HomeMy WebLinkAboutContract 29440 CITY
ETARY
CONTRACT NO. C
STATE OF TEXAS §
COUNTY OF TARRANT §
TAX ABATEMENT AGREEMENT
This TAX ABATEMENT AGREEMENT ("Agreement") is entered into by and
between the CITY OF FORT WORTH, TEXAS (the "City"), a home rule municipal
corporation organized under the laws of the State of Texas and acting by and through Charles
Boswell, its duly authorized Assistant City Manager; CENTREPORT PROPERTIES, INC.
("Centreport"), a Texas corporation acting by and through Daniel Bradley, its duly authorized
Vice President; and F.L. MOTHERAL CO., INC., a Texas corporation doing business as
MOTHERAL PRINTING COMPANY ("Motheral") acting by and through Jim Motheral, its
duly authorized President.
The City Council of the City of Fort Worth ("City Council") hereby finds and the City and
Centreport (to the best of its knowledge) hereby agree that the following statements are true and
correct and constitute the basis upon which the City and Centreport have entered into this
Agreement:
A. On February 26, 2002, the City Council adopted Resolution No. 2811, stating that
the City elects to be eligible to participate in tax abatement and including guidelines and criteria
governing tax abatement agreements entered into between the City and various third parties,
entitled "Tax Abatement Policy Statement for Qualifying Development Projects" (the "Policy
Statement"), which is attached hereto as Exhibit "A" and hereby made a part of this Agreement
for all purposes.
B. The Policy Statement contains appropriate guidelines and criteria governing tax
abatement agreements to be entered into by the City as contemplated by Chapter 312 of the Texas
Tax Code, as amended (the"Code").
C. On March 25, 2003, the City Council adopted Ordinance No. 15499 (the
"Ordinance") establishing Tax Abatement Reinvestment Zone No. 43, City of Fort Worth, Texas
(the"Zone").
D. Motheral currently operates a printing facility on land owned by Motheral at 510 S.
Main Street in the City (the "Main Street Property"). Motheral wishes to relocate its printing
facility from the Main Street Property and, for such purpose, has leased from Centreport certain
real property owned by Centreport, which is located entirely within the Zone and is more
particularly described in Exhibit "B", attached hereto and hereby made a part of this Agreement
for all purposes (the "Land"). A copy of the lease that Centreport and Motheral have executed is
attached hereto as Exhibit "C" (the"Lease"). For purposes of this Agreement, "Lease" shall also
be deemed to mean any lease of the Land entered into between Centreport and Motheral and under
which Motheral is required to pay Centreport's real property taxes, so long as Motheral's right to
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Tax Abatement Agreement between
City of Fort Worth,Centreport Properties,Inc.and Motheral Printing Company
use the Land in accordance with this Agreement and the Motheral Abatement (as defined in Recital
F hereof) is not interrupted.
E. Subject to the terms of the Lease, Centreport will construct or cause to be
constructed the Required Improvements, as defined in Section 1.1 of this Agreement, on the Land
for the use as and operation of a printing facility and business (the "Project").
F. On November 18, 2003, the City Council approved execution of a tax abatement
agreement with Motheral under which the City has agreed to abate a certain percentage of (i)
Motheral's real property taxes in the Land based on its leasehold interest granted under the Lease
and (ii) Motheral's personal property taxes based on personal property owned by Motheral and
located on the Land, as more particularly described in such tax abatement agreement (the
"Motheral Abatement"). The Motheral Abatement, once executed, will be a public document on
file in the City Secretary's Office and will be incorporated herein by reference for all purposes.
G. Under the Lease, Motheral is required to pay Centreport's real property taxes. In
order for Motheral to realize the full tax abatement necessary to provide incentive for Motheral to
undertake the Project and to construct the Required Improvements, which the City Council has
previously found to be consistent with the City's desire to encourage development of the Zone and
to generate economic development and increased employment opportunities in the City, Motheral
has requested that the City grant Centreport an abatement on those real property taxes on the Land
that Motheral is required to pay under the Lease and that are in addition to those real property taxes
that are based on the leasehold value of the Land and that are subject to abatement under the
Motheral Abatement.
H. The terms of this Agreement, the contemplated use of the Land by Motheral and
Required Improvements, satisfy the eligibility criteria of the Policy Statement for tax abatements
on commercial/industrial developments.
I. Written notice that the City intends to enter into this Agreement, along with a copy
of this Agreement, has been furnished in the manner prescribed by the Code to the presiding
officers of the governing bodies of each of the taxing units in which the Land is located.
NOW, THEREFORE, the City and Centreport, for and in consideration of the terms and
conditions set forth herein, do hereby contract, covenant and agree as follows:
1. CENTREPORT'S COVENANTS.
1.1. Real Property Improvements.
Subject to the terms of the Lease, Centreport shall construct, or cause to be
constructed, pursuant to its obligations to Motheral under the Lease, certain improvements
on the Land consisting of a printing facility and business of (i) approximately 150,000
square feet in size and (ii) having a minimum Construction Cost upon completion of
$5,500,000 (collectively, the "Required Improvements"). The kind, number and location
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of the Required Improvements are more particularly described in Attachment A of Exhibit
"C" of the Motheral Abatement. Minor variations in the Required Improvements from the
description provided in the Application for Tax Abatement shall not constitute an Event of
Default, as defined in Section 4.1, provided that the conditions in the first sentence of this
Section 1.1 and the completion deadline set forth in Section 1.2 are met. For purposes of
this Agreement, "Construction Costs" shall mean site development costs, actual
construction costs, including contractor fees, the costs of supplies and materials,
engineering fees, architectural fees and other professional, development and permitting fees
expended directly in connection with the Project. The City recognizes that Centreport will
request bids from various contractors in order to obtain the lowest reasonable price for the
cost of the Project. In the event that bids for the Project are below $5,500,000 for work
substantially the same as that provided in Exhibit "C" and otherwise described in this
Agreement, the City will meet with Centreport and Motheral to negotiate in good faith an
amendment to this Agreement so that Centreport is not in default for its failure to expend at
least $5,500,000 on the Project, with the understanding that the City's staff will
recommend, but cannot guarantee, approval of such amendment by the City Council. If
such an amendment is not executed by the City, taxes will not be abated hereunder and the
City's sole remedy shall be termination of this Agreement consistent with the last sentence
of Section 4.3.
1.2. Completion Date of Required Improvements.
Subject to the terms of the Lease, Centreport shall undertake construction of the
Required Improvements in accordance with the timeline set forth in Attachment A of
Exhibit "C" of the Motheral Abatement. Centreport covenants and agrees that, subject to
the terms of the Lease, it will cause construction of all Required Improvements identified in
Attachment A of Exhibit "C" of the Motheral Abatement to be substantially completed by
December 31, 2003, unless delayed because of Force Majeure, in which case the December
31, 2003 date shall be extended by the number of days comprising the specific Force
Majeure. For purposes of this Agreement, "Force Majeure" shall mean an event beyond
Centreport's reasonable control, including, without limitation, acts of God, fires, strikes,
national disasters, wars (declared or undeclared), terrorism, riots, material or labor
restrictions, and unreasonable delays by the City in issuing any permits with respect to the
Required Improvements or inspecting any of the Required Improvements, but shall not
include construction delays caused due to purely financial matters involving Centreport,
such as, without limitation, delays in the obtaining of adequate financing.
1.3. Use of Land.
Centreport shall require Motheral to use the Land in accordance with the Lease,
which conforms to the use restrictions of the Land set forth in the Motheral Abatement
and is consistent with the general purposes of encouraging development or
redevelopment of the Zone.
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2. ABATEMENT AMOUNTS, TERMS AND CONDITIONS.
Provided that the Lease is in full force and effect at the time, the City will grant to
Centreport annual property tax abatements on the Land, excluding any taxes due on the leasehold
interest in the Land granted under the Lease, for a period of ten(10) years, as specifically provided
in this Section 2 and subject to and in accordance with this Agreement (collectively, the
"Abatement"). The actual amount of the Abatement granted under this Agreement shall be based
upon the increase in value of the Land over its value as of January 1, 2003, which is the year in
which this Agreement was entered into, and upon attainment by Motheral of certain
employment, contracting and spending benchmarks set forth in this Section 2.
2.1. Amount of Abatement.
Subject to Sections 2.3, 2.4 and 2.9 of this Agreement, during each year of the
Term, the Abatement granted hereunder may range up to a maximum of eighty-seven
percent (87%) of the increased value of the Land, excluding the value of the leasehold
interest in the Land granted under the Lease, and shall be calculated as follows:
2.1.1. Abatement Based on Construction Exvenditures (20%).
Centreport shall receive a twenty percent (20%) Abatement if, as part of
the Required Improvements that Centreport is required to construct, Centreport
spends (i) at least forty percent (40%)of the total actual Construction Costs on the
Required Improvements with contractors that are Fort Worth Companies, as
defined in Exhibit "A", and (ii) at least fifteen percent (15%) of the total
Construction Costs on the Required Improvements with M/WBE certified
contractors whose principal business office is located in the City ("Fort Worth
M/WBE Companies"). Terms and requirements relating to the location and
certification of a given contractor are defined and explained in Exhibit "A".
Determination of compliance with the spending requirements of this
Section 2.1.1 shall be based on spending during the period of time prior to and
including December 31, 2003. The maximum percentage of Abatement available
to Centreport under this Section 2.1.1 is twenty percent (20%). Centreport shall
not be eligible for any of the twenty percent (20%) Abatement under this Section
2.1.1 unless, as part of the Required Improvements that Centreport is required to
construct, Centreport meets the minimum requirements set forth in both
subsections (i) and (ii) of the paragraph above. Dollars spent with Fort Worth
M/WBE Companies shall also count toward Centreport's spending goals with
Fort Worth Companies. However, a deficiency in one subsection may not be
offset by Centreport's exceeding its commitment in another subsection. In
addition, if the total Construction Costs of the Required Improvements are less
than as provided in Section 1.1 of this Agreement, not only will Centreport be
ineligible to receive the twenty percent (20%) Abatement under this Section 2.1.1,
but an Event of Default, as defined and addressed in Section 4, shall also occur.
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2.1.2. Abatement Based on Employment Goals (Up to 37%).
2.1.2.1. Base Number of Jobs.
Centreport shall receive a thirty-seven percent (37%)
Abatement if during the previous calendar year, as part of Centreport's
obligations with respect to the use of the Land pursuant to Section 1.3, (i)
at least 217 Full-time Jobs are provided and filled on the Land ("Base
Number of Jobs"), (ii) 136 Full-time Jobs on the Land were held by
individuals residing within the corporate limits of the City (the "Base
Number of Fort Worth Jobs"), and(iii) at least 77 of all Full-time Jobs
on the Land are held by individuals residing within the Central City (the
"Base Number of Central City Jobs"). For purposes of this Agreement,
"Central City" shall be defined as those areas depicted in the map of
Exhibit "D", attached hereto and hereby made a part of this Agreement
for all purposes, as either the central city or a CDBG area, and "Full-time
Job" shall mean jobs filled for a period of not less than forty (40) hours
per week or another measurement used to define full-time employment by
Motheral in accordance with its then-current company-wide personnel
policies and regulations.
2.1.2.2. Reductions for Failure to Provide Base Number of Jobs.
If Motheral failed to provide and fill at least 217 Full-time
Jobs on the Land during the previous calendar year, Centreport shall not be
entitled to any of the thirty-seven percent (37%) Abatement under this
Section 2.1.2. In addition, (i) if Motheral failed to provide and fill the Base
Number of Fort Worth Jobs, the thirty-seven percent (37%) Abatement
under this Section 2.1.2 shall be reduced by 0.5% for up to the first ten (10)
Full-time Jobs not filled by individuals residing within the corporate limits
of the City and by 1% for any remaining Full-time Jobs not filled by
individuals residing within the corporate limits of the City, and (ii) if
Motheral failed to provide and fill the Base Number of Central City Jobs,
the thirty-seven percent (37%) Abatement under this Section 2.1.2 shall be
reduced by one-half percent(0.5%) for up to the first ten(10)Full-time Jobs
not filled by individuals residing within the Central City and by one percent
(1%) for any remaining Full-time Jobs not filled by individuals residing
within the Central City.
2.1.2.3. Calculation and Determination of Compliance.
Determination of compliance with the employment
requirements of this Section 2.1.2 shall be based on Motheral's employment
data on December 31 of each year during the Compliance Auditing Term,
as defined in Section 2.6. The maximum percentage of Abatement
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available to Centreport under this Section 2.1.2 is thirty-seven percent
(37%). The number of Full-time Jobs filled by individuals residing within
the Central City shall also count toward Motheral's goals with respect to
the provision of Full-time Jobs to individuals residing within the corporate
limits of the City. However, a deficiency in one subsection may not be
offset by Motheral's exceeding its commitment in another subsection. In
addition, the reductions provided in subsections (i) and (ii) of the last
sentence in Section 2.1.2.2 shall be cumulative as to the calculation of the
percentage of Abatement available under this Section 2.1.2.
2.1.3. Abatement Based on Additional Employment Goals for Fort Worth
Residents (Up to 10%).
If at least twenty-five percent (25%) of all Full-time Jobs provided and
filled on the Land in excess of the Base Number of Jobs are held by individuals
residing within the corporate limits of the City, regardless of the total number of
Full-time Jobs provided and filled on the Land by Motheral, then Centreport shall
receive an additional one-half percent (0.5%) Abatement, but in no event more
than an additional ten percent (10%), for each Full-time Job that is filled by an
individual residing within the corporate limits of the City in excess of the Base
Number of Fort Worth Jobs, as set forth in Section 2.1.2.1. Determination of
compliance with the employment requirements of this Section 2.1.2 shall be based
on Motheral's employment data on December 31 of each year during the
Compliance Auditing Term, as defined in Section 2.6.
2.1.4. Abatement Based on Additional Employment Goals for Central City
Residents (Up to 10%).
If at least twenty-five percent (25%) of all Full-time Jobs provided and
filled on the Land in excess of the Base Number of Jobs are held by individuals
residing within the corporate limits of the City, regardless of the total number of
Full-time Jobs provided and filled on the Land by Motheral, then Centreport shall
receive an additional one-half percent (0.5%) Abatement, but in no event more
than an additional ten percent (10%), for each Full-time Job that is filled by an
individual residing within the Central City in excess of the Base Number of
Central City Jobs, as set forth in Section 2.1.2.1. Determination of compliance
with the employment requirements of this Section 2.1.2 shall be based on
Motheral's employment data on December 31 of each year during the Compliance
Auditing Term, as defined in Section 2.6.
2.1.5. Abatement Based on Supply and Service Expenditures with
Fort Worth Companies (5%).
Centreport shall receive a five percent (5%) Abatement if during the
previous calendar year, as part of Centreport's obligations with respect to the use
of the Land pursuant to Section 1.3, (i) Motheral spent at least $400,000 in local
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discretionary funds for supplies and services directly in connection with
Motheral's operation of the Required Improvements and (ii) at least twenty-five
percent (25%) of all such expenditures, regardless of the total amount of such
expenditures, were provided by Fort Worth Companies. Determination of
compliance with the requirements of this Section 2.1.5 for local discretionary
spending for supply and service contracts shall be based on spending for an entire
calendar year.
2.1.6. Abatement Based on Supply and Service Expenditures with
Fort Worth M/WBE Companies (5%).
Centreport shall receive a five percent (5%) Abatement if during the
previous calendar year, as part of Centreport's obligations with respect to the use
of the Land pursuant to Section 1.3, (i) Motheral spent at least $400,000 in local
discretionary funds for supplies and services directly in connection with
Motheral's operation of the Required Improvements and (ii) at least fifteen
percent (15%) of all such expenditures, regardless of the total amount of such
expenditures, were provided by Fort Worth M/WBE Companies. Determination
of compliance with the requirements of this Section 2.1.6 for local discretionary
spending for supply and service contracts shall be based on spending for an entire
calendar year.
2.2. Effect of Failure to Meet Section 2.1 Goals.
Unless specifically identified as an Event of Default, the failure to meet any or all
of the numerical commitments, percentages or goals, as the case may be, for Construction
Costs, employment and supply and service vendor contract spending, as set forth in
Sections 2.1.1, 2.1.2, 2.1.3, 2.1.4, 2.1.5 and 2.1.6, shall result only in the reduction of the
percentage of Abatement available to Centreport for a given year or a failure to earn an
additional percentage of Abatement, and shall not constitute an Event of Default as defined
in Section 4.1 of this Agreement or trigger the cure periods and remedies set forth in that
Section 4.
2.3. Annual Payment to City by Motheral of 2003 Tax Liability.
Notwithstanding anything that may be interpreted to the contrary in this Agreement,
Centreport understands and agrees that Centreport will not be entitled to any Abatement
during any year of the Term unless Motheral has paid the City the sum of$63,207.00 for
such year, which amount equals Motheral's tax liability to the City for the 2003 tax year on
the Main Street Property (the "2003 Tag Amount") pursuant to and in accordance with
Section 2.3 of the Motheral Abatement. If in any given year Motheral fails to pay the 2003
Tax Amount in accordance with this Section 2.3, such failure shall not constitute an Event
of Default as defined in Section 4.1 of this Agreement, but instead shall only cause
Centreport to not receive any Abatement for the year in which payment of the 2003 Tax
Amount was due and that Centreport would otherwise have received in that year but for
such failure.
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2.4. Abatement Limitation.
Notwithstanding anything that may be interpreted to the contrary in this Agreement
(but nevertheless subject to Section 2.8 hereof), Centreport's Abatement in any given year
shall be based on the increase in the real property value of the Land since January 1, 2003,
up to a maximum of eighty-seven percent (87%) of $8,250,000. In other words, with
regard to the real property tax Abatement on the Land, in any year in which the value of the
Land exceeds the value of the Land as of January 1, 2003 plus (ii) $8,250,000, Centreport's
real property tax Abatement for that tax year shall be capped and calculated as if the
increase in the value of the Land since January 1, 2003 had only been $8,250,000. For
example, and as an example only, if the value of the Land in the sixth year of the
Compliance Auditing Term is $10,000,000 over the value of the Land as of January 1,
2003, Centreport would receive a maximum real property tax Abatement of eighty-seven
percent(87%) of$8,250,000 in the sixth year of the Term.
2.5. Protests Over Aooraisals or Assessments.
Centreport shall have the right to protest and contest any or all appraisals or
assessments of the Land.
2.6. Terms.
January 1 of the year following the year in which a final certificate of occupancy is
issued for the Required Improvements will constitute the start of auditing for compliance of
this Agreement ("Compliance Auditing Term"). Taxes will not be abated during the first
year of the Compliance Auditing Term. The term of the Abatement benefit (the "Term")
shall begin on January 1 of the year following the year that the Compliance Auditing Term
begins (the "Abatement Beginning Date"). Unless sooner terminated as herein provided,
the Term and the Compliance Auditing Term shall end on the December 31 st immediately
preceding their respective tenth (10th) anniversaries. Information for the last Compliance
Auditing Term shall be submitted as indicated in Section 3.3.
2.7. Abatement Aoolication Fee.
The City acknowledges receipt from Motheral of the required Application fee of
one percent (1%) of Project's estimated cost, not to exceed $15,000. If Centreport
diligently begins or causes to begin construction of the Required Improvements on the
Land within one (1) year from the date of the Application (whether or not Centreport
actually receives any Abatement), this Application fee shall be creditable in full to the
benefit of Centreport against any permit, impact, inspection or other lawful fee required by
the City in connection with the Project, and any remaining amounts shall be refunded to
Motheral.
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2.8. Coordination with Motheral Abatement.
It is the intention of the parties that the Abatement granted hereunder plus the
Motheral Abatement shall equal the value of the abatement that would be available to
Motheral if Motheral were the owner of both the Land and the Required Improvements.
Any reference in this Section 2 to the "value of the Land" or any similar reference shall
include the value of the Required Improvements and shall exclude the value of Motheral's
leasehold interest as determined by the appraisal district that has jurisdiction over the Land.
In recognition that, under the terms of the Lease, Centreport will construct or cause to be
constructed at its initial expense the Required Improvements for use and occupancy by
Motheral, and that the rent under the Lease is calculated such that Motheral will pay for the
costs of construction (as well as other costs) over the term of the Lease, the parties agree
that any provision in this Agreement by which either Centreport or Motheral covenants to
perform or cause to be performed, or to require the other to perform or cause to be
performed, a particular act or to comply with a particular condition shall be deemed to be
satisfied so long as the particular act is performed and the particular condition is met,
regardless of whether it is the Centreport or Motheral who actually performs or causes to be
performed the act or who actually complies or causes compliance with the condition.
2.9. Central City Employment Recruiting and Public Transportation
Commitments.
Throughout the Term and in accordance with the letter attached hereto as Exhibit
"E", which is hereby made a part of this Agreement for all purposes, Centreport shall
direct Motheral to operate continuously a recruitment program with all high schools in the
City in order to attract individuals residing in the Central City for placement by Motheral in
Full-time Jobs on the Land. In addition, throughout the Term and in accordance with the
letter attached hereto as Exhibit "E", Centreport shall direct Motheral to offer continuously
to all employees of Motheral on the Land free Rail Passes issued by the Fort Worth
Transportation Authority (or similar free public transit passes that will enable individuals
residing in the Central City holding Full-time Jobs on the Land to commute readily to and
from the Land). Notwithstanding anything to the contrary in this Agreement, if Motheral
fails to comply with both of the commitments set forth in this Section 2.9 in any year or
portion of a year of the Term, Centreport will not be entitled to receive any Abatement
under this Agreement in the following year, but such failure by Motheral shall not
constitute an Event of Default as defined in Section 4.1 of this Agreement.
3. RECORDS.AUDITS h L EVALUATION OF PROJECT.
3.1. Inspection of Property.
Between the execution date of this Agreement and the last day of the Term, at any
time during normal office hours throughout the Term and the year following the Term and
following reasonable notice to Centreport, subject to the terms of the Lease and the
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Motheral Abatement, the City shall have and Centreport shall cause to be provided access
to the Land and any improvements thereon in order for the City to inspect the Land and
evaluate the Required Improvements to ensure compliance with the terms and conditions of
this Agreement. Centreport and Motheral shall cooperate fully with the City during any
such inspection and/or evaluation. Notwithstanding the foregoing, any representative of
the City must be escorted by Motheral's security personnel and no such inspection shall
unreasonably interfere with Motheral's operations
3.2. Audits.
The City shall have the right to audit the financial and business records of
Centreport that relate to the construction of the Required Improvements and the terms
and conditions set forth in Section 2.1.1 of this Agreement (collectively, the "Records")
at any time during the Compliance Auditing Term in order to determine compliance with
this Agreement -and to calculate the correct percentage of Abatement available to
Centreport, with the understanding that at such time as the City makes a decision and
ruling as to whether Centreport is entitled to the twenty percent (20%) Abatement
available pursuant to Section 2.1.1 (but subject to Sections 2.3 and 2.9 hereof),
Centreport will not be required to provide any additional information or documentation
with respect to such Abatement. Centreport shall make all Records available to the City
on the Land or at another location in the City following reasonable advance notice by the
City and shall otherwise cooperate fully with the City during any audit. Centreport shall
also direct Motheral to make its financial and business records that relate to the Lease, the
Project and Abatement terms and conditions hereunder available to the City on the Land
or at another location in the City following audit by the City following reasonable
advance notice by the City at any time during the Compliance Auditing Term. The City
does not intend to audit Records pertaining to a given year of the Compliance Auditing
Term more than once unless additional information is brought to the City's attention
subsequently or the City reasonably questions the result of an audit performed hereunder.
3.3. Provision of Information.
On or before February 1 following the end of each year during the Compliance
Auditing Term, Centreport shall direct Motheral to provide the City with information and
documentation for the previous year that addresses Motheral's compliance with each of the
terms and conditions of this Agreement for that calendar year that are related to Motheral's
operations on the Land and with respect to the Project. This information shall include, but
not be limited to, the following:
3.3.1. The total number of employees holding Full-time Jobs and who worked in
the Required Improvements, the number of such employees who resided within the
corporate limits of the City and the number of such employees who resided in
Central City areas, all as of December 31 of the preceding calendar year, together
with reasonable documentation regarding the residency of such employees, and
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3.3.2. The number and dollar amounts of all construction contracts and
subcontracts awarded on the Project, specifying the number and dollar amounts
spent with contractors that are Fort Worth Companies, as defined in Exhibit "A",
and with contractors that are Fort Worth M/WBE Companies, as defined in Section
2.1.1; and
3.3.3. The gross dollars and supporting details showing the amounts spent by
Motheral on local discretionary supply and service contracts, specifying the number
and dollar amounts spent with vendors that are Fort Worth Companies, as defined
in Exhibit "A", and with vendors that are Fort Worth MAWBE Companies, as
defined in Section 2.1.1.
Centreport shall direct Motheral to supply any additional information requested by
the City that is pertinent to the City's evaluation of compliance with each of the terms and
conditions of this Agreement. Failure to provide all information required by this Section
3.3 shall constitute an Event of Default, as defined in Section 4.1. All of the foregoing
shall be subject to applicable federal and state privacy laws and regulations.
3.4. Determination of Compliance.
On or before August 1 of each year during the Compliance Auditing Term, the City
shall make a decision and rule on the actual annual percentage of Abatement available to
Centreport for the following year of the Term based on the City's audit of the Records, any
records of Motheral reviewed and/or audited pursuant to the Motheral Abatement and any
inspections of the Land and/or the Required Improvements. The City shall notify
Centreport in writing of such decision and ruling. If Centreport reasonably disagrees with
the City's decision and ruling, Centreport shall notify the City in writing within fourteen
(14) calendar days of receipt. In this event, Centreport, at Centreport's sole cost and
expense, may request an independent third party who is reasonably acceptable to the City
to verify the findings of the City within not more than thirty (30) calendar days following
receipt of Centreport's notice to the City, and if any discrepancies are found, the City,
Centreport, Motheral and the independent third party shall cooperate with one another to
resolve the discrepancy. If resolution cannot be achieved, the matter may be taken to the
City Council for consideration in an open public meeting at which both City staff and
Centreport's and Motheral's representatives will be given an opportunity to comment. The
ruling and determination by the City Council shall be final.
The actual percentage of the Abatement granted for a given year of the Term is
therefore based upon Centreport's and Motheral's compliance with the terms and
conditions of this Agreement during the previous year of the Compliance Auditing Term.
Notwithstanding the foregoing, if the City makes a decision and ruling that Centreport is
entitled to the twenty percent (20%) Abatement available pursuant to Section 2.1.1,
Centreport shall be entitled to the benefits of such twenty percent (20%) Abatement each
year of the Term without the necessity of providing any additional information and
documentation or obtaining any additional decision or ruling from the City.
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4. EVENTS OF DEFAULT.
4.1. Defined.
A default shall exist under this Agreement if(i) any of the covenants set forth in
any portion or all of Sections 1.1, 1.2 and 1.3 of this Agreement are not met; or (ii) the
Lease expires or is terminated for any reason; or (iii) the Lease is amended, or Centreport
and Motheral otherwise agree, so that Motheral will not be required to pay Centreport's
real property taxes on the Land; or(iv) ad valorem real property taxes, excluding any taxes
due on the leasehold interest in the Land granted under the Lease, become delinquent and
Centreport does not timely and properly follow the legal procedures for protest and/or
contest of any such ad valorem real property taxes; or (v) subject to Sections 2.2, 2.3 and
2.9 of this Agreement, breaches of any of the other terms or conditions of this Agreement
(collectively, each an "Event of Default").
4.2. Notice to Cure.
Subject to Section 5, if the City determines that an Event of Default has occurred,
the City shall provide a written notice to Centreport and Motheral that describes the nature
of the Event of Default. If the Event of Default is on account of the expiration or
termination of the Lease, or on account of an amendment of the Lease, or other agreement
between Centreport and Motheral, pursuant to which Motheral will not be required to pay
Centreport's real property taxes on the Land, the City will have the right to terminate this
Agreement immediately. For any other Event of Default, Centreport shall have ninety(90)
calendar days from the date of receipt of this written notice to fully cure or have cured the
Event of Default. The City agrees to accept cure by Motheral of any Event of Default
under this Agreement. If Centreport reasonably believes that Centreport will require
additional time to cure the Event of Default, Centreport shall promptly notify the City in
writing, in which case (i) after advising the City Council in an open meeting of
Centreport's efforts and intent to cure, Centreport shall have one hundred eighty (180)
calendar days from the original date of receipt of the written notice, or (ii) if Centreport
reasonably believes that Centreport will require more than one hundred eighty (180) days
to cure the Event of Default, after advising the City Council in an open meeting of
Centreport's efforts and intent to cure, such additional time, if any, as may be offered by
the City Council in its sole discretion.
4.3. Termination for Event of Default and Payment of Liquidated Damnes.
If an Event of Default has not been cured within the time frame specifically allowed
under Section 4.2, the City shall have the right to terminate this Agreement immediately.
Centreport and Motheral acknowledge and agree that an uncured Event of Default that
exists in any year in which taxes are abated under this Agreement will (i) harm the City's
economic development and redevelopment efforts on the Land and in the vicinity of the
Land; (ii) require unplanned and expensive additional administrative oversight and
involvement by the City; and (iii) otherwise harm the City, and Centreport and Motheral
agree that the amounts of actual damages therefrom are speculative in nature and will be
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1.
Tax Abatement Agreement between 1
.o
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DAL:480075.1
difficult or impossible to ascertain. Therefore, upon termination of this Agreement for any
uncured Event of Default, whether caused by Centreport or by Motheral, or by both
Centreport and Motheral, Motheral hereby agrees to pay the City, as liquidated damages,
all taxes that were abated in accordance with this Agreement for each year that such Event
of Default existed and which otherwise would have been paid to the City in the absence of
this Agreement. The City, Centreport and Motheral agree that this amount is a reasonable
approximation of actual damages that the City will incur as a result of an uncured Event of
Default and that this Section 4.3 is intended to provide the City with compensation for
actual damages and is not a penalty. This amount may be recovered by the City through
adjustments made to any ad valorem property tax appraisal for any taxable real or personal
property located in the City and owned by Motheral by the appraisal district that has
jurisdiction over any such property. Otherwise, this amount shall be due, owing and paid
to the City by Motheral within sixty(60) days following the effective date of termination of
this Agreement. In the event that all or any portion of this amount is not paid to the City
within sixty (60) days following the effective date of termination of this Agreement,
Motheral shall also be liable for all penalties and interest on any outstanding amount at the
statutory rate for delinquent taxes, as determined by the Code at the time of the payment of
such penalties and interest (currently, Section 33.01 of the Code). In no event shall
Centreport be responsible for any damages, penalties or interest in connection with any
default under this Agreement. If this Agreement is terminated on account of any failure to
construct the Required Improvements in accordance with Sections 1.1 and/or 1.2 of this
Agreement, no liquidated damages will be owed to the City because taxes will not yet have
been abated hereunder.
4.4. Termination at Will.
If the City and Centreport mutually determine that the development or use of the
Land or the anticipated Required Improvements are no longer appropriate or feasible, or
that a higher or better use is preferable, the City and Centreport may terminate this
Agreement in a written format that is signed by both parties. In this event, (i) if the Term
has commenced, the Term shall expire as of the effective date of the termination of this
Agreement, (ii) there shall be no recapture of any taxes previously abated, and (iii) neither
party shall have any further rights or obligations hereunder.
5. EFFECT OF SALE OF LAND AND/OR REQUIRED IMPROVEMENTS.
So long as the Lease remains in effect, Centreport may assign this Agreement to
subsequent owners of the Land. Except as set forth in the foregoing sentence, Abatement granted
hereunder shall vest only in Centreport and cannot be assigned to a new owner of all or any portion
of the leasehold interest in the Land and/or Required Improvements and/or tangible personal
property on the Land subject to the leasehold interest without the prior consent of the City Council,
which consent shall not be unreasonably withheld provided that (i) the City Council finds that the
proposed assignee is financially capable of meeting the terms and conditions of this Agreement
and (ii) the proposed assignee agrees in writing to assume all terms and conditions of Centreport
under this Agreement. Centreport may not otherwise assign, lease or convey any of its rights under
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"Tax Abatement Agreement between
City of Fort Worth,Centreport Properties,Inc. and Motheral Printing Company
DAL:480075.1 u 1 1,x,75 4p [IMI7
this Agreement. Any attempted assignment without the City Council's prior consent shall
constitute grounds for termination of this Agreement and the Abatement granted hereunder
following ten(10) calendar days of receipt of written notice from the City to Centreport.
6. NOTICES.
All written notices called for or required by this Agreement shall be addressed to the
following, or such other party or address as either party designates in writing, by certified mail,
postage prepaid, or by hand delivery:
City: Centreport:
City of Fort Worth Centreport Properties, Inc.
Attn: City Manager c/o: Koll Development Company
1000 Throckmorton Attn: William G. Guthrey
Fort Worth, TX 76102 8411 Preston Road, Suite 700
Dallas, TX 75225
with copies to: with copies to:
the City Attorney and Centreport Properties, Inc.
Economic/Community Development c/o AEW Capital Management, L.P.
Director at the same address Attn: Mark Mollica
World Trade Center East
Two Seaport Lane
Boston, MA 02210-2021
and
Andrews &Kurth, L.L.P.
Attn: Jonetta Brooks
1717 Main Street, Suite 3700
Dallas, TX 75201
Notices by the City to Motheral shall be sent in accordance with the provisions of the Motheral
Abatement.
7. MISCELLANEOUS.
7.1. Bonds.
The Required Improvements will not be financed by tax increment bonds. This
Agreement is subject to rights of holders of outstanding bonds of the City.
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Tax Abatement Agreement between
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DAL:480075.1
7.2. Conflicts of Interest.
Neither the Land nor any of the Required Improvements covered by this Agreement
are owned or leased by any member of the City Council, any member of the City Plan or
Zoning Commission or any member of the governing body of any taxing units in the Zone.
7.3. Conflicts Between Documents.
In the event of any conflict between the City's zoning ordinances, or other City
ordinances or regulations, and this Agreement, such ordinances or regulations shall control.
In the event of any conflict between the body of this Agreement and Exhibit "C" of the
Motheral Abatement, the body of this Agreement shall control.
7.4. Future Application.
A portion or all of the Land and/or Required Improvements may be eligible for
complete or partial exemption from ad valorem taxes as a result of existing law or future
legislation. This Agreement shall not be construed as evidence that such exemptions do not
apply to the Land and/or Required Improvements.
7.5. City Council Authorization.
This Agreement was authorized by the City Council through approval Mayor and
Council Communication No. G-14158 on November 18, 2003, which, among other things,
authorized the City Manager to execute this Agreement on behalf of the City.
7.6. Estoppel Certificate.
Any party hereto may request an estoppel certificate from another party hereto so
long as the certificate is requested in connection with a bona fide business purpose. The
certificate, which if requested will be addressed to the Centreport (or at Centreport's
request, a named third party), shall include, but not necessarily be limited to, statements
that this Agreement is in full force and effect without default (or if an Event of Default
exists, the nature of the Event of Default and curative action taken and/or necessary to
effect a cure), the remaining term of this Agreement, the levels and remaining term of the
Abatement in effect, and such other matters reasonably requested by the party or parties to
receive the certificates.
7.7. Standing.
Centreport shall be deemed a proper and necessary party in any litigation
questioning or challenging the validity of this Agreement or any of the underlying laws,
ordinances, resolutions or City Council actions authorizing this Agreement, and Centreport
shall be entitled to intervene in any such litigation. Motheral agrees to indemnify, defend
and hold Centreport harmless from and against any and all costs incurred in connection
with such litigation, including without limitation, reasonable attorney fees and court costs.
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Tax Abatement Agreement between
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DAL:480075.1
7.8. Venue and Jurisdiction.
This Agreement shall be construed in accordance with the laws of the State of
Texas and applicable ordinances, rules, regulations or policies of the City. Venue for any
action under this Agreement shall lie in the State District Court of Tarrant County, Texas.
This Agreement is performable in Tarrant County, Texas.
7.9. Recordation.
A certified copy of this Agreement in recordable form shall be recorded in the Deed
Records of Tarrant County, Texas.
7.10. Severability.
If any provision of this Agreement is held to be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not in any way
be affected or impaired.
7.11. Headings Not Controlling.
Headings and titles used in this Agreement are for reference purposes only and
shall not be deemed a part of this Agreement.
7.12. Entirety of Agreement.
This Agreement, including any exhibits attached hereto and any documents
incorporated herein by reference, contains the entire understanding and agreement
between the City and Centreport, their assigns and successors in interest, as to the matters
contained herein. Any prior or contemporaneous oral or written agreement is hereby
declared null and void to the extent in conflict with any provision of this Agreement.
This Agreement shall not be amended unless executed in writing by both parties and
approved by the City Council. This Agreement may be executed in multiple
counterparts, each of which shall be considered an original, but all of which shall
constitute one instrument.
7.13. Amendment.
This Agreement may be amended only by the written agreement of the City and
Centreport.
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Tax Abatement Agreement between
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DAL:480075.1
CITY OF FORT WORTH: APPROVED AS TO FORM AND LEGALITY:
By: g- By:_ fi��' -
Charles Boswell Peter Vaky
Assistant City Manager Assistant City Attorney
Date: L,2, M & C: G-14158 11-18-03
ATTES :
By: _
City Secre
CENT ORT PROPERTIES, INC.,
a Texas co oration:
By:_
Xame:
Title:
Date:
ATTEST:
By:
Pae 17
Page
Tax Abatement Agreement between 11
City of Fort Worth Centreport Properties,Inc.and Motheral Printing Company 7
� Leo
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed
as of the later date below:
CIT' F FORT WORTH: APPROVED AS TO ORM AND LEGALITY:
By:_ By:
Reid Rect r Peter Vaky
Assistant 'ty Manager Assistant City Attorney
Date: M& C: G-14158 11-18-03
ATTEST-
By:—
City
TTEST:By:_City Secretary
CENTREPORT PROPERTIES, INC.,
a Texas corporation:
By: I
Name: Daniel J.Bradley
Title: Vice President
Date:
ATTEST:
By:_
Page 17
Tax Abatement Agreement between
City of Fort Worth,Centreport Properties,Inc. and Motheral Printing Company
DAL:480075.1
F.L. MOTHERAL CO., INC.,
a Texas corporation d/b/a
MOTHERAL PRINTING COMPANY:
By:
YzrS4otheral
President
Date:
ATTEST:
Page 18
Tax Abatement Agreement between
City of Fort Worth,Centreport Properties,Inc.and Motheral Printing Company
STATE OF TEXAS §
COUNTY OF TARRANT §
BEFORE ME, the undersigned authority, on this day personally appeared Charles
Boswell, Assistant City Manager of the CITY OF FORT WORTH, a municipal corporation
organized under the laws of the State of Texas, known to me to be the person and officer whose
name is subscribed to the foregoing instrument, and acknowledged to me that the same was the act
of the CITY OF FORT WORTH, that he was duly authorized to perform the same by appropriate
resolution of the City Council of the City of Fort Worth and that he executed the same as the act of
the CITY OF FORT WORTH for the purposes and consideration therein expressed and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this �`''�day of
2003.
l�`Y P e, ROSdjL BARNES
Notary Public in and for =°r' N,*% (VOTARY PUBLIC
the State of Texas i,� `
*;
/f' State of Texas
1 'FOFxP Comm Exp, 03-31-2005
Notary's Printed Name
STATE OF §
COUNTY OFA" §
BEFORE ME, the undersigned authority, on this day personally appeared
int &4 d&4 --of CENTREPORT PROPERTIES, INC., known to me to
be the person Anse name is subscribed to the foregoing instrument, and acknowledged to me that
he executed the same for the purposes and consideration therein expressed, in the capacity therein
stated and as the act and deed of CENTREPORT PROEPRTIES, INC.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this ?,9 day
of Aga,1,4e" A di/ , 2003.
yr--
Notary Public in and for
the State of
Notary's Printed Name
.�► L. MARTIN
Notary Public
My Commission Expires
'.3,2007
DAL:480075.1
STATE OF lX §
COUNTY OF7d— §
BEFORE ME, the undersigned authority, on this day personally appeared Jim Motheral,
President of F.L. MOTHERAL CO., INC. d/b/a MOTHERAL PRINTING COMPANY,
known to me to be the person whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and consideration therein
expressed, in the capacity therein stated and as the act and deed of F.L. MOTHERAL CO., INC.
d/b/a MOTHERAL PRINTING COMPANY
GIVEN UNDER MY HAND AND SEAL OF OFFICE this ' day
of ) 2003.�-/� /,� , 2003.
Notary Publi in and for ��'�r'►"�-,, STACY BRASHEARS
���= Notary Public,State of Texas
the State of .CGI S i = My Commission Expires
cy�;Foi E`` May 16,2005
Notary's PrintodName
V V v v 1c L IU.'�i
VU/VJ/YJ Aur, 4.1.up rAA o1/*110400 M%4 R KIK L111 l'11"1VRytiT �J UU3
-E)MMIT "A"
CITY OF FORT WORTH
TAX ABATEMENT POLICY
I. GENERAL PURPOSE AND OBJECTIVES
Certain types of investment result in the creation of new jobs, new income and provide for positive
economic growth and inner-city economic stabilization Which is beneficial to the City as a whole. Tho
City of Fort Worth is committed to the promotion of high quality development in all parts of the City and
improvement in the quality of life for its citizens.
The City of Fort Worth will, on a'case-by-case basis, givo consideration to the granting of propocty tax
incentives to eligible residential, commercial, and industrial development projects. It is the policy of the
City of Fort Worth that consideration of eligible projects will be provided in accordance with the
guidelines and criteria outlined in this document. Texas law authorizes the City of Fort Worth to grant tax
abatement on the value added to a particular property by a specific development project which meets the
economic goals and objectives of the City, and the requirements of the statute (Vemon's Tax Code Ann.
Section 312.001, et. seq.).
As mandated by state law, this policy applies to the owners of real property. It is not the policy of
the City of Fort Worth to grant property tai abatement to any development project for which a
building permit has been previously issued by the City's Department of Development. Nothing in
the policy sbiall be construed as an obligation by the City of Fort Wortb to approve any tax
abatement application.
Although 211 applications which meet the eligibility cxitesia(Section 1E.) of this policy statrmtat will be
reviewed, it is the objective of the City of Port Worth to encourage applications from projects that:
(a) are located in enterprise zones or other designated target areas; or
(b) result in a development with little or no additional cost to the City; or
(c) result in 1,000 or more neva✓jobs,with a commitment to hire Fort Worth and inner city residents.
II. DEFINITIONS
``Abatement" means the full or partial exemption from ad valorem taxes on eligible properties for a period
of up to ten years and an amount of up to 100% of the increase in appraised value (as reflected on the
certified tax roll of the appropriate county appraisal district) resulting from improvements begun after the
execution of the tax abatement agreement. Eligible properties must be located in a reinvestment zone.
"Reinvestment Zone" is an area designated as such by the City of Fort Worth or State of Texas in
accordance with the Texas Property Redevelopment and Tau: Abatement Act, Sections 312.001 through
312.209 of the Tax Code.
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EX—MIT "A'°
"Residential Development Project" is a development project which proposes to construct or renovate
multi-family residential living units on property that is (or meets the requirements to be) zoned multi-
family as defined by the City of Fort 'Worth Zoning Ordinance.
"Fort Worth Company" is a business which has a principal office located within the city lirnits of Fort
Worth.
"Minority or Woman-owned Business Enterprise (MWBE)" is a minority or woman-owned business that
has received certification as either a MBE or WBE by either the North Central Texas Regional
Certification Agency (NCTRCA) or the Texas Department of Transportation (TxDOT), Highway
Division.
"Capital Investment" includes only real property improvements such, as new facilities and structures, site
improvements, facility expansion, and facility modernization. Capital investment does NOT include land
acquisition costs and/or any existing improvements, or personal property(such as machinery,equipment,
and/or supplies and inventory).
"Facility Expansion" is a new permanent real property improvement such as a building or buildings
constructed to provide additional square footage to accommodate increased space requirernents of a Fort
Worth company.
"Facility Modernization" is anew permanent real property improvement under taken to provide increased
productivity for a new or existing Fort Worth company.
"Supply and Service Expenses" are discretionary expenses incurred during the normal Maintenance and
operation activities of a business.
III. ELIGIBILITY CRITERIA
A. RESIDENTIAL PROJECT ELIGIBILITY
A residential development project is eligible for property tax abaterneat if:
1. The project is located in any of the following census tracts: 1002.02, 1010, 1011,
1016, 1017, 1018, 1019 (partial), 1025, 1028 (partial), 1029, 1030, 1031, 1033,
10">5, 1036.01, 1037.01, 1038, 1040, 1041 (partied) (see Map "A'J; AND
2. a. The project will construct or renovate no less than 50 residential living units of
which no less than 20"/o shall be affordable(as defined by the U.S.Department
of Housing and Urban Development) to persons with incomes at or below
80%of median family income; OR
b. The project has a minimum capital investment of SS million(excluding
acquisition costs for land and any existing improvements).
B. COMIWEIRCIAUINDUSTRIAL ELIGIBILITY
1. New Projects
In order to be eligible for property tax abatement, a new commercial/industrial
development project must satisfy one of the following three criteria:
a_ Upon completion will have a minimum capital investment of$10 million
and commits to hire an agreed upon percentage of residents from an eligible
iriacr city census tract(as identified on Map "A") for full time employment_;
OR
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EXSIBIT "A"
b. Is located in. the "inner city" (as identified on Map "A") or property
immediately adjacent to the major thoroughfares which serve as boundaries
to any of these inner city census tracts and commits to hire an agreed upon
percentage of residents from an eligible inner city census tract (as identified
on Map "A")for full time employment; OR
c. Is located outside of the "inner city", has a minimum capital investment of
less than $10 million, and commits to hire an agreed upon percentage of
residents from an eligible inner city census tract (as identified on Niap "A")
:for full time employment.
2. Existing Busyness Expansion and/or Modernization
In order to be eligible for property tax abatement, a facility expansion and/or
modernization by an existing cor mercial/industrial business must:
a. Upon completion have a minimum capital investment of$10 rni.lhon; OR
b. Result in increased employment for which the business commits to hire and
retain an agreed upon perccutagc of residents from an eligible inner city
census tract(as identified on Map "A") for new, full time positions; AND
C. Have a minimum capital investment of (1) $500,000, OR (2) an amount
equal to or greater than 25% of the appraised value, as certified by the
appropriate appraisal district, of real property improvements on the property
for the year in which the abatement is requested..
C. PROOF TESTS
1. Building Permits
No tax abatement will be granted to any development project which has applied for
or received a building permit from the City's Department of Development.
2. Evidence of Need for Tax Abatement
The applicant must provide evidence to substantiate and justify the to abatement
Tequest including (but not limited to)an analysis demonstrating the tax abatement is
necessary for the financial viability of the project.
IV. ABATEMENT GUIDELINES
The Tax abatement agreement must provide that tht applicant:
(1) Hire Fort Worth residents for an agreed upon percentage (at least 25%) of new full time jobs to
be created and make a good faith effort to hire 100% Fort Worth residents for all new jobs
created as a result of the abatement,
(2) Commit to hire an agreed upon percentage of Fort Worth residents from an eligible inner city
census tract (as identified on Map "A')for all new jobs created as a result of the project. The
agreed upon percentage shall be determined by negotiation.
(3) Utilize Fort Worth companies for as agreed upon percentage of the total costs for construction
and Supply and Service Contracts, and
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EXMIT "A"
(4) Utilize Minority and Woman-owned Business Enterprises (MWBEs) for an agreed upon
percentage of the total oasts for construction and supply and service contracts in the manner
provided is the City of Fort Worth's Minority and Women Business Enterprise ordinance.
In addition to the above,the abatement must comply with the following guidelines:
A. State law prohibits abatement of taxes levied on inventory, supplies or the existing tax
base. City policy is not to abate taxes on personal property located within Fort Worth prior
to the date of the tax abatement agreement
B. Unless otherwise specified in the agreement, the amount of the taxes to be abated shall in
no event exceed the amount of the capital investment (as specified it the application)
multiplied by the City's tax rate in effect for the year in which the calculation is made,
C. In certain cases, the City may consider a tax abatement application from the owner of real
property who serves as a landlord or lessor for a development project which meets the
eligibility criteria of this section.
D. The City may consider an application from the owner or lessee of read property requesting ,
abatement of real and or personal property owned or leased by a certificated air carver on
the condition That the certificated air carrier make specific real property improvements or
lease real property improvements for a term of 10 years or more.
E. For an eligible development project to be considered for tax abatement, the "Application
for Tax Abatement" forth must be completed and submitted to the Office of Eeonornic
Development.
F. An application fee must accompany the application. The fee is calculated at the lesser of
(i) 1% of the project capital investment, or(ii)$15,000,
if construction on the project is begun on the site specified in the application within a one
(1) year period from the application submittal date (with or without a tax abatement), this
fee shall be credited to any permit, impact, inspection or any other lawful fee required by
the City of Fort Worth. If the project is not cona'tructed on the site specified in the
application or if construction takes place at the specified site more than one (1) year after
the application submittal date, the application fee shall not be refutided or otherwise
credited.
G. If requested, the applicant must provide evidence that there are no delinquent property
takes due on the property on which the developa=t project is to occur.
H. The tax abatement agreement shall limit the tenses of property consistent with the general
purpose of encouraging development or redevelopment of the zone during the period that
property tax abatements are in effect.
1. Tax abatement may only be granted for projects located in a reinvestment or enterprise
zone. For eligible projects not currently located in such a zone, the City Council may
choose to so designate the applicant's property in order to allow for a tax abatement.
1. The ownem of all projects receiving tax abatement shall properly maintain the property to
assure the long term Economic viability of the project.
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WJ UU(
FIXMI'T "A"
V. PROCEDURAL STEPS
Each request for property tax abatement shall be processed according to the following procedural
guidelines.
A. Application Submission:
Provided that the project meets the criteria detailed in Section IIT of this policy, the
AppUcant muse complete and submit a City of Fort Worth "Application For Tax
.Abatement" forth (with required attachments) and pay tbc appropriate application fee,
13. Application Review and Evaluation:
The Economic Development Office will review the application for accuracy and
completeness. Once complete,the application will be evaluated based on-
1.
n:1. Types of new jobs created, including respective wage rates, and employee benefits
packages such as health insurance, day care provisions, retirement package(s),
transportation assistance, and any other,
2. Percent of new jobs committed to Fort Worth residents.
3, Percent of new jobs committed to Fort Worth"Inner City"residents.
4. Percent of construction contracts committed to:
a, Fort Worth based firms, and
b. Minority and Woman-owned Business Enterprises (MWBEs),
5- Percent of supply and service contract expenses committed to:
a. Fort Worth based firms, and
b. Minority and Woman-owned Business Entegnises (MWBEs).
6. The project's increase in the value of the tax base.
7. Costs to the City (such as infrastructure participation, etc_).
8. Other items which may be negotiated by the City and the applicant.
Based upon the outcome of the evaluation,the Economic Development Office may present
the application to the City Council's Economic Development Committee.
C. Consideration by Council Committee
Should the Economic Development Office present the application to the City Council's
Economic Development Committee, the Committee will consider the application at an
open meeting. The Committee may:
(1) Approve the application, Staff will then incorporate the application into a tax
abatement agreement which will be stmt to the City Council with the Committee's
recornnwndation to approve the agreement; or
(2) Request modifications to the application. Economic Development staff will discuss
the suggested modifications with the applicant nod then, if. the requested
modifications are made, resubmit the mndihed application to the Committee for
consideration; or
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EXHIBIT "A,o
(3) Deny the application. The applicant may appeal the Committee's finding by
requesting the City Council: (a) disregard the Committee's finding and (b) instruct
city staff to incorporate the application into a tax abatement agreement for future
consideration by the City Council.
D. Consideration by the City Council
The City Council retains sole authority to approve or deay any tax abatement agreement
and is under no obligation to approve any tax abatement application or tax abatement
agreement. The City of Fort 'Worth is.under no obligation to provide tax abatement in any
amount or value to any applicant.
L. Effective Dare for Approved Agreements
All tax abatements approved by the City Council will become effective on January I of the
year following the year in which a Certificate of Occupancy (CO) is issued for the
qualifying development project (unless otherwise specified in the rax abatement
agreement). Unless otherwise specified in the agtxmerit, tares levied during the
construction of the project shall be due and payable.
VI. RECAPTURE
If the terms of the tax abatement agreement are not met, the City Council has the right to cancel or
amend the abatement agreement. In the event of cancellation, the recapture of abated taxes shall
be limited to the year(s) in which the default occurred or continued.
VII, INSPECTION AND FINANCIAL VERIFICATION
The terms of the agreement shall include the City of Fort Worth's right to: (1) review and verify
the applicant's financial statements in each year during the life of the agreement prior to granting a
tax abatement in any given year, (2) conduct an on site inspection of the project in each year
during the life of the abatement to verify compliance with the terms of the tax abatement
agreement.
VIII. EVALUATION
Upon completion of construction of the facilities,the City shall no less than annually evaluate each
project receiving abatement to insure compliance with the terms of the agreement. Any incidents
of noncompliance will be reported to all affected taring units.
On or before February V of every year during the life of the agreement, any individual or
entity receiving a tax abatement from the City of Fort Worth shall provide information and
documentation which details the property owner's compliance with the terms of the
respective agreement and shall certify that the owner- is in compliance with each applicable
term of the agreement. Failure to report this information avid to provide the required
certification by the above deadline shall result iva any taxes abated in the prior year being
due and payable.
`SWIC11�b�J
Page 6 of 7
-Wi v� ��� ii• �a rnn at�arteraa t'un'1' wuK'1'ti c l'1'Y A1'1'UKNBY 19000
EXMIT "A"
IX. EFFECT OF SALE, ASSIGNMENT OR LEASE OF PROPERTY
No tax abatement rights may be sold, assigned or leased unless otherwise speczed in the tax
abatement agreement. Any sale, assignment or lease of the property which is not permitted in.the
taX abatement agreement results in cancellation of the agreement and recapture of any taxes abated
after the date on wbiob an unspecified assiproent occurred.
'' ✓
Ngc 7 or 7
EXHIBIT 8
DESCRIPTION OF THE LAND
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EXHIBIT "C"
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") is entered into as of the 51h day of February, 2003, between
CENTREPORT PROPERTIES, INC. ("Landlord"), whose address is c/o Koll Development Company, 8411 Preston Road,
Suite 700, Dallas, Texas 75225, Attention: Mr. William G. Guthrey, and F. L. MOTHERAL COMPANY_a Texas corporation
doing business as Motheral Printing Company("Tenant"),whose address until the Commencement Date(as hereinafter defined)
is 510 S.Main Street,Fort Worth,Texas,and whose address thereafter will be that of the Premises(as hereinafter defined).
WITNESSETH:
I. Definitions and Certain Basic Provisions. The following capitalized terms shall have the meaning indicated
for purposes of this Lease:
(a) "Buildine": an approximately 150,000 square foot building of Net Rentable Area(as hereinafter
defined) to be built at the "CentrePort Business Park" in the City of Fort Worth, Tarrant County, Texas (the
"Complex"),and crosshatched and shaded on Exhibit A attached hereto and incorporated herein for all purposes, the
land ("Land") on which such Building is located being described or shown on Exhibit B attached hereto and
incorporated herein for all purposes.
(b) "Premises": the leased premises located in and constituting the entire Net Rentable Area in the
Building,and the parking areas,facilities,structures,landscaping,drives and other improvements located on the Land.
(c) "Commencement Date": The earlier of: (i)the date on which Tenant occupies any portion of the
Premises(other than for Preparation Work)and begins conducting business therein;or(ii)October 1,2003, subject to
extension as set forth in Section 3.
(d) "Lease Term": Commencing on the Commencement Date and continuing for fifteen (15) years
and no (0) months after the Commencement Date; provided that if the Commencement Date is a date other than the
first day of a calendar month,the Lease Term shall be extended by the number of days remaining in the calendar month
in which the Commencement Date occurs.
(e) "Base Rental":
Lease Per Square Annual Monthly
Year Foot Rate ental Rental
1-3 $5.50 psf $825,000.00 $68,750.00
4-6 $5.75 psf $862,500.00 $71,875.00
7-9 $6.01 psf $901,500.00 $75,125.00
10-12 $6.29 psf $943,500.00 $78,625.00
13-15 $6.58 psf $987,000.00 $82,250.00
(f) "Security Deposit": $68,750.00, such Security Deposit being due and payable upon execution of
this Lease. In addition, Tenant shall provide a Letter of Credit in the amount of$300,000.00 in accordance with
Section 5(c).
(g) "Guarantors": Upon execution of this Lease,Tenant shall deliver to Landlord a Guaranty of Lease
in the form attached hereto as Exhibit E (the "Guaranty") executed by Jim Motheral, Eva Motheral, David F.
Motheral, Margaret Motheral, Roger Motheral, Lisa Motheral, William J. Motheral, and Ann Motheral (collectively,
"Guarantors").
(h) "Net Rentable Area": all floor area measured from the inside surface of the outer glass or exterior
wall of the Building to the inside surface of the opposite outer glass wall or exterior wall of the Building. Prior to the
Commencement Date, the Net Rentable Area of such space shall be determined in good faith and in accordance with
the provisions of this Paragraph by Landlord's architect("Architect"),whose determination thereof shall be conclusive
upon each of the parties, absent manifest error resulting in an over- or under-statement of the Net Rentable Area by
more than ten percent (10%). Landlord and Tenant shall each pay fifty percent (50%) of the Architect's fees and
expenses in respect of any such determination.
EXHIBIT I—Page 1
DAL:387530.6
2. Lease and Demise. Subject to the terms and conditions hereinafter set forth, and each in consideration of the
duties, covenants, and obligations of the other hereunder, Landlord does hereby lease to Tenant, and Tenant does hereby lease
from Landlord,the Premises.
3. Term.
(a) If the Landlord Work (as defined in Section 8(a)) is not Substantially Complete (as defined in
Section 8)on the Commencement Date,this Lease shall not be void or voidable and Landlord shall not be deemed to be
in default under this Lease or otherwise liable to Tenant for any claims,damages or liabilities in connection therewith
or by reason thereof,subject,however to the terms of and Tenant's rights under Section 8(e)below; and in such event
Tenant agrees to accept possession of the Premises at such time as Landlord is able to tender the same Substantially
Complete(and the Commencement Date shall be the date of such tender of possession of the Premises to Tenant). If
Landlord utilizes the provisions of this Section 3(a), Landlord will waive the payment of rent and other charges
covering any period prior to the Commencement Date as modified hereunder. Notwithstanding the foregoing, if the
Landlord Work is not Substantially Complete on the Commencement Date due to delays caused by Tenant, its
employees,agents or contractors,then the Commencement Date shall be deemed to be the date on which the Landlord
Work would have been Substantially Complete but for the occurrence of any Tenant Delay Days(as defined in Section
8). Subject to the terms and conditions set forth herein,this Lease shall continue in force for the Lease Term.
(b) Within five(5)days after the Commencement Date, Tenant shall promptly execute and deliver to
Landlord a Confirmation of Commencement Date tendered and agreed to by Landlord in the form attached hereto as
Exhibit H(and otherwise in form and substance reasonably acceptable to Landlord).
4. Use. The Premises are to be used and occupied by Tenant solely for commercial printing and warehouse
purposes,and related office purposes,and for no other purpose or use without the prior written consent of Landlord.
5. Base Rental.
(a) Tenant hereby agrees to pay to Landlord, without any demand and without any abatement,
reduction, set off or deduction whatsoever (other than as expressly provided in this Lease), the Base Rental. The
annual Base Rental,as adjusted from time to time pursuant to Section 6 hereof,shall be due and payable in advance in
twelve (12) equal monthly installments. The first (Ist) monthly installment of Base Rental shall be payable
contemporaneously with the execution of this Lease; thereafter, Base Rental shall be payable on the first(1st)day of
each month beginning on the first(I st)day of the second (2nd) full calendar month of the Lease Term. Tenant shall
also pay, as additional rent, all other sums of money that become due and payable by Tenant to Landlord under this
Lease ("Additional Rent") (Base Rental and Additional Rent are sometimes hereinafter collectively called "rent").
Tenant shall also pay with each Base Rental payment the amount of any transaction privilege, sales, or similar taxes
incurred by Landlord on the rent transactions. If the Lease Term commences on a day other than the first(1 st)day of a
month,then the first(1 st)installment of Base Rental as adjusted pursuant hereto shall be prorated,based on thirty(30)
days per month, and such installment so prorated shall be paid in advance on the Commencement Date. All rent
payments shall be paid to Landlord, c/o Koll Development Company, 8411 Preston Road, Suite 700, Dallas, Texas
75225 (or as otherwise designated by Landlord from time to time). All rent payments shall be paid in United States
currency.
(b) Upon the execution of this Lease,Tenant agrees to pay to Landlord the Security Deposit,to be held
by Landlord as security for the performance by Tenant of Tenant's covenants and obligations under this Lease,it being
expressly understood that the Security Deposit shall not be considered an advance payment of rental or measure of
Landlord's damages in case of default by Tenant. Upon default by Tenant, Landlord, from time to time, without
prejudice to any other remedy, may(but shall not be required to)apply the Security Deposit against any arrearages of
Base Rental, or other rent,or any other damage, injury,expense or liability caused to Landlord by such default on the
part of Tenant. Should all or any portion of the Security Deposit be used for the purposes described above during the
Lease Term, then Tenant shall remit to Landlord on the first (Ist)day of the month following notice of such use the
amount necessary to restore the Security Deposit to its original balance. Tenant's failure to restore the Security Deposit
upon ten(10)days prior written notice from Landlord shall be a material breach of this Lease.
The Security Deposit shall be held by Landlord in a segregated interest-bearing federally insured account,with interest
accruing thereon to become part of the Security Deposit.
(c) As additional security,Tenant shall deliver to Landlord contemporaneously with execution of this
Lease an irrevocable,unconditional letter of credit in the amount of$300,000.00(the"Letter of Credit"). The Letter
of Credit shall be addressed to Landlord,issued in the form attached hereto as Exhibit G and by a financial institution
EXHIBIT I—Page 2
DAL:387530.6
approved by Landlord,in Landlord's reasonable discretion,shall be freely transferable without fee,shall have a term of
not less than one(1)year(with Tenant renewing or replacing same not less than thirty(30)days prior to the expiration
of such year). Tenant agrees that upon any monetary default (which shall include Tenant's failure to pay sums
expended by Landlord in curing any non-monetary default of Tenant within ten (10) days following written notice)
under this Lease not cured within applicable time periods, Landlord shall have the right to receive payment under the
Letter of Credit of the entire amount of such Letter of Credit at such time,and any such amounts received by Landlord
shall be held by Landlord and applied in accordance with this Lease in the same manner as the Security Deposit.
Notwithstanding anything to the contrary set forth above, provided no uncured default under this Lease exists at such
time, the amount of the Letter of Credit (and if Landlord shall have drawn on such Letter of Credit, any sums paid
thereon to Landlord to the extent not applied by Landlord as set forth in Section 5(b))shall be reduced(and the balance
paid to Tenant, as appropriate): (i) to $150,000.00 on the first(1st) day following the fourth (4th) anniversary of the
Commencement Date;and(ii)to$0.00 on the date which is thirty(30)days following the seventh(7th)anniversary of
the Commencement Date,subject to claims accruing prior to the seventh(7th)anniversary of the Commencement Date;
provided, however, the Letter of Credit shall not be reduced unless Landlord shall have confirmed in writing that no
uncured default exists and that no known claim is then in effect.
(d) If Tenant fails to pay any regular monthly installment of rent by the tenth (10th)day of the month
in which the installment is due, or any other amount constituting rent within ten (10) days after accrual thereof or
billing therefor, there shall be added to such unpaid amount a late charge of five percent (5%) of the installment or
amount due in order to compensate Landlord for the extra administrative expenses incurred.
6. Base Rental Adjustment. The Base Rental payable hereunder shall be adjusted from time to time in
accordance with the following provisions:
(a) Triple-Net Lease. This Lease is intended to be a triple-net lease with respect to Landlord and the
Base Rental owing hereunder is:(i)to be paid by Tenant absolutely net of all costs and expenses relating to Landlord's
ownership and operation of the Building;and(ii)except as expressly set forth herein to the contrary,not to be reduced,
offset or diminished, directly or indirectly, by any cost, charge or expense payable hereunder by Tenant or by others.
In addition to the Base Rental,Tenant shall pay to Landlord Basic Costs(as set forth below)as Additional Rent during
the Lease Term, in accordance with this Section 6,provided,however, that increases of Tenant's share of that portion
of Basic Costs which are controllable by Landlord (excluding taxes, insurance, and utilities) shall be limited to a
maximum of five percent(5%)in any one year over the previous year on a non-cumulative basis.
(b) Payment of Additional Rent. Within ninety(90)days of the end of each calendar year(and prior to
the Commencement Date for the period from the Commencement Date until January I in the first applicable year in the
Lease Term,in the event Commencement Date falls on a date other than January 1)or as soon thereafter as practicable,
Landlord shall give to Tenant notice of Landlord's reasonable estimate of the total amounts that will be payable by
Tenant under this Section 6(b)for the following calendar year(or partial year,as applicable),and Tenant shall pay such
estimated Additional Rent on a monthly basis, in advance, on the first day of each month. Tenant shall continue to
make said monthly payments until notified by Landlord of a change therein. If at any time or times Landlord
reasonably determines that the amounts payable under Section 6(b)for the current calendar year will vary by more than
ten percent(10%)from Landlord's estimate given to Tenant,Landlord,by notice to Tenant,may revise the estimate for
such calendar year, and subsequent payments by Tenant for such calendar year shall be based upon such revised
estimate. By June 1 of each calendar year following the initial calendar year of the Lease Term, Landlord shall
endeavor to provide to Tenant a statement showing the actual Additional Rent due to Landlord for the prior calendar
year(the "Statement"). If the total of the monthly payments of Additional Rent that Tenant has made for the prior
calendar year is less than the actual Additional Rent chargeable to Tenant for such prior calendar year, then Tenant
shall pay the difference in a lump sum within thirty (30) days after receipt of such Statement from Landlord. Any
overpayment by Tenant of Additional Rent for the prior calendar year shall, at Tenant's option, be either credited
towards the Additional Rent next due or returned to Tenant in a lump sum payment within thirty (30) days after
delivery of such Statement.
(c) Final Calculation. Landlord shall make a good faith estimate of Additional Rent for the year in
which this Lease terminates within thirty(30)days following the expiration of such calendar year. Tenant may dispute
such estimate by providing written notice to Landlord within thirty (30) days of receipt of such estimate. If Tenant
disputes such estimate, then Landlord shall deliver to Tenant a statement of actual costs within three (3) months
following the expiration of such calendar year. Even though the Lease Term has expired and Tenant has vacated the
Premises,with respect to the year in which this Lease expires or terminates,Tenant shall remain liable for payment of
any amount due to Landlord in excess of the estimated Additional Rent previously paid by Tenant, and, conversely,
Landlord shall promptly return to Tenant any overpayment. If Tenant fails to dispute Landlord's estimate of Additional
Rent for the year in which this Lease terminates within thirty(30)days of receipt,such estimate shall be deemed to be
EXHIBIT I—Page 3
DAL:387530.6
the actual costs for such year. Failure of Landlord to submit Statements as called for herein shall not be deemed a
waiver of Tenant's obligation to pay Additional Rent as herein provided.
(d) Audit Rights. Provided Tenant notifies Landlord within thirty(30)days of receipt of a Statement
that Tenant disputes such Statement received from Landlord,Tenant or its consultant shall have the right, at Tenant's
sole cost and expense, provided Tenant utilizes a consultant experienced in such type of audits and which is
compensated on an hourly basis(rather than a contingent fee basis), upon at least ten(10)business days prior notice to
Landlord during regular business hours to audit, review and photocopy Landlord's records pertaining to Additional
Rent for the immediately previous two (2) calendar years only. The audit shall commence after Landlord makes
Landlord's books and records available to Tenant's auditor and shall conclude within three (3) business days after
commencement. Tenant agrees to keep all information thereby obtained by Tenant confidential. If the audit proves
that Landlord's calculation of Additional Rent in the aggregate for any calendar year was overstated by more than five
percent (5%), then, after verification, Landlord shall pay Tenant's reasonable out-of-pocket third party audit fees
applicable to the review of said Additional Rent for such calendar year.
7. Basic Costs Defined. "Basic Costs"consist of all operating expenses and disbursements of every kind which
Landlord incurs, pays or becomes obligated to pay in connection with the ownership, operation or maintenance of the common
areas of the Complex (and those costs related to the Premises expressly set forth below). All operating expenses shall be
computed on the accrual basis in accordance with generally accepted accounting principles consistently applied. Operating
expenses consist of all expenses, costs,and disbursements of every kind and nature that Landlord shall pay or become obligated
to pay in connection with the ownership and operation of the common areas of the Complex (and those costs related to the
Premises expressly set forth below),including,but not limited to the following:
(a) Cost of all supplies,materials and equipment rented or used in the operation or maintenance of the
common areas of the Complex(and with respect to the Premises,the landscaping and parking lot lighting).
(b) Cost of all utilities for the common areas of the Complex (and with respect to the Premises, the
parking lot lighting)including,but not limited to,the cost of water and power,gas,and lighting.
(c) Management costs and the cost of all maintenance, janitorial, and service agreements for the
common areas of the Complex (and with respect to the Premises, landscaping and parking lot lighting) and the
equipment therein including, but not limited to, alarm service, security service, traffic control, and landscaping
services.
(d) Cost of all insurance relating to the Building and the common areas of the Complex,including,but
not limited to, the cost of fire and extended coverage insurance, casualty and liability insurance applicable to the
Building and the common areas of the Complex and Landlord's personal property used in connection therewith.
(e) All taxes,assessments,and other governmental charges,whether federal,state,county or municipal
(other than federal taxes on Landlord's net income and Landlord's franchise taxes), and whether they be by taxing
districts or authorities presently taxing the Building or Complex or by others, subsequently created or otherwise,and
any other taxes and assessments attributable to: (i) the Building or its operation; and (ii) the common areas of the
Complex, including but not limited to those assessments and other charges set forth in the Declaration covering the
Complex which is dated February 25, 1983 and recorded in Volume 7463,Page 1641,Deed Records,Tarrant County,
Texas(as amended,the"Deed Restrictions"). It is agreed that Tenant will be responsible for ad valorem taxes on its
personal property and on the value of leasehold improvements made by Tenant.
(f) Wages, salaries, and fees of all employees of Landlord and/or Landlord's agents (whether paid
directly by Landlord itself or reimbursed by Landlord to such other party) engaged in the operation, maintenance, or
security of the common areas of the Complex (and with respect to the Premises, the landscaping and parking lot
lighting) and personnel who may provide traffic control relating to ingress and egress from the parking areas of the
Complex to the surrounding public streets. All taxes, insurance, and benefits for employees providing these services
are also included.
(g) Costs of repairs and general maintenance to the common areas of the Complex(and with respect to
the Premises,parking lot lighting).
Landlord and Tenant agree that the foregoing enumeration of specific types of costs and expenses is intended as
illustrative only and shall not be construed so as to limit the inclusion of any types of costs or expenses otherwise intended to be
included within the term Basic Costs but not set forth above or to obligate Landlord to provide any services contemplated
thereby. Costs attributable to the Deed Restrictions and to the common areas of the Complex as a whole(and not just to the
EXHIBIT I—Page 4
DAL:387530.6
Premises)shall be payable on a proportionate share basis,based on a fraction,the numerator of which is the square footage of the
Building and the denominator of which is the square footage of all the buildings in the Complex. Costs attributable only to the
Premises shall be payable in full by Tenant.
The following items shall be excluded from operating expenses for the purpose of calculating Tenant's pro rata portion
thereof. brokerage expenses, legal expenses or other related expenses incurred in connection with negotiations or disputes with
any particular tenant; expenses for capital improvements made to the Building for which Landlord is responsible,the Complex or
the common areas; depreciation and amortization allowance or expense (other than those referred to in the preceding clause);
expenses for which the Landlord is reimbursed by tenants of the Complex (other than through provisions similar to this Section
6);and income,excess profits,franchise or other such taxes imposed on or measured by the income of Landlord.
8. Construction of Building.
(a) In reliance upon this Lease, Landlord agrees to erect,at its sole cost and expense,the Building in a
good and workmanlike manner,using first-class materials,in accordance with:(1)the plans and specifications attached
hereto as Exhibit F; and (2) the Final Plans (as hereinafter defined); and (3) all building and fire codes and other
applicable laws and regulations. The Final Plans shall provide for the Building and shall include site plans showing,
with respect to the Building, all driveways, sidewalks, parking areas, landscaping and other site improvements. The
work required by the Final Plans(as may be amended by change orders as set forth below)shall be hereinafter referred
to as the"Landlord Work". Following completion,the Final Plans shall be attached to this Lease.
(b) For each phase of construction, Landlord shall cause preliminary plans (collectively, the
"Preliminary Plans") to be submitted to Tenant. Within five(5)days after receipt,Tenant shall review and approve
each set of Preliminary Plans(which approval shall not be unreasonably withheld)and/or inform Landlord in writing of
any corrections(the"Corrections")or changes(the"Changes")thereto. If Tenant fails to respond to Landlord within
any of the time parameters contained in this Lease, Tenant shall be deemed to have given its approval thereto.
Landlord shall be responsible for any additional expense and time required to properly address Corrections. If Tenant
requests any Changes, Landlord shall within five (5) days after receipt present Tenant with revised drawings and
specifications,and a budget and the number of anticipated Tenant Delay Days required for the requested Changes,for
Tenant's approval. If(but only if)Tenant approves such Changes,budget and number of Tenant Delay Days,Landlord
shall incorporate such Changes in the Preliminary Plans. If the Changes will require additional expense or time, then:
(i) Tenant shall be responsible for payment of such additional expense, one-half of which shall be payable upon
Landlord's acceptance of such Change and the remaining one-half of which shall be payable upon Substantial
Completion of the Landlord Work;and(ii)each day's delay caused by such Change shall be considered a Tenant Delay
Day as set forth below. Change orders creating cost savings may be used to offset change orders creating added
expense and/or for additional tenant improvement work to improve the Property. Should Landlord be delayed in
Substantially Completing the Landlord Work as a result of (i) Tenant's failure to timely approve and submit the
Preliminary Plans; or(ii) Tenant's requests for Changes in the Preliminary Plans which delay the Landlord Work; or
(iii) the performance of any of the Landlord Work contemplated herein by a contractor or agent employed by Tenant
(any such contractor or agent being subject to the prior written approval of Landlord);or(iv)any other delay caused by
Tenant, its agents, contractors,representatives or employees, then the Commencement Date under this Lease shall not
be delayed (each such day of delay being referred to as a"Tenant Delay Day") and Tenant's obligation to pay rent
under the Lease shall nevertheless commence on the Commencement Date. After Tenant's approval of each phase's
Preliminary Plans, Landlord shall cause final plans and specifications(collectively, the "Final Plans")to be prepared
and delivered to Tenant. Within ten (10)days after receipt, Tenant shall review and approve each set of Final Plans
and/or notify Landlord of any changes necessary to bring the Final Plans into conformity with the approved
Preliminary Plans. The process for approval by Tenant of Preliminary Plans and the process for approval by Tenant of
Final Plans shall each continue until approval is obtained,provided that if Tenant's approval of either Preliminary Plans
or Final Plans is not obtained, as a result of delays attributable to Tenant, within sixty (60) days after the plans in
question were first delivered to Tenant for approval, then Landlord shall have the right to terminate this Lease, by
written notice to Tenant. Landlord shall pay for all architectural and engineering fees in connection with the
preparation and revisions of the Preliminary Plans and Final Plans.
(c) Changes may be made to the Final Plans only if Tenant approves such change,such approval not to
be unreasonably withheld or delayed, provided that Tenant shall have the right to disapprove any change that in
Tenant's reasonable opinion results in excessive expense to Tenant or delay in achieving Substantial Completion.
However, Landlord may make changes in the Final Plans without Tenant's approval, but then only if necessary to
comply with changes,revisions or additions to applicable building codes and other laws,and then only if such changes
are at Landlord's sole cost.
g,
EXHIBIT I—Page 5 �'
DAL:387530.6
(d) Landlord Work shall be performed by a general contractor that shall be selected by Landlord
("Landlord's General Contractor"). After selection of Landlord's General Contractor, Landlord shall enter into a
contract with Landlord's General Contractor for performance of Landlord Work, which contract shall: (i) require
insurance coverage in amounts and types reasonably acceptable to Landlord; and (ii) include a requirement that
Landlord Work shall be completed in accordance with an agreed upon construction schedule,with appropriate penalties
against the General Contractor for failure to complete Landlord Work in accordance with said schedules. The Premises
shall be deemed to be"Substantially Complete"(herein so called and also referred to as"Substantial Completion"or
"Substantially Completing")on the earlier of: (i)the date that there is delivered to Tenant a certificate from Architect
that all of the Landlord Work required to be constructed by Landlord in the Premises under the terms of this Lease are
substantially complete in the condition set forth in Section 8(a)(except for normal punch list items and minor finishing
jobs) (or would have been complete but for the default or failure of Tenant), which certificate shall be binding and
conclusive upon Tenant and Landlord in the absence of manifest error or bad faith and collusion on the part of or
between Landlord and Architect; or (ii) the date that a permanent certificate of occupancy (or other similar or
substituted license, permit or certificate) is issued by the applicable authority. Landlord shall promptly and diligently
pursue completion of normal punch list items and minor finishing jobs.
(e) Landlord estimates that (subject to force majeure, weather delays and Tenant Delay Days) the
Landlord Work will be Substantially Complete on or before September 30,2003. The date on which Landlord delivers
the Premises to Tenant Substantially Complete in the condition set forth in Section 8(a) is referred to herein as the
"Delivery Date". For a period of seventy-eight (78) days prior to the Delivery Date, Tenant will have the right to
occupy the Premises for the purpose of installing fixtures, equipment, and merchandise (the "Preparation Work").
Such entry will be under all the terms and conditions of this Lease, except no rent will be payable. Such entry by
Tenant shall not interfere with the Landlord Work or delay the Landlord Work. Such entry by Tenant shall not
constitute acceptance of the Premises. Tenant shall indemnify and hold Landlord harmless for any interference or
damage caused by such entry by Tenant prior to the Delivery Date.
M In connection with all work conducted by Tenant in the Premises,Tenant shall,at its own expense,
comply with all present and future laws, ordinances, orders and regulations of federal, state, county and city
governmental and of other governmental authorities having or claiming jurisdiction over the complex, including,
without limitation,The Americans With Disabilities Act,the Federal Occupational Safety and Health Act of 1970 and
regulations thereunder. Tenant shall also cause the Building to comply with the National Fire Code Bulletin entitled
"NFPA 101 - Code for Safety to Life," provided that Landlord shall cause the Portion of the Premises for which
Landlord is responsible to so comply.
(g) During the progress of Landlord Work, Tenant and its agents and employees may, from time to
time, inspect the Building. If, during such construction, Tenant and its agents and employees determine that the
construction is not being done in accordance with the requirements of Section 8(a),Tenant will give prompt notice in
writing to Landlord, specifying in detail the particular deficiency, omission or other respect in which Tenant claims
such construction does not conform with the requirements of Section 8(a). Upon the receipt of any such notice,
Landlord will cause any corrections to be made to such construction that may be necessary to cause Landlord Work to
conform to the requirements of Section 8(a).Tenant has advised Landlord that Tenant will incur substantial damages in
the event the Delivery Date is after October 1, 2003. The parties agree that because of the difficulty, inconvenience
and uncertainty of ascertaining actual damages for such delay Tenant shall be entitled to recover from Landlord, as
liquidated damages (and not as a penalty), the sum of$2,000.00 for each day after October 1, 2003 that Landlord
delays in delivery of possession of the Premises to Tenant Substantially Complete in the condition set forth in Section
8u,less only days due to Tenant Delay or Force Majeure(the"Liquidated Damages"). Such payment shall be made
by Landlord to Tenant upon Tenant's occupancy of the Building for the operation of its business or, at Landlord's
option,Tenant may offset such amount against the rents first coming due. The foregoing Liquidated Damages shall be
Tenant's sole remedy for late delivery of the Premises.
(h) Landlord,at its sole cost and expense,shall promptly repair,or cause to be repaired,any defects to
the Premises (including, without limitation, air conditioning, plumbing, electrical and heating systems) installed by
Landlord or its agents or contractors which are due to defective materials or workmanship in construction thereof,and
of which Tenant gives written notice to Landlord(or which otherwise come to Landlord's attention)at any time on or
before the first anniversary of the Commencement Date. Landlord shall, at Tenant's option, assign to Tenant, or
enforce for the benefit of Tenant, all warranties from subcontractors and material suppliers for such materials,
workmanship,fixtures and equipment in effect.
(i) Subject to the Expansion Conditions (hereinafter defined), Tenant shall have the right to cause
Landlord to expand the Net Rentable Area of the Building an additional 56,700 square feet (the"Expansion Space")
on such portion of the Land designated on the attached Exhibit A (the "Expansion Option"). The Expansiop. ,pace
L
EXHIBIT I—Page 6 �,
DAL:387530.6
shall be constructed by Landlord to the same quality and specifications as the warehouse production area of the
Building (including without limitation, power, lighting, and air conditioning). Tenant may exercise the Expansion
Option upon written notice given to Landlord(the"Expansion Notice")on or before the last day of the fifth(5`h)year
of the Lease Term. The Lease Term for such Expansion Space shall be not less than fifteen(15)years from completion
of the expansion. Landlord shall within sixty(60)days following receipt of the Expansion Notice,provide Tenant with
a good faith written estimate of the schedule for the proposed work and the Base Rental for the Expansion Space,based
on a fifteen(15)year lease term(collectively,"Landlord's Estimate"). The Base Rental structure shall be based on an
eleven percent(11%)return rate on the Total Project Costs at the time of bidding such work,which shall be open book
and competitively bid and reasonably acceptable to Tenant. For purposes of this Lease, "Total Proiect Costs"shall
mean and include any and all reasonable construction and development costs associated with the respective expansion,
including, but not limited to, reasonable landscape, architect, contractor, engineer and other professional fees, taxes,
insurance, interest, legal fees and expenses, commissions, association fees, management and administrative fees.
Tenant may rescind its Expansion Notice within ten(10)business days following receipt of Landlord's Estimate. Such
recission shall be Tenant's sole recourse for Tenant's disagreement or dissatisfaction with Landlord's estimate of such
Base Rental. Tenant's failure to timely deliver the Expansion Notice shall cause the Expansion Option to be null and
void,time being of the essence in the giving of the Expansion Notice. Landlord's obligation to construct the Expansion
Space is subject to: (i)Tenant not being in default under the Lease at the time of the Expansion Notice;(ii)Landlord's
review and approval of Tenant's then-current credit standing,in Landlord's sole discretion exercised in good faith;(iii)
Landlord's ability to secure financing reasonably acceptable to Landlord in Landlord's sole discretion; and (iv)
approval of applicable governmental authorities of such expansion and applicable plans therefor, and compliance with
the Deed Restrictions(collectively, the "Expansion Conditions"). If any of the Expansion Conditions is not satisfied
or waived by Landlord, the Expansion Option shall be null and void. If the Expansion Conditions are satisfied,Tenant
agrees to enter into an amendment of the Lease evidencing the expansion and an extension of the Lease Term for the
Premises for a period of fifteen (15) years to be co-terminus with the Lease Term for the Expansion Space, and
Landlord shall thereupon diligently pursue construction of the Expansion Space in accordance with the proposed
schedule and plans and specifications therefore and otherwise in accordance with the requirements of Section 8(a).
Tenant's obligation to pay rent with respect to the Expansion Space shall not commence until Landlord delivers
possession thereof Substantially Complete.
0) At its cost and expense, and as part of the cost of construction, Landlord shall procure or cause to
be procured and maintained during the construction of the Building, builder's risk insurance insuring the Building and
all other improvements constructed on the Premises against fire, the perils insured under the standard form extended
coverage endorsement, vandalism, and malicious mischief in the full amount of the cost of construction. In the event
the Building shall be damaged or destroyed prior to Substantial Completion by fire or other insured casualty and
Landlord's mortgagee allows the insurance proceeds to be utilized for repair or restoration of the damaged Building,
then,upon Tenant's reaffirmation of the Lease or giving of such other comfort to Landlord and Landlord's mortgagee as
may be reasonably agreed to between Tenant, Landlord and Landlord's mortgagee, and Tenant's waiver of the
Liquidated Damages, Landlord shall repair or restore the damaged Building. If Tenant fails to waive the Liquidated
Damages within ten(10)business days of the casualty,then Landlord shall have the right to terminate this Lease upon
written notice to Tenant. Landlord shall promptly commence such repairs and this Lease shall be unaffected except
that the Commencement Date shall be extended until the Building is Substantially Completed. In the event Landlord's
mortgagee fails to make the insurance proceeds available for repair or restoration,then either party may terminate this
Lease by giving written notice thereof to the other. In the event that Landlord commences such repairs,any such right
to terminate shall be deemed waived, and Landlord shall use its reasonable efforts to diligently pursue such repairs to
completion.
9. Acceptance of Building By Tenant. The taking of possession of the Premises by Tenant following
Substantial Completion (and excluding possession for Preparation Work)shall be conclusive evidence: (a) that Tenant accepts
the Premises as suitable for the purposes for which the same are leased; (b) that Tenant accepts the Building and the Premises
and each and every part and appurtenance thereof as being in a good and satisfactory condition, subject to completion of punch
list items and minor finishing jobs, subject to Landlord's repair obligations under Section 8(h) and subject to Landlord's
obligation to cure any latent conditions that cause the Premises to be out of compliance with the requirements of Section 8(a);
and(c) that Landlord has fully complied with Landlord's obligations contained in this Lease with respect to the construction of
the Building and any improvements on the Premises.
10. Utilities. Following Substantial Completion,Tenant shall be responsible for payment of all utilities used at
the Premises, including without limitation electricity,gas,water,sewer and telephone. All such utilities will be provided through
available public utility providers. Any cessation,malfunction,fluctuation,variation,or interruption thereof,or any breakdown or
malfunction of equipment in the Building resulting therefrom shall not render Landlord liable in any respect for damages,direct
or consequential, to either persons or property, nor be construed as an eviction of Tenant, nor work an abatement of rent,nor
relieve Tenant from the obligation to fulfill any covenant or agreement hereof. Should any of Tenant's office equipment or
machinery breakdown, be damaged, or for any cause cease to function properly as a result of the cessation, malfunction,
EXHIBIT I—Page 7
DAL:387530.6
fluctuation,variation,interruption,or breakdown of services or equipment in the Building,Tenant shall have no claim for rebate,
offset or reduction of rent or damages.
11. Keys and Locks. Landlord shall furnish Tenant a Building standard number of not less than ten(10)keys for
each corridor entering the Premises. Additional keys will be furnished at a reasonable charge by Landlord on receipt of an order
signed by Tenant. All keys shall remain the property of Landlord. No additional locks shall be allowed on any door of the
Premises without Landlord's written permission, and Tenant shall not make or permit to be made any duplicate keys, except
those furnished by Landlord. Upon termination of this Lease, Tenant shall surrender to Landlord all keys to the Premises, and
give to Landlord the explanation of the combination of all locks for safes,safe cabinets,and vault doors,if any,in the Premises.
12. Graphics. Landlord shall provide and install, at Tenant's cost, all letters or numerals on doors in the
Building. All such letters and numerals shall be in the standard graphics for the Complex, and no others shall be used or
permitted on the Premises or Building. Tenant shall not place or permit to be placed any signs on the exterior of the Building
without Landlord's prior written approval,which approval shall not be unreasonably withheld or delayed provided any proposed
sign is placed only in those locations as may be designated by Landlord, and complies with the sign criteria promulgated by
Landlord from time to time. Upon the expiration or earlier termination of the Lease,Tenant shall remove any signage at Tenant's
sole cost and expense and repair any damage to the Building. Upon request of Landlord,Tenant shall immediately remove any
sign, advertising material or lettering which Tenant has placed or permitted to be placed upon the exterior or interior surface of
any door or window or at any point inside the Building if required in connection with any cleaning,maintenance or repairs to the
Building or Complex or which in Landlord's reasonable opinion,is of such a nature as to not be in keeping with the standards of
the Complex and if Tenant fails to do so, Landlord may without liability remove the same at Tenant's expense. Tenant shall
comply with such regulations as may from time to time be promulgated by Landlord governing signs, advertising material or
lettering of all tenants in the Complex.
13. Maintenance and Repairs by Landlord. Landlord shall keep and maintain in good repair and working order
and make repairs to and perform maintenance upon the following (the "Portion of the Premises for which Landlord is
responsible"): (1) the structural elements of the Building, including foundation and exterior walls; (2)the roof of the Building;
(3) the landscaping on the exterior of the Building; and(4) maintenance of the light poles in the parking areas adjacent to the
Building and bulb replacement thereon. Landlord shall be required to repair and correct any portion of Landlord's Work that is
not done in accordance with Section 8(a) Landlord shall comply at its sole cost and expense with all private and public
restrictions and covenants,laws, ordinances, statutes, rules and regulations of any state, federal, municipal,or other government
or governmental agency or quasi-governmental agency having jurisdiction of the Premises that relate to the condition of the
Portion of the Premises for which Landlord is responsible, including, without limitation, compliance with the Americans with
Disabilities Act of 1990,as amended and any regulations promulgated thereunder. Unless otherwise stipulated herein, Landlord
shall not be required to make any other improvements or repairs of any kind or character on the Premises during the Lease Term.
14. Reoairs by Tenant. Tenant shall repair, replace and/or maintain in a good order and condition, at Tenant's
cost and all expense, all portions of the Premises which are not Landlord's express responsibility under the Lease, including
without limitation:(1)the HVAC,plumbing and other equipment serving the Premises;(2)floor coverings and/or raised flooring;
(3) interior partitions; (4)doors; (5) electronic, phone and data cabling and related equipment installed by or for the benefit of
Tenant; (6) bathrooms and all fixtures located therein; (7) kitchen areas and all equipment located therein; (8) parking lot
surfaces; (9) any rail spur serving the Premises (provided, however, Landlord makes no representation or warranty that rail
service is or will be available to the Premises); and(10)all of Tenant's furnishings, trade fixtures, equipment and inventory. If
Tenant fails to commence such repairs or replacements within thirty (30) days of written notice by Landlord and to diligently
prosecute such repairs to completion,Landlord may,at its option,make the repairs or replacements,and Tenant shall pay the cost
thereof to Landlord upon receipt of an invoice. Tenant shall cause the HVAC equipment serving the Premises to be maintained
in accordance with a regular maintenance program, and shall upon request provide a copy of such maintenance contract to
Landlord. All repairs and replacements shall be effected in a good and workmanlike manner in compliance with all building and
fire codes and other applicable laws and regulations and shall be performed only by contractors and subcontractors approved in
writing by Landlord.
15. Security. Landlord is not obligated to provide security services to the Building. Tenant shall be the
determinant of the type and amount of security services, if any, to be provided to the interior of the Building. Except to the
extent caused by the gross negligence or willful misconduct of Landlord, Landlord shall not be liable to Tenant, and Tenant
hereby waives any claim against Landlord for: (i) any unauthorized or criminal entry of third parties into the Premises or
Building; or (ii) any damage to persons or loss of property in and about the Premises or Building from an unauthorized or
criminal acts of third parties,regardless of any action,inaction,failure,breakdown or insufficiency of security.
16. Trash Removal. Tenant shall, at Tenant's sole cost,provide a service for collection of refuse and garbage.
Such refuse and garbage shall be kept in a container reasonably acceptable to Landlord in a location at the Building reasonably
acceptable to Landlord.
EXHIBIT I—Page 8
DAL:387530.6
17. Care of Premises. Tenant shall not commit or allow any waste or damage to be committed on any portion of
the Premises, and at the termination of this Lease, by lapse of time or otherwise, shall deliver possession of the Premises to
Landlord in as good a condition as at the Commencement Date,ordinary wear and tear excepted. Upon any termination of this
Lease,Landlord shall have the right to reenter and resume possession of the Premises.
18. Peaceful Enioyment. Provided Tenant pays the rent and other amounts due under this Lease and performs all
of its other obligations pursuant to this Lease, Tenant shall peaceably and quietly have, hold, and enjoy the Premises in
accordance with this Lease during the term of this Lease without any interruption or disturbance from Landlord or parties
claiming under Landlord, or from any other person possessing superior title to that of Landlord. This covenant and any and all
other covenants and agreements of Landlord contained in the Lease shall be binding upon Landlord and its successors only with
respect to breaches occurring during its or their respective periods of ownership of Landlord's interest hereunder.
19. Holding Over. If after expiration or other termination of this Lease Tenant holds over without the prior
written consent of Landlord,Tenant shall be deemed a tenant at sufferance, and shall throughout the entire holdover period,pay
rent equal to the greater of one hundred fifty percent(150%)of the Base Rental(with such adjustments to Base Rental as would
otherwise have been in effect if the Lease Term had continued during such period of holding over)or the prevailing market rent
reasonably determined by Landlord, plus all other amounts that would otherwise have been payable hereunder as rent had the
Lease Term continued through the period of such holding over by Tenant;provided,however,that Landlord's acceptance of any
such payment shall not constitute nor imply any consent by Landlord to any such holding over by Tenant. No holding over by
Tenant after the expiration of the Lease Term shall be construed to extend the Lease Term;and in the event of any unauthorized
holding over, Tenant shall indemnify, defend and hold Landlord harmless from and against all claims for damages (and
reimburse Landlord upon demand for any sums paid in settlement of any such claims) by any other tenant or prospective tenant
to whom Landlord may have leased all or any part of the Premises effective before or after the expiration of the Lease Term and
by any broker claiming any commission or fee in respect of any such lease or offer to lease. Any holding over with the written
consent of Landlord shall thereafter constitute this Lease a lease from month to month under the terms and provisions of this
Lease, to the extent applicable to a tenancy from month to month,with a Base Rental of one hundred fifty percent(150%) that
payable at the end of the Lease Term.
20. Alterations. Additions. and Imi)rovernents. Tenant shall not permit the Premises to be used for any purpose
other than that stated in Section 4 hereof or make or allow to be made any alterations or physical additions in or to the Premises,
or place signs on the Premises, without first obtaining the written consent of Landlord in each such instance. After the
Commencement Date,Tenant shall not make or permit to be made any alterations,improvements or additions to the Premises(a
"Tenant's Change"),without first obtaining on each occasion Landlord's prior written consent. As part of Landlord's approval
process, Tenant shall submit complete schematics, design plans and specifications to Landlord detailing Tenant's Changes for
Landlord's approval or disapproval. Tenant shall maintain all risk property insurance reasonably satisfactory to Landlord during
the construction of all Tenant's Changes. If Landlord,at the time of giving its approval to any Tenant's Change,notifies Tenant
that approval is conditioned upon restoration, then upon written request of Landlord, Tenant shall, at its sole cost and expense
and upon termination of this Lease,remove the same and restore the Premises to its condition prior to such Tenant's Change. No
Tenant's Change shall impair the structural integrity of any portion of the Premises or reduce its value. Tenant shall pay the full
cost of any Tenant's Change and shall give Landlord such reasonable security as may be requested by Landlord to insure
payment of such cost. No liens shall attach to the Premises or Land at any time as a result of any Tenant's Change. Tenant
agrees to indemnify, defend and hold Landlord harmless against any loss, liability, claim, or damage resulting from any work
done by Tenant in or to the Premises. Any and all alterations,physical additions, or improvements, including Tenant Work and
Tenant's Changes, when made to the Premises by Tenant, shall be done in a good and workmanlike manner with first-class
materials, lien-free and in accordance with all applicable laws, codes, regulations, and requirements and, at Landlord's option,
shall at once become the property of Landlord and shall be surrendered to Landlord upon termination of this Lease by lapse of
time or otherwise; provided, however, this clause shall not apply to trade fixtures, movable equipment, or furniture owned or
leased by Tenant, which, if Tenant is not in default, may be (or if requested by Landlord, shall be) removed by Tenant upon
termination of this Lease; provided, however, that Tenant shall repair and restore any damage or injury to the Premises (to the
condition in which the Premises existed prior to such installation, reasonable wear and tear excepted) caused by the installation
and/or removal of any such tenant fixtures, movable equipment or furniture. Landlord acknowledges that printing presses and
related equipment belonging to Tenant shall constitute trade fixtures.
21. Legal Use and Violations of Insurance. Tenant shall not occupy or use,or permit any portion of the Premises
to be occupied or used, for any business or purpose that is unlawful, disreputable or extra-hazardous in any manner, or permit
anything to be done that could in any way increase the rate or result in the denial or reduction of fire, liability or any other
insurance coverage on the Complex and/or its contents. If, by reason of Tenant's acts or conduct of business, there shall be an
increase in the rate of insurance on the Building or the Building's contents, then Tenant shall pay such increase to Landlord
immediately upon demand as additional rental.
22. Laws and Regulations,Building Rules.
EXHIBIT I—Page 9
DAL:387530.6
(a) Tenant shall comply at its sole cost and expense with all private and public restrictions and
covenants, laws, ordinances, statutes, rules and regulations of any state, federal, municipal, or other government or
governmental agency or quasi-governmental agency having jurisdiction of the Premises that relate to the use,condition
or occupancy of the Premises and the conduct of Tenant's business thereon, including, without limitation, compliance
with the Americans with Disabilities Act of 1990, as amended and any regulations promulgated thereunder. Tenant
will comply with the rules of the Complex adopted and altered by Landlord from time to time for the safety,care,and
cleanliness of the Premises and Complex and for the preservation of good order therein, all changes to which will be
sent by Landlord to Tenant in writing and shall be thereafter carried out and observed by Tenant. Nothing herein shall
require Tenant to modify or correct any of the Portion of the Premises for which Landlord is responsible under Section
13.
(b) Tenant acknowledges that it will be wholly responsible for any accommodations or alterations
which need to be made to the Premises to accommodate disabled employees and customers of Tenant, including
requirements under the Americans with Disabilities Act and the Texas Architectural Barriers Act. Any alterations
made to the Premises in order to comply with either statute must be made solely at Tenant's expense and in compliance
with all terms and requirements of the Lease. Landlord agrees to make reasonable efforts to ensure that the Complex is
in compliance with the applicable disability access laws as of the date hereof. If a complaint is received by Landlord
from either a private or government entity regarding disability access to the Complex, Landlord reserves the right to
mediate, contest, comply with or otherwise respond to such complaint as Landlord deems to be reasonably prudent
under the circumstances. If Landlord decides to make alterations to the Complex in response to any such complaints or
in response to legal requirements Landlord considers to be applicable to the Complex,the cost of such alterations shall
be included in the Basic Costs under the Lease. Landlord and Tenant agree that so long as the governmental entity or
entities charged with enforcing such statutes have not expressly required Landlord or Tenant to take specific action to
effectuate compliance with such statutes, Landlord and Tenant shall be conclusively deemed to be in compliance with
such statutes. In the event either Landlord or Tenant is required to take action to effectuate compliance with such
statutes, each shall have a reasonable period of time to make the improvements and alterations necessary to effectuate
such compliance, which period of time shall be extended by any time necessary to cause any necessary improvements
and alterations to be made. Nothing herein shall require Tenant to modify or correct any of the Portion of the Premises
for which Landlord is responsible under Section 13.
23. Nuisance. Tenant shall conduct its business and control its agents, employees, invitees, and visitors in such
manner as not to create any nuisance, or interfere with, annoy, or disturb any other tenant or Landlord in its operation of the
Complex.
24. Entry by Landlord. Tenant shall per-tit Landlord and its agents and representatives to enter any part of the
Premises at all reasonable hours (and in emergencies at all times) to inspect the same, or to show the Premises to prospective
tenants(during the last year of the Lease Term as same may be extended),purchasers,mortgagees, or insurers,to clean or make
repairs, alterations, or additions thereto, as Landlord may deem necessary or desirable. Tenant shall not be entitled to any
abatement or reduction of rent by reason of such entry. Nothing herein shall imply any duty upon the part of the Landlord to do
any work or repairs required of Tenant hereunder, and the performance thereof by Landlord shall not constitute a waiver of
Tenant's default in failing to perform it. Except in the event of gross negligence or willful misconduct by Landlord, Landlord
shall not be liable for inconvenience,annoyance,disturbance, or other damage to Tenant or the Premises or any part thereof by
reason of making such repairs or the performance of such work in the Premises or on account of bringing materials,supplies and
equipment into or through the Premises during the course thereof, and the obligations of Tenant under this Lease shall not
thereby be affected.
25. Assignment and Subletting.
(a) Tenant shall not,without the prior written consent of Landlord: (i)assign or in any manner transfer
this Lease or any estate or interest therein;or(ii)permit any assignment of this Lease or any estate or interest therein by
operation of law;or(iii) sublease the Premises or any part thereof; or(iv)grant any license, concession,or other right
of occupancy of any portion of the Premises;or(v)permit the use of the Premises by any parties other than Tenant,its
agents and employees. For purposes hereof,the merger or consolidation of Tenant with or into any other corporation
or other entity, a sale or other transfer of any portion of Tenant's capital stock or other analogous ownership interest
(except after the expiration of the seventh(7'h)year of the Term,in which case"any portion"shall be modified to"fifty
percent(50%)or more"of such stock),or a sale or other transfer of fifty percent(50%)or more of Tenant's assets shall
be deemed an assignment of this Lease. Landlord shall also be entitled to charge Tenant a fee of$1,000 for processing
any request by Tenant for an assignment or sublease. Consent by Landlord to one or more assignments or sublettings
shall not operate as a waiver of Landlord's rights as to any subsequent assignments and subletting. The criteria set
forth in the last sentence of Section 25(b)shall be used in determining whether Landlord's withholding of such consent
is reasonable. Notwithstanding any assignment or subletting consented to by Landlord, Tenant and any guarantor of
EXHIBIT I—Page 10
DAL:387530.6
Tenant's obligations under this Lease shall at all times remain fully responsible and liable for the payment of the rent
herein specified and for compliance with all of Tenant's other obligations under this Lease. If any event of default
should occur while the Premises or any part thereof are then assigned or sublet, Landlord, in addition to any other
remedies herein provided or provided by law,may at its option collect directly from such assignee or subtenant all rents
becoming due to Tenant under such assignment or sublease,and apply such rent against any sums due to Landlord by
Tenant hereunder,and Tenant hereby directs any such assignee or subtenant to make such payments of rent directly to
Landlord upon receipt of notice from Landlord. No direct collection by Landlord from any such assignee or subtenant
shall be construed to constitute a novation or a release of Tenant or any guarantor of Tenant from the further
performance of its obligations hereunder. Receipt by Landlord of rent from any assignee,subtenant or occupant of the
Premises shall not be deemed a waiver of the covenant contained in this Lease against assignment and subletting or a
release of Tenant from any obligation under this Lease. The receipt by Landlord to any such assignee or subtenant
obligated to make payments of rent shall be a full and complete release,discharge,and acquittance to such assignee or
subtenant to the extent of any such amount of rent so paid to Landlord. Landlord is authorized and empowered, on
behalf of Tenant, to endorse the name of Tenant upon any check, draft, or other instrument payable to Tenant
evidencing payment of rent, or any part thereof, and to apply the proceeds therefrom in accordance with the terms
hereof. Tenant shall not mortgage,pledge, or otherwise encumber its interest in this Lease or in the Premises. Any
attempted assignment or sublease or encumbrance by Tenant in violation of the terms and covenants of this paragraph
shall be void and constitute an event of default under this Lease. Notwithstanding anything herein to the contrary, a
transfer by way of inheritance (whether by intestacy or pursuant to the terms of a duly probated will) shall not be
deemed to be a transfer requiring consent.
(b) Notwithstanding anything to the contrary contained herein, and without prejudice to Landlord's
right to require a written assumption from each assignee,any person or entity to whom this Lease is assigned including,
without limitation,assignees pursuant to the provisions of the Bankruptcy Code, 11 U.S.C. Paragraph 101 et sea. (the
"Bankruptcy Code")shall automatically be deemed,by acceptance of such assignment or sublease or by taking actual
or constructive possession of the Premises,to have assumed all obligations of Tenant arising under this Lease effective
as of the earlier of the date of such assignment or sublease or the date on which the assignee or sublessee obtains
possession of the Premises. In the event this Lease is assigned to any person or entity pursuant to the provisions of the
Bankruptcy Code, any and all monies or other consideration payable or otherwise to be delivered in connection with
such assignment shall be paid or delivered to Landlord and shall remain the exclusive property of Landlord and not
constitute the property of Tenant or Tenant's estate within the meaning of the Bankruptcy Code. In the event of any
default described in subsection 28(a)(iv) below, in order to provide Landlord with the assurances contemplated by the
Bankruptcy Code, in connection with any assignment and assumption of this Lease Tenant must fulfill the following
obligations, in addition to any other reasonable obligations that Landlord may require, before any assumption of this
Lease is effective: (i) all defaults under subsection (a)of Section 28 of this Lease must be cured within ten(10)days
after the date of assumption;(ii)all other defaults under Section 28 of this Lease other than under subsection(a)(iv)of
Section 28 must be cured within fifteen(15)days after the date of assumption; (iii)all actual monetary losses incurred
by Landlord (including, but not limited to, reasonable attorneys' fees) must be paid to Landlord within ten (10)days
after the date of assumption;and(iv)Landlord must receive within ten(10)days after the date of assumption a security
deposit in the amount of six (6) months Base Rental (using the Base Rental in effect for the first full month
immediately following the assumption) and an advance prepayment of Base Rental in the amount of three(3)months
Base Rental(using the Base Rental in effect for the first full month immediately following the assumption),both sums
to be held by Landlord in accordance with Section 5(b)above and deemed to be rent under this Lease for the purposes
of the Bankruptcy Code as amended and from time to time in effect. In the event this Lease is assumed in accordance
with the requirements of the Bankruptcy Code and this Lease, and is subsequently assigned, then, in addition to any
other reasonable obligations that Landlord may require and in order to provide Landlord with the assurances
contemplated by the Bankruptcy Code, Landlord shall be provided with: (i) a financial statement of the proposed
assignee prepared in accordance with generally accepted accounting principles consistently applied, though on a cash
basis, which reveals a net worth in an amount sufficient, in Landlord's reasonable judgment, to assure the future
performance by the proposed assignee of Tenant's obligations under this Lease; or (ii) a written guaranty by one or
more guarantors with financial ability sufficient to assure the future performance of Tenant's obligations under this
Lease,such guaranty to be in form and content satisfactory to Landlord and to cover the performance of all of Tenant's
obligations under this Lease.
(c) If Tenant requests Landlord's consent to an assignment of the Lease or subletting of all or a part of
the Premises, Tenant shall submit to Landlord in writing, at least sixty (60) days in advance of the date on which
Tenant desires to make such an assignment or sublease,notice of the name of the proposed assignee or subtenant and
the proposed commencement date of such assignment or subletting,together with copies of all agreements entered into
or contemplated to be entered into regarding such subletting or assignment, and such information as Landlord may
request regarding the nature and character of the business of the proposed assignee or subtenant. Landlord shall have
the option (to be exercised within thirty(30) days after Landlord's receipt of Tenant's submissi tten request
and all information requested by Landlord in connection therewith): (i)to permit Tenant to assign r sublet such space
EXHIBIT I—Page 11 I�U� :'v11G�Uttit 9�'�A
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to the proposed assignee or subtenant(in which event Tenant shall deliver to Landlord fully-executed legible,correct
and complete copies of all agreements relating to such assignment or subletting); if, however, the rental or other
consideration payable in respect of such subletting or assignment exceeds the rent payable hereunder by Tenant, then
one-half of such excess rent and other consideration shall be deemed additional rent owed by Tenant to Landlord,and
shall be payable to Landlord by Tenant in the same manner and on the same terms as installments of Base Rental are
payable by Tenant hereunder(or upon Tenant's receipt thereof, whichever is earlier); or (ii) to refuse to consent to
Tenant's assignment or subleasing of such space and to continue this Lease in full force and effect as to the entire
Premises; or (iii) to cancel this Lease (or the applicable portion thereof as to a partial subletting) as of the
commencement date stated in the above-mentioned notice from Tenant of its desire to enter into such subletting or
assignment, in which event the term of this Lease, and the tenancy and occupancy of the Premises (or the applicable
portion thereof as to a partial subletting) by Tenant thereunder, shall terminate as if the cancellation date was the
original termination date of this Lease. if Landlord should fail to notify Tenant in writing of such election within such
thirty(30)day period,Landlord shall be deemed to have elected option(ii)above. If Landlord elects to exercise option
(i) above, Tenant agrees to provide, at its expense and at a location approved by Landlord, direct access from such
sublet space to exterior access doors of the Building. Notwithstanding Landlord's consent to any assignment or
subletting, no further or subsequent assignment or subletting shall be permitted unless Landlord consents in writing
thereto.
26. Transfers by Landlord. Landlord shall have the right to transfer and assign, in whole or in part,all its rights
and obligations hereunder and in the Complex and other property referred to herein, and in such event and upon such transfer
(any such transferee to have the benefit of,and be subject to,the rights and obligations of Landlord hereunder),Landlord shall be
released from any further obligations hereunder,and Tenant agrees to look solely to such successor in interest of Landlord for the
performance of such obligations.
27. Subordination to Mortgage. This Lease is subject and subordinate to any mortgage or deed of trust that may
now or hereafter encumber the Premises or Complex for which Tenant is furnished a non-disturbance agreement reasonably
acceptable to Tenant by which the mortgagee agrees that Tenant's quiet possession of the Premises shall not be disturbed if
Tenant is not in default under the Lease,and to all renewals,modifications,consolidations,replacements,and extensions thereof.
This clause shall be self-operative and no further instrument of subordination need be required by any mortgagee or beneficiary;
provided that any such mortgagee or beneficiary may elect to make this Lease superior to such mortgage or deed of trust by
written instrument delivered to Tenant. In confirmation of such subordination, however, Tenant shall,within five(5)days after
Landlord's request,execute any certificate or instrument evidencing such subordination that Landlord or its lender may request,
provided that such subordination contains an acceptable non-disturbance agreement as set forth above. Tenant hereby constitutes
and appoints Landlord as Tenant's attorney-in-fact to execute any such certificate or instrument for and on behalf of Tenant. In
the event of the enforcement by the mortgagee or beneficiary under any such mortgage or deed of trust of the remedies provided
for by law or by such mortgage or deed of trust, Tenant will, at the option of any person or party succeeding to the interest of
Landlord as a result of such enforcement, attom to and automatically become the Tenant of such successor in interest without
change in the terms or other provisions of this Lease;provided,however,that such successor in interest shall not be:(i)bound by
any payment of rent or additional rent for more than one (1) month in advance, except advance rental payments expressly
provided for in this Lease;(ii)any modification of this Lease made without the written consent of such mortgagee or beneficiary
or such successor in interest;(iii) liable for any act or omission of Landlord;or(iv)subject to any offset or defense arising prior
to the date such successor in interest acquired title to the Building. Upon request by any mortgagee or beneficiary,Tenant shall
execute and deliver an instrument or instruments confirming the attomment provided for herein.
28. Mechanic's Lien. Tenant shall not permit any mechanic's lien or liens to be placed upon the Premises or the
Complex during the term hereof caused by or resulting from any work performed,materials furnished,or obligation incurred by
or at the request of Tenant, and nothing contained in this Lease shall be deemed as constituting the consent or request of
Landlord, express or implied, to any contractor, subcontractor, laborer,or materialman for the performance of any labor or the
furnishing of any materials for any specific improvement,alteration,or repair to the Premises,or any part thereof,nor as giving
Tenant any authority to contract for or permit the rendering of any services or the furnishing of any materials that would give rise
to the filing of any mechanic's or other liens against the interest of Landlord in the Premises. If such a lien is filed upon the
interest of Landlord or Tenant in the Premises or the Complex,Tenant shall cause the same to be discharged of record within ten
(10)days after the filing of same. If Tenant shall fail to discharge such mechanic's lien within such period,then, in addition to
any other right or remedy of Landlord, Landlord may discharge the same,either by paying the amount claimed to be due,or by
procuring the discharge of such lien by deposit in court or bonding. Any amount paid by Landlord for any of the aforesaid
purposes,or for the satisfaction of any other lien not caused by Landlord,with interest thereon at the rate hereinafter provided
from the date of payment,shall be paid by Tenant to Landlord immediately on demand as rent.
29. Estoenel Certificate. Tenant will, at any time and from time to time following the Delivery Date, within
three(3)days from any written request by Landlord,execute,acknowledge,and deliver to Landlord a statement in writing in the
form attached hereto as Exhibit I (as may be reasonably modified by Landlord), executed by Tenant certifying to Landlord
EXHIBIT I—Page 12
DAL:387530.6
and/or any party designated by Landlord that(if such is the case)Tenant is in possession of the Premises under the terms of this
Lease, that this Lease is unmodified and in full effect (or, if there have been modifications, that this Lease is in full effect as
modified, and setting forth such modifications), the dates to which the rent has been paid, that to the knowledge of Tenant no
default exists hereunder or specifying each such default of which Tenant may have knowledge,and such other matters as may be
reasonably requested by Landlord,it being intended that any such certificate or statement delivered pursuant hereto may be relied
upon by Landlord and by any purchaser of title to the Premises and/or Land or any part thereof or by any mortgagee or any
assignee thereof or by any party to a sale leaseback of the Premises or Land. Any such statement by Tenant may be relied upon
by any prospective purchaser or mortgagee of the Complex. Failure to timely deliver an estoppel certificate in accordance
herewith shall constitute an event of default hereunder.
30. Events of Default.
(a) The following events shall be events of default by Tenant under this Lease:
(i) Tenant shall fail or refuse to pay any installment of the rent hereby reserved or other sum
of money payable hereunder or under any other agreement between Landlord and Tenant when due and such
failure or refusal shall continue for ten(10)days after written notice thereof from Landlord to Tenant.
(ii) Tenant shall fail or refuse to comply with any term,provision,or covenant of this Lease,
other than the payment of rent,or any term,provision,or covenant of any other agreement between Landlord
and Tenant,and shall not cure such failure or refusal within thirty(30)days after written notice thereof from
Landlord to Tenant,or if such failure or refusal cannot reasonably be cured within said 30-day period,Tenant
shall fail to commence action to cure same within such 30-day period or,having so commenced action,fails
to thereafter diligently pursue same.
(iii) Tenant or any Guarantor shall become insolvent, make a transfer in fraud of creditors,
make a general assignment for the benefit of creditors,or admit in writing its inability to pay its debts as they
become due.
(iv) Tenant or any Guarantor shall file a petition under any section or chapter of the Federal
Bankruptcy Code, as amended from time to time,or under any similar law or statute or the United States or
any State thereof,or an order for relief shall be entered against Tenant or any Guarantor in any bankruptcy or
insolvency proceedings, or a petition or answer proposing the entry of an order for relief against Tenant or
any Guarantor in a bankruptcy or its reorganization proceedings under any present or future federal or state
bankruptcy or similar law shall be filed in any court and not discharged or denied within sixty(60)days after
its filing.
(v) A receiver,trustee or custodian shall be appointed for all or substantially all of the assets
of Tenant or any Guarantor or any of Tenant's property located therein in any proceeding brought by Tenant
or any Guarantor, or any such receiver, trustee or custodian shall be appointed in any proceeding brought
against Tenant or any Guarantor and shall not be discharged within sixty(60)days after such appointment,or
Tenant or such Guarantor shall consent to or acquiesce in such appointment.
(vi) Tenant's leasehold interest hereunder shall be taken in execution or other process of law
in any action against Tenant.
(vii) Tenant shall cease to conduct its business in the Premises or shall vacate any substantial
portion of the Premises,whether or not rent continues to be paid.
(viii) Tenant shall fail or refuse to move into or take possession of the Premises within fifteen
(15)days after the Commencement Date.
(b) If an event of default occurs, Landlord shall have the right to pursue any one or more of the
following remedies in addition to all other rights or remedies provided herein or at law or in equity:
(i) Landlord may terminate this Lease or,without terminating this Lease,terminate Tenant's
right of possession and forthwith repossess the Premises by forcible entry and detainer suit or otherwise
without liability for trespass or conversion and be entitled to recover as damages a sum of money equal to the
total of: (A) the cost of recovering the Premises; (B) the unpaid rent due and payable at the time of
termination, plus interest thereon at the rate hereinafter specified from the due date; (C) the balance of the
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DAL:387530.6
rent for the remainder of the term less the fair market value of the Premises for such period; and (D) any
other sum of money and damages owed by Tenant to Landlord.
(ii) Landlord may terminate Tenant's right of possession and may repossess the Premises by
forcible entry or detainer suit or otherwise without liability for trespass or conversion, without demand or
notice of any kind to Tenant and without terminating this Lease, in which event Landlord may, but shall be
under no obligation to unless required by applicable law, relet the same for the account of Tenant for such
rent and upon such terms as shall be satisfactory to Landlord. For the purpose of such reletting,Landlord is
authorized to decorate or to make any repairs,changes,alterations,or additions in or to the Premises that may
be necessary or convenient. If Landlord exercises the remedies provided in this subparagraph,Tenant shall
pay to Landlord, and Landlord shall be entitled to recover from Tenant, an amount equal to the total of the
following: (A) unpaid rent, plus interest at the rate hereinafter provided, owing under this Lease the for all
periods of time that the Premises are not relet;plus(B)the cost of recovering possession,and all of the costs
and expenses of such decorations, repairs, changes, alterations, and additions, and the expense of such
reletting and of the collection of the rent accruing therefrom to satisfy the rent provided for in this Lease to be
paid; plus (C) any deficiency in the rentals and other sums actually received by Landlord from any such
reletting from the rent and additional rent required to be paid under this Lease with respect to the periods the
Premises are so relet, and Tenant shall satisfy and pay any such deficiency upon demand therefor from time
to time. Tenant agrees that Landlord may file suit to recover any sums falling due under the terms of this
subparagraph from time to time;and that no delivery or recovery of any portion due Landlord hereunder shall
be a defense in any action to recover any amount not theretofore reduced to judgment in favor of Landlord,
nor shall such reletting be construed as an election on the part of Landlord to terminate this Lease unless a
written notice of such intention be given to Tenant by Landlord. Notwithstanding any such reletting without
termination,Landlord may at any time thereafter elect to terminate this Lease for such previous default.
(iii) Offset against any rents,damages, or other sums of money owed by Tenant any security
deposit and/or any advance rent applicable to any time period after the occurrence of the default and any
sums which would then or thereafter otherwise be due from Landlord to Tenant.
(iv) Landlord may alter locks and other security devices at the Premises in accordance with
applicable law.
(v) Without terminating this Lease,and with or without notice to Tenant,enter into and upon
the Premises or Land or any part thereof and without being liable for prosecution or any claim for damages
therefor, maintain the Premises or Land or any part thereof and repair or replace any damage thereto or do
anything or make payment for which Tenant is responsible hereunder. Tenant shall reimburse Landlord
immediately upon demand for any expenses which Landlord incurs in thus effecting Tenant's compliance
under this Lease and Landlord shall not be liable to Tenant for any damages with respect thereto.
(vi) Without liability to Tenant or any other party and without constituting a constructive or
actual eviction, suspend or discontinue furnishing or rendering to Tenant any property, material, labor,
utilities or other service,wherever Landlord is obligated to furnish or render the same so long as Tenant is in
default under this Lease.
(vii) With or without terminating this Lease, allow the Premises to remain unoccupied and
collect rent from Tenant as it comes due.
(viii) Fulfill any obligation of Tenant under this Lease, including, without limitation, the
payment of insurance premiums or obtaining insurance policies required under this Lease, and Tenant shall
reimburse Landlord upon demand (which such reimbursement shall constitute a part of Additional Rent) for
all costs,expenses and/or premiums paid by Landlord.
(ix) Continue this Lease in full force and effect, and Landlord shall have the right to collect
Base Rental,Additional Rent and any other rent when due.
31. Lien for Rent. Tenant hereby grants to Landlord a lien and security interest on all property of Tenant now or
hereafter placed in or upon the Premises, and such property shall be and remain subject to such lien and security interest of
Landlord for payment of all rent hereunder. The provisions of this paragraph relating to such lien and security interest shall
constitute a security agreement under the Uniform Commercial Code so that Landlord shall have and may enforce a security
interest on all property of Tenant now or hereafter placed in or on the Premises by Tenant, including, but not limited to, all
fixtures, machinery, equipment, furnishings, and other articles of personal property. Tenant shall execute from time to time as
EXHIBIT I—Page 14 g4lI-II�IIQn?'JU
DAL:387530.6 �, ?T"`fi► aH1 9kG�1�
debtor such financing statements or continuation statements as Landlord may hereafter reasonably request in order to perfect such
security interests. Landlord may at its election at any time file a copy of this Lease as a financing statement. Landlord, as
secured party,shall be entitled to all of the rights and remedies afforded a secured party under the Uniform Commercial Code in
addition to the landlord's liens and rights provided by law or by the other terms and provisions of this Lease. Upon request,
Landlord shall subordinate its statutory and any contractual landlord's lien to any security interest granted by Tenant to a third
party lender in Tenant's furniture,fixtures,equipment or inventory.
32. Attorneys' Fees. If Tenant defaults in the performance of any terms, covenants, agreements, or conditions
contained in this Lease and Landlord places the enforcement of this Lease or the collection of any rent due or to become due
hereunder,or recovery of the possession of the Premises in the hands of an attorney,or files suit upon the same,Tenant agrees to
pay Landlord's reasonable attorneys' fees and expenses. In addition,if Tenant requests any consent or other action on the part of
Landlord, in connection with which Landlord deems it necessary for any documents to be prepared or reviewed by its counsel,
Tenant shall pay all reasonable attorneys' fees and expenses incurred by Landlord in such connection. If Landlord defaults in the
performance of any terms, covenants, agreements, or conditions contained in this Lease and Tenant places the enforcement of
this Lease in the hands of an attorney,or files suit upon the same,Landlord agrees to pay Tenant's reasonable attorneys' fees and
expenses.
33. No Implied Waiver. The failure of Landlord to insist at any time upon the strict performance of any covenant
or agreement or to exercise any option, right, power,or remedy contained in this Lease shall not be construed as a waiver or a
relinquishment thereof for the future. The waiver of or redress for any violation of any term,covenant,agreement,or condition
contained in this Lease shall not prevent a subsequent act,which would have originally constituted a violation, from having all
the force and effect of an original violation. No express waiver shall affect any condition other than the one specified in such
waiver and then only for the time and in the manner specifically stated. A receipt by Landlord of any rent with knowledge of the
breach of any covenant or agreement contained in this Lease shall not be deemed a waiver of such breach, and no waiver by
either party of any provision of this Lease shall be deemed to have been made unless expressed in writing and signed by such
party. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly installment of rent due under this Lease
shall be deemed to be other than on account of the earliest rent due hereunder, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as 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 pursue any other remedy in
this Lease provided.
34. Casualty Insurance. Landlord shall maintain fire and extended coverage insurance on the Building at the
expense of Tenant(as a part of the Basic Costs). Such insurance shall be maintained with an insurance company authorized to do
business in Texas, in amounts and with deductibles desired by Landlord(but in no event for less than the full replacement value
of the Building),and payments for losses thereunder shall be made solely to Landlord. Tenant shall maintain at its expense fire
and extended coverage insurance on all of its personal property, including removable trade fixtures, located in the Premises and
on all additions and improvements made by Tenant and not required to be insured by Landlord above. Tenant shall also maintain
business interruption insurance covering the Premises.
35. Liability Insurance.
(a) Tenant shall,effective as of its occupancy of the Premises(including without limitation during any
Preparation Work), at its expense, maintain a policy or policies of comprehensive general liability insurance covering
the Premises and Tenant's use thereof against bodily injury or death,third party property damage and product liability
occurring upon,in or about the Premises,with the premiums thereon fully paid on or before the due date,issued by and
binding upon an insurance company authorized to do business in Texas,with an A.M.Best Rating of at least A-VII and
acceptable to Landlord, such insurance to be written on an occurrence basis (not a claims made basis), to be in
combined single limit amounts not less than$2,000,000.00 for each policy year,with$5,000,000.00 of excess general
liability insurance.All renewal or additional policies shall be procured and maintained by Tenant in like manner and to
the like extent. The insurance coverage required under this Section 35(a) shall, in addition, extend to any liability of
Tenant arising out of the indemnities provided for in Section 36 and,if necessary,the policy shall contain a contractual
endorsement to that effect.
(b) At least fifteen (15) days prior to Tenant's occupancy of the Premises, Tenant shall provide
Landlord with a duplicate policy and a valid certificate for the foregoing liability insurance and Tenant's property
insurance policies,effective as of the dates applicable under the terms of this Lease required by this Lease. Each and
every such policy:
(i) shall name Landlord, Koll Development Company, the property manager for the
Complex, as well as any lender of which Tenant has received notice, and any other party reasonably
designated by Landlord,who has an insurable interest,as an additional insured;
EXHIBIT I—Page 15
DAL:387530.6
(ii) shall be delivered to Landlord prior to the Commencement Date and thereafter within
fifteen (15) days after the scheduled expiration date of each such policy (provided Tenant shall not allow
coverage to lapse),and,as often as any such policy shall expire or terminate. Renewal or additional policies
shall be procured and maintained by Tenant in like manner and to like extent;
(iii) shall contain a provision that the insurer will give to Landlord and such other parties in
interest at least thirty (30) days notice in writing in advance of any contemplated, intended or effective
material change, nonrenewal, cancellation, termination or lapse of any coverage provisions or limits, or the
effective date of any reduction in the amounts of insurance;
(iv) shall be written as a primary policy which does not contribute to and is not in excess of
coverage which Landlord may carry;and
(v) a Waiver of Subrogation in favor of Landlord and agents,employees, servants,directors,
officers, contractors, and subcontractors of Landlord, with respect to the insurance coverage and claims of
Tenant.
Any obligation on the part of Tenant to furnish insurance may be satisfied by adding the Premises and/or Landlord to
Tenant's blanket property and/or liability insurance policies.
36. Indemnity. LANDLORD SHALL NOT BE LIABLE TO TENANT, OR TO TENANT'S AGENTS,
CONTRACTORS, SERVANTS, EMPLOYEES, CUSTOMERS, OR INVITEES, AND TENANT SHALL INDEMNIFY,
DEFEND AND HOLD HARMLESS LANDLORD, LANDLORD'S ASSET MANAGER, LANDLORD'S SUBASSET
MANAGER, LANDLORD'S PARTNERS, ANY SUBSIDIARY OR AFFILIATE OF LANDLORD AND THE OFFICERS,
DIRECTORS, SHAREHOLDERS, PARTNERS, EMPLOYEES, MANAGERS, INDEPENDENT CONTRACTORS,
ATTORNEYS AND AGENTS OF ANY OF THE FOREGOING (COLLECTIVELY, THE "INDEMNITEES") FROM AND
AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION, JUDGMENTS, COSTS AND EXPENSES, AND
ALL LOSSES AND DAMAGES(INCLUDING WITHOUT LIMITATION CONSEQUENTIAL AND PUNITIVE DAMAGES)
ARISING FROM THE USE BY TENANT OR ITS AGENTS, INDEPENDENT CONTRACTORS, SERVANTS,
EMPLOYEES, CUSTOMERS, OR INVITEES OF THE PREMISES OR COMPLEX, OR FROM THE CONDUCT OF ITS
BUSINESS OR FROM ANY ACTIVITY, WORK,OR OTHER ACTS OR THINGS DONE,PERMITTED OR SUFFERED BY
TENANT IN OR ABOUT THE PREMISES OR COMPLEX, AND SHALL FURTHER INDEMNIFY,DEFEND AND HOLD
HARMLESS THE INDEMNITEES FROM AND AGAINST ANY AND ALL CLAIMS ARISING FROM ANY BREACH OR
DEFAULT IN THE PERFORMANCE OF ANY OBLIGATION ON TENANT'S PART TO BE PERFORMED UNDER THE
TERMS OF THIS LEASE,OR ARISING FROM ANY ACT,OMISSION OR NEGLIGENCE OR WILLFUL OR CRIMINAL
MISCONDUCT OF TENANT, OR BY TENANT OR ITS AGENTS, INDEPENDENT CONTRACTORS, SERVANTS,
EMPLOYEES, CUSTOMERS, OR INVITEES AND FROM ALL REASONABLE COSTS, ATTORNEYS' FEES AND
DISBURSEMENTS, AND LIABILITIES INCURRED IN THE DEFENSE OF ANY SUCH CLAIM OR ANY ACTION OR
PROCEEDING WHICH MAY BE BROUGHT AGAINST,OUT OF OR IN ANY WAY RELATED TO THIS LEASE. UPON
NOTICE FROM LANDLORD,TENANT SHALL DEFEND ANY SUCH CLAIM,DEMAND,CAUSE OF ACTION OR SUIT
AT TENANT'S EXPENSE BY COUNSEL SATISFACTORY TO LANDLORD IN ITS SOLE DISCRETION. AS A
MATERIAL PART OF THE CONSIDERATION TO LANDLORD FOR THIS LEASE,TENANT HEREBY ASSUMES ALL
RISK OF DAMAGE TO PROPERTY OR INJURY TO PERSONS IN, UPON OR ABOUT THE PREMISES FROM ANY
CAUSE, AND TENANT HEREBY WAIVES ALL CLAIMS WITH RESPECT THERETO AGAINST LANDLORD. THE
PROVISIONS OF THIS PARAGRAPH SHALL SURVIVE THE EXPIRATION OR SOONER TERMINATION OF THIS
LEASE.
37. Waiver of Subrogation Rights. Anything in this Lease to the contrary notwithstanding,Landlord and Tenant
each hereby waives all rights of recovery, claim, action,or cause of action, against the other, its agents, officers,or employees,
for any loss or damage that may occur to the Premises or the Complex of which the Premises are a part,by reason of fire, the
elements, or any other cause which is required to be insured against under the terms of standard fire and extended coverage
insurance policies referred to in Section 34 hereof or is otherwise insured against under an insurance policy maintained by the
party suffering such loss or damage, regardless of cause or origin, including any negligence of the other party hereto and/or its
agents, officers, or employees, and each party covenants that no insurer shall hold any right of subrogation against such other
party. Each party hereto agrees to give immediately to any insurer that has issued to it policies of fire and extended coverage
insurance written notice of the mutual waiver contained in this provision and to have such policies endorsed, if necessary, to
prevent the invalidation of insurance coverage by reason of such mutual waiver.
38. Casualty Damaee. If the Premises or any part thereof shall be damaged by fire or other casualty,Tenant shall
give prompt written notice thereof to Landlord. If: (i)the damage occurs within the last three(3)years of the Lease Term;or(ii)
the cost of such repair is in excess of fifty percent(50%)of the replacement cost of the Building, then Landlord may terminate
EXHIBIT I—Page 16
DAL:387530.6
this Lease upon written notice to Tenant within sixty(60)days of the damage. If any mortgagee or beneficiary under a mortgage
or deed of trust covering the Premises should require that the insurance proceeds payable as a result of said fire or other casualty
be applied to the balance of the mortgage debt, Landlord may,at its option,terminate this Lease and the term and estate hereby
granted by notifying Tenant in writing of such termination within sixty (60) days after the date such insurance proceeds are
applied to such mortgage debt, in which event the Base Rental hereunder shall be abated as of the date of such damage. If
Landlord does not thus elect to terminate this Lease, Landlord shall within one hundred eighty(180)days after the date of such
damage commence to repair and restore the Complex and shall proceed with reasonable diligence to restore the Complex(except
that Landlord shall not be responsible for delays outside its control) to substantially the same condition in which it was
immediately prior to the happening of the casualty, except that Landlord shall not be required to rebuild, repair, or replace any
part of Tenant's furniture or furnishings or fixture and equipment removable by Tenant under the provisions of this Lease, but
such work shall not exceed the scope of the work done by Landlord in originally constructing the Building nor shall Landlord in
any event be required to spend for such work an amount in excess of the insurance proceeds actually received by Landlord as a
result of the fire or other casualty. Tenant agrees that promptly after completion of such work by Landlord,Tenant will proceed
with reasonable diligence and at Tenant's sole cost and expense to restore, repair and replace all alterations, additions,
improvements, fixtures and equipment installed by Tenant. Landlord shall not be liable for any inconvenience or annoyance to
Tenant or injury to the business of Tenant resulting in any way from such damage or the repair thereof, except that, Landlord
shall allow Tenant a fair diminution of rent during the time and to the extent the Premises are unfit for occupancy. Any insurance
which may be carried by Landlord or Tenant against loss or damage to the Complex or to the Premises shall be for the sole
benefit of the party carrying such insurance and shall be under its sole control. Tenant shall use proceeds from insurance carried
by Tenant to repair and restore Tenant's property.
In the event that either the Premises or the Building are damaged or destroyed by fire or other casualty to such an extent
that Landlord cannot or does not repair or rebuild same within 180 days following Landlord's receipt of insurance proceeds,
Tenant may at its option(as Tenant's sole remedy)terminate this Lease upon 30 days'prior written notice to Landlord,provided
that such notice of termination shall be null and void if Landlord completes the repair or rebuilding within such 30-day period.
39. Condemnation. If the Premises shall be taken or condemned for public purpose, or shall be sold in lieu
thereof,to such extent as to render the Premises untenantable for the permitted use,this Lease shall,at the option of either parry,
cease and terminate as of the date of such taking or condemnation. Either party may exercise such option to terminate by written
notice to the other parry within fifteen (15) days after such taking or condemnation. All proceeds from any taking or
condemnation of the Premises shall belong to and be paid to Landlord. Upon termination pursuant to this Section,Tenant shall
immediately vacate the Premises and any obligation or liability of Tenant, actual or contingent, under this Lease which has
accrued or is due on or prior to such termination date shall survive.
If by reason of a taking or conveyance of the Premises, the Building or the common areas by way of(or in lieu of)
eminent domain, the Premises are rendered substantially unusable for Tenant's business by reason of inability to access the
Premises through public or private roadways, Tenant may cease its operations until reasonable access is available, and during
such period as Tenant ceases its use of the Premises until accessability is restored, the payment of rent and all other charges
required hereunder to be paid to Landlord shall abate. If the Premises are rendered substantially unusable by reason of such
taking or conveyance for more than 180 consecutive days, and Tenant ceases its use for more than 180 consecutive days, either
Landlord or Tenant may terminate this Lease by written notice to the other.
40. Damages from Certain Causes. Landlord shall not be liable to Tenant for any delay or for any loss or damage
to any property or person occasioned by theft, fire, act of God, public enemy, injunction, riot, strike, insurrection, war, court
order,requisition,or order of government body or authority,or for any damage or inconvenience which may arise through repair
or alteration of,or failure to repair,any part of the Complex or Premises necessitated by such causes. Tenant,to the fullest extent
permitted under applicable law, hereby waives any claim or cause of action which may now exist or hereafter arise under any
applicable deceptive trade practices law or consumer protection law or any successor statute.
41. Notice and Cure. In the event of any act or omission by Landlord that would give Tenant the right to
damages from Landlord or the right to terminate this Lease by reason of a constructive or actual eviction from all or part of the
Premises or otherwise, Tenant shall not sue for such damages or exercise any such right to terminate until it shall have given
written notice of such act or omission to Landlord and to the holder(s)of the indebtedness or other obligations secured by any
mortgage or deed of trust affecting the Premises,and thirty(30)days shall have elapsed following the giving of such notice(or if
such act or omission cannot reasonably be cured within said 30-day period,the applicable party shall fail to commence action to
cure same within such 30-day period or, having so commenced action, fail to thereafter diligently pursue same), during which
time Landlord and such holder(s),or either of them,their agents or employees,shall be entitled to enter upon the Premises and do
therein whatever may be necessary to remedy such act or omission. During the period after the giving of such notice and during
the remedying of such act or omission, the Base Rental payable by Tenant for such period as provided in this Lease shall be
abated and apportioned only to the extent that any part of the Premises shall be untenantable for the permitted use due to an act or
omission of Landlord.
EXHIBIT I—Page 17
DAL:387530.6
42. Personal Liability. The liability of Landlord, any agent of Landlord, or any of their respective officers,
directors,shareholders,or employees to Tenant for or in respect of any default by Landlord under the terms of this Lease or in
respect of any other claim or cause of action shall be limited to the interest of Landlord in the Premises and Building,and Tenant
agrees to look solely to Landlord's interest in the Premises and Building for the recovery and satisfaction of any judgment against
Landlord,any agent of Landlord,or any of their respective officers,directors,shareholders,and employees.
43. Notice. Any notice, communication, request, reply or advice (collectively, a"notice") provided for in this
Lease must be in writing, and shall, unless otherwise expressly provided in this Lease, be given or be served by depositing the
same in the United States mail,postpaid and certified and addressed to the party to be notified,with return receipt requested,or
by delivering the same in person to an officer of such party,or by consigning the same to a recognized overnight delivery service
operating on a nationwide basis, addressed to the party to be notified. Notice deposited in the mail in the manner hereinabove
described shall be effective,unless otherwise stated in this Lease,three(3)days after it is so deposited. Notice given in any other
manner shall be effective upon delivery. The addresses for the delivery of any notices hereunder shall, until changed as herein
provided,be those specified on the first page of this Lease. With respect to Landlord,an additional copy shall be delivered to(i)
CentrePort Properties, Inc., c/o AEW Capital Management, L.P.,225 Franklin Street, Boston, Massachusetts 02110, Attention:
Mr. Mark Mollica, and (ii) Andrews & Kurth L.L.P., 1717 Main Street, Suite 3700, Dallas, Texas 75201, Attention: Jonetta
Brooks, Esq. With respect to Tenant,an additional copy shall be delivered to Roger Neely, Albert,Neely&Kuhlmann,L.L.P.,
309 West 7th Street,Suite 1200,Fort Worth,Texas 76102. A party hereto may change its address by at least fifteen(15)days
written notice to the other party delivered in compliance with this paragraph; provided, however, that no such notice shall be
effective until actually received by the other party and provided further that during the Lease Term any notice to Tenant shall be
deemed duly given if delivered to an officer of Tenant at the Premises.
44. Captions. The captions and headings appearing in this Lease are solely for convenience and shall not be
given any effect in construing this Lease.
45. Entirety and Amendments. This Lease embodies the entire contract between the parties hereto,relative to the
subject matter hereof. Except as otherwise herein provided,no variations,modifications,changes,or amendments hereof shall be
binding upon any party hereto unless in writing,executed by a duly authorized officer or agent of the particular party. Landlord
and Tenant have fully negotiated the provisions of this Lease and, notwithstanding any rule or principle of law or equity to the
contrary, no provision of the Lease shall be construed in favor of or against either party by virtue of the authorship or purported
authorship thereof.
46. Severability. If any term or provision of this Lease shall be invalid or unenforceable to any extent, the
remainder of this Lease shall be not be affected thereby,and each term and provision of this Lease shall be valid and enforced to
the fullest extent permitted by law.
47. BindingEf�'ect. All covenants and obligations contained within this Lease shall bind and inure to the benefit
of Landlord, its successors and assigns, and shall be binding upon Tenant, its heirs, administrators, representatives, permitted
successors and assigns.
48. Number and Gender of Words. All personal pronouns used in this Lease shall include the other gender,
whether used in the masculine,feminine,or neuter gender,and the singular shall include the plural whenever and as often as may
be appropriate.
49. Recordation. Tenant shall not record this Lease; provided, however, the parties agree to execute in
recordable form a memorandum hereof which notes at a minimum the Lease Term, the Expansion Option on the Land and
renewal options, which either party may record. In the event this Lease or a memorandum of this Lease is recorded and
thereafter Tenant is in default after expiration of any cure periods under the Lease and the Lease is terminated by Landlord
pursuant to a right contained in the Lease,Landlord may execute and file an affidavit in the public records of the county in which
the Property is located stating no less than the following(the"Affidavit"):
a. The Lease has been terminated;and
b. The date of termination;and
C. Tenant's rights under the Lease to occupy the Premises have been terminated pursuant to the terms of the
Lease.
d. The attached legal description of the Land shall be attached to the Affidavit to advise any third party who
reviews the record title of the Land that the Affidavit has been filed and the date of the filing.
The Affidavit shall be filed in the public records and a copy forwarded to Tenant in accordance with the
provisions of Section 43. In the event Tenant fails to file in the public records an unequivocal statement that: (i)the Lease has
not been terminated by Landlord;(ii)Tenant is entitled to continued possession of the Premises under the Lease;with(iii)a copy
0VI ��.�1
EXHIBIT I—Page 18 ��
DAL:387530.6
of the legal description of the Land attached (the "Counter Affidavit"), within thirty (30) days following the filing of the
Affidavit and giving notice to Tenant with a copy of the Affidavit as provided in the Lease,the recorded Lease or memorandum
thereof shall cease to be notice, constructive or otherwise of the existence of a valid Lease encumbering the Premises granting
rights to Tenant and any third party may accept the filing of the Affidavit and failure of Tenant to file a Counter Affidavit, as
provided herein, within the time provided, as termination of any rights that may otherwise exist by reason of the filing of the
Lease or memorandum thereof.
In the event the Lease is terminated pursuant to a right given to Tenant under this Lease, by the
mutual agreement of Landlord and Tenant, or by its terms because of expiration of the term or otherwise by agreement,Tenant
covenants and agrees to execute and deliver to Landlord a document in recordable form stating that the Lease has been
terminated and is no longer in force and effect on the Land and Premises.
50. Governing Law. This Lease and the rights and obligations of the parties hereto shall be interpreted,
construed,and enforced in accordance with the laws of the State of Texas,without regard to principles of conflict of laws. Venue
for any action arising hereunder shall be exclusively in the state and federal courts of Tarrant County,Texas.
51. Interest Rate. All past-due rents or other sums payable by Tenant hereunder, and any sums advanced by
Landlord for Tenant's account pursuant to applicable provisions hereof, shall bear interest from the date due or advanced until
paid at the lesser of twelve percent(12%)per annum,or the maximum lawful rate in effect at the time such payment was due or
sum was advanced.
52. Force Majeure. Whenever a period of time is herein prescribed for the taking of any action by either party
(other than the payment of money), such party shall not be liable or responsible for, and there shall be excluded from the
computation of such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war,
governmental laws, regulations or restrictions, or any act, omission, delay, or neglect of the other party or any of such other
party's employees or agents,or any other cause whatsoever beyond the control of such party(other than the payment of money).
53. Intentionally Deleted.
54. Reserved Rights. Without limiting in any way Landlord's right to promulgate rules and regulations,
Landlord shall have the following rights, exercisable in good faith without notice and without liability to Tenant for damage or
injury to property,persons or business and without effecting an eviction,constructive or actual,or disturbance of Tenant's use or
possession or giving rise to any claim for set off or abatement of rent:
(a) To change the Building's and/or the Complex's name,design or street address.
(b) To approve, restrict, install, affix, maintain, and remove any and all signs on the exterior and
interior of the Building.
(c) To designate and approve,prior to installation,all types of window shades,blinds,drapes,awnings,
window ventilators and other similar equipment and to control all internal lighting that may be visible from the exterior
of the Building.
(d) To prohibit the use of the roof of the Building by Tenant,unless approved in writing by Landlord.
(e) To retain at all times, and to use in appropriate instances, keys to all doors within and to the
Premises.
(f) To decorate and to make repairs, alterations, additions, changes or improvements, whether
structural or otherwise,in and about the Complex,or any part thereof,and for such purposes to enter upon the Premises
and, during the continuance of any such work, to temporarily close doors and entryways, to interrupt or temporarily
suspend Complex services and facilities and to change the arrangement and location of entrances and other public parts
of the Complex, all without abatement of rent or affecting any of Tenant's obligations hereunder, so long as the
Premises are reasonably accessible.
(g) To have and retain a paramount title to the Premises free and clear of any act of Tenant purporting
to burden or encumber it.
(h) To grant to anyone the exclusive right to conduct any business or render any service in or to the
Complex,provided such exclusive right shall not operate to exclude Tenant from the use expressly permitted herein.
EXHIBIT I—Page 19
DAL:387530.6
(i) To approve the weight, size and location of safes and other heavy equipment and articles in and
about the Premises and the Complex,and to require all such items and furniture and similar items to be moved into and
out of the Complex and the Premises only at such times and in such manner as Landlord shall direct in writing.
Movements of Tenant's property into or out of the Complex and within the Complex are entirely at the risk and
responsibility of Tenant, and Landlord reserves the right to require permits before allowing any such property to be
moved into or out of the Complex. In this respect,Landlord approves the weight,size and location of Tenant's printing
presses and related equipment to the extent same are accounted for in the Plans and Specifications.
0) To take all such reasonable measures as Landlord may deem advisable for the security of the
Complex and its occupants, including without limitation,the closing of the Complex after normal business hours and
on Saturdays, Sundays and holidays; subject, however, to Tenant's right to admittance when the Complex is closed
after normal business hours under such reasonable regulations as Landlord may prescribe from time to time which may
include, by way of example but not of limitation,that persons entering or leaving the Complex, whether or not during
normal business hours, identify themselves to a security officer by registration or otherwise and that such persons
establish their right to enter or leave the Complex.
55. Approval by Landlord's Mortga ees. Landlord's execution and delivery of this Lease are expressly subject
to and conditioned upon approval of all of the provisions of this Lease by any lenders furnishing financing in respect of the
Building,which approval shall be conclusively presumed as between Landlord and Tenant unless Landlord gives Tenant written
notice to the contrary within ten(10)days of the execution hereof..
56. Brokers. Landlord and Tenant represent and warrant that they have had no dealing with any broker other
than Koll Real Estate Group and Stoneleigh Huff Brous McDowell in connection with the negotiation or execution of this Lease,
and each party agrees to indemnify and hold the other party harmless from any and all costs, expenses or liability for
commissions or other compensation claimed by any broker or agent other than the parties named above with respect to this
Lease. A copy of the broker commission agreement is attached hereto at Exhibit J.
57. Time of Essence. Time is of the essence of this Lease and each and every provision of this Lease.
58. Best Efforts. Whenever in this Lease there is imposed upon either party the obligation to use such party's
best efforts or reasonable efforts or diligence, such party will be required to exert such efforts or diligence only to the extent the
same are economically feasible and will not impose upon such party extraordinary financial or other burdens.
59. No Reservation. Submission by Landlord of this instrument to Tenant for examination or signature does not
constitute an offer, a reservation of or option for lease. This Lease will be effective as a lease or otherwise and shall bind the
Landlord and Tenant only upon execution and delivery by both Landlord and Tenant and the receipt by both parties of a fully
executed original thereof. Until such time as Landlord and Tenant has fully executed this Lease,each party is free to terminate
negotiations without any obligation to the other party.
60. Consents. In all circumstances under this Lease where the prior consent of one party (the "consenting
party"), whether it be Landlord or Tenant, is required before the other party(the"requesting Party")is authorized to take any
particular type of action, such consent shall not be withheld, conditioned or delayed in an unreasonable and arbitrary manner;
however,the requesting party agrees that its exclusive remedy if it believes that consent has been withheld improperly(including,
but not limited to, consent required from Landlord pursuant to Section 25)shall be to institute litigation either for a declaratory
judgment or for a mandatory injunction requiring that such consent be given(with the requesting party hereby waiving any claim
for damages,attorneys' fees or any other remedy,other than recovery of such court costs and attorneys' fees as may be awarded
by the court,unless the consenting party refuses to comply with a court order or judgment requiring it to grant its consent).
61. Legal Authority. Each individual executing or attesting this Lease on behalf of Tenant covenants,warrants
and represents that he or she is duly authorized to execute or attest and deliver this Lease on behalf of such corporation.
62. Hazardous Materials.
(a) During the term of this Lease, Tenant shall comply with all Environmental Laws and
Environmental Permits(each as defined in Section 62(d)hereof)applicable to the operation or use of the Premises,will
cause all other persons occupying or using the Premises to comply with all such Environmental Laws and
Environmental Permits,and will immediately pay or cause to be paid all costs and expenses incurred by reason of such
compliance or noncompliance.
EXHIBIT I—Page 20
DAL:387530.6
(b) Tenant shall not generate, use, treat, store, handle,release or dispose of, or permit the generation,
use,treatment,storage,handling,release or disposal of Hazardous Materials(as defined in Section 62(d)hereof)on the
Premises,or the Complex,or transport or permit the transportation of Hazardous Materials to or from the Premises or
the Complex except for such quantities as are reasonably used or stored at the Premises and required in connection with
the routine operation and maintenance of the Premises, and then only upon the written consent of Landlord and in
compliance with all applicable Environmental Laws and Environmental Permits. Attached hereto as Exhibit K are
current Emissions Inventory Reports concerning materials used in connection with the operation of Tenant's business
on the date of this Lease(the"Current Hazardous Materials"). Notwithstanding the provisions above,Tenant shall
have the right without Landlord's prior consent to use commercially reasonable quantities of Current Hazardous
Materials; and Tenant shall have the right without Landlord's prior consent to use commercially reasonable quantities
of Hazardous Materials which do not constitute Current Hazardous Materials,provided that if there is a material change
in the operations or process of Tenant's business from its operation on the date of this Lease (which shall include
without limitation material changes in raw materials or volume of materials used),then Tenant shall provide Landlord
with prior written notice of such change and such information as may be requested by Landlord, and such material
change shall be subject to Landlord's prior written consent. In addition,Tenant shall provide Landlord with copies of
MSDS sheets on any Hazardous Materials used at the Premises which do not constitute Current Hazardous Materials,
and copies of its Tier 2 reports and Emissions Inventory Reports promptly following submission of those reports to
applicable Governmental entities.
(c) Tenant agrees to defend, indemnify and hold harmless Landlord from and against all claims (as
defined herein) (including Hazardous Material removal and remedial actions and any other Governmental legal
enforcement actions,demands,notices,and requests for information)of any kind or nature whatsoever that may at any
time be incurred by, imposed on or asserted against any Indemnitees directly or indirectly based on, or arising or
resulting from:(a)the actual or alleged presence of Hazardous Materials on the Complex which is caused or permitted
by Tenant; and (b) any Environmental Claim relating in any way to Tenant's operation or use of the Premises (the
"Hazardous Materials Indemnified Matters"). The provisions of this Section 62 shall survive the expiration or
sooner termination of this Lease.
(d) As used herein, the following terms shall have the following meanings: "Hazardous Materials"
means (i) petroleum or petroleum products, natural or synthetic gas, asbestos in any form that is or could become
friable,urea formaldehyde foam insulation,and radon gas;(ii)any substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes,""toxic substances,""toxic pollutants,""contaminants" or"pollutants,"or words of similar import,
under any applicable Environmental Law; and (iii) any other substance exposure which is regulated by any
governmental authority. "Environmental Law" means any federal, state or local statute, law, rule, regulation,
ordinance,code,policy or rule of common law now or hereafter in effect and in each case as amended,and any judicial
or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment,
relating to the environment, health, safety or Hazardous Materials, including without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601 et seg. as amended; the
Resource Conservation and Recovery Act,42 U.S.C. §§ 6901 et sea.; the Hazardous Materials Transportation Act,49
U.S.C. §§ 1801 et seg.; the Clean Water Act,33 U.S.C. §§ 1251 et sea.; the Toxic Substances Control Act, 15 U.S.C.
§§2601 et sea.;the Clean Air Act,42 U.S.C. §§7401 et seo.;the Safe Drinking Water Act,42 U.S.C. §§ 300f et sea.;
the Atomic Energy Act,42 U.S.C. §§2011 et seo.;the Federal Insecticide,Fungicide and Rodenticide Act,7 U.S.C.§§
136 et sea.; the Occupational Safety and Health Act, 29 U.S.C. §§ 651 et sea. "Environmental Claims"means any
and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of non-
compliance or violation, investigations,proceedings, consent orders or consent agreements relating in any way to any
Environmental Law or any Environmental Permit, including without limitation: (i) any and all Environmental Claims
by governmental or regulatory authorities for enforcement, cleanup, removal, response, remedial or other actions or
damages pursuant to any applicable Environmental Law; and(ii)any and all Environmental Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment.
"Environmental Permits" means all permits, approvals, identification numbers, licenses and other authorizations
required under any applicable Environmental Law.
(e) Landlord shall have the right, but not the obligation, to enter the Premises at reasonable times
throughout the Lease Term to audit and inspect the Premises for Tenant's compliance with this Section 62.
63. Exhibits. Riders and Addenda. Exhibits A, B. C. D, E. F, G, H and I and any other exhibits, riders and
addenda attached hereto are incorporated herein and made a part of this Lease for all purposes.
EXHIBIT I—Page 21
DAL:387530.6
64. Waiver of Jury Trial. LANDLORD AND TENANT HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LEASE OR ANY DOCUMENTS CONTEMPLATED TO
BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS(WHETHER ORAL OR WRITTEN)OR ACTIONS OF EITHER PARTY ARISING OUT OF OR RELATED
IN ANY MANNER WITH THE PREMISES (INCLUDING WITHOUT LIMITATION, ANY ACTION TO RESCIND OR
CANCEL THIS LEASE OR ANY CLAIMS OR DEFENSES ASSERTING THAT THIS LEASE WAS FRAUDULENTLY
INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT FOR
LANDLORD TO ENTER AND ACCEPT THIS LEASE.
65. Construction Disputes. Any disagreement or dispute which may arise between Landlord and Tenant
concerning the Landlord Work shall be submitted to the Architect whose good faith determination, in the absence of manifest
error in judgment,shall be final and binding in resolving such dispute.
66. Option to Renew. Landlord grants Tenant the option to renew this Lease under the terms and conditions
provided for in Exhibit D attached hereto and incorporated herein for all purposes.
67. Guaranty. As a condition to Landlord's agreement to enter into this Lease, the Guarantors shall execute and
deliver the Guaranty in form and substance as Exhibit E attached hereto and incorporated herein for all purposes.
68. Charges. Landlord and Tenant are knowledgeable and experienced in commercial transactions and agree that
the provisions of this Lease for determining charges,amounts and additional rent payable by Tenant are commercially reasonable
and valid even though such methods may not state a precise mathematical formula for determining such charges.
ACCORDINGLY, TENANT VOLUNTARILY AND KNOWINGLY WAIVES ALL RIGHTS AND BENEFITS OF
TENANT UNDER SECTION 93.004 OF THE TEXAS PROPERTY CODE.
69. Tax Waiver. Tenant waives all rights pursuant to all laws to protest appraised values or receive notice of
reappraisal regarding the Premises or Complex (including without limitation Landlord's personalty), irrespective of whether
Landlord contests same.
70. Financial Reports. Within fifteen (15)days after Landlord's request(which request shall not be made more
than once in any 12-month period), Tenant will furnish to Landlord the most recent audited financial statements of Tenant
(including any notes to them) which shall be dated no more than twelve (12) months prior to the date of the request. Within
thirty(30)days after Landlord's request(which request shall not be made more than once in any 12-month period)Tenant will
furnish or cause to be furnished current financial statements of each of the Guarantors, in each case certified by the respective
Guarantor as being true and correct in all material respects. Landlord will not disclose any aspect of Tenant's or any Guarantor's
financial statements that Tenant or any Guarantor designates to Landlord as confidential except: (1) to Landlord's mortgagee or
prospective mortgagees or purchasers of the Premises;(2)in litigation between Landlord and Tenant and/or any Guarantor;and
(3)if required by court order. Tenant shall not be required to deliver the financial statements required under this Section 70 more
than once in any twelve (12) month period unless requested by Landlord's mortgagee or a prospective buyer or lender of the
Premises or an Event of Default occurs.
71. Tax Abatement Contingency. Notwithstanding anything herein to the contrary, Tenant shall have the
unconditional right to terminate this Lease by written notice given to Landlord on or before 5:00 p.m. on February 12, 2003,if
Tenant has not received to its satisfaction assurances from taxing authorities that the Premises will receive tax abatements in
amounts satisfactory to Tenant. In the event of such termination,Landlord shall deliver to Tenant all monies theretofore paid by
Tenant to Landlord, including any Security Deposit or rent, less reasonable architectural, engineering, and consultant expenses
incurred by Landlord in preparation of plans and specifications for the Building, and legal fees incurred in negotiation of this
Lease.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease in multiple original counterparts as of the
date and year first above written.
EXHIBIT I—Page 22
DAL:387530.6
LANDLORD: CENTREPORT PROPERTIES,INC.,
a Texas corporation
By:
Name:
Title:Authorized
TENANT: F.L.MOTHERAL COMPANY,
a Texas corporation
By:
Name:
Title:Authorized
1� ��,•11� �l t�',I��l /ty c,lf
EXHIBIT I—Page 23
DAL:387530.6
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EXHIBIT "E" 117 261401 PhW#
J17 479 1044 kMgv
March 17, 2002 117 42e 61155 Fxr<
Mr. prank'Moss
City of Fort Worth
400 T'hrockmorton
Fort worth. TX 76101
Re: Info Regarding Ft. `North arid Inner City Recruitment for Mo-Neral Prirldng Ca
Door Frank:
The question has arisen: why is Mozheral Printing leaving the Inner City for'the far east 'aide
'of Ft. WortO
As you will recall. MPC's property was purchased, in lieu of condemnation, by the FWISD.
We are required to be out by late September-2003: We have made four failed sttemprs It
staying in the immetliate area (inside the loop). We are moving to Centerylort as.a last.resort
to story i„ For. Wa�.h.
First, we negotiated on a site south of TCC .South campus, financing was unavailable_ Next,
wo worked on the old Tandycrafr Building in far South R Worth,-but the site was in
Bankruptcy. Next we looked at the Ben E. Keith'Bldg in downtown, which was too
expensive r6 reirofit with new presses. Finally we explored a site in Mercaptile Park,'bur it
was un- frnaceeble for our use_
Unforrunately, there are veiry few optlons for a company our size near tho Ft. Worcll CB ).
Only after A serleus attampts have we elected to go to Censer Port. !t is truly a last resrrt to
stay in The City of R. Worth..AT thin time our alternative to Center PotT is the Technol
building in North Richland Hills_
Despite the inconvience for all Motheral Printing Co, employees, we hope to not only hold
on to all.of our cub
current team, uc to add to our staff from Ft. Worcl' and the Inner.City. n
order to accomplish this goal, we will enhance our current recrtittment program with Tel:h
High School to in all the Ft- Worth High Schoole_ In addltfon, we will fnitete a.
proac'Gve recruiting program at ail campuses of TCC.
Finally with a new marketing program, which will include employee recruiting, we.W111,11 y to
lure employees bjy offering free T Rail Passes to each•employee,.in hopes most will use :he
train-to reach work.
'Our groundbreaking ceremony will be a trip on rhe train from downtown terminal io•the
Centerport Terminal with a short walk ro the site. Following rhe groundbreaking and lun:h,
we will all return to the downtown terminal. We hope this will-excite our staff To the ne w
site.
Motheral PrinTing Co, fully believes we can hold the entire staff and hire our new emple ices
from Ft. Worth. We won'L Ue leaving the inner city; we have worked 'too hard to irnpro+'e
our downtown n-eighborhgod over the past 67 years. Should you have que�tlono, call rr e.
car
David Motheral
u
n
Page 1 of 4
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION: Approved on 11/18/2003
DATE: Tuesday, November 18, 2003
LOG NAME: 17CENTREPORT REFERENCE NO.: G
SUBJECT: ?
Authorize Execution of Tax Abatement Agreements with Motheral Printing Company an(
Centreport Properties, Inc. and Related Findings of Fact by the City Council
RECOMMENDATION:
It is recommended that the City Council:
1. Authorize the City Manager to execute the attached Tax Abatement Agreement with Motheral P1
Company (Motheral); and
2. Authorize the City Manager to execute the attached Tax Abatement Agreement with Cent
Properties, Inc. (Centreport); and
3. Find that the statements set forth in the recitals of both of the attached Tax Abatement Agreemen
true and correct.
DISCUSSION:
On March 25, 2003 (M&C G-13913), the City Council authorized execution of a Tax Abatement Agre(
with Motheral. The proposed Agreement provided for a maximum 87% real and personal propert
Abatement on a new 150,000 square foot printing facility to be constructed in the Centreport Bu:
Park. This property has been designated by the City Council as Tax Abatement Reinvestment Zon
43.
Motheral and Centreport previously entered into a lease agreement under which Motheral will be le
both the land and the new printing facility from Centreport. Centreport will actually oversee construct
the printing facility, and will retain ownership of the printing facility once it is completed. Under the
Motheral is responsible for payment of all of Centreport's property taxes on the real property. Hov
because Motheral will not be the owner of the real estate, state law only allows the City to aba
Motheral the real property taxes on the leasehold interest in the real estate.
After the City Council approved M&C G-13913 on March 25, 2003, Motheral contacted the Cit.
informed staff that the Tarrant Appraisal District's opinion was that the leasehold value in the real pr(
would be virtually nonexistent, since Centreport would own all improvements, and Motheral was pad
fair market rent to Centreport. In other words, the bulk of the value of the real property would be taxa
Centreport, meaning that Motheral would have to pay those taxes, as required in its lease, and that
taxes could not be abated for Motheral because of state law restrictions.
Because it was the intention of the parties that Motheral's property tax liability on the new printing faci
abated as outlined in M&C G-13913, Motheral asked City staff to determine whether this inequity
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legally be remedied. Accordingly, City staff is recommending that the proposed tax abateme
accomplished through two Tax Abatement Agreements: one for Motheral that would abate the real pr(
taxes on the leasehold interest in the property and all personal property located thereon, and of
Centreport that would abate the real property taxes only on the fee interest in the property. The eff
this structure would mean that all of the real property taxes payable by Motheral could legally be abai
the City, which, as stated above, was the original intention of all parties. In other words, the value
total abatement to both Motheral and Centreport will not exceed the value of the abatement prev
approved by the City Council.
Centreport's proposed Tax Abatement Agreement is structured identically to the Tax Abatement Agret
that the City Council approved for Motheral in March 2003, with the understanding that the Cit
terminate Centreport's Tax Abatement Agreement if the lease provision requiring Motheral to pay
Centreport's property taxes ever expires, terminates, or is materially amended. In addition, Centre
Tax Abatement Agreement will automatically terminate upon termination of the Motheral Tax Abatemei
The structure of the Tax Abatement Agreement for Motheral remains the same as provided in MF
13913, with the exception that the estimated cost of the new printing facility is $5.5 million, not $7.5 r
as stated in that M&C. The lower cost is reflective of actual bids that Centreport has received sin(
M&C was approved in Match 2003. As set forth in M&C G-13913, Motheral's Tax Abatement is condil
on and structured as follows:
Project
Motheral, a third generation family-owned Fort Worth company, is planning to occupy a new 150,00 s
foot facility that contains 34,000 square feet of area reserved for expansion. The estimated cost of thi
facility is $5.5 million. Taxable inventory is estimated to be $1.5 million, with 49% of that fr(
exempt. Sales subject to Fort Worth sales taxes are estimated to be $12.3 million initially, and those
are estimated to grow to $30 million by the tenth year of the abatement. Motheral is planning to acquir
million in new taxable personal property (printing equipment).
In consideration of the City's granting a tax abatement on this project, during each year of the prol
abatement Motheral will to pay the City an amount equal to the taxes that it is paying on its current pi
facility at 510 South Main Street ($63,207).
Employment
Motheral will be retaining 217 employees, of which 136 are Fort Worth residents and 77 are Centr=
residents.
Utilization of Fort Worth Businesses
Motheral and Centreport have committed that at least 40% of construction spending on the new pi
facility will be with Fort Worth construction contractors and/or subcontractors. Additionally, at least 2
Motheral's annual supply and service expenditures will be with Fort Worth companies.
Utilization of Fort Worth M/WBE Businesses
Motheral and Centreport have committed that at least 15% of construction spending on the new pi
facility will be with Fort Worth Minority and Women Business Enterprises (M/ BEs). Additionally, al
15% of Motheral's annual supply and service expenditures will be with Fort Worth M/WBEs.
Abatement Terms
Motheral will receive a ten-year tax abatement on real (leasehold interest) and personal property that
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reach a maximum of 87% annually. The abatement incorporates Motheral's and Centreport's constr
expenditures and Motheral's employment and total supply and service spending, as follows:
Minimum Requirements
Improvements having a construction cost of at least $5.5 million must be made on the property a
at least $15 million in new tangible personal property must be located on the property by not later
than December 31, 2003.
Failure to meet these minimum requirements constitute an event of default under both Tax AbatE
Agreements giving rise to termination rights by the City.
Construction of New Building and Improvements - 20%
• Utilize Fort Worth contractors for at least 40% of total investment
• Utilize Fort Worth M/WBE contractors for at least 15% of total investment
If any portion of the three construction items above is missed, that 20% portion of the abatement v
reduced to zero.
Employment - 37%
• Retain current 217 employees
• Maintain 136 Fort Worth (FW) residents
• Maintain 77 Central City (CC) residents
The abatement will be reduced by 1/2 percentage point for each person (up to 10 persons) belo
benchmark of 136 FW employees and 77 CC employees, and reduced by 1 percentage point for
person (11 or more persons) below that benchmark. (In other words, if Motheral missed the benchm,
12 persons, this portion of the abatement would be reduced from 37% to 30% [10 x 0.5% plus 2 x
7%]).
Additional Employment- 20%
• Earn 1/2 percentage point for each FW resident above 136 (maximum 10% abatement)
• Earn 1/2 percentage point for each CC resident above 77 (maximum 10% abatement)
• Fort Worth residents must always be at least 25% of total new employment
Annual Supply and Service Spending - 10%
• Minimum annual spending of$400,000
• Utilize Fort Worth companies for at least 25% of annual spending (maximum 5% abatement)
• Utilize Fort Worth M/WBE companies for at least 15% of annual spending (maximum 5% abaterr
The total tax abatement under both Tax Abatement Agreements is capped at 87% per year.
maximum abatement is reached under both Tax Abatement Agreements, the abated taxes are projec
be approximately $98,772 annually, which, as stated above, was approved by the City Council under
G-13913.
At its October 14, 2003 meeting, the City Council's Central City Revitalization and Economic Develol
Committee unanimously approved full City Council consideration of this matter.
The reinvestment zone covering this project is located in COUNCIL DISTRICT 5.
FISCAL INFORMATION/CERTIFICATION:
The Finance Director certifies that this action does not require the expenditure of City funds.
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TO Fund/Account/Centers FROM Fund/Account/Centers
Submitted for City Manager's Office by: Reid Rector (6140)
Originating Department Head: Tom Higgins (6192)
Additional Information Contact: Ardina Washington (8003)
Peter Vaky (7601)
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