<PAGE>
EXHIBIT 10.7
BASIC LEASE INFORMATION
(Office Lease Agreement)
LANDLORD: Brookdale Investors, L.P.
<TABLE>
<S> <C> <C>
A. BUILDING: The Belvedere
B. ADDRESS (for notices): 14881 Quorum Drive A COPY TO: 3343 Peachtree Road, Suite 510
Dallas, Texas 75240 Atlanta, Georgia 30326
Attn: Property Manager Attention: Fred H. Henritze
C. TELEPHONE: 214-866-8808
</TABLE>
TENANT: ObjectSpace, Inc., a Texas Corporation
A. PREMISES: The spaces known as Suite 600 as identified on EXHIBIT "B"
hereto located on floor 6 of the Building as described in the Lease.
B. ADDRESS (for notices):
Prior to occupancy: After occupancy:
14881 Quorum Drive 14881 Quorum Drive
Suite 400 Suite 600
Dallas, Texas 75240 Dallas, Texas 75240
Attn: __________________ Attn: __________________
Telephone: _____________ Telephone: _____________
BASE RENTAL: February 13, 1998 - February 28, 1999 $21,755.00 per month
March 1, 1999 - February 29, 2000 $22,298.88 per month
March 1, 2000 - February 28, 2001 $23,842.75 per month
March 1, 2001 - February 28, 2002 $23,386.63 per month
March 1, 2002 - March 31, 2003 $23,930.50 per month
SECURITY DEPOSIT:
A. Within ten (10) days of execution of the Lease by Landlord and Tenant,
$12,939.00, to be added to the $8,816.00 Tenant currently has deposited
with Landlord, for a total of $21,755.00.
B. On January 30, 1998, the Letter of Credit in the amount of $156,545.00, to
be held by Landlord until March 1, 1999, at which time the Letter of Credit
shall be reduced by one-third (1/3) annually.
PREPAID RENTAL: $21,755.00 due and payable upon execution of the Lease.
EXPENSE BASE: 1998 actuals.
TENANT'S PRO RATA SHARE: 9.26%
COMMENCEMENT DATE: The day after the end of the Lease Term (as therein defined)
of the Previous Lease, subject to modification pursuant to Paragraph 3(a) of the
Lease which is hereby stipulated to be February 13, 1998 at 12:01 a.m.
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EXHIBIT 10.7
LEASE TERM: A period of sixty-one (61) months from the Commencement Date;
provided that if the Commencement Date is a date other than the first day of a
calendar month the Lease Term shall consist of sixty-one (61) calendar months in
addition to the remainder of the calendar month in which the Commencement Date
occurs.
RENTABLE AREA IN THE PREMISES: 13,053 square feet of Rentable Area.
RENTABLE AREA IN THE BUILDING: 140,981 square feet of Rentable Area.
LANDLORD'S AGENT(S): Transwestern Property Company/Tommy Van Zandt
SPACE PLAN APPROVAL DATE: Not Applicable
PERMITTED USE: General office.
The foregoing Basic Lease Information shall be construed in conjunction
with the references thereto contained in other provisions of the Lease and shall
be limited by such other provisions. Each reference in the Lease to any of the
foregoing Basic Lease Information shall be construed to incorporate each term
set forth hereinabove as so limited. In the event of any conflict between any
Basic Lease Information and the Lease, the terms of the Lease shall control.
2
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EXHIBIT 10.7
TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2. Lease Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3. Lease Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
4. Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5. Base Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
6. Security Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
7. Services to be Furnished by Landlord. . . . . . . . . . . . . . . . . . . . . .7
8. Improvements to be Made by Landlord . . . . . . . . . . . . . . . . . . . . . .9
9. Graphics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
10. Repairs and Alterations by Tenant . . . . . . . . . . . . . . . . . . . . . . .9
11. Use of Electrical Services by Tenant. . . . . . . . . . . . . . . . . . . . . .9
12. Entry by Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
13. Assignment and Subletting . . . . . . . . . . . . . . . . . . . . . . . . . . 10
14. Mechanic's Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
15. Property Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
16. Liability and Worker's Compensation Insurance . . . . . . . . . . . . . . . . 12
17. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
18. Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
19. Evidence of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
20. Casualty Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
21. Damages from Certain Causes . . . . . . . . . . . . . . . . . . . . . . . . . 15
22. Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
23. Events of Default/Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) Default by Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(b) Landlord's Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 16
24. Tenant Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
25. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
26. Event of Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
27. Peaceful Enjoyment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
28. Substitution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
29. Holding Over. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
30. Subordination to Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . 21
31. Attorney's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
32. Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
33. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
35. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
36. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
37. Time of Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
38. Transfers by Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
39. Commission. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
40. Joint and Several Liability . . . . . . . . . . . . . . . . . . . . . . . . . 22
41. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
42. Financial Condition of Tenant . . . . . . . . . . . . . . . . . . . . . . . . 23
43. Effect of Delivery of This Lease. . . . . . . . . . . . . . . . . . . . . . . 23
44. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
45. Roof Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
3
<PAGE>
EXHIBIT 10.7
OFFICE LEASE AGREEMENT
This Office Lease Agreement (the "LEASE"), made and entered into on this
the 5TH day of SEPTEMBER, 1997, between BROOKDALE INVESTORS, L.P. ("LANDLORD")
and OBJECTSPACE, INC., a Texas Corporation ("TENANT").
Previously, Landlord and Tenant have entered into that certain Lease
Agreement dated August 18, 1993 as amended by Amendment I dated November 30,
1994; amended by Amendment 11 dated May 9, 1995; amended by Amendment III dated
July 24, 1995; and amended by Amendment IV dated September 6, 1995; and
supplemented by Supplement I dated effective February 9, 1996, and Supplement 11
dated effective December 5, 1996, all regarding the Premises (hereinafter
defined). All of those documents together shall be referred to herein as the
"Previous Lease". The Previous Lease is replaced in its entirety by this Lease
as of the Commencement Date (hereinafter defined) of this Lease.
W I T N E S S E T H
1. DEFINITIONS. The following are definitions of some of the defined
terms used in this Lease. The definition of other defined terms are found
throughout this Lease.
(a) "BUILDING" shall mean the office building located upon the
real property (the "PROPERTY") together with all appurtenances thereto,
with a street address of 14881 Quorum Drive, Dallas, Texas.
(b) "BASE RENTAL" shall mean the following sums per month for
each of the stated years of the Lease Term for a total of $1,406,927.05
during the Lease Term, as adjusted pursuant to EXHIBIT "C" hereto:
<TABLE>
<S> <C>
February 13, 1998 - February 28, 1999 $21,755.00 per month
March 1, 1999 - February 29, 2000 $22,298.88 per month
March 1, 2000 - February 28, 2001 $23,842.75 per month
March 1, 2001 - February 28, 2002 $23,386.63 per month
March 1, 2002 - March 31, 2003 $23,930.50 per month
</TABLE>
The Base Rental due for the first month during file "Lease Term"
(hereinafter defined) has been deposited with Landlord by Tenant
contemporaneously with the execution hereof.
(c) "BASIC COSTS" shall mean all direct and indirect costs and
expenses incurred in connection with the Building as more fully
defined in EXHIBIT "C" attached hereto.
(d) "SECURITY DEPOSIT" shall mean:
(1) The slim of $12,939.00 to be paid by Tenant to
Landlord within ten (10) days after the execution of this
Lease by Landlord and Tenant which shall be added to the
$8,816.00 Tenant currently has deposited with Landlord, for
a total of $21,755.000; and
(2) An irrevocable, automatically renewable letter of
credit (the "LETTER OF CREDIT") to Landlord's benefit, on
terms acceptable to Landlord, in the amount of $156,545.00,
shall be delivered by Tenant to Landlord on January 30,
1998. The Letter of Credit shall be held by Landlord as
additional security for Tenant's obligations under this
Lease until March 1, 1999, at which time the amount of the
Letter of Credit shall be reduced by onethird (1/3), with
additional annual reductions in the same amount each March
1 thereafter.
(e) "COMMENCEMENT DATE" shall mean the day after the date which
is the end of the Lease Term (as therein defined) of the Previous
Lease which is hereby stipulated to be February 13, 1998 at 12:01
a.m. (except as the same may be delayed pursuant to the provisions
of Paragraph 3(a) hereof).
4
<PAGE>
EXHIBIT 10.7
(f) "LEASE TERM" shall mean a term commencing on the
Commencement Date and continuing until March 31, 2003.
(g) "PREMISES" shall mean Suite 600 located within the Building
and outlined on EXHIBIT "B" to this Lease. The Premises are
stipulated for all purposes to contain approximately 13,053 square
feet of "Rentable Area" (as defined below).
(h) "RENTABLE AREA" shall mean the area contained within the
demising walls of the Premises and any other area designated for
the exclusive use of Tenant plus an allocation of the (as defined
below). The Rentable Area in the Building is deemed to be 140,981
square feet.
(i) "COMMON AREAS" shall mean those areas devoted to corridors,
elevator foyers, mail rooms, restrooms, mechanical rooms, elevator
mechanical rooms, janitorial closets, electrical and telephone
closets, vending areas, and lobby areas (whether at ground level
or otherwise), and other similar facilities provided for the
common use or benefit of tenants generally and/or the public.
(j) "SERVICE AREAS" shall mean those areas within the outside
walls of the Building used for stairs, elevator shafts, flues,
vents, stacks, pipe shafts and other vertical penetrations (but
shall not include any such areas for the exclusive use of a
particular tenant).
(k) "BUILDING STANDARD" when used herein, shall mean the type,
brand, quality and/or quantity of materials Landlord designates
from time to time to be the minimum quality and/or quantity to be
used in the Building or the exclusive type, grade, quality and/or
quantity of material to be used in the Building and shall include,
but not be limited to, the Building Standard Materials defined in
the Work Letter Agreement attached hereto as EXHIBIT "D".
(l) "MAXIMUM RATE", when used herein, shall mean the greatest
of the rates of interest from time to time permitted under
applicable federal and state law. To the extent of the
applicability of Article 5069-1.04, as amended, Texas Revised
Civil Statutes, the Maximum Rate shall be the highest permitted
rate based upon the "indicated rate ceiling", but to the extent
now or hereafter permitted by Texas law, Landlord may from time to
time implement, withdraw and reinstate any ceiling as an
alternative to the indicated rate ceiling, including the right to
reinstate the indicated rate ceiling.
(m) "PRIME RATE" shall mean the per annum interest rate
announced by Texas Commerce Bank from time to time (whether or not
charged in each instance) as its prime or base rate.
(n) "NORMAL BUSINESS HOURS" for the Building shall mean 8:00
a.m. to 6:00 p.m. Mondays through Fridays, and 8:00 a.m. to 1:00
p.m. on Saturdays, exclusive of the normal business holidays of
New Years Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
(o) "BUSINESS DAY(s)" shall mean Mondays through Fridays
exclusive of the normal business holidays of New Year's Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
2. LEASE GRANT. Subject to and upon the terms herein set forth,
Landlord leases to Tenant and Tenant leases from Landlord the Premises.
3. LEASE TERM.
(a) Subject to and upon the terms and conditions set forth in
this Lease, this Lease shall continue in force for the Lease Term.
5
<PAGE>
EXHIBIT 10.7
(b) The taking of possession of the Premises by Tenant shall be
conclusive evidence against Tenant that (i) Tenant warrants and
represents to Landlord that it has conducted its own independent
investigation of the Premises and that the Premises are suitable
for the purpose for which the same are leased, (ii) the Property
and the Building and each and every part and appurtenance thereof
are in good and satisfactory condition, except for any defect
which is not discoverable upon a reasonable inspection, and (iii)
Tenant waives any defects in the Premises and its appurtenances
and in all other parts of the Building and the appurtenances
thereto, except for any defect which is not discoverable upon a
reasonable inspection, but such acceptance shall not limit
Landlord's obligations set forth elsewhere in this Lease.
4. USE. The Premises shall be used for office purposes, which
includes, but is not limited to, conference and computer facilities, a
non-commercial employee kitchen and related facilities, and other legally
permitted business office uses consistent with the characteristics of a
first-class office building in Dallas, Texas, (the "PERMITTED USE") and
for no other purpose. Tenant agrees not to use or permit the use of the
Premises for any purpose which is illegal, dangerous to life, limb or
property or which, in Landlord's opinion, creates a nuisance or which
would increase the cost of insurance coverage with respect to the
Building. In the event there shall be any increase in the cost of
insurance coverage with respect to the Building which results from
Tenant's acts or conduct of business, then Tenant hereby agrees to pay
the amount of such increase on demand. Tenant will conduct its business
and control its agents, servants, employees, customers, licensees, and
invitees in such a manner as not to interfere with, annoy or disturb
other tenants or Landlord in the management of the Building. Tenant will
maintain the Premises in a clean and healthful condition, and comply with
all laws, ordinances, orders, rules and regulations of any governmental
entity with reference to the use, condition or occupancy of the Premises.
Tenant will comply with the rules and regulations of the Building adopted
and altered by Landlord from time to time and will cause all of its
agents, employees, invitees and visitors to do so. All changes to such
rules and regulations will be sent by Landlord to Tenant in writing. A
copy of the existing rules and regulations is attached hereto as Exhibit
"H" and made a part hereof. Tenant agrees not to commit or allow any
waste to be committed on any portion of the Premises, and at the
termination of this Lease to deliver up the Premises to Landlord in as
good condition as at the Commencement Date, ordinary wear and tear
excepted. The terms of this Lease shall control over any conflict with
rules and regulations. Rules and regulations cannot impose additional
economic obligations on Tenant and shall be fairly applied and enforced
by Landlord.
5. BASE RENTAL.
(a) Tenant covenants and agrees to pay during the Lease Term,
to Landlord, without any setoff or deduction whatsoever, the Base
Rental, and all such other sums of money as shall become due
hereunder as additional rent, all of which are sometimes herein
collectively called "rent." In the event of nonpayment of any such
rent, Landlord shall be entitled to exercise all such rights and
remedies as are herein provided in the case of the nonpayment of
Base Rental. Except as otherwise provided herein, the annual Base
Rental for each calendar year or portion thereof during the Lease
Term, together with any estimated adjustment thereto pursuant to
Exhibit "C" hereof then in effect, shall be due and payable in
advance in twelve (12) equal installments on the first day of each
calendar month during the initial term of this Lease and any
extensions or renewals hereof, and Tenant hereby agrees to pay
such Base Rental and any adjustments thereto to Landlord at
address provided herein (or such other address as may be
designated by Landlord in writing from time to time) monthly, in
advance, and without demand. If the term of this Lease commences
on a day other than the first day of a month or terminates on a
day other than the last day of a month, then the installments of
Base Rental and any adjustment thereto for such month or months
shall be prorated, based on the number of days in such month. The
Base Rental for the first partial month, if any, shall be payable
at the beginning of said period. All such payments shall be by a
good and sufficient check (subject to collection) drawn on a bank
acceptable to Landlord. No payment by Tenant or receipt or
acceptance by Landlord of a lesser amount than the correct
installment of rent due under this Lease shall be deemed to be
other than a payment on account of the earliest rent due
hereunder, nor shall any endorsement or statement on any check or
any letter accompanying any check or payment be deemed an accord
and
6
<PAGE>
EXHIBIT 10.7
satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance or
pursue any other remedy provided by this Lease or applicable law.
The acceptance by Landlord of an installment of rent on a date
after the due date of such payment shall not be construed to be a
waiver of Landlord's right to declare a default for any other late
payment. If Tenant fails to timely pay any two (2) installments of
rent in any consecutive twelve month period, Landlord may require
Tenant to pay rent (as estimated by Landlord, if necessary)
quarterly in advance, and, in such event, all future payments
shall be made on or before the due date in cash or by cashier's
check or money order, and the delivery of Tenant's collectible
personal or corporate check shall no longer constitute payment
thereof. Any acceptance of Tenant's collectible personal or
corporate check thereafter by Landlord shall not be construed as a
waiver of the requirement that such payments be made in cash or by
cashier's check or money order. All amounts received by Landlord
from Tenant hereunder shall be applied first to the earliest
accrued and unpaid rent then outstanding.
(b) All installments of rent not paid when due and payable
shall bear interest until paid at a per annum rate equal to the
lesser of (i) the Prime Rate plus five percent (5%) or (ii) the
Maximum Rate.
(c) The Base Rental payable hereunder shall be adjusted upward
from time to time in accordance with the provisions of EXHIBIT "C"
attached hereto and incorporated herein for all purposes.
6. SECURITY DEPOSIT. The Security Deposit shall be held by Landlord
without liability for interest and as security for the performance by
Tenant of Tenant's covenants and obligations under this Lease including
but not limited to those set forth in Paragraph 10 hereof, it being
expressly understood that the Security Deposit shall not be considered an
advance payment of rent or a measure of Tenant's liability for damages in
case of default by Tenant. Landlord may commingle the Security Deposit
with Landlord's other funds. Landlord may, from time to time, without
prejudice to any other remedy, use the Security Deposit to the extent
necessary to make good any arrearages of rent or to satisfy any other
covenant or obligation of Tenant hereunder. Following any such
application of the Security Deposit, Tenant shall pay to Landlord on
demand the amount so applied in order to restore the Security Deposit to
its original amount. If Tenant is not in default at the termination of
this Lease, the balance of the Security Deposit remaining after any such
application shall be returned by Landlord to Tenant. If Landlord
transfers its interest in the Premises during the term of this Lease,
Landlord shall assign the Security Deposit to the transferee and
thereafter shall have no further liability for the return of such
Security Deposit. Tenant agrees to look solely to such transferee or
assignee or successor thereof for the return of the Security Deposit.
Landlord and its successors and assigns shall not be bound by any actual
or attempted assignment or encumbrance of the Security Deposit by Tenant.
7. SERVICES TO BE FURNISHED BY LANDLORD. Landlord shall provide to
Tenant, at no additional or separate charge to Tenant, for the services
listed in this Paragraph 7, the level and quality of services typically
provided by landlords of buildings of the same quality as the Building
within a radius of two miles of the Building and Tenant shall be entitled
to install and operate photocopiers, telephone and telecopy equipment,
word processing equipment, computers and other equipment customarily used
in first class office space in such area without additional charge.
Charges for additional services shall not exceed Landlord's reasonable
charges. The services Landlord is obligated to provide shall include:
(a) Hot and cold water at those points of supply provided for
general use of tenants in the Building, central heat and air
conditioning in season, at such temperatures and in such amounts
as are considered by Landlord to be standard for comparable
buildings or as required by governmental authority; provided,
however, heating and air conditioning service at times other than
for Normal Business Hours for the Building shall be furnished only
upon the written request of Tenant delivered to Landlord prior to
3:00 p.m. at least one Business Day in advance of the date for
which such usage is requested. Tenant shall bear the entire cost
of additional service as such costs are determined by Landlord
from time to time. Tenant shall have the right to install separate
HVAC equipment, which will be separately metered and paid by
Tenant. The current after hours rate for HVAC is $49.00 per
7
<PAGE>
EXHIBIT 10.7
hour, with a two hour minimum, during the Lease Term. This rate
is subject to change due to changes in electricity rates charged
to Landlord.
(b) Routine maintenance and electric lighting service for all
Common Areas and Service Areas of the Building in the manner and
to the extent deemed by Landlord to be standard.
(c) Janitor service on Business Days; provided, however, if
Tenant's floor covering or other improvements require special
treatment, Tenant shall pay the additional cleaning cost
attributable thereto as additional rent upon presentation of a
statement therefor by Landlord.
(d) Subject to the provisions of Paragraph 11 hereof,
facilities to provide all electrical current required by Tenant in
its use and occupancy of the Premises.
(e) All fluorescent bulb replacement in the Premises necessary
to maintain the lighting provided by Landlord as set forth in the
Work Letter Agreement attached hereto as Exhibit "D" as a part of
the Building Standard Materials and fluorescent and incandescent
bulb replacement in the Common Areas and Service Areas.
(f) Passenger elevators for ingress and egress to and from the
floor of the Premises during Normal Business Hours and with at
least one passenger elevator available at all other times.
(g) Access control to the Building during other than Normal
Business Hours shall be provided in such form as Landlord deems
appropriate consistent with buildings of the same quality as the
Building within a radius of two miles of the Building. Coded
access cards will be provided to Tenant's authorized employees for
after hours access to the Building, and a fee will be charged by
Landlord based on its costs for such cards. Tenant also shall have
the right, at its sole cost and expense, to install and operate
such additional access control systems as it shall determine for
the purpose of limiting access to or within the Premises, provided
that Tenant gets Landlord's written approval of such systems
before installation and provided that Landlord shall be provided
access to such systems to enter Tenant's space at any time. Tenant
shall cooperate fully in Landlord's efforts to maintain access
control to the Building and shall follow all regulations
promulgated by Landlord with respect thereto.
(h) Access to Landlord's delivery docks, if any, for use only
during the construction of the Tenant Improvements (as hereinafter
defined), subject to Landlord's rules and regulations regarding
use of the delivery docks and subject to Landlord's prior written
approval of Tenant's proposed use of the delivery docks.
Except as otherwise expressly provided herein, the failure by Landlord to
any extent to furnish, or the interruption or termination of these
defined services in whole or in part, resulting from adherence to laws,
regulations and administrative orders, FORCE MAJEURE or any other causes
beyond the reasonable control of Landlord shall not render Landlord
liable in any respect nor be construed as an eviction of Tenant, nor work
an abatement of rent, nor relieve Tenant from the obligation to fulfill
any covenant or agreement hereof. Should any of the equipment or
machinery used in the provision of such services for any cause cease to
function properly, Landlord shall use reasonable diligence to repair such
equipment or machinery but, except as otherwise expressly provided
herein, Tenant shall have no claim for offset or abatement of rent or
damages on account of an interruption in service thereby or resulting
therefrom. Except as expressly provided herein, Landlord shall not be
required to make any repairs to or maintain the Premises. However, if
services are interrupted or abated for any reason, or if Landlord
interferes with Tenant's operations as a result of the exercise by
Landlord of its right to enter into the Premises, or perform services or
work with respect to any other portion of the Building, and as a result
of such interruption, Tenant cannot use the Premises in substantially the
same manner as prior to such interruption for five (5) consecutive
business days, Tenant shall have the right to abate rent on a pro rata
basis based on the amount of the Premises which are substantially
unusable until such interference is remedied. Landlord shall maintain the
Building, all structural components thereof, all base building
improvements, all mechanical, electrical, and plumbing facilities,
outside of the Premises, not including any HVAC equipment installed by
Tenant, the roof and roof membrane, all utilities, all parking areas, and
all common areas in a condition comparable to that of other buildings
comparable to the Building within a two mile radius of the Building.
8
<PAGE>
EXHIBIT 10.7
8. IMPROVEMENTS TO BE MADE BY LANDLORD. Except as otherwise provided
in the Work Letter Agreement attached hereto as EXHIBIT "D", all
installations and improvements now or hereafter placed on or in the
Premises shall be subject to the provisions of Paragraph 10 hereof and
shall be for Tenant's account and at Tenant's cost (and Tenant shall pay
ad valorem taxes and increased insurance thereon or attributable
thereto), which cost shall be payable by Tenant to Landlord upon demand
as additional rent.
9. GRAPHICS. Landlord shall provide and install, at Tenant's cost,
all letters or numerals on the exterior of the Premises; all such letters
and numerals shall be in the standard graphics for the Building and no
others shall be used or permitted on the Premises without Landlord's
prior written consent. Tenant acknowledges that the standard Building
graphics are acceptable to Tenant. Additionally Landlord, at Tenant's
sole cost, may install a monument sign bearing only Tenant's name. Before
any such installation, Landlord shall have the right to approve the
location, size, design and materials used in the sign. The sign shall be
subject to approval by all city officials and agencies governing the sign
and shall comply with all applicable laws and ordinances. At the end of
the Lease Term (and the Renewal Term, if applicable), at Landlord's
option, Tenant at Tenant's sole cost, shall remove the sign and shall
restore the Building and the Property to a condition at least as good as
that condition which existed immediately prior to the installation of the
sign.
10. REPAIRS AND ALTERATIONS BY TENANT. Tenant covenants and agrees
with Landlord, at Tenant's own cost and expense, to keep the Premises in
good condition and repair and to repair or replace any damage done to the
Building, or any part thereof, caused by Tenant or Tenant's agents,
servants, employees, customers, licensees, or invitees. Tenant further
covenants and agrees that such repairs shall restore the Building to as
good a condition as it was in prior to such damage and that such repairs
shall be effected in compliance with all applicable laws. If Tenant fails
to make such repairs or replacements promptly, Landlord may, at its
option, make such repairs or replacements, and Tenant shall pay the cost
thereof to the Landlord on demand as additional rent. Tenant agrees with
Landlord not to make or allow to be made any alterations to the Premises,
install any vending machines on the Premises, or place signs on the
Premises which are visible from outside the Premises, without first
obtaining the written consent of Landlord in each such instance, which
consent may be refused or given on such conditions as Landlord may elect.
Any and all alterations, additions and improvements to the Premises, all
attached furniture, equipment and fixtures, and any unattached and
movable equipment, furniture, trade fixtures or other personality which
was acquired with funds provided by or on behalf of Landlord shall become
the property of Landlord upon termination of this Lease. In addition, all
other personal property which shall remain in the Premises for more than
five (5) days following either the termination of this Lease or the entry
of the Premises by Landlord following Tenant's default hereunder shall,
at Landlord's option, become the property of Landlord. Landlord shall,
nonetheless, require Tenant to remove such fixtures, furniture, trade
fixtures, equipment, improvements, alterations, additions and personal
property installed on or located in the Premises as are designated by
Landlord at the time plans are approved by Landlord (the "REQUIRED
REMOVABLES") at Tenant's sole cost including without limitation, any
cabling or other computer, satellite or telecommunications equipment or
hardware, whether or not such equipment cabling or hardware is located in
the Premises and repair any damage to the Premises or the Building caused
by such removal. In the event that Landlord so elects, and Tenant fails
to remove the Required Removables, Landlord may remove the Required
Removables at Tenant's cost, and Tenant shall pay Landlord on demand all
costs incurred in removing, storing and/or disposing of the Required
Removables.
11. USE OF ELECTRICAL SERVICES BY TENANT. Tenant's use of electrical
services furnished by Landlord shall not exceed, either in voltage, rated
capacity, or overall load that which Landlord deems to be standard for
the Building. In the event Tenant shall request that it be allowed to
consume electrical services in excess of that deemed by Landlord to be
standard for the Building, Landlord may refuse to consent to such usage
or
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EXHIBIT 10.7
may consent upon such conditions as Landlord elects (including the
requirement that submeters be installed at Tenant's expense).
12. ENTRY BY LANDLORD. Tenant agrees to permit Landlord or its agents
or representatives to enter into and upon any part of the Premises at all
reasonable hours (and in emergencies at all times, by any means Landlord
may deem proper, and without liability therefor) to inspect the same, or
to show the Premises to prospective purchasers, mortgagees, tenants (only
during the last nine months of the Lease Term) or insurers, or to clean
or make repairs, alterations or additions thereto, and Tenant shall not
be entitled to any abatement or reduction of rent by reason thereof.
13. ASSIGNMENT AND SUBLETTING.
(a) Tenant shall not assign, sublease, transfer or encumber
this Lease or any interest therein or grant any license,
concession or other right of occupancy of the Premises or any
portion thereof or otherwise permit the use of the Premises or any
portion thereof by any party other than Tenant (any of which
events is hereinafter called an "ASSIGNMENT") without the prior
written consent of Landlord. Any such attempted assignment in
violation of the terms and covenants of this Paragraph shall, at
Landlord's option, exercisable in Landlord's sole and absolute
discretion, be void. Consent by Landlord to one or more
assignments shall not operate as a waiver of Landlord's rights as
to any subsequent assignments. In addition, Tenant shall not,
without Landlord's consent, publicly offer to assign the Lease nor
advertise the Lease for assignment in any media, including but not
limited to newspapers, periodicals, radio, television, circulars
or brochures. In the event Tenant or any agent, representative or
broker acting on behalf of Tenant or with Tenant's knowledge
violates the provisions of the foregoing sentence, in addition to
all of the remedies which Landlord may have at law, in equity, or
pursuant to the terms of this Lease, Landlord shall be entitled to
seek injunctive relief preventing such action and Tenant shall be
responsible for all costs incurred by Landlord in connection with
seeking such injunctive relief.
(b) If Tenant requests Landlord's consent to an assignment,
Tenant shall submit to Landlord, in writing, the name of the
proposed assignee and the nature and character of the business of
the proposed assignee, the term, use, rental rate and all other
material terms and conditions of the proposed assignment,
including, without limitation, evidence satisfactory to Landlord
that the proposed assignee is financially responsible. Landlord
shall either (i) consent to or refuse to consent to such
assignment in writing (but no such consent to an assignment shall
relieve Tenant or any guarantor of Tenant's obligations under this
Lease of any liability hereunder), or (ii) negotiate directly with
the proposed assignee and (in the event Landlord is able to reach
agreement with such proposed assignee) upon execution of a lease
with such assignee, terminate this Lease (in part or in whole, as
appropriate) upon ninety (90) days' notice. If Landlord should
fail to notify Tenant in writing of its decision within a thirty
(30) day period after the later of the date Landlord is notified
in writing of the proposed assignment or the date Landlord has
received all required information concerning the proposed assignee
and the proposed assignment, Landlord shall be deemed to have
refused to consent to such assignment, and to have elected to keep
this Lease in full force and effect. In the event Landlord
consents to any such assignment, the assignment shall be on a form
approved by Landlord, and Tenant shall bear all costs and expenses
incurred by Landlord in connection with the review and approval of
such documentation. Landlord will have no right to consent or to
terminate this Lease as a result of any assignment or sublease to
any affiliate of Tenant or to any entity that acquires all or
substantially all of the assets of Tenant provided that the
financial condition of said affiliate is at least equal to that of
Tenant prior to the transfer and provided Tenant gives Landlord
written notice of such action at least thirty (30) days before the
action is taken. Changes in ownership of Tenant shall not be an
assignment and sales of stock in Tenant shall not be considered an
assignment provided that the financial condition of the Tenant
after such sales or changes of ownership is at least as good as
its financial condition prior to such sales or change of
ownership. An "AFFILIATE" shall be defined as an entity that owns
at least fifty-one percent (51%) of the equity and
10
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EXHIBIT 10.7
voting control of Tenant or an entity of which Tenant owns at
least fifty-one percent (51%) of the equity and voting control.
(c) All cash or other proceeds of any assignment of Tenant's
interest in this Lease and/or the Premises, whether consented to
by Landlord or not, shall be paid to Landlord notwithstanding the
fact that such proceeds exceed the rentals called for hereunder,
unless Landlord agrees to the contrary in writing, and Tenant
hereby assigns all rights it might have or ever acquire in any
such proceeds to Landlord. In addition to the rent hereunder,
Tenant hereby covenants and agrees to pay to Landlord all rent and
other consideration which it receives which is in excess of the
rent payable hereunder within ten (10) days following receipt
thereof by Tenant. This covenant and assignment shall benefit
Landlord and its successors in ownership of the Building and shall
bind Tenant and Tenant's heirs, executors, administrators,
personal representatives, successors and assigns. In addition to
any other rights and remedies which Landlord may have hereunder,
at law or in equity, in the event Tenant has failed to pay any
rent due hereunder on or before five (5) days following the date
on which it is due, Landlord shall have the right to contact any
assignee and require that from that time forward all payments made
pursuant to the assignment shall be made directly to the Landlord.
Any assignee of Tenant's interest in this Lease (all such
assignees being hereinafter referred to as "Successors"), by
occupying the Premises and/or assuming Tenant's obligations
hereunder, shall be deemed to have assumed liability to Landlord
for all amounts paid to persons other than Landlord by such
Successors in consideration of any such assignment in violation of
the provisions hereof Tenant shall pay to Landlord the excess
consideration received only from a non-affiliated sublease or
assignment after Tenant has recouped brokerage commissions and the
costs of Tenant Improvements incurred by Tenant in assigning or
subleasing so that the excess consideration being paid is profit
to Tenant net of the two listed costs. In the case of an
affiliated assignment or sublease, no excess consideration will be
paid to Landlord.
(d) If Tenant is a corporation and if at any time during the
Lease Term the person or persons who own the voting shares at the
time of the execution of this Lease cease for any reason,
including but not limited to merger, consolidation or other
reorganization involving another corporation, to own a majority of
such shares or if Tenant is a partnership and if at any time
during the Lease Term the general partner or partners who own the
general partnership interests in the partnership at the time of
the execution of this Lease, cease for any reason to own a
majority of such interests (except as the result of transfers by
gift, bequest or inheritance to or for the benefit of members of
the immediate family of such original shareholder(s) or
partner(s)), such an event shall be deemed to be an assignment.
The preceding sentence shall not apply whenever Tenant is a
corporation the outstanding stock of which is listed on a
recognized security exchange, or if at least eighty percent (80%)
of its voting stock is owned by another corporation, the voting
stock of which is so listed , or as provided in Paragraph 13(b).
14. MECHANIC'S LIENS. Tenant will not permit any mechanic's liens or
other liens to be placed upon the Premises, the Building, or the Property
and nothing in this Lease shall be deemed or construed in any way as
constituting the consent or request of Landlord, express or implied, by
inference or otherwise, to any person for the performance of any labor or
the furnishing of any materials to the Premises, the Building, or the
Property or any part thereof, nor as giving Tenant any right, power, or
authority to contract for or permit the rendering of any services or the
furnishing of any materials that would give rise to any mechanic's or
other liens against the Premises, the Building, or the Property. In the
event any such lien is attached to the Premises, the Building, or the
Property, then, in addition to any other right or remedy of Landlord,
Landlord may, but shall not be obligated to, discharge the same. Any
amount paid by Landlord for any of the aforesaid purposes including, but
not limited to, attorneys fees, shall be paid by Tenant to Landlord
promptly on demand as additional rent. In the event Landlord does consent
to the performance of any labor or the furnishing of any materials to the
Premises, the Building, or the Property by any party, which consent must
be in writing, Tenant shall be responsible for insuring that all such
persons procure and maintain insurance coverage against such risks, in
such amounts and with such companies as Landlord may require, including,
but not limited to, Builder's Risk and Worker's Compensation insurance.
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EXHIBIT 10.7
15. PROPERTY INSURANCE.
(a) Landlord shall maintain fire and extended coverage
insurance on the Building and the Premises in an amount not less
than the full replacement cost of the Building, including parking
areas with a reasonable deductible to be determined by Landlord.
The cost of such insurance shall be included as a part of the
Basic Costs, and payments for losses thereunder shall be made
solely to Landlord or the mortgagees of Landlord as their
interests shall appear.
(b) Tenant shall maintain at its expense, in an amount equal to
full replacement cost, fire and extended coverage insurance on all
of its personal property, including removable trade fixtures and
leasehold and tenant improvements, located in the Premises and in
such additional amounts as are required to meet Tenant's
obligations pursuant to Paragraph 19 hereof. Tenant shall furnish
evidence satisfactory to Landlord of the maintenance and timely
renewal of such insurance, and Tenant shall obtain and deliver to
Landlord a written obligation on the part of each insurer to
notify Landlord at least thirty (30) days prior to the
modification, cancellation or expiration of such insurance
policies. In the event Tenant shall not have delivered to Landlord
a policy or certificate evidencing such insurance at least thirty
(30) days prior to the expiration date of each expiring policy,
Landlord may obtain such insurance as Landlord may reasonably
require to protect Landlord's interest (which obtaining of
insurance shall not be deemed to be a waiver of Tenant's default
hereunder). The cost to Landlord of obtaining such policies, plus
an administrative fee in the amount of fifteen percent (15%) of
the cost of such policies shall be paid by Tenant to Landlord as
additional rent upon demand.
(c) Landlord and Tenant each hereby waives on behalf of itself
and its insurers (none of which shall ever be assigned any such
claim or be entitled thereto due to subrogation or otherwise) any
and all rights of recovery, claim, action, or cause of action,
against the other, its agents, officers or employees, for any loss
or damage that may occur to the Premises, or any improvements
thereto or the Building of which the Premises are a part, or any
improvements thereto, or any personal property of such party
therein, by reason of fire, the elements, or any other cause(s)
which are, or could be, insured against under the terms of the
standard tire and extended coverage insurance policies referred to
in this Paragraph 15, regardless of whether such insurance is
actually maintained and regardless of the cause or origin of the
damage involved, including sole, joint or concurrent, negligence
of the other party hereto, its agents, officers, or employees.
16. LIABILITY AND WORKER'S COMPENSATION INSURANCE.
(a) Tenant and Landlord shall, each at its own expense,
maintain during the term of this Lease a policy or policies of
comprehensive general liability insurance (including endorsement
or separate policy for owned or non-owned automobile liability)
with respect to the respective activities of each in the Building
and on the Property, with the premiums thereon fully paid on or
before the due date, issued by and binding upon an insurance
company or companies reasonably approved by Landlord. Such
insurance shall afford minimum protection of not less than
$1,000,000.00 per occurrence per person coverage for bodily
injury, property damage, personal injury, or combination thereof.
The term "personal injury" herein used means false arrest,
detention or imprisonment, malicious prosecution, wrongful entry,
libel and slander. If only a combined single limit coverage is
available, it shall be for at least $1,000,000.00 per occurrence
with an umbrella policy of at least $5,000,000.00 combined single
limit per occurrence. Tenant's insurance policy shall name
Landlord as an additional insured and shall include coverage for
the contractual liability of Tenant to indemnify Landlord pursuant
to Paragraph 17 of this Lease.
(b) Tenant shall obtain and maintain in force worker's
compensation and employer's liability insurance to cover Tenant's
liability to its employees.
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EXHIBIT 10.7
(c) Landlord and Tenant each hereby waives subrogation on its
behalf and on behalf of its insurer, to the extent subrogation on
a paid claim can be legally waived prior to loss by contract
between the parties, in respect of any payment made by such
insurer under any liability or worker's compensation policy.
Neither Landlord nor Tenant shall be liable to the other or any
insurance company (by way of subrogation or otherwise) insuring
the other party for any loss or damage to any building, structure
or other tangible property, or bodily injury or personal injury,
or any resulting loss of income, or losses from workers'
compensation laws and benefits, even though such loss or damage
might have been occasioned by the negligence of such party, its
agents or employees, if any such loss or damage is covered by
insurance benefiting the party suffering such loss or damage or
was required to be covered by insurance pursuant to this Lease.
(d) Each party shall use its good faith efforts to cause its
general liability, automobile liability and worker's compensation
policies to be endorsed by the issuing insurer waiving rights of
subrogation of such insurer against the other party hereto. The
failure of any insurer to issue such endorsement shall not be
deemed to limit or alter the force and effect of Paragraph 16(c)
of this Lease.
17. INDEMNITY. Neither Landlord or Building Manager nor any of their
respective officers, directors, employees, or agents shall be liable to
Tenant, or to Tenant's agents, servants, employees, customers, licensees,
or invitees for any injury to person or damage to property caused by any
act, omission, or neglect of Tenant, its agents, servants, employees,
customers, invitees, licensees or any other person entering the Building
or upon the Property under the invitation of Tenant or arising out of the
use of the Property, Building or Premises by Tenant and the conduct of
its business or out of a default by Tenant in the performance of its
obligations hereunder. TENANT HEREBY INDEMNIFIES AND HOLDS LANDLORD AND
BUILDING MANAGER AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AND
AGENTS ("INDEMNITEES"), HARMLESS FROM ALL LIABILITY AND CLAIMS FOR ANY
PROPERTY DAMAGE, OR BODILY INJURY OR DEATH OF, OR PERSONAL INJURY TO, A
PERSON IN OR ON THE PREMISES, OR AT ANY OTHER PLACE, INCLUDING THE
PROPERTY OR THE BUILDING, CAUSED, IN WHOLE OR IN PART, BY THE NEGLIGENCE
OR WILLFUL MISCONDUCT OF TENANT, ITS EMPLOYEES, AGENTS, SERVANTS,
CUSTOMERS, INVITEES OR LICENSEES AND THIS INDEMNITY SHALL BE ENFORCEABLE
TO THE FULL EXTENT WHETHER OR NOT SUCH LIABILITY AND CLAIMS ARE THE
RESULT OF THE SOLE, JOINT OR CONCURRENT ACTS, NEGLIGENT OR INTENTIONAL,
OR OTHERWISE, OF TENANT, OR ITS EMPLOYEES, AGENTS, SERVANTS, CUSTOMERS,
INVITEES OR LICENSEES. SUCH INDEMNITY FOR THE BENEFIT OF INDEMNITEES
SHALL BE ENFORCEABLE EVEN IF INDEMNITEES, OR ANY ONE OR MORE OF THEM HAVE
OR HAS CAUSED OR PARTICIPATED IN CAUSING SUCH LIABILITY AND CLAIMS BY
THEIR JOINT OR CONCURRENT ACTS, NEGLIGENT OR INTENTIONAL, OR OTHERWISE.
Landlord will indemnify and hold Tenant harmless from and against any
claims, losses, demands, liabilities, damages, and expenses (including
legal fees) caused by the willful misconduct or gross negligence of
Landlord, its agents, servants, and employees.
18. HAZARDOUS MATERIALS. Tenant represents and warrants that Tenant
and all of its agents, servants, employees, customers, invitees,
licensees or any other persons on or adjacent to the Building for the
purpose of engaging in business or providing services for the Tenant,
shall not (either with or without negligence) cause or permit the escape,
disposal or release of any biologically or chemically active or other
hazardous substances, or material. Tenant shall not allow the storage or
use of such substances or materials in any manner not sanctioned by law
or by the highest standards prevailing in the industry for the storage
and use of such substances or materials, nor allow to be brought into the
Building or onto the Property any such materials or substances except to
use in the ordinary course of Tenant's business, and then only after
written notice is given to Landlord of the identify of such substances or
materials. Without limitation, hazardous substances and materials shall
include those described in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section
9601 et seq., any applicable state or local laws and the regulations
adopted under these acts. If any lender or governmental agency shall
ever require testing to ascertain whether or not there has been any
release of hazardous materials, then the reasonable costs thereof shall
be reimbursed by Tenant to Landlord upon demand as additional charges if
such requirement applies to the Premises. In addition, Tenant shall
execute affidavits, representations and the like from time to time at
Landlord's request concerning Tenant's best knowledge and belief
regarding the presence of hazardous substances or materials on the
Premises. In the event that
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EXHIBIT 10.7
Tenant receives any notice form any governmental authority with regard
to biologically or chemically active or other hazardous material, or
substances on, from or affecting the Building, Tenant shall promptly
notify Landlord. TENANT HEREBY INDEMNIFIES AND HOLDS INDEMNITEES
HARMLESS FROM ALL LIABILITY, ACTIONS, PENALTIES, LIENS AND/OR CLAIMS
ARISING FROM, CAUSED BY, IN WHOLE OR IN PART, BY THE ESCAPE, DISPOSAL,
RELEASE, IMPROPER USE, STORAGE, INSTALLATION OR OTHER ACTION INVOLVING
ANY BIOLOGICALLY OR CHEMICALLY ACTIVE OR HAZARDOUS MATERIALS OR
SUBSTANCES BY THE TENANT, ITS EMPLOYEES, AGENTS, SERVANTS, CUSTOMERS,
INVITEES OR LICENSEES. THIS INDEMNITY SHALL BE ENFORCEABLE TO THE FULL
EXTENT WHETHER OR NOT SUCH LIABILITY AND CLAIMS ARE THE RESULT OF THE
SALE, JOINT OR CONCURRENT SETS, NEGLIGENT OR INTENTIONAL, OR
OTHERWISE, OF TENANT, OR ITS EMPLOYEES, AGENTS, SERVANTS, CUSTOMERS,
INVITEES OR LICENSEES. Landlord shall be responsible, at its cost, and
not as an Operating Expense, to keep the Building free of all
Hazardous Materials, the presence of which was caused by Landlord's
willful misconduct or gross negligence, and indemnifies Tenant from
all loss, liability, damage and expense arisen from the presence of
Hazardous Materials, the presence of which was caused by Landlord's
willful misconduct or gross negligence. Hazardous Materials shall be
deemed not to include materials customarily used by office building
tenants, contractors and vendors in quantities that do not violate
Environmental Laws.
19. EVIDENCE OF INSURANCE. On or before five (5) days following the
date of this Lease, Tenant will cause its insurer(s) to issue and deliver
to Landlord certificate(s) of insurance in the form attached hereto as
EXHIBIT "F" evidencing the existence and coverage of insurance required
herein.
20. CASUALTY DAMAGE. If the Premises or any part thereof shall be
damaged by fire or other casualty, Tenant shall give prompt written
notice thereof to Landlord. In case the Building shall be so damaged that
substantial alteration or reconstruction of the Building (meaning more
than fifty percent [50%] of the Building) shall, be required (whether or
not the Premises shall have been damaged by such casualty) or in the
event of any material uninsured loss to the Building (meaning more than
fifty percent [50%] of the Building), Landlord may, at its option,
terminate this Lease by notifying Tenant in writing of such termination
within ninety (90) days after the date of such casualty. If Landlord
chooses to complete the repair work, but Landlord cannot reasonably be
expected to substantially complete its repair work within 270 days from
the date on which Landlord determines it will repair, then Tenant may, at
its option, terminate this Lease by notifying Landlord in writing of such
termination within ninety (90) days after the date of such casualty. If
Landlord does not thus elect to terminate this Lease, Landlord shall
commence and proceed with reasonable diligence to restore the Building,
and the improvements located within the Premises, if any, for which
Landlord had financial responsibility pursuant to the Work Letter
Agreement attached hereto as EXHIBIT "D" (except that Landlord shall not
be responsible for delays not within the control of Landlord) to
substantially the same condition in which it was immediately prior to the
happening of the casualty. Notwithstanding the foregoing, Landlord's
obligation to restore the Building, and the improvements located within
the Premises, if any, for which Landlord had financial responsibility
pursuant to the Work Letter Agreement, shall not require Landlord to
expend for such repair and restoration work more than the insurance
proceeds actually received by the Landlord as a result of the casualty
and Landlord's obligation to restore shall be further limited so that
Landlord shall not be required to expend for the repair and restoration
of the improvements located within the Premises, if any, for which
Landlord had financial responsibility pursuant to the Work Letter
Agreement, more than the dollar amount of the Allowance, if any,
described in the Work Letter Agreement. When the repairs described in the
preceding two sentences have been completed by Landlord, Tenant shall
complete the restoration of all improvements, including furniture,
fixtures and equipment, which are necessary to permit Tenant's
reoccupancy of the Premises. Except as set forth above, all cost and
expense of reconstructing the Premises shall be home by Tenant, and
Tenant shall present Landlord with evidence satisfactory to Landlord of
Tenant's ability to pay such costs prior to Landlord's commencement of
repair and restoration of the Premises. Tenant shall not be entitled to
receive any credit or payment with respect to any portion of the
Reconstruction Allowance not actually spent upon restoration of the
Premises. Landlord shall not be liable for any inconvenience or annoyance
to Tenant or injury to the business of Tenant resulting in any way from
such damage or the repair thereof, except that, subject to the provisions
of the next sentence, Landlord shall allow Tenant a fair diminution of
rent during the time and to the extent the Premises are unfit for
occupancy. If the Premises or any other portion of the Building is
damaged by fire or other
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EXHIBIT 10.7
casualty resulting from the fault or negligence of Tenant or any of
Tenant's agents, employees, or invitees, the rent hereunder shall not
be diminished during the repair of such damage and Tenant shall be
liable to Landlord for the cost of the repair and restoration of the
Building caused thereby to the extent such cost and expense is not
covered by insurance proceeds.
21. DAMAGES FROM CERTAIN CAUSES. Landlord shall not be liable to
Tenant for any injury to person or damage to property sustained by Tenant
or any person claiming through Tenant resulting from any accident or
occurrence in the Premises or any other portion of the Building caused by
the Premises or any other portion of the Building becoming out of repair
or by defect in or failure of equipment, pipes, or wiring, or by broken
glass, or by the backing up of drains, or by gas, water, steam,
electricity, or oil leaking, escaping or flowing into the Premises
(except where due to Landlord's willful failure to make repairs required
to be made pursuant to other provisions of this Lease, after the
expiration of a reasonable time after written notice to Landlord of the
need for such repairs), nor shall Landlord be liable to Tenant for any
loss or damage that may be occasioned by or through the acts or omissions
of other tenants of the Building or of any other persons whomsoever,
including, but not limited to riot, strike, insurrection, war, court
order, requisition, order of any governmental body or authority, acts of
God, fire or theft except to the extent caused by Landlord's gross
negligence or willful misconduct and except that Landlord shall
nevertheless be obligated to perform its maintenance, repair and other
obligations under this Lease.
22. CONDEMNATION. If the whole or any substantial part of the Premises
or if the Building or any portion thereof which would leave the remainder
of the Building unsuitable for use as an office building comparable to
its use on the Commencement Date, shall be taken or condemned for any
public or quasi-public use under governmental law, ordinance or
regulation, or by right of eminent domain, or by private purchase in lieu
thereof, then Landlord may, at its option, terminate this Lease and the
rent shall be abated during the unexpired portion of this Lease,
effective when the physical taking of said Premises or said portion of
the Building shall occur. In the event this Lease is not terminated, the
rent for any portion of the Premises so taken or condemned shall be
abated during the unexpired term of this Lease effective when the
physical taking of said portion of the Premises shall occur. All
compensation awarded for any such taking or condemnation, or sale
proceeds in lieu thereof, shall be the property of Landlord, and Tenant
shall have no claim thereto, the same being hereby expressly waived by
Tenant, except for any portions of such award or proceeds which are
specifically allocated by the condemning or purchasing party for the
taking of or damage to trade fixtures of Tenant, which Tenant
specifically reserves to itself provided Tenant's award does not diminish
the Landlord's award. If any portion of the Premises, access thereto,
parking, or roof top space shall be taken so as to render a substantial
portion of the Premises unoccupiable for Tenant's business, for five
consecutive business days, Tenant, at Tenant's option, may choose to
abate the Basic Rent on a pro rata basis based on the percent of the
Premises which are unusable after the stated five-day period.
23. EVENTS OF DEFAULT/REMEDIES.
(a) DEFAULT BY TENANT. The occurrence of any one or more of the
following events shall constitute a default by Tenant under this
Lease:
(i) Tenant shall fail to pay to Landlord any Base
Rental, Basic Costs or any other monetary charge due
from Tenant hereunder as and when due and payable;
(ii) Tenant breaches or fails to comply with any term,
provision, condition or covenant of this Lease,
other than as described in Section 23(a)(i), or with
any of the Exhibit H, Building Rules and Regulations
now or hereafter established to govern the operation
of the Building;
(iii) An assignment or subletting by Tenant without the
prior written approval of Landlord except for an
assignment or subletting to an affiliate as set
forth in Section 3(b);
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EXHIBIT 10.7
(iv) The interest of Tenant under this Lease shall be
levied on under execution or other legal process;
(v) Any petition in bankruptcy or other insolvency
proceedings shall be filed by or against Tenant, or
any petition shall be filed or other action taken to
declare Tenant a bankrupt or to delay, reduce or
modify Tenant's debts or obligations or to
reorganize or modify Tenant's capital structure or
indebtedness or to appoint a trustee, receiver or
liquidator of Tenant or of any property of Tenant,
or any proceeding or other action shall be commenced
or taken by any governmental authority for the
dissolution or liquidation of Tenant and, within
thirty (30) days thereafter, Tenant fails to secure
a discharge thereof;
(vi) Tenant shall become insolvent, or Tenant shall make
an assignment for the benefit of creditors, or
Tenant shall make a transfer in fraud of creditors,
or a receiver or trustee shall be appointed for
Tenant or any of its properties;
(vii) Tenant shall desert, abandon or vacate the Premises
or any substantial portion thereof or fails to
operate its business in the Premises for any reason
other than destruction or condemnation of the
Premises without giving Landlord written notice of
Tenant's intention to vacate, desert or abandon at
least ninety (90) days prior to the vacating,
deserting or abandoning, and if Tenant otherwise
fully complies with the terms of the Lease;
(viii) Tenant shall do or permit to be done anything which
creates a lien upon the Premises or the Building; or
the term 'Tenant" as used in this Section 23 shall
be deemed to include any guarantor of or any other
person or entity primarily or secondarily liable
for, any of Tenant's obligations under this Lease.
(b) LANDLORD'S REMEDIES. Upon the occurrence of any default by
Tenant under this Lease and (1) if the event of default described
in Section 23(a)(i) is not cured within five (5) days after
written notice from Landlord of such default, or (2) the events
described in Sections 23(a)(iii), (iv), (v), (vi), (vii), and
(viii) are not cured within thirty (30) days after written notice
from Landlord of such default, or (3) the events described in
Section 23(a)(ii) are not cured within thirty (30) days after
written notice of such failure is given to Tenant, or if such
failure is not reasonably susceptible of being cured within such
thirty (30) day period, Tenant shall fail to commence the curing
thereof within such thirty (30) day period, or having commenced
the curing thereof, Tenant shall fail to diligently pursue the
curing of such default with reasonable diligence to completion,
Landlord shall have the option to do and perform any one or more
of the following in addition to, and not in limitation of, any
other remedy or right permitted it by law or in equity or by this
Lease:
(i) Continue this Lease in full force and effect, and
this Lease shall continue in full force and effect
as long as Landlord does not terminate this Lease,
and Landlord shall have the right to collect Base
Rental, Basic Costs and other charges when due.
(ii) Terminate this Lease, and Landlord may forthwith
repossess the Premises and be entitled to recover as
damages a sum of money equal to the total of (1) the
cost of recovering the Premises, (2) the cost of
removing and storing Tenant's or any other
occupant's property, (3) the unpaid Base Rental,
Basic Costs and any other sums accrued hereunder at
the date of termination, (4) a sum equal to the
amount, if any, by which the present value of the
total Base Rental, Basic Costs and other benefits
which would have accrued to Landlord under this
Lease for the remainder of the Lease Term, if the
terms of this Lease had been fully complied with by
Tenant, discounted at five percent (5%) per annum
exceeds the total fair market value of the
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<PAGE>
EXHIBIT 10.7
Premises for the balance of the Lease Term (it
being the agreement of the parties hereto that
Landlord shall receive the benefit of its
bargain), (5) the cost of relating the Premises
including, without limitation, the cost of
restoring the Premises to the condition necessary
to rent the Premises at the prevailing market
rental rate, normal wear and tear expected, (6)
any increase in insurance premiums caused by the
vacancy of the Premises, (7) the amount of any
unamortized improvements to the Premises paid for
by Landlord, (8) the amount of any unamortized
brokerage commission or other costs paid by
Landlord in connection with the leasing of the
Premises and (9) any other sum of money or
damages owed by Tenant to Landlord. In the event
Landlord shall elect to terminate this Lease,
Landlord shall at once have all the rights of
reentry upon the Premises, without becoming
liable for damages, or being guilty of trespass.
(iii) Terminate Tenant's right of occupancy of the
Premises and reenter and repossess the Premises by
entry, forcible entry or detainer suit or otherwise,
without demand or notice of any kind to Tenant and
without terminating this Lease, without acceptance
of surrender of possession of the Premises, and
without becoming liable for damages or guilty of
trespass, in which event Landlord may, but shall be
under no obligation (except as may be required by
applicable law), to relet the Premises or any part
thereof for the account of Tenant (nor shall
Landlord be under any obligation to relet the
Premises before Landlord relets; or leases any other
portion of the Building or any other property under
the ownership or control of Landlord) for a period
equal to or lesser or greater than the remainder of
the Lease Term of the Lease on whatever terms and
conditions Landlord, at Landlord's sole discretion,
deems advisable. Tenant shall be liable for and
shall pay to Landlord all Base Rental and Basic
Costs payable by Tenant under this Lease (plus
interest at the past due rate provided in Section
5(b) of this Lease if in arrears) plus an amount
equal to (1) the cost of recovering possession of
the Premises, (2) the cost of removing and storing
any of Tenant's or any other occupant's property
left on the Premises or in the Building after
reentry, (3) the cost of decorations, repairs,
changes, alterations and additions to the Premises
and the Building, (4) the cost of any attempted
reletting or reletting and the collection of the
rent accruing from such reletting, (5) the cost of
any brokerage fees or commissions payable by
Landlord in connection with any reletting or
attempted reletting, (6) any other costs incurred by
Landlord in connection with any such reletting or
attempted reletting, (7) the cost of any increase in
insurance premiums caused by the termination of
possession of the Premises, (8) the cost of any
increase in insurance premiums caused by the
termination of possession of the Premises, (9) the
amount of any unamortized improvements to the
Premises paid for by Landlord, (10) the amount of
any unamortized brokerage commissions or other costs
paid by Landlord in connection with the leasing of
the Premises and (11) any other sum of money or
damages owed by Tenant to Landlord at law, in equity
or hereunder, all reduced by any sums received by
Landlord through any reletting of the Premises;
PROVIDED, HOWEVER, that in no event shall Tenant be
entitled to any excess of sums obtained by reletting
over and above Base Rental and Basic Costs provided
in this Lease to be paid by Tenant to Landlord. For
the purposes of such reletting Landlord is
authorized to decorate or to make any repairs,
changes, alterations or additions in or to the
Premises that may be necessary. Landlord may file
suit to recover sums falling due under the terms of
this Section 23(b)(iii) from time to time, and no
delivery to or recovery by Landlord of any portion
due Landlord hereunder shall be any defense in any
action to recover any amount not theretofore reduced
to judgment in favor of Landlord. No reletting shall
be construed as an election on the part of Landlord
to terminate this Lease unless in favor of Landlord.
No reletting shall be construed as an election on
the part of Landlord to terminate this Lease unless
a written notice of such intention is given to
Tenant by
17
<PAGE>
EXHIBIT 10.7
Landlord. Notwithstanding any such reletting
without termination, Landlord may at any time
thereafter elect to terminate this Lease for such
previous default and/or exercise its other rights
under this Lease.
(iii) Enter upon the Premises and do whatever Tenant is
obligated to do under 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 plus
fifteen percent ( 15%) of such cost to cover
overhead plus interest at the past due rate provided
in this Lease, and Tenant further agrees that
Landlord shall not be liable for any damages
resulting to Tenant from such action. No action
taken by Landlord under this Section 23(b)(iv) shall
relieve Tenant from any of its obligations under
this Lease or from any consequences or liabilities
arising from the failure to perform such
obligations.
(iv) Without waiving such default, apply all or any part
of the Security Deposit and/or any unapplied Prepaid
Rental to cure the default or to any damages
suffered as a result of the default to the extent of
the amount of damages suffered. Tenant shall
reimburse Landlord for the amount of such depletion
of the Security Deposit and/or any Prepaid Rental on
demand.
(v) Change all door locks and other security devices of
Tenant at the Premises and/or Building, and Landlord
shall not be required to provide the new key to the
Tenant except during Tenant's regular business
hours, and only upon the condition that Tenant has
cured any and all defaults hereunder and in the case
where Tenant owes Base Rental and/or Basic Costs, or
any other sums under this Lease to the Landlord,
reimbursed Landlord for all Base Rental and Basic
Costs and other sums due Landlord hereunder.
Landlord, on terms and conditions satisfactory to
Landlord in its sole discretion, may upon request
from Tenant's employees, enter the Premises for the
purpose of retrieving therefrom personal property of
such employees, provided, Landlord shall have no
obligation to do so.
(vi) Exercise any and all other remedies available to
Landlord in this Lease, at law or in equity.
24. TENANT REMEDIES. Except to the extent specifically provided
herein, Tenant shall not have the right to an abatement of rent or to
terminate this Lease as a result of Landlord's default as to any covenant
or agreement contained in this Lease or as a result of the breach of any
promise or inducement in connection herewith, whether in this Lease or
elsewhere and Tenant hereby waives such remedies of abatement of rent and
termination. Tenant hereby agrees that Tenant's remedies for default
hereunder or in any way arising in connection with this Lease including
any breach of any promise or inducement or warranty, express or implied,
shall be limited to:
(a) A suit for direct and proximate damages provided that
Tenant has given the notices as hereinafter required.
Notwithstanding anything to the contrary contained in this Lease,
the liability of Landlord to Tenant for any default by Landlord
under the terms of this Lease shall be limited to the interest of
Landlord in the Building and the Property and Tenant agrees to
look solely to Landlord's interest in, the Building and the
Property for the recovery of any judgment against the Landlord, it
being intended that Landlord shall not be personally liable for
any judgment or deficiency. Tenant hereby covenants that, prior to
the filing of any suit for direct and proximate damages, it shall
give Landlord and all mortgagees whom Tenant has been notified
hold mortgages or deed of trust liens on the Property, Building or
Premises ("LANDLORD'S MORTGAGEES") notice and reasonable time to
cure any alleged default by Landlord.
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<PAGE>
EXHIBIT 10.7
(b) In the event Landlord fails to commence the cure of a
material default of any material covenant or agreement contained
in this Lease within sixty (60) days following receipt of notice
specifying such alleged default from Tenant by both Landlord and
Landlord's mortgagees, equitable abatement of the Base Rental and
other rent due hereunder to the extent reasonably necessary to
adjust for any inconvenience occasioned by Landlord's failure to
theretofore commence the cure of such default.
The rights of Tenant pursuant to this Section shall be subject to (and,
if applicable, Tenant shall have the benefit of) the express provisions
of this Lease, if any, providing for remedies different from, and in
exclusion of, the remedies above-described. For example, the foregoing
notice and grace periods shall not apply to Tenant's right to abate rent
or terminate this Lease for utility interruptions. Landlord's interest in
the Building and the Property shall include all insurance proceeds and
condemnation awards, subject to the claims of other tenants.
25. NO WAIVER. Failure of Landlord to declare any default immediately
upon its occurrence, or delay in taking any action in connection with an
event of default, shall not constitute a waiver of such default, nor
shall it constitute an estoppel against Landlord, but Landlord shall have
the right to declare the default at any time and take such action as is
lawful or authorized under this Lease. Failure by Landlord to enforce its
rights with respect to any one default shall not constitute a waiver of
its rights with respect to any subsequent default. Receipt by Landlord of
Tenant's keys to the Premises shall not constitute an acceptance of
surrender of the Premises.
26. EVENT OF BANKRUPTCY. In addition to, and in no way limiting the
other remedies set forth herein Landlord and Tenant agree that if Tenant
ever becomes the subject of a voluntary or involuntary bankruptcy,
reorganization, composition, or other similar type proceeding under the
federal bankruptcy laws, as now enacted or hereinafter amended, then:
(a) "ADEQUATE PROTECTION" of Landlord's interest in the
Premises pursuant to the provisions of Section 361 and 363 (or
their successor sections) of the Bankruptcy Code, 11 U.S.C.
Paragraph 101, ET SEQ. (such Bankruptcy Code as amended from time
to time being herein referred to as the "Bankruptcy Code"), prior
to assumption and/or assignment of the Lease by Tenant shall
include, but not be limited to all (or any part) of the following:
(i) the continued payment by Tenant of the Base Rental
and all other rent due and owing hereunder and the
performance of all other covenants and obligations
hereunder by Tenant;
(ii) the hiring of security guards to protect the
Premises if Tenant abandons and/or ceases
operations; such obligation of Tenant only to be
effective so long as Tenant remains in possession
and control of the Premises to the exclusion of
Landlord;
(iii) the furnishing of an additional/new security deposit
by Tenant in the amount of three (3) times the
then-current monthly Base Rental and other rent
payable hereunder.
(b) "ADEQUATE ASSURANCE OF FUTURE PERFORMANCE" by Tenant and/or
any assignee of Tenant pursuant to Bankruptcy Code Section 365
will include (but not be limited to) payment of an additional/new
Security Deposit in the amount of three (3) times the then-current
monthly Base Rental and monthly escrow for Basic Costs payable
hereunder.
(c) Any person or entity to which this Lease is assigned
pursuant to the provisions of the Bankruptcy Code, shall be deemed
without further act or deed to have assumed all of the obligations
of Tenant arising under this Lease on and after the effective date
of such assignment. Any such assignee shall, upon demand by
Landlord, execute and deliver to Landlord an instrument confirming
such assumption of liability.
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EXHIBIT 10.7
(d) Notwithstanding anything in this Lease to the contrary, all
amounts payable by Tenant to or on behalf of the Landlord under
this Lease, whether or not expressly denominated as "rent", shall
constitute "rent" for the purposes of Section 502(b)(6) of the
Bankruptcy Code.
(e) If this Lease is assigned to any person or entity pursuant
to the provisions of the Bankruptcy Code, any and all monies or
other considerations payable or otherwise to be delivered to
Landlord (including Base Rentals and other rent hereunder), shall
be and remain the exclusive property of Landlord and shall not
constitute property of Tenant or of the bankruptcy estate of
Tenant. Any and all monies or other considerations constituting
Landlord's property under the preceding sentence not paid or
delivered to Landlord shall be held in trust by Tenant or Tenant's
bankruptcy estate for the benefit of Landlord and shall be
promptly paid to or turned over to Landlord.
(f) If Tenant assumes this Lease and proposes to assign the
same pursuant to the provisions of the Bankruptcy Code to any
person or entity who shall have made a bona fide offer to accept
an assignment of this Lease on terms acceptable to the Tenant,
then notice of such proposed offer/assignment, setting forth (i)
the name and address of such person or entity; (ii) all of the
terms and conditions of such offer, and (iii) the adequate
assurance to be provided Landlord to assure such person's or
entity's future performance under the Lease, shall be given to
Landlord by Tenant no later than twenty (20) days after receipt by
Tenant, but in any event no later than ten (10) days prior to the
date that Tenant shall make application to a court of competent
jurisdiction for authority and approval to enter into such
assumption and assignment, and Landlord shall thereupon have the
prior right and option, to be exercised by notice to Tenant given
at any time prior to the effective date of such proposed
assignment, to accept an assignment of this Lease upon the same
terms and conditions and for the same consideration, if any, as
the bona fide offer made by such persons or entity, less any
brokerage commission which may be payable out of the consideration
to be paid by such person for the assignment of this Lease.
(g) To the extent permitted by law, Landlord and Tenant agree
that this Lease is a contract under which applicable law excuses
Landlord from accepting performance from (or rendering performance
to) any person or entity other than Tenant within the meaning of
Sections 365(c) and 365(e)(2) of the Bankruptcy Code.
27. PEACEFUL ENJOYMENT. Tenant shall, and may peacefully have, hold,
and enjoy the Premises, subject to the other terms hereof, provided that
Tenant pays the rent and other sums herein recited to be paid by Tenant
and performs all of Tenant's covenants and agreements herein contained.
This covenant and any and all other covenants of Landlord shall be
binding upon Landlord and its successors only with respect to breaches
occurring during its or their respective periods of ownership of the
Landlord's interest hereunder.
28. SUBSTITUTION. Landlord shall be entitled to cause Tenant to
relocate from suite number 250 of the Premises to a comparable space with
comparable improvements (the "RELOCATION SPACE") within the Building at
any time upon prior written notice to Tenant. The reasonable costs
actually incurred in connection with the physical relocation of the
Tenant to the Relocation Space shall be at the expense of Landlord or the
third party tenant replacing Tenant in suite 250 of the Premises and all
other costs, if any, involved with such relocation shall be borne by
Tenant. Such a relocation shall not terminate or otherwise affect or
modify this Lease except that from and after the date of such relocation,
"Premises" shall refer to the rest of the Premises not affected by this
Paragraph 28 and the Relocation Space into which Tenant has been moved,
rather than the original Premises as herein defined and the Base Rental
shall be adjusted so that immediately following such relocation the Base
Rental for the Relocation Space on a per square foot of Rentable Area
basis shall be the same as the Base Rental immediately prior to such
relocation for suite 250 of the Premises on a per square foot of Rentable
Area basis.
29. HOLDING OVER. In the event of holding over by Tenant after
expiration or other termination of this Lease or in the event Tenant
continues to occupy the Premises after the termination of Tenant's right
of
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EXHIBIT 10.7
possession pursuant to Paragraph 22(b) hereof, Tenant shall,
throughout the entire holdover period, pay rent equal to 1.5 times the
sum of the Base Rental plus the additional rent which would have been
applicable had the term of this Lease continued through the period of
such holding over by Tenant. No holding over by Tenant or payments of
money by Tenant to Landlord after the expiration of the term of this
Lease shall be construed to extend the term of this Lease or prevent
Landlord from recovery of immediate possession of the Premises by summary
proceedings or otherwise unless Landlord has sent written notice to
Tenant that Landlord has elected to extend the term of the Lease. Tenant
shall be liable to Landlord for all damage, including any consequential
damage, which Landlord may suffer by reason of any holding over by Tenant
and Tenant shall indemnify Landlord against any and all claims made by
any other tenant or prospective tenant against Landlord for delay by
Landlord in delivering possession of the Premises to such other tenant or
prospective tenant. Nothing in this Paragraph or elsewhere in this Lease
shall be construed as Landlord granting Tenant permission to holdover,
which permission is denied unless Landlord agrees otherwise in writing
prior to the end of the Lease Term.
30. SUBORDINATION TO MORTGAGE. This Lease and all rights and interests
of Tenant hereunder are subject and subordinate to any mortgage, deed of
trust or other lien presently existing or hereafter arising upon the
Premises, or upon the Building and/or the Property, and to any renewals,
modifications, refinancings and extensions thereof, but Tenant agrees
that any such mortgagee shall have the right at any time to subordinate
such mortgage, deed of trust or other lien to this Lease on such terms
and subject to such conditions as such mortgagee may deem appropriate in
its discretion; provided, however, that this Lease shall not be
subordinate to any mortgage, ground lease, or master lease unless Tenant
receives a non-disturbance agreement in a form agreeable to Landlord and
to its tender and Tenant. Landlord will use reasonable efforts to obtain
a non-disturbance agreement from all existing mortgage holders. This
clause shall be self-operative and no further instrument of subordination
shall be required. However, Landlord is hereby irrevocably vested with
full power and authority to subordinate this Lease to any first mortgage,
first deed of trust or other lien now existing or hereafter placed upon
the Premises, or the Building and/or the Property and Tenant agrees upon
demand to execute such further instruments subordinating this Lease or
attorning to the holder of any such liens as Landlord may request. Tenant
further agrees upon request by the holder of any such mortgage, deed of
trust or other lien, before or after the institution of any proceedings
for the foreclosure of any such mortgage, deed of trust or other lien (or
deed in lieu of foreclosure) to attorn to such purchaser upon any such
foreclosure (or deed in lieu thereof) and to recognize such purchaser as
Landlord under this Lease. The agreement of Tenant to attorn upon request
in the immediately preceding sentence shall survive any foreclosure sale
or deed in lieu of foreclosure. Notwithstanding the foregoing, Tenant
shall have no obligation to attorn unless Tenant has previously received
a non-disturbance agreement satisfactory to Landlord and its lender. In
the event that Tenant should fail to execute any subordination or other
agreement required by this Paragraph promptly as requested, Tenant hereby
irrevocably constitutes Landlord as its attorney-in-fact to execute such
instrument in Tenant's name, place and stead, it being agreed that such
power is one coupled with an interest in Landlord and is accordingly
irrevocable. Tenant agrees that it will from time to time upon request by
Landlord execute and deliver to such persons as Landlord shall request a
statement in recordable form certifying that this Lease is unmodified and
in full force and effect (or if there have been modifications, that the
same is in full force and effect as so modified), stating the dates to
which rent and other charges payable under this Lease have been paid,
stating that Landlord is not in default hereunder (or if Tenant alleges a
default stating the nature of such alleged default) and further stating
such other matters as Landlord shall reasonably require.
31. ATTORNEY'S FEES. In the event either party defaults in the
performance of any of the terms of this Lease and the other party employs
an attorney in connection therewith, the defaulting party agrees to pay
the prevailing party's reasonable attorneys' fees.
32. NOTICE. Any notice in this Lease provided for must, unless
otherwise expressly provided herein, be in writing, and may, unless
otherwise in this Lease expressly provided, be given or be served by
sending via a nationally recognized overnight courier service, by
depositing the same in the United States mail, postage paid and certified
with return receipt requested, or by prepaid telegram, when appropriate,
addressed to the
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EXHIBIT 10.7
party to be notified at the address stated in this Lease or such other
address notice of which has been given to the other party or by
delivering the same in person to such party or an officer or partner of
such party. Notice deposited in the mail in the mariner hereinabove
described shall be effective as of the date it is so deposited. Notice
sent via courier shall be effective on the date deposited with the
courier.
33. SEVERABILITY. If any term or provision of this Lease, or the
application thereof to any person or circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Lease, or the
application of such term or provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Lease shall be
valid and enforced to the fullest extent permitted by law.
34. RECORDATION. Tenant agrees not to record this Lease or any
memorandum hereof.
35. GOVERNING LAW. This Lease and the rights and obligations of the
parties hereto shall be interpreted, construed, and enforced in
accordance with the laws of the State of Texas.
36. FORCE MAJEURE. Whenever a period of time is herein prescribed for
the taking of any action by Landlord, Landlord shall not be liable or
responsible for, and there shall be excluded from the computation of such
period of time, any delays due to strikes, riots, acts of God, shortages
of labor or materials, war, governmental laws, regulations or
restrictions, or any other cause whatsoever beyond the control of
Landlord.
37. TIME OF PERFORMANCE. Except as expressly otherwise herein
provided, with respect to all required acts of Tenant, time is of the
essence of this Lease.
38. TRANSFERS BY LANDLORD. Landlord shall have the right to transfer
and assign, in whole or in part, all of its rights and obligations
hereunder and in the Building and Property referred to herein, and in
such event and upon such transfer Landlord shall be released from any
further obligations hereunder, and Tenant agrees to look solely to such
successor in interest of Landlord for the performance of such
obligations.
39. COMMISSIONS. Landlord and Tenant hereby indemnify and hold each
other harmless against an), loss, claim, expense or liability with
respect to any commissions or brokerage fees claimed on account of the
execution and/or renewal of this Lease due to any action of the
indemnifying party. Landlord shall pay the commissions of The Staubach
Company under the terms of a separate agreement.
40. JOINT AND SEVERAL LIABILITY. If there is more than one Tenant, or
if the Tenant as such is comprised of more than one person or entity, the
obligations hereunder imposed upon Tenant shall be joint and several
obligations of all such parties.
41. AUTHORITY. In the event Tenant is a corporation (including any
form of professional association), partnership (general or limited), or
other form of organization other than an individual, then each individual
executing or attesting this Lease on behalf of Tenant hereby covenants,
warrants and represents: (i) that such individual is duly authorized to
execute or attest and deliver this Lease on behalf of Tenant in
accordance with the organizational documents of Tenant; (ii) that this
Lease is binding upon Tenant; (iii) that Tenant is duly organized and
legally existing in the state of its organization, and is qualified to do
business in the State of Texas; (iv) that upon request, Tenant will
provide Landlord with true and correct copies of all organizational
documents of Tenant, and any amendments thereto; and (v) that the
execution and delivery of this Lease by Tenant will not result in any
breach of, or constitute a default under any mortgage, deed of trust,
lease, loan, credit agreement, partnership agreement or other contract or
instrument to which Tenant is a party or by which Tenant may be bound, If
Tenant is a corporation, Tenant will, prior to the Commencement Date,
deliver to Landlord a copy of a resolution of Tenant's board of directors
authorizing or ratifying the execution and delivery of this Lease, which
resolution will be duly certified to Landlord's satisfaction by the
secretary or assistant secretary of Tenant.
22
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EXHIBIT 10.7
42. FINANCIAL CONDITION OF TENANT. Tenant acknowledges that the
financial capability of Tenant to perform its obligations hereunder is
material to Landlord and that Landlord would not enter into this Lease
but for its belief, based on its review of Tenant's financial statements,
that Tenant is capable of performing such financial obligations. Tenant
hereby represents, warrants and certifies to Landlord that its financial
statements are true and correct in all material respects.
43. EFFECT OF DELIVERY OF THIS LEASE. Landlord has delivered a copy of
this Lease to Tenant for Tenant's review only, and the delivery hereof
does not constitute an offer to Tenant or option. This Lease shall not be
effective until an original of this Lease executed by both Landlord and
Tenant.
44. ENTIRE AGREEMENT. This Lease Agreement, including the following
Exhibits:
EXHIBIT "A" - [Intentionally Omitted]
EXHIBIT "B" - Outline and Location of Premises
EXHIBIT "C" - Payment of Excess Basic Cost
EXHIBIT "D" - Work Letter Agreement
EXHIBIT "D-1" - Building Standard Materials
EXHIBIT "D-2" - Tenant Improvement Allowance
EXHIBIT "E" - Parking
EXHIBIT "F" - Certificate of Insurance for Tenant
EXHIBIT "G" - [Intentionally Omitted]
EXHIBIT "H" - Rules and Regulations
EXHIBIT "I" - Renewal Option
EXHIBIT "J" - Right of First Refusal
EXHIBIT "K" - Roof License Agreement
constitute the entire agreement between the parties hereto with respect
to the subject matter of this Lease. Tenant expressly acknowledges and
agrees that Landlord has not made and is not making, and Tenant, in
executing and delivering this Lease, is not relying upon, any warranties,
representations, promises or statements, except to the extent that the
same are expressly set forth in this Lease. All understandings and
agreements heretofore had between the parties are merged in this Lease
which alone fully and completely expresses the agreement of the parties,
neither party relying upon any statement or representation not embodied
in this Lease.
45. ROOF ACCESS. Tenant shall be provided access to the roof of the
Building to install two communications antennae or dishes as set forth in
EXHIBIT "K" - "ROOF LICENSE AGREEMENT" which is attached as part of this
Lease, provided that such equipment is substantially screened and not
obviously visible to the general public.
23
<PAGE>
EXHIBIT 10.7
Landlord and Tenant have executed this Lease in multiple original
counterparts as of the day and year first above written.
TENANT: LANDLORD:
OBJECTSPACE, INC., a Texas Corporation BROOKDALE INVESTORS, L.P.
a Delaware limited partnership
By: Brookdale Partners,
L.L.C., a Georgia
limited liability
company, its sole
general partner
By: /s/ JOHN W. PRITCHETT By: /s/ FRED H. HENRITZE
Name: John W. Pritchett Name: Fred H. Henritze
Title: Vice President Title: Manager
Date: 9/5/97
24
<PAGE>
EXHIBIT 10.7
EXHIBIT "B"
OUTLINE AND LOCATION OF PROPERTY
(Plan showing Tenant's space at Suite 600 of
approximately 13,053 rentable square feet)
<PAGE>
EXHIBIT 10.7
EXHIBIT "C"
PAYMENT OF EXCESS BASIC COSTS
The Base Rental payable hereunder shall be adjusted upward from time to
time in accordance with the following provisions:
1. Tenant's Base Rental is based, in part, upon an Expense Base
(herein so called) equal to the actual per square foot operating expenses
for the Building for calendar year 1998. Tenant shall, during the Lease
Term, pay as an adjustment to Base Rental hereunder an amount (per each
square foot of Rentable Area within the Premises) equal to the excess
('Excess"), if any, from time to time of actual Basic Costs per square
foot per year for the Rentable Area in the Building over the Expense
Base. Prior to January I of each calendar year during Tenant's occupancy
or as soon thereafter as practical, Landlord shall make a good faith
estimate of the Excess for each upcoming calendar year and, upon prior
written notice to Tenant, may require the monthly payment of Base Rental
to be adjusted in accordance with such estimate. Landlord shall have the
right from time to time during any such calendar year to revise the
estimate of the Excess for such year and provide Tenant with a revised
statement therefor, and thereafter the amount Tenant shall pay each month
shall be based upon such revised estimate. Any amounts paid based on any
estimate shall be subject to adjustment pursuant to Paragraph 2 below
when actual Basic Costs are available for such calendar year.
2. As soon as is practical following the era of each calendar year
during Tenant's occupancy Landlord shall famish to Tenant a statement of
Landlord's actual Basic Costs for the previous calendar year. If for any
calendar year additional Base Rental collected for the prior year, as a
result of Landlord's estimate of Basic Costs, is in excess of the
additional Base Rental actually due during such prior year, then Landlord
shall refund to Tenant any overpayment (or at Landlord's option, apply
such amount against rentals due or to become due hereunder). Likewise,
Tenant shall pay to Landlord, on demand, any underpayment with respect to
the prior year whether or not the Lease has terminated prior to receipt
by Tenant of a statement for such underpayment.
3. Tenant or Tenant's independent accountant, at its expense, shall
have the right no more frequently than once per calendar year, following
thirty (30) days prior written notice to Landlord, to audit Landlord's
books and records relating to Basic Costs at Landlord's office during
Normal Business Hours. Tenant shall have the right to audit the then
current and the immediately preceding accounting year if not previously
audited. If the audit reveals that Landlord's statement of Basic Costs
was more than five percent (5%) in error, subject to Landlord's right to
contest, Landlord will pay the costs of the audit up to an amount equal
to the amount of Landlord's accounting error to Tenant's detriment.
4. "BASIC COSTS" shall mean all direct and indirect costs and
expenses incurred in each calendar year in connection with
operating, maintaining, repairing, managing and owning the
Building and the Property, including, without limitation, the
following:
(a) All labor costs for Landlord's employees (only at the level
of Building manager and below as reasonably allocated on the time
actually spent on the Building as opposed to other projects)
performing services required or utilized in connection with the
operation, repair and maintenance of and control of access to the
Building and the Property, including but not limited to amounts
incurred for wages, salaries and other compensation for services,
payroll, social security, unemployment and other similar taxes,
workmen's compensation insurance, disability benefits, pensions,
hospitalization, and retirement plans and group insurance.
(b) All management fees (not to exceed market management fees),
the cost of maintaining a management office at the Building, and
all fees for legal and accounting services relating to the
Building and the Property.
(c) All rental and/or purchase costs of materials, supplies, hand
tools and equipment used in the operation, repair, replacement and
maintenance and the control of access to the Building and the
Property.
26
<PAGE>
EXHIBIT 10.7
(d) All amounts charged to Landlord by contractors and/or
suppliers for services, materials, equipment and supplies
furnished in connection with the operation, repair, maintenance,
replacement of and control of access to any part of the Building,
the plazas, the garage, and the sidewalks adjoining the Building,
if any, or the Property generally, and the heating, air
conditioning, ventilating, plumbing, electrical, elevator and
other systems of the Building and the garage.
(e) All premiums paid by Landlord for fire and extended coverage
insurance, earthquake and extended coverage insurance, liability
and extended coverage insurance and other insurance customarily
carried from time to time by lessors of comparable office
buildings or required to be carried by Landlord.
(f) Charges for all utilities including but not limited to water,
sewer and electricity, but excluding those charges for which
tenants are individually responsible.
(g) Taxes, including (i) all real estate taxes and assessments on
the Property, the Building or the Premises, and taxes and
assessments levied in substitution or supplementation in whole or
in part of such taxes, (ii) all personal property taxes for the
Building's personal property, including license expenses, (iii)
all taxes imposed on services of Landlord's agents and employees,
and (iv) all other taxes, fees or assessments now or hereafter
levied by any governmental authority on the Property, the Building
or its contents or on the operation and use thereof (except as
relate to specific tenants), but excluding income taxes and
franchise taxes.
(h) All landscape expenses and costs of repairing, resurfacing
and striping of the parking areas of the Property.
(i) Cost of all maintenance service agreements for equipment,
alarm service, window cleaning, drapery or venetian blind
cleaning, janitorial services, pest control, uniform supply,
landscaping, and parking equipment.
(j) Cost of all other repairs, replacements and general
maintenance of the Property and Building neither specified above
nor directly billed to tenants.
(k) Amortization of all capital improvements or repairs made to
the Building or parking garage subsequent to the Commencement Date
which are primarily for the purpose of reducing operating expense
costs but only to the extent of the reduction or otherwise
improving the operating efficiency of the Building or which are
required to comply with any change in the laws, rules or
regulations of any governmental authority with respect only to
laws becoming effective after the date hereof or which will extend
the life of the Building, the cost of such items to be amortized
over a period of at least five (5) years.
(1) Operating Costs of the Exterior Common Areas. "EXTERIOR
COMMON AREAS" shall mean those areas of the Property which are
riot located within the Building and its immediate proximity and
which are provided and maintained for the common use and benefit
of Landlord and tenants of the Building generally and the
employees, invitees and licensees of Landlord and such tenants,
including, without limitation, sidewalks and landscapes.
Basic Costs shall not include the cost of capital improvements (except as above
set forth), depreciation, interest, lease commissions, and principal payments on
mortgage and other non-operating debts of Landlord. Basic Costs shall not
include: (i) costs of repairs, restoration, replacement or other work occasioned
by the exercise by a governmental authority of the right of eminent domain; (H)
attorney's fees, costs, disbursements and other expenses incurred in connection
with negotiations or disputes with tenants, prospective tenants, consultants,
management agents, purchasers or mortgagees of the Building; (iii) allowances,
concessions and other costs and expenses incurred in completing, renovating or
otherwise improving, decorating or redecorating space for tenants, or
prospective tenants, or vacant, leasable space in the Building; (iv) any cost
that should be capitalized in accordance with generally accepted accounting
principles except capital improvements made to (a) reduce operating expenses
base in an annual amortization including interest over the estimated useful
life, not to exceed the actual cost savings,
27
<PAGE>
EXHIBIT 10.7
(b) nonstructural capital improvements made by Landlord to comply with
changes in laws after the date hereof, and (c) improved security for the
Building, all amortized on a straight-line basis, including interest; (v)
rental payments made under any ground or underlying lease or leases; (vi)
costs incurred in connection with the sale, financing, refinancing,
mortgaging, selling or change of ownership of the Building; (vii) costs or
expenses of utilities directly metered to tenants of the Building and payable
separately by such tenants and costs of additional, above-standard electrical
equipment installed in premises of other tenants of the Building and costs of
electricity consumed through such additional electrical equipment, whether or
not such costs are payable by such other tenants; (viii) costs of repairs,
restoration, replacements or other work occasioned by the gross negligence or
intentional tort of Landlord, or any representative, employee, agent or
affiliate of Landlord; (ix) costs of repairing, replacing or otherwise
correcting defects in construction of the Building other than repairs or
maintenance as required in Paragraph 7 hereof, the Tenant Improvements, the
leasehold improvements of other tenants of the Building, or in the Building
equipment; (x) costs incurred to correct violations by Landlord of any law,
rule, order or regulation which was in effect as of the date hereof, (xi)
costs of Landlord's general corporate overhead and general administrative
expense, organizational fees, and partnership expenses; (xii) costs of
restoration or repair paid by insurance, condemnation, third parties or
tenants (including deductible amounts to paid); and (xiii) costs which would
be included in Basic Costs which are paid to any affiliate of Landlord to the
extent such costs exceed market rates for such services. If Landlord should
receive more than one hundred percent 100%) of Basic Costs, Landlord shall
pay Tenant (in the form of a credit against Rent next due or, upon expiration
of this Lease, in the form of Landlord's check) Tenant's shares of such
excess. Basic Costs will be calculated in years subsequent to 1997 in a
manner substantially consistent with the calculations made in 1997, including
the application of the gross-up provision.
5. Notwithstanding any language in the Lease seemingly to the contrary, if
the Building is not fully occupied or is receiving less than fully occupied
Building services during any calendar year of the Lease Term, actual Basic Costs
and the Excess for purposes of this Exhibit "C" shall be determined as if the
Building had been fully occupied and receiving full Building services during
such year. Only Basic Costs that vary with occupancy shall be grossed up as
described above. Basic Costs that do not vary with occupancy, such' as taxes,
insurance, repairs and maintenance shall not be grossed up.
28
<PAGE>
EXHIBIT 10.7
EXHIBIT "D"
WORK LETTER AGREEMENT
This Work Letter Agreement supplements and is hereby incorporated in that
certain lease (hereinafter referred to as the "Lease") dated and executed
concurrently herewith by and between Brookdale Investors, L.P. (hereinafter
referred to as "Landlord") and ObjectSpace, Inc., a Texas Corporation
(hereinafter referred to as "Tenant") with the terms defined in the Lease to
have the same definition where used herein.
1. The Premises are leased to Tenant in their "AS IS" condition and this
Work Letter Agreement is intended to set forth the obligations of
Landlord and Tenant with respect to the preparation of the Premises for
Tenant's occupancy. All improvements described in this Work Letter
Agreement to be constructed in and upon the Premises are hereinafter
referred to as the "Tenant Improvements." It is agreed that construction
of the Tenant Improvements will be completed in accordance with the
procedures set forth in this Work Letter Agreement.
2. Tenant shall devote such time in consultation with Landlord or
Landlord's agent as may be required to provide all necessary information
to Landlord or Landlord's agent as Landlord deems necessary in order to
enable Landlord to complete, and obtain Tenant's written approval of, the
final layout, drawings, and plans for the Premises. All of Tenant's plans
and specifications shall be subject to Landlord's consent, the granting
or denial of which shall be in Landlord's sole discretion.
3. Space planning and construction drawings, and when deemed necessary
by Landlord, engineering drawings, shall be prepared by Landlord's
architect. Unless otherwise provided in EXHIBIT "D-2", Tenant shall pay
for space planning services, for Landlord's standard construction and
engineering drawings covering Landlord's Building Standard materials as
defined in EXHIBIT "D-1", and for any nonstandard construction and
engineering drawings, or any additional costs for drawings occasioned by
special installation other than Building Standard. Tenant may pay for
such services out of the Allowance, if any, provided in EXHIBIT "D-2".
Tenant shall furthermore be responsible for the design, function and
maintenance of all special improvements, whether installed by Landlord at
Tenant's request or installed by Tenant with Landlord's prior written
approval. Tenant shall use the Building Standard materials unless other
materials are expressly approved in writing by Landlord.
4. Prior to commencing any construction of Tenant Improvements, Landlord
shall submit to Tenant a written estimate setting forth the anticipated
cost of the Tenant Improvements (excluding any costs which may be
specified herein or in EXHIBIT "D-2", as being borne by Landlord),
including but not limited to labor and materials, contractor's fees
(Landlord's construction management fees), permit fees, and space
planning, construction, and engineering drawing costs which are the
responsibility of Tenant. Within five (5) Business Days Tenant shall
either notify Landlord in writing of its approval of the cost estimate,
or specify its objections thereto and desired changes to the proposed
Tenant Improvements. In the event Tenant notifies Landlord of such
objections and desired changes, Tenant shall work with Landlord to reach
acceptable plans and cost estimate; provided, however, if Tenant fails to
give written approval of a cost estimate within ten (10) Business Days
following delivery to Tenant of the original cost estimate.
5. In the event Landlord's estimate and/or the actual cost of
construction shall exceed the Allowance, (as defined in EXHIBIT "D-2"
attached hereto), if any (such amounts exceeding the Allowance being
herein referred to as the "Excess Costs"), Tenant shall pay to Landlord
such Excess Costs as follows:
(a) Tenant shall deliver to Landlord, with its approval of the
Landlord's estimate, and in any event prior to commencement of
construction, an amount equal to fifty percent (50%) of the Excess
Costs as then estimated by Landlord.
(b) After substantial completion of the Tenant Improvements,
Tenant shall pay to Landlord on demand an amount which when added
to the initial payment described in subparagraph (a) above equals
ninety percent (90%) of the Excess Costs as then estimated by
Landlord.
29
<PAGE>
EXHIBIT 10.7
(c) As soon as the final accounting can be prepared and
submitted to Tenant, Tenant shall pay on demand to Landlord the
entire balance of the Excess Costs based upon the actual cost of
construction.
The statements of costs submitted to Landlord by Landlord's contractors
shall be conclusive for purposes of determining the actual cost of the
items described therein. The amounts payable hereunder constitute other
rent payable pursuant to the Lease, and the failure to timely pay same
constitutes an event of default under the Lease.
6. If Tenant shall request any change, addition or alteration in the
working drawings, after approval by Landlord and Tenant, Landlord shall
have such working drawings prepared, and Tenant shall promptly reimburse
Landlord for the cost thereof. Promptly upon completion of the
revisions, Landlord shall notify Tenant in writing of the cost which will
be chargeable to Tenant by reason of such change, addition or deletion.
Tenant shall, within three (3) Business Days, notify Landlord in writing
whether it desires to proceed with such change, addition or deletion. In
the absence of such written authorization, Landlord shall have the option
to continue work on the Premises disregarding the requested change,
addition or alteration, or Landlord may elect to discontinue work on the
Premises. In the event such revisions result in a higher estimate of the
cost of construction, Tenant shall pay to Landlord an amount sufficient
to provide Landlord with the above described fifty percent (50%) (or if
applicable ninety percent (90%)) payment toward Excess Costs.
7. Following approval of the plans and the payment by Tenant of the
required portion of the Excess Costs, if any, Landlord shall cause the
Tenant Improvements to be constructed in accordance with the approved
plans. Unless otherwise specifically provided in the approved plans, all
material used in the construction of the Tenant's Improvements shall be
of such quality as determined by the Landlord's architect. Landlord shall
notify Tenant of substantial completion of the Tenant Improvements.
8. Any other language in this Exhibit D notwithstanding, the Tenant
Improvements shall be constructed by one of the general contractors
previously approved by Landlord. A minimum of three bids to construct
the Tenant Improvements will be received. Landlord shall select the
general contractor to perform the work and will enter directly into a
contract with that contractor for the Tenant Improvements.
9. Tenant shall have the option to utilize any items currently in
place in the Premises, including but not limited to doors, lights and
glass, at no additional cost to Tenant. The Allowance shall not apply to
these items.
30
<PAGE>
EXHIBIT 10.7
EXHIBIT "D-1"
The Building Standard (herein so called) materials are the following:
<TABLE>
<S>< <C> <C>
A. FLOORING: Grade and quality of carpeting to be selected by
Landlord, with color to be selected by Tenant from
those offered by Landlord.
B. WINDOW COVERING: Miniblinds in Landlord's uniform color.
C. CEILING: Acoustical tiles - Grid system.
D. PARTITIONS: Sheetrock partitions with tape, bed, texture and
paint finish.
E. DOORS: Full height, solid core door with metal frame and
hardware.
F. ELECTRICAL POWER: Standard 110 volt duplex wall-outlets: mounted
convenience outlets.
G. LIGHT SWITCHES: Single pole light switches.
H. TELEPHONE FACILITIES: Standard unwired telephone outlets (ring and
string) mounted on partitions. Tenant must make
timely arrangements for telephone installation and
is responsible for all charges related to such
installation.
I. LIGHT FIXTURES: Recessed fluorescent lighting fixtures.
</TABLE>
31
<PAGE>
EXHIBIT 10.7
EXHIBIT "D-2"
Landlord agrees to provide Tenant an allowance (the "Allowance") of'$5.00 per
square foot of Rentable Area in the Premises (which is deemed by Landlord and
Tenant to be 13,053 square feet), being the total sum of $62,265.00 toward the
cost of Tenant Improvements, which Tenant Improvements shall include (i) fees
totaling no more than five percent (5%) of the total cost of Tenant Improvements
for construction management, (ii) design and engineering fees regarding the
Premises; (iii) the cost of monument signage as set forth elsewhere in this
Lease; (iv) HVAC design and balancing and (v) the cost of telephone, data and
computer cabling. Tenant shall not be entitled to any credit for any amount not
applied to the cost of the Tenant Improvements. In the event the Allowance shall
not be sufficient to complete the improvements contemplated by the approved
plans, Tenant shall pay the Excess Costs as prescribed in Exhibit "D".
32
<PAGE>
EXHIBIT 10.7
EXHIBIT "E"
PARKING AGREEMENT
1. During the herein defined Lease Term, Tenant shall be allotted up to
three (3) standard, covered parking spaces on or about the Garage and Building
site for every 1,000 square feet of Rentable Area of the Premises then under
lease to Tenant, at no charge to Tenant. On the Commencement Date Tenant shall
be entitled to use up to thirty-nine (39) of such parking spaces. No deductions
or allowances will be made for days an individual does not use the parking
facilities.
2. In the event said agreement is canceled, Tenant shall insure that the
automobile owner removes said automobile from the premises promptly upon demand.
Otherwise Landlord shall remove said automobile without assumption of any
liability whatsoever.
3. Landlord shall not be responsible for any loss, theft or damage to any
vehicles or any articles left in any vehicle while in or being driven to or from
the Garage however caused unless due to gross negligence of Landlord, its
agents, servants or employees.
4. Landlord may designate the area in the Garage within which each vehicle
may be parked and may make, modify and enforce reasonable rules and regulations
relating to the parking of vehicles in the Garage, and Tenant agrees to abide by
such rules and regulations.
33
<PAGE>
EXHIBIT 10.7
EXHIBIT "F"
CERTIFICATE OF INSURANCE FOR TENANT
34
<PAGE>
EXHIBIT 10.7
EXHIBIT "H"
BUILDING RULES AND REGULATIONS
The following rules and regulations shall apply, where applicable, to all
leased premises, the Building, the parking garage associated therewith, the land
situated beneath the Building and the appurtenances thereto:
1. Sidewalks, doorways, vestibules, halls, stairways and other
similar areas shall not be obstructed by Tenant or used by any Tenant for any
purpose other than ingress and egress to and from the leased premises and for
going from one to another part of the Building.
2. Plumbing, fixtures and appliances shall be used only for the
purposes for which designed, and no sweepings, rubbish, rags or other unsuitable
material shall be thrown or placed therein. Damage resulting to any such
fixtures or appliances from misuse by a Tenant or such Tenants agents, employees
or invitees, shall be paid by such Tenant, and Landlord shall not in any case be
responsible therefor.
3. Except as otherwise provided in the Lease, no signs,
advertisements or notices shall be painted or affixed on or to any windows,
doors or other parts of such Building except those of such color, size, style
and in such places as shall be first approved in writing by Landlord. No nails,
hooks or screws shall be driven or inserted in any part of the Building except
by the Building maintenance personnel nor shall any part of the Building be
defaced by Tenants. No curtains or other window treatments shall be placed
between the glass and the Building standard window treatment.
4. Landlord will provide and maintain an alphabetical directory board
for all Tenants in the first floor (main lobby) of the Building and no other
directory shall be permitted unless previously consented to by Landlord in
writing.
5. Landlord shall provide all locks for doors in each Tenant's leased
premises, at the cost of such Tenant, and no Tenant shall place any additional
lock or locks on any door in its leased area without Landlord's prior written
consent. A reasonable number of keys to the locks on the doors in each Tenant's
leased premises shall be furnished by Landlord to each Tenant, at the cost of
such Tenant, and the Tenant shall not have any duplicate keys made.
6. All Tenants will refer all contractors, contractors
representatives and installation technicians to Landlord for Landlord's
supervision, approval and control before the performance of any contractual
services. This provision shall apply to all work performed in the Building
including, but not limited to installations of telephones, telegraph equipment,
electrical devices and attachments, doors, entranceways, and any and all
installations of every nature affecting floors, walls, woodwork, trim windows,
ceilings, equipment and any other physical portion of the Building.
7. Movement in or out of the Building of furniture, office equipment,
safes, heavy equipment, bulky material, merchandise or materials which require
the use of elevators or stairways, or movements through the Building entrances
or lobby shall be restricted to such hours as Landlord shall designate. All
such movement shall be under the supervision of Landlord and shall proceed in a
manner agreed upon between the Tenants and Landlord by prearrangement before
performance so as to arrive at the optimum time, method and routing of such
movement; subject, however, to Landlord's decision and control, to prohibit any
such article from being brought into the Building for safety or other concerns.
The Tenants are to assume all risks as to the damage to articles moved and
injury to persons or public engaged or not engaged in such movement, including
equipment, property and personnel of Landlord if damaged or injured as a result
of acts in connection with carrying out this service for a Tenant from the time
of entering the property to completion of work; and Landlord shall not be liable
for acts of any person engaged in, or any damage or loss to any of said property
or persons resulting from, any act in connection with such service performed for
a Tenant.
35
<PAGE>
EXHIBIT 10.7
8. Landlord shall have the power to prescribe the weight and position
of safes and other heavy equipment or items which shall in all cases, to
distribute weight, stand on supporting devices approved by Landlord. All damages
done to the Building by the installation or removal of any property of a Tenant,
or done by a Tenant's property while in the Building, shall be repaired at the
expense of such Tenant.
9. Corridor doors, when not in use, shall be kept closed.
10. Each Tenant shall cooperate with Landlord's employees in keeping
its leased premises neat and clean Tenants shall not employ any person for the
purpose of such cleaning other than the Building's cleaning and maintenance
personnel. Nothing shall be swept or thrown into the corridors, halls, elevator
shafts or stairways.
11. To ensure orderly operation of the Building, no ice, mineral or
other water, towels, newspapers, etc. shall be delivered to any leased area
except by persons appointed or approved by Landlord in writing.
12. Should a Tenant require telegraphic, telephonic, annunciator or
other communication service, Landlord will direct the electrician where and how
wires are to be introduced and placed and none shall be introduced or placed
except as Landlord shall direct. Electric current shall not be used for power or
heating without Landlord's prior written permission.
13. Tenant shall not make or permit any improper, objectionable or
unpleasant noises or odors in the Building or otherwise interfere in any way
with other Tenants or persons having business with them.
14. No birds or animals shall be brought into or kept in, on or about
any Tenant's leased premises.
15. No inflammable or explosive fluid or substance shall be used or
kept in the Building.
16. No portion of any Tenant's leased premises shall at any time be
used or occupied as sleeping or lodging quarters.
17. Landlord reserves the right to rescind any of the rules and
regulations and to make such other and further rules and regulations as in its
judgment shall from time to time be needful for the safety, protection, care and
cleanliness of the Building, the operation thereof, the preservation of good
order therein and the protection and comfort of the Tenants and their agents,
employees, licensees and invitees, which rules and regulations, when made and
written notice thereof is given to a Tenant, shall be binding upon it in like
mariner as if originally herein prescribed. Landlord shall apply these rules
fairly to all tenants in the Building.
36
<PAGE>
EXHIBIT 10.7
EXHIBIT "I"
RENEWAL OPTION
Provided that no event of default has ever occurred more than one time in
any consecutive twelve-month period under any term or provision contained in
this Lease and no condition exists which with the passage of time or the giving
of notice or both would constitute an event of default pursuant to this Lease
and provided that Tenant has continuously occupied the Premises for the
Permitted Use during the Lease Term, Tenant (but not any assignee or subtenant)
shall have the right and option (the "RENEWAL OPTION") to renew this Lease, by
written notice delivered to Landlord no later than twelve (12) months prior to
the expiration of the initial Lease Term, for an additional term (the "RENEWAL
TERM") of sixty (60) months under the same terms, conditions and covenants
contained in the Lease, except that (a) no abatements or other concessions, if
any, applicable to the initial Lease Term shall apply to the Renewal Term, (b)
the Base Rental shall be equal to the market rate for comparable office space
located in buildings comparable to the Building within a two (2) mile radius of
the Building as of the end of the initial Lease Term as reasonably determined by
Landlord, (c) Tenant shall have no option to renew this Lease beyond the
expiration of the Renewal Term; and (d) all leasehold improvements within the
Premises shall be provided in their then existing condition (on an "as is"
basis) at the time the Renewal Term commences. Failure by Tenant to notify
Landlord in writing of Tenant's election to exercise the Renewal Option herein
granted within the time limits set forth for such exercise shall constitute a
waiver of such Renewal Option. In the event Tenant elects to exercise the
Renewal Option as set forth above, Landlord shall, within thirty (30) days
thereafter, notify Tenant in writing of the proposed rental for the Renewal Term
(the "PROPOSED RENEWAL RENTAL"). Tenant shall within thirty (30) days following
delivery of the Proposed Renewal Rental by Landlord notify Landlord in writing
of the acceptance or rejection of the Proposed Renewal Rental. If Tenant
accepts Landlord's proposal, then the Proposed Renewal Rental shall be the
rental rate in effect during the Renewal Term. Failure of Tenant to respond in
writing during the aforementioned thirty (30) day period shall be deemed an
acceptance by Tenant of the Proposed Renewal Rental. Should Tenant reject
Landlord's Proposed Renewal Rental during such thirty (30) day period, then
Landlord and Tenant shall negotiate during the thirty (30) day period commencing
upon Tenant's rejection of Landlord's Proposed Renewal Rental to determine the
rental for the Renewal Term. In the event Landlord and Tenant are unable to
agree to a rental for the Renewal Term during said thirty (30) day period, then
the Renewal Option shall terminate and be null and void and the Lease shall,
pursuant to its terms and provisions, terminate at the end of the original Lease
Term.
Upon exercise of the Renewal Option by Tenant and subject to the
conditions set forth hereinabove, the Lease shall be extended for the period of
such Renewal Term without the necessity of the execution of any further
instrument or document, although if requested by either party, Landlord and
Tenant shall enter into a written agreement modifying and supplementing the
Lease in accordance with the provisions hereof. Any termination of the Lease
during the initial Lease Term shall terminate all renewal rights hereunder. The
renewal rights of Tenant hereunder shall not be severable from the Lease, nor
may such rights be assigned or otherwise conveyed in connection with any
permitted assignment of the Lease. Landlord's consent to any assignment of the
Lease shall not be construed as allowing an assignment of such rights to any
assignee.
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EXHIBIT 10.7
EXHIBIT "J"
RIGHT OF FIRST REFUSAL
Provided that no event of default has ever occurred more than one time in
any consecutive twelve-month period, under any term or provision contained in
this Lease and no condition exists which with the passage of time or the giving
of notice or both would constitute an event of default pursuant to this Lease
and provided that Tenant has continuously occupied the Premises for the
Permitted Use during the Lease Term, Tenant (but not any assignee or subtenant)
shall have the right, subject to the terms and conditions set forth below, to
lease (i) the remainder of the sixth floor of the Building which Tenant is not
leasing under this Lease, and (ii) Suite 395 in the Building which suite
Landlord and Tenant agree contains 3,638 rentable square feet (the "RIGHT OF
FIRST REFUSAL SPACE") before it is leased to any third party.
In the event any third party expresses interest in leasing all or any
portion of the Right of First Refusal Space during the Lease Term ("THIRD PARTY
INTEREST"), Landlord shall offer the entire Right of First Refusal Space to
Tenant upon the same terms, covenants and conditions as provided in the Lease
for the original Premises, except that (i) the rent for the Right of First
Refusal Space shall be the then prevailing market rate, as determined by
Landlord, for comparable office space located in the Building; (ii) Tenant shall
accept the Right of First Refusal Space "As Is"; and (iii) Tenant shall have no
further rights with respect to the Right of First Refusal Space. If Tenant
notifies Landlord in writing of the acceptance of such offer within five (5)
days after Landlord has delivered such offer to Tenant, Landlord and Tenant
shall enter into a written agreement modifying and supplementing the Lease and
specifying that such Right of First Refusal Space accepted by Tenant is a part
of the Premises demised pursuant to the Lease for the remainder of the Lease
Term and any renewal thereof, if applicable and containing other appropriate
terms and conditions relating to the addition of the Right of First Refusal
Space to this Lease (including specifically any increase or adjustment of the
rent as a result of such addition). In the event that Tenant does not notify
Landlord in writing of its acceptance of such offer in such five (5) day period,
then Tenant's rights under this paragraph with respect to the Right of First
Refusal Space shall terminate and Landlord shall thereafter be able to lease the
Right of First Refusal Space or any portion thereof to any third party. Should
Tenant's rights regarding the Right of First Refusal terminate under this
paragraph and Landlord is thereafter unsuccessful in leasing all the Right of
First Refusal Space to a third party, Landlord shall not be obligated to offer
the Right of First Refusal Space to Tenant for six (6) months after the date
Tenant's rights were so terminated. Any termination of the Lease shall
terminate all rights of Tenant with respect to the Right of First Refusal Space.
The rights of Tenant with respect to the Right of First Refusal Space shall not
be severable from the Lease, nor may such rights be assigned or otherwise
conveyed in connection with any permitted assignment of the Lease. Landlord's
consent to any assignment of the Lease shall not be construed as allowing an
assignment or a conveyance of such rights to any assignee. Nothing herein
contained should be construed so as to limit or abridge Landlord's ability to
deal with the Right of First Refusal Space or to lease the Right of First
Refusal Space to other tenants, Landlord's sole obligation being to offer, and
if such offer is accepted, to deliver the Right of First Refusal Space to Tenant
in accordance with this provision. The right of first refusal granted here is
subject to prior rights, of other tenants existing in the Building, which
include prior rights of first refusal and/or renewal rights. This right of
refusal is a continuing right of refusal and shall apply to any releasing of any
space even if Tenant previously had elected not to lease space pursuant to a
previous right of refusal.
The Lease shall not be void or voidable, nor shall Landlord be liable to
Tenant for any loss or damage resulting from any delay in delivering possession
of the Right of First Refusal Space to Tenant, but abatement of the Base Rental
attributable to the Right of First Refusal Space from the date of Tenant's
acceptance of Landlord's offer with respect to the Right of First Refusal Space
to the date of actual delivery of the Right of First Refusal Space shall
constitute full settlement of all claims that Tenant might have against Landlord
by reason of the Right of First Refusal Space not being delivered upon the date
of Tenant's acceptance of Landlord's offer.
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EXHIBIT 10.7
EXHIBIT "K"
ROOF LICENSE AGREEMENT
THIS ROOF LICENSE AGREEMENT made as of this 5TH day of SEPTEMBER, 1997, between
Brookdale Investors, L.P. ('Licensor") and ObjectSpace, Inc., a Texas
Corporation ("Licensee"), having an address at 14881 Quorum Drive, Suite 600,
Dallas, Texas 75240.
WITNESSETH
Licensor or its predecessor in interest, and Licensee or its predecessor in
interest, have heretofore entered into that certain lease dated SEPTEMBER 5,
1997, for premises described as Suite 600, initially containing approximately
13,053 rentable square feet (the "Lease") in the property (the "Property") known
as The Belvedere, located at 14881 Quorum Drive, Dallas, Dallas County, Texas,
75240 which lease has been amended by instruments dated: None
C. BASIC TERMS. The following terms shall have the following meanings
throughout this Agreement.
1. Property Name: The Belvedere
2. Properly Address: 14881 Quorum Drive, Dallas, Texas 75240
3. Roof Premises: The space at (the Properly comprising a
portion of the roof area of the Property shown on the drawing
attached hereto as Exhibit A ("Roof Premises") and which Licensor
reserves the right to reasonably revise or relocate at any time as
long as there is no unreasonable interference with Tenant's use of
the Roof Premises.
4. Term: Commencing FEBRUARY 13, 1998 and ending on MARCH 21,
2003, still subject to amendment, or earlier termination by
agreement of the parties.
5. Type of Activity and Purpose: Location for Licensee's two
communications dishes or ANTENNA WHICH SHALL BE INSTALLED IN A
LOCATION DESIGNATED BY LICENSOR AND THE CABLE FROM SUCH DISH OR
COMMUNICATIONS EQUIPMENT SHALL ENTER THE BUILDING AT THE POINT
DESIGNATED BY LICENSOR.
D. LICENSE. Licensor hereby licenses to Licensee, on a non-exclusive
basis, the use of the Roof Premises for the Term set forth above, unless
terminated sooner in accordance herewith, subject to the terms and
conditions hereof.
E. TERMS AND CONDITIONS. In consideration of the license granted to
Licensee herein, Licensee agrees to the following:
1. PURPOSE. Licensee shall use the Roof Premises only for the Type of
Activity and Purpose set forth above and for no other purpose.
2. INSURANCE. Licensee shall ensure that the insurance provisions of the
above described Lease, by and between Brookdale Investors, L.P. ("Landlord") and
ObjectSpace, Inc., a Texas Corporation ("Tenant"), are extended to the Roof
Premises described in this License Agreement,
3. LANDLORD'S APPROVAL. The license granted hereby is specifically
conditioned on Licensee securing from Licensor Licensor's prior written approval
of Licensee's proposed installation procedures, the location, size and
frequencies of Licensee's communications dishes, antennae and equipment.
Further, Licensee shall have access to the Roof Premises only (i) during normal
business hours (ii) after at least one hour's notice to Licensor and (iii) being
accompanied by Licensor onto the Roof Premises.
4. WAIVER OF CLAIMS AND INDEMNITY. To the extent not prohibited by law,
Licensee shall indemnify, defend and save harmless Licensor and its partners,
beneficiaries, trustees, officers, directors, employees and agents, from and
against any and all liability, claims, damages, costs and expenses, including
without limitation, attorney's fees, resulting from) or in connection with
Licensee's use and occupancy of the Roof Premises unless caused by (the
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EXHIBIT 10.7
gross negligence or willful misconduct of Licensor or Licensor's agents. To
the extent not prohibited by law, Licensee waives all claims against Licensor
and its partners, beneficiaries, trustees, officers, directors, employees and
agents for injury to persons, damage to property or to any other interests of
Licensee sustained by Licensee or any person claiming through Licensee resulting
from any occurrence in or upon the Roof Premises or the Property. Without
limitation, all of Licensee's personal property which may at any time be at the
Roof Premises shall be at Licensee's sole risk unless damage to said personal
property of Licensee is caused by the gross negligence or willful misconduct of
Licensor or its agents.
5. COSTS OF LITIGATION. If Licensor or its agents shall without fault on
their part be made a party to any litigation rising out of any act or omission
of Licensee, Licensee shall pay all cost and expenses, including attorney's
fees, incurred by said parties on account of said obligation. In the event of
any litigation between parties of this Agreement, the prevailing party shall be
entitled to recover from the unsuccessful party its reasonable attorney's fees
and costs as part of the judgment.
6. RELOCATION, POSTPONEMENT AND EARLY TERMINATION. The location of the
communications dishes or communications equipment on the Roof Premises shall be
shown on the plans submitted to Licensor for its approval. In the event that
Licensee desires to move the communications dishes or communications equipment
to a different place on the Roof Premises, then new plans showing such new
locations must be submitted to Licensor for its approval. Licensee must give
Licensor at least ten (10) days notice of relocation. All costs of such
relocation shall be borne by Licensee. Licensor may terminate the License
granted herein upon a violation by Licensee of any provision hereof or of the
Lease.
7. REMOVAL OF PROPERTY; HOLDING OVER. Prior to the end of the Term of this
license, Licensee shall remove all of its communications dishes and
communications equipment from the Roof Premises and shall leave the Roof
Premises in a clean condition and in as good or better condition as when
Licensee took possession of the Roof Premises, making any necessary repairs to
the roof or the building. For each day or part of a day after the end of the
Term that Licensee shall have failed to do the foregoing, Licensee shall pay the
Licensor Two Hundred Dollars ($200.00). If Licensee fails to remove its
communications dishes and communications equipment by the end of the Term,
Licensor may take possession of said communications dishes and communications
equipment and dispose of said communications dishes and communications equipment
in such lawful manner as it shall determine.
8. ASSIGNMENT. This Agreement is personal to Licensee. Licensee shall not
assign, sublicense or in any other manner transfer or encumber this Agreement or
Licensee's rights hereunder, by operation of law or otherwise, except under the
same terms and conditions as Tenant may transfer all the Premises under the
Lease.
9. INSPECTION. Licensor reserves the right to inspect the Roof Premises at
any time, and to enter the same for any other reasonable cause, including
without limitation, the making of repairs to the Building or grounds.
10. OPERATION. Licensee shall operate, maintain and repair the Roof
Premises, and any communications equipment affixed thereto, for the activity and
purpose described above during normal business hours, unless Licensor shall
agree otherwise in writing; provided, however, that Licensee may operate any of
Licensee's equipment on the Roof Premises twenty-four hours a day, seven days a
week. If Licensee shall fail to maintain and repair the Roof Premises as set
forth herein, Landlord may declare Tenant in default under the Lease after
complying with the notice provisions of Section 23 (a)(ii) of the Lease (without
limiting Licensor's remedies for other breaches of this Agreement).
11. RULES. Licensee shall comply with each of the rules set forth on Exhibit
'D" of the Lease which are incorporated herein by reference and made a part
hereof for all purposes. Licensee shall also comply with any additional rules
or modifications of the rules that Licensor reasonably may promulgate and notify
Licensee after the date hereof.
12. COMPLIANCE WITH LAWS. Licensee shall at Licensee's sole cost and expense
install, operate, maintain and remove the communications dishes and
communications equipment in accordance with all governmental laws,
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EXHIBIT 10.7
rules, regulations, codes and ordinances and shall obtain all FCC, FAA and other
governmental licenses, permits and approvals required to install, operate,
maintain and remove the communications dishes and communications equipment.
13. COST OF POWER. Any power requirements shall beat the sole cost of
Licensee.
14. CROSS-DEFAULT- Any default by Licensee under this Agreement shall be
deemed a default under the Lease and any default by Licensee under the Lease
shall be a default under this Agreement. On either form of default, the
provisions of Paragraph 23 of the Lease shall apply.
41
