Exhibit 10.35
LEASE AGREEMENT
THIS AGREEMENT is made and entered into this 29 day of May, 1998, by and
between VRS/TA/S Houston, L.P., a Texas limited partnership (hereinafter
called "Lessor"), and United Stationers Supply Co., an Illinois corporation
(hereinafter called "Lessee").
W I T N E S S E T H:
Lessor, for and in consideration of the covenants of Lessee herein contained,
and subject to the terms, provisions and conditions hereinafter set forth,
hereby leases, demises and lets unto Lessee, and Lessee hereby leases and takes
from Lessor, that certain tract or parcel of land situated in Xxxxxx County,
Texas, as described in EXHIBIT A attached hereto and made a part hereof (the
"Land"), together with and including the building containing approximately
240,000 square feet of floor space and improvements to be made thereon by Lessor
as provided in ARTICLE 1 below, said Land and improvements being hereinafter
referred to as the "Leased Premises".
TO HAVE AND TO HOLD the said Leased Premises, together with all and singular
rights, privileges, and appurtenances "hereunto attaching and belonging, unto
the said Lessee for and during the term hereinafter set forth and in accordance
with the terms, provisions and conditions set forth below.
Wherever and as often as the words this "Agreement" or this "Lease" are used or
appear in this instrument, the same shall mean and refer to this instrument, and
all exhibits hereto and all plans, drawings and specifications identified herein
and any amendments to the same.
Article 1
CONSTRUCTION OF IMPROVEMENTS BY LESSOR
(a) CONSTRUCTION DOCUMENTS: Lessor will construct on
the Leased Premises a warehouse and office building containing a total of
approximately 240,000 square feet of space (the "Building"), together with
adjacent outdoor surface parking consisting of not less than 80 spaces, and the
landscaping and other improvements, if any, located outside of the Building on
the Property (the "Common Areas") all as described on the site plan, the floor
plan, and the related documents attached hereto as EXHIBIT B (collectively, the
" Site Plan Documents"). As used herein, the term "Improvements'' shall mean
the Building and the Common Areas. Based upon the Site Plan Documents, Lessor
and Lessee shall consult and cooperate with each other to finalize the initial
construction plans so that the Lessor can prepare all of the detailed
architectural plans and specifications and the structural, mechanical,
electrical, and related construction documents for the Building (the
"Construction Documents"). The Site Plan Documents have been prepared by
Lessor in consultation with, and approved by, Lessee. Within 75 days after the
date of this Lease (as extended due to any Initial Delay [as defined below])
Lessor shall deliver to Lessee final and complete copies of all
of the final Construction Documents which shall be prepared by Lessor, at
Lessor's expense, pursuant to and in accordance with the Site Plan Documents
and the procedures set forth herein. Within twenty (20) days after Lessee's
receipt of the Construction Documents, Lessee shall deliver to Lessor a
written notice approving the same or a written notice specifying any of
Lessee's objections thereto; provided that Lessee shall not have the right to
object to any aspect of the Construction Documents which are logical
extensions of detail and substantially consistent with the general nature and
scope of the Improvements as shown on the Site Plan Documents. Lessor and
Lessee shall use reasonable good faith efforts to resolve any disagreements
regarding any objection made by Lessee to the Construction Documents. If
Lessor and Lessee do not resolve any such disagreements within twenty (20)
days after the date of Lessee's notice to Lessor, both Lessor and Lessee
shall have the right to terminate this Lease by written notice given to the
other party at any time after such date and prior to the mutual approval of
the Construction Documents. As used herein, the term "Initial Delay" shall
mean any delay in the completion of the initial Construction Documents which
is directly attributable to (i) any new or additional changes to the
Improvements requested by Lessee prior to the completion of the initial
Construction Documents, or (ii) any delay by Lessee in responding to the
initial Construction Documents beyond the 20-day period provided herein.
(b) CONSTRUCTION SCHEDULE: The general contractor for the
Improvements selected by Lessor and approved by Lessee is Xxxxxxx & Xxxxxx
Construction, Inc. (the "Contractor"). If Lessor determines that it is
necessary or desirable to find a substitute general contractor, Lessor shall
have the right to dismiss the contractor and select an appropriate substitute,
which selection shall be subject to the approval of Lessee, which approval shall
not be unreasonably withheld. All of the construction work shall be carried out
by a Contractor under the sole direction of Lessor. Within thirty (30) days
after the date hereof, Lessor shall prepare and furnish to Lessee a construction
schedule for the Improvements showing the time periods estimated by Lessor for
the completion of the major phases of the Improvements (the "Construction
Schedule"). Lessor shall make a good faith effort to advise Lessee as soon as
reasonably possible if Lessor determines that Lessor's actual progress in
completing any phase of the Improvements is behind the time periods set forth on
the Construction Schedule in any material way.
(c) COMMENCEMENT AND COMPLETION DATES: On or before
September 1, 1998 (as extended due to any Initial Delays) (which date is
referred to herein as the ("Construction Date"), Lessor shall, at Lessor's
sole cost and expense, commence the on-site physical construction of the
Improvements on the land. From and after the Construction Date, Lessor shall
use diligent efforts to cause Substantial Completion of the Improvements in
accordance with the Construction Documents to occur on or before May 1, 1999
(the "Scheduled Completion Date").
(d) TAX ABATEMENT: Lessee has filed an application for
property tax abatement with the City of Xxxxxxx - Xxxxxx County - Independent
School District. The parties agree that the receipt of such tax abatement is
a material condition for Lessee
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to enter into this Lease. Accordingly, it is agreed that if such tax
abatement is not received by Lessee, Lessee may terminate the Lease as
provided in Section 1(e).
(e) LESSEE'S RIGHT TO TERMINATE:
(1) If Lessee has not received a property tax abatement by
AUGUST 1, 1998 or if Lessor has not commenced construction of the
Improvements on or before Commencement Date in accordance with the
terms set forth in SECTION 1(c) of this Lease, Lessee shall have
the right to terminate this Lease by written notice given to
Lessor at any time after denial of the tax abatement or after the
Construction Date and prior to the date that Lessor actually
commences such construction. If Lessor has not caused Substantial
Completion of the Improvements to occur on or before the Scheduled
Completion Date (as extended due to any Lessee Delay and to any
Unavoidable Delay), Lessee shall have the right to terminate this
Lease by written notice given to Lessor at any time after the
Scheduled Completion Date and before the date that Substantial
Completion actually occurs. If Lessor has not caused Substantial
Completion of the Improvements to occur on or before JULY 1, 1999
(as extended due to any Lessee Delay but not extended for any
Unavoidable Delay), Lessee shall have the right to terminate this
Lease by written notice given to Lessor at any time after such
date and prior to the date that Substantial Completion actually
occurs.
(2) In the event of any termination of this Lease under
SECTION 1(a) or under this SECTION 1(e), Lessor and Lessee shall
be relieved of all further obligations under this Lease, which
obligations shall continue in full force and effect.
(f) SUBSTANTIAL COMPLETION: As used herein, the term
"Substantial Completion" shall mean the date when all of the following events
have occurred:
(1) The project architect (the "Architect") shall have
delivered to Lessor and Lessee a written certificate stating that all of
the Improvements have been substantially completed in substantial
accordance with the Construction Documents, except for the Punch List
Items.
(2) Lessor shall have obtained a final Certificate of
Occupancy for the Building permitting the use of the Building for
warehouse and office use.
(3) Lessor shall have delivered to Lessee written certification
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that Lessor has met its obligations under clauses (1) and (2) of this
SECTION 1(f), together with a current list of the approved Punch List
Items.
Notwithstanding the foregoing, Lessor shall give to Lessee not
less than ten (10) days written notice of the date on which Lessor expects to
achieve Substantial Completion.
(g) CHANGE ORDERS: Lessee may, from time to time, submit to
Lessor any written requests for changes or additions to the Construction
Documents and/or the Improvements desired by the Lessee in such detail as
Lessor may reasonably require (each a "Change Order"), which changes or
additions shall be subject to Lessor's approval, which approval shall not be
unreasonably withheld or delayed. Such approval shall include Lessor's
written notice to Lessee of (i) the net increase, if any, in the actual out
of-pocket cost to be incurred by Lessor in completing the work associated
with the Change Order (the "Change Cost"), and (ii) the anticipated delays,
if any, in completing the work as a result of such Change Order, including
the processing thereof (the "Change Delay"). Within five (5) business days
after Lessee's receipt of such notice, Lessee shall give to Lessor written
notice to proceed or not to proceed with the Change Order. Lessee's notice
to proceed with the Change Order shall include a specific written agreement
from Lessee to pay to Lessor the Change Cost and written confirmation of
Lessee's acceptance of the Change Delay as a Lessee Delay hereunder.
Following the required approvals, upon Lessee's written acceptance of any
such Change Order, Lessor shall promptly revise the Construction Documents to
incorporate the Change Order and shall proceed to complete the Improvements
in accordance with the Change Order. Any and all Change Costs approved by
Lessee and incurred by Lessor hereunder shall be reimbursed by Lessee to
Lessor over the initial ten (10) year term of this Lease in amounts equal to
for each year the sum of 10.5% multiplied by the total amount of the Change
Costs. Such amounts shall be reimbursed by Lessee to Lessor in equal monthly
installments together with the base rent payable by Lessee hereunder.
Notwithstanding the foregoing, Lessor shall not be obligated hereby to pay
any Change Costs after the total sum of all Change Costs paid by Lessor
hereunder causes the total change order to exceed $200,000.00. Any Change
Costs which will not be paid by Lessor hereunder shall be paid by Lessee on
an item by item basis within ten (10) business days after the date that each
such Change Order has been completed by Lessor and Lessor has delivered to
Lessee a written invoice for such work. Calculations of any Change Costs
shall be subject to audit, verification, and correction, if necessary, by
Lessee (who shall have access to the relevant books and records maintained by
Lessor for such purpose) without either party being prejudiced by any prior
payment thereof; provided that any such audit shall be completed for each
Change Order within forty-five (45) days after the date of Lessee's receipt
of the relevant invoices, statements, and other documents supporting Lessor's
calculation of the Change Cost for each such Change Order. Any disagreements
between Lessor and Lessee regarding the calculation of any Change Costs shall
be resolved in accordance with the procedures set forth in Section l(p) of
this Lease.
(h) SUBSTANTIAL COMPLETION AND PUNCH LIST ITEMS: As used
herein, the term "Punch List Items" shall mean details of construction,
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decoration, and mechanical adjustment which are part of the Improvements and
which in the aggregate, are minor in character and do not materially interfere
with the Lessee's use or enjoyment of the Leased Premises. Concurrently with
Substantial Completion, the Architect, the Contractor, Lessor, and Lessee shall
meet to review and approve of the matters to be included as Punch List Items,
which approvals shall not be unreasonably withheld. Punch List Items shall be
completed by Lessor at Lessor's expense. Lessor shall use its best efforts to
complete all of the Punch List Items within thirty (30) days after the date of
Substantial Completion.
(i) LESSOR'S WARRANTY: In addition to (and not in lieu of)
Lessor's obligations under the Lease with respect to repairs, Lessor warrants to
Lessee that the Improvements will be free from defects in workmanship and
materials for a period of one (1) year after the date of Substantial Completion.
If, at any time during such warranty period, any of the workmanship or material
used in the construction of the Improvement is defective, and Lessee shall,
within the warranty period, so notify Lessor in writing that such workmanship or
material is defective, Lessor shall cause such defective workmanship or material
to be corrected, repaired, or replaced in a manner reasonably acceptable to both
Lessor and Lessee. Such correction, repair, or replacement shall be performed
by Lessor, at Lessor's expense, as promptly as reasonably possible and in such
manner so as to minimize any interference with Lessee in its operations in and
about the Leased Premises. If Lessor fails to correct any such defect within a
reasonable period of time after Lessor's receipt of notice thereof, Lessee shall
have the right (but not the obligation), in addition to all other rights and
remedies available to Lessee for such failure, to correct such defect and to
require Lessor to reimburse Lessee for all of the costs incurred by Lessee in
connection therewith, including a reasonable amount for Lessee's overhead and
administrative costs in coordinating such work. Lessor shall pay such costs to
Lessee within five (5) business days after Lessor's receipt of a written
statement therefor. Within thirty (30) days after the Commencement Date, Lessor
shall deliver to Lessee one complete set of an as built mylar drawing for the
Building and copies of all manuals, pamphlets, and other instructional materials
received by Lessor covering the care, use, operation, and maintenance of the
materials and equipment used in the construction of the Improvements.
(j) INSPECTIONS AND ACCESS BY LESSEE: Lessee and Lessee's
representatives shall have the right, from time to time, to observe the progress
of the Improvements, to inspect the installation of the Improvements, and to
object to any aspect of the Improvements which is not in substantial conformance
with the Construction Documents; provided, however, no such observation shall
create liability or responsibility on the part of Lessee with respect to the
nature or quality or the Improvements. Lessor shall be available, and cause the
Contractor to be available, to Lessee or its representatives from time to time
upon reasonable prior notice when necessary or desirable for the purpose of
reviewing the Improvements.
(k) COMPLIANCE WITH LAWS: Lessor, at its expense, shall obtain
all approvals, permits, and other consents required to commence, perform and
complete the Improvements; shall at all times cause all work in connection with
the Improvements
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to be carried out in compliance with all such consents and in compliance with
all applicable laws, codes, regulations, and other legal requirements; and
shall maintain for inspection by Lessee, upon reasonable request and at
reasonable intervals, copies of the invoices and statements relating to the
Improvements which Lessor generally maintains and all approvals, permits,
inspection reports, notices, and other similar documents prepared or received
by Lessor or the Contractor.
(l) LESSEE'S WORK: All finishing work, equipment installation,
cabling, and interior wall finish for the offices, or other work (the "Lessee's
Work") desired by Lessee, if any, and not initially or thereafter included in
the Improvements, shall be performed by Lessee, at Lessee's expense, through
contractors selected by Lessee and approved by Lessor, which approval shall not
to be unreasonably withheld or delayed. Lessor and Lessee shall each cause
their respective general contractor and/or subcontractors for the Improvements
and Lessee's Work to cooperate with each other in facilitating the mutual access
to the Leased Premises and in coordinating the timing of the stages of the
Improvements and the Lessee's Work so as to facilitate the completion on a
timely basis. To the extent reasonably possible and without having to incur
additional expense, Lessor shall, prior to Substantial Completion, provide
Lessee with access to the Leased Premises and storage space at the site for
Lessee's equipment, trade fixtures, and other property in connection with
Lessee's Work and shall furnish water, electricity, elevator service, and HVAC
to the Leased Premises during the performance of any Lessee's Work; provided
that, if requested by Lessor, Lessee shall reimburse Lessor for the cost of any
such utility services used by Lessee, which cost shall be prorated by Lessor on
a fair and equitable basis to reflect the amount of such services actually used
by Lessee in connection with the performance of any of the Lessee's Work.
(m) LESSEE DELAYS: The term "Lessee Delay" shall mean any
actual delay in the completion of the Improvements which delays Substantial
Completion and which is due to any act or omission of Lessee, its agents, or
contractors. Lessee Delays shall include:
(1) Initial Delays
(2) Change Delays.
(3) Any unreasonable delay by Lessee in giving Lessor notice
of Lessee's approval of any Change Orders or in giving Lessor notice of any
other consents or approvals required of Lessee hereunder in connection with the
Improvements.
(n) UNAVOIDABLE DELAY: In the event Lessor shall be delayed or
hindered in or prevented from the performance of any act required
hereunder in connection with the completion of the Improvements by reason
of strikes, lockouts, labor troubles, inability to procure materials,
failure of power, restrictive governmental laws or regulations, riots,
insurrection, war or other reason of a like nature and not within the
reasonable control of Lessor ("Unavoidable Delay"), then the time allowed
for performance of such act shall be extended by a period
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equivalent to the period directly attributable to such delay.
(o) NOTICE OF DELAY: At the request of either the Lessor or
the Lessee, at any time and from time to time prior to the date of Substantial
Completion, Lessor or Lessee may require the other party to provide a written
notice setting out whether or not Lessor or Lessee, as the case may be, is aware
of any delays under either Section 1(m) or Section 1(n) hereof as of the date of
such notice.
(p) RESOLUTION OF DISPUTES: If Lessor and Lessee disagree as
to whether the Construction Documents have been properly prepared or as to
whether any aspect of the Improvements has been fully or properly completed, or
is otherwise defective, or as to the appropriate manner to correct any such
deficiency, or as to the calculation of Change Costs hereunder, or as to the
designation of any Lessee Delay or Lessor Delay hereunder, and if Lessor and
Lessee, using their reasonable good faith efforts, are otherwise unable to
resolve such dispute, then such dispute shall be resolved by referring the same
to Xxx Xxxxxx architect, whose address is 000 Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx
00000 and whose telephone number is (000) 000-0000 (the "Consulting
Architect"). In order to initiate such a resolution of any dispute, a party
shall be required to give the other party and the Consulting Architect written
notice requesting such resolution, which notice shall identify the issue in
dispute. The Consulting Architect shall promptly notify the parties of the
date, time, and place for the meeting to resolve of such dispute, which date
shall in no event be later than ten (10) business days after the Consulting
Architect's receipt of the demand for resolution. Such notice may be given by
telephone if promptly confirmed by written notice. At the conclusion of such
meeting, the Consulting Architect shall advise both parties of the Consulting
Architect's decision. The Consulting Architect shall send the parties written
notice confirming such decision immediately thereafter. Both parties shall be
bound by any and all decisions made by the Consulting Architect and shall
perform their obligations hereunder in accordance with such decisions. The
Consulting Architect's fees and expenses shall be split equally between the
parties.
Article 2
TERM
(a) Subject to and upon terms, provisions and conditions
hereinafter set forth, this Lease shall be and continue in full force and effect
for an initial term of ten (10) years ("Initial Term" or "Term"), beginning on
the Commencement Date as hereinafter defined.
b) The Initial Term of this Lease shall commence on the date
that Lessor has Substantially Completed the Improvements and delivered
possession of the Leased Premises to Lessee (the "Commencement Date"). There is
attached to this Lease as EXHIBIT C a form of declaration by Lessor and Lessee
relating to the date of commencement of the term hereof, which declaration shall
be executed by both Lessor and Lessee upon said Commencement Date. The date of
delivery of such possession, as
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shown by said declaration, shall be the Commencement Date of the Initial
Term of this Lease.
(c) It is agreed that Lessee may enter into the Leased Premises
prior to the completion of the Improvements for the purpose of completing the
Lessee's Work, if any, without being deemed thereby to have taken possession of
the Leased Premises or obligated itself to pay rent; provided that Lessee's Work
shall in no way interfere with the construction of such Improvements or the work
of Lessor or of Lessor's Contractor and shall not subject Lessor to any
liabilities whatsoever. Any equipment or fixtures installed by Lessee during
such period shall remain vested in Lessee; provided, however, that if any such
equipment or fixtures installed by Lessee pursuant to the terms of this SECTION
2(c) shall be removed prior to the expiration date of this Lease, Lessee shall
be obligated, at its expense, to restore the Building to the condition existing
prior to the installation of such equipment and fixtures.
(d) So long as there is no uncured default hereunder by Lessee
as of the date of Lessee's exercise of any Renewal Option or as of the date of
the commencement of any Renewal Term, Lessee shall be entitled and is hereby
granted two (2) successive options (the "Renewal Options") to extend the Term of
this Lease for an additional period of five (5) years each (the "Renewal
Terms"). Except for rental, as hereinafter defined and separately provided for,
the Renewal Terms shall be on all the other terms and conditions of this Lease.
Lessee shall be entitled to exercise each Renewal Option by giving notice of
such exercise to Lessor not less than twelve (12) months prior to the expiration
of the Initial Term or first Renewal Term, as the case may be. Should Lessee
fail to timely exercise a Renewal Option in accordance with the preceding
provisions, said Renewal Options shall expire and be of no further force and
effect.
(e) At the request of either party, the parties agree to
execute a short form memorandum of lease confirming the basic terms of this
Lease for recordation purposes.
ARTICLE 3
RENTS
(a) BASE RENT AND ADJUSTMENTS.
(1) BASE RENT. As consideration for the use and
occupancy of, and as rental for, the Leased Premises, Lessee
promises and agrees to pay Lessor, while this Lease remains in
force and effect, for the Initial Term, $7,300,000.00 paid in
monthly payments in advance $ 60,833.33 per month.
(2) UNANTICIPATED SITE CONDITIONS. Within thirty (30)
days after the date of this Lease, Lessor shall complete an
engineering evaluation and analysis of the Land to determine
whether the site contains
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any unanticipated physical conditions (an "Unanticipated Site
Condition") which will cause the Lessor to incur any Material
Construction Cost which was not foreseen by Lessor and not
budgeted for in the cost estimates prepared by Lessor and
delivered to Lessee prior to the date of this Lease. If Lessor
discovers any such Unanticipated Site Condition, Lessor shall
give prompt written notice thereof to Lessee describing the
condition, the actions required to correct it, and the
estimated cost of such actions. If, within thirty (30) days
after Lessee's receipt of such notice from Lessor, Lessee and
Lessor have not agreed upon an allocation of such costs
(through an adjustment of rent or otherwise), both Lessor and
Lessee shall have the right to terminate this Lease by written
notice given to the other party. Any such termination shall
have the same effect as described in SECTION 1 (e) (2).
(b) If the term of this Lease, as provided in SECTION 2(b),
commences on a day other than the first day of a calendar month, then the first
monthly rental payment shall be reduced to and shall be the proportionate part
of the monthly rental owed for the number of days between such Commencement Date
and the first day of the following month. Such first rental payment shall be
due on the Commencement Date of this Lease, as provided in SECTION 2(b), and the
succeeding payments of monthly rental shall be due and payable on or before the
first day of each succeeding calendar month thereafter during the full term of
the Lease.
(c) The rental for each Renewal Term shall be equal to the
rental for the previous period plus 10% or the total increase in the Consumer
Price Index (CPI) over the previous five years, whichever is less.
(d) Except as may otherwise be provided herein, Lessee agrees
to pay the rental herein reserved at the times set forth above, without
deduction or offset, in lawful money of the United States of America. All such
rental payments shall be made to Lessor at the following address:
VRS/TA/S Houston, L.P.
000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
or to such other person or to such other place as Lessor may from time to time
designate.
Article 4
TAXES
(a) The term "Taxes" as used herein shall mean all taxes,
levies and
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assessments of every character imposed or assessed upon or against
the Leased Premises by any governmental agency or authority having jurisdiction,
whether foreseen or unforeseen; provided nothing herein shall require or be
construed to require Lessee to pay any gift, estate, inheritance, excess
profits, succession, capital levy, transfer tax, income tax, payroll tax or
other tax assessment, lien, charge or levy arising out of the rent payable by
Lessee or other income received by Lessor, its successors or assigns. If at any
time during the term, the State of Texas or any political subdivision of the
state, including any county, city, city and county, public corporation,
district, or the United States of America, levies or assesses against Lessor a
tax, fee or excise: (i) on rents, (ii) on the square footage of the Leased
Premises, (iii) on the act of entering into this Lease, (iv) on the occupancy of
Lessee, or any other tax, fee, or excise, however described, including, without
limitation, a so-called value added tax, as a direct substitution in whole or in
part for, or (except in the case of (i) above) in addition to, any real property
taxes, Lessee shall pay before delinquency said tax, fee, or excise.
(b) Lessee shall pay all Taxes during the Term of this Lease
and any Renewal Term directly to the taxing authority therefor prior to the
date on which any such Taxes would become delinquent. Lessee shall furnish to
Lessor, within thirty (30) days after the date when due, proof of payment of all
Taxes paid by Lessee.
(c) If any Taxes are paid by Lessor to any taxing authority for
any tax year in installments, the amount payable by Lessee hereunder shall be
payable in similar installments, and no amount shall be payable by Lessee on
account of installments becoming payable after the expiration of the term of
this Lease which are attributable to a period of time after the expiration of
the term hereof or attributable to any period of time prior to the Commencement
Date. If any assessment for new public improvements (and not for repair or
replacement of existing public improvements) is payable only in a lump sum,
rather than in installments, Lessee shall pay a pro rata share of such
assessment based upon the proportion that the number of years remaining in the
term of this Lease bears to the expected useful life of such new public
improvements as determined by a third party consultant. For purposes of the
preceding sentence, the "term" of this Lease shall mean the Initial Term;
provided that, if Lessee exercises a Renewal Option, Lessee shall be assessed
its pro rata share based upon the proportion that the number of years of such
Renewal Term bears to the expected remaining useful life of such public
improvement.
(d) Lessor shall within ten (10) days of receipt, deliver to
Lessee statements, assessments and other notices relative to any tax or
assessment.
(e) Lessee shall have the right, before delinquency occurs, of
contesting, objecting to or opposing the legality, validity or amount of any
such Taxes; provided that prompt notice of such contest, objection or opposition
shall be given to Lessor by Lessee at least twenty (20) days before any
delinquency; and provided, further, that such contest, objection or opposition
shall not be carried on or maintained after the aforementioned time limit for
the payment of said obligations unless Lessee shall have duly paid the amount
involved under protest or shall have procured and maintained a stay
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of all proceedings to enforce any collection thereof and shall also have
provided for payment thereof, together with all penalties, interest, costs,
and expenses, by a deposit of sufficient sum of money or by a good and
sufficient undertaking as may be required or permitted by law to accomplish
such a stay. In the event of any such contest, objection or opposition,
Lessee agrees to pay and discharge any unpaid amounts finally determined to
be due within thirty (30) days after the final determination thereof or
within such later grace period as may be allowed by law.
Article 5
INSURANCE
(a) During the entire term of this Lease, Lessee, at its own
cost and expense, shall provide and keep in force for the benefit of Lessor and
Lessee comprehensive general public liability insurance policies with insurance
companies approved by Lessor and in standard form, protecting Lessor and Lessee
(and specifically naming Lessor as an additional assured) against any or all
liability in the amount of not less than $1,000,000 in respect of any one
occurrence and in the amount of not less than $1,000,000 in respect of injuries
to or death of any one person, and in the amount of not less than $1,000,000 in
respect of destruction or damage to property, which policies shall cover the
entirety of the Leased Premises. Lessee may provide its insurance under a
blanket policy, provided the insurance has a Lessor's protective liability
endorsement attached.
(b) During the entire term of this Lease, Lessee shall keep
the Building and other improvements constituting a portion of the Leased
Premises insured in the name of and for the benefit of Lessor and Lessee and
the holder of any mortgage or deed of trust on the Leased Premises as their
respective interests may appear, against loss or damage by fire and all
hazards covered by the standard form of extended coverage endorsement, and
containing six (6) months' rents insurance. Such insurance shall be for not
less than one hundred percent (100%) of the full replacement value thereof,
as the same shall change from time to time. The term "full insurable value"
as used herein means agreed value for actual replacement costs, including the
cost of debris removal. In addition to such fire and extended coverage
insurance, Lessor shall carry Difference In Conditions coverage or its
equivalent coverage through an acceptable company admitted in the State of
Texas. Lessee shall carry, at Lessee's sole cost and expense, fire and
extended coverage casualty insurance on all of the alterations and
improvements completed by Lessee in the Leased Premises and all trade
fixtures, equipment, inventory, and personal property located on the Leased
Premises.
(c) All insurance policies required by this Article 5 shall be
written by companies of recognized financial standing which are highly rated by
national rating organizations and are legally qualified to issue such insurance.
(d) At the commencement of the Initial Term of this Lease,
Lessee shall deliver to Lessor Certificates of Insurance manifesting the
insurance coverage
11
required by this Article 5 and, at least ten (10) days prior to the
expiration of each such policy, shall pay the premiums for the renewal of
such insurance and provide information satisfactory to Lessor evidencing
payment thereof. All policies shall provide at least twenty (20) days'
written notice to both Lessor and Lessee of any cancellation, termination, or
material alteration.
(e) Lessee and Lessor shall cooperate in connection with the
collection of any insurance monies that may be due in the event of loss and
shall execute and deliver such proofs of loss and other instruments which may be
required for the purposes of obtaining recovery of any such insurance monies.
(f) Anything in this Lease to the contrary notwithstanding,
Lessor and Lessee each hereby waive and release the other from and against any
and all rights of recovery, claims or causes of action, against the other, its
agents, officers, contractors, or employees, for any loss or damage that may
occur to the Improvements, the Leased Premises, or any other improvements
thereto, or any personal property of such party therein, by reason of fire, the
elements, or any other cause which could be insured against under the terms of
any of the insurance policies required to be maintained by the respective
parties under ARTICLE 5 hereof, regardless of cause or origin, including the
negligence of the other party hereto, its agents, officers, contractors, or
employees, and covenants that no insurer shall hold any right of subrogation
against the other party.
Article 6
USE OF LEASED PREMISES AND COMPLIANCE WITH LAWS
(a) It is understood and agreed that Lessee will use and occupy
the Leased Premises for general office and warehouse use and other purposes
reasonably related to Lessee's business operations.
(b) Lessee shall comply with and fulfill all state, federal and
municipal laws, regulations and ordinances applicable to the use of the Leased
Premises by Lessee and the business of Lessee conducted thereon. In the event
that any installations or alterations to any of the Improvements are required by
changes in the laws, rules, regulations or ordinances applicable to the Leased
Premises because of their use by Lessee becoming effective after the
Commencement Date, Lessee shall be required to make such installations or
alterations, but Lessee shall be reimbursed by Lessor, within thirty (30) days
after receipt of an itemized invoice for same, for a pro rata share of the cost
of complying with any such changes applicable to the use of the Leased Premises
equal to (i) the excess, if any, of the expected useful life of such alterations
or installations over the number of years remaining in the term of this Lease,
divided by (ii) the expected useful life of such alterations or installations.
For the purposes of the preceding sentence, the "term" of this Lease shall mean
the Initial Term; provided that, if Lessee exercises either or both of the
Renewal Options, during the applicable Renewal Term, Lessee shall pay its pro
rata share of any such remaining costs based upon the proportion that the number
of years in such Renewal Term bears to the expected
12
remaining useful life of such alterations.
(c) Lessee hereby acknowledges the existence of certain laws
and regulations at the local, state and federal levels ("Environmental Laws")
that control the production, use, transfer, storage and disposal of certain
materials that have the potential to cause harm to either the physical
environment or living things, such substances hereinafter referred to as
"Hazardous Materials". Lessee further acknowledges that it is Lessee's
responsibility to ensure that all activities carried out in the Leased Premises
during the Term of the Lease and any Renewal Terms thereof are in compliance
with the Environmental Laws. Lessee hereby agrees that (i) no activity will be
conducted on the Leased Premises that will produce any Hazardous Materials; (ii)
the Leased Premises shall not be used for the storage of Hazardous Materials
except in accordance with Environmental Laws; and (iii) no toxic or dangerous
chemicals or Hazardous Materials shall be released or discharged by Lessee or
anyone for whom Lessee is in law responsible on the Leased Premises in excess of
quantities permitted by applicable laws. If Lessee violates any of the
foregoing covenants, Lessor will provide written notice to Lessee to take
corrective action and Lessee will be given a reasonable period of time to
commence corrective action. Upon reasonable prior notice to Lessee, Lessor or
Lessor's representative shall have the right, but not the obligation, to enter
the Leased Premises during normal business hours for the purpose of inspecting
the storage, use and disposal of chemicals and materials used in the conduct of
Lessee's business to ensure compliance with the Environmental Laws. Should it
be determined, in the exercise of Lessor's reasonable discretion, that said
chemicals or materials are being improperly stored, transferred, used, or
disposed of, then Lessee shall immediately take such corrective action as
reasonably requested by Lessor. Should Lessee fail to commence to take such
corrective action in a prompt manner, Lessor shall have the right to peform such
work and Lessee shall promptly reimburse Lessor for any and all costs associated
with said work. If at any time during or after the term of the Lease, the
Leased Premises are found to be so contaminated or subject to said conditions,
as a result of matters which occurred on or after the Commencement Date and
which are caused by Lessee, Lessee shall, within a reasonable time period,
diligently institute proper and thorough cleanup procedures at Lessee's sole
cost, and Lessee agrees to indemnify and hold Lessor harmless from all claims,
demands, actions, liabilities, costs, expenses, damages, fines, reimbursement,
restitution and response costs incurred by Lessor in connection therewith, and
the obligations for the foregoing indemnification and the responsibilities of
Lessee shall survive the termination or expiration of this Lease. Lessor will
provide a complete copy of a Level 1 environmental survey to Lessee within
fifteen (15) days of lease execution. Lessee shall notify Lessor within fifteen
(15) days of receipt of any objections to the environmental survey.
Article 7
CONDITION OF LEASED PREMISES AND REPAIRS
(a) Following completion of the Improvements by Lessor as
provided in ARTICLE 1 above, and except as otherwise herein provided, Lessee
agrees, at its sole cost
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and expense, to maintain all of the Leased Premises in good condition and
repair during the full term of this Lease (except for such repairs made
necessary by fire or other casualty and which are repaired in accordance with
the provisions of ARTICLE 9 below) and shall deliver the Leased Premises to
Lessor in as good a condition as existed on the date Lessee took possession,
the effects of Latent Defects (hereinafter defined), ordinary wear and tear,
and obsolescence in spite of repairs excepted. As used herein, the term
"Latent Defects" shall mean any defect in design, materials or workmanship in
the initial construction of the Improvements, the plans and specifications
for same, and/or subsurface soil conditions. Lessee, at its expense shall
maintain in good condition the structure of the Building including the roof,
foundation, load bearing and exterior walls. Lessee shall, at its own cost
and expense, keep and maintain in good order and repair (except for any
Latent Defects, ordinary wear and tear, and obsolescence in spite of repairs)
all plumbing, wiring, fixtures, equipment, heating and air conditioning
equipment, interior and exterior decorations, glass and painting in and on
the Building and the parking area and ingress and egress lanes, it being
understood and agreed that Lessor shall have no obligation to maintain the
Leased Premises after Lessee takes possession other than as provided in this
Article 7, Section 1(i), Article 9, and Article 16 herein, except such
repairs caused by Lessor's tortious acts or omissions, improper workmanship,
or variance from plans and specifications.
(b) Lessor hereby assigns to Lessee all construction or
equipment warranties, guarantees, and/or service policies received by it which
are applicable to the Improvements; provided that such assignment shall not
prevent Lessor from enforcing same for its own benefit in order to perform its
obligations herein. Lessor hereby represents and warrants to Lessee that, in
addition to any other warranties, Lessor shall obtain a warranty covering the
roof of the Leased Premises for a period of not less than 10 years.
(c) In the event Lessee refuses or neglects to commence or to
complete properly and adequately any repairs which are the responsibility of
Lessee hereunder, then Lessor may (but shall not be obligated to) make such
repairs after thirty (30) working days' written notice to Lessee, or such
shorter period required by any emergency. In such event, Lessee shall be
obligated to repay the cost thereof to Lessor, upon demand, as additional rent.
(d) In the event Lessor refuses or neglects to commence or to
complete properly and adequately any repairs which are the responsibility of
Lessor hereunder, Lessee may (but shall not be obligated to) make such repairs
after ten (10) working days' written notice to Lessor, or such shorter period
required by any emergency. In such event, Lessor shall be obligated to repay
the cost thereof to Lessee, upon demand, or after thirty (30) days' notice to
Lessor of such costs incurred by Lessee, Lessee shall deduct the costs from the
next installments of rent until Lessee is fully compensated.
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Article 8
INDEMNIFICATION
Lessee shall indemnify, defend and hold Lessor harmless from any
and all Claims arising from Lessee's use of the Leased Premises or from the
conduct of its business or from any activity, work or things which may be
permitted or suffered by Lessee on or about the Leased Premises and shall
further indemnify, defend and hold Lessor harmless from and against any and all
Claims arising from any negligence of Lessee or any of its agents, contractors,
employees or invitees and any and all cost, attorney's fees, expenses and
liabilities necessarily incurred in the defense of any Claim or any action or
proceeding brought thereon, but excepting any Claims caused by the intentional
acts or negligence of Lessor, its employees, contractors or agents, or Lessor's
breach of any of its obligations set forth in this Lease. Lessee hereby assumes
all risk of damage to property or injury to persons in or about the Leased
Premises from any cause, and Lessee hereby waives all Claims in respect thereof
against Lessor, excepting where said damages are caused by the intentional acts
or negligence of Lessor, its employees, contractors or agents, or Lessor's
breach of any of its obligations set forth in this Lease. "Claims" is hereby
defined to include claims, suits, actions, debts, damages, costs, losses,
obligations, or judgments.
Article 9
DAMAGE OR DESTRUCTION
(a) Subject to the further provisions of this ARTICLE 9, if
the Improvements are damaged or destroyed (whether partially or totally) by
fire or other casualty or cause whatsoever, Lessor at its sole expense shall
promptly thereafter commence and diligently pursue to completion, the
rebuilding, restoration or repair of the Building and Improvements, in a good
and workmanlike manner, to a state and condition of repair in which their
value is not substantially less than their value immediately prior to the
damage and destruction, and this Lease shall continue in full force and
effect, subject to the abatement provision of SECTION 9(b).
(b) If the Improvements are destroyed or damaged and are
repaired or restored pursuant to the provisions of this ARTICLE 9, the monthly
rentals payable hereunder for the period from the date of such destruction or
damage to the date the Building is repaired or restored shall be abated in
proportion to the degree to which the Building is rendered untenantable by
Lessee for its intended purposes.
(c) If Lessor shall be obligated or shall elect to repair or
restore the Building under the provision of this ARTICLE 9, but does not
commence such repair or restoration within ninety (90) days after such
obligation shall accrue (except where such delay is not within the reasonable
control of Lessor) or complete such repair or
15
restoration within one hundred and eighty (180) days after the commencement
thereof (except where such delay is not within the reasonable control of
Lessor), Lessee may at Lessee's option cancel and terminate this Lease as of
the date of the occurrence of such damage by giving Lessor written notice of
Lessee's election to do so at any time after the expiration of such periods
of time and prior to the completion of such restoration work by Lessor.
(d) Upon cancellation of this Lease pursuant to this ARTICLE 9,
all rental and other charges due from Lessee shall terminate, Lessor shall
refund to Lessee any prepayments of rent or other charges, and both parties
shall be relieved of all further obligations under this Lease.
Article 10
ALTERATIONS
(a) Lessee shall not make, or suffer to be made, any
structural alterations of or improvements to the Building or the Leased
Premises, or any part thereof, in excess of $25,000, without the prior
written consent of Lessor, which consent shall not unreasonably be withheld
or delayed.
(b) Any equipment or trade fixtures of whatsoever nature as
shall have been installed in the Building by Lessee, whether permanently affixed
or not, shall continue to be the property of Lessee and may, but need not be,
removed by Lessee at the termination of this Lease; provided, however, Lessee
shall at its own expense repair any injury to the Building resulting from any
such removal and shall pay the cost of removing any trade fixtures installed by
Lessee which are not removed by Lessee on or prior to the termination of this
Lease.
(c) All alterations and improvements made to the Building under
SECTION 10(a) shall become the property of Lessor upon expiration of this Lease
and need not be removed by Lessee at its expense.
Article 11
UTILITIES
Lessee shall pay, before delinquency, all charges for water, gas,
electricity, telephone service and all other services and public utilities
furnished to or used in, upon or about the Leased Premises by Lessee during the
term of this Lease.
Article 12
HOLDING OVER
(a) Lessee agrees that upon the expiration or termination of
this Lease
16
(however the same may be brought about), peaceable possession of the Leased
Premises will be promptly surrendered and delivered to Lessor.
(b) In case of holding over by Lessee after the termination of
this Lease without the written consent of Lessor (however such termination shall
be brought about), Lessee shall be obligated to pay rent to Lessor on a per diem
basis for the entire hold over period at one hundred fifty percent (150%) of the
rental rate in effect at the time of the termination of this Lease. In the
event of a holding over by Lessee after the term of this Lease (whether with or
without the written consent of Lessor), Lessee shall be and continue as the
tenant at will of Lessor and in the event of Lessee's failure to surrender,
Lessor shall be entitled to institute and maintain an action of forcible
detainer of the Leased Premises in any court of competent jurisdiction.
Article 13
ASSIGNMENT AND SALE
(a) In the event Lessee should desire to assign this Lease
or sublet the Leased Premises or any part thereof, Lessee shall give Lessor
written notice of such desire, together with financial information as to the
proposed assignee or sublessee sufficiently complete to allow Lessor to
determine the financial condition of such assignee or sublessee, at least
twenty (20) days in advance of the date on which Lessee desires to make such
assignment or sublease. Lessor shall then have a period of twenty (20) days
following receipt of such notice and financial information within which to
notify Lessee in writing that (i) Lessor consents to such assignment or
sublease, which consent shall not be unreasonably withheld, or delayed, or
(ii) Lessor does not consent thereto provided, however, that Lessee may
without prior written notice and consent from Lessor, assign this Lease or
sublet all or part of the Leased Premises to any entity which controls, is
controlled by, or is under common control with Lessee or any entity which is
a successor to Lessee by acquisition, merger, or consolidation of or with
Lessee. No assignment or subletting by Lessee shall relieve Lessee of any
obligation under this Lease. (iii) Upon request by Lessor, Lessee shall
furnish to Lessor copies of its latest consolidated annual report together
with quarterly income statements and balance sheet to date when such reports
and financial statements have been publicly released.
(b) Lessor shall have the continuing right at any time to sell
or convey the Leased Premises and Lessor's rights under this Lease, and nothing
herein contained shall be construed as restricting such rights of Lessor. In
the event Lessor should hereafter sell or convey the Leased Premises to a third
party or parties, such party or parties shall acquire the Leased Premises
subject to the terms and provisions of this Lease and shall be subrogated to all
of the rights and privileges of Lessor hereunder, and Lessor shall thereupon be
completely relieved and discharged from all duties and obligations herein
imposed upon Lessor which accrue after the effective date of such conveyance;
provided that such transferee of Lessor shall have assumed all of Lessor's
duties and obligations which accrue under this Lease after such date.
17
Article 14
INSOLVENCY AND BANKRUPTCY
It is mutually agreed, covenanted and understood by and between
the parties hereto that in the event any proceeding under the Bankruptcy Code
or any amendment thereto is commenced by or against Lessee, as debtor or in
the event Lessee is adjudged insolvent or makes an assignment for the benefit
of its creditors, or if a writ of attachment or execution is levied on the
leasehold estate created hereby and is not released or satisfied within a
reasonable time thereafter, or if a receiver is appointed in any proceeding
or action to which Lessee is a party as debtor, with authority to take
possession or control of the Leased Premises or the business conducted
therein by Lessee, subject to the then current bankruptcy and similarly
applicable laws, the same shall be a default by Lessee hereunder and Lessor
shall have the right to exercise its remedies as provided hereafter.
In the event that the obligations of Lessor under this Lease
are not performed during the pendency of a bankruptcy or insolvency
proceeding involving the Lessor as the debtor, or following the rejection of
this Lease in accordance with Section 365 of the United States Bankruptcy
Code and the election of the Lessee to remain in the possession of the Leased
Premises in a bankruptcy or insolvency proceeding involving the Lessor as the
debtor, then nothwithstanding any provision of this Lease to the contrary,
Lessee shall have the right to set off against Rents next due and owing under
this Lease (a) any and all damages that it demonstrates to the Bankruptcy
Court were caused by such non-performance of the Lessor's obligations under
this Lease by Lessor, debtor-in-possession, or the bankruptcy trustee and (b)
any and all damages caused by the non-performance of the Lessor's obligations
under this Lease following any rejection of this Lease in accordance with
Section 365 of the United States Bankruptcy Code.
Article 15
DEFAULT AND ABANDONMENT
(a) If Lessee shall at any time fail to pay when due any
payment of rent or other sums provided for herein to be paid to Lessor, and
such failure continues uncured for a period of ten (10) days after the date
that Lessee receives written notice thereof from Lessor, or if Lessee shall
at any time fail to perform any of the covenants, terms, conditions or
provisions of this Lease (other than the payment of rent or other sums), and
such failure continues uncured for a period of thirty (30) days (or if such
failure cannot with reasonable diligence be cured within thirty (30) days,
then such longer period of time as may be reasonably necessary, provided that
Lessee shall continuously use reasonable diligence in attempting to cure such
failure) after Lessor gives Lessee written notice of such failure, or if
Lessee shall assign or sublet without written approval of Lessor (unless such
approval is not required by the terms of this Lease), Lessor shall have any
one or more of the following described remedies, in
18
addition to all other rights and remedies provided at law or in equity:
(i) Lessor may terminate this Lease, upon written
notice to Lessee and all of Lessee's rights shall be forfeited and lapsed, as
fully as if this Lease had expired by lapse of time.
(ii) Lessor may terminate Lessee's right of possession
(but not this Lease) and may repossess the Leased Premises by any lawful
means, without further demand or notice any kind to Lessee and without
terminating this Lease, in which event Lessor will use reasonable efforts to
relet the same for the account of Lessee for such rent and upon such terms as
shall be reasonably satisfactory to Lessor. For the purpose of such
reletting, Lessor is authorized to decorate or to make any repairs, changes
alterations or additions in or to Leased Premises that may be reasonably
necessary. Such reletting will not be construed as an election on the part
of Lessor to terminate this Lease unless a written notice of such intention
be given Lessee by Lessor.
Article 16
EMINENT DOMAIN
(a) If during the term hereof, all or substantially all, of the
Leased Premises, shall be taken in any condemnation or eminent domain
proceeding, this Lease shall thereupon terminate. In such event the obligation
to pay rent and Lessee's right of possession hereunder shall terminate on the
date of such taking. Any rent paid in advance shall be apportioned as of the
date of such taking, and Lessee's portion thereof shall be refunded to Lessee.
(b) If only a part of the Leased Premises are taken so as to
materially affect the operation of Lessee's business from the Leased Premises
and such effect would continue even though the Leased Premises were restored
by Lessor as hereinafter provided, either party hereto shall have the option
to terminate this Lease as of the date of ouster by giving written notice of
termination within fifteen (15) days after Lessee has been ousted from
possession of such part, whereupon this Lease shall be of no further force or
effect, and Lessor and Lessee shall each be relieved of any obligations or
liabilities hereunder as of said date of ouster. If this Lease is not
terminated pursuant to the foregoing provisions, Lessor, at its own risk,
expense and liability to Lessee, shall promptly (but only to the extent of
the proceeds of the condemnation award) make such repairs and alterations to
such part of the Leased Premises not taken so as to constitute a complete
building and land site suitable for the uses and purpose for which said
Leased Premises are being utilized by Lessee. In such event Lessee's right
of possession as to the portion so taken shall terminate on the date of such
taking, and the rental payable hereunder shall be reduced by a just and
proportionate amount to be agreed to by Lessor and Lessee, taking into
consideration the amount of land, and the usable space in the Building and
other improvements remaining after any such taking; but, if so much is taken
as to render the Leased Premises completely untenantable or unsuitable for
the purpose for which they are hereby leased, and neither Lessee nor Lessor
exercises the
19
option to terminate this Lease as herein provided, all rental payments shall
be suspended until the date of completion by Lessor of such repairs and
alterations.
(c) The provisions of this ARTICLE 16 shall only apply to
the Improvements, and in no event shall Lessor be obligated to reconstruct
any improvements constructed by Lessee but Lessor shall pay to Lessee a fair
and equitable portion of the condemnation award in lieu thereof.
(d) Any condemnation award or recovery shall belong and be
paid to Lessor, and Lessee shall have no claim thereto except as specified
herein. Lessee reserves the right to bring an action in its own name for its
loss of business and leasehold interest as well as any other damages which
Lessee may recover as a result of such condemnation action. The provisions
herein shall not be subject to the rights of Lessor's mortgagors to apply
condemnation proceeds to the debt secured by its mortgage.
Article 17
ACCESS TO PREMISES
Lessee shall permit Lessor and its agents to enter into and upon
the Leased Premises at all reasonable times during normal business hours and
with at least five (5) days written notice, except in an emergency situation, in
accordance with the provisions hereof, for the purpose of making repairs,
alterations, or additions to any other portion of the Leased Premises, including
the erection and maintenance of such scaffolding, canopy, fences and props as
may be required or for the purpose of posting notices of nonliability for
alterations, additions or repairs. Lessor shall conduct its activities in the
Leased Premises in a manner that will cause the least possible interference with
Lessee's business operations and rent shall ratably xxxxx during the time Lessee
is deprived of use of any portion of the Leased Premises as a result of Lessor's
presence in the Leased Premises. Lessee shall permit Lessor, at any time within
ninety (90) days prior to the expiration of this Lease, to place upon the Leased
Premises usual or ordinary "For Lease" signs, and during such ninety (90) day
period Lessor or its agents may, during normal business hours, enter upon the
Leased Premises and exhibit same to prospective tenants.
Article 18
SUBORDINATION OF LEASE
Upon Lessor's request, and at Lessor's sole option, Lessee will
subordinate this Lease to the liens of any first mortgage or under first lien
resulting from any method of financing or refinancing except Industrial
Development Bond financing or refinancing (hereinafter collectively referred
to as a "Mortgage") now or hereafter existing against all or part of the
Leased Premises, and to all renewal, modifications, replacements,
consolidations and extensions thereof; provided that the holder of any such
Mortgage agrees in writing that if the Lessor defaults under such Mortgage,
the
20
holder shall not disturb Lessee's possession, rights and leasehold interest
hereunder while Lessee is not in default hereunder beyond the time allowed
for curing the same. At any time and from time to time during the Term of
this Lease, within twenty (20) days after Lessee's receipt of a written
request from Lessor or any of Lessor's lenders, Lessee shall execute and
deliver a document, in form and substance reasonably acceptable to Lessee,
Lessor, and any such lender, confirming such subordination and
nondisturbance. Within ninety (90) days after the date of this Lease, Lessor
shall deliver to Lessee a written nondisturbance agreement from the holder of
any Mortgage executed prior to the Commencement Date in form and substance
reasonably acceptable to Lessee. In the event of such default by Lessor, or
any foreclosure, sale or other event causing Lessor's ownership of the Leased
Premises to terminate, Lessee shall attorn to the new owner and shall
recognize the new owner as Lessee's Lessor under this Lease. Lessee shall,
upon request of the holder of any such Mortgage, execute and deliver any
instrument reasonably requested by such holder to evidence the subordination,
attornment, and nondisturbance provisions set forth herein. Lessee waives any
right which it might have by law or in equity to terminate this Lease or to
surrender possession of the Leased Premises upon termination of, or
institution of proceedings against, Lessor's rihts of ownership in the Leased
Premises; provided that none of Lessee's rights and interests under this
Lease are disturbed. The new owner shall recognize Lessee as a direct tenant
under this Lease; provided that Lessee is not in default as would permit
Lessor to terminate this Lease, and that Lessee delivers to the new owner
upon demand an instrument certifying to such effect and confirming the
agreement of Lessee to attorn to the owner. As herein used, the term
"foreclosure" shall include both judicial proceedings and the exercise of a
power of sale under any mortgage or deed of trust without recourse to
judicial proceedings.
Article 19
ESTOPPEL CERTIFICATE
Lessor and Lessee each hereby agree, at any time and from time to
time within thirty (30) days after requested by the other party, to execute and
deliver to the other party a written certificate stating (a) whether this Lease
is in full force and effect; (b) whether this Lease has been modified or amended
and if so, identifying and describing any such modification or amendment; (c)
whether rent and other charges have been paid more than thirty (30) days in
advance of the date when due and if so that date to which that have been paid in
advance; and (d) whether, to the knowledge of the party giving the certificate,
any uncured default exists on the part of the other party, and, if so,
specifying the nature of such default.
Article 20
WAIVER
No covenant or condition of this Lease to be performed by
Lessee and/or Lessor can be waived except by the written consent of Lessor
and/or Lessee, and
21
forbearance or indulgence by Lessor or Lessee in any regard whatsoever shall
not constitute a waiver of the covenant or condition to be performed by
Lessee and/or Lessor to which the same may apply; and until complete
performance by Lessee or Lessor of said covenant or condition, Lessor and/or
Lessee shall be entitled to invoke any remedy available to it under this
Lease or at law, despite said forbearance or indulgence. The subsequent
acceptance of rental hereunder by Lessor shall not be deemed to be a waiver
of any preceding breach by Lessee of any term, covenant or condition of this
Lease, other than the failure of Lessee to pay the particular rental so
accepted, regardless of Lessor's knowledge of such preceding breach at the
time of acceptance of such rental.
Article 21
QUIET ENJOYMENT
Lessor agrees that so long as Lessee is not in default
hereunder Lessee shall have the quiet enjoyment of the Leased Premises
without hindrance on the part of Lessor, and Lessor will defend Lessee in the
peaceful and quiet enjoyment of the Leased Premises (other than those
claiming by, through, or under Lessee).
Article 22
ATTORNEY FEES AND INTEREST
(a) In the event either party hereto shall institute suit
against the other with reference to the terms and conditions of this Lease,
the prevailing party shall be entitled to reasonable attorney's fees and
court costs.
(b) All sums due from one party to the other party hereunder
which are not paid when due shall bear interest at the lesser of ten percent
(10%) per annum or the national prime interest rate plus two percent (2%) per
annum from the date same became due until paid.
Article 23
SIGNS
Lessee shall have the right to install, maintain and replace
exterior signs in or on the Leased premises subject to any applicable laws,
codes or ordinances and subject to any reasonable rules and regulations
adopted for the Leased Premises. Lessee shall make all repairs required by
reason of the installation and maintenance of its signs, except damage caused
by the acts of Lessor, its agents, servants or employees.
Article 24
SERVICE OF NOTICE
22
Any notice or demand which either party hereby may desire to
serve upon the other in furtherance of any provisions of this Lease shall be
in writing and shall be sufficiently served if the same shall be sent by
Federal Express or other overnight courier service, or shall be sent United
States Mail, postage prepaid, certified or registered, or shall be sent by
facsimile transmission, addressed, in the instance of Lessor, as follows:
VRS/TA/S Houston, L.P.
000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
(Fax) 000-000-0000
or to such other address as Lessor shall designate by written notice to Lessee,
and in the instance of Lessee, addressed as follows:
United Stationers Supply Co.
0000 Xxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxx 00000-0000
Attention: President
(Fax) 000-000-0000
or such other address as Lessee shall designate by written notice to Lessor.
Such notices shall be deemed to have been served at the time of the actual
receipt or refusal of delivery thereof.
Article 25
CAPTIONS
The various headings and numbers herein and the grouping of the
provisions of this Lease into separate articles and paragraphs are for the
purpose of convenience only and shall not be considered a part hereof.
Article 26
TIME
Time is of the essence of this Lease and each and all of its
provisions.
Article 27
SUCCESSORS AND ASSIGNS
This Lease shall inure to the benefit of and be binding upon the
heirs,
23
executors, administrators, successors and assigns of Lessor and Lessee;
provided, however, that nothing herein shall impair any of the provisions
herein above set forth inhibiting assignment or subletting without the
written consent of Lessor.
Article 28
PARTIAL INVALIDITY
If any term, covenant, condition or provision of this Lease or
the application thereof to any person or circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Lease shall not be
affected thereby and each term, covenant, condition and provision of this
Lease shall be valid and be enforced to the fullest extent permitted by law.
Article 29
CONSENT
Whenever the consent of either Lessor or Lessee must be
obtained hereunder, such consent shall not be unreasonably withheld or
delayed.
Article 30
FORCE MAJEURE
(a) Whenever Lessor or Lessee shall be required hereunder or
by law to perform or provide any contract, act, work, labor or service, or to
perform or comply with any law, order, ordinance, or building, zoning or
other regulations, requirements, or rule of any governmental authority having
jurisdiction, or to perform any covenant hereunder (other than the payment of
any sum of money) such party shall not be deemed in default therein and the
other party hereto shall not enforce or exercise any of its rights hereunder
if and so long as:
(i) Non-performance or default therein shall be caused by
strikes, lockouts, non-availability of labor or materials, war or national
defense, governmental restrictions, acts of God or other such unforeseeable
events or circumstances beyond the control of such party; and
(ii) To the extent applicable and reasonable, such party
shall contest the matter involved with due diligence and in good faith in a
proper forum or court with the person or governmental authority requiring
such payment, act, work, labor, services, contract or lien.
(b) The foregoing provision of this ARTICLE 30 shall not
apply to the payment by Lessee to Lessor of rent or any other monetary sums
due by Lessee
24
hereunder or to any of Lessor's obligations under ARTICLE 1 of this Lease.
Article 31
ALTERATION
This Lease shall not be altered, amended, or modified in any
way or terminated except by an instrument in writing, executed by both
parties.
Article 32
PERSONAL PROPERTY TAXES
During the term hereof, Lessee shall pay prior to delinquency
all taxes assessed against and levied upon fixtures, furnishings, equipment
and all other personal property of Lessee contained in the Leased Premises;
and, when possible, Lessee shall cause said fixtures, furnishings, equipment
and other personal property to be assessed and billed separately from the
Leased Premises.
Article 33
LEGAL CONSTRUCTION
This Agreement shall be construed in accordance with the laws of the State of
Texas.
Article 34
LIMITATION OF LIABILITY
Neither party shall ever be liable for consequential or
punitive damage in connection with any of its obligations hereunder.
Article 35
NET LEASE
This Lease is a net lease, and except as otherwise expressly
provided herein, Lessee shall pay all costs and other expenses of every
character, foreseen or unforeseen, for the payment of which Lessee is or shall
become liable by reason of its estate or interest in the Leased Premises, or
which are connected with or arise out of the possession, use, occupancy,
maintenance or repair of the Leased Premises or any portion thereof by Lessee.
Rent and any and all other amounts payable by Lessee hereunder shall
25
be paid by Lessee without notice or demand (except as herein otherwise
provided), and without any set off, deduction, abatement, suspension,
deferment, diminution or reduction of any kind for any reason, except as
specifically provided herein.
Article 36
LIMITATION OF LESSOR'S PERSONAL LIABILITY
Notwithstanding any other provision in this Lease to the
contrary, Lessee specifically agrees to look solely to Lessor's interest in
the Leased Premises and in this Lease for the recovery of any judgment from
Lessor, it being agreed that Lessor shall never be personally liable for any
such judgment.
Article 37
COMPLIANCE WITH ENVIRONMENTAL LAWS
(a) Lessor warrants and represents to Lessee that, to the
best of Lessor's knowledge and after reasonable inquiry, the Leased Premises
will be in full compliance at the date of delivery to Lessee with all
applicable Environmental Laws.
(b) Lessor shall defend, indemnify and save Lessee, its
officers, directors, agents and employees, harmless from and against all
claims, obligations, demands, actions, proceedings and judgments, loss,
damage, liability and expense (including reasonable attorney's fees and
expenses) which any one or more of them may sustain in connection with any
noncompliance of the Leased Premises as of the Commencement Date with all
Environmental Laws or in connection with any environmental condition
affecting the Leased Premises not caused by Lessee.
Article 38
LESSOR'S REPRESENTATIONS AND WARRANTIES
Lessor will represent and warrant to Lessee, as of the
Commencement Date, that to the best of its knowledge:
(a) Lessor does not have knowledge of, or reason to believe
that there are grounds for, the filing of a lien against the Leased Premises,
other than the lien for the construction loan.
(b) Lessor does not have knowledge of any pending condemnation
or similar proceeding affecting the Leased Premises or any portion thereof.
(c) Lessor does not have knowledge of any legal actions, suits,
or other legal or administrative proceedings, pending or threatened against the
Leased Premises or Lessor nor that any such action, suit, proceeding or claim
has been threatened
26
or asserted against Lessor or the Leased Premises.
(d) Lessor has granted no leases or license, nor created any
tenancies, affecting the Leased Premises and there are no parties in possession
of any portion of the Leased Premises as trespassers or otherwise.
(e) Lessor does not have knowledge of any uncured violations of
federal, state or municipal laws, ordinances, orders, regulations, or
requirements affecting any portion of the Leased Premises.
(f) The Leased Premises have adequate legal access to abutting
public highways, streets and roads.
(g) Lessor does not have knowledge of any pending or threatened
governmental or private proceedings which would impair or result in the
termination of access from the Leased Premises to abutting public highways,
streets and roads.
(h) Lessor does not have knowledge of, or reason to believe
that there are (i) any government agencies investigating the Leased Premises,
(ii) any environmental defects affecting the Leased Premises or property, (iii)
radon or radon decay products, asbestos or asbestos decay products, within the
Building or (iv) mines or other subsurface conditions which would have a
materially adverse effect on the Leased Premises.
(i) Lessor does not have knowledge that the Leased Premises
or any adjacent property now are or have been the site of any place of
business engaged in operations which involve the generation, manufacture,
refining, transportation, treatment, storage, handling or disposal of any
Hazardous Materials, above or below ground.
(j) There is presently in existence or available adequate
water, electrical, sewage, stormwater and drainage systems, and gas utility
service required for the intended use of the Leased Premises.
(k) The intended use and occupancy of the Leased Premises are
in full compliance with all requirements of applicable building, zoning and land
development ordinances and all conditions of applicable planning board
subdivision, site plan and variance (if any) approvals.
(l) Lessor has obtained or will obtain all required plan
approvals, permits and certificates of occupancy necessary for Lessee's
occupancy and intended use.
(m) Lessor has no knowledge, or reason to believe that there
are underground storage tanks located on the Leased Premises, nor have there
been any in the past.
27
Article 39
OWNERSHIP OF LEASED PREMISES
Lessor represents and warrants that, upon acquisition of title
to the Leased Premises by Lessor, there shall be no reservations, easements,
building lines, covenants, restrictions, encumbrances or other objections or
exceptions to good and marketable title that would prevent or impair either
the timely construction of the Improvements in accordance with the
Construction Documents approved by Lessee, or the use thereof as contemplated
by Lessee. Immediately upon acquiring title to the site Lessor shall furnish
Lessee a copy of the title policy showing title in Lessor. If it is
determined that Lessor and/or its assigns does not have good and clear title
to the Leased Premises at any time after commencement of construction Lessee
may terminate this Agreement by giving Lessor written notice of its election
to terminate, whereupon Lessee shall have no further obligation to Lessor
under this Lease.
Article 40
COMPLIANCE WITH PUBLIC ACCOMMODATION LAWS
(a) Lessor represents, warrants and covenants that, upon the
Commencement Date, the Leased Premises will comply with all applicable laws,
regulations, and building codes, including, without limitation, all laws
governing non discrimination in public accommodations and commercial
facilities, including, without limitation, the requirements of the Americans
with Disabilities Act and all regulations thereunder.
(b) Lessor agrees to indemnify, defend and hold harmless
Lessee, its officers, directors and employees from and against any and all
claims, liabilities, losses and expenses (including reasonable attorney's
fees) arising in connection with Lessor's failure to comply with the
provisions of this Article, save and except the continued negligence of
Lessee.
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EXECUTED as of the date set forth hereinabove.
LESSOR:
VRS/TA/S Houston, L.P.
A Texas limited partnership
By: VRS/TA Realty Corp. (its general partner)
By: /s/ [Iillegible]
---------------------------
Its: Sr. Vice President
--------------------------
LESSEE:
United Stationers Supply Co.
An Illinois Corporation
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Its: Treasurer & Secretary
---------------------------
29
EXHIBIT A
METES AND BOUNDS DESCRIPTION OF 9.6737 ACRES OR 421,387 SQUARE FEET OF LAND
OUT OF THAT CERTAIN 21.873-ACRE TRACT BEING ALL OF UNRESTRICTED RESREVE "A",
NORTHWEST PLACE, A SUBDIVISION RECORDED IN VOLUME 302, PAGE 16, XXXXXX COUNTY
MAP RECORDS (H.C.M.R.) IN THE X. X. XXXXXXX XXXXXX, X-000, XXXX XX XXXXXXX,
XXXXXX XXXXXX, XXXXX:
BEGINNING: AT A FOUND "X" CUT IN CONCRETE IN THE SOUTH LINE OF PINEMONT
DRIVE, AN 80-FOOT RIGHT-OF-WAY, MARKING THE NORTHWEST CORNER OF SAID RESERVE
"A", SAID "X" BEING THE 10-FOOT SETBACK CORNER OF THE EAST LINE OF HOLLISTER
ROAD, A 100-FOOT RIGHT-OF-WAY;
THENCE: NORTH 87 DEG 36 MIN 10 SEC EAST, ALONG THE SOUTH LINE OF PINEMONT
DRIVE, A DISTANCE OF 607.00 FEET TO A SET 5/8-INCH IRON ROD MARKING THE
NORTHEAST CORNER OF THE HEREIN DESCRIBED TRACT;
THENCE: SOUTH 00 XXX 00 XXX 00 XXX XXXX, DEPARTING FROM THE SOUTH LINE OF
PINEMONT DRIVE A DISTANCE OF 682.58 FEET TO A SET 5/8-INCH IRON ROD IN THE
NORTH LINE OF XXXXXXX STREET, A 60-FOOT RIGHT-OF-WAY MAKING THE SOUTHEAST
CORNER OF THE HEREIN DESCRIBED TRACT;
THENCE: SOUTH 87 DEG 57 MIN 34 SEC WEST, ALONG THE NORTH LINE OF XXXXXXX
STREET, A DISTANCE OF 613.97 FEET TO A FOUND 5/8-INCH IRON ROD MARKING THE
MOST SOUTHERLY SOUTHWEST CORNER OF SAID RESERVE "A" AND THE HEREIN DESCRIBED
TRACT, SAID 5/8-INCH IRON ROD BEING THE 10-FOOT SETBACK XXXXXX XX XXX XXXX
XXXX XX XXXXXXXXX XXXX;
THENCE: NORTH 45 DEG 42 MIN 19 SEC WEST, A DISTANCE OF 13.82 FEET TO A FOUND
5/8-INCH IRON ROD IN THE EAST LINE OF HOLLISTER ROAD, SAID 5/8-INCH IRON ROD
BEING IN THE LEFT;
THENCE: ALONG THE EAST LINE OF HOLLISTER ROAD, IN A NORTHEASTERLY DIRECTION,
AROUND A CURVE TO THE LEFT WHOSE RADIUS EQUALS 2,350.00 FEET, HAVING A
CENTRAL ANGLE OF 02 DEG 33 MIN 39 SEC, AN ARC LENGTH OF 105.04 FEET, A CHORD
BEARING OF NORTH 00 DEG 45 MIN 59 SEC EAST AND A DISTANCE OF 105.03 FEET TO A
FOUND 5/8-INCH IRON ROD, THE POINT OF TANGENCY OF THE CURVE;
THENCE: NORTH 02 DEG 02 MIN 49 SEC WEST, ALONG THE EAST LINE OF HOLLISTER
ROAD, A DISTANCE OF 553.73 FEET TO A FOUND "X" CUT IN CONCRETE, MARKING THE
MOST WESTERLY NORTHWEST CORNER OF SAID RESERVE "A" AND THE HEREIN DESCRIBED
TRACT;
THENCE: NORTH 42 DEG 46 MIN 14 SEC EAST, A DISTANCE OF 14.19 FEET TO THE
PLACE OF BEGINNING AND CONTAINING 9.6737 ACRES OR 421,387 SQUARE FEET OF
LAND, MORE OR LESS.
Exhibit B
Blueprint of office building appears here.
EXHIBIT "B"
IMPROVEMENT SPECIFICATIONS
Our proposal is based on the initial construction of a 240,000 square foot
facility on a 9.56 square acre site. Parking will be provided for 80 cars.
The proposed building will have 8,000 square feet of office area. Further, as
the enclosed site plan indicates, the building is a rear loading facility
with a 130' truck court. Although the building is designed to be cost
efficient it will appropriately present the image of a significant facility
for United Stationers, Inc. Please review the following construction features:
EARTH WORK
We will strip the site to a depth of 4" with strippings hauled off-site if
they are not used for back fill of curbs and/or top soil at landscaped areas.
Subgrade at concrete paving is assumed to be an average excavation of 6" to
9", which is to be relocated and compacted within the building pad. The
building pad will require approximately 2"-0" of off-site select fill
material (minimum 20 P.I.) and compacted in 8" lifts to create a 48" dock
height.
SITE WORK
We will pour the sidewalks to be 4-1/2" thick 3,000 PSI concrete reinforced
with 10-gauge wire mesh and a broom finish. The car parking will be 5" thick
3,000 PSI concrete reinforced with one (1) layer of No.3 rebar at 18" on
center each direction with a broom finish. The truck court and outside
storage area shall be 6" thick 3,000 PSI concrete also reinforced with one
(1) layer of No.3 rebar at 18" on center each direction with a broom finish.
All paved areas will have sealed joints at an average spacing of 30'-0" on
center. Car parking, drives, and the East elevation of the truck court shall
receive a 6" machine extruded, cast-on type curb with reinforcing steel.
Storm drainage shall be underground plastic and concrete pipe for all paved
surfaces.
BUILDING CONCRETE AND STRUCTURE
The foundation will consist of drilled under-xxxx footings. The warehouse
slab shall be 6" thick 3,000 PSI concrete with one (1) layer of No.4 rebar at
16" on center in each direction with a smooth trowel finish. The slab area is
to receive one (1) coat of Lapidolith floor hardener. The slab will be
leveled to a standard of FF-50. All slabs to be placed with a 1/8" wide saw
cut control joint placed at 20'-0" centers in each direction. The office slab
shall be 6" thick 3,000 PSI concrete with one (1) layer of No.4 rebar at 16"
on center in each direction with a smooth trowel finish.
The roof framing will consist of structural steel columns, joist girders and
bar joists. Warehouse column spacing shall be 40'-0"x40'-0. The warehouse
roof structure will provide a minimum clear height of 30'.
Improvement Specifications
Page 2
There will be a 22 gauge galvanized roof deck covered with 1" rigid
insulation board. The board will be covered with two base sheets and hot
asphalt and these two sheets will be covered with a .060 mil thick modified
bituminous cap sheet set in hot asphalt. The resulting roof has a 15 year
warranty and is 20 year bondable if so desired.
Roof drainage has been designed to drain front and rear of the warehouse to
surface mounted gutters and recessed downspouts.
The windows are punched type, 8'-0" x 6'-0" with sloped concrete sill and jam
with glass set in aluminum frames. The main entry shall receive one (1) pair
of 3'-0" x 9'-0" doors. All aluminum is designed to be clear or black with
bronze or xxxx non-reflective glass. The warehouse area shall receive seventy
five (75) 4'-0' x 4'-0" skylights.
All of the exterior tiltwall panels will be approximately 15'-0" wide with
3,000 PSI standard xxxx concrete reinforcing bars necessary for in-service
use. The panels will be load bearing job cast with thickness as designed by
the structural engineer.
All surfaces of exterior tiltwall panels shall receive a medium textured flat
latex with reveal pattern.
The exterior door and dock equipment are as follows:
6 EACH - 3' x 7' hollow metal doors and frames
30 EACH - 9' x 10' nominal 24-gauge sectional overhead
door
28 EACH - 3,000 pound capacity mechanical edge-of-dock
levelers
The special equipment is as follows:
EYE WASH - Included in office finish allowance
WATER FOUNTAIN - Included in office allowance
INTERIOR LADDER - An interior roof ladder will be provided from
the slab to the roof deck
OFFICE INTERIORS
The development of 8,000 square feet of office area is included within the
scope of this proposal at a cost of $30.00 per square foot. This allowance is
to include the separation wall between the warehouse and office areas. If we
are selected as the developer for this project it is our team's intention to
work closely with United Stationers, Inc. in designing the most functional
and cost efficient office layout possible.
Improvements Specifications
Page 3
FIRE SPRINKLER SYSTEM
The sprinkler system will be a ESFR system for class 4 ordinary hazard with
28 foot storage height.
PLUMBING
The domestic water service will be a 2-1/2" Type-K copper underground service
extending from a 2" water meter. The sanitary sewer has been designed to be
PVC material with a 6" line connecting the existing sanitary manhole to the
building with clean-out spacings per the City of Houston requirements.
Interior plumbing is provided within the office finish allowance.
Four (4) hose bibs will be provided and located as determined.
HEATING, VENTILATION AND AIR CONDITIONING
1. OFFICE
The HVAC cost is included within the office finish allowance. It is
our intention to have the system consist of bottom discharge,
summer/winter, DX rooftop package units. Air distribution will be
through ducted supply systems with ducted return. Ductwork will be
1" thick fiberglass duct board. All rooftop units shall be provided
with insulated factory curbs.
2. WAREHOUSE
Six air changes per hour will be achieved through roof fans with fixed
in-take wall louvers with bird screens. Heating will provide freeze
protection of the fire sprinkler system.
ELECTRICAL
The building service will consist of 2,000 amp overhead service to a location
on the East elevation behind the office section.
SITE LIGHTING
400 watt wall pack lighting units at 75 feet on center located on the
front and back of the building.
Improvement Specifications
Page 4
WAREHOUSE LIGHTING
400 watt metal halide fixtures are provided for an average
illumination of thirty foot-candles.
OFFICE LIGHTING
Cost to be included within the office finish allowance and designed
accordingly.
