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EXHIBIT 10.10
11/09/00
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LEASE AGREEMENT
BY AND BETWEEN
▇▇▇▇▇ FIVE PARTNERSHIP, LTD.
AS LANDLORD,
and
CIRRUS LOGIC, INC.
AS TENANT
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TABLE OF CONTENTS
ARTICLE I -
LEASED PREMISES...................................................................................................8
Section 1.01 Leased Premises.................................................................................8
Section 1.02 Lease Grant.....................................................................................9
Section 1.03 Building Core and Shell.........................................................................9
Section 1.04 Location of Emergency Generator and UPS.........................................................9
ARTICLE II - LEASE TERM...........................................................................................9
Section 2.01 Lease Term.............................................................................9
Section 2.02 Holding Over..........................................................................10
ARTICLE III - RENT ..............................................................................................11
Section 3.01 Base Rent.............................................................................11
Section 3.02 Additional Rent.......................................................................11
Section 3.03 Prepaid Rent (Intentionally Omitted)..................................................17
Section 3.04 Rent Payments.........................................................................18
Section 3.05 Security..............................................................................18
ARTICLE IV - UTILITIES AND SERVICES..............................................................................22
Section 4.01 Services to be Provided...............................................................22
Section 4.02 Tenant's Obligations..................................................................24
Section 4.03 Service Interruptions.................................................................24
Section 4.04 Modification..........................................................................25
ARTICLE V - USE AND OCCUPANCY....................................................................................26
Section 5.01 Use and Occupancy.....................................................................26
Section 5.02 Rules and Regulations.................................................................27
Section 5.03 Quiet Enjoyment.......................................................................27
ARTICLE VI - REPAIRS, MAINTENANCE AND ALTERATIONS................................................................27
Section 6.01 Repair and Maintenance by Tenant......................................................27
Section 6.02 Alterations and Additions by Tenant...................................................28
Section 6.03 Mechanics' Liens - Tenant's Obligations...............................................29
Section 6.04 Maintenance and Repair by Landlord....................................................29
ARTICLE VII - INSURANCE, FIRE AND CASUALTY.......................................................................30
Section 7.01 Tenant's Insurance....................................................................30
Section 7.02 Landlord's Insurance..................................................................30
Section 7.03 Fire or Other Casualty................................................................31
Section 7.04 Waiver of Subrogation.................................................................32
ARTICLE VIII - CONDEMNATION......................................................................................33
ARTICLE IX - INDEMNIFICATIONS AND WAIVERS........................................................................34
Section 9.01 Limitations on Liability of Landlord and Waivers......................................34
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Section 9.02 No Implied Waiver.....................................................................34
Section 9.03 Waiver by Tenant......................................................................35
Section 9.04 Hazardous Substances..................................................................35
ARTICLE X - ASSIGNMENT AND SUBLETTING............................................................................36
Section 10.01 No Assignment or Subletting Without Consent...........................................36
Section 10.02 Landlord's Consent....................................................................37
Section 10.03 Permitted Transfers...................................................................38
ARTICLE XI - DEFAULT.............................................................................................38
Section 11.01 Default...............................................................................38
Section 11.02 Landlord's Lien.......................................................................41
Section 11.03 Mitigation of Damages.................................................................41
ARTICLE XII - MISCELLANEOUS PROVISIONS...........................................................................43
Section 12.01 Rights Reserved by Landlord...........................................................43
Section 12.02 Taxes on Tenant's Property............................................................45
Section 12.03 Attorneys' Fees and Legal Expenses....................................................45
Section 12.04 Subordination.........................................................................45
Section 12.05 Estoppel Certificates.................................................................46
Section 12.06 Financial Statements..................................................................46
Section 12.07 Notices...............................................................................46
Section 12.08 Business Purpose......................................................................47
Section 12.09 Severability..........................................................................47
Section 12.10 No Merger.............................................................................47
Section 12.11 Force Majeure.........................................................................47
Section 12.12 Gender................................................................................48
Section 12.13 Joint and Several Liability...........................................................48
Section 12.14 No Representations....................................................................48
Section 12.15 Entire Agreement; Amendments..........................................................48
Section 12.16 Section Headings......................................................................48
Section 12.17 Binding Effect........................................................................48
Section 12.18 Counterparts..........................................................................48
Section 12.19 Rental Tax............................................................................49
Section 12.20 Authority to Sign Lease...............................................................49
Section 12.21 Execution and Approval of Lease.......................................................49
Section 12.22 Time of the Essence...................................................................49
Section 12.23 No Personal Liability of Landlord or Guarantor .......................................49
ARTICLE XIII - ADDITIONAL AGREEMENTS.............................................................................50
Section 13.01 Parking...............................................................................50
Section 13.02 Signage...............................................................................51
Section 13.03 Tenant's Ability to Perform Landlord's Unperformed Obligations........................51
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Section 13.04 Real Estate Brokers...................................................................52
Section 13.05 Conditions Precedent..................................................................52
Section 13.06 Title, Survey and Environmental Report................................................53
Section 13.07 Covenants of Landlord.................................................................53
Section 13.08 Entry by Landlord.....................................................................54
Section 13.09 Tenant's Purchase Option..............................................................54
Section 13.10 Joint Approval of Press Releases......................................................56
ARTICLE XIV - EXHIBITS AND ATTACHMENTS...........................................................................56
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BASIC LEASE PROVISIONS
LANDLORD: ▇▇▇▇▇ Five Partnership, Ltd., a Texas
limited partnership
LANDLORD'S ADDRESS: ▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Mr. L. ▇▇▇▇ ▇▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
with copy to:
▇▇▇▇▇ Five Partnership, Ltd.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇ ▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
TENANT: Cirrus Logic, Inc.
TENANT'S ADDRESS PRIOR
TO COMMENCEMENT DATE: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
with copy to:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
TENANT'S ADDRESS AFTER
COMMENCEMENT DATE: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone No. (512) __________________
Fax No. (512)________________________
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with copy to:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telephone No. (512) __________________
Fax No. (512)________________________
BUILDING: The land described on Exhibit A attached
hereto (the "Land"), together with all
improvements constructed or to be
constructed thereon, including all building
systems which are included within and/or
serve the Building and the related parking
garage located on the Land (the "Garage").
The floor plans of the Building are
generally depicted on Exhibit B attached
hereto. The Building will be known as, ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
LEASED PREMISES: All of the Building and the Land.
TOTAL BUILDING AREA: 192,000 square feet of Rentable Area,
subject to adjustment as provided in
Paragraph 1.01.
BASE RENT: Beginning on the Commencement Date, Base
Rent under this Lease will be payable in an
amount as calculated pursuant to Section
3.01 of the Lease. As soon as possible after
"Project Cost", as defined herein, is
determined, but not later than the
Commencement Date, Landlord and Tenant shall
enter into an amendment to this Lease to
provide for the actual Base Rent in the
Table set forth below:
Lease Months Annual Rate Monthly Installments
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1 - 120 Approx. $24.76 approx. $396,160
Per square foot of
Rentable Area per
year
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RENT: The Base Rent, Additional Rent (hereinafter
defined), and all other amounts payable by
Tenant to Landlord under this Lease.
TENANT'S PERCENTAGE: One Hundred percent (100%);
EFFECTIVE DATE: November 10, 2000
COMMENCEMENT DATE: Anticipated to be September 1, 2002; the
actual Commencement Date will be determined
in accordance with Section 2.01(a).
LEASE TERM: One Hundred Twenty (120) months, commencing
on the Commencement Date and subject to the
option to extend set forth on Exhibit H.
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BUILDING STANDARD HOURS: 7:00 a.m. to 7:00 p.m. on each Monday
through Friday (excluding Building Holidays)
and 8:00 a.m. to 5:00 p.m. on each Saturday
(excluding Building Holidays), subject to
the modifications set forth in Section
4.01(b). Notwithstanding the foregoing
recitation of Building Standard Hours or any
other provision in this Lease to the
contrary, it is agreed and understood that
Tenant and Tenant's authorized employees
shall have free and uninterrupted access to
the Leased Premises at all times (24 hours
per day, 7 days per week).
BUILDING HOLIDAYS: New Years Day, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and
Christmas Day.
TENANT'S BROKER: NAI Commercial Industrial Properties Company
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
LANDLORD'S BROKER: Colliers Oxford Commercial, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
SECURITY: A cash deposit of $540,160 plus a $9,000,000
Letter of Credit, as may be adjusted
pursuant to Section 3.05.
PARKING: Tenant shall be entitled to utilize all of
the parking spaces in the Garage (which will
be at least 768 parking spaces and all of
the surface parking spaces which are located
upon the Land), all at no cost to Tenant.
PERMITTED USE General office uses, uses related to
integrated circuit design, and uses which
are ancillary or appurtenant to the
foregoing, including, but not limited to
training centers, cafeterias, computer
rooms, data and word processing centers, and
research services use including research
laboratories in which testing and
verification of electrical products occurs
in accordance with applicable city zoning
ordinances.
The Basic Lease Provisions set forth hereinabove are hereby incorporated into
and made a part of the Lease Agreement which is attached hereto (the "Lease").
Each reference in the Lease to any of the provisions or definitions set forth in
these Basic Lease Provisions shall mean and refer to the provisions and
definitions hereinabove set forth and shall be used in conjunction with the
provisions of the Lease. In the event of any direct conflict between these Basic
Lease Provisions and the Lease, these Basic Lease Provisions shall control;
provided, however, that those provisions in the Lease (including all exhibits
and attachments thereto) which expressly require an adjustment or modification
to any of the matters set forth in these Basic Lease Provisions shall supersede
the adjusted or modified provisions of these Basic Lease Provisions.
EXECUTED by the undersigned in multiple originals as of the Effective Date set
out hereinabove.
LANDLORD: ▇▇▇▇▇ FIVE PARTNERSHIP, LTD., a Texas
limited partnership
By: ▇▇▇▇▇ FIVE DEVELOPMENT CORP., a Texas
corporation, its general partner
By:
L. ▇▇▇▇ ▇▇▇▇▇▇, President
TENANT: CIRRUS LOGIC, INC.
By:
Name:
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Title:
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LEASE AGREEMENT
This Lease Agreement ("Lease") is entered into as of the Effective Date
specified in the Basic Lease Provisions by and between Landlord and Tenant. The
Basic Lease Provisions attached hereto and the defined terms set out therein are
hereby incorporated herein by reference.
ARTICLE I - LEASED PREMISES
Section 1.01 Leased Premises
The Leased Premises will include the entire Rentable Area of the
Building as depicted on Exhibit B. Landlord and Tenant acknowledge and
agree that the Rentable Area as stated in the Basic Lease Provisions is
an approximate number and cannot be conclusively determined until after
completion of construction of the Building. Within forty-five (45) days
following the Substantial Completion date (as hereinafter defined), the
Rentable Area of the Building will be determined and certified in
writing to Landlord and Tenant by Landlord's architect, using the "BOMA
Method" described below. In the event that Tenant disputes the
calculation by the Landlord's architect of Rentable Area of the
Building, then Tenant may cause its architect to measure the Leased
Premises and/or Building in the manner provided herein and to deliver
its own architect's certificate to Landlord within thirty (30) days
after receipt of the Landlord's architect's certificate. Landlord and
Tenant will endeavor in good faith for a period of twenty (20) days
after receipt of the Tenant's architect's certificate to agree on the
Rentable Area of the Building. In the event that Landlord and Tenant
cannot agree within such twenty (20) day period, then Landlord's and
Tenant's architects will within ten (10) days thereafter jointly select
a third licensed architect to review the architect's certificates and
related back-up
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materials and such architect will make a determination of Rentable Area
based on the materials provided within fifteen (15) days after being so
selected. Absent gross error, the determination of the third architect
will be final and binding on Landlord and Tenant. As used herein, "BOMA
Method" shall mean the method for measuring floor area in office
buildings as set out in ANSI/BOMA Z65.1- 1996.
Section 1.02 Lease Grant
For the consideration and subject to the terms, provisions and
conditions set out below, Landlord lets and leases to Tenant and Tenant
leases from Landlord the Leased Premises.
Section 1.03 Building Core and Shell
Landlord will provide the improvements which are listed and described
on Exhibit C which is attached hereto and incorporated herein by
reference (the "Building Design Development Criteria"). The
improvements to be constructed by Landlord within the Leased Premises
are set forth in the "Tenant Work Letter" which is attached to this
Lease as Exhibit M and incorporated herein by reference (the "Tenant
Work Letter"). Notwithstanding any provisions herein to the contrary,
none of the provisions in the Tenant Work Letter will be construed to
modify Landlord's obligation to construct the Building Core and Shell
in accordance with Exhibit C attached hereto and incorporated herein by
reference.
Section 1.04 Location of Emergency Generator and UPS
Landlord agrees that, at Tenant's option and election: (i) Tenant may
install an emergency generator (150 kw to 250 kw in size) with self
contained fuel tanks ("Generator"); or (ii) Landlord will increase the
size and capacity of Landlord's generator in an amount sufficient to
cover Tenant's internal needs. If Tenant elects to install the
Generator, then Landlord agrees to provide Tenant with a location for
the Generator in the office building portion of the Building. The
location of the Generator must be mutually agreed upon by Landlord and
Tenant. Tenant shall have the right to run conduit from the Generator
to the Leased Premises at Tenant's sole cost. Tenant will also have the
right to install uninterruptible power supplies ("UPS") as required to
support areas within the Leased Premises such as labs, computer server
equipment and telecommunications equipment. The cost of the Generator
and UPS will be borne as part of the Allowance as provided for in the
Tenant Work Letter.
ARTICLE II - LEASE TERM
Section 2.01 Lease Term
(a) For purposes of this Lease, the "Commencement Date" shall mean and
refer to the date upon which all of the following (collectively, the
"Completion Items") have occurred: (i) Base Building Substantial
Completion (as said terms are defined in the Tenant Work Letter) has
occurred; (ii) Substantial Completion of the Tenant Finish Work (as
said terms are defined in the Tenant Work Letter) has occurred; and
(iii) Landlord has delivered possession of the Leased Premises to
Tenant. Landlord shall permit Tenant and Tenant's agents to have access
to the Leased Premises during the forty-five (45) day period prior to
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the Commencement Date in order that Tenant may install Tenant's
furniture and equipment (including telecommunications and computer
wiring and equipment). Notwithstanding any provision herein to the
contrary, the Commencement Date shall not occur until the foregoing
referenced forty-five (45) day period has been provided to Tenant.
(b) Subject to and upon the terms and conditions set forth in the
Lease, or in any exhibit attached hereto, the primary term of this
Lease shall commence on the Commencement Date and shall expire on the
last day of the one hundred twentieth (120th) month following the
Commencement Date or such earlier date as this Lease may terminate as
provided herein (the "Expiration Date"). The "Lease Term" of this Lease
shall be the primary term specified in this Section 2.01, as renewed or
otherwise extended or earlier terminated pursuant to the terms and
provisions set forth herein. If the Commencement Date is not the first
day of a calendar month, then the Lease Term shall be extended by the
time between the Commencement Date and the first day of the next month.
(c) After the Commencement Date, Landlord and Tenant shall promptly,
upon the request of either of them, execute and deliver to each other
an agreement setting forth the Commencement and Expiration Dates.
(d) This Lease is being executed before the Leased Premises are
available and ready for occupancy. Landlord and Tenant currently
anticipate that the Completion Items will be completed on or before
September 1, 2002 (the "Scheduled Commencement Date"). If the
Completion Items are not completed on or before the Scheduled
Commencement Date: (i) Landlord shall not be in default hereunder or be
liable for damages therefor, but Tenant shall be entitled to two (2)
days abatement of Rent under this Lease (from and after the actual
Commencement Date) for each day that lapses between the Scheduled
Commencement Date and the actual Commencement Date; and (ii) Tenant
shall accept possession of the Leased Premises after the Completion
Items are actually completed.
Section 2.02 Holding Over
Should Tenant hold the Leased Premises after termination of this Lease,
by lapse of time, default, or otherwise, such holding over shall be
construed as a tenancy at sufferance only, and Tenant shall pay in
advance, as Rent, for each day of such holding, a per diem amount equal
to 1/30 of one hundred fifty percent (150%) of the Rent payable for the
last month of the Lease Term. No receipt of money by Landlord from
Tenant after termination of this Lease shall reinstate or extend this
Lease, or affect any prior notice given by Landlord to Tenant, and no
extension shall be valid unless in writing, signed by Landlord and
Tenant. The foregoing shall not be construed as Landlord's consent for
any such holding over, and Landlord reserves the right to proceed
against Tenant for any actual damages caused thereby.
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ARTICLE III - RENT
Section 3.01 Base Rent
(a) Landlord and Tenant agree that the annual Base Rent (per rentable
square foot) shall be equal to twelve percent (12%) of the actual
"Project Cost" (allocated on a per-rentable-square-foot basis). The
term "Project Cost" is defined in the Tenant Work Letter. Landlord will
develop and present to Tenant for approval a proposed budget which
reflects the anticipated Project Cost (the "Project Cost Budget").
Tenant will, within ten (10) business days after receipt of Landlord's
proposed Project Cost Budget, either approve or disapprove the same in
writing, with such approval not to be unreasonably withheld. In the
event of disapproval, Landlord and Tenant will meet and use good faith
efforts to arrive at a mutually agreeable disposition of the objection
or objections raised by Tenant. Landlord agrees it will not
unreasonably withhold approval to any cost reduction proposals if
requested by Tenant. If Landlord and Tenant are unable to agree,
Landlord's decision shall prevail. Notwithstanding any provision herein
to the contrary: (i) Landlord and Tenant agree to work together to
design and engineer the Building with the objective of achieving a Base
Rent rate of $24.00 per rentable square foot per year or less; and (ii)
Landlord agrees the Base Rent shall not, in any event, exceed $26.40
per rentable square foot per year.
(b) Tenant shall pay the Base Rent to Landlord in monthly installments
in advance on or before the first day of each calendar month during the
Lease Term. If the Lease Term is extended for a partial month under the
terms of Section 2.01(a) hereinabove, then the Lease Months referenced
in the Base Rent table set out in the Basic Lease Provisions will begin
on the first day of the next full calendar month after the Commencement
Date and Base Rent will be calculated for the partial month at the
beginning of the Lease Term at the same rate as is provided with
respect to the first Lease Month. Base Rent for any partial calendar
month will be prorated on a per diem basis.
(c) Landlord and Tenant have agreed to estimate the annual Base Rent to
be $24.76 per rentable square foot. This estimate is based on the pro
forma calculations set forth on Attachment 2 to the Tenant Work Letter
and is attached for the sole purpose of establishing the formula for
calculating the actual annual Base Rent when all Project Costs are
determined.
Section 3.02 Additional Rent
(a) For purposes of this Lease "Operating Expenses" means all of
Landlord's reasonable, necessary and customary costs and expenses paid
or incurred by Landlord in owning, operating, managing and maintaining
the Building for a particular calendar year or portion thereof (subject
to the exclusions provided for hereinbelow), determined on the cash
basis and otherwise in accordance with Generally Accepted Accounting
Principles ("GAAP") consistently applied, including by way of
illustration but not limitation: (i) all taxes, assessments and
governmental charges of any kind and nature whatsoever levied or
assessed against the Building; (ii) any and all assessments
attributable to the Building and levied by the planned unit development
(the "Terrace P.U.D.") owner's association; (iii) all premiums for any
and all insurance maintained in connection with the ownership,
operation, maintenance, and/or management of the Building (including
but not limited to property and liability coverage); (iv) water, sewer,
electrical and other utility charges; (v) service and other charges
incurred in the operation and maintenance of the elevators and the
heating, ventilation and air-conditioning system; (vi) cleaning and
other janitorial
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services; (vii) tools and supplies; (viii) repair costs (but excluding
capital repairs as provided herein below); (ix) landscape maintenance
costs (the Operating Expenses will not include any costs incurred for
initial landscape installation); (x) security services; (xi) license,
permit and inspection fees other than that required for Tenant's
interior improvements; (xii) reasonable management fees (during the
initial Lease Term, the management fees charged in any year will not
exceed four percent (4%) of the Base Rent and the Additional Rent
payable by Tenant during such year); (xiii) wages and related benefits
payable to employees who render services to or for the direct benefit
of the Building or tenants of the Building and are not managerial
services covered by the management fee; (xiv) legal and accounting
fees; (xv) trash removal; (xvi) Garage maintenance and operating costs;
(xvii) the cost of electrical surveys, not to exceed $2,000 in any
annual period; (xviii) capital improvements costing less than five
thousand dollars ($5,000) (amortized under GAAP) which is limited to
all capital improvements and capital repairs, including repairs to or
replacements of the building structure, building systems, the Garage;
and, in general, (xiv) all other costs and expenses which would
generally be regarded as operating and maintenance costs and expenses.
Also included in Operating Expenses is the cost of any capital
improvement made to the Building by Landlord after the date of this
Lease that is required under governmental law or regulation not
applicable to the Building at the time the Building was constructed,
amortized over a period Landlord reasonably determines to be the useful
life of the improvements, together with an amount equal to interest at
the rate of ten percent (10%) per annum on the unamortized balance.
Landlord may, with the prior written approval of Tenant (not to be
unreasonably withheld) install any device, improvement or equipment
which will improve the operating efficiency of any system within the
Building (e.g. solar collectors) or reduce Operating Expenses. Landlord
may add to the Operating Expenses each year during the useful life of
any device, improvement, or equipment installed under the terms of the
preceding sentence (as the useful life is determined under GAAP) in an
amount equal to the annual amortization of the cost of the installed
device, improvement, or equipment, calculated on a straight line basis
over the useful life, but such amortized costs shall only be included
in Operating Expenses for that portion of the useful life of the
included capital item which falls within the Lease Term.
Landlord estimates that the Additional Rent during the initial year of
the Lease Term will be an amount not in excess of (i) the number of
square feet of Rental Area in the Leased Premises multiplied by (ii)
$9.00.
(b) Operating Expenses shall not include costs for:
(i) repair, replacements and general maintenance paid by
proceeds of insurance or by Tenant or other third parties;
(ii) interest, amortization or other payments on loans to
Landlord;
(iii) leasing commissions and expenses;
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(iv) legal or accounting expenses for services, other than
those that benefit the Building tenants generally (e.g., tax
disputes);
(v) renovating or otherwise improving space for occupants or
prospective occupants of the Building or vacant space in the
Building;
(vi) the costs incurred by Landlord to bring the Building, the
Land or any equipment maintained therein in compliance with
laws, ordinances, rules, regulations, requirements,
directives, guidelines and orders in effect and applicable to
the Building as of the Commencement Date of this Lease;
(vii) the cost of any services or materials supplied to other
tenants and not to Tenant;
(viii) the cost of any services or materials for which
Landlord receives reimbursement from other sources;
(ix) depreciation on the Building;
(x) franchise taxes or federal income taxes imposed on or
measured by the income of Landlord from the operation of the
Building;
(xi) repairs, alterations, additions, improvements,
replacements made to rectify or correct any defect in the
original design, materials or workmanship of the Building
other than repairs, alterations, additions, improvements or
replacements made as a result of ordinary wear and tear;
(xii) damage and repairs attributable to fire or other
casualty;
(xiii) damage and repairs necessitated by the gross negligence
or willful misconduct of Landlord, Landlord's employees,
contractors or agents;
(xiv) executive salaries or salaries of service personnel to
the extent that the services of such persons do not relate to
the direct management, operation, repair or maintenance of the
Building;
(xv) Landlord's general overhead and administrative expenses
not incurred in the direct operation of the Building
(including salaries, fringe benefits and other compensation
paid to partners, officers, and executives of Landlord);
(xvi) costs including permit, license and inspection fees
incurred in renovating or otherwise improving, decorating or
painting or altering space for tenants or other occupants or
of vacant space in the Building;
(xvii) legal fees, fines, penalties, and similar costs
incurred due to a violation by Landlord of the terms and
conditions of this or any other lease;
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(xviii) cost of any service provided to Tenant or other
occupants of the Building for which Landlord is reimbursed or
has received reimbursement from another source;
(xix) interest on debt or principal amortization payments on
any mortgages or deeds of trust or rental payments on any
ground lease of the Land or any other debt for borrowed money;
(xx) costs of repairs or replacements incurred by reason of
fire, windstorm, other insured casualty or condemnation
(except to the extent of any deductible or not covered by
insurance or condemnation proceeds);
(xxi) the cost of installing, operating and maintaining any
specialty service, such as a luncheon club, athletic or
recreational club, except to the extent provided to all
tenants at no charge and for which rent is not collected from
any occupant thereof;
(xxii) the cost of any work or service performed for any
facility other than the Building except service areas
benefitting the Building located in facilities other than in
the Building;
(xxiii) the cost of capital improvements other than
specifically provided in Section 3.02(a) above;
(xxiv) insurance premiums to the extent Landlord is
specifically reimbursed therefore by another tenant other than
as part of Operating Expenses;
(xxv) any costs included in Operating Expenses representing an
amount paid to any person or entity related to Landlord which
is in excess of the amount which would have been paid in the
absence of such relationship;
(xxvi) rentals and other related expenses incurred in leasing
air conditioning systems, elevators or other Building
equipment ordinarily considered to be of a capital nature, the
cost of which equipment would not constitute an expense under
GAAP consistently applied if the equipment were purchased;
(xxvii) any expense for repairs or maintenance to the extent
such costs are recovered under warranties or service
contracts;
(xxviii) legal and auditing fees which are for the benefit of
Landlord such as preparing tax returns and financial
statements;
(xxix) the wages of any employee for services not related
directly to the management, maintenance, operation and repair
of the Building;
(xxx) charitable contributions;
(xxxi) costs of removal, abatement or treatment of any
Hazardous Substances in or under the Building or Land
associated therewith, to the extent such costs are
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incurred as a result of any act, omission, or negligence of
Landlord or its agents, employees or contractors;
(xxxii) electrical power costs above normal consumption for
which any tenant is separately metered or directly contracts
with the local public service company;
(xxxiii) overhead and profit increment paid to Landlord or to
subsidiaries or affiliates of Landlord for services or
materials in the Building to the extent the same exceeds the
market costs of such services or materials rendered by
comparable unaffiliated third parties on a competitive basis;
(xxxiv) costs of purchasing paintings, sculptures or other art
work for display in the Building unless approved by Tenant;
(xxxv) costs incurred primarily in connection with the sale,
financing, refinancing, mortgaging, selling or change of
ownership of Landlord, the Building or the Land;
(xxxvi) management fees in excess of the then-prevailing
market rate (and during each year of the initial Lease Term,
such management fees will not exceed four percent (4%) of the
Base Rent and Additional Rent paid by Tenant under this Lease
during such year);
(xxxvii) late charges, fines, penalties and interest incurred
by Landlord for its failure to pay timely any item which is
included in the Operating Expenses unless caused by Tenant;
(xxxviii) bad debt loss, rent loss, or reserves for either of
these, and any other reserves for repairs, maintenance or
replacements unless pursuant GAAP;
(xxxix) capital repairs and capital improvements in excess of
the $5,000 per year expressly allowed under Section 3.02(a)
(xviii); and
(xxxx) any items which are included in the Project Cost (but
not the repair or replacement of such items).
(c) In addition to the Base Rent, Tenant shall pay to Landlord as
Additional Rent for the Leased Premises, in each calendar year, or
partial calendar year, during the Lease Term, an amount equal to
Tenant's Percentage of the Operating Expenses for the calendar year or
portion of the calendar year.
(d) Landlord shall estimate Tenant's Additional Rent for each
subsequent calendar year, and give written notice thereof to Tenant by
April 1 of each year. Landlord's estimate of Tenant's Additional Rent
shall include a budget in reasonable detail of the anticipated
Operating Expenses for the then current calendar year. If Tenant
objects to the amount of the estimated Additional Rent or to any
expenses reflected in the Operating Expenses budget, Landlord shall
meet with Tenant and use Landlord's good faith efforts to address
Tenant's concerns and to reduce the Operating Expenses and Tenant's
Additional Rent. In all events, Landlord agrees that Landlord will
utilize good faith efforts to
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minimize Operating Expenses, taking into account, however, the
operating and maintenance standards which are applicable to Landlord
under the terms of this Lease.
(e) For each calendar year (or partial calendar year) Tenant shall pay
to Landlord each month, at the same time the Base Rent is due, an
amount equal to one-twelfth (1/12) of the estimated annual Additional
Rent due; provided that, Landlord agrees that in calendar year 2004 and
subsequent calendar years, Operating Expenses which may be controlled
by Landlord shall not increase more than six percent (6%) on an annual
cumulative basis. For these purposes Operating Expenses over which
Landlord has no control shall mean: (i) ad valorem taxes, assessments
and governmental charges or impositions of any kind or nature
whatsoever which are levied against the Building (provided, however,
that Landlord shall utilize reasonable efforts to protest any tax
appraisals which are above fair market value and Landlord will utilize
other reasonable efforts to minimize ad valorem taxes and assessments
against the Building); (ii) premiums for any and all property,
casualty, worker's compensation and/or other insurance Landlord is
required to maintain or chooses to maintain under the terms of this
Lease (provided, however, that Landlord shall use reasonable efforts to
minimize insurance costs); or (iii) impositions, charges or fees of
whatever kind or nature for water, sewer, gas, electric or other
utilities (provided, however, Landlord will use reasonable efforts to
minimize utility expenses). For any year during which Additional Rent
is due for less than the entire calendar year, Tenant shall pay to
Landlord each calendar month during such year, one-twelfth of the
estimated Additional Rent that would have been due if Additional Rent
had been due throughout that calendar year.
(f) If Operating Expenses increase during a calendar year, Landlord may
revise the estimated Additional Rent during such year by giving Tenant
at least thirty (30) days advance written notice to that effect, and
thereafter Tenant shall pay to Landlord, in each of the remaining
months of that calendar year, an additional amount equal to the amount
of the increase in the estimated Additional Rent divided by the number
of months remaining in the year. Notwithstanding the foregoing,
Landlord may not revise the estimated Additional Rent more than two (2)
times during any given calendar year.
(g) Within one hundred twenty (120) days after the end of each calendar
year, Landlord shall prepare and deliver to Tenant a statement showing
Tenant's actual Additional Rent for that calendar year. The statement
shall separately set forth the basic components (in reasonable detail)
of Additional Rent for the prior calendar year and shall be certified
as correct by a certified public accountant or an accounting firm, or
if such statement is not audited, certified by the Building's manager,
and if reasonably requested by Tenant, Landlord shall provide Tenant
with a supplemental statement setting forth the applicability of such
costs and the rationale behind the allocation thereof. Within thirty
(30) days after receipt of each statement, Tenant shall pay to
Landlord, or Landlord shall credit against the next Additional Rent
payment or payments due from Tenant, as the case may be, the difference
between Tenant's actual Additional Rent for the preceding calendar year
and the estimated Additional Rent paid by Tenant during the year.
(h) Tenant will have the right, for a period of two (2) years after the
expiration of any calendar year (but not thereafter) to audit
Landlord's books, at Tenant's cost and expense, to verify the Operating
Expenses for such calendar year. If Tenant does not request an
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audit within two (2) years after the expiration of any particular
calendar year, then Tenant will be deemed to have waived any right it
may have to an adjustment to Tenant's Percentage of any Operating
Expenses for such calendar year. If it is finally determined that
Tenant's actual share of Additional Rent is different than Landlord's
computation of Tenant's share of Additional Rent, then Landlord shall
refund to Tenant any overpayment of any such costs for the year in
question and for each year during the Term the same error was made or
Tenant shall pay to Landlord any underpayment of any such costs for the
year in question and for each year during the Lease Term the same error
was made, as the case may be, within thirty (30) days after
notification thereof. All such audits shall be performed at Tenant's
expense unless it is finally determined that the statement for the time
period in question was in error and, as a result thereof, Tenant paid
to Landlord more than (A) 102.5% of the Additional Rent due for such
time period, in which case Landlord shall pay one half of the
reasonable out-of-pocket audit costs of Tenant; or (B) 105% of the
Additional Rent due for such time period, in which case Landlord shall
pay all reasonable out-of-pocket audit costs of Tenant.
(i) Tenant's right to verify Operating Expenses shall be subject to the
following limitations and conditions: (i) Tenant shall have provided
Landlord with a timely written notice of its desire to verify Operating
Expenses and specified a date for such verification not less than ten
(10) days nor more than thirty (30) days from the delivery of the
notice to Landlord; (ii) such review or verification shall take place
in Landlord's offices; and (iii) Tenant and any third party auditor or
reviewer employed by Tenant shall execute and deliver to Landlord a
confidentiality agreement reasonably acceptable to Landlord and which
shall include, among other terms, the agreement of Tenant and such
third party not to disclose to any other person the existence of the
review, the results of the review and the agreement of any third party
not to solicit verifications or reviews on the part of any other tenant
of the Building.
(j) In the event Landlord and Tenant are unable to agree on the
appropriate resolution of any dispute relating to Operating Expenses,
the sole and exclusive remedy of Tenant shall be to submit the
appropriate determination of Operating Expenses to binding arbitration
in ▇▇▇▇▇▇ County, Texas in accordance with the rules of the American
Arbitration Association for commercial disputes. In the event Landlord
and Tenant can not agree on a panel of arbiters within ten (10) days
after either party notifies the other of its election to submit the
matter to arbitration, then Landlord and Tenant shall each appoint an
arbitrator and the two arbitrators selected shall appoint the third.
All arbitrators selected or appointed for resolution of the dispute
shall be unaffiliated with the parties and shall have at least ten (10)
years experience in commercial real estate leasing in ▇▇▇▇▇▇ County,
Texas as either an attorney or a licensed real estate broker. The
arbitration panel shall render a decision within ninety (90) days of
appointment.
Section 3.03 Prepaid Rent
Intentionally omitted.
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Section 3.04 Rent Payments
(a) All Rent is payable by Tenant at the times and in the amounts
specified in this Lease in legal tender of the United States of America
to Landlord at Landlord's management office in the Terrace P.U.D., or
to any other person or at any other address as Landlord may from time
to time designate in the continental United States by prior written
notice to Tenant.
(b) Rent is payable by Tenant without notice, demand, abatement,
deduction, or set-off except as expressly specified in this Lease.
Tenant's obligation to pay Rent is independent of any obligation of
Landlord under this Lease. If any installment of: (i) Base Rent or
Additional Rent is not paid within five (5) business days after it is
due; or (ii) any other Rent is not paid within fifteen (15) business
days after it is due, Tenant shall pay to Landlord a late charge in an
amount equal to two and one half percent (2 1/2%) of the delinquent
installment of Rent when it pays the delinquent installment. In
addition, if Tenant fails to pay any Rent within five (5) business days
when the same is due (and such Rent represents amounts not already
specified as bearing interest under other provisions of this Lease)
then Tenant shall also pay to Landlord interest on the unpaid Rent from
the due date until the date paid at the highest rate lawfully permitted
to be contracted for, charged or received pursuant to a written
contract under applicable federal or state law (the lower of such rates
being referred to herein as the "Interest Rate").
Section 3.05 Security
(a) Tenant and Landlord hereby acknowledge and agree that Landlord has
been asked to contribute the value of the Land and its personnel,
resources and expertise toward the development of the Land and the
construction thereon of the Building to Tenant's specifications for the
purpose of leasing the same to Tenant and, but for the agreements of
Tenant herein regarding, in particular, the payment of Base Rent during
the first seven (7) years of the Lease Term, Landlord would not agree
to construct the Building, obtain a loan to finance such construction
(herein, the "Construction Loan"), or enter into this Lease. Tenant and
Landlord acknowledge and agree that this Lease shall serve to evidence
the obligations of Landlord, as developer, regarding the development of
the Land and the construction of the Building and also the obligations
of Landlord and Tenant, as lessor and lessee. Landlord and Tenant have
identified certain development costs that will be incurred by Landlord
including (i) amounts to be expended by Landlord in connection with the
performance of Landlord's obligations hereunder and the delivery of the
Leased Premises to Tenant on or before the Commencement Date of the
Lease (including, specifically, the costs of Tenant Finish Work,
brokerage commissions, and Landlord's overhead fees and expenses), (ii)
following the occurrence of an Event of Default under this Lease by
Tenant (particularly if such Event of Default shall occur prior to the
Commencement Date of this Lease), additional interest payable on, and
other costs related to the delayed repayment of, the Construction Loan,
additional costs to design, redesign and construct alternative interior
tenant finish work (including costs, if any, to any general contractor
or subcontractor to commence or recommence work in respect of the
Building or any interior tenant finish) to the specifications of any
replacement tenants who desire to lease any portion of the Building
after an Event of Default hereunder in respect of Tenant, additional
leasing commissions payable by Landlord in connection with the
reletting of the
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Leased Premises (all of such development costs are referred to herein
as "Landlord's Development Costs").
(b) As an inducement for Landlord to agree to construct the Building,
obtain the Construction Loan, and to enter into this Lease, Tenant has
agreed that Tenant shall within ten (10) days after the Effective Date
of this Lease deliver to Landlord the following collateral:
(1) a cash deposit in the amount of $540,160 (the "Cash
Security Deposit"); and
(2) a $9,000,000 irrevocable Letter of Credit addressed
to Landlord and Landlord's Mortgagee in the form of
Exhibit N attached hereto and incorporated herein by
reference or in such other form as may be reasonably
acceptable to Landlord and Landlord's Mortgagee and
issued by ▇▇▇▇▇ Fargo Bank, N.A. or another financial
institution reasonably acceptable to Landlord and
Landlord's Mortgagee (the "Letter of Credit");
the Cash Security Deposit and the Letter of Credit are hereafter
referred to as the "Security". The Security shall secure the timely and
prompt payment and performance by Tenant of:
(1) its obligations under this Lease; and
(2) its obligations under the Tri-Party Agreement set
forth on Exhibit L (the "Tri-Party Agreement")
(c) Landlord agrees to deposit the Cash Security Deposit in a money
market account yielding a market interest rate at a financial
institution approved by Tenant, such approval not to be unreasonably
withheld, with the interest accruing for the benefit of and payable to
Tenant as it accrues on a monthly basis.
(d) Tenant and Landlord hereby acknowledge and agree that the Security
shall not be deemed an advance payment of Rent, liquidated damages, or
a limitation on, or measurement of, Landlord's damages resulting from
the occurrence of an Event of Default hereunder in respect of Tenant.
If an Event of Default occurs hereunder in respect of Tenant, Landlord
may, without prejudice to any other right or remedy hereunder, under
the Tri-Party Agreement, at law or in equity, use the Security to the
extent necessary to:
(1) reimburse Landlord for the Landlord's Development
Costs which have been incurred or obligated to be
incurred by Landlord prior to the Event of Default;
(2) pay any arrearages in Rent or any other sum owing by
Tenant under this Lease or the Tri-Party Agreement,
and
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(3) pay or reimburse Landlord for any other damage,
injury, expense, or liability of Landlord arising
from such Event of Default.
Notwithstanding any provision herein to the contrary, however, it is
agreed and understood that any sums utilized to reimburse Landlord for
Landlord's Development Costs under item (1) above will be applied
against and in reduction of any sums which are paid to or collected by
Landlord under items (2) and/or (3) above. Any and all funds which are
collected by or delivered to Landlord in connection with the Security
and which are in excess of the total amount of the sums payable under
items (2) and/or (3) above are referred to herein as "Excess Funds".
Notwithstanding any provision herein to the contrary, it is agreed and
understood that: (i) the Excess Funds will be maintained by Landlord in
a separate account and will bear interest as provided in subparagraph
3.05(c) above (except that interest will be retained in the account and
will be added to the Excess Funds being held by Landlord until final
disbursement, rather than being paid to Tenant monthly); (ii) no
interest, late charges or other similar fees, charges or penalties will
be levied or charged against Tenant under the terms of this Lease until
and unless the Excess Funds have been fully depleted; and (iii)
Landlord may retain the Excess Funds until a final determination has
been made as to the sums payable to Landlord under items (2) and/or (3)
above, but Landlord will refund all remaining Excess Funds to Tenant
within ten (10) business days after the date of such final
determination.
(e) Landlord shall be permitted to make partial draws of the Letter of
Credit. Landlord may, upon the occurrence of an uncured Event of
Default (i) make a draw upon the Letter of Credit and/or (ii) apply all
or part of the Cash Security Deposit and, in either case, apply the
proceeds of such draw or the amount of such Cash Security Deposit, as
applicable, to the payment of Rent and other amounts owing by Tenant
under this Lease and the Tri-Party Agreement. If Landlord makes a
partial draw or applies all or any portion of the Cash Security Deposit
as provided herein, then Tenant shall promptly take all action as may
be necessary to (i) restore the amount of the Letter of Credit to the
letter of credit amount which is then required under the terms and
provisions of Section 3.05(g) hereinbelow, and/or (ii) pay to Landlord
the amount necessary to restore the Cash Security Deposit to its
original amount. Landlord and Tenant recognize the Landlord's Mortgagee
has required as a condition for the construction loan for the Building
that Landlord and Tenant enter into the Tri-Party Agreement relating to
the Letter of Credit.
(f) If at any time during the term of this Lease:
(1) an Event of Default occurs under the provisions of
Section 11.01(a)(2); or
(2) an Event of Default occurs under the provisions of
Sections 11.01(a)(3) and/or 11.01(a)(4) and the
aggregate of the monetary defaults thereunder exceed
$1,000,000;
then Landlord may draw the full amount of the Letter of Credit
and apply such amount toward the payment of any amounts owed
under the Lease including
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Landlord's Development Costs, to the extent but only to the
extent the same have been previously actually incurred or
obligated to be incurred by Landlord. If Landlord makes a draw
on the full amount of the Letter of Credit, Landlord shall be
required to notify Tenant of which election it has made under
Section 11.01(b) of this Lease, and Landlord will be subject
to the provisions of Section 3.05(d) hereinabove.
(g) The Letter of Credit shall be automatically reduced on each
anniversary of the Commencement Date to the amounts set out
hereinbelow; except, however, that if an uncured Event of Default on
the part of Tenant exists under this Lease, then the reduction will not
occur until and unless Tenant has cured such Event of Default. The
automatic reductions of the Letter of Credit are as follows:
ANNIVERSARY OF COMMENCEMENT DATE LETTER OF CREDIT REDUCES TO
-----------------------------------------------------------------------
1st $ 7,714,284
2nd 6,428,510
3rd 5,142,856
4th 3,857,142
5th 2,571,428
6th 1,285,714
7th -0-
If at any time during the term hereof, Tenant provides Landlord with
notice that Tenant has attained a Standard & Poors Bond Rating of "BB"
or better, Landlord shall promptly reduce Tenant's obligation as to the
Letter of Credit by fifty percent (50%) for so long as Tenant's rating
remains at "BB" or better. The fifty percent (50%) reduction (the "LOC
Reduction") hereunder is in addition to the automatic annual reductions
provided for hereinabove. If Tenant obtains the credit rating specified
above, then the initial amount of the Letter of Credit and each of the
amounts set out in the column hereinabove relating to the remaining
amount of the Letter of Credit after each annual reduction will be
reduced by fifty percent (50%). If at any time after the LOC Reduction
is effective should Tenant's bond rating be revised to less than a
"BB", Tenant shall immediately post a Letter of Credit (by amendment of
the existing Letter of Credit or an additional Letter of Credit) to
increase the amount in accordance with the above schedule.
Notwithstanding any provision herein to the contrary, it is agreed and
understood that Tenant will have no obligation to maintain the Letter
of Credit from and after the date which is exactly seven (7) years
after the Commencement Date; except, however, that if an uncured Event
of Default on the part of Tenant exists at such time, then the Letter
of Credit will be released only if and after Tenant has cured such
Event of Default.
(h) The Letter of Credit may be reduced or replaced from time to time
to effectuate the changes in amount which are provided for under this
Lease. If at any time during the term of the Lease in which the Letter
of Credit is continuing as Security under the Lease, Landlord is
notified that the issuing bank of the Letter of Credit has elected not
to renew the Letter of Credit, Tenant shall have until the date which
is thirty (30) days prior to the then current expiration date of the
Letter of Credit to provide a replacement Letter of Credit reasonably
acceptable to Landlord. If Tenant fails to provide a replacement Letter
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of Credit, reasonably satisfactory to Landlord, then Landlord may draw
the full amount of the Letter of Credit and apply the proceeds to the
amounts specified in, and subject to the limitations and provisions of
Section 3.05(d), the remaining funds will be held with the Cash
Security Deposit pursuant to Section 3.05(c) above. Notwithstanding any
provision herein to the contrary, however, it is agreed and understood
that if Landlord draws upon the Letter of Credit under the terms of
this Section 3.05(h) and Tenant subsequently delivers to Landlord a new
Letter of Credit which satisfies the requirements under this Lease
then, so long as no uncured Event of Default in respect of Tenant
exists at such time, Landlord will simultaneously with Tenant's
delivery of the new Letter of Credit, return to Tenant all sums which
were previously drawn by Landlord under the old Letter of Credit.
(i) Landlord shall return (i) the original, unexpired Letter of Credit,
and (ii) the remaining balance of the Cash Security Deposit, if any, to
Tenant upon the termination or expiration of this Lease (except in the
case of an Event of Default) and after surrender by Tenant of
possession of the Leased Premises to Landlord in accordance with this
Lease.
(j) If Landlord assigns its interest in the Leased Premises, Landlord
may assign the Security to the assignee. Landlord will then have no
further liability for the return of the Security after the assignment
and Tenant shall look solely to the assignee for the return of the
Security. Tenant may not assign or encumber or attempt to assign
(except in connection with a permitted assignment of this Lease by
Tenant or a collateral assignment to a lender) Tenant's interest in the
Security. Landlord and its successors and assigns are not bound by any
actual or attempted assignment (except in connection with a permitted
assignment of this Lease by Tenant or a collateral assignment to a
lender) of Tenant's interest in the Security.
(k) Notwithstanding any provision herein to the contrary, it is agreed
and understood that possession and control of the Letter of Credit,
including all funds drawn under the Letter of Credit, will be held by
Landlord's Mortgagee (hereinafter defined).
ARTICLE IV - UTILITIES AND SERVICES
Section 4.01 Services to be Provided
Provided no uncured Event of Default on the part of Tenant exists,
Landlord shall furnish or cause to be furnished to the Leased Premises,
the utilities and services described below, subject to the conditions
and in accordance with the standards set forth herein:
(a) Landlord shall provide automatic elevator service to the Leased
Premises twenty-four (24) hours per day, seven (7) days per week.
(b) During Building Standard Hours, Landlord agrees to ventilate the
Leased Premises and furnish heat or air conditioning, at such
temperatures and in such amounts as is necessary and appropriate for
the comfortable occupancy of the Leased Premises, reasonably consistent
with the standards of "Class A" office buildings in Austin, Texas and
in accordance with Tenant's instructions. With respect to the Building
(i) so long as Tenant is the sole Tenant of the Building, Tenant shall
have the right to modify Building
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Standard Hours at any time and from time to time by delivering written
notice of such modification to Landlord; and (ii) Tenant shall be
provided after hours service through an automated "on-demand" system,
which will allow Tenant to directly control the heating and air
conditioning system. Tenant shall reimburse Landlord for the actual
costs incurred by Landlord for all additional heating or air
conditioning. Upon request, Landlord will provide Tenant with a
calculation of the basis for Landlord's then current charges for
additional heating and air conditioning.
(c) Electric lighting for the Building.
(d) Toilet facilities and hot and cold water for lavatory and drinking
purposes (at temperatures prescribed by applicable law or as
customarily provided in other Class A buildings in Austin, Texas).
(e) Replacement, as necessary, of all lamps and ballasts in the
building standard light fixtures within the Leased Premises.
(f) Window washing of exterior windows not less than once each year.
(g) Professional landscaping services periodically as necessary to
maintain all landscaped areas from time to time on the Land.
(h) Janitorial services five (5) days per week, during hours designated
by Tenant from time to time (provided such designations do not increase
normal and customary costs for such services) reasonably consistent in
quality to those being provided by other Class A office buildings in
Austin, Texas.
(i) A building engineer located within the Terrace P.U.D. with
"on-call" hours consistent with other Class A office buildings in
Austin, Texas.
(j) Competent property management for the Building located within the
Terrace P.U.D.
(k) Landlord shall furnish electrical service to the Leased Premises in
accordance with Exhibit C at all times, subject to interruptions beyond
Landlord's control and temporary interruptions necessary or appropriate
for Building maintenance or equipment installation. In no event may
Tenant's use of electricity exceed the capacity of the feeders to the
Building or the risers or wiring installation. Electrical consumption
in the Leased Premises, or in any portion of the Leased Premises in
which excess electricity is consumed, may, at Landlord's option, be
separately metered. Tenant shall pay on demand all costs associated
with any separate metering required by Landlord, including but not
limited to installation of any separate metering devices and the costs
of all electrical consumption in any areas which are separately
metered. The obligation of Landlord to provide or cause to be provided
electricity is subject to the rules and regulations of the supplier of
electricity and of any municipal or other governmental authority
regulating the business of providing electricity, except as provided in
Section 4.04. Except as expressly provided in this Lease, Landlord is
not liable or responsible to Tenant for any loss, damage
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or expense Tenant sustains or incurs if either the quality or character
of the electricity is changed or is no longer available or no longer
suitable for Tenant's requirements.
At any time when Landlord is furnishing electricity to the Leased
Premises under this subsection, Landlord may, at its option, upon not
less than thirty (30) days prior written notice to Tenant, discontinue
the furnishing of electricity, provided adequate provisions have been
made for a transfer of service so that no interruption of electrical
service will occur. If Landlord gives a notice of discontinuance,
Landlord shall make all reasonably necessary arrangements with the
public utility supplying the electricity to the Building with respect
to connecting electrical service to the Leased Premises, but Tenant
shall contract directly with the public utility with respect to
supplying the electrical service.
(l) If not included in the Tenant Finish Work, at Tenant's option and
election after the Commencement Date: (i) Landlord, at Tenant's sole
cost and expense, will install and maintain a card-key access control
system for entry into the Building and for elevator operation during
non-Business Standard Hours for the use of Tenant, which system must be
approved by Tenant and must be compatible with the security system
installed by Tenant within the Leased Premises; or (ii) Tenant may, at
Tenant's sole cost and expense, install its own card-key access control
system for entry into the Building and for elevator operation during
non-Business Standard Hours. Further, Landlord will provide 24-hour per
day, 7 days per week security service for the Building. Provided Tenant
is the sole Tenant of the Building, Tenant may at Tenant's option and
election, replace Landlord's security service with a security service
or security personnel retained by Tenant (and in such event, no costs
for security services will be included by Landlord in the Operating
Expenses). In all events, Tenant will have the right to install its own
security system equipment in the Leased Premises, and all such security
system equipment will remain Tenant's property and may be removed by
Tenant upon termination of the Lease.
Section 4.02 Tenant's Obligations
Tenant shall cooperate fully at all times with Landlord and abide by
all regulations and requirements Landlord may prescribe for the use of
all utilities and services that are consistent with the terms of this
Lease.
Section 4.03 Service Interruptions
(a) Landlord does not warrant that the services provided by Landlord
will be free from any slow-down, interruption, or stoppage by
governmental bodies, regulatory agencies, utility companies, and others
supplying services or caused by the maintenance, repair, replacement,
or improvement of any equipment involved in the furnishing of the
services or caused by changes of services, alterations, strikes,
lock-outs, labor controversies, fuel shortages, accidents, acts of God,
the elements, or other causes beyond the reasonable control of
Landlord.
(b) Landlord shall use diligent and reasonable efforts to restore any
service that becomes unavailable; however such unavailability shall not
render Landlord liable for any damages caused thereby, be a
constructive eviction of Tenant, constitute a breach of any implied
warranty, or, except as provided in the next sentence, entitle Tenant
to any
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abatement of Tenant's obligations hereunder unless such unavailability
is caused by Landlord's gross negligence or intentional misconduct.
However, if because of the unavailability of any such service Tenant is
prevented from making reasonable use of a material portion of the
Leased Premises for more than five (5) consecutive business days, then
Tenant's obligation to pay Base Rent and Additional Rent in respect of
the portion of the Leased Premises rendered untenantable thereby shall
be abated for each consecutive day after such five (5) business day
period that Tenant is so prevented from making reasonable use of such
portion of the Leased Premises. If any such unavailability or
interruption of services occurs (other than because of a taking or
Casualty [defined below] as to which Article VIII and Section 7.03
shall control), and Landlord fails to restore such services to the
Leased Premises within fifteen (15) days following delivery of written
notice from Tenant to Landlord, Tenant may commence to restore such
services unless Landlord is diligently performing the work that may be
necessary to restore such services. All actual third-party costs
incurred by Tenant in connection with restoring such services shall be
paid by Landlord to Tenant within thirty (30) days following written
demand therefor to Landlord (accompanied by invoices substantiating
such claim) plus interest at the Interest Rate from the date of payment
of such cost by Tenant until paid by Landlord. Tenant's right to
perform work under this Section 4.03(b) is subject to the following
conditions:
(1) all such work shall be performed in a good and workmanlike
manner and in accordance with law;
(2) except in an emergency or in the event of work which
consists solely of the repair and/or replacement of existing
facilities, all such work shall be performed in accordance
with plans and specifications approved by Landlord (which
approval shall not be unreasonably withheld), whose approval
shall be deemed given if Landlord fails to disapprove any
submitted plans and specifications within three business days
after Tenant delivers such plans to Landlord;
(3) all such work shall be performed by contractors reasonably
acceptable to Landlord which maintain commercial liability
insurance in an amount not less than $1,000,000 per occurrence
naming Landlord as an additional insured; Landlord's approval
shall be deemed given if Landlord fails to disapprove any
contractor within three business days after Tenant delivers to
Landlord a request for its consent thereto; and
(4) except in an emergency or in the event of work which
consists solely of the repair and/or replacement of existing
facilities, Tenant delivers to Landlord "as-built" plans of
the work performed by Tenant.
Section 4.04 Modification
Landlord reserves the right from time to time to make reasonable and
nondiscriminatory modifications to the above standards for utilities
and services by giving written notice to Tenant.
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ARTICLE V - USE AND OCCUPANCY
Section 5.01 Use and Occupancy
(a) The Leased Premises may be used and occupied for the Permitted Use
specified in the Basic Lease Provisions and for any other uses allowed
under Applicable Laws (hereinafter defined). Tenant shall use and
maintain the Leased Premises in an operable, attractive condition
(ordinary wear and tear and damage by casualty and condemnation
excepted) and shall comply with all laws, ordinances, orders, rules,
regulations and requirements of any kind imposed by any governmental
authority (state, federal, county and municipal) applicable to or
having jurisdiction over the use, occupancy, operation, and maintenance
of the Leased Premises, including without limitation, all applicable
environmental laws and the Americans With Disabilities Act of 1990
(ADA) (those laws, ordinances, orders, rules, decisions, and
regulations hereafter referred to as "Applicable Law" or "Applicable
Laws"). Landlord shall construct the Building and the Leased Premises
in accordance with all Applicable Laws; shall operate and maintain the
Building in compliance with all Applicable Laws; and shall otherwise
comply with all Applicable Laws relating to access to the Building and
the Leased Premises.
(b) Tenant may not deface or injure the Leased Premises or the Building
or any part thereof or overload the floors of the Leased Premises
(beyond the capacities for which such floors are required to be
designed under the terms and provisions of this Lease). Tenant may not
commit waste or permit waste to be committed or cause or permit any
nuisance on or in the Leased Premises or the Building. Tenant shall pay
Landlord on demand as Rent for any damages to the Leased Premises or to
any other part of the Building which is not covered by insurance which
Landlord is required to carry under the terms of this Lease and which
is caused by any negligence or willful act or any misuse or abuse
(whether or not the misuse or abuse results from negligence or willful
acts) by Tenant or notwithstanding any provision herein to the
contrary, Tenant shall have no liability to Landlord for any damage or
liability which is or should be covered by the insurance which Landlord
is required to maintain under the terms and provisions of this Lease.
(c) Tenant's agents, employees, licensees, invitees or contractors
(hereafter referred to as "Tenant Party" or "Tenant Parties") shall not
erect, place, or allow to be placed any sign, symbol, advertising
matter, stand, booth, or showcase in or upon the doorsteps, vestibules,
halls, corridors, doors, walls, windows, or pavement of the Building
visible outside the Leased Premises (except for lettering on the door
or doors to the Leased Premises as allowed by the Rules and Regulations
attached hereto as Exhibit D) without the prior consent of Landlord
which will not be unreasonably withheld.
(d) Tenant may not use or allow or permit the Leased Premises to be
used in any way or for any purpose that:
(1) is extra-hazardous on account of the possibility of fire
or other casualty;
(2) renders the Building uninsurable at normal rates by
responsible insurance carriers authorized to do business in
the State of Texas or renders void or voidable any insurance
on the Building.
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If insurance premiums are increased because of Tenant's use of the
Leased Premises, then, in addition to any other remedies Landlord may
have, Tenant shall pay the amount of the increase to Landlord as Rent
within five (5) days after demand.
Section 5.02 Rules and Regulations
Tenant and each Tenant Party shall comply with the rules and
regulations attached as Exhibit D (the "Rules and Regulations"). Tenant
is responsible for the compliance with the Rules and Regulations by
each Tenant Party.
Section 5.03 Quiet Enjoyment
If Tenant pays the Rent when due and timely performs all other
obligations of Tenant under this Lease, then Tenant may peaceably and
quietly enjoy the Leased Premises during the Lease Term without any
disturbance from Landlord or from any other person claiming by,
through, or under Landlord, subject to the terms of this Lease and of
the deeds of trust, mortgages, ordinances, utility easements,
agreements and other matters to which this Lease may be subordinate.
ARTICLE VI - REPAIRS, MAINTENANCE AND ALTERATIONS
Section 6.01 Repair and Maintenance by Tenant
(a) Tenant shall keep the Leased Premises and all fixtures installed by
or on behalf of Tenant in good and tenantable condition (ordinary wear
and tear and damage by casualty and condemnation excepted). Tenant
shall promptly make all necessary non-structural repairs and
replacements thereto at Tenant's expense. All repairs and replacements
must be at least equal in quality to the original work, and all
contractors and subcontractors performing such repairs and replacements
must comply with the conditions specified in Section 6.02(a)
hereinbelow. Without diminishing this obligation of Tenant, if Tenant
fails to commence to make any repairs and replacements which are
required of Tenant hereunder within fifteen (15) days after notice from
Landlord and thereafter diligently pursue such repairs or replacements,
Landlord may at its option make the repairs and replacements and Tenant
shall pay Landlord on demand as Rent the costs incurred by Landlord
plus an administrative fee equal to ten (10%) percent of the costs plus
interest at the Interest Rate from the date of payment of such cost by
Landlord until paid by Tenant.
(b) Tenant shall pay the cost of repairs and replacements due to damage
or injury to the Building or any part thereof caused by any Tenant
Party or by any malfunction or misuse of any equipment installed by or
on behalf of Tenant. This amount is payable by Tenant to Landlord on
demand as Rent plus interest at the Interest Rate from the date of
payment by Landlord until paid by Tenant. Notwithstanding any provision
herein to the contrary, however, Tenant shall not be required to pay
any cost or expense related to any damage or injury which is or should
be covered by insurance which Landlord is required to maintain under
the terms and provisions of this Lease. If Tenant requests Landlord to
perform any maintenance or repairs to the Leased Premises, over and
above the services required to be performed by Landlord pursuant to
Article IV, Tenant shall pay the actual
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cost thereof, plus a reasonable administrative fee not to exceed ten
(10%) percent of the actual cost thereof, to Landlord as Rent within
ten (10) business days after demand.
Section 6.02 Alterations and Additions by Tenant
(a) Tenant may not make or permit any alterations, improvements or
additions in or to the Leased Premises or the Building without
Landlord's prior written consent, such consent not to be unreasonably
withheld; provided however, that: (i) Tenant shall not be required to
obtain Landlord's approval for alterations which cost less than $30,000
each and do not materially affect the structure of the Building or its
HVAC, electrical or plumbing systems; and (ii) nothing in this Lease
will require Tenant to obtain Landlord's consent for interior painting,
carpeting and similar decorative modifications to the Leased Premises,
regardless of the costs thereof. All alterations, additions and
improvements made to, or fixtures or other improvements placed in or
upon, the Leased Premises, whether temporary or permanent in character,
by either party (except only Tenant's fixtures, and all of Tenant's
office furniture, equipment and other movable items of personal
property) are a part of the Building and are the property of Landlord
when they are placed in the Leased Premises unless otherwise agreed by
Landlord and Tenant. Except for alterations, improvements and additions
which Tenant is allowed to make without necessity of obtaining
Landlord's approval, all alterations, improvements and additions in and
to the Leased Premises requested by Tenant must be made in accordance
with plans and specifications approved in advance in writing by
Landlord. All work must be performed at Tenant's expense either by
Landlord or by contractors and subcontractors approved in advance by
Landlord. If the work is not performed by Landlord, then all work
performed by Tenant's contractors and subcontractors is subject to the
following conditions:
(1) Each contractor and subcontractor must deliver evidence
satisfactory to Landlord that the insurance specified in
Exhibit E is in force prior to commencing work.
(2) Tenant shall use good faith efforts to insure that all
workers are cooperative with Building personnel and comply
with all Building Rules and Regulations.
(3) Tenant must deliver to Landlord evidence that Tenant has
obtained all necessary governmental permits and approvals for
the improvements or alterations prior to starting any work.
(4) All construction must be done in a good and workmanlike
manner and is subject to approval by Landlord during and after
construction, in its reasonable discretion.
(5) Lien releases from each contractor (subject to final
retainage payments) must be submitted to Landlord within ten
(10) business days after completion of the work performed by
the contractor.
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(6) Within thirty (30) days after completion of any
improvements or alterations, Tenant, at its cost, shall
deliver to Landlord, on CAD disks, copies of "as-built" plans
and specifications (1/8" scale) for each floor where material
alterations or improvements were made.
(b) All alterations and improvements must comply with all Applicable
Laws. Neither Landlord's approval of Tenant's plans and specifications
for the alterations or improvements, nor Landlord's acceptance of
Tenant's as-built plans is a confirmation or agreement by Landlord that
the improvements and alterations comply with Applicable Laws.
Section 6.03 Mechanics' Liens - Tenant's Obligations
If any mechanic's or materialman's lien is placed upon Landlord's
interest in the Building or the Leased Premises or any part thereof or
against Landlord's interest under this Lease by any architect,
contractor, subcontractor, laborer, or materialman performing any labor
or furnishing any materials to Tenant for any improvement, alteration,
or repair of or to the Leased Premises, the Building, or any part
thereof, Tenant shall either: (i) cause the same to be discharged of
record within twenty (20) days after filing; or (ii) post a bond or
other security reasonably acceptable to Landlord to cover the full
amount of the claim. If Tenant does not satisfy one or the other of the
foregoing requirements, then Landlord may, but is not obligated to,
discharge the lien by paying the amount claimed to be due or by
procuring the discharge of the lien by deposit in court or bonding. Any
amount paid by Landlord relating to any lien not caused by Landlord,
and all reasonable legal and other expenses of Landlord, including
reasonable attorneys' fees, in defending any action or in procuring the
discharge of any lien, with interest thereon at the Interest Rate from
date of payment by Landlord until paid by Tenant, is payable by Tenant
to Landlord on demand as Rent.
Section 6.04 Maintenance and Repair by Landlord
Landlord shall maintain the Building in first-class condition and
repair and shall operate the Building as a first-class office building,
similar to other Class A buildings in Austin, Texas. Landlord shall not
permit or allow to remain any waste or damage to any portion of the
Building. Without limitation on the generality of the foregoing,
Landlord represents and warrants to Tenant that the Building's
structure and operational systems will be in good condition and
suitable for Tenant's Permitted Use from and after the Commencement
Date. Subject to reimbursement of the Operating Expenses, Landlord will
maintain in good repair and condition all (i) service areas; (ii)
roofs, ceilings, foundations, floorslabs, parking areas, pavement,
exterior windows and load bearing items; (iii) exterior surfaces of
walls; (iv) plumbing, pipes and conduits located in the service areas;
(v) central heating, ventilation and air conditioning, electrical,
mechanical and plumbing systems, including, but not limited to, those
servicing the Leased Premises (other than excess electrical equipment
and other supplemental equipment installed by or for Tenant); (vi)
structural and mechanical elements, including without limitation, those
related to the Leased Premises necessary to provide the services
described in Article IV; (vii) parking garages; (viii) elevators; (ix)
surface parking lots, driveways, sidewalks, landscaping and other
improvements or additions to the Land; and (x) Building security
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and life safety systems. Landlord will at all times maintain the
Building in accordance with standards as customarily followed in the
operation and maintenance of Class A office buildings in Austin, Texas.
ARTICLE VII - INSURANCE, FIRE AND CASUALTY
Section 7.01 Tenant's Insurance
(a) Tenant shall, at its expense, maintain at all times a policy or
policies of insurance insuring Tenant against all liability for injury
to or death of a person or persons and for damage to or destruction of
property occasioned by or arising out of or in connection with the use
or occupancy of the Leased Premises or by the condition of the Leased
Premises (including Tenant's contractual liability to indemnify and
defend Landlord) with a combined single limit of $2,000,000 for bodily
injury and property damages, or with increased limits as may be
reasonably required from time to time by Landlord by giving notice to
Tenant not to exceed a combined single limit in excess of $5,000,000.
Tenant's policies must be written by an insurance company or companies
reasonably satisfactory to Landlord and licensed to do business in the
State of Texas with Landlord and Landlord's manager named as additional
insureds. Tenant shall obtain a written obligation on the part of each
insurance company to notify Landlord at least fifteen (15) days prior
to cancellation of the insurance.
(b) Tenant shall deliver duly executed certificates of insurance to
Landlord prior to occupying any part of the Leased Premises. Tenant
shall deliver satisfactory evidence of renewals of the insurance
policies to Landlord within ten (10) days of the expiration of the
respective policies. If Tenant fails to comply with these insurance
requirements, Landlord may obtain the insurance and Tenant shall pay to
Landlord on demand as additional Rent the premium cost thereof plus
interest at the Interest Rate from the date of payment by Landlord
until paid by Tenant.
(c) Tenant shall insure that all contractors, subcontractors, moving
companies and others performing work of any type for Tenant in the
Building shall comply with the insurance requirements set out on
Exhibit E attached hereto and incorporated herein by reference, as such
insurance requirements may be reasonably revised from time to time by
Landlord (acting reasonably and in accordance with practices which are
comparable to practices utilized at other Class A buildings in Austin,
Texas). Landlord shall inform Tenant in writing of all revisions to the
insurance requirements.
Section 7.02 Landlord's Insurance
Landlord shall, at all times during the Lease Term, maintain insurance
insuring the Building at its full replacement cost, and also insuring
any loss of rents by Landlord due to any loss or damage by fire,
explosion or other hazards or contingencies. Such insurance will be
provided through a policy or policies with deductible amounts which are
approved in writing by Tenant and otherwise with terms, coverages and
conditions as are normally carried by reasonably prudent owners of
properties similar to the Building. The company or companies writing
any insurance which Landlord is required to maintain under this Lease
must be licensed to do business in the State of Texas and must have an
A.M. Best
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rating of AVI or better. Tenant agrees that all personal property upon
the Leased Premises shall be at the risk of Tenant only and that
Landlord shall not be liable for any damage thereto or theft thereof.
If by reason of any act or conduct of business of Tenant there shall be
any increase in the rate of insurance on the Building or contents
created by Tenant's acts or conduct of business, Tenant agrees to pay
Landlord the amount of such increase on demand.
Section 7.03 Fire or Other Casualty
(a) If the Leased Premises or any part thereof are damaged by fire or
other casualty (a "Casualty"), Tenant shall give prompt notice thereof
to Landlord. If the Leased Premises or the Building is damaged by a
Casualty, Landlord shall, within thirty (30) days after such Casualty
deliver to Tenant a good faith estimate (the "Damage Notice") of the
date on which the repair of the damage caused by such Casualty will be
substantially completed (such date is herein called the "Estimated
Restoration Completion Date"). Base Rent and Additional Rent shall
▇▇▇▇▇ to a fair and equitable extent as of the date of the Casualty
with respect to the portion of the Leased Premises and/or the Building
affected by the Casualty until substantial completion of repairs to the
Leased Premises and elevator access and other services are available to
the Leased Premises for conduct of Tenant's business.
(b) If the Leased Premises or the Building is damaged by Casualty such
that Tenant is prevented from conducting its business in a material
portion of the Leased Premises in a manner reasonably comparable to
that conducted immediately before such Casualty, then:
(i) if the Estimated Restoration Completion Date is later than
one hundred eighty (180) days after the date of the Casualty,
Tenant may terminate this Lease by delivering written notice
to Landlord of its election to terminate within thirty (30)
days after the Damage Notice has been delivered to Tenant or,
if no such notice is delivered by Landlord, within ninety (90)
days after the Casualty; and
(ii) if Tenant does not, or does not have the right to,
terminate this Lease pursuant to this Section 7.03(b) and such
damage is not repaired by the Casualty Restoration Termination
Date (defined below), Tenant may terminate this Lease by
delivering written notice to Landlord of its election to
terminate before the earlier of (A) thirty (30) days after the
Casualty Restoration Termination Date (defined below) or (B)
the completion of such repairs.
Any termination right of Tenant not timely exercised shall be deemed
waived, time being of the essence with respect thereto. In case of any
termination under Section 7.03(b)(i) above, Base Rent and Additional
Rent shall ▇▇▇▇▇ in full as of the date of the Casualty. In case of any
termination under Section 7.03(b)(ii) above, the portion of the Base
Rent for the portion of the Leased Premises affected thereby not
theretofore abated shall ▇▇▇▇▇ as of the date of termination. Unless
Landlord and Tenant agree in writing otherwise, the "Casualty
Restoration Termination Date" shall be thirty (30) days after the later
of (1) one hundred eighty (180) days after the Casualty, or (2) the
Estimated Restoration Completion Date.
(c) If Tenant does not elect to terminate this Lease following a
Casualty, then Landlord shall, within a reasonable time after such
Casualty, subject to approval from
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Landlord's Mortgagee, commence to repair the Building and the Leased
Premises and shall proceed with reasonable diligence to restore the
Building and Leased Premises to substantially the same condition as
they existed immediately before such Casualty; however, Landlord shall
not be required to repair or replace any part of the furniture,
equipment, fixtures, and other improvements which may have been placed
by, or at the request of, Tenant or other occupants in the Building or
the Leased Premises.
(d) If the damages are caused by the willful misconduct of Tenant or
any Tenant Party, Tenant shall pay to Landlord on demand as Additional
Rent any damages in excess of the amount paid by insurance proceeds
received by Landlord which are not covered by the insurance which
Landlord is required to carry under the terms and provisions of this
Lease. Any insurance carried by Landlord or Tenant against loss or
damage to the Building or to the Leased Premises is for the sole
benefit of the party carrying the insurance and under its sole control.
(e) If Tenant does not elect to terminate the Lease pursuant to Section
7.03(b) above and Landlord's Mortgagee requires that the insurance
proceeds due Landlord for the Casualty are to be applied to the
Building Mortgage, then in such event, Landlord will use reasonable
efforts to acquire replacement financing in order to restore the
Building. Landlord and Tenant acknowledge that in such event it is not
possible to predict market conditions in advance. In such event,
Landlord hereby grants Tenant a Right of First Offer (the "Tenant's
First Offer Right") as hereafter described:
(i) If Landlord is able to acquire replacement financing
to rebuild the Building, then in such event, Landlord
shall, prior to offering the Building for lease or
sale to a third party, give Tenant not less than
thirty (30) days within which to accept a proposal
for the sale or lease of the Building.
(ii) If Landlord is not able to acquire replacement
financing and determines to sell the Land, then in
such event, Landlord shall, prior to offering the
Land for sale to a third party, give Tenant a
proposal for Tenant to purchase the Land and Tenant
shall have thirty (30) days within which to accept
the proposal for the purchase of the Land.
Landlord and Tenant agree if Landlord shall offer the Tenant's First
Offer Right, Landlord and Tenant will meet, if required, to reach a
market rate rent or purchase price. If an agreement cannot be reached
after good faith discussions between Landlord and Tenant within said
thirty (30) day period, neither party shall have any further obligation
hereunder.
Section 7.04 Waiver of Subrogation
Each party waives all claims that arise or may arise in its favor
against the other party, or anyone claiming through or under them, by
way of subrogation or otherwise, during the Lease Term or any extension
or renewal thereof, for any injury to or death of any person or persons
or the theft, destruction, loss of, or damage to, any of its property
(a "Loss") caused by casualty, theft, fire, third parties, or any other
matter, to the extent the same is insured against by it under any
insurance policy that covers the Building, the Leased
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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 (whether or not the loss or damage is caused by
the fault or negligence of the other party or anyone for whom the other
party is responsible). These waivers are in addition to, and not in
limitation of, any other waiver or release in this Lease with respect
to any Loss. Since these mutual waivers preclude the assignment of any
claim by way of subrogation (or otherwise) to an insurance company (or
any other person), each party shall immediately give each insurance
company issuing to it policies of fire and extended coverage insurance
written notice of the terms of these mutual waivers, and have the
insurance policies properly endorsed, if necessary, to prevent the
invalidation of the insurance coverages by reason of these waivers.
ARTICLE VIII - CONDEMNATION
(a) If all or substantially all of the Building is taken for any public
or quasi-public use under any governmental law, ordinance or regulation
or by right of eminent domain or is sold to the condemning authority in
lieu of condemnation, then this Lease will terminate as of the date
when physical possession of the portion of the Building is taken by the
condemning authority. If less than all or substantially all of the
Building is taken or sold, and if such taking or sale prevents Tenant
from conducting its business in the Leased Premises in a manner
reasonably comparable to that conducted immediately before such taking,
then Tenant may terminate this Lease as of the date of such taking or
sale by giving Landlord written notice within sixty (60) days after the
taking, and Rent shall be apportioned as of the date of such taking.
(b) If this Lease is not terminated by Tenant upon any taking or sale
of less than all or substantially all of the Building and Tenant does
not terminate this Lease as provided below:
(1) The Rent will be reduced by a fair and equitable amount
representing that part of the Rent properly allocable to the
portion of the Leased Premises or the Building which is taken
or sold, if any; and
(2) Landlord shall, at Landlord's sole expense, restore the
Building to substantially its former condition to the extent
reasonably deemed feasible by Landlord, but:
(A) Landlord's restoration obligation does not exceed
the scope of the work done by Landlord in originally
constructing the Building and installing Tenant
Finish Work in the Leased Premises; and
(B) Landlord is not required to spend for the work an
amount in excess of the amount received by Landlord
as compensation or damages (over and above amounts
going to the mortgagee of the property taken) for the
part of the Building so taken.
(c) Tenant shall be entitled to receive, out of the compensation
awarded upon a taking of any part of the Building, an amount equal to
any unamortized Tenant expenditures for
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build-out costs incurred by Tenant in excess of the Allowance. In this
regard, all amortizations of Tenant expenditures will be done on a
straight line basis over the Lease Term. In addition, Tenant shall be
entitled to separately pursue claims against the condemner for the
value of Tenant's personal property, moving costs, loss of business and
other reasonable claims it may have. Except as provided above, Landlord
will be entitled to receive all of the compensation awarded upon a
taking of all or any part of the Building, including any award for the
value of the unexpired Lease Term.
ARTICLE IX - INDEMNIFICATIONS AND WAIVERS
Section 9.01 Limitations on Liability of Landlord and Waivers
Landlord is not liable to any Tenant or any Tenant Party or any other
person, and Tenant waives any liability of Landlord, for:
(1) any injury or damage to person or property due to the
condition or design of, or any defect in the Building that
exists now or occurs in the future, except for Landlord's
or any of Landlord's agents or contractors' gross
negligence or willful misconduct;
(2) any injury or damage to person or property due to the
Building or related improvements or appurtenances being
out of repair, or defects in or failure of pipes or
wiring, or backing up of drains, or the bursting or
leaking of pipes, faucets and plumbing mixtures, or gas,
water, stream, electricity, or oil leaking, escaping, or
flowing into the Leased Premises unless caused by
Landlord's willful misconduct or gross negligence;
(3) any loss or damage caused by the acts or omissions of
other tenants in the Building or of any other persons,
excepting only the willful misconduct or gross negligence
of Landlord; or
(4) any loss or damage to property or person occasioned by
theft, fire, act of God, public enemy, injunction, riot,
insurrection, war, court order, requisition, order of
government authority, and any other cause beyond the
control of Landlord.
Section 9.02 No Implied Waiver
The failure of either party to insist at any time upon the strict
performance of any of the terms of this Lease or to exercise any
option, right, power or remedy contained in this Lease is not a waiver
of the right or remedy for the future. The waiver of any breach of this
Lease or violation of the Rules and Regulations attached hereto does
not prevent a subsequent act, which would have originally constituted a
breach or violation, from having all the force and effect of an
original breach or violation. No express waiver affects any terms other
than the ones specified in the waiver and those only for the time and
in the manner specifically stated. Acceptance by Landlord of any Rent
after the breach of any of the terms of this Lease or violation of any
Rule or Regulation is not a waiver of the breach or violation or the
right to collect applicable late charges and interest, and no waiver by
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either party of any of the terms of this Lease is effective unless
expressed in writing and signed by such party.
Section 9.03 Waiver by Tenant
Tenant waives and surrenders for itself and all persons or entities
claiming by, through, and under it, including creditors of all kinds:
(A) any right and privilege which it or any of them has under any
present or future constitution, statute, or rule of law to redeem the
Leased Premises or to have a continuance of this Lease for the Lease
Term after termination of Tenant's right of occupancy by order or
judgment of any court or by any legal process or writ, or under the
terms of this Lease, (B) the benefits of any present or future
constitution, statute, or rule of law that exempts property from
liability for debt or for distress for Rent, (C) any provision of law
relating to notice or delay in levy of execution in case of eviction of
a Tenant for nonpayment of Rent, and (D) any rights, privileges, and
liens set out under Section 91.004 and 93.003 of the Texas Property
Code (as amended), and Tenant exempts Landlord from any liability or
duty thereunder.
Section 9.04 Hazardous Substances
(a) Tenant has no liability or responsibility with respect to Hazardous
Substances, if any, which were placed or located within the Leased
Premises or the Building prior to the Commencement Date, but Tenant may
not, except as provided for herein:
(1) cause or permit the escape, disposal, or release in the
Leased Premises or the Building of any biologically active,
chemically active, or hazardous substances or materials
(hereafter referred to as "Hazardous Substances"); or
(2) bring or permit or allow any Tenant Party to bring, any
Hazardous Substances into the Leased Premises or the Building
except for Hazardous Substances which are used by Tenant in
conjunction with Tenant's business and which are maintained
and utilized by Tenant in accordance with Applicable Laws.
The term Hazardous Substances includes, but is not limited to, those
described in the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq., the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section
6901 et seq., the Texas Water Code, the Texas Solid Waste Disposal Act,
and other applicable state or local environmental laws and the
regulations adopted under those acts.
Landlord consents to Tenant operating laboratories in the Leased
Premises which will be used for research and development which may
require the presence of the following: compressed air, vacuum, bottled
carbon dioxide, liquid nitrogen, and Hazardous Substances which will be
maintained and disposed of by Tenant in accordance with Applicable
Laws.
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(b) If any lender or governmental agency requires testing to ascertain
whether or not a release of Hazardous Substances has occurred in or on
the Leased Premises or the Building based on probable cause that a
release occurred and was caused by any Tenant or Tenant Party, then
Tenant shall reimburse the reasonable costs of the testing to Landlord
on demand as Rent if a release by Tenant or a Tenant Party actually
occurred.
(c) Each party shall execute affidavits, representations, and the like
from time to time reasonably requested by the other party and in form
and substance reasonably acceptable to the other party concerning such
party's actual knowledge and belief regarding the presence of Hazardous
Substances in the Leased Premises and the Building.
(d) Tenant shall indemnify Landlord against any and all costs and
expenses incurred by Landlord arising from any release of Hazardous
Substances in or on the Leased Premises or the Building caused by any
Tenant or Tenant Party.
(e) Landlord shall be responsible for all Hazardous Substances, if any,
which were placed or located within the Leased Premises and/or the
Building prior to the Commencement Date. Landlord will indemnify and
save and hold Tenant harmless from and against all claims, liabilities
or obligations of any kind or nature arising in connection with: (i)
any Hazardous Substances which were placed or located within the Leased
Premises or the Building prior to the Commencement Date; and/or (ii)
any release of Hazardous Substances in or on the Leased Premises or the
Building caused by Landlord or by any person or entity operating by,
through or under Landlord.
(f) The provisions of this Section 9.04 survive the expiration or
earlier termination of this Lease.
ARTICLE X - ASSIGNMENT AND SUBLETTING
Section 10.01 No Assignment or Subletting Without Consent.
(a) Except as hereinafter provided, Tenant may not, without Landlord's
prior written consent: (1) assign or transfer this Lease or any
interest therein; (2) permit any assignment of this Lease or any
interest therein by operation of law; (3) sublet the Leased Premises or
any part thereof, (4) grant any license, concession, or other right of
occupancy of any portion of the Leased Premises; (5) mortgage, pledge,
or otherwise encumber its interest in this Lease; or (6) permit the use
of the Leased Premises by any parties other than Tenant and its
employees.
(b) In the event Tenant desires the consent of Landlord to an
assignment or subletting, Tenant shall submit to Landlord not less than
fifteen (15) days prior to the effective date of the assignment or
subletting a written notice of such fact which shall include copies of
the final form of the documentation of the assignment or sublease and
sufficient information to permit Landlord to determine the identity,
character and financial condition of the proposed assignee or
subtenant. Landlord shall either approve or reject Tenant's request
within fifteen (15) days of receipt of Tenant's written notice.
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Section 10.02 Landlord's Consent
(a) Landlord's consent hereunder shall not be unreasonably withheld;
provided, however, in granting or withholding its consent Landlord
shall be entitled to take into consideration all relevant factors
including without limitation, the creditworthiness, nature of the
business and business reputation of the proposed subtenant or assignee
and the parking requirements of the proposed subtenant or assignee to
the extent and only to the extent such parking requirements exceed the
parking requirements of Tenant. Landlord may, if it so elects, withhold
its consent if the proposed subtenant or assignee is a government
entity. Landlord may withhold or condition its consent subject to
execution and delivery of an appropriate sublease or assignment which
includes provisions for notice to Landlord, prohibition on further
assignment or subleasing without Landlord's consent, except pursuant to
the terms of this Lease and indemnification of Landlord by the
subtenant or assignee. Landlord may withhold its consent to any
proposed assignment or sublease if an Event of Default has occurred and
is continuing, or an event has occurred which, with the giving of
notice, or the passage of time, or both, could constitute any Event of
Default. Landlord's consent to any assignment or subletting, is not a
waiver of Landlord's right to approve or disapprove any subsequent
assignment or subletting.
(b) For any approved sublease or assignment, in the event the Base Rent
paid by any assignee or subtenant exceeds the Base Rent due to Landlord
from Tenant, Landlord shall be entitled to receive one-half ( 1/2) of
such excess above the Base Rent after Tenant has received full
reimbursement out of such excess of all reasonable sublease or
assignment expenses, including but not limited to architectural fees,
contractor fees, cost of leasehold improvements, rental abatement and
legal and brokerage fees.
(c) The provisions of Section 10.02(b) to the contrary notwithstanding,
should Tenant request consent to enter into one or more subleases or
assignments, which in the aggregate, cover more than (i) twenty-five
percent (25%) of the Leased Premises and are for a period of time which
extended into the final twenty-four (24) months of the Lease Term, or
(ii) thirty-five percent (35%) or more of the Leased Premises, in
either event, Landlord shall be entitled to recapture the portion of
the Leased Premises under consideration for sublease or assignment by
providing Tenant with written notice within ten (10) days of the date
of the requested consent. In either event, Landlord and Tenant shall
promptly enter into an amendment to this Lease reflecting such
recapture of a portion of the Leased Premises as well as such other
provisions which are required to reflect the conversion of the Building
to a multi-tenant building, including but not limited to Building Rules
and Regulations and parking regulations. Notwithstanding the above: (i)
if Tenant exercises its renewal option with respect to any sublease
space concurrently with the subleasing, then Landlord will have no
right to recapture such space under the provisions of (i) the
immediately preceding sentence; and (ii) Landlord's right of recapture
will not apply to any subleases or assignments made pursuant to Section
10.03 hereof and such subleases and assignments will not be included or
considered under the provisions set forth hereinabove for the purpose
of calculating the percentage of the Leased Premises which has been
leased.
(d) Notwithstanding the consent by Landlord to any assignment or
subletting, Tenant shall remain liable for the payment of Rent and
performance of all other obligations under this Lease.
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(e) Tenant shall have the right to erect partitions and demising walls
to accommodate any sublease which is entered into by Tenant under the
terms and provisions of this Lease.
Section 10.03 Permitted Transfers
Notwithstanding anything to the contrary in this Lease, (a) an
assignment or sublease to a subsidiary of Tenant or to an entity under
joint ownership or control with Tenant, (b) the merger or transfer of
all of the stock in Tenant; or (c) an assignment of the Lease in
conjunction with the sale of all or substantially all of the assets of
Tenant, shall be considered transfers permitted under this Lease
provided in each such case the resulting entity's financial condition
is equal to or better than Tenant's (a "Permitted Transfer").
ARTICLE XI - DEFAULT
Section 11.01 Default
(a) Each of the following shall constitute an "Event of Default"
by Tenant:
(1) The Tenant abandons all or any part of the Leased
Premises and fails to pay one or more installments of
Base Rent or Additional Rent when the same is due; or
(2) The filing of a petition by Tenant or by a third
party which is not contested by Tenant to declare
Tenant is bankrupt or to delay, reduce or modify
Tenant's debts or obligations, or for the appointment
of a receiver or trustee of Tenant or its property or
for the winding up or liquidation of its affairs; or
if Tenant makes an assignment of the benefits of
Tenant's creditors or admits in writing Tenant's
inability to pay the debts due; or
(3) The failure of Tenant to pay when due any installment
of Base Rent, or Additional Rent, or any other money
payments due hereunder, or any part thereof, and such
failure shall continue for a period of five (5)
business days after Landlord has delivered to Tenant
written notice of such failure (provided, however,
that if Tenant fails to pay installments of Rent
hereunder on a timely basis on two (2) or more
occasions during any calendar year, then Landlord
will thereafter have no obligation to deliver any
notice of default to Tenant under the terms hereof
during the remainder of such calendar year and an
"Event of Default" will be deemed to have occurred
immediately upon the failure of Tenant to pay when
due any installment of Rent which comes due during
the remainder of such calendar year, without any
grace period and without necessity of Landlord
delivering any notice of default to Tenant); or
(4) The failure of Tenant to fulfill or perform in whole
or in part, any agreement or provision of this Lease
which is an obligation upon Tenant, other than the
payment of Rent or any other money amounts due
hereunder, and such failure or nonperformance shall
continue for a period
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of thirty (30) days after written notice thereof has
been given by Landlord to Tenant, or such longer
period as may be reasonably required to cure such
failure or nonperformance, provided that Tenant
commences curative action within such thirty (30) day
period and diligently pursues such curative action to
completion.
(b) Upon the occurrence of any Event of Default, Landlord shall
have the option to do any one or more of the following after
providing notices as set forth hereinbelow, but otherwise
without any notice or demand, in addition to and in limitation
of any other remedy permitted by law or by this lease:
(1) Draw all or part of the Letter of Credit (after
compliance with Section 3.05 of the Lease and subject
to the limitations set out therein) and apply the
proceeds thereof to the payment of any amounts due to
Landlord hereunder and under the Tri-Party Agreement
(including the payment of any of Landlord's
Development Costs).
(2) Apply all or part of the Cash Security Deposit to the
payment of amounts due to Landlord hereunder and
under the Tri-Party Agreement (including the payment
of any of Landlord's Development Costs after
compliance with Section 3.05 of the Lease and subject
to the limitations set out therein).
(3) Terminate this Lease and forthwith repossess the
Leased Premises, and Landlord will be entitled to
recover forthwith as damages a sum of money equal to
the total of (i) the reasonable cost of recovering
the Leased Premises (including attorneys' fees and
costs of suit); (ii) the unpaid Rent earned at the
time of termination, plus interest thereon at the
Interest Rate; (iii) an amount equal to the total
Base Rent payable during the remainder of the Lease
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",
less the present value (discounted at the same rate)
of the fair market rental value of the Leased
Premises for said period; and (iv) Landlord's
Development Costs and any other sum of money and
damages owed by Tenant to Landlord; provided,
however, that in determining the actual damages due
to Landlord, proper credit shall be given for any
portion of the Security previously applied by
Landlord to the payment of such damages or available
to Landlord for such payment, as provided in Section
3.05(d) hereof.
(4) Terminate Tenant's right to possession of the Leased
Premises without terminating this Lease by giving
written notice thereof to Tenant, in which event
Tenant shall pay to Landlord (i) all Rent and other
amounts accrued hereunder (including the Landlord's
Development Costs) to the date of termination of
possession, (ii) the reasonable cost of recovering
the Leased Premises (including reasonable attorneys'
fees and costs of suit), and (iii) all Rent and other
sums required hereunder to be paid by Tenant during
the
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remainder of the Lease Term, diminished by any net
sums thereafter received by Landlord through
reletting the Leased Premises during such period;
provided, however, that in determining the actual
damages due to Landlord, proper credit shall be given
for any portion of the Security previously applied by
Landlord to the payment of such damages or available
to Landlord for such payment, as provided in Section
3.05(d) hereof. Landlord shall use reasonable efforts
to relet the Leased Premises on such terms and
conditions as Landlord in its reasonable discretion
may determine (including the terms and conditions
specified in Section 11.03). Subject to the
provisions of Section 11.03, Landlord shall not be
liable for, nor shall Tenant's obligations hereunder
be diminished because of, Landlord's failure to relet
the Leased Premises or to collect rent due for such
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 Leased
Premises shall not affect Tenant's obligations
hereunder for the unexpired Lease 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 expiration
of the Lease Term. 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
Leased Premises shall be deemed to be taken under
this Section 11.01(b)(4). If Landlord elects to
proceed under this Section 11.01(b)(4), it may at any
time elect to terminate this Lease under Section
11.01(b)(3).
(5) Landlord may make such payments and/or take such
actions (including, without limitation, entering upon
or within the Leased Premises) and do whatever Tenant
is obligated to do under the terms of this Lease, and
Tenant covenants and agrees to reimburse Landlord on
demand for any expenses which Landlord may incur in
effecting compliance with Tenant's obligations under
this Lease, together with interest thereon at the
Interest Rate from the date paid by Landlord.
(6) After terminating this Lease or Tenant's right to
possession of the Leased Premises, Landlord may
deliver to Tenant written notice that Landlord
intends to remove Tenant's personal property from the
Leased Premises, and if Tenant fails to remove
Tenant's personal property from the Leased Premises
within ten (10) days after Tenant's receipt of such
notice, then Landlord may remove any and all personal
property located in the Leased Premises and either
dispose of or store such personal property at
Tenant's expense.
(7) In addition to the other remedies provided in this
Lease, Landlord shall be entitled, to the extent
permitted by applicable law, to injunctive relief in
case of the violation or attempted or threatened
violation, of any of the provisions of this Lease, or
to a decree compelling performance of any other
provisions of this Lease, or to any other remedy
allowed at law or in equity.
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Tenant and Landlord intend that this Lease evidence the obligations of
Landlord, as developer, regarding the development of the Land and the
construction of the Building, as well as, the obligations of Landlord
and Tenant, as lessor and lessee. Tenant and Landlord acknowledge and
agree that, due to the peculiar nature of this transaction and the
particular development obligations to be assumed by Landlord to perform
its duties hereunder, the recovery by Landlord of damages adequate to
cover up to $9,000,000 of Landlord's Development Costs shall not be
limited by the foregoing provisions regarding the calculation and
acceleration of Rent. Instead, Landlord's right to recover damages
adequate to cover Landlord's Development Costs addressed in Section
3.05 hereinabove and Landlord's rights in that regard are limited by
and subject to the terms and provisions which are set out in Section
3.05 hereinabove. In addition, Landlord is subject to the reimbursement
obligations set out in Section 3.05 hereinabove if Landlord collects or
receives any Excess Funds.
Notwithstanding any other remedy or provision set forth in this Lease:
(i) this Lease may be terminated by Landlord only by written notice of
such termination from Landlord to Tenant given in accordance with the
notice provisions of this Lease; (ii) this Lease may be terminated by
Tenant only by written notice of such termination from Tenant to
Landlord given in accordance with the notice provisions of this Lease
and no other act or omission of Tenant shall be construed as a
termination of this Lease; (iii) all rights and remedies of Landlord
and Tenant herein or existing at law or in equity are cumulative and
the exercise of one or more rights or remedies shall not be taken to
exclude or waive the right to the exercise of any other; (iv) Tenant
agrees that acceptance of full or partial payments by Landlord after
notice of termination or forfeiture will not constitute a waiver of the
default, termination, or forfeiture unless Landlord agrees to a waiver
in writing, nor affect any legal proceedings taken or to be taken by
Landlord except to reduce Tenant's obligation to Landlord by the amount
of such payment; (v) waiver by either party of any defaults or breaches
by the other party of any provisions of this Lease shall not bar the
non-defaulting party thereafter from requiring prompt performance by
the defaulting party of the obligations of this Lease, nor shall the
non-defaulting party be barred thereafter from immediate exercise of
any of the non-defaulting party's rights or remedies in case of
continuing or subsequent default or violation by the defaulting party;
and (vi) Landlord acknowledges that should it be determined that
Landlord's actual damages resulting from the Event(s) of Default by
Tenant are less than the portion of the Security applied by Landlord to
the payment of its damages hereunder, Landlord will return such excess
to Tenant within ten (10) business days after Landlord's actual damages
are determined.
Section 11.02 Landlord's Lien
All statutory and contractual liens for rent are hereby waived by Landlord.
Section 11.03 Mitigation of Damages
(a) Both Landlord and Tenant shall each use commercially reasonably efforts
to mitigate any damages resulting from a default of the other party
under this Lease.
(b) Landlord and Tenant agree to the following criteria in connection with
Landlord's obligation to mitigate damages after a default by Tenant
under this Lease:
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(1) Landlord will have no obligation to solicit or
entertain negotiations with any other prospective
tenants of the Leased Premises until and unless
Landlord obtains full and complete possession of the
Leased Premises, including without limitation, the
final and unappealable legal right to relet the
Leased Premises free of any claim of Tenant.
(2) Landlord will not be obligated to offer the Leased
Premises to a prospective tenant when other premises
suitable for that prospective tenant's use are (or
soon will be) in buildings owned by affiliates of
Landlord in the Terrace P.U.D. For all purposes under
this Lease, affiliates of Landlord shall mean and
include (i) any person or entity owning or holding
(directly or indirectly) any interest in Landlord;
and (ii) any entity in which Landlord or any person
or entity owning or holding any interest (directly or
indirectly) in Landlord, owns or holds any interest
(directly or indirectly).
(3) Landlord will not have any obligation to lease the
Leased Premises for any rental less than the current
rate then prevailing for similar space in comparable
buildings in the same market area as the Building nor
shall Landlord be obligated to enter into a new lease
under any terms or conditions that are unacceptable
to Landlord under Landlord's then current leasing
policies for space which is comparable to the
Building.
(4) Landlord will not be obligated to enter into any
lease with any prospective tenant whose presence or
operations in the Building would: (i) violate any
restriction, covenant or requirement contained in the
lease of another tenant in the Building; (ii)
materially adversely affect the reputation of the
Building; or (iii) be materially incompatible with
the operation of the Building as a first class office
building.
(5) Landlord will not be obligated to enter into a lease
with any prospective tenant which does not have, in
Landlord's reasonable judgment and opinion,
sufficient financial resources and operating
experience to operate the Leased Premises in a first
class manner and meet its financial obligations.
(6) Landlord will not be required to expand any amount of
money to alter, remodel or otherwise make the Leased
Premises suitable for use by any prospective tenant.
(7) Landlord will have no obligation to advertise or
expend any sums of money to market the Leased
Premises.
If Landlord makes the Leased Premises available for reletting under the
criteria set forth hereinabove, Landlord will be deemed to have fully
satisfied Landlord's obligation to mitigate damages under this Lease
and under any law or judicial ruling in effect on the date of this
Lease or at the time of Tenant's default, and Tenant hereby waives and
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releases, to the fullest extent legally permissible, any right to
assert in any action by Landlord to enforce the terms of this Lease,
any defense, counterclaim, or rights of set-off or recoupment
respecting the mitigation of damages by Landlord (or alleged failure by
Landlord to adequately mitigate its damages), unless and to the extent
Landlord maliciously or in bad faith fails to act in accordance with
the requirements of this Section 11.03.
(c) Tenant's right to seek mitigation as a result of a default by Landlord
under this Section 11.03 shall be conditioned on Tenant taking such
action as is reasonably required, under the circumstances, to minimize
any loss or damage to Tenant's property or business, or to any of
Tenant's officers, employees, agents, invitees, or other third parties
that may be caused by any such default of Landlord.
ARTICLE XII- MISCELLANEOUS PROVISIONS
Section 12.01 Rights Reserved by Landlord
Landlord reserves the following rights, which may be exercised by
Landlord at any time and from time to time without notice and without
liability to Tenant or Tenant Party for damage or injury to property,
persons, or business. Tenant agrees that the exercise by Landlord of
any of the following rights will not create or give rise to any
eviction, constructive or actual, or disturbance of Tenant's use or
possession or giving rise to any claim for set-off or abatement of
Rent, provided the exercise of such rights do not unreasonably
interfere with Tenant's occupancy of the Leased Premises or breach the
provisions of this Lease. The rights reserved by Landlord hereunder are
as follows:
(a) Subject to Section 13.02, to install, affix, and maintain
directional or informational signage on the exterior and interior
of the Building similar to other buildings in the Terrace P.U.D.
(but as long as Tenant is the sole tenant of the Building,
Landlord will not have the right to place any other tenant
identification signs on the Building).
(b) To approve, prior to installation, all types of window shades,
blinds, drapes, awnings, window ventilators, and similar equipment
and to control all internal lighting that is visible from the
exterior of the Building; provided, however, that Landlord's
approval will not be unreasonably withheld and Landlord's control
will not be unreasonably exercised.
(c) Subject to the terms and provisions of Section 13.09 of this
Lease, to enter upon the Leased Premises at reasonable business
hours to inspect, clean, or make repairs or alterations to the
Leased Premises (but without any obligation to do so, except as
expressly specified in this Lease), to make repairs or alterations
to any part of the Building or the Building systems (including
adjacent premises), to show the Leased Premises to prospective
lenders, purchasers, and, during the last nine (9) months of the
Lease Term, to show the Leased Premises to prospective tenants
during reasonable business hours and, if the Leased Premises are
vacant, to prepare them for re-occupancy.
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(d) To retain at all times, and to use in appropriate instances,
master keys to all doors within and into the Leased Premises.
Tenant may change and re-key locks from time to time, and at any
time, so long as Landlord is provided with master keys. Landlord
will strictly control access to all master keys and Landlord will
provide to Tenant in writing a list of all persons who are
provided with access to the master keys other than the names of
cleaning staff.
(e) To decorate and make reasonable repairs, alterations, additions,
changes, or improvements, whether structural or otherwise, in and
about the Building and for those purposes to enter upon the Leased
Premises (after giving Tenant reasonable notice thereof, which may
be oral notice, except in cases of real or apparent emergency, in
which case no notice will be required) and, during the continuance
of the work, temporarily close doors, entryways, public space, and
corridors in the Building, to interrupt or temporarily suspend
Building services and facilities, and to change the arrangement
and location of entrances or passageways, doors and doorways,
corridors, elevators, stairs, toilets, or other public parts of
the Building, all without abatement or set off of Rent or
affecting any of Tenant's obligations under this Lease, so long as
the Leased Premises are reasonable accessible. Landlord will use
reasonable efforts not to disrupt Tenant's normal business
routine.
(f) To have and retain a paramount title to the Leased Premises and
the Building free and clear of any act of Tenant purporting to
burden or encumber the Leased Premises or the Building, except as
permitted under this Lease.
(g) To approve the weight, size, and location of safes, heavy
equipment, file cabinets, book shelves, and other heavy items in
and about the Leased Premises and the Building.
(h) To require all those items and all furniture to be moved into and
out of the Building and the Leased Premises only at times and in a
manner reasonably specified by Landlord after advance notice has
been given by Tenant to Landlord. Movements of Tenant's property
into or out of the Building and within the Building are entirely
at the risk and responsibility of Tenant.
(i) To have access for Landlord and other tenants in the building to
any mail chutes or other depositories located on the Leased
Premises according to the rules of the United States Postal
Service.
(j) To take reasonable measures as Landlord deems advisable for the
security of the Building and its occupants (including, in
emergency situations only, the search of all persons entering or
leaving the Building), the evacuation of the Building for cause,
suspected cause, or for drill purposes, and the temporary denial
of access to the Building in emergency situations only.
(k) After the completion of the construction of the Building, to
transfer, assign or convey, in whole or in part, the Building and
Landlord's rights under this Lease to any party who acquires title
to the Building. If Landlord transfers, assigns, or conveys its
rights under this Lease, Landlord is released from any further
obligations under this Lease
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provided such transferee assumes such obligations in a written
agreement which is delivered to Tenant and which provides for the
assumption by the transferee of all of the obligations to Tenant
under this Lease, and thereafter, and Tenant shall look solely to
the successor in interest of Landlord for performance of the
obligations of "Landlord" under this Lease. Landlord agrees to
keep the terms and conditions of any sale of the Building
confidential and to require any purchaser of the Building to also
keep such terms and conditions confidential; provided, however,
that Landlord and such purchaser may disclose such terms and
conditions to their employees and consultants who have a need to
know and to their respective lenders and financial partners.
Section 12.02 Taxes on Tenant's Property
Tenant shall pay, and indemnify, defend, and hold Landlord harmless
against, all taxes levied or assessed against personal property,
furniture, fixtures, or other improvements placed by or for Tenant in
the Leased Premises. If any taxes for which Tenant is liable are levied
or assessed against Landlord or Landlord's property and if Landlord is
required to pay the taxes or if the assessed value of Landlord's
property is increased by inclusion of personal property, furniture,
fixtures, or other improvements placed by or for Tenant in the Leased
Premises and Landlord elects to pay the increased taxes, Tenant shall
pay to Landlord on demand as additional Rent that part of the taxes for
which Tenant is liable under this Section.
Section 12.03 Attorneys' Fees and Legal Expenses
If either party files litigation concerning the interpretation or
enforcement of this Lease, the prevailing party is entitled to recover
from the losing party the prevailing party's reasonable attorneys'
fees, court costs, and expenses, both at the trial level and at the
appellate level.
Section 12.04 Subordination
(a) This Lease and all rights of Tenant under this Lease are subject
and subordinate to:
(1) any mortgage or deed of trust secured by a lien against
the Building and/or the Land (a "Mortgage"), or any ground
lease or master lease (a "Primary Lease") that now or
hereafter covers all or any part of the Leased Premises
(the mortgagee under any Mortgage or the lessor under any
Primary Lease is referred to herein as "Landlord's
Mortgagee"); and
(2) all increases, renewals, modifications, consolidations,
replacements, and extensions of any Mortgage or Primary
Lease;
Landlord warrants and represents on the Effective Date that the Leased
Premises is free and clear of liens and encumbrances, except for liens
and encumbrances held by Bank One, Texas, N.A. Within ten (10) days of
the execution hereof, Tenant and Landlord's Mortgagee shall enter into
a subordination, non-disturbance and attornment agreement,
substantially in the form of Exhibit G attached hereto ("SNDA"). The
subordination of this Lease to any future mortgagee shall be
conditioned upon the future mortgagee
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entering into (and delivering to Tenant) a SNDA substantially in the
same form as that executed contemporaneously with the execution hereof
or another form reasonably acceptable to Tenant and the future
mortgagee. Tenant shall, upon demand at any time or times, execute,
acknowledge, and deliver to Landlord, or to Landlord's Mortgagee, any
instruments that may be reasonably requested by Landlord or any
Landlord's Mortgagee to more effectively effect or evidence this
subordination to any Mortgage or Primary Lease.
(b) If any Mortgage against the Building is foreclosed, and if the
mortgagee thereunder has executed and delivered to Tenant an SNDA in
substantially the same form as that attached hereto as Exhibit G,
Tenant shall, upon request by the purchaser at the foreclosure sale:
(1) attorn to the purchaser and recognize the purchaser as
"Landlord" under this Lease; and
(2) execute, acknowledge, and delivery to the purchaser an
agreement confirming such attornment as such purchaser may
reasonably request.
(c) Tenant waives the provisions of any statute or rule of law, now or
hereafter in effect, that may give or purport to give Tenant any right
or election to terminate or otherwise adversely affect this Lease and
the obligations of Tenant under this Lease if any foreclosure sale
occurs. This Lease is not affected in any way whatsoever by any
foreclosure sale unless the holder(s) of the indebtedness or other
obligations secured by the Mortgage declare otherwise pursuant to the
terms of the SNDA with such holder(s).
Section 12.05 Estoppel Certificates
Tenant shall, from time to time within twenty (20) days after receipt
of a request for same, execute, acknowledge, and deliver to Landlord an
estoppel certificate in substantially the form attached as Exhibit F,
with such changes as may be necessary to conform such estoppel
certificate to the facts which exist at the time. Landlord shall, from
time to time, within twenty (20) days after receipt of a request for
same, execute, acknowledge and deliver to Tenant estoppel certificates
in such form as may be reasonably requested by Tenant. Tenant
specifically agrees to execute an estoppel to Landlord's Mortgagee at
the time Landlord's Mortgagee is obligated to close the construction
loan for the construction of the Building.
Section 12.06 Financial Statements
Tenant will, from time to time, within twenty (20) days after receipt
of a written request for same, but not more than twice in any one
twelve (12) month period, furnish to Landlord copies of the most recent
public annual or quarterly SEC report of Tenant.
Section 12.07 Notices
All notices, requests, approvals, and other communications required or
permitted to be delivered under this Lease must be in writing and are
effective:
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(a) on the same business day sent, if sent by telecopier prior to 5:00
P.M., Austin, Texas time and the sending telecopier generates a written
confirmation of sending (provided, however, that an additional copy of
the notice, request, approval, or other communication must be delivered
by United States mail, certified, return receipt requested, and postage
prepaid;
(b) the next business day after delivery on a business day to a
nationally recognized overnight courier service for prepaid overnight
delivery;
(c) if orderly delivery of the mail is not then disrupted or
threatened, in which event some method of delivery other than the mail
must be used, 3 business days after being deposited in the United
States mail, certified, return receipt requested, postage prepaid; or
(d) upon receipt if delivered personally or by any method other than by
telecopier (with written confirmation),
nationally-recognized-overnight-courier service, or mail;
in each instance addressed to Landlord or Tenant, as the case may be,
at the address or the addresses (if more than one) specified for such
party in the Basic Lease Provisions, or to any other address or
addresses either party may designate by ten (10) days' prior notice to
the other party.
Section 12.08 Business Purpose
Tenant represents that this Lease is executed by Tenant, and all
obligations of Tenant arising out of this Lease are, primarily for
business or commercial purposes and not for personal, family, or
household purposes.
Section 12.09 Severability
Each of the terms of this Lease is, and must be construed to be,
separate and independent. If any of the terms of this Lease or its
application to any person or circumstances is to any extent invalid and
unenforceable, the remainder of this Lease, or the application of that
term to persons or circumstances other than those as to which it is
invalid or unenforceable, are not affected thereby.
Section 12.10 No Merger
The fact that the same person may acquire or hold, directly or
indirectly, this Lease or the leasehold estate hereby created or any
interest in this Lease or in the leasehold estate as well as the fee
estate in the Leased Premises or any interest in the fee estate does
not cause a merger of this Lease or of the leasehold estate hereby
created with the fee estate in the Leased Premises.
Section 12.11 Force Majeure
When this Lease prescribes a period of time for action to be taken by
Landlord or Tenant (except for the payment of money), neither Landlord
nor Tenant will be liable or
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responsible for, and there is excluded from the computation for the
period of time, any delays due to strikes, acts of God, shortages of
labor or materials, war, governmental laws, regulations, restrictions,
or any other cause of any kind that is beyond the control of such
party.
Section 12.12 Gender
Words of any gender used in this Lease include any other gender and
words in the singular number include the plural, unless the context
otherwise requires.
Section 12.13 Joint and Several Liability
If there is more than one Tenant, the obligations imposed upon Tenant
under this Lease are joint and several.
Section 12.14 No Representations
Landlord and Landlord's agents made no representations or promises with
respect to the Leased Premises or the Building except as expressly set
forth in this Lease. No rights, easements, or licenses are acquired by
Tenant by implication or otherwise except as expressly set forth in
this Lease.
Section 12.15 Entire Agreement; Amendments
This Lease is the entire agreement between the parties and supersedes
all negotiations, considerations, representations, and understandings
between Landlord and Tenant prior to the date hereof. No act or
omission of any employee or agent of Landlord or of Landlord's Broker
may alter, change, or modify any of the terms of this Lease. Similarly,
no act or omission of any employee or agent of Tenant or of Tenant's
broker may alter, change or modify any of the terms of this Lease. No
amendment or modification of this Lease is binding unless expressed in
a written instrument executed for that purpose by Landlord and Tenant.
Section 12.16 Section Headings
The section headings in this Lease are for convenience only and in no
way enlarge or limit the scope or meaning of the paragraphs in this
Lease.
Section 12.17 Binding Effect
All terms of this Lease are binding upon the respective heirs, personal
representatives, successors, and, to the extent assignment is
permitted, assigns of Landlord and Tenant.
Section 12.18 Counterparts
This Lease may be executed in two or more counterparts, each of which
is deemed an original and all of which together constitute one and the
same instrument.
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Section 12.19 Rental Tax
Tenant shall pay as Rent all licenses, charges, and other fees of every
kind and nature as and when they become due arising out of or in
connection with Tenant's use and occupancy of the Leased Premises and
the Building (including the Garage), including but not limited to
license fees, business license taxes, and privilege, sales, excise, or
other taxes (other than income taxes, franchise taxes and other similar
taxes) imposed upon Rent or upon services provided by Landlord or upon
Landlord in an amount measured by Rent received by Landlord.
Section 12.20 Authority to Sign Lease
If either Landlord or Tenant is a corporation or a partnership (general
or limited), Landlord and Tenant, as applicable, represent each to the
other that the person(s) signing this Lease as an officer or partner of
each party hereto represents to the other that such person(s) is
authorized to execute this Lease without the necessity of obtaining any
other signature of any other officer or partner, that the execution of
this Lease has been authorized by the board of directors of the
corporation or by the partners of the partnership, as the case may be,
and that this Lease is fully binding on Landlord or Tenant, as
applicable. Landlord or Tenant each reserve the right to request
evidence of the approval of this Lease and authorization of other
party's signatories to bind such party, which evidence shall be
satisfactory in form and content to Landlord and Tenant, as applicable,
and their respective counsel.
Section 12.21 Execution and Approval of Lease
Employees and agents of Landlord, Landlord's broker, Tenant and
Tenant's broker have no authority to make or agree to make a lease or
any other agreement or undertaking in connection herewith. The
submission of this Lease for examination and negotiation is not an
offer to lease, agreement to reserve, or option to lease the Leased
Premises. This Lease is effective and binding on Landlord only upon the
execution and delivery of this Lease by Landlord and Tenant.
Section 12.22 Time of the Essence
Time is of the essence in connection with each provision of this Lease.
Section 12.23 No Personal Liability of Landlord or Guarantor
Except as provided hereinbelow, with respect to the "Guaranteed
Obligations" (i) if Landlord shall fail to perform any covenant, term
or condition of this Lease and if, as a consequence of such failure,
Tenant shall recover a money judgment against Landlord, such judgment
shall be satisfied only out of the proceeds received at a judicial sale
upon execution and levy against the right, title and interest of
Landlord in the Building and in the rents, income or other proceeds
from the Building receivable by Landlord; and (ii) neither Landlord nor
Landlord's affiliate companies nor their respective owners, partners,
venturers, shareholders, directors or officers shall have any personal,
corporate or other liability hereunder.
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Tenant covenants and agrees not to bring suit against: (i) the owners,
partners, venturers, shareholders, directors or officers of Landlord
and/or any affiliate of Landlord; or (ii) any affiliate of Landlord.
Notwithstanding any provisions herein to the contrary, Landlord shall
have personal liability with respect to the Guaranteed Obligations. W&G
Partnership, Ltd. shall guarantee the performance of the Guaranteed
Obligations and shall have personal liability therefor (but none of the
owners, partners, venturers, shareholders, directors or officers of
Landlord shall have any personal liability therefor) for so long as
▇▇▇▇▇ Five Partnership, Ltd. or any other affiliate of W&G Partnership,
Ltd. is the owner of the Building. Notwithstanding the provisions of
the first sentence of this paragraph, Tenant will have the right to
bring suit against W&G Partnership, Ltd. with respect to the Guaranteed
Obligations. For purposes hereof the "Guaranteed Obligations" mean and
refer to all liabilities and/or obligations which may arise out of or
as a result of: (i) Landlord's failure to apply insurance proceeds or
condemnation awards in accordance with the terms of this Lease; (ii)
the misappropriation of escrowed Operating Expenses; or (iii) damages
caused by a breach of Landlord's covenant of quiet enjoyment.
ARTICLE XIII - ADDITIONAL AGREEMENTS
Section 13.01 Parking
(a) During the initial Lease Term and at no cost to Tenant, Landlord shall
provide to Tenant all of the parking spaces (which shall be a minimum of
768 spaces) in the Garage and all of the surface parking spaces on the
Land. Landlord and Tenant will work together during the design and
operation of the Garage regarding parking space sizes, percentages, and
number of reserved spaces. Thereafter, Tenant will have the right from time
to time to restripe the Garage with such parking configurations as may be
desired by Tenant from time to time. Additionally, Tenant may, from time to
time, designate certain parking spaces in the Garage as reserved spaces.
(b) All Tenant Parties must comply with all traffic, security, safety, and
other rules and regulations reasonably promulgated from time to time with
respect to the Garage.
(c) Landlord shall provide in the Garage bicycle racks which are adequate for
Tenant's employees.
(d) Landlord shall not be responsible for money, jewelry, automobiles or other
personal property lost in or stolen from the Garage regardless of whether
such loss or theft occurs when the Garage or other areas therein are locked
or otherwise secured against entry. Except as caused by the gross
negligence or willful misconduct of Landlord, Landlord shall not be liable
for any loss, injury or damage to persons using the Garage or automobiles
or other property therein, it being agreed that, to the fullest extent
permitted by law, the use of the Garage and the spaces shall be at the sole
risk of Tenant and its employees.
(e) Landlord shall have the right from time to time to promulgate reasonable
rules and regulations regarding the Garage, the spaces and the use thereof,
including, but not limited to, rules and regulations controlling the flow
of traffic to and from various parking areas, the angle and direction of
parking, and the like. Tenant shall comply with and cause its employees to
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comply with all such rules and regulations as well as all reasonable
additions and amendments thereto.
(f) Except for emergency repairs, Tenant and its employees shall not perform
any work on any automobiles while located in the Garage or the Leased
Premises.
(g) Landlord shall have the right to temporarily close the Garage or certain
areas therein in order to perform necessary repairs, maintenance and
improvements to the Garage; provided, however, that all such closures will
be limited in duration and scope to the extent possible and, except in
emergency situations, such closings will not occur during normal business
hours.
(h) Tenant shall not assign or sublease any of the spaces without the consent
of Landlord except, however, that Tenant may assign or sublease parking
spaces without Landlord's consent in conjunction with any assignment or
sublease which is permitted or consented to under Article X of this Lease.
(i) At Tenant's option and election, Landlord, at Tenant's sole cost and
expense, will install in the Garage a card-key access security system
designed to specifications approved by Tenant and designed to be compatible
with Tenant's security system in the Leased Premises.
Section 13.02 Signage
(a) Landlord agrees that Tenant has the exclusive right to install
illuminated signage with Tenant's name and logo (if any) near the top
of the Building (and on the sides of the Building facing Loop 1 and/or
Via Fortuna) and at the entrance to the Building as well as on the
monument sign on the Land. In addition, Tenant has the non-exclusive
right to have its name included on the monument sign at one of the
entrances to the Terrace P.U.D. when such sign is constructed. All
signs shall conform to the design and aesthetics of other signage
within the Terrace P.U.D. and must be approved by the Architectural
Committee of the Terrace P.U.D. Association, which approval shall not
be unreasonably withheld. The monument signs will be placed at
locations to be determined by Tenant and Landlord, and subject to the
Terrace P.U.D. and City of Austin signage guidelines and ordinances.
Landlord shall be responsible for all sign maintenance.
(b) Landlord agrees that the initial costs for the signage located on the
exterior of the Building, if any, may be paid for out of the Allowance
described in the Tenant Work Letter. Maintenance of the signs will be
an Operating Expense.
Section 13.03 Tenant's Ability to Perform Landlord's Unperformed Obligations
Notwithstanding anything to the contrary contained in this Lease, if
Landlord shall fail to perform any of the terms, provisions, covenants
or conditions to be performed or complied with by Landlord under
Section 6.04 of this Lease with respect only to the Leased Premises
(such terms, provisions, covenants or conditions are referred to
herein, collectively as "Landlord Repair Obligations") or Section 7.02
of this Lease (the "Landlord Insurance Obligations") after expiration
of a twenty (20) day notice and cure period for Landlord and Landlord's
Mortgagee, then Tenant may, at Tenant's option and risk, but without
any obligation to do so, after delivery of an additional twenty (20)
day
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prior written notice to Landlord and Landlord's Mortgagee, perform such
Landlord Repair Obligations or Landlord Insurance Obligations on
Landlord's behalf. If Tenant so performs any of such Landlord Repair
Obligations hereunder, then Tenant will perform such Landlord Repair
Obligations (1) in compliance with all Applicable Laws, regulations and
requirements to which Landlord would be subject under this Lease (if
Landlord were performing such Landlord Repair Obligations), (2) using
materials of a quality and grade at least equal to that in place as of
the date of delivery of the Leased Premises to Tenant, if applicable,
(3) without interfering with the rights of other tenants of the
Building, and (4) in compliance with all applicable warranties or
guarantees in effect with respect to the Building. Tenant will promptly
assign to Landlord any warranties or guaranties in respect of any
Landlord Repair Obligations. If Tenant so performs any of the Landlord
Repair Obligations or Landlord Insurance Obligations hereunder, the
full amount of the fair and reasonable costs and expenses incurred by
Tenant shall be owing by Landlord to Tenant, and Landlord shall pay to
Tenant the full undisputed amount thereof plus interest at the Interest
Rate from the date of payment of such obligations by Tenant until paid
by Landlord, within ten (10) business days of Landlord's receipt of
Tenant's written demand therefor (together with reasonable evidence
verifying the amount of such costs and expenses).
Section 13.04 Real Estate Brokers
Landlord represents to Tenant that it has not dealt with any real
estate broker with respect to this Lease except for Colliers Oxford
Commercial, Inc. ("COCI"). Tenant represents to Landlord that it has
not dealt with any real estate broker with respect to this Lease except
for NAI/Commercial Industrial Properties Company ("CIP") and CIP's
affiliate, NAI/BT Commercial in Palo Alto, California ("NAI/BT").
Landlord agrees to pay to COCI and CIP brokerage commissions in
connection with this Lease pursuant to separate written agreements with
COCI and CIP. CIP will be responsible for any sums payable to NAI/BT.
Landlord and Tenant will indemnify and defend the other against any
claims by any other broker or third party claiming through Landlord or
Tenant, as applicable, for any real estate payment of any kind in
connection with this Lease.
Section 13.05 Conditions Precedent
Notwithstanding any provision in this Lease to the contrary, Tenant's
obligations under this Lease are expressly subject to and conditioned
upon the satisfaction of the following conditions precedent:
(a) Landlord's delivery to Tenant of Landlord's proposed
subdivision plat (which must provide for the subdivision of
the Land into a separate legal lot) and Landlord's proposed
application for a site development permit (which is to be
reviewed and approved by Tenant prior to filing with the City
of Austin and will not be materially changed without further
review and approval by Tenant) within sixty (60) days of the
Effective Date, (such subdivision plat and site development
permit referred to herein collectively as the "Governmental
Permits");
(b) the delivery by Landlord to Tenant of written confirmation
in a form reasonably acceptable to Tenant that all of the
Governmental Permits have been
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finally approved by all applicable governmental authorities
and are in final form and condition, not subject to any
further appeals or conditions on or before June 1, 2001;
(c) the delivery by Landlord to Tenant of written confirmation
from the City of Austin in form reasonably acceptable to
Tenant verifying that the Building may be utilized for the
Permitted Use and specifically confirming that Tenant may
utilize up to ten percent (10%) of the Leased Premises for
research services as an accessory use in conjunction with the
research and development activities of Tenant within the
Leased Premises.
Section 13.06 Title, Survey and Environmental Report
(a) Title Commitment. Within ten (10) days after the Effective Date of
this Lease, Landlord shall furnish to Tenant a title commitment
("Commitment") issued by Heritage Title Company showing Landlord as the
record fee title owner of the Land, by the terms of which the Title
Company agrees to issue to Tenant a leasehold policy of title insurance
("Title Policy") on the standard form promulgated by the Department of
Insurance of the State of Texas, insuring Tenant's leasehold estate to
be good and indefeasible subject to the terms of such policy and the
Schedule B exceptions, together with legible copies of all documents
and plats, if any ("Title Review Documents") which will be shown as
Schedule B Exceptions on the Title Policy upon issuance. Tenant may, at
Tenant's option and expense, purchase the Title Policy.
(b) Survey. Landlord shall, within ten (10) days after the Effective
Date of this Lease, cause to be furnished to Tenant an on-the-ground
survey ("Survey") of the Land, prepared by a registered surveyor
reasonably acceptable to Tenant.
(c) Environmental Report. Landlord shall, within ten (10) days after
the Effective Date of this Lease, cause to be furnished to Tenant Phase
I environmental site assessment of the Land which is dated not earlier
than thirty (30) days prior to the Effective Date of this Lease, which
is specifically addressed to Tenant and which is in form reasonably
acceptable to Tenant (the "Environmental Report").
(d) Objections. On or before five (5) business days after the date on
which the Commitment, the Title Review Documents, the Survey and the
Environmental Report have all been delivered to Tenant, Tenant shall
provide Landlord with written notice of any objection to the Land. If
Tenant has objections to the Land, Tenant shall have the right to
terminate this Lease in such notice of objection.
Section 13.07 Covenants of Landlord
Landlord covenants and agrees that, during the Lease Term:
(a) Neither Landlord nor any entity which is affiliated with Landlord
or which has any substantial commonality of ownership with Landlord
will lease space within any building in the Terrace P.U.D. which is
occupied 50% or more by Tenant, to any competitor of Tenant. As used
herein the term "competitor" shall mean any business which is engaged
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in the design, manufacture and/or sale of semi-conductors and any
business which provides semi-conductor services, such as electronic
design automation software.
(b) Landlord will not enter into or grant any liens on the Land, except
in connection with any financing or refinancing of the Building
pursuant to which an SNDA is provided to Tenant under the terms and
provisions of Section 12.04 of this Lease.
(c) Landlord will not enter into any leases, contracts or agreement of
any kind or nature which would be binding upon Tenant or which would
affect Tenant's rights under this Lease without the prior written
approval of Tenant.
(d) Landlord will immediately upon obtaining notice of same, notify
Tenant of any foreclosure proceeding instituted or proposed with
respect to the Building or any portion thereof.
(e) Landlord agrees, upon Tenant's request, to execute and deliver to
Tenant a memorandum of this Lease which Tenant may record at its
expense in any real property records or other public records. The
provisions of this Lease shall control, however, in regard to any
omissions from the memorandum of lease or any provisions hereof which
may be in conflict with the memorandum of lease.
(f) Landlord will not grant any easements, rights of way or other
encumbrances on the Land which will materially interfere with Tenant's
use of the Building or Land, other than a Joint Use Agreement in form
approved by Landlord and Tenant which relates to ingress and egress to
the land upon which Building VI may be constructed, as described on
Attachment 1 to Exhibit I ("Building VI"), and easements for utilities
which service the Building and/or Building VI, provided the location of
such easements and the form of all easement documents are approved by
Landlord and Tenant. Landlord and Tenant each agrees not to
unreasonably withhold or delay approval of such easements, rights of
way or encumbrances.
Section 13.08 Entry by Landlord
Due to the confidential nature of the work being performed within the
Leased Premises, Tenant may control access of third parties to the
Leased Premises. Notwithstanding any provision in this Lease to the
contrary, it is expressly agreed and understood that, except in the
event of an emergency or in connection with janitorial services, access
to the Leased Premises by Landlord or by any person operating by,
through or under Landlord will be allowed only upon reasonable prior
written notice to Tenant and only if each person who enters the Leased
Premises on behalf of Landlord or on behalf of any entity operating by,
through or under Landlord is accompanied by a representative of the
Tenant.
Section 13.09 Tenant's Purchase Option
Provided no uncured Event of Default on the part of Tenant exists at
the time of Tenant's exercise of the purchase option hereunder, and
provided that Tenant has leased all of the Building, Tenant shall have
the right and option to purchase the Building by providing written
notice of Tenant's exercise of such option to Landlord at any time
within twelve (12) months following the Commencement Date. The closing
of the sale and purchase
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shall occur within one hundred twenty (120) days after Tenant's
delivery of notice of exercise of the purchase option to Landlord. At
the closing: (i) there shall be no uncured Event of Default by Landlord
under this Lease, and Landlord shall deliver to Tenant a special
warranty deed conveying the Building to Tenant free and clear of all
liens and encumbrances, subject only to title exceptions approved by
Tenant, which are not related to liens or encumbrances; (ii) Tenant
will pay to Landlord, in readily available funds, a purchase price
determined by dividing the annual amount of Base Rent under this Lease
by .095 (for example, if the annual Base Rent under this Lease is
$4,753,920.00, then the purchase price will be $50,041,263.00); (iii)
Landlord will pay for an owner's policy of title insurance to be
delivered to Tenant in the amount of the purchase price, subject only
to the permitted exceptions approved by Tenant; (iv) this Lease will be
terminated insofar as it relates to the Building and the Security will
be returned to Tenant, but all expansion options, rights of first
refusal and other matters under this Lease not relating to the Building
shall remain in full force and effect, and Landlord and Tenant will
enter into an amendment to this Lease to document such matters; (v)
Landlord will assign and deliver to Tenant all construction plans and
specifications, engineering reports, environmental reports, technical
reports, drawings, surveys, utility studies, market studies, appraisals
and/or other reports or data covering or relating to the Building which
are in Landlord's possession or which may be obtained by Landlord
without additional expense; all of Landlord's right, title and interest
in and to all warranties, guaranties and indemnities relating to the
Building and all claims thereunder; all of Landlord's right, title and
interest in and to all approvals, permits, licenses and/or applications
of any kind or nature which have been issued by or which are on file
with any governmental agencies, departments or authorities with respect
to the Building, including without limitation, all zoning approvals,
subdivision approvals, special permit approvals, site development
permits, building permits and/or certificates of occupancy and an
allocation of peak hour trips (relating to vehicle traffic capacity),
wastewater capacity and impervious cover adequate to accommodate the
needs of the Building; all water, wastewater, electric, gas, cable
television, telephone and other utility service rights, permits and/or
applications relating to or benefitting the Building, including,
without limitation, all utility taps, utility commitments and/or
utility meters; all of Landlord's right, title and interest in and to
all off-site water lines, wastewater lines and other lines, facilities
or improvements of any kind or nature which provide water, wastewater,
electric, natural gas, cable television, telephone and other services
to the Building and all rights of reimbursement for expended costs or
costs to be incurred in the future arising from or relating to any such
improvements; all of Landlord's right, title and interest in and to any
and all off-site street and drainage improvements of any kind or nature
which provide roadway access or drainage service to the Building; and
all intangible property of any kind or nature owned or held by Landlord
in connection with the Building, including without limitation, all
indemnities or claims which Landlord may have with respect to the
Building; (vi) all expenses relating to the Building will be prorated
between Landlord and Tenant and any sums which have been previously
delivered by Tenant to Landlord to pay for or establish reserves for
the payment of anticipated ad valorem taxes and/or any other
anticipated expenses which are not yet due or payable will be refunded
by Landlord to Tenant; and (vii) Landlord and Tenant shall execute a
property management agreement in a form reasonably acceptable to both
Landlord and Tenant, pursuant to which Landlord will provide property
management services for a period of not less than five (5) years from
the date of closing for compensation equivalent to the management fee
referenced in subpart (xii) of Section 3.02(a) hereinabove. Tenant may
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assign its purchase option under this Lease to a third party without
the prior written consent of Landlord provided Tenant (or an entity
which is an affiliate or related to Tenant) remains as an occupant of
the Building.
13.10 Joint Approval of Press Releases
Landlord and Tenant acknowledge there will be requests and other
opportunities to announce Landlord and Tenant entering into this Lease.
Landlord and Tenant agree to either jointly issue a press release, or
prior to individually issuing any press release, to provide the other
party a draft of such release with a reasonable time in which to
comment. Landlord and Tenant agree to each use reasonable efforts to
accommodate the requests and comments of the other party in regard to
the press releases.
ARTICLE XIV - EXHIBITS AND ATTACHMENTS
The following exhibits and attachments are attached to and made a part
of this Lease: Exhibit A [Land], Exhibit B [Leased Premises], Exhibit C
[Base Building Design Criteria], Exhibit D [Building Rules and
Regulations], Exhibit E [Insurance Requirements], Exhibit F [Estoppel
Certificate], Exhibit G [Subordination, Attornment and Non-Disturbance
Agreement], Exhibit H [Option to Extend Lease Term], Exhibit I
[Expansion in Building VI], Exhibit J [Option for Expansion in Building
VII], Exhibit K [Option for Expansion in Building II], Exhibit L
[Tri-Party Agreement], and Exhibit M [Tenant Work Letter] and Exhibit N
[Letter of Credit]. All of the terms and provisions in the attached
exhibits and attachments are hereby incorporated into this Lease as if
the same were set forth herein verbatim.
This Lease is executed in multiple originals as of the Effective Date.
LANDLORD: ▇▇▇▇▇ FIVE PARTNERSHIP, LTD.,
a Texas limited partnership
By: ▇▇▇▇▇ FIVE DEVELOPMENT CORP., a
Texas corporation, its general partner
By:
L. ▇▇▇▇ ▇▇▇▇▇▇, President
TENANT: CIRRUS LOGIC, INC.
By:
Name:
-----------------------------
Title:
56
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GUARANTOR: W&G PARTNERSHIP, LTD.,
(Pursuant to the provisions of Section a Texas limited partnership
12.23 only)
By: ClayDesta, L.P., a Texas limited
partnership, its general partner
By: CLAYDESTA OPERATING, L.L.C., a Texas
limited liability company, its
general partner
By:
L. ▇▇▇▇ ▇▇▇▇▇▇, President
EXHIBITS AND ATTACHMENTS:
Exhibit A: Land
Exhibit B: Leased Premises
Exhibit C: Base Building Design Criteria
Exhibit D: Building Rules and Regulations
Exhibit E: Insurance Requirements
Exhibit F: Estoppel Certificate
Exhibit G: Subordination, Attornment and Non-Disturbance Agreement
Exhibit H: Option to Extend Lease Term
Exhibit I: Expansion in Building VI
Exhibit J: Option for Expansion in Building VII
Exhibit K: Option for Expansion in Building II
Exhibit L: Tri-Party Agreement
Exhibit M: Tenant Work Letter
Exhibit N: Letter of Credit
57