8-K
Valion Bio, Inc. (VBIO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934
Date of Report (Dateof earliest event reported): March 9,2026
Tivic Health Systems, Inc.
(Exact name of Registrant as Specified in ItsCharter)
| Delaware | 001-41052 | 81-4016391 |
|---|---|---|
| (State or Other Jurisdiction | (Commission File Number) | (IRS Employer |
| of Incorporation) | Identification No.) | |
| 1305 E. Houston Street,<br><br> <br>Building 1, Suite 311 | ||
| San Antonio, Texas | 78205 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| Registrant’s Telephone Number, Including Area Code: 888 276-6888 | ||
| --- |
47685 Lakeview Blvd.
Fremont, CA 94538
(Former Name or Former Address, if ChangedSince Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b)of the Act:
| Title of each class | TradingSymbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.0001 per share | TIVC | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
Microbial Building Lease
On March 13, 2026, Tivic Health Systems, Inc.’s (the “Company”) wholly owned subsidiary Velocity Bioworks, Inc. (“VBI”) entered into a Building Lease Agreement (the “Microbial Building Lease”) with TPB Merchants Ice LLC (“TPB”) to lease an approximately 8,024 square foot facility (the “Microbial Building”) located at 1305 E. Houston St., San Antonio, TX 78205 (the “Property”). The initial term of the Microbial Building Lease is eight years, unless earlier terminated by the parties pursuant to the terms thereof. VBI has (i) a one-time option to extend the lease term for an additional period of five years and (ii) the exclusive option to purchase the Microbial Building and the Property from TPB at any time during the first 24 months of the initial term for $12.5 million.
In exchange for leasing the premises, VBI shall pay TPB a monthly base rent of approximately $22,605 for the first twelve months, or a total of $271,260, with annual dollar increases in later years of the lease term. The aggregate base rent over the eight-year lease term is approximately $5.34 million. The Microbial Building Lease provides that VBI will pay additional expenses to TPB related to VBI’s share of operating expenses, taxes and utilities related to the premises using ratable percentages set forth in the Microbial Building Lease.
Mammalian Building Lease
On March 9, 2026, VBI entered into a Lease (the “Mammalian Building Lease”) with Merchants Ice II, LLC (“Merchants Ice II”) to lease an approximately 20,144 square foot facility located at the Property. The term of the Mammalian Building Lease is 102 months, effective January 1, 2026, unless earlier terminated by the parties pursuant to the terms thereof.
In exchange for leasing the premises, VBI shall pay Merchants Ice II a monthly base rent of $55,029.73 for the first twelve months, or a total of $660,356.78, with annual increases of approximately 3.0%. The aggregate base rent over the lease term is approximately $6.29 million. The Mammalian Building Lease provides that VBI will pay additional expenses to TPB related to VBI’s share of operating expenses, taxes and utilities related to the premises using ratable percentages set forth in the Mammalian Building Lease.
Office Sublease
On March 13, 2026, VBI entered into a Sublease (the “Office Sublease” and together with the Microbial Building Lease and the Mammalian Building Lease, the “Facility Leases”) with Texas Research and Technology Foundation (“TRTF”) to sublease approximately 8,122 square feet of office space located at the Property, which Office Sublease was consented to by TPB, as landlord of the leased premises, and is subject to the terms of that certain Office Lease Agreement, dated June 1, 2024, by and between TRTF and TPB. The term of the Office Sublease is 110 months, unless earlier terminated by the parties pursuant to the terms of the Office Sublease. This office will serve as the new principal executive office of the Company.
In exchange for subleasing the premises, VBI shall pay TRTF a monthly base rent starting at $31,044.94, with annual increases of approximately 3.0%. The Office Sublease provides that VBI will pay additional expenses to TPB related to VBI’s share of operating expenses, taxes and utilities related to the premises using ratable percentages set forth in the Office Sublease.
The Microbial Building Lease, the Mammalian Building Lease, and the Office Sublease are filed as Exhibit 10.1, Exhibit 10.2, and Exhibit 10.3, respectively, to this Current Report on Form 8-K and are incorporated herein by reference. The foregoing descriptions of the terms of the Facility Leases do not purport to be complete and are qualified in their entirety by reference to such exhibits.
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Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. |
|---|---|
| Exhibit No. | Description |
| --- | --- |
| 10.1+ | Building Lease Agreement by and between Velocity Bioworks, Inc. and TPB Merchants Ice LLC, signed March 13, 2026. |
| 10.2+ | Lease by and between Velocity Bioworks, Inc. and Merchants Ice II, LLC, signed March 9, 2026. |
| 10.3+ | Sublease by and among Velocity Bioworks, Inc., Texas Research and Technology Foundation, and TPB Merchants Ice LLC, signed March 13, 2026. |
| 104 | Cover Page Interactive Data File (embedded within the XBRL document). |
| + | The annexes, schedules and exhibits<br>have been omitted pursuant to Item 601 of Regulation S-K. The registrant undertakes to furnish supplementally a copy of such schedules<br>and exhibits, or any section thereof, to the SEC upon request. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TIVIC HEALTH SYSTEMS, INC. | |||
|---|---|---|---|
| Date: | March 13, 2026 | By: | /s/ Lisa Wolf |
| Name: Lisa Wolf<br><br>Title: Chief Financial Officer |
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Exhibit 10.1
BUILDING LEASE AGREEMENT
This BUILDING LEASE AGREEMENT (“Lease”), dated as of the 13th day of March, 2026 (the “Effective Date”), is entered into by and between TPB Merchants Ice LLC, a Texas limited liability company (“Landlord”) and Velocity Bioworks, Inc., a Delaware corporation (“Tenant"). Landlord and Tenant are also sometimes referred to in this Lease collectively as the "Parties" or individually as a "Party."
The Parties agree as follows:
1. Definitions. The following terms not otherwise defined within the Lease shall have the following meanings
"Additional Rent" means all sums other than Basic Rent payable by Tenant to Landlord under this Lease, including Operating Expenses and Taxes, Tenant's payments for services, Late Fees, overtime service charges, interest, and any and all other amounts due under this Lease, including any and all other sums that may become due by reason of any default of Tenant or failure to timely comply with the agreements, terms, covenants, and conditions of this Lease to be performed by Tenant.
"AdministrativeCharge" means the amount added to the cost of any Landlord service charges or charges incurred by Landlord from third-party service providers to cover Landlord's administrative costs, which amount shall equal three percent (3%) of such charge.
"Affiliate" means for any entity, any parent, subsidiary, or affiliate corporation which Controls, is Controlled by or is under common Control with such entity. For purposes of this definition, "Control" means the possession of the power to direct or cause the direction of the management and policy of an entity, whether through the ownership of voting securities, by statute, or by contract.
“Building” means the building commonly known as “Building 7” having the street address of 1305 E. Houston St., San Antonio, Texas 78205. Landlord and Tenant hereby agree that the Building contains approximately 8,042 square feet of area.
"Building Systems" means the structural portions of the Building, the roof, the foundation, the elevators, the HVAC Systems, and the mechanical, electrical, plumbing, security, and fire and life safety systems and equipment, including the fire alarms and fire sprinklers.
“Business Day” or "Business Days" means all days, excluding the following days: Saturdays, Sundays, and all days observed as legal holidays by the State of Texas, and the Federal Government.
"Business Hours" means, on each Business Day, the hours from 7 a.m. to 6 p.m. Central Time.
"Common Areas" means the entrances, lobby, accessways, hallways, bathrooms, stairways, elevator banks, and other Building areas and the driveways, parking areas (if any), and landscaped areas on the Property that are designated for the non-exclusive common use of all tenants of the Building and their invitees.
“Complex” means the Property and those certain six adjacent office buildings that together comprise what is commonly known as the “Merchant’s Ice” development, comprising a total of 149,828.65 square feet of rentable area.
"Force MajeureEvent" means any event beyond the reasonable control of a Parties that prevents such Party from completing their obligations pursuant to this Lease, which shall include but not be limited to any of the following events: (a) acts of God; (b) hurricanes, tornadoes, floods, fires, earthquakes, explosions, or other natural disasters; (c) war, invasions, hostilities (whether war is declared or not), terrorist threats or acts, riots or other civil unrest; (d) proclamations, orders, laws, actions, or requests made or enacted by governmental authority; (e) embargoes or blockades; (f) epidemics, pandemics, or other national or regional public health emergencies; (g) strikes, labor stoppages or slowdowns, or other industrial disturbances; and (h) shortages of supplies, adequate power, or transportation facilities.
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"Ground Lease" means any future ground lease or underlying lease affecting all or any portion of the Property, including all modifications, renewals, supplements, consolidations, and replacements thereof.
"Hazardous Materials" means any chemical, compound, material, substance, or other matter that: (a) is defined as a hazardous substance, hazardous material, or waste, or toxic substance under any Hazardous Materials Law; (b) is regulated, controlled, or governed by any Hazardous Materials Law or other laws; (c) is petroleum or a petroleum product; or (d) is asbestos, formaldehyde, radioactive material, drug, bacteria, virus, or other injurious or potentially injurious material (by itself or in combination with other materials).
"Hazardous MaterialsLaw" means any federal, state, or local law, ordinance, rule, decree, order, regulation, or court decision relating to Hazardous Materials or other environmental conditions on, under, or about the Premises, the Building, and/or the Property, or soil and ground water conditions, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), the Resource Conservation and Recovery Act (RCRA), the Hazardous Materials Transportation Act, any other law or legal requirement concerning hazardous or toxic substances, and any amendments to the foregoing.
"HVAC" means heating, ventilation, and air-conditioning.
"HVAC Systems" means the HVAC systems of the Building.
"Landlord Party" or “Landlord Parties” means Landlord's direct or indirect partners, officers, shareholders, directors, members, trustees, beneficiaries, employees, principals, contractors, licensees, agents, invitees, or representatives.
"Landlord's Addressfor Rent Payments" means 1305 E. Houston St., San Antonio, Texas 78205, until otherwise directed in writing.
"Market ServiceRate" means, for each service provided by Landlord to Tenant, the full market rate then charged by Landlord, or any party providing the service on behalf of Landlord, to tenants of the Building, in each case together with an Administrative Charge.
"Mortgage" means any current or future mortgage, deed of trust, or other security instrument in any amount for which all or any portion of the Property or Landlord's interest or estate in the Property is specified as security, including all modifications, renewals, supplements, consolidations, and replacements thereof.
"Mortgagee" means any mortgagee or beneficiary under any current or future Mortgage affecting the Property.
"Permitted Use" means any purpose permitted under the applicable zoning and code restrictions of the city, including but not limited to general and executive offices and uses incidental thereto, and for no other purpose whatsoever.
"Premises" means the entire Building, as more particularly shown on the floor plan attached hereto as Exhibit A. Landlord and Tenant hereby agree that the Premises contains 8,042 square feet of rentable area based on Landlord's current standards of measurement. The Landlord reserves the right to remeasure the Premises and adjust the Rentable Square Footage (RSF) at its sole discretion, provided that any such adjustment is made in accordance with the Building Owners and Managers Association (BOMA) standards or other generally accepted measurement standards and that Landlord provides Tenant with written notice of any such adjustment at least thirty (30) days prior to the effective date of such adjustment. Any increase in Rentable Square Footage resulting from such remeasurement shall not result in an increase in Basic Rent unless the actual usable area available to Tenant has increased.
"Property" means the real property on which the Building is located together with the Building and all appurtenant fixtures and personal property of Landlord used in the operation of the Building and/or the Property, and any other improvements now existing or hereafter constructed thereon, including the parking lot, walkways, and landscaped ground as depicted on the site plan attached hereto as Exhibit B.
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"Rent" means, collectively, Basic Rent and Additional Rent.
"Security Deposit" means an irrevocable, unconditional, standby letter of credit in the amount of $350,000.00, issued by a financial institution reasonably acceptable to Landlord in a form reasonably acceptable to Landlord (“Letter of Credit”).
"Tenant'sEquipment" means all of Tenant's personal property, now or hereafter located upon the Premises and owned by Tenant or any third party, and regardless of the method in which such personal property is attached or affixed to the Premises.
"Tenant Parties" means Tenant, any Affiliate of Tenant, any permitted assignee subtenant or occupant of the Premises, and each of their respective direct or indirect partners, officers, shareholders, directors, members, trustees, beneficiaries, employees, principals, contractors, licensees, agents, invitees, or representatives.
"Tenant's Addressfor Notices" means 1305 E. Houston St., Building 2, San Antonio, Texas 78205; Email – corporate@velocitybioworks.com, Attention: Michael Handley, or at such other address as Tenant or its counsel shall designate by written notice to Landlord sent pursuant to Section 25.
“Tenant’sShare” is (a) 100% of the Taxes and Operating Expenses attributable to the Building; plus (b) except as included in (a), 5.41% of the Complex Common Area Operating Expenses as provided annually by Complex owner, which percentage is obtained by dividing (A) the rentable square feet of the Premises by (B) the rentable square feet of the Complex as of the Effective Date. If the rentable square feet of the Complex changes after the Effective Date, the percentage in (b) shall be recalculated (but in no event, will the percentage in (b) increase after the Effective Date). Tenant shall not be obligated to pay amounts due under (b) to the extent such Complex Common Areas (defined below) are unavailable to Tenant due to casualty, condemnation, or other cause that is not the fault of Tenant.
2. Lease of the Premises
2.1 Demise. Landlord hereby leases to Tenant, and Tenant hereby rents from Landlord the Premises for the Term, upon and subject to the terms, covenants, representations, warranties, provisions, and conditions of this Lease.
2.2 Common Areas. The Lease of the Premises includes the nonexclusive right of Tenant to use, in common with others and in accordance with the Rules and Regulations, those Common Areas and facilities of the Property which are from time to time provided and specifically designated by Landlord for the use of tenants of the Property. The Property is part of the Complex and subject to Operating Expenses for Common Area maintenance and operations assessed by the owner of the Complex. The Common Areas include the grounds, landscaped areas, outside sitting areas, sidewalks, courtyards, walkways, and designated parking spaces located within the Complex (collectively, the “Complex Common Areas”). Except as may be otherwise provided expressly in this Lease, Tenant shall not have the right to use the roof, electrical closets, janitorial closets, mechanical rooms, or any other non-common or nonpublic area of the Building and/or the Property.
3. Term
3.1 Term. This Lease shall be effective and binding on Landlord and Tenant on the Effective Date. The term of this Lease shall be for a period of 96 months ("Term"), commencing on the Lease Commencement Date and ending at 11:59 p.m. local time on the last day of the 96^th^ full calendar month following the Lease Commencement Date ("Lease Expiration Date"), subject to adjustment and earlier termination as provided in this Lease. Unless otherwise provided in this Lease, the word "Term" shall include any Extension Term properly exercised by Tenant in accordance with Section 3.4.
3.2 Lease Commencement. The "Lease Commencement Date" shall be the Effective Date.
3.3 Delivery of the Premises. Landlord shall deliver the Premises to Tenant on the Effective Date.
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3.4 Option to Extend Lease Term.
(a) Subject to satisfaction of all of the Extension Conditions, Tenant shall have one (1) option ("Extension Option") to extend the Term of this Lease for one (1) additional period of five (5) years (the "Extension Term"). In order for the Extension Term to be effective, the Extension Conditions must be fully satisfied both at the time the option is exercised and at the time of the commencement of the Extension Term. The term "Extension Conditions" means that, as a condition to Tenant exercising the Extension Option: (i) Tenant shall have timely given Landlord an Extension Notice in accordance with Section 3.4(b); and (ii) on the date the Extension Option is exercised, and at the commencement of the Extension Option, no Event of Default by Tenant shall have occurred and be continuing.
(b) The Extension Option shall be exercisable by written notice (the "Extension Notice") to Landlord given no more than twelve (12) months and no less than nine (9) months prior to the expiration of the then-current Term. Time is of the essence as to the giving of the Extension Notice. If Tenant does not timely exercise the Extension Option in accordance with the terms of this Lease, the Extension Option shall automatically terminate, and the Lease Term shall expire as of the expiration of the then-current Term.
(c) The Extension Term shall constitute an extension of the Term and shall be upon all of the same terms and conditions as the existing Term, except that: (i) Landlord shall not be required to furnish any materials or perform any work to prepare the Premises for Tenant's continued occupancy during the Extension Term (nor shall Landlord be required to reimburse Tenant for any Alterations made or to be made by Tenant during or in preparation for the Extension Term); (ii) the Basic Rent for the Extension Term shall be based on prevailing market rental rates for comparable properties in the vicinity, as mutually agreed to between the parties; and (iii) there shall be no additional option to extend the Term of this Lease beyond the Extension Term set forth above.
(d) Prior to the commencement of the Extension Term, the Landlord shall prepare an amendment to reflect any changes in the Basic Rent and other appropriate terms, all subject to Tenant’s reasonable approval.
4. Rent and Late Fees.
4.1 Basic Rent. Subject to the terms of this Section, the Basic Rent (“Basic Rent”) shall be payable in equal monthly installments, in advance, commencing on the Lease Commencement Date, in the amounts set forth in Section 4.2 below.
4.2 Basic Rent Escalation. The Basic Rent shall escalate during the Term in accordance with the schedule set forth below. For the avoidance of doubt, the Basic Rent for the initial Term is as follows:
| Lease Months | Annual Basic Rent | Monthly Basic Rent | Rent PSF |
|---|---|---|---|
| 0-12 | $271,260.00 | $22,605.00 | $33.73 |
| 13-24 | $341,470.00 | $28,455.83 | $42.46 |
| 25-36 | $441,890.00 | $36,824.17 | $54.95 |
| 37-48 | $542,310.00 | $45,192.50 | $67.43 |
| 49-60 | $642,730.00 | $53,560.83 | $79.92 |
| 61-72 | $823,150.00 | $68,595.83 | $102.36 |
| 73-84 | $1,033,570.00 | $86,130.83 | $128.52 |
| 85-96 | $1,243,990.00 | $103,665.83 | $154.69 |
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4.3 Additional Rent. In addition to Basic Rent, Tenant shall pay to Landlord: (a) Operating Expenses in accordance with Section 5; (b) Taxes in accordance with Section 6; and (c) all other items of Additional Rent as they shall become due and payable by Tenant to Landlord under this Lease.
4.4 Rent Payments. Basic Rent shall be payable commencing on the Lease Commencement Date and thereafter in equal monthly installments in advance on the first day of each and every calendar month during the term of this Lease. Operating Expenses shall be payable in accordance with Section 5. Taxes shall be payable in accordance with Section 6. Subject to the terms and conditions of this Lease, Tenant covenants and agrees to pay Basic Rent, Tenant's Share of Operating Expenses, and Tenant's Share of Taxes promptly when due without notice or demand therefor (other than any notice required under Section 5 or Section 6) and, with respect to other Additional Rent items, following written notice thereof pursuant to the terms of this Lease. All items of Rent shall be paid without any abatement, deduction, or setoff for any reason whatsoever, except as expressly provided in this Lease. Tenant covenants and agrees to pay all Rent in lawful money of the United States, to Landlord at Landlord's Address for Rent Payments. Tenant's covenant to pay all Rent is independent of every other covenant in this Lease.
4.5 Prorated Rent. Concurrently with the mutual execution and delivery of this Lease, Tenant shall pay to Landlord an amount equal to one (1) monthly installment of Basic Rent payable under this Lease for the first full calendar month of the Term. For any partial month during the Term, the monthly installments payable for such month, including the payments of Basic Rent, Operating Expenses, and Taxes, shall be prorated on a per diem basis based on the actual number of days in such partial month.
4.6 Late Fee. Any Rent payable by Tenant to Landlord under this Lease that is not paid within ten (10) days after the applicable due date will be subject to a late payment charge equal to five percent (5%) of the delinquent amount ("Late Fee"). Tenant acknowledges that the Late Fee represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payments by Tenant and does not constitute a penalty. Neither assessment nor acceptance of a Late Fee by Landlord shall constitute a waiver of Tenant's default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies available to Landlord.
5. Operating Expenses Commencing on the Lease Commencement Date, for each Operating Year within the Term, Tenant shall pay to Landlord in accordance with this Section, as Additional Rent, an amount equal to Tenant's Share of all Operating Expenses for that Operating Year.
5.1 Operating Expense Definitions. As used in this Lease:
(a) "Operating Expense Estimate" means a written estimate of the amount of Tenant's Share of Operating Expenses for the applicable Operating Year (including with respect to the Complex Common Areas). Such Operating Expense Estimate shall be in reasonable detail and be consistent with Landlord's current practices in the Building.
(b) "Operating Expenses" means, except as expressly provided in this Lease to the contrary, all costs and expenses paid or incurred by or on behalf of Landlord in connection with the ownership, management, operation, maintenance, repair and/or replacement of the Building and the Property or providing services in accordance with this Lease.
(i) In particular, Operating Expenses shall include the cost of:
(A) landscaping for the Common Areas;
(B) utilities, water, and sewage services for the Property;
(C) maintenance of signs (other than tenants' signs);
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(D) insurance premiums (including workers' compensation, terrorism, and flood insurance) and deductibles, or reasonable premium equivalents or deductible equivalents should Landlord elect to self-insure any risk that Landlord is authorized to insure hereunder;
(E) rentals or lease payments paid by Landlord for rented or leased personal property used in the operation or maintenance of the Common Areas;
(F) elevator and escalator maintenance, including the cost of elevator maintenance contracts;
(G) fees for licenses and permits;
(H) routine maintenance and repair of roof membrane, flashings, gutters, downspouts, and roof drains;
(I) maintenance of paved areas (including sweeping, striping, repairing, resurfacing, and repaving);
(J) costs of services provided to tenants of the Building in accordance with Section 7 (but excluding any overtime services for which a tenant pays landlord directly);
(K) general maintenance services to the Common Areas;
(L) window washing;
(M) exterior and interior painting of the Common Areas;
(N) janitorial cleaning and refuse removal services;
(O) security costs, including security access control systems and security personnel;
(P) HVAC costs for interior Common Areas, including maintenance contracts for HVAC Systems;
(Q) Intentionally Omitted;
(R) capital expenditures for items that are primarily (in Landlord's good faith determination) for the purpose of: (1) reducing or avoiding increases in Operating Expenses, or (2) are required to comply with Laws enacted, or which take effect, after the Effective Date, and any repairs, disposals, or removals necessitated thereby (including, but not limited to, the cost of complying with Laws), provided, however, that the cost of any such permitted capital expenditure shall be amortized on a straight line basis over the useful life thereof (as reasonably determined in accordance with generally accepted accounting principles), and Landlord shall only include in Operating Expenses in each Operating Year an amount equal to the annual amortization of such cost, together with interest at an annual rate of 6% on the unamortized balance;
(S) personnel costs applicable to the Building and the Property, including wages and salaries, fringe benefits, and payroll taxes;
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(T) a management fee (“Management Fee”) for the professional operation of the Property, not to exceed 4% of the gross rents for the Building in the applicable Operating Year.
(ii) Operating Expenses shall not include:
(A) costs associated with the operation of the business of the entity which constitutes "Landlord" (as distinguished from the costs of operating, maintaining, repairing, replacing, and managing the Building or the Property), including, but not limited to, general corporate overhead and general administrative expenses, or costs associated with the purchase, sale, or financing of the Building or the Property;
(B) depreciation or amortization charges (except as otherwise provided in Section 5.1(b)(i)(R)), or interest and/or principal payments on any Mortgage, or any rent under any Ground Lease;
(C) costs relating to the leasing of the Building, including brokers' commissions, accounting, and legal fees (including attorneys' fees for disputes with tenants);
(D) charitable or political contributions;
(E) advertising, printing costs and brochures;
(F) space planning, tenant allowances, leasehold Improvements, and other tenant concessions;
(G) any amounts paid to Landlord by another party, so that Landlord shall not recover any such item or cost more than once;
(H) any late fees, penalties, interest charges or similar fees payable by Landlord;
(I) cost of selling, syndicating, financing, mortgaging or hypothecating any of the Landlord’s interest in the Premises or Complex or the improvements thereon;
(J) any debt losses, rent losses or reserves for bad debt (or reserves of any kind);
(K) expenses reimbursed by insurance proceeds under any insurance policies or by third parties;
(L) except for any legal fees or costs payable by Tenant under the terms of the Lease, any legal fees or costs associated with enforcing Landlord’s rights or remedies against any other tenants of the Complex, defending any lawsuits with mortgagees or ground lessors, disputes between Landlord and any other tenant, employee, contractor or agent of Landlord;
(M) overhead or profits paid to subsidiaries or affiliates of Landlord for management or other services to the Complex, or for supplies or materials, to the extent that the costs of such services, supplies or materials materially exceed the fair market value of such costs at the time the services are rendered or materials supplied by more than 10% had the services, supplies or materials been provided by parties unaffiliated with Landlord on a competitive basis, as demonstrated by Tenant with competent third-party evidence; provided, however, that this exclusion shall not apply to the Management Fee;
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(N) expenses in connection with services or other benefits provided solely and exclusively to other tenants or occupants of the Complex, but not to Tenant (excluding repairs or replacements to the Complex that are made on the same basis for Tenant if applicable);
(O) expenses resulting from the negligence or willful misconduct or material breach of any lease or violation of any law by Landlord, its agents or employees, to the extent that such expenses exceed the expenses which would have normally been incurred by Landlord absent such negligence or willful misconduct or material breach of lease or violation of law (where "law" means any law, statute, ordinance, court order, etc. of any authority having jurisdiction);
(P) costs and expenses of repairs and replacements, which under generally accepted accounting principles should be classified as capital expenditures, except for the current amortized portion of the costs and expenses (based upon amortization of the cost on a straight-line basis over the useful life of such items) of repairs or replacements of items in place within the Building on the Effective Date.
(iii) When used in calculating “Operating Expenses” for the Complex Common Areas, references in the definition and exclusion of “Operating Expenses” to “Property” shall be deemed to refer to the “Property and/or the Complex, as applicable”; references to “Landlord” shall be deemed to refer to “Landlord and/or the owner of the Complex (which, as of the Effective Date is Tenant), as applicable.
(iv) Landlord may contract with third parties or affiliates of Landlord for any or all of the services described in Section 5.1(b)(i) and the cost of such services shall be included in Operating Expenses.
(c) "Operating Year" means a calendar year.
5.2 Monthly Installments. Before the Lease Commencement Date, and thereafter before the start of each full or partial Operating Year, Landlord shall give Tenant an Operating Expense Estimate. For each month of the Term, on the same date that Basic Rent is due, Tenant shall pay Landlord an amount equal to 1/12th of the Operating Expenses for the Operating Year, as shown on the Operating Expense Estimate.
5.3 Continuation of Payments. If Landlord has not furnished Tenant with an Operating Expense Estimate before the start of an Operating Year, Tenant shall continue to pay the monthly sum payable by Tenant for the last month of the preceding Operating Year until an Operating Expense Estimate applicable to such Operating Year is furnished to Tenant, at which time Tenant shall pay the monthly sum specified in the newly furnished Operating Expense Estimate in accordance with Section 5.2 of this Lease. When Landlord delivers the Operating Expense Estimate to Tenant, Landlord shall also notify Tenant of any deficiency or overpayment in the payments made to date for the Operating Year. If there is a deficiency, Tenant shall pay the amount of such deficiency together with the next monthly payment of Operating Expenses. If there has been an overpayment, Landlord shall credit the overpaid amount to the next monthly payment of Operating Expenses.
5.4 Revisions to Operating Expense Estimate. If, at any time during any Operating Year, any one or more of the Operating Expenses are increased (or are projected to increase) to rates or amounts in excess of the rates or amounts used in calculating the Operating Expense Estimate for that Operating Year, then Landlord may issue a revised Operating Expense Estimate. The revised Operating Expense Estimate shall advise Tenant of the amount of the increase in the Operating Expenses, the month in which the increase will become effective, Tenant's Share thereof, and the months for which the increased payments are due. Tenant shall pay the increase to Landlord as part of Tenant's monthly payments of estimated expenses as provided in Section 5.2, commencing with the month in which the increase becomes effective.
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5.5 Reconciliation Statement. As soon as is reasonably possible after the end of each Operating Year, Landlord shall furnish to Tenant a statement (a "Reconciliation Statement") showing in reasonable detail the actual or prorated Tenant's Share of Operating Expenses incurred by Landlord during such Operating Year. Any delay or failure by Landlord in delivering any Reconciliation Statement shall not constitute a waiver of Landlord's right to require Tenant to pay Tenant's Share of Operating Expenses pursuant hereto. Any amount due Tenant shall be credited against installments of Operating Expenses next coming due, and any deficiency shall be paid by Tenant together with the next installment of Operating Expenses. If Tenant shall fail within thirty (30) days following delivery of Landlord's Reconciliation Statement to object in writing to Landlord's determination of Tenant's Share of Operating Expenses for the applicable Operating Year as provided in this Section, the Reconciliation Statement shall be conclusive and binding on Tenant for all purposes and any future claims by Tenant to the contrary shall be barred.
5.6 Audit. Tenant shall have the right, at its sole cost and expense and no more than once per calendar year, upon written notice given to Landlord no later than sixty (60) days after receipt of the annual Reconciliation Statement from Landlord, to make an audit of all of Landlord's books and records relating to Operating Expenses for the immediately preceding calendar year. Upon such written request of Tenant, Landlord shall make available to Tenant, during normal business hours and at the location where Landlord’s books and records are kept (or electronically if maintained in electronic format), such information as Tenant shall reasonably request. Landlord shall cooperate reasonably with Tenant in its explanation of its books and records. Tenant agrees that it will treat such information confidentially and shall not divulge such information obtained from Landlord to any other person, firm, corporation, business organization, entity, tenant or occupant at any time. Tenant shall have the right to retain the services of an independent certified public accountant or lease audit firm (but not on a contingency fee basis) for such audit at its sole cost and expense. Tenant shall complete any such audit of Operating Expenses within sixty (60) days after the date of Tenant’s audit notice and shall deliver to Landlord the written results of such audit within ten (10) days after Tenant receives the same. If such audit discloses an overpayment by Tenant, Landlord shall credit such amount against Tenant’s future obligations for Operating Expenses. If such audit discloses additional amounts due from Tenant, Tenant shall pay such amounts within ten (10) days of completion of such audit. Any dispute regarding the results of such audit shall be resolved by binding arbitration in accordance with the rules of the American Arbitration Association, with each party bearing its own costs and expenses (including attorneys' fees) and sharing equally the costs of the arbitrator. Tenant's failure to object in writing to any item disclosed in such audit within thirty (30) days after delivery of the audit results to Landlord shall be deemed an acceptance of such audit results. If property taxes and insurance premiums are otherwise payable by Tenant hereunder, but not included in Operating Expenses, then Tenant’s audit rights pursuant to this paragraph shall extend to such charges as well.
6. Taxes Commencing on the Lease Commencement Date, for each Tax Year within the Term, Tenant shall pay to Landlord in accordance with this Section, as Additional Rent, an amount equal to Tenant's Share of all Taxes for that Tax Year.
6.1 Tax Definitions. As used in this Lease:
(a) "Tax" or "Taxes" means and includes any form of federal, state, county, or local government or municipal taxes, fees, charges, or other impositions of every kind (whether general, special, ordinary, or extraordinary) related to the ownership, leasing, or operation of the Premises, the Building, or the Property, including the following: (i) all real estate taxes levied, payable, or imposed against the Premises, the Building, or the Property, as such property taxes may be reassessed from time to time; (ii) other taxes, charges, and assessments which are levied with respect to this Lease or to the Building and/or the Property, and any improvements, fixtures, and equipment and other personal property of Landlord located in or used in the operation of the Building and/or the Property; (iii) all assessments and fees for public improvements, services, and facilities and impacts thereon, including arising out of any community facilities district, special improvement district, or similar assessment districts, and any traffic impact mitigation assessments or fees; (iv) any tax, surcharge, or assessment which shall be levied in addition to or in lieu of real estate or personal property taxes; (v) taxes based on the receipt of rent (including gross receipts or sales taxes applicable to the receipt of rent); and (vi) all costs and expenses incurred by Landlord in appropriate proceedings to contest the amount or validity of any Tax or the assessed value of the Building. Notwithstanding the foregoing, Taxes shall not include personal or corporate income or franchise taxes imposed against Landlord.
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(b) "Tax Statement" means a written statement of the amount of Tenant's Share of taxes for the applicable Tax Year. A Tax Statement shall be in reasonable detail, consistent with Landlord's current practices in the Building, and shall include copies of the tax bills, if received.
(c) "Tax Year" means the twelve (12)-month period commencing on the first calendar date of each calendar year, or such other twelve (12)-month period as may be duly adopted as the fiscal year for real estate tax purposes by the Bexar County Appraisal District.
6.2 Monthly Installments. Before the Lease Commencement Date, and thereafter before the start of each full or partial Tax Year, Landlord shall give Tenant a Tax Statement. For each month of the Term, on the same date that Basic Rent is due, Tenant shall pay Landlord an amount equal to 1/12th of the Tenant's Share of Taxes for the Tax Year, as shown on the Tax Statement.
6.3 Reconciliation. When the final tax bills for the Tax Year are available, Landlord shall give Tenant an amended Tax Statement that makes any necessary adjustment to Tenant's payment of Taxes. Any amount due to Tenant shall be credited against future installments of Taxes coming due for the Tax Year, and any deficiency shall be paid by Tenant together with the next monthly installment of Taxes.
7. Utilities and Services. From and after the Lease Commencement Date and thereafter throughout the Term, provided no Event of Default exists under this Lease, Landlord agrees to furnish the Premises with the utilities and services described in this Section. Landlord shall include the costs of these services as a component of Operating Expenses, except as stated otherwise in this Section.
7.1 Electricity. Landlord shall supply electric service reasonably sufficient for lighting and for the operation of lighting, computers, facsimile machines, scanners, and other business equipment, exclusive of the operation of the Building HVAC Systems that serve the Building. Landlord has installed an electrical meter to measure Tenant's electrical consumption. Tenant shall reimburse Landlord for all electrical services consumed as measured by the electrical meter based on monthly meter readings.
7.2 Water. Landlord shall furnish hot and cold, running, potable water and sewer service to the Premises. Water service to the Premises is separately metered. Tenant shall reimburse Landlord for all water consumption as measured by the water meter based on monthly meter readings.
7.3 HVAC. Tenant shall be responsible for all HVAC services within the Premises, including routine maintenance and repair. Landlord shall provide tenant representative administrative access to landlord’s HVAC control software. Any HVAC control changes required by Tenant are to be coordinated with Landlord and landlord’s HVAC controls contractor at Tenant’s sole cost and expense. Tenant shall promptly notify Landlord in writing of any material malfunction, unusual performance, or needed repair of the HVAC systems serving the Premises. Notwithstanding any provision of this Lease to the contrary, if the HVAC systems serving the Premises require replacement due to normal wear and tear or useful life expiration, then such replacement shall be performed by Landlord at Landlord’s sole cost and expense (subject to Section 5 of this Lease). Notwithstanding the foregoing, if the need for such replacement arises, in whole or in part, from Tenant's misuse, neglect, or failure to perform routine maintenance and repair obligations as required under this Section, then such replacement shall be at Tenant's sole cost and expense. Tenant shall maintain complete records of all HVAC maintenance, repairs, and service calls performed during the Term and shall provide copies of such records to Landlord upon request and no less than annually. Failure to maintain or produce such records may be considered by Landlord in determining whether a replacement obligation falls under Tenant's responsibility pursuant to this Section.
7.4 Janitorial. Tenant shall be responsible for all janitorial services, including cleaning, removal of rubbish, and furnishing necessary janitorial supplies for the Premises at Tenant's sole cost and expense.
7.5 Access and Security.
(a) Subject to Landlord's reasonable maintenance and security requirements, Force Majeure Events, and applicable Laws, Tenant shall have access to the Premises and the parking areas provided for under this Lease twenty-four (24) hours per day, seven (7) days per week.
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(b) In the event that Landlord provides security for the Building, such as the posting of a concierge or lobby attendant, or the screening of all employees, guests, and visitors before being admitted access to the Building, Landlord shall not be liable to Tenant for any failure of any such security. At any time and from time to time during the term of this Lease, Landlord may modify its security procedures without notice to (or the consent of) Tenant, provided that its security procedures shall be consistent with the security procedures of other comparable office buildings in the vicinity.
(c) Landlord owns and maintains access control and camera system serving the Premises. Landlord will provide tenant will user access to access control and administrative access to cameras located within the interior of the Premises. Notwithstanding Tenant's administrative access to interior cameras, (i) all cameras remain Landlord's property and equipment, and (ii) access control for the Building and all exterior cameras shall remain under Landlord's sole control. Maintenance and updates to this system will be Tenant’s responsibility and shall be coordinated with Landlord’s network vendor.
7.6 Telecommunications. With respect to Tenant's telecommunications facilities and services, Landlord shall provide, install, and maintain adequate telecommunications infrastructure within the Premises. Tenant shall reimburse Landlord for Tenant's Share of all telecommunications costs and expenses incurred by Landlord in connection with the telecommunications infrastructure serving the Premises. Landlord and Tenant shall work in good faith to implement reasonable measures to maintain the confidentiality and security of any data generated, transmitted, or stored by Tenant through the telecommunications infrastructure. Landlord shall not disclose any such data except: (i) as required by applicable law or legal process; (ii) as necessary to maintain, repair, or upgrade the telecommunications infrastructure; or (iii) with Tenant's prior written consent. Tenant acknowledges that Landlord makes no warranty regarding the security of the telecommunications infrastructure and that Tenant is responsible for implementing its own security measures for sensitive or confidential data.
7.7 Service Interruptions. Landlord shall not be liable to Tenant in any respect for the inadequacy, stoppage, interruption, or discontinuance of any utility or service due to labor disputes, breakdown, accident, repair, or any other cause, including Force Majeure Events. Any interruption or discontinuance of any such service shall not be deemed an eviction or disturbance of Tenant's use and possession of the Premises, or any part thereof, nor shall it render Landlord liable to Tenant for any injury, loss, or damage, by abatement of rent or otherwise, nor shall it relieve Tenant from performance of Tenant's obligations under this Lease. Notwithstanding the foregoing, Tenant shall be entitled to an abatement of all Rent if Tenant is prevented from using, and does not use, the Premises or any material portion thereof as a consequence of a Service Interruption Event. "ServiceInterruption Event" means the interruption of any utility or other service that is necessary for Tenant to utilize the Premises where the interruption: (a) is not caused by Tenant or any Tenant Party and is within the reasonable control of Landlord to correct; or (b) is caused by the negligence or willful misconduct of Landlord or any Landlord Party. Tenant shall give Landlord notice of each Service Interruption Event. If a Service Interruption Event continues for more than three (3) consecutive Business Days after Landlord's receipt of such notice, then payments of Rent shall be abated for the period starting on the date when Tenant was first unable to so use the Premises, and ending on the date that Tenant is again able to so use the Premises, in the proportion that the rentable square footage of the Premises that Tenant is prevented from using, and does not use, bears to the total rentable square footage of the Premises.
8. Preparation for Occupancy
8.1 As-Is. Tenant agrees that Tenant is familiar with the condition of both the Premises and the Building, and Tenant hereby accepts the Premises in their "AS-IS, WHERE-IS" condition. Tenant acknowledges that neither Landlord, nor any representative of Landlord, has made any representation as to the condition of the Premises or their suitability for Tenant's intended use other than as expressly set forth in this Lease. Tenant acknowledges and agrees that Tenant has made its own inspection of the Premises and Landlord has no obligation to make any repairs, replacements, or improvements (whether structural or otherwise) of any kind or nature in connection with preparing the Premises for Tenant's occupancy.
8.2 Landlord’s FF&E. All furniture, fixtures, and equipment currently located on the Premises as of the date Tenant takes possession pursuant to Section 3.3, as more particularly described in Exhibit C attached hereto (collectively, "Landlord's FF&E") shall remain the property of Landlord throughout the Term unless and until sold to Tenant in accordance with subsection (c) below or pursuant to a separate written agreement between the parties. Landlord grants to Tenant the exclusive right to use the Landlord’s FF&E during the Term, subject to the terms and conditions of this Lease.
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(a) Tenant acknowledges that it has inspected the Landlord’s FF&E and accepts the same in its "AS-IS, WHERE-IS" condition, with all faults. Landlord makes no representation or warranty, express or implied, regarding the condition, merchantability, fitness for a particular purpose, or suitability of the Landlord’s FF&E for Tenant's intended use.
(b) During the Term, Tenant shall, at its sole cost and expense, keep and maintain the Landlord’s FF&E in good working order, condition, and repair, ordinary wear and tear excepted. Tenant shall be responsible for all maintenance contracts, repairs, and replacements of the Landlord’s FF&E. Tenant shall not make any modifications or alterations to the Landlord’s FF&E without Landlord's prior written consent.
(c) Upon the expiration of the initial Term (excluding any Extension Term), Tenant shall purchase the Landlord’s FF&E from Landlord for one dollar ($1.00), provided that Tenant is not then in default under this Lease beyond any applicable cure period. If this Lease terminates early for any reason other than Tenant's default, Tenant shall have the option, but not the obligation, to purchase the Landlord's FF&E for one dollar ($1.00) by providing written notice to Landlord within thirty (30) days prior to such early termination (where practicable). The purchase shall be evidenced by a bill of sale in a form reasonably acceptable to both parties, conveying the Landlord's FF&E to Tenant "AS-IS, WHERE-IS" without warranty of any kind.
8.3 Intentionally Omitted.
8.4 Landlord’s Lien.
(a) Tenant acknowledges and agrees that Landlord shall have and retain a contractual landlord's lien upon all Tenant's FF&E placed upon the Premises. Such lien shall secure the payment of all Rent and other sums of money becoming due under this Lease from Tenant, and shall also secure the performance of all covenants, agreements, conditions, and obligations of Tenant under this Lease. Landlord's lien shall be in addition to, and not in lieu of, any statutory landlord's lien and shall be superior to any lien, security interest, or encumbrance created by Tenant after the Effective Date, except as specifically provided in subsection (b) below.
(b) Landlord's lien shall be automatically subordinate to any bona fide security interests, liens, or encumbrances on Tenant's FF&E or other personal property or equipment that exist as of the Effective Date or are created thereafter in connection with the purchase, lease, or financing of such property by any financing party or lender, so long as no Event of Default exists under this Lease at the time of such subordination. Tenant shall provide Landlord with written notice and copies of all financing statements and security agreements relating to such security interests within thirty (30) days after the Effective Date (for existing liens) or within thirty (30) days after creation (for future liens).
(c) In the event of any default by Tenant under this Lease, Landlord may enforce its contractual lien by any method permitted by law, including but not limited to: (i) retaining possession of any Tenant's FF&E upon termination of this Lease; (ii) selling such property at public or private sale with or without notice to Tenant (except such notice as may be required by applicable law); and (iii) applying the proceeds of any such sale to the payment of all sums due under this Lease, with any surplus to be paid to Tenant.
(d) Tenant shall not remove any Tenant's FF&E from the Premises if: (i) Tenant is in default under this Lease; or (ii) such removal would materially impair Landlord's security interest in such Tenant FF&E.
(e) The automatic subordination of Landlord's lien to Financing Party Liens that exist as of the Effective Date shall not be revocable. However, the subordination of Landlord's lien to any Financing Party Liens created after the Effective Date may be revoked by Landlord upon written notice to Tenant and the affected third-party secured creditor if an Event of Default occurs and continues under this Lease. Landlord's agreement to subordinate its lien to any third-party security interest shall not waive or impair Landlord's lien as to any items not subject to such subordinated security interest.
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9. Option to Purchase.
9.1 Grant of Purchase Option. Landlord hereby grants to Tenant the exclusive, irrevocable right and option (the "PurchaseOption") to purchase the Building and Property from Landlord at any time during the first twenty-four (24) months of the initial Term (the "Purchase Option Period") for $12,500,000.00 (the "Purchase Price"), payable in cash at closing and upon the terms and conditions set forth in this Section and in the Purchase and Sale Agreement attached hereto as Exhibit D (the "PSA"). The PSA is incorporated herein by this reference, and in the event of any conflict between the terms of this Section 9 and the PSA, the PSA shall control.
9.2 Exercise of Purchase Option and Closing. Tenant may exercise the Purchase Option by delivering written notice of exercise (the "Exercise Notice") to Landlord at any time during the Purchase Option Period. Time is of the essence with respect to the delivery of the Exercise Notice. Following delivery of an Exercise Notice, the parties shall use commercially reasonable efforts to close the purchase and sale transaction within ninety (90) days after the date of the Exercise Notice (the "Target Closing Date"), with the closing to be conducted in accordance with the terms and conditions set forth in the PSA.
9.3 Effect on Lease. Upon the closing of the purchase and sale transaction pursuant to this Section, this Lease shall automatically terminate as of the closing date, and neither party shall have any further obligations under this Lease except for those obligations that expressly survive termination of the Lease.
9.4 Conditions to Purchase. Tenant's right to exercise the Purchase Option and consummate the purchase and sale transaction shall be subject to the following conditions: (a) no Event of Default shall have occurred and be continuing under this Lease at the time of delivery of the Exercise Notice or at closing; (b) Tenant shall have obtained any necessary financing or approvals to complete the all-cash purchase and delivered satisfactory proof of such financing or approvals to Landlord; and (c) Tenant shall not have assigned this Lease or sublet all or any material portion of the Premises without Landlord's consent.
9.5 Termination of Purchase Option. The Purchase Option shall automatically terminate and be of no further force or effect upon the earliest to occur of: (a) the expiration of the Purchase Option Period without Tenant having delivered an Exercise Notice; (b) the occurrence of an Event of Default under this Lease that remains uncured; (c) Tenant's written notice to Landlord that Tenant elects not to proceed with the purchase after delivering an Exercise Notice; or (d) the closing of the purchase and sale transaction.
9.6 Personal to Tenant. The Purchase Option granted herein is personal to Tenant and may not be exercised by, or assigned or transferred to, any other person or entity.
10. Use of Premises; Compliance with Laws; Hazardous Materials
10.1 Use. The Premises shall be used only for the Permitted Use and for no other purpose.
10.2 Legal and Other Restrictions of Tenant's Use. Use of the Premises is subject to all covenants, conditions, and restrictions of record. Tenant shall not use or occupy the Premises: (a) for any unlawful purpose; (b) in any way that will violate the certificate of occupancy for the Premises or the Building; (c) in a way that will constitute waste, nuisance, or unreasonable annoyance to Landlord or any other tenant or user of the Building; or (d) in a way that may increase the cost of, or invalidate, any policy of insurance carried on the Building or the Property.
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10.3 Compliance with Laws. Tenant, at Tenant's sole cost and expense, shall comply with (and shall cause all Tenant Parties to comply with) all Laws applicable to the Premises or Tenant’s (or any permitted sublet or assign) use and occupancy of the Premises, including any obligation to make Alterations to the portions of Premises Tenant (or any permitted sublet or assign) maintains under this Lease that are required as a condition of Tenant's occupancy. "Laws" means all present and future laws (including the Americans with Disabilities Act of 1990, as amended by the Americans with Disabilities Act Amendments Act of 2008, and the regulations promulgated thereunder), ordinances (including zoning ordinances and land use requirements), rules, and regulations of governmental and quasi-governmental authorities. If any Laws require an occupancy or use permit or license for the Premises or the operation of the business conducted therein (including a certificate of occupancy or nonresidential use permit), then Tenant shall obtain and keep current such permit or license at Tenant's sole cost and expense and shall promptly deliver a copy thereof to Landlord. Nothing in this Section, however, shall permit Tenant to make, without Landlord's prior written approval, any Alterations to the Premises which otherwise would require Landlord's approval under this Lease, and Tenant shall comply with all of the requirements of this Lease in making any such Alterations.
10.4 Rules and Regulations. Tenant shall comply, and shall cause all Tenant Parties to comply, with the building rules and regulations attached to this Lease as Exhibit E (the "Rules andRegulations"). Landlord may at any time adopt new reasonable, non-discriminatory and uniformly enforced Rules and Regulations or modify or eliminate existing Rules and Regulations as Landlord shall deem necessary or appropriate. In the event of any conflict or inconsistency between the provisions of this Lease and any of the Rules and Regulations, the Rules and Regulations shall control, provided that such Rules and Regulations do not materially alter or expand Tenant's obligations or diminish Tenant's rights under this Lease.
10.5 Hazardous Materials.
(a) General Prohibition and Permitted Use. Tenant shall not cause or knowingly permit any Hazardous Materials to be brought upon, kept or used in or about the Premises, the Building, or the Property in violation of Laws by Tenant or any Tenant Parties. Notwithstanding the foregoing, Landlord acknowledges that it is not the intent of this Section to prohibit Tenant from operating its business for the Permitted Use. Tenant may operate its business according to the custom of Tenant's industry, including the operation of a BSL-2 laboratory, so long as the use or presence of Hazardous Materials is strictly and properly monitored in accordance with Laws.
(b) Hazardous Materials Documentation. As a material inducement to Landlord to allow Tenant to use Hazardous Materials in connection with its business, Tenant shall provide Landlord with documentation identifying the substances Tenant intends to have in the Premises during the Term ("Hazardous Materials Documents"). The Hazardous Materials Documents shall include: (i) a list identifying each type of Hazardous Material to be present at the Premises that is subject to regulations under any Laws; (ii) a list of any and all approvals or permits from governmental authorities required in connection with the presence of such Hazardous Materials; and (iii) correct and complete copies of any notices of violations of Laws related to Hazardous Materials received by Tenant and plans relating to the installation of any storage tanks (provided that installation of storage tanks shall only be permitted after Landlord has given Tenant its prior written consent, which consent Landlord may withhold in its sole discretion).
(c) Delivery and Updates. Tenant shall deliver to Landlord the Hazardous Materials Documents: (i) no later than thirty (30) days prior to the initial occupancy of any portion of the Premises; (ii) annually thereafter no later than December 31st of each year, and Tenant shall certify in writing whether there have been any changes from the prior year's submission; and (iii) thirty (30) days prior to the initiation by Tenant of any Alterations that involve any material increase in the types or amounts of Hazardous Materials. For each type of Hazardous Material listed, the documentation shall include the chemical names, material state, concentration, storage and use amounts and conditions, location, and chemical abstract service number (if known). Tenant shall not be required to provide Landlord with any documentation containing proprietary information that does not reference Hazardous Materials or related activities.
(d) Review and Compliance. Landlord may, at Landlord's expense, cause the Hazardous Materials Documents to be reviewed by a qualified person or firm to confirm compliance with this Lease and Laws. If such review indicates non-compliance, Tenant shall, at its expense, diligently take steps to bring its storage and use of Hazardous Materials into compliance.
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(e) Testing Rights. At any time during the Term, upon reasonable prior written notice to Tenant, Landlord shall have the right, at Landlord's expense, to conduct appropriate tests of the Property to investigate whether Hazardous Materials are present or contamination has occurred due to Tenant or any Tenant Parties. Tenant shall pay all reasonable costs of such testing if it reveals that Tenant has introduced or utilized existing Hazardous Materials at the Property in violation of this Lease.
(f) Assignment or Sublease. If any proposed assignee or sublessee has been required by any prior landlord, lender, or governmental authority to take material remedial action in connection with Hazardous Materials contamination resulting from such party's actions, or is subject to a material enforcement order regarding Hazardous Materials, then Landlord shall have the right to withhold consent to any proposed assignment or subletting (with respect to any proposed assignee or sublessee).
(g) Reporting Obligations. During the Term, Tenant shall promptly report to Landlord any actual or suspected presence of mold or water intrusion at the Premises of which Tenant obtains actual knowledge.
(h) Removal Obligations. If the presence of any Hazardous Materials in, on, under, or about the Property caused or knowingly permitted by Tenant results in any contamination of the Property or any adjacent property, then Tenant shall promptly take all actions at its sole cost and expense as are reasonably necessary to immediately return the Property to its condition existing prior to the time of such contamination (or, if such restoration is not practicable, then to such level as is in compliance with Laws); provided that Landlord's written approval of such action shall first be obtained, which approval shall not be unreasonably withheld. Upon expiration or earlier termination of this Lease, Tenant shall, at its sole cost and expense, remove all Hazardous Materials brought onto the Property by Tenant, or any Tenant Parties, in accordance with all applicable Laws, and restore the Property to its condition existing prior to the introduction of such Hazardous Materials, subject to Landlord's prior written approval, which approval will not be unreasonably withheld, conditioned or delayed.
(i) Indemnification. Tenant shall indemnify, defend (at Landlord's option and with counsel reasonably acceptable to Landlord), and hold Landlord and the Landlord Parties harmless from and against any and all losses, liabilities, claims, damages, expenses, and causes of action that are a direct result of the presence of any Hazardous Materials in, on, under, or about the Property caused by any Tenant or Tenant Parties, including but not limited to any Hazardous Materials that migrate, spread, or are exacerbated during Tenant's occupancy as a result of Tenant’s Permitted Use of the Premises, regardless of the original source. This indemnification includes reasonable costs incurred in connection with any investigation, clean-up, remedial, removal, or restoration work required by any governmental authority. Landlord shall indemnify, defend (at Tenant's option), and hold Tenant and the Tenant Parties harmless from and against any and all losses, liabilities, claims, damages, expenses, and causes of action that are a direct result of the presence of any Hazardous Materials in, on, under, or about the Property caused by Landlord or any Landlord Parties, or which exist within the Premises prior to the Lease Commencement Date; provided that Landlord shall not be obligated to indemnify, defend, or hold Tenant and/or Tenant Parties harmless to the extent that any such losses, liabilities, claims, damages, expenses, or causes of action arise from or are contributed to by Tenant's or any Tenant Party's use, handling, storage, disturbance, movement, exacerbation, release, or other interaction with such pre-existing Hazardous Materials, including without limitation any failure by Tenant or any Tenant Party to (i) comply with all applicable Hazardous Materials Laws in connection with such Hazardous Materials, (ii) follow proper protocols for the containment, management, or disposal of such Hazardous Materials, or (iii) promptly notify Landlord of any known or suspected release, migration, or contamination involving such Hazardous Materials. For the avoidance of doubt, Tenant acknowledges that Tenant has inspected the Premises, is aware of the potential presence of Hazardous Materials therein, and assumes all risk associated with Tenant's or any Tenant Party's voluntary interaction with any such pre-existing Hazardous Materials in connection with the Permitted Use.
(j) Survival and Holdover. The terms of this Section shall survive the expiration or earlier termination of this Lease. During any period after the expiration or earlier termination of this Lease needed by Tenant or Landlord to complete the removal from the Premises of any Hazardous Materials after termination, Tenant shall be deemed a holdover tenant subject to Section 20.2.
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11. Maintenance and Repairs
11.1 Landlord's Maintenance and Repair Obligations. Throughout the Term, Landlord shall keep the Building, the Common Areas, the Building Systems, and the Property in good condition and repair. All costs incurred by Landlord for the maintenance and operation of the Building, the Common Areas, the Building Systems, and the Property shall be included in Operating Expenses, except to the extent any particular cost is related to a specific tenant of the Building in which event, such costs shall be charged directly to such tenant. If Landlord fails to complete any maintenance or repair that Landlord is obligated to perform under this Section 11.1 within thirty (30) days after receipt of written notice from Tenant identifying such failure or need, and such failure prevents Tenant's use of the Premises, then Basic Rent shall abate commencing on the day following expiration of such 30-day period and continuing until such maintenance or repair is substantially completed. Notwithstanding the foregoing, no rent abatement shall apply if Landlord is diligently pursuing completion of such maintenance or repair and the delay is not caused by Landlord's fault or inaction.
11.2 Tenant's Maintenance and Repair Obligations. Throughout the Term, Tenant, at Tenant's expense, shall repair, replace, and maintain in good condition all portions of the Premises, including entries, doors, ceilings, glass partitions, and interior walls. Any repairs or maintenance shall be completed with materials of similar quality to the original materials. Tenant is required to submit all plans and specifications for maintenance and repair to Landlord for prior written approval. All such repairs or maintenance shall be performed by Landlord-approved contractors, or such other contractors approved in writing by Landlord, which approval shall not be unreasonably withheld, conditioned, or delayed. If Tenant fails to maintain the Premises in accordance with this Section and such failure continues for more than fifteen (15) days (or, in the case of an emergency, such shorter period as is reasonable under the circumstances), Landlord shall provide Tenant with written notice identifying such failure. If Tenant fails to cure such failure within ten (10) days following receipt of such written notice, Landlord may, in its sole discretion and upon fifteen (15) days prior written notice to Tenant (except only reasonable advance notice shall be required in the case of emergencies), perform such maintenance. Tenant shall pay to Landlord all costs or expenses, including administrative charges, incurred by Landlord to perform such maintenance within ten (10) days after written demand.
12. Alterations
12.1 Tenant Alterations. Tenant shall not make or allow to be made any alterations, additions, or improvements in or to the Premises (collectively, "Alterations") without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed.
12.2 Performance by Tenant. Tenant agrees that all Alterations shall be performed and completed: (a) at Tenant's sole cost and expense; (b) in accordance with written plans and specifications previously approved by Landlord pursuant to Section 12.1; and (c) in a good and workmanlike manner by contractors approved in advance by Landlord in Landlord’s reasonable discretion. The performance and completion of any such Alterations shall not impair the structural integrity of the Building or adversely affect the Building. Tenant shall not permit any liens to attach to any part of the Premises, the Building, or the Property arising out of the Alterations. Tenant shall obtain, at its sole expense, all permits required for such Alterations. Tenant shall also obtain and provide to Landlord lien waivers to prevent liens from encumbering the Property. Throughout the performance of the Alterations, Tenant, at its expense, shall carry insurance required by Section 13.2(e).
12.3 Ownership of Alterations. Unless Landlord elects otherwise in writing at the time Landlord approves the Alterations, all Alterations made by Tenant shall become the property of Landlord upon the expiration or earlier termination of this Lease and shall be surrendered to Landlord on the Lease Expiration Date. Notwithstanding the foregoing, all movable equipment, trade fixtures, personal property, furniture, or any other items that can be removed without harm to the Premises will remain Tenant's property (collectively, "Tenant-Owned Property") and shall not become the property of Landlord. Landlord may, by written notice at the time Landlord approves the Alterations, identify Alterations that Tenant shall be required to remove upon the expiration or earlier termination of this Lease. On or before the Lease Expiration Date, Tenant shall remove all Tenant-Owned Property and any Alterations that Tenant is required to remove and Tenant shall repair at its sole cost and expense all damage caused to the Premises or the Building by such removal. Tenant's obligations under this Section shall survive the expiration or earlier termination of this Lease.
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13. Insurance
13.1 Insurance Rating. Except as permitted in Section 10.1 or Section 10.5, Tenant will not conduct or permit to be conducted, any activity, or place any equipment, material, chemical, fluid or substance outside of the Premises which will in any way increase the rate of fire insurance or other insurance on the Property (unless the rate of fire insurance increases only with respect to the Premises and Tenant satisfies such increased premium); if any increase in the rate of fire insurance or other insurance is stated by any insurance company or by the applicable Insurance Rating Bureau to be due to any activity or equipment of Tenant in or about the Premises that is not permitted under this Lease (and the increase in the premium for such policy is not paid by Tenant under its policy), such statement shall be conclusive evidence that the increase in such rate is due to such activity or equipment and as a result thereof, Tenant shall be liable for such increase and shall reimburse Landlord therefor upon demand and any such sum shall be considered Additional Rent payable hereunder.
13.2 Tenant Insurance. At all times during the Term of this Lease, Tenant shall maintain, at its sole cost and expense, the following insurance policies in accordance with this Section:
(a) "All-risk" or "special perils" property insurance covering physical loss or damage insuring the full replacement value of all present and future Alterations, leasehold improvements, and all items of Tenant- Owned Property to a limit of not less than the full replacement value thereof.
(b) An umbrella insurance policy with limits of at least Five Million Dollars ($5,000,000.00) per occurrence and Five Million Dollars ($5,000,000.00) aggregate.
(c) Commercial general liability insurance in respect of the Premises and the conduct or operation of business therein with a minimum combined single limit of liability of at least one million dollars ($1,000,000.00) per occurrence and two million dollars ($2,000,000.00) aggregate. Such liability insurance shall include products and completed operations liability insurance, fire, and legal liability insurance, and such other coverage as Landlord may reasonably require from time to time.
(d) Workers' compensation insurance covering all of Tenant's employees providing statutory limits as required by the jurisdiction in which the Building is located, and employer's liability insurance with a minimum limit for employer's liability of at least two hundred fifty thousand dollars ($250,000.00) bodily injury per accident, five hundred thousand dollars ($500,000.00) bodily injury disease policy limit and two hundred fifty thousand dollars ($250,000.00) per disease per employee.
(e) At all times when Alterations are in progress, and only to the extent such risks are not covered under Tenant’s insurance existing coverage, Tenant, at its expense, shall maintain, or cause to be maintained, all-risk property and/or Builders Risk insurance and general liability insurance, with completed operation endorsement, for any occurrence in or about the Building. Tenant shall furnish Landlord with reasonably satisfactory evidence that such insurance is in effect at or before the commencement of Alterations and, on request, at reasonable intervals thereafter during the continuance of Alterations.
13.3 Policy Requirements.
(a) Tenant's insurance shall be issued by companies that (i) are rated not less than A- VII in the most current available Best's Insurance Reports, or have a financial strength rating of at least A- from Standard & Poor's or a comparable rating from a similar rating agency, and (ii) are authorized to do business in the State of Texas. Tenant shall have the right to provide insurance coverage pursuant to blanket policies obtained by Tenant if the blanket policies expressly afford the coverage required by this Section.
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(b) All insurance policies required to be carried by Tenant under this Lease (except for workers' compensation insurance) shall: (i) name Landlord, and any parties designated by Landlord, as additional insureds; (ii) as to liability coverages, be written on an "occurrence" basis; (iii) contain an endorsement that such policy shall remain in full force and effect notwithstanding that the insured has waived his right of action against any party prior to the occurrence of a loss; and (iv) contain an endorsement that will prohibit its cancellation prior to the expiration of thirty (30) days after notice of such proposed cancellation to Landlord.
(c) Each such policy shall contain a provision that such policy and the coverage evidenced thereby shall be primary and non-contributing with respect to any policies carried by Landlord. Tenant shall deliver to Landlord certificates of insurance evidencing the coverage required under this Lease on or before the date Tenant first enters or occupies the Premises, and thereafter at least thirty (30) days before the expiration dates of expiring policies.
(d) If Tenant fails to maintain such insurance in accordance with the terms of this Lease, Landlord shall have the right, but not the obligation, to procure any such insurance for the account of Tenant, immediately and without notice to Tenant, and the cost thereof shall be reimbursed by Tenant to Landlord on demand. The limits of the insurance required under this Lease shall not limit Tenant's liability. During the Term, at Landlord's request, Tenant shall increase such insurance coverage to a level that is commercially reasonably required by Landlord.
13.4 Non-Liability. Unless caused by the gross negligence or intentional misconduct or Landlord or any Landlord Party, Landlord shall not be liable for damage of any nature to any person, to the Premises, or to Tenant's personal property or equipment, including the Tenant-Owned Property, caused by explosion, fire, theft, breakage, vandalism, falling plaster, Building System failure, steam, gas, electricity, water, rain, or other substances leaking, emanating from, or flowing into any part of the Premises, or from damage caused by any other tenant of the Building, it being agreed that Tenant is responsible for obtaining appropriate insurance to protect its interests.
13.5 Waiver of Subrogation. To the extent such waivers are obtainable from insurance carriers, Landlord and Tenant waive their respective right of recovery against the other for any direct or consequential damage to the property of the other by fire or other casualty to the extent such damage is insured against under a policy or policies of insurance. Each Party shall cause its insurance policy to be endorsed to evidence compliance with such waiver.
14. Indemnification
14.1 Indemnity of Landlord. Except to the extent resulting from the gross negligence or willful misconduct of Landlord or any Landlord Party, Tenant shall indemnify, defend, and hold Landlord harmless from and against any and all claims, losses, costs, liabilities, damages, and expenses, including penalties, fines, and reasonable attorneys' fees, incurred in connection with or arising directly or indirectly from: (a) any breach or default by Tenant in the performance of any of its obligations under this Lease; (b) any injury or death to persons or damage to property occurring within or about the Premises; or (c) the use or occupancy of the Premises by Tenant, any Tenant Parties, or any person occupying the Premises through Tenant.
14.2 Indemnity of Tenant. Except to the extent resulting from the negligence or willful misconduct of Tenant or any Tenant Party, Landlord shall indemnify, defend, and hold Tenant harmless from and against any and all claims, losses, costs, liabilities, damages, and expenses, including penalties, fines, and reasonable attorneys' fees, incurred in connection with or arising directly or indirectly from: (a) any breach or default by Landlord in the performance of any of its obligations under this Lease; (b) any injury or death to persons or damage to property occurring within or about the Property; or (c) the use or occupancy of the Property by Landlord, any Landlord Parties, or any person occupying the Property through Landlord.
14.3 Survival. The terms of this Section shall survive the expiration or earlier termination of this Lease.
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15. Damage and Destruction
15.1 Restoration. Tenant shall promptly notify Landlord of any damage to the Premises resulting from fire or any other casualty. If the Premises or the Common Areas are destroyed or damaged by fire or other casualty so that Tenant is unable to occupy the Premises for its Permitted Use, then within ten (10) days after that event, Landlord shall give Tenant a notice specifying the estimated time, in Landlord's reasonable judgment, required for repair or restoration (the "RestorationEstimate"). If either (a) the Restoration Estimate is one hundred eighty (180) days or less, or (b) the Restoration Estimate exceeds one hundred eighty (180) days and Landlord does not elect to terminate this Lease in accordance with Section 15.2, then Landlord shall proceed promptly to the extent of the available insurance proceeds, to repair and/or restore the Premises provided, however, Landlord shall not be obligated to repair or restore any Tenant Alterations and/or Tenant-Owned Property. Provided this Lease is not terminated pursuant to Section 15.2, this Lease shall remain in full force, except that Basic Rent shall abate in accordance with Section 15.3.
15.2 Termination Rights. If the Restoration Estimate exceeds one hundred eighty (180), then Landlord may elect to terminate this Lease by giving a termination notice to Tenant within fifteen (15) days following delivery of the Restoration Estimate, in which event this Lease shall cease and terminate as of the date of such termination notice. If the casualty occurs during the last six (6) months of the Term, then either Landlord or Tenant may elect to terminate this Lease, by giving a written termination notice to the other Party within thirty (30) days following delivery of the Restoration Estimate, in which event this Lease shall cease and terminate as of the date of such termination notice; provided, however, that if Landlord terminates this Lease due to a casualty occurring in the last twelve (12) months of this Lease and Tenant has timely and properly exercised its option to renew or extend this Lease in accordance with Section 3.4 and no Event of Default exists at the time of such exercise or at the time of Landlord's termination notice, then Tenant shall have the right to nullify Landlord's termination by delivering written notice to Landlord within ten (10) business days after receipt of Landlord's termination notice, subject to the following conditions: (i) Landlord reasonably determines that the restoration can be substantially completed within nine (9) months from the date of the casualty; (ii) Tenant agrees in writing to accept the Premises in their restored condition based on the scope of work that can be completed with available insurance proceeds, and (iii) no Event of Default exists under this Lease.
15.3 Rent Abatement. If the damage or destruction renders all or part of the Premises untenantable, Basic Rent shall proportionately abate commencing on the date of discovery of the damage or destruction and ending on the date the Premises are delivered to Tenant with the restoration substantially completed. The extent of the abatement shall be based upon the portion of the Premises rendered untenantable.
16. Condemnation
16.1 Total Taking. A "Taking" means any taking for any public or quasi-public use by condemnation or other eminent domain proceedings pursuant to any general or special law, or any permanent transfer in settlement of, or under threat of, any condemnation or other eminent domain proceedings. If the entire Premises is subject to a Taking, this Lease shall automatically terminate as of the date that title vests in the condemning authority.
16.2 Partial Taking. If there is a Taking of a part but not all of the Premises, this Lease shall automatically terminate as to the portion of the Premises so taken as of the date that title vests in the condemning authority. If either Landlord or Tenant reasonably determines that the Taking renders the balance of the Premises unusable by Tenant for the Permitted Use, then either Landlord or Tenant may terminate this Lease by written notice delivered to the other party within thirty (30) days after the date of the Taking. Any such election to terminate the Lease as to the remaining portion of the Premises shall be effective as of the date specified in the termination notice. In the event of a partial Taking that does not result in a termination of this Lease as to the entire Premises, then from and after the date of such partial Taking, Rent shall be equitably adjusted in relation to the portions of the Premises and the Building taken or rendered unusable by such partial Taking.
16.3 Restoration. If this Lease is not terminated as a result of any Taking, Landlord shall restore the Building to an architecturally whole unit; provided, however, that Landlord shall not be obligated to expend on such restoration more than the amount of condemnation proceeds actually received by Landlord.
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16.4 Allocation of Awards. Landlord shall be entitled to the entire award for any Taking, including any award made for the value of the leasehold estate created by this Lease. No award for any partial or total Taking shall be apportioned, and Tenant hereby assigns to Landlord its share, if any, of any award made in any Taking of the Property or the estate created by this Lease, together with any and all rights of Tenant now or hereafter arising in or to such award or any part thereof. The foregoing shall not be deemed to grant Landlord any rights or interests in or to any separate award made directly to Tenant for its relocation expenses, the Taking of Tenant-Owned Property and fixtures belonging to Tenant, or the interruption of or damage to Tenant's business.
16.5 Temporary Taking. A "Temporary Taking" means a Taking of all or any portion of the Premises for a period not exceeding two (2) months before or during the Term. If there is a Temporary Taking, this Lease shall remain in full force and effect; provided, however, that Rent shall abate during the Temporary Taking period in proportion to the portion of the Premises subject to the Temporary Taking. Landlord shall be entitled to receive the entire award made in connection with any such Temporary Taking; provided, however, that nothing contained in this Lease shall be deemed to give Landlord any interest in or to require Tenant to assign to Landlord any separate award made to Tenant for its relocation expenses, the Taking of Tenant-Owned Property and fixtures belonging to Tenant, or the interruption of or damage to Tenant's business.
17. Assignment and Subletting
17.1 Landlord Consent Required. Neither Tenant nor any sublessee or assignee of Tenant, directly or indirectly, voluntarily or by operation of law, shall enter into an Assignment of this Lease or a Sublease of the Premises without Landlord's prior written consent in each instance, which consent shall not be unreasonably withheld, conditioned, or delayed. Landlord shall provide Tenant with written consent or denial, including specific reasons for any denial, within thirty (30) business days of receipt of Tenant's written request together with all information reasonably necessary to evaluate the proposed Assignment or Sublease as described in Section 17.2. Landlord's failure to respond within such thirty (30) business day period shall be deemed a denial to the proposed Assignment or Sublease, and Tenant may thereafter re-submit the request with any additional information Landlord may reasonably require. Tenant acknowledges that time is of the essence in Landlord's review process, and failure by Landlord to respond within such period shall not constitute consent or waiver of Landlord's rights. In addition, except as previously disclosed to Landlord, Tenant shall not mortgage, pledge, or otherwise encumber its interest in this Lease or in the Premises, without Landlord’s prior written consent, which shall not be unreasonable delayed, conditioned, or withheld. An "Assignment" means any sale, assignment, or other transfer of all or any part of the Premises or Tenant's leasehold estate hereunder. A "Sublease" means any subletting of the Premises, or any portion thereof, or permitting the Premises to be occupied by any person other than Tenant. Any Assignment or Sublease that is not in compliance with Section 17 shall be void. The acceptance of rental payments by Landlord from a proposed assignee, sublessee, or occupant of the Premises shall not constitute consent to such Assignment or Sublease by Landlord.
17.2 Request for Consent. Any request by Tenant for Landlord's consent to a specific Assignment or Sublease shall include: (a) the name of the proposed assignee, sublessee, or occupant; (b) the nature of the proposed assignee's, sublessee's, or occupant's business to be carried on in the Premises; (c) a copy of the proposed Assignment or Sublease documents; and (d) such financial information and such other information as Landlord may reasonably request concerning the proposed assignee, sublessee, or occupant and its
17.3 Effect of Consent. No consent by Landlord to any Assignment or Sublease by Tenant nor the collection or acceptance of rent from any such assignee, subtenant or occupant, shall relieve Tenant of any covenant or obligation to be performed by Tenant under this Lease. The consent by Landlord to any Assignment or Sublease shall not relieve Tenant or any successor of Tenant from the obligation to obtain Landlord's express written consent to any other Assignment or Sublease. No Assignment or Sublease shall be valid or effective unless the assignee, sublessee, or Tenant shall deliver to Landlord a fully-executed counterpart of the Assignment or Sublease and an instrument that contains a covenant of assumption by the assignee or agreement of the sublessee, reasonably satisfactory in substance and form to Landlord.
17.4 Transfer Profits. In connection with any Assignment or Sublease, Tenant shall promptly pay to Landlord 100% of the excess payable by an assignee or sublessee over and above the Basic Rent and Additional Rent due and payable under this Lease. Together with such payment, Tenant shall give Landlord a detailed statement of all consideration Tenant either has or will derive from such Assignment or Sublease, and the calculation of the amounts due Landlord under this Section.
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17.5 Landlord Costs. Tenant shall reimburse Landlord for its reasonable costs incurred in processing every proposed Assignment or Sublease, including Landlord’s legal review fees and expenses, and all direct and indirect expenses incurred by Landlord arising from any assignee or sublessee taking occupancy in the Building (including the costs of all additional security, janitorial, cleaning, and rubbish removal services), not to exceed $50,000.00.
17.6 Intentionally omitted.
17.7 No Encumbrances. Except as previously disclosed to Landlord, Tenant shall not mortgage, pledge, or otherwise encumber its interest in this Lease or in the Premises, without Landlord’s prior written consent.
18. Tenant's Default. Each of the following events shall be an "Event of Default" hereunder:
18.1 Monetary Default. Tenant fails to pay when due any installment of Rent and such failure continues for a period of ten (10) Business Days after written notice from Landlord that such payment is past due.
18.2 Nonmonetary Default. Tenant fails to perform or observe any other covenant, condition, or obligation of Tenant, and such failure continues for a period of thirty (30) days after Landlord gives Tenant written notice thereof. Notwithstanding the foregoing, if a cure cannot be effected within such thirty (30) day period and provided that Tenant promptly begins and diligently pursues the cure in good faith during the thirty (30) day period, Tenant shall have such additional time as is reasonably necessary, not to exceed sixty (60) days in the aggregate to effect such cure.
18.3 Abandonment. The Premises become vacant and abandoned (other than in connection with a casualty under Section 15 or a condemnation under Section 16) and Tenant fails to perform Tenant’s obligations under the Lease, and such failure continues for more than thirty (30) days.
18.4 Prohibited Transfers. Tenant Assigns this Lease or Subleases the Premises in violation of Section 17 and such assignment or sublease is not reversed within fifteen (15) days following written notice from Landlord.
18.5 Tenant Debtor Protections. The occurrence of any of the following:
(a) Tenant: (i) makes an assignment for the benefit of creditors; (ii) admits in writing its inability to pay its debts as they become due; or (iii) files a voluntary petition in bankruptcy.
(b) A proceeding or case is commenced against Tenant, without the application or consent of Tenant, in any court of competent jurisdiction, which is not dismissed within thirty (30) days after filing, seeking: (i) the appointment of a receiver to take possession of all or substantially all of the assets of Tenant; (ii) the attachment, execution, or other judicial seizure of all or substantially all of Tenant's assets; or (iii) reorganization, arrangement, composition, readjustment, liquidation, or dissolution of Tenant, or other similar relief.
19. Landlord's Remedies. Upon the occurrence of an Event of Default by Tenant, Landlord shall have all of the following rights and remedies in addition to all other rights and remedies available to Landlord at law or in equity:
19.1 Repossession of Premises. Landlord may: (a) terminate this Lease without further notice, and Tenant shall then surrender the Premises to Landlord, provided that, if Landlord terminates the lease following an Event of Default, Landlord shall use reasonable efforts to re- market the Premises and to mitigate its damages in accordance with Section 19.3; or (b) enter and take possession of the Premises (without being liable to indictment, prosecution, or damages therefor), in accordance with any applicable laws governing such repossession, and remove Tenant, with or without having terminated this Lease. If necessary, Landlord may proceed to recover possession of the Premises by force, self-help, or otherwise under applicable laws, or by other legal proceedings. Landlord's exercise of any of its remedies or its re-entry and acceptance of Tenant's keys shall not be considered an acceptance of a surrender of the Premises or of this Lease by Tenant. A surrender must be agreed to in a writing signed by both Parties.
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19.2 Landlord's Damages. If Landlord terminates this Lease or terminates Tenant's right to possess the Premises because of an Event of Default, then everything in this Lease required to be done or performed by Landlord shall cease, without prejudice, however, to Tenant's liability for all Rent and other sums due hereunder. In such event, Landlord may hold Tenant liable for: (a) all Rent which shall have accrued and remains unpaid through the date of termination; (b) accelerated Rent and other indebtedness that otherwise would have been payable by Tenant to Landlord discounted to present value using a discount rate equal to the Prime Rate as published in The Wall Street Journal (or successor publication) on the date of termination, plus two percent (2%), but in no event less than six percent (6%) per annum, less any amount that Landlord receives from re-letting the Premises after all of Landlord's costs and expenses incurred in such re-letting have been subtracted; (c) other necessary expenses (including without limitation reasonable attorneys' fees) incurred by Landlord in enforcing its remedies; and (d) notwithstanding the foregoing sentence, at Landlord's election, Tenant shall pay to Landlord, on demand, as liquidated and agreed final damages, a sum equal to the amount by which the Rent (including payments of Operating Expenses, Taxes, and all items of Additional Rent in the amounts such items were payable for the month immediately prior to the Event of Default) for the period which otherwise would have constituted the unexpired portion of the Term exceeds the then fair and reasonable rental value of the Premises, for the same period less the aggregate amount of any sums theretofore collected by Landlord pursuant to the provisions of this Section for the same period. If, before presentation of proof of such liquidated damages to any court, the Premises, or any part thereof, shall have been re-let by Landlord for the period which otherwise would have constituted the unexpired portion of the Term, or any part thereof, the amount of rent reserved upon such re-letting shall be deemed prima facie, to be the fair and reasonable rental value for the part or the whole of the Premises re-let during the term of the re- letting.
19.3 Re-Letting the Premises. Landlord shall use reasonable efforts to mitigate its damages and to re-let the Premises or any part thereof, alone or together with other premises, for such term(s) (which may extend beyond the date on which the Lease Term would have expired but for Tenant's default) and on such terms and conditions (which may include concessions or free rent and alterations of the Premises) as Landlord, in its reasonable discretion, may determine. Landlord, at Landlord's option, may make such repairs, replacements, alterations, additions, improvements, decorations, and other physical changes to the Premises as Landlord, in its reasonable discretion, considers advisable or necessary in connection with any such reletting or proposed reletting, without relieving Tenant of any remaining liability under this Lease or otherwise affecting any such liability. If the Premises or any part thereof, shall be relet together with other space in the Building, the rents collected or reserved under any such reletting and the expenses of any such reletting shall be equitably apportioned for the purposes of this Section. Tenant shall in no event be entitled to any rents collected or payable under any reletting, whether or not such rents shall exceed the Rent reserved in this Lease.
19.4 Waiver. Tenant hereby covenants and agrees, as a consideration for the granting by Landlord of this Lease that, in the event of the termination of this Lease by summary proceedings, or in the event of the entry of a judgment for the recovery of the possession of the Premises in any other action, or if Landlord enters by process of law or otherwise, the right of redemption provided or permitted by any statute, law, or decision now or hereafter in force, and the right to any second and further trial provided or permitted by any statute, law, or decision now or hereafter in force shall be and hereby is expressly waived by Tenant. Further, Tenant, on its own behalf and for its legal representatives, successors, and assigns, and on behalf of all persons or business entities claiming through or under this Lease, together with creditors of all classes, and all other persons having an interest therein, does hereby waive, surrender, and give up all right or privilege which it may or might have by reason of any present or future law or decision, to redeem the Premises or have a continuance of this Lease for any part of the term hereof after having been dispossessed or ejected therefrom by process of law or otherwise.
19.5 Cumulative Rights and Remedies. Landlord's and Tenant’s rights and remedies set forth in this Lease are cumulative and in addition to their other rights and remedies at law or in equity, including those available as a result of any anticipatory breach of this Lease. Landlord's or Tenant’s exercise of any such right or remedy shall not prevent the concurrent or subsequent exercise of any other right or remedy. Landlord's or Tenant’s delay or failure to exercise or enforce any of their rights or remedies shall not constitute a waiver of any such rights, remedies, or obligations. Neither Landlord nor Tenant shall be deemed to have waived any default unless such waiver expressly is set forth in an instrument signed by the applicable party. Any such waiver shall not be construed as a waiver of any covenant or condition except as to the specific circumstances described in such waiver. Neither Tenant's payment of an amount less than a sum due nor Tenant's endorsement or statement on any check or letter accompanying such payment shall be deemed an accord and satisfaction. Notwithstanding any request or designation by Tenant, Landlord may apply any payment received from Tenant to any payment then due. Landlord may accept the same without prejudice to Landlord's right to recover the balance of such sum or to pursue other remedies. Mention of any particular remedy in this Lease shall not preclude Landlord or Tenant from any other remedy, at law or in equity.
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20. Subordination; Estoppel Certificates
20.1 Subordination. Subject to the provisions set forth in Section 20.2 this Lease shall be subject and subordinate at all times to all current or future Ground Leases and Mortgages. The provisions of this Section shall be self-operative, and no further instrument shall be required to effect the provisions of this Section, except as otherwise provided in Section 20.2. Tenant agrees to execute, acknowledge, and deliver, within ten (10) days, any and all reasonable documents or instruments which Landlord or a Mortgagee deem necessary or desirable to confirm such subordination, which documents may also contain such other terms as any Mortgagee or prospective Mortgagee may reasonably require.
20.2 Subordination, Non-Disturbance, and Attornment Agreement. This Lease is subject and subordinate to all ground or underlying leases and to all mortgages and/or deeds of trust which may now or hereafter affect such leases or the real property of which the Premises form a part, and to all renewals, modifications, consolidations, replacements and extensions thereof, provided that Landlord delivers to Tenant a subordination, nondisturbance, and attornment agreement from the holder of such ground lease, mortgage, or deed of trust providing that in the event Landlord defaults under such Mortgage, Tenant's possession of the Premises shall not be disturbed so long as Tenant is not in default of this Lease beyond any applicable cure period ("SNDA"). In confirmation of such subordination, Tenant shall execute promptly any certificate that the Landlord, or the holder of such deed of trust, may reasonably request, provided that such certificate contains commercially reasonable nondisturbance and attornment provisions. Notwithstanding the foregoing, in the event of any foreclosure sale under such deed of trust, this Lease shall continue in full force and effect, and the Tenant hereby attorns to the party secured by such deed of trust or the purchaser under any such foreclosure sale, which attornment is self-operative and requires no further instrument or agreement. Tenant covenants and agrees that, notwithstanding the self-operative nature of the attornment contained in this Lease, Tenant will, at the written request of the party secured by any such deed of trust, execute, acknowledge and deliver any commercially reasonable SNDA.
20.3 Notices to Lender. Tenant agrees to simultaneously give to any Mortgagee, in accordance with the notice requirements set forth in Section 25, a copy of any notice of default served upon Landlord, provided Landlord has notified Tenant in writing of the names and addresses of such Mortgagee and such Mortgagee shall have the option, but not the obligation, to cure such default on behalf of Landlord.
20.4 Estoppel Certificates. Tenant, at any time and from time to time, shall execute and deliver to Landlord, an estoppel certificate within fifteen (15) days after written request from Landlord. The estoppel certificate shall (i) certify that this Lease is unmodified and in full force and effect (or if there have been modifications, that the Lease is in full force and effect as modified and stating the modification), (ii) state the Basic Rent, and the dates to which the Rent and any other charges hereunder have been paid by Tenant, (iii) state whether Tenant is in default in the performance of any covenant, agreement or condition contained in this Lease, and if so, specifying each such default, and state to the actual knowledge of Tenant (without duty of inquiry), whether Landlord is in default in the performance of any covenant, agreement or condition contained in this Lease, and if so, specifying each such default of which Tenant may have actual knowledge, (iv) state the address to which notices to Tenant should be sent, (v) state the Term of the Lease, the area encompassed by it, and the Lease Commencement Date; (vi) state that Tenant has not prepaid any Rent except as otherwise required under the Lease; and (vii) state that Tenant has accepted the Premises in its "as is" condition, is in possession of the Premises and that all improvements have been made to the Premises as required by the Lease (or, providing details to the extent the foregoing in (viii) are not correct). It is intended that any such certificate may be relied upon by Landlord and all those Landlord specifies as addressees. If Tenant fails to execute and deliver such estoppel certificate to Landlord within fifteen (15) days after receipt of Landlord's request, Landlord shall provide Tenant with written notice of such failure. If Tenant fails to execute and deliver such estoppel certificate within five (5) Business Days after receipt of such additional written notice from Landlord, such failure shall constitute an Event of Default under this Lease.
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21. End of Term; Holding Over
21.1 Condition Upon Surrender. On the Lease Expiration Date, or upon any earlier termination of this Lease, Tenant must vacate and surrender the Premises to Landlord. The Premises shall be surrendered to Landlord vacant, "broom-clean," and in good order, condition, and repair, normal wear and tear excepted. Tenant shall remove all of Tenant's Equipment and personal property, all telecommunications equipment and wires and cables installed by or on behalf of Tenant, all Tenant-Owned Property, and all Alterations that Tenant is required to remove in accordance with Section 12.3. Tenant shall repair any damage to the Premises, including any damage caused by such removal. If Tenant fails to repair any damage caused by the removal of any Alterations, Tenant shall reimburse Landlord for all costs and expenses incurred by Landlord in making any repairs and replacements to the Premises. Any property (including Tenant-Owned Property) not removed by Tenant shall be deemed abandoned and, if Landlord so elects, deemed to be Landlord's property, and may be retained or removed and disposed of by Landlord in such manner as Landlord shall determine. Tenant shall reimburse Landlord for all costs and expenses, including administrative charges, incurred by Landlord in effecting such removal and disposal. The provisions of this Section shall survive the expiration or earlier termination of this Lease.
21.2 Holdover. No holding over by Tenant after the expiration or other termination of this Lease shall operate to extend the Term. Any holding over with Landlord's written consent shall be construed as a tenancy at sufferance or from month to month, at Landlord's option. If Tenant holds over, then: (a) Tenant shall pay to Landlord for each month and for each portion of any month during which Tenant holds over in all or any portion of the Premises 150% of the Rent (including payments of Operating Expenses, Taxes, and all items of Additional Rent) payable during the final full month of the Term; (b) Tenant's occupancy shall otherwise be on the terms and conditions of this Lease so far as applicable (but expressly excluding all extension rights); and (c) Tenant shall indemnify, defend, and hold Landlord harmless from all losses, costs (including reasonable attorneys' fees), and liabilities resulting from Tenant’s failure to vacate the Premises, including any claims made by any succeeding tenants founded upon such holdover. The acceptance by Landlord of any holdover rent shall not preclude Landlord from exercising any other rights under this Lease or at law, including Landlord's rights and remedies provided by law or this Lease.
22. Security Deposit
22.1 Use of Deposit. On or before the Effective Date, Tenant shall deposit with Landlord the Letter of Credit as security for the performance by Tenant of all of Tenant's obligations, covenants, conditions, and agreements under this Lease. The Letter of Credit must permit partial and multiple draws and must be drawable at a financial institution with offices in Bexar County, Texas (or such other location as Landlord may reasonably approve). Landlord shall not be required to maintain the Letter of Credit in any particular manner or location. If an Event of Default occurs under this Lease by Tenant, Landlord shall have the right, but not the obligation, to draw upon all or any portion of the Letter of Credit for the payment of: (a) Rent or any other sum due hereunder; or (b) Landlord's losses, costs, and expenses incurred by reason of Tenant's default. Landlord shall provide Tenant with five (5) Business Days' prior written notice before drawing on the Letter of Credit, except that no such notice shall be required: (i) in the event of an emergency; (ii) if Tenant has filed for bankruptcy or similar debtor protection; or (iii) if the Letter of Credit is scheduled to expire within ten (10) Business Days and Tenant has not provided a replacement or renewal Letter of Credit in accordance with Section 22.3. If any portion of the Letter of Credit is drawn upon by Landlord in accordance with this Section, then within ten (10) Business Days after Landlord gives Tenant written notice of such draw, Tenant shall deposit with Landlord a replacement or additional Letter of Credit in such amounts as needed to restore the Letter of Credit to the full amount of $350,000.00. Tenant's failure to do so shall constitute an Event of Default under this Lease.
22.2 Release Upon Transfer. Provided that no Event of Default has occurred and is continuing, and Tenant has fully performed all of its obligations under this Lease (including payment of all Rent and other amounts due and the repair of any damage to the Premises for which Tenant is responsible), Landlord shall return the Letter of Credit to Tenant (or, at Landlord's option, consent in writing to the cancellation of the Letter of Credit by the issuing bank) within thirty (30) days after the later of: (a) the expiration or earlier termination of this Lease; or (b) Tenant's surrender of the Premises in accordance with Section 21.1 and Landlord's inspection and acceptance of the condition of the Premises. If Landlord transfers the Letter of Credit to any purchaser or other transferee of Landlord's interest in the Property, Landlord shall provide written notice to Tenant of such transfer, and upon such transfer and notice, Tenant shall look only to such purchaser or transferee for the return of the Letter of Credit and Landlord shall be released from all liability to Tenant for the return of the Letter of Credit, provided that such transferee has acknowledged in writing its assumption of Landlord's obligations with respect to the Letter of Credit. Any such transfer of the Letter of Credit to a purchaser or transferee shall be at no cost to Tenant, and Tenant shall reasonably cooperate with any such transfer, including by executing any transfer documents reasonably required by the issuing bank.
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22.3 Renewal and Maintenance of Letter of Credit. Tenant shall maintain the Letter of Credit in full force and effect throughout the Term and until the date that is sixty (60) days after the Lease Expiration Date or the date of early termination of this Lease (or such earlier date as Landlord returns the Letter of Credit or consents to its cancellation in accordance with Section 22.2). If the Letter of Credit has an expiration date that is less than sixty (60) days after the Lease Expiration Date (as it may be extended), Tenant shall provide a renewal or replacement Letter of Credit (in form reasonably acceptable to Landlord) at least thirty (30) days before the expiration of the then-current Letter of Credit. Tenant's failure to timely provide such renewal or replacement Letter of Credit shall constitute an Event of Default under this Lease.
22.4 Issuing Bank Requirements. Tenant shall monitor the financial condition of the issuing bank. If at any time during the Term: (a) the financial institution that issued the Letter of Credit fails, becomes insolvent, or is taken over by the FDIC or any other regulatory authority; or (b) the credit rating of such institution falls below investment grade, then Tenant shall, within fifteen (15) Business Days after such event, provide Landlord with a substitute Letter of Credit from a different financial institution reasonably acceptable to Landlord. Additionally, if the issuing bank becomes unacceptable to Landlord in Landlord's reasonable discretion for any other reason that would cause a prudent commercial landlord concern about the issuing bank's creditworthiness or ability to honor the Letter of Credit (such as a material adverse change in the bank's financial condition or regulatory standing), Landlord may require Tenant to provide a substitute Letter of Credit by providing Tenant with written notice specifying the reasons for such requirement, and Tenant shall provide such substitute Letter of Credit within fifteen (15) Business Days after receipt of such notice. Tenant's failure to timely provide such substitute Letter of Credit shall constitute an Event of Default under this Lease.
23. Signs. Tenant has the right to erect signage on the Premises and/or landscaped portion of the Common Area within or adjoining the Premises, subject to local ordinance and any requirements imposed on the Premises by the Texas Historical Commission or the National Park Service, at Tenant’s sole cost and expense, and in accordance with those commercially reasonable sign specifications to be established by Landlord regarding signage within the Property. Landlord shall have the right to prohibit any other advertisement of Tenant which in its reasonable opinion tends to impair the reputation of the Property or its desirability as a high-quality Property for offices, and upon written notice from Landlord, Tenant shall immediately refrain from and discontinue any such advertisement. All signage to be installed by Tenant must first be approved in writing by Landlord.
24. Parking. Landlord shall provide, and Tenant shall have the right to use parking spaces in the surface lot located 1304 E Houston St., San Antonio, Texas 78205. Parking spaces shall be subject to such reasonable rules and/or regulations which may from time to time be established by Landlord, provided that such are furnished to Tenant in writing in advance.
25. Notices Notices and other communications shall be given to the Parties in writing and shall be considered properly delivered only when received or when first refused by the addressee, if such notice is transmitted to the recipient's address, as provided below until otherwise directed in writing, and such transmittal is given or served (i) personally, (ii) by reputable overnight courier service (such as FedEx or UPS), or (iii) by registered or certified mail (return receipt requested) deposited in the United States general or branch post office.
| If to Landlord: | TPB Merchant’s Ice LLC<br><br> <br><br><br> <br>1305 E. Houston St.<br><br> <br><br><br> <br>San Antonio, Texas 78205<br><br> <br><br><br> <br>Attention: Daniel Koehl, Chief Financial Officer<br><br> <br>Email:<br> dkoehl@kslawllp.com |
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| With Copy To: | TransPecos Development Corp.<br><br> <br><br><br> <br>P.O. Box 12747<br><br> <br><br><br> <br>San Antonio, Texas 78212<br><br> <br><br><br> <br>Attention: William D. Sutherland, President<br><br> <br>Email:<br> dsutherland@kslawllp.com |
| If to Tenant: | Velocity Bioworks, Inc.<br><br> <br><br><br> <br>1305 E. Houston St., Building<br>2<br><br> <br>San Antonio, Texas 78205<br><br> <br>Attention: Michael K. Handley<br><br> <br>Email:<br>corporate@velocitybioworks.com |
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Notwithstanding the foregoing, all bills, statements, invoices, consents, requests, or other communications from Landlord to Tenant with respect to Rent may be sent to Tenant by regular U.S. Mail. If Landlord notifies Tenant in writing of the names and addresses of any Mortgagee in accordance with Section 20.3, then no notice to Landlord shall be considered duly given unless a copy of such notice is simultaneously given in accordance with this Section to such Mortgagee.
26. Miscellaneous Provisions
26.1 Brokers. Tenant represents and warrants to Landlord that Tenant has not employed or dealt with any broker, agent, or finder in connection with this Lease. Tenant shall indemnify and hold Landlord harmless from and against any claim or claims for any broker's fee or commission asserted by any broker, agent, or finder employed by Tenant. Landlord shall be solely responsible for paying any brokerage commission to any broker engaged by Landlord pursuant to a separate written agreement. The provisions of this Section shall survive the expiration or earlier termination of this Lease.
26.2 Landlord Access. Upon at least 48 hours’ prior notice to Tenant (which may be telephonic), Landlord, and applicable Landlord Parties, shall have the right to enter the Premises, at all reasonable hours (and at any time in the event of an emergency) to: (a) inspect the Premises; (b) supply any service to the Premises; (c) show the Premises to prospective purchasers and Mortgagees, at any time; (d) show the Premises to prospective tenants during the final three (3) months of the Term; (e) post notices; (f) determine whether Tenant is complying with its obligations under this Lease; and (g) alter, improve, or repair the Premises, any Building Systems, or any other portion of the Building. So long as Landlord uses commercially reasonable efforts to avoid interference with Tenant’s use of the Premises, then, except to the extent caused by the negligence or willful misconduct of Landlord or any Landlord Party, Landlord shall not be liable to Tenant for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, any right to abatement of Rent, or any other loss occasioned by Landlord's exercise of any of its rights under this Section.
26.3 Successors and Assigns. The terms, covenants, and conditions contained in this Lease shall bind and inure to the benefit of Landlord and Tenant and, except as otherwise expressly provided in this Lease, their respective personal representatives, successors and assigns.
26.4 Transfer of Landlord's Interest. The term "Landlord" as used in this Lease, is limited to mean and include only the owner or owners of Landlord's interest in this Lease at the time in question. Upon the sale, assignment, or transfer by Landlord of its interest in the Building or the Property as owner or lessee, including any transfer upon or in lieu of foreclosure or by operation of law, Landlord shall be relieved from all obligations or liabilities under this Lease from and after the effective date of such transfer. The transferee shall assume this Lease and all obligations hereunder shall be binding upon the transferee as of the date of such transfer. Any such transferee, by accepting such interest, shall be deemed to have assumed such subsequent obligations and liabilities.
26.5 Limitation on Landlord's Liability. If Landlord becomes obligated to pay Tenant any judgment arising out of any failure by the Landlord to perform or observe any of the terms, covenants, conditions, or provisions to be performed or observed by Landlord under this Lease, Tenant shall be limited in the satisfaction of such judgment solely to Landlord's interest in the Building and the Property or any insurance or condemnation proceeds, or proceeds arising from the sale thereof. No other property or assets of Landlord or the individual partners, directors, officers, members, or shareholders of Landlord or its constituent partners shall be subject to levy, execution, or other enforcement procedure whatsoever for the satisfaction of any such money judgment.
26.6 Force Majeure.
(a) Neither Party shall be liable or responsible to the other Party, nor be deemed to have defaulted under or breached this Lease, for any failure or delay in fulfilling or performing any obligation under this Lease (except for any obligations to make payments to the other Party hereunder), when and to the extent such failure or delay is caused by a Force Majeure Event. The failure or inability of either Party to perform its obligations in this Lease due to a Force Majeure Event shall be excused for the duration of the Force Majeure Event and extended for a period equivalent to the period of such delay. Nothing contained in this Section shall excuse either Party from paying in a timely fashion any payments due under the terms of this Lease or extend the term of this Lease.
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(b) Either Party (the "Force Majeure Noticing Party") shall give the other Party notice within fifteen (15) days of the commencement of the Force Majeure Event, explaining the nature or cause of the delay and stating the period of time the delay is expected to continue. The Force Majeure Noticing Party shall use commercially reasonable efforts to end the failure or delay and ensure the effects of such Force Majeure Event are minimized. The Force Majeure Noticing Party shall resume the performance of its obligations as soon as reasonably practicable after the Force Majeure Event ends.
26.7 Partial Invalidity. Each provision of this Lease shall be valid and enforceable to the fullest extent permitted by law. If any 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 provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall remain in effect and shall be enforceable to the full extent permitted by law.
26.8 Entire Agreement. All prior agreements between Landlord and Tenant are incorporated in this Lease, which (including all Exhibits) constitutes and is intended as a final expression of the Parties' agreement and may not be contradicted by evidence of any prior written or oral agreement. The Parties further intend that this Lease constitutes the complete and exclusive statement of its terms, and that no extrinsic evidence whatsoever may be introduced in any judicial or other proceeding, if any, involving this Lease.
26.9 No Representations. Neither Landlord nor Landlord's agents have made any representations or warranties with respect to the Premises, the Building, the Property, or this Lease except as expressly set forth in this Lease.
26.10 Quiet Enjoyment. Upon Tenant paying the Rent and performing all of Tenant's obligations under this Lease, Tenant may peacefully and quietly enjoy the Premises during the Term as against all persons or entities claiming by, through, or under Landlord, subject, however, to the provisions of this Lease and to the priority of any mortgages or deeds of trust or ground or underlying leases.
26.11 Survival. Upon the expiration or other termination of this Lease, neither Party shall have any further obligation or liability to the other, except as otherwise expressly provided in this Lease and except for such obligations as by their nature can only be performed after such expiration or other termination. Any liability for a payment which shall have accrued or relates to any period before the expiration or other termination of this Lease shall survive the expiration or earlier termination of this Lease.
26.12 Governing Law; Consent to Jurisdiction and Venue. The Laws of the State of Texas shall govern the validity, performance, and enforcement of this Lease. Tenant consents to personal jurisdiction and venue in Bexar County, Texas. The courts of State of Texas will have exclusive jurisdiction and Tenant hereby agrees to such exclusive jurisdiction.
26.13 Amendments. This Lease may only be amended, modified, or supplemented by an agreement in writing duly executed by both Landlord and Tenant.
26.14 WAIVER OF JURY TRIAL. LANDLORD AND TENANT KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY EITHER PARTY AGAINST THE OTHER IN ANY MATTER ARISING OUT OF THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES, OR ANY CLAIM OF INJURY OR DAMAGE.
26.15 SUBMISSION OF LEASE. SUBMISSION OF THIS LEASE TO TENANT SHALL NOT CONSTITUTE AN OFFER AND SHALL NOT BIND EITHER PARTY IN ANY MANNER UNTIL THIS INSTRUMENT IS DULY SIGNED AND DELIVERED BY LANDLORD AND TENANT.
26.16 No Recording. Tenant shall not record this Lease nor any memorandum of this Lease in any land records or other public records of any jurisdiction, without Landlord’s prior written consent.
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26.17 Prevailing Party. If any Party brings an action or proceeding involving the Premises to enforce the Terms of this Lease or to declare rights hereunder, then such initiating Party shall be entitled to reasonable attorneys' fees, if it is the Prevailing Party in any such proceeding, action, or appeal thereon. The term, "Prevailing Party" shall include, without limitation, a Party that substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party of its claim or defense. The attorneys' fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all reasonable attorneys' fees actually incurred. In addition, the Prevailing Party shall be entitled to attorneys' fees, costs, and expenses incurred in the preparation and service of notices of default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such default.
26.18 Tax Incentives. Landlord intends to seek Federal and Texas historic tax credits in connection with improvement of the Property. Tenant agrees to cooperate with Landlord’s efforts, at no cost to Tenant (other than routine administrative expenses), to obtain any and all historic tax credits in connection with the “qualified rehabilitation expenditure” made by Landlord with respect to the Premises as that term is defined in Section 47 of the Internal Revenue Code. Tenant acknowledges that any Alterations must be made in accordance with the Standards for Rehabilitation promulgated under federal and state law and will cooperate reasonably with Landlord’s counsel, historic architectural, tax, and accounting consultants in making any Alterations under this Lease.
[signature page follows]
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IN WITNESS WHEREOF, the Parties have executed this Lease as of the Effective Date.
| **** <br><br><br>LANDLORD:<br><br><br><br><br><br><br><br>TPB Merchants Ice LLC | |
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| By: TransPecos Development Corp., its Managing<br>Member | |
| By: | /s/ William D. Sutherland |
| William D. Sutherland<br><br><br><br><br><br><br><br>President |
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IN WITNESS WHEREOF, the Parties have executed this Lease as of the Effective Date.
| **** <br><br><br>TENANT: | |
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| VELOCITY BIOWORKS, INC., A DELAWARE CORPORATION | |
| By: | /s/ Michael Handley |
| Name: Michael Handley<br><br><br><br>Title: CEO |
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Exhibit A
FLOOR PLAN OF THE PREMISES
(See attached)
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Exhibit 10.2
LEASE
THIS LEASE*(“Lease”)* is made this 1st day of January, 2026 (the “Effective Date”), by and between MERCHANTS ICE II, LLC, a Texas limited liability company (hereinafter referred to as “Landlord”) and Velocity Bioworks, Inc., a Delaware corporation (hereinafter referred to as “Tenant”).
WHEREAS, Landlord is the owner of a certain parcel of real property located at 1305 E. Houston Street, San Antonio, Texas 78205 as more particularly described in Exhibit “A”, which real property is improved by two office buildings and additional structures, commonly known as the Merchants Ice Building(s) collectively referred to herein as the “Complex”, including the buildings, improvements and underlying and adjacent land; and
**WHEREAS,**Tenant desires to lease space in the Complex and Landlord is willing to lease Tenant space in the Complex, upon the terms, conditions, covenants and agreements set forth herein.
NOW, THEREFORE, the parties hereto, intending legally to be bound, hereby covenant and agree as set forth below.
| 1. | THE PREMISES |
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Landlord hereby leases to Tenant and Tenant hereby leases from Landlord for the Term (as defined below) and upon the terms, conditions, covenants, and agreements hereinafter provided, the space (the “Premises”) that is currently estimated to be 20,144 square feet of rentable area (the “Premises Rentable Square Feet”), which in any event constitutes the entire rentable area of the structure known as the “Music Building” that is located within the Complex. The Premises are labeled as “Building 2 - 20,144 SF” on Exhibit “B” attached hereto and made a part hereof. The Lease of the Premises includes the non-exclusive right of Tenant to use, in common with others and in accordance with the Rules and Regulations attached as Exhibit “C”, those certain areas (the “Common Areas”) and facilities of the Complex which are from time to time provided and designated by Landlord for the use of tenants of the Complex and its employees, clients, customers, licensees and invitees or for use by the public, which facilities and improvements include any and all corridors, foyers, vending areas, bathrooms, electrical and telephone rooms, mechanical rooms, janitorial areas, kitchens, conference/meeting rooms, and other similar facilities of the Complex and any and all grounds, parks, landscaped areas, outside sitting areas, sidewalks, courtyards, walkways, and generally all other improvements located in the Complex that are not the subject of an exclusive lease. Landlord agrees to maintain such Common Areas in good order and condition consistent with other Class-A office building projects in San Antonio, Texas, normal wear and tear excepted, and subject to Landlord’s right to charge the tenants of the Complex for Operating Expenses as outlined in this Lease.
| 2. | USE OF PREMISES |
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Tenant will use and occupy the Premises solely for general office, laboratory, research, analytical, and/or biomanufacturing purposes, subject to Applicable Laws (as hereinafter defined); without the prior written consent of Landlord, the Premises will not be used for any other purpose, including any use set forth in Section 50 of this Lease. Tenant will not use or occupy the Premises for any unlawful purpose, or for any purpose that will constitute a nuisance under applicable law, and will comply with all present and future laws, ordinances, regulations, and orders of the United States of America, State of Texas, Bexar County, and any other governmental authority having jurisdiction over the Premises (“Applicable Laws”).
| 3. | TERM |
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The Term (as used herein, so called) of this Lease shall be for a period of one hundred ten (110) full calendar months commencing on the Lease Commencement Date (as hereinafter defined), plus any partial month from the Lease Commencement Date to the end of the month in which the Lease Commencement Date falls, ending at 11:59 p.m. local time on the last day of the 110th full calendar month following the Lease Commencement Date (the “Lease Expiration Date”), subject to adjustment and earlier termination as provided in this Lease. The initial period of time referenced in the preceding that comprises the Term is the “Initial Term”.
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3A. LEASE COMMENCEMENT DATE
The “Lease Commencement Date” is January 1, 2026.
| 4. | RENT |
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Tenant shall pay as rent for the Premises the following amounts as more fully described in Sections 4.A. and 4.D. (each of which shall be considered Rent and all of which are collectively referred to herein as “Rent”):
A. Basic Rent. Subject to the provisions of Section 4.B., below: (1) The Basic Rent (hereinafter called the “BasicRent”) shall be Six Hundred Sixty Thousand Three Hundred Fifty-Six and 78/100 Dollars ($660,356.78) annually for the first twelve calendar months of the Lease (each, a “Lease Month”), payable in equal monthly installments, in advance, of Fifty-Five Thousand Twenty-Nine and 73/100 Dollars ($55,029.73), subject to the terms of the following sentence, the first payment to be made on or before the Lease Commencement Date, and each subsequent monthly payment to be made on the first day of each and every calendar month during the Term hereof; and (2) The Rent shall be considered late and subject to penalty if not paid ten days after the applicable due date. If the Term of this Lease begins on a date other than the first day of a month, or ends on a date other than the last day of a month, Rent for the month of such termination or commencement shall be prorated at the rate of one-thirtieth (1/30th) of the fixed monthly rental for each day, payable in advance.
B. Basic Rent Escalation. On the first business day of the first full month after the anniversary of the Lease Commencement Date during the Term of the Lease, the Basic Rent for such month and the following eleven calendar months shall be increased by three percent (3%) per annum from the Basic Rent previously in effect. For the avoidance of doubt, the Basic Rent for the Initial Term as follows:
| Lease Months<br><br> <br>(following the<br> Lease Commencement Date and any partial month after the Lease Commencement Date prior to the<br><br> <br>first full calendar month of the Term) | Annual Basic Rent | Monthly Basic Rent |
|---|---|---|
| 1-12 | $660,356.78 | $55,029.73 |
| 13-24 | $680,167.48 | $56,680.62 |
| 25-36 | $700,572.51 | $58,381.04 |
| 37-48 | $721,589.68 | $60,132.47 |
| 49-60 | $743,237.37 | $61,936.45 |
| 61-72 | $765,534.50 | $63,794.54 |
| 73-84 | $788,500.53 | $65,708.38 |
| 85-96 | $812,155.55 | $67,679.63 |
| 97-110 | $836,520.21 | $69,710.02 |
C. It is expressly understood and agreed that in addition to and along with the Basic Rent and Additional Rent for the month of January 2026, Sublessee shall pay to Sublessor the amount of Rent that would have been due for the month of December 2025.
D. Additional Rent. During the Term, Tenant shall pay Additional Rent (as used herein, so called), which consists of the Tenant’s Share (as hereinafter defined) of Operating Expenses and Taxes. Tenant shall make such payments as set forth in Sections 4.G and 4.H, below.
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E. Tenant'sShare. The term “Tenant's Share” means: (1) 100% of the Taxes (as hereinafter defined) attributable to the Premises; plus (2) 100% of the Operating Expenses incurred by Landlord solely with respect to the Premises; plus (3) 33.57% of the Taxes (as hereinafter defined) of the Common Areas of the Complex; plus (4) Except as included in Section 4.E.(2), 33.57% of the Operating Expenses (as hereinafter defined) of the Complex, which percentages in this Section 4.E are obtained by dividing (a) the Premises Rentable Square Feet as stated above by (b) the Complex Rentable Square Feet as of the Effective Date.
F. Stipulations. Landlord and Tenant stipulate that the Premises Rentable Square Feet and the Complex Rentable Square Feet set forth above are conclusive and shall be binding upon them during the Term. If, during the Term, any change occurs in either the Premises Rentable Square Feet or the Complex Rentable Square Feet, Tenant's Share shall be adjusted, effective as of the date such change occurs. provided, however, in no event will the Complex Rentable Square Feet for the purpose of calculating Additional Rent in Section 4.D be greater than the amount set forth in Section 4.D above, or will Tenant’s Share in Section 4.E above be greater than 33.57% (although Tenant's Share in Section 4.E may decrease if the Complex Rentable Square Feet increases).
G. Taxes. For each year during the Term of this Lease, Landlord shall submit to Tenant a statement of the Taxes that are actually assessed by the Bexar County Tax Assessor and within thirty (30) days after receipt of such statement, Tenant shall pay to Landlord, subject to the terms of Section 4.D and 4.E, above, that portion of Additional Rent that consists of Tenant’s Share of Taxes (and, for any partial calendar year after the Lease Commencement Date, Tenant shall be responsible only for remitting to Landlord a pro-rated portion thereof, based on the number of actual days in the calendar year: (1) after the Lease Commencement Date until the end of such year; and (2) prior to the Lease Expiration Date). The termination of this Lease shall not affect the obligations of the Landlord and Tenant pursuant to this Section 4.G to be performed after such termination, but shall be effective only with respect to the period of time that constitutes the Term.
As used in this Lease, the term “Taxes” means taxes, assessments, and governmental charges or fees whether federal, state, county or municipal, and whether they be by taxing districts or authorities presently taxing or by others, subsequently created or otherwise, and any other taxes and assessments (including non-governmental assessments and charges under any restrictive covenant, declaration of covenants, restrictions and easements or other private agreement that are not treated as part of Operating Expenses) now or hereafter attributable to the Complex (or its operation), excluding, however, penalties and interest thereon and federal and state taxes on income. Notwithstanding the foregoing to the contrary, in no event shall “Taxes” be deemed to include any franchise, margin, estate, inheritance, or income tax. Taxes shall include reasonable costs of consultants retained in an effort to lower taxes and all costs incurred in disputing any taxes or in seeking to lower the tax valuation of the Complex, but only to the extent actual savings result from such efforts.
H. Paymentof Operating Expenses. Prior to January 1 of each year, or as soon thereafter as practicable, during the Term of this Lease, Landlord shall provide Tenant a good faith projection of Operating Expenses for the coming year, and commencing on January 1 of each year, Tenant shall pay monthly, one-twelfth (1/12) of the Tenant’s Share with respect to the Operating Expenses of operating the Complex that are set forth in Section 4.E. Landlord shall, within the period of ninety (90) days (or as soon thereafter as possible) after the close of each calendar year, provide Tenant a statement of such year's actual Operating Expenses with respect thereto. Tenant shall pay Landlord within thirty (30) days of statement receipt Tenant’s Share of the difference, if any, if the actual Operating Expenses was in excess of the projected Operating Expenses. If the projected Operating Expenses exceeded the actual Operating Expenses, Landlord shall refund Tenant’s Share of the excess to Tenant within ten (10) days after such determination is made or, if requested by Tenant, credit such excess against the next monthly installment(s) of Rent thereafter payable by Tenant.
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I. Definition of Operating Expenses. The term “Operating Expenses” as used herein shall mean all reasonable and necessary expenses, costs and disbursements which Landlord incurs in connection with the ownership, operation, and maintenance of the Complex and performance of Landlord’s obligations under this Lease, in each case, determined in accordance with sound accounting principles consistently applied, without duplication, including the following costs:
| i. | Wages and salaries of the building manager and all employees below the grade of<br>building manager engaged in operating and maintenance or security of the Complex, including taxes, insurance and benefits relating thereto. |
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| ii. | All supplies and materials used in operation and maintenance of the Complex. |
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| iii. | All utilities, including surcharges for the Complex, the cost of water, sewer,<br>gas, and electricity, if not separately metered to Tenant (but not metered or sub-metered utilities paid by other tenants). |
| --- | --- |
| iv. | All heating, lighting, air conditioning, and ventilating of the Complex, if not<br>separately metered to Tenant or other tenants. |
| --- | --- |
| v. | Cost of all maintenance and service agreements for the Complex and the equipment<br>therein, including but not limited to security, landscape, irrigation, IT, trash removal, music, energy management services, window cleaning,<br>elevator maintenance (if applicable) and janitorial service (except with respect to replacements that are capital in nature which shall<br>be calculated and allocated as provided for herein). |
| --- | --- |
| vi. | Cost of all insurance relating to the Complex, including the cost of casualty and<br>liability insurance applicable to the Complex and Landlord's personal property used in connection therewith. |
| vii. | Cost of repairs, replacements, and general maintenance (excluding repairs and<br>general maintenance paid by proceeds of insurance or by Tenant or third parties, alterations attributable solely to tenants of the Complex<br>other than Tenant, and replacements that are capital in nature, except as provided herein). |
| --- | --- |
| viii. | The costs of any additional services provided by Landlord in the prudent ownership,<br>service, repair, management, maintenance, and operation of the Complex, except as expressly excluded under this Lease. |
| ix. | The cost of any capital improvements made to the Complex after the Lease Commencement<br>Date that, in Landlord's reasonable judgment, reduces other operating expenses such as lighting retrofit and installation of energy management<br>systems but only to the extent these capital expenditures result in a reduction of Operating Expenses, as amortized over their useful<br>life in accordance with sound real estate accounting principles consistently applied, as well as capital improvements made in order to<br>comply with any Law hereafter promulgated by any governmental authority, or any amendment to or any interpretation hereafter rendered<br>with respect to any existing Law that have the effect of changing the legal requirements applicable to the Complex from those currently<br>in effect, as amortized over their useful life in accordance with sound real estate accounting principles consistently applied. |
| --- | --- |
| x. | A management fee (the “Management Fee”) in an amount equal to three percent (5%) of all Rent payable by Tenant under this Lease. |
| --- | --- |
| xi. | costs associated with managing, repairing, maintaining, insuring, or operating<br>any parking structure, including the cost of payroll for clerks, attendants, and other persons, bookkeeping, parking insurance, parking<br>management fees, tickets, striping, and uniforms directly incurred in operating the parking garage. |
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Notwithstanding the foregoing, Operating Expenses shall not include the following:
(a) any late fees, penalties, interest charges or similar fees payable by Landlord; (b) cost of selling, syndicating, financing, mortgaging or hypothecating any of the Landlord’s interest in the Premises or Complex or the improvements thereon; (c) any debt losses, rent losses or reserves for bad debt (or reserves of any kind); (d) expenses reimbursed by insurance proceeds under any insurance policies or by third parties; (e) real estate broker’s commissions, marketing, advertising or any other expenses incurred in connection with the leasing of the Complex or any part thereof; (f) costs of leasehold/construction improvements, alterations, space planning fees and architectural fees incurred for other tenants of the Complex; (g) except for any legal fees or costs payable by Tenant under the terms of the Lease, any legal fees or costs associated with enforcing Landlord’s rights or remedies against any other tenants of the Complex, defending any lawsuits with mortgagees or ground lessors, disputes between Landlord and any other tenant, employee, contractor or agent of Landlord or any other third party; (h) contributions to charitable, political or civic organizations; (i) costs and expenses of repairs and replacements, which under generally accepted accounting principles should be classified as capital expenditures, except for the current amortized portion of the costs and expenses (based upon amortization of the cost on a straight-line basis over the useful life of such items) of the capital improvements described in Section 4(I)(ix) above and any repairs or replacements of items in place on the date Tenant opens for business that are repaired or replaced due to wear and tear and not due to the initial construction or remodeling of the Premises or Complex; (j) except as otherwise provided, depreciation and amortization of any type, except for materials, tools, supplies and vendor type equipment purchased by Landlord to enable Landlord to supply services Landlord might otherwise contract for with a third party where such depreciation and amortization would otherwise have been included in the charge for such third party’s services; (k) except as may be included within the Management Fee, all costs associated with the operation of the business of the entity which constitutes “Landlord” (as distinguished from the costs of the operation of the complex) including, but not limited to, Landlord’s general corporate overhead and general administrative expenses; (l) except as may be included within the Management Fee, overhead or profits paid to subsidiaries or affiliates of Landlord for management or other services to the Complex, or for supplies or materials, to the extent that the costs of such services, supplies or materials exceed the fair market value of such costs had the services, supplies or materials been provided by parties unaffiliated with Landlord on a competitive basis; (m) except as may be included within the Management Fee, wages, salaries and other compensation paid to any executive employee of Landlord or Landlord’s property management provider above the grade of property manager; (n) expenses in connection with services or other benefits provided solely and exclusively to other tenants or occupants of the Complex, but not to Tenant; or (o) expenses resulting from the gross negligence or willful misconduct or breach of any lease or violation of any law by Landlord, its agents or employees, to the extent that such expenses exceed the expenses which would have normally been incurred by Landlord absent such negligence or willful misconduct or breach of lease or violation of law.
J. Examination of Books. Upon reasonable prior notice, Tenant, at its expense, shall have the right during business hours to examine Landlord's books and records relating to Operating Expenses for the Complex for a calendar year in question, for a period of one year following the end of said calendar year. In the event Tenant’s examination reveals Landlord overstated Tenant’s Share in an amount equal to or greater than five percent (5%), Landlord shall pay to Tenant, within thirty (30) days after receipt of an invoice therefor from Tenant, Tenant’s costs and expenses incurred in the performance of said audit. Notwithstanding, if Tenant does not audit Landlord’s books and records within one year following the end of a calendar year, Tenant’s right to audit the Operating Expenses shall lapse, and the Operating Expenses shall be deemed final and conclusive for all previous periods, except for the then current year.
K. Survival of Obligation. Tenant's obligation to pay Operating Expenses during the Term of this Lease shall survive following any termination of this Lease, and Landlord's obligation to refund overpayments to Tenant, shall survive until the later of: (1) one year following the end of the calendar year in which the Operating Expenses were paid; and (2) any audit timely commenced under Subsection 4(J), above.
L. Demand; Time. Each of the foregoing amounts of Rent shall be paid to Landlord without demand and without deduction, set-off or counterclaim (except as expressly provided in this Lease) on the first (1st) day of every month during the Term of this Lease. If Landlord shall at any time or times accept Rent after it shall become due and payable, such acceptance shall not excuse a delay upon subsequent occasions, or constitute, or be construed as a waiver of any or all of Landlord's rights hereunder.
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M. Payment of Rent and Additional Rent. In addition to and not in limitation of any other rights and remedies which Landlord may have in case of failure by Tenant to pay any sum of Additional Rent when due, such non-payment shall entitle Landlord to the remedies available to it hereunder for non-payment of Rent. All such charges or expenditures shall be paid to Landlord, at the office of the Landlord, or to such other party or to such other address as Landlord may designate from time to time by written notice to Tenant. Any unpaid Basic Rent or Additional Rent shall accrue interest thereon at the rate of fifteen percent (15%) per annum commencing thirty (30) days after the date it is due. Any Basic Rent or Additional Rent not paid within fifteen (15) days of the date it is due shall be subject to a late charge of five percent (5%) of the unpaid amount to cover the administrative costs of the late payment.
| 5. | UPKEEP OF PREMISES; UPKEEP OF COMPLEX |
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Except for any obligation of Landlord with respect to the Premises, Tenant will keep the Premises and fixtures and Tenant's equipment therein in clean and safe condition, will take good care thereof, will suffer no waste or injury thereto, and will at the expiration or other termination of the Term of this Lease, surrender the same broom clean in substantially the same order and condition in which they are on the Lease Commencement Date, ordinary wear and tear, casualty, condemnation, and other unavoidable damage excepted. All injury to the Premises or the Complex of which they are a part, caused by moving property of Tenant's into, in or out of said Complex and all breakage done by Tenant, or the agents, servants, employees, and visitors of Tenant shall be repaired by Tenant at expense of Tenant. In the event Tenant shall fail to do so within a reasonable time after written notice Tenant of the need for repairs, then Landlord shall have the right to make such reasonably necessary repairs, alterations and replacements, structural or otherwise and any charge or cost so reasonably incurred by Landlord shall be paid by Tenant with the right on the part of Landlord to elect in its discretion to regard the same as Additional Rent, in which event, such cost or charge shall become Additional Rent payable with the installment of Rent next becoming due or thereafter falling due under the terms of this Lease.
Landlord shall pay for and make the following repairs and replacements as and when reasonably necessary and shall keep all Common Areas and Complex systems in good order, condition, and repair (subject to the right to charge any tenants of the Complex for any portion of same that are Operating Expenses defined above): (1) structural repairs and replacements to the Premises and Common Areas; and (2) repairs and replacements required in order to provide any services to be furnished by Landlord pursuant to this Lease (including with respect to the Common Areas); and (3) repairs and replacements to the windows and roof of the Premises. If a repair, which is Landlord's responsibility, is necessitated by an act or omission of Tenant or its agents, Landlord shall make the repair, and Tenant shall reimburse Landlord promptly for the reasonable cost of the repair. Tenant shall promptly notify Landlord of any condition needing repair which is Landlord's responsibility under this Section and to which Tenant has actual knowledge. Tenant, at its sole cost and expense, shall maintain in good order, condition and repair, all portions of the Premises not specifically designated as Landlord’s duty in this paragraph, including but not limited to the HVAC, plumbing, wiring, glazing, interior doors, floors, ceilings, interior walls and the interior surface of exterior walls, fixtures, lighting, fire protection and alarm systems, equipment and signs. Provided that such activities are Operating Expenses within the terms and conditions of this Lease, Tenant shall reimburse Landlord for the foregoing as part of Tenant's payments of Additional Rent, subject to the terms thereof. If Landlord fails to make any required maintenance, repair or replacement to the Premises or the Common Areas reasonably necessary to the efficient operation of Tenant’s business at the Premises, then, after five (5) days written notice (in an emergency, reasonable notice shall suffice), Tenant has the right (but not the obligation) to make the repair or replacement for Landlord, and Landlord shall reimburse Tenant for its actual costs incurred therein within fifteen (15) days after demand therefor. If Landlord fails to reimburse Tenant for such costs within said fifteen (15) days period, Tenant may deduct such amount from its rent payments due hereunder. Any amount not paid by Landlord within fifteen (15) days shall bear interest at 10% per annum from the due date until paid or deducted from Tenant’s rent.
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| --- | | 6. | MECHANIC'S LIENS | | --- | --- |
If any mechanic's or materialmen's lien is filed against the Premises, the Complex and/or the land for work claimed to have been done for, or materials claimed to have been furnished to Tenant or its subtenants (except for work performed by or at the request of Landlord in furtherance of Landlord's obligations under this Lease), such lien shall be discharged by Tenant within thirty (30) days after the Tenant receives written notice of such lien, at Tenant's sole cost and expense by the payment thereof or by filing any bond required by Applicable Law. If Tenant shall fail to discharge any such mechanic's or materialmen's lien, Landlord may, at its option, discharge the same and treat the cost thereof as Additional Rent payable with the monthly installment of Rent next becoming due; it being hereby expressly covenanted and agreed that such discharge by Landlord shall not be deemed to waive or release the default of Tenant in not discharging the same. It is further understood and agreed that in the event Landlord shall give its written consent to Tenant's making any such Alterations (as defined below) pursuant to Section 7 below, such written consent shall not be deemed to be an agreement or consent by Landlord to subject Landlord's interest in the Premises, the Complex or the land to any mechanic's or materialmen's liens which may be filed in respect of any such Alterations made by or on behalf of Tenant.
| 7. | TENANT ALTERATIONS |
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A. Alterations. Tenant shall not make or allow to be made any alterations, additions, or improvements in or to the Premises *(*collectively “Alterations”) without the prior written consent of Landlord, which consent may be withheld by Landlord in its reasonable discretion. If Landlord approves any Alterations, Tenant shall also obtain, at its sole cost and expense and through its own efforts, and provide to Landlord all necessary approvals from the Texas Historical Commission (“THC”) and/or National Park Service (“NPS”), whichever is necessary considering the Alteration request, to perform said Alterations, and said Alterations shall not otherwise prevent availability of federal or state historic tax credits or cause recapture of federal historic tax credit.
B. Propertyof Landlord. All alterations, installations, changes, replacements, attached equipment, laboratory casework, built-in cabinet work sinks and related plumbing fixtures, laboratory benches, exterior venting fume hoods, additions to, or improvements in, including wall-to-wall carpet, upon the Premises (whether with or without the prior written consent of Landlord) shall, at the election of the Landlord (which election Landlord shall deliver in writing to Tenant at least 120 days prior to the expiration of the Term; and, if Landlord does not timely deliver such election to Tenant, Landlord will be deemed to have elected to waive its rights to designate property to be retained under this Section 7.B), remain upon the Premises, become property of the Landlord, and be surrendered with the Premises at the expiration or termination of this Lease or upon expiration of any renewal period hereof without disturbance, molestation or injury; provided, however, that if Tenant is not then in default in the performance of any of its obligations under this Lease, Tenant shall have the right (but not the obligation) to remove, during the 90-day period prior to the Lease Expiration Date, any of the foregoing items which Landlord does not wish to retain (or which Landlord is deemed to have waived its right to retain), together with all of Tenant's movable furniture, movable furnishings, or movable equipment, or trade fixtures purchased by Tenant at its sole cost and expense and within the Premises, at the expense of Tenant. If Tenant elects to so remove any such items from the Premises, Tenant agrees to repair all material damage to the Premises and the fixtures, appurtenances and equipment of the Landlord therein, and to the Complex caused by the Tenant's removal of its furniture, fixtures, equipment, machinery and the like and the removal of any improvements or alterations. Should the Tenant fail to repair all the above-referred to damage, then, and in such event, the Landlord may repair the said damage at the Tenant's expense and the Tenant hereby agrees to reimburse the Landlord for such reasonable expense within 10 business days following receipt of demand therefor.
C. Indemnification. Tenant will indemnify and hold Landlord, Landlord's mortgagees, and its respective employees, agents, tenants, invitees, licensees, affiliates, partners, members, shareholders, and principals (each a “Landlord Indemnified Party” and collectively, the “Landlord Indemnified Parties”) harmless from and against any and all losses, liability, expenses, liens, claims or damages (each, a “Loss”) to person or property which occur during the Term of this Lease as a direct result of Tenant's alterations, decorations, additions or improvements, including without limitation, (the “Tenant Improvements”) or any Alteration, except to the extent any such Loss is caused by Landlord’s breach of its maintenance obligations under Section 5 of this Lease or the gross negligence or willful misconduct of Landlord or Landlord’s agents, contractors or employees. If any such alteration, decoration, addition or improvement is made without the prior written consent of Landlord and such Alteration is not permitted under this Lease, Landlord may correct or remove the same, and Tenant shall be liable for any and all reasonable expenses incurred by Landlord in the performance of this work.
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| --- | | 8. | SERVICES | | --- | --- |
Landlord shall furnish to Tenant during the Term of the Lease hot and cold water, electric current adequate for Tenant's proposed use of the Premises, and sanitary sewer services at those points of supply up to the demarcation of the Premises as set forth on Plans and Specifications (as hereinafter defined). Notwithstanding the foregoing, Landlord shall not be liable for failure to furnish or for suspension or delay in furnishing any of such services under this Section 8 caused by breakdown that is outside of Landlord's reasonable control, maintenance or repair work (to the extent outside of Landlord's reasonable control) or strike, riot, civil commotion, natural disaster, or pandemic. If, however, Tenant is prevented from using, and does not use, the Premises or access thereto because of the unavailability of any such service for a period of two (2) consecutive business days and such unavailability was within Landlord’s reasonable control, then Tenant shall, as its exclusive remedy be entitled to abatement of Basic Rent and Additional Rent for each day that Tenant is so prevented from using or accessing the Premises. Tenant shall be responsible for obtaining its own separately metered electricity, telephone, internet, and other desired services.
| 9. | INSPECTION |
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Tenant will permit Landlord, or its agents or other representatives to enter the Premises during Tenant’s normal business hours with three (3) days written notice to Tenant except in the case of an emergency when Landlord may enter without notice and without charge therefor to Landlord and without diminution of the Rent payable by Tenant to examine, inspect and protect the Premises and the Complex and to make such alterations and/or repairs as in the judgment of the Landlord may be deemed reasonably necessary, or to exhibit the same to prospective tenants or purchasers during the Term of this Lease. Written notice shall include the names, employer, and purpose of the entry. Landlord acknowledges that the Premises must comply with various federal security requirements and that Tenant may prescribe additional requirements to comply with federal laws and maintain the integrity of the laboratory and other facilities within the Premises; Landlord shall comply with the foregoing at Tenant’s expense prior to entering the Premises. In addition, Landlord shall use commercially reasonable efforts to avoid any interference with Tenant’s use of the Premises.
| 10. | DAMAGE TO THE PREMISES OR COMPLEX |
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If a portion of the Premises or Complex shall be damaged by fire or other cause (a “Casualty”), Landlord shall, within 60 days after such Casualty, deliver to Tenant a good faith estimate (the “Damage Notice“) of the time needed to repair the damage caused by such Casualty use best efforts to repair such damage at the expense of the Landlord.
A. Tenant’s Rights. If the Premises or the Complex are damaged by Casualty such that Tenant is prevented from conducting its business in the Premises in a manner reasonably comparable to that conducted immediately before such Casualty and Landlord reasonably estimates that the damage caused thereby for which Landlord is responsible to repair under this Lease pursuant to Section 10.C below cannot be repaired within 270 days after the commencement of repairs (the “Repair Period“), then Tenant may terminate this Lease by delivering written notice to Landlord of its election to terminate within 30 days after the Damage Notice has been delivered to Tenant.
B. Landlord’s Rights. If a Casualty occurs and (1) Landlord estimates that the damage cannot be repaired within the Repair Period, (2) the damage exceeds 50% of the replacement cost thereof (excluding foundations and footings), as estimated by Landlord, and such damage occurs during the last two years of the Term, or (3) Landlord is required to pay any insurance proceeds arising out of the Casualty to Landlord’s mortgagee and the remaining proceeds are insufficient to repair the damage, then Landlord may terminate this Lease by giving written notice of its election to terminate within 30 days after the Damage Notice has been delivered to Tenant.
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C. Repair Obligation. If neither party elects to terminate this Lease following a Casualty, then Landlord shall, within a reasonable time after such Casualty, begin to repair the Premises and shall proceed with reasonable diligence to restore the Premises to substantially the same condition as they existed immediately before such Casualty; however, Landlord shall not be required to repair or replace any improvements, alterations or betterments within the Premises constructed or installed by Tenant (which shall be promptly and with due diligence repaired and restored by Tenant at Tenant’s sole cost and expense) or any furniture, equipment, trade fixtures or personal property of Tenant or others in the Premises or the Complex, and Landlord’s obligation to repair or restore the Premises shall be limited to the extent of the insurance proceeds actually received by Landlord for the Casualty in question. Tenant shall be entitled to the full proceeds of the Tenant’s insurance policies providing coverage for all alterations, improvements and betterments in the Premises constructed or installed by Tenant (and, if Tenant has failed to maintain insurance on such items as required by this Lease, Tenant shall pay Landlord an amount equal to the proceeds Landlord would have received had Tenant maintained insurance on such items as required by this Lease); for the avoidance of doubt, notwithstanding anything contained herein to the contrary, Tenant shall be entitled to the full proceeds of the insurance policies that Tenant maintains under Section 11.D, below.
D. Abatement of Rent. If the Premises are damaged by Casualty, Basic Rent and Additional Rent for the portion of the Premises rendered untenantable by the damage shall be abated on a reasonable basis from the date of damage until the earlier of a. completion of Landlord’s repairs, b. the date upon which completion of Landlord’s repairs would have occurred but for delays caused by Tenant Parties, or c. the date of termination of this Lease by Landlord or Tenant as provided above, as the case may be, unless a Tenant Party caused such damage, in which case, Tenant shall continue to pay Basic Rent and Additional Rent without abatement. In the event that damage to the Premises or to the Complex is caused by the negligence or willful misconduct of Tenant or its agents, employees or invitees, any cost or expense reasonably incurred by Landlord to repair or restore the Premises or the Complex which is not covered by insurance shall be paid by Tenant, in which event such cost and expense shall become Additional Rent payable with the installment of Rent next becoming due under the Terms of this Lease.
| 11. | INSURANCE |
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A. InsuranceRating. Except as permitted in Section 2, Tenant will not conduct or permit to be conducted, any activity, or place any equipment, material, chemical, fluid or substance outside of the Premises which will in any way increase the rate of fire insurance or other insurance on the Complex (unless the rate of fire insurance increases only with respect to the Premises and Tenant satisfies such increased premium); if any increase in the rate of fire insurance or other insurance is stated by any insurance company or by the applicable Insurance Rating Bureau to be due to any activity or equipment of Tenant in or about the Premises that is not permitted under this Lease (and the increase in the premium for such policy is not paid by Tenant under its policy), such statement shall be conclusive evidence that the increase in such rate is due to such activity or equipment and as a result thereof, Tenant shall be liable for such increase and shall reimburse Landlord therefor upon demand and any such sum shall be considered Additional Rent payable hereunder.
B. General Requirements. In all insurance policies carried by Tenant pursuant to the requirements of this Lease, Tenant shall name Landlord and Landlord's management agent, if any, as an additional insured, as its interests may appear, and shall contain an endorsement that such policy shall remain in full force and effect notwithstanding that the insured has waived his right of action against any party prior to the occurrence of a loss. Each policy shall contain an endorsement that will prohibit its cancellation prior to the expiration of ten (10) days after notice of such proposed cancellation to Landlord. All such insurance policies shall be written as primary and non-contributory. Tenant shall provide Landlord with Certificates of Insurance evidencing the coverages required under this Lease prior to the occupancy and at least annually thereafter. Each policy shall be with a company or companies licensed to do business in the State of Texas and approved by Landlord and having a Best Rating of at least “A:VIII”. Tenant shall promptly notify Landlord of the cancellation of any insurance required to be carried by Tenant hereunder. If Tenant fails to maintain any insurance required by this Section 11, Landlord may obtain such insurance, and any premium paid by Landlord shall be immediately payable by Tenant to Landlord as Additional Rent. Tenant shall require any permitted sublessee or assignee of the Premises pursuant to this Lease to comply with the requirements of this Section 11.
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C. Liability Insurance. Throughout the term, Tenant shall carry commercial general liability insurance, including contractual liability, public liability and property injury, and products and completed operations liability, with limits of at least One Million Dollars ($1,000,000) per occurrence and Two Million Dollars ($2,000,000) aggregate for Tenant’s activities in the Premises, in a form providing occurrence basis coverage, in a form providing occurrence basis coverage.
D. Other Insurance. Tenant shall carry a special form – causes of loss policy of insurance covering any insurable interest that Tenant may have in the Premises or in any equipment serving the Premises, Tenant's leasehold improvements, trade fixtures, equipment and personal property kept at the Premises or elsewhere in the Complex, in an amount not less than the full replacement cost of such items. Tenant shall carry an umbrella insurance policy with limits of at least Five Million Dollars ($5,000,000) per occurrence and Five Million Dollars ($5,000,000) aggregate. Tenant shall obtain and maintain Worker’s Compensation insurance and Employer’s Liability coverage to cover obligations imposed by federal and state law covering all of Tenant’s employees, including statutory benefits outlined in the Texas Workers’ Compensation Act and minimum policy limits for Employer’s Liability of at least Two Hundred Fifty Thousand Dollars ($250,000) bodily injury per accident, Five Hundred Thousand Dollars ($500,000) bodily injury disease policy limit and Two Hundred Fifty Thousand Dollars ($250,000) per disease per employee.
E. Waiver of Subrogation. The Landlord and the Tenant each hereby waives its right of recovery against the other and each releases the other from any claim arising out of loss, damage or destruction to the Complex, Premises, or contents thereon or therein, to the extent its property is covered by a policy of insurance, whether or not such loss, damage or destruction may be attributable to the negligence of either party or its respective agent, visitor, contractor, servant or employee. Each policy shall include a waiver of the insurer's rights of subrogation against the party hereto who is not the insured under said policy.
| F. | Landlord’s Insurance. |
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| i. | Property Insurance. From and after the date of this Lease, Landlord will<br>carry a policy or policies of all risk extended coverage insurance covering the Complex (excluding property required to be insured by<br>Tenant) in an amount equal to 100% of the full replacement cost thereof, endorsed to provide replacement cost coverage and providing protection<br>against perils included within the standard Texas form of fire and extended<br>coverage insurance policy, together with insurance against sprinkler damage, vandalism, malicious mischief and such other risks as Landlord<br>may from time to time determine and with any such deductibles as Landlord may from time to time determine, in its commercially reasonable<br>discretion. |
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| ii. | Commercial General Liability Insurance. Landlord will carry Commercial General<br>Liability policy or policies covering the Complex against claims for personal or bodily injury, or death, or property damage resulting<br>from the negligence of the Landlord or property manager or its agents, occurring upon, in or about the Complex to afford protection to<br>the limit of not less than $2,000,000 per occurrence, and $2,000,000 annual aggregate or such limits and umbrella coverage as Landlord<br>my determine in its commercially reasonable discretion. This insurance coverage shall extend to any liability of Landlord arising out<br>of this Lease. |
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| iii. | Other Requirements. Any insurance provided for in this Section 11.F may<br>be effected by a policy or policies of blanket insurance covering additional items or locations or assureds, provided that the requirements<br>of this Section 11.F are otherwise satisfied. Tenant shall have no rights in any policy or policies maintained by Landlord. |
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| --- | | 12. | CONDEMNATION | | --- | --- |
If all or a substantial part of the Premises (or use or occupancy of the Premises) shall be taken or condemned by any governmental or quasi-governmental authority for any public or quasi-public use or purpose (including sale under threat of such a taking), then the Term of this Lease shall cease and terminate as of the date when title vests in such governmental or quasi-governmental authority, and the Rent shall be abated on the date when such title vests in such governmental or quasi-governmental authority. If less than a substantial part of the Premises is taken or condemned by any governmental or quasi-governmental authority for any public or quasi-public use or purpose (including sale under threat of such a taking), Tenant may terminate this Lease only if, in its commercially reasonable opinion, its use of the Premises will be materially adversely affected by such taking. If this Lease does not terminate pursuant to the terms of this Section 12, the Rent shall be equitably adjusted (on the basis of the number of square feet of the Premises (and, as applicable, in the Complex) subject to the Lease before and after such event) on the date when title vests in such governmental or quasi-governmental authority and the Lease shall otherwise continue in full force and effect. Tenant shall have no claim against Landlord (or otherwise) and hereby agrees to make no claim against the condemning authority for any portion of the amount that may be awarded as damage as a result of any governmental or quasi-governmental taking or condemnation (or sale under threat of such taking or condemnation) for the value of any expired or unexpired Term of the Lease. Such awards or damages must be made by a condemnation court or other authority and must be separate and distinct from award to Landlord and shall not diminish any award of the Landlord. For purposes of this Section 12, a substantial part of the Premises shall be considered to have been taken if more than fifty percent (50%) of the Premises are unusable by Tenant as a direct result of such taking.
| 13. | SIGNS |
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Tenant has the right to erect signage on the Music Building and/or landscaped portion of the Common Area within or adjoining the Premises, subject to local ordinance, at Tenant’s sole cost and expense, and in accordance with those commercially reasonable specifications to be established by Landlord regarding signage within the Complex. If allowed by the Historic Design Review Commission, Tenant shall have the right to install a sign facing Houston Street and the plaza, provided that the design of same meets Landlord’s commercial reasonable sign specifications. Landlord shall have the right to prohibit any other advertisement of Tenant which in its reasonable opinion tends to impair the reputation of the Complex or its desirability as a high-quality Complex for offices, and upon written notice from Landlord, Tenant shall immediately refrain from and discontinue any such advertisement.
| 14. | HAZARDOUS MATERIALS |
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Tenant shall not cause or knowingly permit any Hazardous Materials (as defined below) to be brought upon, kept or used in or about the Premises or the Complex in violation of Applicable Laws by Tenant or its employees, agents, contractors or invitees (collectively, “TenantParties”). Tenant shall indemnify, save, defend (at Landlord's option and with counsel reasonably acceptable to Landlord) and hold the Landlord Indemnified Parties harmless from and against any and all losses, liability, claims, damages, expenses and causes of action (“Claims”) that are a direct result of the presence of any Hazardous Materials in, on, under or about the Complex, any portion thereof, or any adjacent property, to the extent caused by Tenant Parties. This indemnification by Tenant includes reasonable costs incurred in connection with any investigation of site conditions or any clean-up, remedial, removal or restoration work required by any governmental or quasi-governmental authority because of the foregoing breach by Tenant which caused Hazardous Materials to be present in the air, soil or groundwater above, on or under or about the Complex in a manner that violates Applicable Laws and which was above levels that were present prior to the Effective Date hereof. Without limiting the foregoing, if the presence of any Hazardous Materials in, on, under or about the Complex, any portion thereof, or any adjacent property, which is caused or knowingly permitted by Tenant results in any contamination of the Complex, any portion thereof or any adjacent property, then Tenant shall promptly take all actions at its sole cost and expense as are reasonably necessary to return the Complex, any portion thereof or any adjacent property to its respective condition existing prior to the time of such contamination (or, if such mitigation is not practicable, then to such level as is in compliance with Applicable Laws); provided that Landlord's written approval of such action shall first be obtained, which approval Landlord shall not unreasonably withhold.
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A. Landlord acknowledges that it is not the intent of this Section to prohibit Tenant from operating its business for the use permitted by Section 2. Tenant may operate its business according to the custom of Tenant's industry, which includes the operation of a BSL-2 laboratory, so long as the use or presence of Hazardous Materials is strictly and properly monitored in accordance with Applicable Laws. As a material inducement to Landlord to allow Tenant to use Hazardous Materials in connection with its business, attached Exhibit“D” illustrates the substances the Tenant intends to have in the space during the term of the lease. Tenant agrees (a) this list identifying each type of Hazardous Material is to be present at the Premises that is subject to regulations under any environmental Applicable Laws, and shall be reviewed and updated periodically by Tenant; (b) a list of any and all approvals or permits from governmental or quasi-governmental authorities required in connection with the presence of such Hazardous Material shall be kept at or be made accessible from the Premises, and (c) correct and complete copies of (i) notices of violations of Applicable Laws related to Hazardous Materials and (ii) plans relating to the installation of any storage tanks to be installed in, on, under or about the Complex (provided that installation of storage tanks shall only be permitted after Landlord has given Tenant its written consent to do so, which consent Landlord may withhold in its sole and absolute discretion) and closure plans or any other documents required by any and all governmental or quasi-governmental authorities for any storage tanks installed in, on, under or above the Complex for the closure of any such storage tanks (collectively, “Hazardous Materials Documents”) shall be provided to Landlord by Tenant pursuant to the following sentence*.* Tenant shall deliver to Landlord updated Hazardous Materials Documents (a) no later than thirty (30) days prior to the initial occupancy of any portion of the Premises or the initial placement of equipment anywhere at the Complex, (b) if there are any changes to the Hazardous Materials Documents, annually thereafter no later than December 31st of each year, and (c) thirty (30) days prior to the initiation by Tenant of any Alterations or changes in Tenant's business that involve any material increase in the types or amounts of Hazardous Materials. For each type of Hazardous Material listed, the Hazardous Materials Documents shall include (i) the chemical names, (ii) the material state (e.g., solid, liquid, gas or cryogen), (ii) the concentration, (iv) the storage amount and storage condition (e.g., in cabinets or not in cabinets), (v) the use amount and use condition (e.g., open use or closed use), (vi) the location (e.g., room number or other identification) and (vii) if known, the chemical abstract service number. Notwithstanding anything in this Section to the contrary, Tenant shall not be required to provide Landlord with any Hazardous Materials Documents containing information of a proprietary nature, which Hazardous Materials Documents, in and of themselves, do not contain a reference to any Hazardous Materials or activities related to Hazardous Materials. Landlord may, at Landlord's expense, cause the Hazardous Materials Documents to be reviewed by a person or firm qualified to analyze Hazardous Materials to confirm compliance with the provisions of this Lease and with Applicable Laws. In the event that a review of the Hazardous Materials Documents indicates non-compliance with this Lease or Applicable Laws, Tenant shall, at its expense, diligently take steps to bring its storage and use of Hazardous Materials into compliance
B. If any proposed transferee, assignee, or sublessee of Tenant has been required by any prior landlord, lender, mortgagee, or governmental or quasi-governmental authority to take material remedial action in connection with Hazardous Materials contaminating a property if the contamination resulted from such party's action or omission or use of the property in question, or (b) Tenant or any proposed transferee, assignee or sublessee is subject to a material enforcement order issued by any governmental or quasi-governmental authority in connection with the use, disposal or storage of Hazardous Materials, then it shall not be unreasonable for Landlord to withhold its consent to any proposed transfer, assignment, or subletting (with respect to any such matter involving a proposed transferee, assignee or sublessee).
C. At any time, and from time to time, prior to the expiration of the Term, Landlord shall have the right, at Landlord’s sole cost and expense, to conduct appropriate tests of the Complex or any portion thereof, including without limitation the Premises, to investigate whether Hazardous Materials are present or that contamination has occurred due to Tenant or Tenant's employees, agents, contractors or invitees. Notwithstanding the preceding sentence to the contrary, Tenant shall pay all reasonable cost of such test if such test reveals that Hazardous Materials exist at the Complex in violation of this Lease.
D. During the Term, Tenant shall promptly report to Landlord any actual or suspected presence of mold or water intrusion at the Premises of which Tenant obtains actual knowledge.
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E. Tenant's indemnification obligations under this Section shall survive the expiration or earlier termination of the lease. During any period of time needed by Tenant or Landlord after the termination of this Lease to complete the removal from the Premises of any such Hazardous Materials, Tenant shall be deemed a holdover tenant and subject to the provisions of Section 17 below.
F. As used herein, the term “Hazardous Material” means any hazardous or toxic substance, material or waste that is or becomes regulated by any governmental or quasi-governmental authority.
| 15. | SURRENDER |
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A. At least ten (10) days prior to Tenant's surrender of possession of any part of the Premises, Tenant shall provide Landlord with (a) a facility decommissioning and Hazardous Materials closure plan for the Premises (“Exit Survey”) prepared by an independent third party reasonably acceptable to Landlord, (b) written evidence of all appropriate governmental releases obtained by Tenant in accordance with Applicable Laws, including laws pertaining to the surrender of the Premises, and (c) proof that the Premises have been decommissioned in accordance with American National Standards Institute (“ANSI” Publication Z9.11-2008 (entitled “LaboratoryDecommissioning”) or any successor standard published by ANSI or any successor organization (or, if ANSI and it successors no longer exit, a similar entity publishing similar standards). In addition, Tenant agrees to remain responsible after the surrender of the Premises for the remediation of any recognized environmental conditions (including without limitation, Hazardous Materials) set forth in the Exit Survey. Tenant's obligations under this Section shall survive the expiration or earlier termination of the Lease.
B. No surrender of possession of any part of the Premises shall release Tenant from any of its obligations hereunder, unless such surrender is accepted in writing by Landlord.
C. The voluntary or other surrender of this Lease by Tenant shall not effect a merger with Landlord's fee title or leasehold interest in the Premises or the Complex, unless Landlord consents in writing, which shall not be unreasonably withheld, delayed, denied, or conditioned, and shall, at Landlord's option, operate as an assignment to Landlord of any or all subleases. The voluntary or other surrender of any ground or other underlying lease that now exists or may hereafter be executed affecting the Complex, or a mutual cancellation thereof or of Landlord's interest therein by Landlord and its lessor shall not effect a merger with Landlord's fee title or leasehold interest in the Premises or the Complex.
| 16. | DEFAULT OF TENANT |
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A. Eventsof Default. If Tenant shall (i) fail to pay any monthly installment of Rent (as required by Section 4 or any other provision of this Lease) as and when due or shall fail to timely make any other payment required by the terms and provisions hereof and such failure shall continue for a period of ten (10) days after Tenant receives written notice thereof from Landlord (provided that Landlord shall not be required to provide written notice thereof more than twice in any rolling 12-month period) or, if Landlord is not required to give such notice because it has already done so in a particular rolling 12-month period, and such failure continues for a period of ten (10) days after the due date thereof; (ii) violate or fail to perform any of the other terms, conditions, covenants or agreements herein made by Tenant and such other violation or failure shall continue for a period of thirty (30) days after written notice thereof to Tenant by Landlord (or if such obligation cannot be cured within thirty (30) days, then after such period of time as reasonably necessary to cure so long as Tenant has commenced such cure within said thirty (30) days period and diligently prosecutes the same to completion, and provided further that in no event shall the period of time to cure exceed sixty (60) days); or (iii) make or consent to an assignment for the benefit of creditors or a common law composition of creditors, or a receiver of Tenant's assets is appointed, or Tenant files a voluntary petition in any bankruptcy or insolvency proceeding, or an involuntary petition in any bankruptcy or insolvency proceeding is filed against Tenant and not discharged by Tenant within one hundred twenty (120) days, or Tenant is adjudicated a bankrupt, then in any of the foregoing events (each, an “Event of Default”), Landlord shall be entitled to elect from the following remedies:
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| --- | | i. | Landlord may terminate this Lease by giving Tenant written notice thereof, in<br>which event this Lease and the leasehold estate hereby created and all interest of Tenant and all parties claiming by, through or under<br>Tenant shall automatically terminate upon the effective date of such notice. If Landlord elects to so terminate this Lease, everything<br>contained in this Lease on the part of Landlord to be done and performed shall cease without prejudice, however, to the right of Landlord<br>to recover from Tenant all Rent and any other sums accrued up to the time of termination or the date on which Tenant actually vacates<br>the Premises, whichever is later. | | --- | --- |
Should Landlord terminate this Lease due to an Event of Default, Landlord may elect, as its sole remedy: (i) to accelerate the Basic Rent due hereunder to the end of the Term hereof, discounted to present value at a per annum rate equal to eight percent (8%), minus the then-present fair rental value of the Premises for such period, similarly discounted; (ii) to recover possession of the Premises, by force, summary proceedings, or otherwise or (iii) to relet the Premises for such Rent and upon such terms as are not unreasonable under the circumstances and, Tenant shall be liable for all direct, out of pocket damages sustained by Landlord, including, without limitation, deficiency (if any) in Basic Rent between what Tenant was obligated to pay as Basic Rent under this Lease and the basic rent actually collected by Landlord, reasonable attorneys' fees incurred by Landlord against Tenant, brokerage fees, and expenses of removing Alterations that were not approved by Landlord and reasonable expenses of placing the Premises in rentable condition that comparable with that which existed on the Effective Date.
| ii. | Landlord may terminate Tenant’s right to possession of the Premises and enjoyment of the rent, issues and profits therefrom without<br>terminating this Lease or the leasehold estate created hereby, re-enter and take possession of the Premises and remove all persons and<br>property therefrom with or without process of law, without being deemed guilty of any manner of trespass and without prejudice to any<br>remedies for arrears of Rent or existing breaches hereof, and lease, manage and operate the Premises and collect the rents, issues and<br>profits therefrom all for the account of Tenant, and credit to the satisfaction of Tenant’s obligations hereunder the net rental<br>thus received (after deducting therefrom all reasonable costs and expenses of repossessing, leasing, managing and operating the Premises).<br>Tenant shall continue to remain liable to Landlord for all obligations under this Lease, including, without limitation, the Rent (subject<br>to any offset for reletting). If the net rental so received by Landlord exceeds the amounts necessary to satisfy all of Tenant’s<br>obligations under this Lease, nevertheless Landlord shall retain such excess. If Landlord elects to proceed under this Section, it may<br>at any time thereafter elect to terminate this Lease as provided in Section 16Ai. Any damage or loss of Rent sustained by Landlord may<br>be recovered by Landlord at the time of an Event of Default, or at Landlord's option, at the time of the reletting, or in separate actions,<br>from time to time, as said damage shall have been made more easily ascertainable by successive relettings, or, at Landlord's option, may<br>be deferred until the expiration of the Term of this Lease, in which event Tenant hereby agrees that the cause of action shall not be<br>deemed to have occurred until the date of expiration of said Term. Landlord shall use commercially reasonable efforts to mitigate its<br>damages resulting from an Event of Default. However, provided that Landlord uses commercially reasonable efforts to relet the Premises,<br>in no event shall Landlord be liable for failure to so lease, manage or operate the Premises or collect the rentals due under any subleases<br>and any such failure shall not reduce Tenant’s liability hereunder. |
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B. Waiver. If, under the provisions hereof, Landlord shall institute proceedings against Tenant and a compromise or settlement thereof shall be made, the same shall not constitute a waiver of any other covenant, condition or agreement herein contained, nor of any of Landlord's rights hereunder, except to the extent covered by such settlement. No waiver by Landlord of any breach of any covenant, condition or agreement herein contained shall operate as a waiver of such covenant, condition or agreement itself, or of any subsequent breach thereof. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly installment of Rent herein stipulated shall be deemed to be other than on account of the earliest stipulated Rent, nor shall any endorsement or statement on any check or letter accompanying a check for payment of Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such Rent or to pursue any other remedy provided in this Lease. No re-entry by Landlord, and no acceptance by Landlord of keys from Tenant, shall be considered an acceptance or a surrender of the Lease.
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C. Right of Landlord to Cure Tenant's Default. Upon the occurrence of an Event of Default, Landlord may, but shall not be required to, make such payment or do such act, and charge the amount of the expense thereof, if made or done by Landlord, with interest thereon at the rate of five percent (5%) per annum from the date paid by Landlord to the date of payment thereof by Tenant; provided, however, that nothing herein contained shall be construed or implemented in such a manner as to allow Landlord to charge or receive interest in excess of the maximum legal rate then allowed by law. Such payment and interest shall constitute Additional Rent hereunder due and payable with the next monthly installment of Rent; but the making of such payment or the taking of such action by Landlord shall not operate to cure such Event of Default or to estop Landlord from the pursuit of any remedy to which Landlord would otherwise be entitled unless and until Tenant so performs such obligation.
D. TenantRemedies Upon Landlord’s Default. If Landlord fails to perform any of its obligations under this Lease, and such failure continues for a period of thirty (30) days after written notice thereof to Landlord by Tenant (or if such obligation, but only if non-monetary in nature, is not reasonably capable of being performed within such 30-day period, if Landlord fails to commence the cure thereof and diligently pursue such cure), Tenant may, in its sole discretion, as its sole and exclusive remedies, (a) sue for actual damages, or (b) cure such failure and receive a credit toward future Rent for the cost incurred by Tenant to cure such failure.
| 17. | HOLDOVER |
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In the event that Tenant does not immediately surrender the Premises on the date of expiration of the Term hereof, Tenant shall, by virtue of the provisions hereof, become a month to month tenant at one hundred twenty five percent (125%) the monthly Basic Rent in effect during the last month of the Term of this Lease, which said monthly tenancy shall commence with the first day next after the expiration of the Term of this Lease. Tenant, a month-to-month tenant, shall be subject to all of the terms, conditions, covenants, and agreements of this Lease. Tenant shall give to Landlord at least thirty (30) days written notice of any intention to quit the Premises, and Tenant shall be entitled to thirty (30) days written notice to quit the Premises, unless and Event of Default has occurred and is continuing, in which event Tenant shall not be entitled to any notice to quit, the usual thirty (30) days' notice to quit being hereby expressly waived.
| 18. | NOTICES |
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Any notice, request, communication or demand under this Lease shall be in writing and shall be considered properly delivered only when received or when first refused by the addressee, if such notice is transmitted to the recipient’s address as hereinafter provided, and such transmittal is given or served (i) personally, (ii) by reputable overnight courier service (such as FedEx or UPS) or (iii) by registered or certified mail (return receipt requested) deposited in the United States general or branch post office. Any notice, request, communication or demand by the Tenant to the Landlord shall be addressed to the Landlord at:
1305 E.Houston Street
San Antonio, Texas 78205
Attn: Rene Dominguez rene@velocitytx.org
until otherwise directed in writing by the Landlord and, if requested in writing by the Landlord, given or served simultaneously to the Landlord's mortgagee at the address specified in such request. Any notice, request, communication or demand by the Landlord to the Tenant shall be addressed to the Tenant at:
1305 E. Houston St., Building 2
San Antonio, Texas 78205
Attn: Michael Handley
until otherwise directed in writing by the Tenant. Rejection or other refusal to accept a notice, request, communication or demand or the inability to deliver the same because of a changed address of which no notice was given shall be deemed to be receipt of the notice, request, communication or demand sent.
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| --- | | 19. | ASSIGNMENT AND SUBLETTING | | --- | --- |
A. Landlord'sConsent Requirement. Tenant will not assign, transfer, mortgage, or otherwise encumber this Lease or sublet or rent the Premises (or permit the occupancy or use thereof by a person other than Tenant, its employees, licensees, invitees, or affiliates), or any part thereof, without obtaining the prior written consent of Landlord, which shall not be unreasonably withheld, denied, delayed, or conditioned. Tenant shall give Landlord written notice of Tenant's desire to assign, or sublet the Premises. Within thirty (30) days following such request, Landlord shall either consent to such request on such terms and conditions as Landlord may reasonably require or provide written comments regarding its rejection of same. If Tenant requests Landlord's consent to an assignment or sublet of all or any portion of the Premises, Tenant shall reimburse Landlord for reasonable legal fees and expenses, and costs incurred in connection with the preparation and review of the documents to effectuate the assignment or sublet, not to exceed $2,000.00 (and Tenant shall be responsible for such legal fees and expenses even if Landlord rejects such proposed assignment or sublet, if such rejection is in accordance with the terms of this Lease). The consent by Landlord to any assignment or subletting shall not be construed as a waiver or release of Tenant from the terms of any covenant or obligation under this Lease, nor shall the collection or acceptance of rent from any such assignee, subtenant or occupant constitute a waiver or release of Tenant of any covenant or obligation contained in this Lease, nor shall any such assignment or subletting be construed to relieve Tenant from obtaining the consent in writing of Landlord to any further assignment or subletting. If an Event of Default has occurred and is continuing, Tenant hereby assigns to Landlord the rent due from any subtenant of Tenant and hereby authorizes each such subtenant to pay said rent directly to Landlord.
If the rent agreed upon between Tenant and its proposed subtenant under any permitted subletting (other than to a Tenant Affiliate) is greater than the sum of the Basic Rent then payable by Tenant under this Lease for the portion of the Premises that is subject to such permitted subletting, then fifty percent (50%) of the excess shall be paid to Landlord as Additional Rent when received by Tenant in the same manner that Tenant pays Basic Rent under this Lease.
B. Intra-Tenant Transfer. Notwithstanding the provision of Section 19.A, above, Tenant may assign this Lease or sublet the Premises or any portion thereof, with Landlord’s consent, and consent shall not be unreasonably withheld, conditioned, or delayed to (1) any limited liability company, partnership, corporation or entity owned or controlled by Tenant or owned or controlled by any entity owning one hundred percent (100%) of ownership interests in Tenant (a “Tenant Affiliate”), (2) to another person or entity in the event of a merger where Tenant is the surviving entity or the sale of substantially all of Tenant's assets, provided that (i) the transferee has a sufficient net worth to perform Tenant’s obligations under the Lease;
(ii) there is no change in the permitted use of the Premises; and (iii) Tenant remains fully liable for the obligations of the Tenant under this Lease and that regardless of Tenant remaining liable under the Lease in the event of an assignment, such entity assumes jointly and severally the obligations of Tenant hereunder. Tenant shall immediately notify Landlord of any such assignment or subletting under the terms of this Section 19.B. Unless permitted under the terms of this Section 19.B., any sale or transfer of more than forty-nine percent (49%) of the ownership interests in Tenant as of the Effective Date shall be deemed an assignment of this Lease subject to the terms of Section 19.A. above.
| 20. | QUIET ENJOYMENT |
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Landlord covenants that it has the right to make this Lease for the Term aforesaid, and that if Tenant shall pay the Rent and perform all of the covenants, terms, conditions and agreements of this Lease to be performed by Tenant, Tenant shall, during the Term hereby created, freely, peaceably and quietly occupy and enjoy the full possession of the Premises without molestation, disturbance, or hindrance by Landlord or any party claiming through or under Landlord, subject to the provisions of this Lease.
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| --- | | 21. | SUBORDINATION | | --- | --- |
Subject to the delivery to Tenant of a written agreement from the applicable interest or lien holder providing in the event Landlord defaults under such lien or security interest, Tenant's possession of the Premises shall not be disturbed so long as Tenant is not in default of this Lease beyond any applicable cure period, this Lease is subject and subordinate to all ground or underlying leases and to all mortgages and/or deeds of trust which may now or hereafter affect such leases or the real property of which the Premises form a part, and to all renewals, modifications, consolidations, replacements and extensions thereof. In confirmation of such subordination, Tenant shall execute promptly any certificate that the Landlord, or the holder of such deed of trust, may reasonably request, provided that such certificate contains commercially reasonable non-disturbance and attornment provisions. Notwithstanding the foregoing, in the event of any foreclosure sale under such deed of trust, this Lease shall continue in full force and effect, and the Tenant hereby attorns to the party secured by such deed of trust or the purchaser under any such foreclosure sale, which attornment is self-operative and requires no further instrument or agreement. Tenant covenants and agrees that, notwithstanding the self-operative nature of the attornment contained herein, Tenant will, at the written request of the party secured by any such deed of trust, execute, acknowledge and deliver any commercially reasonable instrument that has for its purpose and effect the confirmation of the subordination, non-disturbance, and attornment provisions contained herein (the “SNDA”).
| 22. | RULES AND REGULATIONS |
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Tenant, its agents, employees, invitees, licensees, customers, clients, family members and guests shall at all times abide by and observe the rules and regulations attached hereto as Exhibit “C”. In addition, Tenant, its agents, employees, invitees, licensees, customers, clients, family members and guests shall abide by and observe such other rules or regulations as may be reasonably promulgated from time to time by Landlord for the Complex (provided that such updated rules and regulations apply consistently to all tenants, licensees, and invitees of the Complex), with a copy transmitted to Tenant at least 10 business days prior to the effective date of thereof; provided, however, that the same are not inconsistent with the provisions of this Lease and do not impose an unreasonable economic burden on Tenant. Landlord agrees to use commercially reasonable efforts to enforce the rules and regulations of the complex fairly. If there is any inconsistency between this Lease and the rules and regulations as set forth in Exhibit “C”, as may be updated from time to time, this Lease shall govern. The Landlord may, upon request by any tenant, waive the compliance by such Tenant of any of the rules and regulations provided that (i) no waiver shall be effective unless signed by Landlord or Landlord's authorized agent, (ii) any such waiver shall not relieve such Tenant from the obligation to comply with such rule or regulation in the future unless expressly consented to by Landlord, and (iii) no waiver granted to any tenant shall relieve any other tenant from the obligation of complying with the following rules and regulations unless such other tenant has received a similar waiver in writing from Landlord.
| 23. | ESTOPPEL CERTIFICATE |
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Tenant agrees, at any time and from time to time, upon not less than fifteen (15) days prior written notice by Landlord, to execute, acknowledge and deliver to Landlord a statement in form and substance reasonably acceptable to Tenant (i) certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the Lease is in full force and effect as modified and stating the modification), (ii) stating the Basic Rent, and the dates to which the Rent and any other charges hereunder have been paid by Tenant, (iii) stating to the actual knowledge of Tenant, whether Landlord and Tenant are in default in the performance of any covenant, agreement or condition contained in this Lease, and if so, specifying each such default of which Tenant may have actual knowledge, (iv) stating the address to which notices to Tenant should be sent, (v) stating the Term of the Lease, the area encompassed by it, and the Lease Commencement Date; (vi) stating that Tenant has not prepaid any Rent under the Lease; and (vii) stating that Tenant has accepted the Premises in its “as is” condition, is in possession of the Premises and that all improvements have been made to the Premises as required by the Lease (or, providing details to the extent the foregoing in (vii) are not correct). Any such statement delivered pursuant hereto may be relied upon by the party so named in such certificate, provided that such party is an owner of the Complex, a prospective purchaser of the Complex, a mortgagee or prospective mortgagee of the Complex or of Landlord's interest in either, or any prospective assignee of any such mortgagee.
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| --- | | 24. | REPRESENTATIONS BY LANDLORD | | --- | --- |
Tenant agrees and acknowledges that neither Landlord nor any broker, agent or employee of Landlord has made any representations or promises with respect to the Premises or the Complex except as herein expressly set forth, and no rights, privileges, easements or licenses are acquired by Tenant except as herein expressly set forth or in a separate writing executed on or after the Effective Date by Landlord and Tenant.
| 25. | CONDITION OF PREMISES |
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By taking possession of the Premises, Tenant shall be deemed to have agreed that (a) it had an opportunity to inspect the Premises; (b) it accepts the Premises “AS IS” and “WITH ALL FAULTS;” and (c) Landlord does not make and Tenant does not rely on any representation or warranty of any kind, expressed or implied, with respect to the condition of the Premises; and (c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, LANDLORD HEREBY DISCLAIMS AND TENANT WAIVES THE BENEFIT OF, ANY AND ALL IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF HABITABILITY AND FITNESS OR SUITABILITY FOR A PARTICULAR PURPOSE.
| 26. | TENANT'S FURNISHINGS/EQUIPMENT |
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A. Furnishings. Landlord shall have the right to approve the weight and position of equipment or fixtures in the Premises, which shall not be unreasonably withheld, delayed, denied, or conditioned. Any and all damage or injury to the Premises or the Complex caused by moving the property of Tenant into, or out of the Premises, or due to the same being on the Premises, shall be repaired by, and at the sole cost of Tenant. No furniture, equipment or other bulky matter of any description will be received into the Complex or moved within the Complex except as approved by Landlord, and all such furniture, equipment and other bulky matter shall be delivered only through the designated delivery entrance of the Complex. All moving of furniture, equipment and other materials shall be under the control and supervision of Landlord who shall, however, not be responsible for any damage to or charges for moving the same.
B. Equipment. Tenant will be permitted to utilize such equipment as reasonably necessary in connection with its use of the Premises, as set forth in Section 2, above. Business machines and mechanical equipment belonging to Tenant which cause noise or vibration that may be transmitted to the structure of the Complex or to any space therein to such a degree as to be reasonably objectionable to Landlord or to any tenant shall be installed and maintained by Tenant, at Tenant's expense, on vibration eliminators or other devices sufficient to reasonably mitigate such noise and vibration.
| 27. | GENDER AND NUMBER |
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Feminine or neuter pronouns shall be substituted for those of the masculine form, and the plural shall be substituted for the singular number, in any place or places herein in which the context may require such substitution.
| 28. | CAPTIONS |
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The captions in this Lease are included for convenience only and shall not be taken into consideration in any construction or interpretation of this Lease or any of its provisions.
| 29. | BROKER |
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Neither party has been represented by a realtor or broker. Each party hereby agrees to indemnify and hold the other party harmless of and from any and all losses, costs, damages or expenses (including, without limitation, all attorneys’ fees, court costs and disbursements) by reason of any claim of or liability to any broker or person claiming through such party, and arising out of or in connection with the negotiation, execution and delivery of this Lease.
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| --- | | 30. | LIABILITY OF LANDLORD | | --- | --- |
Landlord shall not be liable to Tenant, its employees, agents, invitees, licenses, customers, clients, family members or guests for any damage, compensation or claim arising from the necessity of repairing any portion of the Complex, the interruption in the use of the Complex, accident or damage resulting from the use or operation (by Landlord, Tenant, or any other person or persons whatsoever) of elevators (if applicable), heating, cooling, electrical or plumbing equipment or apparatus or the termination of this Lease by reason of destruction of the Complex, or from any fire, robbery, theft, mysterious disappearance and/or any other casualty, or from any leakage in any part or portion of the Complex, or from water, rain or snow that may leak into or from any leakage in any part or portion of the drains, pipes or plumbing work in the Complex or from any other cause whatsoever except to the extent such loss or damage is caused by Landlord’s gross negligence or willful misconduct or from Landlord’s breach of its obligations under this Lease or Applicable Law. Any goods, property or personal effects, stored or placed by the Tenant in or about the Complex shall be at the risk of the Tenant and the Landlord shall not in any manner be held responsible therefor. The Landlord shall not be liable for any accident to or injury to any person or persons or property in or about the Complex which are caused by the conduct and operation of any business or by virtue of equipment or property of any other tenant in said Complex, except to the extent arising from Landlord’s gross negligence or willful misconduct, or Landlord’s breach of its obligations under this Lease or Applicable Law.
| 31. | INDEMNITY |
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Tenant hereby agrees to indemnify and hold the Landlord Indemnified Parties harmless from and against any out-of-pocket loss, cost, damage, claim, liability or expense (including reasonable attorney's fees, but excluding special, consequential, punitive, or exemplary damages) (collectively, the “Expenses”) (as qualified herein, each is an “Indemnified Claim”) incurred by any Landlord Indemnified Party including in the defense of any such claim, to the extent directly caused by (i) Tenant’s use of the Premises or Complex or from the conduct of Tenant’s business or from any activity, work, or other acts or things done, permitted or suffered by Tenant in or about the Premises or Complex, (ii) any breach or default in the performance of any obligation on Tenant’s part to be performed under the terms of this Lease, (iii) any act, omission or negligence or willful or misconduct of Tenant in violation of this Lease, or (iv) any negligence of any officer, agent, employee, independent contractor, guest, or invitee of Tenant, in each case, except to the extent such Expenses are the result of the gross negligence or willful misconduct of Landlord or a Landlord Indemnified Party; provided that Landlord shall give notice to Tenant of any event giving rise to such loss or damage within thirty (30) days of Landlord’s knowledge of same. Upon receipt of written notice from Landlord, Tenant shall, within thirty (30) days thereafter, defend any such Indemnified Claim at Tenant’s expense by counsel reasonably satisfactory to Landlord. The parties shall give each other immediate notice in case of casualty or accidents in the Premises. The provisions of this Section 31 shall survive the expiration or earlier termination of this Lease. THE PARTIES ACKNOWLEDGE THAT TENANT ENTERED AND TOOK POSSESSION OF THE PREMISES PRIOR TO THE EFFECTIVE DATE, AND EXPRESSLYAGREE THAT THIS INDEMNITY PROVISION SHALL APPLY RETROACTIVELY AND WITHOUT LIMITATION TO THE DATE OF SUCH POSSESSION
| 32. | SALE BY LANDLORD |
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In the event the original Landlord hereunder, or any successor owner of the Complex, shall sell or convey the Complex, such Landlord’s responsibility for any then-existing liabilities and obligations shall end; and thereupon all such liabilities and obligations (including all liabilities and obligations thereafter accruing) shall be binding on the new owner. Tenant agrees to attorn to such new owner in writing if requested by Landlord to do so on such form that contains commercially reasonable terms and conditions.
| 33. | NO PARTNERSHIP |
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Nothing contained in this Lease shall be deemed or construed to create a partnership or joint venture of or between Landlord and Tenant, or to create any other relationship between the parties hereto other than that of Landlord or Tenant.
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| --- | | 34. | AUTHORITY | | --- | --- |
Landlord and Tenant hereby represent, warrant and covenant each for itself, that each has full right, power and authority to enter into this Lease upon the terms and conditions herein set forth. If Tenant signs as a corporation, each of the persons executing this Lease on behalf of Tenant does hereby covenant and warrant that Tenant is a duly authorized and existing corporation, qualified to do business in the State of Texas, that the corporation has full right and authority to enter into this Lease, and that each and both of the persons signing on behalf of the corporation were authorized to do so.
| 35. | TIME OF ESSENCE |
|---|
Time is of the essence with respect to the performance of each party’s obligations under each provision of this Lease.
| 36. | WAIVER OF JURY TRIAL |
|---|
Landlord and Tenant hereby waive trial by jury in any action, proceeding, or counterclaim brought by either of the parties hereto against the other on or in respect of any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant hereunder, Tenant's use or occupancy of the Premises, and/or any claim of injury or damage.
| 37. | CHOICE OF LAW |
|---|
This Lease and all the terms and provisions hereof shall be interpreted in accordance with the laws of the State of Texas. Any dispute, controversy or claim arising out of or relating to this Lease or the breach thereof, shall be brought in the state and federal courts of Bexar County, Texas. By executing and delivering this Lease, each party for itself irrevocably (a) accepts generally and unconditionally the exclusive jurisdiction and venue of such courts; (b) waives any defense of forum non conveniens; (c) agrees that service of all process in any such proceeding may be made by registered mail, return receipt requested, to the applicable party at its address provided herein; and (d) agrees that service as provided in clause (c) above is sufficient to confer personal jurisdiction on the applicable party in any such proceeding in such court, and otherwise constitutes effective and binding service in every respect.
| 38. | EXAMINATION OF LEASE |
|---|
Submission of this Lease for examination or signature by Tenant shall not constitute the reservation of or an option for Lease, and the same shall not be effective as a Lease or otherwise until execution and delivery by both Landlord and Tenant.
| 39. | ATTORNEY'S FEES |
|---|
If as a result of any breach or default in the performance of any of the provisions of this Lease, the non-breaching party to this Lease uses the services of an attorney in order to secure compliance with such provisions or recover damages therefor, or to terminate this Lease or (in the case of Landlord) to evict Tenant, the party that prevails in connection therewith or in any subsequent litigation shall be entitled to reimbursement from the non-prevailing party for reasonable attorney's fees and costs to enforce the terms of this lease, upon rendering of a final non-appealable judgment therefor.
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| --- | | 40. | RESERVATION OF RIGHTS | | --- | --- |
Landlord hereby reserves to itself and its successors and assigns the following rights (all of which are hereby consented to by Tenant): (i) to change the street address and/or name the Complex by providing 90 days prior notice to Tenant, (ii) to erect, use and maintain pipes and conduits in and through the public areas of the Complex (but not the Premises), provided that the utilities that service the Premises and Tenants use of the Premises are not adversely affected thereby. Landlord may exercise any or all of the foregoing rights without being deemed to be guilty of an eviction, actual or constructive, or a disturbance or interruption of the business of Tenant or Tenant's use or occupancy of the Premises.
| 41. | INTENTIONALLY DELETED |
|---|---|
| 42. | PARTIAL INVALIDITY |
| --- | --- |
If any provision of this Lease or the application thereof to any person or circumstances shall to any extent be invalid or unenforceable, the remainder of this Lease, or the application of such provision to persons or circumstances other than those to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall be valid and be enforced to the fullest extent permitted by Applicable Law.
| 43. | NO WAIVER |
|---|
The failure of Landlord or Tenant to seek redress for violation of, or to insist upon the strict performance of, any covenant or condition of this Lease, or of any rule or regulation, shall not prevent a subsequent act, which would have originally constituted a violation from having all the force and effect of an original violation. The receipt by Landlord of Rent with knowledge of the breach of any covenant of this Lease, shall not be deemed a waiver of such breach. No provision of this Lease shall be deemed to have been waived by Landlord or Tenant unless such waiver be in writing, signed by the waiving party.
| 44. | BENEFIT AND BURDEN |
|---|
The provisions of this Lease shall be binding upon, and shall inure to the benefit of, the parties hereto and each of its respective representatives, successors and assigns. Landlord may freely and fully assign its interest hereunder.
| 45. | PARKING |
|---|
During the Term of this Lease, Landlord grants a license to Tenant to utilize not more than 55 unreserved parking spaces on a first come, first served basis, in the paved surface parking lot portion of the property described in that one certain Deed without Warranty, dated April 8, 2022, from the State of Texas, grantor, to Texas Research and Technology Foundation, grantee, recorded as Document No. 20220090086, of the Official Public Records, Bexar County, Texas (the “Sutton Lots”). Landlord shall have the right at any time to change the location of the Tenant’s parking spaces from the Sutton Lots to an alternate location or facility designated by Landlord in Landlord’s sole and absolute discretion, provided that the alternate location or facility shall be within two (2) city blocks of the Premises, with thirty (30) days advance written notice of such change to Tenant. It is agreed and understood that the taxes, maintenance, and operating expenses of the Sutton Lots or any alternate parking facility shall be charged to Tenant each month as part of Tenant’s Share of Operating Expenses for the Complex, but that Tenant will not be required to pay a parking fee for same.
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| --- | |
|---|---|
| --- | --- |
Landlord hereby agrees that any landlord’s lien or similar lien it might now or in the future have in any of Tenant’s personal property shall be subordinate to the lien of Tenant’s lender. Although such subordination shall be automatic and self-operative without the necessity of any further instrument, Landlord hereby agrees to execute promptly such further instruments as may be reasonably required by Tenant or Tenant’s lender to evidence such subordination.
| 47. | OFAC; FINANCIAL CONTROL LAWS. |
|---|
As of the effective date of this Lease and at all times throughout the Term of this Lease, including after giving effect to any transfers of interests permitted pursuant to this Lease or done in violation of this Lease, (i) Tenant and every officer, director, trustee, member, partner, manager, person and entity holding a direct ownership interest in Tenant are in full compliance with all applicable laws and regulations of the United States of America that prohibit, regulate or restrict financial transactions, and any amendments or successors thereto and any applicable regulations promulgated thereunder (collectively, the “Financial Control Laws”), including but not limited to those related to money laundering offenses and related compliance and reporting requirements including any money laundering offenses prohibited under the Money Laundering Control Act, 18 U.S.C. Sections 1956, 1957 and the Bank Secrecy Act, 31 U.S.C. Sections 5311 etseq.), the Foreign Assets Control Regulations, 31 C.F.R. Section 500 et seq., Executive Order 13224, 66 Fed. Reg. 49079 (September 25, 2001) (the “Executive Order”), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act and related regulations, as may be amended or supplemented from time to time (the “PatriotAct”); (ii) Tenant and every officer, director, trustee, member, partner, manager, person and entity holding a direct or ownership interest in Tenant are not a Barred Person nor is Tenant owned or controlled directly by any Barred Person; and neither the Tenant nor any of its officers, directors, trustees, members, partners, managers, persons or entities holding a direct ownership interest in Tenant is acting, directly or indirectly, for or on behalf of any Barred Person. The term “Barred Person” means: (i) any person, group or entity named as a “Specially Designated National and Blocked Person” or as a person who commits, threatens to commit, supports, or is associated with terrorism as designated by the United States Department of the Treasury's Office of Foreign Assets Control (“OFAC”); (ii) any person, group or entity named in the lists maintained by the United States Department of Commerce (Denied Persons and Entities); (iii) any government or citizen of any country that is subject to a United States Embargo identified in regulations promulgated by OFAC; and (iv) any person, group or entity named as a denied or blocked person or terrorist in any other list maintained by any agency of the United States government, including the not limited to the Executive Order and the Patriot Act. Tenant understands and has been advised by legal counsel on the requirements of the Financial Control Laws.
| 48. | ENTIRE AGREEMENT |
|---|
This Lease, together with the Exhibits attached hereto, contains and embodies the entire agreement of the parties hereto, and no representations, inducements or agreements, oral or otherwise, between the parties not contained in this Lease, the Exhibits, or separate written agreement entered into on or after the Effective Date, shall be of any force or effect. This Lease may not be modified, changed or terminated in whole or in part in any manner other than by an agreement in writing duly signed by both parties hereto. The recitals are hereby incorporated herein to the same extent as if set forth herein in full.
| 49. | INTENTIONALLY DELETED |
|---|---|
| 50. | TAX INCENTIVES |
| --- | --- |
Landlord intends to seek Federal and Texas historic tax credits in connection with improvement of the Complex. Tenant agrees to cooperate with Landlord’s efforts, at no cost to Tenant (other than routine administrative expenses), to obtain any and all historic tax credits in connection with the “qualified rehabilitation expenditure” made by Landlord with respect to the Premises as that term is defined in Section 47 of the Internal Revenue Code. Tenant acknowledges that any Tenant Improvements or Alterations must be made in accordance with the Standards for Rehabilitation promulgated under federal and state law and will cooperate reasonably with Landlord’s counsel, historic architectural, tax, and accounting consultants in making any Tenant Improvements or Alterations under this Lease.
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| --- | | 51. | CROSS DEFAULT | | --- | --- |
Tenant acknowledges and agrees that this Lease relates to that certain Sublease between Texas Research and Technology Foundation, as Sublessor, and Velocity Bioworks, Inc., as Sublessee (the “Sublease”), covering Suite 1305 containing approximately 8,122 square feet of rentable area (the “Subleased Premises”) within the Complex. Texas Research and Technology Foundation is an entity that is under common control with Landlord. Tenant further agrees that, so long as Texas Research and Technology Foundation remains an entity that is under common control with Landlord, any default by Sublessee under the Sublease shall automatically constitute an Event of Default under this Lease, without the necessity of additional notice or cure periods beyond those expressly provided in the Sublease. Upon the occurrence of such default, Landlord shall have the right to exercise any and all remedies available under this Lease, at law, or in equity. Conversely, any termination of the Sublease as a result of Sublessee’s default shall, at Landlord’s option, constitute a termination of this Lease. Tenant acknowledges that its rights under this Lease are expressly conditioned upon the continued existence and good standing of the Sublease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease under seal.
| LANDLORD: | TENANT: | ||
|---|---|---|---|
| Merchants Ice II, LLC, a Texas limited liability | Velocity Bioworks, a Delaware corporation company | ||
| By: | /s/ Rene Dominquez | By: | /s/ Michael Handley |
| Printed Name: | Rene Dominquez | Printed Name: | Michael Handley |
| Its: | President<br>& CEO | CEO |
List of Exhibits:
Exhibit “A” - Legal Description of Complex
Exhibit “B” - Premises
Exhibit “C” - Rules and Regulations
Exhibit “D” - Hazardous Material List
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| --- |
Exhibit 10.3
SUBLEASE
Basic Information
| Date: | January 1, 2026 | |
|---|---|---|
| Sublessor: | Texas Research and Technology Foundation, a Texas non-profit corporation | |
| Sublessor’s Address: | 1305 E. Houston St. | |
| San Antonio, Texas 78205 | ||
| Sublessee: | Velocity Bioworks, Inc, a Delaware corporation | |
| Sublessee’s Address: | 1305<br>E. Houston St., Ste. 1305 | |
| San Antonio, Texas 78205 | ||
| Subleased Premises: | Suite 1305, containing<br>approximately 8,122 square feet of rentable area, depicted on Exhibit A attached hereto. The Subleased Premises is located in<br>the Merchants Ice Main Building (which, together with the building known as Eddie’s Workshop, comprises the “Building”).<br>The Building is located within the Merchants Ice Complex, with an address of 1305 E. Houston St., San Antonio, Texas 78205 (“Complex”). | |
| Sublease Commencement Date: | January 1,<br>2026 | |
| Sublease Termination Date: | February<br>28, 2035 | |
| Sublease Term: | 110 months<br>(ending at 11:59 p.m. on the last day of the 110th full calendar month). | |
| Sublease Security Deposit: | None. | |
| Sublease Rent: | (a) | The “Monthly Basic Rent” as the same<br>is due under the Base Lease; |
| --- | --- | --- |
| (b) | The “TI P&I” as the same is due under the Base Lease; | |
| (c) | The “Tenant’s Share” of the “Operating Expenses”<br>and “Taxes” for the Building as the same are defined in the Base Lease, calculated to be 12.91% pro-rated for the Lease Term, paid<br>monthly; | |
| (d) | The “Tenant’s Share” of the “Operating Expenses”<br>for the Complex, as the same is defined in the Base Lease, calculated to be 5.68% pro-rated for the Lease Term, paid monthly; and | |
| (e) | All other items of Additional Rent as the same are due and payable under the Base<br>Lease. For purposes of this Sublease, Additional Rent, as defined in the Base Lease, shall not include any Late Fees for Sublessor’s<br>failure to timely tender payments due and owing to Landlord by Sublessor under the Base Lease. |
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| --- | | | Collectively, items (a)-(e) above<br>shall be the “Sublease Rent” hereunder. | | --- | --- | | | It is expressly understood and<br>agreed that in addition to and along with the Sublease Rent for the month of January 2026, Sublessee shall pay to Sublessor the amount<br>of Sublease Rent that would have been due for the month of December 2025. | | Permitted Sublease Use: | General office<br>use, consistent with the character of a first-class office building and for no other purpose whatsoever. | | Base Lease: | The Office Lease Agreement dated June 1, 2024, between TPB Merchants Ice, LLC, a Texas<br>limited liability company, as Landlord and Texas Research and Technology Foundation, a Texas non-profit corporation, as Tenant, a true<br>and correct copy of which is attached hereto as Exhibit C. |
Notices. Notices and other communications shall be given to the parties in writing and shall be considered properly delivered only when received or when first refused by the addressee, if such notice is transmitted to the recipient's address, as provided below until otherwise directed in writing, and such transmittal is given or served (i) personally, (ii) by reputable overnight courier service (such as FedEx or UPS), or (iii) by registered or certified mail (return receipt requested) deposited in the United States general or branch post office.
| If to Sublessor: | Texas Research and Technology Foundation |
|---|---|
| 1305 E. Houston St. | |
| San Antonio, Texas 78205 | |
| Attention: Rene Dominguez, Chief Executive Officer | |
| Email: rene@velocitytx.org | |
| With Copy To: | Person<br>Mohrer Morales Boddy Garcia & Gutierrez, PLLC |
| 8610 Broadway, Suite 440 | |
| San Antonio, Texas 78217 | |
| Attention: Elizabeth Boddy | |
| Email: eboddy@pmbglaw.com | |
| If to Sublessee: | Velocity Bioworks, Inc. |
| 1305 E. Houston St., Building 2 | |
| San Antonio, Texas<br>78205 | |
| Attention: Michael K. Handley | |
| Email: corporate@velocitybioworks.com | |
| A. | Sublessee’s Obligations |
| --- | --- |
A.1. Sublessee agrees to—
*A.1.a.*Sublease the Subleased Premises for the Sublease Term beginning on the Sublease Commencement Date and ending on the Sublease Termination Date.
*A.1.b.*Pay the Sublease Rent to Sublessor in advance of the first day of each month.
A.1.c. Obey all laws relating to Sublessee’s use of the Subleased Premises.
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A.1.d. Comply with all of Sublessor’s obligations under the Base Lease.
*A.1.e.*Vacate the Subleased Premises and return all keys to the Subleased Premises on termination of this Sublease.
*A.1.f.*INDEMNIFY, DEFEND, AND HOLD SUBLESSOR AND SUBLESSOR’S AGENTS HARMLESS FROM ANY INJURY (AND ANY RESULTING OR RELATED CLAIM, ACTION, LOSS, LIABILITY, OR REASONABLE EXPENSE, INCLUDING ATTORNEY’S FEES AND OTHER FEES AND COURT AND OTHER COSTS) OCCURRING (I) IN ANY PORTION OF THE SUBLEASED PREMISES, OR (II) IN COMPLEX TO THE EXTENT CAUSED BY THE NEGLIGENCE OR WILLFUL MISCONDUCT OF SUBLESSEE OR SUBLESSEE’S AGENTS, CONTRACTORS OR EMPLOYEES, EXCEPT TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUBLESSOR OR SUBLESSOR’S AGENTS, CONTRACTORS OR EMPLOYEES. THE INDEMNITY CONTAINED IN THIS PARAGRAPH (i) IS INDEPENDENT OF SUBLESSEE’SINSURANCE, (ii) WILL NOT BE LIMITED BY COMPARATIVE NEGLIGENCE STATUTES OR DAMAGES PAID UNDER THE WORKERS’ COMPENSATION ACT OR SIMILAREMPLOYEE BENEFIT ACTS, (iii) WILL SURVIVE THE END OF THE SUBLEASE TERM, AND (iv) WILL APPLY EVEN IF AN INJURY IS CAUSED IN WHOLE OR INPART BY THE ORDINARY NEGLIGENCE OR STRICT LIABILITY OF SUBLESSOR OR SUBLESSOR’S AGENTS, BUT WILL NOT APPLY TO THE EXTENT AN INJURYIS CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUBLESSOR OR SUBLESSOR’S AGENTS. THE PARTIES ACKNOWLEDGE THAT SUBLESSEEENTERED AND TOOK POSSESSION OF THE LEASED PREMISES PRIOR TO THE EFFECTIVE DATE, AND EXPRESSLY AGREE THAT THIS INDEMNITY PROVISION SHALLAPPLY RETROACTIVELY AND WITHOUT LIMITATION TO THE DATE OF SUCH POSSESSION.
*A.1.g.*Maintain liability insurance for the Subleased Premises and the conduct of Sublessee’s business, with Sublessor and TPB Merchants Ice, LLC, named as additional insureds, in the amounts stated in the Base Lease.
A.1.h. Maintain insurance on Sublessee’s personal property.
*A.1.i.*Deliver certificates of insurance to Sublessor before the Sublease Commencement Date and thereafter when requested.
*A.1.j.*Cooperate reasonably with Sublessor’s counsel, historic architectural, tax, and accounting consultants regarding federal and state historic tax credits.
A.2. Sublessee agrees not to—
*A.2.a.*Use the Subleased Premises for any purpose other than the Permitted Sublease Use.
A.2.b. Create a nuisance.
*A.2.c.*Interfere with any other tenant’s normal business operations or Landlord’s management of the building.
*A.2.d.*Permit any waste or damage to the Subleased Premises or to the furniture and equipment located within the Leased Premises owned by Sublessor and being licensed to Sublessee for use, more particularly described on Exhibit B attached hereto (the “FF&E”).
*A.2.e.*Use the Subleased Premises in any way that is extra hazardous, would increase insurance premiums, or would void insurance on the Building.
A.2.f. Intentionally omitted.
*A.2.g.*Alter the Subleased Premises except for alterations that are approved in writing by Sublessor, which consent shall not be unreasonably withheld, conditioned, or delayed. If any alterations are approved by Sublessor, Sublessee shall also be required to obtain, at its expense, all necessary approvals from the Texas Historic Commission (“THC”) and National Park Service (“NPS”) regarding state and federal historic tax credits.
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A.2.h. Allow a lien to be placed on the Subleased Premises.
*A.2.i.*Assign this Sublease or sublease any portion of the Subleased Premises without Sublessor’s written consent, which consent will not be unreasonably withheld, conditioned, or delayed. Notwithstanding any provision of this Sublease to the contrary, but subject to the Base Lease, the sale or transfer of less than forty-nine percent (49%) of the ownership interests in Tenant as of the Effective Date shall not be deemed an assignment of this Lease requiring Sublessor’s consent, but shall nonetheless be subject to the Landlord’s consent as required under the Base Lease.
| B. | Sublessor’s Obligations |
|---|
Sublessor agrees to—
B.1. Sublease the Subleased Premises to Sublessee for the Sublease Term.
B.2. Enforce Landlord’s obligations under the Base Lease.
*B.3.*Refrain from amending or supplementing the Base Lease in any manner that adversely affects the Sublessee.
*B.4.*Return the Sublease Security Deposit to Sublessee, less itemized deductions, if any, on or before the fifth day after the date Sublessee surrenders the Subleased Premises.
*B.5.*Indemnify, protect, defend and hold Sublessee harmless from and against any and all loss, cost, damage and expense arising out of or in any way related to a breach or default of the Sublessor’s obligations under the Base Lease, unless the loss, cost, damage or expense was caused by Sublessee.
*B.6.*Make available to the Subleased Premises all services and rights provided under the Base Lease.
B.7. Obey all laws relating to Sublessor’s operation of the Subleased Premises.
B.8. Intentionally omitted.
*B.9.*Allow Sublessee to use the FF&E located within the Subleased Premises owned by Sublessor, more particularly described on Exhibit B attached hereto.
*B.10.*Pursuant to the terms of the Base Lease, timely pay to Landlord all expenses due thereunder, including but not limited to, Basic Rent, Tenant’s Share of Operating Expenses for the Building, Tenant’s Share of Operating Expenses for the Complex, Tenant’s Share of Taxes, and Additional Rent.
| C. | General Provisions |
|---|
Sublessor and Sublessee agree to the following:
C.1. Defaults by Sublessee are (a) failing to pay timely Sublease Rent within five (5) days following written notice from Sublessor that such rent is past due, and (b) failing to comply within ten (10) days after written notice with any provision of the Base Lease or Sublease other than the default set forth in (a) (or if such breach cannot be cured within ten (10) days, then after such period of time as reasonably necessary to cure so long as Tenant has commenced such cure within said ten (10) days period and diligently prosecutes the same to completion; provided however, if Sublessee’s default under this Sublease also constitutes a default under the Base Lease, then such additional time period shall not be longer than the cure period under the Base Lease).
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*C.2.*Sublessor’s remedies for Sublessee’s default are to (a) enter and take possession of the Subleased Premises, after which Sublessor may relet the Subleased Premises on behalf of Sublessee and receive the Sublease Rent directly by reason of the reletting, and Sublessee agrees to reimburse Sublessor for any expenditures made in order to relet, (b) enter the Subleased Premises and perform Sublessee’s obligations, and (c) terminate this Sublease by written notice and sue for damages. Sublessor shall use commercially reasonable efforts to mitigate its damages.
*C.3.*Defaults by Sublessor are (a) failing to comply with any provision of this Sublease within thirty (30) days after written notice from Sublessee, and (b) being in default under the terms of the Base Lease.
*C.4.*Sublessee’s sole and exclusive remedies for Sublessor’s default are to (a) sue for damages, or (b) cure such failure and receive credit toward future rental payments for the cost incurred by Sublessee to cure such failure.
*C.5.*This Sublease is subordinate to the Base Lease, a copy of which is attached hereto and incorporated herein for all purposes as Exhibit C.
*C.6.*Sublessor may retain, destroy, or dispose of any property left in the Subleased Premises at the end of seven (7) days after the expiration of the Sublease Term. Sublessor grants a license to Sublessee to enter the Subleased Premises and remove said property for this period. The provisions of this Section C.6. shall survive the expiration or earlier termination of this Sublease.
*C.7.*Sublessor has all the rights of Landlord under the Base Lease as to Sublessee.
*C.8.*Sublessee shall be responsible for any damages to the Subleased Premises and the FF&E that go beyond ordinary wear and tear.
*C.9.*If either party retains an attorney to enforce this Sublease, the party prevailing in litigation is entitled to recover reasonable attorney’s fees and court and other costs.
*C.10.*SUBLESSEE IS FAMILIAR WITH THE CONDITION OF THE SUBLEASED PREMISES, THE BUILDING, AND THE COMPLEX, AND HEREBY ACCEPTS SAME IN THEIR “AS IS, WHERE IS” AND “WITH ALL FAULTS” CONDITION. SUBLESSEE ACKNOWLEDGES THAT NEITHER SUBLESSOR NOR ANY REPRESENTATIVE OF SUBLESSOR HAS MADE ANY REPRESENTATION AS TO THE CONDITION OF THE SUBLEASED PREMISES OR ITS SUITABILITY FOR SUBLESSEE’S INTENDED USE OTHER THAN AS EXPRESSLY SET FORTH HEREIN. SUBLESSEE ACKNOWLEDGES AND AGREES THAT SUBLESSEE HAS MADE ITS OWN INSPECTION OF THE SUBLEASED PREMISES AND SUBLESSOR HAS NO OBLIGATION TO MAKE ANY REPAIRS, REPLACEMENTS, OR IMPROVEMENTS (WHETHER STRUCTURAL OR OTHERWISE) OF ANY KIND OR NATURE IN CONNECTION WITH PREPARING THE SUBLEASED PREMISES FOR SUBLESSEE’S OCCUPANCY. SUBLESSOR ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS SUBLEASE, SUBLESSOR HAS MADE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES, THE BUILDING, OR THE COMPLEX, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY, HABITABILITY, FITNESS FOR A PARTICULAR PURPOSE, SUITABILITY FOR TENANT’S INTENDED USE, OR COMPLIANCE WITH ANY LAWS, CODES, OR REGULATIONS.
*C.11.*Each party hereby releases the other party and each other’s employees, agents, customers and invitees from any and all liability for any losses covered by, or required to be covered by, property insurance under the terms of this Sublease, other than those losses caused by the other party’s gross negligence or intentional acts, each party hereby waives and releases the other, its officers, directors, employees and agents, from any and all claims and liability or responsibility with respect to such losses, including losses arising out of the inability to conduct business. Each party further agrees that its insurance companies shall have no right of subrogation against the other on account of this release.
*C.12.*The laws of the State of Texas shall govern the validity, performance, and enforcement of this Sublease. Sublessee consents to personal jurisdiction and venue in Bexar County, Texas. The courts of the State of Texas will have exclusive jurisdiction, and Sublessee hereby agrees to such exclusive jurisdiction, regardless of any conflict-of-laws.
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*C.13.*Each party waives and releases the other and covenants not to seek any indirect, special, incidental, exemplary, punitive or consequential damages (including loss of business, staff time, goodwill, use or other economic advantage) under this Sublease.
*C.14.*SUBLESSOR AND SUBLESSEE KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY EITHER PARTY AGAINST THE OTHER IN ANY MATTER ARISING OUT OF THE SUBLEASE, THE RELATIONSHIP BETWEEN THE SUBLESSOR AND SUBLESSEE, SUBLESSEE’S USE OR OCCUPANCY OF THE SUBLEASED PREMISES, OR ANY CLAIM OF INJURY OR DAMAGE.
*C.15.*Sublessee and Sublessor hereby represent and warrant to either party that each party: (i) is in compliance with the Office of Foreign Assets Control sanctions and regulations promulgated under the authority granted by the Trading with the Enemy Act, 12 U.S.C. § 95(a) et seq., and the International Emergency Economic Powers Act, 50 U.S.C. § 1701 et seq., as the same apply to it or its activities; (ii) is in compliance with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended from time to time (the “Patriot Act”) and all rules and regulations promulgated under the Patriot Act applicable to Sublessee; and (iii) (A) is not now, nor has ever been, under investigation by any governmental authority for, nor has been charged with, or convicted of a crime under, 18 U.S.C. §§ 1956 or 1957 or any predicate offense thereunder; (B) has never been assessed a civil penalty under any anti-money laundering Laws or predicate offenses thereunder; (C) has not had any of its funds seized, frozen, or forfeited in any action relating to any anti-money laundering Laws or predicate offenses thereunder; (D) has taken such steps and implemented such policies as are reasonably necessary to ensure that it is not promoting, facilitating, or otherwise furthering, intentionally or unintentionally, the transfer, deposit, or withdrawal of criminally derived property, or of money or monetary instruments which are (or which Sublessee suspects or has reason to believe are) the proceeds of any illegal activity, or which are intended to be used to promote or further any illegal activity; and (E) has taken such steps and implemented such policies as are reasonably necessary to ensure that it is in compliance with all Laws and regulations applicable to its business for the prevention of money laundering and with anti-terrorism Laws and regulations, with respect both to the source of funds from its investors and from its operations, and that such steps include the development and implementation of an anti-money laundering compliance program within the meaning of Section 352 of the Patriot Act, to the extent such a Party is required to develop such a program under the rules and regulations promulgated pursuant to Section 352 of the Patriot Act. Neither Sublessee nor any other person owning a direct or indirect, legal, or beneficial interest in Sublessee is in violation of the Executive Order or the Patriot Act. Neither Sublessee nor any of its respective constituents, investors (direct or indirect and whether or not holding a legal or beneficial interest), or affiliates, acting or benefiting, directly or indirectly, in any capacity in connection with the Sublessor and/or the Property or this Lease, is: (w) listed in the Annex to, or otherwise subject to the provisions of, that certain Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit or Support Terrorism (the “Executive Order”); (x) named as a Specifically Designated National (“SDN”) or Blocked Person on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website (http://www.treas.gov.ofac/t11sdn.pdf) or at any replacement website or other replacement official publication of such list or that is named on any other Governmental Authority list issued post 9/11/01; (y) acting, directly or indirectly for terrorist organizations or narcotics traffickers, including those persons that are included on any relevant lists maintained by the United Nations, North Atlantic Treaty Organization, Financial Action Task Force on Money Laundering, U.S. Office of Foreign Assets Control, U.S. Securities and Exchange Commission, U.S. Federal Bureau of Investigation, U.S. Central Intelligence Agency, U.S. Internal Revenue Service, all as may be amended or superseded from time to time; or (z) owned or controlled by, or acting for or on behalf of, any person described in clauses (w), (x) or (y) above (a “Prohibited Person”). None of the funds or other assets of Sublessee constitute property of, or are beneficially owned, directly or indirectly, by any person, entity, or government subject to trade restrictions under U.S. law, including but not limited to: (1) the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq.; (2) The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq.; and (3) any Executive Orders or regulations promulgated thereunder, with the result that sale by Sublessee or other persons (whether directly or indirectly), is prohibited by law (an “Embargoed Person”). No Embargoed Person has any interest of any nature whatsoever in Sublessee (whether directly or indirectly); and none of the funds of Sublessee have been derived from any unlawful activity with the result that an investment in Sublessee (whether directly or indirectly) or sale by Sublessee, is prohibited by law or that execution, delivery, and performance of this Lease or any of the other documents contemplated hereby or thereby is in violation of law.
*C.16.*This Sublease is contingent upon the consent of the Landlord under the Base Lease.
*C.17.*It is agreed and understood that there is no parking available to Tenant in the Complex.
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*C.18.*Sublessee acknowledges and agrees that this Sublease relates to that certain Lease between Merchants Ice II, LLC, as Landlord and Velocity Bioworks, Inc., as Tenant (the “Music Building Lease”), covering the Music building within the Complex (the “Premises”). Merchants Ice II, LLC is an entity that is under common control with Sublessor. Sublessee further agrees that, so long as the landlord under the Music Building Lease remains an entity that is under common control with Sublessor, any Event of Default by Tenant under the Music Building Lease shall automatically constitute a default under this Sublease, without the necessity of additional notice or cure periods beyond those expressly provided in the Music Building Lease. Upon the occurrence of such default, Sublessor shall have the right to exercise any and all remedies available under this Sublease, at law, or in equity. Conversely, any termination of the Music Building Lease as a result of Tenant’s Event of Default shall, at Sublessor’s option, constitute a termination of this Sublease. Sublessee acknowledges that its rights under this Sublease are expressly conditioned upon the continued existence and good standing of the Music Building Lease.
[SIGNATURES AND LANDLORD CONSENT ON THE FOLLOWING PAGE(S)]
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| --- | | Texas Research & Technology Foundation,<br><br><br><br>a Texas nonprofit corporation | | | --- | --- | | By: | /s/ Rene Dominguez | | Name: | Rene<br>Dominquez | | Title: | President & CEO | | Velocity Bioworks, a Delaware corporation | | | By: | /s/ Michael Handley | | Name: | Michael Handley | | Title: | CEO |
Consent of Landlord
Landlord consents to this Sublease by Sublessor to Sublessee.
| TPB Merchants Ice LLC,<br><br> <br>a Texas limited liability company | |
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| By: | /s/ William Sutherland |
| Name: | William Sutherland |
| Title: | Manager |
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