SUBLEASE AGREEMENT
This agreement is made and entered into as of this 22nd day of November,
1994, between Arkwright Mutual Insurance Company, a Massachusetts
corporation, hereinafter referred to as "Sublessor", and Caprock
Communications, a Texas corporation, hereinafter referred to as "Sublessee".
W I T N E S S E T H
WHEREAS, Sublessor, as Tenant, entered into a lease with Two Galleria
Tower Limited, as Lessor, dated September 11, 1989, leasing certain space in
the building known as Two Galleria Tower, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, to
which lease reference is hereby made as if the same were herein set forth at
length, and which lease is hereinafter referred to as the "Prime Lease";
WHEREAS, the parties hereto have agreed that Sublessor shall sublet
approximately 8,418 rentable square feet of such space to Sublessee,
NOW, THEREFORE the parties hereby covenant and agree as follows:
1. Sublessor shall sublet to Sublessee the 8,418 rentable square feet
of the space on the nineteenth floor, shown on Exhibit "A" attached hereto
and made a part hereof, for the term December 1, 1994 to April 30, 1999.
Sublessee shall pay rent at a rate of $14.00 per rentable square foot per
year throughout the term of the lease. Sublessee shall also be subject to its
pro rata share of increases in taxes and operating expenses above base year
1994, to be paid as "Additional Rent". All such payments of rent and
additional rent shall be due and payable by Sublessee in twelve (12) equal
installments on the first day of each calendar month during the term of the
sublease. Sublessee's rent shall be abated for the first fifteen (15) days of
the December 1994 rent, resulting in a December payment due upon lease
execution of $4,910.50.
2. Sublessee shall pay a security deposit of $9,821 upon lease
execution.
3. Sublessee shall sublease space in its "as is" condition.
4. Sublessor warrants and represents that it has, or will, comply with
the provisions of IV.5, Assignment of Sublease, contained in the Prime Lease
with respect to giving notice to the Lessor under the Prime Lease of its
desire to sublet, and shall, on or
before occupancy by Sublessee, furnish Sublessee satisfactory evidence of the
approval of Lessor under the Prime Lease to this Sublease.
5. Sublessee shall be provided with up to twenty-seven (27) parking
spaces, four (4) of which will be on the executive level, and corresponding
access cards at no cost throughout the term. However, if cards are lost or
stolen, Sublessee shall be subject to replacement charges under the Prime
Lease.
6. If Sublessor shall be charged for additional rent or other sums
pursuant to the provisions of the Prime Lease, Sublessee shall be liable for
its pro rata share of such additional rent or sums. If such rent or sums
shall be due to additional use by Sublessee of electrical current in excess
of Sublessee's proportionate part of additional use in the premises demised
under the Prime Lease, such excess shall be paid in entirety by Sublessee. If
Sublessee shall procure any additional services from the building, Sublessee
shall pay for same at the rates charged therefor by lessor under the Prime
Lease. If Sublessor shall receive any refund under this Article, Sublessee
shall be entitled to the return of so much thereof as shall be attributable
to prior payments by Sublessee.
7. This sublease is subject and subordinate to the Prime Lease. Except
as may be inconsistent with the terms hereof, all the terms, covenants and
conditions in the Prime Lease shall be applicable to this Agreement with the
same force and effect as if Sublessor were the Lessor under the Prime Lease
and Sublessee were the Lessee thereunder; and in case of any breach hereof by
Sublessee, Sublessor shall have all the rights against Sublessee as would be
available to the Lessor against the Lessee under the Prime Lease if such
breach were by the Lessee thereunder.
8. Notwithstanding anything herein, the only services or right to which
Sublessee is entitled hereunder are those to which Sublessor is entitled under
the Prime Lease and that for all such services and rights Sublessee will look
to the Lessor under the Prime Lease.
9. Sublessee shall neither do nor permit anything to be done which
would cause the Prime Lease to be terminated or forfeited by reason of any
right of termination or forfeiture reserved or vested in the Lessor under the
Prime Lease, and Sublessee shall indemnify and hold Sublessor harmless from
and against all claims of any kind whatsoever
by reason of any breach or default on the part of Sublessee by reason of
which the Prime Lease may be terminated or forfeited.
10. Sublessee represents that it has read and is familiar with the terms
of the Prime Lease.
11. All prior understandings and agreements between the parties are
merged within this Agreement, which sets forth in entirety the understanding
of the parties; and this sublease may not be changed or terminated orally or
in any manner other than by an agreement in writing and signed by the party
against whom enforcement of the change of termination is sought.
12. The covenants and agreements contained herein shall bind and inure
to the benefit of Sublessor, Sublessee, Sublessee Guarantor and their
respective executors, administrators, successors and assigns.
IN WITNESS WHEREOF, Sublessor and Sublessee have respectively signed and
sealed this sublease as of the day and year first above written.
CAPROCK COMMUNICATIONS, ARKWRIGHT MUTUAL
AS SUBLESSEE INSURANCE COMPANY,
AS SUBLESSOR
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. By: /s/ R. Bank
-------------------------- --------------------------
Title: President Title: Senior Vice President
----------------------- -----------------------
Date: 11/11/94 Date: 11/22/94
------------------------ ------------------------
[LETTERHEAD]
LEASE AGREEMENT
THE STATE OF TEXAS
COUNTY OF DALLAS
THIS LEASE AGREEMENT made and entered into on this the 25th day of January,
1989 between Two Galleria Tower Limited, a limited partnership organized
under the Texas Uniform Limited Partnership Act (hereinafter called "Lessor"),
whose address for purposes hereof is ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, and Arkwright Mutual Insurance Company (hereinafter called
"Lessee").
Lessee's address for purpose hereof until commencement of the term of this
Lease being 12700 Hillcrest, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and thereafter being that
of the "Building" (thereafter defined).
WITNESSETH:
1.
Leased Premises
1. Subject to and upon the terms, provisions and conditions hereinafter
set forth, and each in consideration of the duties, covenants and obligations
of the other hereunder Lessor does hereby lease, demise and let to Lessee
and Lessee does hereby lease from Lessor those certain premises (hereinafter
sometimes called the "Leased Premises") in the building known as Two Galleria
Tower/13455 ▇▇▇▇ Road (herein called the "Building") located in Dallas,
Texas, such premises being more particularly described as follows: Twenty two
thousand three hundred sixty nine (22,369) square feet of Net Rentable Area
located on the nineteenth (19th) floor as reflected on the floor plan of such
premises attached hereto and made a part hereof as EXHIBIT A.
2. The term "Net Rentable Area" (NRA) as used herein shall refer to (i) in
the case of single tenancy floor, all floor area measured from the inside
surface of the outer glass or exterior wall of the Building to the inside
surface of the opposite exterior wall, excluding only the areas within the
outside walls used for elevator mechanical rooms, building stairs, fire
towers, elevator shafts, flues, vents, stacks, vertical pipe shafts and
vertical ducts, but including any such areas which are for the specific use
of the particular tenant such as special stairs or elevators, plus an
allocation of the square footage of the Building's elevator and main
mechanical rooms, ground level lobby and basement service area and basement
support facilities for such service area and (ii) in the case of a partial
floor, all floor areas within the inside surface of the outer glass or
exterior wall enclosing the portion of the Leased Premises on such floor and
measured to the mid-point of the walls separating areas leased by or held for
lease to other tenants or from areas devoted to corridors, elevator foyers,
restrooms, mechanical rooms, janitor closets, vending areas and other
similar facilities for the use of all tenants on the particular floor
(hereinafter sometimes called "Common Areas"), but including a proportionate
part of the Common Areas located on such floor based upon the ratio which the
tenant's NRA on such floor bears to the aggregate NRA on such floor plus an
allocation of the square footage of the Building's elevator and main
mechanical rooms, ground level lobby and basement service area and basement
service area and basement support facilities for such service area. No
deductions from NRA are made for columns or projections necessary to the
Building. All parking facilities located within the building are excluded
from NRA. The NRA in the Leased Premises has been calculated on the basis of
the foregoing definition and is hereby stipulated for all purposes hereof to
be 22,369 square feet, whether the same should be more or less as a result of
minor variations resulting from actual construction and completion of the
Leased Premises for occupancy so long as such work is in accordance with the
terms and provisions hereof.
Term
1. (a) Subject to and upon the terms and conditions set forth herein, or
in any exhibit or addendum hereto, this Lease shall continue in force for a
term of One hundred twenty (120) months, beginning on the 1st day of May 1989
and ending on the 30th day of April 1999.
(b) In the event the Leased Premises should not be ready for occupancy
by said commencement date for any reason, Lessor shall not be liable or
responsible for any claims, damages or liabilities in connection therewith or
by reason thereof. This Lease Agreement shall be effective only from the time
that the leased premises are ready for occupancy by Lessee which date shall
be the date of commencement of the term of this lease. Should the term of
this Lease commence on a date other than that specified in Paragraph 1(a)
above, of Article II, Lessor and Lessee will, at the request of either,
execute a declaration specifying the beginning date of the term of this Lease
Agreement. In such event, rental under this Lease shall not commence until
said revised commencement date, and the stated term in this Lease shall
thereupon commence and the expiration date shall be extended so as to give
effect to the full stated term.
Use
2. The Leased Premises are to be used and occupied by Lessee for the
purpose of office space.
Base Rental
3. Lessee hereby agrees to pay a base annual rental (herein called "Base
Rental") in the sum of ** per year. Lessee shall pay, as additional rent, all
other sums of money as shall become due and payable by Lessee to Lessor
under this Lease. The Lessor shall have the same remedies of default for the
payment of additional rent as are available to Lessor in the case of a default
in the payment of Base Rental. Such Base Rental, together with any
adjustments of rent provided for herein then in effect, shall be due and
payable in twelve (12) equal installments on the first day of each
calendar month during the initial term or any extensions or renewals thereof,
and Lessee hereby agrees to pay such rent to Lessor at such address as may be
designated by lessor monthly in advance without demand. If the term of this
Lease as heretofore established commences on other than the first day of a
month or terminates on other than the last day of a month, then the installment
of Base Rental of such month or months shall be prorated and the installment
or installments so prorated shall be paid in advance. All past due
installments of rent shall bear interest at the maximum lawful rate* per annum
until paid. *not to exceed 18% per annum. **See Addendum Paragraph 2.
4. The Base Rental Adjustment shall be calculated in accordance with the
following:
(a) Lessee's Base Rental includes a component applicable to Basic
Costs (hereafter defined) equal to *$6.15/square foot of NRA of the Leased
Premises. This amount is an estimate of Basic Costs as if the Building,
Parking Garage(s) in which tenants of the Building are authorized to park
from time to time, and skywalks (the "Office Project") were in operation
in 1988.
(b) Prior to the Lessee's occupancy of the Leased Premises, Lessor
will provide an updated estimate of Basic Costs for the year in which
occupancy occurs. If this estimate exceeds *$6.14/square foot of NRA, then
Lessee's Base Rental shall be adjusted upward by the amount of this excess.
(c) Prior to the commencement of each calendar year of Lessee's
occupancy, Lessor shall provide an estimate of Basic Costs for said calendar
year. Lessee shall pay a Base Rental for said calendar year adjusted upward
or downward, as appropriate, by the amount of difference between the prior
calendar year's estimated Basic Costs and the coming year's estimated Basic
Costs.
(d) Within 150 days or as soon thereafter as possible of the
conclusion of each calendar year of the lease term, Lessor shall furnish to
Lessee a statement of Lessor's Basic Costs for said lease year. A lump sum
payment will be made from Lessor to Lessee for from Lessee to Lessor, as
appropriate, within 30 days of the delivery of such statement equal to the
difference in actual Basic Costs and estimated Basic Costs for which payments
have been included in the adjusted Base Rental set forth above for the just
completed year. The effect of this reconciliation payment is that lessee will
pay during the lease term its share of Basic Costs increases over the
original *$6.15/square foot estimate and no more.
*Notwithstanding anything to the contrary, Lessee shall only be responsible
for increases in basic costs beyond base year 1989.
(e) All increases in Basic Costs shall be paid by Lessee in the
proportion which Lessee's Net Rentable Area bears to 95% of the total Net
Rentable Area in the Building or to the total Net Rentable Area leased in the
Building (if such total leased is greater than 95% of the total Building NRA).
Nothing contained in this Paragraph 4 shall be construed at any time so to
reduce the monthly installments of Base Rental payable hereunder below the
amount set forth in Article II, Paragraph 3, of this lease.
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*To the extent expenses outlined herein and incurred for the benefit of
other portions of the Complex in addition to the Office Project then the
Office Project will only be billed its proportionate share of such
expense.
BASIS COSTS DEFINED
5. "Basic Costs" as said term is used herein shall consist of all
operating expenses of the Office Project, which shall be computed on the
accrual basis and shall include all expenditures by Lessor to maintain and
operate all facilities of the Office Project in operation from the beginning
of the lease term and such additional facilities in subsequent years as may
be determined by Lessor to be necessary. All operating expenses shall be
determined in accordance with generally accepted accounting principals which
shall be consistently applied. The term "operating expenses" as used herein
shall mean all expenses, costs and disbursements (but not replacement of
capital investment items nor specific costs especially billed to and paid by
specific tenants) of every kind and nature which Lessor shall pay or become
obligated to pay because of or in connection with the ownership and operation
of the Office Project, including but not limited to, the following:
*(a) Wages, salaries and all related expenses and benefits, of all
employees engaged in operation and maintenance, or security of the Office
Project and personnel who may provide traffic control relating to ingress and
engress to and from the parking facilities which are part of the Office Project
to the surrounding public streets. All taxes, insurance and benefits
relating to employees providing these services shall be included.
(b) Cost of all supplies and materials and equipment rented or used in
operation and maintenance of the Office Project.
(c) Cost of all utilities for the Office Project, including the cost of
water and power, heating, lighting, air conditioning and ventilating for the
Office Project (including charges to the Office Project for any such services
for the Office Project provided from a central plant which also serves other
parts of the Complex.
(d) Management costs and the cost of all maintenance and service
agreements for the Office Project and the equipment therein, including, but
not limited to alarm service, window cleaning, security service, traffic
control, janitorial service and elevator maintenance.
(e) Cost of all insurance relating to the Office Project, including,
but not limited to the cost of fire, rental abatement, casualty and liability
insurance applicable to the Office Project and Lessor's personal property
used in connection therewith.
*(f) All taxes and assessments and governmental charges whether federal,
state, county or municipal, and whether they be taxing districts or
authorities presently taxing the Office Project or by others subsequently
created or otherwise, and any other taxes and assessments attributable to the
Office Project or its operation and an allocation to the Office Project of
the taxes for the service roads which serve the Complex. It is agreed that
Lessee will be responsible for ad valorem taxes on its personal property and on
the value of leasehold improvements which exceed those existing as of the
commencement of the Lease as approved by Lessor.
(g) Cost of repairs and general maintenance of the Office Project
(excluding repairs and general maintenance paid by proceeds of insurance or
by Lessee or other third parties, and alterations attributable solely to
tenants of the Building other than Lessee).
(h) Amortization of the cost of installation of capital investment items
which are primarily for the purpose of reducing operating costs or which may
be required by governmental authority. All such costs shall be amortized
over the reasonable life of the capital investment items by including in
Basic Costs annually the applicable amortization amount, with the reasonable
life and amortization schedule being determined in accordance with generally
accepted accounting principles and in no event to extend beyond the
reasonable life of the Building.
(i) Lessor's central accounting costs applicable to the Office Project.
(j) Any allocation of expenditures for service or operation of the
Complex attributable to the Office Project, determined in accordance with
generally accepted accounting principles.
*(k) Cost of an office in the Building maintained for management of the
Building.
As used herein, the term "Complex" shall mean the Office Project and the
other parts of a larger development bounded by Dallas Parkway, Alpha Road,
▇▇▇▇ Road, and LBJ Freeway which from time to time are subject to reciprocal
easement arrangements for common use of certain areas in an integrated
mixed-use Complex.
Notwithstanding any other provision herein to the contrary, it is agreed
that in the event the Building is not fully occupied during any year of the
lease term, an adjustment shall be made in computing the Basic Costs for such
year so that the Basic Costs shall be computed for such year as though the
Building had been fully occupied during such year.
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Lessee at its expense shall have the right at any reasonable time
within twelve months after the end of a year in which additional rental
is due, to retain an independent certified public accountant to audit
Lessor's books and records relating to this Lease for any year or years
for which additional rental payments become due or at Lessor's sole
discretion. Lessor will provide such audit prepared by a certified public
accountant. If Lessee's audit reveals a discrepency by more than 5%, then
Lessor shall bear the full cost of such audit.
III.
SERVICES TO BE FURNISHED BY LESSOR
Lessor covenants and agrees with Lessee: Lessor agrees to use its
reasonable efforts to keep all services in good working order.
1. To use its best efforts to cause public utilities to furnish the
electricity, gas and water utilized in operating any and all facilities
serving the leased premises.
2. To provide (as part of the Basic Costs of the Office Project)
security to the Building during weekends and after normal working hours during
the week. Lessor shall not be liable to Lessee for losses due to theft or
burglary or for damages done by unauthorized persons on the premises.
3. To furnish (as part of the Basic Costs of the Office Project) Lessee
while occupying the premises:
(a) Hot and cold water at those points of supply provided for
general use of other tenants in the Building; central heat and air
conditioning in season at such temperatures and in such amounts as are
considered by Lessor to be standard, in comparison to other Class A office
buildings in the North Dallas area, but such service at times during week days
other than normal business hours for the Building, on Saturday afternoons,
Sundays, and holidays to be furnished only upon the request of Lessee, who
shall bear the entire cost thereof. (After hour HVAC charges shall be at
$25.00 per hour.) However, this cost may be adjusted if Lessor's cost
increases; routine maintenance and electric lighting service for all public
areas and special service areas of the Building in the manner and to the
extent deemed by Lessor to be standard, in comparison with other Class A
office buildings in the North Dallas area.
(b) Janitor service on a five (5) day week basis at no extra
charge for improvements as of the commencement date of the Lease as approved
by Lessor, provided, however, if Lessee's floor coverings or other improvements
are other than building standard. Lessee shall pay the additional cleaning
cost attributable thereto as additional rent. Lessee shall pay said
additional rent upon presentation of a statement therefor by Lessor and
Lessee's failure to pay shall constitute default hereunder.
(c) Electrical facilities to furnish sufficient power for
typewriters, voice writers, calculating machines and other machines of
similar low electrical consumption (total consumption not to exceed one watt
per square foot of Net Rental Area per month); but not including electricity
required for duplicating and electronic data processing equipment, special
lighting in excess of building standard, and any other item of electrical
equipment which (singly) consumes more than 0.5 kilowatts at rated capacity
or requires a voltage other than 120 volts single phase and provided that if
the installation of said electrical equipment requires additional air
conditioning capacity above that provided by the building standard system
then the additional air conditioning installation and operating costs will be
the obligation of Lessee.
(d) All building standard fluorescent bulbs replacement in all areas
and all incandescent bulb replacement in public areas, toilet and restroom
areas and stairwells.
Failure by Lessor to any extent to furnish these defined services, or
any cessation thereof, resulting from causes beyond the reasonable control of
Lessor shall not render Lessor liable in any respect for damages to either
person or property, nor be construed as an eviction of Lessee, nor work an
abatement of rent, nor relieve Lessee from fulfillment of any covenant or
agreement thereof. Should any of the equipment or machinery serving the
Office Project break down, or for any cause cease to function properly,
Lessee shall have no claim for rebate of rent or damages on account of an
interruption in service occasioned thereby or resulting therefrom. In the
event the Leased premises are rendered untenantable for a period of more than
five (5) business days as a result thereof rent shall be abated during such
period for such portion of the Leased Premises that are not tenantable.
KEYS AND LOCKS
4. To furnish Lessee ten (10) keys (with more as needed be Lessee) for
each corridor door entering the Leased Premises. Additional keys will be
furnished at no charge by Lessor on an order signed by Lessee or Lessee's
authorized representative. All such keys shall remain the property of Lessor.
No additional locks shall be allowed on any door of the Leased Premises without
Lessor's permission, and Lessee shall not make or permit to be made any
duplicate keys, except those furnished by Lessor. Upon termination of this
Lease, Lessee shall surrender to Lessor all keys of the Leased Premises, and
give to Lessor the explanation of the combination of all locks for safes, safe
cabinets and vault doors, if any, in the Leased Premises.
WINDOW COVERINGS
5. To provide window coverings as indicated in Schedule I hereto.
Lessee agrees that any window covering in addition to those indicated in
Schedule I are at Lessee's cost and are subject to Lessor's written approval.
4
Graphics
6. To provide and install, at Lessor's cost, all letters or numerals on
doors in the Leased Premises; all such letters and numerals shall be in
Building standard graphics, and no others shall be used or permitted on the
Leased Premises. Lessor also agrees to provide and install, at its expense, a
listing on the Building directory board.
Improvement to be made by Lessor
7. Lessee shall comply with the Lessee improvement schedule attached hereto
and made a part hereof as Schedule II. After receipt of the approved tenant
pricing letter described in said Schedule II, Lessor will partition and
prepare said Leased Premises in accordance therewith; however, Lessor shall
not be required to install any partitions or improvements which are not in
conformity with the plans and specifications for the Building or which are not
approved by Lessor and Lessor's architect. It is stipulated that time is of
the essence in connection with Lessee's compliance with the terms of Schedule
II. The provisions of Schedule II or payments by Lessee to Lessor for failure
to comply with the provisions of Schedule II shall not alter Lessor's right to
treat any such default by Lessee as a complete default under this Lease.
Peaceful Enjoyment
8. That Lessee shall, and may peacefully have, hold and enjoy the Leased
Premises, subject to the other terms hereof, provided that Lessee pays the
rental and other sums herein recited to be paid by Lessee and performs all of
Lessee's covenants and agreements herein contained. It is understood and
agreed that this covenant and any and all other covenants of Lessor contained
in this Lease shall be binding upon Lessor and its successors only with
respect to breaches occurring during its and their respective ownerships of
the Lessor's interest hereunder.
Limitation of Lessor's Personal Liability
9. Lessee specifically agrees to look solely to Lessor's interest in the
Building for the recovery of any judgment from Lessor, it being agreed that
Lessor shall never be personally liable for any such judgment. The provision
contained in the foregoing sentence is not intended to, and shall not, limit
any right that Lessee might otherwise have to obtain injunctive relief against
Lessor or Lessor's successors in interest, or any other action not involving
the personal liability of Lessor to respond in monetary damages from assets
other than Lessor's interest in the Building or any suit or action in
connection with enforcement or collection of amounts which may become owing or
payable under or on account of insurance maintained by Lessor.
Parking
10. Lessee shall at all times during the term of this Lease lease parking
rights for at least 71 regular/9 executive vehicles in the Parking Garage
located adjacent to the Building. Lessee shall have the right to lease up to
*5 additional parking rights during the lease term at the then prevailing
market rate for parking spaces in the Garage. No specific spaces in the
Parking Garage are to be assigned to Lessee but Lessor will issue to Lessee
the aforesaid number of parking stickers each of which will authorize parking
in the Parking Garage of a vehicle on which the sticker is displayed, or
Lessor will provide a reasonable alternative means of identifying or
controlling vehicles authorized to be parked in the Parking Garage. Lessor may
designate the area within which each such vehicle may be parked, and Lessor
may change such designations from time to time. Lessor may make, modify and
enforce rules and regulations relating to the parking of automobiles in the
Parking Garage, and Lessee will abide by such rules and regulations. Lessor
also reserves the right to increase the size of the Parking Garage.
*71 regular and 9 executive parking spaces shall be provided at no charge for
the term of the lease. The five (5) additional spaces will also be provided at
no charge for the term of the lease.
As the Basic Parking Charge, Lessee covenants and agrees to pay Lessor
during the term of this Lease, as additional rental hereunder, the sum of
*$45.00 per month plus any applicable Sales Tax for each of the parking
stickers to be issued by Lessor as herein provided, such sum to be payable
monthly in advance on the first day of each and every calendar month during
the lease term, and a pro rata portion of such sum shall be payable for the
first partial calendar month in the event the lease term commences on a date
other
5
than the first day of a calendar month, Lessee's obligation to pay the Parking
Charge shall be considered an obligation to pay rent for all purposes
hereunder and shall be secured in like manner as is Lessee's obligation to pay
rent. Default in payment of such Parking Charge (after notice as hereinafter
provided) shall be deemed a default in payment of rent.
IV.
Lessee covenants and agrees with Lessor:
Payments by Lessee
1. To pay all rent and sums provided to be paid to Lessor hereunder at the
times and in the manner herein provided.
Repairs by Lessor
2. Unless otherwise stipulated herein, Lessor shall not be required to make
any improvements or repairs of any kind or character on the Leased Premises
during the term of this lease, except such repairs as may be required for
normal maintenance operations. The obligation of Lessor to maintain and repair
the Leased Premises shall be limited to building standard items. Special
leasehold improvements will, at Lessee's written request, be maintained by
Lessor at Lessee's costs, plus an additional charge, to cover overhead.
Repairs by Lessee
3. At its own cost and expense, to repair and replace any damage or injury
to the Building, or any part thereof, caused by Lessee or Lessee's agents,
employees, invitees or visitors; provided, however, if Lessee fails to make
such repairs or replacement promptly Lessor may, at its option, make such
repairs or replacements, and Lessee shall repay the cost thereof to the Lessor
on demand, subject to Article V, paragraph 15.
Care of the Lease Premises
4. Not to commit or allow any waste or damage to be committed on any
portion of the Leased Premises, and at the termination of this Lease, by lapse
of time or otherwise, to deliver up said Leased Premises to Lessor in as good
condition as at date of possession by Lessee, ordinary wear and tear excepted,
and upon such termination of this Lease, Lessor shall have the right to
re-enter and resume possession of the Leased Premises.
Assignment or Sublease
5. In the event Lessee should desire to assign this Agreement or sublet the
Leased Premises or any part thereof, Lessee shall give Lessor written notice
of such desire at least thirty (30) days in advance of the date on which
Lessee desires to make such assignment or sublease. Lessor shall then have a
period of fifteen (15) days following receipt of such notice within which to
notify Lessee in writing that Lessor elects either (1) to terminate this
agreement as to the space so affected as of the date so specified by Lessee in
which event Lessee will be relieved of all further obligation hereunder as to
such space, or (2) to permit Lessee to assign or sublet such space, subject,
however, to subsequent written approval of the proposed assignee or sublessee
by Lessor which approval shall not be unreasonably withheld or delayed
provided such sublessee or assign is of character consistent with other
tenants in the building; if however, the rental rate agreed upon between
Lessee and Sublessee is greater than the rental rate that Lessee must pay
Lessor, then such excess rental shall be deemed additional rent owed by Lessee
to Lessor and shall be paid by Lessee to Lessor in the same manner that Lessee
pays the base rent as outlined in Section II, Paragraph 3 (such excess rental
shall be due and payable to Lessor after Lessee has been reimbursed for
reasonable out of pocket expenses and attorney's fees relating to the
assignment or sublease) or (3) to refuse to consent which approval shall not
be unreasonably withheld or delayed provided such sublessee or assign is of
character consistent with other tenants in the building (with cause only) to
Lessee's assignment or subleasing such space and to continue this Lease in
full force and effect as to the entire Leased Premises. If Lessor should fail
to notify Lessee in writing of such election within said fifteen (15) period.
Lessor shall be deemed to have elected option (2) above. Excluding the ▇▇▇▇▇
Group, if Lessor elects to exercise option (2) above, Lessee agrees to provide
at its expense, direct access from such sublet space to a public corridor of
the Building. No assignment or subletting by Lessee shall relieve Lessee of
any obligation under this Lease. Any attempted assignment or sublease by
Lessee in violation of the terms and covenants of this paragraph shall be
void. Notwithstanding the foregoing, Lessee shall be entitled to assign or
sublease this Lease without Lessor's prior written approval to an affiliate or
subsidiary of Arkwright Mutual Insurance Company, provided however, no such
assignment or sublease shall relieve Lessee of any obligation under this Lease.
Alterations, Additions, Improvements
6. Not to permit the Leased Premises to be used for any purpose other than
that stated in the use clause hereof, or make or allow to be made any
alterations or physical additions in or to the Leased Premises, without first
obtaining the written consent of Lessor. Any and all such alterations,
physical additions, or improvements, when made to the Leased Premises by
Lessee, shall at once become the property of Lessor and shall be surrendered
to Lessor upon the termination of this Lease by lapse of time or otherwise;
provided, however, this clause shall not apply to movable equipment or
furniture owned by Lessee. Lessee agrees specifically that no food, soft drink
or other vending machine will be installed within the Leased Premises except
for machines installed for the exclusive use of employee.
Legal Use and Violations of Insurance Coverage
7. Not to occupy or use,or permit any portion of the Leased Premises to be
occupied or used for any business or purpose which is unlawful, disreputable
or deemed to be extra-hazardous on account of fire, or permit anything to be
done which would in any way increase the rate of fire insurance coverage on
said Building and/or its contents.
6
LAWS AND REGULATIONS; RULES OF BUILDING
8. To comply with all laws, ordinances, orders, rules and regulations
(state, federal, municipal and other agencies or bodies having any
jurisdiction thereof) relating to the use, condition and occupancy of the
Leased Premises. Lessee will comply with the rules of the Building adopted
by Lessor from time to time for the safety, care and cleanliness of the
Leased Premises and for preservation of good order therein, all of which will
be sent by Lessor to Lessee in writing and shall be thereafter carried out
and observed by Lessee.
ENTRY FOR REPAIRS AND INSPECTION
9. To permit Lessor or its agents or representatives to enter into with
reasonable prior notice except in the case of an emergency and upon any part
of the Leased Premises at all reasonable hours to inspect same, clean or make
repairs, alterations or additions thereto, as Lessor may deem necessary or
desirable, and Lessee shall not be entitled to any abatement or reduction of
rent by reason thereof. If the Leased premises become untenantable for a
period of more than five (5) business days as a result hereof, Lessee shall be
granted rental abatement during such period on such portion of Leased Premises
which are untenantable until said repairs are completed.
NUISANCE
10. To conduct its business and control its agents, employees, invitees
and visitors in such manner as not to create any nuisance, or interfere with,
annoy or disturb any other tenant or Lessor in his operation of the Building.
SUBORDINATION TO MORTGAGE
11. This Lease is subject and subordinate to any first lien mortgage or
deed of trust which may now or hereafter encumber the Building of which the
Leased Premises form a part and to all renewals, modifications,
consolidations, replacements and extentions thereof. This clause shall be
self-operative and no further instrument of subordination need be required by
any mortgagee. In confirmation of such subordination, however, Lessee shall
at Lessor's request execute promptly any appropriate certificate or
instrument that Lessor may request. Lessee hereby constitutes and appoints
Lessor the Lessee's attorney-in-fact to execute any such certificate or
instrument for and on behalf of Lessee. In the event of the enforcement by
the trustee or the beneficiary under any such mortgage or deed of trust of
the remedies provided for by law or by such mortgage or deed of trust.
Lessee, will, upon request of any person or party succeeding to the interest
of Lessor as a result of such enforcement, automatically become the Lessee of
such successor in interest without change in the terms or other provisions of
such lease, provided, however, that such successor in interest shall not be
bound by (i) any payment of rent or additional rent for more than one month
in advance except prepayments in the nature of security for the performance
by Lessee of its obligations under this lease or (ii) any amendment or
modification of this Lease made without the written consent of such trustee
or such beneficiary or such successor in interest. Upon request by such
successor in interest, Lessee shall execute and deliver an instrument or
instruments confirming the attornment herein provided for.
ESTOPPEL CERTIFICATE OR THIRD PARTY AGREEMENT
12. At Lessor's request Lessee will execute either an estoppel
certificate addressed to Lessor's mortgagee or a three-party agreement among
Lessor. Lessee and said mortgagee certifying as to such facts (if true) and
agreeing to such notice provisions and other matters as such Mortgagee may
reasonably require in connection with Lessor's financing.
NAME CHANGES
13. That Lessor shall have the right to change the name of the Building
and/or Complex or the design of construction of the building thereof whenever
Lessor, in its sole discretion deems it appropriate without any liability to
Lessee and without any consent of Lessee being necessary provided Lessee is
given sixty (60) days notice of such name change or construction.
▇.
▇▇▇▇▇▇ and Lessee mutually covenant and agree as follows:
CONDEMNATION AND LOSS OR DAMAGE
1. If the Leased Premises shall be taken or condemned for public
purpose to such an extent as to render the Leased Premises untenantable this
lease shall, at the option of either party, forthwith cease and terminate.
All proceeds from any taking or condemnation of the Leased Premises shall
belong to and be paid to Lessor.
DAMAGES FROM CERTAIN CAUSES
2. Lessor shall not be liable or responsible to Lessee for any loss or
damage to any property or person occasioned by theft, fire, act of God, public
enemy, injunction, riot, strike, insurrection, war, court order, requisition
or order of governmental body or authority, or for any damage or inconvenience
which may arise through repair or alternation of any part of the Building, or
failure to make any such repairs. If the Leased premises are made
untenantable for a period of more than five (5) business days from a result of
an occurrence of this paragraph, Lessee shall receive rental abatement during
such period on such portion of the Leased Premises which are untenantable
until the Leased Premises are again tenantable.
LESSOR'S RIGHT TO RELET
3. The Lease Premises will not be considered abandoned as long as rent
is being paid. In the event of default by Lessee in any of the terms or
covenants of this Lease or in the event the Leased Premises are abandoned by
Lessee, Lessor shall have the right, but not the obligations, to relet same
for the remainder of the term provided for herein; and if the rent received
through such reletting does not at least equal the rent provided for herein,
Lessee shall pay and satisfy any deficiency between the amount of the rent so
provided for and that received through reletting, and, in addition
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thereto, shall pay all reasonable expenses incurred in connection with any
such reletting, including, but not limited to, the reasonable cost of
renovating, altering and decorating for a new occupant. Nothing herein
shall be construed as in any way denying Lessor the right in the event of
abandonment of said premises of other breach of this agreement by Lessee, to
treat the same as an entire breach and at Lessor's option to immediately ▇▇▇
for the entire breach of this agreement and any and all damages which Lessor
suffers thereby.
HOLDING OVER
4. In the event of holding over by Lessee after expiration or
termination of this Lease without the written consent of Lessor, Lessee shall
pay as liquidated damages 150% rent for the entire holdover period. No
holding over by Lessee after the term of this Lease shall operate to extend
the Lease, in the event of any unauthorized holding over, Lessee shall
indemnify Lessor against all claims for damages by any other lessee to whom
Lessor may have leased all or any part of the premises covered hereby
effective upon the termination of this Lease. Any holding over with the
consent of Lessor in writing shall thereafter constitute this Lease a lease
from month to month.
FIRE CLAUSE
5. In the event of a fire in the Leased Premises, Lessee shall
immediately give notice thereof to Lessor. If the Leased Premises, through
no fault or neglect of Lessee, its agents, employees, invitees or visitors,
shall be partially destroyed by fire or other casualty so as to render the
Leased Premises untenantable, the rental herein shall ▇▇▇▇▇ thereafter
until such time as the Leased Premises are made tenantable as determined by
Lessor. In the event of the total destruction of the Leased Premises without
fault or neglect of Lessee, its agents, employees, invitees or visitors, or
if from such cause the same shall be so damaged that Lessor shall decide not
to rebuild, then all rent owed up to the time of such destruction or
termination shall be paid by Lessee and thenceforth this lease shall cease
and come to an end.
ATTORNEY'S FEES
6. In the event Lessee or Lessor makes default in the performance of
any of the terms, covenants, agreements or conditions contained in this Lease
and Lessor or Lessee places the enforcement of this Lease, or any part
thereof, or the collection of any rent due, or to become due hereunder, or
recovery of the possession of the Leased Premises in the hands of an
attorney, or files suit upon the same, Lessee or Lessor agrees to pay the
prevailing party's reasonable attorney's fees.
ALTERATION
7. This agreement may not be altered, changed or amended, except by an
instrument in writing, signed by both parties hereto.
ASSIGNMENT BY LESSOR
8. Lessor shall have the right to transfer and assign, in whole or in
part, all its rights and obligation hereunder and in the Building and
property referred to herein, and in such event and upon its transferee's
assuming Lessor's obligations hereunder (any such transferee to have the
benefit of, and be subject to, the provisions of Paragraphs 8 and 9 of Article
III hereof) no further liability or obligation shall thereafter accrue
against Lessor hereunder.
DEFAULT BY LESSEE
9. If default shall be made in the payment of any sum to be paid by
Lessee under this Lease, and default shall continue for ten (10) days, or
default shall be made in the performance of any of the other covenants or
conditions which Lessee is required to observe and to perform, and such
default shall continue for twenty (20) days, or if the interest of Lessee
under this Lease shall be levied on under execution or other legal process,
or if any petition shall be filed by or against Lessee to declare Lessee a
bankrupt or to delay, reduce or modify Lessee's debts or obligations, or if
any petition shall be filed or other action taken to reorganize or modify
Lessee's capital structure if Lessee be a corporation or other entity; or if
Lessee be declared insolvent according to law, or if any assignment of
Lessee's property shall be made for the benefit of creditors, or if a
receiver or trustee is appointed for Lessee or its property, or if Lessee
shall abandon (The Leased Premises shall not be considered as abandoned as
long as rent is being paid.) the Leased Premises during the term of this
Lease or any renewals or extensions thereof, then Lessor may treat the
occurrence of any one or more of the foregoing events as a breach of this
Lease (provided that no such levy, execution, legal process or petition filed
against Lessee shall constitute a breach of this Lease if Lessee shall
vigorously contest the same by appropriate proceedings and shall remove or
vacate the same within thirty (30) days from the date of its creation,
service or filing) and thereupon, at Lessor's option, may have any one or
more of the following described remedies in addition to all other rights and
remedies provided at law or in equity:
or five (5) days after receipt of written notice by Lessee, such notice being
delivered by Lessor on the eleventh (11th) day after rent is not received,
and such notice shall not be required of Lessor more than twice per annum
(a) Lessor may terminate this Lease and forthwith repossess the
Leased Premises and be entitled to recover forthwith as damages a sum of
money equal to the total of (i) the cost of recovering the Leased Premises,
(ii) the unpaid rent earned at the time of termination, plus interest thereon
at the
8
maximum lawful rate per annum from the due date, (iii) the balance of the
rent for the remainder of the term less the fair market rental value of the
Leased Premises for said period and (iv) any other sum of money and damages
owed by Lessee to Lessor.
(b) Lessor may terminate Lessee's right of possession (but not the
Lease) and may repossess the Leased Premises by forcible entry or detainer
suit or otherwise, without demand or notice of any kind to Lessee and without
terminating this Lease, in which event Lessor may but shall be under no
obligation to do so, relet the same for the account of Lessee for such rent
and upon such terms as shall be satisfactory to Lessor. For the purpose of
such reletting Lessor is authorized to decorate or to make any repairs,
changes, alterations or additions in or to Leased Premises that may be
necessary or convenient, and (i) if Lessor shall fail or refuse to relet the
Leased Premises, or (ii) if the same are relet and a sufficient sum shall not
be realized from such reletting after paying the unpaid basic and additional
rent due hereunder earned but unpaid at the time of reletting plus ten per
cent per annum thereon, the cost of recovering possession, and all of the
costs and expenses of such decorations, repairs, changes, alterations and
additions and the expense of such reletting and of the collection of the rent
accruing therefrom to satisfy the rent provided for in this lease to be paid,
then Lessee shall pay to Lessor as damages a sum equal to the amount of the
rental reserved in this lease for such period or periods, or if the leased
premises have been relet, the Lessee shall satisfy and pay any such
deficiency upon demand therefor from time to time and Lessee agrees that
Lessor may file suit to recover any sums falling due under the terms of this
Article V, Paragraph 9(b) from time to time; and that no delivery to or
recovery of any portion due Lessor hereunder shall be any defense in any
action to recover any amount not therefore reduced to judgment in favor of
Lessor, nor shall such reletting be construed as an election on the part of
Lessor to terminate this Lease unless a written notice of such intention be
given by Lessor to Lessee. Notwithstanding any such reletting without
termination, Lessor may at any time thereafter elect to terminate this Lease
for such previous breach.
NON-WAIVER
10. Failure of Lessor to declare any default immediately upon
occurrence thereof, or delay in taking action in connection therewith, shall
not waive such default, but Lessor shall have the right to declare any such
default at any time and take such action as might be lawful or authorized
hereunder, either in law or in equity. Lessor agrees to disclose to Lessee
within sixty (60) days any default after it comes to Lessor's attention.
CASUALTY INSURANCE
11. Lessor shall maintain fire and extended coverage insurance on the
portion of the Building constructed by Lessor, including additions and
improvements by Lessee which are required to be made by Lessee by this Lease
and which have become or are to become the property of Lessor upon vacation of
the Leased Premises by Lessee. Said insurance shall be maintained with an
insurance company authorized to do business in Texas, in amounts and with
deductibles desired by Lessor and at the expense of Lessor and payments for
losses thereunder shall be made solely to Lessor. Lessee shall maintain at
its expense fire and extended coverage insurance on all of its personal
property, including removable trade fixtures, located in the Leased Premises
and on all additions and improvements made by Lessee and not required to be
insured by Lessor above. If the annual premiums to be paid by Lessor shall
exceed the standard rates because Lessee's operations, contents of the Leased
Premises, or improvements with respect to the Leased Premises beyond building
standard, result in extra hazardous exposure, Lessee shall promptly pay the
excess amount of the premium upon request by Lessor.
LIABILITY INSURANCE
12. Lessor shall, at its expense, maintain a policy or policies of
comprehensive general liability insurance with the premiums thereon fully
paid on or before due date, issued by and binding upon some solvent insurance
company, such insurance to afford minimum protection of not less than Three
Hundred Thousand Dollars ($300,000,000) in respect of personal injury or
death in respect to any one occurrence, and of not less than One Hundred
Thousand Dollars ($100,000,000) for property damage in any one occurrence.
HOLD HARMLESS
13. Lessee shall not be liable to Lessor, or to Lessor's agents,
servants, employees, customers or invitees for any damage to person or
property caused by any act, omission or neglect of Lessor, its servants or
employees, and Lessor agrees to indemnify and hold Lessee harmless from all
claims for such damage. Lessor shall not be liable to Lessee, or to Lessee's
agents, servants, employees, customers or invitees for any damage to person or
property caused by any act, omission or neglect of Lessee, its agents,
servants or employees, and Lessee agrees to indemnify and hold Lessor harmless
from all liability and claims for any such damage.
9
WAIVER OF SUBROGATION RIGHTS
14. Anything in this Lease to the contrary notwithstanding, Lessor and
Lessee each hereby waives any and all rights of recovery, claim, action or
cause of action, against the other, its agents, officers, or employees, for
any loss or damage that may occur to the premises hereby demised, or any
improvements thereto, or said Building of which the Leased Premises are a
part, or any improvements thereto, or any personal property of such party
therein, by reason of fire, the elements, or any other cause which could be
insured against under the terms of standard fire and extended coverage
insurance policies referred to in Article V, Paragraph II, hereof, regardless
of cause or origin including negligence of the other party hereto, its
agents, officers or employees, and covenants that no insurer shall hold any
right of subrogation against such other party. This waiver of subrogation
provision shall be effective to the full extent, but only to the extent, that
the same does not impair the effectiveness of insurance policies of Lessor
and Lessee.
NOTICE
15. All notices, demands, consents and approvals which may or are
required to be given by either party to the other hereunder shall be in
writing and shall be deemed to have been fully given when deposited in the
United States mail, certified or registered, postage prepaid, and addressed
to the party to be notified at the address for such party specified in this
Lease Agreement*, or to such other place as the party to be notified may from
time to time designate by at least fifteen (15) days notice to the notifying
party. Lessee hereby appoints as an agent to receive the service of all
dispossessory or distraint proceedings and notices thereunder the person in
charge of or occupying the Leased Premises at the time, and if no person
shall be in charge of or occupying the same, then such service may be made by
attaching the same on the main entrance of the Leased Premises.
NO JOINT VENTURE
16. This Lease shall not be deemed or construed to create or establish
any relationship (other than that of the landlord and tenant) or
partnership or joint venture or similar relationship or agreement between
Lessor and Lessee hereunder.
*provided a duplicate of such notice or notices shall simultaneously be
mailed by certified or registered mail, return receipt requested to:
Arkwright Mutual Insurance Company, C/O Assistant Property Manager, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇. ▇▇▇▇▇-▇▇▇▇ or such other address as Lessee may
designate by written notice to Lessor and if no person shall be in charge or
occupy the same then such service may be made by attaching same on the main
entrance of the premises, provided a duplicate of such notice or notices be
simultaneously mailed by certified or registered mail, return receipt to the
address indicated above.
10
This Lease shall be binding upon and inure to the benefit of the
successors and assigns of the Lessor, and shall be binding upon and inure to
the benefit of Lessee, its successors, and, to the extent assignment may be
approved by Lessor hereunder, Lessee's assigns. The pronouns of any gender
shall include the other genders, and either the singular or the plural shall
include the other.
All rights and remedies of Lessor under this Lease shall be cumulative
and none shall exclude any other rights or remedies allowed by law; and this
Lease is declared to be a Texas contract, and all of the terms thereof shall
be construed according to the laws of the State of Texas.
IN TESTIMONY WHEREOF, the parties hereto have executed this lease as of
the date aforesaid.
Two Galleria Tower, Limited
a Texas limited partnership
By: 2GT Associates, Ltd.
a Texas limited partnership,
the general partner
By: Two HDG Ltd.,
a Texas limited partnership,
the general partner
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Interests, Ltd.
a Texas limited partnership,
the general partner
By: ▇▇▇▇▇ Consolidated Investments, Inc.
a Texas corporation,
the general partner
By: /s/ ILLEGIBLE
----------------------------------
LESSOR
ARKWRIGHT MUTUAL INSURANCE COMPANY
----------------------------------
By: /s/ A. D. Alexander
-------------------------------
LESSEE
(The attached Addendum is made a part of this Lease for all purposes.)
11
SCHEDULE I TO LEASE AGREEMENT
BETWEEN TWO GALLERIA TOWER LIMITED ("LESSOR")
AND
ARKWRIGHT MUTUAL INSURANCE COMPANY
----------------------------------
("LESSEE")
SCHEDULE OF STANDARD IMPROVEMENTS (quantities notwithstanding) are defined to
include:
PARTITIONS
One (1) lineal foot of building standard type II partition per twelve (12)
square feet of Net Rentable Area leased outside the core area in the case of
a full floor tenant and the area within the demising walls for a tenant on a
partial floor (the "Useable Area"). All required partitions will be 5/8"
gypsum board, painted with building standard colors to be provided by
Landlord.
CEILINGS
Fissured type mineral fiber acoustical ceiling tile, 12"x 12"x 5/8" thick
mechanically suspended on a concealed grid throughout the Leased Premises.
LIGHTING FIXTURES
One (1) 2' x 4' recessed 3 tube fluorescent lighting fixture with anodized
aluminum parabolic shaped louvers, including initial ▇▇▇▇▇▇▇, per
seventy-five (75) square feet of Useable Area.
DUPLEX ELECTRIC OUTLETS
One (1) duplex wall-mounted convenience outlet for each one hundred-twenty
(120) square feet of Useable Area.
TELEPHONE OUTLETS
One (1) telephone wall outlet for each two hundred ten (210) square feet of
Useable Area.
FLOOR COVERING
Building standard commercial grade carpeting throughout the Leased Premises.
DOORS
One (1) full height, solid core door with a metal frame and lever handle
latch set hardware per three hundred (300) square feet of Useable Area.
LIGHT SWITCHES
One (1) single pole light switch for each three hundred (300) square feet of
Useable Area. Group switching will be provided in open areas.
WINDOW COVERINGS
One inch horizontal aluminum slat mini-blinds for exterior windows throughout
the Leased Premises.
FIRE SPRINKLER HEADS
Ceiling mounted fire sprinkler heads throughout the Leased Premises to conform
with light hazard occupancy for protection system design criteria up to one
sprinkler per 125 square feet of Usable Area.
12
SCHEDULE II TO LEASE AGREEMENT
BETWEEN TWO GALLERIA TOWER LIMITED ("LESSOR")
AND
ARKWRIGHT MUTUAL INSURANCE COMPANY
("LESSEE")
PART A. PROCEDURE FOR DESIGN PREPARATION, PRICING APPROVAL, AND CONSTRUCTION
OF THE LEASED PREMISES.
1. Lessee will deliver to Lessor no later than February 20, 1989 a
detailed space plan together with the other drawings, information and written
instructions required in Part B below for any and all improvements desired by
Lessee in the leased premises (herein called "Lessee's Space Plan").
2. Upon receipt of the Lessee Space Plan, Lessor will review the same to
confirm that it conforms to the requirements listed in Part B below. In the
event the Lessee Space Plan does not conform to the requirements of Part B
below Lessor will return the Lessee Space Plan to Lessee for corrections.
Lessee will deliver a corrected Lessee Space Plan to Lessor no later than ten
(10) days after the initial Lessee Space PLan has been returned to Lessee by
Lessor.
3. After Lessor has received the final, mutually approved Lessee Space
Plan, Lessor shall promptly cause working drawings (hereafter called "Lessee
Working Drawings") of the improvements to be prepared and shall deliver them
to the Lessee for its review and approval.
4. Lessee shall deliver to Lessor written approval of the Lessee Working
Drawings no later than seven (7) days after Lessee receives the Lessee
Working Drawings and by said approval Lessee shall acknowledge that said
drawings correctly depict the proper layout and design for any and all
improvements desired by the Lessee for the leased premises.
In the event the Lessee Working Drawings vary in design from the Lessee
Space Plan, and if Lessee gives Lessor written notice within seven (7) days
thereof, Lessor shall promptly cause the Lessee Working Drawings to be
corrected and Lessee will approve said corrected Working Drawings within five
(5) days of receipt.
5. Upon receipt of Lessee's approval of the Lessee Working Drawings,
Lessor agrees to promptly price the cost of constructing the improvements in
accordance with the Lessee Working Drawings, and to furnish Lessee a tenant
pricing letter. Lessee agrees to promptly review the tenant pricing letter
and to return the tenant pricing letter, approved and executed by Lessee,
within ten (10) days after receipt of the tenant pricing letter. It is
recognized that Lessee may order changes in design to effect cost reductions
after receipt of the tenant pricing letter. In that event, the provisions of
paragraph 6 shall apply.
6. Should Lessee order changes in the work after approval of Lessee's
Working Drawings or during construction, or fail to deliver Lessee's Space
Plan or approved Lessee Working Drawings and tenant pricing letter as
scheduled, Lessee shall pay to Lessor for additional expenses which will be
incurred by Lessor because of inability to proceed with the work as
scheduled, one day's rent on the Leased Premises for each day beyond the
scheduled delivery date and/or delivery dates specified in Schedule II, plus
charges for additional architectural and coordination time resulting from
these changes or delays. Such additional rent and charges shall be paid by
Lessee to Lessor within fourteen (14) days after receipt of Lessor's invoice
thereof. Payment of such sums shall not alter Lessor's right to pursue
Lessor's other remedies for default by Lessee under the Lease.
7. Lessor agrees to install partitions and improvements in the quantity
allowed in Schedule I within the period of time between the dates shown in
the Lease for (1) Commencement Date in Article II, paragraph 1, and (2) the
dates of delivery of Lessee's Space Plans and various approvals by Lessee in
this Schedule II, subject to extension for any reason beyond Lessor's
reasonable control and for any Lessee delay.
13
PART B. MINIMUM INFORMATION REQUIRED OF LESSEE SPACE PLAN
FLOOR PLANS INDICATING
1. Location and type of all partitions.
2. Location and types of all doors -- indicate hardware and provide keying
schedule.
3. Location and type of glass partitions, windows and doors -- indicate
framing if not building standard.
4. Location of telephone equipment room accompanied by an approval of the
telephone company.
5. Indicate critical dimensions necessary for construction.
6. Location of all building standard electrical items -- outlets,
switches, telephone outlets. (Building standard lighting will be determined
by building architect.)
7. Location and type of all non-building standard electrical items
including lighting.
8. Location and type of equipment that will require special electrical
requirements. Provide manufacturers specifications for use and operation.
9. Location, weight per square foot and description of any exceptionally
heavy equipment, filing system, library and etc., exceeding 50 psf live load.
10. Requirements for special air conditioning or ventilation.
11. Type and color of floor covering.
12. Location, type and color wall covering.
13. Location, type and color of building standard and non-building
standard paint or finishes.
14. Location and specifications of all sinks and plumbing.
15. Location and specifications of kitchen equipment.
16. Plans must conform to the City of Dallas Building Fire Codes.
DETAILS SHOWING:
1. All millwork with verified dimensions and dimensions of all equipment
to be built-in.
2. Corridor entrance.
3. Bracing or support of special walls, glass partitions, and live loads
exceeding 50 psf, etc., if desired. If not included with the space plan, the
building architect will design, at Lessee's expense, all support or bracing
required.
14
ADDENDUM TO LEASE AGREEMENT
1. Lessee shall pay at lease signing the first four month's rent in the
amount of $29,527.08.
2. Reference Section II, page 2, paragraph 3 of the Lease Agreement. Annual
Base Rental shall be as follows:
Months 1 - 8 $ 3.96 per square foot of NRA
Months 9 - 20 9.50 per square foot of NRA
Months 21 - 36 16.00 per square foot of NRA
Years 4 - 7 17.00 per square foot of NRA
Years 8 - 10 18.00 per square foot of NRA
3. Lessee shall be granted a $2.00 per square foot of NRA moving allowance,
payable within thirty (30) days following occupancy by Lessee.
4. Lessee shall be granted a $15.00 per square foot of NRA construction
allowance (the "Construction Allowance") for demolition and buildout.
In the event such demolition and buildout costs exceed the Construction
Allowance (the "Excess Costs") such Excess Costs, not to exceed $5.00
per square foot of NRA, shall be paid by Lessee as additional Base
Rental to yield a fully amortized 10% (ten percent) return to the Lessor
on the Excess Costs from the 21st through the 120th month of the Lease
term. If the Construction Allowance is not completely utilized in
demolition and buildout, any remaining monies ("Savings") will be
applied as a Base Rental reduction based on a 10% discount rate from the
21st through the 120th month of the Lease term. Such increase or
decrease (as the case may be) in Base Rental shall be calculated as
follows (the "Base Rental Adjustment Formula"): For each $1.00 per
square foot of NRA of Excess Costs or Savings, as the case may be, the
Base Rental rate shall be increased or decreased by $.21 per square foot
of NRA per year from the 21st through the 120th month of the Lease term.
Such increase or decrease in the Base Rental rate shall be proportional
to the ratio of the Excess Costs or Savings, as the case may be, per
square foot of NRA to $1.00 per square foot of NRA.
5. As long as Lessee is not in default in the performance of its covenants
under this lease, Lessee is hereby granted the option to renew the term
of this Lease for a period of five (5) additional years ("Renewal
Term"), to commence at the expiration of the term of this Lease. Lessee
shall exercise its option to renew by delivering written notice of such
election to Lessor at least nine (9) months prior to the expiration of
the term of this Lease. The renewal of this Lease shall be upon the
same terms and conditions of this Lease, except (a) the Base Rental and
Parking Charge during the Renewal Term shall be at the prevailing market
Base
2
Rental and Parking Charge (similarly defined) at the time the Renewal
Term commences. However, in no event shall such Base Rental be less
than Lessee's Base Rental plus all increases for Base Rental Adjustments
in effect for the calendar year in which the Renewal Term commences; (b)
Lessee shall have no option to renew this Lease beyond the expiration of
the Renewal Term; (c) Lessee shall not have the right to assign its
renewal rights to any sublessee of the Leased Premises or assignee of
the Lease, excepting any subsidiary or associate company; and (d) the
leasehold improvements will be provided in their then existing condition
(on an "as is" basis) at the time the Renewal Term commences. Although
not required, if Lessor and Lessee mutually agree on a finish out
allowance, such allowance will be amortized over the renewal term at
twelve percent (12%) interest.
6. Lessee shall have the right to submit three construction bids from
contractors previously approved by Lessor in addition to the bids
received by Lessor. If Lessee's contractor has the lowest responsible
bid; Lessee shall be allowed to use that contractor, provided such
contractor uses Lessor's required subcontractors for the electrical,
mechanical and plumbing work. Lessor's subcontractors for said
electrical, mechanical and plumbing work must have submitted a bid
within 7% of Lessee's most competitive bid.
7. Lessee shall be granted a $1.75 per square foot of NRA space planning
allowance for the initial 22,369 square feet payable upon receipt of
invoice from Lessee. Any unused monies shall be credited toward Base
Rental over the term of the Lease in accordance with the Base Rental
Adjustment Formula for Savings.
8. Lessor shall pay the initiation costs only for seven (7) Fitness
memberships to the University Club.
9. Lessor shall complete a construction "punch list" within ten (10) days
of Lessee's occupancy of the Lease Premised. Lessor agrees to use
reasonable efforts to complete all work outlined on said punch list
within thirty (30) days after completion of the punch list, provided
there are no change orders requested by Lessee which would cause delays
beyond the 30 days.
10. As long as Lessee is not in default in the performance of its covenants
under this Lease, Lessee shall have a one time option to terminate this
Lease (the "Termination Option") effective as of the expiration of the
sixtieth (60th) calendar month of the term of this Lease, provided
Lessee notifies Lessor in writing on or before the expiration of the
fifty first (51st) calendar month of the term of this Lease of such
intent and such notice is accompanied by a cashier's or certified check
made payable to Lessor in the amount of the Termination Payment
(hereinafter defined). As used herein, the term "Termination Payment"
means the sum of $475,000.00 with respect to the original 22,369 square
feet of NRA of the Leased Premises; provided, however, (i) in the event
the Leased Premises, at the time of the exercise of the Termination
3
Option, exceeds 22,369 square feet of NRA, the Termination Payment shall
be increased by a sum equal to Lessor's unamortized Lease Costs
(hereinafter defined) for such additional NRA. As used herein, the term
"Lease Costs" mean all costs incurred by Lessor in connection with such
additional NRA, including without limitation, all finishout costs and
lease commissions (both external and internal) plus 12% (twelve percent)
per annum self amortizing return from date of expenditure through the
original expiration date of this Lease on such costs; and (ii) in the
event the Base Rental, at the time of the exercise of the Termination
Option, has been adjusted by the Base Rental Adjustment Formula pursuant
to paragraph 4 or 7 of this Addendum, the Termination Payment shall be
adjusted by a sum equal to the unamortized Excess Costs or Savings, as
the case may be based on a 10% return to the Lessor.
11. If Lessee does not exercise the Termination Option at the end of the
fifty first (51st) month of occupancy as set out above, Lessee shall be
granted an additional $55,922.50 refurbishment allowance upon written
request to Lessor.
12. Lessor hereby grants Lessee an ongoing "Right of First Refusal", on all
or part of the 20th floor of Two Galleria Tower as outlined on attached
Exhibit C (approximately 22,248 square feet of net rentable area) which
shall be available August 1, 1991, subject to Southland Corporation NOT
exercising its renewal option. If Southland Corporation's lease
agreement terminates for any reason prior to August 1, 1991, the Right
of First Refusal space shall become available as of such termination or
November 1, 1990, whichever is later, but in no event shall the space be
available prior to November 1, 1990 to any other tenant. Lessee is also
granted ongoing Rights of First Refusal on approximately 2,500 square
feet of NRA on the 4th floor (Exhibit D) and 4,335 square feet of NRA on
the 5th floor (Exhibit E) which are currently vacant. Provided Lessee is
not in default, Lessee may exercise the Right of First Refusal upon the
following terms:
a. The lease term for such Right of First Refusal area shall be
coterminous with the expiration date of this Lease Agreement.
b. After written notification from Lessor to Lessee that Lessor has
another lessee desirous of leasing said space, Lessee shall have
seven (7) days or five (5) working days after receipt from an
overnight carrier, whichever is greater, to exercise its Right of
First Refusal by giving written notice to Lessor of its intent to
exercise said option.
c. The Base Rental for the Right of First Refusal space leased by
Lessee shall be at the same Base Rental then in effect per the
schedule outlined in paragraph 2 of this Addendum plus all Base
Rental Adjustments in effect pursuant to the Lease if exercised
before the 61st month of the lease term. Thereafter, the Base
Rental shall be at the then prevailing market rate, but in no event
shall such Base Rental be less than Lessee's Base Rental per the
schedule outlined in
4
paragraph 2 of this Addendum plus all Base Rental Adjustments In
effect pursuant to this Lease.
d. In the event Lessee exercises a Right of First Refusal pursuant to
the terms hereof, Lessee shall be granted a $15.00 per square foot
of NRA improvement allowance if additional space is leased within
the first 3 years of Lessee's lease term and $12.00 per square foot
of NRA if exercised during years 4 and 5 of the lease term. Right
of First Refusal space shall be taken on an "as is" basis anytime
thereafter. Although not required, if Lessor and Lessee mutually
agree on a finish out allowance after year 5 of the lease term,
such allowance will be amortized over the remaining lease term at
twelve percent (12%) interest.
Any additional improvement dollars expended by Lessor on Right of
First Refusal space during the first five years of lease term shall
be paid by Lessee as additional Base Rental by fully amortizing the
additional costs at 12% over the original lease term.
▇. ▇▇▇▇▇▇ shall not be liable for failure to give possession of said
Right of First Refusal Space by reason of the holding over or
retention of possession of any previous lessee, lessees or
occupants of same, nor shall such failure impair the validity of
this Lease, nor extend the term hereof, but the rent for such Right
of First Refusal Space shall be abated until possession thereof is
delivered to Lessee. However, Lessor does covenant that it will
use reasonable diligence to deliver possession of such Right of
First Refusal Space to Lessee in a timely manner.
f. Each ongoing Right of First Refusal shall terminate when said lease
premises are leased to another lessee or upon the termination of
Lessee's Lease Agreement, whichever occurs first.
g. The Right of First Refusal shall apply only to each Right of First
Refusal space in its entirety as offered to another potential
lessee, and not to any lesser portion thereof unless Lessor is
willing to lease a lesser portion thereof to such other lessee, in
which event the Right of First Refusal shall apply to such lesser
portion.
h. Lessee shall be granted free parking at the ratio of 1 space per
280 square feet of NRA for the Right of First Refusal space if such
space is taken during the first five (5) years of the lease term.
Anytime after the fifth year of occupancy, parking shall be
provided at the then prevailing market rate at the same ratio as
stated above.
13. Lessor agrees that it will not extend a sublessee of Southland
Corporation which may occupy said 20th floor lease premises beyond
August 1, 1991. However, if Southland Corporation
5
chooses to renew its lease term under renewal rights presently contained
in their lease for its own occupancy or that of one of its subsidiaries
or sublessees, Lessor must honor the renewal.
14. (Reference Section IV, page 7, paragraph 11.) Lessor warrants and
represents to Lessee that as of the date hereof, the Building is not
subject to any lien or encumbrance except: (1) lien for taxes not yet
due and payable and (2) easements not containing any power of sale or
right of foreclosure. This Lease shall automatically become subject and
subordinate to any first lien mortgage or deed of trust ("Lessor's
Mortgage") which may hereafter encumber the Building of which the Leased
Premises form a part and to all renewals, modifications, consolidations,
replacements and extensions thereof provided that Lessor and the
mortgagee or lender ("Lessor's Mortgagee") shall have executed and
delivered to tenant a Recognition, non-disturbance and attornment
agreement in form and substance reasonably acceptable to Lessee. Such
agreement at a minimum shall provide that notwithstanding any
enforcement by the trustee or the beneficiary under Lessor's Mortgage,
that Lessee's occupancy of the Lease Premises shall not be disturbed so
long as Lessee is not in default under this Lease. In the event of the
enforcement by the trustee or Lessor's Mortgagee, the successor in
interest shall not be bound by (i) any payment of rent or additional
rent for more than one month in advance except prepayments in the nature
of security for the performance by Lessee of its obligations under this
lease, (ii) such other unperformed obligations of Lessor only requiring
Lessor to pay Lessee a sum of money (for example, return of an
overcharge of additional rent), or (iii) any amendment or modification
of this Lease made (a) after the date Lessee is informed in writing of
the name and address of Lessor's Mortgagee, and (b) without the written
consent of such trustee or such beneficiary or such successor in
interest. However, Lessor's Mortgagee shall be responsible for
non-monetary obligations (i.e. maintenance) of Lessor yet to be
performed by Lessor at the time Mortgagee enforces its right under the
mortgage or deed of trust.
Signed for Identification:
/s/ Illegible
----------------------------------
Lessor
/s/ A.D. Alexander
----------------------------------
Lessee
FIRST AMENDMENT TO LEASE AGREEMENT
This First Amendment to Lease Agreement (the "Amendment") is made and
entered into as of the 17th day of March, 1989 by and between Two Galleria
Tower Limited ("Lessor") and Arkwright Mutual Insurance Company ("Lessee").
RECITALS
A. Lessor and Lessee entered into that certain Lease Agreement (the
"Lease") dated January 25, 1989, covering approximately 22,369 square feet of
Net Rentable Area on the 19th floor of the building known as Two Galleria Tower,
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ (the "Leased Premises").
B. The cost of construction of the Leased Premises exceeded the
Construction Allowance by the sum of $1.20 per square foot of Net Rentable Area.
▇. ▇▇▇▇▇▇ and Lessee desire to adjust the Base Rental for the Leased
Premises pursuant to the Base Rental Adjustment Formula as set out in paragraph
4 of the Addendum to the Lease.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee
hereby agree as follows:
1. The capitalized terms used herein shall have the same meaning as
ascribed to them in the Lease.
2. In accordance with the Base Rental Adjustment Formula set out in
paragraph 4 of the Addendum to the Lease, the Base Rental 88 provided in
paragraph 2 of the Addendum to the Lease is hereby amended by increasing the
Base Rental by the sum of $.25 per square foot of Net Rentable Area for months
21 through 120 of the Lease Term. The increased annual Base Rental for such
period shall be as follows:
Months 21 through 36 $16.25 per square foot of NRA
Years 4 through 7 $17.25 per square foot of NRA
Years 8 through 10 $18.25 per square foot of NRA
3. Except as hereby expressly amended, the Lease shall continue in full
force and affect.
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IN WITNESS WHEREOF, Lessor and Lessee have executed this Amendment in
multiple original counterparts as of the date and year first above written.
LESSOR:
Two Galleria Tower Limited,
a Texas limited partnership
By: Two GT Associates, Ltd.,
a Texas limited partnership,
the general partner
By: Two HDG, Ltd.,
a Texas limited partnership,
the general partner
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Interests, Ltd.,
a Texas limited partnership,
the general partner
By: ▇▇▇▇▇ Consolidated Investments, Inc.,
a Texas corporation,
the general partner
By: /s/ Illegible
------------------------------------
LESSEE:
Arkwright Mutual Insurance Company,
a _____________________ corporation
By: /s/ A. D. Alexander
---------------------------------
Title: Sr. VP & Area Mgr
------------------------------
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