. (the "Bankruptcy Code").
5. DISCLAIMER OF WARRANTIES. BY EXECUTION OF THIS LEASE, TENANT
ACKNOWLEDGES AND AGREES THAT EXCEPT AS EXPRESSLY SET FORTH IN THIS LEASE,
NEITHER LANDLORD NOR ANY OFFICER, PARTNER, AGENT, EMPLOYEE, OR REPRESENTATIVE OF
LANDLORD MAKES OR HAS MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR
CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES, OR ANY PORTION
THEREOF, ITS PHYSICAL CONDITION, INCOME TO BE DERIVED THEREFROM, OR EXPENSES TO
BE INCURRED WITH RESPECT THERETO, ITS FITNESS OR SUITABILITY FOR ANY PARTICULAR
USE, OR ANY OTHER MATTER OR THING RELATING TO OR AFFECTING THE SAME. THERE ARE
NO ORAL AGREEMENTS, WARRANTIES, OR REPRESENTATIONS COLLATERAL TO OR AFFECTING
THE PREMISES OR ANY PORTION THEREOF, EXCEPT AS MAY BE OTHERWISE EXPRESSLY SET
FORTH IN THIS LEASE. LANDLORD AND TENANT EACH HEREBY AGREES THAT THE PREMISES
ARE LEASED IN AN AS IS CONDITION WITH ANY AND ALL LATENT OR PATENT DEFECTS. IN
NO EVENT SHALL TENANT HAVE THE RIGHT TO RECOVER CONSEQUENTIAL DAMAGES. TENANT,
BY EXECUTION OF THIS LEASE, EXPRESSLY AGREES THAT LANDLORD HAS NOT MADE AND DOES
NOT MAKE ANY WARRANTIES WITH RESPECT TO THE PREMISES UPON WHICH AN ACTION UNDER
THE TEXAS DECEPTIVE TRADE PRACTICES ACT COULD BE BASED.
6. USE. The Premises shall be used, to the extent permitted by applicable
law, only for general office purposes and, to the extent applicable, for the
purpose of receiving, storing, shipping, and selling (other than retail)
products, materials, and merchandise made and/or distributed by Tenant and for
such other lawful purposes as may be incidental thereto. Tenant shall, at its
own cost and expense, obtain and at all times maintain any and all licenses and
permits necessary for any such use. Tenant, at Tenant's expense, shall comply
with all laws, rules, orders, ordinances, directions, regulations, and
requirements of federal, state, county, and municipal authorities pertaining to
Tenant's use of the Premises and with all recorded covenants, conditions, and
restrictions, regardless of when they become effective, and shall promptly
comply with all governmental orders and directives for the correction,
prevention, and abatement of nuisances and other activities in or upon, or
connected with the Premises, all at Tenant's sole expense. Without Landlord's
prior written consent, Tenant shall not receive, store, or otherwise handle any
product, material, or merchandise which is explosive or highly inflammable or
any material which may be corrosive or otherwise damaging to the Premises or any
appurtenances thereto. Tenant shall not, without Landlord's approval, permit the
Premises to be used for any purpose which would render the insurance thereon
void or the insurance risk more hazardous or the premiums therefor more
expensive. Further, Tenant shall not introduce into the Premises or use therein
any equipment or fixtures which might be reasonably expected, due to excess
weight, vibration, or any other characteristic, to cause damage to the Premises
or undue interference with the occupants of adjacent premises, and Tenant shall
not permit, for any reason, any fumes, odors, or excess noise to emanate from
the Premises. Additionally, Tenant shall not store any products, materials, or
merchandise outside the exterior walls or interior demising walls of the
Premises without Landlord's prior written consent.
7. TAXES AND ASSESSMENTS. Subject to Tenant's obligation to pay to Landlord
the Reimbursable Expenses, Landlord agrees to pay before they become delinquent
Tenant's Share of all Taxes; provided, however, Landlord may, at its sole cost
3
and expense (in its own name or in the name of both Landlord and Tenant as
Landlord may deem appropriate) dispute and contest the same, and in such case
such disputed item need not be paid until finally adjudged to be valid and any
right to appeal has lapsed. At the conclusion of such contest, Landlord shall
pay the items contested to the extent that they are held valid, together with
all items, court costs, interest, and penalties relating thereto. If the real
estate taxes levied against the Premises are increased as a result of any
alterations, additions, or improvements made by Tenant or by Landlord at the
request of Tenant, Tenant shall pay to Landlord upon demand, as Additional Rent,
the amount of the increase and continue to pay the increase during the Term.
8. REPAIR AND COMMON AREA OBLIGATIONS. Landlord shall at its expense
maintain only the roof, foundation, and the structural soundness of the exterior
walls of the Building in good repair, reasonable wear and tear excepted. Tenant
shall repair and pay for any damage caused by the negligence or willful
misconduct of Tenant, or Tenant's employees, agents, or invitees, or caused by
Tenant's default hereunder. The term "walls" as used herein shall not include
windows, glass or plate glass, doors, or special storefronts. Tenant shall
immediately give Landlord written notice of any defect or need for repairs,
after which Landlord shall have a reasonable opportunity to repair same or cure
such defect. Landlord's liability hereunder shall be limited to the cost of such
repairs or curing such defect. In the event the Premises have air conditioning
installed therein on the date of this Lease, then Landlord represents that on
the Commencement Date of this Lease such air-conditioning system shall be in
good operating condition; provided, however, that during the Term, Tenant shall
at its own cost and expense maintain such system in good operating condition,
shall make all necessary repairs and replacements, and upon termination of this
Lease shall deliver such system to Landlord in good operating condition. Subject
to Tenant's obligation to pay to Landlord the Reimbursable Expenses, Landlord
shall take reasonable care to maintain and repair the common areas of the Land
and Building, and the grounds around the Building, including exterior lighting,
mowing of grass, care of shrubs and trees, and general landscaping and shall
keep the parking areas, driveways, and exterior loading areas in a reasonably
clean, usable, and sanitary condition.
9. INSURANCE. Subject to Tenant's obligation to pay to Landlord the
Reimbursable Expenses, Landlord covenants and agrees to maintain standard fire
and extended coverage insurance covering the Building (exclusive of any of
Tenant's fixtures, furnishings, and equipment attached thereto or located
thereon) in an amount not less than eighty percent (80%) of the replacement cost
thereof. Tenant shall not permit any operation or activity to be conducted, or
storage or use of any volatile or any other materials, on or about the Premises
that would cause suspension or cancellation of any insurance policy carried by
Landlord, or increase the premiums therefor, without the prior written consent
of Landlord.
10. TENANT'S REPAIRS. Tenant shall, at its own cost and expense, keep in
good condition and repair all other parts of the Premises, including but not
limited to, windows, glass and plate glass, doors (including overhead doors),
any special storefront, interior walls and finish work, floors and floor
covering, heating, ventilating, and air-conditioning systems, gutters,
downspouts and protective posts therefor, curbs, dock boards, dock bumpers, dock
levelers, steps and landings, plumbing work and fixtures, and gas, electric,
water, and other utility lines, and shall take good care of the Premises and its
fixtures and suffer no waste. Tenant shall keep the Premises free of all pest
infestation, including, but not limited to, termites and rodents, and shall
maintain a regular pest control prevention program. Except as set forth in the
last sentence of this Section 10, Tenant shall not be obligated to repair any
damage caused by fire, tornado, or other casualty covered by items set forth
under the extended coverage provisions of Landlord's fire insurance policy. In
the event the Premises are served by rail track or spur track, then Tenant,
notwithstanding the provisions of any rail track agreements to the contrary,
shall be liable and responsible for maintaining, or reimbursing the rail carrier
for the maintenance of, the portion of the track and related facilities adjacent
to the Premises. Tenant shall also be obligated to repair any damage to the
Premises or any part thereof caused by the negligent act or willful misconduct
of Tenant, its agents, customers, employees, or invitees regardless of whether
Tenant would otherwise be obligated to make such repair by the provisions
hereof.
11. ALTERATIONS. Tenant shall not make any major alterations, additions, or
improvements to the Premises without the prior written consent of Landlord.
Tenant may, without the consent of Landlord, but at Tenant's own cost and
expense and in a good, workmanlike manner, make such minor alterations,
additions, or improvements or erect, remove, or alter such partitions, or erect
such shelves, bins, machinery, and trade fixtures as it may deem advisable,
without altering the basic character of the Building or improvements, without
affecting the structural or loadbearing elements of the Building or
improvements, without overloading or damaging such Building or improvements or
any utility systems servicing same, and without interference to the other
occupants of the Building or any other of Landlord's tenants, and in each case
complying with all applicable governmental laws, ordinances, regulations, and
other requirements. At the termination of this Lease, Tenant shall, if Landlord
so elects, and at Tenant's sole cost and expense, remove all alterations,
additions, improvements, and partitions erected by Tenant and restore the
Premises to their original condition; otherwise, such improvements shall be
4
delivered to Landlord with the Premises. All shelves, bins, machinery, and trade
fixtures installed by Tenant may be removed by Tenant at the termination of this
Lease, if Tenant so elects, so long as no event of default by Tenant is then in
existence, and shall be removed if required by Landlord. All such removals and
restorations shall be accomplished in a good, workmanlike manner so as not to
damage the primary structure or structural qualities of the Building and other
improvements situated on the Premises. Any fixtures installed in the Premises by
Tenant other than shelves, bins, machinery, and similar trade fixtures shall
become the property of Landlord when installed.
12. SIGNS. Tenant shall have the right to install signs upon the exterior
of the Building and other improvements situated on the Premises only when first
approved in writing by Landlord and subject to any applicable governmental laws,
ordinances, regulations, and other requirements and subject to applicable
restrictive covenants, if any. Tenant shall remove all such signs (or lettering
installed by Tenant on sign panels installed by Landlord) at the termination of
this Lease. Such installations and removals shall be made in such a manner as to
avoid injury or defacement of the Building and other improvements situated on
the Premises.
13. INSPECTION. Landlord and Landlord's agents and representatives shall
have the right to enter and inspect the Premises at any time during reasonable
business hours for the purpose of ascertaining the condition of the Premises or
in order to make such repairs as may be required to be made by Landlord under
the terms of this Lease and for the purpose of showing the Premises and the
Building to prospective purchasers. During the period that is six (6) months
prior to the end of the Term hereof, Landlord and Landlord's agents and
representatives shall have the right to enter the Premises at any time during
reasonable business hours for the purpose of showing the Premises to prospective
tenants and shall have the right to erect on the Premises a suitable sign
indicating that the Premises are for sale or lease.
14. UTILITIES. Landlord agrees to provide such water, electricity,
telephone, and other utility service connections into the Premises as may be
presently in place. Tenant shall pay all charges incurred for any utility
services used on or from the Premises and any maintenance charges for utilities,
shall be responsible for any costs associated in any manner with any additional
utility connections to the Premises which Tenant may require, and shall furnish
all electric light bulbs and tubes. Such payments shall be made directly to the
supplier of any utility separately metered (or submetered) to the Premises, or
to Landlord if any such utilities are not separately submetered or metered.
Landlord shall calculate the cost of Tenant's portion of any such utilities on
such equitable basis as may be determined by Landlord with respect to any such
utilities. Unless otherwise required by law, Landlord is the party entitled to
designate utility and telecommunication service providers to the Building.
Landlord shall in no event be liable for any interruption or failure of utility
or telecommunication services on the Premises.
15. ASSIGNMENT AND SUBLETTING.
15.1 Tenant shall not have the right to assign this Lease or to sublet
the whole or any part of the Premises without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Notwithstanding any
assignment or subletting, Tenant shall at all times remain fully responsible and
liable for the payment of the Rent herein specified and for compliance with all
of the other obligations imposed on Tenant under the terms, provisions, and
covenants of this Lease. Upon the occurrence of an event of default, if the
Premises or any part thereof are then assigned or sublet, Landlord, in addition
to any other remedies herein provided, or provided by law, may at its option
collect directly from such assignee or subtenant all rents or payments becoming
due to Tenant under such assignment or sublease and apply such rent or payment
against any sums due to Landlord by Tenant. No such collection shall be
construed to constitute a novation or a release of Tenant from the further
performance of its obligations under this Lease. Landlord shall have the right
to assign any of its rights under this Lease.
15.2 If Tenant is a corporation, then any transfer of this Lease from
Tenant by merger, consolidation, or dissolution or any change in ownership or
power to vote a majority of the voting stock in Tenant outstanding at the time
of execution of this instrument (or at any future time) shall constitute an
assignment for the purpose of this Lease; provided, however, that acquisition of
all stock of a corporate Tenant by any corporation, the stock of which is listed
on either the New York or American Stock Exchange, or the merger of a corporate
Tenant into such a corporation, the stock of which is so listed, shall not
itself be deemed to be a violation of Section 15 hereof. For purposes of this
Section 15.2, the term "voting stock" shall refer to shares of stock regularly
entitled to vote for the election of directors of the corporation involved.
5
15.3 If Tenant is a general partnership having one or more corporations
as partners, or if Tenant is a limited partnership having one or more
corporations as general partners, the provisions of the preceding Section 15.2
shall apply to each of such corporations as if such corporation alone had been
the Tenant hereunder.
15.4 If Tenant is a general partnership, then the transfer of a
majority of the partnership interest of Tenant existing at the time of execution
of this instrument (or at any future time) shall constitute an assignment for
the purpose of this Lease. If Tenant is a limited partnership, then the
assignment of all or any portion of the interest of a general partner of Tenant
shall constitute an assignment for the purpose of this Lease.
16. FIRE AND CASUALTY DAMAGE.
16.1 If the Premises should be damaged or destroyed by fire, tornado,
or other casualty, Tenant shall give immediate written notice thereof to
Landlord.
16.2 If the Premises or the Building should be totally destroyed by
fire, tornado, or other casualty, or if either should be so damaged that
rebuilding or repairs cannot be completed within 200 days after the date upon
which Landlord is notified by Tenant of such damage, this Lease shall terminate
and the Rent shall be abated during the unexpired portion of this Lease,
effective upon the date of the occurrence of such damage.
16.3 If the Premises or the Building should be damaged by fire,
tornado, or other casualty, but only to such extent that rebuilding or repairs
can be completed within 200 days after the date upon which Landlord is notified
by Tenant of such damage, this Lease shall not terminate, but Landlord shall, at
its sole cost and expense, proceed with reasonable diligence to rebuild and
repair such Building to substantially the condition in which it existed prior to
such damage, except that (i) Landlord shall not be required to so rebuild or
repair if less than twelve (12) months remain in the Term hereof after the
expiration of such 200-day period, (ii) Landlord shall not be required to
rebuild, repair, or replace any part of the partitions, fixtures, and other
improvements which may have been placed on the Premises by Tenant, and (iii) so
long as Landlord has complied with the provisions hereof relating to insurance
coverage, Landlord shall not be obligated to expend any funds in excess of
available insurance proceeds attributable to such damage in rebuilding the
Premises. If the Premises are untenantable in whole or in part following such
damage, the Rent payable hereunder during the period the Premises are
untenantable shall be reduced to such extent as may be fair and reasonable under
all of the circumstances. In the event that Landlord should fail to complete
such repairs and rebuilding within 200 days after the date upon which Landlord
is notified by Tenant of such damage, Tenant may, at its option, terminate this
Lease by delivering written notice of termination to Landlord within thirty (30)
days after the expiration of such 200-day period, as Tenant's exclusive remedy,
whereupon all rights and obligations hereunder shall cease and determine.
16.4 Notwithstanding anything herein to the contrary, in the event the
holder of any indebtedness secured by a mortgage or deed of trust covering the
Premises requires that the insurance proceeds be applied to such indebtedness,
then Landlord shall have the right to terminate this Lease by delivering written
notice of termination to Tenant, whereupon all rights and obligations hereunder
shall cease and determine.
16.5 Any insurance which may be carried by Landlord or Tenant against
loss or damage to the buildings and other improvements situated on the Premises
shall be for the sole benefit of the party carrying such insurance and under its
sole control.
16.6 Each of Landlord and Tenant hereby releases the other from any and
all liability or responsibility to the other or anyone claiming through or under
them by way of subrogation or otherwise for any loss or damage to property
caused by fire or any other cause of loss covered by the insurance maintained
hereunder, even if such fire or other casualty shall have been caused by the
fault or negligence of the other party or anyone for whom such party may be
responsible; provided, however, that this release shall be applicable and in
force and effect only with respect to loss or damage occurring during such times
as the releasing parties' policies contain a clause or endorsement to the effect
that any release shall not adversely affect or impair said policies or prejudice
the right of the releasing party to recover thereunder. Each of Landlord and
Tenant agrees that it shall request its insurance carriers to include in its
policies such a clause or endorsement.
17. LIABILITY. Landlord shall not be liable to Tenant or Tenant's
employees, agents, patrons, or visitors, or to any other person whomsoever, for
any injury to person or damage to property on or about the Premises caused by
the negligence or misconduct of Tenant, its agents, servants, or employees, or
of any other person entering upon the Premises or caused by the
6
Building and improvements located on the Premises becoming out of repair, or
caused by leakage of gas, oil, water, or steam or by electricity emanating from
the Premises, or caused by or arising out of the Tenant's failure to comply with
the requirements of this Lease, or due to any cause whatsoever, and Tenant
agrees to indemnify Landlord and hold it harmless from any loss, expense, or
claims, including attorneys' fees, arising out of any such damage or injury;
except that any injury to person or damage to property caused by the gross
negligence of Landlord or by the failure of Landlord to repair and maintain that
part of the Premises which Landlord is obligated to repair and maintain within a
reasonable time after the receipt of written notice from Tenant of needed
repairs or defects shall be the liability of Landlord and not of Tenant. Tenant
shall procure and maintain throughout the Term a policy or policies of
insurance, at its sole cost and expense, insuring both Landlord and Tenant
against all claims, demands, or actions arising out of or in connection with
Tenant's use or occupancy of the Premises, or by the condition of the Premises,
the limits of such policy or policies to be in an amount not less than
$1,000,000 in respect of any one occurrence and a general aggregate limit of
$2,000,000, and to be written by insurance companies authorized to do business
in the state in which the Premises are located and satisfactory to Landlord.
Such policies or duly executed certificates of insurance shall be promptly
delivered to Landlord and renewals thereof as required shall be delivered to
Landlord at least ten (10) days prior to the expiration of the respective policy
terms. All such policies shall contain provisions requiring that the insurer
give Landlord not less than thirty (30) days' prior written notice of the
cancellation of such policies.
18. CONDEMNATION.
18.1 If the whole or any substantial part of the Premises or the
Building or Land upon which the Premises are located should be taken for any
public or quasi-public use under governmental law, ordinance, or regulation, or
by right of eminent domain, or by private purchase in lieu thereof, this Lease
shall terminate and the Rent shall be abated during the unexpired portion of
this Lease, effective when the physical taking of said Premises shall occur. For
the purposes hereof "substantial part of the Premises" shall be deemed to mean
such portion of the Premises the loss of which would, in Landlord's reasonable
opinion, materially lessen the usefulness of the Premises to Tenant for the
purposes for which Tenant is then using the Premises.
18.2 If less than a substantial part of the Premises or the Building or
Land upon which the Premises are located shall be taken for any public or
quasi-public use under any governmental law, ordinance, or regulation, or by
right of eminent domain, or by private purchase in lieu thereof, this Lease
shall not terminate, but the Rent payable hereunder during the unexpired portion
of this Lease shall be reduced to such extent as may be fair and reasonable
under all of the circumstances.
18.3 In the event of any such taking or private purchase in lieu
thereof, Landlord and Tenant shall each be entitled to receive and retain such
separate awards and/or portion of lump sum awards as may be allocated to their
respective interests in any condemnation proceedings.
19. HOLDING OVER. Should Tenant, or any of its successors in interest, hold
over the Premises, or any part thereof, after the expiration of the Term, as the
Term may be renewed or extended, unless otherwise agreed in writing, such
holding over shall constitute and be construed as creating a month-to-month
tenancy only, terminable at the will of Landlord, at a rental equal to the
greater of (a) the then fair market rental value of the Premises or (b) the
total rental payable for the last month of the Term plus fifty percent (50%) of
such amount, payable in full on the first day on which Tenant holds over and on
the first day of each month thereafter during such holdover period. The
inclusion of the preceding sentence shall not be construed as Landlord's
permission for Tenant to hold over.
20. QUIET ENJOYMENT. Landlord covenants that it now has, or will acquire
before Tenant takes possession of the Premises, good title to the Premises, free
and clear of all liens and encumbrances, excepting only the lien for current
taxes not yet due, such mortgage or mortgages as are permitted by the terms of
this Lease, zoning ordinances, and other building and fire ordinances and
governmental regulations relating to the use of such property, and easements,
restrictions, and other conditions of record. In the event this Lease is a
sublease, then Tenant agrees to take the Premises subject to the provisions of
the prior leases. Landlord represents and warrants that it has full right and
authority to enter into this Lease and that Tenant, upon paying the rental and
performing its other covenants and agreements under the terms of this Lease,
shall peaceably and quietly have, hold, and enjoy the Premises for the Term
without hindrance or molestation from Landlord, or anyone claiming by, through,
or under Landlord, but not otherwise, subject to the terms and provisions of
this Lease.
21. TENANT'S ENVIRONMENTAL COVENANTS, REPRESENTATIONS, AND INDEMNITY.
7
21.1 Tenant shall strictly comply with all Environmental Laws which
relate to or affect the Premises, the Building, or the Land during the Term and
any extensions or renewals thereof.
21.2 "Environmental Laws" means all federal, state and local laws,
ordinances, regulations and rules, as amended from time to time, regulating or
pertaining to human health and the environment; including, without limitation,
(a) the Solid Waste Disposal Act, 42 U.S.C.ss.6901 et seq. (also known as the
Resource Conservation and Recovery Act), (b) the Comprehensive Environmental
Response, Compensation & Liability Act, 42 U.S.C.ss.9601 et seq., (c) the
Federal Water Pollution Control Act, 33 U.S.C.ss.1251 et seq. (also known as the
"Clean Water Act"), (d) the Clean Air Act, 42 U.S.C.ss.7401 et seq., (e) the
Toxic Substance Control Act, 15 U.S.C. ss.2601 et seq., (f) the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C.ss.11001 et seq., (g) the Oil
Pollution Act, 33 U.S.C.ss.2701 et seq., (h) radioactive materials under the
Atomic Energy Act, 42 U.S.C.ss.2014, et seq., and all state and local laws and
ordinances similar or analogous to these laws.
21.3 Tenant expressly agrees that Tenant shall not use, store, process,
produce, handle, release, or dispose of any "Hazardous Substance" (as herein
defined) on the Premises or on the Land, except for such use, storage,
processing, production, or handling of Hazardous Substances as are part of the
ordinary course of Tenant's business activities (the "Permitted Activities"),
provided said Permitted Activities are at all times conducted in strict
compliance with all Environmental Laws and further provided that the Permitted
Activities have been approved in advance in writing by Landlord after disclosure
to Landlord by Tenant of the specific Hazardous Substances involved (the
"Permitted Materials"). Reasonable amounts of copy machine toners and other
normal office supplies as reasonably necessary for the conduct of Tenant's
regular office functions within the Premises shall be considered Permitted
Materials, and the normal use of such office supplies and materials in the
conduct of normal office operations shall be considered Permitted Activities for
purposes of this Lease. The grant or denial of such approval shall be in
Landlord's sole discretion, and Tenant acknowledges that Landlord has advised
Tenant that such approval should be sought before execution of this Lease.
Tenant acknowledges that the release or disposal of any Hazardous Substances on,
at, or from the Premises or the Land is not a Permitted Activity under any
circumstances, and that Tenant may not use any portion of the Premises or the
Land as a landfill or a dump for Hazardous Substances or any other wastes.
Tenant agrees not to install any aboveground or underground tank systems of any
type on the Premises or the Land without the express written consent of
Landlord.
21.4 If any Hazardous Substances, other than Permitted Materials, or if
Permitted Materials in amounts in excess of those reasonably required in the
course of the Permitted Activities, are brought onto or found on the Premises,
or are brought onto the Land by Tenant or those acting on Tenant's behalf, the
same shall be immediately removed from the Premises and/or the Land by Tenant,
at Tenant's sole cost and expense.
21.5 Tenant shall immediately notify Landlord should Tenant become
aware of any Hazardous Substance or other environmental problem or liability
with respect to the Premises or the Land. In the event of the release or
disposal of Hazardous Substances (or Permitted Materials) on or from the
Tenant's Premises, or on or from the Land should Tenant be responsible therefor,
Tenant shall be required at its own expense to remove the released or disposed
of Hazardous Materials and to remediate any resulting contamination to the
levels required by the governmental or other agency with jurisdiction over such
releases, but in no event shall Tenant be allowed to remediate the contamination
to levels less stringent than those which would permit closure of the
contamination without further remedial, monitoring, or control measures by
Tenant or any other person. In the event such contamination results from
Hazardous Substances which are not Permitted Materials, or from Permitted
Materials present in excess of any amount that could reasonably be required in
the course of the Permitted Activities, Tenant shall be required to remediate
any contamination to those background levels which would have been present in
the absence of any releases by Tenant or those for whom Tenant is responsible,
and Tenant shall be responsible for proving that these background levels will
permit cessation of remediation. Tenant shall be responsible in this same manner
for contamination which originated during a prior lease between Tenant or any of
its predecessors and Landlord or any of its predecessors of the Premises.
21.6 "Hazardous Substances" means any substance (i) the presence of
which requires removal, remediation, or investigation under any Environmental
Law; (ii) that is defined or classified as a hazardous waste, hazardous material
pollutant, contaminant, or toxic or hazardous substance under any Environmental
Law, including without limitation, any hazardous substance within the meaning of
Section 101(14) of the Comprehensive Environmental Response, Compensation &
Liability Act, as amended, 42 U.S.C. ss.9601(14); or (iii) that contains or
consists of gasoline, diesel fuel, oil, fuel oil, or other petroleum
hydrocarbons.
8
21.7 Tenant agrees that it shall comply with the requirements of this
Section 21 at its sole expense. However, in the event that Landlord is required
to take any action, or spend any sum, or incur any damage, or a claim is made by
some person (including Tenant) against Landlord therefor as a result of Tenant's
failure to comply with any of its obligations under this Section 21, Tenant
shall indemnify and hold Landlord (and any mortgagee and trustee under any deed
of trust or mortgage on the Premises or the Land) harmless from all claims,
demands, actions, liabilities, costs, (including attorneys' and consultants'
fees), expenses, penalties, fines, damages (including, without limitation,
diminution in value of the Land, Building, or improvements, damages for the loss
or restriction on use of rentable or unusable space or of any amenity or
appurtenance of the Building, damages arising from any adverse impact on
marketing of building space or land area), and obligations of any nature arising
from the breach of Tenant's warranties, representations, and covenants contained
in this Section 21, or as a result of any use of the Premises by Tenant, its
invitees, agents, contractors, or employees in violation of the foregoing
provisions relating to Hazardous Substances. Amounts due under this indemnity
shall be paid by Tenant within ten (10) days after written notice from Landlord
that amounts subject to such indemnification have been incurred, without the
requirement of awaiting for the ultimate outcome of any claim, proceeding, or
litigation, whether administrative or judicial, to which the parties may resort
for the resolution of their claims. The foregoing indemnification shall survive
the termination or expiration of this Lease.
22. EVENTS OF DEFAULT. Each of the following events shall be deemed to be
an "event of default" by Tenant under this Lease:
22.1 The failure of Tenant to pay any installment of Rent payable under
this Lease, or failure to perform or discharge any other obligation or liability
of Tenant under this Lease requiring the payment of money, when any such payment
is due.
22.2 Tenant's becoming insolvent or making a transfer in fraud of
creditors or an assignment for the benefit of creditors.
22.3 The filing by Tenant of a petition under any section or chapter of
the Bankruptcy Code or under any present or future bankruptcy, insolvency, or
similar law or statute of the United States or any state thereof heretofore or
hereinafter enacted; or the filing of such a petition against Tenant
involuntarily if such petition is not withdrawn or otherwise removed within
sixty (60) days of its being filed; or the adjudication of Tenant as bankrupt or
insolvent in proceedings filed against Tenant thereunder.
22.4 The appointment of a receiver, trustee, or custodian for, or the
taking possession by such a receiver, trustee, or custodian of, all or
substantially all of the assets of Tenant.
22.5 Abandonment or vacation by Tenant of any substantial portion of
the Premises.
22.6 Failure by Tenant to comply with any term, provision, or covenant
of this Lease or to discharge any obligation or liability under this Lease not
involving the payment of money, and the failure to cure any such failure within
five (5) days after written notice thereof to Tenant, provided that if such
default is not susceptible to cure within five (5) days, Tenant shall be deemed
to have cured such default if Tenant has commenced efforts to cure such default
within such five (5) day period and diligently pursues and completes such
curative actions within a reasonably prompt period of time thereafter.
23. REMEDIES. As used in this Section 23, the term "rent" or "Rent" shall
be deemed to be and to mean all Base Rent, Additional Rent, Reimbursable
Expenses, and other monetary sums required to be paid by Tenant pursuant to this
Lease, and the term "Time of Determination" means the particular time at which
Landlord, in its reasonable discretion, makes a determination of damages to
which Landlord is entitled by reason of Tenant's default under this Lease.
Landlord may make such determination at any one or more times as necessary.
Upon the occurrence of any default or breach of this Lease by Tenant, Landlord's
obligations under this Lease shall be suspended and Landlord may at any time
thereafter, without any notice or demand whatsoever (Tenant hereby expressly
waiving any such notice or demand), without limiting Landlord in the exercise of
any other right or remedy at law or in equity which Landlord may have, do any
one or more of the following:
23.1 Maintain this Lease in full force and effect and recover the Rent
and other monetary charges as they become due, without terminating Tenant's
right to possession regardless of whether Tenant has abandoned the Premises. If
Landlord
9
elects not to terminate this Lease, Landlord shall have the right to attempt to
relet the Premises at such rent and upon such conditions, and for such a term,
as Landlord deems appropriate in its sole discretion and to do all acts
necessary with regard thereto, without being deemed to have elected to terminate
this Lease, including re-entering the Premises to make repairs or to maintain or
modify the Premises, and removing all persons and property from the Premises.
Such property may be removed and stored in a public warehouse or elsewhere at
the cost of and for the account of Tenant. Reletting may be for a period shorter
or longer than the remaining Term, and for more or less rent. If reletting
occurs, this Lease shall terminate automatically when the new tenant takes
possession of the Premises and commences payment of rent. Notwithstanding that
Landlord fails to elect to terminate this Lease initially, Landlord at any time
thereafter may elect to terminate this Lease by virtue of any previous uncured
default by Tenant. In the event of any termination as provided by this Section
23.1, Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenants default (including, without limitation, the
damages described in this Section 23), as well as costs of repairing and
restoring the Premises to the same good order and condition as the Premises were
in prior to the beginning of the Term, reasonable wear and tear expected, and
all costs of reletting, including, without limitation, commissions, attorneys'
fees, restoration or remodeling costs for subsequent tenants or otherwise, and
all other damages (including consequential damages).
23.2 Terminate Tenant's right to possession by any lawful means, in
which case this Lease shall terminate and Tenant shall immediately surrender
possession of the Premises to Landlord. In such event, Landlord shall be
entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default including, without limitation, the sum of the amounts of
damages computed in accordance with Sections 23.2.1, 23.2.2, 23.2.3, 23.2.4, and
23.2.5. For the purpose of determining the amount of "unpaid Rent" as referenced
in Sections 23.2.2 and 23.2.3, the amount of Reimbursable Expenses shall be
deemed to increase annually for the balance of the Term by an amount equal to
their average annual percentage increase during the three calendar years
preceding the year in which this Lease was terminated, or, if such termination
occurs prior to the expiration of the third calendar year occurring during the
Term, then the amount of Reimbursable Expenses shall be deemed to increase
monthly for the balance of the Term by an amount equal to their average monthly
percentage increase during all of the calendar months preceding the month in
which this Lease was terminated.
23.2.1 Damages through the date of termination of this Lease shall
include the total amount of any unpaid Rent which had been earned through such
date of termination and interest thereon, from day to day, at the then maximum
rate of interest allowable under law which could be charged Tenant by Landlord.
23.2.2 Damages from the date of termination of this Lease through
the Time of Determination, shall include the amounts by which the unpaid Rent
which would have become due for each month from the date of termination of this
Lease (without regard to the termination of the Lease) through the Time of
Determination exceeds the amounts, if any, of Rent received by Landlord for each
such month through the Time of Determination as a result of any reletting of the
Premises by Landlord, if any, with interest on such excess amounts, from day to
day, at the then maximum rate of interest allowable under law which could be
charged Tenant by Landlord. If the amount of Rent received by Landlord for any
month through the Time of Determination as a result of Landlord's reletting of
the Premises exceeds the amount of unpaid Rent which would have become due for
such month, Landlord shall in no event be obligated to pay to or credit to
Tenant any amount with respect to such excess.
23.2.3 Damages from the Time of Determination through the end of
the Term (without regard to the termination of this Lease), shall include the
amount by which the unpaid Rent for each month for the balance of the Term after
the Time of Determination exceeds the amount, if any, of Rent contracted to be
received by Landlord for such month from the Time of Determination through the
end of the Term as a result of Landlord's reletting of the Premises, if any,
discounting each such excess amount to its present value at the Time of
Determination at the annual rate of 5.00% (the "Agreed Discount Rate"). By
execution of this Lease, Tenant agrees that the Agreed Discount Rate is
reasonable. If the amount of Rent contracted to be received by Landlord for any
month after the Time of Determination as a result of Landlord's reletting of the
Premises exceeds the amount of unpaid Rent which would have become due for such
month, Landlord shall in no event be obligated to pay to or credit to Tenant any
amount with respect to such excess.
23.2.4 The total amount of damages to which Landlord is entitled
shall include any other amount, necessary to compensate Landlord for all the
detriment proximately caused by Tenant's default or which in the ordinary course
of business would be likely to result therefrom (including, without limiting the
generality of the foregoing, the amount of any commissions and/or finder's fee
for a replacement tenant) and, at Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time by
applicable law.
10
23.2.5 In addition to any damages and other amounts set forth
herein, Tenant agrees to pay Landlord's reasonable attorneys' fees and court
costs in connection with Landlord's enforcement or defense of any of Landlord's
rights or remedies under this Lease.
23.3 Enter upon the Premises, without terminating this Lease and
without being liable for prosecution or for any claim for damages, and do
whatever Tenant is obligated to do under the terms of this Lease. Tenant agrees
to pay Landlord on demand for expenses that Landlord may incur in thus effecting
compliance with Tenant's obligations under this Lease, together with interest
thereon at the rate of ten percent (10%) per annum from the date expended until
paid. Landlord will not be liable for any damages resulting to Tenant from such
action, whether caused by negligence of Landlord or otherwise.
23.4 In addition to the foregoing remedies, Landlord may change or
modify the locks on the Premises if Tenant fails to pay the Rent when due.
Landlord will not be obligated to provide another key to Tenant or allow Tenant
to regain entry to the Premises unless and until Tenant pays Landlord all Rent
that is delinquent. Tenant agrees that Landlord will not be liable for any
damages resulting to the Tenant from the lockout. When Landlord changes or
modifies the locks, Landlord or Landlord's agent shall post a written notice in
accordance with Section 93.002 of the Texas Property Code, or its successor
statute. Tenant may be subject to legal liability if Tenant or Tenant's
representative tampers with any lock after the locks have been changed or
modified by Landlord.
23.5 No re-entry or taking possession of the Premises by Landlord will
be construed as an election to terminate this Lease, unless a written notice of
that intention is given to Tenant. Notwithstanding any such reletting or reentry
or taking possession, Landlord may, at any time thereafter, elect to terminate
this Lease for a previous default. The loss or damage that Landlord may suffer
by reason of termination of this Lease or the deficiency from any reletting as
provided for above shall include, without limitation, the expense of
repossession and any repairs or remodeling undertaken by Landlord following
repossession.
23.6 Any duty imposed by law on Landlord to mitigate damages after a
default by Tenant under this Lease will be satisfied in full if Landlord
undertakes to attempt to lease the Premises to another tenant (a "Substitute
Tenant") in accordance with the following criteria:
23.6.1 Landlord shall list the Premises on its web site, if
Landlord has a web site, and on any inventory it mails to various parties when
seeking new tenants, if Landlord mails an inventory. Landlord shall place a "For
Lease" or similar sign in the vicinity of the Premises. Landlord shall list the
Premises on any property data bases to which Landlord subscribes.
23.6.2 Landlord will have no obligation to solicit or entertain
negotiations with any other prospective tenants for the Premises until Landlord
obtains full and complete possession of the Premises including, without
limitation, the final and unappealable legal right to relet the Premises free of
any claim of Tenant.
23.6.3 Landlord will not be obligated to lease or show the
Premises on a priority basis, or offer the Premises to a prospective tenant when
other space in the Building, or in any other buildings owned by Landlord,
suitable for the prospective tenant's use is (or soon will be) available.
23.6.4 Landlord will not be obligated to lease the Premises to a
Substitute Tenant for a rent less than the current fair market rent then
prevailing for similar uses in comparable buildings in the same market area as
the Building, nor will Landlord be obligated to enter into a new lease under
other terms and conditions that are unacceptable to Landlord under Landlord's
then current leasing policies for comparable space in the Building.
23.7 In the event Tenant fails to pay any installment of Rent hereunder
as and when such installment is due, Tenant shall be obligated to pay to
Landlord (without the necessity of a demand therefor by Landlord) a late charge
in an amount equal to fifteen percent (15%) of such installment; and the failure
to pay such amount within ten (10) days after such installment was due shall be
an event of default hereunder. The provision for such late charge shall be in
addition to all of Landlord's other rights and remedies hereunder or at law and
shall not be construed as liquidated damages or as limiting Landlord's remedies
in any manner. Additionally, if any check tendered to Landlord by Tenant under
this Lease is dishonored for any reason, Tenant shall pay to Landlord an amount
equal to the amount Landlord has been required to pay to its bank as a result of
such dishonor.
11
23.8 If, for any reason, any two or more payments by check from Tenant
to Landlord for Rent are dishonored or returned unpaid, thereafter Landlord may,
at Landlord's sole option, upon written notice to Tenant, require that all
future payments of Rent for the remaining Term must be made by cash, certified
check, cashier's check, official bank check, money order, or automatic
electronic funds transfer ("Good Funds") and that the delivery of Tenant's
personal or corporate check will no longer constitute payment of Rent under this
Lease. Any acceptance by Landlord of a payment for Rent by Tenant's personal or
corporate check thereafter will not be construed as a waiver of Landlord's right
to insist upon payment by Good Funds as set forth herein.
23.9 No right or remedy of Landlord is intended to be exclusive of any
other right or remedy, and each and every right and remedy will be cumulative
and in addition to any other right or remedy now or hereafter existing under
this Lease, at law, in equity, or by statute. Pursuit of any of the remedies
available to Landlord under this Lease or by law or equity shall not preclude
pursuit of any other remedies provided by law, nor will pursuit of any remedy
provided in this Lease constitute a forfeiture or waiver of any Rent due to
Landlord under this Lease or of any damages accruing to Landlord by reason of
the violation of any of the terms, provisions, and covenants contained in this
Lease. Failure of Landlord to declare any default immediately upon its
occurrence, or failure to enforce one or more of Landlord's remedies, or
forbearance by Landlord to enforce one or more of Landlord's remedies upon an
event of default, will not be deemed or construed to constitute a waiver of
default or waiver of any violation or breach of the terms of this Lease.
24. MORTGAGES. Tenant accepts this Lease subject and subordinate to any and
all mortgages and/or deeds of trust now or at any time hereafter constituting a
lien or charge upon the Premises or the improvements situated thereon or any
portion thereof. Tenant shall at any time hereafter on demand execute any
instruments, releases or other documents which may be required by any mortgagee
for the purpose of subjecting and subordinating this Lease to the lien of any
such mortgage. With respect to any mortgages and/or deeds of trust at any time
hereafter created which constitute a lien or charge upon the Premises or the
improvements situated thereon, Landlord agrees to request the holder of such
mortgage to enter into a non-disturbance and attornment agreement with Tenant
providing for such lender to honor this Lease and Tenant's interest in the
Premises so long as Tenant is not in default hereunder. However, Landlord makes
no warranty that any such agreement is obtainable, and Tenant's obligation to
subordinate this Lease to any such mortgage shall not be dependent upon the
execution of any such agreement.
25. LANDLORD'S DEFAULT. In the event Landlord should become in default in
any payments due on any such mortgage described in the above Section 24 or in
the payment of taxes or any other items which might become a lien upon the
Premises and which Tenant is not obligated to pay under the terms and provisions
of this Lease, Tenant is authorized and empowered, after giving Landlord (and
the holder of any mortgage or deed of trust lien encumbering the Premises of
which it has received notice) five (5) days' prior written notice of such
default and if Landlord fails to cure such default, to pay any such items for
and on behalf of Landlord, and the amount of any item so paid by Tenant for or
on behalf of Landlord, together with any interest or penalty required to be paid
in connection therewith, shall be credited against the installments of Rent next
payable by Tenant hereunder; provided, however, that Tenant shall not be
authorized and empowered to make any payment under the terms of this Section 25,
unless the items paid shall be superior to Tenant's interest hereunder.
26. MECHANIC'S LIENS. Tenant shall have no authority, express or implied,
to create or place any lien or encumbrance of any kind or nature whatsoever
upon, or in any manner to bind, the interest of Landlord in the Premises or to
charge the rentals payable hereunder for any claim in favor of any person
dealing with Tenant, including those who may furnish materials or perform labor
for any construction or repairs, and each such claim shall affect and each such
lien shall attach, if at all, only to the leasehold interest granted to Tenant
by this instrument. Tenant covenants and agrees that it shall pay or cause to be
paid all sums legally due and payable by it on account of any labor performed or
materials furnished in connection with any work performed on the Premises on
which any lien is or can be validly and legally asserted against its leasehold
interest in the Premises or the improvements thereon, and that it shall save and
hold Landlord harmless from any and all loss, cost, or expense based on or
arising out of asserted claims or liens against the leasehold estate or against
the rights, titles, and interest of Landlord in the Premises or under the terms
of this Lease. Further, Tenant agrees that it shall immediately remove and have
released any mechanics', materialmen's, or similar lien which may become
attached to the Premises or any interest therein during the Term.
27. NOTICES. Each provision of this instrument or of any applicable
governmental laws, ordinances, regulations, and other requirements with
reference to the sending, mailing, or delivery of any notice or the making of
any payment by Landlord to Tenant or with reference to the sending, mailing, or
delivery of any notice or the making of any payment by Tenant to Landlord shall
be deemed to be complied with when and if the following steps are taken:
12
27.1 All Rent and other payments required to be made by Tenant to
Landlord hereunder shall be payable to Landlord at the address for payment of
Rent hereinbelow set forth or at such other address as Landlord may specify from
time to time by written notice delivered in accordance herewith.
27.2 All payments required to be made by Landlord to Tenant hereunder
shall be payable to Tenant at the address hereinbelow set forth, or at such
other address as Tenant may specify from time to time by written notice
delivered in accordance herewith.
27.3 Any notice or document required or permitted to be delivered
hereunder (collectively called "Notices") must be in writing to be effective.
Any Notice, other than a payment, which shall be deemed received only when
actually received, that is addressed to the party for whom it is intended at its
address specified for the receipt of Notices (which is currently the address set
forth below) will be deemed to have been given or made, whether actually
received or not, on the second Business Day after the date it is deposited in
the United States mail, postage prepaid, certified, return receipt requested.
Any party may change its address for the receipt of Notices by Notice in
accordance with this Section 27.3. Notices given otherwise than in accordance
with this Section 27.3, including Notices given by facsimile or e-mail, will be
effective upon receipt. The current addresses of the parties for Notices are as
follows:
LANDLORD: Address for Payment of Rent: Industrial Properties Corporation
X.X. Xxx 000000
Xxxxxx, Xxxxx 00000-0000
Address for Notices and All
Other Correspondence: Industrial Properties Corporation
000 Xxxx Xxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000-0000
TENANT: Nano-Proprietary, Inc.
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
ADDITIONAL NOTICE ADDRESS: None
If and when included within the term "Landlord," as used in this instrument,
there are more than one person, firm, or corporation, all shall jointly arrange
among themselves for their joint execution of a notice specifying an individual
at a specific address for the receipt of notices and payments to Landlord; if
and when included within the term "Tenant," as used in this instrument, there
are more than one person, firm, or corporation, all shall jointly arrange among
themselves for their joint execution of a notice specifying an individual at a
specific address for the receipt of notices and payments to Tenant. All parties
included within the terms "Landlord" and "Tenant," respectively, shall be bound
by notices given in accordance with the provisions of this Section 27.3 to the
same effect as if each had received such notice.
28. MISCELLANEOUS.
28.1 Words of any gender used in this Lease shall be held and construed
to include any other gender, and words in the singular number shall be held to
include the plural and vice versa, unless the context otherwise requires.
28.2 The terms, provisions, covenants, and conditions contained in this
Lease shall apply to, inure to the benefit of, and be binding upon, the parties
hereto and upon their respective heirs, legal representatives, successors, and
permitted assigns, except as otherwise herein expressly provided.
28.3 The captions are inserted in this Lease for convenience only and
in no way define, limit, or describe the scope or intent of this Lease, or any
provision hereof, nor in any way affect the interpretation of this Lease.
13
28.4 Tenant agrees, within ten (10) days after request of Landlord, to
deliver to Landlord, or Landlord's designee, an estoppel certificate stating
that this Lease is in full force and effect, the date to which Rent has been
paid, the unexpired Term, and such other matters pertaining to this Lease as may
be reasonably requested by Landlord.
28.5 Within ten (10) days after written request from Landlord, Tenant
shall deliver to Landlord such financial statements as are reasonably required
by Landlord to verify the net worth of Tenant, or any assignee, subtenant, or
guarantor of Tenant. In addition, Tenant shall deliver to any lender designated
by Landlord any financial statements required by the lender to facilitate the
financing or refinancing of the Building and Land. Tenant represents and
warrants to Landlord that each financial statement is a true, complete, and
accurate statement as of the date of the statement. All financial statements
will be confidential and will be used only for the purposes set forth in this
Lease.
28.6 This Lease may not be altered, changed, or amended except by an
instrument in writing executed by Landlord and Tenant.
28.7 This instrument, including all Exhibits and Riders (signed or
initialed by Landlord and Tenant) which are attached hereto, constitutes the
entire agreement between Landlord and Tenant. No prior written or prior or
contemporaneous oral statements, promises, or representations shall be binding.
28.8 If any provision of this Lease shall ever be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provisions of the Lease, but such other provisions shall continue in full force
and effect.
28.9 This Lease shall be construed and enforced in accordance with the
laws of the State of Texas.
28.10 The parties acknowledge that each party and its counsel has
reviewed and had the opportunity to negotiate revisions to this Lease, and that
the normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Lease or any amendments, annexes, or exhibits hereto.
28.11 It is expressly agreed by the parties hereto that time is of the
essence with respect to this Lease.
28.12 Under no circumstances whatsoever shall Landlord ever be liable
hereunder for consequential damages or special damages; and all liability of
Landlord for damages for breach of any covenant, duty or obligation of Landlord
hereunder may be satisfied only out of the interest of Landlord in the Land and
Building existing at the time any such liability is finally adjudicated and all
rights to appeal have lapsed. The term "Landlord" means only the owner of the
Land, and in the event of the transfer by such owner of its interests in the
Land, such owner shall thereupon be released and discharged from all covenants
and obligations of Landlord thereafter accruing, but such covenants and
obligations shall be binding upon each new owner for the duration of such
owner's ownership.
28.13 In the event of any act or omission by Landlord which would give
Tenant the right to damages from Landlord or the right to terminate this Lease
by reason of a constructive or actual eviction from all or part of the Premises
or otherwise, Tenant shall not xxx for such damages or exercise any such right
to terminate until (a) it shall have given written notice of such act or
omission to Landlord and to the holder(s) of the indebtedness or other
obligations secured by any mortgage or deed of trust affecting the Premises, if
the name and address of such holder(s) shall have previously been furnished to
Tenant; and (b) a reasonable period of time for remedying such act or omission
shall have elapsed following the giving of such notice, during which time
Landlord and such holder(s) or either of them, their agents, or employees, shall
be entitled to enter upon the Premises and do therein whatever may be necessary
to remedy such act or omission.
28.14 Whenever a period of time is herein prescribed for action to be
taken by Landlord, Landlord shall not be liable or responsible for, and there
shall be excluded from the computation for any such period of time, any delays
due to strikes, riots, acts of God, shortages of labor or materials, war,
governmental laws, regulations, or restrictions, or any other causes of any kind
whatsoever which are beyond the reasonable control of Landlord.
28.15 Landlord and Tenant agree and intend that this Lease shall
supersede Section 93.002 of the Texas Property Code (and any successor statute
dealing with such matters) to the extent of any conflict; without limiting the
foregoing, none of the obligations or duties imposed by such section shall be
binding upon Landlord unless expressly provided for in this Lease.
14
29. RETURN OF PREMISES. At the end of the Term, or upon such earlier
termination of this Lease as provided herein, Tenant shall surrender the
Premises to Landlord in the same good order and condition as the Premises were
in prior to the beginning of the Term, reasonable wear and tear excepted;
provided, that in any case the Premises shall be surrendered to Landlord
reasonably clean and free of debris. At such time Tenant shall deliver to
Landlord all keys to the Premises. Any equipment, trade fixtures, or other
property of Tenant left in the Premises after the end of the Term shall be
conclusively deemed to have been abandoned by Tenant, and Landlord may thereupon
without notice to Tenant take possession of such property and, at Landlord's
option, either (i) declare same to be the property of Landlord, or (ii) at the
sole cost and expense of Tenant, dispose of such property in any manner and for
whatever consideration Landlord in its sole discretion deems advisable. Tenant
agrees that it shall, promptly upon Landlord's request, execute, at Tenant's
sole cost and expense, such bills of sale or other evidences of title to such
property as Landlord may request.
30. SPECIAL PROVISIONS. Additional provisions, if any, set forth on
Exhibits and Riders attached hereto and made a part hereof for all purposes are
incorporated herein as if fully set forth in this Lease. The attached Exhibits
and Riders are as follows: EXHIBIT "A" (DEMISING PLAN). Further, the following
special provisions are set forth below and made a part hereof for all purposes:
30.1 Landlord will provide an allowance of $5,000.00 to be used for
interior construction within the Premises. Landlord and Tenant shall mutually
agree upon such interior construction. If the cost of the work exceeds
$5,000.00, Tenant will be responsible for paying the excess cost.
EXECUTED the 6th day of , 2004.
LANDLORD:
Industrial Properties Corporation
By: /s/ Xxx Xxxxxxx, Xx.
---------------------------------
Xxx Xxxxxxx, Xx.
---------------------------------
Printed Name
Its: Exec. Vice President
---------------------------------
Title
TENANT:
Nano-Proprietary, Inc.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
Xxxxxxx X. Xxxxx
---------------------------------
Printed Name
Its: Chief Financial Officer
---------------------------------
Title
