Exhibit 10.18
 

 
OFFICE BUILDING LEASE
 
 
 
NEWQUEST OFFICE PARK
 
 
 
BY AND BETWEEN:
 
 
DEEP DOWN, INC.
TENANT
 
 
 
A-K-S-L 49 BELTWAY 8, L.P.
 
LANDLORD
 
NOVEMBER 24. 2008
 
 
 
 
 
 
 
 

 
 
 

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TABLE OF CONTENTS

 
SECTION
 
PAGE
1.
LEASED PREMISES; COMMON AREA
1
2.
TERM
1
3.
SECURITY DEPOSIT
2
4.
RENT AND OTHER AMOUNTS PAYABLE BY TENANT
2
5.
POSSESSION
7
6.
USE
7
7.
SERVICE TO BE PROVIDED BY LANDLORD
8
8.
REPAIR AND MAINTENANCE
9
9.
LANDLORD'S INSURANCE; FIRE AND CASUALTY
9
10.
COMPLIANCE WITH LAWS AND USAGE
10
11.
INDEMNITY
11
12.
WAIVER OF LIABILITY
11
13.
WAIVER OF SUBROGATION
11
14.
TENANTS INSURANCE
11
15.
ADDITIONS AND FIXTURES
12
16.
ASSIGNMENT AND SUBLETTING
12
17.
SUBORDINATION AND ATTORNMENT
14
18.
RULES AND REGULATIONS
14
19.
EMINENT DOMAIN
15
20.
ACCESS BY LANDLORD
13
21.
LANDLORD'S LIEN AND SECURITY INTEREST
15
22.
DEFAULT AND REMEDIES
15
23.
NONWAIVER
18
24.
HOLDING OVER
18
25.
NOTICE
18
26.
LANDLORD'S MORTGAGEE
18
27.
QUIET ENJOYMENT
19
28,
TIME OF ESSENCE
19
29.
MECHANIC'S LIEN
19
30.
MEMORANDUM OF LEASE
19
31.
INVALIDITY OF PARTICULAR PROVISIONS
19
32.
WAIVER OF BENEFITS
19
33.
WAIVER OF TRIAL BY JURY
19
34.
MISCELLANEOUS TAXES
19
35.
SUBSTITUTE PREMISES
19
36.
BROKERAGE
19
37.
NO REINSTATEMENT
20
38,
LIMITATION OF IMPLIED WARRANTY
20
39.
CAPTIONS AND BINDING EFFECT
20
40.
INTEREST
20
41.
GUARANTY
20
42.
ATTORNEYS' FEES
20
43.
FORCE MAJEURE
20
44.
USE OF LANGUAGE
20
45.
DAMAGE FROM CERTAIN CAUSES
20
46.
GOVERNING LAW
20
47.
ASBESTOS OR OTHER HAZARDOUS SUBSTANCES
20
48.
AMENDMENT
21
49.
ENTIRE AGREEMENT
21

 
EXHIBIT "A" - DEPICTION OF LEASED PREMISES: I.EGAL DESCRIPTION
 
EXHIBIT "B" - LANDLORD'S WORK LETTER
 
EXHIBIT "C" - PYLON SIGN
 
EXHIBIT "D" - FORM OF SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT
EXHIBIT "E" - RENEWAL OPTION

 
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OFFICE BUILDING LEASE
 
THIS OFFICE BUILDING LEASE ("Lease') is entered into by and between A-K-S-L 49
BELTWAY 8. L.P., a Texas limited partnership ("Landlord") and DEEP DOWN. INC., a
Nevada corporation ("Tenant").
 
WITNESSETH:
 
1.           LEASED PREMISES; COMMON AREA.
 
(a)           Landlord hereby leases to Tenant and Tenant hereby Leases from
Landlord approximately 8,856 square feet of Rentable Area on the first ( 1st)
floor designated in the office building within NewQuest Office located at 8827
W. Sam Houston Parkway N., Houston, Harris County, Texas (the Park "Building").
The area hereby leased in the Building is hereinafter called "Leased Premises-
and is outlined on the floor plan drawing designated as Exhibit "A" attached
hereto and made a part hereof. and the legal description of the land on which
the Building is located is described in Exhibit "A". The land on which the
Building is located. the Building. and any parking garage or other parking
facility for use by tenants of the Building are collectively referred to herein
as the "Project'.
 
The term "Rentable Area as used shall mean: On each floor of the Building on
which the entire space rentable to tenants is or will be leased to one tenant,
the Rentable Area for such floor ("Single Tenant Floor”) shall be the entire
area bounded by the exterior or the exterior walls of the Building on such floor
less the area contained within the building stairs, vertical ducts, elevator
shafts, flues, vents. Stacks, and pipe shafts. All the area on any Single Tenant
Floor that is used for elevator lobbies, corridors, special stairways,
restrooms, mechanical rooms, electrical rooms, telephone closets and all
vertical penetrations that are included for the special use by Tenant and
columns and other structural portions of the Building shall he included within
the Rentable Area for such floor.
 
On each floor of the Building on which space is or will be leased to more than
one tenant, the Rentable Area attributable to each such lease shall be the total
of ( i) the entire area included within the leased premises covered by such
lease, being the area bounded by the exterior of the exterior wall or walls of
the Building bounding such leased premises, the exterior of all walls separating
such leased premises, from any public corridors or other public areas on such
floor, and the centerline of all walls separating such leased premises from
other areas leased or to be leased to other tenants on such floor, and (ii) a
pro rata portion of the area covered by the elevator lobbies, corridors.
restrooms, mechanical rooms, electrical rooms and telephone closets or other
common area situated on such floor.
 
The Rentable Area for the entire Building shall be deemed to be 50,710 square
feet for the purposes of this Lease. The Rentable Area contained within the
Leased Premises and the Rentable Area of the Building shall be deemed for all
purposes of the Lease to be the number of square feet set forth above.
regardless of minor variations resulting from construction of the Building
and/or tenant improvements.
 
(b)           Except to the extent that Landlord is obligated to construct
improvements in the Leased Premises, as provided on Exhibit "B" attached hereto
and made a part hereof for all purposes. the Leased Premises are delivered to
Tenant and are being leased "AS IS" and "WITH ALL FAULTS." and Landlord makes no
representation or warranty of any kind, expressed or implied, with respect to
the condition of the Leased Premises (including habitability, fitness or
suitability for particular purpose of the Leased Premises, or that the Building
or the improvements to the Leased Premises have been constructed in a good and
workmanlike manner). TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, LANDLORD
HEREBY DISCLAIMS. AND TENANT WAIVES THE  BENEFIT OF, ANY AND ALL EXPRESS OR
IMPLIED WARRANTIES. INCLUDING IMPLIED WARRANTIES OF HABITABILITY, FITNESS OR
SUITABILITY FOR ANY PARTICULAR PURPOSE, OR THAT THE BUILDING OR THE IMPROVEMENTS
IN THE LEASED PREMISES HAVE BEEN CONSTRUCTED IN A GOOD AND WORKMANLIKE MANNER.
TENANT EXPRESSLY ACKNOWLEDGES THAT LANDLORD DID NOT CONSTRUCT OR APPROVE THE
QUALITY OF CONSTRUCTION OF THE BUILDING.
 
(c)           The "Common Area" of the Building as it shall exist from time to
time shall be that part of the Building designated by Landlord from time to time
for the common use of all tenants, (including among other facilities, elevators.
tunnels, skyways, halls, lobbies. delivery passages, drinking fountains, public
toilets and the like). Landlord reserves the right to change from time to time
the dimensions and location of the Common Area, Tenant, and its employees and
invitees, shall have the nonexclusive right to use the Common Area constituted
from time to time, such use to be in common with Landlord, other tenants of the
Building, and other persons entitled to use the same, and subject to the rules
and regulations governing use as Landlord may from time to time prescribe.
Tenant shall not solicit business or display merchandise within the Common Area,
distribute handbills therein, or take any action which would interfere with the
rights of other persons to use the Common Area.
 
(d)           Tenant shall have the right to use thirty-six (36) unreserved
parking spaces on a non-exclusive basis at no charge during the Term of the
Lease. Subject to availability, Tenant may lease from Landlord reserved parking
spaces on an exclusive basis for Tenant's employees, and Tenant shall pay to
Landlord, as Additional Rent therefor, Thirty-Five Dollars ($35.00) per month
for each reserved parking space.
 
2.           TERM. The term of this Lease ("Term") shall be for a period of
eighty-nine (89) months, commencing on the date that is five (5) days following
the substantial completion by Landlord of the Leasehold Improvements pursuant to
Exhibit B attached hereto and terminating on the last day of the eighty-ninth
(89th) month thereafter. The estimated date on which Landlord will deliver the
Leasehold Improvements is February 15, 2009.
 

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3.          SECURITY DEPOSIT. Intentionally Deleted.
 
4.          RENT AND OTHER AMOUNTS PAYABLE BY TENANT.
 
(a)                   As base rental for the Lease and use of the Leased
Premises ("Base Rent"), Tenant will pay landlord at the Building managers office
or other location as Landlord may direct, without demand and without deduction.
abatement or setoff (except as otherwise expressly provided for in Paragraph 9
or Paragraph 19), the sum of SIXTEEN AND 50/100 DOLLARS ($16.50) per square foot
of Rentable Area of the Leased Premises per year at the monthly Rent of Twelve
Thousand One Hundred Seventy-Seven and 00/100 Dollars ($12,177.00) for months
six (6) through seventeen (17) of the Term; then SEVENTEEN AND 00/100 DOLLARS
($17.00) per square foot of Rentable Area of the Leased Premises per year at the
monthly Rent of Twelve Thousand Five Hundred Forty-Six and 00/100 Dollars
($12,546.00) for months eighteen (18) through twenty-nine (29) of the Term; then
SEVENTEEN AND 50/100 DOLLARS ($17.50) per square foot of Rentable Area of the
Leased Premises per year at the monthly Rent of Twelve Thousand Nine Hundred
Fifteen and 00/100 Dollars ($12,915.00) for months thirty (30) through forty-one
(41) of the Term; then EIGHTEEN AND 00/100 DOLLARS ($18.00) per square foot of
Rentable Area of the Leased Premises per year at the monthly Rent of Thirteen
Thousand Two Hundred Eight-Four and 00/100 Dollars ($ 13,284.00) for months
forty-two(42) through fifty- three (53) of the Term; then EIGHTEEN AND 50/100
DOLLARS ($18.50) per square foot of Rentable Area of the Leased Premises per
year at the monthly Rent of Thirteen Thousand Six Hundred Fifty-Three and 00/100
Dollars ($13,653.00) for months fifty-four (54) through sixty-five (65) of the
Term; then NINETEEN AND 00/100 DOLLARS ($19.00) per square foot of Rentable Area
of the Leased Premises per year at the monthly Rent of Fourteen Thousand
Twenty-Two and 00/100 Dollars ($14,022.00) for months sixty-six (66) through
seventy-seven (77) of the Term; then NINETEEN AND 50/100 DOLLARS ($19.50) per
square foot of Rentable Area of the Leased Premises per year at the monthly Rent
of Fourteen Thousand Three Hundred Ninety-One and 00/100 Dollars ($14,391.00)
for months seventy- eight (78) through eighty-nine (89) of the Term. No Base
Rent shall be payable during months one (1) through five (5) of the Term.
Beginning on the sixth month of' the Term, Base Rent shall be paid in advance on
the first day of each calendar month,. for each and every month in the Term, in
lawful money of the United States. If the Term does not commence on the first
day of a calendar month or end on the last day of a calendar month, Tenant will
pay in advance a pro rata part of such sum as Base Rent for such partial month,
which pro rata amount shall be figured on the ratio that the number of days from
the first day of the Term bears to the total number of days in the first
calendar month of the Term.
 
(b)                   Beginning on the sixth month of the Term, Tenant agrees to
pay as additional rent, as hereafter provided, an amount equal to Tenant's "Pro
Rata Share" of  ''Operating Expenses" as such quoted terms are herein defined)
adjusted from time to time, pursuant to the provisions hereafter stated. As used
herein, the term "Pro Rata Share" shall mean 17.46%, which is the percentage
obtained by dividing the rentable square feet of area in the Premises, which is
stipulated to be 8,856 rentable square feet by the total number of square feet
of area in the Building, which is stipulated to be 50,710 rentable square feet.
Landlord shall utilize accounting records and procedures conforming to generally
accepted accounting principles, consistently applied, with respect to all
aspects of determining Tenant's Pro Rata Share of the Total Cost (herein
defined). As used herein, the term "Operating Expenses' means all expenses,
costs and disbursements of every kind which Landlord shall pay in connection
with the operation and maintenance of the Project, including, without
limitation, the following:
 
(i)      wages, salaries and fees of all personnel or entities engaged in the
operation, maintenance or security of the Project, including taxes, insurance
and benefits relating thereto: provided, however, that if during the Term such
personnel or entities are working on other projects periodically developed or
operated by Landlord as well as working on the Project, their wages. salaries,
fees and related expenses shall be appropriately allocated among all of such
projects and only those portions of such expenses reasonably allocable to the
Project shall be included as Operating Expenses;
 
(ii)      all supplies and materials used in the operation, repair, cleaning and
maintenance of the Project;
 
(iii)     cost of all maintenance, security and service agreements for the
Project and the equipment thereon, including, without limitation. alarm service,
janitorial service, trash removal service, window cleaning, elevator
maintenance, landscaping, lawn care and irrigation service, and parking area
maintenance;
 
(iv)     cost of all insurance relating to the Project for which Landlord is
responsible hereunder, or which Landlord considers reasonably necessary for the
operation of the Project, including. without limitation, the cost of casualty
and liability insurance applicable to the Project and Landlord's personal
property used in connection therewith, and the cost of business interruption
insurance in such amounts as will reimburse Landlord for all losses of earnings
and other income attributable to such perils as are commonly insured against by
prudent landlords;
 
(v)    all taxes, assessments, and other governmental charges, whether federal,
state, county. or municipal, and whether assessed by taxing districts or
authorities presently taxing the Project or by others, subsequently created or
otherwise, and any other taxes and assessments attributable to the Project or
its operation (including, without limitation, any sales or use taxes), exclusive
of any inheritance, gift, franchise, income, corporate or profit taxes which may
be assessed against Landlord;

 
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(vi)           cost of repairs and general maintenance (excluding repairs and
general maintenance paid by proceeds of insurance or paid directly by Tenant or
other third parties, and excluding alterations, other than those standard for
the Project, which are performed for the benefit of tenants on the Project):
 
(vii)           amortization of the cost of installation of capital improvement
items which are primarily to reduce operating costs for the benefit of all
tenants on the Project or to enhance the Project or which may be required by any
governmental authority. All such costs, including interest costs, shall be
amortized over the reasonable life of the capital investment items, with the
reasonable life and amortization schedule being determined by Landlord according
to generally accepted accounting principles, but in no event to extend beyond
the reasonable life of the Building;
 
(viii)           all charges for utilities (including. but not limited to,
water, sewer, electricity and gas) paid by Landlord;
 
(ix)           rent or rental value of Landlords leasing and management offices
on or near the Project;
 
(x)           Landlord's central accounting costs, together with the costs of
all audits required by the terms of this Lease, and legal and appraisal fees
relating to the operation of the Project; and
 
(xi)           the property management fee (not to exceed 4% of total Base Rent
per year for the Building) which is from time to time in effect and which is due
to the manager of the Project.
 
Notwithstanding anything to the contrary contained in the Lease, the following
items shall be excluded from the calculation of Total Costs:
 
(A)                Corporate Overhead. All costs associated with the operation
of the business of the entity which constitutes "Landlord" or "Landlord's
managing agent" (as distinguished from the costs of the operations of the
Building/Project) including, but not limited to, Landlord's or Landlord's
managing agent's general corporate overhead and general administrative expenses,
legal,. risk management, and corporate and/or partnership accounting and legal
costs, mortgages, debt costs or other financing charges, asset management fees,
administrative fees, any costs that would normally be considered included in a
management fee (e.g., property accounting charges, local area network ("LAN")
and wide area network ("WAN") charges, travel expenses for company meetings or
training. etc.), placement/recruiting fees/costs for employees whether they are
assigned to the Building/Project or not, employee training programs, real estate
licenses and other industry certifications, health/sports club dues, employee
parking and transportation charges, tickets to special events, costs of any
business licenses regardless if such costs are considered a form of Real Estate
Tax, costs of defending any lawsuits, costs of selling, syndicating, financing,
mortgaging or hypothecating any of Landlord's interests in the Building/Project,
bad debt loss, rent loss or any reserves thereof, and costs incurred in
connection with any disputes between Landlord and/or Landlord's management agent
and their employees, tenants or occupants, and providers of goods and services
to the Building/Project;
 
(B)                Leasing. Any cost relating to the marketing, solicitation,
negotiation and execution of leases of space in the Building/Project, including
without limitation, promotional and advertising expenses, commissions, finders
fees, and referral fees, accounting, legal and other professional fees and
expenses relating to the negotiation and preparation of any lease, license,
sublease or other such document, costs of design, plans, permits, licenses,
inspection, utilities, construction and clean up of tenant improvements to the
Premises or the premises of other tenants or other occupants, the amount at' any
allowances or credits paid to or granted to tenants or other occupants of any
such design or construction, and all other costs of alterations of space in the
Building/Project leased to or occupied by other tenants or occupants;
 
(C)                Executive/Unrelated/Off-Site Salaries. Wages, salaries, fees,
fringe benefits, and any other form of compensation paid to any executive
employee of Landlord and/or Landlord's managing agent above the grade of
Building Manager as such term is commonly understood in the property management
industry, provided, however, all wages, salaries and other compensation
otherwise allowed lobe included in Operating Costs shall also exclude any
portion of such costs related to any employee's time devoted to other efforts
unrelated to the maintenance and operation of the Building/Project;
 
(D)                Competitively Bid. Any amount paid by Landlord or Landlord's
managing agent to a subsidiary or affiliate of Landlord or Landlord's managing
agent, or to any party as a result of a non-competitive selection process, for
management or other services to the Building/Project, or for supplies or other
materials, to the extent the cost of such services, supplies, or materials
exceeds the cost that would have been paid had the services, supplies or
materials been provided by parties unaffiliated with the Landlord or Landlord's
managing agent on a competitive basis and are consistent with those incurred by
similar buildings in the same metropolitan area in which the Building/Project is
located;
 

 
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(E)             Ground Lease. Any rental payments and related costs pursuant to
any ground lease of land underlying all or any portion of the Building/Project,
and any costs related to any reciprocal easement agreement, and/or covenant,
condition and restriction agreement;
 
(F)             Office & Parking Charges. Any office rental and any parking
charges, either actual or nor, for the Landlord's and/or Landlord's managing
agent's management, engineering, maintenance, security, parking or other vendor
personnel:
 
(G)             Building Defects. Any costs incurred in connection with the
original design, construction, landscaping and clean-up of the Building/Project
or any major changes to same, including but not limited to, additions or
deletions of floors, renovations of the common areas (except as otherwise
expressly permitted under this BOCA), correction of defects in design and/or
construction of the Building/Project including defective equipment, replacement
of major components which have reached the and of their useful life irrespective
of whether the replacement may result in reducing the Total Costs, and the
repair of damage to the Building/Project in connection with any type of
casualty, event of damage or destruction or condemnation;
 
(H)            Capital. All costs of a capital nature, including, but not
limited to, capital improvements, capital repairs, capital equipment, and
capital tools, all as determined in accordance with generally accepted
accounting principles, consistently applied. and sound management practices,
except (i)any capital improvement made to the Building which actually reduces
Total Costs, amortized on a straight- line basis, including interest as the
lesser of the interest rate actually paid by Landlord or 7.0% per annum, over
the improvement's useful life in accordance with generally accepted accounting
principles, provided, however, the annual amortization shall not exceed the
annual amount of Total Costs actually saved as a result of such capital
improvement, or (ii) capital expenditures required by government regulation or
law enacted after the Commencement Date, the amount of such costs to be
amortized on a straight-line basis, with interest at the lesser of the interest
rate actually paid by Landlord or 7.0% per annum, over the asset's useful life
in accordance with generally accepted accounting principles, or (iii) any cost
incurred which is not considered annual recurring routine maintenance but
maintains the general appearance of the Building/Project (i.e., painting of the
common areas, replacement of carpet in common areas. maintenance of stone/tile)
with the amount of all such costs to be amortized on a straight-line basis over
the useful life, with interest at the lesser of the interest rate actually paid
by Landlord or 7.0% per annum;
 
(I)              Other Capital, Rentals and other related expenses incurred in
leasing air conditioning systems, elevators or other equipment, the cost of
which if purchased would be excluded from Total Costs as a capital cost,
excepting from this exclusion equipment not affixed to the Building/Project
which is used in providing janitorial or similar services and, further excepting
from this exclusion such equipment rented or leased to remedy or ameliorate an
emergency condition in the Building/Project;
 
(J)             Building Codes/ADA. Any cost incurred in connection with
upgrading the Building/Project to comply with insurance requirements, life
safety codes, ordinances, statutes, or other laws as such laws are in effect
prior to the Commencement Date, including without limitation the Americans With
Disabilities Act (or similar laws, statutes, ordinances or rules imposed by the
State, County. City, or other agency where the Building/Project is located),
including penalties or damages incurred as a result of non-compliance;
 
(K)            Hazardous Material. Any cost or expense related to monitoring,
testing, removal, cleaning, abatement or remediation of any "hazardous
material", including toxic mold, in or about the Building/Project or real
property, and including, without limitation, hazardous substances in the ground
water or soil;
 
(L)             Reimbursements. Any cost of any service or items sold or
provided to tenants or other occupants for which Landlord or Landlord's managing
agent has been or is entitled to be reimbursed by such tenants or other
occupants for such service or has been or is entitled to be reimbursed by
insurance or otherwise compensated by parties other than tenants of the
Building/Project to include replacement of any item covered by a warranty;
 
(M)           Benefits to Others. Expenses in connection with services or other
benefits which are provided to another tenant or occupant of the
Building/Project and which do not benefit Tenant to include the repairs and
maintenance of the common area of a multi-tenant floor (e.g. elevator lobby,
restrooms and hallways) if Tenant is a full-floor tenant and such repairs and
maintenance are not provided to Tenant;
 
(N)           Other Taxes. Landlord's gross receipts taxes for the
Building/Project, personal and corporate income taxes, inheritance and estate
taxes, other business taxes and assessments, franchise, gift and transfer taxes,
and all other Real Estate Taxes relating to a period payable or assessed outside
the term of the Lease;
 

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(O)            Special Assessment. Special assessments or special taxes
initiated as a means of financing improvements to the Building/Project and the
surrounding areas thereof;
 
(P)            Advertising/Promotion/Gifts. All advertising and promotional
costs including any form of entertainment expenses, dining expenses, any costs
relating to tenant or vendor relation programs including flowers, gifts,
luncheons, parties, and other social events but excluding any cost associated
with life safety information services;
 
(Q)            FinesPenalties. Any fines, costs, lace charges. liquidated
damages, penalties, tax penalties or related interest charges, imposed on
Landlord or Landlord's managing agent;
 
(R)            Contributions/Dues/Subscriptions. Any costs, fees, dues,
contributions or similar expenses for political, charitable, industry
association or similar organizations, as well as the cost of any newspaper,
magazine, trade or other subscriptions. excepting the Building's/Project's
annual membership dues in the local Building Owners and Managers Association
("BOMA").
 
(S)            Art. Costs, other than those incurred in ordinary maintenance and
repair, for sculptures. paintings, fountains or other objects of art or the
display of such items;
 
(T-)            Concessionaires. Any compensation or benefits paid to or
provided to clerks, attendants or other persons in commercial concessions
operated by or on behalf of the Landlord;
 
(U)            Insurance. Costs incurred by Landlord for the repair of damage to
the Building/Project caused by fire, windstorm, earthquake or other casualty,
condemnation or eminent domain to include terrorism or environmental other than
deductibles not to exceed (i) $15,000 to Tenant per occurrence for windstorm,
and (ii) Tenant's Pro Rata Share of $10,000 per occurrence for other casualties;
 
(V)             Other Insurance. Any increase in the cost of Landlord's
insurance caused by a specific use of another tenant or by Landlord;
 
(W)            Reserves. Any reserves of any kind;
 
(X)            Telecommunications. Any cost incurred in connection with
modifying, upgrading, replacing, repairing or maintaining any component of the
Building's telecommunication systems which is not used by Tenant; and
 
(Z)            Parking. Any maintenance, repair or replacement of the canopies
installed in the parking area for the exclusive use of certain tenants on a
reserved basis.
 
In determining the amount of Operating Expenses for any calendar year (i) if
less than 95% of the Building shall have been occupied by tenants and fully used
by them, at any time during the year, Landlord shall make an appropriate
adjustment in accordance with industry standards and generally accepted
accounting principles, consistently applied, to the Building/Project and
Operating Expenses shall be increased to an amount equal to the like operating
expense which would normally be expected to be incurred had such occupancy been
95% and had such full utilization been made during the entire period, or (ii) if
the Landlord is not furnishing any particular work or service (the cost of which
if' performed by the Landlord would constitute an Operating Expense) to tenants
who have undertaken to perform such work or service in lieu of the performance
thereof by the Landlord, Operating Expenses shall he deemed for the purposes of
this Paragraph to he increased by an amount equal to the additional Operating
Expense which would have reasonably been incurred during such period by the
Landlord if it had at its own expense furnished such work or service. Tenant
shall not pay Total Costs that exceed cost actually paid by Landlord.
 
(C)            Other Adjustments.
 
(i)   Net Expenses. Operating Expenses. Tax (herein defined) and Insurance
Charges (herein defined) shall be "net" only and shall therefore be reduced by
all cash discounts, trade discounts, quantity discounts, rebates, refunds,
credits, or other amounts received by Landlord or Landlord's managing agent,
including any such related amounts from tenants of the Building/Project, for its
purchase of or provision of any goods, utilities, or services:
 
(ii)  Partial Year. Building/Project Operating Expenses that cover a period
of  time not entirely within the Term of the Lease shall be prorated based on
the actual number of days in the year:
 
(iii)   Vacancy Credit. Except in the event, Operating Expenses are to be
"grossed up”, in the event Tenant ceases to occupy (but still leases) the
Premises or any portion thereof, Tenant shall receive a credit against rent (for
example, a credit to either Base Rent or Tenant's Pro Rata Share of Operating
Costs) equal to Tenant's Pro Rata Share of the reduction in the cost of
utilities not incurred as a result of such vacancy;
 
(iv)   Duplicate Charges. Landlord shall not (i) profit by including items in
Operating Costs and/or Real Estate Taxes that are otherwise also charged
separately to others, or (ii) collect Operating Costs and/or Real Estate Taxes
from Tenant and all other tenants/occupants in the Building/Project in an amount
in excess of what Landlord actually incurred for the items included in Operating
Costs:

 
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(d)       Tenant further agrees to pay as part of "Additional Rent", an amount
equal to Tenant's Pro Rata Share of the "Tax" and "Insurance Charges" (as
hereafter defined) adjusted from time to time, as hereafter provided:
 
(i)          The phrases "Tax" and "Taxes", as used herein, shall mean all
taxes, assessments, impositions, levies, charges, and other sums (whether now
existing or hereafter arising, whether foreseen or unforeseen and whether made
under the present system of real estate taxation or some other system), levied,
assessed. charged or imposed by any governmental authority or other taxing
authority (including, but not by way of limitation, municipal utility district
taxing authorities) or which accrue upon the Project for any Calendar Year (or
portion thereof) during the Term, including, without  limitation, any future tax
upon rents received by Landlord (to he distinguished from income, franchise or
profit taxes), as well as any costs incurred by Landlord contesting any such
Taxes or obtaining consultants relative to any tax assessments, together with
all penalties, interest and other charges (with respect to taxes) payable by
reason of any delay and/or failure or refusal of Tenant to make timely payment
as required under this Lease. "Taxes" shall not include any of Landlord's
income, franchise or profit, estate, inheritance or gift taxes.
 
(ii)          The phrase "Insurance Charges" shall mean the total annual
insurance premiums which accrue on all fire and extended coverage insurance,
boiler insurance, public liability and properly damage insurance, rent
insurance, and any other insurance which, from time to time, may, at Landlord's
election, be carried by Landlord with respect to the Project during any Calendar
Year (or portion thereof) during the Term; provided, however, that in the event,
during any such Calendar Year, all or any part of such coverage is written under
a blanket policy or other policy form whereby Landlord is unable to determine a
specific insurance premium charge applicable to the Project (or to determine an
equitable manner in which to prorate such charge among the properties covered by
such policy), then in such event, the amount considered to be the Insurance
Charge with respect to such policy shall be that amount, as reasonably
determined by Landlord. which would have been the annual Insurance Charge
payable under the rates in effect (at approximately the same time that such
policy was issued) for a separate Texas standard form insurance policy generally
providing such type and amount of coverage (without any deductible amount) with
respect to the Project (considering the type of construction and other relevant
matters), even though Landlord carried such insurance, or a portion thereof,
under such blanket coverage. Landlord may, from time to time, make a
corresponding calculation as such policy is renewed or replaced. The phrase
"Insurance Charges" shall also include the amount of any deductibles payable
with respect to insurance carried by Landlord with respect to the Project.
 
(d)          Tenant shall pay to Landlord monthly estimated Operating Expenses,
and estimated Tax and Insurance Charges (all of which are hereafter referred to
as the "Monthly Estimated Costs"), as determined by Landlord from time to time,
which shall be due and payable on or before the first day of each month during
the Term hereof. Within one hundred twenty (120) days after the end of each
Calendar Year occurring during the Term (and subsequent to the expiration or
other termination of this Lease, if such occurs on a date other than the last
day of the Calendar Year), Landlord will give Tenant notice of the total amount
paid by Tenant for the applicable Calendar Year together with the actual amount
of (i) Operating Expenses and (ii) Tax and Insurance Charges for such Calendar
Year (collectively referred to in this section as the "Total Costs"). It the
actual amount of Tenant's Pro Rata Share the Total Costs with respect to such
period exceeds the aggregate amount previously paid by Tenant with respect
thereto during such period, Tenant shall pay to Landlord the deficiency within
thirty (30) days following notice from Landlord: if, however, the aggregate
amount previously paid by Tenant with respect thereto exceeds Tenant's Pro Rata
Share of the Total Costs for such period, then, at Landlord's election, such
excess (net of any amounts then owing by Tenant  to Landlord) shall be credited
against the next installment of any such cost due hereunder by Tenant, or
Landlord may refund such net excess to Tenant within thirty (30)days following
delivery of Landlord's notice. Periodically, during the Term of this Lease,
Tenant shall pay all taxes assessed against Tenant's personal property and
leasehold improvements. Notwithstanding anything contained in this Article 4 to
the contrary, annual increases in the amount of Tenant's Additional Rent
(Tenant's Pro Rata Share of Operating Expenses, Taxes and insurance) shall be
capped at ten percent (10%), calculated on a cumulative basis, solely with
respect to Controllable Expenses following the first full calendar year of the
Project. “Controllable Expenses” specifically does not include ( i) Insurance,
(ii) Taxes, (iii) utilities, and (iv) any change in Additional Rent which is a
result of an increase in minimum wage, labor unions, or any change mandated by
governmental regulation.
 
(e)          The term "Calendar Year as used herein, means each calendar year
and partial calendar year for the full Term hereof. The First (1st) Calendar
Year means the period which begins with the Commencement  Date and which ends on
the following 31st day of December. Each following Calendar Year period shall be
for a term of a full twelve (12) months beginning with the next following
January 1st and shall continue for each and every twelve (12) month period
thereafter; however the last Calendar Year shall be for less than twelve (12)
months if the Lease Term ends on a date other than December 31st.
 
(f)         For all purposes tinder this Lease, "Rent" shall mean the Base Rent
and Additional Rent. Tenant acknowledges that late payment by Tenant to Landlord
of all Rent or other charges due from Tenant under this Lease will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of such
costs being extremely difficult and impractical to fix. Such costs include,
without limitation, processing accounting charges, and late charges that may be
imposed on landlord by the terms of any encumbrance and note secured by any
encumbrance covering the demised premises. Therefore, if any installment of Rent
or other charges due from Tenant under this Lease is not received within ten
(10) days of the date when due, Tenant shall pay to Landlord an additional sum
of ten percent (10%) of the overdue Rent or earlier charges due from Tenant
under this Lease as a late charge. Further, the parties agree that this late
charge represents a fair and reasonable estimate of the costs that Landlord will
incur by reason of late payments by Tenant, however, Landlord's acceptance of
any late charge shall not constitute a waiver of Tenant's default with respect
to the overdue amount, nor prevent Landlord from exercising any of the other
rights and remedies available to Landlord.
 
 
 
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(g)    Tenant, at Tenant's sole cost and expense, shall have the right, to be
exercised by written notice given to Landlord within ninety (90) days after
receipt of aforesaid statement showing Total Costs for the previous calendar
year, to audit, at the place where Landlord maintains its books and records,
Landlord's books and records pertaining only to such Total Costs for such
previous calendar year, provided (A) such audit commences within thirty (30)
days after Tenant's notice to Landlord and thereafter proceeds regularly and
continuously to conclusion, (B) that Tenant or Tenant's employee is present at
all times during the audit, (C) such audit does not unreasonably interfere with
the conduct of Landlord's business, (D) such audit is performed by a national or
regional auditing Finn which is commonly known to be reputable, and (E) said
auditing firm signs a nondisclosure agreement in favor of Landlord, acceptable
to Landlord in all respects, agreeing that information derived from such audit
shall not be used directly or indirectly in connection with soliciting
additional auditing business from other existing, previous or future tenants in
the Building, Landlord agrees to cooperate in good faith with Tenant in the
conduct of any such audit. Notwithstanding anything to the contrary set forth in
this Paragraph, however, in no event shall Tenant ever be permitted to audit or
cause to be audited Landlord's records concerning Total Costs through, or with
the assistance of auditors or others whose compensation is contingent upon, or
the amount of whose compensation is affected by, the outcome of such audit, in
whole or in part, or on any payment or reimbursement by Landlord to Tenant in
connection with such audit, or which is otherwise done in whole or in part on
any basis other than reasonable hourly charges for the hours expended in the
performance of such audit, and reimbursement of reasonable out-of-pocket
expenses incurred by such auditors in connection with such audit. In the event
that the audit determines that the amount charged to Tenant exceeds the correct
amount by 5% or more. Landlord will promptly refund the Tenant all amounts
overpaid and Landlord shall pay for the reasonable cost of the audit.
 
5.    POSSESSION. If Landlord is unable to deliver possession of the Leased
Premises on the date of the commencement of the Term because the Leased Premises
are not ready for occupancy, Landlord shall not be subject to any liability for
the failure to deliver possession on said date. Under such circumstances, unless
the delay is the fault of Tenant, the Rent shall not commence until Leased
Premises are ready for occupancy by Tenant, and no such failure to deliver
possession on the date of commencement of the Term shall in any way affect the
validity of this Lease or the obligations of Tenant hereunder, nor shall same be
construed in any way to extend the Term, the delay in the accrual of rent
described in the foregoing sentence constitutes full settlement of all claims
that Tenant might otherwise have by reason of the Leased Premises not being
ready for occupancy on the commencement of the Term. If, at Tenant's
request, Landlord shall make the Leased Premises available to Tenant prior to
the date of commencement of the Term for the purposes of decorating.
constructing, furnishing, and equipping he Leased Premises, the use of the
Leased Premises for such work shall not create a landlord-tenant relationship
between the parties nor constitute occupancy of the Leased Premises within the
meaning of the next sentence, but the provisions of Paragraph 9, 11, 12,13 and
14 of the Lease shall apply from the date the Leased Premises are made available
to the Tenant. If with the consent of Landlord, Tenant shall enter into
occupancy on the Leased Premises to do business therein prior to the date of
commencement of the Term, the provisions of the Lease shall apply and rent shall
accrue and he payable from the date of occupancy. If pursuant to the terms of
this Paragraph 3, the Term shall commence on any data other than that
commencement date noted in Paragraph 2, Tenant agrees to enter into a letter
amendment to this Lease identifying the new "Term" hereof. Notwithstanding
anything to the contrary contained in this Lease upon execution of this Lease by
Landlord and Tenant. Landlord and Tenant hereby agree that they are bound by the
terms of this Lease from and after the date both parties executed this Lease.
 
6.     USE.
 
(a)          Tenant shall use the Leased Premises solely for the purpose of
general office space. Tenant shall use the Leased Premises for no other purpose
without the prior written consent of Landlord. In addition, Tenant covenants and
agrees to operate its approved business in a first-class, reputable and
efficient manner, throughout the Term °runs Lease in or on the Leased Premises.
 
(b)          Tenant shall be entitled to place, at Tenant's sole cost and
expense. a sin panel on the pylon sign to be constructed for the Building, which
pylon sign shall be constructed by Landlord at its sole cost and expense within
thirty (30) days following the Commencement Date. The location and appearance of
such sign and panel are shown on the attached Exhibit "C". Landlord shall
furnish and install building standard graphics including Tenant's name and/or
logo on all Building directories and at Tenant's entry door, at Landlord's cost.
 
(c)          The Project will be at all times under the control, management and
operation of Landlord: provided. However, nothing in this subparagraph (c) shall
create liability on the part of Landlord, if such liability arises out of any
obligation undertaken by Tenant under this Lease. Landlord may from time to time
(i) alter or redecorate the Project (including any Common Area) or construct
additional facilities adjoining or approximate to the Project: (ii)
close, temporarily, doors, entryways, public spaces and corridors and interrupt
or suspend, temporarily, Building services and facilities in order to perform
any redecorating or alteration or in order to prevent the public from acquiring
prescriptive rights in any Common Area; (iii) change the name or street address
of the Building: and (iv) install, maintain or change a sign or signs on the
exterior or interior of the Building.
 
(d)          Landlord will use commercially reasonable efforts not to disrupt
Tenant's operations in the Leased Premises during the proper exercise of
Landlord's rights under Paragraph 6(c) or Paragraph 20 hereof, but it is not
required to incur any unreasonable expenses in order to minimize the disruption.
Tenant hereby waives all claims for damages. injuries or interference with
Tenant's business, loss of occupancy, or quiet enjoyment and for claims under
any other laws resulting from the proper exercise by Landlord of any right under
Paragraph 6(c) or Paragraph 20 hereof. No proper exercise by Landlord of any
right under Paragraph 6(c) or Paragraph 20 hereof constitutes actual or
constructive eviction or breach of any expressed or implied covenant for quiet
enjoyment.

 
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(e)    If, at any time during the Term, Tenant vacates, abandons, or ceases its
operation at the Lease Premises for more than ninety (90) days (except as a
result of casualty or condemnation). Landlord shall provide written notice to
Tenant thereof. and if Tenant shall not have recommenced its occupancy for
operation at the Premises within thirty (30) days following receipt of such
notice, then Landlord shall have the right to immediately recapture the Leased
Premises and in such event, the Lease Term shall expire and end on the date
stated in Landlord's notice (the "Recapture Notice"), in which event neither
Landlord nor Tenant shall have any further liability hereunder, except for those
obligations which expressly survive the expiration or earlier termination of
this Lease.
 
7.    SERVICE TO BE PROVIDED BY LANDLORD.
 
(a)    Subject to the Building rules and regulations hereinafter set forth,
Landlord shall furnish Tenant, at Landlord's expense, except as provided in
Paragraph 4 above, the following services while Tenant is occupying the Leased
Premises during the Term:
 
(i)          During normal business hours (7:00 a.m. - 7:00 p.m.) on Mondays
through Fridays, and, Saturdays (9:00. a.m. - 12:00 p.m.) air-conditioning and
beating in season, at such temperatures and in such amounts as are considered by
Landlord to be standard. but such service outside normal business hours and on
Sundays and holidays shall be furnished only at Landlord's discretion and in any
event only upon forty-eight (48) hours prior written request by Tenant, who
shall bear the standard charges of Landlord therefor, which shall never be less
than the cost thereof
 
(ii)          Hot and cold water at those points of supply provided for general
use.
 
(iii)          Standard building janitor service in and about the Building and
the Leased Premises, five (5) days per week, and periodic window washing;
however, Tenant shall pay the additional costs attributable to the cleaning of
improvements within the Leased Premises other titan building standard
improvements.
 
(iv)          Elevators for ingress to and egress from the Building during
normal business hours and other such periods as are considered by Landlord to be
standard.
 
(v)          Proper building standard facilities to furnish sufficient
electrical power for standard lighting, typewriters, dictating equipment,
calculating machines and other machines of similar low electrical consumption,
but not including electricity required for special lighting in excess of
building standard, or which, in Landlord's reasonable judgment, exceeds the
capacity of existing feeders, conductors, risers, or wiring in or to the Leased
Premises or Building, and not including electricity for any other item of
electrical equipment which singly consumes more than 0.25 kilowatts per hour at
rated capacity, or voltage other than 120 volts or single phase. Tenant shall
pay to landlord, monthly as billed, such charges as may be separately metered or
as Landlord's engineer may compute for any electrical service furnished to
Tenant in excess of that stated above.
 
(vi)          Replacement of fluorescent lamps in building standard ceiling
mounted fixtures installed by Landlord and incandescent bulb replacement in
public areas.
 
(b)    No interruption, moratorium or malfunction of any services, or failure of
any machinery, equipment or systems, or components thereof, to operate, or
malfunction in the operation thereof, for any cause whatsoever shall constitute
an eviction or disturbance of Tenant's use and possession of the Leased Premises
or Project or a breach by Landlord of any of its obligations hereunder or render
Landlord liable for damages or entitle Tenant to be relieved from any of its
obligations hereunder (including the obligation to pay Rent) or grant Tenant any
right of setoff or recoupment. In the event of any such interruption, however,
Landlord shall use reasonable diligence to restore such service in any
circumstances in which such restoration is within the reasonable control of
Landlord and the interruption was not caused by Tenant's fault or the fault of
Tenant's employees, agents, contractors, invitees, or licensees. Notwithstanding
anything contained herein, Landlord shall use reasonable efforts to restore any
service required of it that becomes unavailable: however, such unavailability
shall not render Landlord liable for any damages caused thereby, be a
constructive eviction of Tenant, constitute a breach of any implied warranty,
or, except as provided in the next sentence, entitle Tenant to any abatement of
Tenant's obligations hereunder. If, however, Tenant is prevented from using the
Premises for more than live (5) consecutive business days because of the
unavailability of any such service and such service is within Landlord's
control, then Tenant shall, as its exclusive remedy be entitled to a reasonable
abatement of Base Rent and Additional Rent for each consecutive day (after such
5-day period) that Tenant is so prevented from using the Premises.
 
(c)    Should Tenant desire any additional services beyond those described in
Subparagraph (a) of this Paragraph 7 or rendition of any such services outside
the normal times of Landlord for providing such services. Landlord may (at
Landlord's option), upon reasonable advance notice from Tenant to Landlord,
furnish such services, and Tenant agrees to pay Landlord such charges as may be
agreed on between Landlord and Tenant, but in no event at a charge less than
Landlord's actual cost plus reasonable overhead for the additional services
provided. By way of illustration and not limitation, special equipment requiring
abnormal use of water or electricity used as a power source for data processing
machines, including, air conditioning costs therefor, large business machines
and similar equipment of high electrical consumption characteristics shall not
constitute standard water consumption or electrical service, as the case may be,
and the costs thereat' shall he paid by Tenant. Tenant hereby agrees to cause,
at its sole expense, separate meters for measuring units of' consumption to be
installed within the Leased Premises, if the services consumed by Tenant are
reasonably determined by Landlord to be beyond or more than those services
described in Subparagraph (a) of this Paragraph 7 to be provided by Landlord.

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(d)          Tenant shall pay to the Landlord the amount provided for in this
Paragraph 7(c) for additional services within five (5) business days after
receipt of an invoice therefor from Landlord.
 
(e)          Tenant shall also pay for, before delinquencies, all telephone
charges and the cost or charge for all other materials and services not
expressly the obligation of Landlord that are Furnished to or used on, in or
about the Leased Premises by other parties during the Term of this Lease.
 
8.    REPAIR AND MAINTENANCE.
 
(a)          Landlord shall, subject to the casualty provisions of Paragraph 9,
maintain the (i) Common Area and service areas of the Project, ( ii) roof,
foundation, exterior windows and load-bearing items of the Building; (iii)
exterior (located outside the Leased Premises) surfaces of walls; (iv) plumbing,
pipes and conduits located in the Common Area or service areas of the Project;
and (v) the Buildings central heating, ventilation and air conditioning,
electrical, mechanical and plumbing systems, landlord is not required to make
any repair in connection with or resulting from (1) any alteration or
modification to the Leased Premises or to Building equipment performed by, for
or because of Tenant or to special equipment or systems, installed by, for or
because of Tenant, (2) the installation, use or operation of Tenant's property,
fixtures, and equipment, (3) the moving of Tenant's property in or out of the
Building, or in and about the Leased Premises, (4) Tenant's use or occupancy of
the Leased Premises in violation of Paragraph 6 or in a manner set out in this
Lease (e.g. subsequent installation of special use rooms), (5) the acts or
omissions of Tenant and Tenant's employees, agents, invitees, subtenants,
licensees or contractors, or (6) fire or other casualty, except as provided in
Paragraph 9. Depending on the nature of repairs undertaken by Landlord, the cost
of the repairs will be borne solely by Landlord (if required to be under the
terms of the Lease) or will be reimbursed to Landlord either by a particular
tenant or tenants or by all tenants as part of the Operating Expenses.
 
(b)          Except for janitorial services provided by Landlord and landlord's
obligations under Paragraph I(b) and 8(a), and subject to the terms of Paragraph
15. Tenant shall maintain the Leased Premises, including all fixtures installed
by Tenant, in good and tenantable condition and repair and shall promptly make
all reasonably necessary non­structural repairs and replacements thereto except
those caused by fire or other casualty covered by insurance on the Building
under policies naming Landlord as the insured. all at Tenant's sole expense,
under the supervision and with the reasonable approval of Landlord. Such repairs
and replacements shall be in quality and class equal to the original work.
Without diminishing such obligations of Tenant, if Tenant fails to make such
repairs or replacements within fifteen (15) days after the occurrence of the
damage or injury, Landlord may at its option (after prior written notice to
Tenant) make such repair and Tenant shall pay Landlord for the reasonable cost
thereof upon demand, plus interest thereon, as provided in this Lease, from
demand until payment. In addition, Tenant shall pay the cost of repair and
replacement due to damage or injury done to the Building or any part thereof or
any part of the Project, by Tenant or Tenant's agents, employees, contractors,
licensees or invitees. Such amount shall be paid by Tenant to Landlord within
five (5) business days, after written demand, plus interest thereon, as provided
in this Lease, from demand until payment. Upon termination of this Lease, Tenant
will surrender the Leased Premises to Landlord in the same condition in which
they existed at the commencement of the Lease or as subsequently Unproved by
Landlord or Tenant, excepting only ordinary wear and tear and damage arising
from any cause required hereunder to be repaired at Landlord's expense.
 
(c)          If there now is or shall be installed in the Building a "sprinkler
system" and such systems or any of its appliances shall be damaged or injured or
not in perfect working order by reason of any act or omission of Tenant,
Tenant's agents, servants, employees, contractors, licensees or invitees, Tenant
shall forthwith restore same to good working condition at its own expense under
the supervision and with the approval of Landlord; and if any bureau, department
or official oldie state or city government require or recommend that any
changes, modifications or alterations be made or that sprinkler heads and
equipment be supplied by reason of Tenant's business, or the location of
partitions, trade Fixtures or other contents of the Leased Premises. Tenant
shall, at Tenant's expense, promptly make and supply such changes, or
modifications, alterations, additional sprinkler heads or other equipment.
 
(d)          Tenant acknowledges that after it has inspected the Leased Premises
and Tenant's taking possession of the Leased Premises shall be conclusive
evidence as against the Tenant that the Leased Premises were in good order and
satisfactory condition when the Tenant took possession. No promise of the
Landlord to alter, remodel, repair or improve the Leased Premises or the
Building and no representation respecting the condition of the Leased Premises
or the Building have been made by Landlord to Tenant, other than as may be
contained herein or in a separate Work Letter agreement signed by Landlord and,
Tenant.
 
9.    LANDLORD'S INSURANCE; FIRE AND CASUALTY.
 
(a)    Landlord will maintain fire and extended coverage insurance on the
Building in an amount not less than 80% (or such greater percentage as necessary
to comply with co-insurance requirements of the policy) of the "replacement
cost" thereof, as defined in a Replacement Cost Endorsement to be attached
thereto. Said insurance is for Landlord's sole benefit and is under its sole
control.
 
 
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(b)            If at any time during the Term, the Leased Premises or any
portion of the Building or Common Area shall be damaged or destroyed by tire or
other casualty, then Landlord shall have the election either to terminate this
Lease or to repair and reconstruct the Common Area, the Leased Premises and/or
the Building to substantially the same condition in which they existed
immediately prior to such damage or destruction, except that Landlord shall not
be required to repair, replace or reconstruct any personal property, furniture,
trade fixtures, tenants improvements, alterations or additions made by or for
Tenant, or office equipment which is located in the Leased Premises and
removable or insurable by Tenant under the provisions of this Lease, and except
that Landlord is not required in any event to expend more than the amount of
insurance proceeds actually received by Landlord as a result of fire or other
casualty.
 
(c)            In any of the aforesaid circumstances, Rent shall abate
proportionately during the period and to the extent that the Leased Premises or
portion thereof are untenantable or unfit for use by Tenant in the ordinary
conduct of its business, if Landlord has elected to repair and restore the
Leased Premises to the extent staled above, this Lease shall continue in full
force and effect and such repairs will be made within a reasonable time
thereafter, subject to delays arising from shortages of labor or materials, acts
of God, war or other conditions beyond Landlord's reasonable control. Within
sixty (60) days following any casualty hereunder, Landlord notify Tenant in
writing of the time required to repairs such casualty, as estimated by Landlord.
Should (i) Landlord, in Landlord's reasonable judgment, estimate that reasonable
repairs cannot be completed within six (6) months after the casualty, or (ii)
Landlord estimate that the reasonable repairs will be completed within six (6)
months after the casualty, but Landlord does not in fact complete such repairs
within such six (6) month period, then Tenant may terminate this Lease by
written notice within (x) thirty (30) days after receipt of Landlord's notice
with respect to clause (i) of this sentence, or (y) thirty (30) days following
the expiration of such six (6) month period with respect to clause (ii) of this
sentence. In the event that this Lease is terminated as herein permitted,
Landlord shall refund to Tenant any prepaid Rent (unaccrued as of the date of
damage or destruction) less any sum then owing Landlord by Tenant. If Landlord
has elected to repair and reconstruct the Leased Premises to the extent stated
above, then, at Landlord's election, the Term may be extended by a period of
time equal to the period of such repair and reconstruction.
 
(d)           Notwithstanding the provisions of Subparagraphs (b) and (c) of
this Paragraph 9, if the Leased Premises or any other portion of the Building is
damaged by fire or other casualty resulting from the fault or negligence of
Tenant or any of Tenant's agents, employees, contractors, licensees or invitees,
the Rent hereunder shall not be diminished during repair of such damage, and
Tenant shall be liable to Landlord for the reasonable cost and expense of the
repair and restoration of the Leased Premises or the Building caused thereby to
the extent such reasonable cost and expenses are not covered by insurance
proceeds.
 
(e)            Notwithstanding anything herein to the contrary, if Landlords
Mortgagee requires that the insurance proceeds be applied to indebtedness owed
to such mortgagee. Landlord may terminate this Lease by delivering written
notice of termination to Tenant within three (3) days after the requirement is
made by Landlord's Mortgagee, whereupon all further rights and obligations of
each party hereunder shall cease and terminate.
 
(f)             If the Leased Premises, or any part thereof, are damaged or
destroyed by a casualty other than a peril covered by the insurance to be
provided by landlord under Subparagraph 9(a), or if any other improvements
situated on the Leased Premises are damaged or destroyed, then Tenant shall at
its sole cost and expense proceed with reasonable diligence to rebuild and
repair the damaged improvements to substantially the condition in which they
existed before the damage or destruction, subject to Landlord's approval of The
plans and specifications for the rebuilding and repairing.
 
10.    COMPLIANCE WITH LAWS AND USAGE. Tenant, at its own expense, will (i)
promptly comply with all federal, state, municipal and other laws, ordinances,
rules and regulations applicable to the Leased Premises and the business
conducted therein by Tenant: (ii) not engage in any activity which would cause
Landlords fire and extended coverage insurance to be canceled or the rate
therefor to be increased (or, at Landlord's option, will pay any such increase);
(iii) not commit any act which is a nuisance, disturbance or annoyance to
Landlord or to other tenants, or which might, in the exclusive reasonable
judgment of Landlord, waste in the Leased Premises or Building; and (v) not
paint, erect or display any sign, advertisement, placard or lettering which is
visible on the corridors or lobby of the Building or from the exterior of the
Building without Landlords prior written approval. The parties acknowledge that
the Americans With Disabilities Act of 1990 (42 U.S.C. ss. 12101 et seq.) and
regulations and guidelines promulgated thereunder, as all of the same may be
amended and supplemented from time to time (collectively referred to herein as
the "ADA") establish requirements for business operations, accessibility and
barrier removal, and that such requirements may or may not apply to the Leased
Premises and the Building depending on, among other things; (1) whether Tenant's
business is deemed a "public accommodation" or "commercial facility", (2)
whether such requirements are "readily achievable", and (3) whether a given
alteration affects a "primary function area" or triggers "path of travel"
requirements. The parties hereby agree that; (a) Landlord shall be responsible
for ADA Title III compliance in the Common Areas of the Building, except as
provided below, (b) Tenant shall be responsible for ADA Title III compliance in
the Leased Premises, including any leasehold improvements or other work to be
performed in the Leased Premises under or in connection with this Lease, and (c)
Landlord may perform, or require that Tenant perform, and Tenant shall be
responsible for the cost of, ADA Title III "path of travel" requirements
triggered by alterations in the Leased Premises. Tenant shall be solely
responsible for requirements under Title I of the ADA relating to Tenant's
employees. The parties hereto specifically agree that no provision of this Lease
or any exhibit attached hereto shall be construed in any manner as to violate
the ADA, and neither party has any intent, and disclaims any intent, to violate
the ADA, and no activities of the Landlord or Tenant otherwise prohibited by
this Lease or any exhibit hereto shall be prohibited to the extent such
prohibition is construed as a violation of the ADA.
 
 
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11.          INDEMNITY. Landlord shall not be liable for and Tenant agrees to
indemnify and save harmless Landlord and its affiliates and their agents,
servants, directors, officers and employees (collectively "Indemnitees") from
and against any and all liabilities, damages, claims, suits, costs (including
reasonable costs of suit, reasonable attorneys' fees and reasonable costs of
investigation) and actions of any kind arising or alleged by the injured party
or arise by reason of injury to or death of any person or damage to or loss of
property occurring on, in or about the Leased Premises or by reason of any other
claim whatsoever of any person or party occasioned or alleged to be occasioned
by any act or omission on the part of Tenant or any invitee, patron, licensee,
employee, director, officer, agent, servant, owner, contractor, subcontractor,
or tenant of Tenant, or on the part of any person entering the Building or
Leased Premises under the expressed or implied invitation of Tenant, or by any
breach, violation or nonperformance of any covenant of Tenant, or by any breach,
violation or nonperformance of any covenant of Tenant under this Lease, whether
such liability, claims, suits, costs, injuries, deaths, or damages arise from or
are attributed to the concurrent negligence of any Indemnitee, if any action or
proceeding shall be brought by or against any Indemnitee in connection with any
such liability or claim, Tenant, on notice from the Indemnitee shall defend such
action or proceeding, at Tenant's expense, by or through attorneys reasonably
satisfactory to the Indemnitee. The provisions of this Paragraph shall apply to
all activities of Tenant with respect to Leased Premises or the Project,
occurring after execution of this Lease, Tenant's obligations under this
Paragraph shall not be limited to the limits or coverage of insurance maintained
or required to be maintained by Tenant under this Lease.
 
12.          WAIVER OF LIABILITY. No Indemnitee shall be liable in any manner to
Tenant or any other person or party for any injury to or death of persons or for
any loss of or damage to property of Tenant, its employees, agents, customers,
invitees or to others, regardless of whether such property is entrusted to
employees of the Building or such loss or damage is occasioned by casualty,
theft or any other cause of whatsoever nature, unless caused by the willful
misconduct or gross negligence of the particular Indemnitee. In no event shall
any Indemnitee be liable in any manner to Tenant or any other person or party as
a result of the acts or omissions of Tenant, its agents, employees, contractors,
invitees, patrons, licensees, directors, officers, tenants, or any other person
or party entering the Project or the Leased Premises under the expressed or
implied invitation of Tenant, or any other tenant of the Building. All personal
property upon the Leased Premises shall be at the risk of Tenant only, and no
Indemnitee shall be liable for any damage thereto or theft thereof, whether or
not due in whole or in part to the negligence of any Indemnitee.
 
13.          WAIVER OF SUBROGATION. Regardless of fault or negligence, Landlord
and Tenant hereby waive any claim arising in favor of one against the other, or
anyone claiming through either, by way of subrogation or otherwise, for any loss
of or damage to any property of either which loss or damage is covered under
their respective casualty insurance policies (including extended coverage). Said
waiver shall be in addition to any other waiver or release contained in this
Lease with regard to loss or damage to property of either. Landlord and Tenant
each shall request its insurer to consent to such waiver and agree to waive all
rights of subrogation against the other party, and Landlord and Tenant shall
provide the other party with all endorsements necessary to evidence the consent
of its insurer.
 
14.          TENANT'S INSURANCE. Tenant shall maintain at all times during the
term of this Lease, at Tenant's expense:
 
(a)          CASUALTY INSURANCE; including extended coverage, vandalism, and
malicious mischief, and demolition and debris removal, insuring for an amount
not less than 80% of the current replacement cost of all Tenant improvements,
alterations or additions made to the Leased Premises by Tenant, and Tenant's
trade fixtures, inventory, furniture and equipment owned, controlled or in use
by Tenant and situated in the Leased Premises. Landlord shall have no interest
in the insurance upon Tenant's equipment and trade fixtures other than as a lien
holder pursuant to Paragraph 21 with respect to such equipment and trade
fixtures. Landlord will not carry insurance insuring Tenant's property unless it
elects to do so pursuant to Paragraph 14(1) below.
 
(b)          COMMERCIAL GENERAL LIABILITY INSURANCE including Bodily Injury and
Property Damage Liability and Person & Advertising Injury Liability on an
occurrence basis with respect to Tenant's business and occupancy of the Leased
Premises for any one occurrence or claim of not less than $2,000,000. with N/A
Products Aggregate and $5,000,000 General Aggregate, or such greater amount as
Landlord may reasonably require in writing from time to time. Such insurance
shall contain a provision including coverage for all liabilities assumed by
Tenant under this Lease and shall name Landlord as an additional insured.
 
(c)          WORKER'S COMPENSATION INSURANCE for all Tenant employees working in
the Leased Premises in an amount sufficient to comply with applicable laws or
regulations. The policy shall include Employer's Liability with minimum limits
of Sl00.000 per accident, $100,000 per employee, $500.000 policy limit.
 
(d)          INSURANCE against such other perils and in such amounts as Landlord
may from time to time reasonably require in writing. Such request shall be made
on the basis that the insurance coverage requested is customary at the time for
prudent tenants.
 
All policies of insurance required to be maintained by Tenant hereunder shall
(i) be in a form acceptable to Landlord: (ii) be issued by an insurer licensed
to do business in the state in which the Building is situated and which insurer
shall otherwise be reasonably acceptable to Landlord: (iii) require at least
thirty (30) days written notice to Landlord before termination or material
alteration: and (iv) with respect to insurance, required under Subparagraphs
(a), (h), and (e), name Landlord and Landlord's Mortgagee as an "additional
insured". Tenant shall, upon the commencement of the Term of this Lease and
thereafter within thirty (30) days prior to the expiration of each such policy,
promptly deliver to Landlord certified copies or other evidence of such policies
and evidence satisfactory to Landlord that all premiums have been paid and the
policies are in effect.
 
 
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(f)    Tenant shall provide Landlord with an original certificate of insurance
upon execution of this Lease. If Tenant fails to comply with the insurance
requirements set forth in Paragraph 14, then Landlord may (in addition to having
available to it all other remedies provided herein upon an occurrence of an
Event of Default), obtain such insurance and Tenant shall pay to Landlord on
demand, the premium cost thereof, plus interest provided under Paragraph 40.
 
I5.    ADDITIONS AND FIXTURES.
 
(a)          Tenant shall not make any alteration, change, improvement, repair,
replacement or addition to the Leased Premises ("Alteration") without prior
written consent of Landlord which consent shall not be unreasonably withheld.
Unless Landlord has waived the requirement in writing, together with Tenant's
request for approval of an Alteration, Tenant must also submit reasonable detail
with respect so design concept, plans and specifications. certificates of
insurance to be maintained by Tenant's contractors, hours of construction,
proposed construction methods, details with respect to the quality of the
proposed work, and reasonable evidence of security (such as payment and
performance bonds) to assure timely completion and payment of the costs of the
work by the contractor. With respect to an Alteration that is visible from
outside the Leased Premises, the Alteration must, in the opinion of the
Landlord, also be architecturally and aesthetically harmonious with the
remainder of the Building. If Landlord consents to the Alteration, the work in
such connection shall be at Tenant's expense, but be performed by workers of
Landlord or workers and contractors approved by the Landlord in advance and in
writing, and shall he performed in a manner and upon terms and conditions and at
times reasonably satisfactory to and approved in advance and in writing by
Landlord. In any instance in which Landlord grants such consent, Landlord may
grant such consent contingent and conditioned upon Tenant's working in harmony
and not interfering with any labor utilized by Landlord. Landlord's contractors
or mechanics, or by any other tenant or such other tenant's contractors or
mechanics: and if at any time such entry by one or more persons furnishing labor
or materials for Tenant's work shall cause interference in the Project or with
respect to other tenants and their employees, agents, contractors, invitees or
licensees, the consent granted by Landlord to Tenant may be withdrawn upon
forty-eight (48) hours written notice to Tenant. All work performed by or for
Tenant will be performed diligently and in a first class, workmanlike manner,
and in compliance with all applicable laws, ordinances, regulations and rules of
any public authority having jurisdiction over the Building  and/or Tenant and,
so long as communicated in writing to Tenant, Landlord's insurance carriers.
Landlord has the right, but not the obligation,. to inspect periodically the
work on the Leased Premises and may require or make changes in the method or
quality of the work.
 
Except for the cost that Landlord agrees with Tenant in writing to pay, Tenant
shall pay for all costs incurred or arising out of any Alterations and shall not
permit a mechanic's or materialman's lien to be asserted against the Leased
Premises. On Landlord's request, Tenant shall deliver to Landlord proof of
payment and lien waivers and releases satisfactory to Landlord of all costs
incurred or arising out of Alterations. If for any reason Tenant fails to
discharge any such obligation, and a mechanics or materialman's lien is tiled
against any portion of the Project, other than liens that are being contested by
Tenant in good faith, in addition to any other right or remedy of Landlord for
an occurrence of an Event of Default under this Lease. Landlord may (but is not
obligated to) discharge the lien, either by paying the amount due or by
procuring a bond, or by any other means. Any amount paid by Landlord to obtain
the discharge of the lien, with interest as provided in Paragraph 40, shall be
paid by Tenant to Landlord on demand.
 
(b)          Tenant may remove its trade fixtures, office supplies and movable
office furniture and equipment not attached to the Building provided: (i) such
removal is made prior to the termination of the term: (ii) Tenant is not in
default of any obligation or covenant under this Lease at the time of such
removal: and (iii) Tenant promptly repairs all damage cause by such removal. All
other property at the Leased Premises and any Alteration of the Leased Premises
(including wall-to-wall carpeting, paneling or other wall covering) and any
other article attached or affixed to the Leased Premises (any of which as stated
above shall require Landlord's prior written consent) shall become the property
of Landlord upon construction or installation and shall remain upon and he
surrendered with the Leased Premises as part thereof at the termination of this
Lease, (however, Landlord shall not have any obligation to insure or rebuild or
replace any such alterations) and Tenant hereby waives all rights to any payment
or compensation therefor. If, however, Landlord notifies Tenant in writing upon
approval of the "Final Plans" (as defined in Exhibit C attached hereto). Tenant
will, prior to termination of this Lease, remove any and/or all Alterations,
fixtures, equipment and property placed or installed by it or at its request in
the Lease Premises and will repair any damage caused by such removal.
 
16.    ASSIGNMENT AND SUBLETTING.
 
(a)    Neither Tenant, nor Tenant's legal representatives or successors in
interest by operation of law or otherwise, shall assign this Lease or sublease
of the Leased Premises or any part thereof or mortgage, pledge or hypothecate
its leasehold interest in this Lease or grant any concession or license within
the Leased Premises without the prior express written permission of Landlord
(which permission may not be unreasonably withheld, conditioned or delayed), and
any attempt to do any of the foregoing without the prior express written
permission of Landlord shall be an Event of Default hereunder and such attempted
act shall be void and of no effect. In the event Tenant requests Landlords
permission as to any such assignment, sublease or other transaction, in the
event of any such attempted assignment or attempted sublease or should Tenant,
in any other transaction, permit or attempt to permit anyone to occupy the
Leased Premises (or any other portion thereof) without the prior written
permission of the Landlord. Landlord shall thereupon have the right and option,
but not the obligation, to cancel and terminate this Lease effective upon
fifteen (15) days notice to Tenant given by Landlord at any time thereafter
either as to the entire Leased Premises or as to only the portion thereof which
Tenant shall have attempted to assign or sublease or otherwise permitted some
other party's occupancy without Landlord's prior express written permission, and
if Landlord elects to cancel and terminate this Lease as to the aforesaid
portion of the  Leased Premises, then the Rent and other charges payable
hereunder shall thereafter be proportionately reduced. This prohibition against
assigning or subletting shall be construed to include a prohibition against any
assignment or subletting by operation of the law, Tenant shall pay Landlord, on
demand, as additional Rent hereunder all reasonable costs (including reasonable
attorneys' fees) incurred by Landlord in connection with any request by Tenant
hereunder, whether or not such request is approved.

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(b)    Notwithstanding that the prior express written permission of Landlord to
any of the aforesaid transactions may have been obtained, the following shall
apply:
 
(i)          In the event of an assignment, contemporaneously with the granting
of Landlord's aforesaid consent, Tenant shall cause the assignee to expressly
assume in writing and agree to perform all of the covenants, duties and
obligations of Tenant hereunder and such assignee shall be jointly and severally
liable therefor along with Tenant;
 
(ii)          A signed counterpart or all instruments relative thereto (executed
by all parties to such transaction with the exception of Landlord) shall be
submitted by Tenant to Landlord prior to or contemporaneously with the request
for Landlord's written consent thereto (it being understood that no such
instrument shall be effective without the written consent of Landlord);
 
(iii)          Tenant shall subordinate to Landlords statutory lien and
Landlord's contractual lien and security interest any liens or other rights
which Tenant may claim with respect to any fixtures, leased to tire proposed
assignee or sublessee or other party intending to occupy the Leased Premises;
 
(iv)          No usage of the Leased Premises different from the usage herein
provided to be made by Tenant shall be permitted and all other terms and
provisions of this Lease shall continue to apply after any such assignment or
subleasing; and
 
(v)   In any case where Landlord consents to an assignment, sublease, grant or
concession or license or mortgage, pledge or hypothecation of the leasehold, the
Tenant (and any guarantor of this Lease) will nevertheless remain directly and
primarily liable for the performance of all the covenants, duties and
obligations of Tenant hereunder (including, without limitation, the obligation
to pay all Rent and other sums herein provided to be paid), and Landlord shall
be permitted to enforce the provisions of this instrument against the
undersigned Tenant (and such guarantor) and/or any assignee without demand upon
or proceeding in any way against any other person; and
 
(vi)         In the event that the Rent and any other consideration due and
payable on a monthly basis or otherwise by a sublessee under any sublease
permitted by Landlord pursuant to the terms of this Lease, exceed the Rent
payable under this Lease, or if with respect to a permitted assignment.
permitted license or other transfer by Tenant permitted by Landlord, the
consideration payable to Tenant by the assignee, licensee or other transferee
exceeds the Rent payable tinder this Lease, then Tenant shall he bound and
obligated to pay Landlord. in addition to Rent due under this Lease, as
additional Rent under this Lease, Fifty percent (50%) of all such excess Rent
(after deducting the costs paid by Tenant to complete such sublease, assignment
or transfer) other excess consideration within ten (10) days following receipt
thereof by Tenant from such sublessee, assignee, licensee or other transferee,
as the case might be.
 
(c)    If Tenant or any guarantor of Tenant's obligations hereunder is a
corporation, then any merger or consolidation of the corporation with another
corporation or dissolution of the corporation or any change in ownership or
power to vote a majority of the voting stock outstanding at the time of
execution of this instrument of Tenant or such guarantor shall constitute an
assignment of this Lease for the purpose of this Lease, if the outstanding
voting shares of capital stock of Tenant or any guarantor of Tenant's
obligations hereunder is stock which is registered pursuant to the Securities
Exchange Act of 1941, and listed on a recognized security exchange or
over-the-counter market, the provision or the Paragraph I 6(c) shall not apply.
For purposes of this Paragraph 16(c), the term "voting stock" shall refer to
shares of stock regularly entitled to vote for the election of directors of the
corporation involved.
 
If Tenant or such guarantor is a general partnership having one or more
corporations as partner, or if Tenant is a limited partnership having one or
more corporations as a general partner, the provisions of the  preceding
paragraph shall apply to each of such corporations as if such corporation alone
had been the Tenant or such guarantor hereunder.
 
If Tenant or such guarantor is a general partnership (whether or not having any
corporations as partners or if Tenant or such guarantor is a limited partnership
(whether or not having any corporation as general partners) the transfer of the
partnership interest or interests constituting a majority of the general
partnership interests on the date of full execution of this Lease shall
constitute an assignment for the purpose of this Lease.
 
(d)    Consent by Landlord to a particular assignment or sublease or other
transaction shall not be deemed consent to any other or subsequent transaction,
if this Lease be assigned or if the Leased Premises be subleased (whether in
whole or in part) or in the event of the mortgage, pledge or hypothecation of
the leasehold interest or grant of any concession or license within the Leased
Premises without the prior express written permission of the Landlord, or  of
the Leased Premises be occupied in whole or in part by anyone other than Tenant
without prior express written permission of Landlord, Landlord may nevertheless
collect Rent from the assignee, sublessee, mortgagee, pledgee, party to whom the
leasehold interest was hypothecated, concessionee or licensee or other occupant
and apply the net amount collected to the Rent payable hereunder, but no such
transaction or collection of Rent or application thereof by Landlord shall be
deemed a waiver of the provisions of this Lease relating to assignment and
subletting of this Lease, or a release of Tenant from further performance by
Tenant of its covenants, duties and obligations hereunder.

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17.    SUBORDINATION AND ATTORNMENT.

(a)          Tenant accepts this Lease subject and subordinate to any mortgage,
deed of trust or other lien presently existing or hereafter placed upon the
Building and to any renewals and extensions thereof; but Tenant agrees that any
mortgagee and/or beneficiary of any such deed of trust or other lien
("Landlord's Mortgagee") and/or Landlord shall have the right (but shall not be
obligated) at any time to subordinate such mortgage, deed of trust or other lien
to this Lease on such terms and subject to such conditions as Landlords
Mortgagee may deem appropriate in its discretion. Within thirty (30) days
following Tenant's execution of this Lease, Tenant agrees to promptly execute
and deliver a subordination, non-disturbance and attornment agreement ("SNDA"),
substantially in the forms attached hereto as Exhibit "D", subordinating this
Lease, as Landlords Mortgagee shall request, Landlord shall deliver to Tenant
the fully-executed SNDA within sixty (60) days after Landlord receives Tenant's
executed counterpart copy of the SNDA.

(b)          If a mortgagee or other lienholder or any other purchaser acquires
the Building or Project as a purchaser at a foreclosure sale (any such mortgagee
or other lienholder or purchaser at a foreclosure sale being each hereinafter
referred to as the "Purchaser at Foreclosure"), then Tenant shall (at the sole
and absolute election of the Purchaser at Foreclosure) thereafter remain bound
to the terms of this Lease to the same effect as if a new and identical lease
between the Purchaser at Foreclosure, as Landlord and Tenant, as Tenant, had
been entered into for the remainder of the Term of the Lease in effect at the
time of the foreclosure. Tenant shall, on request, execute any certificate or
instrument necessary or desirable further to confirm a Purchaser at Foreclosures
election to continue (or discontinue) of the Lease in effect alter foreclosure,
as above provided. If the Purchaser at Foreclosure elects to continue this Lease
within ninety (90) days after such foreclosure, Tenant shall attorn and pay vent
to the Purchaser at Foreclosure as if that party were a signatory to this
Agreement as "Landlord".

(c)    In the event that Tenant shall fail to execute any instrument described
in (a) or (b) above within seven (7) days as requested. Tenant hereby
irrevocably constitutes Landlord as Tenant's attorney-in-fact to execute such
instrument in Tenant's name, place and stead, it being stipulated by Landlord
and Tenant That such agency is coupled with an interest in Landlord and is,
accordingly, irrevocable.

18.    RULES AND REGULATIONS.

(a)          Tenant shall not exhibit, sell or offer for sale on the Leased
Premises or on the Project any article or thing (except those articles or things
essentially connected with the stated use of the Leased Premises by Tenant)
without the prior written consent of Landlord.

(b)          Tenant shall not display, inscribe, print, paint, maintain, or
affix in or about the Project any sign, notice, legend, direction, figure or
advertisement, except on the doors of the Leased Premises and on the Building
directory and then only such names) and matter and in such color, size, style,
place and materials as shall first have been approved by the Landlord. The
listing of any name other than that of Tenant, whether on the doors of the
Leased Premises, on the Building directory or otherwise, shall not operate to
vest in any additionally named party any right or interest in this Lease or in
the Leased Premises or be deemed to be written consent of Landlord to any act of
Tenant, it being expressly understood that any such listing is a privilege
extended by Landlord revocable at will by written notice to Tenant.
 
(c)          Tenant shall not advertise the business, profession or activities
of the Tenant conducted in the Leased Premises in any manner that violates the
letter or spirit of any code of ethics adopted by a recognized association or
organization pertaining to such business, profession or activities and shall not
use the name of the Building for any purposes other than that of the business
address of the Tenant and shall never use any picture or likeness of the
Building in any circular, notices, advertisements or correspondence without
Landlord's consent.
 
(d)          No additional locks or similar devices shall be attached to any
door or window without Landlord's prior written consent. No keys for any door
other than those provided by the Landlord shall be trade. If more than two (2)
keys for one lock are desired, Landlord will provide the same upon payment by
Tenant of the cost of making such additional keys. All keys must be returned to
Landlord at the expiration or termination of this Lease.
 
(e)    All persons entering or leaving the Building alter hours on Monday
through Friday, or at any time on Saturdays, Sundays or holidays, may be
required to do so under such regulations as Landlord may impose. The Landlord
may exclude or expel any peddler, and Landlord shall not be required to accept
any deliveries or packages on behalf of Tenant.
 
(f)    Tenant shall not overload, in accordance with commercially reasonable
standards, any floor. Landlord may direct the time and manner of delivery,
routing and removal and the location of safes and other heavy articles.
 
(g)    Unless Landlord gives advance written consent, Tenant shall not install
or operate any steam or internal combustion engine, boiler, machinery,
refrigerating or heating device or air conditioning apparatus in or about the
Leased Premises or carry on any mechanical business therein or use the Leased
Premises for housing accommodations or lodging or sleeping purposes, or do any
cooking with the exception of microwave ovens therein or use or permit to be
brought into the Building any inflammable fluids such as gasoline, kerosene,
naphtha and benzine or any explosive, radioactive materials or other articles
deemed extra hazardous to life, limb or property. Tenant shall not use the
Leased Premises of any illegal or immoral purposes.
 
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(h)         Tenant shall reasonably cooperate fully with Landlord to assure the
commercially effective  operation of the Buildings air-conditioning system,
including the closing of venetian blinds and drapes.
 
(i)          The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by Tenant or used for any purpose other than
for ingress to or egress from the Leased Premises. The halls, passages, exits,
entrances. elevators, stairways and roof, not for the uses of the general public
and Landlord shall in all cases retain the right to control and prevent access
thereto by all persons whose presence, in the judgment of Landlord, shall be
prejudicial to the safety, character, reputation and interests of the Building
and its tenants. Neither Tenant nor the agents. Contractors, employees, or
invitees of Tenant shall go upon the roof or mechanical floor of the Building.
Tenant shall keep closed at all times, except for ordinary use, all corridor
entrance/exit doors in the Leased Premises.
 
(j)    Tenant shall not use, keep or permit to be used or kept any foul or
noxious gas or substance in the Leased Premises or permit or suffer the Leased
Premises to be occupied or used in a manner offensive or objectionable to
landlord or other occupants of the Building by reason of noise, odors and/or
vibrations, or interfere in any way with other tenants or those having business
there, nor shall any animals or birds be brought in or kept about the Leased
Premises or the Building.
 
(k)    Tenant shall see that the doors and windows, if operable, of the Leased
Premises are closed and securely locked before leaving the Building and shall
observe strict care and caution that all water faucets or water apparatus are
entirely shut off before Tenant or Tenant's employees leave the Building and
that all electricity shall likewise be shut off so as to reasonably prevent
waste or damage. For any default of or under this Lease by Tenant or
carelessness of Tenant, Tenant shall reimburse, indemnify and hold harmless
Landlord and all other tenants and occupants of the Project for or front all
injuries or losses sustained by Landlord or other tenants or occupants of the
Building.
 
In addition to all other liabilities for any failure by Tenant to observe the
rules and regulations, Tenant shall pay to Landlord an amount equal to any
increase in insurance premiums payable by the Landlord or any other tenant in
the Building caused solely by such failure. The inability of Landlord to cause
another occupant of the Building to comply with the rules and regulations will
neither excuse Tenant's obligation to comply with the rules or any other
provisions of this Lease, nor cause Landlord to he liable to Tenant for any
damages resulting to Tenant. Tenant shall cause its employees, agents, invitees,
licensees and contractors to comply with all rules and regulations for the
Project.
 
19.          EMINENT DOMAIN. If there shall be taken by exercise of the power of
eminent domain during the Term of this Lease any of the Leased Premises.
Landlord or Tenant may elect to terminate this Lease. If more than ten percent
(10%) of the Building shall be taken by exercise of the power of eminent domain
during the Term of this Lease, Landlord may elect to terminate this Lease. If
neither party terminates this Lease, then this Lease shall continue in full
force and effect, except that Rent shall be reduced in proportion to the area of
the Leased Premises to be taken and Landlord shall repair any damage to the
Leased Premises or Building resulting from such taking. All sums awarded or
agreed upon between Landlord and the condemning authority for the raking of the
interest of Landlord or Tenant, whether as damages or as compensation, will be
the property of Landlord without prejudice, and are hereby assigned from Tenant
(to the extent of Tenant's interest) to Landlord. However, as to claims of
Tenant against the condemning authority on account of the unamortized cost of
leasehold improvements paid For by Tenant taken by the condemning authority. If
this Lease should he terminated tinder any provision of this Paragraph 19. Rent
shall be payable up to the date that possession is taken by the condemning
authority and Landlord will refund to Tenant any prepaid unaccrued Rent less any
sum then owing by Tenant to Landlord.
 
20.          ACCESS BY LANDLORD. Landlord, its agents and employees shall have
access to and the right to enter upon the Leased Premises at any reasonable time
and upon reasonable notice during regular business hours except for an emergency
to examine the condition thereof, to make any repair's or alterations required
to be made by Landlord hereunder, to show the Leased Premises to prospective
purchasers, mortgagees or tenants and for any other purpose deemed reasonable by
Landlord. In addition, Landlord may post "For Rent” signs on or about the
Project advertising the Building and Leased Premises for lease.
 
21.          INTENTIONALLY DELETED.
 
22.          DEFAULT AND REMEDIES.
 
(a)    Each of the following acts or omissions of Tenant or occurrences shall
constitute and "Event of Default":
 
(i)          Failure or refusal by Tenant to timely pay Rent or other payments
hereunder within two (2) business days following written notice to Tenant of
such failure.
 
(ii)        Failure to perform or observe any other covenant or condition of
this Lease by Tenant to be performed or observed prior to the expiration of a
period of thirty (30) days following written notice to Tenant specifying with
particularity such failure (plus an additional reasonable period as may be
required by Tenant to cure such default if Tenant shall diligently pursue the
cure of such default until the same shall be cured).
 

 
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(iii)          The filing or execution or occurrence of any of the following
with respect to either Tenant or any guarantor of this Lease: a petition in
bankruptcy or other solvency proceeding by or against them; or any petition or
answer seeking relief under any provision of the Bankruptcy Code or an
assignment for the benefit of creditors or composition: or a petition or other
proceeding by or against them for the appointment of a trustee, receiver or
liquidator of them or any of their property; or a proceeding by any governmental
authority for the dissolution or liquidation of them.
 
(b)    This Lease and the Term and estate hereby granted and the demise hereby
made are subject to the limitation that if and whenever any Event of Default
shall occur, Landlord may, at its option, in addition to till other rights and
remedies given hereunder or by law or equity, do any one or more of the
following:
 
(i)          Terminate this Lease, in which event Tenant shall immediately
surrender possession of the Leased Premises to Landlord.
 
(ii)          Enter upon and take possession of the Leased Premises and expel or
remove Tenant and any other occupant therefrom, with or without terminating the
Lease.
 
(iii)        Change or alter locks and other security devices at the Leased
Premises prohibiting entry into the Leased Premises and deny Tenants access
thereto. In connection with such change or alteration, of locks. Landlord shall
have no obligation to advise Tenant of the change of locks other than to provide
written notice at the Demised Premises of the person Tenant may contact, during
normal business hours for the Leased Premises, to acquire additional
information. Furthermore, Tenant waives all rights under Section 91 of the Texas
Property Code, to which it is otherwise entitled.
 
(iv)       Perform any action required to be performed by Tenant hereunder.
 
(c)    Exercise by Landlord of any one or more remedies hereunder granted or
otherwise available shall not be deemed to be an acceptance or surrender of the
Leased Premises by Tenant, whether by agreement or by operation of the law, it
being understood that such surrender can he affected only by the written
agreement of Landlord and Tenant. No such alteration of security devices and no
removal or other exercise of dominion by Landlord over the property of Tenant or
others at the Leased Premises shall be deemed unauthorized or constitute a
conversion. Tenant hereby consenting, after an Event of Default, to the
aforesaid exercise of dominion over Tenant's property within the Building. All
claims for damages by reason of such re-entry and/or repossession and/or
alteration of locks or other security devices are hereby waived, as are all
claims for damages by reason of Landlord's compliance with distress warrant,
forcible detainer proceeding, sequestration proceedings, or other legal process.
Tenant agrees that any re-entry by Landlord may be pursuant to judgment obtained
in forcible detainer proceedings or other legal proceedings or without the
necessity for any legal proceedings, as Landlord may elect, and Landlord shall
not be liable in trespass or otherwise.
 
(d)    In the event Landlord elects to terminate the Lease by reason of an Event
of Default. Then, notwithstanding such termination, Tenant shall be liable, as
damages to Landlord and not as a penalty, for the breach of this Lease, and
shall pay to Landlord the total of (i) the reasonable costs of recovering the
Leased Premises and the sum of all Rent and other indebtedness accrued to the
date of such termination, (ii) the Rent due hereunder which was suspended or
waived because of any "free rent period", (iii) out of pocket expenses of
Landlord in constructing the Tenant finish required under this Lease, (iv) all
commissions paid by Landlord in connection with this Lease, (v) the amount of
the excess of (a) the total Rent and other benefits which Landlord would have
received under this Lease for the remainder of the Term (at rates then in
effect) together with all other expenses incurred by Landlord in connection with
Tenant's default, over (b) the Fair Market Value of the Balance of the Lease
Term (as hereinafter defined) as of the time of such breach: and (vi) all other
sums of money and damages then owing by Tenant to Landlord. As used herein, the
term "Fair Market Value of the Balance of the Lease Term shall mean the
difference between art amount equal to all Rent and other benefits payable over
the remainder of the Lease Term, minus reasonable rental value of the Leased
Premises for the same period. by comparison to other tenants of the Building
(or, if there are no comparable tenants in the Building, in comparable
buildings) and to other leasing space of comparable size, similarly situated,
for a lease term comparable to the remainder of the Term, with such difference
discounted to a present value based upon a rare of seven percent (7%) per annum.
 
(e)    In the event that Landlord elects to repossess the Leased Premises
without terminating the Lease, then Tenant shall be liable for and shall pay to
Landlord all Rent and other indebtedness accrued to the date of such
repossession, plus rent required to be paid by Tenant to Landlord during the
remainder of the Term until the date of expiration of the Term as stated in
Paragraph 2, diminished by any net sums thereafter received by Landlord through
reletting the Leased Premises during said period (after deducting reasonable
expenses incurred by Landlord as provided in Subparagraph 22(1) hereof). Actions
to collect amounts due by Tenant provided for in this Paragraph may be brought
front time to time by Land lord during the aforesaid period, on one or more
occasions, without the necessity of Landlord's waiting until expiration of such
period; and in no event shall Tenant he entitled to any excess of Rent (or Rent
plus other sums) obtained by reletting over and above the Rent provided for in
this Lease.
 
(f)    In the case of an Event of Default, Tenant shall also be liable for and
shall pay to Landlord in addition to any sum provided to be paid above, (i)
reasonable broker's fees incurred by Landlord in connection with reletting the
whole or any part of the Leased Premises, (ii) the reasonable cost of removing
and storing Tenants or other occupants property; (iii) reasonable cost of
repairing, altering, remodeling or otherwise purring the Leased Premises into
condition acceptable to a new tenant or tenants, and (iv) all reasonable
expenses incurred by Landlord in enforcing Landlord's remedies, including
reasonable attorneys' fees. Past due Rent and other past due payments shall bear
interest from maturity until paid by Landlord to Tenant at the rate described in
Paragraph 40 hereof.
 

 
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(g)          In the event of repossession of the Leased Premises after an Event
of Default. Landlord shall not have any obligation to reset or attempt to reset
the Leased Premises, or any port ion thereof, or to collect Rent after
reletting: but Landlord shall have the option to relet or attempt to relett and
in the event of reletting. Landlord may reset the whole or any portion of the
Leased Premises for any period, to any tenant, and for any use and purpose.
 
(h)          If Tenant should fail to make any payment or cure any Event of
Default hereunder within the time herein permitted, Landlord, without being
under any obligation to do so and without thereby waiving such default, may make
such payment and/or remedy such other Event of Default for the account of Tenant
(and enter the Leased Premises for study purposes) and thereupon Tenant shall be
obligated to, and hereby agrees to pay Landlord upon demand, as additional Rent
hereunder, all reasonable costs, expenses and disbursements (including
reasonable attorneys' fees) incurred by Landlord in taking such remedial action.
 
(i)    In the event of any default by Landlord, Tenant's exclusive remedy shall
be an action for damages (Tenant hereby waiving the benefit of any laws granting
the right to terminate this Lease, to a lien upon the property of Landlord
and/or upon Rent due Landlord), but prior to any such action Tenant will give
landlord written notice specifying such default with particularity and Landlord
shall have thirty (30) days (plus an additional reasonable period as may be
required by Landlord to cure such default, if Landlord shall diligently pursue
the cure of such default until same shall be cured) in which to cure any such
default. Unless and until Landlord bills to so cure any default after such
notice, Tenant shall also have any remedy or causes of action by reason thereof.
All obligations of Landlord hereunder will be construed as covenants, not
conditions, and all such obligations will be binding upon Landlord only during
period of its ownership of the Building and not thereafter. Landlord shall have
no personal liability for the performance of any obligations hereunder, recourse
by any party for default against Landlord being limited to Landlord's interest
in the Building. The term "Landlord" shall mean only the owner of the Building
at the date a commencement of the Term, and in the event of the transfer by such
owner (or subsequent owner) of its interest in the Building, such previous owner
shall thereupon be released and discharged from all covenants and obligations of
the Landlord under this Lease thereafter accruing, and Tenant agree to look only
to the new owner for the performance of the obligations of Landlord hereunder.
 
(j)    In any circumstances set out in this Lease where Landlord is permitted to
enter upon Leased Premises during  the Term, whether for the purposes of curing
any default of Tenant or repairing damage resulting from fire or other casualty
or an eminent domain taking or where Landlord is otherwise permitted hereunder
or by law to go upon the Leased Premises, no such entry in accordance therewith
will constitute an eviction or disturbance of Tenant's use and possession of the
Leased Premises or a breach by Landlord of any of its obligations hereunder or
render Landlord liable for damages for loss of business or for any other reason
to entitle tenant to be relieved from any of its obligations hereunder or grant
Tenant any right of setoff or recoupment or other remedy; and in connection with
any such entry incident to performance of repairs, replacements, maintenance or
construction, all of the aforesaid provisions shall be applicable
notwithstanding that Landlord may elect to take building materials in, to or
upon the Leased Premises that may be required or utilized in connection with
such entry by Landlord.
 
(k)    In the event Landlord commences any proceedings against Tenant for
nonpayment of Rent or any other sum due and payable by Tenant hereunder. Tenant
will not interpose any non-compulsory counterclaim against Landlord of whatever
nature or description in any such proceedings, and in the event Tenant
interposes any such non-compulsory counterclaim or other claim against Landlord
in such proceedings. Landlord and Tenant stipulate and agree that in addition to
any other lawful remedy of Landlord, upon motion of Landlord, such
non-compulsory counterclaim or other claim instituted by Tenant shall be severed
from the proceeding institutes by Landlord and the proceedings instituted by
landlord may proceed to final judgment separately and apart from and without
consolidation with or reference to the status of such non-compulsory
counterclaim or any other claim asserted by Tenant: provided, however, the
provisions of this sentence do not apply to counterclaims or claims by Tenant
which may only be asserted in the aforesaid proceedings brought by Landlord or
forever be barred if not asserted in said proceedings.
 
(l)    Landlord may seek to restrain or enjoin any breach or threatened breach
of any covenant, duty or obligation of Tenant herein. The remedies of Landlord
hereunder,  at law or in equity shall be deemed cumulative, and no remedy of
landlord, whether exercised by Landlord or not, shall be deemed to be in
exclusion of any other. Except as may be otherwise herein expressly provided, in
all circumstances under this Lease where prior consent or permission of one
party ("first party") is required before the other party ("second party") is
authorized to take any particular type of action. the matter of whether to grant
such consent or permission shall be within the sole and exclusive judgment and
discretion of the first party; and it shall not constitute any nature of breach
by the first party hereunder or any defense to the performance of any covenant,
duty or obligation of the second party hereunder that the first party delayed or
withheld the granting of such consent or permission, whether or not the delay or
withholding of such consent or permission was prudent or reasonable or based on
good cause.
 
(m)    The obligation of Tenant to pay all Rent and other sums hereunder
provided to be paid by Tenant and the obligation of Tenant to perform Tenant's
other covenants and duties hereunder constitute independent, unconditional
obligations to be performed at all times provided for hereunder, save and except
only when an abatement thereof or reduction therein is herein expressly provided
for and not otherwise. Tenant waives and relinquishes all rights which Tenant
might have to claim any nature of lien against or withhold, deduct from or
offset against any Rent and other sums provided hereunder to be paid Landlord by
Tenant. Tenant waives and relinquishes any right to assert, either as a claim or
as a defense, which Landlord is bound to perform or is liable for time
nonperformance of any implied covenant or implied duty of Landlord not expressly
herein set forth.
 
 
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(n)          In the event of foreclosure by any 1ienholder of the Building or
Project, Tenant shall not have a right to terminate this Lease, although Tenant
hereby understands and agrees that such lienholder who or which forecloses its
lien on the Building or Project -shall have the option to terminate this Lease
(as such rights are further described in Paragraph 17(b)), unless such
lienholder has agreed in writing to the contrary.
 
(o)          Under no circumstances whatsoever shall Landlord or Tenant ever by
liable hereunder for consequential damages or special damages.
 
(p)          This Lease is a contract under which applicable law excuses
Landlord from accepting performance from (or rendering performance to) any
person or entity other than Tenant within the meaning of Sections 365(e) and
365(e)(2) of the Bankruptcy Code. 11 U.S.C. §5101 et seq. ("Bankruptcy Code")
 
(q)          If 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, shall be and remain the exclusive property of
Landlord, and shall not constitute property of Tenant or of the Estate of Tenant
within the meaning of the Bankruptcy Code. Any and all monies or other
considerations constituting Landlord's property under the preceding sentence not
paid or delivered to Landlord shall be held in trust for the benefit of Landlord
and he promptly paid or delivered to Landlord.
 
(r)          Notwithstanding anything to the contrary, in any bankruptcy filed
by or against Tenant, all Rent or other amounts payable by Tenant or on behalf
of Tenant to Landlord tinder this Lease, whether or not expressly denominated as
rent, shall constitute credit provided to the Bankruptcy Estate which shall have
the priority set forth in Section 264(c)(1) of the Bankruptcy Code, and such
designation as credit shall be binding on any trustee, assignee, or receiver of
Tenant. Notwithstanding the foregoing, should Landlord's Section 364(c)(1)
priority not be allowed, then any rents or other amounts due to Landlord under
this Lease shall constitute administrative priority allowed pursuant to, inter
alia, Section 503(b) of the Bankruptcy Code. Furthermore, Tenant agrees not to
seek any extension under Section 365(d) of the Bankruptcy Code.
 
(s)          Any person or entity to which this Lease is assigned pursuant to
the provisions of the Bankruptcy Code shall be deemed, without further act or
deed, to have assumed all of the obligations arising under this Lease on or
after the date of such assignment. Any such assignee shall upon demand execute
and deliver to Landlord any instrument confirming such assumption.
 
23.          NONWAIVER. Neither acceptance of Rent by Landlord nor failure by
Landlord to complain of any action, non action or default of Tenant shall
constitute a waiver of any of Landlords rights hereunder. Waiver by Landlord of
any right for any default of Tenant shall not constitute a waiver of any right
for either a subsequent default of the same obligation or any other default.
Receipt by Landlord of Tenant's keys to the Leased Premises shall not constitute
any acceptance or surrender of the Leased Premises.
 
24.          HOLDING OVER. If Tenant should remain in possession of the Leased
Premises after the expiration of the Term without execution by Landlord and
Tenant of a new lease, then Tenant shall be deemed to be occupying the Leased
Premises as a tenant-at-sufferance, subject to all the covenants and obligations
of this Lease and at a daily rental of 1.50 times the per day Rent provided
hereunder, computed on the basis of a thirty (30) day month. Additionally,
Tenant shall pay Landlord for all direct damages sustained by Landlord by reason
of Tenant's retention of possession. If any property not belonging to Landlord
remains at the Leased Premises after the expiration of the Term of this Lease,
Tenant hereby authorizes Landlord to make such disposition of such property as
Landlord may desire without liability for compensation or damages to Tenant.
Tenant agrees to indemnify and hold Landlord harmless from all suits, actions,
liability. loss, damages, and expenses in connection with or incident to any
removal, exercise or dominion over, and/or disposition of such property by
Landlord. The provisions of this Paragraph do not exclude Landlord's right of
re-entry or any other right of Landlord hereunder.
 
25.    NOTICE. Any notice or request which may or shall be given tinder the
terms of this Lease shall be in writing and shall be either delivered by hand to
the Building management office (for Landlord) or the Leased Premises (by Tenant)
or sent by United States Registered or Certified Mail, post prepaid, addressed
to the parties hereto at the respective addressed set out opposite their names
below. Such address may be changed from time to time by either party giving
notice as provided above. Notice shall be deemed given when delivered (if
delivered by hand) or when postmarked (if sent by mail).
 

Tenant:
 
Deep Down. Inc.
8827 W. Sam Houston Pkwy., N. Suite 100
Houston, Texas 77040
Landlord:
 
A-K-S-L 49 BELTWAY 8, L.P
8827 W. Sam Houston Pkwy N.
Suite 200
Houston, TX 77040

 
26.    LANDLORD'S MORTGAGEE.
 
(a)    If the Project. Building and/or Leased Premises are at any time subject
to a mortgage or deed of trust lien, then in any instance in which Tenant gives
notice to Landlord alleging default by' Landlord hereunder. Tenant will also
simultaneously give a copy of such notice to each Landlord's Mortgagee (provided
Landlord or Landlord's Mortgagee shall have provided written notice to Tenant of
the name and address of Landlord's Mortgagee), and each Landlord's Mortgagee
shall have the right (but not the obligation) to cure or remedy such default
during the period that is permitted to Landlord hereunder, plus and additional
period or thirty (30) days, and Tenant will accept such curative or remedial
action (if any) taken by Landlord's Mortgagee with the same effect as if such
action had been taken by Landlord.

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(b)    Tenant agrees that from time to time Tenant will deliver to Landlord a
statement in writing certifying (i) that this Lease is unmodified and in full
force and effect (or if there have been modifications that the same is in full
force and effect as modified and identifying the modifications), (ii) the dates
to which the Rent and other charges have been paid and (iii) that the Landlord
is not in default or specifying each such default of which the person making the
certificate may have knowledge, it being understood that any such statement so
delivered may be relied upon by any landlord under any ground or underlying
lease, or any prospective purchaser, mortgagee or any assignee of any mortgage
on the Project or any part thereof.
 
27.          QUIET ENJOYMENT. Provided Tenant complies with its covenants,
duties and obligations hereunder, Tenant shall quietly have, hold and enjoy the
Leased Premises during the Term as against Landlord, subject to the terms and
provisions of this Lease.
 
28.          TIME OF ESSENCE. In all instances where Landlord or Tenant is
required hereunder to pay any sum or do any act at a particular indicated time
or within an indicated period. it is understood that time is of the essence: and
all performance due dates, time schedules and conditions precedent to exercising
a right by Landlord or Tenant shall he strictly adhered to without delay except
where otherwise expressly provided.
 
29.    MECHANIC'S LIEN. It because of any act or omission of Tenant, its
employees, agents, contractors or subcontractors, any mechanic's lien or other
lien, charge or order for the payment of money shall be filed against Landlord
or against all or any portion of the Leased Premises or the Building. Tenant
shall, at its own cost and expense, cause the same to be discharged of record
within thirty (30) days after filing thereat and Tenant shall indemnify and save
harmless Landlord against and from all reasonable costs and expenses,
liabilities, suits, penalties, claims and demands, including, without
limitation, reasonable attorneys fees, resulting therefrom.
 
30.    MEMORANDUM OF LEASE. Tenant agrees that, upon written request from
Landlord, Tenant will within ten (10) days of such request deliver a copy of
this Lease, or, if the Landlord so requests, a Memorandum of this Lease in
recordable form to Landlord. Tenant shall not record this Lease or a memorandum
thereof without the prior written consent of the Landlord. Any such recording
without Landlords prior written consent shall be an Event of Default hereunder.
 
31.          INVALIDITY OF PARTICULAR PROVISIONS. If any clause or provision of
this Lease is or becomes illegal, invalid or unenforceable because of present or
future laws or any rule or regulation of any governmental or quasi- governmental
body or any court holding effective during the Term, the intention of the
parties hereto is that the remaining parts of this Lease shall not be affected
thereby unless such invalidity is. in the sole determination of the Landlord,
essential to the rights of both parties, in which event Landlord has the right,
but not tine obligation, to terminate this Lease on written notice to Tenant.
 
32.          WAIVER OF BENEFITS. To the extent permitted by law, tenant waives
the benefits of all existing and future rent control legislation and statutes
and similar governmental rules and regulations, whether in time of war or not.
 
33.          WAIVER OF TRIAL BY JURY. It is mutually agreed by and between
Landlord and Tenant that the respective parties hereto shall and they hereby do
waive trial by jury in any action, proceeding or counterclaim brought by either
of the parties hereto against the other on any matters whatsoever arising out of
or in any way connected with this Lease, the relationship of Landlord and
Tenant,  Tenant's use or occupancy of the Leased Premised and any emergency
statute or any other statutory remedy.
 
34.          MISCELLANEOUS TAXES. Tenant shall pay prior to delinquency all
taxes assessed against or levied upon its occupancy of tine Leased Premises, or
upon the fixtures, furnishings, equipment and all other personal property owned
by Tenant located on the Leased Premises, if nonpayment thereof shall give rise
to a lien on the real estate, and when possible Tenant shall use its best
efforts to cause said fixtures, furnishings, equipment and other personal
property to be assessed and billed separately from the property of the Landlord.
In the event any or all of Tenant's fixtures, Furnishings, equipment and other
personal property upon, or Tenant's occupancy of, the Leased Premises shall be
assessed and taxed with the property of Landlord. Tenant shall pay to Landlord
Tenant's share of such taxes within ten (10) days after delivery to Tenant by
Landlord of a statement in writing setting forth the amount of such taxes
applicable to Tenant's fixtures, furnishings, equipment or personal property
along with a copy of the assessment and tax invoice.
 
35.     INTENTIONALLY DELETED.
 
36.    BROKERAGE. Tenant represents and warrants that, except for Mary Caldwell
or Caldwell Companies, it has dealt with no broker, agent or other person in
connection with this transaction and that no broker, agent or other person
brought about this transaction, and Tenant agrees to indemnify and hold Landlord
harmless from and against any claims by any other broker, agent or other person
claiming a commission or other form of compensation by virtue of having dealt
with Tenant with regard to this leasing transaction. The provisions of this
Paragraph, in addition to all of Tenant's indemnities and covenants expressly
set forth in this Lease, shall survive the termination of this Lease.
 
 
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37.          NO REINSTATEMENT. No receipt of money by Landlord from Tenant after
the termination of this Lease, after the service of any notice of any Event of
Default or of termination of this Lease, or after the commencement of any suit
or after final judgment for possession of the Leased Premises shall reinstate,
continue to extend the term of this Lease or affect any such notice, demand or
suit or imply consent for any action for which Landlord's consent is required.
 
38.          LIMITATION OF IMPLIED WARRANTY. Landlord's duties and warranties
are limited to those expressly stated in this Lease and shall not include any
implied duties or implied warranty now or in the future. LANDLORD HAS NOT MADE,
AND TENANT MAY NOT RELY ON, ANY REPRESENTATIONS OR WARRANTIES WITH REGARD TO THE
BUILDING, LEASED PREMISES OR OTHERWISE, EXPRESSED OR IMPLIED, EXCEPT AS STATED
IN THIS LEASE. IN PARTICULAR, LANDLORD HAS NOT AUTHORIZED ANY AGENT OR BROKER TO
MAKE A REPRESENTATION OR WARRANTY INCONSISTENT WITH THE TERMS OF THIS LEASE AND
TENANT MAY NOT RELY ON ANY SUCH INCONSISTENT REPRESENTATION OR WARRANTY.
 
39.          CAPTIONS AND BINDING EFFECT. Paragraph captions are for convenience
only and neither limit nor amplify the provisions of this Lease. The provisions
of this Lease shall be binding upon and inure to the benefit of the heirs,
executors, administrators, successors and assigns of the parties, but this
provision shall in no way alter the restriction herein in connection with
assignment and subletting by Tenant. In the event of variation or discrepancy
between copies of this Lease, Landlord's original copy shall control.
 
40.          INTEREST. Notwithstanding any provision of the Lease to the
contrary, whenever this Lease provides for the payment of interest to Landlord,
the rate of interest shall be the maximum rate allowed by applicable law, and if
there is no maximum rate, then twelve percent (12%) per annum, however,
regardless of any provision contained herein. or in any other document executed
in connection herewith, no Landlord or holder of this Lease shall ever be
entitled to receive, collect or apply, as interest on any amount owing
hereunder, any amount in excess of the maximum non-usurious contract rate of
interest allowed front time to time by applicable law ("Highest Lawful Rate"),
and in the event any Landlord or holder of this Lease ever receives, collects,
or applies, as interest. any such excess, such amount as would be excessive same
shall be ipso facto reduced to the amount permitted by law; and if all amounts
of this Lease shall be paid in full. any excess shall forthwith be paid to
Tenant. In determining whether or not the interest paid or payable, tinder any
specific contingency, exceeds the Highest Lawful Rate, the Landlord and any
holder of this Lease shall, to the maximum extent permitted by law (a)
characterize any non-principal payment as an expense, fee or premium rather than
as interest: (b) exclude voluntary prepayment and the effects thereof; and (c)
compare the total amount of interest collected, contracted for. charged or
received throughout the entire contemplated term of this Lease at the Highest
Lawful Rate; provided that if all Tenant's obligations under this Lease are paid
and performed prior to the end of the full contemplated terms thereof, and if
the interest received for the actual period of existence hereof exceeds the
Highest Lawful Rate, the Landlord and holder of this Lease shall refund to the
Tenant the amount of such excess, and in such event, no Landlord or holder of
this Lease shall be subject to any penalties provided by any laws for
collecting, contracting for, charging or receiving interest in excess of the
Highest Lawful Rate.
 
41.          INTENTIONALLY DELETED.
 
42.          ATTORNEYS' FEES. If, as a result of any breach or default by Tenant
of its respective obligations under this Lease, Landlord employs an attorney to
enforce or defend any of its rights or remedies hereunder, and if Landlord
prevails, then Tenant shall pay to Landlord the reasonable attorneys' fees
incurred by Landlord. If Tenant prevails, Landlord shall pay to Tenant the
reasonable attorney's Fees incurred by Tenant.
 
43.          FORCE MAJURE. If the performance by Landlord or Tenant of any
provision of this Lease is delayed or prevented by an Act of God, strike,
lockout, shortage of material or labor, restriction by any governmental
authority, civil riot, flood and any other cause not within the control of
Landlord or Tenant, then the period for landlord's or Tenant's performance of
the provision shall be automatically extended for the same amount of time that
Landlord or Tenant in so delayed or hindered.
 
44.          USE OF LANGUAGE. Words of any gender used in this Lease include any
other gender, and words in the singular include the plural, unless the context
otherwise requires.
 
45.          DAMAGE FROM CERTAIN CAUSES. Landlord or Tenant are not liable or
responsible to the other party 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 governmental body or
authority, or for any damages or inconvenience that may arise through repair or
alteration of any part of the Project, the Building or the Leased Premises, or
failure to make any such repairs.
 
46.          GOVERNING LAW. This Lease and the rights and obligations of the
parties hereto shall be interpreted, construed and enforced in accordance with
the local laws of the State of Texas.
 
47.         ASBESTOS OR OTHER HAZARDOUS SUBSTANCES. Tenant shall not cause or
permit any hazardous substance or solid waste to be brought upon, kept or used
in or about the Leased Premises by Tenant or its agents, employees, contractors
or invitees (the "Tenant Group'). If Tenant breaches the obligations stated in
the preceding sentence (which shall be an Event of Default under this Lease), or
if the presence of a hazardous substance or solid waste otherwise occurs, in or
about the Leased Premises caused by the Tenant Group, then Tenant shall
indemnify, defend and hold harmless Landlord and Landlords' parents,
subsidiaries, affiliates, officers, directors, employees, agents, attorneys and
representatives front any and all claims, judgments, damages, penalties, fines,
reasonable costs, liabilities or losses which arise during or after the Lease
Term as a result of such contamination, and Tenant shall, at its sole cost and
expense, cause the removal or containment of any such contamination in
accordance with all laws, rules and/or regulations of any governmental authority
having jurisdiction. Furthermore, if Landlord discovers any hazardous substance
or solid waste on or about the Project, including, but not limited to asbestos
in the Building of a material amount, Landlord shall have the option to
terminate this Lease upon fifteen (15) days written notice to Tenant. The term
"hazardous substances" and "solid waste" shall have the meanings specified in
the Comprehensive Environmental Response. Compensation and Liability Act
of  1980, as amended, the Resource Conservation and Recovery Act of 1976. as
amended, the Texas Water Code and The Texas Solid Waste Disposal Act.
 
 
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48.          AMENDMENT.  Except where (a) otherwise authorized, permitted or
required by express terms of this lease, and (b) notice to consent or approval
of, or joinder by any party has been expressly waived by the provisions hereof,
no amendment, moderation, deletion, release, termination or extension of;
alteration, variance or change in; or supplement to, the provisions of this
Lease shall be valid or effective or otherwise binding on the parties hereto,
unless and until such amendment, etc., shall have been reduced to writing and
executed by the parties hereto with the same formality as this Lease.
 
49.          ENTIRE AGREEMENT. THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT,
WITH REGARD TO THE SUBJECT MATTER OF THIS LEASE AND THE TRANSACTIONS
CONTEMPLATED HEREIN (a) THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES HERETO
AND (b) THIS LEASE, INCLUDING THE DEFINED TERMS AND ALL EXHIBITS AND ADDENDUMS,
IF ANY, ATTACHED HERETO, (i) EMBODIES THE FINAL AND COMPLETE AGREEMENT BETWEEN
THE PARTIES; (ii) SUPERSEDES ALL PRIOR AND CONTEMPORANEOUS NEGOTIATIONS, OFFERS,
PROPOSALS, AGREEMENTS, COMMITMENTS, ASSURANCES AND UNDERSTANDINGS, WHETHER
VERBAL OR WRITTEN, AND (iii) MAY NOT BE VARIED OR CONTRADICTED BY EVIDENCE OF
ANY SUCH PRIOR OR CONTEMPORANEOUS MATTER OR BY EVIDENCE OF ANY SUBSEQUENT ORAL
AGREEMENT OF THE PARTIES HERETO.
 
Executed on this the Day of November. 2008.
 

 

 
LANDLORD:
 
A-K-S-L 49 BELTWAY 8, LP., a Texas limited partnership
 
By:A-K-S-L 49, L.C.,
a Texas limited liability company, its General Partner

By:  /s/ Jay K. Sears
Name Jay Sears
Title:  Member-Manager
 
 
 
TENANT:
 
DEEPDOWN, INC.,
a Nevada Corporation
 
By:  /s/ Bradley Parro
Name:  Bradley Parro
Title:  Vice President

 
 
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