Exhibit 10.7
COMMERCIAL LEASE AGREEMENT
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(LANDLORD)
AND
METASOLV SOFTWARE, INC.
(TENANT)
Address:
_____ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
TABLE OF CONTENTS
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Page No.
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1. PREMISES, TERM, AND INITIAL IMPROVEMENTS..........................................................1
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2. BASE RENT, SECURITY DEPOSIT AND ADDITIONAL RENT...................................................1
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3. TAXES.............................................................................................3
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4. NET LEASE.........................................................................................3
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5. TENANT'S AND LANDLORD'S MAINTENANCE AND REPAIR OBLIGATIONS........................................3
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6. ALTERATIONS.......................................................................................4
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7. SIGNS.............................................................................................5
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8. UTILITIES.........................................................................................5
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9. INSURANCE.........................................................................................5
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11. LIABILITY, INDEMNIFICATION.......................................................................6
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12. USE..............................................................................................6
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13. INSPECTION.......................................................................................7
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14. ASSIGNMENT AND SUBLETTING........................................................................7
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15. CONDEMNATION.....................................................................................8
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16. SURRENDER OF PREMISES; HOLDING OVER..............................................................8
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17. QUIET ENJOYMENT..................................................................................9
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18. EVENTS OF DEFAULT................................................................................9
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19. REMEDIES.........................................................................................9
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20. LANDLORD'S LIABILITY............................................................................10
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21. MORTGAGES.......................................................................................10
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22. ENCUMBRANCES....................................................................................11
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23. MISCELLANEOUS...................................................................................11
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24. NOTICES.........................................................................................12
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25. HAZARDOUS WASTE.................................................................................12
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26. (INTENTIONALLY DELETED.)........................................................................13
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27. LANDLORD'S LIEN.................................................................................13
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28. ROOFTOP EQUIPMENT...............................................................................13
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29. TAX INCENTIVES..................................................................................13
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LIST OF DEFINED TERMS
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Page No.
AAA...............................................................................F-1
AAA.................................................................................8
Affiliate..........................................................................11
Applicable Percentage.............................................................E-1
Base Rent...........................................................................1
Building............................................................................1
Building's Structure................................................................4
Casualty............................................................................6
Claimant...........................................................................10
Commencement Date...................................................................1
Construction Allowance..............................................................5
Disabilities Acts...................................................................7
Environmental Law..................................................................13
Event of Default....................................................................9
Extension.........................................................................F-1
Extension Notice..................................................................D-1
Fair Market Rental Rate...........................................................F-1
FMRR Notice.......................................................................F-1
Hazardous Substances...............................................................13
HVAC System.........................................................................4
including..........................................................................11
Indemnified Parties.................................................................6
Improvements........................................................................4
Land................................................................................1
Landlord............................................................................1
Landlord's Mortgagee...............................................................11
Landlord's Proposal...............................................................E-1
Law................................................................................11
Laws...............................................................................11
Lease...............................................................................1
Legal Requirements.................................................................13
Letter of Credit....................................................................2
Loss................................................................................6
Market Area.......................................................................F-1
Monument Sign.......................................................................5
Mortgage...........................................................................11
MSDS...............................................................................13
Original Lease......................................................................1
Pass-Through Expenses...............................................................2
Permitted Activities...............................................................13
Permitted Materials................................................................13
Permitted Transfer..................................................................8
Permitted Transferee................................................................8
Permitted Use.......................................................................7
Premises............................................................................1
Primary Lease......................................................................11
rent................................................................................3
Rooftop Equipment..................................................................13
Security Deposit....................................................................2
Sign Conditions.....................................................................5
Sign Requirements...................................................................5
Space.............................................................................F-1
Taking..............................................................................9
Tangible Net Worth..................................................................7
Taxes...............................................................................3
Tenant..............................................................................1
Tenant Panel........................................................................5
Tenant Party.......................................................................11
Term................................................................................1
Total Construction Costs............................................................4
Transfer............................................................................7
Vacation Date.......................................................................7
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LEASE AGREEMENT
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This Lease Agreement (this "Lease") is entered into by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Landlord"), and METASOLV SOFTWARE, INC., a Delaware
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corporation ("Tenant").
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1. PREMISES, TERM, AND IMPROVEMENTS.
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(a) Landlord leases to Tenant, and Tenant leases from Landlord, the
real property described on Exhibit A (the "Premises"), which includes the
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approximately 100,000 rentable square foot building (the "Building") to be
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constructed by Landlord on the real property described on Exhibit A (the
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"Land"), subject to the terms and conditions in this Lease. Landlord and Tenant
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stipulate that for purposes of calculating Tenant's obligations to pay Base Rent
the size of the Premises shall be determined by Landlord's architect upon
completion of construction of the Building using current applicable BOMA
standards.
(b) The Lease term shall be 132 months, beginning on the Commencement
Date (defined below) (the "Term", which defined term shall include all renewals
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and extensions of the Term); however, if the Commencement Date is not the first
day of a calendar month, then the Term shall end on the last day of the 132-
month period that begins with the first day of the first full calendar month of
the Term. The "Commencement Date" shall be the date which is 60 days following
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the date on which the Premises are tendered to Tenant, which shall be the date
of substantial completion of the construction of the Building by Landlord (as
defined in Exhibit B hereto). Tenant shall execute and deliver to Landlord,
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within ten days after Landlord has requested same, a letter confirming (1) the
Commencement Date, (2) that Tenant has accepted the Premises, subject to
Landlord's obligations to complete "punchlist" items following substantial
completion of construction of the Building, and (3) that Landlord has performed
all of its obligations with respect to the Premises.
2. BASE RENT, SECURITY DEPOSIT AND ADDITIONAL RENT.
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(a) Tenant shall pay to Landlord "Base Rent", in advance, without
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demand, deduction or set off, equal to the following amounts for the following
months of the Term:
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Monthly Base Rent
(subject to verification
Annual Base Rent of net rentable area, as
Rate Per Rentable set forth in Section
Time Period Square Foot 1.(a) above)
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Months 1 through 12 $12.00 $100,000.00
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Months 13 through 24 $16.32 $136,000.00
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Months 25 through 36 $16.65 $138,750.00
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Months 37 through 48 $16.98 $141,500.00
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Months 49 through 60 $17.31 $144,250.00
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Months 61 through 72 $17.64 $147,000.00
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Months 73 through 84 $17.97 $149,750.00
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Months 85 through 96 $18.30 $152,500.00
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Months 97 through 108 $18.83 $156,916.67
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Months 109 through 120 $19.36 $161,333.33
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Months 121 through the expiration date $19.89 $165,750.00
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The first monthly installment of Base Rent, plus the other monthly charges set
forth in Section 2.(c), shall be due on the Commencement Date; thereafter,
monthly installments of Base Rent shall be due on the first day of each calendar
month following the Commencement Date. If the Term begins on a day other than
the first day of a month or ends on a day other than the last day of a month,
the Base Rent and additional rent for such partial month shall be prorated.
(b) Tenant shall deposit with Landlord within five business days after
the date hereof, a Letter of Credit (defined below) (the "Security Deposit"),
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which shall be held by Landlord to secure Tenant's obligations under this Lease
and under that certain Commercial Lease Agreement dated April 1, 1997 between
CrowInvest I, L.P., as Landlord (as assigned to Landlord hereunder) and Tenant
covering premises located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ (the "Original
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Lease"); however, the Security Deposit is not an advance rental deposit or a
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measure of Landlord's damages for an Event of Default (defined below). Landlord
may use any portion of the Security Deposit to satisfy Tenant's unperformed
obligations hereunder or under the Original Lease, without prejudice to any of
Landlord's other remedies. If so used, Tenant shall pay Landlord an amount that
will restore the Security Deposit to its original amount upon request. The
Security Deposit shall be Landlord's property. The unused portion of the
Security Deposit will be returned to Tenant within 45 days after the end of the
Term, provided that Tenant has fully and timely performed its obligations
hereunder throughout the Term.
As used herein, "Letter of Credit" shall mean a standby, unconditional,
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irrevocable letter of credit in the initial face amount of $1,300,000, naming
Landlord as beneficiary issued by a bank or financial institution acceptable to
Landlord with banking offices (or providing for draws on a confirming bank with
offices) in Dallas,
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Texas, permitting partial draws thereon, and otherwise in form acceptable to
Landlord (including without limitation, provisions for drawing "on sight" only
and permitting assignment to any person or entity. Tenant shall from time to
time cause the Letter of Credit, if any, to be renewed no later than 60 days
prior to any expiration date thereof so that the Letter of Credit remains in
effect for 60 days after the scheduled expiration date of the Term or any
renewal Term; if Tenant fails timely to renew the Letter of Credit, then
Landlord shall have the right to draw thereon, and retain the amounts so drawn
as the Security Deposit. Landlord may draw upon the Letter of Credit and apply
the proceeds thereof to perform any of Tenant's unperformed obligations under
this Lease. After any such draw, Tenant shall pay to Landlord on demand the
amount so drawn to be held as part of the Security Deposit.
Notwithstanding the foregoing, the face amount of the Letter of Credit
required to be maintained hereunder shall be reduced to $650,000 upon the
satisfaction or occurrence, as the case may be, of the following:
(a) during the Term of this Lease,
(i) no Event of Default has occurred and is continuing under
either this Lease or the Original Lease, and Tenant has fully paid and performed
all of its obligations under both this Lease and the Original Lease for the same
twelve (12) consecutive month period; and
(ii) Tenant has an unencumbered cash balance of not less than
Ten Million and No/100 Dollars ($10,000,000) at the time it has satisfied the
other requirements of this Section 2(b); and
(iii) Tenant has a Tangible Net Worth (as defined in Section
14(c) hereof) of not less than Forty Million and No/100 Dollars ($40,000,000) at
the time it has satisfied the other requirements of this Section 2(b); and
(iv) Tenant currently occupies all of the Premises and no
portion thereof is subject to a sublease; and
(v) the amount of Tenant's outstanding indebtedness (which
shall not include trade payables or contingent liabilities with respect to lease
obligations) shall not exceed thirty percent (30%) of the value of Tenant's
assets (as Landlord shall verify by reviewing evidence thereof submitted by
Tenant); and
(vi) Tenant's Cash Flow shall equal or exceed twice the amount
of Tenant's monetary obligations under this Lease for the twelve (12) month
period following the date of satisfaction of the other requirements of this
Section 2(b); as used herein, "Cash Flow" shall mean all revenues, receipts and
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proceeds received by Tenant from its business operations less all costs incurred
in connection with Tenant's business operations which costs shall include,
without limitation, operating costs, capital expenditures, all interest paid on
loans to Tenant and other forms of indebtedness of Tenant and investments made
by Tenant (but excluding from such costs non-cash charges). Cash Flow shall be
computed on an accrual basis with respect to expenses only.
Tenant shall submit audited financial statements for its immediately
preceding fiscal year prepared in accordance with generally accepted accounting
principles to verify the satisfaction of the conditions set forth in clauses
(ii), (iii), (v) and (vi) hereof. Additionally, the requirement that Tenant
maintain the Letter of Credit shall be waived upon the satisfaction or
occurrence, as the case may be, of the following: (aa) the passage of forty-
five (45) days following the expiration of the Term of this Lease, or (bb) the
satisfaction of the conditions set forth in subparagraph (a), clauses (i)
through (vi) hereof in at least two (2) separate, consecutive fiscal years (and
the pertinent time periods shall be completely separate, consecutive and
distinct).
(c) Tenant shall pay, as additional rent, all costs incurred by
Landlord for the following expenses ("Pass-Through Expenses"): (1) the cost of
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insurance, to the extent paid by Landlord, including that portion of the
premiums under any blanket or umbrella insurance policy maintained and paid by
Landlord as may be reasonably allocated to the Premises by Landlord; and (2)
rents under Primary Leases (defined below), if any. Tenant shall pay all
insurance premiums in one installment in advance within ten days after Landlord
requests such payment. The initial monthly payments of Pass-Through Expenses
are based upon Landlord's estimate of the Pass-Through Expenses for the year in
question, and shall be increased or decreased annually to reflect the projected
actual Pass-Through Expenses for that year. If Tenant's total payments in
respect of Pass-Through Expenses for any year are less than the Pass-Through
Expenses for that year, Tenant shall pay the difference to Landlord within ten
days after Landlord's request therefor; if such payments are more than such
Pass-Through Expenses, Landlord shall retain such excess and credit it against
Tenant's future annual payments. The amounts of the initial monthly
installments of Base Rent and Pass-Through Expenses are as follows:
Base Rent.................................... $100,000.00
Pass-Through Expenses........................ $ 0.00*
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Total initial monthly pay ment............... $100,000.00
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*This estimate assumes that the insurance expenses described above have already
been paid by Tenant to reimburse Landlord for the cost of a lump sum annual
insurance installment payment.
(d) If any payment required of Tenant under this Lease is not paid
when due and Tenant fails to pay such amount within five days after Landlord
delivers to Tenant written notice thereof, then Landlord may charge Tenant a fee
equal to 5% of the delinquent payment to reimburse Landlord for its cost and
inconvenience incurred as a consequence of Tenant's delinquency; however, if
during the 12-month period preceding any such delinquent payment, Landlord has
twice delivered to Tenant written notice that Tenant has failed to pay rent when
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due, then Landlord may charge Tenant such 5% fee for the delinquent payment in
question when such payment is past due without first delivering to Tenant
written notice thereof.
(e) All payments and reimbursements required to be made by Tenant
under this Lease shall constitute "rent" (herein so called).
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3. TAXES.
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(a) Tenant shall pay all taxes, assessments and governmental charges
whether federal, state, county, or municipal and whether they are imposed by
taxing or management districts or authorities presently existing or hereafter
created and all dues, assessment and other charges applicable to the Premises
payable to any property or community owner association under restrictive
covenants or deed restrictions encumbering the Premises (collectively, "Taxes")
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that accrue against the Premises and deliver to Landlord receipts from the
applicable taxing authority or other evidence acceptable to Landlord to verify
the payment thereof at least ten days before such Taxes become delinquent. If,
during the Term, there is levied, assessed or imposed on Landlord a capital levy
or other tax directly on the rent or a franchise tax, assessment, levy or charge
measured by or based, in whole or in part, upon rent, then all such taxes,
assessments, levies or charges, or the part thereof so measured or based, shall
be included within the term "Taxes".
(b) Tenant may, at its expense, contest the validity or amount of any
Taxes in accordance with Law, in which event the obligation to pay such amount
under this Lease shall be deferred during the pendency of such contest, if
diligently prosecuted. Within 15 days before any contested Taxes become due,
Tenant shall deposit with Landlord an amount equal to the amount payable for
such contested Taxes for the preceding Tax year (together with any interest,
fees, and penalties that may accrue during any such contest), which amount shall
be applied to the payment of the contested Taxes when the amount thereof shall
be finally determined, with Tenant paying any unpaid portion of the amount of
the contested Taxes (together with interest, fees, and penalties that may accrue
thereon). Nothing herein, however, shall permit any Taxes to remain unpaid for
any interval that would permit the Premises, or any part thereof, to be sold or
seized by any governmental authority for the nonpayment of Taxes. If at any
time, in the reasonable judgment of Landlord, it shall become necessary to do
so, Landlord may, after written notice to Tenant, under protest, if so requested
by Tenant, apply the amounts so deposited or so much thereof as may be required
to prevent a sale or seizure of the Premises or foreclosure of any lien created
thereon to secure payment of such unpaid Taxes. Tenant shall pay all penalties,
interest, and fees assessed because of Tenant's failure to pay Taxes when due,
and Tenant shall indemnify, defend, and hold harmless Landlord from and against
any costs, liability, or damage incurred by Landlord arising out of or
attributable to Tenant's failure to pay Taxes when due. If required by Law,
Landlord shall join in any contest proceedings brought by Tenant, at Tenant's
expense.
(c) If Tenant fails timely to deliver evidence of the payment of the
amounts required to be paid by Tenant under this Section 3, then Landlord may
pay such amounts, in which case, Tenant shall reimburse to Landlord all amounts
so paid within ten days after Landlord delivers to Tenant written notice
thereof.
(d) If any Landlord's Mortgagee requires that Landlord establish an
escrow for the payment of Taxes or if an Event of Default occurs, then Tenant
shall pay to Landlord a sum equal to 1/12th of the annual Taxes payable under
this Lease on the first day of each month during the Term. Landlord shall hold
such payments in a non-interest bearing account. All such monthly payments of
Taxes shall be based on Landlord's reasonable estimate of the Taxes due for the
year in question, and any deficiency of funds in the escrow account shall be
paid by Tenant to Landlord upon demand. If an Event of Default occurs, Landlord
may apply any funds in the escrow account to the satisfaction of any unperformed
obligation of Tenant under this Lease.
4. NET LEASE. This Lease is intended to be an absolutely net lease;
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accordingly, except as provided in Section 5.(b), Landlord shall not be required
to maintain, repair or perform any other obligations with respect to the
Premises. Except as provided in Section 15 hereof, Tenant's obligation to pay
rent hereunder shall be absolute and net of all expenses incurred in connection
with the operation, maintenance, ownership and management of the Premises.
5. TENANT'S AND LANDLORD'S MAINTENANCE AND REPAIR OBLIGATIONS.
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(a) Tenant's Obligations. Except as provided in Section 5.(b), Tenant
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shall maintain all parts of the Premises including the Building's roof and
structural elements, all mechanical, electrical, plumbing, and lighting systems
and equipment, and skylights, windows, plate glass, doors, and partitions in
good condition and promptly make all necessary repairs and replacements to the
Premises. If any portion of the Premises cannot be fully repaired or restored,
then Tenant shall promptly replace such portion of the Premises, regardless of
whether the benefit of such replacement extends beyond the Term. Without
limiting the generality of the foregoing, Tenant shall perform the following
obligations:
(1) Tenant shall maintain the parking areas, driveways, alleys,
landscaping and grounds surrounding the Premises in a clean and
sanitary condition, consistent with the operation of a first-class
office/warehouse building, including prompt maintenance, repairs and
replacements of (A) the exterior of the Building (including painting),
(B) sprinkler systems and sewage lines, (C) pavement, curbs, and
sidewalks, and (D) any other items normally associated with the
foregoing.
(2) Tenant shall maintain the hot water equipment and the
heating, air condition, and ventilation equipment and system (the
"HVAC System"), in good repair and condition and in
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accordance with Law and with such equipment manufacturers' suggested
operation/maintenance service program; such obligation shall include
replacement of all equipment necessary to maintain such equipment and
system in good working order. Within ten business days after the
Commencement Date, Tenant shall enter into regularly scheduled
preventive maintenance/service contracts for such equipment, each in
form and substance and with a contractor reasonably acceptable to
Landlord, and deliver copies thereof to Landlord. At least 14 days
before the end of the Term, Tenant shall deliver to Landlord a
certificate from an engineer reasonably acceptable to Landlord
certifying that the hot water equipment and the HVAC System are then
in good repair and working order.
(b) Landlord's Obligations. Landlord's maintenance obligations are
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limited solely to the maintenance of the foundation piers and structural members
of the exterior walls and replacement of the roof if same is damaged; however,
Landlord shall not be responsible (1) for any such work until Tenant delivers to
Landlord written notice of the need therefor, (2) for alternations to such items
required by Law because of Tenant's use of the Premises (which alterations shall
be performed by Tenant), or (3) for damage caused to such items by a Tenant
Party. Landlord's liability for any such items shall be limited to the cost of
performing such work.
6. ALTERATIONS.
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(a) General. Tenant shall not make any alterations, additions or
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improvements to the Premises which affect the Building's Structure (defined
below) without the prior written consent of Landlord. Landlord shall not be
required to notify Tenant of whether it consents to any such alteration,
addition or improvements until it (1) has received plans and specifications
therefor which are sufficiently detailed to allow construction of the work
depicted thereon to be performed in a good and workmanlike manner and (2) has
had a reasonable opportunity to review them. If the alteration, addition or
improvement will affect the Building's roof, foundation and structural elements
(the roof, foundation, and structural elements being herein collectively called
the "Building's Structure"), HVAC System, or mechanical, electrical, or plumbing
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systems, then the plans and specifications therefor must be prepared by a
licensed engineer reasonably acceptable to Landlord. Landlord's approval of any
plans and specifications shall not be a representation that the plans or the
work depicted thereon will comply with Law or be adequate for any purpose, but
shall merely be Landlord's consent to performance of the work. Upon completion
of any alteration, addition, or improvement, Tenant shall deliver to Landlord
accurate, reproducible as-built plans therefor. Tenant may erect shelves, bins,
machinery and trade fixtures provided that such items (A) do not alter the basic
character of the Premises; (B) do not overload or damage the Premises; and (C)
may be removed without damage to the Premises. Unless Landlord specifies in
writing otherwise, all alterations, additions, improvements, and fixtures shall
be Landlord's property when installed in the Premises, except for furniture and
equipment of Tenant which is not affixed to the Premises so as to become a
fixture (i.e., unattached items and items which are temporarily attached by
bolts and screws, but not items which are built-in or incorporated into the
Building or the electrical, plumbing, or mechanical systems therein). All work
performed by a Tenant Party in the Premises (including that relating to the
installations, repair, replacement, or removal of any item) shall be performed
in accordance with Law and with Landlord's specifications and requirements, in a
good and workmanlike manner, and so as not to damage or alter the Building's
Structure or the Premises.
(b) Tenant Improvements. Following the date on which Landlord has
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tendered the Premises to Tenant (which shall be upon substantial completion of
Landlord's construction of the Building), the tenant improvements (the
"Improvements") shall be constructed at Tenant's expense, except as provided
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below.
(1) Tenant shall bear the entire cost of performing the Work (defined
below) relating to the Improvements (including, without limitation, design
of the Improvements and preparation of the Working Drawings, costs of
construction labor and materials, electrical usage during construction,
additional janitorial services, general tenant signage, related taxes and
insurance costs relating thereto, all of which costs are herein
collectively called the "Total Construction Costs") in excess of the
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Construction Allowance. Upon approval of the Working Drawings for the
Improvements and selection of a contractor, Tenant shall promptly execute a
work order agreement prepared by Landlord which identifies such drawings,
itemizes the Total Construction Costs and sets forth the Construction
Allowance.
(2) Provided no Event of Default exists, Landlord shall provide to
Tenant a construction allowance for the Improvements (the "Construction
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Allowance") equal to the lesser of (A) the Total Construction Costs
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incurred for the Improvements or (B) the product of $15.00 times the actual
rentable area of the Premises (as determined by Landlord's architect
pursuant to Section 1.(a)). To the extent Tenant is entitled to receive
such allowance, the construction allowance shall be disbursed in monthly
advances based on the costs of the work incurred. Tenant shall submit to
Landlord (but not more frequently than once per month) construction
allowance requests accompanied by all invoices from contractors,
subcontractors, and suppliers evidencing the cost of performing the Work
for which the request is being submitted, together with lien waivers from
such parties. Provided that no Event of Default exists, Landlord shall
make advances of the construction allowances within ten days after its
receipt of the advance request accompanied by the appropriate
documentation; however, the final draw of the Construction Allowance, which
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shall not be less than 10% of the amount of such allowance, shall not be
disbursed until Landlord has received final lien waivers from all persons
performing work or supplying materials for the Improvements and a
certificate of occupancy from the appropriate governmental authority, if
applicable to the Work for the Improvements, or, if applicable, evidence of
governmental inspection and approval of the Work for the Improvements.
Tenant shall have the right to apply any unused portion of the Construction
Allowance toward other non-specific improvements relating to the finish-out
of the Premises.
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If Landlord constructs the Improvements on behalf of Tenant, then
all costs relating to the construction thereof and of other improvements
requested by Tenant such as a skybridge, energy management system and
monument sign, in excess of the Construction Allowance shall be payable to
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Landlord as additional rent, and such excess amount shall be amortized on a
monthly basis over the Term using an interest rate of eleven percent (11%).
Such excess amount shall not be greater than $500,000; however, such other
improvements which are not essentially "building standard" in nature (such
as those set forth in this paragraph) shall not exceed the sum of $300,000.
7. SIGNS.
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(a) Subject to Section 7.(b), Tenant shall not place, install or
attach any signage, decorations, advertising media, blinds, draperies, or window
treatments which can be viewed from outside the Building, or bars, or security
installations to the Premises or the Building without Landlord's prior written
approval. Tenant shall repair, paint, and/or replace any portion of the
Premises or the Building damaged or altered as a result of its signage when it
is removed (including, without limitation, any discoloration of the Building).
Subject to Section 7.(b), Tenant shall not (1) make any changes to the exterior
of the Premises or the Building, (2) install any exterior lights, decorations,
balloons, flags, pennants, banners or paintings, or (3) erect or install any
signs, windows or door lettering, decals, window or storefront stickers,
placards, decorations or advertising media of any type that is visible from the
exterior of the Premises without Landlord's prior written consent. Landlord
shall not be required to notify Tenant of whether it consents to any sign until
it (A) has received detailed, to-scale drawings thereof specifying design,
material composition, color scheme, and method of installation, and (B) has had
a reasonable opportunity to review them.
(b) If (1) Tenant or its Affiliates are occupying the entire Premises,
and (2) Tenant's right to possess the Premises or this Lease has not been
terminated (collectively, the "Sign Conditions"), then Tenant may, at its risk
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and expense place Tenant's sign panel (the "Tenant Panel") on the Building's
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existing monument sign (the "Monument Sign"). The location, design, size, color
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and material composition of the Tenant Panel must be reasonably acceptable to
Landlord. If Landlord grants its approval, Tenant shall install the Tenant
Panel and maintain the Tenant Panel in a good, clean and safe condition and in
accordance with all Laws, including the payment of all fees in connection
therewith (the "Sign Requirements"). If either of the Sign Conditions are not
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satisfied, Tenant shall remove the Tenant Panel upon Landlord's written demand
therefor and Tenant's rights under this Section 7.(b) shall terminate. If
Tenant fails to so remove the Tenant Panel within 10 days after Landlord's
written request, Landlord may, at Tenant's expense, remove and dispose of the
Tenant Panel in any manner it deems appropriate, all without compensation to
Tenant. After the end of the Term or after Tenant's right to possess the
Premises has been terminated, Landlord may require that Tenant remove the Tenant
Panel by delivering to Tenant written notice thereof within 30 days after the
end of the Term. If Landlord so requests, Tenant shall remove the Tenant Panel
and repair all damage caused thereby, within ten days after Landlord's request
therefor (reasonable wear and tear and damage by fire or other casualty
excepted). If Tenant fails to timely do so, Landlord may, without compensation
to Tenant, (1) use the Tenant Panel or (2) at Tenant's expense, remove the
Tenant Panel, perform the related restoration and repair work and dispose of the
Tenant Panel in any manner Landlord deems appropriate. Tenant shall defend,
indemnify, and hold harmless Landlord from all losses, claims, costs and
liabilities arising in connection with or relating to the installation,
maintenance, use, or removal of the Tenant Panel, excluding those arising from
----------------------------
Landlord's negligence. The rights granted to Tenant under this Section 7.(b)
---------------------
may not be assigned to any party, other than in connection with a Permitted
Transfer of the entire Premises.
8. UTILITIES. Tenant shall obtain and pay for all water, gas,
---------
electricity, heat, telephone, sewer, sprinkler charges and other utilities and
services used at the Premises, together with any taxes, penalties, surcharges,
maintenance charges, and the like pertaining to the Tenant's use of the
Premises. Landlord shall not be liable for any interruption or failure of
utility service to the Premises. If Tenant fails to pay any such amounts when
due, Landlord may do so, in which case, Tenant shall reimburse Landlord for all
amounts paid by Landlord within ten days after Landlord's request therefor.
Landlord will cooperate with Tenant in obtaining the most favorable rates for
utilities available in the area commonly known as the Legacy Business Park.
9. INSURANCE. Tenant shall maintain (1) workers' compensation insurance
---------
(with a waiver of subrogation endorsement reasonably acceptable to Landlord) and
commercial general liability insurance (with contractual liability endorsement),
including personal injury and property damage in the amount of $1,000,000 per
occurrence combined single limit for personal injuries and death of persons and
property damage occurring in or about the Premises, plus umbrella liability
coverage of at least $2,000,000 per occurrence, (2) fire and extended coverage
insurance covering (A) the replacement cost of all alterations, additions,
partitions and improvements installed in the Premises, (B) the replacement cost
of all of Tenant's personal property in the Premises, and (C) loss of profits in
the event of an insured peril damaging the Premises, and (3) such other
insurance as Landlord may reasonably require. Such policies shall (i) name
Landlord, Landlord's agents, Landlord's Mortgagee's and their respective
Affiliates (defined below), as additional insureds (and as loss payees on the
fire and extended coverage insurance), (ii) be issued by an insurance company
acceptable to Landlord, (iii) provide that such insurance may not be canceled
unless 30-days' prior written notice is first given to Landlord and Landlord's
Mortgagee, (iv) be delivered to Landlord by Tenant before the Commencement Date
and at least 15 days before each renewal thereof, and (v) provide primary
coverage to Landlord when any policy issued to Landlord is similar or duplicate
in coverage, in which case Landlord's policy shall be excess over Tenant's
policies.
10. DESTRUCTION OF OR DAMAGE TO PROPERTY.
------------------------------------
(a) Tenant shall notify Landlord in writing immediately upon the
occurrence of any damage (a "Casualty") to the Premises. In no event shall rent
--------
▇▇▇▇▇, nor shall this Lease terminate, because of a Casualty, except as provided
below. If a material portion of the Premises is damaged or destroyed and (1)
cannot be rebuilt
5
and repaired due to applicable Law or (2) if a Casualty occurs during the last
12 months of the Term and such damage cannot be repaired within 30 days after
such Casualty and Tenant has not elected to extend the Term as provided in
Exhibit D, then Landlord or (if a Tenant Party did not cause such Casualty)
---------
Tenant may terminate this Lease by delivering to the other written notice
thereof within 30 days after such Casualty, in which case, the rent shall be
abated during the unexpired portion of the Term effective upon the date the
Casualty occurred. Time is of the essence with respect to the delivery of such
notices.
(b) Subject to Section 10.(c), if this Lease is not terminated under
Section 10.(a), then subject to Tenant's payment to Landlord of any deductible
amounts relating to the insurance coverage for such Casualty, Landlord shall
restore the Premises to substantially the same or better condition as existed
before the occurrence of such Casualty, except that Landlord shall not be
required to rebuild, repair, or replace any part of the partitions, fixtures,
additions and other improvements or personal property required to be covered by
Tenant's insurance under Section 9, and this Lease shall remain in effect.
Tenant's obligations to pay rent shall be abated while the Premises are
untenantable, but only to the extent of the rent-loss insurance received by
Landlord in connection with such Casualty.
(c) If the Premises are destroyed or substantially damaged by any
peril not covered by the insurance maintained by Landlord, or any Landlord's
Mortgagee (defined below) requires that insurance proceeds be applied to the
indebtedness secured by its Mortgage (defined below) obligations, Landlord may
terminate this Lease by delivering written notice of termination to Tenant
within 30 days after such destruction or damage or such requirement is made
known by any such Landlord's Mortgagee, as applicable, whereupon all rights and
obligations hereunder shall cease and terminate, except for any liabilities of
Tenant which accrued before this Lease is terminated.
11. LIABILITY, INDEMNIFICATION, WAIVER OF SUBROGATION AND NEGLIGENCE
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CLAIMS.
------
(a) Subject to Section 11.(b), Tenant shall indemnify, defend, and
hold harmless Landlord, its successors, assigns, agents, employees, contractors,
partners, directors, officers and Affiliates (collectively, the "Indemnified
-----------
Parties") from and against all fines, suits, losses, costs, liabilities, claims,
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demands, actions and judgments of every kind or character (1) arising from
Tenant's failure to perform its covenants hereunder, (2) recovered from or
asserted against any of the Indemnified Parties on account of any Loss (defined
below) to the extent that any such Loss directly or indirectly relates to or is
caused by the actions or omissions of a Tenant Party or any other person
entering upon the Premises under or with a Tenant Party's express or implied
invitation or permission, or (3) arising from or out of the occupancy or use by
a Tenant Party or arising from or out of any occurrence in the Premises;
provided, however, nothing contained herein shall obligate Tenant to indemnify
Landlord for any Losses caused in whole or in part by any Indemnified Party's
gross negligence or willful misconduct.
(b) Landlord shall not be liable to Tenant or those claiming by,
through, or under Tenant for any injury to or death of any person or persons or
the damage to or theft, destruction, loss, or loss of use of any property or
inconvenience (a "Loss") caused by casualty, theft, fire, third parties, or any
----
other matter (including Losses arising through repair or alteration of any part
of the Building, or failure to make repairs, or from any other cause),
regardless of whether the negligence of either party caused such Loss in whole
------------------------------------------------------------------------------
or in part. Each of Landlord and Tenant waives any claim it might have against
----------
the other for any damage to or theft, destruction, loss, or loss of use of any
property, to the extent the same is insured against under any insurance policy
maintained by it that covers the Premises, Landlord's or Tenant's fixtures,
personal property, leasehold improvements, or business, or is required to be
insured against by it under the terms hereof, regardless of whether the
-------------------------
negligence or fault of the other party caused such loss; however, Landlord's
-------------------------------------------------------
waiver shall be inapplicable to any deductible amount maintained under
Landlord's insurance policies.
12. USE.
---
(a) The Premises shall be used only for general office use and for
receiving, storing, shipping and selling products, materials and merchandise
made or distributed by Tenant and for such other lawful purposes as may be
incidental thereto (the "Permitted Use"); however, no store-front retail sales
-------------
may be made from the Premises. Tenant may not use any part of the Premises for
any use other than office use without Landlord's consent, which shall not be
unreasonably withheld. Tenant shall not use the Premises to receive, store or
handle any product, material or merchandise that is explosive or highly
inflammable or hazardous, except in compliance with all applicable Laws and in
accordance with Section 25. Outside storage is prohibited. Tenant shall be
solely responsible for complying with all Laws applicable to the use, occupancy,
and condition of the Premises. Tenant shall not permit any objectionable or
unpleasant odors, smoke, dust, gas, light, noise or vibrations to emanate from
the Premises; nor take any other action that would constitute a nuisance or
would disturb, unreasonably interfere with, or endanger Landlord or any other
person; nor permit the Premises to be used for any purpose or in any manner that
would (1) void the insurance thereon, (2) increase the insurance risk, or (3)
cause the disallowance of any sprinkler credits. Tenant shall pay to Landlord
on demand any increase in the cost of any insurance on the Premises incurred by
Landlord, which is caused by Tenant's use of the Premises or because Tenant
vacates the Premises.
(b) Tenant and its employees and invitees may use the parking areas
described in Exhibit E. Landlord shall not be responsible for enforcing
---------
Tenant's parking rights against third parties.
(c) Notwithstanding anything in this Lease to the contrary, as between
Landlord and Tenant, Tenant shall bear the risk of complying with Title III of
the Americans with Disabilities Act of 1990, the Texas Elimination of
Architectural Barriers Act, and all rules, regulations, and guidelines
promulgated under either of such
6
acts, as they may be amended from time to time (collectively, the "Disabilities
------------
Acts"), in the Premises. However, Landlord warrants that the Building shell
----
shall be in compliance with the Disabilities Acts and other applicable laws as
of the Commencement Date.
13. INSPECTION. Upon twenty-four (24) hours prior written or oral
----------
notice to Tenant (except in the event of an emergency, in which case no such
notice is required), Landlord and Landlord's agents and representatives may
enter the Premises during business hours to inspect the Premises; to make such
repairs as may be required or permitted under this Lease; to perform any
unperformed obligations of Tenant hereunder; and to show the Premises to
prospective purchasers, mortgagees, ground lessors, and (during the last 9
months of the Term) tenants. During the last 9 months of the Term, Landlord may
erect a sign reasonably acceptable to Landlord and Tenant on the Premises
indicating that the Premises are available and, if applicable, that Tenant is
relocating. Tenant shall notify Landlord in writing of its intention to vacate
the Premises at least 60 days before Tenant will vacate the Premises; such
notice shall specify the date on which Tenant intends to vacate the Premises
(the "Vacation Date"). At least 30 days before the Vacation Date, Tenant shall
-------------
arrange to meet with Landlord for a joint inspection of the Premises. After
such inspection, Landlord shall prepare a list of items that Tenant must perform
before the Vacation Date to substantially restore the Premises to the condition
required in Section 16. If Tenant fails to arrange for such inspection, then
Landlord may conduct such inspection and Landlord's determination of the work
Tenant is required to perform before the Vacation Date shall be conclusive. If
Tenant fails to perform such work before the Vacation Date, then Landlord may
perform such work at Tenant's cost. Tenant shall pay all costs incurred by
Landlord in performing such work within ten days after Landlord's request
therefor.
14. ASSIGNMENT AND SUBLETTING.
-------------------------
(a) Except as provided below, Tenant shall not, without the prior
written consent of Landlord, (1) assign, transfer, or encumber this Lease or any
estate or interest herein, whether directly or by operation of law, (2) permit
any other entity to become Tenant hereunder by merger, consolidation, or other
reorganization, except as provided in Section 14.(c), (3) if Tenant is an entity
other than a corporation whose stock is publicly traded, permit the transfer of
more than 50% of the ownership interest in Tenant, (4) grant any license,
concession, or other right of occupancy of any portion of the Premises, or (5)
permit the use of the Premises by any parties other than Tenant (any of the
events listed in Sections 14.(a)(1) through 14.(a)(5) being a "Transfer"). If
--------
Tenant requests Landlord's consent to a Transfer, then Tenant shall provide
Landlord with a written description of all terms and conditions of the proposed
Transfer, copies of the proposed documentation, and the following information
about the proposed transferee: name and address; reasonably satisfactory
information about its business and business history; its proposed use of the
Premises; banking, financial, and other credit information; and general
references sufficient to enable Landlord to determine the proposed transferee's
creditworthiness and character. Tenant shall reimburse Landlord for its
reasonable attorneys' fees and other expenses incurred in connection with
considering any request for its consent to a Transfer. Landlord shall, within
fifteen (15) days of receipt of such information from Tenant, approve such
Transfer or notify Tenant in writing of Landlord's reason for not approving such
proposed Transfer. Landlord will use commercially reasonable efforts to obtain
the consent of Landlord's Mortgagee to any proposed assignee or subtenant of
which Landlord approves. If Landlord fails to so notify Tenant within such
period, then the proposed Transfer shall be deemed disapproved. If Landlord
consents to a proposed Transfer, then the proposed transferee shall deliver to
Landlord a written agreement whereby it expressly assumes the Tenant's
obligations hereunder (however, any transferee of less than all of the space in
the Premises shall be liable only for obligations under this Lease that are
properly allocable to the space subject to the Transfer, and only to the extent
of the rent it has agreed to pay Tenant therefor). No Transfer or Permitted
Transfer shall release Tenant from performing the obligations of the "Tenant"
under this Lease, but rather Tenant and its transferee shall be jointly and
severally liable therefor. Landlord's consent to any Transfer shall not waive
Landlord's rights as to any subsequent Transfers. If an Event of Default occurs
while the Premises or any part thereof are subject to a Transfer, then Landlord,
in addition to its other remedies, may collect directly from such transferee all
rents becoming due to Tenant and apply such rents against Tenant's rent
obligations. Tenant authorizes its transferees to make payments of rent
directly to Landlord upon receipt of notice from Landlord to do so.
(b) Tenant hereby assigns, transfers and conveys all consideration
(less reasonable costs and expenses actually incurred by Tenant directly
relating to such Transfer) received by Tenant under any Transfer, which are in
excess of the rents payable by Tenant under this Lease, and Tenant shall hold
such amounts in trust for Landlord and pay them to Landlord within ten days
after receipt.
(c) Notwithstanding the foregoing, Tenant may Transfer all or part of
its interest in this Lease or all or part of the Premises to the following types
of entities (a "Permitted Transferee") without the written consent of Landlord
--------------------
(a "Permitted Transfer"), provided that the conditions set forth below are
------------------
satisfied:
(1) an Affiliate of Tenant (as defined in Section 23);
(2) any corporation in which or with which Tenant, or its
corporate successors or assigns, is merged or consolidated, in
accordance with applicable statutory provisions governing merger and
consolidation of corporations, or any transfer of more than fifty
percent (50%) of the ownership interest in Tenant, so long as (A)
Tenant's obligations hereunder are assumed by the corporation or other
entity surviving such merger or transfer of interest or created by
such consolidation or transfer of interest; (B) the Tangible Net Worth
of the surviving or created corporation or other entity is not less
than the Tangible Net Worth of Tenant as of the date hereof; and (C)
the combined gross revenues of Tenant and the other corporation or
other form of transferee for the preceding 12-month period exceeded
$25,000,000 and the combined net income of Tenant and the other
corporation or other form of transferee before taxes for the
7
preceding 12-month period exceeding $1,300,000, as verified by the
audited financial statement of Tenant and such other corporation or
other form of transferee delivered to Landlord; or
(3) any corporation acquiring all or substantially all of
Tenant's assets, if (A) such corporation's Tangible Net Worth after
such acquisition is not less than the Tangible Net Worth of Tenant as
of the date hereof, and (B) such corporation has gross revenues for
the preceding 12-month period exceeding $25,000,000 and has net income
before taxes for the preceding 12-month period exceeding $1,300,000,
as verified by the acquiring corporation's audited financial
statements delivered to Landlord.
Tenant shall promptly notify Landlord of any such Permitted Transfer. As a
condition precedent to any Permitted Transfer, the proposed Permitted Transferee
must deliver to Landlord a written agreement whereby it expressly assumes the
Tenant's obligations hereunder. As used herein, "Tangible Net Worth" shall mean
------------------
the excess of total assets over total liabilities (in each case, determined in
accordance with GAAP) excluding from the determination of total assets all
assets which would be classified as intangible assets under GAAP, including,
without limitation, goodwill, licenses, patents, trademarks, trade names,
copyrights, and franchises. Any subsequent Transfer by a Permitted Transferee
shall be subject to Landlord's prior written consent (which Landlord may grant
or deny in its sole discretion). Notwithstanding any assignment or subletting,
Tenant shall at all times remain fully responsible and liable for the payment of
the rent and for compliance with all of Tenant's other obligations under this
Lease (regardless of whether Landlords' approval has been obtained for any such
assignments or sublettings).
(d) With respect to any written request by Tenant to Landlord for
Landlord's consent to a Transfer (other than a Permitted Transfer), Landlord
may, within 30 days after submission of such request, cancel this Lease (or, as
to a subletting or assignment, cancel as to the portion of the Premises proposed
to be sublet or assigned) as of the date of the proposed Transfer was to be
effective. If, pursuant to the exercise of this right, Landlord cancels this
Lease as to any portion of the Premises, then this Lease shall cease for such
portion of the Premises and Tenant shall pay to Landlord all rent accrued
through the cancellation date relating to the portion of the Premises covered by
the proposed Transfer. Thereafter, Landlord may lease such portion of the
Premises to the prospective transferee (or to any other person) without
liability to Tenant. Notwithstanding the foregoing, Landlord shall not have the
right to cancel this Lease with respect to the portion of space proposed to be
leased under the first two Qualifying Subleases (as defined herein) presented to
Landlord for its consent during the primary term of this Lease. A "Qualifying
----------
Sublease" shall mean a sublease for a portion of the Premises to a person or
--------
entity provided that the aggregate sublease space at any given time does not
exceed fifty percent (50%) of the rentable area of the Premises and the duration
of the primary term of such sublease does not exceed three (3) years in the
aggregate.
(e) Tenant shall have the right to sublease all or any part of the
Premises with the prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, Tenant shall
have the right to sublease all or any part of the Premises to an Affiliate
without the prior written consent of Landlord if such Affiliate's use of the
Premises will be substantially similar to Tenant's use thereof. Landlord shall
have the right to withhold its consent to any proposed sublease to a non-
Affiliate unless such proposed sublease is for at least 25,000 contiguous
rentable square feet within the Premises.
15. CONDEMNATION. If a material portion of the Premises is permanently
------------
taken for any public or quasi-public use by right of eminent domain or private
purchase in lieu thereof (a "Taking"), and the Taking prevents or materially
------
interferes with the use of the remainder of the Premises for the purpose for
which they were leased to Tenant, either party may terminate this Lease by
delivering to the other written notice thereof within 30 days after the Taking,
in which case rent shall be abated during the unexpired portion of the Term,
effective on the date of such Taking. If the permanent Taking does not prevent
or materially interfere with the use of the Premises for the purpose for which
they were leased to Tenant, then neither party may terminate this Lease, but the
rent payable during the unexpired portion of the Term shall be reduced to such
extent as may be fair and reasonable under the circumstances, and Landlord shall
repair any damage to the Premises caused by the Taking, to the extent of the
award actually received by Landlord (less than the cost incurred in connection
with the receiving of such award and any amounts payable to a Landlord's
Mortgagee). All compensation awarded for any Taking shall be the property of
Landlord and Tenant assigns any interest it may have in any such award to
Landlord; however, Landlord shall have no interest in any award made to Tenant
for loss of business or goodwill or for the taking of Tenant's property, if a
separate award for such items is made to Tenant. If a Taking occurs which is
not permanent in nature, then Tenant shall continue to pay rent hereunder
without abatement and all condemnation awards payable in respect of the Premises
for the portion of such Taking during the Term shall be payable to Tenant, and
the remainder of such award shall be payable to Landlord.
16. SURRENDER OF PREMISES; HOLDING OVER.
-----------------------------------
(a) No act by Landlord shall be an acceptance of a surrender of the
Premises, and no agreement to accept a surrender of the Premises shall be valid
unless it is in writing and signed by Landlord. At the end of the Term or the
termination of Tenant's right to possess the Premises, Tenant shall (1) deliver
to Landlord the Premises with all improvements located thereon in good repair
and condition, reasonable wear and tear (subject however to Tenant's maintenance
obligations) excepted, and with the HVAC System, and the plumbing, mechanical,
and electrical systems and equipment (including hot water equipment), light and
light fixtures (including ballasts), overhead doors and related equipment, and
roof in good working order, condition and repair, (2) deliver to Landlord all
keys to the Premises, and (3) remove all signage placed on the Premises by or at
Tenant's request. All fixtures, alterations, additions, and improvements
(whether temporary or permanent) shall be Landlord's property and shall remain
on the Premises except as provided in the next two sentences. Tenant may remove
all of Tenant's furniture and equipment which is not affixed to the Premises so
as to become a fixture (i.e, unattached items and items which
8
are temporarily attached by bolts and screws, but not items which are built-in
or incorporated into the Building or the electrical, plumbing, or mechanical
systems therein), but Tenant shall not remove any such item which was paid for,
in whole or in part, by Landlord. Additionally, Tenant shall remove such
alterations, additions, improvements, fixtures, equipment, wiring, furniture,
and other property to the extent that such items were constructed or installed
by or under the direction of a Tenant Party as Landlord may request, provided
such request is made within 30 days after the end of the Term, unless Landlord
has specifically agreed in writing that such items need not be so removed. All
items not so removed shall, at the option of Landlord, be deemed abandoned by
Tenant and may be appropriated, sold, stored, destroyed, or otherwise disposed
of by Landlord without notice to Tenant and without any obligation to account
for such items and Tenant shall pay for the costs incurred by Landlord in
connection therewith. All work required of Tenant under this Section 16.(a)
shall be coordinated with Landlord and be done in a good and workmanlike manner,
in accordance with all Laws, and so as not to damage the Building. Tenant shall,
at its expense, repair all damage caused by any work performed by Tenant under
this Section 16.(a).
(b) If Tenant fails to vacate the Premises at the end of the Term,
then Tenant shall be a Tenant at will and Tenant shall pay, in addition to the
other rent due hereunder, a daily base rental equal to 150% of the daily Base
Rent payable during the last month of the Term. Additionally, Tenant shall
defend, indemnify, and hold harmless Landlord from any damage, liability and
expense (including attorneys' fees and expenses) incurred because of such
holding over. No payments of money by Tenant to Landlord after the Term shall
reinstate, continue or extend the Term, and no extension of the Term shall be
valid unless it is in writing and signed by Landlord and Tenant.
17. QUIET ENJOYMENT. Provided Tenant has fully performed its
---------------
obligations under this Lease, Tenant shall peaceably and quietly hold and enjoy
the Premises for the Term, without hindrance from Landlord or any party claiming
by, through, or under Landlord, but not otherwise.
18. EVENTS OF DEFAULT. Each of the following events shall constitute an
-----------------
"Event of Default" under this Lease:
----------------
(a) Tenant fails to pay any rent when due and such failure continues
for a period of five (5) days from the date Landlord notifies Tenant in writing
of such failure.
(b) The filing of a petition by or against Tenant (1) in any
bankruptcy or other insolvency proceeding; (2) seeking in any relief under any
debtor relief Law; (3) for the appointment of a liquidator, receiver, trustee,
custodian, or similar official for all or substantially all of Tenant's property
or for Tenant's interest in this Lease; or (4) for reorganization or
modification of Tenant's capital structure (however, if any such petition is
filed against Tenant, then the filing of such petition shall not constitute an
Event of Default, unless it is not dismissed within 45 days after the filing
thereof).
(c) Tenant (1) vacates all or a substantial portion of the Premises
for a period of 90 days or (2) fails to continuously operate its business at the
Premises for the Permitted Use.
(d) Tenant fails to discharge any lien placed upon the Premises in
violation of Section 22 within ten (10) days after any such lien or encumbrance
is filed against the Premises.
(e) Tenant fails to comply with any term, provision or covenant of
this Lease (other than those listed in this Section 18), or in any other
agreement between Landlord and Tenant and such failure continues for 30 days
after Tenant commences to cure such default following written notice thereof to
Tenant and Tenant thereafter diligently pursues same to completion.
(f) Tenant fails to pay its obligations as they become due or Tenant
has defaulted under any agreement executed in connection with or evidencing
indebtedness of Tenant in excess of $100,000.
(g) An Event of Default has occurred under the Original Lease.
19. REMEDIES.
--------
(a) Upon any Event of Default, Landlord may, in addition to all other
rights and remedies afforded Landlord hereunder or by Law, take any of the
following actions:
(1) Terminate this Lease by giving Tenant written notice thereof,
in which event, Tenant shall pay to Landlord the sum of (A) all rent
accrued hereunder through the date of termination, (B) all amounts due
under Section 19.(b), and (C) an amount equal to (i) the total rent that
Tenant would have been required to pay for the remainder of the Term
discounted to present value at a per annum rate equal to the "Discount
Rate" as published on the date this Lease is terminated by The Wall Street
Journal, Southwest Edition, in its listing of "Money Rates," minus (ii) the
then present fair rental value of the Premises for such period, similarly
discounted; or
(2) Terminate Tenant's right to possess the Premises without
terminating this Lease by giving written notice thereof to Tenant, in which
event Tenant shall pay to Landlord (A) all rent and other amounts accrued
hereunder to the date of termination of possession, (B) all amounts due
from time to time under Section 19.(b), and (C) all rent and other sums
required hereunder to be paid by Tenant during the remainder of the Term,
diminished by any net sums thereafter received by Landlord through
reletting the Premises during such period. Landlord shall use reasonable
efforts to relet the Premises on such terms and conditions as Landlord may
determine (including a term different than the Term, rental concessions,
9
and alterations to, and improvement of, the Premises). Landlord shall not
be liable for, nor shall Tenant's obligations hereunder be diminished
because of Landlord's failure to relet the Premises or to collect rent due
for a reletting. Tenant shall not be entitled to the excess of any
consideration obtained by reletting over the rent due hereunder. Reentry
by Landlord in the Premises shall not affect Tenant's obligations hereunder
for the unexpired Term; rather, Landlord may, from time to time, bring
action against Tenant to collect amounts due by Tenant, without the
necessity of Landlord's waiting until the Term ends. Unless Landlord
delivers written notice to Tenant expressly stating that it has elected to
terminate this Lease, all actions taken by Landlord to exclude or
dispossess Tenant of the Premises shall be deemed to be taken under this
Section 19.(a)(2). If Landlord elects to proceed under this Section
19.(a)(2), it may at any time elect to terminate this Lease under Section
19.(a)(1).
Additionally, Landlord may perform Tenant's unperformed obligations hereunder
and, without notice, Landlord may alter locks or other security devices at the
Premises to deprive Tenant of access thereto, and Landlord shall not be required
to provide a new key or right of access to Tenant.
(b) Tenant shall pay to Landlord all costs incurred by Landlord
(including court costs and reasonable attorneys' fees and expenses) in (1)
obtaining possession of the Premises, (2) removing and storing Tenant's or any
other occupant's property, (3) repairing, restoring, altering, remodeling, or
otherwise putting the Premises into condition acceptable to a new tenant, (4) if
Tenant is dispossessed of the Premises and this Lease is not terminated,
reletting all or any part of the Premises (including brokerage commissions, cost
of tenant finish work, and other costs incidental to such reletting), (5)
performing Tenant's obligations which Tenant failed to perform, and (6)
enforcing, or advising Landlord of, its rights, remedies, and recourses.
Landlord's acceptance of rent following an Event of Default shall not waive
Landlord's rights regarding such Event of Default. Landlord's receipt of rent
with knowledge of any default by Tenant hereunder shall not be a waiver of such
default, and no waiver by Landlord of any provision of this Lease shall be
deemed to have been made unless set forth in writing and signed by Landlord. No
waiver by Landlord of any violation or breach of any of the terms contained
herein shall waive Landlord's rights regarding any future violation of such term
or violation of any other term. If Landlord repossesses the Premises pursuant
to the authority herein granted, then Landlord shall have the right to (A) keep
in place and use or (B) remove and store, at Tenant's expense, all of the
furniture, fixtures, equipment and other property in the Premises, including
that which is owned by or leased to Tenant at all times before any foreclosure
thereon by Landlord or repossession thereof by any lessor thereof or third party
having a lien thereon. Landlord may relinquish possession of all or any portion
of such furniture, fixtures, equipment and other property to any person (a
"Claimant") who presents to Landlord a copy of any instrument represented by
---------
Claimant to have been executed by Tenant (or any predecessor of Tenant) granting
Claimant the right under various circumstances to take possession of such
furniture, fixtures, equipment or other property, without the necessity on the
part of Landlord to inquire into the authenticity or legality of the instrument.
Landlord may, at its option and without prejudice to or waiver of any rights it
may have, escort Tenant to the Premises to retrieve any personal belongings of
Tenant and/or its employees, and make such property available to Tenant and/or
Tenant's employees; however, Tenant first shall pay in cash all costs and
estimated expenses to be incurred in connection with the removal of such
property and making it available. The rights of Landlord herein stated are in
addition to any and all other rights that Landlord has or may hereafter have at
law or in equity, and Tenant agrees that the rights herein granted Landlord are
commercially reasonable.
20. LANDLORD'S LIABILITY. Liability of Landlord to Tenant for any
--------------------
default by Landlord, shall be limited to actual, direct, but not consequential,
damages therefor and shall be recoverable only from the interest of Landlord in
the Building and the Land, and neither Landlord nor Landlord's owners shall have
any personal liability therefor. Tenant hereby waives its rights under Section
91.004 of the Texas Property Code.
21. MORTGAGES.
---------
(a) This Lease shall be subordinate to any deed of trust, mortgage or
other security instrument (a "Mortgage"), and any ground lease, master lease, or
--------
primary lease (a "Primary Lease") that now or hereafter covers any portion of
-------------
the Premises (the mortgagee under any Mortgage or the lessor under any Primary
Lease is referred to herein as "Landlord's Mortgagee"), and to increases,
--------------------
renewals, modifications, consolidations, replacements, and extensions thereof.
However, any Landlord's Mortgagee may elect to subordinate its Mortgage or
Primary Lease (as the case may be) to this Lease by delivering written notice
thereof to Tenant. The provisions of this Section 21 shall be self-operative,
and no further instrument shall be required to effect such subordination;
however, Tenant shall from time to time within ten days after request therefor,
execute any instruments that may be required by any Landlord's Mortgagee to
evidence the subordination of this Lease to any such Mortgage or Primary Lease.
(b) Tenant shall attorn to any party succeeding to Landlord's interest
in the Premises, whether by purchase, foreclosure, deed in lieu of foreclosure,
power of sale, termination of lease, or otherwise, upon such party's request,
and shall execute such agreements confirming such attornment as such party may
reasonably request. Tenant shall not seek to enforce any remedy it may have for
any default on the part of Landlord without first giving written notice by
certified mail, return receipt requested, specifying the default in reasonable
detail to any Landlord's Mortgagee whose address has been given to Tenant, and
affording such Landlord's Mortgagee a reasonable opportunity to perform
Landlord's obligations hereunder.
(c) Notwithstanding any such attornment or subordination of a Mortgage
or Primary Lease to this Lease, the Landlord's Mortgagee shall not be liable for
any acts of any previous landlord, shall not be obligated to install the
Improvements, and shall not be bound by any amendment to which it did not
consent in writing nor any payment of rent made more than one month in advance.
10
(d) Notwithstanding the provisions of this Section 21 and except as
provided in the Nondisturbance, Attornment and Subordination Agreement executed
by Tenant as provided below and Landlord's Mortgagee, so long as this Lease is
in effect, Tenant's right of possession to the Premises and other rights arising
out of this Lease shall not be affected or disturbed by any Landlord's Mortgagee
in the exercise of its rights under the Mortgage, and in the event that any
Landlord's Mortgagee shall agree to the sale of the Land pursuant to its
exercise of any rights and remedies under the Mortgage or otherwise, such sale
shall be made subject to this Lease and the rights of the Tenant hereunder.
(e) Within thirty (30) days following the full execution of this
Lease, Tenant agrees to execute and acknowledge the forms of Nondisturbance,
Attornment and Subordination Agreement and Lender Estoppel attached as Exhibits
C-1 and C-2 and deliver them to Landlord.
22. ENCUMBRANCES. Tenant has 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 Landlord's property or the interest of Landlord or
Tenant in the Premises or to charge the rent 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. Tenant shall pay or cause to be paid all
sums due for any labor performed or materials furnished in connection with any
work performed on the Premises by or at the request of Tenant. Tenant shall
give Landlord immediate written notice of the placing of any lien or encumbrance
against the Premises.
23. MISCELLANEOUS.
-------------
(a) Words of any gender used in this Lease shall include any other
gender, and words in the singular shall include the plural, unless the context
otherwise requires. The captions inserted in this Lease are for convenience
only and in no way affect the interpretation of this Lease. The following terms
shall have the following meanings: "Laws" shall mean all federal, state, and
----
local laws, rules, and regulations; all court orders, governmental directives,
and governmental orders; and all restrictive covenants affecting the Property,
and "Law" shall mean any of the foregoing; "Affiliate" shall mean any person or
--- ---------
entity which, directly or indirectly, controls, is controlled by, or is under
common control with the party in question; "Tenant Party" shall include Tenant,
------------
any assignees claiming by, through, or under Tenant, any subtenants claiming by,
through, or under Tenant, and any of their respective agents, contractors,
employees, and invitees; and "including" means including without limitation.
---------
(b) Landlord may transfer and assign, in whole or in part, its rights
and obligations in the Premises, in which case Landlord shall have no further
liability hereunder. Each party shall furnish to the other, promptly upon
demand, a corporate resolution, proof of due authorization by partners, or other
appropriate documentation evidencing the due authorization of such party to
enter into this Lease.
(c) Other than for Tenant's monetary obligations under this Lease,
whenever a period of time is herein prescribed for action to be taken by
Landlord or Tenant, neither Landlord nor Tenant 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 control of Landlord or
Tenant, as the case may be.
(d) Tenant shall, from time to time, within 15 days after request of
Landlord, deliver to Landlord, or Landlord's designee, a certificate of
occupancy for the Premises, financial statements for itself and any guarantor of
its obligations hereunder, evidence reasonably satisfactory to Landlord that
Tenant has performed its obligations under this Lease (including evidence of the
payment of the Security Deposit), and an estoppel certificate stating that this
Lease is in full effect, the date to which rent has been paid, the unexpired
Term and such other factual matters pertaining to this Lease as may be requested
by Landlord. Tenant's obligation to furnish the above-described items in a
timely fashion is a material inducement for Landlord's execution of this Lease.
(e) This Lease constitutes the entire agreement of the Landlord and
Tenant with respect to the subject matter of this Lease, and contains all of the
covenants and agreements of Landlord and Tenant with respect thereto. Landlord
and Tenant each acknowledge that no representations, inducements, promises or
agreements, oral or written, have been made by Landlord or Tenant, or anyone
acting on behalf of Landlord or Tenant, which are not contained herein, and any
prior agreements, promises, negotiations, or representations not expressly set
forth in this Lease are of no effect. This Lease may not be altered, changed or
amended except by an instrument in writing signed by both parties hereto.
(f) All obligations of Tenant hereunder not fully performed by the end
of the Term shall survive, including, without limitation, all payment
obligations with respect to Taxes and insurance and all obligations concerning
the condition and repair of the Premises. Upon the end of the Term and before
Tenant vacates the Premises, Tenant shall pay to Landlord any amount reasonably
estimated by Landlord as necessary to put the Premises in good condition and
repair, reasonable wear and tear excluded. Tenant shall also, prior to vacating
the Premises, pay to Landlord the amount, as estimated by Landlord, of Tenant's
obligation hereunder for Pass-Through Expenses for the year in which the Term
ends. All such amounts shall be used and held by Landlord for payment of such
obligations of Tenant hereunder, with Tenant being liable for any additional
costs therefor upon demand by Landlord or with any excess to be returned to
Tenant after all such obligations have been determined and satisfied as the case
may be. Any Security Deposit held by Landlord may be credited against the
amount due by Tenant under this Section 23.(f).
(g) If any provision of this Lease is illegal, invalid or
unenforceable, then the remainder of this Lease shall not be affected thereby,
and in lieu of each such provision, there shall be added, as a part of this
11
Lease, a provision as similar in terms to such illegal, invalid or unenforceable
clause or provision as may be possible and be legal, valid and enforceable.
(h) All references in this Lease to "the date hereof" or similar
references shall be deemed to refer to the last date, in point of time, on which
all parties hereto have executed this Lease.
(i) Landlord and Tenant each warrant to the other that it has not
dealt with any broker or agent in connection with this Lease, other than ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇ of Texas, Inc. and ▇▇▇▇▇▇▇▇ ▇▇▇▇ Dallas/Fort Worth, Inc., whose
commissions shall be paid by Landlord pursuant to a separate written agreement.
Tenant and Landlord shall each indemnify the other against all costs, attorneys'
fees, and other liabilities for commissions or other compensation claimed by any
broker or agent claiming the same by, through, or under the indemnifying party.
(j) If and when included within the term "Tenant," as used in this
instrument, there is 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 within the continental United
States 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 Section 24 to the same effect
as if each had received such notice.
(k) The terms and conditions of this Lease are confidential and Tenant
shall not disclose the terms of this Lease to any third party except as may be
required by law or to enforce its rights hereunder.
(l) Tenant shall pay interest on all past-due rent from the date due
until paid at the maximum lawful rate. In no event, however, shall the charges
permitted under this Section 23.(l) or elsewhere in this Lease, to the extent
they are considered to be interest under applicable Law, exceed the maximum
lawful rate of interest.
24. NOTICES. Each provision of this instrument or of any applicable
-------
Laws and other requirements with reference to the sending, mailing or delivering
of notice or the making of any payment hereunder shall be deemed to be complied
with when and if the following steps are taken:
(a) All rent shall be payable to Landlord at the address for Landlord
set forth below or at such other address as Landlord may specify from time to
time by written notice delivered in accordance herewith. Tenant's obligation to
pay rent shall not be deemed satisfied until such rent has been actually
received by Landlord.
(b) All payments required to be made by Landlord to Tenant hereunder
shall be payable to Tenant at the address set forth below, or at such other
address within the continental United States as Tenant may specify from time to
time by written notice delivered in accordance herewith.
(c) Any written notice or document required or permitted to be
delivered hereunder shall be deemed to be delivered upon the earlier to occur of
(1) tender of delivery (in the case of a hand-delivered notice), (2) deposit in
the -United States Mail, postage prepaid, Certified Mail, or (3) receipt by
facsimile transmission, in each case, addressed to the parties hereto at the
respective addresses set out below, or at such other address as they have
theretofore specified by written notice delivered in accordance herewith. If
Landlord has attempted to deliver notice to Tenant at Tenant's address reflected
on Landlord's books but such notice was returned or acceptance thereof was
refused, then Landlord may post such notice in or on the Premises, which notice
shall be deemed delivered to Tenant upon the posting thereof.
25. HAZARDOUS WASTE. The term "Hazardous Substances," as used in this
--------------- --------------------
Lease shall mean pollutants, contaminants, toxic or hazardous wastes, or any
other substances, the removal of which is required or the use of which is
restricted, prohibited or penalized by any "Environmental Law," which term shall
-----------------
mean any Law relating to health, pollution or protection of the environment.
Tenant hereby agrees that (a) no activity will be conducted on the Premises that
will produce any Hazardous Substances, except for such activities that are part
of the ordinary course of Tenant's business activities (the "Permitted
---------
Activities") provided such Permitted Activities are conducted in accordance with
----------
all Environmental Laws and have been approved in advance in writing by Landlord;
(b) the Premises will not be used in any manner for the storage of any Hazardous
Substances except for any temporary storage of such materials that are used in
the ordinary course of Tenant's business (the "Permitted Materials") provided
-------------------
such Permitted Materials are properly stored in a manner and location satisfying
all Environmental Laws and approved in advance in writing by Landlord; (c) no
portion of the Premises will be used as a landfill or a dump; (d) Tenant will
not install any underground tanks of any type; (e) Tenant will not allow any
surface or subsurface conditions to exist or come into existence that
constitute, or with the passage of time may constitute a public or private
nuisance; and (f) Tenant will not permit any Hazardous Substances to be brought
onto the Premises, except for the Permitted Materials, and if so brought or
found located thereon, the same shall be immediately removed by Tenant, with
proper disposal, and all required cleanup procedures shall be diligently
undertaken pursuant to all Environmental Laws. If at any time during or after
the Term, the Premises are found to be so contaminated by or subject to such
conditions which were caused by a Tenant Party, Tenant shall defend, indemnify
and hold Landlord harmless from all claims, demands, actions, liabilities,
costs, expenses, damages and obligations of any nature arising therefrom or as a
result thereof. Tenant will maintain on the Premises a list of all materials
stored at the Premises for which a materials safety data sheet (an "MSDS") was
----
issued by the producers or manufacturers thereof, together with copies of the
MSDS for such materials, and shall deliver such list and MSDS copies to Landlord
upon Landlord's request therefor. Tenant shall remove all Permitted Materials
from the Premises in a manner acceptable to Landlord before Tenant's right to
possess the Premises is terminated. Unless expressly identified on an addendum
to this Lease, as of the date hereof there are no "Permitted Activities" or
"Permitted Materials" for purposes of the foregoing provision and none shall
exist unless and until approved in writing by the Landlord. Landlord may enter
the Premises and conduct environmental inspections and tests therein as it may
require from time to time, provided that Landlord shall use reasonable efforts
to minimize the interference with
12
Tenant's business. Such inspections and tests shall be conducted at Landlord's
expense, unless they reveal the presence of Hazardous Substances (other than
Permitted Materials) which were caused by a Tenant Party, or that Tenant has not
complied with the requirements set forth in this Section 25, in which case
Tenant shall reimburse Landlord for the cost thereof within ten days after
Landlord's request therefor. Landlord represents and warrants that to the best
of its current actual knowledge there are no Hazardous Substances or other
environmental contamination in, on or under the Land, the Building or the
Premises. Within three business days after its receipt thereof, Landlord shall
have delivered to Tenant copies of any Phase I reports or other environmental
reports or studies regarding the Land or the Building in Landlord's possession.
26. CONDITIONS TO LANDLORD'S OBLIGATIONS. (Intentionally Deleted).
------------------------------------
27. LANDLORD'S LIEN. Landlord hereby waives its statutory landlord's
---------------
lien.
28. ROOFTOP EQUIPMENT. Provided that Tenant complies with the terms of
-----------------
this Section, Tenant may, at its risk and expense, install a satellite dish and
related communications equipment and wiring (collectively, the "Rooftop
-------
Equipment") on the roof of the Building at a location approved by Landlord,
---------
which equipment may be used solely by Tenant and its Permitted Transferees or
Permitted Sublessees. Before installing the Rooftop Equipment, Tenant shall
submit to Landlord for its approval (which approval shall be in Landlord's sole
discretion) plans and specifications which (a) specify in detail the design,
location, size, and, in the case of a satellite dish, frequency of the Rooftop
Equipment and (b) are sufficiently detailed to allow for the installation of the
Rooftop Equipment in a good and workmanlike manner and in accordance with all
Laws (the "Legal Requirements"). If Landlord approves of such plans, Tenant
------------------
shall install (in a good and workmanlike manner), maintain and use the Rooftop
Equipment in accordance with all Legal Requirements and shall obtain all
consents and permits required for the installation and operation thereof; copies
of all such permits and evidence of such consents must be submitted to Landlord
before Tenant begins to install the Rooftop Equipment. Tenant shall thereafter
maintain all permits necessary for the maintenance and operation of the Rooftop
Equipment while it is on the Building and operate and maintain the Rooftop
Equipment in such a manner so as not to unreasonably interfere with any other
satellite, antennae, or other transmission facility on the Building's roof or in
the Building. Landlord may require that Tenant screen the Rooftop Equipment with
a parapet or other screening device acceptable to Landlord. Tenant shall
maintain the Rooftop Equipment and screening device in good repair and
condition. Tenant shall, at its risk and expense, remove the Rooftop Equipment
(including all wiring related thereto), within five days after the occurrence of
any of the following events: (1) the termination of Tenant's right to possess
the Premises; (2) the termination of the Lease; (3) the expiration of the Term;
or (4) Tenant's vacating the Premises. If Tenant fails to do so, Landlord may
remove the Rooftop Equipment and store or dispose of it in any manner Landlord
deems appropriate without liability to Tenant; Tenant shall reimburse Landlord
for all costs incurred by Landlord in connection therewith within ten days after
Landlord's request therefor. Tenant shall repair any damage to the Building
caused by or relating to the Rooftop Equipment, including that which is caused
by its installation, maintenance, use, or removal and shall indemnify Landlord
against all Losses arising from the installation, maintenance, use, or removal
of the Rooftop Equipment, excluding that caused by Landlord's negligence. All
----------------------------------------------
work relating to the Rooftop Equipment shall, at Tenant's expense, be
coordinated with Landlord's roofing contractor so as not to affect any warranty
for the Building's roof.
29. TAX INCENTIVES. Landlord shall reasonably cooperate with Tenant in
--------------
obtaining all governmental tax incentives, abatements, discounts and
concessions.
30. FINANCIAL STATEMENTS. Notwithstanding any other provision of this
--------------------
Lease, until such time as Tenant successfully completes an initial public
offering of Tenant's stock on a nationally-recognized public exchange, Tenant
shall upon Landlord's request therefor, provide Landlord within ninety (90) days
following (i) the end of each fiscal year of Tenant, a copy of audited financial
statements prepared in accordance with generally accepted accounting principles,
and within forty-five (45) days following (ii) the end of each fiscal quarter of
Tenant, the following: (a) a balance sheet, (b) an income statement, (c) a
statement of cash flow and (d) such other supporting documentation as Landlord
may reasonably require.
Executed by Tenant on August 21, 1998.
TENANT: METASOLV SOFTWARE, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Title: V.P. - Business Services
------------------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
13
Executed by Landlord on August 21, 1998.
LANDLORD:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: Ten Thousand ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
14
EXHIBIT A
[Description of Premises]
A-1
EXHIBIT B
WORK LETTER
-----------
(To be attached)
B
EXHIBIT C
---------
FORMS OF SNDA AND LENDER ESTOPPEL
---------------------------------
C
EXHIBIT D
---------
EXTENSION OPTIONS
-----------------
Provided no Event of Default exists and Tenant is occupying the entire
Premises at the time of such election, Tenant may renew this Lease as to all of
the then-leased Premises for two additional periods of five years each on the
same terms provided in this Lease (except as set forth below), by delivering
written notice of the exercise thereof to Landlord (an "Extension Notice") not
----------------
later than nine months before the expiration of the Term. On or before the
commencement date of the extended Term in question, Landlord and Tenant shall
execute an amendment to this Lease extending the Term on the same terms provided
in this Lease, except as follows:
(1) The Basic Rental payable for each month during each such extended
Term shall be the Fair Market Rental Rate for the extended Term.
(2) Tenant shall have no further renewal options or expansion options
(except as otherwise provided herein) unless expressly granted by Landlord
in writing; and
(3) Landlord shall lease to Tenant the Premises in their then-current
condition, and Landlord shall not provide to Tenant any allowances (e.g.,
moving allowance, construction allowance, and the like) or other tenant
inducements.
Tenant's rights under this Exhibit shall terminate if (1) this Lease or
Tenant's right to possession of the Premises is terminated, (2) Tenant assigns
any of its interest in this Lease or sublets any portion of the Premises, except
to a Permitted Transferee or to an assignee or subtenant approved by Landlord as
provided in this Lease, or (3) Tenant fails to timely exercise its option under
this Exhibit, time being of the essence with respect to Tenant's exercise
thereof. Tenant may not assign its rights under this Exhibit to any assignee or
subtenant other than to a Permitted Transferee of the entire Premises.
D
EXHIBIT E
---------
PARKING
-------
Landlord shall use its best efforts to provide to Tenant a combination of
underground and surface parking at a ratio of no less than four (4) spaces per
1,000 square feet of net rentable area of the Premises. The underground portion
of such parking area shall accommodate at least one hundred twenty (120) spaces.
E
EXHIBIT F
---------
FAIR MARKET RENTAL RATE
-----------------------
1. Definition. The term "Fair Market Rental Rate" shall mean the market
-----------------------
rental rate for the time period such determination is being made for office
space in office buildings in the vicinity of the Building (the "Market Area") of
-----------
comparable age, quality and condition for space of equivalent quality, size,
utility, and location. Such determination shall take into account all relevant
factors, including, without limitation, the following matters: the credit
standing of Tenant; the length of the term; expense stops; and construction
allowances and other tenant concessions or lack thereof.
2. Determination. Landlord shall deliver to Tenant notice confirming the
Fair Market Rental Rate (the "FMRR Notice") for the space in question (the
-----------
"Space") or extension of the Term (an "Extension") within 20 days after Tenant
------ ---------
exercises the option giving rise for the need to determine the Fair Market
Rental Rate. If Tenant disagrees with Landlord's assessment of the Fair Market
Rental Rate specified in a FMRR Notice, then it shall so notify Landlord in
writing within ten days after delivery of such FMRR Notice; otherwise, the rate
set forth in such notice shall be the Fair Market Rental Rate. If Tenant timely
delivers to Landlord written notice that it disagrees with Landlord's assessment
of the Fair Market Rental Rate, then Landlord and Tenant shall meet to attempt
to determine the Fair Market Rental Rate. If Tenant and Landlord are unable to
agree on such Fair Market Rental Rate within ten days after Tenant notifies
Landlord of its disagreement with Landlord's assessment thereof, then (within
the next ten days) Landlord and Tenant shall jointly appoint an independent MAI
real estate appraiser with at least five-years' commercial real estate appraisal
experience in the Market Area and submit their respective assessments of the
Fair Market Rental Rate to the appraiser. If the parties are unable to agree on
an independent real estate appraiser, then either party may apply to any Dallas,
Texas office of the American Arbitration Association (the "AAA") to appoint an
---
appraiser having the qualifications described in the previous sentence. The
AAA's selection of the appraiser shall be binding on Landlord and Tenant. The
appraiser shall then, within ten days after his designation, select the
assessment (i.e., either Landlord's or Tenant's) that is closest to his
determination of the Fair Market Rental Rate, which assessment shall then be the
Fair Market Rental Rate for the Space in question or Extension (as applicable).
The party whose assessment was not chosen by the appraiser shall pay the fees
and expenses of the appraiser.
3. Administration. If Tenant has exercised an option or right to lease
Space to extend the Term and the Fair Market Rental Rate for the Space or
Extension has not been determined in accordance with this Exhibit by the time
that Base Rent for such Space or Extension is to commence in accordance with the
terms hereof, then Tenant shall pay base rent for such Space based on the Fair
Market Rental Rate proposed by Landlord pursuant to this Exhibit until such time
as the Fair Market Rental Rate has been so determined, at which time appropriate
cash adjustments shall be made between Landlord and Tenant such that Tenant is
charged Base Rent based on the Fair Market Rental Rate (as finally determined
pursuant to this Exhibit) for the Space during the interval in question.
F
FIRST AMENDMENT TO COMMERCIAL LEASE AGREEMENT
---------------------------------------------
(Phase II Lease)
THIS FIRST AMENDMENT TO COMMERCIAL LEASE AGREEMENT (this "Amendment") is
---------
made and entered into as of September 16, 1998, by and between PARAGON LEGACY
ASSOCIATES, INC. ("Landlord"), and METASOLV SOFTWARE, INC., a Delaware
--------
corporation ("Tenant").
------
RECITALS
WHEREAS, Landlord is the owner of an approximately 9.565-acre tract of land
located on Tennyson Parkway in Plano, Texas, which, together with the
improvements thereon, is known as the "MetaSolv Project" (the "Land");
----
WHEREAS, Tenant currently occupies the existing building on the Land (the
"Phase I Building"), pursuant to that certain Commercial Lease Agreement dated
----------------
April 1, 1997, between Tenant and CrowInvest II, L.P., as amended by that
certain First Amendment to Commercial Lease Agreement dated August 21, 1998,
between Landlord and Tenant, and as assigned by that certain Blanket ▇▇▇▇ of
Sale and Assignment dated September 16, 1998, from CRIN-Plano I., L.P. to
Landlord and that certain Assignment of Lease Documents dated as of September
16, 1998, from the Coopers to Landlord (such assignments being collectively
herein called the "Lease Assignments", and such lease, as so amended and
-----------------
assigned, being collectively herein called the "Phase I Lease");
-------------
WHEREAS, Tenant has heretofore had the right under the Phase I Lease to
request that Landlord construct additional surface parking for the Phase I
Building (the "Phase I Surface Parking"), provided that the costs for such
-----------------------
construction would be amortized and repaid to Landlord in the form of an
increase in Tenant's rent under such lease, all as more particularly provided on
Exhibit D such lease, and Tenant has heretofore requested the construction of
such parking;
WHEREAS, Tenant has heretofore entered into that certain Commercial Lease
Agreement with the Coopers to cover an additional building to be constructed on
the Land, as assigned to Landlord by the Lease Assignments (such lease, as
assigned, being herein called the "Phase II Lease"; such lease together with the
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Phase I Lease being herein called the "Leases"); and
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WHEREAS, the Phase II Lease (including the attachments thereto) contains
various plans, specifications, time periods for completion and other provisions
relating to the construction of the New Phase I Parking as well as the
construction of an additional building;
WHEREAS, concurrently herewith, Landlord and Tenant are executing an
amendment to delete Exhibit D to the Phase I Lease;
WHEREAS, Landlord and Tenant desire to modify the provisions of the Phase
II Lease as set out below.
AGREEMENTS
NOW, THEREFORE, for and in consideration of the sum of Ten and No/100
Dollars ($10.00) and other good and valuable consideration paid by each party
hereto to the other, the receipt and sufficiency of which are mutually
acknowledged, Landlord and Tenant hereby agree as follows:
1. Defined Terms. All initially-capitalized terms used and not otherwise
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defined herein shall have the meanings prescribed in the Phase II Lease.
2. Phase II Lease Controlling as to Additional Surface Parking. Landlord
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and Tenant hereby confirm and agree that the plans, specifications, times for
completion of construction,
1
reimbursement to Landlord for such construction and all other matters pertaining
to the construction of the New Phase I Parking shall be governed by the Phase II
Lease. To the extent of any conflict between the Phase II Lease and any
provision in the Phase I Lease pertaining to the New Phase I Parking, the Phase
II Lease shall be controlling.
3. Costs for New Phase I Parking. In lieu of the amortization originally
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contemplated in Exhibit D to the Phase I Lease, Tenant shall pay only one-half
(the "New Parking Payment") of the total costs and expenses for construction of
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the New Phase I Parking, which total is estimated at $110,000.00 (including any
and all developer or construction management fees payable to Landlord or any
other person to the extent allocable to the New Phase I Parking).
4. Form and Time of Payment. Provided no default then exists on the part
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of Tenant under either of the Leases, Tenant shall be entitled to pay the New
Parking Payment in any one or more of the following four forms, to the extent
----
such forms are available under then current circumstances, at Tenant's sole
option:
(a) In the form of a check (or cash or cash equivalent);
(b) In the form of a set-off against the Construction Allowance payable
under Section 6(b)(2) of the Phase II Lease, to the extent such
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allowance is not depleted for costs and expenses for the other
construction under the Phase II lease;
(c) If Landlord performs such construction of the Improvements, to the
extent that the total costs and expenses for such construction
including any skybridge or other items requested by Tenant, together
with the New Parking Payment, would exceed the Construction Allowance,
then the new Parking Payment may be made to the extent of such excess
in the form of an addition to any other amounts that are allowed to be
amortized pursuant to Section 6 (b)(2) of the Phase II Lease. To the
----------------
extent, however, that the total excess to be amortized would exceed
the $500,000 ceiling applicable under Section 6(b)(2), the excess over
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such ceiling must be paid in cash; or
(d) In the form of a set-off against the $50,000 maximum allowance for
costs for a monument sign, an energy management system and a security
system, as provided under Section 2 of the Work Agreement attached as
Exhibit B to the Phase II Lease to the extent such allowance is not
depleted for costs and expenses for such three items.
Tenant shall be entitled to require as a condition to payment of the New Parking
Payment (in any form) that Landlord provide copies of invoices or other evidence
of the costs and expenses for the New Phase I Parking reasonably supporting the
amount of such payment. In the event that any portion of the New Parking
Payment is required to be paid in cash pursuant to subsection (b), (c) or (d)
------------------- ---
above, such portion shall be paid within ten (10) days following Landlord's
submission of such evidence reasonably supporting the amount of the New Parking
Payment. Any failure by Tenant to pay such portion in cash fully and promptly
when due shall without further notice constitute an Event of Default under the
Leases.
5. Form of Tenant Estoppel. Tenant hereby confirms and agrees that the
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form of Tenant Estoppel attached as Exhibit C-2 hereto is the form of tenant
estoppel referred to in Section 21(e) of the Phase II Lease and is hereby
incorporated into such lease as Exhibit C-2 thereof in lieu of any other form of
tenant estoppel, which is hereby deleted, that may be attached as such exhibit.
6. Phase II Lease Ratified. As amended hereby, Landlord and Tenant
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confirm and ratify all of the terms and provisions of the Phase II Lease.
7. Miscellaneous. The headings sections in this Amendment are for
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convenience only shall not be construed as limiting or affecting the meaning of
the text of this Amendment. This Amendment may not be rescinded, terminated,
waived, amended or modified in whole or in part,
2
orally, by course of conduct or otherwise than by a writing signed by both
Landlord and Tenant. This Amendment may be executed in one or more
counterparts, and provided that each of the parties hereto signs at least one
counterpart, such counterparts shall together constitute one agreement that may
be sufficiently evidenced by any counterpart.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have executed this Amendment to be effective as of the date first written
above.
LANDLORD
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PARAGON LEGACY ASSOCIATES, LTD.
a Texas limited partnership
By: WRC Turtle Creek, Inc.
a Texas corporation
By: _______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
TENANT:
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METASOLV SOFTWARE, INC.
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: V.P. - Business Services
-----------------------------