Exhibit 10.2
LEASE AGREEMENT
between
FLEXTRONICS INTERNATIONAL USA, INC.,
a California corporation,
as Landlord,
and
SMTC MANUFACTURING CORPORATION OF TEXAS,
a Texas corporation,
as Tenant
TABLE OF CONTENTS
ARTICLE ............................................................... PAGE
1 BASIC LEASE INFORMATION ............................................. 1
Section 1.1 Basic Lease Terms ................................... 1
Section 1.2 Defined Terms ....................................... 3
2 OCCUPANCY AND USE ................................................... 4
Section 2.1 Grant and Term ...................................... 4
Section 2.2 Delivery ............................................ 4
Section 2.3 Acceptance of Premises .............................. 4
Section 2.4 Use ................................................. 4
Section 2.5 Peaceful Enjoyment .................................. 5
3 RENT ................................................................ 5
Section 3.1 Rental Payments ..................................... 5
Section 3.2 Pass Through Expenses ............................... 4
Section 3.3 Net Lease ........................................... 6
Section 3.4 Security Deposit .................................... 5
4 UTILITIES ........................................................... 6
Section 4.1 Utilities ........................................... 6
Section 4.2 Interruption of Utilities or Services ............... 7
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Section 4.3 Payment for Utility Services ........................ 7
5 MAINTENANCE, REPAIRS AND INSTALLATIONS .............................. 7
Section 5.1 Maintenance and Repairs ............................. 7
Section 5.2 Tenant's Installations .............................. 8
Section 5.3 Surrender of Premises ............................... 10
6 RIGHTS RESERVED BY LANDLORD ......................................... 10
Section 6.1 Landlord's Access ................................... 10
Section 6.2 Assignment, Subletting, or Other Transfers by Tenant 11
Section 6.3 Assignment by Landlord .............................. 12
Section 6.4 Subordination to Mortgages and Leases ............... 13
Section 6.5 Certificates ........................................ 14
7 CONDEMNATION, CASUALTY AND INSURANCE ................................ 14
Section 7.1 Condemnation ........................................ 14
Section 7.2 Casualty Damage ..................................... 15
Section 7.3 Insurance ........................................... 16
Section 7.4 Compliance .......................................... 16
Section 7.5 Waiver of Subrogation ............................... 13
Section 7.6 Indemnity ........................................... 17
Section 7.7 Damages from Certain Causes ......................... 18
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8 DEFAULT AND REMEDIES ................................................ 18
Section 8.1 Default by Tenant ................................... 18
Section 8.2 Landlord's Remedies ................................. 19
Section 8.3 Landlord's Lien ..................................... 22
Section 8.4 Attorney's Fees and Other Expenses of Enforcement ... 22
Section 8.5 Default by Landlord ................................. 22
9 MISCELLANEOUS PROVISIONS ............................................ 23
Section 9.1 Amendments .......................................... 23
Section 9.2 Non-Waiver .......................................... 23
Section 9.3 Holding Over ........................................ 23
Section 9.4 Notices ............................................. 23
Section 9.5 Independent Obligations ............................. 24
Section 9.6 Survival ............................................ 24
Section 9.7 Unavoidable Delays .................................. 24
Section 9.8 Consent by Landlord ................................. 24
Section 9.9 Legal Interpretation ................................ 25
Section 9.10 Entire Agreement ................................... 25
Section 9.11 Waiver of Consumer Rights .......................... 26
Section 9.12 Authority .......................................... 26
Section 9.13 Taxes on Tenant's Property ......................... 26
Section 9.14 Landlord's Liability ............................... 26
Section 9.15 Time of the Essence ................................ 26
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Section 9.16 Instruments and Evidence Required to be
Submitted to Landlord ...................................... 27
Section 9.17 Counterparts ....................................... 27
Section 9.18 Recordation ........................................ 27
Section 9.19 Effective Date ..................................... 27
Section 9.20 Successors and Assigns ............................. 27
Section 9.21 Joint and Several Liability ........................ 27
Section 9.22 Commissions ........................................ 21
Section 9.23 Protests ........................................... 21
Section 9.24 Exhibits ........................................... 28
EXHIBITS
Exhibit A - Legal Description ................................... 23
Exhibit B - Index to Defined Terms .............................. 24
Exhibit C - Renewal Option ...................................... 26
Exhibit D - Purchase Option ..................................... 30
Exhibit E - Right of First Refusal .............................. 34
Exhibit F - Special Warranty Deed ............................... 35
Exhibit G - Memorandum of Lease ................................. 38
Exhibit H - Termination of Memorandum of Lease .................. 40
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LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is entered into as of the Effective Date,
by and among FLEXTRONICS INTERNATIONAL USA, INC., a California corporation
("Landlord"), and SMTC MANUFACTURING CORPORATION OF TEXAS, a Texas corporation
("Tenant").
ARTICLE 1
BASIC LEASE INFORMATION
Section 1.1 Basic Lease Terms.
(a) "Base Rent" means the sum of:
(i) One Hundred Fifty-Five Thousand Six Hundred Ninety-Five
and 66/100 Dollars ($155,695.66) per calendar month during the first (1st)
Lease Year;
(ii) One Hundred Sixty Thousand Three Hundred Sixty-Six and
52/100 Dollars ($160,366.52) per calendar month during the second (2nd)
Lease Year;
(iii) One Hundred Sixty-Five Thousand One Hundred
Seventy-Seven and 51/100 Dollars ($165,177.51) per calendar month during
the third (3rd) Lease Year;
(iv) One Hundred Seventy Thousand One Hundred Thirty-Two and
83/100 Dollars ($170,132.83) per calendar month during the fourth (4th)
Lease Year;
(v) One Hundred Seventy-Five Thousand Two Hundred Thirty-Six
and 81/100 Dollars ($175,236.81) per calendar month during the fifth (5th)
Lease Year;
(vi) One Hundred Eighty Thousand Four Hundred Ninety-Three and
91/100 Dollars ($180,493.91) per calendar month during the sixth (6th)
Lease Year;
(vii) One Hundred Eighty-Five Thousand Nine Hundred Eight and
72/100 Dollars ($185,908.72) per calendar month during the seventh (7th)
Lease Year;
(viii) One Hundred Ninety-One Thousand Four Hundred
Eighty-Five and 98/100 Dollars ($191,485.98) per calendar month during the
eighth (8th) Lease Year;
(ix) One Hundred Ninety-Seven Thousand Two Hundred Thirty and
55/100 Dollars ($197,230.55) per calendar month during the ninth (9th)
Lease Year;
(x) Two Hundred Three Thousand One Hundred Forty-Seven and
46/100 Dollars ($203,147.46) per calendar month during the tenth (10th)
Lease Year; and,
(b) "Building" means the building located on the Land, the street
address of which is 00000 Xxxx Xxxxx Xxxxx, Xxxxxx, Xxxxx 00000.
(c) "Commencement Date" means September 1, 2001.
(d) "Delivery Date" means the date on which the Premises are
delivered to Tenant.
(e) "Land" means the tracts of real property which are described in
Exhibit "A" to this Lease.
(f) "Landlord's Address" is 0000 Xxxxxxx Xxxxx, Xxx Xxxx, Xxxxxxxxxx
00000, Attn: Xxxx Xxxxxx; or if by facsimile, to 214.510.5021, Attn: Xxx Xxxx;
or any other address for notices designated by Landlord pursuant to Section 9.4.
(g) "Lease Term" means a term commencing on the Commencement Date
and continuing for one hundred twenty (120) full calendar months.
(h) "Lease Year" means a period of twelve (12) full calendar months.
The first (1st) Lease Year will begin on the Commencement Date, and each
subsequent Lease Year will begin on September 1 of the applicable calendar year.
(i) "Operating Expenses" means any and all expenses which Landlord
shall pay or become obligated to pay in connection with the Premises other than
personal income, inheritance, or estate taxes.
(j) "Pass Through Expenses" means all costs and expenses incurred by
Landlord relative to (A) all taxes, assessments, and other governmental charges,
whether federal, state, county or municipal and whether by taxing districts or
authorities presently existing or created hereafter, attributable to the
Premises or its operations, and any form of real estate tax or assessment,
general, special, ordinary, or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy, or tax (other than personal income,
inheritance, or estate
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taxes) imposed on Landlord because of its ownership of the Premises or imposed
on the Premises or any portion thereof by any authority having the direct or
indirect power to tax; (B) any owner's association dues and assessments; (C) all
costs and premiums relative to each commercial general liability insurance
policy, fire and extended coverage insurance policy, and rent loss insurance
policy maintained by Landlord with respect to the Premises; and (D) an amount
equal to one and one-half percent (1-1/2%) of the Base Rent for the subject
Lease Year.
(k) "Permitted Use" means the use of the Premises for one or more
of: (i) the manufacturing, assembly, warehousing, distribution, and office
operations conducted in the Premises by Tenant on the Effective Date; (ii)
similar manufacturing operations conducted elsewhere by Tenant or an Affiliate
of Tenant on the Effective Date, including other electronic assembly and light
manufacturing, warehousing, research and development, and related activities;
and (iii) other manufacturing, assembly, warehousing, and distribution
activities similar to those conducted by Tenant on the Effective Date, and/or
related office, shipping, receiving, or research and development uses, provided,
in any instance, that such uses comply with any applicable Legal Requirements.
Tenant shall not conduct any other uses in the Premises without first obtaining
Landlord's written consent, which shall not be unreasonably withheld,
conditioned, or delayed.
(l) "Premises" means, collectively, the Land, the Building, and all
other improvements located on the Land.
(m) "Rent" means, collectively, the Base Rent and any other amounts
payable to Landlord by Tenant.
(n) "Security Deposit" means the sum of $475,000.00.
(o) "Tenant's Address" is 00000 Xxxx Xxxxx Xxxxx, Xxxxxx, Xxxxx
00000, Attn: Xxxx Xxxxxxxxx, facsimile number 512.310.4301; with a copy to SMTC
Corporation, 000 Xxxx Xxxx, Xxxxxxx, Xxxxxxx, Xxxxxx X0X0X0, Attn: Xxxxxxx
Xxxxx, Chief Financial Officer, facsimile number 905.479.5326; or any other
address(es) for notices designated by Tenant pursuant to Section 9.4.
1.2 Defined Terms. Each of the Basic Lease Terms defined in Section 1.1
will be used as defined terms in this Lease (including the Exhibits to this
Lease). In addition, other terms are defined in various sections of this Lease.
The schedule of those defined terms can be
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found at Exhibit "B" to this Lease. All words which are used as defined terms in
this Lease are delineated with initial capital letters and, when delineated with
initial capital letters, shall have the meaning specified in the applicable
provision of this Lease in which that term is defined.
ARTICLE 2
OCCUPANCY AND USE
Section 2.1 Grant and Term. In consideration for the obligation of Tenant
to pay Rent and subject to and upon the terms and conditions stated in this
Lease, Landlord leases to Tenant, and Tenant leases from Landlord, the Premises
for the Lease Term.
Section 2.2 Delivery. The Premises shall be delivered to Tenant as of the
Commencement Date. Tenant is currently in occupancy of the Premises under the
terms of the prior Lease, dated as of February 23, 2001 ("Prior Lease").
Section 2.3 Acceptance of Premises. During the period in which Tenant
occupied the Premises under the Prior Lease, Tenant made a complete examination
and inspection of the Premises and hereby accepts the Premises "as is" in its
condition on the Effective Date.
Section 2.4 Use. The Premises may be used only for the Permitted Use and
for no other purposes without the prior written consent of Landlord. Tenant
shall not, even if technically within the Permitted Use, use the Premises for
any purpose which is unreasonably dangerous to person or property, which creates
a nuisance, or which would violate any applicable Legal Requirement or Insurance
Requirement. In addition, the Permitted Use shall not, under any circumstances,
include the operation of an Adult Oriented Business, and Adult Oriented
Businesses are specifically prohibited. Tenant shall comply with, and shall
cause any Tenant Related Parties to comply with, all Legal Requirements and
Insurance Requirements relating to the use, condition, or occupancy of the
Premises. "Insurance Requirements" means all terms of any insurance policy
obtained by Landlord or Tenant covering or applicable to the Premises; all
requirements for the issuing of each such insurance policy; and all orders,
rules, regulations, and other requirements of the National Board of Fire
Underwriters (or any other bodies exercising any similar functions) which are
applicable to or affect the Premises or any use or condition of the Premises.
"Legal Requirements" means (a) all laws, statutes, codes, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, and requirements of all governmental authorities, foreseen or
unforeseen, which now or at any time hereafter may be applicable to the
Premises, including (i) the Americans with Disabilities Act, (ii) all federal,
state, and local laws, regulations, and ordinances pertaining to air and water
quality, hazardous materials, waste disposal, and other environmental matters;
and (iii) all laws, codes, and regulations pertaining to zoning, land use,
health, or safety; and (b) any restrictive covenants applicable to the Premises.
"Adult Oriented Business" shall mean a nightclub, bar (i.e., an establishment
which derives more than fifty percent (50%) of its gross income from the sale of
alcoholic beverages), movie theater, bowling alley, bingo hall, or sexually
oriented business. Capital Costs required in order to comply
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with any applicable Legal Requirements shall be allocated between Landlord and
Tenant as provided in Section 5.1 of this Lease.
Section 2.5 Peaceful Enjoyment. Tenant may peacefully occupy the Premises
for the Permitted Use during the Lease Term subject to the terms and provisions
of this Lease and provided that Tenant pays the Rent and performs all of
Tenant's covenants and agreements contained in this Lease.
ARTICLE 3
RENT
Section 3.1 Rental Payments. Tenant shall pay Rent to Landlord for each
month during the Lease Term as provided in this Lease. Rent shall be due and
payable in advance on the first day of each month during the Lease Term. If the
Commencement Date is a date other than the first (1st) day of a calendar month,
the Rent for the portion of the calendar month in which the Commencement Date
occurs shall be due and payable on the Commencement Date; and the Rent for such
partial month shall be prorated based upon the number of days from the
Commencement Date to the end of that calendar month. Rent for any partial month
at the end of the Lease Term shall be prorated based upon the number of days
from the beginning of that month to the end of the Lease Term. Rent shall be
payable at the address for Landlord designated in the first paragraph of this
Lease (or at such other address as may be designated by Landlord from time to
time). Tenant shall pay all Rent under this Lease at the times and in the manner
provided in this Lease, without abatement, notice, demand, counterclaim, or
set-off. No payment by Tenant or receipt by Landlord of a lesser amount than the
total amount of Rent then due shall be deemed to be other than on account of the
earliest past due installment of Rent required to be paid under this Lease. No
endorsement or statement on any check or in any letter accompanying any check or
payment of Rent shall ever be deemed an accord and satisfaction, and Landlord
may accept such check or payment without prejudice to Landlord's right to
recover the balance of the Rent then due or to pursue any other remedy available
under this Lease, at law, or in equity.
Section 3.2 Pass Through Expenses. Landlord shall make a good faith
estimate of the Pass Through Expenses from time to time for each upcoming fiscal
year of Landlord (or remainder thereof, if applicable). Landlord's fiscal year
ends on March 31 of each calendar year. Landlord may also, from time to time,
revise that estimate; and upon thirty (30) days prior written notice to Tenant,
Landlord may require the "Monthly Operating Payment" to be adjusted in
accordance with such revised estimate. Any amount paid based upon an estimate
shall be subject to adjustment when the Pass Through Expenses are actually
determined for that calendar year. By April 1 of each calendar year during the
Lease Term or as soon thereafter as reasonably practicable, Landlord shall
furnish to Tenant a statement of the actual Pass Through Expenses for the
previous calendar year. If for any calendar year Tenant's aggregate Monthly
Operating Payments were in excess of the Pass Through Expenses actually paid
during such prior year, then Landlord shall refund any overpayment (or at
Landlord's election, apply such amount against Base Rent due or to become due
under the Lease). Likewise, Tenant shall pay
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to Landlord, on demand, any underpayment of Pass Through Expenses with respect
to the prior year. In the event that the Lease Term commences on a day other
than January 1 or terminates on a day other than December 31, the Pass Through
Expenses for that part of the initial calendar year or last calendar year during
the Lease Term shall be prorated based upon the number of months in that partial
calendar year. With respect to any partial calendar month occurring during that
partial calendar year, the Pass Through Expenses shall also be prorated based
upon the number of days in that partial calendar month. The provisions of this
Section 3.2 shall survive the termination of the Lease Term. As used herein, the
term "Monthly Operating Payment" shall mean one-twelfth (1/12) of the Pass
Through Expenses for that calendar year, as estimated by Landlord, in the
exercise of good faith and reasonable business judgment, with respect to the
applicable period. Landlord shall apply amounts collected from Tenant under this
Section for the payment of the Pass-Through Expenses.
Section 3.3 Net Lease. The Base Rent shall be absolutely net to Landlord,
free of any Operating Expense, so that this Lease will yield the Base Rent net
to or for the account to Landlord throughout the Lease Term. Without limiting
the foregoing, Tenant shall be responsible for, and shall pay (a) all costs of
obtaining utility service for the Property and assessments (if any) and all
costs of maintenance and repairs to the Property directly to the provider
thereof and (b) all Pass Through Expenses to Landlord..
Section 3.4 Security Deposit. Tenant shall pay the Security Deposit to
Landlord on the date this Lease is executed by Tenant in cash or in such other
manner acceptable to Landlord. Tenant hereby grants to Landlord a security
interest in the Security Deposit. Landlord shall have, and Landlord expressly
retains and reserves, all rights of setoff, recoupment, and similar remedies
available to Landlord under applicable laws or in equity. Landlord may commingle
the Security Deposit with its other funds and shall receive and hold the
Security Deposit without liability for interest. Upon default by Tenant,
Landlord may from time to time, and without prejudice to any other remedy, use
the Security Deposit to the extent necessary to make good any arrears of Rent or
other sums then due from Tenant to Landlord or to pay the cost of any damage,
injury, expense, or liability caused by any default by Tenant under this Lease.
After any such application of any portion of the Security Deposit, Tenant shall
pay to Landlord, immediately upon demand, the amount so applied so as to restore
the Security Deposit to its original amount; and such amount shall then be
deemed to be part of the Security Deposit. Tenant's failure to restore the
Security Deposit may, at Landlord's sole option, constitute a default under this
Lease. If Tenant is not in default under this Lease and after application of the
Security Deposit to the repair of any damage or injury to the Premises caused by
Tenant or by any Tenant Related Party, any remaining balance of the Security
Deposit held by Landlord shall be returned by Landlord to Tenant within
forty-five (45) days following the expiration or termination of this Lease. The
Security Deposit shall not be considered an advance payment of rental or a
measure of Landlord's damages resulting from a default by Tenant.
ARTICLE 4
UTILITIES
Section 4.1 Utilities. The mains, conduits, and other facilities necessary
to supply normal water, electricity, and sewage service to the
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Premises are available to the Building. Tenant shall maintain those facilities
during and throughout the Lease Term. Landlord shall not be responsible for, and
shall have no liability with respect to, the quality, quantity, or condition of
any services provided by such public utilities.
Section 4.2 Interruption of Utilities or Services. In the event that any
utility services to the Premises are interrupted, malfunction, or are subject to
partial curtailment; any equipment, machinery, or facility within the Building
breaks down or, for any cause, ceases to function; or an interruption or
malfunction occurs with respect to any utility services, Tenant shall repair (if
related to facilities or equipment within the Premises) or obtain the
restoration of such services as soon as reasonably practicable. No such
occurrence, nor Landlord's compliance with any Legal Requirement or with any
voluntary governmental or business guidelines related to the conservation of
energy, shall ever (a) cause Landlord to be liable or responsible to Tenant for
any loss or damage which Tenant may sustain or incur as a result of any such
occurrence, (b) be construed as an eviction of Tenant or as a disturbance of
Tenant's use or possession of the Premises, (c) constitute a breach by Landlord
of any of Landlord's obligations under this Lease, (d) work an abatement or
reduction of Rent, (e) entitle Tenant to any right of setoff or recoupment, or
(f) relieve Tenant of any of Tenant's obligations under this Lease.
Section 4.3 Payment for Utility Services. The cost and expense of
installing and maintaining the necessary pipes, conduits, and other facilities
necessary to provide utility services to the Premises, and the charges and fees
for all water, electricity, telephone services, and other utilities used in the
Premises, will be borne by Tenant; and Tenant shall pay the applicable charges
and fees for each of these utilities directly to the respective providers of
each.
ARTICLE 5
MAINTENANCE, REPAIRS AND INSTALLATIONS
Section 5.1 Maintenance and Repairs. Tenant shall take good care of and
maintain the Premises (including the foundation, exterior walls, and roof of the
Building and all plate glass, improvements, additions, or alterations situated
in the Premises; and all landscaping, parking, and other exterior areas of the
Premises) in a first class, clean, and safe condition. Tenant shall also
maintain and repair all Tenant Service Equipment installed in the Premises,
above the acoustical ceiling, of the Premises, or elsewhere in the Premises.
"Tenant Service Equipment" means any supplemental heating, ventilation, or air
conditioning units, data and phone cabling, and all other equipment installed by
or on behalf of Tenant which services the Premises. Tenant shall not commit or
allow any waste or damage to be committed on any portion of the Premises and
shall repair or replace any damage to any part of the Premises (casualty loss
and reasonable wear and tear excepted). While Landlord shall not be required to
maintain or repair the Premises, Landlord may, at its option, make such repairs,
improvements, or replacements; and Tenant shall repay Landlord on demand the
actual costs incurred by Landlord to make such repairs, improvements, or
replacements
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plus an additional charge in an amount not to exceed fifteen percent (15%) of
the reasonable and actual cost so incurred by Landlord to cover Landlord's
administrative overhead. In the event that Tenant must incur a Capital Cost in
order to comply with Tenant's maintenance and repair obligations under this
Lease or to comply with a Legal Requirement, Tenant shall, as soon as reasonably
practicable, provide notice to Landlord of the nature and estimated amount of
that Capital Cost. Any repair, replacement, or maintenance work which requires
Tenant to incur a Capital Cost shall be considered to be an Installation and
governed by the provisions of Section 5.2 of this Lease. Any Capital Cost which
is incurred by Tenant under this Lease shall be allocated between Tenant and
Landlord based upon the useful life of the capitalized item of repair,
replacement, or maintenance, as determined in accordance with generally accepted
accounting practices, consistently applied to prior reporting periods of
Landlord ("GAAP"). Tenant shall be responsible for that portion of each Capital
Cost applicable to the portion of the useful life of that capitalized item
during the Lease Term, and Landlord shall reimburse Tenant for that portion of
that Capital Cost relative to the portion of the useful life of that capitalized
item during a period which extends beyond the Lease Term. In the event that
Landlord has reimbursed Tenant for Landlord's share of a Capital Cost and Tenant
thereafter exercises either Renewal Option provided in Exhibit "C" to this
Lease, the reallocation of that cost should be made based upon that extension of
the Lease Term; and Tenant shall repay Landlord the excess amount previously
paid by Landlord with respect to each applicable Capital Cost. In the event that
a Capital Cost is incurred during the Option Period (as defined in Exhibit "D"
to this Lease) and Tenant thereafter exercises its Purchase Option, then Tenant
shall have sole responsibility for paying that Capital Cost; and no allocation
of that Capital Cost will be made to Landlord. As used in this Lease, the term
"Capital Cost" means any maintenance, repair, or replacement costs which, under
GAAP, is required to be capitalized.
Section 5.2 Tenant's Installations.
(a) Subject to the further provisions of this Section 5.2, Tenant
shall not make any Installations in the Premises without Landlord's prior
consent. "Installations" means any changes, modifications, alterations,
additions, or improvements (including Tenant Service Equipment) made by or on
behalf of Tenant in the Premises other than installations of Tenant's Property
in the Premises. "Tenant's Property" means any office equipment and other
unattached personal property of Tenant. By execution of this Lease, Landlord
approves Tenant's Installations installed in the Premises as of the Commencement
Date. All work done in connection with any Installations made by Tenant on or
after the Commencement Date shall be subject to the conditions specified in this
Section. No such work shall be commenced until approved in writing by Landlord
(which approval will not be unreasonably withheld, conditioned, or delayed). All
such work shall be (a) done at Tenant's sole cost, risk, and expense and in
accordance with all Legal Requirements, Insurance Requirements, and construction
guidelines and standards of Landlord; (b) performed in a good and workmanlike
manner with labor and materials of such quality as Landlord may reasonably
require; (c) performed in strict accordance with the plans and/or specifications
previously approved by Landlord; (d) prosecuted diligently and continuously to
completion; and (e) performed by
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contractors approved in writing by Landlord. If requested by Landlord, any such
contractor and all work to be performed by that contractor shall be fully bonded
(with Landlord named as co-obligee) with companies and in amounts acceptable to
Landlord in its sole discretion. No such work shall be commenced until approved
in writing by Landlord and Landlord may impose such conditions with respect to
such work as Landlord deems appropriate, including requiring Tenant to furnish
Landlord with security for the payment of all costs to be incurred in connection
with such work and requiring Tenant or Tenant's contractor to maintain insurance
against liabilities which may arise out of such work. Upon completion of any
such work, Tenant shall deliver to Landlord evidence of payment, contractors'
affidavits, and full and final waivers of all liens for labor, services, or
material. No Installations made to the Premises by or on behalf of either
Landlord or Tenant may be removed by Tenant without Landlord's prior consent.
Except as otherwise provided below, all Installations shall become the property
of Landlord upon the termination or expiration of this Lease; and Tenant shall
have no (and hereby waives all) rights to payment or compensation for any such
alteration, improvement, or addition to the Premises. Tenant shall not allow any
liens to be filed against the Premises in connection with any Installations. If
any such liens are filed, Tenant shall cause the same to be released immediately
by payment, bonding, or other method acceptable to Landlord. If Tenant shall
fail to cancel or remove any lien, then Landlord, at its sole option, may obtain
the release of that lien; and Tenant shall pay to Landlord, on demand, the
amount incurred by Landlord for the release of each lien, plus an additional
charge in an amount not to exceed fifteen percent (15%) of the amount incurred
by Landlord for the release of that lien to cover Landlord's administrative
overhead and expenses. Landlord's approval of any plans or specifications shall
never constitute an indication, representation, or certification that such
Installations will be in compliance with any applicable Legal Requirement or
Insurance Requirement or as to the adequacy or sufficiency of the Installations
to which that consent relates. In instances in which several sets of
requirements must be met, the strictest applicable requirements shall control.
(b) Notwithstanding any provision of this Lease to the contrary,
Tenant shall be entitled to remove from the Premises without compensation to
Landlord other than repair of damage occasioned by such removal, at the
expiration or termination of this Lease, the items of Tenant's Installations
and/or Tenant's Property hereinafter described, even if the removal of such
items requires unbolting from the Building: (i) air compressors, (ii) vacuum
pumps, (iii) exhaust fans, (iv) computer equipment, (v) telephone switches, (vi)
telephone handsets, (vii) security boxes, (viii) security cameras, and (ix) any
like equipment that can be removed without material damage to the Building by
unbolting or removing screws or similar fastening devices, provided that Tenant
repairs any damage to the Building after such removal.
(c) Notwithstanding any provision of this Lease to the contrary, but
subject to the further provisions of this Subsection (c), Tenant shall be
entitled to make Permitted Alterations to the Building with prior notice to, but
without the necessity for the prior consent of, Landlord. "Permitted
Alterations" shall mean (i) the installation of and/or reconfiguration of
electrical lines, vacuum lines, compressed air lines, exhaust lines, telephone
and/or computer lines, and fiber
9
optic and similar cable, as needed to service Tenant's operations in the
Building, and (ii) the installation of additional electrical panels and
auxiliary and/or supplementary utility equipment as needed to support increases
in or the reconfiguration of Tenant's operations in the Building. Tenant's right
to make Permitted Alterations is subject to the condition that the specific
alterations shall not result in the penetration of the roof, exterior walls, or
slab of the Building or materially increase the load on the structural members
of the Building. All Permitted Alterations shall be performed in accordance with
all applicable Legal Requirements.
(d) Notwithstanding any provision to this Lease to the contrary,
Tenant may erect such signs for the purposes of identifying Tenant's occupancy
of the Premises which Tenant may deem reasonable without the necessity of first
obtaining Landlord's prior consent to the installation or erection of any such
signs; provided, however, that all signs installed or erected on or about the
Premises by Tenant shall be in compliance with all applicable Legal
Requirements. In addition, at the expiration or termination of this Lease,
Tenant shall have the obligation to remove all such signs and to repair any
damage to the Premises as a result of such removal, all at Tenant's sole cost
and expense.
Section 5.3 Surrender of Premises. Upon the expiration or termination of
this Lease and except in the event of a termination following a casualty
permitted under Section 7.2 and subject to the limitations on restoration
provided in Section 7.2, Tenant shall peaceably and quietly surrender the
Premises to Landlord, broom-clean and in a good state of repair and condition,
excepting only ordinary wear and tear and damage which was not caused by Tenant
or a Tenant Related Party. Upon the expiration or termination of this Lease,
Tenant will deliver all keys to the Premises to Landlord and inform Landlord of
all combinations on locks, safes, and vaults, if any, which remain in the
Premises. "Tenant Related Parties" means Tenant's officers, partners, employees,
agents, contractors, licensees, concessionaires, subtenants, customers,
suppliers, and invitees.
ARTICLE 6
RIGHTS RESERVED BY LANDLORD
Section 6.1 Landlord's Access. Landlord (and the Landlord Related Parties)
shall have the right to enter upon the Premises at any reasonable time (and, in
the case of an emergency, at any time) to (a) inspect the Premises; (b) make
repairs; and (c) show the Premises to prospective tenants, (but only after a
default by Tenant or during the final nine [9] months of the Lease Term),
mortgagees, and purchasers in each instance as Landlord may deem necessary or
desirable. Tenant shall have the right to have a representative present during
any entry of the Building by Landlord; but if Tenant fails to provide a
representative after having been given reasonable prior notice by Landlord (or
in the case of an emergency), then Landlord shall have the right to enter the
Building without a representative of Tenant being present. Tenant shall not be
entitled to any abatement or reduction of any Rent by reason of any such entry
by Landlord, and no such entry shall ever be construed to be an eviction of
Tenant, a default by Landlord, or a breach of the
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covenant of quiet enjoyment. In exercising its rights under this Section 6.1,
Landlord shall (a) provide Tenant with reasonable notice of such proposed entry
and (b) use reasonable efforts to avoid (to the extent reasonable and
practicable under the circumstances) material interference with Tenant's
Permitted Use of the Premises.
Section 6.2 Assignment, Subletting, or Other Transfers by Tenant. Landlord
reserves the right to approve any transfers of any interest of Tenant under this
Lease. Tenant shall not, without having obtained Landlord's prior written
consent, (a) assign, convey, mortgage, pledge, encumber, or otherwise transfer
(whether voluntarily, by operation of law, or otherwise) this Lease, the
Premises, or any interest of Tenant under this Lease, (b) grant any concession
or license within the Premises, (c) allow any lien, security interest, or other
encumbrance to be placed upon any interest of Tenant under this Lease, (d)
sublet all or any part of the Premises, or (e) permit any other party to occupy
or use all or any part of the Premises except as otherwise specifically
permitted in this Section. Landlord shall not unreasonably withhold its consent
in connection with a proposed assignment or sublease to a qualified third party
if (f) Landlord receives evidence satisfactory to Landlord that such proposed
third party is Creditworthy, (g) Landlord receives evidence satisfactory to
Landlord that the proposed subtenant or assignee will only use the Premises or
applicable portion, for the Permitted Use, and (h) the occupancy of the
Premises, or applicable portion, by the proposed third party would not increase
fire hazards, require substantial alterations to the Premises, reduce the rental
value of space within the Premises, or adversely affect the reputation or image
of the Premises. In no event shall Landlord be deemed to have unreasonably
withheld consent to an assignment or sublease to a third party who is owned or
controlled by a foreign government, involved in lobbying activities, or reputed
to be involved in illegal or illicit activities. For purposes of this Lease, the
term "Creditworthy" shall mean a net worth of not less than Fifteen Million and
No/100 Dollars ($15,000,000.00). The phrase "qualified third party" means an
unrelated third party who meets the qualifications specified in this Section
6.2. Under no circumstances shall Tenant have the right, without first obtaining
Landlord's prior consent, to advertise or to engage in any other promotional
activities regarding an assignment or subletting. Any attempted transfer by
Tenant without Landlord's prior consent shall be of no force or effect. If
Tenant is other than a natural person and if Tenant's voting securities are not
traded on a national securities exchange, any conveyance, assignment, or
transfer of more than a twenty-five percent (25%) interest in Tenant in a single
transaction or in a series of transactions shall be deemed an assignment, which
shall require Landlord's consent. In the event of a transfer of any interest of
Tenant under this Lease (whether with or without Landlord's consent), each
transferee shall fully observe all covenants and obligations of Tenant under
this Lease; and no transferee shall use the Premises for any use except the
Permitted Use. Such transfer shall be subject to all of the terms, covenants,
and conditions of this Lease; any transferee must assume in writing all of the
applicable obligations of the Tenant under this Lease; and any expansion,
renewal, or like options granted to Tenant under this Lease shall automatically
terminate as of the date of such transfer unless that transfer is an Affiliate
Transfer or a Customer Transfer Agreement. In the event of a transfer on terms
that result in payment to Tenant of rental or other consideration which are
11
in excess of the amount of Rent payable by Tenant to Landlord for the same
period, Tenant shall remit to Landlord promptly upon receipt of each such
installment fifty percent (50%) of the excess amount received by Tenant over the
Rent payable by Tenant to Landlord for that period; and Tenant hereby assigns
all rights that Tenant might have or ever acquire to that portion of any such
proceeds to Landlord. No such transfer shall ever be construed to constitute a
waiver of any of Tenant's covenants contained in this Lease, a release of Tenant
from any obligation or liability of Tenant under this Lease, or a waiver of any
of Landlord's rights under this Lease. The consent by Landlord to a particular
transfer shall not constitute Landlord's consent to any other or subsequent
transfer. No transferee of Tenant shall have any right to further sublease or
assign, or otherwise transfer, encumber, pledge, or mortgage its interest under
this Lease. Notwithstanding the foregoing, Tenant shall have the right, without
the necessity of obtaining Landlord's prior consent, to make an "Affiliate
Transfer" or a "Customer Transfer" (as those terms are defined below). The term
"Affiliate Transfer" means either a subletting of all or any part of the
Premises or an assignment of this Lease to an Affiliate of Tenant or an
assignment of this Lease in connection with the sale of all, or substantially
all, of Tenant's assets. The term "Affiliate of Tenant" means any parent Person
of Tenant; any subsidiary Person of Tenant, or any subsidiary Person of Tenant's
parent Person; any entity in which Tenant, any parent Person of Tenant, or any
subsidiary Person of Tenant or Tenant's parent Person holds, directly or
indirectly, a majority of the outstanding shares or ownership interest in that
entity; any Person who holds, directly or indirectly, a majority of the
outstanding shares of ownership interest in Tenant; any subsidiary Person of any
Person who holds, directly or indirectly, a majority of the outstanding shares
of ownership interest in Tenant; or any Person resulting from the merger,
consolidation, or reorganization of Tenant or of Tenant's parent Person or of
the parent Person of Tenant's parent Person with another Person; but only if
such affiliate is Credit Worthy as of the date of such assignment or subletting.
As used herein the term "Person" means, as applicable, a natural person,
corporation, general partnership, limited partnership, limited liability
partnership, limited liability company, or any other legal entity. The term
"Customer Transfer" means an occupancy agreement (but not a sublease or
assignment) between Tenant and its suppliers and/or customers for portions of
the warehousing and manufacturing space within the Building for storage by such
suppliers and/or customers of components supplied to Tenant or inventory of
finished goods produced by Tenant, as applicable; provided that, in no event,
shall areas in excess of twenty percent (20%) of the total floor area of the
Building devoted to warehouse space or areas in excess of forty percent (40%) of
the total floor area of the Building devoted to manufacturing space be the
subject of Customer Transfers; and provided further that the agreement
evidencing any Customer Transfer must not confer, or attempt to confer, any
privity of contract between such suppliers and/or customers and Landlord; must
not provide that any such customer or supplier is a third party beneficiary to
this Lease; and must not grant any real property or leasehold rights in the
Building or any portion of the Premises to those customers and/or suppliers.
Section 6.3 Assignment by Landlord. Landlord shall have the right at any
time to transfer and assign Landlord's rights, benefits, privileges, duties, and
obligations under this Lease, in the Building,
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or in any portion of the Premises. Landlord shall then be released from any
further obligation under this Lease, and Tenant agrees to look solely to
Landlord's successor in interest for the performance of, all obligations of
Landlord accruing subsequent to the date of such transfer. All covenants of
Landlord under this Lease shall be binding upon Landlord and its successors only
with respect to breaches occurring during its or their respective periods of
ownership of Landlord's interest under this Lease.
Section 6.4 Subordination to Mortgages and Leases. Subject to the
provisions of this Section 6.4, this Lease shall be subject and subordinate at
all times to (a) all ground or underlying leases now existing or which may be
subsequently executed affecting the Premises ("Ground Lease"), (b) the lien or
liens of all mortgages and deeds of trust in any amount or amounts now existing
or subsequently placed on the Premises or Landlord's interest or estate in the
Premises ("Financing Lien"), and (c) all renewals, modifications,
consolidations, replacements, and extensions of any Ground Lease or Financing
Lien. However, Tenant's agreement to subordinate this Lease to any future Ground
Lease or Financing Lien shall be specifically conditioned and contingent upon
Tenant's receipt of a non-disturbance agreement from the future holder of a
Financing Lien or the lessor under a Ground Lease which is reasonably acceptable
to Tenant and to the holder of that Financing Lien or the lessor under that
Ground Lease. The required non-disturbance agreement will be reasonably
acceptable to Tenant if that non-disturbance agreement (a) is in recordable form
and executed by the other party, (b) provides that Tenant shall not be named or
joined in any action or proceeding to terminate a Ground Lease or to foreclose
or enforce a Financing Lien, (c) such non-disturbance agreement provides that
the rights of Tenant under this Lease shall not be disturbed but shall continue
in full force and effect so long as there exists no uncured default by Tenant
under this Lease in the event of a foreclosure of a Financing Lien or the
termination of that Ground Lease and (d) such party will assume obligations of
Landlord under this Lease which accrue subsequent to such transfer (but not
prior thereto). Providing a non-disturbance agreement in compliance with the
requirements of this Section 6.4 is provided to Tenant, the provisions of this
Section shall be self-operative without the necessity of the execution of any
other document by any party. In the event of the enforcement by the lessor under
any such Ground Lease or by the holder of any Financing Lien of the remedies
provided for by law or by such Ground Lease or Financing Lien, or in the event
of the transfer of the Premises or Landlord's interest or estate in any part of
the Premises by deed in lieu of foreclosure, Tenant, upon request of any person
or party succeeding to the interest of Landlord as a result of such enforcement
or deed in lieu of foreclosure, automatically will become the tenant of such
successor in interest without change in the terms or provisions of this Lease.
However, such successor in interest shall not be bound by any payment of Rent
for more than one (1) month in advance, except prepayments in the nature of
security for the performance by Tenant of its obligations under this Lease which
have been actually delivered to such successor; liable for the return of any
security deposit or other deposit unless such security deposit or other deposit
has actually been delivered to such successor; or bound by any amendment or
modification of this Lease made after the applicable Ground Lease or Financing
Lien is placed
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against the Premises without the written consent of any trustee, mortgagee,
beneficiary, or lessor. Tenant shall, upon request, execute and deliver an
instrument or instruments confirming the attornment and other agreements
contemplated by this Section. Notwithstanding anything to the contrary set forth
in this Lease, the lessor under any Ground Lease or the holder of any Financing
Lien may elect at any time to cause their interest in the Premises to be
subordinate to Tenant's interest under this Lease by filing an instrument in the
real property records of Xxxxxx County, Texas, affecting such election; and
Tenant shall execute and deliver to Landlord immediately any such instruments or
documents requested by the lessor under such Ground Lease or the holder of such
Financing Lien for the purpose of confirming that such Ground Lease or Financing
Lien is subordinated to Tenant's interest under this Lease. On the date of
Landlord's execution of this Lease, no Ground Lease or Financing Lien exists
with respect to the Premises.
Section 6.5 Certificates. Within ten (10) business days after Landlord's
written request, Tenant will execute, acknowledge, and deliver to Landlord (and
any other persons specified by Landlord) a certificate certifying as to such
facts (to the extent true) as Landlord may reasonably request, including (a)
that this Lease is in full force and effect, (b) the date and nature of each
modification to this Lease, (c) the date to which Rent and other sums payable
under this Lease have been paid, and (d) that Tenant is not aware of any default
under this Lease which has not been cured, except those defaults which are
specified in that certificate. Such request may be made by Landlord at any time,
and from time to time, during the Lease Term. Any such certificate may be relied
upon by Landlord and by such other persons specified by Landlord or to whom that
certificate may be addressed. Tenant's failure to deliver any such certificate
within the specified time period shall constitute a representation by Tenant
that all factual statements made by Landlord relative to those matters are true
and correct and may be relied upon by any person.
ARTICLE 7
CONDEMNATION, CASUALTY AND INSURANCE
Section 7.1 Condemnation. In the event of a Total Taking of the Premises
or the Building, then this Lease shall terminate as of the date when physical
possession is taken by the condemning authority. If a Partial Taking occurs
which relates to a material portion of the Building or if Landlord is required
to pay any of the proceeds from such Partial Taking to the lessor under a Ground
Lease or to the holder of a Financing Lien, or if the Premises are rendered
Untenantable as a result of that Partial Taking, then this Lease, at the option
of either Tenant or Landlord, exercised by written notice to the other party
within thirty (30) days after the date of such Partial Taking, shall terminate.
In these events, Rent shall be apportioned as of the date when physical
possession of the applicable portion of the Building is taken by the condemning
authority. If a Partial Taking of the Premises occurs which does not result in
the termination of this Lease, then Landlord shall allow Tenant a fair
diminution of Rent as to that portion of the Premises subject to such Taking;
and this Lease shall otherwise continue in full force and effect. All proceeds
(whether in a lump sum or in
14
separate awards) of any Taking shall be paid to Landlord, and Tenant shall not
be entitled to (and expressly waives any claim to) any portion of any such
award. Notwithstanding the foregoing, Tenant shall have the right to make a
separate claim with the condemning authority for (a) any moving expenses
incurred by Tenant as a result of such Taking; (b) any unamortized costs
incurred and paid by Tenant for Tenant's Installations and any other alterations
or improvements made by Tenant to the Premises; (c) the value of any of Tenant's
Property subject to that Taking; and (d) any other separate claim which Tenant
may be permitted to make. "Untenantable" shall mean that Tenant is unable to
conduct its business in the Premises in a manner reasonably comparable to that
conducted immediately before the applicable occurrence. The term "Taking" means
a transfer during the Lease Term of all or any part of the Premises, as a result
of, or in lieu of or in anticipation of, the exercise of the right of
condemnation or eminent domain for any public or quasi-public use under any
governmental law, ordinance, or regulation. The term "Partial Taking" means a
Taking of less than the whole or substantially the whole of the Premises. The
term "Total Taking" means a Taking of the whole or substantially the whole of
the Premises or a Taking which results in the termination of an applicable
Ground Lease.
Section 7.2 Casualty Damage. If the Premises shall be destroyed or damaged
by fire or any other casualty, Tenant shall immediately give written notice of
that occurrence to Landlord. In the event that any portion of the Premises is
damaged by fire or other casualty and if (a) such damage is such that the
necessary restoration work or repairs cannot reasonably be completed within one
hundred eighty (180) days after the date of the casualty, (b) less than one (1)
year remains in the Lease Term at the time of any damage to the Premises, or (c)
the holder of a Financing Lien or lessor under a Ground Lease elects to take the
applicable insurance proceeds, then either party, at its sole option, shall have
the right to terminate this Lease. In such event, all Rent owed up to the time
of the fire or other casualty shall be paid by Tenant to Landlord, whereupon
this Lease shall cease and come to an end as of the date of written notice to
the other party regarding such fire or other casualty. During the period from
the occurrence of a casualty until the completion of the restoration work which
is necessary to render the Premises tenantable, Rent shall be reduced to the
extent that the Premises are rendered Untenantable. If, however, the Premises is
damaged by fire or other casualty resulting from the fault or negligence of
Tenant or any Tenant Related Party, Tenant shall not have the option to
terminate this Lease unless clauses (b) or (c) of this Section 7.2 are
applicable. If neither party elects to terminate this Lease as the result of
such casualty, then Tenant shall commence and proceed with reasonable diligence
to restore the Premises. Tenant's restoration work shall be conducted in
accordance with the provisions of Section 5.2 above. In no event shall Landlord
or Tenant have the obligation to expend for the restoration or repair of the
Premises an amount in excess of the insurance proceeds actually received as a
result of such casualty. Landlord shall not be liable for any inconvenience or
annoyance to Tenant or injury to the business of Tenant resulting in any way
from any casualty or the repair or restoration work made necessary by the
occurrence of any casualty.
15
Section 7.3 Insurance. Landlord shall maintain fire and extended coverage
insurance on the Premises on an "All-Risk" or equivalent form (including
demolition costs but excluding earthquake damage, site preparation, and
foundations) against loss or damage to the Building and all other improvements
now or hereafter located on the Land (including flood insurance if the Premises
are located in a flood hazard area) in an amount equal to the full replacement
cost thereof. The cost of Landlord's fire and extended coverage insurance policy
shall be a Pass Through Expense. Tenant shall procure and maintain, at its sole
cost and expense during and throughout the Lease Term, a policy or policies of
(i) commercial general liability insurance in an amount of not less than
$1,000,000.00 per occurrence, with a general aggregate limit of not less than
$2,000,000.00, (ii) fire and extended coverage insurance with respect to
Tenant's Property and Installations written on an "All Risk" basis for the full
replacement cost, (iii) worker's compensation and employer's liability
insurance, containing a limit of at least $1,000,000.00 per accident for bodily
injury by accident and at least $1,000,000.00 per employee for bodily injury by
disease, (iv) comprehensive catastrophic liability insurance in an amount of not
less than Ten Million and No/100 Dollars ($10,000,000.00), (v) business income
insurance providing coverage for not less than six (6) months, (vi) commercial
automobile liability insurance with policy limits of One Million and No/100
Dollars ($1,000,000.00) combined single limit for bodily injury and property
damage loss, and (vii) such other insurance as Landlord may, from time to time,
reasonably require. Landlord and the Landlord Related Parties shall be named as
"additional insureds" under each commercial general liability insurance policy
to be carried by Tenant; and with respect to all insurance coverages and limits
required under this Lease, Tenant's insurance will be deemed primary and
non-contributory with any other valid and collectible insurance maintained by
Landlord. Each policy shall also contain a severability of interest clause. All
such insurance to be obtained by Tenant shall be maintained with companies
authorized to transact business in the State of Texas and of good financial
standing (i.e., a rating of A-/VIII or better by A.M. Best Company) and on forms
and in amounts acceptable to Landlord. All policies of insurance required to be
maintained by Tenant shall provide that Landlord shall be given at least thirty
(30) days' prior written notice of any cancellation or non-renewal of any such
policy. All such policies shall provide that Tenant is solely responsible for
the payment of premiums, that, in the event of payment for any loss covered by
that policy, Landlord will be paid first by the insurance company for Landlord's
loss, that Tenant's insurance is primary in the event of any overlapping
coverage which may be carried by Landlord, and that any insurance policies
carried by Landlord shall be excess, secondary, and noncontributing with the
policy carried by Tenant. A duly executed certificate of insurance (in form and
content approved by Landlord) with respect to each such policy shall be
deposited with Landlord by Tenant on or before the Commencement Date, and a duly
executed certificate of insurance (in form and content approved by Landlord)
with respect to each subsequent policy shall be deposited with Landlord at least
fifteen (15) days prior to the expiration of the policy then in effect.
Section 7.4 Compliance. Tenant shall not do or permit anything to be done
in or about the Premises, nor bring nor keep nor permit anything to be brought
to or kept in the Premises, which will in any way
16
adversely affect any insurance on the Premises or any of its contents, cause a
cancellation or invalidation of any such insurance, or otherwise violate any
Insurance Requirement.
Section 7.5 Waiver of Subrogation. All fire and extended coverage
insurance policies carried by either Landlord or Tenant shall provide for a
waiver of rights of subrogation against Landlord and Tenant on the part of the
applicable insurance carrier unless either (i) such waiver is then prohibited by
applicable Texas law or (ii) such waiver would invalidate, nullify, or provide a
defense to coverage under any such insurance policy, except as caused by failure
to notify or obtain the required consent from the applicable insurer as to the
terms of this Section. As long as the waivers contemplated by this Section are
in effect, Landlord and Tenant each hereby waives any and all rights of
recovery, claims, actions, or causes of action against the other (and their
respective employees, agents, officers, or partners) for any loss or damage
which may occur to the Premises and/or Tenant's Property or Installations which
is covered by valid and collectible insurance policies and to the extent that
such loss is actually recovered under any such insurance policy. The failure of
Landlord or Tenant to take out or maintain any insurance policy required under
Section 7.3 shall be a defense to any claim asserted by the insuring party
against the other party by reason of any loss sustained by the insuring party
which would have been covered by any such required policy. The waivers set forth
in this Section shall be in addition to, but shall not be in substitution for,
any other waivers, indemnities or limitation of liabilities set forth in this
Lease.
Section 7.6 Indemnity. Tenant shall not be liable to Landlord or to the
Landlord Related Parties for any injury to person or damage to property caused
by the negligence or willful misconduct of Landlord or the Landlord Related
Parties. Subject to the provisions of Section 9.14 below, Landlord shall
indemnify and hold Tenant and the Tenant Related Parties harmless from any
liability, loss, cost, claim, or expense (including attorneys' fees and
expenses, court costs, and costs of investigation) arising out of the negligence
or willful misconduct of Landlord or the Protected Parties. Landlord and the
other Protected Parties shall not be liable to Tenant or to the Tenant Related
Parties for any injury to person or damage to property arising out of or related
to the negligence or misconduct of Tenant or the Tenant Related Parties, any
breach by Tenant under this Lease, or any use of, or the conduct of any business
in, the Premises or other portions of the Premises, by Tenant or the Tenant
Related Parties. Tenant shall indemnify and hold Landlord and the other
Protected Parties harmless from any liability, loss, cost, claim, or expense
(including attorneys' fees and expenses, court costs, and costs of
investigation) arising out of, or alleged to have arisen out of, the negligence
or misconduct of Tenant or the Tenant Related Parties, any breach by Tenant
under this Lease, or any use of, or conduct of any business in, the Premises or
any other portion of the Premises by Tenant or the Tenant Related Parties. In
the event that any injury or damage is attributable to both Landlord and Tenant,
Landlord and Tenant agree, without regard to any concurrent or other negligence
by the indemnified party, to provide each other with comparative indemnification
for that portion of the injury or damage which is attributable to the
indemnifying party. The indemnifications granted by both Landlord and Tenant in
this Section 7.6 are subject to any express limitations to the contrary in this
Lease. The provisions of this
17
Section 7.6 shall survive the expiration or termination of this Lease. "Landlord
Related Parties" means Landlord's directors, officers, partners, employees,
agents, contractors, and property managers (and their respective directors,
officers, partners, employees, and agents). "Protected Parties" means the
Landlord Related Parties and, to the extent applicable, the holder of any
Financing Lien and the lessor under any Ground Lease (and their respective
directors, partners, officers, employees, and agents).
Section 7.7 Damages from Certain Causes. Except for loss, injury to
person, or damage to property arising from the negligence or willful misconduct
of Landlord or the Protected Parties, neither Landlord nor the Protected Parties
shall ever be liable or responsible to Tenant, or any person claiming through
Tenant, for any loss, injury to person, or damage to property in, upon, or about
the Premises resulting from (a) theft, fire, casualty, vandalism, acts of God,
public enemy, injunction, riot, strike, inability to procure materials,
insurrection, war, court order, requisition, or order of any governmental body
or authority; (b) any other causes beyond Landlord's control; or (c) any damage
or inconvenience which may arise through repair or alteration of the Premises.
All goods, property, or personal effects stored or placed by Tenant in or about
the Premises shall be at the sole risk of Tenant.
ARTICLE 8
DEFAULT AND REMEDIES
Section 8.1 Default by Tenant. The occurrence of any of the following
events and the expiration of any grace periods hereafter described shall
constitute a default by Tenant under this Lease:
(a) The failure to pay any Rent when due, and the continuance of
such failure for a period of five (5) calendar days after the date Tenant
receives written notice of such delinquency from Landlord; provided, however,
that if Landlord has delivered two (2) such written notices of monetary default
within the immediately preceding twelve (12) calendar month period, Tenant shall
thereafter be in default if Tenant fails to pay any Rent when due and such
failure continues for a period of three (3) calendar days after the calendar
date such Rent is due.
(b) Tenant assigns its interest in this Lease or sublets any portion
of the Premises except as permitted in this Lease or Tenant otherwise breaches
the provisions of Section 6.2 of this Lease.
(c) Tenant breaches or fails to comply with any provision or
covenant in this Lease (other than as described in Subsections (a) or (b)
above), and such breach or failure continues for fifteen (15) calendar days
after notice by Landlord to Tenant. However, if such failure cannot reasonably
be cured within such fifteen (15) day period Tenant shall not be in default
under this Lease so long as Tenant commences curative action within that fifteen
(15) day period, diligently and continuously pursues that corrective action, and
completely cures that failure within sixty (60) days after Landlord's notice to
Tenant or such later date as Landlord may approve in writing
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after a request for additional curative time by Tenant, which approval will not
be unreasonably withheld, conditioned, or delayed. For purposes of this
Subsection, the phrase "commences curative action" shall mean, at a minimum,
that Tenant has taken steps in preparation for that cure (including, if
applicable, contacting third parties who may supply labor or materials in the
prosecution of that cure.
(d) If the interest of Tenant under this Lease is levied on under
execution or other legal process, or if Tenant becomes insolvent, makes an
assignment for the benefit of creditors, or makes a transfer in fraud of
creditors, or if a receiver or trustee is appointed for Tenant or any of its
properties, or if any petition in bankruptcy or other insolvency proceedings is
filed by or against Tenant, or any petition is filed or other action taken to
declare Tenant as bankrupt or to delay, reduce or modify Tenant's debts or
obligations or to reorganize or modify Tenant's capital structure or
indebtedness or to appoint a trustee, receiver or liquidator of Tenant or of any
property of Tenant, or any proceedings or other action is commenced or taken by
a governmental authority for the dissolution or liquidation of Tenant (provided
that no such levy, execution, legal process or petition filed against Tenant
shall constitute a breach of this Lease if Tenant shall vigorously contest the
same by appropriate proceedings and shall remove or vacate the same within sixty
(60) calendar days from the date of its creation, service, or filing).
Section 8.2 Landlord's Remedies. Upon the occurrence of any default by
Tenant under this Lease, Landlord, at Landlord's sole option, may exercise any
one or more of the following described remedies, in addition to all other rights
and remedies provided at law or in equity:
(a) Landlord may at any time thereafter (without being under any
obligation to do so) re-enter the Premises and correct or repair any condition
which shall constitute a failure on the part of Tenant to observe, perform, or
satisfy any term, condition, covenant, agreement, or obligation of Tenant under
this Lease; and Tenant shall fully reimburse and compensate Landlord on demand
for the reasonable costs incurred by Landlord in doing so, plus profit and
overhead in an amount equal to fifteen percent (15%) of such cost. No action
taken by Landlord under this Subsection shall relieve Tenant from any of
Tenant's obligations under this Lease or from any consequences or liabilities
arising from the failure of Tenant to perform such obligations.
(b) Landlord may terminate this Lease and repossess the Premises. In
the event that Landlord elects to terminate this Lease, Landlord shall be
entitled to recover damages equal to the total of (i) the cost of recovering the
Premises (including reasonable attorneys' fees and costs); (ii) the reasonable
cost of removing and storing Tenant's or any other occupant's property; (iii)
the unpaid Rent owed at the time of termination, plus interest thereon from the
date when due at the maximum rate of interest then allowed by law; (iv) the
reasonable cost of reletting the Premises (as reasonably estimated by Landlord
and including the reasonable cost of alterations or repairs to the Premises and
brokerage commissions applicable to the remainder of the Lease Term); (v) the
costs of collecting any sum due to Landlord (including without limitation,
attorneys' fees and costs); and (vi) any other sum
19
of money or damages owed by Tenant to Landlord as a result of the default by
Tenant, whether under this Lease, at law, or in equity.
(c) Landlord may terminate Tenant's right of possession of the
Premises without terminating this Lease and repossess the Premises. In the event
that Landlord elects to take possession of the Premises without terminating this
Lease, Tenant shall remain liable for, and shall pay to Landlord, from time to
time on demand, (i) all costs and damages described in Subsection (b) of this
Section 8.2 and (ii) any deficiency between the total Rent due under this Lease
for the remainder of the Lease Term and rents, if any, which Landlord is able to
collect from another tenant for the Premises during the remainder of the Lease
Term ("Rental Deficiency"). Landlord may file suit to recover any sums falling
due under the terms of this Lease from time to time, and no delivery to or
recovery by Landlord of any portion of the sums owed to Landlord by Tenant under
this Lease shall be a defense in any action to recover any amount not previously
reduced to judgment in favor of Landlord. Landlord shall use reasonable efforts
to relet the Premises on such terms and conditions and to such parties as
Landlord, in Landlord's sole discretion, may determine (including a term
different from the Lease Term, rental concessions, and alterations and
improvements to the Premises). However; Landlord shall be under no obligation to
accept any tenant that Landlord deems undesirable or unacceptable or to expend
any funds in connection with such reletting, it being the intent of the parties
that Tenant shall not be placed in a preferential position by reason of Tenant's
own default. Any net proceeds received by Landlord through reletting shall
reduce the sums owing by Tenant to Landlord, but Tenant shall not be entitled to
any excess of any sums obtained by reletting over and above the Rent provided in
this Lease under any circumstances. For the purpose of such reletting, Landlord
is authorized to decorate or to make any repairs, changes, alterations, or
additions in and to the Premises that Landlord may deem necessary or advisable.
No reletting shall be construed as an election on the part of Landlord to
terminate this Lease unless a written notice of such intention is given to
Tenant by Landlord. Notwithstanding any such reletting without termination,
Landlord may, at any time thereafter, elect to terminate this Lease for such
previous default. In the alternative (but only in the event that Tenant's
default constitutes a material breach), Landlord may elect to terminate Tenant's
right to possession of the Premises and to immediately recover as damages, in
lieu of the Rental Deficiency, a sum equal to the difference between (a) the
total Rent due under this Lease for the remainder of the Lease Term and (b) the
then fair market rental value of the Premises during such period, which
difference shall be discounted to present value using a discount rate of nine
percent (9%) per annum ("Discounted Future Rent"). In such event, Landlord shall
have no obligation to relet the Premises or to apply any rentals received by
Landlord as a result of any reletting to Tenant's obligations under this Lease;
and the aggregate amount of all damages due to Landlord, including the
Discounted Future Rent, shall be immediately due and payable to Landlord upon
demand.
(d) In the event that Landlord elects to re-enter or take possession
of the Premises after Tenant's default, Landlord shall deliver at least ten (10)
calendar days prior notice of such reentry or repossession and of Landlord's
intent to reenter or retake possession.
20
Landlord may, without prejudice to any other remedy which Landlord may have for
possession or arrearages in or future Rent, expel or remove Tenant or any other
person who may be occupying the Premises. Landlord may also change or alter the
locks or other security devices on the doors to the Premises and/or, if
applicable, remove Tenant's access media from the security system; and Tenant
waives, to the fullest extent allowed by law, any requirement that notice be
posted on the Premises as to the location of a key to such new locks and any
rights to obtain such a key. The provisions of this Section 8.2 shall override
and control over any conflicting provisions of Section 93.002 of the Texas
Property Code (as amended), and Tenant expressly waives any and all rights
Tenant may have under Section 93.002.
(e) In the event that Tenant fails to make any monthly Rent payment
within five (5) days after the date on which that Rent payment becomes due, then
Tenant shall also be obligated to pay interest on such past due amounts at a
rate equal to the lesser of eighteen percent (18%) per annum or the highest rate
of interest permitted by applicable law, as Rent under this Lease. Should Tenant
make a partial payment of past due amounts, the amount of such partial payment
shall be applied first to reduce all accrued and unpaid interest and late
charges, in inverse order of their maturity, and then to reduce all other past
due amounts, in the inverse order of their maturity. If Tenant fails in two (2)
consecutive months to make Rent payments within five (5) days after the date
when due, Landlord may require that future Rent payments be paid quarterly in
advance instead of monthly. The election by Landlord to exercise either or both
of the foregoing remedies shall be made by written notice to Tenant and shall be
in addition to any interest accruing on the unpaid amount, as well as any other
rights and remedies accruing as a result of such default. Any acceptance of a
monthly Rent payment in the form of a personal or corporate check by Landlord
thereafter shall not be construed as a subsequent waiver of these rights.
(f) Subsequent to the termination of this Lease or the termination
of Tenant's right to possess the Premises as a result of a default, Landlord may
remove and store any of Tenant's Property that remains within the Premises at
Tenant's expense. In addition to Landlord's other rights and remedies, Landlord
may dispose of the stored property if Tenant does not claim that property within
thirty (30) days after the date on which that property is first stored by
Landlord. Landlord shall deliver by certified mail to Tenant, at Tenant's last
known address, a notice stating that Landlord will dispose of Tenant's Property
if Tenant does not claim Tenant's Property within thirty (30) days after the
date on which Tenant's Property was first seized and stored by Landlord. In
addition, Tenant shall be liable to Landlord for all costs and expenses incurred
by Landlord in moving, storing, and disposing of the abandoned Tenant's
Property.
(g) No termination of this Lease shall ever be deemed to have
occurred unless Landlord specifically notifies Tenant in writing that Landlord
has elected to terminate this Lease. No election of Landlord to reenter the
Premises or to retake possession of the Premises shall ever be deemed or
construed to be a termination of this Lease.
21
(h) If Tenant commits any event of default under this Lease with
respect to which written notice was provided on two (2) or more occasions within
the immediately preceding twelve (12) month period and thereafter commits the
same or a similar default, no notice after the second (2nd) such notice shall be
required to be given by Landlord for or with respect to any subsequent default
of a similar nature before the pursuit of any one or more of the remedies
provided in this Lease during the twelve (12) months following the date of that
second (2nd) notice. Thereafter, Tenant's right to notice, if any, shall be
reinstated but shall again be subject to the provisions of this Subsection.
(i) All rights and remedies of Landlord under this Lease shall be
non-exclusive and shall be in addition to an cumulative of all other rights or
remedies available to Landlord under this Lease or by law or in equity.
Section 8.3 Landlord's Lien. Landlord hereby waives the statutory
landlord's lien created pursuant to Section 54.021 of the Texas Property Code,
as the same may be amended from time to time, and any successor statute.
Landlord shall execute and acknowledge documents from time to time providing
solely for confirmation of such waiver within ten (10) business days following
receipt of written request for same from Tenant.
Section 8.4 Attorney's Fees and Other Expenses of Enforcement. In the
event that either party seeks to enforce the performance or observance of any of
the terms, covenants, agreements, or conditions contained in this Lease, then
the prevailing party, to the extent permitted by applicable law, shall be
entitled to recover all reasonable expenses incurred by the prevailing party in
collecting any sums due under, or enforcing any of the terms of, this Lease
including all reasonable attorneys' fees and other costs of collection and
enforcement incurred by the prevailing party.
Section 8.5 Default by Landlord. Landlord shall be in default under this
Lease in the event Landlord has not begun and pursued with reasonable diligence
the cure of any failure of Landlord to meet its obligations under this Lease
within thirty (30) days of the receipt by Landlord of written notice from Tenant
of Landlord's alleged failure to perform. In no event shall Tenant have the
right to terminate or rescind this Lease as a result of Landlord's default.
Tenant waives such remedies of termination and rescission and agrees that
Tenant's remedies for default under this Lease and for breach of any promise or
inducement are limited to a suit for damages and/or injunction. Notwithstanding
the foregoing, if Landlord's default involves non-payment by Landlord of any
sums which have been collected from Tenant as Pass-Through Expenses, then Tenant
shall be entitled to make such payments before they become delinquent and to
offset the amount of any such payment (together with interest thereon at the
rate of eighteen percent [18%] per annum) against Rent thereafter due under this
Lease. In addition, Tenant shall, prior to the exercise of any such remedies,
provide each holder of a Financing Lien and each lessor under a Ground Lease
with written notice and a reasonable time to cure any default by Landlord.
22
ARTICLE 9
MISCELLANEOUS PROVISIONS
Section 9.1 Amendments. This Lease may not be altered, changed, or amended
except by an instrument in writing signed by both Landlord and Tenant.
Section 9.2 Non-Waiver. No course of dealing between Landlord and Tenant
or any other person, nor any delay on the part of Landlord in exercising any
rights under this Lease, nor any failure to enforce any provision of this Lease,
nor the acceptance of any Rent by Landlord shall operate as a waiver or a
modification of the terms of this Lease or of any right which Landlord has to
demand strict compliance by Tenant with the terms of this Lease. If Landlord
waives any agreement, condition, or provision of this Lease, such waiver must be
expressly set forth in a writing signed by Landlord and shall not be deemed a
waiver of any subsequent breach of the same or any other agreement, condition,
or provision contained in this Lease.
Section 9.3 Holding Over. In the event Tenant remains in possession of the
Premises after the expiration or termination of this Lease without the consent
of Landlord, Tenant shall be deemed to be occupying the Premises as a tenant at
will and shall pay Rent for each month (or partial month) during any such
holdover period at a rate equal to (a) one hundred twenty-five percent (125%) of
the Base Rent which Tenant was obligated to pay for the last full calendar month
immediately preceding the end of the Lease Term (the amount due for that final
full calendar month of the Lease Term being referred to as the "Base Amount")
during all or any part of the first (1st) thirty (30) day period subsequent to
the date on which the Lease Term expires or terminates (such date being the
"Termination Date"), (b) one hundred fifty percent (150%) of the Base Amount
during all or any part of the second (2nd) thirty (30) day period subsequent to
the Termination Date, and (c) two hundred percent (200%) of the Base Amount
thereafter, plus, during each period, the applicable portion of the Pass-Through
Expenses for that period. No holding over by Tenant after the expiration or
termination of this Lease shall be construed to extend the Lease Term or in any
other manner be construed as permission by Landlord to holdover. Additionally,
in the event of any unauthorized holding over by Tenant, Tenant shall indemnify
Landlord against all claims for any damages by any other person or entity to
whom Landlord may have leased all or any part of the Premises and for any other
loss, cost, damage, or expense (including attorneys' fees and costs of suit)
incurred by Landlord as a result of such holding over.
Section 9.4 Notices. Any notice, demand, consent, approval, request, or
other communication required or permitted to be given pursuant to this Lease
(including any Exhibit to this Lease) or by applicable law shall be in writing
and shall be delivered by registered or certified mail, postage prepaid, return
receipt requested, telegram, facsimile, or expedited delivery service with proof
of delivery, addressed to Landlord or Tenant, as applicable, at Landlord's
Address or Tenant's Address. Any such communication transmitted by telegram,
facsimile, or personal delivery shall be deemed to have been delivered as of the
date actually received by the addressee, provided that, in
23
each instance, transmission is successfully accomplished prior to 5:00 p.m.,
local time, at the place of receipt on a business day. Any communication
transmitted by telegram, facsimile, or personal delivery which is not
successfully transmitted prior to 5:00 p.m., local time, at the place of receipt
on a business day shall be deemed to have been delivered on the next following
business day. Any such communication transmitted by registered or certified mail
shall be deemed to have been given or served on the third (3rd) day following
the date on which such notice was deposited in a receptacle maintained by the
United States Postal Service for such purpose. Any notice of default from Tenant
to Landlord shall also be delivered to any holder of a Financing Lien or any
lessor under a Ground Lease who has notified Tenant of its interest and the
address to which notices are to be sent; and such notice shall not be effective
until delivered to such parties. Either Landlord or Tenant may, by ten (10)
days' prior notice to the other in accordance with this Section 9.4, designate a
different address or different addresses to which communications intended for
the party are to be sent.
Section 9.5 Independent Obligations. The obligations of Tenant under this
Lease are independent of Landlord's obligations, and Tenant shall not, for any
reason, withhold or reduce Tenant's required payments of Rent or fail to fully
perform Tenant's obligations under this Lease.
Section 9.6 Survival. Neither the expiration or termination of the Lease
Term pursuant to the provisions of this Lease, by operation of law, or
otherwise, nor any repossession of the Premises pursuant to any remedy granted
to Landlord under this Lease or otherwise shall ever relieve Tenant of Tenant's
liabilities and obligations under this Lease, all of which shall survive such
expiration, termination, or repossession.
Section 9.7 Unavoidable Delays. Except as otherwise specifically provided
in this Lease, the time within which either party shall be required to perform
any act under this Lease, other than the payment of money, shall be extended for
a period of time equal to the number of days during which performance of that
act is delayed due to an Unavoidable Delay. However, in order to qualify for an
extension based upon an Unavoidable Delay, Tenant shall give notice to Landlord
of Tenant's claim for that extension and the nature of the Unavoidable Delay
giving rise to that claim within five (5) business days after the start of that
Unavoidable Delay. "Unavoidable Delay" shall mean a delay due to strike,
lock-out, or other labor or industrial disturbance (whether on the part of
employee of either party to this lease); civil disturbance, act of a public
enemy, riot, sabotage, or embargo; fire, storm, or other casualty or act of God;
or any cause whatsoever beyond the reasonable control of the party claiming an
Unavoidable Delay, whether or not similar to any of causes stated above.
However, for the purpose of this definition, Tenant's lack of funds or inability
to obtain financing shall not be deemed to be a cause beyond the control of
Tenant with respect to Tenant's obligation to pay Rent or other sums as and when
due under this Lease.
Section 9.8 Consent by Landlord. In each circumstance under this Lease in
which the prior consent or approval of Landlord is required before Tenant is
authorized to take any particular type of action, the decision of whether to
grant or deny such consent or approval shall be
24
within the sole and exclusive judgment and discretion of Landlord unless
otherwise specifically provided in this Lease with respect to that specific
matter. Tenant shall not have any claim for breach by Landlord or any defense to
performance of any covenant, duty, or obligation of Tenant under this Lease on
the basis that Landlord delayed or withheld the granting of such consent or
approval. Landlord's consent or approval to any particular act by Tenant which
requires such consent or approval shall not be deemed to waive or render
unnecessary consent to or approval of any subsequent similar act.
Section 9.9 Legal Interpretation. This Lease, and the rights and
obligations of Landlord and Tenant under this Lease, shall be interpreted,
construed, and enforced in accordance with the laws of the State of Texas. All
obligations of the parties shall be performable in, and all legal actions to
enforce or construe this Lease shall be instituted in, the courts of, Xxxxxx
County, Texas. All defined terms and other words used in this Lease shall
include the singular and plural, as applicable. References to the Premises, the
Building, or the Land shall also include any portion of each. References to the
Premises shall include the Building and the Land, and references to the Building
shall include the Premises. Words which are not used as defined terms in this
Lease shall be construed in accordance with the meanings commonly ascribed to
those words, relative to the context in which each is used. The word "including"
shall be construed as if followed, in each instance, by the phrase "but not
limited to." All article, section, and subsection headings used in this Lease
are for reference and identification purposes only and are not intended to, and
shall not under any circumstances, alter, amend, amplify, vary, or limit the
express provisions in this Lease. All rights, powers, and remedies provided in
this Lease may be exercised only to the extent that their exercise does not
violate any applicable law and are intended to be limited to the extent
necessary so that such provision will not render this Lease invalid or
unenforceable under applicable law. In the event that any provision in this
Lease, or the application of such provision to any person or circumstance, shall
be invalid or unenforceable to any extent, the remainder of this Lease, or the
application of such term or provision to persons or circumstances other than
those to which it is held invalid or unenforceable, shall not be affected
thereby. Landlord and Tenant hereby respectively acknowledge that each such
party has substantial experience in negotiation commercial real estate leases,
that this Lease is the product of extension negotiations between the parties,
and that, therefore, neither Landlord nor Tenant shall be charged with having
promulgated this Lease and that no rule of strict construction with respect to
the provisions of this Lease shall be applicable.
Section 9.10 Entire Agreement. Tenant agrees that (a) this Lease
supersedes and cancels any and all previous statements, negotiations,
arrangements, brochures, agreements, and understandings, if any, between
Landlord and Tenant or displayed by Landlord to Tenant with respect of the
subject matter of this Lease, the Premises, the Building, or the Premises and
(b) there are no representations, agreements or warranties (express or implied,
oral or written) between Landlord and Tenant with respect to the subject matter
of this Lease, the Premises, the Building, or the Premises other than as set
forth in this Lease. Landlord expressly disclaims any warranty that the Premises
25
are suitable for Tenant's intended use. Landlord does not make any warranties,
express or implied, with respect to the Premises, the Building, or the Premises.
All implied warranties (including those of habitability, merchantability, or
fitness for a particular purpose) are expressly negated and waived.
Section 9.11 Waiver of Consumer Rights. TENANT HEREBY WAIVES ALL OF ITS
RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION
17.41 ET SEQ. OF THE TEXAS BUSINESS AND COMMERCE CODE, A LAW THAT GIVES
CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF
TENANT'S OWN SELECTION, TENANT VOLUNTARILY CONSENTS TO THIS WAIVER. The
provisions of this section shall survive any termination of this Lease.
Section 9.12 Authority. Landlord and Tenant represent and warrant to the
other party that (a) such party has the full right, power, and authority to
enter into, and to perform its obligations under, this Lease, and (b) upon
execution of this Lease by such party, this Lease shall constitute a valid and
legally binding obligation of such party.
Section 9.13 Taxes on Tenant's Property. Tenant shall be liable for all
taxes levied against any of Tenant's Property in the Premises. If any such taxes
are ever assessed against Landlord or Landlord's property and Landlord elects to
pay the same or if the assessed value of Landlord's property is increased by the
inclusion of Tenant's Property, Tenant shall pay to Landlord, within ten (10)
days of demand, that part of such taxes attributable to Tenant's Property. If
any Installations made by Tenant causes an increase in the real property taxes,
assessments, or other governmental charges levied against the Premises, Tenant
shall pay to Landlord, within ten (10) days of demand, the amount of any such
increase.
Section 9.14 Landlord's Liability. Notwithstanding anything to the
contrary set forth in this Lease, Tenant agrees that no personal, partnership,
or corporate liability of any kind or character whatsoever shall attach to
Landlord or the Protected Parties for payment or performance of any obligation
under this Lease. The exclusive remedies of Tenant for the failure of Landlord
to perform any of Landlord's obligations under this Lease shall be to proceed
against the interest of Landlord in and to the Premises. The foregoing
limitation does not apply to the misappropriation of Pass-Through Expenses or
the Security Deposit paid by Tenant to Landlord or a failure by Landlord to
apply insurance proceeds or condemnation awards in accordance with the terms of
this Lease (provided, however, that in no event shall Landlord be responsible
for any insurance proceeds or condemnation awards which are not actually
received by Landlord). Landlord shall not be responsible in any way to Tenant or
any Tenant Related Party for any loss of property from the Premises or public
areas of the Premises or for any damages to any property from any cause
whatever. Landlord shall never be liable for consequential or special damages.
Section 9.15 Time of the Essence. In all instances in which either party
is required to pay any sum or do any act at a particular time or within a
particular period, it is understood that time is of the essence.
26
Section 9.16 Instruments and Evidence Required to be Submitted to
Landlord. Each written instrument and all evidence of the existence or
non-existence of any circumstances or conditions which is required by this Lease
to be furnished to Landlord shall in all respects be in form and substance
reasonably satisfactory to Landlord.
Section 9.17 Counterparts. This Lease may be executed in any number of
counterparts, each of which, when executed and delivered, shall be an original;
but such counterparts shall together constitute one and the same instrument.
Section 9.18 Recordation. Tenant shall not record this Lease or any
instrument to which this Lease may now or hereafter be attached. However, Tenant
may record a Memorandum of Lease which is in form and content identical to the
form of Memorandum of Lease attached at Exhibit "G" to this Lease. Upon the
expiration of the Lease Term, or the earlier termination of this Lease, Tenant
shall (or Landlord may) execute a Termination Memorandum of Lease in the form
attached at Exhibit "H" to this Lease.
Section 9.19 Effective Date. The submission of this Lease to Tenant for
examination does not constitute a reservation of or offer or option for the
Premises, and this Lease shall become effective only upon execution by both
Landlord and Tenant. The term "Effective Date" shall mean the date on which this
Lease is first fully executed by both Landlord and Tenant.
Section 9.20 Successors and Assigns. From and after the Effective Date,
this Lease shall be binding upon, inure to the benefit of, and be enforceable by
the parties to this Lease and their respective successors and assigns (subject
to the provisions of this Lease). As used in this Lease, the phrase "successors
and assigns" is used in its broadest possible context and includes, without
limitation and as applicable, the respective heirs, personal representatives,
successors, and assigns of each of the parties to this Lease and any person,
partnership, corporation, or other entity succeeding to any interest in this
Lease, the Premises, the Building, or the Premises. Nothing contained in this
Section 9.20 nor in the definition of Tenant Related Parties shall serve to
alter or vary the provisions of Section 6.2 prohibiting the types of transfers
by Tenant described in that Section.
Section 9.21 Joint and Several Liability. If there is more than one party
executes this Lease as Tenant, or if Tenant is a partnership, Tenant's
obligations under this Lease shall be the joint and several obligations of all
such parties executing as Tenant or all such partners constituting Tenant (as
applicable).
Section 9.22 Commissions. Tenant represents and warrants to Landlord that
no Person has any other claim through Tenant for brokerage commissions or
finder's fees in connection with this Lease. Landlord represents and warrants to
Tenant that no Person has any claim through Landlord for brokerage commissions
of finder's fees in connection with the Lease. Landlord and Tenant shall each
indemnify the other against all liabilities and costs arising from the other
claims, commissions, brokerage fees, or finder's fees relating to this Lease
arising through
27
Persons claiming through such indemnifying party. Such indemnification shall
include reasonable attorneys' fees and costs of investigation.
Section 9.23 Tax Protests. The provisions of Section 41.413 and 42.015 of
the Texas Tax Code ("Protest Provisions") provides tenants with the right to
protest and appeal ad valorem real estate taxes under certain circumstances. The
Protest Provisions shall be deemed to be incorporated into this Lease, so that,
in the event that the Protest Provisions are either repealed or modified to
preclude the filing of a protest by a tenant, Tenant shall still have the right
to make a protest of an assessed evaluation under this Lease, as if the Protest
Provisions, as in effect on the Commencement Date, had remained in effect.
Section 9.24 Exhibits. The following Exhibits (and, if applicable,
addenda, riders, or other attachments to this Lease) are attached, to and
incorporated in, this Lease for all purposes.
Exhibit "A" Legal Description
Exhibit "B" Index to Defined Terms
Exhibit "C" Renewal Option
Exhibit "D" Purchase Option
Exhibit "E" Right of First Refusal
Exhibit "F" Special Warranty Deed
Exhibit "G" Memorandum of Lease
Exhibit "H" Termination of Memorandum of Lease
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
Effective Date.
LANDLORD:
FLEXTRONICS INTERNATIONAL USA, INC.,
a California corporation
By: /s/ Xxxx Xxxxxx
-------------------------------------------
Name: Xxxx Xxxxxx
-----------------------------------------
Title: General Manager
----------------------------------------
TENANT:
SMTC MANUFACTURING CORPORATION OF TEXAS,
a Texas corporation
28
By: /s/ Xxxx Xxxxxx
-------------------------------------------
Name: Xxxx Xxxxxx
-----------------------------------------
Title: President
----------------------------------------
29
EXHIBIT "A"
TO LEASE AGREEMENT BETWEEN
FLEXTRONICS INTERNATIONAL USA, INC.,
as Landlord, and
SMTC MANUFACTURING CORPORATION OF TEXAS, as Tenant
LEGAL DESCRIPTION
Xxxx 0, 0, xxx 0 xx XXXX BUSINESS PARK, a subdivision of Xxxxxx County,
Texas, according to the map or plat recorded in Volume 89, Pages 263-265,
of the Plat Records of Xxxxxx County, Texas.
30
EXHIBIT "B"
TO LEASE AGREEMENT BETWEEN FLEXTRONICS INTERNATIONAL USA, INC.,
as Landlord, and
SMTC MANUFACTURING CORPORATION OF TEXAS, as Tenant
INDEX TO DEFINED TERMS
Section
at which
Defined Term Term is Defined
------------ ---------------
Adult Oriented Business ......................................... ss.2.4
Base Rent ....................................................... ss.1.1(a)
Building ........................................................ ss.1.1(b)
Capital Cost .................................................... ss.5.1
Commencement Date ............................................... ss.1.1(c)
Creditworthy .................................................... ss.6.2
Customer Transfer ............................................... ss.6.2
Delivery Date ................................................... ss.1.1(d)
Discounted Future Rent .......................................... ss.8.2(c)
Effective Date .................................................. ss.9.19
Financing Lien .................................................. ss.6.4
GAAP ............................................................ ss.5.1
Ground Lease .................................................... ss.6.4
Insurance Requirements .......................................... ss.2.4
Installations ................................................... ss.5.2
Land ............................................................ ss.1.1(e)
Landlord's Address .............................................. ss.1.1(f)
Landlord Related Parties ........................................ ss.7.7
Lease Term ...................................................... ss.1.1(g)
Lease Year ...................................................... ss. 1.1(h)
Legal Requirements .............................................. ss.2.4
Monthly Operating Payment ....................................... ss. 3.2
Operating Expenses .............................................. ss.1.1(i)
Partial Taking .................................................. ss.7.1
Pass Through Expenses ........................................... ss. 1.1(j)
Permitted Alterations ........................................... ss.5.2(c)
Permitted Use ................................................... ss.1.1(k)
Premises ........................................................ ss.1.1(l)
Prior Lease ..................................................... ss.2.2
Protected Parties ............................................... ss.7.7
Ready for Occupancy ............................................. ss.2.2
Rent ............................................................ ss.1.1(m)
Rental Deficiency ............................................... ss.8.2(c)
Security Deposit ................................................ ss.1.1(n)
Tenant's Address ................................................ ss.1.1(o)
Taking .......................................................... ss.7.1
Tenant Related Parties .......................................... ss.5.3
Tenant's Broker ................................................. ss.9.22
Tenant's Property ............................................... ss.5.2
Tenant Service Equipment ........................................ ss.5.1
Total Taking .................................................... ss.7.1
Unavoidable Delay ............................................... ss.9.7
31
EXHIBIT "C"
TO LEASE AGREEMENT BETWEEN
FLEXTRONICS INTERNATIONAL USA, INC.,
as Landlord, and
SMTC MANUFACTURING CORPORATION OF TEXAS, as Tenant
RENEWAL OPTION'
This Exhibit "C" describes the Renewal Option, which is being granted to
Tenant upon the following terms and conditions:
1. DEFINED TERMS. For purposes of this Exhibit, all terms defined in this
Lease (including other exhibits to this Lease) will be used in this
Exhibit without further definition. In addition, when delineated with
initial capital letters, the following terms shall have the following
respective meanings:
(a) "Comparable Buildings" shall mean manufacturing/warehouse/office
buildings having comparable amenities and infrastructures and being
of comparable condition, construction, age, and size to the Building
and being located within the greater metropolitan area of Austin,
Texas.
(b) "First Renewal Date" shall mean the first day next following the
expiration date of the Lease Term.
(c) "First Renewal Option" shall mean the option being granted to Tenant
to renew this Lease for the First Renewal Term in accordance with
the provisions of this Exhibit.
(d) "First Renewal Term" shall mean a period commencing on the First
Renewal Date and continuing for sixty (60) full calendar months.
(e) "Prevailing Market Rate" shall mean the rate of base rental being
charged by the owners of Comparable Buildings for comparable space
in those Comparable Buildings, in each case to new tenants who have
a financial condition reasonably comparable to that of Tenant as of
as of the time in question for reasonably comparable space, for uses
which are comparable to the Permitted Use, and for a term comparable
to the applicable Renewal Term as of the date of Tenant's exercise
of the applicable Renewal Option.
(f) "Renewal Rate" shall mean the Base Rent payable during the Renewal
Term determined in accordance with this Exhibit.
(g) "Renewal Option" shall mean, individually or collectively as
applicable, the First Renewal Option or the Second Renewal Option.
(h) "Renewal Term" shall mean the First Renewal Term or the Second
Renewal Term, as applicable.
(i) "Second Renewal Date" shall mean the first day next following the
expiration date of the First Renewal Term.
(f) "Second Renewal Option" shall mean the option being granted to
Tenant to renew this Lease for the Second Renewal Term in accordance
with the provisions of this Exhibit.
(g) "Second Renewal Term" shall mean a period commencing on the Second
Renewal Date and continuing for sixty (60) full calendar months.
2. FIRST RENEWAL OPTION. Tenant may, by notifying Landlord of its election in
writing at least nine (9) full calendar months prior to the end of the
Lease Term, renew this Lease for the First Renewal Term. Such renewal
shall be on all of the terms and conditions of this Lease which are not
inconsistent with the terms of this Exhibit, except that the Base Rent
payable beginning on the First Renewal Date and continuing through the end
of the First Renewal Term shall be the Renewal Rate determined in
accordance with Paragraph 4 and Paragraph 5 of this Exhibit.
3. SECOND RENEWAL OPTION. Tenant may, by notifying Landlord of its election
in writing at least nine (9) full calendar months prior to the end of the
First Renewal Term, renew this Lease for the Second Renewal Term. Such
renewal shall be on all of the terms and conditions of this Lease which
are not inconsistent with the terms of this Exhibit, except that (a) the
Base Rent payable beginning on the Second Renewal Date and continuing
through the end of the Second Renewal Term shall be the Renewal Rate
determined in accordance with Paragraph 4 and Paragraph 5 of this Exhibit.
33.
4. DETERMINATION BY AGREEMENT. The Base Rent payable beginning on the first
(1st) day of the applicable Renewal Term and continuing thereafter through
the expiration of the applicable Renewal Term shall be at the Prevailing
Market Rate as of the first (1st) day of the applicable Renewal Term and
shall be increased by three percent (3%) per Lease Year during each year
of such Renewal Term. Landlord shall notify Tenant ("Rate Notice") of the
then Prevailing Market Rate ("Landlord Estimate") within twenty (20)
calendar days following Tenant's exercise of the applicable Renewal
Option; and if such rate is not acceptable to Tenant, then Tenant has the
right to either (i) rescind its exercise of that Renewal Option by
providing a written revocation notice to Landlord within twenty (20) days
of Tenant's receipt of Landlord's Rate Notice, in which case Tenant will
have no further right to renew this Lease, or (ii) provide landlord with a
Resolution Notice, whereupon the Prevailing Market Rate shall be
determined in accordance with Paragraph 5 below.'
5. DISPUTE RESOLUTION. In the event that Tenant disagrees with Landlord's
determination of the Prevailing Market Rate applicable to any Renewal
Term, Tenant may, by written notice to Landlord ("Resolution Notice"),
elect to have the Prevailing Market Rate determined in accordance with the
provisions of this Paragraph 5. In the Resolution Notice, Tenant shall
also notify Landlord of Tenant's estimate of the then Prevailing Market
Rate ("Tenant's Estimate"). A Resolution Notice must be delivered to
Landlord within twenty (20) days of Tenant's receipt of Landlord's Rate
Notice, and the failure of Tenant to deliver a Resolution Notice to
Landlord within that twenty (20) day period shall constitute an
irrevocable waiver by Tenant of Tenant's right to have the Prevailing
Market Rate determined under this Paragraph 5 and an irrevocable election
by Tenant to accept Landlord's determination of the Prevailing Market
Rate. If Tenant does provide Landlord with a Resolution Notice in the time
period specified in this Xxxxxxxxx 0, Xxxxxxxx and Tenant shall attempt,
in good faith, to resolve their dispute as to the Prevailing Market Rate
for a period of thirty (30) days following Landlord's receipt of the
Resolution Notice ("Agreement Period"). If Landlord and Tenant shall agree
upon the Prevailing Market Rate, such agreement shall be confirmed in
writing by both Landlord and Tenant in an amendment to the Lease
specifying the applicable Renewal Term, Prevailing Market Rate, and Base
Rent payable during each Lease Year of that Renewal Term. If Landlord and
Tenant are unable to agree upon the Prevailing Market Rate within the
Agreement Period, Tenant may, if Tenant so elects, withdraw Tenant's
exercise of the applicable Renewal Option, by providing written notice of
Tenant's election to withdraw Tenant's exercise of that Renewal Option
within five (5) days following the expiration of the Agreement Period. If
Tenant does not withdraw Tenant's exercise of the applicable Renewal
Option in the manner and within the time period specified above, then
Tenant shall within twenty (20) days following the expiration of the
Agreement Period, appoint an appraiser (having the qualifications
specified in this Paragraph 5) to assist in the determination of the
Prevailing Market Rate in accordance with the provisions of this Exhibit.
Tenant shall provide written notice to the Landlord,
34.
within twenty (20) days of the expiration of the Agreement Period of
Tenant's appointment of Tenant's appraiser ("Tenant's Appointment
Notice"). Tenant's Appointment Notice shall advise Landlord of the
identity of Tenant's appraiser, and the delivery of Tenant's Appointment
Notice to Landlord shall be deemed to be an irrevocable waiver of Tenant's
right to withdraw Tenant's election to exercise the applicable Renewal
Option, as a confirmation of Tenant's election to exercise the applicable
Renewal Option, and as an extension of the Lease Term for the applicable
Renewal Term. However, the failure of Tenant to deliver Tenant's
Appointment Notice within that twenty (20) period shall constitute a
withdrawal of Tenant's exercise of that Renewal Option and an irrevocable
waiver of that Renewal Option. Within twenty (20) days of Landlord's
receipt of Tenant's Appointment Notice, Landlord should also appoint an
appraiser (having the qualifications specified in this Paragraph 5) to
assist in the determination of the Prevailing Market Rate. Each such
appointed appraiser shall be a member of the American Appraisal Institute
who is located in Austin, Texas, and who has at least ten (10) years
experience in appraising Comparable Buildings in the greater Austin, Texas
metropolitan area. No appointed appraiser may be (a) a person who has a
direct and continuing business relationship, either personally or through
one or more companies, with Landlord or Tenant or (b) any person who, for
any reason whatsoever, cannot reasonably be expected to render a
competent, objective and impartial decision with respect to the Prevailing
Market Rate. The two (2) appraisers shall promptly proceed to determine
the Prevailing Market Rate as defined in this Exhibit and in accordance
with this Lease. If they are unable to agree upon which of Landlord's
Estimate or Tenant's Estimate most closely reflects the Prevailing Market
Rate within thirty (30) days following their appointment ("Initial
Appraisal Period"), then they shall appoint a third appraiser
("Independent Appraiser"), with the same qualifications specified above,
within twenty (20) business days following the end of the Initial
Appraisal Period. Should the two initial appraisers not agree upon an
Independent Appraiser within that ten (10) business day period specified,
then the Independent Appraiser shall be appointed by a District Court
Judge in Xxxxxx County, Texas. Such request of the District Court for
appointment of the Independent Appraiser shall be made immediately upon
the expiration of the ten (10) business day period specified above. The
Independent Appraiser shall also determine whether Landlord's Estimate or
Tenant's Estimate most closely reflects the Prevailing Market Rate within
thirty (30) days of the date of his or her appointment. Each appraiser
shall submit in writing to both Landlord and Tenant, acknowledged by that
appraiser, that appraiser's determination of which of the two (2)
specified estimates most closely reflects the Prevailing Market Rate. The
actual Prevailing Market Rate will then be determined by the agreement of
any two (2) appraisers as to which of Landlord's Estimate or Tenant's
Estimate most closely reflects the Prevailing Market Rate. If two (2)
appraisers cannot agree, the decision of the Independent Appraiser on this
issue shall be final and binding on both parties. The appraisers shall not
have the power to add or to subtract from or otherwise alter or vary the
terms or provisions of this Lease, and their determination shall be
consistent and in accordance with the terms and provisions of this Lease,
including, without limitation, the definitions of Prevailing Market Rate
and Comparable Buildings specified in this Exhibit. Each appraiser shall
be provided with a copy of this Exhibit in order to assure compliance with
its terms. The determination of the Prevailing Market Rate shall be
initiated and
35.
conducted in good faith and concluded as expeditiously as possible under
the circumstances. Each party shall pay the appraiser which is chosen by
that party (or on behalf of that party). In regard to the Independent
Appraiser, all costs shall be shared equally by Landlord and Tenant. The
Prevailing Market Rate, whether determined by the agreement of the parties
or by appraisal (in accordance with the provisions of this Paragraph 5),
shall be final and binding upon both Landlord and Tenant and enforceable
in any court of competent jurisdiction. In the event that the Prevailing
Market Rate applicable to any Renewal Term has not been determined by the
applicable Renewal Date, then Landlord's Estimate specified in Landlord's
Rate Notice shall be applicable unless and until the Prevailing Market
Rate for that Renewal Period has been determined in accordance with this
Paragraph 5. At that time, the Prevailing Market Rate determined in
accordance with this Paragraph 5 shall then become applicable, and the
Renewal Rate shall be computed on that basis. This determination of the
Renewal Rate and of extension of the Lease Term for the Renewal Term shall
be evidenced by a written amendment to this Lease executed by Landlord and
Tenant, but the failure of either party to execute that amendment shall
not alter or nullify the provisions of this Exhibit.
6. GENERAL PROVISIONS. Tenant's failure to notify Landlord of Tenant's
election to exercise a Renewal Option in the manner provided herein and
within the specified time limit, shall constitute an irrevocable waiver of
the Renewal Option. Notwithstanding the foregoing, a Renewal Option shall
not be applicable at any time when there is an uncured event of default
under the Lease. In addition, both Renewal Options shall automatically
terminate upon the termination of the Lease Term, whether by Landlord upon
the occurrence of an event of default or otherwise or, at the option of
Landlord, in its sole discretion, upon the assignment, subletting, or
other transfer by Tenant, whether or not with the approval of Landlord, to
any Person or entity other than under an Affiliate Transfer or a Customer
Transfer.
36.
EXHIBIT "D"
TO LEASE AGREEMENT BETWEEN
FLEXTRONICS INTERNATIONAL USA, INC.,
as Landlord, and
SMTC MANUFACTURING CORPORATION OF TEXAS, as Tenant
PURCHASE OPTION
This Exhibit "D" describes the Purchase Option being granted to Tenant
upon the following terms and conditions:
1. DEFINED TERMS. For purposes of this Exhibit, all terms defined in this
Lease (including other exhibits to this Lease) will be used in this
Exhibit without further definition. In addition, when delineated with
initial capital letters, the following terms shall have the following
respective meanings:
(a) "Option Closing Date" shall mean the business day following the
expiration of thirty (30) calendar days from the date on which
Landlord receives Purchaser's Option Notice.
(b) "Option Notice" shall mean a written notice from Tenant to Landlord
of Tenant's election to exercise its Purchase Option.
(c) "Option Period" shall mean the period commencing on the Commencement
Date and ending on July 31, 2002.
(d) "Option Price" shall mean the sum of Sixteen Million Three Hundred
Thousand and No/100 Dollars ($16,300,000.00).
(e) "Purchase Option" shall mean the option being granted to Tenant to
purchase the Premises in accordance with the terms and provisions of
this Exhibit.
2. GRANT AND EXERCISE OF OPTION. Landlord hereby grants the Purchase Option
to Tenant during the Option Period. Tenant may, by providing an Option
Notice to Landlord, during the Option Period, elect to exercise the
Purchase Option.
3. CLOSING. The sale and purchase of the Premises pursuant to the Purchase
Option shall be consummated at a Closing ("Closing") to be held on the
Option Closing Date at such time and place as Landlord and Tenant may
agree in writing.
4. LANDLORD'S CLOSING OBLIGATION. At the Closing, Landlord shall deliver, or
cause to be delivered, to Tenant:
(a) a Special Warranty Deed in the form of Exhibit "F" to this Lease,
duly executed by Landlord, in recordable form, and evidencing
Landlord's conveyance of title to the Premises to Tenant, subject to
all matters of record as of the date thereof;
37.
(b) a Certificate of Corporate Resolutions adopted by the Board of
Directors of Landlord and containing resolutions authorizing
Landlord to close the sale of the Premises to Tenant in accordance
with the terms of this Exhibit;
(c) an Incumbency Certificate with respect to the officers of Landlord
who are authorized to execute the Closing documents on behalf of
Landlord;
(d) all keys and master keys to all locks located on the Premises (to
the extent that same are in Landlord's possession), unless Landlord
and Tenant have made an alternative arrangement for the delivery of
same; and
(e) all records and documents, if any, regarding the Premises (but
specifically excluding agreements and other documents regarding
Landlord's acquisition of the Premises) to the extent that any of
these are in Landlord's possession, unless Landlord and Tenant make
an arrangement for the alternative delivery of same.
5. TENANT'S CLOSING OBLIGATIONS. At the Closing, Tenant shall:
(a) deliver, or cause to be delivered, to Landlord cash or current funds
in the amount of the Option Price, together with such additional
funds as may be necessary to pay its share of the Closing costs and
prorations described in this Exhibit; and
(b) deliver to Landlord a Certificate of Corporate Resolutions
containing a certified resolution of the Board of Directors of
Tenant, authorizing Tenant to close the transactions contemplated by
this Exhibit, together with an Incumbency Certificate with respect
to the officers of Tenant who are authorized to execute the Closing
documents on behalf of Tenant.
6. CLOSING COSTS. Tenant shall pay all recordation fees and any sales or
transfer taxes applicable to the subject transaction and the premium for the
issuance of an Owner's Policy of Title Insurance, if requested by Tenant. Each
party shall be responsible for paying its respective attorneys' fees incurred in
connection with the transaction contemplated by this Exhibit. Tenant shall also
pay escrow fees and any other Closing costs.
7. PRORATION. Ad valorem taxes and personal property taxes shall be prorated
between Landlord and Tenant for the year in which the Closing based on the tax
statements for such year; provided, however, that if such tax statements are not
available as of the Option Closing Date, the tax proration between Landlord and
Tenant shall be based on the actual tax rate for the prior year applied to the
most recent valuation of the Premises. Because Tenant will be in occupancy of
the Premises, no other prorations shall be made. If ad valorem taxes for the
year in which the Closing occurs cannot be determined with certainty at the time
of Closing, Landlord and Tenant shall reallocate the amounts charged to each
with respect to the year of Closing once such taxes are determined with
certainty. This covenant to adjust ad valorem taxes after Closing for the year
of Closing shall survive the Closing.
38.
8. DISCLAIMER OF WARRANTIES. EXCEPT AS OTHERWISE SPECIFICALLY STATED IN THIS
EXHIBIT, OR IN THE SPECIAL WARRANTY DEED TO BE DELIVERED TO TENANT AT CLOSING,
TENANT HEREBY SPECIFICALLY DISCLAIMS ANY WARRANTY, GUARANTY OR REPRESENTATION,
ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, OR CONCERNING (a) THE
NATURE AND CONDITION OF THE PREMISES, INCLUDING, WITHOUT LIMITATION, THE WATER,
SOIL AND GEOLOGY, AND THE SUITABILITY THEREOF FOR ANY AND ALL ACTIVITIES AND
USES WHICH TENANT MAY ELECT TO CONDUCT THEREON, AND THE EXISTENCE OF ANY
ENVIRONMENTAL HAZARDS OR CONDITIONS THEREON (INCLUDING THE PRESENCE OF ASBESTOS)
OR COMPLIANCE WITH ALL APPLICABLE LAWS, RULES OR REGULATIONS; (b) THE NATURE AND
EXTENT OF ANY RIGHT-OF-WAY, LEASE, POSSESSION, LIEN, ENCUMBRANCE, LICENSE,
RESERVATION, CONDITION OR OTHERWISE; AND (c) THE COMPLIANCE OF THE LANDLORD (OR
ANY PRIOR OWNER OR ITS OPERATION WITH ANY LAWS, ORDINANCES OR REGULATIONS OF ANY
GOVERNMENTAL AUTHORITY OR ENTITY OR OTHER BODY. TENANT ACKNOWLEDGES THAT IT WILL
INSPECT THE PREMISES AND TENANT WILL RELY SOLELY ON ITS OWN INVESTIGATION OF THE
PREMISES AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY LANDLORD,
OTHER THAN THE REPRESENTATIONS OF LANDLORD SET FORTH IN THE SPECIAL WARRANTY
DEED TO BE DELIVERED BY LANDLORD AT CLOSING. THE SALE OF THE PREMISES IS MADE ON
AN "AS IS" BASIS, AND TENANT EXPRESSLY ACKNOWLEDGES THAT IN CONSIDERATION OF THE
AGREEMENTS OF LANDLORD AND EXCEPT AS OTHERWISE SPECIFIED IN THE SPECIAL WARRANTY
DEED TO BE DELIVERED TO BY LANDLORD, LANDLORD MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING,
BUT NOT LIMITED TO, ANY WARRANTY OF CONDITION, HABITABILITY, MERCHANTABILITY, OR
FITNESS FOR A PARTICULAR PURPOSE, RELATIVE TO THE PROJECT.
9. WAIVER OF CLAIMS. Except as specifically set forth in this Exhibit, Tenant
agrees that Landlord shall not be responsible or liable to Tenant for any
construction defect, errors, omissions, or on account of any other conditions
affecting the Project, and that Tenant is purchasing the Project AS-IS,
WHERE-IS, and WITH ALL FAULTS. Tenant hereby fully releases Landlord, its
executors, beneficiaries, representatives and agents from any and all claims
that it may now have or hereafter acquire against Landlord, its executors,
beneficiaries, directors, representatives and agents for any cost, loss,
liability, damage, expense, demand, action or cause of action arising from or
related to any construction defects, errors, omissions, or other conditions
affecting the Project (including, without limitation, any claim for contribution
and/or cost recovery under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C.A. ss. 9601, et seq. ("CERLA"), and the
Texas Solid Waste Disposal Act, Tex. Health & Safety Code, Ch. 361 ("Texas
Act"). Tenant further acknowledges and agrees that this release shall be given
full force and effect according to each of its expressed terms and provisions,
including, but not limited to, those relating to unknown and unsuspected claims,
damages and causes of action. This waiver and release of claims shall survive
the Closing.
39.
10. DECEPTIVE TRADE PRACTICES. TO THE EXTENT APPLICABLE AND PERMITTED BY LAW
(AND WITHOUT ADMITTING SUCH APPLICABILITY), TENANT HEREBY WAIVES THE PROVISIONS
OF THE TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT, CHAPTER 17,
SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER THAN SECTION
17.555, WHICH IS NOT WAIVED).
11. INDEMNIFICATION. Tenant hereby agrees to indemnify, protect, defend, save
and hold harmless Landlord, and Landlord's executors, beneficiaries,
representatives and agents, from and against (a) any and all debts, duties,
obligations, liabilities, suits, claims, demands, causes of action, damages to
persons or Premises, losses, costs and expenses (including, without limitation,
attorneys' fees and expenses and court costs) in any way relating to, connected
with, or arising out of the Project or the ownership, leasing, use, operation,
maintenance and management of the Project which arise from and after the
Commencement Date and (b) any and all duties, obligations, liabilities, suits,
claims, demands, causes of actions, damages to person or Premises, losses,
costs, and expenses, (including without limitation, reasonable attorney's fees
and expenses and court costs) in any way relating to, connected with, or arising
out of the environmental condition of the Project or the existence of any
environmental hazard or conditions on, in, or under the Project, arising after
the Commencement Date, and including, without limitation, any compensation
and/or cost recovery claim under the CERCLA or the Texas Act.
12. GENERAL PROVISIONS. Tenant's failure to provide Landlord with an Option
Notice during the Option Period will constitute an irrevocable waiver of the
Purchase Option. In addition, the Purchase Option shall not be applicable at any
time when there is an uncured event of default under the Lease; and the Purchase
Option shall automatically terminate upon the termination of the Lease Term,
whether by Landlord upon the occurrence of an event of default or otherwise, or
at the option of Landlord, in its sole discretion, upon the assignment,
subletting, or other transfer by Tenant, whether with the approval of Landlord,
to any Person or entity other than under an Affiliate Transfer or a Customer
Transfer. Landlord shall not market, engage in attempts to sell, or sell the
Premises during the Option Period.
40.
EXHIBIT "E"
TO LEASE AGREEMENT BETWEEN
FLEXTRONICS INTERNATIONAL USA, INC.,
as Landlord, and
SMTC MANUFACTURING CORPORATION OF TEXAS, as Tenant
RIGHT OF FIRST REFUSAL
This Exhibit "E" describes and specifies the Refusal Right which is being
granted by Landlord to Tenant upon the following terms and conditions:
1. DEFINED TERMS. For purposes of this Exhibit "E", all terms defined in the
Lease (including other Exhibits to the Lease) will be used in this Exhibit
without further definition. In addition, when delineated with initial capital
letters, the following terms will have the following respective meanings:
(a) "Refusal Right" means the right of first refusal to purchase all or
a part of the Premises being granted to Tenant pursuant to the
provisions of Paragraph 2 below.
(b) "Bona Fide Offer" means an offer from an unrelated third party to
purchase the Premises (or any improved or unimproved platted lot
within the Premises) which Landlord is willing to accept.
(c) "Refusal Period" means the period commencing on September 1, 2002,
and extending through the remainder of the Lease Term (but not
during any Renewal Term).
2. GRANT OF REFUSAL RIGHT. Provided that Tenant is not in default under this
Lease, Landlord hereby grants Tenant the Refusal Right during the Refusal Period
after Landlord's receipt of a Bona Fide Offer.
3. EXERCISE OF REFUSAL RIGHT. Landlord shall notify Tenant in writing ("Offer
Notice") in the event that Landlord receives a Bona Fide Offer to purchase the
Premises or any platted lot within the Premises during the Refusal Period and
shall include all material terms of the proposed sale (including the purchase
price, identification of the portion of the Premises which is the subject of
that Bona Fide offer, contingencies, cost and risk allocations, and other
material terms) in the Offer Notice or attach a copy of the Bona Fide Offer
(with the identity of the offeree omitted) to the Offer Notice. Tenant shall
have fifteen (15) days from the receipt of
41.
the Offer Notice in which to notify Landlord, in writing, of Tenant's decision
to exercise the Refusal Right; and in the event Tenant fails to so notify
Landlord within that fifteen (15) day period, Tenant shall be deemed to have
irrevocably waived the Refusal Right, as to the portion of the Premises which
was the subject of that Offer Notice or, if the Offer Notice related to Lot 2
within the Premises, the Refusal Right as to all portions of the Premises.
4. EFFECTIVE EXERCISE OF REFUSAL RIGHT. In the event Tenant exercises Tenant's
Refusal Right, Tenant shall purchase the applicable part of Premises upon the
same terms and conditions as specified in the Offer Notice.
5. TERMINATION OF REFUSAL RIGHT. The Refusal Right shall automatically terminate
upon (a) the expiration or termination of the Lease Term, whether by Landlord or
upon the occurrence of an event of default or otherwise, or (b) an assignment,
subletting, or other transfer by Tenant of any part of its leasehold interest
under the Lease to any Person, whether with the approval of Landlord, other than
an Affiliate Transfer or a Customer Transfer. In addition, the Refusal Right
shall not be applicable during any renewal or extension of the Lease Term.
42.
EXHIBIT "F"
TO LEASE AGREEMENT BETWEEN
FLEXTRONICS INTERNATIONAL USA, INC.,
as Landlord, and
SMTC MANUFACTURING CORPORATION OF TEXAS, as Tenant
SPECIAL WARRANTY DEED
STATE OF TEXAS ss.
ss. KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF TRAVIS ss.
THAT FLEXTRONICS INTERNATIONAL USA, INC. ("Grantor"), for and in
consideration of the sum of Ten Dollars ($10.00) and other valuable
consideration paid to Grantor by SMTC MANUFACTURING CORPORATION OF TEXAS
("Grantee"), the receipt and sufficiency of which are hereby acknowledged, does
hereby GRANT, SELL, CONVEY, ASSIGN and DELIVER to Grantee the real property
situated in Xxxxxx County, Texas described in Exhibit "A" attached hereto and
made a part hereof together with all improvements thereon, fixtures affixed
thereto, and appurtenances ("Property"), subject to general real estate taxes on
the Property for the current year, zoning laws, regulations and ordinances of
municipal and other governmental authorities, if any, affecting the Property,
and all other liens, encumbrances, or other matters of record as of the date
hereof (all of the foregoing hereinafter referred to as the "Permitted
Exceptions").
TO HAVE AND TO HOLD the Property, together with all and singular the
rights, and appurtenances thereto in anywise belonging, unto Grantee, its
successors and assigns forever, and Grantor does hereby bind itself and its
successors and assigns to warrant and forever defend all and singular the
Property unto Grantee, its successors and assigns, against every person
whomsoever lawfully claiming, or to claim the same, or any part thereof by,
through or under Grantor, but not otherwise, subject, however, to the Permitted
Exceptions.
BY THE ACCEPTANCE OF THIS DEED, GRANTEE, EXCEPT FOR THE WARRANTIES OF
TITLE SET FORTH IN THIS CONVEYANCE, SPECIFICALLY WAIVES, AND ACKNOWLEDGES THAT
GRANTOR HAS SPECIFICALLY DISCLAIMED, ANY WARRANTY, GUARANTY, OR REPRESENTATION,
ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO OR CONCERNING (A) THE NATURE
AND CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL,
AND GEOLOGY, AND THE SUITABILITY THEREOF FOR ANY AND ALL ACTIVITIES AND USES
WHICH GRANTEE MAY ELECT TO CONDUCT THEREON, AND THE EXISTENCE OF ANY
ENVIRONMENTAL HAZARD OR CONDITIONS ON, IN, OR UNDER THE PROPERTY (INCLUDING THE
PRESENCE OF ASBESTOS) OR COMPLIANCE WITH ALL APPLICABLE LAWS, RULES OR
REGULATIONS; (B) THE NATURE AND EXTENT OF ANY RIGHT-OF-WAY, LEASE, POSSESSION,
LIEN, ENCUMBRANCE, LICENSE, RESERVATION, CONDITION, OR OTHERWISE AFFECTING THE
PROPERTY; AND (C) THE COMPLIANCE OF THE PROPERTY OR ITS OPERATION WITH ANY LAWS,
ORDINANCES, OR REGULATIONS
43.
OF ANY GOVERNMENTAL AUTHORITY OR ENTITY OR OTHER BODY. GRANTEE ACKNOWLEDGES THAT
IT HAS INSPECTED THE PROPERTY AND THAT GRANTEE HAS RELIED SOLELY ON ITS OWN
INVESTIGATIONS OF THE PROPERTY AND NOT ON ANY INFORMATION PROVIDED BY GRANTOR,
OTHER THAN THE WARRANTIES OF TITLE OF GRANTOR SET FORTH HEREIN. THE SALE OF THE
PROPERTY IS MADE ON AN "AS IS" BASIS, AND GRANTEE EXPRESSLY ACKNOWLEDGES THAT IN
CONSIDERATION OF THE AGREEMENTS OF GRANTOR AND EXCEPT AS OTHERWISE SPECIFIED
HEREIN, GRANTOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED OR
ARISING BY OPERATION OF LAW, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF
CONDITION, HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
RELATIVE TO THE PROPERTY.
Current ad valorem taxes relative to the Property having been prorated,
Grantee hereby assumes the payment thereof.
IN WITNESS WHEREOF, this Special Warranty Deed is executed by Grantor and
Grantee to be effective as of the ____ day of ___________, 2001.
GRANTOR:
FLEXTRONICS INTERNATIONAL USA, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
STATE OF ____________ ss.
COUNTY OF ___________ ss.
ss.
This instrument was acknowledged before me on this ____ day of __________,
2001, by __________ in his capacity as _________________ of FLEXTRONICS
INTERNATIONAL USA, INC., on behalf of said corporation.
-------------------------------
Notary Public, State of
--------
My Commission Expires:
--------------------------
44.
EXHIBIT "A"
TO SPECIAL WARRANTY DEED
LAND DESCRIPTION
Xxxx 0, 0, xxx 0 xx XXXX BUSINESS PARK, a subdivision of Xxxxxx County, Texas,
according to the map or plat recorded in Volume 89, Pages 263-265, of the Plat
Records of Xxxxxx County, Texas.
45.
EXHIBIT "G"
TO LEASE AGREEMENT BETWEEN
FLEXTRONICS INTERNATIONAL USA, INC.,
as Landlord, and
SMTC MANUFACTURING CORPORATION OF TEXAS, as Tenant
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE (hereinafter referred to as the "Memorandum") by
and between FLEXTRONICS INTERNATIONAL USA, INC., a California corporation
(hereinafter referred to as "Landlord"), and SMTC MANUFACTURING CORPORATION OF
TEXAS, a Texas corporation (hereinafter referred to as "Tenant"), is made and
executed on this _____ day of ___________, 200__.
1. Landlord, for good and valuable consideration, the receipt of which is
hereby acknowledged and confessed is, contemporaneously with Landlord's
execution hereof, entering into that certain Lease Agreement, dated effective as
of September 1, 2001 (hereinafter referred to as the "Lease"), under the terms
of which Landlord is leasing to Tenant certain improved premises ("Premises")
located on those certain tracts of real property in Xxxxxx County, Texas, which
are more particularly described in Exhibit "A" attached hereto and incorporated
herein by reference for all purposes. The Lease is for a term commencing on
September 1, 2001, and ending one hundred twenty (120) calendar months
thereafter, unless sooner terminated or extended pursuant to the provisions of
the Lease ("Lease Term").
2. The Lease provides for two (2) five (5) year renewal options and a
right of first refusal to purchase the Premises during the Lease Term.
3. Landlord and Tenant have executed this Memorandum of Lease in
recordable form in order to identify the names of the parties and the Premises
and to provide public notice of the existence of the Lease.
4. Tenant, for good and valuable consideration, hereby appoints Landlord
as Tenant's attorney-in-fact and lawful agent, with power of substitution, to
execute and file of record documents evidencing the cancellation of this
Memorandum at the expiration of the Lease, whether by reason of default or
otherwise. The rights, powers, and authority of Landlord to act as Tenant's
attorney-in-fact and agent may not be modified, canceled or revoked by Tenant
during or after the expiration or earlier termination of the term of the Lease.
Tenant hereby acknowledges that Landlord has a compelling interest in being able
to execute the appropriate documents canceling this Memorandum in order to
maintain clear title to the Property and that, therefore, Tenant's appointment
of Landlord as Tenant's attorney-in-fact is coupled with an interest.
46.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Memorandum as
of the day and year first above written.
LANDLORD:
FLEXTRONICS INTERNATIONAL USA, INC.,
a California corporation
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
TENANT:
SMTC MANUFACTURING CORPORATION OF TEXAS,
a Texas corporation
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
(Add Acknowledgment and Exhibit "A" before filing)
47.
EXHIBIT "H"
TO LEASE AGREEMENT BETWEEN
FLEXTRONICS INTERNATIONAL USA, INC.,
as Landlord, and
SMTC MANUFACTURING CORPORATION OF TEXAS, as Tenant
TERMINATION OF MEMORANDUM OF LEASE
On __________, 20__, a Memorandum of Lease was signed by FLEXTRONICS
INTERNATIONAL USA, INC., a California corporation, as Landlord, and SMTC
MANUFACTURING CORPORATION OF TEXAS, a Texas corporation, as Tenant. That
Memorandum of Lease was recorded in Volume ___, Page ___, of the Real Property
Records of Xxxxxx County, Texas. It covered certain leased premises which are
described on Schedule 1 hereto.
The Memorandum of Lease is hereby terminated and cancelled as is of no
further force or effect. As provided in the original Memorandum of Lease, this
instrument may be validly signed by either Landlord or Tenant, or any of their
successors or assigns.
IN WITNESS WHEREOF, this Termination of Memorandum of Lease has been
executed by Landlord and Tenant as of the day and year first above written.
[Add Signature Lines for the applicable party, Acknowledgments and Schedule 1
before execution and filing]
48.
