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Sample Business ContractsHome: Sample Business Contracts:
SUBLEASE
This sublease is made as of the 3 day of February, 1997 between KMART
CORPORATION, 3100 West Big Beaver Road, Troy, Michigan 48084 ("Sublessor"), and
DAL-TILE Corporation, a Pennsylvania corporation having an address 7834 C.F.
Hawn Freeway, Dallas Texas 75217 ("Sublessee").
Recitals:
--------
A. Metropolitan Life Insurance Company, a New York corporation, ("Prime
Lessor") and Sublessor entered into that certain lease, dated February, 1989,
(the "Prime Lease"), whereby the Prime Lessor leased to Sublessor certain land
and building in the City of Sunnyvale, Dallas County, Texas together with
certain non-exclusive rights and easements, all as more fully described on
Exhibit "A" attached hereto and made a part hereof (the "Demised Premises").
B. Sublessor and Sublessee desire to enter into a Sublease of the Demised
Premises upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the Demised Premises, the rents
reserved herein and the mutual benefits to be derived by Sublessor and
Sublessee, the parties hereby agree as follows:
1. Base Rent. Sublessee agrees to pay to Sublessor annual rent ("Base
---------
Rent") as follows: a) for the first two months of the term of this Sublease the
Base Rent shall be abated; b) for the third month through the thirty-sixth month
of the term of this Sublease, the Base Rent shall be One Million One Hundred Ten
Thousand Three Hundred Seventy Five and no/100 Dollars ($1,110,375.00) payable
in monthly installments of Ninety Two Thousand Five Hundred Thirty One and
25/100 Dollars ($92,531.25) each; c) for the thirty-seventh month through the
seventy second month of the term of this Sublease, the annual Base Rent shall be
One Million One Hundred Fifty Seven Thousand Six Hundred Twenty Five and 00/100
Dollars ($1,157,625.00) payable in monthly installments of Ninety Six Thousand
Four Hundred Sixty Eight and 75/100 Dollars ($96,468.75) each; d) if Sublessee
shall elect to extend the term hereof, for the First Extended Term of this
Sublease, the Basic Rent shall be One Million Two Hundred Fifty Two Thousand One
Hundred Twenty Five and 00/100 Dollars ($1,252,125.00) payable in monthly
installments of One Hundred Four Thousand Three Hundred Forty Three and 75/100
Dollars ($104,343.75) each; and e) for the Second Extended Term of this Sublease
the Base Rent shall be One Million Three Hundred Forty Six Thousand Six Thousand
Twenty Five and 00/100 Dollars ($1,346,625.00), payable in monthly installments
of One Hundred Twelve Thousand Two Hundred Eighteen and 75/100 Dollars
($112,218.75). Each installment shall be due on the first day of each calendar
month, and provided that Sublessor is able to obtain the agreement of Prime
Lessor as set forth in Section 6(e) below, shall be made at such place as may
from time to time be designated by Sublessor, in writing, and without previous
demand, setoff or deduction whatsoever; in the event that Sublessor is unable to
obtain the agreement of Prime Lessor as set forth in Section 6(e), then and in
that event, Sublessee shall pay a portion
<PAGE>
of the Basic Rent directly to Prime Lessor each month equal to the installment
of rent due to Prime Lessor under the Prime Lease, and shall pay the balance of
the Basic Rental installment each month to Sublessor and deliver therewith a
copy of the check for rent sent to the Prime Lessor. If the term of this
Sublease commences on a day other than the first of the month or ends on a day
other than the last day of the month (for a reason other than termination of the
Sublease on account of Sublessee's default), Base Rent for such month shall be
prorated. Prorated Base Rent for any such partial first month of the term hereof
shall be paid on the date on which the term commences and Base Rent for a
partial final month of the term shall be prorated on a daily basis and be
refunded to Sublessee.
2. Sublease Term. (a) Primary Term. Sublessor hereby subleases and
------------- ------------
demises to Sublessee and Sublessee hereby subleases and takes from Sublessor the
Demised Premises for an initial term commencing on the earlier of the thirty
first day from the date hereof or the date upon which the conditions of Sections
22(c) and 22(d) of the Prime Lease are satisfied (the "Term Commencement Date")
and ending on January 30, 2003 (the "Primary Term"). Sublessor agrees to deliver
to Sublessee and Sublessee agrees to accept from Sublessor exclusive possession
of the Demised Premises on the Term Commencement Date and Sublessee shall
thereafter have all of the rights and obligations of Tenant under the Prime
Lease, except as hereinafter set forth. Sublessor hereby agrees that Sublessee
shall have the benefit of all representations, rights and covenants provided to
Sublessor under the Prime Lease as fully and completely as if such
representations, rights and covenants were made by Prime Lessor directly to
Sublessee. From and after the date of this Sublease until the Term Commencement
Date, Sublessee shall have a license to enter upon the Demised Premises at
reasonable times and upon reasonable notice, in order to minimize interference
with the conduct of Sublessor's business and from time to time to make
inspections and investigations, to show the Demised Premises to contractors, to
professional consultants and others. All such entries by Sublessee and its
employees, agents, and invitees shall be at Sublessee's own risk and expense and
Sublessee agrees to indemnify Sublessor from and against any loss, cost,
liability or damage which results from Sublessee's rights of entry provided for
herein.
(b) Extension Terms. Sublessee shall have the option to extend the
---------------
term of Sublease for two successive terms, the first of which ("First Extended
Term") shall be for a period of six (6) years, and the second of which ("Second
Extended Term") shall commence at the end of the First Extended Term and shall
terminate on March 14, 2014, provided:
(i) Sublessee shall give Sublessor written notice of the
exercise of its option not less than nine (9) months prior to the expiration of
the then existing term hereof;
(ii) Sublessee shall not at the time of such exercise or at the
commencement of the extension term, be in default under the terms of this
Sublease; and
(iii) each such extension term shall be upon the terms and
conditions as set forth herein.
3. Prime Lease Obligations. (a) Sublessor shall be responsible for the
-----------------------
maintenance and repair of the roof of the Demised Premises.
2
<PAGE>
(b) Except as otherwise specifically provided herein, Sublessee agrees
to pay and perform Sublessor's obligations under the Prime Lease which are to be
performed after the date hereof, other than the obligation to pay the annual
rental required under the terms of Section 3, of the Prime Lease ("Prime Lease
Rent"). All payments to be made to governmental authorities and other third
parties shall be made by Sublessee on or before the due date. All such payments
shall be made directly to such governmental authorities or third parties.
Sublessor may from time to time request and Sublessee shall supply evidence of
payment. Sublessee shall have the same rights with respect to the timing and
manner of payments as Sublessor would have had under the Prime Lease including,
without limitation, the right to contest the imposition or amount of any tax or
other governmental assessment or levy, or the application to Sublessee or the
Demised Premises of any law, rule, regulation, order, ordinance or other form of
governmental regulation, to the same extent that Sublessor could do so under the
Prime Lease. Sublessor shall forward to Sublessee immediately upon receipt all
bills, invoices, statements, notices, orders or communications of any kind
concerning or pertainig to any matter or thing for which Sublessee is or may be
responsible hereunder.
(c) All amounts which Sublessee is required to pay pursuant to this
Sublease (other than Base Rent), together with every fine, penalty, interest and
cost which may be added for non-payment or late payment thereof, (other than
non-payment or late payment attributable to Sublessor's failure or delay in
forwarding bills invoices, statements or notices relating to such required
payment), shall constitute additional rent ("Additional Rent"). In the event
that Sublessee shall fail to make any payment of Additional Rent for five (5)
days following notice that the same was not paid when due, Sublessor shall have
the right to make such payment on Sublessee's behalf and to demand reimbursement
of such amount from Sublessee.
(d) If any installment of Base Rent shall not be paid on its due date,
Sublessee shall pay to Sublessor, on demand, interest at the rate provided for
late payments of Prime Lease Rent under the Prime Lease (or the highest interest
rate allowed by law, whichever is lower) on the amount of such installment from
the due date thereof until paid. Sublessee shall pay to Sublessor, on demand,
interest at such rate on all overdue Additional Rent paid by Sublessor on behalf
of Sublessee from the date of payment by Sublessor until repaid by Sublessee.
(e) Sublessor agrees that it will pay to Prime Lessor, on or before
the date due, all installments of annual rent which are due under the Prime
Lease and shall otherwise comply with all terms and conditions of the Prime
Lease which are not undertaken by Sublessee under this Sublease. Sublessor
agrees that it will, upon request of Sublessee, pursue any rights which it may
have under the Prime Lease against the Prime Lessor in the event that the Prime
Lessor shall fail to comply with a request by the Sublessee under the Prime
Lease.
4. Use. The Demised Premises are agreed to contain 472,500 square feet
---
and may be used by Sublessee solely as a warehouse and distribution facility and
not for any manufacturing activities. The foregoing notwithstanding, Sublessee
shall not use the Demised Premises nor permit the Demised Premises to be used,
directly or indirectly, for: a massage parlor, adult book store or pornographic
display of any nature; gas station, auto service or repair center; junk yard or
dump; dry cleaner; or any use involving the operation of a below ground storage
tank or the use or sale on the Demised Premises of toxic, hazardous or explosive
substances, in violation of applicable law.
3
<PAGE>
5. Title and Condition of Demised Premises. Sublessor will remove all of
---------------------------------------
its equipment from the Demised Premises, except the security system and
equipment utilized in the operation of the building and systems, prior to tender
of possession. Except as specifically provided in Section 7, (a)(v) below, (a).
The Demised Premises are subleased to Sublessee in their present condition by
Sublessor, without representation or warranty, subject to: (i) the Prime Lease
and all other easements, agreements, covenants and matters of record, (ii) all
taxes not yet due and payable, and (iii) subject to paragraph 4 above, all
applicable zoning rules, restrictions, regulations, resolutions and ordinances
and building restrictions and governmental regulations now or hereafter in
effect.
(b) By execution of this Sublease, Sublessee acknowledges and agrees
that it shall accept the Demised Premises on the Term Commencement Date in its
then "as is" and "where is" condition, provided that there has been no change or
deterioration in the Demised Premises from the date hereof other than change or
deterioration caused by Sublessee's use of the Demised Premises. Sublessee
acknowledges and agrees that neither Sublessor nor its agents or employees has
made any express warranty or representation regarding the physical or
environmental condition of the Demised Premises, the quality or workmanship of
the Demised Premises, latent or patent, or the fitness of the Demised Premises
for any particular use or purpose and that no such representation or warranty
shall be implied by law, it being agreed that all such risks are to be borne by
Sublessee.
(c) Sublessor makes no representation or warranty, express or
implied, with respect to the necessity (or lack of necessity) for or
availability of any permits, licenses or other governmental authorizations in
order to modify, alter or change the Demised Premises or to operate the Demised
Premises for the uses intended by Sublessee, it being agreed that all such risks
are to be borne by Sublessee.
(d) Upon termination of this Sublease, Sublessee shall remove all of
its equipment from the Demised Premises, repair any damage caused by such
removal and return the Demised Premises, broom clean and in the same condition
as received, ordinary wear and tear excepted.
6. The Prime Lease. (a) This Sublease and all rights of Sublease
---------------
hereunder and with respect to the Demised Premises are subject to the terms,
conditions and provisions of the Prime Lease. Sublessee shall have all of the
rights of Sublessor vis a vis the Landlord to enforce the obligations of the
Landlord under the Prime Lease.
(b) Without limitation of the foregoing:
(i) if Sublease desires to take any action, including structural
changes within the Demised Premises, and the Prime Lease would require the
Sublessor obtain the consent of the Prime Lessor before undertaking any action
of the same kind, Sublessee shall not undertake the same without the prior
written consent of Sublessor. Sublessor may condition its consent on the consent
of the Prime Lessor being obtained, and may require Sublessee to contact the
Prime Lessor directly for such consent but Sublessor shall not otherwise
unreasonably withhold, delay or condition its consent;
(ii) Sublessor shall also have all rights, and all privileges,
options, reservations and remedies, granted or allowed to, or held by, the Prime
Lessor under the
4
<PAGE>
Prime Lease to the extent that the exercise of those rights is not inconsistent
with the terms of the Sublease;
(iii) Sublessee shall maintain insurance of the kinds required to
be maintained by Sublessor under the Prime Lease and including any rights of
self insurance subject to the Net Worth Requirement under the Prime Lease, and
the consent of Prime Lessor. All policies of liability insurance shall name the
Prime Lessor and Sublessor as additional insured and all physical damage
insurance shall insure Prime Lessor as its interest may appear; provided, that
Sublessee shall not be entitled to any insurance proceeds from policies which
may be carried by Sublessor, and if Sublessor is required to repair or restore
improvements and betterments to the Demised Premises insured by Sublessee,
Sublessee shall make available all insurance proceeds for such repair or
restoration to Prime Lessor; provided, however, that at the election of
Sublessee, Sublessor will maintain the insurance required to be maintained under
the Prime Lease, and Sublessee shall reimburse Sublessor therefore at the rate
of Forty Seven Thousand Two Hundred Fifty and no/100 Dollars (47,250.00) per
annum payable in equal monthly installment of Three Thousand Nine Hundred Thirty
Seven and 50/100 Dollars ($3,937.50) in advance on the first of each calendar
month;
(iv) Neither Sublessor nor Sublessee shall do anything or suffer
or permit anything to be done which results in a default under the Prime Lease
or permit the Prime Lease to be canceled or terminated. Sublessor shall not
attempt or agree to amend modify, cancel or reject the Prime Lease without the
prior written consent of Sublessee which may be withheld or granted in
Sublessor's sole discretion.
(c) Notwithstanding anything contained herein or in the Prime Lease
which may appear to be to the contrary, Sublessor and Sublessee hereby agree as
follows
(i) Sublessee shall not assign, or otherwise transfer or permit
the transfer of the Sublease or any interest of Sublessee in this Sublease, by
operation of law or otherwise, or permit the use of the Demised Premises or any
part thereof by any persons other than Sublessee and Sublessee's employees, or
sublet the Demised Premises or any part thereof, except to the extent Sublessor
gives consent to a subletting or assignment; provided that no consent shall be
required for a full or partial assignment of this Sublease or a sub-sublease of
all or any portion of the Demised Premises to an entity which controls, is
controlled by or under common control with the Sublessee. Sublessor agrees that
it will not unreasonably withhold, delay or condition its consent to a proposed
subletting or assignment for which its consent is required, provided that
Sublessee shall remain liable under this Sublease;
(ii) neither rental nor other payments hereunder shall abate by
reason of any damage to or destruction of all or part of the Demised Premises or
the Building unless, and then only to the extent that, rent actually abates
under the Prime Lease with respect to the Demised Premises on account of such
event;
(iii) in the event of any conflict between the terms, conditions
and provisions of the Prime Lease and of this Sublease, the terms, conditions
and provisions of this Sublease shall govern and control.
5
<PAGE>
(d) Except as provided herein it is expressly understood and agreed that
Sublessor does not assume and shall not have any of the obligations or
liabilities of the Prime Lessor under the Prime Lease and that Sublessor is not
making the representations or warranties, if any, made by the Prime Lessor in
the prime Lease. With respect to work, services, repairs and restorations or the
performance of other obligations required of the Prime Lessor under the Prime
Lease, Sublessor's sole obligation with respect thereto shall be to request the
same, upon written request from Sublessee, and to use diligent efforts to abtain
the same from the Prime Lessor. Sublessor shall have the right to deal directly
with the Prime Lessor concerning the performance of Prime Lessor's obligations
under the Prime Lease. Sublessor shall not be liable in damages, nor shall rent
abate hereunder, for or on account of any failure by the Prime Lessor to perform
the obligations and duties imposed on it under the Prime Lease, except as set
forth in Section 6(c)(ii) above.
(e) Sublessor shall use its best commercially reasonable efforts to
obtain an agreement from Prime Lessor for the benefit of Sublessee, that Prime
Lessor shall give written notice of any default under the Prime Lease to
Sublessee and thereafter Sublessee shall have fifteen (15) days to cure such
default.
7. Representations and Warranties.
------------------------------
(a) Sublessor. Sublessor represents and warrants to Sublessee as
---------
follows:
(i) Sublessor is a corporation, duly organized, validly existing
and in good standing in the State of Michigan; it has full power and authority
to enter into this Sublease with Sublessee; it has duly authorized the execution
and delivery of this Sublease; the Sublease has been duly executed and delivered
and constitutes a valid and binding obligation of Sublessor, enforceable in
accordance with its terms; the execution and delivery of the Sublease does not
violate or contravene any document, instrument, agreement, rule, regulation or
order to which Sublessor is a party or by or under which Sublessor is bound; no
consent or approval of any person or entity is required for this Sublease which
has not been obtained. As of the execution and delivery of the Sublease,
Sublessor is solvent, and will not be rendered insolvent by the transaction
contemplated herein;
(ii) There is no litigation pending, or to Sublessor's best
knowledge, threatened by any person or entity which does or could affect the
Demised Premises, or the Prime Lease, or this Sublease; Sublessor has not been
notified that there is any violation of law at or with respect to the Demised
Premises;
(iii) The Prime Lease is in full force and effect, and has not been
terminated, amended, or modified except as indicated above. To the best of
Sublessor's knowledge and belief no default by Sublessor or Prime Lessor exists
under the Prime Lease and no event or act has occurred which, with the giving of
notice or passage of time or both, could ripen into a default under the Prime
Lease;
(iv) To the best of Sublessor's knowledge and belief, no
underground storage tanks are located on the Demised Premises;
6
<PAGE>
(v) The Demised Premises will be delivered broom clean,
equipment in proper working order and bolts will be removed or flush cut
and holes in the floor caused by equipment removal or excessive wear by material
handling equipment will be repaired to the extent required for safety;
(vi) The Commencement Date of the Prime Lease is March 15, 1989
and the Prime Lease shall terminate March 31, 2014;
(vii) On July 12, 1996, Sublessor sent written notice to Prime
Lessor of its intention to discontinue its operation at the Demised Premises and
of its desire to assign or sublet the Demised Premises, and that on the Term
Commencement Date, Sublessor shall not have received a notice of termination of
the Prime Lease from Prime Lessor.
(b) Sublessee represents and warrants to Sublessor that: (i)
Sublessee is a corporation, duly organized, validly existing and in good
standing under the laws of The State of Pennslyvania and has the power to own
its property and assets and carry on its business in the State of Texas;
(ii) the execution of this Sublease constitutes the binding
obligation of Sublessee;
(iii) the sublease of the Demised Premises will not conflict with
or result in a breach of Sublessee's Articles of Incorporation or By-laws or any
material agreement to which Sublessee is a party or by which it may be bound, or
violate any state or federal governmental law, statute, ordinance or regulation.
8. Notices, Demands and Other Instruments. All notices, demands or other
--------------------------------------
communications given pursuant to this Sublease shall be in writing and shall be
deemed given on the date mailed if mailed by nationally recognized overnight
courier or by registered or certified mail, return receipt requested, with
postage prepaid if: (a) when mailed to Sublessor, it is addressed to Sublessor
at its address set forth above, marked "Attention: Vice President - Corporate
Facilities," and (b) when mailed to Sublessee, it is addressed to Sublessee at
its address set forth above. The parties may specify any other address in the
United States with fifteen (15) days' notice.
To Sublessor: Kmart Corporation.
3100 West Big Beaver Road
Troy, Michigan 48084
Attn: Vice President Real Estate
Telecopier: 810-643-2689
With a copy to: Dickinson Wright, Moon, VanDusen
and Freeman
225 West Washington Street, #400
Chicago, Illinois 60606
Attention: Ronald B. Grais
Telecopier: 312-220-0021
7
<PAGE>
To Sublessee: Dal-Tile Corporation
7834 Hawn Freeway
Dallas, TX 75217
Attn: Manager-Real Estate
Telecopier: 214-309-4934
With a copy to: Godwin & Carlton
901 Main Street
Suite 3300
Dallas, TX 75202-3714
Attn: Joshua Mond
Telecopier: 214-760-7332
9. Separability. If any provision of this Sublease or its application to
------------
any persor or circumstance shall be declared invalid or unenforceable, the
remaining provisions of this Sublease, or the application of such provision to
persons or circumstances other than those to which it is invalid or
unenforceable, shall not be affected thereby and each provision shall be valid
and enforceable to the extent permitted by law.
10. Binding Effect. All provisions contained in this Sublease shall be
--------------
binding upon, inure to the benefit of, and be enforceable by, the respective
successors and assigns of Sublessor and Sublessee. If Sublessor acquires a fee
interest in the Demised Premises, this Sublease shall not be affected and shall
continue as a direct lease of the Demised Premises between Sublessor and
Sublessee.
11. Interpretation, Amendment and Modification. This Sublease shall be
-------------------------------------------
interpreted under the laws of the State of Texas. The Section and subsection
captions are for the convenient reference of the parties only and are not
intended to and shall not be deemed to modify the interpretation of the Section
or subsection from that which is indicated by the text of the Section or
subsection alone. All of the representations, warranties and indemnities
contained in this Sublease shall survive indefinitely the expiration or
termination of this Sublease. This Sublease is the product of negotiation and
the parties agree that it shall not be interpreted against the drafter. This
Sublease contains the entire agreement between the parties with respect to the
Demised Premises and all prior negotiations or agreements, whether oral or
written, are superseded and merged herein. This Sublease may not be changed or
amended except by a writing duly authorized and executed by the party against
whom enforcement is sought.
12. Brokers. Each party hereby represents and warranties to the other that
-------
it has had no dealings with any real estate broker or agent in connection with
this Sublease excepting only Russ Peterson of Dallas, Texas, whose commission
shall be paid upon Sublessee's occupancy by Sublessor in accordance with the
agreement between broker and Sublessor and subject to rent offset and that it
knows of no other real estate broker or agent who is or might be entitled to a
commission in connection with this Sublease. Each party agrees to protect,
defend, indemnify and hold the other harmless from and against any and all
claims inconsistent with the foregoing representations and warranty for any
brokerage, finders or similar fee or commission in connection with this Sublease
if such claims are based on or relate to any act of the indemnifying party which
is contrary to the foregoing representations and warrantiies.
8
<PAGE>
13. Memorandum of Sublease. This Sublease shall not be recorded. If a
----------------------
party records this Sublease, it shall be a default hereunder by such party.
Sublessor and Sublessee shall, simultaneously with the execution of this
Sublease, enter into a short form memorandum of this Sublease and Sublessee
shall pay the cost to record the memorandum and any transfer, conveyance or
similar tax due as a result of the subleasing of the Demised Premises or the
recording of the memorandum.
14. Indemnification. (a) Indemnification by Sublessee. Sublessee agrees
--------------- ----------------------------
that it will indemnify and hold Sublessor, and its successors in interest
hereunder, harmless from and against any loss, cost, expense, damage (including
consequential or incidental damage), penalty or liability which Sublessor does
incur as a result of or arising from
(i) Sublessee's use of the Demised Premises during the term;
(ii) the breach or violation of any representation, warranty,
covenant or agreement made by Sublessee hereunder;
(iii) Sublessee's failure to perform its obligations under this
Sublease or to perform those of the obligations under the Prime Lease which
Sublessee has agreed to perform on Sublessor's behalf.
(b) Indemnification by Sublessor. Sublessor agrees that it will
----------------------------
indemnify and hold Sublessee, and its successors in interest hereunder, harmless
from and against any loss, cost, expense, damage (including consequential or
incidental damage), penalty or liability which Sublessee does incur as a result
of or arising from
(i) the condition or use of the demised Premises prior to the
Sublease Term Commencement Date;
(ii) the breach or violation of any representation, warranty,
covenant or agreement made by Sublessor hereunder.
(iii) the failure of Sublessor to perform its obligations under
this Sublease or to perform those of its obligations under the Prime Lease which
remain the primary responsibility of Sublessor, or
(iv) any act or omission done or made by Sublessor which results
in the termination, cancellation or rejection of the Prime Lease and/or the
Sublease, or the inability of Sublessee to have the full benefit of the rights
provided to Sublessee hereunder.
(c) In no event shall Sublessee or Sublessor be required to indemnify
or hold harmless any person or entity for any loss, cost, damage, penalty or
liability which is the result of the negligence or willful misconduct of the
person or entity seeking indemnification.
15. Rental Deposit. Upon the Term Commencement Date, Sublessee shall
--------------
prepay the monthly installments of Base Rent for the eleventh and twelfth months
of the Primary Term, in the amount of Ninety Two Thousand Five Hundred Thirty
One and 25/100 Dollars ($92,531.25) each respectively.
9
<PAGE>
16. Condition Precedent. This Sublease is subject to consent thereto by
-------------------
Prime Lessor either by lapse of time under Section 22 (b) of the Prime lease or
by written consent to the terms of this Sublease, within thirty (30) days of the
date hereof. If Prime Lessor refuses to consent to this Sublease, or elects to
negotiate directly with Sublessee in accordance with Section 22(b) of the Prime
Lease, this Sublease shall simultaneously terminate and neither party shall have
any further rights or obligations under the Sublease and each party hereby
releases the other from any cost, loss, damage, claim, liability, expense, fee
or charge related to, arising from or involving this Sublease or the Demised
Premises.
IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be
executed as of the date first above written.
WITNESSED: KMART CORPORATION
("Sublessor")
/s/ [ILLEGIBLE]
-------------------- By: /s/ [ILLEGIBLE]
-----------------------------------
-------------------- Its: Real Estate Rep:
---------------------------------------------
Dickinson, Wright:
Approved:_____________________________
Reviewed (see comments): /s/ ILLEGIBLE
--------------
DAL-TILE CORPORATION
("Sublessee")
By: /s/ James Eckelberger
-------------------------------
James Eckelberger
/s/ [ILLEGIBLE] Its: Vice President
--------------------
10
<PAGE>
EXHIBIT A
---------
K MART ADDITION, an Addition to the City of Sunnyvale, Dallas County, Texas,
according to the Plat recorded in Volume 87118, Page 1904, Map Records, Dallas
County, Texas, and being more particularly described by metes and bounds as
follows:
Beginning at an iron rod found at the Northeast corner of Lot 1, Block 8 of
SAMUEL PARK FARMS WEST, an Addition to the City of Mesquite, Texas, according to
the Plat recorded in Volume 83216, Page 3409, Map Records, Dallas County, Texas,
said iron rod also being in the West right-of-way line of Planters Road;
THENCE South 89 degrees 33 minutes 38 seconds West, along the North line of said
SAMUEL PARK FARMS WEST, a distance of 1669,48 feet to an iron rod found in
place;
THENCE North 0 degrees 05 minutes 25 seconds West, 970.81 feet to an iron rod
found in place;
THENCE North 89 degrees 33 minutes 38 seconds East, 1237.00 East to an iron rod
found in place in the aforementioned West right-of-way line of Planters Road;
THENCE along said West right-of-way line as follows;
1) Southeasterly, 8.04 feet along a curve to the left having a radius of
1030.00 feet, a central angle of 0 dgrees 26 minutes 50 seconds and a chord
bearing South 46 degrees 18 minutes 50 seconds East a distance of 8.04 feet to
an iron rod found in place at the-end of said curve;
2) South 46 degrees 32 minutes 20 seconds East, 373.37 feet to an iron rod
found in place at the beginning of a curve to the right;
3) Southeasterly, 398.27 feet along said curve to the right having a radius of
495.00 feet, a central angle of 46 degrees 05 minutes 58 seconds and a chord
bearing South 23 degrees 29 minutes 21 seconds East a distance of 387.81 feet to
a ??? found cut in concrete at the end of said curve;
4) South 0 degrees 26 minutes 22 seconds East, 349.63 feet to the PLACE OF
BEGINNING and containing 35.000 acres (1,524,600 square feet) of land.
<PAGE>
EXHIBIT "C"
THIS LEASE (the "Lease") made and entered into as of the _____
day of February, 1989, by and between METROPLITAN LIFE INSURANCE
COMPANY, a New York corporation having its principal office at One
Madison Avenue, New York, New York 10010 (herein referred to as
"Landlord"), and K MART CORPORATION, a Michigan corporation having
its principal office at 3100 West Big Beaver Road, Troy, Michigan
48084 (herein referred to as "Tenant"),
WITNESSETH: That in consideration of the rents, covenants, and
conditions herein set forth, landlord and Tenant do hereby covenant,
promise and agree as follows:
Demised
Premises 1. Without representation or warranty, express or implied,
-------- Landlord does demise unto Tenant and Tenant does take from Landlord,
for the "Lease Term" (hereinafter defined), the following property:
That certain tract or parcel of real property which is more
particularly described on Exhibit "A" attached hereto and made a
part hereof (the "Land"), together with the building(s) and/or
improvements existing on the Land on the date hereof and all
additional buildings and/or improvements hereafter erected or
constructed on the Land (the "Improvements"); subject, however, to
the matters listed on Exhibit "B" attached hereto and made a part
hereof.
Said Land and Improvements, together with any right, title or
interest of Landlord in or to any licenses, rights, privileges and
easements appurtenant thereto, shall be hereinafter collectively
referred to as the "demised premises".
Term 2. The term of this Lease shall commence upon the date of this
---- Lease (the "Commencement Date") and shall terminate upon such date
as shall be twenty-five (25) years from the last day of the month
during which the Commencement Date occurs (the "Initial Lease Term);
provided however, the term of this Lease may be extended as provided
in Article 12 hereof. The phrase "Lease Term", as used in this
Lease, shall mean the Initial Lease Term, together with any
extension(s) pursuant to Article 12 hereof.
Annual
Rental 3. Tenant shall, during the Lease Term, pay to Landlord, at
------ such place as Landlord shall designate in writing from time to time,
an annual rental in the following amounts:
Years 1-5: $1,040,910 per annum
Years 6-10: $1,092,956 per annum
Years 11-15: $1,147,604 per annum
Years 16-20: $1,204,984 per annum
Years 21-25: $1,265,233 per annum
Rental During Option Period
---------------------------
1st five-year option - $1,391,756.00 per annum
2nd five-year option - $1,530,931.00 per annum
3rd five-year option - $1,684,024.00 per annum
4th five-year option - $1,852,427.00 per annum
5th five-year option - $2,037,670.00 per annum
6th five-year option - $2,241,437.00 per annum
<PAGE>
The annual rentals listed above shall be paid by Tenant to Landlord
without deduction or offset, except as expressly provided in Articles
20 and 21 hereof, in equal monthly installments on the first day of
each month, in advance, commencing on the Commencement Date; provided
however, in the event the Commencement Date shall not be the first day
of a calendar month, then the rental for such month shall be prorated
(on the basis of a rental of $1,040,910.00 per annum) upon a daily
basis and shall be in addition to rental for the first year of the
Lease Term in the amount of $1,040,910.00 as provided above in this
Article 3; it being understood between Landlord and Tenant that the
first year of the Lease term shall be a period of twelve (12) months,
plus the number of days which exist between the Commencement Date and
the last day of the month during which the Commencement Date occurs.
The annual rental to be paid by Tenant hereunder shall be absolutely
net to Landlord and free of any operating expenses relative to the
demised premises, so that this Lease shall yield the annual rentals
specified above, net to Landlord, throughout the Lease Term.
Real
Estate
Tax 4. Tenant shall pay and discharge all ad valorem real estate
---
taxes and assessments of any nature which shall be levied against the
demised premises during the Lease Term.
Tenant shall pay and be liable for all sales and use taxes and
other similar taxes, if any, levied or imposed by any city, state,
county or other governmental body having authority. Tenant shall also
be liable for and shall pay all taxes levied or assessed against
Tenant's property or equipment located in or upon the demised
premises, or any part thereof. Notwithstanding the immediately
preceding sentence, Tenant shall not be chargeable with, nor be
obligated to pay, any income, profit, inheritance, estate, succession,
gift, franchise or transfer taxes which are or may be imposed upon
Landlord, its successors or assigns, and which do not result from
Tenant's use of the demised premises, by whatsoever authority imposed
or howsoever designated.
Taxes and assessments payable by Tenant pursuant to this Article
4 for the last year of the Lease Term shall be prorated based upon
actual tax and/or assessments statements, if available; otherwise, the
proration shall be made based upon the most recent tax and/or
assessment statements available.
Written evidence of the payment by Tenant of taxes and
assessments pursuant to this Article 4 shall be furnished by Tenant to
Landlord not later than ten (10) days prior to the date upon which any
such taxes or assessments would become delinquent.
Tenant shall have the right to contest, with such right to be
exercised reasonably and in good faith, the validity or the amount of
any tax or assessment levied against the demised premises by such
appellate or other proceedings as may be appropriate in the
jurisdiction and may defer payment of such obligations, pay same under
protest, or take such other steps as Tenant may reasonably deem
appropriate; provided that, (i) neither the demised premises, nor any
part thereof or interest therein, would be, in Landlord's sole
opinion, in any danger of being sold, forfeited, lost or interfered
with, and (ii) Tenant
-2-
<PAGE>
shall furnish such security as may be required in any legal
proceeding or as shall be reasonably requested by Landlord.
Landlord shall cooperate in the institution and prosecution of
any such proceedings in a reasonable manner (but without cost or
expense to Landlord) and will execute any documents reasonably
required therefor. All costs and expenses of such proceedings
shall be borne solely by Tenant and any refunds or rebates
secured thereby shall belong to Tenant. Tenant shall not withhold
payment of taxes which will cause any taxing authority to impose
a tax lien against the demised premises, or any part thereof, and
shall indemnify and hold Landlord harmless from any loss, cost or
expense incurred by Landlord including, without limitation,
attorneys' fees, as a result of any such contest(s) or
proceeding(s).
5. Article 5 is Intentionally Deleted.
6. Article 6 is Intentionally Deleted.
7. Article 7 is Intentionally Deleted.
8. Article 8 is Intentionally Deleted.
9. Article 9 is Intentionally Deleted.
10. Article 10 is Intentionally Deleted.
Landlord's
Covenant
not to
Build 11. Landlord covenants that it will not erect any buildings
-----
or other structures on the land described in Exhibit "A" during
the Lease Term.
Options
Extend
Lease 12. Tenant shall have the right and option to extend the
-----
term of this Lease for six (6) successive additional periods of
five (5) years each, such extended term to begin, as the case may
be, upon the expiration of the Initial Lease Term or upon the
expiration of the then current extension following the expiration
of the Initial Lease Term and each such extension shall be upon
the same terms and conditions as herein set forth, except as
otherwise provided herein. If Tenant shall elect to exercise one
or more of the aforesaid option(s), it shall do so, in each case,
by giving written notice to Landlord not less than six (6) months
prior to the expiration of the then current term of this Lease.
Time is of the essence with respect to each notice of Tenant's
election to extend the term of this Lease and the failure of
Tenant to provide written notice to Landlord on or before six (6)
months prior to the expiration of the then current term of this
Lease, shall be deemed to be an irrevocable waiver of any further
rights to Tenant to extend the term of this Lease.
Purchase
Options 13. Anything in this Lease contained to the contrary
-------
notwithstanding, and without in any manner affecting or limiting
any of the rights, options or estates granted to Tenant under
this Lease, if the Landlord, at any time during the Lease Term,
receives one or more bona fide offers from third parties to
purchase the demised premises, and if any such offer is
acceptable to the Landlord, then Landlord shall notify Tenant in
writing, giving the price, terms and conditions of such offer,
and
-3-
<PAGE>
Tenant shall have ten (10) days from and after the receipt of
such notice from Landlord in which to elect to purchase the
demised premises for the consideration and on the terms and
conditions contained in the bona fide offer. If Tenant does not
elect to purchase said demised premises and Landlord thereafter
sells the demised premises, the purchaser shall take the demised
premises, subject to and burdened with all the terms, provisions
and conditions of this Lease, excluding this Article 13, the
former landlord shall be relieved of all obligations hereunder,
and the rights of the Tenant under this Lease as against the new
owner shall not be lessened or diminished by reason of the change
of ownership. Tenant's failure at any time to exercise its option
under this Article 13 in the manner and within the time period
specified above shall be deemed to be an irrevocable waiver by
Tenant of such option. The date of closing of the subject sales
transaction and the procedure to be followed with respect to the
closing of the subject transaction shall be as specified in
Landlord's notice. The purchase option granted to Tenant under
this Article 13 shall be personal to Tenant and shall terminate
upon the assignment of this Lease or the subletting of all or any
portion of the demised premises by Tenant. The provisions of this
Article 13 shall not be applicable to the transfer, conveyance or
assignment, by whatsoever means, of the demised premises, or any
portion thereof, or interest therein, and/or this Lease to an
"Affiliate" of Landlord. As used in this Article 13, the term
"Affiliate" shall mean any person or entity under common control
of a person or entity which controls Landlord or which is
controlled by Landlord.
Repairs 14. Tenant shall, at Tenant's sole cost and expense,
------- undertake all maintenance and repairs with respect to the demised
premises including, without limitation, structural and
non-structural repairs and replacements, and Tenant shall, during
and throughout the Lease Term, take good care of the demised
premises and maintain the demised premises in good, safe and
tenantable condition. With respect to any structural repairs or
replacements, Tenant shall, after obtaining Landlord's prior
written consent to the extent required pursuant to this Article
14, promptly cause all necessary structural repairs and
replacements to be made in quality and class equal to the
condition of such structural portions on the date of this Lease,
and upon completion shall furnish to Landlord "as built" plans
and specifications for the work so performed. As used herein, the
phrase "structural portions" refers to the foundation, exterior
walls, members supporting the roof and the roof, but excludes, by
way of example and not by way of limitation, interior walls,
doors, molding, trim, window frames, door frames, closure,
devices, hardware and plate glass. With respect to non-structural
repairs or replacements, Tenant, after obtaining Landlord's
consent to the extent required pursuant to this Article 14, shall
promptly cause all necessary non-structural repairs and
replacements to be made in quality and class equal to the
condition of the demised premises on the date of this Lease. In
the event that Landlord considers it necessary that any
maintenance, replacements, renewals or repairs required by the
provision of this Article 14 be made by Tenant, Landlord may
request Tenant to undertake such repairs, renewals, replacements,
or maintenance; and upon Tenant's failure or refusal to do so
promptly, and in any event in case of an emergency, Landlord
shall have the right, but not the obligation, to perform such
maintenance or to make such repairs, renewals or replacements,
Tenant hereby waiving any claim for damage caused thereby. Any
-4-
<PAGE>
sum so expended by Landlord shall be promptly reimbursed to
Landlord by Tenant; and any such amount shall bear interest from
the date on which Landlord expends such sum to the date of
payment by Tenant at the then highest lawful contract rate which
Tenant is authorized to pay under applicable law, not to exceed
18% per annum. Any such sum for which Tenant becomes liable to
reimburse Landlord may be treated by Landlord as rent and be
payable to Landlord on the first (1st) day of the next succeeding
month. In the event that Landlord performs any such maintenance
or makes any such repairs, renewals or replacements or undertakes
to do so, Landlord shall not be liable to Tenant for any loss or
damage which may occur to Tenant's equipment and property located
within or on the demised premises incident to such action by
Landlord. Tenant need not obtain the consent of Landlord before
undertaking repairs or replacements pursuant to this Article 14
or alterations pursuant to Article 15, provided, in the case of
non-structural repairs, replacements, changes and alternations,
the costs of all such non-structural repairs, replacements,
changes and alternations made during any calendar year do not
exceed $200,000.00 in the aggregate; and provided, further that
in the case of structural repairs, replacements, changes and
alterations, the costs of all such structural repairs,
relacements, changes and alterations made during any calendar
year do not exceed $75,000.00 in the aggregate. In the event the
costs of repairs, replacements, changes, and alterations proposed
to be made would cause the aggregate costs of such repairs,
replacements and alterations to exceed the limits for a calendar
year set forth in the immediately preceding sentence of this
Article 14, then Tenant shall obtain the consent of Landlord to
such repairs, replacements, changes and alterations proposed to
be made before the same are commenced, which consent shall not be
unreasonably withheld or delayed by Landlord.
Alterations
and Addi-
tional Con-
struction 15. Tenant may, at its own expense at any time, subject to
---------
the conditions hereinafter set forth in this Article 15, (a)
after obtaining the prior written consent of Landlord, which
consent shall not be unreasonably withheld or delayed, erect or
construct additional buildings or structures ("Additional
Improvements") on any portion of the Land; (b) make such
alterations or changes, structural or non-structural, in and to
the buildings on the Land as it may deem necessary or suitable
after obtaining the consent of Landlord to the extent required
under the provisions of Article 14; or (c) after obtaining the
prior written consent of Landlord, demolish the whole or any part
of any building at any time standing on the Land; provided that,
if Tenant obtains Landlord's prior written consent to demolish a
building on the Land, Tenant will replace the building which was
demolished with a structure equal to or greater in value than the
building demolished (the demolition of a building and the
replacement thereof being referred to in this Article 15 as
"Demolition Improvements").
In the event Tenant obtains the prior written consent of Landlord
for Additional Improvements or Demolition Improvement, the
following terms and conditions shall be applicable to Tenant's
making Additional Improvements or Demolition Improvements:
-5-
<PAGE>
(a) In connection with the design and construction (including
demolition work, if any) of Additional Improvements or Demolition
Improvements, Tenant shall comply with and observe all laws, codes, rules,
regulations and restrictions applicable to (i) such design and construction
and (ii) the demised premises.
(b) The erection or construction of neither Additional Improvements
nor Demolition Improvements shall adversely affect the Value (as
hereinafter defined) of the demised premises.
(c) Prior to the commencement of any work to erect or construct
(including demolition work, if any) Additional Improvements or Demolition
Improvements, Tenant shall cause to be issued to Landlord an unconditional
irrevocable sight draft letter of credit ("Letter of Credit") issued by a
national banking institution acceptable to Landlord in an amount equal to
125% of the Costs (as hereinafter defined). The term of the Letter of
Credit shall be for a period extending twelve (12) months beyond the
Completed Date (as hereinafter defined).
(d) Completion (as hereinafter defined) of the Additional Improvements
or Demolition Improvements must occur within 180 days after the Completion
Date, and, notwithstanding anything to the contrary contained in this
Lease, Tenant shall be deemed to be in default under the terms of this
Lease if Completion does not occur within said 180 day period.
(e) Landlord, as separate covenants with Tenant and without imposing
conditions on the right of Landlord to draw on the Letter of Credit by
sight draft or restricting the obligation of the issuing bank to pay upon
said Letter of Credit upon presentation of a sight draft from Landlord
identifying the Letter of Credit, shall have the right to draw on the
Letter of Credit only during the last sixty (60) days of the term of the
Letter of Credit or at such earlier date on which Tenant shall be in
default under the terms of this Lease.
(f) In the event Tenant is in default under the provisions of
subparagraph (d) of this Article 15, Landlord shall have the right, but not
the obligation, in its sole discretion, to (i) cause the Additional
Improvements or Demolition Improvements to be completed in whole or in part
to the satisfaction of Landlord and/or (ii) cause the Additional
Improvements or Demolition Improvements to be removed in whole or in part
from the Land. For the purposes of performing all work which may be
necessary to the full exercise of the rights granted to Landlord pursuant
to this subparagraph (f), Landlord, its agents, contractors and consultants
and their respective agents, employees, contractors and materialmen shall
have the right to enter upon and use the demised premises without being or
becoming liable for any damages resulting to Tenant from such actions.
(g) Landlord may use the proceeds obtained from payment to it on the
Letter of Credit to pay (i) all costs and expenses of work performed
pursuant to the provisions of subparagraph (f) of this Article 15,
-6-
<PAGE>
including but not limited to architectural, engineering and consultant's
fees, all charges for work performed and materials furnished and reasonable
fees of independent legal counsel and (ii) all charges for labor performed,
services rendered and materials furnished in connection with the Additional
Improvements or Demolition Improvements performed, rendered or furnished
prior to the date Landlord exercises its rights under subparagraph (f) of
this Article 15 which have not been paid by Tenant. In the event such
proceeds are insufficient to make all payments authorized in this
paragraph, Tenant shall be and remain liable to Landlord for the payment of
any deficiency. In the event any of such proceeds remain unexpended by
Landlord thirty (30) days after the last date on which any contractor,
subcontractor, laborer or materialman who performs labor or furnishes
labor, material or services in connection with the Additional Improvements
or Demolition Improvements or work which may be performed pursuant to
subparagraph (f) could perfect a lien pursuant to the provisions of Chapter
53 of the Texas Property Code, as amended, such remaining proceeds shall be
paid to Tenant.
(h) Upon request from Landlord, Tenant agrees to promptly furnish to
Landlord such information and documentation relating to the design and
construction of Additional Improvements of Demolition Improvements and
Landlord may reasonably request, including but not limited to construction
contracts and subcontracts, agreements with architects and engineers,
working plans and specifications, permits and licenses, inspection reports,
draw requests and cost certifications. Upon Completion, Tenant shall
furnish to Landlord a complete set of the as-built plans and
specifications for the Additional Improvements or Demolition Improvements
and an as-built survey of the demised premises after Completion certified
to Landlord in substantially the form of the Survey Certificate attached as
Exhibit "D" to that certain Agreement of Sale dated ______________ between
Tenant, as Seller, and Landlord, as Buyer, covering the demised premises.
For the purposes of this Article 15 the term "Completion" is defined to
mean the substantial completion of the Additional Improvements or Demolition
Improvements in accordance with the plans and specifications therefor as
evidenced by (i) a certificate addressed to Landlord and Tenant, in form and
substance acceptable to Landlord, from Tenant's independent architect to the
effect that the Additional Improvements or Demolition Improvements have been
built in accordance with the plans and specifications, are in compliance with
all codes, rules, regulations and restrictions applicable to (x) such
construction or (y) the demised premises and have been substantially completed,
(ii) the issuance to Tenant of a certificate of occupancy for the Additional
Improvements or Demolition Improvements by the governmental authority having
jurisdiction to issue the same and (iii) the written certification by Tenant to
Landlord, in form and substance satisfactory to Landlord, that the Additional
Improvements or Demolition Improvements have been constructed in accordance with
the plans and specifications therefor and in compliance with all laws, codes,
rules, regulations and restrictions applicable thereto, that after Completion
the demised premises are in compliance with all laws, codes,
-7-
<PAGE>
rules, regulations and restrictions applicable to the demised
premises, that the Additional Improvements and Demolition
Improvements do not impair the Value of the demised premises
and that all bills and charges for labor performed, services
rendered and materials furnished in connection with the
Additional Improvements of Demolition Improvements have been
paid, said certification to be accompanied by lien waivers or
releases from all contractors, subcontractors, materialmen and
laborers who performed services or labor or furnished materials
with respect to the Additional Improvements or demolition
Improvements. The term "Completion Date" is defined for the
purposes of this Article 15 as the original date specified in
the initial construction contract, before any amendments,
modifications or changes thereto or change orders relating
thereto, for substantial completion of the Additional
Improvements or Demolition Improvements, a copy or which
contract shall be furnished by Tenant to Landlord. The term
"Costs" is defined for the purposes of this Article 15 to mean
the greater of (i) the estimated total costs and expenses
(including all "soft costs") of designing and constructing
(including demolition costs, if any) the Additional
Improvements or Demolition Improvements as submitted in writing
to Landlord by Tenant at the time Tenant requests the consent
of Landlord as provided in this Article 15 or (ii) if Landlord,
in its sole discretion, disagrees with the estimate submitted
by Tenant, then such estimated total costs and expenses as
Landlord may determine, in its sole discretion, and submit to
Tenant within thirty (30) days after receipt of Tenant's
estimate. The term "Value" as used in this Article 15 is
defined to mean the fair market value of the demised premises
assuming the completion of the Additional Improvements or
Demolition Improvements, as estimated by Landlord in its sole
discretion. The reference to "structural changes", as used in
clause (b) of the first paragraph of this Article 15, shall not
include the moving of non-loadbearing partitions, minor
plumbing or minor electrical work, modification and
rearrangement of fixtures or other minor changes.
Any costs connected with filing applications for
building permits or authorizations for any work permitted under
Article 14 or this Article 15, or processing or obtaining the
same shall be borne by Tenant. Landlord, at Tenant's cost,
shall cooperate with Tenant in securing building or other
permits or authorizations required from time to time for any
work permitted under Article 14 or this Article 15 or for
installations by Tenant permitted under Article 14 or this
Article 15.
Utilities
--------- 16. Tenant shall pay all charges for utility services
furnished to the demised premises during the Lease Term and
Landlord shall not be responsible for any interruption in or
termination of any or all of said services.
Govern-
mental
Regula-
tions
----- 17. (a) Tenant shall, at its own expense, observe and
comply with all rules, orders and regulations of all duly
constituted public authorities including, without limitation,
the environmental laws, rules, regulations and orders referred
to in Article 17(b) and all restrictions, covenants, agreement
and other matters of record on the date of this Lease effecting
the Land and/or the
-8-
<PAGE>
Improvements. Tenant shall have the right to diligently contest, by proper
proceedings conducted reasonably and in good faith and without cost to Landlord,
the validity or application of any such rule, order or regulation and may
postpone compliance therewith until the final determination of any such
proceeding, provided that:
(i) Neither the demised premises, nor any part thereof or interest
therein, would be in any danger of being sold, forfeited, lost of
interfered with;
(ii) Landlord would not be in any danger of any civil or any
criminal penalty for the failure to comply therewith;
(iii) Tenant shall have furnished such security, if any, as may be
required in any such proceedings or may be requested by Landlord; and
(iv) Nothing contained herein shall be construed as providing
Tenant with the right to contest any sum billed to Tenant by Landlord.
(b) "Hazardous Materials" shall mean (a) any "hazardous waste" as defined
by the Resource Conservation and Recovery Act of 1976 ( 42 U.S.C. Section 6901
et seq.), as amended from time to time, and regulations promulgated thereunder;
(b) any "hazardous substance" as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1080 ( 42 U.S.C. Section 9601 et
seq.) ("CERLA"), as amended from time to time, and regulations promulgated
thereunder; (c) asbestos; (d) polychlorinated biphenyls; (e) Underground or
above ground storage tanks, whether empty, filled or partially filled with any
substance; (f) any substance the presence of which on the demised premises is
prohibited by any Governmental Requirements; (g) any other substance which by
any Governmental Requirements requires special handling or notification of any
federal, state or local governmental entity in its collection, storage,
treatment, or disposal; (h) urea formaldehyde insulation; (i) "toxic chemicals,"
"hazardous chemicals", or "extremely hazardous substances," under either the
Emergency Planning and Community Right to Know Act of 1986 or the Occupational
Safety and Health Act of 1970; (j) any "pollutant" within the meaning of the
federal Clean Water Act and the regulations promulgated thereunder, including
within the definitions found in 40 CFR (S) 122.2; (k) any "waste" within the
meaning of the Texas Water Code, including within the definition thereof in
Section 26.001; (l) any substance governed by the Toxic Substances Control Act
(15 U.S.C. (S) 2601); and ( m) any "hazardous waste" or "solid waste" within the
meaning of the Texas Solid Waste Act, with particular reference to the
definitions of such terms which appear in TEX. REV. CIV. STAT. ANN. Art. 4477-7,
(S) 2.
(i) Neither Tenant nor the demised premises shall become subject to
any private or governmental lien or judicial or administrative notice,
order or action relating to Hazardous Materials or subject to any public or
governmental lien or judicial or administrative notice, order or action
relating to any environmental problems, impairments, or liabilities with
respect to the demised premises, as a result of Tenant's use of the demised
premises.
<PAGE>
(ii) Tenant shall immediately notify Landlord should
Tenant become aware of (1) any Hazardous Materials in, upon
or under the demised premises, (2) any lien, action or
notice of the nature described in subparagraph (b) (i) of
this Article 17 relating, directly or indirectly, to the
demised premises, or (3) any litigation or threat of
litigation relating to any alleged unauthorized release of
any Hazardous Material from or the existence of any
Hazardous Material in, on or under the demised premises.
(iii) Tenant hereby covenants and agrees not to do or
take any action or omit or fail to take any such action
which will result in the introduction of any Hazardous
Materials in, on or under the demised premises.
Liens and
Encumb-
rances
------ 18. Tenant will not, directly or indirectly, create or
permit to be created or to remain, and will promptly discharge,
any mortgage, lien, security interest, encumbrance, or charge
on, pledge of, or conditional sale or other title retention
agreement with respect to the demised premises or any part
thereof, Tenant's interest therein, the rents accruing
hereunder, or any other sum payable to Landlord under this
Lease. Should any mechanic's or materialman's lien or liens or
encumbrances or affidavits claiming liens or encumbrances be
filed against the demised premises, or any part thereof, or
interest therein, for any reason whatsoever incident to the acts
or omissions of Tenant, or of any contractor, subcontractor,
laborer performing labor, or materialmen furnishing materials
at or for the demised premises or by reason of any specially
fabricated materials, whether or not placed upon the demised
premises, Tenant shall cause the same to be canceled or
discharged of record by payment within fifteen (15) days of the
filing thereof, or at such earlier time as shall be necessary to
prevent the foreclosure thereof.
Insurance
--------- 19. Throughout the Lease Term, Tenant shall, at its own
expense, be obligated to have procured and shall be obligated to
maintain insurance against loss or damage by fire and such other
hazards as are included in so-called "extended coverage" and
against malicious mischief and against such other insurable
hazards as, under good insurance practices, from time to time
are insured against for structures similar to the Improvements
in Dallas, Texas (the "Minimum Insurance"). The amount of such
insurance shall be not less than eighty percent (80%) of the
full replacement costs of the Improvements without reduction for
depreciation. "Full replacement costs", as used in this Article
19, means the costs of replacing the Improvements; exclusive of
the costs of excavations, foundations and footings below the
lowest basement floor.
Notwithstanding the foregoing provisions of this Article 19,
at any time during the Lease Term that Tenant's net worth,
determined as hereinafter provided in this Article 19, shall
have exceeded One Hundred Million and No/100 Dollars
($100,000,000.00) throughout the immediately preceding fiscal
year of Tenant (the "Net Worth Requirement"), Tenant shall have
the right, upon not less than thirty (30) days' prior written
notice to Landlord and any mortgagee of Landlord, to self-insure
the Improvements for perils which could be covered by the
Minimum Insurance. Tenant shall promptly furnish to
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Landlord, upon Landlord's request, quarterly financial statements for Tenant
prepared in accordance with generally accepted accounting principles and signed
or certified by an officer of Tenant, and Tenant shall furnish to Landlord not
later than June 1 of each year during the Lease Term an annual report, which
will include audited financial statements, for Tenant for the preceding fiscal
year of Tenant ended January 31. Provided each of the financial statements
required to be furnished to Landlord by Tenant reflect Tenant's net worth to be
$100,000,000.00 or more the Net Worth Requirement shall be deemed satisfied;
however, in the event any of the aforesaid financial statements shall reflect a
net worth for Tenant of less than $100,000,000.00, then Landlord may give
written notice to Tenant that Tenant does not satisfy the Net Worth Requirement
and that Tenant must immediately cease to be self insured under this Article 19.
Tenant may not thereafter elect to be self insured under this Article 19 unless
and until the financial statements for Tenant included in an annual report
furnished to Landlord after the date of its notice of non-compliance to Tenant
reflect a net worth for Tenant of $100,000,000.00, or more. Landlord hereby
acknowledges that Tenant has furnished evidence of its satisfaction of the Net
Worth Requirement as of the date of this Lease and that Landlord has been
advised of Tenant's intent to self-insure the Improvements during the Lease
Term; provided that, Tenant continues to satisfy the Net Worth Requirement.
Tenant hereby acknowledges and agrees that during any time that Tenant shall
have failed to obtain and shall fail to maintain the Minimum Insurance in the
amount of not less than eighty percent (80%) of the full replacement cost of the
Improvements, Tenant shall be deemed to be a self-insurer and, in the event of
any casualty loss or damage to any of the Improvements, Tenant shall be
obligated to pay to Landlord, as additional rent, an amount equal to eighty
percent (80%) of the full replacement cost of such Improvements, with such
additional rent being due and payable to Landlord by Tenant upon the first day
of the first month following written notice from Landlord to Tenant of the
amount of additional rent so due and owing by Tenant to Landlord.
In addition, Tenant shall obtain and keep in force, during and throughout
the Lease Term, a policy of comprehensive public liability insurance insuring
Landlord and Tenant, as their respective interests may appear, against any
liability arising out of the ownership, use, occupancy or maintenance of the
demised premises. Such insurance shall be in an amount of not less than One
Million Dollars ($1,000,000,000.00) for injury to or death of one person in any
one accident or occurrence and in an amount not less than Five Million Dollars
($5,000,000.00) for injury to or death of more than one person. Such insurance
shall further insure Landlord and Tenant against liability for property damage
of at least Five Hundred Thousand Dollars ($500,000.00). The limits of said
insurance shall not, however, limit the liability of Tenant hereunder. In
addition, said policy of comprehensive public liability insurance shall insure
Landlord with respect to the contractual indemnification of Landlord by Tenant
for which provision is made in Article 29 of this Lease. In the event that
Tenant shall fail to secure and maintain said policy of comprehensive public
liability insurance, Landlord may, at Landlord's sole option and without any
requirement with respect thereto, procure and maintain the same; and the cost of
any such policy shall be considered as an operating
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expense of Tenant which shall be repaid to Landlord on demand,
with interest accruing on any sums so expended by Landlord at the
then highest lawful contract rate which Tenant is authorised to
pay under the laws of the State of Texas from the date on which
Landlord expended such sums to the date of payment.
Notwithstanding the foregoing, so long as Tenant satisfies the Net
Worth Requirement, Tenant's general corporate public liability
insurance shall be deemed to satisfy the public liability
insurance requirements of this Article 19, and Tenant may self
insure for losses under $50,000,000.00.
Policies of insurance procured and maintained pursuant to
this Article 19 shall be payable to Landlord. Tenant shall furnish
to Landlord and Landlord's mortgagee, if any, certificates from
the insuring company showing the existence of the insurance
required by this Article 19. In case of casualty loss or damage,
Tenant shall have no right to adjust the loss or execute proof
thereof in the name of Landlord without the prior written consent
of Landlord.
Casualty 20. Should the whole or any part of the demised premises be
-------- partially or totally destroyed by fire or any other casualty after
the commencement of this Lease, Tenant shall give prompt written
notice thereof to Landlord, generally describing the nature and
the extent of such damage. Should over fifty (50%) percent of the
usable area (as such term is defined in the third subparagraph (a)
of Article 21) in the building existing on the Land as of the date
of this Lease be destroyed during the last three years of the
Lease Term, Tenant shall have the right, at its option, to
terminate this Lease by giving written notice to Landlord within
thirty (30) days after the casualty. In the event of the
termination of this Lease by Tenant as provided in the immediately
preceding sentence of this Article 20, the following provision
shall apply:
(a) All the insurance proceeds payable as a result of
such casualty shall be paid and belong to Landlord. In the
event the Improvements are self insured at the time of the
loss, Tenant shall pay to Landlord or as Landlord may
direct, an amount equivalent to the insurance proceeds that
would have been paid had insurance been in force, but not to
exceed eighty (80%) percent of the full replacement costs of
the Improvements.
(b) Tenant shall have sixty (60) days, rent free,
within which to remove its property from the demised
premises.
(c) All unearned rent and other charges paid in advance
shall be refunded to Tenant.
If Tenant does not terminate or does not have the right to
terminate this Lease as provided above, then the following
provisions shall be applicable:
(a) Within forty-five (45) days after the date of the
casualty and before work is commenced to repair or restore
the demised premises to substantially the same condition as
before the casualty ("Restoration Work"), Tenant shall cause
to be issued to Landlord by a national banking institution
acceptable to Landlord an unconditional irrevocable sight
draft letter of credit ("Letter of
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<PAGE>
Credit") in an amount equal to 125% of the Costs (as hereinafter defined). The
Letter of Credit shall be for a term extending for a period of twelve (12)
months beyond the Completion Date (as hereinafter defined). Notwithstanding
anything to the contrary contained in this Lease, if prior to the date of the
casualty the originally named Landlord herein shall have transferred, conveyed
or assigned the demised premises and/or this Lease to a party which is not an
Affiliate of such Landlord (as the term Affiliate is defined in Article 13)
payment on the Letter of Credit other than during the last sixty (60) days of
the term thereof may be conditioned upon a certification by the then Landlord to
the issuing bank the Tenant is in default under this Lease.
(b) All of the insurance proceeds payable under insurance policies
maintained by Tenant pursuant to Article 19 as a result of the casualty shall be
paid to Landlord. In the event the Improvements are self-insured at the time of
the casualty, Tenant shall pay to Landlord on or before the expiration of
forty-five (45) days after the date of the casualty an amount equivalent to the
insurance proceeds that would have been paid had insurance been in force, but
not to exceed eighty (80) percent of the full replacement cost of the
Improvements, unless Tenant shall have theretofore furnished to Landlord the
Letter of Credit.
(c) Not later than forty-five (45) days after the date of the casualty,
Tenant shall commence the Restoration Work. Completion (as hereinafter defined)
of the Restoration Work must occur within 180 days after the Completion Date,
and, notwithstanding anything to the contrary contained in this Lease, Tenant
shall be deemed to be in default under the terms of this Lease if Completion
does not occur within said 180 day period. Tenant shall be obligated to repair
and restore the demised premises to substantially the same condition as before
the casualty, notwithstanding the fact that insurance proceeds or proceeds from
self insurance may not be adequate to pay the Costs in full.
(d) There shall be no abatement of rental or other charges payable by
Tenant under the terms of this Lease during the period of repairs or
restoration.
(e) Landlord, as separate covenants with Tenant and without imposing
conditions on the right of Landlord to draw on the Letter of Credit by sight
draft or restricting the obligation of the issuing bank to pay upon said Letter
of Credit upon presentation of a sight draft from Landlord identifying the
Letter of Credit, shall have the right to draw on the Letter of Credit only
during the last sixty (60) days of the term of the Letter of Credit or at such
earlier date on which Tenant shall be in default under the terms of this Lease.
(f) In the event Tenant is in default under the provisions of the second
subparagraph (c) of this Article 20, Landlord shall have the right, but not the
obligation, in its sole discretion, to cause the Restoration Work to be
completed in whole or in part to the satisfaction of Landlord. For the purposes
of
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<PAGE>
performing all work which may be necessary to the full exercise of the
rights granted to Landlord pursuant to this subparagraph (f), Landlord, its
agents, contractors and consultants and their respective agents, employees,
contractors and materialmen shall have the right to enter upon and use the
demised premises without being or becoming liable for any damages resulting
to Tenant from such actions.
(g) Landlord may use the insurance proceeds and proceeds obtained
from payment to it on the Letter of Credit to pay (i) all costs and
expenses of work performed pursuant to the provisions of subparagraph (f)
of this Article 20, including but not limited to architectural, engineering
and consultant's fees, all charges for work performed and materials
furnished and reasonable fees of independent legal counsel and (ii) all
charges for labor performed, services rendered and materials furnished in
connection with the Restoration Work performed, rendered or furnished
prior to the date Landlord exercises its rights under subparagraph (f) of
this Article 20 which have not been paid by Tenant. In the event such
proceeds are insufficient to make all payments authorized in this
paragraph, Tenant shall be and remain liable to Landlord for the payment
of any deficiency. In the event any of such proceeds remain unexpended by
Landlord thirty (30) days after the last date on which any contractor,
subcontractor, laborer or materialman who performs labor or furnishes
labor, material or services in connection with the Restoration Work or work
which may be performed pursuant to subparagraph (f) could perfect a lien
pursuant to the provisions of Chapter 53 of the Texas Property Code, as
amended, such remaining proceeds shall be paid to Tenant.
(h) Upon request from Landlord, Tenant agrees to promptly furnish to
Landlord such information and documentation relating to the design and
construction of Restoration Work as Landlord may reasonably request,
including but not limited to construction contracts and subcontracts,
agreements with architects and engineers, working plans and specifications,
permits and licenses, inspection reports, draw requests and cost
certifications. Upon Completion, Tenant shall furnish to Landlord a
complete set of the as-built plans and specifications for the Restoration
Work and an as-built survey of the demised premises after Completion
certified to Landlord in substantially the form of the Survey Certificate
attached as Exhibit "D" to that certain Agreement of Sale dated ___________
between Tenant, as Seller, and Landlord, as Buyer, covering the demised
premises.
(i) In connection with the design and construction (including
demolition work, if any) of Restoration Work, Tenant shall comply with and
observe all laws, codes, rules, regulations, and restrictions applicable to
(i) such design and construction and (ii) the demised premises.
For the purposes of this Article 20 the term "Completion" is defined to
mean the substantial completion of the Restoration Work in accordance with the
plans and specifications therefor as evidenced by (i) a certificate
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addressed to Landlord and Tenant, in form and substance acceptable to
Landlord, from Tenant's independent architect to the effect that the
Restoration Work has been built in accordance with the plans and
specifications, are in compliance with all codes, rules, regulations
and restrictions applicable to (x) such construction or (y) the
demised premises and have been substantially completed, (ii) the
issuance to Tenant of a certificate of occupancy for the Restoration
Work by the governmental authority having jurisdiction to issue the
same and (iii) the written certification by Tenant to Landlord, in
form and substance satisfactory to Landlord, that the Restoration Work
has been constructed in accordance with the plans and specifications
therefor and in compliance with all laws, codes, rules, regulations
and restrictions applicable thereto, that after Completion the demised
premises are in compliance with all laws, codes, rules, regulations
and restrictions applicable to the demised premises, that the
Restoration Work does not impair the Value of the demised premises and
that all bills and charges for labor performed, services rendered and
materials furnished in connection with the Restoration Work have been
paid, said certification to be accompanied by lien waivers or releases
from all contractors, subcontractors, materialmen and laborers who
performed services or labor or furnished materials with respect to the
Restoration Work. The term "Completion Date" is defined for the
purposes of this Article 20 as the original date specified in the
initial construction contract, before any amendments, modifications or
changes thereto or change orders relating thereto, for substantial
completion of the Restoration Work, a copy of which contract shall be
furnished by Tenant to Landlord. The term "Costs" is defined for the
purposes of this Article 20 to mean the greater of (i) the estimated
total costs and expenses (including all "soft costs") of designing and
constructing (including demolition costs, if any) the Restoration Work
as submitted in writing to Landlord by Tenant prior to commencement of
the Restoration Work or (ii) if Landlord, in its sole discretion,
disagrees with the estimate submitted by Tenant, then such estimated
total costs and expenses as Landlord may determine, in its sole
discretion, and submit to Tenant within twenty (20) days after receipt
of Tenant's estimate. The term "Value" as used in this Article 20 is
defined to mean the fair market value of the demised premises assuming
the completion of the Restoration Work, as estimated by Landlord in
its sole discretion.
Any costs connected with filing applications for building permits
or authorizations for any work required under this Article 20, or
processing or obtaining the same shall be borne by Tenant. Landlord,
at Tenant's cost, shall cooperate with Tenant in securing building or
other permits or authorizations required from time to time for any
work required under this Article 20.
Eminent
Domain 21. As used herein, the term "Taking" refers to a permanent
------ taking during the Lease Term of all or any part of the demised
premises or of Tenant's leasehold interest with respect thereto, as
the result of or in lieu of or in anticipation of the exercise of the
right of condemnation or of eminent domain for any public or
quasi-public use under any governmental law, ordinance or regulation
including, without limitation, a sale to a condemning authority in
lieu of condemnation. As used herein, the term "Total Taking" shall
refer to a Taking of the whole
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<PAGE>
or substantially the whole of the demised premises. As used herein, the
term "Partial Taking" shall refer to a Taking of less than the whole of the
Improvements or the demised premises. As used herein, the term "Tender
Date" shall refer to the earlier of (i) the date physical possession of the
demised premises or any portion thereof is tendered to the condemning
authority or (ii) the date physical possession of the demised premises or
any portion thereof is taken by the condemning authority. As used in
this Article 21, the term "Restoration Work" is defined to mean the work
necessary to repair and restore the demised premises to substantially the
same condition as before the Partial Taking insofar as possible. For the
purposes of this Article 21 the term "Completion" is defined to mean the
substantial completion of the Restoration Work in accordance with the plans
and specifications therefor as evidenced by (i) a certificate addressed to
Landlord and Tenant, in form and substance acceptable to Landlord, from
Tenant's independent architect to the effect that the Restoration Work has
been built in accordance with the plans and specifications, are in
compliance with all codes, rules, regulations and restrictions applicable
to (x) such construction or (y) the demised premises and have been
substantially completed, (ii) the issuance to Tenant of a certificate of
occupancy for the Restoration Work by the governmental authority having
jurisdiction to issue the same and (iii) the written certification by
Tenant to Landlord, in form and substance satisfactory to Landlord, that
the Restoration Work has been constructed in accordance with the plans and
specifications therefor and in compliance with all laws, codes, rules,
regulations and restrictions applicable thereto, that after Completion the
demised premises are in compliance with all laws, codes, rules,
regulations and restrictions applicable to the demised premises, and that
all bills and charges for labor performed, services rendered and materials
furnished in connection with the Restoration Work have been paid, said
certification to be accompanied by lien waivers or releases from all
contractors, subcontractors, materialmen and laborers who performed
services or labor or furnished materials with respect to the Restoration
Work. The term "Completion Date" is defined for the purposes of this
Article 21 as the original date specified in the initial construction
contract, before any amendments, modifications or changes thereto or change
orders relating thereto, for substantial completion of the Restoration
Work, a copy of which contract shall be furnished by Tenant to Landlord.
The term "Costs" is defined for the purposes of this Article 21 to mean the
greater of (i) the estimated total costs and expenses (including all "soft
costs") of designing and constructing (including demolition costs, if any)
the Restoration Work as submitted in writing to Landlord by Tenant prior to
commencement of the Restoration Work or (ii) if Landlord, in its sole
discretion, disagrees with the estimate submitted by Tenant, then such
estimated total costs and expenses as Landlord may determine, in its sole
discretion, and submit to Tenant within twenty (20) days after receipt of
Tenant's estimate. The term "Value" as used in this Article 21 is defined
to mean the fair market value of the demised premises assuming the
completion of the Restoration Work, as estimated by Landlord in its sole
discretion.
Any costs connected with filing applications for building permits or
authorizations for any work required under this Article 21, or processing
or obtaining the same shall be borne by Tenant. Landlord, at Tenant's cost,
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shall cooperate with Tenant in securing building or other permits or
authorizations required from time to time for any work required under this
Article 21.
In the event of a Total Taking during the Lease Term, such Total Taking
shall be deemed to have caused this Lease to terminate and the Lease Term to
expire on the Tender Date.
If at any time during the Lease Term a Partial Taking occurs, then:
(a) If the Partial Taking involves a Taking of more than
75,000 square feet of usable area (as defined in the third paragraph (a)
of this Article 21) in the building existing on the Land on the date of
this Lease, Tenant shall have the option to terminate this Lease by
giving Landlord written notice of such termination within thirty (30)
days after the Tender Date of the usable area, such termination to be
effective as of the date of the tender or taking of physical possession.
(b) If the Partial Taking results in the total denial of
access by Tenant to (i) any utility necessary to service the
demised premises, (ii) all of the parking areas on the Land or (iii) the
building located on the Land as of the date of this Lease, or if as a
result of such Partial Taking the parking area or spaces on the demised
premises remaining after such Partial Taking are inadequate to satisfy
zoning or parking ordinances or regulations applicable to the demised
premises as applied to the Improvements existing on the date of this
Lease or restrictive covenants applicable to the demised premises
improved only by the Improvements existing on the date of this lease
(the requirements of which shall be reduced by any modifications or
waivers thereof made or granted prior to the date of the Partial Taking)
and substitute or alternate areas for parking necessary to bring the
demised premises into compliance with such ordinances, regulations or
restrictive covenants are not available on the demised premises for
reasons other than the construction of additional buildings or
structures on the demised premises by Tenant after the date of this
Lease, Tenant shall have the option to terminate the Lease by giving
Landlord written notice of such termination within thirty (30) days
after the Tender Date of that portion of the demised premises involved
in the Taking, such termination to be effective as of the date of the
Tender Date.
(c) If more than 75,000 square feet of usable area in the
building existing on the Land as of the date of this Lease is involved
in the Partial Taking, Landlord shall have the option to terminate this
Lease by giving Tenant written notice of such termination within thirty
(30) days after the Tender Date of the usable area, such termination to
be effective as of the last described date.
In the event this Lease should be terminated pursuant to this Article
21, any rent paid for occupancy subsequent to the effective termination date
shall be refunded to Tenant, and Tenant shall have sixty (60) days, rent free,
within which to remove its property from the demised premises.
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If this Lease is not terminated as provided above in this Article 21
as a result of a Partial Taking, then the following provisions shall be
applicable:
(a) Within forty-five (45) days after the Tender Date and before
Restoration Work is commenced Tenant shall cause to be issued to
Landlord by a national banking institution acceptable to Landlord an
unconditional irrevocable sight draft letter of credit ("Letter of
Credit") in an amount equal to 125% of the Costs. The Letter of Credit
shall be for a term extending for a period of twelve (12) months
beyond the Completion Date.
(b) All damages awarded for such Partial Taking shall be
deposited in an account with a national banking institution acceptable
to Landlord under the joint control of Landlord and Tenant. Upon
Completion by Tenant there shall be disbursed from such joint account
to Tenant an amount up to the Costs, and any balance remaining in the
joint Account after such disbursement shall be disbursed to Landlord.
(c) Not later than forty-five (45) days after the Tender Date,
Tenant shall commence the Restoration Work. Completion of the
Restoration Work must occur within 180 days after the Completion Date,
and, notwithstanding anything to the contrary contained in this Lease,
Tenant shall be deemed to be in default under the terms of this Lease
if Completion does not occur within said 180 day period. Tenant shall
be obligated to repair and restore the demised premises to
substantially the same condition as before the Partial Taking,
notwithstanding the fact that damages awarded for such Partial Taking
may not be adequate to pay the Costs in full.
(d) Landlord, as separate covenants with Tenant and without
imposing conditions on the right of Landlord to draw on the Letter of
Credit by sight draft or restricting the obligation of the issuing
bank to pay upon said Letter of Credit upon presentation of a sight
draft from Landlord identifying the Letter of Credit, shall have the
right to draw on the Letter of Credit only during the last sixty (60)
days of the term of the Letter of Credit or at such earlier date on
which Tenant shall be in default under the terms of this Lease.
(e) In the event Tenant is in default under the provisions of the
second subparagraph (c) of this Article 21, Landlord shall have the
right, but not the obligation, in its sole discretion, to cause the
Restoration Work to be completed in whole or in part to the
satisfaction of Landlord. For the purposes of performing all work
which may be necessary to the full exercise of the rights granted to
Landlord pursuant to this subparagraph (e), Landlord, its agents,
contractors and consultants and their respective agents, employees,
contractors and materialmen shall have the right to enter upon and use
the demised premises without being or becoming liable for any damages
resulting to Tenant from such actions.
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(f) Landlord may use the proceeds from the Condemnation Award and
proceeds obtained from payment to it on the Letter of Credit to pay (i) all
costs and expenses of work performed pursuant to the provisions of
subparagraph (e) of this Article 21, including but not limited to
architectural, engineering and consultant's fees, all charges for work
performed and materials furnished and reasonable fees of independent legal
counsel and (ii) all charges for labor performed, services rendered and
materials furnished in connection with the Restoration Work performed,
rendered or furnished prior to the date Landlord exercises its rights
under subparagraph (e) of this Article 21 which have not been paid by
Tenant. In the event such proceeds are insufficient to make all payments
authorized in this paragraph, Tenant shall be paid and remain liable to
Landlord for the payment of any deficiency. In the event any of such
proceeds remain unexpended by Landlord thirty (30) days after the last date
on which any contractor, subcontractor, laborer or materialman who performs
labor or furnishes labor, material or services in connection with the
Restoration Work or work which may be performed pursuant to subparagraph
(e) could perfect a lien pursuant to the provision of Chapter 53 of the
Texas Property Code, as amended, such remaining proceeds shall be paid to
Tenant.
(g) Upon request from Landlord, Tenant agrees to promptly furnish to
Landlord such information and documentation relating to the design and
construction of Restoration Work as Landlord may reasonably request,
including but not limited to construction contracts and subcontracts,
agreements with architects and engineers, working plans and specifications,
permits and licenses, inspection reports, draw requests and cost
certifications. Upon Completion, Tenant shall furnish to Landlord a
complete set of the as-built plans and specifications for the Restoration
Work and an as-built survey of the demised premises after Completion
certified to Landlord in substantially the form of the Survey Certificate
attched as Exhibit "D" to that certain Agreement of Sale dated
______________ between Tenant, as Seller, and Landlord, as Buyer, covering
the demised premises.
(h) In connection with the design and construction (including
demolition work, if any) of Restoration Work, Tenant shall comply with and
observe all laws, codes, rules, regulations and restrictions applicable to
(i) such design and construction and (ii) the demised premises.
If a Partial Taking involves less than 75,000 square feet of usable area in
the building existing on the Land on the date of this Lease, then the annual
rent rate payable during the remainder of the Lease Term commencing with the
first day of the first full calendar month following the calendar month in which
the Tender Date occurs shall be the greater of the following:
(a) The annual rent payable pursuant to the provisions of Article 3
multiplied by a fraction the numerator of which is the number of square
feet of usable area remaining in the building existing on the Land after
the Partial Taking and the denominator of which is the number of square
feet of usable area in
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such building immediately prior to such Partial Taking. For
the purposes of this Article 21, the term "usable area" is
defined to mean the gross square footage of building area
enclosed within the interior surface of the exterior walls of
the building, and, as of the date of this Lease, is deemed to
be 470,182 square feet; or
(b) An annual rental computed in accordance with the
following formula: ($11,500,000.00 minus Net Award) X Rental
Percentage. For the purposes of the above stated formula the
term "Net Award" is defined to mean the award made to the
Landlord or the proceeds of sale realized by Landlord
resulting from a taking for public or quasi-public purposes
less (i) attorneys fees and other costs and expenses incurred
by Landlord in connection with obtaining the award or
consummating the sale and (ii) the portion of such award or
proceeds used by Landlord and/or made available to Tenant to
pay for or reimburse Tenant for the Costs of Restoration
Work. For the purposes of the above stated formula "Rental
Percentage" is defined to mean the percentage set forth below
for the year in which the Tender Date Occurs:
Years 1-5 9.1 %
Years 6-10 9.5 %
Years 11-15 10.0 %
Years 16-20 10.5 %
Years 21-25 11.0 %
1st Renewal option 12.1 %
2nd Renewal option 13.3 %
3rd Renewal option 14.6 %
4th Renewal option 16.1 %
5th Renewal option 17.7 %
6th Renewal option 19.5 %
Provided, however, in no event shall the Tenant be required to
pay rent at an annual rental rate which exceeds the annual
rental rates set forth in Article 3 of this Lease. There shall
be no other abatement of rental or other charges payable by
Tenant as a result of a Partial Taking under this Lease.
All damages awarded for a Taking hereunder which results in a
termination of this Lease shall belong to the Landlord; nothing
herein contained, however, shall prevent Tenant from claiming,
proving, collecting (from the condemning authority) and
retaining any damages separately awarded to the Tenant by the
condemnor for Tenant's fixtures and leasehold improvements,
relocation costs, lost business or for any other damage
separately compensable to Tenant by the condemnor without
causing or resulting in a reduction of any award to Landlord.
Landlord makes no representation or warranty that any such
separate award or compensation is available under applicable
law.
Assignment
and Subletting
-------------- 22. (a) Tenant shall not (i) assign this Lease or any
interest therein, or (ii) sublease the demised premises or any
portion thereof except in accordance with the terms and
covenants of this Article 22. Any attempted assignment or
sublease by Tenant in violation of the terms and covenants of
this Article 22 shall be void. If Tenant is not a natural
person, the acquisition of a controlling interest in Tenant
shall be deemed to be an assignment for
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purposes hereof. As used herein, the phrase "controlling interest" shall mean
ownership of in excess of forty-nine percent (49%) of the voting interest in
Tenant. Notwithstanding the provisions of this Article 22, Tenant may, upon
written notice to Landlord but without the necessity of obtaining Landlord's
consent and without the necessity to comply with the provisions of subparagraph
(b) of this Article 22, assign this Lease or sublet the demised premises to an
"Affiliate." As used herein, the term "Affiliate" shall mean any entity under
common control of a person or entity which controls Tenant or which is
controlled by Tenant. Notwithstanding any assignment or sublease to an
Affiliate, Tenant shall remain liable for payment of all rents and the
performance and compliance with all other obligations and liabilities imposed
upon Tenant hereunder.
(b) In the event Tenant desires to assign this Lease or sublet all (but not
less than all) of the demised premises, Tenant shall give Landlord written
notice thereof ("Tenant's Notice"). If, as of the date of Tenant's Notice,
Tenant has received or made a proposal for an assignment of the Lease or a
sublease of the entire demised premises or has had communications with a third
party regarding the same, Tenant's Notice shall identify the party to or from
whom the proposal was made or received or the party with whom Tenant has had
communications regarding a possible assignment or sublease. Landlord may request
from Tenant such additional information and materials relating to the aforesaid
proposal or communications as may be within Tenant's knowledge or control.
During a period of two hundred ten (210) days after receipt of Tenant's Notice
("Negotiation Period"), Landlord shall have an absolute right to negotiate
directly with third parties (including the party or parties identified in
Tenant's Notice) for a lease covering the demised premises. At any time prior to
the expiration of the Negotiation Period, Landlord may terminate this Lease by
giving Tenant written notice of termination ("Landlord's Notice") and this Lease
shall terminate thirty (30) days after the date of Landlord's Notice. In the
event Landlord does not give Landlord's Notice as provided in the immediately
preceding sentence, then from and after the expiration of the Negotiation Period
Tenant shall have the right to assign this Lease or sublease the entire demised
premises (but not less than all of the demised premises) without the necessity
for obtaining Landlord's consent, provided (i) any such assignment or sublease
is subject to the terms and provisions of this Lease, including but not limited
to subparagraphs (c) and (d) of this Article 22 and Article 47 and (ii) Tenant
shall remain primarily liable for payment of all rents and the performance and
compliance with all other obligations and liabilities imposed upon Tenant under
this Lease notwithstanding such assignment or sublease.
(c) Notwithstanding the provisions of subparagraphs (a) and (b) of this
Article 22, no assignment of this Lease or sublease of the demised premises
pursuant to the provisions of subparagraphs (a) or (b) of this Article 22 shall
be effective until such time as Landlord receives evidence satisfactory to
Landlord that (i) the proposed subtenant or assignee will use the demised
premises in accordance with Article 47 hereof, for the remainder of the Lease
Term, or for the entire term of any sublease, if such expires prior to the
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expiration of the Lease Term; (ii) the occupancy of the demised
premises by the proposed third party would not increase fire hazards,
require substantial alterations to the demised premises, or adversely
affect the reputation and image of the demised premises; and (iii) the
third party is not owned or controlled by a foreign government,
involved in lobbying activities, or reputed to be involved in illegal
or illicit activities.
(d) No assignment or sublease by Tenant permitted
under the terms of this Article 22 shall be effective until Tenant has
furnished Landlord with a true and correct copy of the assignment or
sublease and, with respect to an assignment or sublease pursuant to
subparagraph (b) of this Article 22, until Landlord has been furnished
with the evidence as required by subparagraph (c) of this Article 22.
In the event of an assignment or sublease by Tenant pursuant to the
provisions of subparagraph (b) of this Article 22, no assignee or
sublessee or any subsequent assignee or sublessee shall have (i) any
options to extend the term of this Lease as provided in Article 12
beyond the expiration of the then current term of this Lease; (ii) any
right to make Additional Improvements or Demolition Improvements
pursuant to Article 15; or (iii) any right to self-insure in any of
the amounts or against any of the perils as provided in Article 19.
Notwithstanding any assignment or sublease made in compliance with
this Article 22 or the collection by Landlord of rent from any
assignee or sublessee, Tenant shall remain primarily 1iable for
payment of all rents and the performance and compliance with all other
obligations and liabilities imposed upon Tenant under this Lease.
Signs 23. During the Lease Term and the continued occupancy of the
----- entire demised premises by Tenant, the demised premises shall be
referred to by only such designation as Tenant may indicate. Landlord
expressly recognizes that Tenant claims the service mark and trademark
"K mart" as valid and exclusive property of Tenant, and Landlord
agrees that it shall not either during the Lease Term or thereafter,
directly or indirectly, contest the validity of said mark "K mart" or
any of Tenant's registrations pertaining thereto in the United States
or elsewhere, nor adopt or use said mark or any term, word, mark or
designation which is in any aspect similar to the mark of Tenant.
Landlord further agrees that it will not at any time do or cause to be
done any act or thing directly or indirectly, contesting or in any way
impairing or tending to impair any part of the Tenant's right, title
and interest in the aforesaid mark, and Landlord shall not in any
manner represent that it has ownership interest in the aforesaid mark
or registrations therefor, and specifically acknowledges that any use
thereof pursuant to this Lease shall not create in Landlord any right,
title or interest in the aforesaid mark.
Ingress
and
Egress 24. Landlord warrants, as a consideration for Tenant
------ entering into this Lease, that it will refrain from taking any steps
to interfere with the ingress and egress facilities to public streets
and highways in the number and substantially in the locations existing
on the date of this Lease, subject to unavoidable temporary closings
or temporary relocations necessitated by public authority, or other
circumstances beyond Landlord's control.
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Landlord's
Remedies
-------- 25. (a) The following events shall be deemed to be
events of default by Tenant under this Lease: (i) Tenant shall
fail to pay any rent or other sum of money due hereunder and such
failure shall continue for a period of ten (10) business days
after the date such sum is due; (ii) Tenant shall fail to comply
with any provision of this Lease or any other agreement between
Landlord and Tenant not requiring the payment of money, all of
which terms, provisions and covenants shall be deemed material
and such failure shall continue for a period of thirty (30) days
after written notice of such default is delivered to Tenant, or
if such condition cannot reasonably be cured within such thirty
(30) day period, Tenant shall fail to commence to cure such
condition within such thirty (30) day period and/or shall
thereafter fail to prosecute such cure diligently and
continuously to completion within ninety (90) days of the date of
Landlord's notice of such default; (iii) the leasehold hereunder
demised shall be taken on execution or other process of law in
any action against Tenant; (iv) Tenant shall cease to do business
in (except for temporary periods necessary to prepare the demised
premises or a portion thereof for occupancy by an assignee or
sublessee permitted under the terms of this Lease) or abandon any
portion of the demised premises; (v) Tenant shall become
insolvent or unable to pay its debts as they become due, or
Tenant notifies Landlord that it anticipates either condition; or
(vi) a receiver or trustee shall be appointed for Tenant's
leasehold interest in the demised premises or for all or a
substantial part of the assets of Tenant and such receiver or
trustee shall not be discharged within (90) days of appointment.
(b) Upon the occurrence of any event or events of
default by Tenant, Landlord shall have the option to pursue any
one or more of the following remedies without any notice [except
for such notice expressly required by Article 25(a)(ii) or
applicable law] or demand for possession whatsoever (and without
limiting the generality of the foregoing, Tenant hereby
specifically waives notice and demand for payment of rent or
other obligations due and waives any and all other notices or
demand requirements except as imposed by applicable law): (i)
terminate this Lease, in which event Tenant shall immediately
surrender the demised premises to Landlord; (ii) terminate
Tenant's right to occupy the demised premises and re-enter and
take possession of the demised premises (without terminating this
Lease); (iii) enter upon the demised premises and do whatever
Tenant is obligated to do under the terms of this Lease; and
Tenant agrees to reimburse Landlord on demand for any expenses
which Landlord may incur in effecting compliance with Tenant's
obligations under this Lease, and Tenant further agrees that
landlord shall not be liable for any damages resulting to the
Tenant from such action; and (iv) exercise all other remedies
available to Landlord at law or in equity including, without
limitation, injunctive relief of all varieties.
(c) In the event Landlord elects to re-enter or take
possession of the demised premises after Tenant's default, Tenant
hereby waives notice of such re-entry or repossession except to
the extent required by law and of Landlord's intent to re-enter
or retake possession. Landlord may, without prejudice to any
other remedy which it may have for possession arrearages in or
future rent, expel or remove Tenant and any other person who may
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be occupying said demised premises or any part thereof. The rental provisions
for holding over of Article 32 hereof shall apply with respect to the period
from and after the giving of notice of such repossession by Landlord. In
additio |
