Loading...
Item 4ECITY OF SOUTHLAKE 4E-1 MEMORANDUM August 20, 2013 To: Shana Yelverton, City Manager From: Chris Tribble, Director of Community Services Subject: Approve renewal of lease agreement with Top Flight Gymnastics Action Requested: City Council consideration to renew a lease agreement with Top Flight Gymnastics, Inc. (Scott Taylor) for an additional five (5) year term. Background Information: The renewal lease with Top Flight Gymnastics will continue the lease arrangement that has been in effect since the City purchased the Texas School of Baseball (now named Southlake Sports Complex) located at 2100 Crooked Lane, in 2001 from David and Beverly Thorne. As part of the purchase, the City assumed the lease the Thorne's had entered into with Top Flight Gymnastics in September 2000. When the original lease with Top Flight Gymnastics expired in 2005, Top Flight elected to exercise its option to renew the lease for an additional five (5) years that extended it through December 31, 2010. Staff has contacted Scott Taylor and he has requested to continue the lease arrangement on a month to month basis and to enter into another five (5) year lease. The proposed lease is a five (5) year lease to expire December 31, 2018. The City receives annual rental of $153,824 per year, payable in equal monthly installments, in advance, at the rate of $12,818.67 per month, based upon an annual rent equal to $8.00 per square foot for 19,228 square feet of leased premises. Comparable properties in Southlake lease at an average rate of $8.00 per square foot. A copy of the proposed lease is included in the packet. City of Southlake Values: Integrity ♦ Innovation ♦ Accountability ♦ Commitment to Excellence ♦ Teamwork 4E - 2 Shana Yelverton, City Manager Meeting Date — August 20, 2013 Page 2 of 3 Financial Consideration: The City receives monthly revenue of $12,818.67 for the term of the lease; over $153,800 annually. Strategic Link: This item is linked to the City's Strategy Map related to the focus area of Performance Management and Service Delivery and meets the corporate objective to Invest to Provide and Maintain High Quality Public Assets Citizen Input/ Board Review: City Council to consider August 20, 2013 Legal Review: Lease agreement is being reviewed by the City Attorney and by Top Flight Gymnastics. Alternatives: Alternatives may include: ■ City Council approve as presented ■ City Council approval with modifications ■ City Council decision not to approve Supporting Documents: Supporting documents include: ■ Proposed lease agreement Staff Recommendation: City Council approval to renew a lease agreement with Top Flight Gymnastics, Inc. (Scott Taylor) for an additional five (5) year term. City of Southlake Values: Integrity ♦ Innovation ♦ Accountability ♦ Commitment to Excellence ♦ Teamwork 4E - 3 LEASE THE STATE OF TEXAS COUNTY OF TARRANT THIS LEASE, made and entered into this day of , 2013 (the "Effective Date"), by and between the City of Southlake, 1400 Main Street, Southlake, Texas, 76092, Tarrant County (herein called "Landlord"), and Top Flight Gymnastics Training Center, Inc. (hereinafter called "Tenant"); WITNESSETH: Landlord, in consideration of the rent to be paid and the covenants and agreements to be performed by Tenant, as hereinafter set forth, does hereby LEASE, DEMISE and LET unto Tenant and Tenant hereby takes and accepts the premises shown on Exhibit A attached hereto and made a part hereof together with all rights, privileges, easements and appurtenances belonging to or in any way pertaining to the said premises and together with a part of the existing building and other improvements now situated on the said premises (hereinafter collectively called the "leased premises") for a term beginning the Vt day of September 2013 (the "Commencement Date"), and ending the 31st day of December 2018, unless extended or sooner terminated as herein provided. The leased premises are leased by Landlord to Tenant and are accepted and are to be used and possessed by Tenant upon and subject to the following terms, provisions, covenants, agreements and conditions. 1. Rent and Additional Rent (a) Rent. Tenant covenants and agrees to pay to Landlord in currency of the United States of America that at the time of payment is legal tender for public and private debts, without any setoff or deduction whatsoever, the annual rental of $153,824.00 per year, payable in equal monthly installments, in advance, on the first day of each calendar month at the rate of $12,818.67 per month, based upon an annual rent equal to $8.00 per square foot for 19,228 square feet of leased premises. Should this lease commence on a day other than the first day of a calendar month or terminate on a day other than the last day of a calendar month, the rent for such partial month shall be prorated. The first installment of rent, whether for a full calendar month or a portion thereof, shall be paid contemporaneously with the execution of this lease. Such installments of rent shall be paid to Landlord at the address 4E - 4 specified in this lease or elsewhere as designated from time to time by written notice from Landlord to Tenant. (b) Additional Rent. In the event that Landlord's property taxes for the property of which the leased premises are a part shall, in any calendar year during the term of this lease, exceed the previous year's property taxes, Tenant agrees to pay as additional rent 1/12 of the amount of such increase as Tenant's pro rata share. Landlord shall furnish to Tenant an accounting showing in reasonable detail the computations of additional rent due under this Section 1(b). Tenant shall pay such additional rent due under this Section 1(b) within thirty (30) days following receipt of invoice and the accounting showing the amount of additional rent due. 2. Security Deposit. Contemporaneously with the execution of this lease, Tenant shall deposit with Landlord the sum of $0 as security for the full and faithful performance by Tenant of Tenant's covenants and obligations hereunder. Such security deposit shall not bear interest and shall not be considered an advance payment of rental or a measure of Landlord's damages in case of default by Tenant. In the event Tenant defaults in the performance of any of the covenants and obligations to be performed by it hereunder, including but not limited to the payment of all rent to be paid hereunder, Landlord may, from time to time, without prejudice to any other remedy, use such security deposit to the extent necessary to make good any arrearages in rent or any sum as to which Tenant is in default and any other damages or deficiency in the reletting of the leased premises, whether such damages or deficiency may accrue before or after termination of this lease. Following any such application of the security deposit, Tenant shall pay to Landlord on demand the amount so applied in order to restore the security deposit to its original amount. If Tenant is not then in default hereunder, any remaining balance of the security deposit shall be returned by Landlord to Tenant upon termination of this lease and after delivery of the entire possession of the leased premises to Landlord in accordance with this lease. If Landlord assigns its interests in the leased premises during the lease term, Landlord may assign the security deposit to the assignee and thereafter landlord shall have no further liability for the return of such security deposit. The provisions of the preceding sentence shall apply to every transfer or assignment made of the security deposit to a new Landlord. Tenant agrees that it will not assign or encumber or attempt to assign or encumber the moneys deposited herein as security and that Landlord and its successors and assigns shall not be bound by any such actual or attempted assignment or encumbrance. Regardless of any assignment of this lease by Tenant, Landlord may return the security deposit to the original Tenant, in the absence of evidence satisfactory to Landlord of an assignment of the right to receive such security deposit or any part of the balance thereof. Notwithstanding any provision to the contrary, if at the end of the second year of this lease Tenant has not defaulted in performance of this lease, Landlord shall apply a portion of the Security Deposit in payment of September 4E -5 2014 rent, reducing the amount of the Security Deposit accordingly. If at the end of the fourth year of the lease, Tenant has not defaulted in performance of this lease, Landlord shall apply a portion of the Security Deposit in payment of September 2015 rent, and return to Tenant any remaining Security Deposit, resulting in a Security Deposit balance of zero. 3. Option to Extend. Tenant at its option may extend the term of this lease for up to an additional five (5) years by serving notice thereof upon Landlord at least one hundred eighty (180) days before the expiration of the initial term hereof provided that at the time of such notice and at the time of such extension, there shall exist no event of default as defined in Paragraph 22 of this lease. Upon the service of said notice, this lease shall be extended without the necessity of the execution of any further instrument or document. Such extended term shall be upon the same terms, covenants and conditions, with the same annual rent payable as provided in this lease for the initial term. Payment of all additional rent and other charges required to be made by Tenant as provided in this lease for the initial term shall continue to be made during such extended term. Any termination of this lease during the initial term shall terminate all rights of extension hereunder. 4. Commencement of Rent. If for any reason the leased premises are not ready for occupancy by Tenant on the date of the commencement of the term hereof, this lease and the obligations of Tenant shall nonetheless continue in full force and effect and the same shall not be construed in any way to extend the term of this lease; provided, however, if the leased premises are not ready for occupancy for any reason other than omission, delay or default on the part of Tenant or anyone acting under or for Tenant, the rent herein provided shall not commence until the leased premises are ready for occupancy by Tenant. Such abatement of rent shall constitute full settlement of all claims that Tenant might otherwise have against Landlord by reason of the leased premises not being ready for occupancy by Tenant on the date of the commence of the term hereof. 5. Delivery and Acceptance of Leased Premises. (a) Landlord represents and warrants that it has the right and authority to execute this lease, and Tenant, upon payment of the required rents and subject to the terms, conditions, covenants and agreements contained in this Lease, shall have possession of the leased premises during the full term of this Lease as well as any extension or renewal thereof. (b) The taking of possession of the leased premises by Tenant shall be conclusive evidence as against Tenant (i) that it accepts the leased premises as suitable for the purposes for which same are leased; (ii) that it accepts the leased premises and each and every part and appurtenance thereof as being in a good and satisfactory condition, and (iii) that Tenant waives any defects in the leased premises and its appurtenances. 4E - 6 (c) LANDLORD SHALL NOT BE LIABLE, EXCEPT IN THE EVENT OF NEGLIGENCE OR WILLFUL MISCONDUCT, TO TENANT OR ANY OF ITS AGENTS, EMPLOYEES, LICENSEES, SERVANTS OR INVITEES FOR ANY INJURY OR DAMAGE TO PERSON OR PROPERTY DUE TO THE CONDITION OR DESIGN OR ANY DEFECT IN THE LEASED PREMISES OR ITS MECHANICAL SYSTEMS AND EQUIPMENT WHICH MAY EXIST OR OCCUR. 6. Repair and Maintenance by Tenant. Landlord shall not be required to make any repairs or improvements of any kind upon the leased premises except for necessary repairs as provided in Paragraph 9 hereof. Tenant shall keep the leased premises (other than the portions thereof herein provided to be maintained by Landlord) including all fixtures and improvements installed by Tenant in good and tenantable repair and condition and shall promptly make all necessary repairs and replacements thereto except those caused by fire or other casualty covered by insurance on the leased premises under policies naming Landlord as the insured, all at Tenant's sole expense, under the supervision and with the approval of Landlord. Said repairs and replacements shall be in quality and class equal to the original work and shall include without limitation repairs and all necessary replacements to the interior plumbing, windows, window glass, plate glass, doors, interior walls, columns and partitions, lighting, plumbing and sewage facilities, heating and air conditioning equipment (including the cooling tower), and fire protection sprinkler system. Tenant shall keep the leased premises free of insects, rodents and pests. Without diminishing such obligation of Tenant, if Tenant fails to make such repairs and replacements within fifteen (15) days after the occurrence of the damage or injury, Landlord may at is option make such repair and Tenant shall pay Landlord for the cost thereof upon demand, plus ten percent (10%) per annum interest from demand until payment. In addition, Tenant shall pay the cost of repair and replacement due to damage or injury done to the exterior of any building forming a part of the leased premises by Tenant or Tenant's agents, employees or invitees. Such amount shall be paid by Tenant to Landlord upon demand, plus ten percent (10%) per annum interest from demand until payment. 7. Mechanic's Liens. Tenant will not permit any mechanic's lien or liens to be placed upon the leased premises 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 in this lease contained shall be deemed or construed in any way as constituting the consent or request of Landlord, express or implied, by inference or otherwise, to any contractor, subcontractor, laborer or materialman for the performance of any labor or the furnishing of any materials for any specific improvement, alteration or repair of or to the leased premises or any part thereof, nor as giving Tenant any right, power or authority to contract for or permit the rendering of any services or 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 leased premises. In the case of the filing of any lien on the 4E - 7 interest of Landlord or Tenant in the leased premises, Tenant shall cause the same to be discharged of record within twenty (20) 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, but shall not be obligated to, 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 or claimed to be caused by Landlord, and all reasonable legal and other expensed of Landlord, including reasonable attorney's fees, in defending any such action or in or about procuring the discharge of such lien, with all necessary disbursements in connection therewith, with interest thereon at the rate of ten percent (10%) per annum from the date of payment shall be paid by Tenant to Landlord on demand. 8. Alteration and Additions by Tenant. Tenant shall not make or allow to be made any openings in the roof or exterior walls of any building forming a part of the leased premises or any alterations, improvements or additions in or to the leased premises without first obtaining the written consent of Landlord, and all alterations, additions and improvements made to or fixtures or other improvements placed in or upon the leased premises, whether temporary or permanent in character, by either party shall be deemed a part of the leased premises and the property of Landlord at the time same are placed in or upon the leased premises, without compensation to Tenant. Notwithstanding the foregoing, Tenant shall have the right at all times during the term of this lease to paint, decorate, install shelves, bins, machinery and trade fixtures (hereinafter collectively called "Trade Fixtures"), provided that Tenant complies with all applicable governmental laws, ordinance and regulations. 9. Repair and Maintenance by Landlord. Landlord shall at its expense maintain only the roof, foundation, underground or otherwise concealed plumbing, and the structural soundness of the exterior walls (excluding all windows, window glass, plate glass, and all doors) of any building forming a part of the leased premises in good repair and condition, except for reasonable wear and tear. In addition, Landlord shall at it expense maintain the parking area forming a part of the leased premises in good repair and condition, except for reasonable wear and tear. Tenant shall give immediate written notice to Landlord of the need of such repairs and Landlord shall proceed promptly after receipt thereof to make such repairs. Landlord's liability hereunder shall be limited to the cost of such repairs. 10. Use and Occupancy. Tenant agrees that the leased premises shall be used and occupied by Tenant only and then only as and for a gymnastics, martial arts and dance facility (the "Purpose") and for no other purpose. Tenant shall at its own expense obtain any and all governmental licenses and permits necessary for such use. Tenant agrees to use and maintain the leased premises in a clean, careful, safe and proper manner and to comply with all applicable laws, ordinance, orders, rules and regulations of all governmental bodies (state, federal 4E - 8 and municipal). Tenant will not in any manner deface or injure the leased premises or any part thereof or overload the floors on the leased premises. Tenant agrees to pay Landlord on demand for any damage to the leased premises caused by any negligence or willful act or any misuse or abuse (whether or not any such misuse or abuse results from negligence or willful act) by the Tenant or any of its agents, employees, licensees, or invitees or any other person not prohibited, expressly or impliedly, by Tenant from entering upon the leased premises. Tenant agrees not to use or allow or permit the leased premises to be used for any purpose prohibited by any law of the United States or of the State of Texas or by any ordinance of the City of Southlake, Texas, and Tenant agrees not to commit waste or suffer or permit waste to be committed or to allow or permit any nuisance on or in the leased premises. Tenant will not use the leased premises for lodging or sleeping purposes or for any illegal purposes. Tenant shall not at any time sell, purchase or give away, or permit, except with Landlord's prior written approval, the sale, purchase or gift of food in any form by or to any of Tenant's agents or employees or any other parties on the leased premises. Tenant shall not use the leased premises or allow or permit same to be used in any way or for any purpose that Landlord may reasonably deem to be extra hazardous on account of the possibility of fire or other casualty or which will increase the rate of fire or other insurance for the leased premises or its contents or in respect of the operation of the leased premises or which may render the leased premises uninsurable at normal rates by responsible insurance carriers authorized to do business in the State of Texas or which may render void or voidable any insurance on the leased premises. Tenant shall have the right to erect signs on the exterior walls of the building forming a part of the leased premises, securely attached to and parallel to said walls, subject to applicable laws and deed restrictions and subject to Landlord's prior approval which approval shall not unreasonably be withheld. Tenant shall not erect any signs other than customary trade signs identifying its business, and shall not erect any signs on the roof or paint or otherwise deface the exterior walls of said building. Tenant shall remove all signs at the termination of this lease, and shall repair any damage and close any holes caused by such removal. 11. LIABILITY OF LANDLORD. LANDLORD SHALL NOT BE LIABLE TO TENANT OR TO TENANT'S EMPLOYEES, AGENTS, LICENSEES, OR VISITORS, OR TO ANY OTHER PERSON WHOMSOEVER, FOR (1) ANY INJURY OR DAMAGE TO PERSON OR PROPERTY DUE TO THE LEASED PREMISES OR ANY PART THEREOF BECOMING OUT OF REPAIR OR BY DEFECT IN OR FAILURE OF PIPES OR WIRING, OR BY THE BACKING UP OF DRAINS OR BY THE BURSTING OR LEAKING OF PIPES, FAUCETS AND PLUMBING FIXTURES OR BY GAS, WATER, STEAM, ELECTRICITY OR OIL LEAKING, ESCAPING OR FLOWING INTO THE LEASED PREMISES, OR (11) ANY LOSS OR DAMAGE THAT MAY BE OCCASIONED BY OR THROUGH THE ACTS OR OMISSIONS OF ANY OTHER PERSON WHATSOEVER, EXCEPTING ONLY THE WILLFUL MISCONDUCT OR NEGLIGENCE OF THE LANDLORD AND/OR ITS EMPLOYEES AND AGENTS OF LANDLORD, OR 4E - 9 (III) FOR ANY LOSS OR DAMAGE TO ANY PROPERTY OR PERSON OCCASIONED BY THEFT, FIRE, ACT OF GOD, PUBLIC ENEMY, INJUNCTION, RIOT, INSURRECTION, WAR, COURT ORDER, REQUISITION OR ORDER OF GOVERNMENTAL AUTHORITY, OR ANY OTHER MATTER BEYOND THE CONTROL OF LANDLORD. TENANT AGREES THAT ALL PERSONAL PROPERTY UPON THE LEASED PREMISES SHALL BE AT THE RISK OF TENANT ONLY, AND THAT LANDLORD SHALL NOT BE LIABLE FOR ANY DAMAGE THERETO OR THEFT THEREOF, EXCEPT AS MAY ARISE OUT OF OR BE CAUSED BY THE NEGLIGENCE OR WILFUL MISCONDUCT OF THE LANDLORD. 12. TENANT'S INDEMNIFICATION OF LANDLORD. TENANT AGREES THAT IT WILL INDEMNIFY AND HOLD SAVE LANDLORD WHOLE AND HARMLESS OF, FROM AND AGAINST (1) ALL FINES, SUITS, LOSS, COST, LIABILITY, CLAIMS, DEMANDS, ACTIONS AND JUDGMENTS OF EVERY KIND AND CHARACTER BY REASON OF ANY BREACH, VIOLATION OR NONPERFORMANCE OF ANY TERM, PROVISION, COVENANT, AGREEMENT OR CONDITION ON THE PART OF TENANT HEREUNDER AND (11) ALL CLAIMS, DEMANDS, ACTIONS, DAMAGES, LOSS, COST, LIABILITIES, EXPENSES AND JUDGMENTS SUFFERED BY, RECOVERED FROM OR ASSERTED AGAINST LANDLORD ON ACCOUNT OF INJURY OR DAMAGE TO PERSON OR PROPERTY TO THE EXTENT THAT ANY SUCH DAMAGE OR INJURY MAY BE INCIDENT TO, ARISE OUT OF, OR BE CAUSED, EITHER PROXIMATELY OR REMOTELY, WHOLLY OR IN PART, BY AN ACT, OMISSION, NEGLIGENCE OR MISCONDUCT ON THE PART OF TENANT OR ANY OF ITS AGENTS, SERVANTS, EMPLOYEES, CONTRACTORS, PATRONS, GUESTS, LICENSEES OR INVITEES OF THE LEASED PREMISES. HOWEVER, SUCH INDEMNIFICATION OF LANDLORD BY TENANT SHALL NOT BE EFFECTIVE IF SUCH DAMAGE OR INJURY RESULTED IN WHOLE OR IN PART FROM THE NEGLIGENCE OF LANDLORD OR ANY OF ITS AGENTS, SERVANTS, EMPLOYEES, CONTRACTORS, PATRONS, GUESTS, LICENSEES OR INVITEES. TENANT COVENANTS AND AGREES THAT IN CASE LANDLORD SHALL BE MADE A PARTY TO ANY LITIGATION COMMENCED BY OR AGAINST TENANT OR RELATING TO THIS LEASE OR TO THE LEASED PREMISES AND LANDLORD IS NOT DETERMINED BY THE COURT TO HAVE BEEN WHOLLY OR PARTIALLY LIABLE FOR DAMAGES DUE TO ITS NEGLIGENCE OR WILFUL MISCONDUCT, THEN TENANT SHALL AND WILL PAY ALL COSTS AND EXPENSES, INCLUDING ATTORNEYS' FEES AND COURT COSTS, INCURRED BY OR IMPOSED UPON LANDLORD BY VIRTUE OF ANY SUCH LITIGATION AND THE AMOUNT OF ALL SUCH COSTS AND EXPENSES, INCLUDING ATTORNEYS' FEES AND COURT COSTS, SHALL BE A DEMAND OBLIGATION OWING BY TENANT TO LANDLORD BEARING INTEREST AT THE RATE OF SIX PERCENT (6%) PER ANNUM FROM THE DATE OF OUTLAY. 4E-10 13. Insurance. (a) Landlord shall at all times during the lease term maintain a policy or policies of insurance with premiums paid in advance, issued by and binding upon some solvent insurance company, insuring the building against all risk of direct physical loss in an amount equal to at least one hundred percent (100%) of the full replacement cost of the building structure and its improvements as of the date of loss; provided Landlord shall not be obligated in any way or manner to insure any personal property or any improvement which Tenant may have constructed on the leased premises. (b) Tenant shall, at its sole cost and expense, procure and maintain through the term of this lease Comprehensive General Liability insurance against claims for bodily injury or death and property damage occurring in or upon or resulting from the leased premises, in standard form and with such insurance company or companies as may be acceptable to Landlord, such insurance to afford immediate protection, to the limit of not less than $500,000 in respect of injuries to or death of any one person, $1,000,000 in respect of any one accident or occurrence, and to the limit of not less than $100,000 for property damage. Such Comprehensive General Liability insurance shall include Blanket Contractual Liability coverage with insures contractual liability under the indemnification of Landlord by Tenant set forth in this lease (but such coverage or the amount thereof shall in no way limit such indemnification). Tenant shall maintain with respect to each policy or agreement evidencing such Comprehensive General Liability insurance such endorsements as may be required by Landlord and shall at all times deliver and maintain with Landlord a certificate with respect to such insurance in form satisfactory to Landlord. Tenant shall ensure that each policy contains a written obligation on the part of each insurance company to notify Landlord at least ten (10) days prior to cancellation of such insurance. Such policies or duly executed certificates of insurance relating thereto shall be promptly delivered to Landlord and renewals thereof as required shall be delivered to Landlord at least thirty (30) days prior to the expiration of the respective policy terms. If Tenant fails to comply with the foregoing requirements relating to insurance, Landlord may obtain such insurance and Tenant shall pay to Landlord on demand the premium cost thereof plus interest at the rate of ten percent (10%) per annum from the date of payment by Landlord until repaid by Tenant. 14. Right of Entry by Landlord. Landlord shall have the right, exercisable upon the giving of not less than twenty-four (24) hours 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, to enter upon the leased premises at reasonable hours to inspect same or make repairs or alterations (but without any obligation to do so, except as expressly provided 4E-11 for herein) or to show the leased premises to prospective lenders or purchasers, and, during the last six (6) months of the term hereof, to show them to prospective tenants at reasonable hours and, if they are vacated, to prepare them for re -occupancy and also to retain at all times, and to use in appropriate instances, keys to all doors within and into the leased premises. No locks shall be changed or added without the prior written consent of Landlord. Landlord and its authorized agents shall have the right, within the final sixty (60) day period of the term of this lease, to erect on or about the leased premises a customary sign advertising the leased property for lease and shall have the right, at any time during the term of this lease to erect on or about the leased premises a customary sign advertising the leased property for sale. 15. Utility Services. Landlord shall provide at the beginning date of this lease the normal and customary utility service connections in and to the leased premises. Tenant shall pay the cost of all gas and electric utility services used on the leased premises. Landlord shall pay the cost of all water utility services, the costs of which water utility services are included in the rent amounts due and payable under Section 1. Landlord shall not be liable for any interruption in the supply of any utilities unless such interruption is the result of Landlord's or Landlord's employees or agents negligence or willful misconduct. 16. Assignment and Subletting. (a) With the exception of an assignment or sublease to a parent, subsidiary or otherwise affiliated entity, 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) sublet the leased premises or any part thereof, or (iv) grant any license, concession or other right of occupancy of any premises or any portion of the leased premises, or (v) permit the use of the leased premises, other than use of the leased premises by Tenant's invitees in the normal course of business, by any parties other than Tenant, its agents and employees, which consent shall not be unreasonably withheld. 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 sublettings. Notwithstanding any assignment or subletting, Tenant 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 an event of default, as hereinafter defined, should occur while the leased 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 assignee or sublessee 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 authorizes and directs any such assignee or sublessee to make such payments of rent directly to Landlord upon receipt of notice from Landlord. No 4E-12 direct collection by Landlord from any such assignee or sublessee shall be construed to constitute a novation or a release of Tenant from the further performance of its obligations hereunder. Receipt by Landlord of rent from any assignee, sublessee or occupant of the leased premises shall not be deemed a waiver of the covenant in this lease contained against assignment and subletting or a release of Tenant under this lease. The receipt of payments of rent by Landlord from any such assignee or sublessee obligated to make payments of rent shall be a full and complete release, discharge, and acquittance to such assignee or sublessee 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 proceeds therefrom in accordance with the terms hereof. Tenant shall not mortgage, pledge or otherwise encumber its interests in this lease or in the leased premises. (b) It Tenant requests Landlord's consent to an assignment of the lease or subletting of all or a part of the leased premises, it shall submit to Landlord, the name of the proposed assignee or subtenant and the nature and character of the business of the proposed assignee or subtenant. (c) Landlord shall have the right to transfer, assign and convey, in whole or in part, the leased premises and any and all of its rights under this lease, and in the event Landlord assigns its rights under this lease, Landlord shall thereby be released from any further obligations hereunder, and Tenant agrees to look solely to such successor in interest of the Landlord for performance of such obligations. 17. Fire or Other Casualty. If the leased premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give prompt written notice thereof to Landlord. In case the leased premises shall be so damaged by fire or other casualty that substantial alteration or reconstruction of the leased premises shall, in Landlord's sole opinion, be required or in the event of any mortgagee under a mortgage or deed of trust covering the leased premises should require that the insurance proceeds payable as a result of said fire or other casualty be used to retire 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 of such damage, in which event the rent hereunder shall be abated as of the date of such damage. If Landlord does not thus elect to terminate this lease, Landlord shall, within seventy-five (75) days after the date of such damage, commence to repair and restore the leased premises and shall proceed with reasonable diligence to restore the leased premises (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 Property (as hereinafter defined). 4E-13 Landlord shall not be liable for any inconvenience or annoyance to Tenant or injury to the business of Tenant resulting in any way from such damage or the repair thereof, except that, subject to the provisions of the next sentence, Landlord shall allow Tenant a fair diminution of rent during the time and to the extent the leased premises are unfit for occupancy. If the leased premises are damaged by fire or other casualty resulting from the fault or negligence of Tenant or any of Tenant's agents, employees or invitees, the rent hereunder shall not be diminished during the repair of such damage and Tenant shall be liable to Landlord for the cost and expense of the repair and restoration of the leased premises caused thereby to the extent such costs and expenses are not covered by insurance proceeds. Any Insurance which may be carried by Landlord or Tenant against loss or damage to the leased premises shall be for the sole benefit of the party carrying such insurance and under its sole control. 18. Waiver of Subrogation. Each party hereto hereby waives any and every claim which arises or may arise in its favor and against the other party hereto during the term of this lease or any extension or renewal thereof for any and all loss of, or damage to, any of its property which loss or damage is covered by valid and collectible fire and extended coverage insurance policies, to the extent that such loss or damage is recovered under said insurance policies. Said waivers shall be in addition to, and not in limitation or derogation of, any other waiver or release contained in this lease with respect to any loss or damage to property of the parties hereto. Inasmuch as the above mutual waivers will preclude the assignment of any aforesaid claim by way of subrogation (or otherwise) to any insurance company (or any other person), each party hereto hereby agrees to immediately give to each insurance company, which has issued to it policies of fire and extended insurance coverage, written notice of the terms of said mutual waivers, and to have said insurance policies properly endorsed, if necessary, to prevent the invalidation of said insurance coverages by reason of said waivers. 19. Taxes on Tenant's Property. Tenant shall be liable for all taxes levied or assessed against personal property, furniture or fixtures placed by Tenant in the leased premises. In addition to the additional rent under paragraph 1(b) herein, Tenant shall be liable for the amount of any increase in the property tax liability of Landlord for the leased premises due to an increase in the assessed value of the leased premises caused by the inclusion of personal property, furniture or fixtures placed on the leased premises by Tenant. If any such taxes for which Tenant is liable are levied or assessed against Landlord or Landlord's property and if Landlord elects to pay the same or if the assessed value of Landlord's property is increased by inclusion of personal property, furniture or fixtures placed by Tenant in the leased premises, and Landlord elects to pay the taxes based on such increase, Tenant shall pay to Landlord upon demand that part of such taxes for which Tenant is liable hereunder. 20. Surrender under Termination. At the termination of this lease, whether caused by lapse of time or otherwise, Tenant shall at once surrender possession of the 4E-14 leased premises and deliver said premises to Landlord broom -clean, in as good repair and condition as at the commencement of Tenant's occupancy, reasonable wear and tear and damages or destruction by fire or other casualty excepted, and shall deliver to Landlord all keys to the leased premises. If such possession is not immediately surrendered, Landlord may forthwith enter upon and take possession of the leased premises and expel or remove Tenant and any other person who may be occupying said premises, or any part thereof, by force, if necessary, without having any civil or criminal liability thereof. All alterations, additions or improvements, whether temporary or permanent in character (other than Trade Fixtures and gymnasium equipment), made in or upon the leased premises, either by Landlord or Tenant, shall be Landlord's property on termination of this lease and shall remain on the leased premises without compensation to Tenant. All Trade Fixtures, furniture, furnishings and office and gymnasium equipment installed by Tenant may be removed by Tenant at the termination of this lease provided that Tenant is not at that time in default under this lease. All such removals shall be accomplished in a good workmanlike manner so as not to damage the leased premises or the primary structure or structural qualities of the leased premises or the plumbing, electrical lines or other utilities. All Trade Fixtures, furniture, furnishings and office and gymnasium equipment installed by Tenant not promptly removed after such termination shall thereupon be conclusively presumed to have been abandoned by Tenant and Landlord may, at its option, take over the possession of such property and either (i) declare same to be the property of Landlord by written notice thereof to Tenant or (ii) at the sole cost and expense of Tenant remove the same or any part thereof in any manner that Landlord shall choose and store the same without incurring liability to Tenant or any other person. 21. Events of Default. (a) The following events shall be deemed to be events of default by Tenant under this lease: (i) Tenant shall fail to pay any installment of the rent hereby reserved when it comes due. (ii) Tenant shall fail to comply with any term, provision or covenant of this lease, other than the payment of rent, and shall not cure such failure within thirty (30) days after written notice thereof to Tenant. (iii) Tenant shall become insolvent, or shall make a transfer in fraud of creditors, or shall commit any act of bankruptcy or shall make an assignment for the benefit of creditors, or Tenant shall admit in writing its inability to pay its debts as they become due. (iv) Tenant shall file a petition under any section or chapter of the National Bankruptcy Act, as amended, or under any similar law or statute of the United States or the State of Texas, or Tenant shall be adjudged bankrupt or insolvent in proceedings filed against Tenant thereunder; or a petition or answer 4E-15 proposing the adjudication of Tenant as a bankrupt or its reorganization under any present or future federal or State of Texas bankruptcy or similar law shall be filed in any court and such petition or answer shall not be discharged or denied within one hundred twenty (120) days after the filing thereof. (v) A receiver or trustee shall be appointed for all or substantially all of the assets of Tenant or of the leased premises or any of Tenant's property located thereon in any proceeding brought by Tenant, or any such receiver or trustee shall be appointed in any proceeding brought against Tenant and shall not be discharged within one hundred twenty (120) days after such appointment or Tenant shall consent to or acquiesce in such appointment. (vi) The leasehold hereunder shall be taken on execution or other process of law in any action against Tenant. (vii) Tenant shall abandon any substantial portion of the leased premises. (b) If an event of default shall have occurred, Landlord shall have the right at its election, then or at any time thereafter while such event of default shall continue, to pursue any one or more of the following remedies: (i) Terminate this lease by giving notice thereof to Tenant, in which event Tenant shall immediately surrender the leased premises to Landlord. If Tenant fails to surrender the leased premises upon notice of termination, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in rent, enter upon and take possession of the leased premises and expel or remove Tenant and any other person who may be occupying said premises, or any part thereof, by force, if necessary, without having any civil or criminal liability therefor. Tenant hereby agrees to pay to Landlord, on demand, the amount of all loss and damage which Landlord may suffer by reason of such termination, whether through inability to relet the leased premises on satisfactory terms or otherwise, specifically including, but not limited to (i) all reasonable expenses necessary to relet the leased premises which shall include the reasonable cost of renovating, repairing and altering the leased premises for a new tenant or tenants, and advertisements and brokerage fees, and (ii) any increase in insurance premiums caused by the vacancy of the leased premises. If such termination is caused by the failure to pay rent and/or the abandonment of any substantial portion of the leased premises, Landlord may elect, by sending written notice thereof to Tenant, to receive liquidated damages in an amount equal to the rental payable hereunder for the month during which the lease is terminated times twelve (12), which shall be in lieu of the payment of loss and damage Landlord may suffer by reason of such termination as provided in the preceding sentence but which shall not be in lieu of or reduce in any way any amount (including accrued rent) or damages due to breach of covenant (whether or not liquidated) payable by Tenant to Landlord which accrued prior to 4E-16 the termination of the lease. Nothing contained in this lease shall limit or prejudice the right of Landlord to prove for and obtain in proceedings for bankruptcy or insolvency by reason of the termination of this lease, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater, equal to, or less than the amount of the loss or damages referred to above. (ii) Enter upon and take possession of the leased premises and expel or remove Tenant or any other person who may be occupying said premises, or any part thereof, by force, if necessary, without having any civil or criminal liability therefor and, without terminating this Lease, Landlord may (but shall be under no obligation to) relet the leased premises or any part thereof for the account of Tenant, in the name of Tenant or Landlord or otherwise, without notice to Tenant for such terms or terms, which may be greater or less than the period which would otherwise have constituted the balance of the term of this lease, and on such conditions, which may include reasonable concessions or free rent, and for such reasonable uses as Landlord in its absolute discretion may determine and Landlord may collect and receive any rents payable by reason of such reletting. Tenant agrees to pay Landlord on demand all reasonable expenses necessary to relet the leased premises which shall include the cost of renovating, repairing and altering the leased premises for a new tenant or tenants, advertisements and brokerage fees, and Tenant further agrees to pay Landlord on demand any deficiency that may arise by reason of such reletting. Landlord shall not be responsible or liable for any failure to relet the leased premises or any part thereof or for any failure to collect any rent due upon any such reletting. No such reentry or taking of possession of the leased premises by Landlord shall be construed as an election on Landord's part to terminate this lease, unless a written notice of such termination is given to Tenant pursuant to subparagraph (b)(i) above. (iii) Enter upon the leased premises, by force if necessary, without having any civil or criminal liability therefor, and do whatever Tenant is obligated to do under the terms of this lease and Tenant agrees to reimburse Landlord on demand for any expenses which Landlord may incur in thus effecting compliance with Tenant's obligations under this lease and Tenant further agrees that Landlord shall not be liable for any damages resulting to Tenant from such action, whether caused by the negligence of Landlord of otherwise. (c) No repossession of or reentering on the leased premises or any part thereof pursuant to subparagraphs (b)(ii) and (iii) above or otherwise and no reletting of the leased premises or any part thereof pursuant to subparagraph (b)(ii) shall relieve Tenant of its liabilities and obligations hereunder, all of which shall survive such repossession or reentering. In the event of any such repossession or reentering on the leased premises or any part thereof by reason 4E-17 of the occurrence of any event of default, Tenant will pay to Landlord the rent required to be paid by Tenant. (d) No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity or by statute. In addition to other remedies provided in this lease, Landlord shall be entitled, to the extent permitted by applicable law, to injunctive relief in case of the violation, or attempted or threatened violation, of any of the covenants, agreements, conditions or provisions of this lease, or to a decree compelling performance of any of the covenants, agreements, conditions or provisions of this lease, or to any other remedy allowed to Landlord at law or in equity. 22. 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 that one 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 Landlord of any provision of this lease shall be deemed to have been made unless expressed in writing and signed by Landlord. 23. Waiver by Tenant. Tenant hereby waives and surrenders for itself and all claiming by, through and under it, including creditors of all kinds, (i) any right and privilege which it or any of them may have under any present or future constitution, statute or rule of law to redeem the leased premises or to have a continuance of this lease for the term hereby demised after termination of Tenant's right of occupancy by order or judgment of any court or by any legal process or writ, or under the terms of this lease, or after the termination of the term of this lease as herein provided and (ii) the benefits of any present or future constitution, statute or rule of law which exempts property from liability for debt or for distress for rent. 24. Attorney's Fees and Legal Expenses. Should either party hereto institute any action or proceeding in court to enforce any provision hereof or for damages by reason of any alleged breach of any provision of this lease or for any other judicial remedy, the prevailing party shall be entitled to receive from the losing party all reasonable attorneys' fees and all court costs in connection with said proceeding. 4E-18 25. Quiet Enjoyment. Provided Tenant pays the rent payable hereunder as and when due and payable and keeps and fulfills all of the terms, covenants, agreements and conditions to be performed by Tenant hereunder, Tenant shall at all times during the lease term peaceably and quietly enjoy the leased premises without any disturbance from Landlord or from any other person claiming by, through or under Landlord, subject to the terms, provisions, covenants, agreements and conditions of this lease and to the deeds of trust, mortgages, ground leases and ordinance to which this lease is subject and subordinate, as hereinabove set forth. 26. Notice to Landlord and Mortgagee. In the event of any act or omission by Landlord which 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 leased premises or otherwise, Tenant shall not sue for such damages or exercise any such right to terminate until (i) 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 first mortgage or first deed of trust affecting the leased premises, if the name and address of such holder(s) shall previously have been furnished to Tenant, and (ii) a reasonable period of time for remedying such act or omission shall have elapsed following the giving of such notice, during which time Landlord and such holder(s), or either of them, their agents or employees, shall be entitled to enter upon the leased 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 rent 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 leased premises shall be untenantable. 27. Holding Over by Tenant. Should Tenant or any of its successors in interest continue to hold the leased premises after the termination of this lease, whether such termination occurs by lapse of time or otherwise, such holding over shall constitute and be construed as a tenancy from month to month, at a monthly rental equal to the monthly rent provided herein plus fifty percent (50%) thereof. During such time as Tenant shall continue to hold the leased premises after the termination hereof, Tenant shall be regarded as a tenant from month to month; subject, however, to all of the terms, provisions, covenants and agreements on the part of Tenant hereunder. No payments of money by Tenant to Landlord after the termination of this lease shall reinstate, continue or extend the term of this lease and no extension of this lease after the termination thereof shall be valid unless and until the same shall be reduced to writing and signed by both Landlord and Tenant. 28. Estoppel Certificate. Tenant will, at any time and from time to time, upon not less than twenty (20) days prior request by Landlord, execute, acknowledge and deliver to Landlord a statement in writing executed by Tenant certifying that this lease is unmodified and in full effect (or, if there have been modifications, that 4E-19 this lease is in full effect as modified, and setting forth such modifications) and the dates to which the rent has been paid, and either stating that to the knowledge of the signer of such certificate no default exists hereunder or specifying each such default of which the signer may have knowledge; it being intended that any such statement by Tenant may be relied upon by any prospective purchaser or mortgagee of the leased premises. 29. Notices. Each provision of this lease, or of any applicable governmental laws, ordinances, regulations and other requirements with reference to the sending, mailing or delivery of any notice or with reference to the making of any payment by Tenant to Landlord, shall be deemed to be complied with when and if the following steps are taken: (a) All rent and other payments required to be made by Tenant to Landlord hereunder shall be payable to Landlord in Tarrant County, Texas, at the address herein below set forth, or at such other address as Landlord may specify from time to time by written notice delivered in accordance herewith. (b) Any notice or document required to be delivered hereunder shall be deemed to be delivered, whether actually received or not, three (3) days after being deposited in the United States mail, postage prepaid, certified mail, return receipt requested, addressed to the parties hereto at the respective addresses set out opposite their names below, or at such other address as they have heretofore specified by written notice: Landlord: City of Southlake 1400 Main Street Southlake, Texas 76092 Tenant: 409 W. Round Grove Road, #617 Lewisville, TX 75067 Attn: Scott Taylor 30. Miscellaneous. (a) Real Estate Commissions. Each party hereto represents to the other that, he has not authorized any broker or finder to act on his behalf in connection with the lease hereunder and that he has not dealt with any broker or finder purporting to act on behalf of any other party. Each party hereto agrees to indemnify and hold harmless the other party from and against any and all claims, losses, damages, costs or expenses of any kind or character arising out of or resulting from any agreement, arrangement or understanding alleged to have been made by such party or on his behalf with any broker or finder in connection with this lease or the transaction contemplated hereby. 4E - 20 (b) Severability. Each and every covenant and agreement contained in this lease is, and shall be construed to be, a separate and independent covenant and agreement. If any term or provision of this lease or the application thereof to any person or circumstances shall be to any extent invalid and unenforceable, the remainder of this lease, or the application of such term or provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby. (c) No Merger. There shall be no merger of this lease or of the leasehold estate hereby created with the fee estate in the leased premises or any part thereof by reason of the fact that the same person may acquire or hold, directly or indirectly, this lease or the leasehold estate hereby created or any interest in this lease or in such leasehold estate as well as the fee estate in the leased premises or any interest in such fee estate. (d) Force Maieure. Whenever a period of time is herein prescribed for action to be taken by Landlord or Tenant, such party shall not be liable or responsible for, and there shall be excluded from the computation for any such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, governmental laws, regulations or restrictions or any other causes of any kind whatsoever which are beyond the control of such party. (e) Gender. Words of any gender used in this lease shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires. (f) Joint and Several Liability. If there be more than one Tenant, the obligations hereunder imposed upon Tenant shall be joint and several. (g) No Representations. Landlord or Landlord's agents have made no representations or promises with respect to the leased premises except as herein expressly set forth and no rights, easements or licenses are acquired by Tenant by implication or otherwise except as expressly set forth in the provisions of this lease. (h) Entire Agreement. This lease sets forth the entire agreement between the parties and no amendment or modification of this lease shall be binding or valid unless expressed in writing executed by both parties hereto. (i) Paragraph Headings. The paragraph headings contained in this lease are for convenience only and shall in no way enlarge or limit the scope or meaning of the various and several paragraphs hereof. (j) Binding Effect. All of the covenants, agreements, terms and conditions to be observed and performed by the parties hereto shall be applicable to and 4E - 21 binding upon their respective heirs, personal representatives, successors and, to the extent assignment is permitted hereunder, their respective assigns. (k) Governing Law and Venue. The validity, enforceability, interpretation, and construction of this lease shall be governed by the substantive laws of the State of Texas (without regard to conflict of law rules) and the laws of the United States applicable to transactions in Texas. All obligations of the parties created hereunder are to be performed, and exclusive venue shall lie, in Tarrant County, Texas. (1) Rules of Construction. All parties to this transaction are represented by legal counsel, and have had the opportunity to discuss the terms of this lease with their legal counsel and to negotiate regarding the terms of this lease. It is the intent of the parties that the terms and provisions of this lease shall be construed neutrally, and not against or in favor of a party hereto regardless of whether such party is the drafter of this lease. (m) Time of Essence. Time is of the essence of this lease and each and all of its provisions in which performance is a factor. (n) No Waiver of Governmental Immunity. Nothing contained in this lease shall be construed as a waiver of the City's governmental immunity, or of any damage caps or limitations imposed by law, or any other legal protections granted to the City by law, except to the extent expressly provided or necessarily implied herein. [signature page follows] 4E - 22 IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date first above written. ATTEST: CITY SECRETARY CITY OF SOUTHLAKE ("LANDLORD") By: Name: Title: Date: TOP FLIGHT GYMNASTICS TRAINING CENTER, INC. ("TENANT") By: Name: Title: Date: APPROVED AS TO LEGALITY AND FORM: CITY ATTORNEY Date: 4E - 23 EXHIBIT A (PLAT) (DESCRIPTION AND DIAGRAM OF THE BUILDING) (DESCRIPTION AND DIAGRAM OF PARKING) Parking and Entry Driveway Area: The leased premises includes use of and access to the parking areas and driveway to the leased premises. Tenant, its employees, agents, invitees, and customers, shall have the non-exclusive right to use the parking area and entry driveway as constituted from time to time, such use to be in common with Landlord, and other persons permitted by Landlord to use the same. Landlord may from time to time substitute for any parking area other areas reasonably accessible to the Tenant, which areas may be elevated, surface or underground.